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Federal Trade Commission v. Boehringer Ingelheim Pharmaceuticals, Inc.

United States Court of Appeals, District of Columbia Circuit

February 20, 2015


Argued: October 14, 2014.

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[Copyrighted Material Omitted]

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Appeal from the United States District Court for the District of Columbia. (No. 1:09-mc-00564).

Mark S. Hegedus, Attorney, Federal Trade Commission, argued the cause for appellant. With him on the briefs were Jonathan E. Nuechterlein, General Counsel, David C. Shonka, Principal Deputy General Counsel, John F. Daly, Deputy General Counsel for Litigation, and Leslie Rice Melman, Assistant General Counsel for Litigation. David L. Sieradzki, Attorney, entered an appearance.

Lawrence D. Rosenberg argued the cause for appellee. With him on the brief was Michael Sennett.

Before: ROGERS, GRIFFITH and WILKINS, Circuit Judges. OPINION filed by Circuit Judge WILKINS.


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Wilkins, Circuit Judge:

In 2009, the Federal Trade Commission initiated an antitrust investigation into a patent settlement agreement between Boehringer Ingelheim Pharmaceuticals, Inc. (" Boehringer" ), a brand-name pharmaceutical company, and Barr Industries (" Barr" ), a generic drug manufacturer. As part of its investigation, the FTC issued an administrative subpoena seeking various documents relating to the settlement. When Boehringer failed to comply, the FTC initiated an enforcement proceeding in the District Court for the District of Columbia. See FTC v. Boehringer Ingelheim Pharms., Inc., 286 F.R.D. 101 (D.D.C. 2012). Although Boehringer ultimately certified compliance with the subpoena, it withheld hundreds of responsive documents under the work product doctrine and the attorney-client privilege. After the FTC objected, the District Court reviewed in camera a sample of the contested documents, and found that almost all

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were properly withheld under the work product doctrine or the attorney-client privilege. On appeal, the FTC challenges the District Court's application of the work product doctrine.

The FTC first asserts that the District Court erred as a matter of law when it concluded that settlement documents pertaining to a co-promotion agreement between Boehringer and Barr were prepared " in anticipation of litigation," as required under the work product doctrine. According to the FTC, this conclusion cannot be reconciled with Boehringer's representation that the co-promotion agreement involved payment for other services apart from Barr's agreement to dismiss the patent litigation. We reject the FTC's argument and hold that a settlement term may have independent economic value and still be considered part of a settlement for purposes of work product protection. In addition, we find that the District Court reasonably concluded that the bulk of the contested co-promotion materials were prepared " in anticipation" of the Boehringer-Barr litigation. The sole exception is a small group of documents drafted after the settlement was executed, which the District Court did not explicitly address. Accordingly, we generally affirm the District Court's findings on this issue but remand for further consideration with respect to the post-settlement documents.

The FTC next argues that the District Court committed legal error by applying an overly expansive definition of " opinion" work product, which is highly protected, as opposed to " fact" work product, which is substantially less so. Because we agree that the District Court misapprehended the proper distinction between fact and opinion work product, we reverse and remand on this issue.


Boehringer manufactures Aggrenox and Mirapex, two patented pharmaceutical drugs that earn hundreds of millions of dollars in U.S. sales each year. In 2005, Barr sought and received FDA approval to market generic versions of these drugs, which led Boehringer to sue Barr for patent infringement. See Boehringer Ingelheim Int'l GmbH v. Barr Labs. Inc., Civ. Action No. 05-700-JJF (D. Del. filed Sept. 26, 2005). Barr, in turn, contended that Boehringer's patents were invalid. While the Delaware litigation was pending, Boehringer and Barr entered into settlement negotiations. Boehringer's senior vice president and general counsel, Marla Persky, served as its lead negotiator during these discussions. FTC Investig. Hr'g Tr. at 70-71, J.A. 755-56. To this end, Persky and her staff engaged in both legal and business activities, including evaluating possible litigation outcomes, considering potential antitrust concerns, and evaluating and negotiating the business terms of the settlement. Id. at 113-16, 118, 120-23, J.A. 772-80.

On August 11, 2008, the two companies settled their dispute on the following terms: Barr would refrain from marketing its generic versions of Aggrenox and Mirapex in the immediate future, but Boehringer would permit Barr to enter the market several months ahead of the expiration of Boehringer's patents. Boehringer, 286 F.R.D at 105; see also Aggrenox Settlement Agreement, J.A. 871-83; Press Release, J.A. 886-88. In the meantime, under a related co-promotion agreement, Barr would help Boehringer promote Aggrenox to medical professionals in exchange for certain specified fees and royalties on Aggrenox sales. Boehringer, 286 F.R.D at 105; see also Co-Promotion Agreement, J.A. 889-930.

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While this type of settlement deal is not necessarily unlawful, see FTC v. Actavis, Inc., 133 S.Ct. 2223, 2237-38, 186 L.Ed.2d 343 (2013), such a settlement may be subject to antitrust scrutiny if it appears that the patent-holding firm -- here, Boehringer -- was using the co-promotion agreement as a vehicle to avoid legitimate competition. Id. at 2236-37. And, indeed, the specific terms of this settlement raised the suspicions of the FTC that Boehringer was simply paying Barr off in order to delay the entry of generics into the market. Boehringer, 286 F.R.D at 105. The FTC initiated an investigation and served Boehringer with a subpoena duces tecum. Id. After Boehringer failed to meet a deadline for production, the FTC filed a petition in district court for an order enforcing the subpoena. Id.

Boehringer ultimately completed production and certified compliance with the subpoena, although it withheld nearly a quarter of identified responsive documents as protected by the attorney-client privilege, the work product doctrine, or both. Id. at 106. The FTC was not satisfied with Boehringer's response and objected that many of the withheld documents fell outside the scope of these privileges. Id. It specifically challenged Boehringer's refusal to produce documents containing financial analyses of the Aggrenox co-promotion agreement, forecasting analyses of alternative time lines for generic entry into the market, and financial analyses of the business terms of the settlement agreement. Id. at 108. The FTC also challenged Boehringer's withholding of several other categories of documents not at issue in this appeal. See id. at 112 (discussing emails, notes, and reports on strategic decisions and other issues; emails containing legal advice or requests for legal advice; transmittal emails; and duplicate documents); Appellant's Br. 12-16 (limiting challenge on appeal to financial documents analyzing litigation settlement and co-promotion agreement).

By agreement of the parties, Boehringer submitted a sample set of documents in camera to the District Court. Boehringer, 286 F.R.D at 106. After reviewing the documents, the District Court issued a decision largely upholding Boehringer's work product claims. Id. at 108-12.

The District Court first explained why the financial analyses and forecasts fell within the scope of the work product doctrine. It began by observing that work product developed for the purpose of settling a lawsuit falls within the scope of materials prepared " in anticipation of litigation," as required under Rule 26. Boehringer, 286 F.R.D. at 107, 109; see Fed.R.Civ.P. 26(b)(3) (protecting from disclosure materials " prepared in anticipation of litigation" ). The documents analyzing litigation outcomes and the settlement terms were, therefore, plainly work product. Boehringer, 286 F.R.D. at 109. As for the co-promotion agreement materials, the court found that the co-promotion agreement was " integral" to the global settlement deal and therefore also belonged in the class of materials prepared in anticipation of litigation. Id.

The District Court next considered whether the materials sought were fact work product, which may be discovered under certain circumstances, or opinion work product, which is subject to strict protection. Id. at 109-10. It found that although the materials resembled financial reports that might be prepared in the standard course of business, the specific reports were prepared using " information and frameworks" provided by Boehringer counsel and reflected, at minimum, counsel's opinions as to what data were important in determining an acceptable settlement.

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Id. at 109. On these grounds, the District Court concluded that the materials constituted opinion work product, deserving of the utmost protection. Id. at 110. The District Court further found that the FTC had not demonstrated the sort of " overriding and compelling" need required to pierce opinion work product protection. Id. at 109-10. Because the District Court found that the documents were wholly protected under the work product doctrine, it did not reach Boehringer's attorney-client privilege claims with respect to any of these financial documents. See id.

The FTC contends that the District Court erred in two ways. It first argues that the District Court failed to properly consider whether many of these materials -- particularly, the financial analyses of the Aggrenox co-promotion agreement and materials produced after the settlement agreement was executed -- actually were prepared " in anticipation of litigation." It next asserts that even if all of the contested documents are work product, then they are, at most, fact work product and therefore may be discovered by the FTC upon a showing of substantial need and undue hardship.


We review a district court's decision to enforce an administrative subpoena for abuse of discretion. See U.S. Int'l Trade Comm'n v. ASAT, Inc., 411 F.3d 245, 253, 366 U.S.App.D.C. 269 (D.C. Cir. 2005). A district court necessarily abuses its discretion if it applies the incorrect legal standard, a question that is reviewed de novo. See Conservation Force v. Salazar, 699 F.3d 538, 542, 403 U.S.App.D.C. 69 (D.C. Cir. 2012); FTC v. Church & Dwight Co., 665 F.3d 1312, 1315, 398 U.S.App.D.C. 449 (D.C. Cir. 2011).

A district court's factual findings are reviewed for clear error. Boca Investerings P'ship v. United States, 314 F.3d 625, 629, 354 U.S.App.D.C. 184 (D.C. Cir. 2003). A finding is clearly erroneous, even where there is record evidence to support it, if " the reviewing court on the entire record is left with the definite and firm conviction that a mistake has been committed." Awad v. Obama, ...

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