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Magistrate Judge Fallon Recommends Denial of Transfer and Judgment on Pleadings, Grant of Motion to Dismiss Contributory Infringement

Magistrate Judge Fallon recently issued a report and recommendation in litigation between Merck and Teva over Teva’s proposed generic version of mometasone furoate nasal spray, marketed by Merck as Nasonex®. Merck Sharp & Dohme Corp. v. Teva Pharmaceuticals USA, Inc., C.A. No. 14-874-SLR-SRF, Report and Recommendation at 1-2 (D. Del. July 1, 2015). Judge Fallon addressed several motions at once, recommending denying Teva’s motion to transfer to the District of New Jersey based on the Third Circuit’s Jumara factors, which indicated that Delaware was “a legitimate forum based on Teva’s state of incorporation” and would not be unduly burdensome (id. at 3-8); denying as moot Teva’s motion for judgment on the pleadings (id. at 16); and granting Teva’s motion to dismiss Count II of the complaint with leave to amend (id. at 8-16).

Count II of the complaint dealt with Merck’s claim of contributory infringement. As the Court explained, “[p]ursuant to Merck’s conversion theory of contributory infringement, Teva would be liable for infringement even if the generic copy of Nasonex® nasal spray sold by Teva contains only anhydrous mometasone furoate, because at least some of the mometasone furoate contained in Teva’s product converts to the allegedly infringing monohydrate form during the proposed shelf life of the product.” Id. at 2-3.

Teva argued that the complaint did not include sufficient allegations supporting Merck’s “conversion theory,” which was more fully expressed in its briefs, including that Teva had knowledge of such a conversion or that its product was made especially for such a conversion. Judge Fallon rejected this argument, however, finding that the contributory infringement theory met the plausibility requirement of Twombly and Iqbal. Id. at 12-14. Similarly, Judge Fallon found that Merck had adequately plead the absence of a substantial non-infringing use and adequately identified a component of the invention as allegedly infringing. Id. at 14-15.

Judge Fallon agreed, however, with Teva’s assertion that “Merck’s cause of action for contributory infringement is facially deficient because it fails to specifically reference or make factual allegations regarding materiality,” i.e. that the complaint does not set out that the allegedly infringing component constitutes a material part of the invention as required by § 271(c). Thus, “Merck’s cause of action for contributory infringement is facially deficient and should be dismissed on this basis.” Id. at 11-12. Judge Fallon recommended, however, that dismissal be with leave to amend the complaint to address the materiality requirement. Id. at 15-16.

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