Generic Defendants Shed No Tears after Winning Motion to Add Incorrect Inventorship Defense
The US District Court for the Eastern District of Texas granted defendants' motion to amend their pleadings after the deadline for amending had passed. Allergan v. Teva Pharmaceuticals USA, No. 15-1455-WCB, 2017 WL 1512334 (E.D. Tex. Apr. 27, 2017) (Bryson, C.J.)
Allergan sued several defendants, including Teva, Mylan and Akorn, alleging infringement of patents Orange-Book listed for Restasis, an ophthalmic emulsion for treating chronic dry eyes containing 0.05 percent cyclosporine. Defendants asserted invalidity defenses based on prior art patents naming Dr. Shulin Ding as the inventor. Dr. Ding, who worked for Allergan as a formulation scientist during the relevant development period of Restasis, was not named as an inventor of the asserted Orange-Book patents.
Defendants sought discovery related to Dr. Ding's work at Allergan. In response, Allergan produced technical reports and later, after the deadline for amending pleadings, a lab notebook showing Dr. Ding was involved in formulating and testing the formulation that became the Restasis product. During Dr. Ding's deposition, taken after the close of fact discovery and after the amended pleading deadline, she testified that she had worked on the development of Restasis for several years, and confirmed that the formulations described in the reports and lab notebook were her work and were the same formulations that eventually became Restasis. Two months after Dr. Ding's deposition, defendants moved to amend their pleadings to add a new invalidity theory based on incorrect inventorship.
Judge Bryson analyzed defendants' motion to amend under the 5th Circuit's four prong test, weighing each prong to determine whether to allow defendants to add a defense after the amended pleadings deadline had passed. Judge Bryson considered: (1) defendants' explanation of delay; (2) the importance of amendment; (3) prejudice to plaintiff; and (4) availability of a continuance to cure prejudice.
The court weighed the first prong in favor of allowing the amendment, even though defendants waited two months after Dr. Ding's deposition to file their motion to amend. The court found the defendants were not at fault for the delay between the production of the technical reports and lab notebook related to Dr. Ding's work or the delay in taking her deposition. Nor did the court agree that defendants could have amended their pleadings after receiving the technical reports and lab notebook. It was only after Dr. Ding's deposition could defendants have had a good faith basis to assert an invalidity defense based on incorrect inventorship.
Turning to the second prong, even though inventorship could be corrected by Allergan, which would obviate defendants' invalidity defense, the court found the second prong also weighed in favor of allowing the amendment. In weighing this factor, the court reasoned that even though inventorship could be corrected, there were incentives to name the correct inventors (e.g., triggering the duty of disclosure of an unnamed, but correct, inventor). The court also weighed this factor with a "pragmatic judgment" on the likelihood that the new defense would succeed, effectively overlaying a likelihood of success analysis. In doing so, the court found that defendants were somewhat likely to show Dr. Ding was a co-inventor.
Finishing with the third and fourth prongs, the court gave Allergan additional time to conduct limited discovery on the inventorship issue, thus negating any prejudice to Allergan. The fourth prong was found to be irrelevant because there was sufficient time in the case schedule to allow for limited fact discovery on the inventorship issue. Because all the factors weighed in favor of allowing the amendment or were irrelevant, the court granted defendants motion to amend their pleadings and invalidity contentions to add an invalidity defense based on incorrect inventorship.