District Court Grants Stay of Litigation Pending IPR and Refuses to Similarly Extend 30 Month Stay

On December 11, 2015, the Southern District of Indiana issued an order granting the request of several defendants to stay litigation pending resolution of inter partes review (“IPR”) of two of the patents-in-suit. Eli Lilly & Co. et al. v. Accord Healthcare Inc. et al., Civ. No. 14-cv-00389-SEB-TAB (S.D. Ind. Dec. 11, 2015).  Magistrate Judge Tim A. Baker issued the order wherein he methodically reviewed the three guiding factors, namely, whether the stay would: (1) simplify the issues and streamline the case for trial; (2) reduce the burden of litigation on the parties and the Court; and (3) unduly prejudice or tactically disadvantage the Plaintiff.

With respect to the first factor, the Court stated, “[t]here is no question that the IPRs will streamline the case and narrow the issues for trial. . . . If Defendants are successful in the IPRs, all the claims of the ‘703 and ‘325 patent will cease to exist and 22 parties will be entitled to judgment in their favor and dismissal.”  Order at 2.  The Court made clear that “IPR proceedings do not have to eliminate every issue in the case in order for a stay of the litigation to be entered.”  Id.  The mere “‘potential reduction in the number of claims, patents, and/or prior art references’” may suffice.  Id.  Given that the instant case was “in flux,” the Court determined that it “would be prudent to stay th[e] litigation so that the parties do not waste time and money developing a record” for a case that might change.  Id.  The Court also noted that a stay would offer the added benefit of “avoid[ing] the possibility of obtaining a result that is inconsistent with any decision by the PTO” involving the ‘703 and ‘325 patents.  Id.

With respect to the second factor, the Court found persuasive that the case was in the early stages of discovery.  The Court emphasized that there had been minimal document and written discovery and no depositions.  It further highlighted that no dates had been set for the close of fact and expert discovery; nor had any dates been set for a Markman hearing or for trial.  Id. at 3.  In light of that background, the Court determined that a stay would “reduce the burdens on the parties and the Court.”  Id.

The Court concluded that the third factor was more balanced, noting that it may even favor plaintiffs.  The plaintiffs had argued that they would be prejudiced because the case would not be “resolved before the expiration of the statutory 30-month stay of approval” of defendants’ ANDAs.  Id.  Although the Court seemed swayed by plaintiffs’ argument, it ruled that “[t]he fact that Plaintiffs cannot get final resolution of their case before the expiration of the 30-month stay is not a recognized prejudice that can overcome the strong showing for a stay in this case.  Plaintiffs will have ample opportunity to seek an injunction once the IPRs are finally concluded, which eliminates any alleged prejudice to Plaintiffs.”  Id.  The plaintiffs also argued that any stay should include a corresponding extension of the regulatory stay preventing FDA approval of the underlying ANDAs.  The Court rejected this argument, holding that “[t]here is no law that justifies this request.”  Id.

Notably, Judge Baker had previously denied similar relief sought by a broader set of defendants in the same case.  The critical distinction between the defendants’ earlier request and this request was that, at the time of their first request, the PTO had not yet instituted IPR against the two relevant patents-in-suit—the defendants’ had merely petitioned for IPR.  Judge Baker decided that, as a result, the defendants’ request for a litigation stay was premature.

Takeaway:  This case provides ANDA filers with authority to argue for a stay pending resolution of IPR.  ANDA filers should consider leveraging the Court’s recognition that the benefits of a stay overcome any prejudice that may result due to resolution of a case being delayed until after expiration of the 30-month stay, even if the IPR does not resolve all of the asserted claims.  It would be prudent, however, for ANDA filers to wait until the PTO institutes IPR before requesting a stay to maximize a likelihood of success.