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SMITHKLINE BEECHAM CORPORATION v. APOTEX CORPORATION

United States District Court, E.D. Pennsylvania


July 16, 2004.

SMITHKLINE BEECHAM CORPORATION, SMITHKLINE BEECHAM, P.L.C., BEECHAM GROUP, P.L.C. and GLAXOSMITHKLINE, P.L.C.
v.
APOTEX CORPORATION, APOTEX, INC. and TORPHARM, INC. v. PENTECH PHARMACEUTICALS, INC. and PAR PHARMACEUTICALS, INC. SMITHKLINE BEECHAM CORPORATION, SMITHKLINE BEECHAM, P.L.C. and BEECHAM GROUP, P.L.C. v. GENEVA PHARMACEUTICALS, INC. and SUMIKA FINE CHEMICALS CO., LTD. SMITHKLINE BEECHAM CORPORATION, SMITHKLINE BEECHAM, P.L.C. and BEECHAM GROUP, P.L.C. v. ZENITH GOLDLINE PHARMACEUTICALS, INC. and SUMIKA FINE CHEMICALS CO., LTD. SMITHKLINE BEECHAM CORPORATION, SMITHKLINE BEECHAM, P.L.C. and BEECHAM GROUP, P.L.C. v. ALPHAPHARM PTY, LTD. and SUMIKA FINE CHEMICALS CO., LTD. SMITHKLINE BEECHAM CORPORATION, and BEECHAM GROUP, P.L.C. v. ANDRX PHARMACEUTICALS, INC. ANDRX PHARMACEUTICALS, L.L.C. BASF CORPORATION, BASF PHARMACHEMIKALIEN GMBH & CO. KG and KNOLL AG. SMITHKLINE BEECHAM CORPORATION, and BEECHAM GROUP, P.L.C. v. TEVA PHARMACEUTICALS USA, INC.

The opinion of the court was delivered by: RICHARD B. SURRICK, District Judge

MEMORANDUM AND ORDER

On June 25, 2004, Plaintiffs SmithKline Beecham Corporation, SmithKline Beecham, P.L.C., Beecham Group, P.L.C. and GlaxoSmithKline, P.L.C. ("SmithKline") filed a Motion to Stay the Consolidated Actions and for a Protective Order. (Civil Action No. 99-2926, Doc. No. 106.) SmithKline requested that we temporarily stay all proceedings between it and all Defendants with the exception of the proceedings between SmithKline and Defendants Apotex Corporation, Apotex, Inc., and Torpharm, Inc. (collectively, "Apotex"). On June 23, 2004, we ordered that any responses to SmithKline's Motion be filed within seven days. (Civil Action No. 99-2926, Doc. No. 108.) Expedited briefing was necessary because SmithKline sought to postpone several depositions scheduled for the first week of July, 2004. We received the following responses: Defendant Sumika Fine Chemical Co., Ltd. ("Sumika") requests that we deny SmithKline's Motion and permit Sumika to proceed with its depositions; Apotex opposes SmithKline's Motion to the extent that a stay would limit the discovery Apotex wished to pursue; Defendant Teva Pharmaceuticals USA, Inc. stipulated with SmithKline to a stay of discovery; Defendants BASF Corporation, BASF Pharmachemikalien GmbH & Co. KG, and Knoll Ag (n/k/a Abbott GmbH) conditionally agree not to oppose SmithKline's request to stay discovery;*fn1 and Defendants Andrx Pharmaceuticals, Inc. and Andrx Pharmaceuticals, L.L.C. state that they do not oppose SmithKline's request. In addition, SmithKline and Defendant Zenith Goldline Pharmaceuticals have entered into a Consent Judgment and Injunction, which, if approved by the Court, will end the proceedings between them. On July 2, 2004, we entered an Order granting SmithKline's Motion, temporarily staying all proceedings in Civil Action Nos. 99-2926, 00-5953, 02-1484, 01-1027, 01-3364, 02-8493, 01-2981, 03-6117, and 03-3365, and issuing a protective order postponing any depositions in those Civil Actions. In this Memorandum, we explain why we concluded that a temporary stay of these proceedings was appropriate at this juncture. We also take this opportunity to reconsider, sua sponte, our Order dated March 26, 2004, in which we declined to certify, pursuant to Federal Rule of Civil Procedure 54(b), our December 20, 2002 Order granting summary judgment after determining that several of SmithKline's patent claims were invalid. As explained in more detail below, we now conclude there is no just reason to delay SmithKline's appeal of our decision holding U.S. Patent No. 6,113,944 (the "`944 Patent") invalid. Accordingly, we direct the Clerk to enter that portion of our December 20, 2002 Order as a final, appealable judgment pursuant to Rule 54(b). I. BACKGROUND*fn2

These consolidated cases began with claims of patent infringement made by SmithKline. The patents at issue cover certain forms of paroxetine hydrochloride, processes for making paroxetine hydrochloride, and uses of paroxetine hydrochloride. SmithKline manufactures the hemihydrate form of paroxetine hydrochloride, and then tablets and sells that product in the United States under the trademark Paxil® ("Paxil"). Paxil is an anti-depressant drug used to treat a variety of disorders, and is one of the most widely prescribed prescription drugs in the United States.

  The Defendants in these cases are generic drug manufacturers (and suppliers of those manufacturers) who seek to sell generic versions of Paxil. SmithKline claims that the Defendants' generic products and/or methods of manufacturing the same infringe one or more of SmithKline's patents. One of these generic manufacturers is Apotex. In March, 1998, Apotex became the first generic drug manufacturer to file an Abbreviated New Drug Application ("ANDA") with the U.S. Food and Drug Administration ("FDA") seeking its approval to market a generic version of Paxil.

  A. The Hatch-Waxman Amendments

  We briefly digress to discuss the statutory framework governing the approval of generic drugs. The introduction of new prescription drugs to the marketplace is governed by the Food, Drug & Cosmetic Act. See 21 U.S.C. § 301 et seq. (the "FDC Act"). Generally, any company seeking to market a new drug must first receive the approval of the FDA by submitting a New Drug Application ("NDA"). See id. § 355(a). The NDA is a thorough, time-consuming, and costly process that must include data from clinical studies that support the proposed drug's safety and effectiveness. See Mova Pharm. Corp. v. Shalala, 140 F.3d 1060, 1063 (D.C. Cir. 1998).

  Prior to 1984, both brand name and generic drug manufacturers who wished to bring a drug to market were required to file a NDA.*fn3 Concerned that the NDA was a "cumbersome drug approval process [that] delayed the entry of relatively inexpensive generic drugs into the market place," Mylan Pharm., Inc. v. Shalala, 81 F. Supp.2d 30, 32 (D.D.C. 2000), Congress enacted the Hatch-Waxman Amendments to the FDC Act. See Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No. 98-417, 90 Stat. 1585 (1984) (codified in scattered sections of Titles 21, 35, and 42 of the United States Code). The Hatch-Waxman Amendments simplified the approval mechanism for generic versions of drugs that the FDA had approved via the NDA process.

  Under the Hatch-Waxman Amendments, a company that wishes to market a generic version of a pioneer drug no longer needs to file a complete NDA. Instead, Congress created the ANDA process, by which a generic drug manufacturer can rely on the clinical studies performed by the pioneer drug manufacturer and is not required to prove the safety and effectiveness of its generic drug from scratch. Instead, the generic drug manufacturer proves that its product is safe and effective principally by showing that its drug is bioequivalent to the brand name drug it wants to copy. See 21 U.S.C. § 355(j)(2)(A). Although Congress was interested in increasing the availability of generic drugs, it also wanted to protect the rights of those holding patents that claim pioneer drugs. The Hatch-Waxman Amendments, therefore, require that an NDA contain a list of any patents "which claim[] the drug . . . or which claim[] a method of using such drug and with respect to which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner engaged in the manufacture, use, or sale of the drug." Id. § 355(b)(1). The FDA maintains a record of the patents that claim approved drugs in its publication entitled Approved Drug Products with Therapeutic Equivalence, commonly known as the Orange Book. See id. § 355(j)(7)(A). An applicant filing an ANDA must certify whether its proposed generic drug will infringe any of the patents listed in connection with the pioneer drug in the Orange Book and, if not, why not. An applicant filing an ANDA has four certification options. It may certify that: (1) the required patent information has not been filed, (2) the patent has expired, (3) the patent has not expired but will expire on a particular date, or (4) the patent is invalid or will not be infringed by the drug for which the applicant seeks approval. See id. § 355(j)(2)(A)(vii). The last of these options, and the one used by Apotex in its ANDA, is the so-called Paragraph IV certification.

  An applicant who makes a Paragraph IV certification is required to give notice to the holder of the patent alleged to be invalid or not infringed, stating that an ANDA has been filed seeking approval to engage in the commercial manufacture, use, or sale of the drug before the expiration of the patent, and setting forth a detailed statement of the factual and legal basis for the applicant's opinion that the patent is not valid or will not be infringed. See id. §§ 355(b)(3)(B), 355(j)(2)(B)(ii). Upon receiving notice of a Paragraph IV certification, which technically is an act of infringement by the ANDA applicant, see 35 U.S.C. § 271(e)(2), the patent owner has forty-five days in which to initiate a patent infringement suit against the ANDA applicant, or else approval of the ANDA will be effective immediately, 21 U.S.C. § 355(c)(3)(C). If the patent owner brings such a suit, then approval of the ANDA may not be made effective until the court rules that the patent is invalid or not infringed or until the expiration of (in general) thirty months, whichever first occurs. Id.

  B. The Illinois Case

  Since Apotex's ANDA filing constituted a technical act of infringement of those patents SmithKline had listed in connection with Paxil in the Orange Book, SmithKline sued Apotex in the Northern District of Illinois for patent infringement (the "Illinois Case"). The patent at issue in the Illinois Case was U.S. Patent No. 4,721,723 (the "`723 Patent"), which claims crystalline paroxetine hydrochloride hemihydrate, along with certain processes for making it. During the course of that litigation, SmithKline moved for partial summary judgment that claim 1 of the `723 Patent was not invalid by way of the public use bar in 35 U.S.C. § 102(b).*fn4 Although SmithKline had conducted clinical trials in the United States with paroxetine hydrochloride more than one year before it filed the patent application that led to the `723 Patent, SmithKline argued that its clinical trials were experimental uses and therefore did not trigger the public use bar in § 102(b). The Court agreed and granted SmithKline's partial motion for summary judgment. SmithKline Beecham Corp. v. Apotex Corp., 286 F. Supp.2d 925, 936-38 (N.D. Ill. 2001).

  The Illinois Case went to trial in February, 2003. After an approximate three-week bench trial, the Court held that Apotex was likely to market a paroxetine product that contained some of the hemihydrate form. SmithKline Beecham Corp. v. Apotex Corp., 247 F. Supp.2d 1011, 1032 (N.D. Ill. 2003). Though Apotex intended to market only the anhydrate form of paroxetine, for reasons not relevant here, the Court found that Apotex's product was likely to contain at least some small amount of the hemihydrate form. Id. Nevertheless, the Court ruled that Apotex would not infringe the `723 Patent. Id. at 1052. It reached this conclusion by construing the `723 Patent to claim only a "commercially significant" amount of the hemihydrate form of paroxetine. Id. at 1030. The Court found that Apotex's product would likely not contain a commercially significant amount of paroxetine hemihydrate, and, therefore, that it would not infringe the `723 Patent. Id. at 1031.

  SmithKline appealed the Court's non-infringement ruling to the Federal Circuit, and Apotex cross-appealed on the issue of invalidity. SmithKline Beecham Corp. v. Apotex Corp., 365 F.3d 1306 (Fed. Cir. 2004). A unanimous panel of the Federal Circuit disagreed with the Northern District of Illinois' claim construction, holding that the `723 Patent claimed any amount — even a commercially insignificant amount — of paroxetine hemihydrate. Id. at 1313, 1324. The panel agreed that Apotex's product would likely contain some amount of paroxetine hemihydrate, thereby presenting a prima facie case of patent infringement. Id. at 1312, 1324.

  Nevertheless, the Federal Circuit dismissed SmithKline's claims because it held that the `723 Patent was invalid. The majority of the panel held that the `723 Patent was invalid for public use based on SmithKline's clinical trials of paroxetine hemihydrate. Id. at 1320. Those clinical trials were not experimental uses, the majority ruled, because, (1) to qualify as experimental uses, the experiments must have been testing claimed features of the invention, id. (citing In re Theis, 610 F.2d 786, 793 (3d Cir. 1979)); (2) SmithKline's clinical trials tested the safety and efficacy of paroxetine hemihydrate as an antidepressant; and (3) claim 1 of the `723 Patent only claimed the paroxetine hemihydrate molecule, not its possible use as an anti-depressant, id. The Court cautioned that "a patentee should understand that testing the properties, uses, and commercial significance of a compound claimed solely in structural terms may start the clock under § 102(b) for filing a claim that is not limited by any property, commercially significant amount, or other use of the compound."*fn5 Id. On June 4, 2004, SmithKline sought an en banc review of the Court's public use holding. Should that request be denied, SmithKline intends to seek further review of that holding by petitioning for a writ of certiorari from the Supreme Court.

  C. The Pennsylvania Cases

  While the Illinois Case was pending, SmithKline filed the instant patent infringement actions (the "Pennsylvania Cases"), which we have consolidated. In each of these actions, SmithKline asserts patent infringement claims against generic drug manufacturers (and suppliers of those manufacturers) who seek to sell generic versions of Paxil. The Defendants in these cases have counterclaimed against SmithKline seeking declaratory judgments of patent invalidity, non-infringement, and unenforceability, and asserting claims for violations of the federal antitrust laws, unfair competition, and attorney's fees.

  1. SmithKline's claims against Apotex

  In the Pennsylvania Cases, SmithKline alleges that if Apotex is permitted to market its generic paroxetine product, Apotex will infringe U.S. Patent No. 6,172,233 (the "`233 Patent"), the `423 Patent, the `759 Patent, and the `944 Patent. The `423 Patent, issued on May 4, 1999, contains a single claim for a particular form of paroxetine hydrochloride anhydrate ("Form A"), comprising a number of identifying characteristics derived from test data. The `759 Patent, granted on June 27, 2000, contains eighteen claims for processes for making paroxetine hydrochloride anhydrate Form A, and paroxetine hydrochloride anhydrate Form A made according to processes set forth in that patent. The `944 Patent, granted on September 5, 2000, sets forth two product-by-process claims for paroxetine tablets produced on a commercial scale by a defined process. Finally, the `233 Patent, granted on January 9, 2001, claims processes for making paroxetine and paroxetine made by the claimed processes. We note that, in this Court, SmithKline is not asserting patent infringement claims against Apotex based on the `723 Patent.*fn6

  Apotex moved for summary judgment as to the invalidity and/or non-infringement of the foregoing Patents, and, on December 20, 2002, we issued a Memorandum and Order granting in part, and denying part, Apotex's motion. SmithKline Beecham Corp. v. Geneva Pharms., Inc., Nos. 99-2926, et al., 2002 U.S. Dist. LEXIS 25275 (E.D. Pa. Dec. 20, 2002). Specifically, we held that the "product-by-process" patent claims*fn7 in the `233, `944, and `759 Patents were invalid for public use under 35 U.S.C. § 102(b).*fn8 Id. at *21-22, 27, 37. We declined to summarily dispose of SmithKline's claims of infringement with respect to the non-product-by-process patent claims, specifically claims 10-11 and 14-15 of the `759 Patent, and all the claims of the `423 Patent. Id. at *47. Defendants did not move for summary judgment as to the invalidity and/or non-infringement of claims 1-10 and 14-16 of the `233 Patent.

  In finding SmithKline's product-by-process claims invalid, we held that product-by-process claims must be evaluated independent of the process limitations of those claims. Id. at *16. Stripped of their process limitations, we held that all of SmithKline's product-by-process claims were anticipated by or obvious in light of prior art and therefore invalid pursuant to 35 U.S.C. § 102(b). In concluding that product-by-process claims must be evaluated independent of process limitations, we were forced to choose between two conflicting precedents from the Federal Circuit. In Scripps Clinic & Research Found. v. Grenentech, the Federal Circuit held that "[s]ince claims must be construed the same way for validity and for infringement, the correct reading of product-by-process claims is that they are not limited to product prepared by the process set forth in the claims." 927 F.2d 1565, 1583 (Fed. Cir. 1991) (citing In re Thorpe, 777 F.2d 695 (Fed. Cir. 1985)). The following year, a different panel of the Federal Circuit decided Atlantic Thermoplastics Co., Inc. v. Faytex Corp., 970 F.2d 834 (Fed. Cir. 1992), reh'g en banc denied, 974 F.2d 1299. In Atlantic, the court rejected the holding in Scripps, and concluded that in the context of validity and infringement litigation, product-by-process claims must be construed as limited by the process claims. Atlantic, 970 F.2d at 846-47. We decided to follow Scripps — the earlier decision — because Atlantic was a panel decision, and "only an en banc decision can overrule an earlier holding." SmithKline Beecham Corp. v. Geneva Pharms., Inc., 2002 U.S. Dist. LEXIS, at *16 (quoting Newell Cos., Inc. v. Kenney Mfg. Co., 864 F.2d 757, 765 (Fed. Cir. 1988)). We indicated however, that it is "impossible to know which approach is correct," and we "encourage[d] counsel to seek clarification of the law on this issue." Id. n. 12.

  2. SmithKline's claims against the Non-Apotex Defendants

  As we have noted, these consolidated actions include patent infringement claims made by SmithKline against generic drug manufacturers and suppliers other than Apotex. The other patent infringement defendants are Geneva Pharmaceuticals, Inc., Sumika, Zenith Goldline Pharmaceuticals,*fn9 Alphapharm Pty, Ltd., Andrx Pharmaceuticals, Inc., Andrx Pharmaceuticals, L.L.C., BASF Corporation, BASF Pharmachemikalien GmbH & Co. KG, Knoll AG., and Teva Pharmaceuticals USA, Inc. (collectively, the "Non-Apotex Defendants"). Though SmithKline initially asserted the same patent infringement claims against Apotex and the Non-Apotex Defendants, SmithKline represents that it and the Non-Apotex Defendants are in the process of resolving the claims concerning all of SmithKline's patents with the exception of the `723 and `944 Patents.*fn10 Thus, it would appear that the only live issues remaining between SmithKline and the Non-Apotex Defendants are SmithKline's claims that the Defendants will infringe the `723 and `944 Patents, the Defendants' counterclaims for patent invalidity, non-infringement, and/or unenforceability, and the Defendants' related claims for violations of the federal antitrust laws, unfair competition, and attorney's fees.

  II. SMITHKLINE'S MOTION TO STAY DISCOVERY

  SmithKline has moved for a temporary stay of all proceedings between it and the Non-Apotex Defendants until SmithKline exhausts its appeals concerning the validity of the `723 Patent in the Federal Circuit, and, if necessary, the Supreme Court. According to SmithKline, if the Federal Circuit declines SmithKline's request for en banc review of its decision invalidating the `723 Patent, and the Supreme Court denies SmithKline's petition for a writ of certiorari, SmithKline will have no further patent infringement claims against the Non-Apotex Defendants.*fn11 In that event, SmithKline agrees to dismiss all of its claims against the Non-Apotex Defendants based on the `723 Patent and argues that its patent infringement lawsuit against those Defendants will end.*fn12 (Doc. No. 111 at 3.) If, on the other hand, SmithKline succeeds in overturning the Federal Circuit panel decision invalidating its `723 Patent, SmithKline argues that its litigation with the Non-Apotex Defendants will be simplified because some of the counterclaims asserted by the those Defendants will be moot, including their counterclaims for violations of the federal antitrust laws, unfair competition, and attorney's fees. Thus, SmithKline asserts, a stay of these proceedings until the validity of the `723 Patent can be finally determined will simply these proceedings, conserve judicial resources, and avoid potentially needless discovery.

  Sumika opposes SmithKline's request for a stay. Sumika argues that its declaratory judgment counterclaims as to the invalidity, non-infringement, and/or unenforceability of the `723 and `944 Patents present live controversies despite the rulings that those Patents are invalid. In addition, Sumika argues that its counterclaims for violations of the federal antitrust laws, unfair competition, and attorney's fees will remain live regardless of the ultimate disposition of SmithKline's appeals concerning the `723 Patent. Sumika argues that the scheduled depositions that SmithKline wants to postpone seek information relevant to those counterclaims. Finally, Sumika argues that it has a considerable interest in quickly resolving the validity, infringement, and/or enforceability of the `723 and `944 Patents because Sumika is supplying its customers with material that those customers use to manufacture a generic form of Paxil, thereby subjecting Sumika to liability should SmithKline's Patents ultimately be deemed valid, enforceable, and infringed.

  Apotex also filed papers opposing SmithKline's Motion, reiterating many of the arguments made by Sumika. Apotex also opposes SmithKline's Motion because it believes that if the Court stays the proceedings against the Non-Apotex Defendants, SmithKline will then argue that the Court should stay discovery with respect to Apotex's counterclaims related to the `723 and `944 Patents. Apotex argues that it is entitled to discovery with respect to these counterclaims and defenses, and that the facts pertaining to its counterclaims are inextricably intertwined with the facts surrounding the development, issuance, listing, and assertion of all of SmithKline's Paxil-related patents, including the `723 and `944 Patents. Apotex believes that if the Court stays all discovery relating to the `723 and `944 Patents in these consolidated cases, Apotex will be prevented from fully developing the "complete story" upon which its counterclaims are based. A. Legal Standard

  "[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants. How this can best be done calls for the exercise of judgment, which must weigh competing interests and maintain an even balance." Landis v. North Am. Co., 299 U.S. 248, 254 (1936); see also Bechtel Corp. v. Local 215, Laborers' Int'l Union, 544 F.2d 1207, 1215 (3d Cir. 1976) ("In the exercise of its sound discretion, a court may hold one lawsuit in abeyance to abide the outcome of another which may substantially affect it or be dispositive of the issues."). The parties identify the following factors for us to consider in determining whether to stay these proceedings: (1) whether a stay will simplify issues and promote judicial economy; (2) the balance of harm to the parties; and (3) the length of the requested stay. See Cheyney State Coll. Faculty v. Hufstedler, 703 F.2d 732, 737-38 (3d Cir. 1983) (citing Landis, 299 U.S. at 254-55). We conclude that these factors favor granting the requested stay.

  1. Whether a stay will simplify issues and promote judicial economy

  Sumika argues that its counterclaims for declaratory judgments that the `723 and `944 Patents are invalid, not infringed and/or unenforceable are not moot because SmithKline intends to revive its infringement claims concerning the `723 and `944 Patents in the event those Patents are declared valid on appeal. See, e.g., Respironics, Inc. v. Resmed Ltd., No. 95-151, 2001 U.S. Dist. LEXIS 24355, at *4 (W.D. Pa. Nov. 21, 2001). In addition, Sumika contends that its counterclaims for violations of the antitrust laws, unfair competition, and attorney's fees will remain in litigation regardless of the disposition of SmithKline's appeals concerning the validity of the `723 and `944 Patents. According to Sumika, therefore, a stay will serve only to delay these proceedings. We disagree with Sumika's position.

  Even if we were to agree that Sumika's declaratory judgment counterclaims are not presently moot, they will be moot in the event the decisions holding the `723 and `944 Patents invalid are affirmed on appeal.*fn13 If that happens, SmithKline's patent infringement claims against the Non-Apotex Defendants and their declaratory judgment counterclaims will no longer be in litigation, leaving only the counterclaims for violations of the antitrust laws, unfair competition, and attorney's fees. In addition, once SmithKline exhausts its appeals, it will not be able to assert the validity of those Patents as a defense to those antitrust, unfair competition, and attorney's fees counterclaims.*fn14 Clearly then, this litigation will be simplified if the `723 and/or `944 Patents are determined to be invalid on appeal.

  We also think that this litigation will likely be simplified even if the invalidity rulings concerning the `723 and/or `944 Patents are reversed on appeal. In that event, the Non-Apotex Defendants' counterclaims for declaratory judgments of patent invalidity, at least insofar as they are based on the public use bar in 35 U.S.C. § 102(b), will likely be resolved. In addition, to the extent issues relating to the validity of the `723 and `944 Patents arise in the context of the Non-Apotex Defendants' antitrust and unfair competition counterclaims, those issues will also likely be resolved. Thus, we conclude that this litigation will likely be simplified even if the invalidity rulings concerning the `723 and/or `944 Patents are reversed on appeal.*fn15 Accordingly, judicial economy favors staying the proceedings between SmithKline and the Non-Apotex Defendants until the validity of the `723 and `944 Patents can be determined on appeal.*fn16

  2. The balance of harm to the parties

  Sumika argues that on balance, it will suffer more harm if we stay these proceedings than SmithKline will suffer if we deny the requested stay. According to Sumika, every sale of a generic Paxil product by one of its customers exposes Sumika and the customer to potential liability for patent infringement. For this reason Sumika argues it has a substantial interest in the quick resolution of its declaratory judgment counterclaims that SmithKline's patents are invalid, not infringed, and/or unenforceable. In a related argument, Sumika argues that SmithKline's patent infringement lawsuits deter Sumika and its customers (as well as other generic drug manufacturers) from investing in the generic Paxil market, harming not only generic drug manufacturers and their suppliers but also consumers who may be denied a generic alternative to Paxil. SmithKline counters that a stay of these proceedings will not harm Sumika because it has already entered the generic Paxil market. According to SmithKline, a stay of these proceedings will merely postpone discovery that may never be needed. Thus, SmithKline argues, denying a stay will harm all the parties by subjecting them to potentially needless litigation costs.

  We have already discussed how resolving the validity of the `723 and `944 Patents will likely simplify this case by eliminating several issues from this litigation. It follows then that if we decline to stay these proceedings, there is a substantial risk that the parties will engage in costly, time-consuming discovery that might ultimately be unnecessary. Denying the requested stay therefore creates a risk of harm to all the parties to these consolidated cases.

  On the other hand, we think that Sumika has overstated somewhat the risk of harm to it if we stay these proceedings. According to Sumika, the fact that these cases remain unresolved deters Sumika from investing in the market for generic Paxil. However, Sumika does not dispute that it has begun selling material to generic drug manufacturers so that they may produce generic Paxil. The fact that Sumika has entered the market for generic Paxil even though these cases remain unresolved means we cannot completely credit its assertion that these cases deter it from investing in that market. Sumika also argues that it should be permitted to continue with its discovery while the validity of the `723 Patent is resolved on appeal because discovery may reveal other grounds for invalidating that Patent, or grounds for a finding that the `723 Patent is not infringed and/or unenforceable. Sumika does not contend, however, that we should address those issues while the Federal Circuit's decision invalidating the `723 Patent remains intact. (See Doc. No. 110 at 8 ("If further evidence is uncovered [through discovery] (which Sumika believes likely) and [SmithKline] is successful on its appeal, Sumika would be in a position to immediately file summary judgment motions providing further bases for invalidity and or inequitable conduct which could lead to an early resolution of this case.").) Thus, Sumika suggests that it will wait until SmithKline's appeals respecting the `723 Patent are resolved before it files any further motions to challenge that Patent. Sumika opposes the stay only because it wishes to continue with its discovery, some of which, it admits, may be unnecessary if SmithKline cannot overturn the Federal Circuit's ruling that the `723 Patent is invalid. In short, while Sumika argues that a stay of these proceedings will delay (potentially unnecessary) discovery, it does not persuasively argue that the stay will substantially delay the resolution of SmithKline's patent infringement claims.*fn17

  Under the circumstances, we think the best way to minimize potential harm to all the parties is to stay these proceedings pending a final resolution of the validity of the `723 and `944 Patents. If it is determined on appeal that those Patents are invalid, we will lift the stay and the Non-Apotex Defendants can proceed with their counterclaims for violations of the antitrust laws, unfair competition, and attorney's fees. If, on the other hand, those Patents are deemed valid on appeal, then the parties can litigate whether those Patents were infringed and if they are enforceable. Either way, the stay will likely have avoided potentially unnecessary discovery while inflicting a minimal amount of harm on the parties.

  3. The length of the requested stay

  With respect to the final factor, we find it favors granting the stay because the requested stay is of "moderate length, and not [] of indefinite duration which require[s] a party to take affirmative steps for dissolution." Cheyney State College, 703 F.2d at 738 (citing Landis, 299 U.S. at 257). The stay will remain in effect only until SmithKline exhausts its appeals with respect to the decisions holding the `723 and `944 Patents invalid. Sumika argues that we should deny the stay because it is uncertain when the Federal Circuit will rule on SmithKline's motion for a en banc review of its decision, or when the Supreme Court will act on SmithKline's anticipated petition for a writ of certiorari. We think the danger that the stay will continue indefinitely can be lessened by requiring the parties to update the Court on the status of SmithKline's appeals every six months. Any party may move the Court for relief from the stay if it feels that the stay has extended too long or otherwise outlived its usefulness.

  B. How the Stay Will Affect Apotex

  Apotex opposes the stay because it fears that if the stay is entered SmithKline will then argue that we should also limit discovery in the cases involving Apotex. Everything we have said in this Memorandum about the desirability of staying discovery related specifically to the `723 and `944 Patents until the validity of those Patents is resolved applies with equal force to the cases involving Apotex. Accordingly, we expect that SmithKline and Apotex will work together to lessen the risk that they will engage in discovery that may prove unnecessary after the validity of the `723 and `944 Patents is resolved. However, because the litigation between SmithKline and Apotex involves patents other than the `723 and `944 Patents, we see no need to stay that litigation and expect that it will go forward. We also expect that there may be some overlap with respect to the parties' claims related to the `233, 423, and `759 Patents on the one hand, and the parties' claims related to the `723 and `944 Patents on the other hand We emphasize that the stay does affect Apotex's right to engage in discovery relating to the claims and counterclaims involving the `233, 423, and `759 Patents. When discovery related to those Patents overlaps with discovery related to the `723 and `944 Patents, we expect that the parties will, to the extent possible, resolve their differences without Court involvement, keeping in mind the importance in avoiding duplicative and/or potentially unnecessary discovery.

  C. Sumika's Requests For Costs

  Sumika requests that we order SmithKline to reimburse Sumika for the costs it incurred while preparing for the now-postponed depositions. Sumika claims that SmithKline should pay its costs because SmithKline waited until Sumika had noticed and prepared for those depositions before moving for a protective order. We fail to see any reason to require SmithKline to pay Sumika's costs. The record reveals that on June 17, 2004, SmithKline wrote a letter to Defendants asking them to agree to a postponement of discovery in light of the fact that SmithKline and the Defendants were in the process of resolving many of SmithKline's patent infringement claims. (Doc. No. 106, Ex. 4.) Sumika refused to agree to any postponement; on June 22, 2004, SmithKline moved for a protective order. (Id.) Under the circumstances, we fail to find that SmithKline engaged in bad faith or any other reason that might justify requiring SmithKline to reimburse Sumika its expenses.

  III. THE COURT'S PREVIOUS RULE 54(b) RULING

  On January 7, 2003, SmithKline moved to certify our December 20, 2002 Order as final pursuant to Rule 54(b) in order to appeal it to the Federal Circuit. Under Rule 54(b), we can "direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon express direction for the entry of judgment." The Rule requires us to address two distinct issues. First, we must determine whether the judgment is "final with respect to one or more claims." W.L. Gore & Assoc., Inc. v. Int'l Med. Prosthetics Research Assoc., Inc., 975 F.2d 858, 861 (Fed. Cir. 1992). A district court may not certify a judgment pursuant to Rule 54(b) when it "has ruled on only `part of a single claim.'" Id. at 863 (quoting Tolson v. United States, 732 F.2d 998, 999 (D.C. Cir. 1984)). To be eligible for certification under Rule 54(b), the judgment must be "`an ultimate disposition of an individual claim entered in the course of a multiple claims action.'" Id. at 861-62 (emphasis removed) (quoting Sears, 351 U.S. at 436). "The requirement of finality is a statutory mandate and not a matter of discretion." Id. at 862.

  If we determine that there is a final judgment as to an individual claim, we must then exercise our discretion "to determine the `appropriate time' when each final decision in a multiple claims action is ready for appeal." Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 8 (1980). "[I]n deciding whether there are no just reasons to delay the appeal of individual final judgments . . ., a district court must take into account judicial administrative interests as well as the equities involved." Id. In exercising this discretion, courts have considered a number of factors, including, "whether the claims under review were separable from the others remaining to be adjudicated and whether the nature of the claims already determined was such that no appellate court would have to decide the same issues more than once even if there were subsequent appeals." Id.

  We denied SmithKline's Rule 54(b) motion on March 26, 2004. With respect to the `233 and `759 Patents, we noted that our December 20, 2002 Order did not address the validity and/or infringement of certain claims under those Patents, specifically, the non-product-by-process claims. Therefore, those claims remained in litigation. SmithKline Beecham Corp. v. Apotex Corp., No. 99-4304, et al., 2004 WL 634867, at *4 (E.D. Pa. Mar. 26, 2004). After, reviewing caselaw from a number of jurisdictions, including two non-precedential opinions from the Federal Circuit, we concluded that "an action alleging infringement of multiple claims asserted under a single patent asserts a single claim for purposes of Rule 54, as the plaintiff's recovery is the same no matter which theory of infringement, if any, is ultimately proven. Insofar as our December 20, 2002 Order determined the validity of only some of the claims asserted under the `233 and `759 Patents, we hold that it was not a final judgment and may not be certified for an immediate appeal." Id. at *4.

  We reached a different conclusion with respect to the `944 Patent because our December 20, 2002 Order ruled that all of the claims in that Patent were invalid. Accordingly, insofar as our December 20, 2002 Order ruled that the `944 Patent was invalid, that Order was a "final judgment" within the meaning of Rule 54(b) and eligible for certification. Thus, we proceeded to assess whether there was any "just reason for delay" of an appeal of our Order with respect to the `944 Patent. Id. at *5 (quoting FED. R. CIV. P. 54(b)). We concluded that a majority of the relevant factors counseled against allowing SmithKline to immediately appeal our ruling that the `944 Patent was invalid. We noted that the SmithKline's claims of infringement of the `944 Patent were closely related to their claims of infringement of the `233 and `759 Patents, raising the risk that if we allowed piecemeal appeals, the Federal Circuit would "have to decide the same issues more than once." Id. (quoting Curtiss-Wright, 446 U.S. at 8). We also noted that SmithKline did not show that it would be irreparably harmed if its appeal were delayed because SmithKline had essentially agreed that there was no impediment under the Hatch-Waxman Amendments to prevent Apotex from marketing a generic form of Paxil. Id.

  We have the power to sua sponte reconsider our earlier interlocutory order denying certification under Rule 54(b). See, e.g., City of Los Angeles, Harbor Division v. Santa Monica Baykeeper, 254 F.3d 882, 889 (9th Cir. 2001) (district court did not abuse its discretion in reconsidering sua sponte its Rule 54(b) certification order); Kimberly-Clark Corp., Brown-Bridge Div. v. Eastern Fine Paper, Inc., 559 F. Supp. 815, 836 n. 2 (D. Me. 1981) ("The Court properly may determine sua sponte whether to include in the judgment a Rule 54(b) certification.") (citing McNellis v. Raymond, 287 F. Supp. 232, 245 (N.D.N.Y. 1968), rev'd on other grounds, 420 F.2d 51 (2d Cir. 1970)); see generally United States v. Jerry, 487 F.2d 600, 605 (3d Cir. 1973) (stating that in both civil and criminal cases, "so long as the district court has jurisdiction over the case, it possesses inherent power over interlocutory orders, and can reconsider them when it is consonant with justice to do so"). Under the present circumstances, we are compelled to conclude that there now exists no just reason to delay SmithKline's appeal of our decision holding the `944 Patent invalid.*fn18 We reach this conclusion for two primary reasons.

  First, we are satisfied that sound judicial administrative interests favor the certification of our `944 Patent ruling as an appealable, final judgment. As we have explained, once the parties resolve the validity of the `723 and `944 Patents, the cases involving the Non-Apotex Defendants will be greatly simplified. SmithKline is currently pursuing appeals concerning the `723 Patent. In order to allow the parties to simultaneously resolve the validity of the `944 Patent, however, we must certify our ruling concerning that Patent as a final, appealable order. Under the circumstances, we think allowing SmithKline to simultaneously resolve the validity of both Patents is the best course of action.

  In addition, we no longer think that allowing SmithKline to immediately appeal our Order raises a risk that the Federal Circuit will have to decide the same issues more than once. Since our March 26, 2004 Order denying SmithKline's Rule 54(b) Motion, the Federal Circuit has heard an appeal concerning the paroxetine-related patents. Even if we were to decline to certify our Order as final, it is likely that another appeal concerning the paroxetine-related patents will eventually reach the Federal Circuit. Thus, a decision that allows SmithKline to immediately appeal our `944 Patent ruling does not raise any extra risk that the Federal Circuit will have to repeatedly familiarize itself with the many paroxetine-related patents. Taking into consideration all the relevant factors, including a balance of the equities involved, we conclude that there is no just reason to delay SmithKline's appeal of our `944 Patent ruling.

  An appropriate Order follows. ORDER

  AND NOW, this 16th day of July, 2004, the Court having entered an Order dated July 2, 2004 temporarily staying all proceedings in Civil Action Nos. 99-2926, 00-5953, 02-1484, 01-1027, 01-3364, 02-8493, 01-2981, 03-6117, and 03-3365 until further order of the Court, it is ORDERED that the Clerk is directed to certify the Court's Order dated December 20, 2002 as a final, appealable judgment pursuant to Federal Rule of Civil Procedure 54(b), insofar as that Order ruled that the claims of the `944 Patent were invalid.

  IT IS SO ORDERED.


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