2nd Circuit finds DDAVP purchasers stated Walker Process and related claims and had antitrust standing

On 16 October 2009 the Court of Appeals for the Second Circuit held (In re: DDAVP Direct Purchaser Antitrust Litigation) that direct purchasers of desmopressin acetate tablets, sold under the name DDAVP, stated Walker Process and related antitrust claims and had antitrust standing to do so. The Court thus vacated a U.S. District Court (S.D.N.Y.) decision of 2006, which found to the contrary, and remanded the case.

The plaintiffs allege that the defendants abused the patent system to suppress generic competition and maintain their monopoly power over DDAVP. Underlying the suit is the allegation that Ferring B.V. and Ferring Pharmaceuticals, Inc. (“Ferring”) failed to disclose the company’s prior affiliation with scientists who submitted declarations supporting the grant of a patent for DDAVP. In subsequent patent litigation, this omission was found to constitute inequitable conduct, rendering the patent unenforceable. In this antitrust suit, the plaintiffs claim that Ferring (and its exclusive licensee Aventis Pharmaceuticals, Inc.), not only engaged in inequitable conduct, but also violated antitrust laws by 1) committing a Walker Process fraud, 2) improperly listing the patent in the Food and Drug Administration’s (“FDA”) Orange Book, 3) engaging in sham litigation against generic competitors, and 4) filing a sham citizen petition to delay FDA’s approval of a generic competitor’s marketing authorization.

The Court considered that the plaintiffs, direct purchasers of the pharmaceuticals, had antitrust standing to bring the Walker Process and related claims. This represented a novel legal issue since typically Walker Process claims are raised by alleged infringers in patent infringement suits, not by others in separate antitrust actions. Although the Court found that the plaintiffs had standing, it limited its holding to situations where a patent has already been found unenforceable due to inequitable conduct, leaving thus undecided possible standing of purchasers absent such prior finding.

The Court further held that plaintiffs properly stated the four antitrust claims mentioned above. Upon finding that the plaintiffs sufficiently alleged Walker Process fraud, the Court considered that also the other patent based claims – sham litigation and improper Orange Book listing – were adequately plead. This was also true for the sham citizen petition claim, as such a petition could delay generic competition. [Juha Vesala]