Case: 18-2621 Document: 003113256881 Page: 1 Date Filed: 06/05/2019 Nos. 18-2621, -2748, -2758 UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT FEDERAL TRADE COMMISSION, Plaintiff/Appellant, v. ABBVIE INC.; ABBOTT LABORATORIES; UNIMED PHARMACEUTICALS LLC; BESINS HEALTHCARE, INC.; *TEVA PHARMACEUTICALS USA, INC., Defendants/Cross-Appellants. (*Dismissed Pursuant To Court’s 3/12/2019 Order) On Appeals from the United States District Court for the Eastern District of Pennsylvania, No. 2:14-cv-05151, Hon. Harvey Bartle III OPENING/RESPONSE BRIEF FOR APPELLEES/CROSS-APPELLANTS ABBVIE INC., ABBOTT LABORATORIES, AND UNIMED PHARMACEUTICALS LLC JEFFREY I. WEINBERGER SETH P. WAXMAN STUART N. SENATOR LEON B. GREENFIELD ADAM R. LAWTON CATHERINE M.A. CARROLL MUNGER, TOLLES & OLSON LLP BRITTANY BLUEITT AMADI 350 South Grand Avenue WILMER CUTLER PICKERING Los Angeles, CA 90071 HALE AND DORR LLP (213) 683-9100 1875 Pennsylvania Avenue, NW Washington, DC 20006 ELAINE J. GOLDENBERG (202) 663-6000 MUNGER, TOLLES & OLSON LLP 1155 F Street NW WILLIAM F. LEE Washington, DC 20004 WILMER CUTLER PICKERING (202) 220-1000 HALE AND DORR LLP 60 State Street Boston, MA 02109 June 5, 2019 (617) 526-6000 ADDITIONAL COUNSEL LISTED ON INSIDE COVER Case: 18-2621 Document: 003113256881 Page: 2 Date Filed: 06/05/2019 PAUL H. SAINT-ANTOINE JOHN S. YI DRINKER BIDDLE & REATH LLP One Logan Square, Suite 2000 Philadelphia, PA 19103 (215) 988-2700 Case: 18-2621 Document: 003113256881 Page: 3 Date Filed: 06/05/2019 CORPORATE DISCLOSURE STATEMENT AbbVie Inc. has no parent corporation, and no publicly held company owns 10% or more of its stock. Abbott Laboratories has no parent corporation, and no publicly held company owns 10% or more of its stock. Unimed Pharmaceuticals LLC is an indirect, wholly owned subsidiary of AbbVie Inc., a publicly traded company. i Case: 18-2621 Document: 003113256881 Page: 4 Date Filed: 06/05/2019 TABLE OF CONTENTS Page CORPORATE DISCLOSURE STATEMENT .......................................................... i TABLE OF AUTHORITIES .................................................................................... vi INTRODUCTION ..................................................................................................... 1 JURISDICTIONAL STATEMENT .......................................................................... 4 STATEMENT OF ISSUES ....................................................................................... 4 STATEMENT OF RELATED CASES ..................................................................... 6 STATEMENT OF THE CASE .................................................................................. 6 A. AndroGel And The Testosterone Replacement Therapy Market.................................................................................................... 6 B. The Patent-Infringement Suits .............................................................. 9 1. The ’894 patent ........................................................................... 9 2. The Hatch-Waxman Act ........................................................... 11 3. Teva’s and Perrigo’s products and the ensuing lawsuits ...................................................................................... 13 a. Teva ................................................................................ 13 b. Perrigo ............................................................................. 19 C. The FTC’s Complaint And Proceedings Below ................................. 22 1. Dismissal of Count 2 ................................................................. 23 2. Summary judgment on objective baselessness ......................... 25 3. Trial ........................................................................................... 28 SUMMARY OF ARGUMENT ............................................................................... 31 ii Case: 18-2621 Document: 003113256881 Page: 5 Date Filed: 06/05/2019 ARGUMENT ........................................................................................................... 34 ABBVIE AND BESINS APPEAL .......................................................................... 34 I. THE INFRINGEMENT SUITS WERE NOT OBJECTIVELY BASELESS .................... 34 A. Standard Of Review ............................................................................ 36 B. The Teva Suit Was Not A Sham ......................................................... 37 C. The Perrigo Suit Was Not A Sham ..................................................... 46 D. The Settlement Agreements Flatly Refute The District Court’s Conclusion .............................................................................. 50 II. THE INFRINGEMENT SUITS WERE NOT SUBJECTIVELY BASELESS ................... 53 A. Standard Of Review ............................................................................ 55 B. The District Court Improperly Collapsed The Objective And Subjective Elements And Identified No Evidence Of Subjective Baselessness ...................................................................... 55 C. The District Court Disregarded Substantial Evidence That AbbVie And Besins Sued To Procure A Favorable Outcome .............................................................................................. 58 III. THE FTC FAILED TO PROVE MONOPOLY POWER ........................................... 61 A. Standard Of Review ............................................................................ 62 B. The District Court Clearly Erred By Excluding Injectables From The Relevant Market ............................................... 63 C. The District Court Committed Legal Error In Finding Monopoly Power Within The Defined Market ................................... 66 1. The court erred in giving dispositive weight to market share data while ignoring real-world evidence .................................................................................... 66 iii Case: 18-2621 Document: 003113256881 Page: 6 Date Filed: 06/05/2019 2. The district court erred in finding high barriers to entry ........................................................................................... 70 IV. THE DISGORGEMENT AWARD IS UNLAWFUL .................................................. 72 A. Standard Of Review ............................................................................ 72 B. The Court Had No Authority To Order Disgorgement ....................... 73 1. Section 13(b) does not authorize disgorgement ........................ 74 2. The disgorgement order is a penalty, not an equitable remedy ....................................................................... 77 3. The FTC’s failure to prove the preconditions for injunctive relief also forecloses disgorgement.......................... 80 C. The District Court Abused Its Discretion In Awarding Disgorgement ...................................................................................... 81 1. The court misconstrued the record regarding the FDA’s knowledge of Perrigo’s license date ............................. 82 2. The court unreasonably assumed that Perrigo would have sued the FDA for undue delay before any delay occurred .................................................................... 83 RESPONSE TO FTC APPEAL ............................................................................... 85 V. THE COURT CORRECTLY DISMISSED THE “REVERSE PAYMENT” CLAIM ............................................................................................................. 86 A. Standard Of Review ............................................................................ 86 B. The FTC Failed To State A Reverse-Payment Claim ......................... 86 C. Remand On The Reverse-Payment Claim Would Be Futile .................................................................................................... 91 VI. THE FTC’S CHALLENGES TO THE REMEDIAL ORDERS FAIL ........................... 93 A. Standard Of Review ............................................................................ 93 iv Case: 18-2621 Document: 003113256881 Page: 7 Date Filed: 06/05/2019 B. The FTC’s Challenge To The Disgorgement Award Fails Because Teva Would Not Have Entered The Market Regardless Of The Infringement Suit ................................................. 93 C. The Court Did Not Abuse Its Discretion In Denying Injunctive Relief ................................................................................ 102 CONCLUSION ...................................................................................................... 106 CERTIFICATE OF BAR MEMBERSHIP (LAR 46.1) CERTIFICATE OF COMPLIANCE CERTIFICATE OF SERVICE v Case: 18-2621 Document: 003113256881 Page: 8 Date Filed: 06/05/2019 TABLE OF AUTHORITIES CASES Page(s) A&H Sportswear, Inc. v. Victoria’s Secret Stores, Inc., 237 F.3d 198 (3d Cir. 2000) .......................................................................... 93 Abbott Laboratories v. Sandoz, Inc., 544 F.3d 1341 (Fed. Cir. 2008) .................... 11 Alexander v. Sandoval, 532 U.S. 275 (2001) ..................................................... 76, 77 Allen-Myland, Inc. v. IBM Corp., 33 F.3d 194 (3d Cir. 1994) ................................ 62 Armstrong Surgical Center, Inc. v. Armstrong County Memorial Hospital, 185 F.3d 154 (3d Cir. 1999) .................................................... 53, 56 Ashcroft v. Iqbal, 556 U.S. 662 (2009) .................................................................... 86 Barr Laboratories, Inc. v. Abbott