Bausch Health Ireland Ltd. v. Padagis Israel Pharms. Ltd.

Case Name: Bausch Health Ireland Ltd. v. Padagis Israel Pharms. Ltd., Civ. No. 22-4248 (SRC), 2023 WL 7131809 (D.N.J. Oct. 30, 2023) (Chesler, J.)

Drug Product and Patent(s)-in-Suit: Arazlo® (tazarotene); U.S. Patent Nos. 11,311,482 (“the ’482 patent”)

Nature of the Case and Issue(s) Presented: Bausch owns the ’482 patent, which covers its Arazlo product. Padagis filed an ANDA seeking approval from FDA to make and sell generic tazarotene lotion. Bausch filed suit alleging patent infringement. Padagis filed an amended answer asserting, among other things, an affirmative defense of inequitable conduct and a counterclaim seeking a declaration of unenforceability of the ’482 patent due to inequitable conduct. Bausch moved under Rule 12(c) for partial judgment on the pleadings on Padagis’s inequitable conduct affirmative defense and counterclaim. The court granted Bausch’s motion.

Why Bausch Prevailed: During the prosecution of the ’482 patent, the Examiner rejected the operative claims on the basis that the prior art Dow reference taught lotions containing halobetasol and tazarotene, wherein the tazarotene was present in concentrations of less than 0.5%. To overcome this rejection, Bausch amended its claims to make tazarotene .045% the sole active ingredient, which the Examiner credited in his notice of allowance.

Padagis’s inequitable conduct argument alleged that Bausch withheld certain spreadsheets that showed the use of tazarotene .05% to treat acne that occurred prior to the earliest effective filing date of the ’482 patent, and that but-for this failure to disclose, the claims of the ’482 patent would not have been allowed. In response, Bausch contended that it otherwise disclosed the prior art use of .05% tazarotene for the treatment of acne, and that the spreadsheets in question are merely cumulative of those other prior art disclosures. Specifically, Bausch argued that the spreadsheets were cumulative of two references that were before the Examiner, Shalita 1999 and Kircik 2009, both of which, according to Bausch, disclosed the use of .05% tazarotene to treat acne. Padagis responded that the spreadsheets were not cumulative because they document this use in “real-world clinical practice” rather than “experimental clinical studies.”

“The problem for [Padagis] is that this is a new argument unsupported by the factual allegations in the Amended Answer. The Third Counterclaim, as pled in the Amended Answer, says nothing about real-world clinical practice, nor about the distinction between use of a treatment in a study versus use in clinical practice. No facts have been pled which would make plausible the inference that, but for the withholding of the spreadsheets, the applicants would not have overcome the rejection for obviousness in view of Dow and Donello, and obtained allowance.”

Padagis’s counterclaim failed to plead sufficient facts to make plausible the inference of materiality. On the other hand, Bausch has clearly established that no material issue of fact remains to be resolved and that it is entitled to judgment as a matter of law. The court dismissed the counterclaim with prejudice because Padagis had not suggested that repleading might remedy the deficiency that has led to dismissal.