Sanofi-Aventis Deutschland GMBH v. Glenmark Pharms. Inc., USA, 2014 U.S. App. LEXIS 7392 (Fed. Cir. April 21, 2014):

This patent infringement suit concerns the antihypertension drug having the brand name Tarka®. Tarka® is a combination of two active ingredients into a single dosage product: the angiotensin converting enzyme (ACE) inhibitor trandolapril, and the calcium channel blocker (also called "calcium antagonist") verapamil hydrochloride. The combination drug is covered by United States Patent No. 5,721,244 (the '244 patent) and is owned by or exclusively licensed to Sanofi-Aventis Deutschland  [*2] GmbH (a company of Germany), Aventis Pharma S.A. (a company of France); Abbott GmbH (a company of Germany), and Abbott Laboratories and Abbott Laboratories Inc. (United States companies) (collectively "Plaintiffs").

The New Drug Application (NDA) for the Tarka® product was approved by the Food and Drug Administration in 1996 and acquired by Abbott Laboratories in 2001. In 2007 the defendants Glenmark Pharmaceuticals Inc. and Glenmark Pharmaceuticals Ltd. (collectively "Glenmark") filed an abbreviated new drug application (ANDA) for the generic counterpart of this product. Since the '244 patent had not expired, Glenmark filed a Hatch-Waxman "Paragraph IV Certification," leading to the filing by Plaintiffs of this infringement suit.

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Trial was to a jury. Glenmark admitted infringement, and the jury held that the '244 patent had not been proved invalid.  [*3] The jury awarded $15,200,000 in lost profits and $803,514 in price erosion damages. Post-trial motions were denied, and judgment was entered on the verdict. The district court retained authority to assess post-verdict damages if this court sustained the judgment on appeal.

Glenmark does not appeal the quantum of damages, but argues (1) that the '244 patent is invalid, (2) that Glenmark is entitled to a new trial based on a prejudicial jury instruction on evidence spoliation, and (3) that no damages should be awarded due to lack of standing of the Abbott United States companies. Plaintiffs defend the judgment, and also state that this court lacks jurisdiction to entertain this appeal because the district court's judgment was not final.

We conclude that jurisdiction is proper, and affirm the district court's judgment and related rulings.

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Spoliation

The district court concluded that Glenmark had violated its duty to preserve relevant evidence when litigation is planned or reasonably foreseen. The court denied the Plaintiffs' motion for default, but instructed the jury that it was permitted to draw an adverse inference that the electronic documents that Glenmark deleted in 2005 and 2006 would have been unfavorable.

Glenmark does not dispute that in 2005 and 2006 it had in place a policy whereby all emails and related electronic documents were retained for only one month, and that this policy continued as Glenmark was proceeding with production of the generic product and preparation of the ANDA in 2006. In response to Plaintiffs' discovery requests on filing of this Hatch-Waxman suit, Glenmark produced three emails from 2005 and twenty-two email chains from 2006, although other evidence, such as the work product log, showed activity in preparation for litigation.

The district court applied Third Circuit law, under which spoliation occurs when "the evidence was in the party's control; the evidence is relevant to the claims or defenses in the case; there has been  [*17] actual suppression or withholding of evidence; and the duty to preserve the evidence was reasonably foreseeable to the party." Bull v. United Parcel Serv., Inc., 665 F.3d 68, 73 (3d Cir. 2012).

The district court found that litigation became "reasonably foreseeable" to Glenmark no later than the date asserted for "work product" in its privilege log. Spoliation Op. at 9. The privilege log contained entries for "work product" as early as February 2006. The court observed that "[a] party claiming work-product immunity bears the burden of showing that the materials in question were 'prepared in the course of preparation for possible litigation.'" Id. (quoting Holmes v. Pension Plan of Bethlehem Steel Corp., 213 F.3d 124, 138 (3d Cir. 2000)).

The district court exercised its discretion, and gave the jury a permissive instruction, as follows:

You may make an adverse inference in this case against Glenmark. In this case, I have determined that Glenmark systematically overwrote the emails on its email server between February 23, 2006 and mid-2007 and that some of these documents were relevant to the claims in suit.

An adverse inference permits you, the jury, to infer that the destroyed emails  [*18] and attached documents might or would have been unfavorable to the position of Glenmark. However, you are not required to draw such an inference, and the weight to be given such an inference is your decision.

Jury Instructions, ECF No. 366 at 16, ll.1-13.

Glenmark argues that the district court's instruction was improper and prejudicial, citing Hill v. Laeisz, 435 F.3d 404, 420 (3d Cir. 2006) for the statement that prejudice occurs when "there is a reasonable possibility" that the error affected the result. Glenmark argues that the Plaintiffs did not show that any deleted emails contained relevant evidence. The Plaintiffs respond that the content of the emails is unknown because they were destroyed, and point to Glenmark's decision to produce and follow the ANDA procedure for a generic version of Tarka® in 2005, and Glenmark's claim of litigation work product protection starting in February 2006, as indirect evidence of relevance of the destroyed documents. A spoliation sanction "may rely on circumstantial evidence to suggest the contents of destroyed evidence." Beaven v. U.S. Dep't of Justice, 622 F.3d 540, 555 (6th Cir. 2010).

Glenmark's witnesses stated that email was a mode of communication  [*19] used during the relevant time frame. Terrance Coughlin, Glenmark's President and CEO, stated that he communicated by email with Dr. Soni (Vice President of Intellectual Property) and Mr. Dutra (head of marketing) when they were unable to meet in person. Dr. Soni testified that he communicated with the research and development department in India concerning the decision to develop a generic version of Tarka®, and acknowledged that Glenmark used email to communicate with the team in India during the development. It was pointed out to the district court that attorney work product claims were made relative to this period, before Glenmark's later institution of a litigation hold. It was reasonable for the district court to infer that some destroyed emails related to issues for which litigation was expected by Glenmark. See Gumbs v. Int'l Harvester, Inc., 718 F.2d 88, 96, 19 V.I. 642 (3d Cir. 1983) ("The unexplained failure or refusal of a party to judicial proceedings to produce evidence that would tend to throw light on the issues authorizes, under certain circumstances, an inference or presumption unfavorable to such party.").

The destroyed records were from the period that was acknowledged to include  [*20] discussion of the generic drug, marketing in the United States, preparation of the ANDA, and the Paragraph IV Certification challenging the patent. Glenmark did not negate the reasonable inference that the destroyed emails related to relevant issues. See Brewer v. Quaker State Oil Ref. Corp., 72 F.3d 326, 334 (3d Cir. 1995) ("When the contents of a document are relevant to an issue in a case, the trier of fact generally may receive the fact of the document's nonproduction or destruction as evidence that the party that has prevented production did so out of the well-founded fear that the contents would harm him."). Absent any reasonable negation of this inference, the district court's finding that the documents were likely to be relevant was not clearly erroneous, and informing the jury of the destruction program was not an abuse of discretion. See Fujifilm Corp. v. Benun, 605 F.3d 1366, 1370 (Fed. Cir. 2010) (The district court abuses its discretion only "if its determinations are based on an erroneous view of the law or on a clearly erroneous assessment of the evidence.").

Although the district court declined to impose the sanction of forfeiture as requested by Plaintiffs, the court  [*21] was well within its discretion in informing the jury that it may draw an inference that the destroyed documents may have been unfavorable to Glenmark. The courts are not required to tolerate acts in derogation of the integrity of judicial process. Chambers v. NASCO, Inc., 501 U.S. 32, 45, 111 S. Ct. 2123, 115 L. Ed. 2d 27 (1991) ("A primary aspect of that discretion is the ability to fashion an appropriate sanction for conduct which abuses the judicial process."). The destruction of documents in the course of preparation for litigation has no entitlement to judicial protection, and need not be concealed from the jury. A new trial on this ground is not warranted.