IP Law Daily, PATENT—E.D. Pa.: Court to perform limited in camera inspection of allegedly privileged documents, (Mar 29, 2023)

By Kenneth H. Ryesky, M.B.A., J.D.

Drug wholesalers showed cause to suspect that court’s in camera inspection may reveal basis to break the attorney-client privilege and/or attorney work product privilege asserted by proprietary drug manufacturers.

The federal district court in Philadelphia, Pennsylvania granted limited in camera inspection of documents claimed by defendant proprietary pharmaceutical manufacturers to be privileged under the attorney-client and/or attorney work product privilege. The court found that Third Circuit case law precedent rather than Federal Circuit precedent applies to the drug wholesaler plaintiffs, and that the generic manufacturers made sufficient showing that an in camera inspection might reveal a basis to invoke the crime-fraud exception to the privileges asserted by the proprietary manufacturers. The court accordingly agreed to review some of the documents in camera, and give the proprietary manufacturers opportunity to contest any determination of disclosure the court might make (King Drug Co. of Florence, Inc. v. Abbott Laboratories, March 27, 2023, Bartle, H.).

Fourteen direct-purchase pharmaceutical drug wholesalers (together, King Drug) brought a civil Sherman Act lawsuit against drug manufacturers AbbVie and Besins, alleging anticompetitive conduct that denied the wholesalers the opportunity to purchase generic varieties of the AndroGel® 1%, a transdermal testosterone replacement therapy gel. AbbVie and Besins had been issued U.S. Patent No. 6,503,894 for AndroGel® in 2003.

In 2011, AbbVie's predecessor and Besins had filed an action against third-party generic drug manufacturer Perrigo (the Perrigo action) regarding Perrigo's New Drug Application with the FDA, in which AbbVie and Besins contended that Perrigo's generic version of AndroGel® infringed upon their Patent '894 The filing of this lawsuit froze the FDA's approval process for its generic version of AndroGel®, thereby delaying the market availability of the Perrigo product until December 2014.

After the Perrigo suit was filed, the FTC brought a suit against AbbVie and Besins in the New Jersey federal district court alleging anticompetitive conduct in connection with AndroGel®. Although the FTC action was and ultimately dismissed, the Third Circuit in that action did uphold the trial court’s finding that the AbbVie and Besins patent infringement lawsuit against Perrigo was objectively baseless. In March 2022, the court in the instant case denied a motion by King Drug to preclude AbbVie and Besins from relitigating issues decided in the FTC's case because the Third Circuit had significantly reversed the New Jersey District Court's judgment it made in the FTC's favor, and the FTC accordingly was not the prevailing party in that case.

In April 2022, the court in the instant case denied King Drug's motion to compel production of certain documents, finding that the attorney-client privilege and an earlier stipulation in another AndroGel® case brought in Georgia applied in the instant Pennsylvania case. In January 2023, the court granted King Drug partial summary judgment, finding that the Perrigo action was objectively baseless.

King Drug has moved for the court to conduct an in camera review of 211 specific documents, comprising 800 total pages, alleged by AbbVie and Besins to be covered by attorney-client and attorney work product privileges; King Drug believes that those documents may be subject to the crime-fraud exception to those privileges.

Jurisdiction-patent pleadings. The court found that the Third Circuit would have jurisdiction over any appeal of its decision on the instant motion. The Federal Circuit has exclusive jurisdiction over any case in which a claim or counterclaim arising under "any Act of Congress relating to patents" is asserted [28 U.S.C. § 1295(a)(1)]. Here, although one of several Sherman Act violation theories asserted by King Drug involved a particular patent, success on that particular theory was not essential in order for King Drug to prevail in the litigation. Moreover, the Third Circuit had already similarly found that it and not the Federal Circuit had jurisdiction over the FTC's lawsuit against AbbVie and Besins.

Case law-precedent. Having found that the Third Circuit and not the Federal Circuit would have jurisdiction to hear any appeal of its decision on the instant motion, the district court found that the case law precedent of the Third Circuit applied here. The court needed to make this determination on account of the differing standards regarding the crime-fraud exception enunciated in case law of the respective Circuits. The Federal Circuit requires demonstration of the elements of common law fraud, while the Third Circuit case law requires neither consummation of the fraud nor reliance by the defrauded party for the crime-fraud exception to overcome the attorney-client or work product privileges.

Privilege-crime fraud exception. The court found that King Drug had articulated a reasonable basis to believe that an in camera inspection by the court might uncover evidence to support the crime-fraud exception. Here, there was a log that listed the 211 documents for which the privileges were claimed, and there was a previous finding AbbVie and Besins may have engaged in inappropriate conduct that would invoke the crime-fraud exception to the attorney-client or work product privileges. The Perrigo patent infringement action was already found to be baseless, and it was brought by seasoned and experienced patent attorneys.

But the court, wary of unnecessarily weakening the attorney-client and work product privileges which promote frank discussions between attorneys and clients and accordingly facilitate the ascertainment of the truth, granted King Drug's in camera inspection motion to the extent that it would review 100 documents of King Drug's choosing, and then, if any document is found to be disclosable, would give AbbVie and Besins opportunity to file briefs in opposition of disclosure and to appeal before actual disclosure is made.

The Case is No. 19-3565.

Attorneys: Joseph Opper (Garwin Gerstein & Fisher LLP) for King Drug Co. of Florence, Inc. James F. Hurst (Kirkland & Ellis LLP) for Abbott Laboratories.

Companies: King Drug Co. of Florence, Inc.; Abbott Laboratories

Cases: Patent PennsylvaniaNews