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Mylan Inc. v. Smithkline Beecham Corporation

United States Court of Appeals, Third Circuit

July 22, 2013


Argued: January 8, 2013

Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action No. 3-10-cv-04809) District Judge: Honorable Joel A. Pisano

Gary D. Adamson, Esquire Michael E. Johnson, Esquire (Argued) Alston & Bird Counsel for Appellants

William H. Burgess, Esquire F. Christopher Mizzo, Esquire (Argued) Michael A. Pearson, Esquire Kirkland & Ellis Thomas A. Cunniff, Esquire Fox Rothschild Eric I. Abraham, Esquire (Argued) Christina L. Saveriano, Esquire Hill Wallack

Before: SCIRICA, AMBRO, and FUENTES, Circuit Judges


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 Plaintiff/Appellant "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]


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 II(c) of the License Agreement granted Mylan exclusive rights to market and sell generic paroxetine for the remaining life of GSK's patent (i.e., 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 II(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 agrees to waive its exclusivity under Section II(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 ...

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