Bumble beeIn a recent order by the magistrate judge in Jazz Pharmaceuticals, Inc. v. Amneal Pharmaceuticals, LLC (NJD, Jan. 22, 2016), defendants Amneal Pharmaceuticals and Par Pharmaceuticals were reprimanded and threatened with sanctions and monetary fines for trying to use confidential information from the litigation to move for additional discovery in a related IPR proceedings.  The judge ruled this behavior violated a Discovery Confidentiality Order (DCO) in place in the litigation.  

Jazz sued generic drug makers Amneal and Par over generic versions of Jazz’s narcolepsy drug Xyrem after the two generics filed Abbreviated New Drug Applications.  Subsequent to the commencement of litigation, the generics filed Petitions for Inter Partes Review (IPR) of several of Jazz’s patents covering the drug product.  The DCO in place during the litigation states that “All Confidential Information and highly Confidential Information disclosed pursuant to this Order shall be used by a recipient thereof solely for the purposes of this litigation and not for any business or competitive purposes…” and the court determined that this includes not using that information in any form during related IPR proceedings.

The district court determined that there were two violations of the DCO by the defendants. First, the defendants contacted Jazz by letter, alleging that certain documents produced in litigation were inconsistent with positions taken during related IPR proceedings, and demanded that Jazz produce the documents in the IPRs.  Second, the defendants contacted Jazz several months later by email, attaching IPR document requests, and arguing that the requests satisfied the Board’s Garmin factors for IPR discovery. The court determined that these communications were violations of the DCO, even though the communications were with Jazz, the producing party. The Court held that by referencing Jazz’s Confidential litigation documents as a rationale for why Jazz should have to provide additional discovery in the IPRs violated the DCO.  Defendants argued that only public information was used in the discovery requests and therefore there was no violation of the DCO.  However, defendants referenced the Confidential Information in making their discovery requests and explaining why there is the possibility of finding something useful in additional discovery under the Garmin factors.  The Judge found that even this reference to Confidential Information violated the complete inhibition of use of the information outside of the litigation under the DCO.

The Court said it could sanction the defendants for violation of the DCO, and held the final sanction in abeyance until the end of the case, alluding to the fact that such sanctions could include a prosecution bar or monetary damages.  More importantly, the Court also alluded to ways parties could prevent potential cross-pollination of confidential information from litigation to IPRs.  Potential means to avoid such inner conflict would be to limit those exposed to another’s confidential information produced under a DCO or other confidentiality order to not participate in post-grant proceedings.  Additionally, the court suggested modification of the DCO in this case in such a way that it would allow use of Confidential information in other proceedings for limited purposes, but does not give a party a competitive advantage.  One of the difficulties in carrying out the second solution is where and who draws the line on competitive advantage and whether the confidential information is appropriately used.

This case is yet another in the line of District Court cases that is struggling with the interplay between IPRs and litigation.  This blog has several entries on instances when evidence of IPR decisions is or is not allowed in a related court case.  This current order by the magistrate is interesting in that this decision does not even go to a final disposition of an IPR, but to the type of evidence that can be used in litigation and IPRs and the appropriateness of such evidence, suggesting that practitioners who practice in both areas should be careful about any confidentiality orders that exist and overstepping the boundaries between litigation and IPRs.