Case Briefing

Wyeth timely removed the action to the U.S. District Court for the Northern District of Mississippi, asserting that plaintiffs fraudulently joined the in-state physician defendants in an attempt to defeat federal diversity. Thereafter, plaintiffs moved to remand this action under 28 U.S.C. ' 1447(c). The Mississippi federal court deferred ruling on plaintiffs' motion, and the case was then transferred to the U.S. District Court for the Eastern District of Pennsylvania as part of MDL 1203, the mass tort litigation involving the diet drugs known as fen-phen. No federal claims for relief are alleged.

Plaintiffs maintained that remand would be appropriate because complete diversity does not exist as required under 28 U.S.C. ' 1332(a). Wyeth countered that the non-diverse physicians were fraudulently joined because Mississippi's applicable 2-year statute of limitations bars plaintiffs' claims against these non-diverse defendants. See MISS. CODE ANN. ' 15-1-36 (West 2003). Thus, Wyeth argued, plaintiffs' claims against these non-diverse defendants should be disregarded for purposes of determining diversity of citizenship of the parties. Plaintiffs responded that the statute of limitations had not expired because they discovered their injuries less than 2 years prior to filing their complaint.

Citing to the rule enunciated in Saris v. Smith, 782 So. 2d 721, 725 (Miss. 2001), the court here found that the statute began running, “when the plaintiffs should have reasonably known of some negligent conduct, even if the plaintiffs did not know with absolute certainty that the conduct was legally negligent.” The court found that the publicity surrounding the withdrawal of the diet drugs put plaintiffs on inquiry notice of their claims in September 1997 or, at the very latest, by March 2000, at the height of Wyeth's extensive media campaign. Thus, they would have needed to file their complaint by March 2002. Because they did not do so until December 2002, and because their assertions that they were not aware of the publicity surrounding the diet drugs were without merit, their claims against the in-state physicians were clearly time barred. Therefore, the motion for remand to state court was denied.

On-Sale Bar Not Invoked By Licensing Offers

Elan Corp.'s letters to drug companies proposing licensing agreements for a drug product they were developing did not rise to the level of offers to sell, so its patent was not rendered invalid by the on-sale bar codified at 35 U.S.C. ' 102(b) (2000). Elan Corp. PLC v. Andrx Pharmaceuticals Inc., Nos. 03-1354, 03-1355, 03-1386, 03-1387, 2004 U.S. App. LEXIS 8850 (Fed. Cir. 5/5/04). (Under ' 102, a person is entitled to a patent unless the invention was on sale in this country more than 1 year prior to the date of the application for patent in the United States.)

In the 1980s, in preparation for the December 1993 expiration of a competitor's patent, Elan began development of a controlled-release naproxen formulation for once-daily administration. In a letter dated Aug. 7, 1987, Elan's Executive Vice President for Business Planning and Commercial Development wrote to Lederle Laboratories seeking a marketing partner for the product it was developing. Over the following year, Elan officers sent similar letters to Schering Laboratories, Warner-Lambert, and Wyeth Ayers Laboratories. On Jan. 14, 1991, Elan filed a U.S. patent application directed to a controlled-release naproxen formulation. Elan was issued U.S. Patent 5,637,320 on June 10, 1997. In 1994, Elan filed a New Drug Application (NDA) at the FDA, directed to its once-daily formulation. The FDA approved the NDA on Jan. 5, 1996, and Elan launched the approved formulation under the tradename Naprelan' in April 1996.

In 1998, Andrx submitted an Abbreviated New Drug Application (ANDA) seeking approval to market its own once-daily naproxen formulation. Elan then sued Andrx for infringement of the '320 patent under 35 U.S.C. ' 271(e)(2)(A). Andrx defended by arguing that Elan's patent is invalid under the on-sale bar of ' 102 as a result of its having offered to supply the patented tablets to Lederle, Warner-Lambert, Schering, and Wyeth.

The district court found that Elan's letter offering to supply tablets to Lederle did bring the on-sale bar into play. The court noted that that letter had included a price term and referred to a proposed contract. The court also concluded that the formulation that Elan had offered to supply to Lederle was “ready for patenting” and was the same composition that was eventually claimed.

On appeal, Elan argued that the plain language of the letter and the unrebutted testimony of both the letter's author and its recipient established that the letter was not a definite offer, but merely an initial inquiry into whether Lederle would be interested in further discussions about a potential licensing and development project for a product that had not yet been developed and that could not be marketed until at least 6 years later.

Because Elan's application was filed on Jan. 14, 1991, the critical date for the purpose of ' 102(b) is Jan. 14, 1990. In other words, if the once-daily naproxen formulation that is the subject of the '320 patent was on sale in the United States prior to Jan. 14, 1990, that patent should not have been granted and is therefore invalid. Thus, the question became whether Elan's letter to Lederle or any of its letters to other potential licensees prior to Jan. 14, 1990, contained “offers for sale.”

The Federal Circuit concluded that the district court erred in finding that Elan's product was the subject of a commercial offer for sale based on the letter to Lederle. An offer to enter into a license under a patent for future sale of the invention covered by the patent when and if it has been developed — which is what the Lederle letter was — is not an offer to sell the patented invention that constitutes an on-sale bar. The letter to Lederle lacked any mention of quantities, time of delivery, place of delivery, or product specifications beyond the general statement that the potential product would be a 500 mg once-daily tablet containing naproxen. Therefore, the district court's decision was reversed.

Publicity Campaign Puts Plaintiffs On Notice of Claims

Publicity about the dangers of certain diet drugs should have put plaintiffs on notice that they had claims against the doctors who prescribed them, so their lawsuits were time barred, joinder of these physician defendants did not destroy complete diversity, and plaintiffs' motion for remand to state court was denied. In Re Diet Drugs v. Wyeth , MDL Docket No. 1203, Civ. Act. No. 03-20243, 2004 U.S. Dist. LEXIS 9430 (E.D. Penn. 5/15/04).

Plaintiffs, all of whom are resident citizens of Mississippi, filed suits in Circuit Court of Coahoma County MS, for injuries sustained as a result of their use of the diet drugs known as Pondimin and/or Redux against 1) Wyeth, 2) in-state physicians who had prescribed Wyeth's diet drugs Pondimin and/or Redux for plaintiffs, and 3) Interneuron Pharmaceuticals Inc., a manufacturer of phentermine products. Defendants Wyeth and Interneuron Pharmaceuticals are parties of diverse citizenship from the plaintiffs. Ten of the 29 defendant physicians who prescribed Pondimin and/or Redux to plaintiffs are alleged to be citizens of Mississippi. The remaining 19 physician defendants are citizens of Arkansas, Missouri, or Tennessee.

Wyeth timely removed the action to the U.S. District Court for the Northern District of Mississippi, asserting that plaintiffs fraudulently joined the in-state physician defendants in an attempt to defeat federal diversity. Thereafter, plaintiffs moved to remand this action under 28 U.S.C. ' 1447(c). The Mississippi federal court deferred ruling on plaintiffs' motion, and the case was then transferred to the U.S. District Court for the Eastern District of Pennsylvania as part of MDL 1203, the mass tort litigation involving the diet drugs known as fen-phen. No federal claims for relief are alleged.

Plaintiffs maintained that remand would be appropriate because complete diversity does not exist as required under 28 U.S.C. ' 1332(a). Wyeth countered that the non-diverse physicians were fraudulently joined because Mississippi's applicable 2-year statute of limitations bars plaintiffs' claims against these non-diverse defendants. See MISS. CODE ANN. ' 15-1-36 (West 2003). Thus, Wyeth argued, plaintiffs' claims against these non-diverse defendants should be disregarded for purposes of determining diversity of citizenship of the parties. Plaintiffs responded that the statute of limitations had not expired because they discovered their injuries less than 2 years prior to filing their complaint.

Citing to the rule enunciated in Saris v. Smith , 782 So. 2d 721, 725 (Miss. 2001), the court here found that the statute began running, “when the plaintiffs should have reasonably known of some negligent conduct, even if the plaintiffs did not know with absolute certainty that the conduct was legally negligent.” The court found that the publicity surrounding the withdrawal of the diet drugs put plaintiffs on inquiry notice of their claims in September 1997 or, at the very latest, by March 2000, at the height of Wyeth's extensive media campaign. Thus, they would have needed to file their complaint by March 2002. Because they did not do so until December 2002, and because their assertions that they were not aware of the publicity surrounding the diet drugs were without merit, their claims against the in-state physicians were clearly time barred. Therefore, the motion for remand to state court was denied.

On-Sale Bar Not Invoked By Licensing Offers

Elan Corp.'s letters to drug companies proposing licensing agreements for a drug product they were developing did not rise to the level of offers to sell, so its patent was not rendered invalid by the on-sale bar codified at 35 U.S.C. ' 102(b) (2000). Elan Corp. PLC v. Andrx Pharmaceuticals Inc., Nos. 03-1354, 03-1355, 03-1386, 03-1387, 2004 U.S. App. LEXIS 8850 (Fed. Cir. 5/5/04). (Under ' 102, a person is entitled to a patent unless the invention was on sale in this country more than 1 year prior to the date of the application for patent in the United States.)

In the 1980s, in preparation for the December 1993 expiration of a competitor's patent, Elan began development of a controlled-release naproxen formulation for once-daily administration. In a letter dated Aug. 7, 1987, Elan's Executive Vice President for Business Planning and Commercial Development wrote to Lederle Laboratories seeking a marketing partner for the product it was developing. Over the following year, Elan officers sent similar letters to Schering Laboratories, Warner-Lambert, and Wyeth Ayers Laboratories. On Jan. 14, 1991, Elan filed a U.S. patent application directed to a controlled-release naproxen formulation. Elan was issued U.S. Patent 5,637,320 on June 10, 1997. In 1994, Elan filed a New Drug Application (NDA) at the FDA, directed to its once-daily formulation. The FDA approved the NDA on Jan. 5, 1996, and Elan launched the approved formulation under the tradename Naprelan' in April 1996.

In 1998, Andrx submitted an Abbreviated New Drug Application (ANDA) seeking approval to market its own once-daily naproxen formulation. Elan then sued Andrx for infringement of the '320 patent under 35 U.S.C. ' 271(e)(2)(A). Andrx defended by arguing that Elan's patent is invalid under the on-sale bar of ' 102 as a result of its having offered to supply the patented tablets to Lederle, Warner-Lambert, Schering, and Wyeth.

The district court found that Elan's letter offering to supply tablets to Lederle did bring the on-sale bar into play. The court noted that that letter had included a price term and referred to a proposed contract. The court also concluded that the formulation that Elan had offered to supply to Lederle was “ready for patenting” and was the same composition that was eventually claimed.

On appeal, Elan argued that the plain language of the letter and the unrebutted testimony of both the letter's author and its recipient established that the letter was not a definite offer, but merely an initial inquiry into whether Lederle would be interested in further discussions about a potential licensing and development project for a product that had not yet been developed and that could not be marketed until at least 6 years later.

Because Elan's application was filed on Jan. 14, 1991, the critical date for the purpose of ' 102(b) is Jan. 14, 1990. In other words, if the once-daily naproxen formulation that is the subject of the '320 patent was on sale in the United States prior to Jan. 14, 1990, that patent should not have been granted and is therefore invalid. Thus, the question became whether Elan's letter to Lederle or any of its letters to other potential licensees prior to Jan. 14, 1990, contained “offers for sale.”

The Federal Circuit concluded that the district court erred in finding that Elan's product was the subject of a commercial offer for sale based on the letter to Lederle. An offer to enter into a license under a patent for future sale of the invention covered by the patent when and if it has been developed — which is what the Lederle letter was — is not an offer to sell the patented invention that constitutes an on-sale bar. The letter to Lederle lacked any mention of quantities, time of delivery, place of delivery, or product specifications beyond the general statement that the potential product would be a 500 mg once-daily tablet containing naproxen. Therefore, the district court's decision was reversed.