Using Expert Opinions in ‘Reverse-Payment’ Settlement Cases Under Actavis – King Drug Company of Florence, Corporation., et al. v. Cephalon, Corporation., et al.

Using Expert Opinions in ‘Reverse-Payment’ Settlement Cases Under Actavis – King Drug Company of Florence, Corporation., et al. v. Cephalon, Corporation., et al.

Applying its previous rulings in related litigation and interpreting Federal trade commission v. Actavis, 570 U.S. 756 (2013), the U.S. District Court for that Eastern District of Pennsylvania was given the job of figuring out whether or not to preclude expert testimony pursuant to Federal Rule of Evidence 702 and Daubert v. Merrell Dow jones Pharm., Corporation., 509 U.S. 579 (1993) in antitrust lawsuits involving “reverse-payment” settlements. King Drug Company of Florence, Corporation., et al. v. Cephalon, Corporation., et al., Situation No. 06-1797, 2015 WL 6750899 (E.D. Pa. November. 5, 2015) (Goldberg, D.J.).

Factual and Procedural Background

Defendant Cephalon was granted U.S. Pat. No. 5,618,845 in 1997 for that modafinil formulation in Provigil?. In The month of january 2002, Cephalon was granted a reissue patent on Provigil, U.S. Pat. No. RE 37,516 (RE‘516 patent). In December 2002, generic manufacturers (the Generic Defendants) each filed an abbreviated new drug application (ANDA) for generic Provigil, which incorporated Paragraph IV certifications that Cephalon’s patent was either invalid or otherwise infringed.

In 2003, Cephalon sued the Generic Defendants for violation (Paragraph IV litigation), which settled between 2005 and 2006. Underneath the settlement, Cephalon compensated the Generic Defendants huge amount of money to remain off market until 2012. This kind of settlement is called a reverse-payment or pay-for-delay settlement, and it was lately examined through the Top Court from the U . s . States in Actavis. Direct purchasers and finish payors of Provigil, together with generic competitor Apotex, Corporation., sued Cephalon and also the Generic Defendants alleging these reverse-payment settlements violate antitrust laws and regulations (consolidated because the In re Modafinil Litigation). Apotex also alleged the Paragraph IV litigation would be a sham, violating the Sherman Act.

Additionally towards the antitrust claims, Apotex sued Cephalon seeking a declaratory judgment on validity, unenforceability and violation. Following two bench trials, a legal court found the RE ‘516 patent 1) invalid 2) unenforceable and three) not infringed by Apotex’s generic product.

Motions to Preclude Expert Testimony

Cephalon identified numerous pros who may testify in the antitrust trial and also the In re Modafinil Litigation plaintiffs elevated numerous challenges to those experts under Daubert.

Underneath the rule-of-reason analysis of Actavis, plaintiffs bear the first burden of demonstrating anticompetitive effects, including proof of large reverse payments. Defendants then possess the burden to exhibit procompetitive effects, including justifications for that reverse payments (e.g., fair value for services and prevented litigation costs). Plaintiffs can rebut these justifications by showing overturn payments weren’t reasonably necessary to offer the procompetitive effects and were rather targeted at delaying generic entry. The direct purchasers and finish payors contended that Cephalon’s experts’ opinions ought to be excluded as they do not fit any risk the jury will consider underneath the Actavis standards. All Plaintiffs also challenged the validity and violation experts for reliability and fit, alleging inconsistencies between your experts’ opinions which court’s prior rulings within the Apotex situation. Apotex also challenged the experts’ opinions around the reasonableness from the validity, enforceability and violation arguments elevated by Defendants within the Paragraph IV litigation as well as their decision to stay, quarrelling these opinions present impermissible legal opinions that usurp the roles from the judge and jury.

Cephalon contended the testimony won’t be provided to prove issues it’s estopped from litigating, for example validity, enforceability and violation, but instead to help the jury in figuring out if the settlements were reasonable and procompetitive under Actavis. Cephalon also contended the testimony would show the motivation for settling the Paragraph IV litigation ended up being to avoid litigation uncertainty, instead of getting any anticompetitive purpose. Finally, Cephalon offered these opinions to exhibit it were built with a reasonable basis to create violation claims from the Generic Defendants as a result of Apotex’s sham litigation claim.

Opinions Regarding Strength of Patent Positions

A legal court first addressed Plaintiffs’ challenge to expert testimony provided to establish the effectiveness of Defendants’ patent positions within the Paragraph IV litigation, which Plaintiffs contended does not matter under Actavis. A legal court noted, however, Plaintiffs aim to introduce evidence concerning the weakness from the RE ‘516 patent to be able to establish Defendants had anticompetitive motivations in getting into settlement contracts, which Plaintiffs contended is pertinent towards the Actavis rule of reason analysis. A legal court found Plaintiffs’ positions sporadic, and figured “if Plaintiffs pursue a theory that the weak patent is probative of antitrust motivations in settling the Paragraph IV litigation, [it] allows Defendants to reply and try to rebut this evidence.” Evidence concerning the strength or weakness of the patent “speaks directly to the point of why the settlement contracts were executed” and “may profit the jury in answering [the issue that explains why for that reverse payment settlement], as it can certainly provide circumstantial proof of the settling parties’ intentions.”

Opinions Regarding Validity

Next, a legal court addressed Plaintiffs’ challenge towards the validity experts’ testimony the RE ‘516 patent applies. Plaintiffs contended this testimony conflicts using the court’s prior rulings within the Apotex litigation and should be excluded. Cephalon contended this testimony isn’t provided to prove the RE ‘516 patent applies, but instead “to reveal that, ex ante, a business in Cephalon’s position might have reasonably thought that the RE ‘516 patent was strong and likely to prevail within the Paragraph IV litigation.” Finding these opinions to directly contradict the rulings within the Apotex trial, a legal court held the validity experts’ opinions regarding the validity from the RE ‘516 patent don’t fit the details of the situation and aren’t admissible. “Such testimony would probably be confusing towards the jury and wouldn’t help them in deciding the details at trouble in the antitrust trial, because the validity from the patent continues to be made the decision and is not in contention.”

Opinions Regarding Infringement

Embracing the violation opinions, a legal court held that “Cephalon’s experts [cannot] opine the Generic Defendants’ products presently infringe the RE ‘516 patent,” since that “testimony wouldn’t fit the details of the situation and can confuse the jury.” The violation experts are restricted towards the “infringement opinions and arguments elevated through the parties during the time of the Paragraph IV litigation with an ex ante basis.”

A legal court then addressed challenges to a particular violation experts’ opinions on drug testing, claim construction and also the doctrine of equivalents. A legal court excluded the drug testing expert’s opinions as hard to rely on, just like it did within the Apotex litigation, because the substantial variations within the outcome was so severe it made them inadmissible. A legal court found the claim construction opinions allowable, despite conflicting using the court’s prior claim construction ruling, since “that evidence [helped] to describe, with an ex ante basis, what Cephalon might have reasonably believed concerning the claim construction from the RE ‘516 patent.” A legal court also permitted the doctrine of equivalents expert opinion. Despite Cephalon not evolving that argument throughout the Paragraph IV litigation, it doesn’t mean Cephalon never considered it during the time of overturn-payment settlements, and “testimony regarding arguments made throughout the Paragraph IV litigation and also the information open to the parties in those days regarding violation wouldn’t offend Daubert’s fit requirement.”

Opinions Regarding “Reasonableness”

Finally, a legal court addressed the “reasonableness” expert testimony. Professionals within this category-all lawyers-opined around the reasonableness from the validity, enforceability and violation arguments elevated by Defendants throughout the Paragraph IV litigation and Defendants’ decision to stay. Plaintiffs challenged these experts to make statements that conflicted using the court’s prior findings within the Apotex trial. A legal court reiterated professionals cannot opine the RE ‘516 is presently valid in order to adopt legal standards that directly conflict using the conclusions of law established within the Apotex litigation.

Apotex individually challenged these experts for presenting what it really contended is impermissible legal opinions-“opinions presented by lawyers who’re simply applying patent law towards the underlying details from the Paragraph IV litigation, so that their conclusions usurp the roles from the judge and jury.” Cephalon contended professionals didn’t present a legitimate opinion, but instead gave opinions regarding the customs and practices of the profession, in addition to factors the Defendants considered in deciding whether or not to settle the Paragraph IV litigation.

For that Actavis claims, as the court acknowledged evidence provided to show strength of patent positions within the Paragraph IV litigation is permitted, it held that including opinions that individuals arguments were reasonable and opinions whether it had been reasonable to anticipate success around the merits could be excluded as impermissible legal opinions. “The suggested experts are attorneys who’re evaluating the merits of the legal argument by making use of the details towards the law, which invades the jury’s role.” A legal court also found opinions by a lawyer expert whether he’d have counseled an offender to stay the Paragraph IV litigation will also be excluded as prejudicial and confusing towards the jury.

Regarding Apotex’s sham litigation claim against Cephalon, a legal court concluded the reasonableness opinions weren’t useful towards the jury. “Whether Cephalon presented reasonable claims throughout the underlying litigation, such that could have realistically expected success around the merits is a component Apotex must convince the jury to be able to establish sham litigation.” A legal court held that opinions that just tell the jury which conclusion to achieve with an essential element would clearly usurp the function from the jury, and should be excluded.

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