Opinion ID: 209444
Heading Depth: 3
Heading Rank: 2

Heading: Mylan

Text: On appeal, Mylan argues that the district court based its finding of an exceptional case against Mylan on conjecture rather than requiring Takeda to show clear and convincing evidence. As support for its position, Mylan points to its decision not to pursue the same arguments at trial as in its Paragraph IV letter, arguing that because Mylan's original invalidity theory was never pursued, the court had to rely on speculation in finding the certification letter baseless. Mylan also asserts that its decision to amend its defenses to include a revised obviousness claim and an inequitable conduct claim did not constitute litigation misconduct or demonstrate bad faith because it is customary to develop defenses during discovery. Mylan argues that the fact that it ultimately did not win on these claims does not render this case exceptional. Furthermore, Mylan asserts that the district court's decision to allow Mylan to assert its inequitable conduct claim demonstrates that it was not frivolous and thus was not litigation misconduct. Takeda responds by pointing to the district court's analysis of the evidence regarding Mylan's certification letter and litigation misconduct. Takeda notes Mylan's error in characterizing compound 14 and pioglitazone as bioisosteres in its Paragraph IV letter, which certified that pioglitazone was obvious based on the disclosure of compound 14 in the '200 patent and Sohda II. Takeda argues that this invalidity argument was so devoid of merit that Mylan did not pursue this obviousness claim in discovery and abandoned it before trial. Takeda then argues that Mylan suddenly asserted a revised obviousness theory centering on compound 3894 that was similarly fraught with scientific errors. With regard to Mylan's inequitable conduct claim, Takeda asserts that this claim was also frivolous, as Mylan completely failed to present any evidence of intent to deceive the PTO, and notes that the court specifically stated that allowing Mylan to amend its defenses to include inequitable conduct did not mean that the amendment was timely or meritorious. We conclude that the court did not commit clear error in finding that Mylan's misconduct contributed to this being an exceptional case. In fact, Mylan's invalidity argument in its certification letter appears even more baseless than Alphapharm's. Mylan certified that pioglitazone was rendered obvious because Takeda had already disclosed compound 14, which had high efficacy, and simply replaced its benzene ring with a pyridine ring, which it described as a bioisostere, to create pioglitazone. But Mylan's Rule 30(b)(6) designee testified that no reason existed to choose compound 14 as the lead compound; Takeda's expert emphatically disagreed with the assertion that benzene and pyridine rings are bioisosteres; and Alphapharm's expert testified that the properties of compound 14 taught nothing with respect to pyridines. We find it unsurprising, therefore, that the district court characterized Mylan's defense of the merits of its Paragraph IV letter as utterly frivolous. September Opinion, 459 F.Supp.2d at 247. In light of the scientific errors present in Mylan's certification letter, the fact that the court was unmoved by Mylan's decision not to pursue this obviousness claim at trial can hardly be deemed clear error. We believe the court had ample reason to hold that Mylan's certification letter was filed in bad faith and with no reasonable basis to claim the '777 patent invalid. Similarly, the finding that Mylan engaged in litigation misconduct was well-supported and explained by the district court. The court deemed Mylan's later argument based on compound 3894 to be extremely misleading. Id. at 247. In addition, the court discussed Takeda's seven asserted separate grounds for litigation misconduct committed by Mylan in its pursuit of an inequitable conduct claim. As Takeda points out, the district court stated that its decision to allow Mylan to bring its claim of inequitable conduct was absolutely not a finding that it was timely or meritorious. Id. at 249. Accordingly, the court found that the inequitable conduct claim was always frivolous and unsupported, as Mylan did not present any evidence that Takeda hid or misrepresented any information to the PTO. Id. We do not find persuasive Mylan's argument that the district court took issue with the mere fact that Mylan changed its theory of invalidity and then lost. Rather, the court determined that Mylan's initial certification letter was completely baseless and that the claims Mylan offered as substitutes were similarly frivolous. In short, the district court, which was in the best position to evaluate the entire strategy pursued by Mylan, did not commit clear error in finding litigation misconduct. Finally, we find the chilling argument regarding ANDA filers advanced by Alphapharm and Mylan to be unpersuasive, despite the support provided by the amicus filing of the Generic Pharmaceutical Association. In making a Paragraph IV certification, appellants are statutorily required to include a detailed statement of the factual and legal basis of the opinion of the applicant that the patent is invalid. 21 U.S.C. § 355(j)(2)(B)(iv)(II) (2006). It is clear from the district court's opinion that it was not faulting Alphapharm or Mylan for the act of filing an ANDA that challenged the pioglitazone patent, nor did it limit the filers to the theories raised in their certification letters. Rather, the district court found the case exceptional based on the specific circumstances involved in this case, viz., baseless certification letters compounded with litigation misconduct. In fact, the court addressed the deterrence argument directly: There is no basis to find that this award of fees will deter ANDA filings and litigation. This award addresses baseless ANDA filings and the pursuit of frivolous ANDA litigation in bad faith and other litigation misconduct. The Hatch-Waxman Act cannot be read to immunize such conduct. September Opinion, 459 F.Supp.2d at 251. Given the court's specific articulation that its ruling was directed toward baseless ANDA filings and litigation in bad faith, we decline to disturb the court's finding of an exceptional case as potentially chilling non-frivolous ANDA filings under the Hatch-Waxman Act. Well-supported filings challenging the validity and infringement of patents owned by an NDA holder should not raise the specter of an unjustified holding of an exceptional case.