Federal Circuit Allows Declaratory Judgment Jurisdiction for Generic Drug Patent Challenges

Teva Pharms. USA v. Novartis Pharms. et al., No. 06-1181 (Fed. Cir. 2007)

For the second time in as many days, the Federal Circuit has decided a case with broad implications for innovator and generic drug companies.  The decision today, in Teva v. Novartis, opens the door to many more lawsuits by generic drug companies seeking declarations of patent invalidity or noninfringement.

The Federal Circuit held as follows:

A justiciable declaratory judgment controversy arises for an ANDA filer when a patentee lists patents in the Orange Book, the ANDA applicant files its ANDA certifying the listed patents under paragraph IV, and the patentee brings an action against the submitted ANDA on one or more of the patents.  The combination of these three circumstances is dispositive in establishing an actual declaratory judgment controversy as to all the paragraph IV certified patents, whether the patentee has sued on all or only some of the paragraph IV certified patents.

In the case, Teva filed an ANDA to market a generic version of Famvir, an antiviral medication.  Novartis then sued Teva for infringing U.S. Patent No. 5,246,937, which covers the active ingredient in Famvir, famciclovir.  Novartis chose not to sue Teva on any of its other four Orange Book-listed patents for Famvir, each of which covers methods of use.  Teva then brought a declaratory judgment action on the four remaining method patents under a provision of the 2003 Medicare Modernization Act entitled "civil action to obtain patent certainty."  The district court dismissed Teva's complaint, and the Federal Circuit has now reversed the dismissal.

The district court dismissed the case pursuant to the Federal Circuit's application of its "reasonable apprehension of suit" test in Teva v. Pfizer.  The Supreme Court's recent decision in MedImmune, however, has forced the Federal Circuit to revisit that test.  Indeed, in today's opinion the Federal Circuit expressly acknowledged that MedImmune overruled the test.

Today's decision eliminates a powerful weapon innovator drug companies had in their ongoing battle against generics: the uncertainty and risk that generics face when considering whether to launch their drug products before patent expiration.  Now, generics in Teva's position will be able to file a declaratory judgment action and obtain a court decision on the validity or infringement of Orange Book-listed patents before deciding whether to launch.

In fact, the court's opinion today suggests that unless an innovator grants a covenant not to sue, the mere listing of a patent in the Orange Book coupled with a paragraph IV certification may be sufficient to establish declaratory judgment jurisdiction.  In other words, generic drug companies may be able to pursue declaratory judgment actions even if the innovator declines to file suit on any of its Orange Book-listed patents.

If that turns out to be true, it would go a long way toward solving a "bottleneck problem," where delay by a 180-day generic exclusivity holder prevents subsequent ANDA filers from launching their generic drugs.

RELATED READING:

• Patently-O; Patent Baristas; Patent Docs
• Feb. 26 OBB post on this case
• Jan. 31 OBB post on a similar DJ case recently filed by Apotex

UPDATES:

• The holding of this case does not bode well for Forest Labs' March 13 motion to dismiss Caraco's DJ complaint in the Lexapro case.

Comments

[Robert Dailey]

The case presents several interesting questions.

First, the holding is only directly binding on cases in which the NDA holder has sued the ANDA filer on at least one of its listed patents within the 45-day window and has refused to issue a covenant not to sue on the unasserted patents. The CAFC recognizes that this practice permits NDA holders to "game" the 30-month stay, i.e., they get the benefits of the 30-month stay while the ANDA filer remains on the hook for infringing the unasserted patents. Hence, the holding does appear to close an apparent loophole in how Hatch-Waxman handles the 30-month stay.

Second, Judge Friedman's concurrence addresses a much broader set of situations. This is perhaps a preview of the question that will be addressed by the pending DJ action filed by Apotex in the Eastern District of Virginia in Norfolk. In that case, gaming of the 30-month stay is not at issue: the NDA holder did not sue Apotex on any listed patent within the 45-day window (but had sued other ANDA filers on the listed patent). So, is Judge Friedman using his concurrence to give the Norfolk court a peek at the CAFC's hand? I guess we'll have to see.

Of course, other questions will remain. What if the NDA holder let the 45-day window pass and had never sued any ANDA filer on the patent? And how would the laches doctrine play out in all of this? Since Congress is in the process of considering legislation on reverse payments under Hatch-Waxman, maybe they should address these Hatch-Waxman issues as well.

[Eric Messersmith]

I thought that the 2003 Medicare Amendments went a long way in solving the bottleneck problem by providing that first to file paragraph IV certification ANDAs would be forfeited upon several critical dates (failure to market, etc.). Is this wrong?