Delaware case document -
DEFENDANT HEALTH NET, LLC’S REPLY BRIEF IN SUPPORT OF ITS
MOTION TO SEVER
OF COUNSEL:
Don J. Mizerk
HUSCH BLACKWELL LLP
120 South Riverside Plaza, Suite 2200
Chicago, IL 60606
(312) 655-1500
Dustin L.
1027
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I. INTRODUCTION
Amarin1 alleges induced infringement against two very different defendants. Amarin first alleged Hikma2, the manufacturer of generic icosapent ethyl capsules, induces infringement through statements made (and missing) in the generic’s label and statements made in press releases. Two months later, Amarin amended its complaint to allege Health Net, one of many insurance providers that cover both Hikma’s generic product and Amarin’s branded product, also induces infringement of the same patents not through any affirmative statement or instruction, but by covering the generic product despite alleged knowledge that others may infringe. The “facts giving rise” to Amarin’s inducement claims against Hikma and its separate inducement claims against Health Net do not overlap at all. Amarin does not allege Hikma and Health Net are “acting in concert” and cannot contest its factual allegations against Hikma are entirely unrelated to those against Health Net. Amarin’s claims against Hikma and Health Net have only one thing in common: claimed induced infringement of the same patents. This is insufficient as a matter of law. 35 U.S.C. § 299(b). Thus, Amarin had no right to join Health Net in its pending case against Hikma and these claims should be severed.
Neither can, nor should, Amarin’s claims against these two separate and unrelated defendants be consolidated under Rule 42(a). Section 299 prohibits both joinder and consolidation for trial under the facts here. Consolidation would severely prejudice Health Net, which is merely one of several insurance providers that offer services in California. Hikma, in contrast, manufacturers its generic product for distribution nationwide. Icosapent ethyl capsules, whether Amarin’s brand product or Hikma’s generic, are merely one of hundreds of drugs on Health Net’s
1 Plaintiffs Amarin Pharma, Inc., Amarin Pharmaceuticals Ireland Limited, Mochida Pharmaceutical Co., Ltd. are collectively referenced herein as “Plaintiffs” or “Amarin”.
2 Defendants Hikma Pharmaceuticals USA Inc. and Hikma Pharmaceuticals PLC are collectively referenced herein as “Hikma”. Case 1:20-cv-01630-RGA-JLH Document 49 Filed 05/03/21 Page 4 of 14 PageID #: 1028
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formularies and, even accepting Amarin’s allegations as true, coverage for the Hikma generic is only approximately one-fourth of the total volume of Amarin’s brand product. (D.I. 17, ¶ 162.) Consolidating Amarin’s claims against Health Net with its claims against Hikma would subject Health Net to the higher litigation costs inherent in a patent litigation case with a larger amount in controversy and swaths of irrelevant discovery for Health Net to disentangle. Moreover, consolidation is improper under Rule 42 because Health Net and Hikma’s accused conduct is not similar, resulting in very different interests in, inter alia, claim construction and invalidity.
II. ARGUMENT
There is no dispute that Health Net is not “acting in concert” with Hikma. Neither Amarin’s complaint nor its opposition to this motion suggests otherwise. Potter Voice Techs. LLC v. Apple, Inc., No. 12-CV-01096-REB-CBS, 2013 WL 1333460, at *3 (D. Colo. Mar. 29, 2013) (severing claims where the complaint “does not allege that the various defendants somehow have coordinated their alleged inducements. Rather, the complaint alleges inducements by each defendant acting independently of all of the other defendants.”). The word “concert” does not even appear in Amarin’s answering brief. (D.I. 43.) “Claims against independent defendants (i.e., situations in which the defendants are not acting in concert) cannot be joined under Rule 20’s transaction-or-occurrence test unless the facts underlying the claim of infringement asserted against each defendant share an aggregate of operative facts.” In re EMC Corp., 677 F.3d 1351, 1359 (Fed. Cir. 2012) (emphasis added). Because the facts giving rise to Amarin’s inducement claims against Hikma (the contents of the label and press releases) do not overlap at all with those giving rise to Amarin’s inducement claims against Health Net (providing coverage for the generic product despite knowing others may infringe), joinder is not allowed as a matter of law. Case 1:20-cv-01630-RGA-JLH Document 49 Filed 05/03/21 Page 5 of 14 PageID #: 1029
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A. There Is Not a Substantial Evidentiary Overlap in the Facts Allegedly Giving Rise to Amarin’s Claims Against Hikma and Against Health Net.
The operative facts Amarin alleges give rise to its claims against Hikma and Health Net do not overlap. As established in Health Net’s opening brief, Amarin alleges Hikma induces infringement of the asserted patents through statements in (and missing from) its label, in press releases, and on its website. (D.I. 33 at 8 (citing D.I. 17, ¶¶ 107, 108, 111–126, 130–134).) Separately, Amarin alleges Health Net induces infringement by listing Amarin’s brand drug product on a lower tier and offering more favorable payment terms for the generic product despite knowing others purportedly use the generic product to infringe. (Id. at 8–9 (citing D.I. 17, ¶¶ 149–151).) Because Amarin fails to allege Hikma was involved at all in these activities or that Hikma and Health Net act in concert, its claims against Health Net must be severed.
In response, Amarin argues the defendants “share a logical relationship in the pharmaceutical drug market to dispense drugs to patients . . . .” (D.I. 43, 6.) Such facts regarding any “logical relationship” are merely coincidental, not overlapping. In re EMC Corp., 677 F.3d at 1359 (“To be part of the ‘same transaction’ requires shared, overlapping facts that give rise to each cause of action, and not just distinct, albeit coincidentally identical, facts.”). Whether or not Hikma and Health Net both perform a role in “deliver[ing] prescription drugs to patients” is immaterial. (D.I. 43 at 6.) The existence of some common facts or evidence alone cannot meet the “same transaction” requirement. In re EMC Corp., 677 F.3d at 1359. Rather, the shared facts must be those that “give rise to each cause of action.” Id. Here, that means those facts Amarin alleges support its claims for induced infringement. Amarin’s response does not even try to show these facts overlap. Moreover, allowing Amarin to broadly define the “same transaction” as “deliver[ing] prescription drugs to patients” would render Rule 20’s requirements meaningless. Any action by two parties would be part of the “same transaction” if that phrase is defined as Case 1:20-cv-01630-RGA-JLH Document 49 Filed 05/03/21 Page 6 of 14 PageID #: 1030
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broadly as Amarin suggests.
Unable to identify any shared facts that give rise to Amarin’s claims against the two unrelated defendants, Amarin instead speculates that the evidence it will introduce at trial will overlap. Amarin’s speculative evidence, however, does not relate to proving its inducement causes of action, but rather relates to ancillary and background information. In any patent infringement suit, there will be evidence of the “invention” and the market in which it functions. In any pharmaceutical case, the evidence will involve “FDA’s role in approving and rating generic products.” (D.I. 43 at 7.) Yet Section 299(b) dictates “accused infringers may not be joined in one action as defendants . . . based solely on allegations that they each have infringed the patent or patents in suit.” 35 U.S.C. § 299(b). Amarin cannot circumvent this prohibition simply by describing the evidence it would introduce in any suit alleging infringement of these patents. And even if there were some overlap, that does not meet the “substantial evidentiary overlap” required to satisfy the “same transaction” test. In re EMC Corp., 677 F.3d at 1358.
Moreover, the speculative “overlapping” trial evidence Amarin identifies is contradictory. Amarin speculates it will introduce evidence regarding “whether the pharmacist dispended the drug based on the doctor’s prescription or based on the pharmacy plan” (D.I. 43 at 6 (emphasis added).) Any evidence purportedly showing a pharmacist is induced by the pharmacy plan would contradict evidence other sources (e.g, the prescription, Hikma’s label, or Hikma’s press releases) encouraged the pharmacist’s infringement. Far from showing there is a “substantial evidentiary overlap,” Amarin’s brief shows any consolidated case would include contradicting evidence.
Amarin’s reliance on the Eastern District of Texas Smartflash decision is misplaced. (D.I. 43 at 8 (citing Smartflash LLC v. Apple, Inc., Civil Action No. 6:13-cv-447, 2014 WL 4421657 at *3 (E.D. Tex. Sept. 8, 2014). There, the court found the “same transaction” test was satisfied where Case 1:20-cv-01630-RGA-JLH Document 49 Filed 05/03/21 Page 7 of 14 PageID #: 1031
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the plaintiff’s infringement contentions were directed to Apple’s direct provision of a “Store Kit” framework to other defendants to help them implement in-app payment functionality. 2014 WL 4421657 at *3. By contrast, Amarin’s infringement theories here necessarily will focus on the separate conduct it alleges Hikma and Health Net each performs to induce infringement. While Amarin’s infringement contentions against Hikma will likely focus on Hikma’s label and press releases, Amarin cannot in good faith include those facts in its contentions against Health Net, which must focus on Health Net’s placing the generic product on a “preferred” tier3 and its prior authorization form. There is no overlap between these facts and Smartflash is inapplicable.
Amarin also argues joinder is proper because it “satisf[ies] the requirement of asserting claims ‘jointly, severally, or in the alternative’ against multiple defendants in one action.” (D.I. 43 at 8 (citing 35 U.S.C. § 299(a)(1)).) An honest and unbiased reading of the complaint, however, shows it simply does not allege joint and several liability, which is fatal to Amarin’s argument under Delaware law. See Philips Elecs. N. Am. Corp. v. Contec Corp., 220 F.R.D. 415, 418 (D. Del. 2004) (granting motion to sever upon finding “[t]here is no allegation that CMT is jointly and severally liable with Hango for any alleged infringement of the patents-in-suit.”). Amarin’s opposition does not even mention this Court’s Philips decision.
Regardless, Amarin’s argument ignores that section 299 requires any right to be asserted jointly, severally, or in the alternative “with respect to or arising out of the same transaction . . . relating to the making, using, importing into the United States, offering for sale, or selling of the same accused product or process.” 35 U.S.C. § 299(a)(1). Thus, Amarin must allege not only that
3 The “preferred” language is required by California statute. See CAL. HEALTH & SAFETY CODE § 1367.205(b)(2) (“The standard formulary template . . . shall do all of the following: . . . Indicate any drugs on the formulary that are preferred over other drugs on the formulary . . . .” (emphasis added)). Case 1:20-cv-01630-RGA-JLH Document 49 Filed 05/03/21 Page 8 of 14 PageID #: 1032
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Hikma and Health Net are each severally or alternatively liable, but that its right to relief (i.e., claim for induced infringement) arises out of the same transaction, occurrence, or series thereof. Id. As shown above, Amarin cannot meet this requirement. Amarin argues the “requested relief from infringement” relates to “the dispensing and use of Hikma’s generic for the infringing CV Indication even though FDA never awarded Hikma’s generic the CV Indication.” (D.I. 43 at 8.) While that may be true in a claim for direct infringement, Amarin’s requested relief actually relates to the transactions Amarin contends constitute indirect infringement. Because there is no overlap there, joinder is not allowed. Moreover, Amarin’s argument contradicts subsection (b) of section 299, which prohibits joinder or consolidation of actions “based solely on allegations that [the defendants] each have infringed the patent or patents in suit.” 35 U.S.C. § 299(b). By Amarin’s own admission, its “requested relief” is merely related to allegations of patent infringement and thus cannot support joinder or consolidation. Id.
B. There Is No Question of Law or Fact Common to the Disparate Claims.
Because Health Net has shown, and Amarin has failed to rebut, that Amarin’s claims against Health Net and Hikma do not arise from the “same transaction,” Health Net has also shown there are no questions of fact common to all defendants. Federal Trade Comm’n v. Endo Pharms., Inc., Civ. No. 16-1440, 2016 WL 6124376, at *4 (E.D. Pa. Oct. 20, 2016) (“Courts in [the Third] Circuit have found that ‘the same series of transactions or occurrences prerequisite under Rule 20 essentially consumes the second requirement that there arise a question of law or fact common to all joined parties.’”) (citation omitted). Amarin nevertheless argues “Health Net ignores that the accused products and directly infringing activity underlying the claims are the same.” (D.I. 43 at 9.) But that is immaterial given Amarin’s failure to identify any common “questions of law or fact” that this would raise against both defendants. To resolve Amarin’s claims against Health Net, the jury must answer whether Amarin proved, among other things, the alleged direct infringers such
Case 1:20-cv-01630-RGA-JLH Document 49 Filed 05/03/21 Page 9 of 14 PageID #: 1033
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as pharmacists were encouraged to infringe by Health Net’s actions specifically (and not those of other insurance providers). To resolve Amarin’s claims against Hikma, the jury must answer whether the alleged direct infringers were encouraged to infringe by Hikma’s actions. Thus, the accused products and directly infringing activity will raise different questions of law and fact for each defendant.
Amarin also argues joinder would allow the parties to simultaneously raise claim construction and invalidity issues. (D.I. 43 at 9.) The Federal Circuit has already rejected this argument. In re EMC Corp., 677 F.3d 1351 at 1357 (“In the present context the mere fact that infringement of the same claims of the same patent is alleged does not support joinder, even though the claims would raise common questions of claim construction and patent invalidity.”); see also Body Sci. LLC v. Bos. Sci. Corp., 846 F. Supp. 2d 980, 990 (N.D. Ill. 2012) (“Rule 20(a) requires ‘that a claim asserted against the Defendants arise out of the same transaction or occurrence.’ Therefore, ‘the fact that the defendants’ defenses may arise out of the same transaction or occurrence is not sufficient for joinder under Rule 20(a).’”) (quotation omitted)).
Although Amarin claims the “accused product” is the same in both cases, Amarin ignores that the accused product is not the basis of the infringement claim against Health Net. Amarin’s reliance on In re Apple Inc. and Simpson, two unpublished decisions outside this district, is therefore misplaced. (D.I. 43 at 10 (citing In re Apple Inc., 650 Fed. App’x 771, 775 (Fed. Cir. 2015); Simpson Performance Prods., Inc. v. NecksGen Inc., No. 3:18-CV-01260-BEN-MDD, 2019 WL 4187463, at *4 (S.D. Cal. Mar. 25, 2019)). In each case, the defendant’s allegedly infringing activity arose from their sale or use of the accused product. In In re Apple, the defendants were accused of using the same software applications on their devices to practice the patents-in-suit. Content Guard Holdings, Inc. v. Amazon.com, Inc., No. 2:13-CV-1112-JRG, 2015 WL Case 1:20-cv-01630-RGA-JLH Document 49 Filed 05/03/21 Page 10 of 14 PageID #: 1034
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1263346, at *3 (E.D. Tex. Mar. 19, 2015). Similarly, in Simpson, the plaintiff alleged both defendants sold the exact same device. 2019 WL 4187463 at *1. Here, Amarin’s alleged actions do not directly involve the same accused product but are rather separate activities.
Amarin’s efforts to distinguish the case law upon which Health Net relies also fails. (D.I. 43 at 11.) Although Amarin argues these cases are inapposite because they involve different accused products, Amarin misses the point. None of Amarin’s allegations against either Hikma or Health Net involve the same accused product, but rather involve separate conduct Amarin contends each, separately, induces infringement of the same asserted patents. Indeed, Amarin has never alleged, much less proven, direct infringement of the asserted patents and does not name any direct infringer in its complaint.
C. Consolidation Is Improper.
Relying on In re EMC, Amarin argues additional factors, including prejudice to the parties and judicial efficiency, favor joinder. (D.I. 43 at 12.) Amarin has misread the Federal Circuit’s decision, which actually states even where joinder is not appropriate under Rule 20, “the district court has considerable discretion to consolidate cases for discovery and for trial under Rule 42 where venue is proper and there is only ‘a common question of law or fact.’” 677 F.3d at 1360 (quoting Fed. R. Civ. P. 42(a)). Importantly, the In re EMC decision did not consider Section 299, id. at 1360 n.4, which prohibits either joinder or consolidation for trial if the requirements of subsection 299(a) are not met. 35 U.S.C. § 299(a). Because Health Net has shown those requirements are not met, supra, neither joinder nor trial consolidation is allowed.
Regardless, even if considered, these additional factors show severance should be granted. Most importantly, continued consolidation would severely prejudice Health Net by subjecting it to higher litigation costs than it would face in a case brought solely against it. Health Net is merely one of many insurance providers that offer services in California (itself only one state). Hikma, in Case 1:20-cv-01630-RGA-JLH Document 49 Filed 05/03/21 Page 11 of 14 PageID #: 1035
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contrast, manufacturers its generic product for distribution nationwide. Icosapent ethyl capsules, whether Amarin’s brand product or Hikma’s generic, are merely one of hundreds of drugs on Health Net’s formularies. Even accepting Amarin’s unsupported allegations as true, coverage for the Hikma generic is only approximately one-fourth of the total volume of Amarin’s brand product. (D.I. 17, ¶ 162.) Thus, the potential amount in controversy in Amarin’s suit against Health Net is substantially dwarfed by the potential amount in controversy in its suit against Hikma. Forcing Health Net to assume the risks and obligations inherent in an expensive patent case with a much larger amount in controversy severely prejudices Health Net.
Amarin ignores this prejudice and instead argues joinder “will help streamline the Court’s docket” and “allow Defendants to coordinate and prepare a joint defense.” (D.I. 43, 12.) Amarin is, again, wrong. Health Net’s opening brief established that severing the claims against Health Net would allow those claims to proceed through discovery more quickly and less expensively and be resolved by a jury sooner. (D.I. 33 at 11.) Amarin does not meaningfully address this argument, but instead concludes “there is no guarantee that the claims against Hikma would proceed” more quickly. (D.I. 43 at 12.) Setting aside that it is Amarin’s substantially smaller, less complex, claims against Health Net that would likely proceed more quickly, severing Amarin’s claims against Health Net would not “create two separate but similar infringement actions with the potential for inconsistent outcomes.” (D.I. 43 at 12 (citing Omega Patents, LLC v. Skypatrol, LLC, No. 1:11-CV-24201-KMM, 2012 WL 2339320, at *2 (S.D. Fla. June 19, 2012)).) Unlike the allegations in Skypatrol, which arose from the sale and resale of the same product, Amarin’s allegations against Health Net and Hikma are entirely separate and unrelated.
Joinder will also not allow Defendants to prepare a joint defense, but rather will prevent each defendant from “hav[ing] a meaningful opportunity to present individualized defenses on Case 1:20-cv-01630-RGA-JLH Document 49 Filed 05/03/21 Page 12 of 14 PageID #: 1036
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issues such as infringement, . . . and damages because each defendant will have limited opportunities to present its own defense to the jury.” In re EMC Corp., 677 F.3d at 1355. If joinder would so benefit both defendants as Amarin claims, then why do both Hikma and Health Net support severance? Joinder serves only Amarin’s interests while prejudicing Defendants.
The need for different witnesses and documentary proof also supports severance. In re EMC Corp., 677 F.3d at 1360 (finding “a district court would be justified in exercising its discretion to deny joinder ‘when different witnesses and documentary proof would be required.”). Despite claiming in its opposition that Health Net’s motion would merely achieve “presenting the same evidence to two juries instead of one” (D.I. 43 at 13), in attempting to justify a consolidated schedule, Amarin argued “it will largely be Health Net’s own documentation that supports inducement claims.” (D.I. 45 at 3.) Additionally, evidence and testimony of Hikma’s “statements” is unnecessary to pursue Amarin’s claims against Health Net.
Amarin alternatively proposes the Court consolidate the two cases for pre-trial matters, including claim construction and validity. This ignores Health Net and Hikma will likely have substantial disparate pre-trial interests and concerns due to the widely varied theories of induced infringement alleged against each defendant and the differing amounts in controversy for each defendant. As set forth in Health Net’s portion of the letter accompanying the proposed schedule letter, consolidation is not appropriate and would severely prejudice Health Net. (D.I. 45 at 3–4.)
III. CONCLUSION
For the foregoing reasons, Health Net respectfully requests the Court sever Counts IV, V, and VI of Amarin’s First Amended Complaint, D.I. 17, from this case and require Amarin to file these claims in a separate action if Amarin still wishes to proceed with them.
