22-0427-cv Regeneron Pharmaceuticals, Inc. v. Novartis Pharma AG

In the United States Court of Appeals for the Second Circuit

August Term 2023 No. 22-0427-cv

REGENERON PHARMACEUTICALS, INC., Plaintiff-Appellant, v. NOVARTIS PHARMA AG, NOVARTIS TECHNOLOGY LLC, NOVARTIS PHARMACEUTICALS CORPORATION, VETTER PHARMA INTERNATIONAL GMBH, Defendants-Appellees.

On Appeal from the United States District Court for the Northern District of New York

ARGUED: OCTOBER 11, 2023 DECIDED: MARCH 18, 2024 Before: PARKER, LEE, and MERRIAM, Circuit Judges.

Plaintiff-Appellant Regeneron Pharmaceuticals, Inc. appeals from a judgment of the United States District Court for the Northern District of New York (Hurd, J.) dismissing under Fed. R. Civ. P. 12(b)(6) Regeneron’s claims alleging antitrust violations and tortious interference with contract. On appeal, Regeneron contends that the district court erred in concluding that it failed to plead the existence of a relevant antitrust market and also erred in dismissing, as untimely, its tortious interference claim. Because we agree with Regeneron on both grounds, we REVERSE the judgment of the district court and REMAND for further proceedings consistent with this opinion.

ADAM BANKS, (Joshua Halpern, Elizabeth S. Weiswasser, Eric S. Hochstadt, & Anish R. Desai, on the brief), Weil, Gotshal & Manges LLP, New York, NY & Washington, D.C., for Plaintiff-Appellant

WILLIAM JAY, (Ian Simmons, Lisa Pensabene, Stephen J. McIntyre, & Melissa C. Cassel, on the brief), O’Melveny & Myers LLP, Washington, D.C., New York, NY, Los Angeles, CA & San Francisco, CA, for Defendants-Appellees Novartis Pharma AG, Novartis Technology LLC, and Novartis Pharmaceuticals Corp.

Benjamin T. Horton & Julianne M. Hartzell, on the brief, Marshall Gerstein & Borun LLP, Chicago, IL, for Defendant-Appellee Vetter Pharma International GmbH

MATTHEW M. HOFFMAN, (Anisha S. Dasgupta & Joel Marcus, on the brief), Federal Trade Commission, Washington, D.C., and Jonathan S. Kanter, Daniel E. Haar, Nickolai G. Levin, & Andrew N. DeLaney, on the brief, United States Department of Justice, Antitrust Division, Washington, D.C., Amici Curiae in Support of Neither Party BARRINGTON D. PARKER, Circuit Judge:

The resolution of this appeal turns on the definition of the relevant antitrust

product market. The products in question are prescription medications used to

treat the overproduction of vascular endothelial growth factor (“VEGF”), a

naturally occurring protein that, if overproduced, can lead to various eye

disorders and, in some cases, to permanent blindness. Both Plaintiff-Appellant

Regeneron Pharmaceuticals, Inc. (“Regeneron”) and Defendant-Appellees

Novartis Pharma AG, Novartis Technology LLC, and Novartis Pharmaceuticals

Corporation (collectively, “Novartis”) produce “anti-VEGF” medications to

combat the overproduction of VEGF. Regeneron produces EYLEA, while Novartis

produces LUCENTIS.

For several years after they were first introduced, anti-VEGF medications

were packaged into vials and administered in a two-step process. A doctor would

first fill a syringe with medicine from an anti-VEGF vial and then inject the drug

into a patient’s eye. The newer versions of the medications are sold in prefilled

syringes (“PFSs”) and administered in one step. PFSs contain the same medication

as vials but are injected directly into the patient’s eye. This simpler process carries

a significantly lower risk of complications and infections and is now the preferred way of administering anti-VEGF medications. The pivotal issue in this appeal is

whether anti-VEGF medications in vials and PFSs compete in the same or in

different product markets.

Starting around 2005, Regeneron recognized the comparative advantages of

PFSs over vials and, for approximately the next fifteen years, sought to develop

and obtain FDA approval for an anti-VEGF PFS treatment. At the beginning of

this development process, Regeneron contracted with Defendant-Appellee Vetter

Pharma International GmbH (“Vetter”) to collaborate on a PFS version of its

EYLEA drug. At that time, Vetter was already providing non-exclusive “filling”

services for Regeneron’s vial version of EYLEA. Unbeknownst to Regeneron,

however, Vetter allegedly entered into a similar agreement with Novartis in 2009

to produce a competing PFS version of Novartis’s drug, LUCENTIS.

Regeneron alleges that from 2009 to 2015, Novartis and Vetter fraudulently

concealed Vetter’s contributions to a patent that Novartis obtained in 2015 for a

PFS version of LUCENTIS. Then, after unlawfully obtaining the patent, Novartis

and Vetter allegedly took steps to keep Regeneron out of the anti-VEGF PFS

market until 2019, when Regeneron finally released its own PFS version of EYLEA.

Regeneron argues that these steps delayed the release of its anti-VEGF PFS by several years and enabled Novartis to increase its market share during this period.

In July 2020, Regeneron sued Novartis and Vetter in the United States

District Court for the Southern District of New York, which transferred the case to

the Northern District. The Amended Complaint asserts five claims: two claims

against Novartis of attempted monopolization under Walker Process Equip., Inc. v.

Food Mach. & Chem. Corp.,

(1965), in violation of Section 2 of the

Sherman Act,

; one claim against Novartis of non-Walker Process

attempted monopolization in violation of Section 2; one claim against Novartis

and Vetter of unreasonable restraint of trade in violation of Section 1 of the

Sherman Act,

; and one claim against Novartis of tortious interference

with contract in violation of New York law.

Novartis and Vetter moved under Fed. R. Civ. P. 12(b)(6) to dismiss the

Amended Complaint, and the district court (Hurd, J.) granted the motion. As to

the antitrust claims, the court reasoned that Regeneron failed to allege plausibly

that the relevant antitrust market is properly limited to anti-VEGF PFSs, to the

exclusion of vials. The district court focused on the functional similarities between

the PFS and vial versions of Regeneron’s and Novartis’s respective anti-VEGF

treatments and concluded that, because of those similarities, both versions compete in the same relevant market. The court further concluded that Regeneron

could not state a Sherman Act claim under Walker Process because a proposed

relevant market cannot be coextensive with the bounds of a patent. Additionally,

the district court dismissed Regeneron’s tortious interference claim as untimely,

holding that Regeneron’s pleadings failed to establish that Novartis should be

equitably estopped from invoking the statute of limitations.

On appeal, Regeneron argues that the district court improperly dismissed

its antitrust claims both because it plausibly alleged that anti-VEGF PFSs

constitute their own product market—distinct from the market for vials—and

because the district court applied an improper standard to its claims under Walker

Process. Regeneron also argues that the district court improperly rejected its

equitable estoppel argument because Novartis and Vetter took steps to prevent

Regeneron from learning of Novartis’s tortious interference until after the

limitations period had expired. We agree with Regeneron. We therefore

REVERSE the judgment of the district court and REMAND for further

proceedings consistent with this opinion. BACKGROUND 1

I. Factual Background

Regeneron and Novartis are biotechnology and pharmaceutical companies

that produce drugs that treat the overproduction of VEGF. Vetter, a supplier of

drug “filling” services, has contracted with both Regeneron and Novartis to fill

vials and PFSs with their anti-VEGF treatments.

The overproduction of VEGF, if left untreated, can cause patients to “see the

world as if through distorted lenses: straight lines may appear bent, central vision

may be reduced, colors may be dulled, and patients may see haziness.” J. App’x

at 349 (Am. Cmplt. ¶ 38). Patients may also “experience a well-defined blurry or

blind spot in their central field of vision,” or even suffer permanent blindness.

(Am. Cmplt. ¶¶ 38-39).

EYLEA and LUCENTIS, produced by Regeneron and Novartis,

respectively, are the primary anti-VEGF drugs approved by the FDA. Vetter has

historically provided drug filling services to both Regeneron and Novartis, filling

1 In this posture, we accept the well-pleaded factual allegations in the Amended Complaint as true and draw all reasonable inferences in Regeneron’s favor. Francis v. Kings Park Manor, Inc.,

(2d Cir. 2021) (en banc). vials and PFSs with the anti-VEGF medicines they produce.

While anti-VEGF vials and PFSs contain the same active ingredients and are

used to combat the same condition, their differing formats have significant

implications for how physicians treat patients. When delivered in vials, the

treatments come “with multiple components, including the vialed biologic, two

separate needles, and a plastic syringe.” J. App’x at 360 (Am. Complt. ¶ 76).

Doctors using the vials must, under sterile conditions, “use the filter needle to

withdraw the correct amount of the anti-VEGF from the vial and then switch to an

injection needle before injecting the properly measured dosage into the patient’s

eye.”

This process is cumbersome and, if handled incorrectly, introduces a

heightened risk of endophthalmitis—a harmful inflammation of the interior of the

eye.

PFSs, on the other hand, are easier to administer and, according to the

parties, “permit more safe, effective and efficient injections of VEGF-antagonists

into the eye.” J. App’x at 362 (Am. Cmplt. ¶ 82) (quoting Novartis’s patent

infringement complaint). PFSs enable physicians to administer the required dose

more precisely and with a lower risk of foreign particles entering the eye, thereby

increasing dose accuracy and clinical efficiency. See id. at 361-62 (Am. Cmplt. ¶¶ 79, 81). Accordingly, Regeneron asserts that PFSs have been recognized as a “boon

to patients” and that physicians treating patients with EYLEA and LUCENTIS

converted between 80 and 100 percent of their patients from vials to PFSs once PFS

versions of the drugs became available. Id. at 361 (Am. Complt. ¶ 78).

Recognizing the comparative advantages offered by anti-VEGF PFSs over

vials, Regeneron entered into an agreement in 2005 with Vetter to collaborate on a

PFS version of EYLEA (the “2005 Agreement”). Regeneron alleges that this

agreement granted it an ownership interest “in any patent conceived or reduced

to practice by Regeneron or Vetter related to EYLEA PFS.” Appellant’s Br. at 11; J.

App’x at 394 (Am. Cmplt. ¶ 148).

Notwithstanding this arrangement, Regeneron alleges that in 2009, Vetter

confidentially entered into a similar agreement with Novartis to develop and

commercialize a PFS version of LUCENTIS. According to Regeneron, the

agreement between Vetter and Novartis resulted in their cooperation on a patent

application for a PFS containing anti-VEGF treatments. In December 2015, after

several years of this allegedly secret collaboration, Novartis obtained

(the “’631 Patent”), which specifically identifies EYLEA as the

“preferred” anti-VEGF for use with the invention. Appellant’s Br. at 11. Regeneron alleges that in doing so, Novartis and Vetter “sabotage[d] Regeneron’s

ownership rights” to the ’631 Patent under the 2005 Agreement. 2 J. App’x at 339

(Am. Cmplt. ¶ 10).

Regeneron asserts that because of (1) Vetter’s secret collaboration with

Novartis, (2) Novartis’s fraudulent acquisition of the ’631 Patent, and (3)

subsequent anti-competitive steps taken by both companies to keep Regeneron out

of the anti-VEGF PFS market, Regeneron’s development of an EYLEA PFS was

significantly compromised. This in turn forced Regeneron to delay the release of

a competing EYLEA PFS by several years, until 2019. Regeneron’s antitrust

allegations center on Novartis’s and Vetter’s conduct between 2009 and 2017.

First, Regeneron alleges that prior to the issuance of the ’631 Patent in 2015,

it “specifically and repeatedly asked Vetter about the nature of its agreement with

Novartis,” yet Vetter refused to disclose the details of this agreement. Appellant’s

Br. at 51; see also J. App’x at 410, 447 (Am. Cmplt. ¶¶ 179, 273). Meanwhile, in

October 2013, Vetter, allegedly acting at Novartis’s behest, demanded several

2 Soon after obtaining the ’631 Patent in 2015, Novartis worked with non-party Genentech, Inc. (“Genentech”), another pharmaceutical company, to commercialize a LUCENTIS PFS. It then licensed the ’631 Patent to Genentech to market LUCENTIS PFS in North America, while Novartis maintained exclusive commercialization rights in the rest of the world. In early 2017, Novartis and Genentech officially launched LUCENTIS PFS in the United States. modifications to its 2005 Agreement with Regeneron. For example, Vetter

allegedly demanded that Regeneron take out a license on a hypothetical, not-yet-

issued PFS patent, agree in advance not to challenge the patent once it issued, and

commit to using Vetter as its exclusive PFS filler for the life of the patent without

a guaranteed supply commitment from Vetter. See J. App’x 404-06 (Am. Cmplt.

¶¶ 166-70). These steps, Regeneron alleges, were intended to monopolize the

market by freezing out competitors.

Regeneron alleges that it refused to accede to these demands—“even

though it knew doing so would delay the launch of EYLEA PFS and cost

Regeneron millions of dollars”—because it believed they would “compromise the

competitiveness of EYLEA PFS.”

(Am. Cmplt. ¶ 174). When Regeneron

rejected Vetter’s demands, however, Novartis and Vetter allegedly agreed to

exclude Regeneron from Vetter’s filling services, a step that they knew would force

Regeneron “to invest significant time, money, and effort to establish a new, reliable

supply chain for EYLEA PFS” and delay its launch by several years.

(Am.

Cmplt. ¶175).

Second, Regeneron alleges that Novartis fraudulently procured the ’631

Patent both by failing to name Vetter as a co-inventor in its application to the U.S. Patent and Trademark Office (“USPTO”), as required by law, 3 and by knowingly

withholding material prior art from that Office.

Specifically, relying on confidential discovery obtained in a separate patent

litigation, Regeneron alleges that Novartis explicitly but confidentially recognized

Vetter’s contributions to the LUCENTIS PFS in a September 2013 amendment to

the development agreement between Novartis and Vetter. Regeneron further

alleges that during this period Novartis knew the 2005 Agreement vested

Regeneron with ownership rights in any patent that arose from Novartis’s

collaboration with Vetter. That knowledge allegedly caused Novartis to omit

Vetter’s contributions to the LUCENTIS PFS from the ’631 Patent application and

to secure Vetter’s assent to the deception by granting Vetter a co-exclusive license

over the ’631 Patent. J. App’x at 403-04 (Am. Cmplt. ¶ 165). As a result, the

USPTO—and by extension Regeneron—did not learn about Vetter’s involvement.

Regeneron additionally alleges that, by knowingly withholding material

prior art from the USPTO, Novartis fraudulently obtained the ’631 Patent.

Specifically, Novartis allegedly narrowed its application to claim a patent only for

a “terminally sterilized” PFS yet failed to disclose numerous prior art references

3 See

;

, 1.63. regarding terminal sterilization—despite knowing that they were material and

that the USPTO had previously discussed them in a separate PFS-related patent

application by Novartis. J. App’x at 377 (Am. Cmplt. ¶ 112). That omission,

according to Regeneron, enabled Novartis to obtain the ’631 Patent when it

otherwise would have been denied. 4

Finally, Regeneron points to Novartis’s and Vetter’s conduct after Novartis

obtained the ’631 Patent as evincing anti-competitive behavior. Having already

rejected Vetter’s October 2013 proposed conditions, Regeneron continued to

negotiate with Vetter, hoping to come to an agreement on PFS filling terms. Yet,

when the parties revisited terms in October 2017, Vetter allegedly continued its

anti-competitive behavior by insisting that it would not work with Regeneron on

an EYLEA PFS unless Regeneron agreed to a long-term exclusivity agreement and

not to challenge the ’631 Patent. Regeneron again refused to agree to these terms.

While these negotiations were ongoing, Novartis received FDA approval for

LUCENTIS PFS and subsequently launched it in the United States, through

4 This conclusion, according to Regeneron, is reinforced by the fact that in October 2021, the USPTO Patent Trial and Appeal Board found that Regeneron had “established a reasonable likelihood of prevailing on its assertion that at least one of the claims [in the Patent] would have been obvious” based on this withheld prior art. J. App’x at 862. Genentech, in early 2017.

Regeneron alleges that following the launch of LUCENTIS PFS, 80% of

LUCENTIS users switched from vials to PFSs. Genentech, having licensed the ’631

Patent from Novartis for North American sales, saw dramatically increased

demand for LUCENTIS PFSs. Through 2018, LUCENTIS PFS sales continued to

grow markedly, with Genentech’s parent company touting “‘increas[ed] market

shares in all approved indications’ due to LUCENTIS PFS’ ‘competitive

advantage.’” J. App’x at 364 (Am. Cmplt. ¶ 85) (quotation marks omitted). Since

the launch of LUCENTIS PFS, nearly all of LUCENTIS’s sales have been in PFSs.

In August 2019, Regeneron received FDA approval for its EYLEA PFS. In

December 2019, having arranged for a new filling supply chain, Regeneron finally

launched EYLEA PFS in the United States. Less than two weeks later, Vetter

transferred sole enforcement rights over the ’631 Patent to Novartis. The purpose

of this transfer, Regeneron alleges, was to allow Novartis to sue Regeneron for

infringing the ’631 Patent without naming Vetter as a co-plaintiff. Within six months of EYLEA PFS’ launch, 80% of anti-VEGF patients using EYLEA, like

LUCENTIS, switched from vials to PFSs.

II. Patent-Related Litigation

In June 2020, shortly after EYLEA PFS launched, patent-related litigation

began. First, Novartis sued Regeneron in the United States District Court for the

Northern District of New York 5 and then before the International Trade

Commission (“ITC”), alleging that Regeneron’s EYLEA PFS infringed the ’631

Patent.

During discovery in the ITC suit, Regeneron obtained a copy of a

confidential 2013 amendment to the agreement between Novartis and Vetter,

which documented their cooperation on the ’631 Patent. Regeneron alleges that,

from this document, it learned for the first time about Vetter’s role in inventing

and developing key features of the LUCENTIS PFS. However, because of a

protective order in the ITC proceedings, Regeneron was unable to make use of this

5 Novartis’s patent claims against Regeneron (and Regeneron’s counterclaims against Novartis in

that suit) were considered in tandem with Regeneron’s antitrust suit in the Northern District. See Novartis Pharma AG v. Regeneron Pharms., Inc, No. 20-cv-00690 (N.D.N.Y.). In the same opinion granting Novartis’s and Vetter’s motions to dismiss Regeneron’s antitrust and tortious interference claims, the district court also declined to reimpose a stay on the patent claims, pending further review by the USPTO. Those claims are not before us on appeal. newly-discovered information immediately.

In March 2021, the ITC’s independent Office of Unfair Import Investigations

filed a brief concluding that Novartis’s ’631 Patent was invalid because Novartis

had failed to disclose Vetter’s inventorship and material prior art. See J. App’x at

619-701. After this brief was sent to Regeneron and Novartis, but before the case

went to trial, Novartis terminated the ITC action.

In October 2021, the Patent Trial and Appeals Board (“PTAB”) instituted

inter partes review of the ’631 Patent. In October 2022, after the briefing in this

appeal was completed, the PTAB issued a final written decision finding the ’631

Patent invalid. The following month, Novartis’s patent case was again stayed in

the Northern District pending Novartis’s appeal of the PTAB’s decision to the

Federal Circuit. The patent case remains stayed as of this writing.

III. Procedural History & District Court Decision

Regeneron initiated this suit against Novartis and Vetter in the United States

District Court for the Southern District of New York in July 2020. That court

(Nathan, J.) transferred the case to the Northern District of New York, where the

patent litigation was already pending.

As noted, Regeneron’s Amended Complaint asserts four antitrust claims and a tortious interference with contract claim. In support of its Section 1 and

Section 2 antitrust claims, Regeneron alleged—and reiterates on appeal—that

“[t]he relevant product market is anti-VEGFs in prefilled syringes that are

approved by the FDA for the treatment of certain ophthalmic diseases,” which it

emphasizes is distinct from the markets for just anti-VEGF vials or for all anti-

VEGF treatments. 6 J. App’x at 415-16 (Am. Cmplt. ¶ 191); see also Appellant’s Br.

at 19.

The district court disagreed. It concluded that Regeneron’s proposed

market was not plausible and dismissed the antitrust claims without leave to

amend. See Novartis Pharma AG v. Regeneron Pharms., Inc.,

, 46

(N.D.N.Y. 2022). The court also dismissed Regeneron’s tortious interference with

contract claim as time-barred.

In dismissing the antitrust claims, the district court relied on two distinct,

albeit related, rationales. First, the court concluded that anti-VEGF vials and PFSs

compete in the same, not separate, markets because they contain the same

medicines and are used to treat the same condition. The district court further

6The parties agree that the relevant geographic market is the United States. J. App’x at 420 (Am. Cmplt. ¶ 201). concluded that Regeneron failed plausibly to allege why, given these significant

functional similarities, consumers would not consider them interchangeable.

.

Second, the court concluded that Regeneron’s proposed anti-VEGF PFS

market could not support its antitrust claims because, absent extraordinary

circumstances “where the subject of a patent is so novel that there really is no

fitting substitute,” a proposed antitrust market cannot be coextensive with the

bounds of a patent.

. Having created this new standard, the district court

held that Regeneron failed to satisfy it because the proposed market was “identical

to the protection afforded to Novartis by the ’631 Patent.”

.

Finally, the district court dismissed without leave to amend Regeneron’s

tortious interference with contract claim against Novartis as untimely, rejecting

Regeneron’s argument that Novartis was equitably estopped from raising a statute

of limitations defense. The court reasoned that Regeneron could not claim

estoppel because, to the extent Novartis and Vetter sought to conceal their

cooperation on an anti-VEGF PFS, this constituted a deception directed to the

general public and not to Regeneron specifically. See

. Moreover, the court

concluded that Regeneron failed to adequately investigate whether it had a viable tortious interference claim before the statute of limitations lapsed. Regeneron then

timely appealed the district court’s dismissal of its claims.

DISCUSSION 7

This appeal presents two issues: first, whether Regeneron stated any

plausible antitrust claims against Novartis and Vetter based on the existence of a

PFS-only market; and second, whether Regeneron’s tortious interference claim

against Novartis was untimely, notwithstanding its equitable estoppel arguments.

We hold that the district court erred on both issues and that Regeneron

properly stated antitrust and tortious interference claims. First, the district court

improperly concluded that Regeneron failed to plead adequately the existence of

a distinct anti-VEGF PFS market because it (1) placed improper weight on the

functional, rather than economic, similarities between anti-VEGF PFSs and vials

and (2) misconstrued the relationship between a patent and a proposed antitrust

market. Second, the district court improperly rejected Regeneron’s equitable

7“We review de novo a district court’s dismissal of a complaint pursuant to Rule 12(b)(6), construing the complaint liberally, accepting all factual allegations in the complaint as true, and drawing all reasonable inferences in the plaintiff’s favor.” Green v. Dep’t of Educ. of City of New York,

(2d Cir. 2021) (quoting Chambers v. Time Warner, Inc.,

(2d Cir. 2002)). To survive a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal,

(2009) (quoting Bell Atl. Corp. v. Twombly,

(2007)). estoppel argument in support of its tortious interference claim. Regeneron has

satisfactorily alleged, at this stage in the litigation, that Novartis prevented

Regeneron from learning about its contractual interference until after the

limitations period expired. We consider the two issues in turn.

I. Regeneron’s Proposed Relevant Market

A. Functional vs. Economic Similarities Between anti-VEGF PFSs and

Vials

To state a claim under either Section 1 or Section 2 of the Sherman Act, a

plaintiff must plausibly allege that the defendants’ anticompetitive conduct

restricted competition within a relevant market. Our Court defines the relevant

market as “all products reasonably interchangeable by consumers for the same

purposes.” United States v. Am. Express Co.,

(2d Cir. 2016)

(citation and quotation marks omitted); see also United States v. E.I. du Pont de

Nemours & Co.,

(1956). At the motion-to-dismiss stage, a

plaintiff’s proposed relevant market must “bear a rational relation to the

methodology courts prescribe to define a market” and include a “plausible

explanation as to why a market should be limited” to exclude possible

substitutes. Todd v. Exxon Corp.,

(2d Cir. 2001) (citation and quotation marks omitted). This is a relatively permissive pleading standard.

To determine the boundaries of a product market, we look to “the

reasonable interchangeability of use or the cross-elasticity of demand between

the product itself and substitutes for it.” Brown Shoe Co. v. United States,

(1962). Two products are reasonably interchangeable where there is

“sufficient cross-elasticity of demand”—that is, where “consumers would

respond to a slight increase in the price of one product by switching to another

product.” Todd,

-02 (quoting AD/SAT v. Associated Press,

(2d Cir. 1999)); see also US Airways, Inc. v. Sabre Holdings Corp.,

, 64 (2d Cir. 2019).

Our Court has evaluated interchangeability by, for instance, “imagining

that a hypothetical monopolist has imposed a small but significant non-

transitory increase in price (‘SSNIP’) within the proposed market.” Am. Express,

. If the hypothetical monopolist can impose a SSNIP without

losing so many sales to other products as to render the SSNIP unprofitable, then

the proposed market is the relevant market.

Courts also often look to

“practical indicia” of market boundaries to identify whether two products are

economic substitutes and compete within the same antitrust market. Brown Shoe,

. These indicia can include “industry or public recognition of the

[]market as a separate economic entity, the product’s peculiar characteristics and

uses, unique production facilities, distinct customers, distinct prices, sensitivity

to price changes, and specialized vendors.”

(setting forth the “Brown Shoe

factors”); see also US Airways, 938 F.3d at 64-65 (enumerating and applying the

Brown Shoe factors); Geneva Pharms. Tech. Corp. v. Barr Labs., Inc.,

,

496-99 (2d Cir. 2004) (applying Brown Shoe factors, including different

distribution chains, industry recognition, and lack of supply substitution, to

determine the bounds of an antitrust market); PepsiCo, Inc. v. Coca-Cola Co.,

(2d Cir. 2002) (same).

The Supreme Court has cautioned that identifying the scope of a relevant

market requires resolving empirical questions that “can be determined only after

a factual inquiry into the commercial realities faced by consumers.” Eastman

Kodak Co. v. Image Tech. Servs., Inc.,

(1992) (citation and

quotation marks omitted). Accordingly, we have recognized that “market

definition is a deeply fact-intensive inquiry,” and that courts therefore “hesitate

to grant motions to dismiss for failure to plead a relevant product market.”

Chapman v. New York State Div. for Youth,

(2d Cir. 2008) (citation and quotation marks omitted). Motions to dismiss should generally not be

granted in such cases except “[w]here the plaintiff fails to define its proposed

relevant market with reference to the rule of reasonable interchangeability and

cross-elasticity of demand, or alleges a proposed relevant market that clearly

does not encompass all interchangeable substitute products.”

(alteration in

original) (quoting Queen City Pizza, Inc. v. Domino’s Pizza, Inc.,

, 436

(3d Cir. 1997)).

Where a plaintiff pleads facts plausibly showing that two products should

be considered part of distinct antitrust markets, those proposed markets are not

to be rejected simply because a court believes the plaintiff is unintuitively

separating products that might have real-world functional similarities into

different relevant markets. Rather, the applicable analysis is whether or not the

products are economic substitutes, not whether they appear to be functionally

similar. This analysis turns on economic differences, such as a lack of cross-

elasticity of demand or reasonable interchangeability among products. See Todd,

; Brown Shoe,

.

In dismissing Regeneron’s proposed PFS-only market, the district court

erred by focusing too heavily on the functional similarities between anti-VEGF vials and PFSs, rather than on the extent to which consumers are willing to

substitute one for the other.

The district court posited that it would be “strange” to limit the relevant

market to anti-VEGF PFSs “when the same drug comes in a vial as well.”

Novartis Pharma AG, 582 F. Supp. 3d at 41. Accordingly, it rejected Regeneron’s

proposed market for three reasons. First, the court concluded that PFSs are only

“marginally superior” to vials and rejected Regeneron’s allegations that PFSs

have performance-based and safety advantages over vials. Id. at 42. Second, it

concluded that differences in the equipment required to produce PFSs and vials

“say[] nothing about whether a consumer would find a vial and PFS

interchangeable.” Id. at 41. And third, it concluded that Regeneron’s allegations

that a SSNIP in anti-VEGF PFSs would not cause consumers to substitute PFSs

for vials could not establish the proposed relevant market because a “small boost

in usefulness will often be valuable enough to merit some heightened costs.” Id.

These considerations led the court to conclude that Regeneron had not

“meaningfully explain[ed]” why anti-VEGF vials are not reasonable substitutes

for anti-VEGF PFSs. Id. at 42.

We disagree with these conclusions. The fact that vials and PFSs contain the same medicines and treat the same condition does not automatically mean

that they compete in the same market. In Geneva Pharmaceuticals, we held that a

drug manufacturer plausibly alleged that the market for the generic version of a

blood-thinning drug was distinct from the market for the name-brand version of

the drug—even though the two were functionally the same. 386 F.3d at 496. We

explained that while functional interchangeability is a prima facie indication that

two products may be in the same antitrust market, other economic factors may

nonetheless restrict the cross-elasticity of demand between two products and

confine them to different product markets. Id. at 496-97; cf. FTC v. AbbVie Inc.,

(3d Cir. 2020) (same). For instance, the substantially higher

prices for the name-brand version of the drug in that case, we concluded showed

customer allegiance and inelastic demand, even in the face of a generic

alternative. Geneva Pharms., 386 F.3d at 497. We also relied on several additional

differences between the name-brand and generic versions—for example, the fact

that risk sensitive patients tended to prefer the name-brand version and the

different supply chains used for distribution of the name-brand and generic

versions—to conclude that they were part of distinct markets. Id. at 497-98. The same principles apply in this case.

The district court here should have focused on whether Regeneron alleges

that the PFSs and vials are not economic substitutes under established legal

frameworks such as the “hypothetical monopolist” test or the Brown Shoe

factors. 8 See Am. Express,

; Brown Shoe,

. Regeneron

plainly does so.

As to the hypothetical monopolist test, the Amended Complaint alleges

that physicians have a “strong preference” for PFSs and that a “small, but

significant, price increase in the PFS version would not cause physicians to

substitute the vial version for PFS (even if they contain the same underlying anti-

VEGF).” J. App’x at 419-20 (Am. Cmplt. ¶ 200). Regeneron supports this

contention by pleading that more than 80% of patients on anti-VEGF treatment

courses transitioned from vials to PFSs due to their superiority.

(Am.

Cmplt. ¶ 188). These allegations indicate an inelasticity of demand for PFSs vis-

à-vis vials. Indeed, at this stage of the litigation, like in Geneva Pharmaceuticals,

8Our Court has emphasized that market definition turns on “the actual dynamics of the market rather than rote application of any formula.” Geneva Pharms., 386 F.3d at 496. Thus, so long as an antitrust plaintiff adequately references one or more of the legal frameworks we have recognized as supporting a proposed market, “there is no requirement to use any specific methodology.” Optronic Techs., Inc. v. Ningbo Sunny Elec. Co.,

(9th Cir. 2021). Regeneron’s allegations plausibly establish that anti-VEGF PFSs compete in a

wholly separate market from vials. Regeneron alleges that the ability of patients

or physicians to switch from PFSs to vials does not “restrain a [PFS] firm’s ability

to raise prices above the competitive level” because PFSs and vials are not

viewed as economic substitutes—even if they are functional substitutes. Geneva

Pharms., 386 F.3d at 496. The district court did not properly credit these

allegations.

As to the Brown Shoe factors, Regeneron’s Amended Complaint includes

several references to the “practical indicia” identified by the Supreme Court as

relevant to a proposed market definition. See Brown Shoe,

. For

example, Regeneron alleges that anti-VEGF PFSs require “unique production

facilities and capabilities that are distinct from those required to manufacture

anti-VEGF vials.” J. App’x at 419 (Am. Cmplt. ¶ 199). Regeneron also alleges

that “industry recognition” and “particular characteristics and uses”—such as

methods of administration, accuracy, and convenience—differentiate anti-VEGF

PFSs from vials.

(Am. Cmplt. ¶¶ 96, 224, 235, 253).

These allegations, particularly when combined with those relating to SSNIP,

convince us that Regeneron has provided a plausible explanation as to why the relevant market should be limited to anti-VEGF PFSs.

B. Effect of a Patent on a Proposed Antitrust Market

The district court also justified dismissal of Regeneron’s Section 2 Walker

Process claims based on the overlap between Regeneron’s proposed market and

the protections afforded to Novartis by the ’631 Patent. 9 It concluded that an

antitrust market cannot be coextensive with a patent because this would mean

that “all patents would immediately confer complete monopoly power.”

Novartis Pharma AG, 582 F. Supp. 3d at 42. The court therefore held Regeneron to

a heightened pleading standard, requiring it to show that “the subject of [the]

patent is so novel that there really is no fitting substitute.” Id. This reasoning

was flawed.

The appropriate inquiry into whether a patent confers monopoly power is

9 As our Court has explained, the Supreme Court’s Walker Process decision enables a plaintiff to assert antitrust claims when the relevant patent giving rise to allegedly anticompetitive conduct was fraudulently procured. See In re DDAVP Direct Purchaser Antitrust Litig.,

(2d Cir. 2009) (citing Walker Process,

); Ritz Camera & Image, LLC v. SanDisk Corp.,

(Fed. Cir. 2012) (“The Supreme Court in [Walker Process] held that antitrust liability may attach when a party uses a patent to obtain or preserve a monopoly if the patent was procured through intentional fraud on the Patent and Trademark Office.”). Fraud in this context “requires (1) a false representation or deliberate omission of a fact material to patentability, (2) made with the intent to deceive the patent examiner, (3) on which the examiner justifiably relied in granting the patent, (4) but for which misrepresentation or deliberate omission the patent would not have been granted.” In re DDAVP,

(citing C.R. Bard, Inc. v. M3 Sys., Inc.,

(Fed. Cir. 1998)). whether there are “effective substitutes for the [product] which do not infringe

the patent.” Walker Process,

. Whether and to what extent a patent

confers monopoly power is “a matter of proof” that must be assessed using the

same principles that courts typically apply in antitrust cases. Id.; see Illinois Tool

Works Inc. v. Indep. Ink, Inc.,

(2006) (“[A] patent does not

necessarily confer market power upon the patentee.”). As discussed above, this

is a “deeply fact-intensive” inquiry that requires consideration of the factors that

might affect the cross-elasticity of demand and reasonable interchangeability

between two products. Todd,

; see also US Airways, 938 F.3d at 64.

Regeneron’s allegations plausibly demonstrate that anti-VEGF PFSs and vials are

not reasonably interchangeable and are consequently not part of the same

product market.

The district court reasoned that if a relevant market were coextensive with

the scope of a patent, then each of the three elements of an attempted

monopolization claim—anticompetitive conduct, specific intent to monopolize,

and a dangerous probability of achieving monopoly power—“would be met as a

matter of course.” Novartis Pharma AG, 582 F. Supp. 3d at 42. However, where,

as here, an antitrust plaintiff alleges that a patent was fraudulently obtained and the patent holder garnered monopoly power as a result of that fraud, a court

must “appraise the exclusionary power of the illegal patent claim in terms of the

relevant market for the product involved.” Walker Process,

. In

other words, once an antitrust plaintiff has demonstrated that a patent was

obtained through fraud, it must separately explain how the fraudulently

obtained patent enabled the defendants to achieve market power within the

relevant market. “Without a definition of that market there is no way to measure

[the defendant’s] ability to lessen or destroy competition.”

Under this framework, the district court should have considered (1)

whether Regeneron adequately pleaded that the ’631 Patent was fraudulently

obtained; and (2) whether Novartis’s and Vetter’s use of that patent conferred

monopoly power in the relevant market. At the motion-to-dismiss stage,

Regeneron’s allegations meet these requirements.

First, the Amended Complaint alleges that the ’631 Patent was

fraudulently obtained. Regeneron alleges that in order to avoid triggering

Regeneron’s rights under the 2005 Agreement with Vetter, Novartis and Vetter

concealed Vetter’s role as a co-inventor from the USPTO—despite being

obligated to disclose that role. See J. App’x at 434 (Am. Cmplt. ¶ 240); see

;

, 1.63. Regeneron alleges that this “deception was

successful, as the USPTO, unaware of the contributions of the Vetter employee(s)

to the inventions claimed in the ’631 Patent, allowed the patent to issue with only

the Novartis employees identified as the named inventors.” J. App’x at 433-34

(Am. Cmplt. ¶ 240). Regeneron further asserts that in prosecuting the ’631

Patent, Novartis, acting “with an intent to deceive,” “deliberately withheld …

prior art and other determinations by the USPTO.”

(Am. Cmplt. ¶

110). Specifically, Regeneron alleges that the ’631 Patent would not have been

granted had the patent examiner been aware of this undisclosed material prior

art.

.

Second, Regeneron alleges that Novartis and Vetter sought to control the

supply of all anti-VEGF PFS treatments both before and after obtaining the ’631

Patent by “jointly agree[ing] to leverage Novartis’s fraudulently procured ’631

Patent to try to coerce Regeneron. . . into long-term exclusive PFS filling

relationships.”

(Am. Cmplt. ¶ 171). Regeneron alleges that Novartis

and Vetter insisted on onerous modifications to Vetter’s 2005 Agreement with

Regeneron after obtaining the ’631 Patent in order to give Vetter total control

over the supply of EYLEA PFS and to enable Novartis to control the supply of “effectively all FDA-approved anti-VEGF PFS treatments.”

(Am.

Cmplt. ¶ 173). Regeneron further alleges that after it refused these demands,

Novartis and Vetter “jointly agreed to cut off Regeneron entirely” from Vetter’s

PFS filling services.

(Am. Cmplt. ¶ 175). According to the Amended

Complaint, these actions allegedly delayed the release of Regeneron’s EYLEA

PFS to 2019 and enabled Novartis to accumulate market power. Accordingly, we

conclude that these allegations plausibly state claims for Section 2 Walker Process

attempted monopolization violations.

II. Tortious Interference with Contract

In addition to its antitrust claims, Regeneron asserts a tortious interference

claim against Novartis under New York law. The district court dismissed this

claim as untimely, and we reverse. Regeneron’s pleadings adequately establish

that Novartis was estopped from asserting a statute of limitations defense

because Novartis and Vetter prevented Regeneron from learning of their secret

arrangement until after the limitations period expired.

Under New York law, a plaintiff claiming tortious interference with

contract must plead (1) “the existence of a valid contract between the plaintiff

and a third party”; (2) the “defendant’s knowledge of that contract”; (3) the “defendant’s intentional procurement of the third-party’s breach of the contract

without justification”; (4) “actual breach of the contract”; and (5) “damages

resulting therefrom.” Rich v. Fox News Network, LLC,

(2d Cir.

2019) (quoting Lama Holding Co. v. Smith Barney Inc.,

(1996)).

Additionally, the “plaintiff must allege that the contract would not have been

breached but for the defendant’s conduct.”

(quoting Burrowes v. Combs,

(1st Dep’t 2006)).

Regeneron alleges that Novartis tortiously interfered in its contract with

Vetter by covertly working with Vetter to fraudulently procure the ’631 Patent

and by preventing Regeneron from obtaining the ownership rights in the Patent

promised to it by the 2005 Agreement. J. App’x at 451-55 (Am. Cmplt. ¶¶ 285-

94). Knowing about this preexisting contract and seeking to circumvent it,

Novartis allegedly “fraudulently conceal[ed] Vetter employees’ inventorship

from the USPTO in order to sabotage Regeneron’s ownership rights.”

(Am.

Cmplt. ¶ 288). Regeneron claims that Novartis “intentionally procured Vetter’s

breach” and injured Regeneron by depriving it of its intellectual property

ownership rights under the 2005 Agreement. Id. at 453-54 (Am. Cmplt. ¶¶ 290,

293). As a consequence, Regeneron was required to spend money and divert resources to develop a new, alternative supply of EYLEA PFS using a different

filler and different assembly processes. See id. at 454 (Am. Cmplt. ¶ 293).

New York provides for a three-year statute of limitations for tortious

interference claims. A plaintiff’s claim accrues “when all elements of the tort can

be truthfully alleged in a complaint.” IDT Corp. v. Morgan Stanley Dean Witter &

Co.,

(2009). Novartis and Vetter argue that Regeneron was

required to bring its tortious interference claim by 2016 because the Amended

Complaint alleges that Regeneron first suffered contractual injury in late 2013

(when Vetter allegedly cut Regeneron off from its filling services, forcing it “to

invest significant time, money, and effort” to find an alternative filler).

Appellees’ Br. at 59 (quoting J. App’x at 404, 408 (Am. Cmplt. ¶¶ 166, 175)).

Regeneron did not commence this action until July 2020.

Notwithstanding the three-year limitations period, New York law

recognizes that a defendant may be equitably estopped from invoking the statute

of limitations “where [the] plaintiff was induced by fraud, misrepresentations or

deception to refrain from filing a timely action.” Zumpano v. Quinn,

(2006) (citation and quotation marks omitted). The doctrine applies if the

plaintiff can show “some conduct on the part of the defendant after the initial wrongdoing” to conceal the fraud. Ross v. Louise Wise Servs.,

(2007); see also Matter of Steyer,

(1988) (equitable estoppel

applies when a defendant refuses to respond to a plaintiff’s efforts “to elicit the

facts”). The plaintiff bears the burden of establishing that the claim was brought

within a reasonable time after the deception came to light. See Simcuski v. Saeli,

, 450 (1978).

Regeneron makes four assertions in support of its equitable estoppel

argument. First, it contends that Novartis “purchased Vetter’s silence and

complicity” by offering Vetter, among other things, a “co-extensive license over

the [’631 Patent] with the right to sub-license.” Appellant’s Br. at 50. Second,

Regeneron argues that “Vetter—acting pursuant to its anticompetitive agreement

with Novartis—refused to disclose the details” of its 2013 agreement with

Novartis when Regeneron asked specifically and repeatedly about the nature of

the agreement.

. Third, Regeneron states that “Novartis further

concealed the fraud,” and therefore its tortious interference, “by transferring to

itself exclusive enforcement authority over the patent,” which enabled Novartis

to pursue patent-related litigation against Regeneron without disclosing Vetter’s

role as a co-inventor.

. And fourth, Regeneron contends that it was able to discover Vetter’s role only “because Novartis was compelled to disclose the

information” in 2020, during discovery in the related patent litigation.

Regeneron then promptly brought this suit. Under New York law, these

allegations are sufficient to estop Novartis from invoking the statute of

limitations as a defense to Regeneron’s tortious interference claim at the motion

to dismiss stage. See Ross,

.

In rejecting Regeneron’s equitable estoppel arguments, the district court

stated that “equitable estoppel is only appropriate where the plaintiff is

prevented from filing an action within the applicable statute of limitations due to

defendants’ misconduct toward the potential plaintiff, not a community at

large.” Novartis Pharma AG, 582 F. Supp. 3d at 43 (citation and quotation marks

omitted). It therefore concluded that Regeneron’s arguments failed because

Novartis and Vetter “sought to deceive the [USPTO] and the market at large” by

concealing Vetter’s inventorship—the alleged fraud was not targeted solely and

directly at Regeneron. Id. at 45.

Our review of New York law finds no support for this proposition. The

notion that a party who has been induced by fraud, misrepresentation, or

deception to violate the statute of limitations cannot invoke equitable estoppel because the defendant sought to deceive other parties in addition to the putative

plaintiff has no basis in New York law. Regeneron’s allegation that it could not

have known that its contractual rights were being violated within the limitations

period because of Novartis’s conduct is supported by detailed, plausible facts.

Indeed, Regeneron alleges that it diligently sought information about the nature

of Vetter’s relationship with Novartis, only for Vetter to refuse to provide that

information, preventing Regeneron from bringing a claim.

We conclude that these allegations were sufficient to permit Regeneron to

invoke equitable estoppel and that the Amended Complaint plausibly alleges a

claim for tortious interference with contract.

CONCLUSION

For the foregoing reasons, we hold that Regeneron’s Amended Complaint

plausibly alleges violations of Section 1 and Section 2 of the Sherman Act and

tortious interference with contract. Accordingly, we REVERSE the judgment of

the district court and REMAND for further proceedings consistent with this

opinion.