Case 2:20-cv-00337-JRG Document 356 Filed 04/01/22 Page 1 of 13 PageID #: 12643
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`SEAGEN INC.,
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`v.
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`Plaintiff,
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`CASE NO. 2:20-cv-00337-JRG
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`IN THE UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`DAIICHI SANKYO CO., LTD.,
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`Defendant, and
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`ASTRAZENECA PHARMACEUTICALS
`LP and ASTRAZENECA UK LTD.,
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`Intervenor-Defendants.
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`DAIICHI SANKYO COMPANY, LIMITED’S MOTION FOR SANCTIONS
`AGAINST SEAGEN INC. FOR VIOLATIONS
`OF THE COURT’S DISCOVERY ORDER AND PROTECTIVE ORDER
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`Case 2:20-cv-00337-JRG Document 356 Filed 04/01/22 Page 2 of 13 PageID #: 12644
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`INTRODUCTION
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`Plaintiff Seagen Inc. (“Seagen”) recently pursued and obtained from Defendant Daiichi
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`Sankyo Company, Limited (“Daiichi Sankyo Japan”) documents concerning methods to conjugate
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`drug products. Conjugation is a process or synthesis method that can be used to manufacture drug
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`products. Here, such documents are unquestionably irrelevant because the asserted patent claims
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`drug products; it does not claim any process of making drug products, nor does it contain any claim
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`limitations detailing a conjugation process. The law is well-settled that “the process by which a
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`product is made is irrelevant to the question of whether that product infringes a pure apparatus
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`claim.”1
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`On January 6, 2022, Seagen revealed its motivation for seeking such irrelevant documents.
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`Specifically, Seagen filed a motion to reopen a pending, private arbitration between Seagen and
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`Daiichi Sankyo Japan. One of the allegations in the Arbitration (vigorously disputed by Daiichi
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`Sanko Japan) is that Daiichi Sankyo Japan utilized alleged Seagen proprietary
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`. In support of its motion to reopen the Arbitration, Seagen submitted a brief and an
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`accompanying “offer of proof” that both described, detailed, and quoted the confidential Daiichi
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`Sankyo Japan documents and associated deposition testimony from Dr. Koji Morita that Seagen
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`obtained solely through this action. The materials that Seagen used in the Arbitration are four lab
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`notebooks, seven emails, and the deposition transcripts of Dr. Morita from November 30, 2021,
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`December 1, 2021, and January 10, 2022 (collectively the “Texas Discovery Materials”).
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`The Court’s Discovery Order and Protective Order, however, provide that use of discovery
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`materials from this action can be used in another proceeding only after obtaining leave of this
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`1 Baldwin Graphic Sys., Inc. v. Siebert, Inc., 512 F.3d 1338, 1344 (Fed. Cir. 2008).
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`Court.2 Instead of seeking the required leave, Seagen ignored the Court’s orders, used the Texas
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`Discovery Materials in the Arbitration, and continued to use them in a January 12, 2022 Reply
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`brief to the Arbitrator. After that extensive use of the Texas Discovery Materials, Seagen brazenly
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`filed a motion with the Court on January 14, 2022 seeking permission after-the-fact to do what it
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`has already done, i.e., use protected discovery from this case in another proceeding. (See Dkt.
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`272.) And without having obtained the required leave, on January 19, 2022, Seagen further
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`described, detailed, and quoted the Texas Discovery Materials during a hearing in the Arbitration.
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`The Court should not condone Seagen’s blatant violations of this Court’s Discovery Order
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`and Protective Order. As explained in further detail below, Seagen should be sanctioned for its
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`violations. Otherwise, the protective provisions of this Court’s orders would be rendered
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`meaningless and it would encourage litigants to flout this Court’s procedures, rules, and orders.
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`ADDITIONAL RELEVANT BACKGROUND
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`A.
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`Arbitration Between Seagen and Daiichi Sankyo Japan
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`On November 12, 2019, Seagen filed an arbitration demand against Daiichi Sankyo Japan
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`seeking, among other things, patent rights to Daiichi Sankyo Japan’s groundbreaking and
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`lifesaving antibody-drug conjugate, DS-8201. The Arbitration involves a breach of contract claim
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`with different subject matter than the instant patent infringement lawsuit. (See Dkts. 278, 299.)
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`The Arbitration Hearing was declared closed on
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`. Seagen and Daiichi Sankyo
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`Japan agreed that the final award in the Arbitration would be due
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`, after which
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`both Parties agreed to extend the award deadline to
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` upon the Tribunal’s request.3
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`2 (See Dkt. 51 at ¶ 12(b); Dkt. 248. at ¶¶ 6, 8.)
`3 Daiichi Sankyo Japan’s opposition to Seagen’s belated motion for leave to use the Texas Discovery Materials in
`the Arbitration (Dkt. 262) also contains factual background regarding Seagen’s unauthorized use of the Texas
`Discovery Materials. (See Dkt. 278 at 3-4.)
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`The pending Arbitration was all but completed and pending imminent decision, but
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`Seagen’s use of the Texas Discovery Materials in support of its motion to reopen, in an unsolicited
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`reply brief, and during oral argument, caused the Arbitrator to reopen the Arbitration Hearing.4
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`B.
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`The Court’s Discovery Order and Protective Order
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`From the beginning of this action, Seagen and Daiichi Sankyo Japan disputed the use of
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`discovery from this action in another proceeding. Seagen sought, and Daiichi Sankyo Japan
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`opposed, open cross-use among any other proceeding. The Court resolved the parties’ dispute by
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`permitting cross-use, but only upon obtaining leave of this Court. (See Dkt. 51 (Discovery Order)
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`at ¶ 12(b).) The Protective Order similarly prohibits the use of any discovery from this action in
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`any other proceeding without prior leave of this Court. (See Dkt. 248 at ¶¶ 6, 8.)
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`A.
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`The Applicable Legal Standard for Issuing Sanctions
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`ARGUMENT
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`The Court can issue sanctions pursuant to Rule 37(b) against a party that fails to obey the
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`Court’s discovery orders, such as the Discovery Order and Protective Order in this action. See
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`Fed. R. Civ. P. 37(b)(2)(A). “The Court has broad discretion under Rule 37(b) to fashion remedies
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`suited to the misconduct.” CEATS, Inc. v. TicketNetwork, Inc., No. 2:15-cv-01470-JRG, 2021 WL
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`3738847, at *2 (E.D. Tex. Aug. 24, 2021) (internal quotations omitted). The Court can order the
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`breaching party “to pay the reasonable expenses, including attorney’s fees, caused by the failure”
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`(unless the failure was substantially justified or other circumstances make such an award unjust).
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`Fed. R. Civ. P. 37(b)(2)(C). Additionally, the Court’s authority to impose sanctions under Rule
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`4 Daiichi Sankyo Japan vigorously disputed that the Texas Discovery Materials are probative of Seagen’s claims in
`the Arbitration. The Arbitrator did not find that the Texas Discovery Materials supported Seagen’s claims in the
`Arbitration. Instead, the Arbitrator stated that while
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`question. (See Ex. 8.)
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`which requires the Arbitrator to receive and evaluate the evidence in
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`37 may include, without limitation, curative instructions, striking pleadings, and/or finding the
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`violating party to be in contempt of court. Fed. R. Civ. P. 37(b)(2)(A)(i)-(vii).
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`B.
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`Seagen Violated the Discovery Order and Protective Order by Using
`the Texas Discovery Material in the Arbitration Without Leave of Court
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`As detailed in the following sections, Seagen extensively used the Texas Discovery
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`Materials in the Arbitration, specifically in connection with its motion to reopen the Arbitration
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`hearing, its reply in support of that motion, and its oral argument and demonstrative slides
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`presented at the hearing on that motion. Seagen had not obtained leave of Court at any time before
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`using the Texas Discovery Materials in the Arbitration (indeed, as of the time of the filing of this
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`motion, Seagen still has never obtained leave of Court to use the materials in the Arbitration).
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`Accordingly, Seagen’s use was a violation of the Court’s orders. See Jazz Pharms., Inc. v. Amneal
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`Pharms. LLC, Civ. A. No. 13-391(ES) (JAP), 2016 WL 11480203, at *2-4 (D.N.J. Jan. 22, 2016)
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`(finding use of confidential discovery materials from one proceeding to argue for additional
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`discovery in another proceeding violated a protective order); Hydro-Blok USA LLC v. Wedi Corp.,
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`No. C15-671 TSZ, 2017 WL 6513697, at *2 (W.D. Wa. Dec. 20, 2017) (party violated protective
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`order by basing allegations in one proceeding on confidential discovery material obtained in
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`another proceeding); Wolters Kluwer Fin. Servs. Inc. v. Scivantage, No. 07 CV 2352(HB), 2007
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`WL 1498114, at *7-8 (S.D.N.Y. May 23, 2007) (similar). Sanctions are thus warranted against
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`Seagen.
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`1.
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`Seagen Used the Texas Discovery
`Materials in Its Motion to Reopen the Arbitration
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`Seagen’s motion to reopen the Arbitration repeatedly detailed, directly referenced, and
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`described the contents of the Texas Discovery Material, without leave of Court. For example, at
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`page 4 of Seagen’s motion to reopen, it described in specifics deposition testimony Dr. Morita
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`provided on November 30-December 1, 2021 solely in this action:
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`(See Ex. 1 at 4.) Seagen’s purported “offer of proof” submitted alongside its motion to reopen
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`likewise detailed (and mischaracterized) the contents of the Texas Discovery Material. Seagen’s
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`offer of proof described that certain Daiichi Sankyo Japan scientists
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` and that the
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`, noting
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`their purported relevance; and that the contents of Daiichi Sankyo Japan’s scientists’ lab notebooks
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` and information purportedly relevant to the Arbitration. (See Ex.
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`2 at 1-2.)5 Seagen even quoted the lab notebooks. (See id. at 2) All of the cited documents and
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`testimony used were obtained solely from this action.
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`Seagen’s past and anticipated arguments attempting to excuse its failure for requesting
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`leave before using the Texas Discovery Materials are unavailing. For example, Seagen argues that
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`its motion to the Arbitrator did not violate the Court’s orders because it provided only “high-level
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`descriptions of the documents and testimony” to the Arbitrator, citing Milwaukee Elec. Tool Corp.
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`v. Snap-On Inc., No. 14-CV-1296-JPS, 2016 WL 1719657 (E.D. Wis. Mar. 16, 2016). (See Dkt.
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`262 at 3; Dkt. 283 at 3.) First, as demonstrated above, Seagen provided far more than “high-level
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`5 Seagen’s motion and offer of proof (like its subsequent reply, oral argument, and demonstrative slides)
`mischaracterize the Texas Discovery Materials and omit certain context and related materials, and they also assert
`arguments about the interpretation and significance of such materials. While Daiichi Sankyo Japan disputes Seagen’s
`interpretation of, and conclusions regarding, such materials, embedded among Seagen’s argument and
`mischaracterization is the substance of the materials.
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`descriptions” of Daiichi Sankyo Japan’s documents and deposition testimony from Dr. Morita.
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`This fact alone distinguishes Seagen’s conduct from that at issue in Milwaukee, where the plaintiffs
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`merely listed Bates numbers and provided a general description of the documents. See id. at *4.6
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`Second, the Milwaukee court’s rationale is inapplicable here because the protective order in that
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`case was silent as to cross-use and so the court there determined its purpose was to protect against
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`disclosure of commercial secrets rather than to protect against disclosure in other proceedings. But
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`here, the Discovery Order and Protective Order expressly protect against cross-use absent leave of
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`Court. (See Dkt. 51; Dkt. 248.)
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`Seagen also argues that its offer of proof simply “referred to information that had already
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`been presented publicly in this Court’s December 20 hearing.” (Dkt. 283 at 2.) That is incorrect.
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`At the December 20 hearing, the discussion concerned whether, when, and for how long a further
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`deposition of Dr. Morita should occur and whether, when, and to what extent the expert witnesses
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`should be permitted to supplement their opinions based on the production of the lab notebooks;
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`there was no discussion of the details of the Texas Discovery Materials disclosed in Seagen’s
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`motion to reopen the Arbitration. (See generally Tr., Dec. 20, 2021 Hrg.)
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`2.
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`Seagen Used the Texas Discovery Materials in
`Its Reply in Support of Its Motion to Reopen the Arbitration
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`As mentioned above, on January 12, 2022, Seagen submitted a reply in support of its
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`motion to reopen the Arbitration. Seagen’s reply was neither ordered nor requested by the
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`Tribunal. Like its motion, Seagen’s reply described and detailed the contents of the Texas
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`Discovery Materials. In particular, but without limitation, Seagen’s reply attached an eight-page
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`“Exhibit A” that contained direct quotation of approximately 12 pages of the transcript of Dr.
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`6 Indeed, the court in Milwaukee drew a distinction between “the use of knowledge regarding the existence of certain
`documents” (what the plaintiff did in that case) “versus the use of the confidential content within the documents”
`(what Seagen has done here). Id.
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`Morita’s deposition. (See Ex. 3.)
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`As with its motion, Seagen’s past and anticipated arguments attempting to excuse its failure
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`to request leave of this Court are unavailing. Any suggestion that Milwaukee provides cover for
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`Seagen is a misapplication of the law, as the facts in that case are not analogous to those here,
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`where Seagen’s reply extensively directly quoted the transcript of Dr. Morita’s deposition.
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`Seagen has also insinuated that Daiichi Sankyo Japan in its opposition to the motion to
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`reopen engaged in the same self-help that Seagen did. (See Dkt. 262 at 3.) Not so. Instead,
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`because Seagen’s motion to reopen mischaracterized and omitted pertinent context for and
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`portions of the Texas Discovery Materials, Daiichi Sankyo Japan’s opposition included additional
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`material and information. But all such confidential information cited in Daiichi Sankyo Japan’s
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`opposition that was not already part of the Arbitration was Daiichi Sankyo Japan’s information.
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`For example, Daiichi Sankyo Japan cited its own lab notebooks, its own witness’ testimony (Dr.
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`Morita’s), and expert reports concerning its own such information.7 The Discovery Order and
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`Protective Order restrict what a receiving party can do with the other party’s discovery materials
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`when they are obtained solely from this action. Thus, Seagen’s insinuations are unfounded.
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`Seagen has also argued that its use of the Texas Discovery Materials in its reply in the
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`Arbitration does not constitute a violation because Daiichi Sankyo Japan’s opposition “opened the
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`door for the parties to use the materials in the arbitration.” (Dkt. 283 at 3-4.) Seagen notably fails
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`to cite any case law or provision of the Court’s Discovery Order or Protective Order supporting its
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`theory that Daiichi Sankyo Japan’s use of its own information opened the door for Seagen to
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`7 That Dr. Bertozzi’s supplemental report included only Daiichi Sankyo Japan information is confirmed by Seagen
`readily confirming that Daiichi Sankyo Japan, including those employees not designated under the Protective Order,
`could review it without any redaction. (See Ex. 7.)
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`violate the Court’s orders. (See id.) And, indeed, there is none.8 It must be emphasized that
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`Seagen’s failure to seek leave of Court as required begat this entire situation. This is again a
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`remarkable attempt at bootstrapping by Seagen: improperly use and misrepresent discovery from
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`this action in the Arbitration; then, when Daiichi Sankyo Japan is forced to correct Seagen’s
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`misrepresentations, claim that Daiichi Sankyo Japan’s response grants Seagen unfettered ability
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`to quote and otherwise use the materials going forward. Seagen’s conduct warrants sanctions.
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`3.
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`Seagen Used the Texas Discovery Materials During Oral
`Argument Regarding Its Motion to Reopen the Arbitration
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`Seagen continued its use of the Texas Discovery Materials without leave of Court during
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`the January 19, 2022 oral argument on its motion to reopen the Arbitration. For example, Seagen’s
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`counsel in oral argument described the contents of the lab notebooks as well as Seagen’s deposition
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`of Dr. Morita about them, telling the Arbitrator:
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`(See Ex. 4.) Seagen also displayed several demonstrative slides during the oral argument that
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`depicted direct quotations of Dr. Morita’s deposition transcript. (See Ex. 5.)
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`The Arbitrator even raised the concern and question of whether he was permitted to see the
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`discovery materials that Seagen was displaying and discussing, asking
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` (See Ex. 4.) In response, Seagen’s counsel
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` (Id.) That representation was false. For example, Dr. Morita’s
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`8 The Discovery Order and Protective Order require leave of Court for a receiving party to cross-use discovery
`materials it received in this action. Those orders do not prohibit a producing party from using its own materials.
`(See generally Dkt. 51; Dkt. 248.)
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`deposition testimony was never presented in open court. Seagen’s counsel went further and urged
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`an end-run around this Court and its orders: “
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` (Id.)9
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`4.
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`Seagen’s Violations of the Court’s Orders Were Deliberate
`and Have Caused Undue Prejudice to Daiichi Sankyo Japan
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`In its motion to reopen the Arbitration, Seagen acknowledged this Court’s Protective Order
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`and Discovery Order and the requirement to obtain leave of Court. (See Ex. 1 at 1 n.1.) Seagen
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`nevertheless proceeded to use the Texas Discovery Materials without leave. Additionally, Daiichi
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`Sankyo Japan notified Seagen that its motion to reopen violated the Discovery Order and
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`Protective Order (having to ask Seagen to explain any contention to the contrary four times before
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`Seagen responded). (See Ex. 6.) Undeterred, without seeking leave or any clarification from the
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`Court, Seagen proceeded to use the materials to an even greater extent in its reply, and then again
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`in its oral argument and demonstrative slides. Seagen was well aware of its requirement to obtain
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`leave of Court before using the Texas Discovery Material in the Arbitration, yet it ignored that
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`requirement. This constitutes willful misconduct.10 See CEATS, 2021 WL 3738847, at *2 (“The
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`most severe sanctions typically require a finding of bad faith or willful misconduct.”).
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`Meanwhile, Daiichi Sankyo Japan has suffered and continues to suffer undue prejudice
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`9 Additionally, Seagen has attempted to excuse its conduct at the hearing on its motion to reopen by saying it
`“referred only to information that had been previously submitted with the parties’ papers.” (See Dkt. 283 at 2.) That
`is misleading; what Seagen means is that it referred to information that it had previously submitted with its papers.
`However, it was improper for Seagen to have submitted those materials with its papers prior to obtaining leave of
`Court, so this explanation provides no excuse and instead reflects Seagen doubling down on its violation of the
`Court’s orders.
`10 Daiichi Sankyo Japan’s initial perception from Seagen’s filing of this action was that it is an attempted end run
`around the Arbitration’s discovery orders. Several Seagen actions fueled this concern, including heavily negotiated
`and hotly contested Discovery and Protective Orders. (See, e.g., Ex. 9.) It appears Daiichi Sankyo Japan’s concerns
`were not unfounded given Seagen’s improper cross-use and violation of the Court’s orders.
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`from Seagen’s violations. It has incurred fees and costs in bringing Seagen’s violation to the
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`Court’s attention (see Dkt. 278) while responding to Seagen’s efforts to conceal its misconduct by
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`(1) unilaterally declaring Daiichi Sankyo Japan’s motion for leave moot (see Dkt. 296), and
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`(2) offering to not oppose Daiichi Sankyo Japan’s previous motion for leave if Daiichi Sankyo
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`Japan would withdraw its opposition disclosing Seagen’s violations and not pursue this motion for
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`sanctions. Daiichi Sankyo Japan also faces undue prejudice of having relied on the protections of
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`the Court’s orders only to have Seagen potentially violate them directly with no consequence.
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`C.
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`Appropriate Sanctions Include At Least Monetary Sanctions
`and Precluding the Use of the Documents and
`Deposition Testimony Improperly Cross-Used by Seagen
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`Seagen’s repeated violations of the Court’s orders justify at least the imposition of
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`monetary sanctions, including the reasonable expenses, costs, and attorneys’ fees associated with
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`the preparation and filing of this motion and Daiichi Sankyo Japan’s opposition and sur-reply to
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`Seagen’s Motion for Leave (Dkt. 262). See CEATS, 2021WL 3738847, at *11. A monetary
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`sanction alone, however, may “simply set a price on violating the Court’s protective orders in a
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`manner that could cause irreparable, unquantifiable harm.” Id. Accordingly, Daiichi Sankyo
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`Japan also respectfully requests that the Court preclude the use, including at trial, of the documents
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`and deposition testimony cross-used in the Arbitration without obtaining leave of Court. These
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`sanctions—combined with any further sanctions the Court deems appropriate—are (1) tailored to
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`Seagen’s conduct and the undue prejudice to Daiichi Sankyo Japan and (2) apt deterrents for future
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`violations by Seagen and other litigants in this Court.
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`CONCLUSION
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`For the foregoing reasons, Daiichi Sankyo Japan respectfully requests this Court grant
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`Daiichi Sankyo Japan’s motion and impose appropriate sanctions against Seagen.
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`Dated: February 10, 2022
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`Respectfully submitted,
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`/s/ Preston K. Ratliff II
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`Deron R. Dacus
`State Bar No. 00790553
`The Dacus Firm, P.C.
`821 ESE Loop 323, Suite 430
`Tyler, Texas, 75701
`+1 (903) 705-1117
`+1 (903) 581-2543 facsimile
`ddacus@dacusfirm.com
`
`J. Mark Mann
`State Bar No. 12926150
`mark@themannfirm.com
`MANN | TINDEL | THOMPSON
`300 West Main Street
`Henderson, Texas 75652
`(903) 657-8540
`(903) 657-6003 (fax)
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`Attorneys for Defendant Daiichi Sankyo Company,
`Limited
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`OF COUNSEL:
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`Preston K. Ratliff II
`Ashley N. Mays-Williams
`Paul Hastings LLP
`200 Park Avenue
`New York, NY 10166
`(212) 318-6000
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`Jeffrey A. Pade
`Paul Hastings LLP
`2050 M Street NW
`Washington, DC 20036
`(202) 551-1700
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`Attorneys for Defendant Daiichi Sankyo Company,
`Limited
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that all counsel of record who have consented to
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`electronic service are being served with a copy of this document via electronic mail on February
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`10, 2022.
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`/s/ Preston K. Ratliff II
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