Mylan Inc. v. Smithkline Beecham Corp.

723 F.3d 413, 2013 WL 3780163, 2013 U.S. App. LEXIS 14772
CourtCourt of Appeals for the Third Circuit
DecidedJuly 22, 2013
Docket12-1539
StatusPublished
Cited by91 cases

This text of 723 F.3d 413 (Mylan Inc. v. Smithkline Beecham Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mylan Inc. v. Smithkline Beecham Corp., 723 F.3d 413, 2013 WL 3780163, 2013 U.S. App. LEXIS 14772 (3d Cir. 2013).

Opinion

OPINION OF THE COURT

AMBRO, Circuit Judge.

This case involves competing rights over the pharmaceutical paroxetine hydrochloride controlled release tablets (“paroxetine”) in generic form. Defendant/Appellee GSK 1 holds patent and FDA rights to market and sell paroxetine for the treatment of depression under the brand name Paxil CR. 2 As part of a 2007 settlement agreement, GSK granted PlaintiffiAppellant “Mylan” (jointly and severally referring to Mylan Inc. and Mylan Pharmaceuticals Inc.) certain rights to produce, market, and sell generic paroxetine. Then, in 2010, GSK agreed — as part of an unrelated settlement — to begin supplying Defendant/Appellee “Apotex” (jointly and severally referring to Apotex Inc. and Apotex Corp.) with GSK-produced generic paroxetine for marketing and sale to downstream customers. Mylan filed suit against GSK and Apotex, claiming the 2010 agreement violated its licensing agreement with GSK, which did not permit GSK to provide its own form of generic paroxetine to another generic drug company — such as Apotex — to be marketed and sold in direct competition with Mylan.

The District Court found that the terms of the GSK-Mylan agreement were unambiguous, and they did not limit to whom GSK was permitted to market and sell its own version of generic paroxetine. It thus held GSK did not breach its agreement by agreeing to provide Apotex with GSK-produced generic drugs, and granted summary judgment against Mylan on all claims. For the reasons that follow, we reverse the Court’s grant of summary judgment on the breach-of-contract cause of action against GSK, and remand for the parties to proceed to trial on that claim. We affirm its grant of summary judgment on all other claims. Because the District Court denied GSK’s motion to strike Mylan’s expert damages report as moot on the basis of its summary judgment rulings, we will vacate that denial for reconsideration on remand. 3

*416 I. BACKGROUND

A. GSK-Mylan Patent Settlement & License Agreement

In June 2007, GSK sued Mylan for patent infringement after Mylan sought FDA approval to introduce a generic version of paroxetine into the market before GSK’s patent had expired. 4 The parties settled the case shortly thereafter, signing a Patent License and Settlement Agreement in August 2007 (“License Agreement”). Section 11(c) of the License Agreement granted Mylan exclusive rights to market and sell generic paroxetine for the remaining life of GSK’s patent (ie., nearly nine years of complete generic exclusivity). This included manufacturing, marketing, and selling Mylan’s own generic paroxetine drug products, as well as sales rights for AG paroxetine manufactured by GSK. Mylan’s generic rights were exclusive “even [as] to GSK.” See J.A. at 51 (quoting License Agreement, Section 11(c)).

The parties submitted to the Federal Trade Commission (“FTC”) the License Agreement, in accord with its terms and as required by federal law. See Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub.L. No. 108-173, Title XI §§ 1112-13, 117 Stat. 2066, 2461-63 (codified at 21 U.S.C. § 355). In response to concerns raised by the FTC about the length and absoluteness of Mylan’s exclusive generic rights, the parties amended the License Agreement in September 2007 (the “Second Amendment”; the First Amendment to the License Agreement is irrelevant to this opinion). It provided two specific exceptions to the complete generic exclusivity provided under the License Agreement. First, in the settlement of subsequent patent litigation with other third-party companies that had filed ANDAs for generic paroxetine, GSK was permitted to grant nonexclusive licenses as part of a settlement agreement with those third parties:

If GSK receives a Third Party Notification and GSK initiates an action for patent infringement, GSK can enter into a settlement agreement with respect to such action at any time and Mylan *417 agrees to waive its exclusivity under Section 11(c) in order to permit GSK under such settlement agreement to grant such Third Party a non-exclusive license under the GSK Patents to sell Generic Paroxetine Product(s) in the dosage form(s) specified in the Third Party’s ANDA....

J.A. at 51 (quoting Second Amendment, Section 11(e) para, a) (the so-called “ANDA Clause”).

Second, and more relevant here, GSK (or a GSK affiliate) was entitled to market and sell AG paroxetine beginning two years after Mylan launched its generic products:

Aso, GSK or its Affiliate may commence marketing and selling generic paroxetine hydrochloride controlled or modified release products pursuant to its Paxil® CR NDA (“Authorized Generic Products”) at the end of the second year after Mylan launches its Generic Paroxetine Products.

Id. (quoting Second Amendment, Section 11(e) para, b) (the “Authorized Generic Clause”).

The Second Amendment alleviated the FTC’s exclusivity-related concerns. Thereafter, Mylan launched its generic paroxetine drug products in May 2008.

B. GSK-Apotex Antitrust Litigation & Supply Agreement

In May 2010, GSK settled an unrelated antitrust lawsuit brought against it by Apotex. The terms of the settlement agreement provided for a $300 million cash payment to Apotex; in addition, Apotex was entitled to a guaranteed minimum of $180 million to be earned through the sale of GSK products (£&, “in-kind transfers”). During negotiations regarding the potential products GSK would provide for the in-kind transfers, Apotex became aware that Mylan (i) had certain licensing rights with respect to paroxetine, for which Mylan paid GSK royalties, and (ii) was the only generic paroxetine market participant. While it refused Apotex’s request for a copy of the License Agreement due to confidentiality concerns, GSK did advise Apotex that its supply obligation to Mylan ended by June 2010. See J.A. at 8.

The parties agreed that one of the GSK-supplied products from which Apotex would produce sales revenues would be AG paroxetine. Thus, to implement the in-kind transfer arrangement, GSK and Apotex subsequently entered into an Exclusive Supply & Distribution Agreement for AG paroxetine (“S & D Agreement”). Id. Apotex subsequently began sales activities for AG paroxetine, which led to the filing by Mylan of this lawsuit in September 2010.

C. District Court Proceedings

Mylan brought claims against GSK for breach of contract and the implied covenant of good faith and fair dealing, and against Apotex for tortious interference with and inducement to breach a contract.

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723 F.3d 413, 2013 WL 3780163, 2013 U.S. App. LEXIS 14772, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mylan-inc-v-smithkline-beecham-corp-ca3-2013.