Opinion ID: 3054322
Heading Depth: 5
Heading Rank: 1

Heading: Sham Litigation

Text: Kaiser contends that Abbott’s seventeen infringement suits against the seven would-be manufacturers of generic terazosin hydrochloride constitute sham litigation. Kaiser argues that Abbott’s litigation was an attempt to use the judicial process, rather than favorable judicial outcomes, to extend improperly its terazosin hydrochloride monopoly. See Omni Outdoor Adver., Inc., 499 U.S. at 380. [8] We discussed the sham litigation exception to NoerrPennington at length in USS-POSCO Industries v. Contra Costa County Building & Construction Trades Council, 31 F.3d 800 (9th Cir. 1994). We took pains in USS-POSCO to reconcile the Supreme Court’s opinions in Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, 508 U.S. 49 (1993), and California Motor Transport v. Trucking Unlimited, 404 U.S. 508 (1972), both of which dealt with the sham litigation exception to Noerr-Pennington. We wrote: We reconcile these cases by reading them as applying to different situations. Professional Real Estate Investors provides a strict two-step analysis to assess whether a single action constitutes sham petitioning. This inquiry is essentially retrospective: If the suit turns out to have objective merit, the plaintiff KAISER FOUNDATION v. ABBOTT LABORATORIES 447 can’t proceed to inquire into subjective purposes, and the action is perforce not a sham. California Motor Transport deals with the case where the defendant is accused of bringing a whole series of legal proceedings. Litigation is invariably costly, distracting and time-consuming; having to defend a whole series of such proceedings can inflict a crushing burden on a business. California Motor Transport thus recognized that the filing of a whole series of lawsuits and other legal actions without regard to the merits has far more serious implications than filing a single action, and can serve as a very effective restraint on trade. When dealing with a series of lawsuits, the question is not whether any one of them has merit—some may turn out to, just as a matter of chance—but whether they are brought pursuant to a policy of starting legal proceedings without regard to the merits and for the purpose of injuring a market rival. The inquiry in such cases is prospective: Were the legal filings made, not out of a genuine interest in redressing grievances, but as part of a pattern or practice of successive filings undertaken essentially for purposes of harassment? USS-POSCO, 31 F.3d at 810-11 (internal citation omitted). Kaiser asks us to apply the California Motor Transport test for sham litigation, as we described that test in USS-POSCO, because Abbott brought a “series of legal proceedings.” Abbott objects to our application of USS-POSCO (and California Motor Transport) on the ground that Kaiser asked the MDL court to apply only the Professional Real Estate Investors test. We need not decide whether Kaiser has waived its argument that the California Motor Transport test applies, for even under that test Kaiser loses its sham litigation claim. The MDL court carefully analyzed each of the seventeen suits brought by Abbott against the would-be generic manu448 KAISER FOUNDATION v. ABBOTT LABORATORIES facturers. In re Antitrust Litig. II, 335 F. Supp. 2d at 1356-65. Abbott won seven of the seventeen suits. It lost the other ten, but in each of the ten cases it had a plausible argument on which it could have prevailed. Two of the ten suits depended on whether a Hatch- Waxman infringement suit could be brought based on a patent that was not listed in the Orange Book. This was a question of first impression. The district court held against Abbott, but only after detailed and careful analysis. Zenith, 934 F. Supp. at 933-36. Two more of the suits depended on whether the Uruguay Round Agreements Act of 1994 extended the life of Abbott’s ’097 patent for three years. The MDL court wrote, “The [Uruguay Round] treaty was new, the provision had not been the subject of prior interpretation, and [Abbott’s] argument, while hypertechnical, passed the ‘straight face’ test.” In re Antitrust Litig. II, 335 F. Supp. 2d at 1359. The last six suits were all infringement suits brought by Abbott to enforce its ’207 patent. The MDL court viewed these suits as presenting the closest question. Id. at 1360. The same issue was litigated in all six of these suits — whether the on-sale bar of 35 U.S.C. § 102(b) invalidated Abbott’s ’207 patent on Form IV terazosin hydrochloride. Abbott admitted that Form IV terazosin hydrochloride had been sold more than a year before Abbott sought its ’207 patent, but it argued that the on-sale bar did not apply because neither the seller nor the buyer knew that Form IV terazosin hydrochloride had been sold. The Federal Circuit ultimately resolved all six suits by holding that the sellers’ and buyers’ knowledge was irrelevant to the on-sale bar. Geneva II, 182 F.3d at 1318-19. The court’s decision was influenced by the Supreme Court’s decision in Pfaff v. Wells Electronics, Inc., 525 U.S. 55 (1998), which was rendered after Abbott filed its suits. [9] There is insufficient evidence in this record to allow a jury to conclude that Abbott’s seventeen suits constituted “sham” litigation within the meaning of the exception to KAISER FOUNDATION v. ABBOTT LABORATORIES 449 Noerr-Pennington. It is true that Abbott was litigious, but to some degree its litigiousness was a product of HatchWaxman. Abbott filed suit quickly in order to preserve its rights under Hatch-Waxman, but it did not persist in litigating when it became obvious that the suits were baseless. Further, the volume of Abbott’s suits was dependent on the number of generic companies attempting to enter the terazosin hydrochloride marketplace, a matter over which Abbott had no control.