Pfizer Inc. v. Sandoz Inc., No. 12-654-GMS-MPT (D. Del.)
Undue delay that resulted in prejudice to Pfizer coupled with failure to demonstrate good cause are some of the reasons why on November 4, 2013, Magistrate Judge Mary Pat Thynge issued a report and recommendation denying Sandoz’s motion to amend its answers, defenses and counterclaims to add an inequitable conduct defense.
On May 24, 2012, Pfizer filed suit against Sandoz for infringement of U.S. Patent No. 8,026,276 directed to parenteral formulations of rapamycin. In Sandoz's expert reports, which were served August 20, 2013, Sandoz first raised the theory of inequitable conduct. On September 20, 2013, Sandoz moved to amend its pleadings to add claims of inequitable conduct. The deadline to amend the pleadings was March 22, 2013.
When deciding whether to grant leave to amend pleadings under Rule 15(a), the court considers four elements: 1) undue delay by the movant; 2) unfair prejudice to the nonmovant; 3) improper purpose; and 4) futility. As for the good cause requirement of Rule 16(b), the movant must demonstrate "that the amendment could not have been reasonably sought in a timely manner despite diligence."
While undue delay alone is "not sufficient to justify a denial of leave to amend," it weighs in favor of denial. Here, the court focused on the actions of Sandoz, concluding that because Sandoz had the required documents in its possession within a few weeks of the deadline to amend the pleadings, its delay was undue. The court was not convinced by Sandoz’s explanation for the delay--the volume of the record and concurrent litigation--concluding that Sandoz did not establish good cause under Rule 16(b) because it could not "satisfactorily explain its substantial delay."
The court then concluded that Pfizer would be subject to unfair prejudice if the leave to amend was granted. Even though the inequitable conduct allegations were based on documents within Pfizer's control, the court concluded that Pfizer had "a significantly compressed time frame" for a response compared to the "fourteen months" Sandoz had to develop its inequitable conduct defense.
The court also concluded that Sandoz's amendment would be futile (improper purpose was not challenged by Pfizer and therefore not addressed by the court). Inequitable conduct is based in fraud and under Rule 9(b) the elements of fraudulent claims must be plead with particularity. Sandoz argued that Pfizer’s Rule 131 and Rule 132 declaration were "unmistakably false and the falsehood is both material and evidence of specific intent." But the court concluded that Sandoz failed to "create a reasonable inference of specific intent to deceive the PTO" because "other than alleging that the inventor filed two false affidavits, [Sandoz] does no more than argue that information and belief is sufficient to reasonably infer intent. Thus, there is an insufficient factual basis to draw an inference of specific intent to deceive."
Finally the court held that "[e]ven if the proposed amendment is not futile, the failure to demonstrate good cause and inadequately explained delay for filing the motion resulting in prejudice warrant denying the motion."
On November 12, 2013, the parties jointly submitted a letter to the court stating that they had agreed to settle the case.