Orange Book Blog

Astellas v. Sandoz – Post-Remand Procedural Issues Following At-Risk Launch

    By: Rocco Screnci

Ben recently covered Astellas Pharma, Inc. v. Sandoz Inc., in which the Federal Circuit vacated a district court decision for violating the principle of party presentation. 117 F.4th 1371 (Fed. Cir. 2024). Today’s post focuses on some interesting procedural issues that have since developed on remand.

By way of background, the district court in Astellas found the patent-in-suit invalid under § 101 even though the defendants’ invalidity contentions nowhere raised a § 101 defense and the parties had stipulated to trying only infringement and § 112 invalidity. The Federal Circuit thus vacated and ordered a limited remand to address those issues. But while the appeal was pending, the FDA approved the ANDAs, meaning that the generic manufacturers could launch their competing sustained-release mirabegron tablets. As a result, on remand, Astellas sought to amend its complaint to demand a jury trial and to supplement with infringement claims under 35 §§ 271(a)-(c) based on the generic manufacturers’ post-FDA-approval conduct. The district court, however, denied Astellas’s motion.

As to the infringement claims for the post-approval activities, the district court found that allowing amendment would be “counterproductive to a just, speedy, and inexpensive” disposition. This is because pivoting to a traditional infringement theory would require the parties to conduct additional discovery, address infringement based on the actual products (rather than the ANDA submissions), and assess damages. The district court also reasoned that letting Astellas raise a new infringement theory would contradict the Federal Circuit’s decision, which contemplated a limited remand to decide only the issues “properly raised and adequately supported by the record.” See 117 F.4th at 1379.

As for the jury demand, the court declined to exercise its discretion to empanel a jury to try the ANDA issues for two main reasons. First, the district court explained that Astellas had no Seventh Amendment right to a jury for the ANDA issues because Astellas’s original complaint only sought declaratory and injunctive relief. Second, the district court found that Astellas had waived any jury-trial right on the ANDA issues when it proceeded to a bench trial without objection. According to the court, Astellas made a strategic decision by proceeding with the Hatch-Waxman route—which gave Astellas the chance at an injunction blocking generic entry—rather than letting a claim for damages ripen and thereby suffering real-world economic harm. To this, the court added that the Seventh Amendment does not give litigants “a second bite at the apple” simply because they regret choosing the bench-trial route after an adverse ruling. Slip. op. at 10. That all said, the district court explained that Astellas could still pursue post-launch infringement claims against the generic manufacturers in a separate action. And as the district court emphasized, nothing in its decision would prevent the parties from demanding a jury should Astellas bring those post-launch claims.

Likely unsatisfied with this outcome, Astellas has since urged the court to amend the scheduling order to postpone the trial date and let it present the post-launch evidence to a jury. But unlike the previously denied proposed amended and supplemental complaint, which added infringement claims under §§ 271(a)-(c) that were not ripe at the onset of the case, Astellas’s request to amend the scheduling order premises its request on its prayer for relief in the original complaint under § 271(e)(4)(C). That provision lets a court award “damages or other monetary relief” for infringement under § 271(e)(2) “only if there has been commercial manufacture, use, offer to sell, or sale . . . of an approved drug.” See 35 U.S.C. § 271(e)(4)(C). This framing is seemingly intended to undermine the district court’s stated justification for denying the motion to supplement—that Astellas chose the ANDA route as “a matter of strategy” rather than wait for the more conventional infringement claims to ripen. At the same time, however, the rest of Astellas’s motion echoes the arguments the court rejecting in denying leave to supplement the original complaint and to add a jury demand.

Even so, it seems like Astellas’s recent motion paid off. In response to that motion, the court issued a brief order instructing the parties to submit briefs on how they believe the case should progress, with particular attention to their positions on supplementing the record, bifurcating trial, and conducting a jury trial on damages under § 271(e)(4)(C). It thus appears that the court is somewhat inclined to side with Astellas on supplementation, as the court likely would have denied the motion for the same reasons it denied Astellas leave to amend and supplement its complaint.

But perhaps the most fascinating issue implicated by the court’s order is whether Astellas is entitled to a jury trial because it now seeks monetary relief for infringement. This issue is particularly interesting because caselaw interpreting § 271(e)(4)(C) is scant. And while courts so far have assumed that damages under § 271(e)(4)(C) are no different from those awarded under § 284 for more conventional forms of infringement and thus require a jury trial, others have made compelling arguments that the statutory text mandates that the two damages provisions be treated differently. Robert A. Matthews, 2 Annotated Patent Digest § 10:172.100; Brian D. Coggio & Sandra A. Bresnick, The Right to A Jury Trial in Actions Under the Hatch-Waxman Act, 79 J. Pat. & Trademark Office Soc’y 765, 771-72 (1997). Relevant to Astellas’s recent motion, some have argued that the relief available under § 271(e)(4)(C), though monetary, is equitable because the statute commits the decision to award damages to the court’s discretion. See Coggio & Bresnick, supra, at 777-780.  By contrast, § 284 requires damages be awarded for infringement under §§ 271(a)-(c), and contemplates that a jury—not the court—will usually be responsible for calculating those damages.

I, for one, am uncertain about the right answer to whether as a matter of first principles relief for at-risk launches ought to go to a jury or the bench. It seems logical and consistent with Hatch-Waxman that Congress intended judges, not juries, to decide all issues relating to an infringement claim brought under § 271(e)(2) and craft the relief accordingly. Indeed, the Supreme Court has emphasized how an action under § 271(e)(2) and the accompanying remedies under § 271(e)(4) are “artificial” and intended to “enable the judicial adjudication” of ANDAs. Eli Lilly and Co. v. Medtronic, Inc., 496 U.S. 661, 678 (1990) (emphasis added).  I also tend to agree that the differences between § 271(e)(4) and § 284—not only in language, but in structure—should make some difference in how the two apply. After all, remedies under the former provision appear aimed at preserving the status quo. And because relief preserving the status quo is traditionally associated with equitable relief, not “legal” relief within the scope of the Seventh Amendment, the defendants could fairly argue that a jury trial is not required there. But I also think that the statutory-interpretation argument can cut the other way. Given that damages are the “quintessential legal remedy,” it seems that specifying that “damages” are available under § 271(e)(4)(C) could be dispositive in the Seventh Amendment analysis.

In any event, it will be interesting to see whether the district court will confront these questions in ruling on Astellas’s motion. A ruling that no jury trial is required under § 271(e)(4)(C) will likely favor defendants generally in future cases, as the consensus is that plaintiffs fare better in patent cases when trying them to a jury. I am also interested in the potential preclusive effects of a judgement in the ANDA case on any post-launch infringement claims that Astellas may bring in a separate action. But I plan to explore those in a separate post depending on how the court rules on the pending motions and the merits of the remaining infringement and § 112 issues.

Obviousness-Type Double Patenting for Patent-Term-Adjusted Patents post-Allergan and In re Cellect (2/2)

  by: Rocco J. Screnci

This is the second post in a two-part series on obviousness-type double patenting (“ODP”). Part one summarized the two recent precedential Federal Circuit decisions in this area.

To sum up where last post left off: The Federal Circuit’s decision in Cellect initially seemed to drastically expand the application of ODP, and the Allergan decision limited the broadest readings of Cellect by explaining that later-filed, later-issued patents cannot be used as ODP references against the “first” patent in the family even if patent-term adjustment (“PTA”) awarded for Patent Office delays during prosecution means that the “first” patent expires later. At the same time, Allergan seemingly reaffirmed its earlier ODP cases, including Cellect, in which expiration date controlled the outcome. This leaves a few important takeaways.

First, Allergan did not disturb past cases applying ODP to invalidate later-filed and later-expiring patents. Indeed, Allergan contrasted its facts with those in past cases, like Abbvie Inc. v. Mathilda & Terence Kennedy Inst. of Rheumatology Tr., 764 F.3d 1366 (Fed. Cir. 2014), in which the patentee secured a second, later-expiring patent by filing a continuation that received 750 days more PTA than the first patent in the family, and Gilead Scis., Inc. v. Natco Pharma Ltd., 753 F.3d 1208 (Fed. Cir. 2014), in which the patentee secured a second, later-expiring patent by beginning a new application chain with a later priority date. With that in mind, it is important for defendants to always keep an eye on a plaintiff’s earlier-filed, earlier-expiring patents as potential grounds for invalidity against later-filed, later-expiring patents. And plaintiffs will need to keep its earlier-filed, earlier-patents in mind when developing their prosecution and Orange Book-listing strategies.

Second, Allergan left intact Cellect’s central holding: that the PTA-added expiration date is the expiration date that matters for ODP purposes. It will thus be important for ANDA filers to keep track of not just when Orange Book-listed patents expire, but also when the NDA holder’s other patents expire. What’s more, given that PTE and PTA are treated differently for ODP purposes, ANDA filers will want to account for both PTE- and PTA-added expiration dates when planning their filing strategies. On the flipside, NDA holders will want to consider revisiting their Orange Book-listed patents to see if any terminal disclaimers are necessary for later-filed patents with PTA.

Third, Allergan clarified that issuance date matters in the ODP analysis. This limits the available references that can be asserted to support an ODP defense. Defendants now know that they cannot simply invoke PTA-added expiration dates when arguing invalidity on ODP grounds. That said, the precise contours of Allergan’s holding on that point are a bit unclear.

On one hand, Allergan seems to shut the door on the idea that a later-filed, later-issued “child” patent without PTA can invalidate a “first” or “parent” patent. But that only invites the question of what it means to be a “first” or “parent” patent. Recall that the ODP reference patents in Allergan were not the immediate descendants of the challenged “first” patent in the family. The ODP reference 011 and 709 patents in Allergan were the metaphoric grandchild and great-grandchild, respectively, of the 356 patent. The 011 patent issued on a divisional of an application that itself was a continuation of the 356 patent’s application, and the 709 patent was a continuation of the 011 patent’s application. Indeed, the 356 patent issued before the applications leading to the 011 and 709 patent were filed. And the Federal Circuit emphasized those facts when explaining why the facts in Allergan exemplified why ODP did not apply. As a result, some may construe Allergan as narrowly applying to the precise fact pattern there: The patent issuing from the first nonprovisional application in the family cannot be invalidated by later-issued patents that were applied for only after the first patent issued. This could mean that patents issuing from continuations are still susceptible to attack, or that a different rule applies if the reference patent’s application was copending.

On the other hand, some may read Allergan as foreclosing ODP whenever the later-expiring patent was earlier filed and earlier issued than the would-be reference patents, even if the patents were copending and have different priority chains. This broad reading stems from Allergan’s favorably citing past cases in which the Federal Circuit declined to extend ODP to similar situations. See 111 F.4th at 1370. But those cases were limited to distinct scenarios or expressed their narrow views on ODP only in dicta. See Cellect, 81 F.4th at 1230 (“We do, however, note that the non-asserted claims in the challenged patents are entitled to their full term, including the duly granted PTA, unless they are found to be later-filed obvious variations of earlier-filed, commonly owned claims.”); Novartis AG v. Ezra Ventures LLC, 909 F.3d 1367, 1374 (Fed. Cir. 2018) (“[T]he traditional concern with obviousness-type double patenting” is not raised where “it is the earlier-filed, earlier issued ... patent, not the later-filed, later-issued ... patent, that has the later expiration date”); Novartis Pharms. Corp. v. Breckenridge Pharm. Inc., 909 F.3d 1355, 1366 (Fed. Cir. 2018), (declining to invalidate patent on ODP grounds “[i]n th[e] particular situation where we have an earlier-filed, earlier-issued. . . patent that expires after the later-filed, later-issued . . . patent due to a change in statutory patent term law”).

Of course, the real impact of Allergan is yet to be seen and likely lies somewhere between the narrowest and broadest possible readings. One can imagine a middle-ground approach that forecloses ODP as a form of patent patricide. In other words, the rule from Allergan would bar defendants from pitting later-filed, later-issued patents against the earlier-filed, earlier-issued patents in the same priority chain. This rule would potentially balance the Federal Circuit’s policy concerns about depriving patentees of their original patent terms while leaving room for the courts to curb any gamesmanship that may arise when patentees try to stagger priority chains to secure longer patent terms.

In any event, perhaps the most important takeaway from Allergan is that the Federal Circuit continues to develop its view on ODP case-by-case. In its latest cases addressing ODP, the Federal Circuit has carefully parsed its ODP jurisprudence to determine how ODP ought to apply to the issues on appeal. Allergan continues this trend by limiting earlier ODP cases to their particular facts and by narrowing Cellect to the issue framed by the appellant about how PTA interacts with ODP. This trend is important for two key reasons. First, it shows how critical it is for defendants to continue to identify and raise potential ODP defenses as the law in this area continues to develop, and for plaintiffs to anticipate these arguments when preparing for litigation. Second, it reminds all litigants to consider how they frame arguments. Given some of the Federal Circuit’s concerns in Allergan, perhaps the fact pattern in Cellect could have played out differently had the appellant taken a more moderate approach in urging to reverse the ODP determinations by the Patent Trial and Appeals Board.

Obviousness-Type Double Patenting for Patent-Term-Adjusted Patents post-Allergan and In re Cellect (1/2)

    by: Rocco J. Screnci

This post is the first in a two-part series about recent developments in the law of double patenting. This post provides relevant background and summarizes the Federal Circuit’s recent decisions in In re Cellect, 81 F.4th 1216 (Fed. Cir. 2023) and Allergan USA, Inc. v. MSN Laboratories Priv. Ltd., 111 F.4th 1358 (Fed. Cir. 2024). For those already familiar with the decisions, please feel free to move on to the next post in this series, which discusses the potential implications of these cases for Orange Book patents.

The doctrine of obviousness-type double patenting (“ODP”) is judge made and bars a patentee from securing multiple patents with different expirations for patentably indistinct (i.e., obvious) variants of the same invention. The doctrine developed to address gamesmanship that arose under earlier versions of the patent act when patent applications were not published and when expiration dates were determined by the issuance dates. ODP was thus needed to combat “submarine” patents, a practice by which patentees maintained a chain of secret applications before drafting patentably indistinct claims on a competing product long after the original patent had expired. But submarine patents are now a relic of the past. This is because applications are published and because filing date—not issuance date—determines patent term. Even so, ODP still persists as an invalidity defense when two patents claiming patentably indistinct subject matter expire at different times.

In fact, the law on ODP is dynamic as ever. Last year, in In re Cellect, the Federal Circuit explained for the first time how ODP interacts with patents that have received a patent-term adjustment (“PTA”) for delays during prosecution. The patentee in Cellect had secured a web of patents with a shared priority date, but having different PTAs and thus different expiration dates as depicted in the following timeline. Several patents were challenged on ODP grounds in petitions for ex parte reexamination. Because each of the challenged patents were patentably indistinct from the reference patents (as shown in the table below), the sole issue was what expiration date mattered when analyzing ODP.

Challenged Patent	ODP Reference Patent
742	369
369	036
626	369
621	626

The patentee relied on earlier decisions that had held that ODP challenges to patents with patent-term extensions (“PTE”)—additional patent term awarded to certain drug or medical device patents due to time spent awaiting FDA approval—must use the expiration date before accounting for any PTE. In other words, if there are no ODP concerns for a patent’s original patent term, it can enjoy its full original patent term plus PTE. The patentee in Cellect argued that the same rule should apply for PTA, but the Federal Circuit disagreed. As a result, each patents was held invalid on ODP grounds.

Many saw Cellect as a drastic expansion of ODP. While some took issue with the disparate treatment of PTE and PTA when evaluating ODP, the bigger concern was the Cellect seemingly stood for the premise that PTA-added expiration date—and that expiration date alone—is all that matters for ODP purposes. This would mean that later-filed, later-issued patents could invalidate earlier-filed, earlier-issued patents simply because the earlier patent received PTA and the later patents did not. That rule would be surprising because it would create an invalidity defense that escapes prosecution. Usually, the Patent Office catches ODP concerns during examination of later-filed patent that claim obvious variants of previously issued patents. To overcome an ODP rejection, the applicant must file a terminal disclaimer, which ties expiration date of the later-filed claims to those of the earlier-filed claims. But a broad reading of Cellect would flip that scenario on its head, meaning that issued patents could have their patent terms truncated if later continuations received less PTA. And because earlier Federal Circuit decisions prevent patentees from terminally disclaiming to already-expired patents, that broad reading would mean that it was too late to save some otherwise valid patents. This reading would be even more impactful given that Cellect arose from ex parte reexaminations.

Ex parte reexamination is a post-grant proceeding in which the Patent Office reopens patent prosecution if a petition for reexamination identifies a "substantial new question of patentability." While the petitioner in an ex parte reexamination has less involvement in proceedings than its counterpart in inter partes review ("IPR"), ex parte reexamination has some noteworthy advantages over IPR. For one, IPR has tighter filing deadlines and limits challenges to novelty and obviousness based on printed prior art (i.e., patents and publications). A petition for ex parte reexamination, by contrast may be filed any time before the patent expires and also may raise ODP as an invalidity ground. The generous filing deadline makes ex parte reexamination a particularly powerful tool in the ODP context because it means that a party can wait until after the reference patents expire to challenge a patent on ODP grounds, leaving the patentee no time to file a terminal disclaimer to overcome ODP. With that in mind, a broad interpretation of Cellect would empower defendants to invalidate an entire patent simply by waiting until it is too late to cure ODP with a terminal disclaimer.

At least one district court endorsed that broad reading of Cellect. In Allergan v. MSN Laboratories, the district court applied ODP to invalidate Allergan’s Orange Book-listed 356 patent covering eluxadoline, a drug used to treat IBS-D sold under the brand name Viberzi®. The district court found that the 356 patent was patentably indistinct from Allergan’s two earlier-expiring patents in the same patent family that also claimed eluxadoline. Relying on Cellect, the district court said it was irrelevant that the 011 and 709 patents were later-filed, later-issued descendants of the 356 patent. The district court read Cellect for the broad proposition that “[w]hen analyzing ODP, a court compares patent expiration dates, rather than filing or issuance dates…[N]o exception[s].” Allergan USA, Inc. v. MSN Laboratories Priv. Ltd., 694 F. Supp. 3d 511, 540 (D. Del. 2023).

But in late-August, the Federal Circuit explained that Cellect is not so broad. In a precedential decision, the Federal Circuit reversed the district court in Allergan v. MSN Laboratories, 111 F.4th 1358 (Fed. Cir. 2024). The court explained that Cellect addressed only the narrow issue about how ODP interacts with PTA. “Cellect does not address,” the court continued, the threshold issue about when a patent “can properly serve as an ODP reference.” Allergan, 111 F.4th at 1368. The court then concluded that the 011 and 709 patents could not be asserted as ODP references against the 356 patent because the 356 patent was the “first” patent to cover eluxadoline. There was thus no concern that Allergan tried to prolong its monopoly on eluxadoline beyond the original patent term because the first-issued, first-filed 356 patent—not the later-filed, later-issued 011 and 709 patents—dictated that patent term. Put another way, the Federal Circuit declined to let a “second” patent truncate the effective patent term of the “first” patent.

The Federal Circuit also took time to address pre-Cellect cases that seemingly stood for the proposition that patent filing dates are irrelevant when analyzing ODP. The court distinguished those cases by explaining that they confronted different scenarios. Those cases, the court explained, each involved later-expiring patents that, at a minimum, were filed after the ODP reference patents. According to the court, those cases presented the opportunities for gamesmanship that ODP seeks to prevent. By contrast, the facts in Allergan presented, as the court put it, “‘a prime example’ of when ODP does not apply.” 111 F.4th at 1371. Because the 011 and 709 patents did not exist when the 356 patent issued, the 356 patent in no way “result[ed] in an extension of patent term of the invention[s] claimed in the [011 and 709] patent[s].” Id. In other words, the court recognized that letting the later-filed, later-issued patents invalidate the "first" patent would defy the rationale underlying ODP, which is to prevent a patentee from using serial continuations to prolong a patent monopoly. If later-filed, later-issued patents could serve as ODP reference patents, patentees would effectively be forced to forgo PTA or cease filing continuations altogether.

While Allergan seems to have reined in Cellect’s impact, the Federal Circuit still left intact most pre-Cellect caselaw. Part two of this post explores what this means for Orange Book patents. It also identifies a few ambiguities in Allergan and their potential implications.

Federal Circuit Dramatically Narrows Scope of Proper Venue in Paragraph IV Litigation

Valeant v. Mylan, No. 19-2402 (Fed. Cir.)

    by Alex Menchaca

In a precedential decision last week, the Federal Circuit settled how the Supreme Court's TC Heartland decision bears on venue issues in Hatch-Waxman litigation. Valeant details the court's pre-TC Heartland patent venue jurisprudence when venue for patent infringement cases could be established by showing personal jurisdiction—i.e., for large corporations, virtually anywhere in the United States. Valeant further explains how the court's Acorda decision, addressing specific personal jurisdiction in ANDA cases, led to a wide-open venue analysis. In Acorda, the Federal Circuit had held that "planned future acts were sufficient to justify the exercise of specific personal jurisdiction over a defendant in ANDA cases." As noted, pre-TC Heartland wherever there was personal jurisdiction, there was venue.

Valeant settles that venue in Hatch-Waxman litigation must follow the example of TC Heartland and its narrow reading of 35 U.S.C. § 1400(b). The patent venue statute provides for establishing venue in two ways: (i) where a defendant resides or (ii) where the defendant has committed acts of infringement and has an established place of business. TC Heartland established that for purposes of this statute a defendant resides only in its place of incorporation, thus eliminating the pre-TC Heartland wide-open venue analysis based on a mere showing of personal jurisdiction. With the first prong of the venue statute narrowed by TC Heartland, patent owners relied on the second prong to litigate in their favored districts—in ANDA cases often New Jersey and Delaware. Valeant addresses the second prong of the patent venue statute and greatly narrows its reach, likely limiting access to those favored districts.

Before Valeant, district courts struggled to define what was the "act of infringement" in an ANDA case for purposes of the venue statute. In Valeant, the Federal Circuit examines two district court decisions—one from Delaware and the other from New Jersey—that conclude potential future nationwide sales of the generic product may be considered the act of infringement for purposes of establishing venue. Such an analysis subjects the ANDA applicant to nationwide venue. The Federal Circuit, however, rejects that analysis and instead defines a much more narrow conduct that may constitute the act of infringement for venue purposes: "it is the submission of the ANDA, and only the submission, that constitutes an act of infringement." Therefore, when a patent owner seeks to establish venue by alleging a local act of infringement (35 U.S.C. § 1400(b)), only the submission qualifies as such an act and not some potential future plans to sell the ANDA product throughout the United States. In Valeant, the ANDA was sent from West Virginia for filing with the FDA in Maryland. West Virginia (and perhaps Maryland (question not considered)) is the proper venue in this case. This decision dramatically restricts the scope of proper venue for U.S.-based ANDA filers, and will likely lead to a dispersal of ANDA cases outside of Delaware and New Jersey in the future.

Interestingly, the Federal Circuit criticizes the characterization of 35 U.S.C. § 271(e)(2) infringement as an "artificial act of infringement." The statute defines what constitutes infringement and the ANDA filing is simply another form of infringement, according to the court. Perhaps this criticism will remove the phrase "artificial act of infringement" from patent bar parlance.

Also interesting is the Federal Circuit's discussion of Acorda. As noted above, Acorda established specific personal jurisdiction based on "planned future acts." In limiting "acts of infringement" to the sending and filing of the ANDA, Valeant criticized consideration of "planned future acts" in venue considerations. Acorda appears inconsistent with Valeant, but the Federal Circuit may not need to address that inconsistency because Valeant’s clear-cut venue rule may short-circuit any consideration of specific personal jurisdiction issues.

Split Federal Circuit Panel Reinstates Jury Verdict of Induced Infringement in Coreg (carvedilol) Case

GlaxoSmithKline v. Teva, No. 18-1976 (Fed. Cir. 2020)

     by Alex Menchaca

In our last post, we reported that Chief Judge Stark of the District of Delaware granted Judgment as a Matter of Law of no induced infringement in a case concerning Coreg® (carvedilol) tablets, wiping away a $200 million jury verdict in favor of GSK and against Teva.

In a precedential decision on October 2nd, a split Federal Circuit panel reversed that judgment, finding that the jury verdict was supported by substantial evidence. Judge Newman, joined by Judge Moore, wrote the majority opinion. Chief Judge Prost dissented.

This note addresses primarily the Federal Circuit's treatment of Teva's "skinny label" as evidence of inducement. Teva sold with a skinny label from September 2007 until April 2011 and with a full label after April 2011. At the end of this note (in case you want to skip the juicy details), we state our hopes for the next steps in this case.

A skinny label alone cannot support a determination of induced infringement. Warner-Lambert Co. v. Apotex Corp., 316 F.3d 1348, 1364-65 (Fed. Cir. 2003) ("the request to make and sell a drug labeled with a permissible (non-infringing) use cannot reasonably be interpreted as an act of infringement (induced or otherwise) with respect to a patent on an unapproved use, as the ANDA does not induce anyone to perform the unapproved acts required to infringe.").

The question then is what was the additional evidence, as evaluated by the Federal Circuit, that justified a jury verdict of induced infringement. That additional evidence had to show "an affirmative act to encourage infringement with the knowledge that the induced acts constitute patent infringement." Power Integrations, Inc. v. Fairchild Semiconductor Int'l, Inc., 843 F.3d 1315, 1332 (Fed. Cir. 2016)).

The claim at issue included detailed instructions for administering the drug:

1. A method of decreasing mortality caused by congestive heart failure in a patient in need thereof which comprises administering a therapeutically acceptable amount of carvedilol in conjunction with one or more other therapeutic agents, said agents being selected from the group consisting of an angiotensin converting enzyme inhibitor (ACE), a diuretic, and digoxin,

wherein the administering comprises administering to said patient daily maintenance dosages for a maintenance period to decrease a risk of mortality caused by congestive heart failure, and said maintenance period is greater than six months.

According to the claim, there must be daily administering for a period greater than six months. If there is no daily administering, there is no infringement. If there is no six months of administering, there is no infringement. And, if Teva did not undertake an affirmative act to induce those administering claim limitations, there is no induced infringement. Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 766 (2011) ("we now hold that induced infringement under § 271(b) requires knowledge that the induced acts constitute patent infringement."); Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1219 (Fed. Cir. 2014) ("In order to prove induced infringement, the patentee must show that the alleged infringer performs, or induces another party to perform, every single step in the method.")

So what evidence did the Federal Circuit identify that the jury relied on as an affirmative act by Teva to induce physicians to undertake daily administering for greater than six months? Spoiler – it's really hard to find.

The evidence introduced at trial and referenced by the Federal Circuit is described below with discussion from both the majority and the dissent. There is a lot of discussion for some of the evidence, so we limited our recitation to the best quotes (unless indicated otherwise the below are direct quotes from the opinion):

A general statement by the majority: "Teva’s promotional materials referred to Teva’s carvedilol tablets as AB rated equivalents of the Coreg® tablets."

Majority

• [GSK's expert], testified that doctors are "completely reliant" on information provided by the generic producers, and that doctors receive Teva’s product catalogs, visit its website, and read its product guides.

Dissent

• [I]n closing arguments to the jury, GSK's counsel acknowledged that "the fact that Teva said they were AB rated isn’t enough to prove inducement . . . . [W]e have to show you more than just the AB rating."
• In marketing its generic carvedilol, Teva never stated that it was approved, or could be used, to treat CHF. In fact, the record suggests Teva hardly marketed its generic at all.
• [E]ven if Teva's documents suggested using its carvedilol products to treat CHF, which they do not, such a suggestion would not be enough to induce infringement of the ’000 patent. ([GSK's doctor expert]agree[d] that not every CHF patient treated with carvedilol infringes the claimed method). 

Teva June 9, 2004 press release describing Teva’s carvedilol as the "AB-rated generic equivalent of GSK's Coreg® tablets."

Majority

• [GSK's expert] testified that he saw the 2004 press release, in which "Teva is telling doctors that they had received tentative approval for generic carvedilol, and that its final approval is anticipated in 2007."
• He testified that Teva was telling him, as a physician, that Teva was "expecting to have a generic version of GlaxoSmithKline Coreg that is AB rated, and that it is indicated for the treatment of heart failure."

Dissent

• [The 2004 press release was] published before the '000 patent issued in 2008 and therefore cannot alone be an act of infringement.
• [T]he 2004 press release . . . reports only "tentative approval." . . . The suggestion that a practicing physician would (or should) rely on an announcement for "tentative approval" in making prescribing decisions over three years in the future seems unlikely.
• GSK's counsel acknowledged that "the fact that Teva said they were AB rated isn't enough to prove inducement."

Teva's 2007 press release remained on Teva's website; screenshot bearing the date "4/14/2015" with the caption . . . “Teva Announces Approval and Shipment of Generic Coreg® Tablets”

Majority

• [GSK's expert] told the jury that [the 2007 press] release "indicates that we should be able to prescribe generic carvedilol for heart failure."
• [T]he 2007 press release remained on Teva's website throughout the life of the '000 patent [which the Federal Circuit characterized as] continued affirmative promotion of its carvedilol tablet as the AB generic equivalent of Coreg®.

Dissent

• Teva's short [2007] press release stated that it had been granted "final approval . . . to market . . . Generic . . . Coreg® (Carvedilol) Tablets."
• [The 2007 press release was] published before the '000 patent issued in 2008 and therefore cannot alone be an act of infringement.
• [P]assive maintenance of the pre-issuance press releases [on the Teva website] is not an affirmative act of inducement.
• Teva's press releases . . . do not promote treating CHF at all.

Teva Spring 2008 Product Catalog [listing the AB rating of Teva's carvedilol]

Majority

• [GSK's expert] testified that Teva's Spring 2008 catalog lists Teva's carvedilol tablets next to Coreg® tablets and uses the phrase "AB rating," and that this would lead a doctor to believe that "they're therapeutically interchangeable."
• GSK [regulatory expert] . . . explained the drug approval process, and explained that the AB-rating means that "if the generic drug is used in accordance with its label, you would expect it to have the same clinical effect" as the brand drug. She introduced Teva's product catalogs that "list the AB ratings and they compare Teva's carvedilol with Coreg on that table with carvedilol on the left and Coreg on the right,"

Dissent

• The product catalogs likewise said nothing about the product’s indications.
• GSK's counsel acknowledged that "the fact that Teva said they were AB rated isn’t enough to prove inducement."
• GSK's [regulatory expert] testified that AB rating "is an indication that the product is therapeutically equivalent when used as labeled" and [not] with respect to the off-label uses."

None of the cited evidence supports a finding of an affirmative act by Teva to induce physicians to undertake the administering steps. As the dissent notes, "the Majority seems to rely on references to Teva's 'AB rating' or therapeutic equivalence as evidence of inducement." But that also cannot support induced infringement by Teva, GSK's counsel acknowledged that.

With respect to the full label period, the only additional evidence was the full label and product reference guides. The reference guides stated nothing more than that Teva's generic was "AB Rated and bioequivalent to Coreg® Tablets." The full label included reference to treatment of CHF, but there was no evidence that any doctor even read the full label. Still, it seems to us, not enough.

We think the dissent has the better position. But the dissent overstates the majority's view when it states that the "Majority [holds] that the content of Teva's skinny label can itself establish inducement." The majority did not really say that, generally stating: "[p]recedent has recognized that the content of the product label is evidence of inducement to infringe" (citing cases).

The real problem in the majority opinion is that it conflates its treatment of the skinny label period with that of the full label period. The majority lumps the documentary evidence for both periods into one paragraph (Slip Op. pp. 12-13) and glosses over the language distinctions of the labels (Slip Op. pp. 16-17). Perhaps that is why the dissent understood the majority opinion to "nullif[y] Congress's statutory provision for skinny labels—creating liability for inducement where there should be none."

What would we like to see happen in this case? We would like to see the panel or the en banc Federal Circuit revisit this opinion and clearly break out the skinny label period from the full label period. Everybody involved in the case understood that each period deserved its own treatment; the dissent emphasized that GSK's counsel argued "[n]o label, no inducement." There simply is no evidence to support a finding of induced infringement during the skinny label period. A clear statement to that effect following Supreme Court and Federal Circuit precedent would undo the damage this opinion could do to the rights of ANDA applicants to pursue approval of skinny labels and file Section viii statements rather than paragraph IV certifications.

Regarding the full label period? Based on the evidence detailed in the opinions, we don’t see inducement. But that is what the jury considered and perhaps the Federal Circuit may simply rely on that jury finding.

Judge Stark (D. Del.) Holds Generic Label Including Patented Indication is Insufficient to Prove Inducement

GlaxoSmithKline v. Teva, No. 14-878-LPS-CJB (D. Del.)

    by Aaron F. Barkoff

In an opinion last week, Judge Stark of the District of Delaware granted Teva's motion for judgment as a matter of law that GSK failed to present sufficient evidence to support a jury verdict that Teva induced infringement of U.S. Patent No. RE40,000.  Judge Stark's decision effectively vacates a jury award of more than $200 million to GSK.

Here is an abbreviated chronology of the relevant facts:

• May 1997: GSK obtains FDA approval of Coreg® (carvedilol) tablets for the treatment of congestive heart failure (CHF)
• June 1998: U.S. Patent No. 5,760,069 issues to GSK, claiming a method of treating CHF by administering carvedilol
• March 2002: Teva files an ANDA for carvedilol tablets with a para. III certification to U.S. Patent No. 4,503,067, which claims the carvedilol compound, and a para. IV certification to the '069 patent
• March 2007: the '067 patent expires
• August 2007: Teva amends its para. IV certification against the '069 patent to a section viii statement, carving out the CHF indication from its label and leaving indications for hypertension and left ventricular dysfunction
• September 2007: FDA approves Teva's ANDA; Teva launches generic carvedilol
• January 2008: the '069 patent reissues as the '000 patent
• April 2011: Teva amends its label, adding back the CHF indication, making Teva's label essentially a copy of GSK's full label
• June 2015:  the '000 patent expires

Judge Stark held a seven-day jury trial last year.  The jury found that Teva willfully induced infringement of certain claims of the '000 patent during two time periods: (1) January 2008 to April 2011 (the "skinny label" period); and (2) May 2011 to June 2015 (the "full label" period).  The jury awarded $234 million in lost profits and $1.4 million in reasonable royalty damages to GSK.  The parties then filed post-trial motions.

In granting Teva's motion for JMOL, the court summarized its conclusion as follows:

The Court agrees with Teva that neither sufficient nor substantial evidence supports the jury's finding of inducement.  GSK failed to prove by a preponderance of the evidence that "Teva's alleged inducement, as opposed to other factors, actually caused the physicians [i.e., as a class or even at least one of them] to directly infringe," by prescribing generic carvedilol and to do so for the treatment of mild to severe CHF.  Without proof of causation, which is an essential element of GSK's action, a finding of inducement cannot stand.

The court's decision that no reasonable jury could have found that Teva induced infringement of the '000 patent during the skinny label period is not surprising.  But the court's decision of no inducement during the "full label" period is unexpected.

The court found that many factors--but not Teva's label or marketing materials--caused doctors to prescribe generic carvedilol.  For instance, the court found:

In addition to the knowledge and experience that ordinarily skilled cardiologists had acquired by July 2007 about the benefits of treatment with carvedilol, such doctors had access to American Heart Association and American College of Cardiology guidelines, carvedilol research studies published in the New England Journal of Medicine, The Lancet, and the British Heart Journal, GSK's own Coreg® label and product insert, and GSK's extensive promotional activity--totaling nearly $1 billion--which included sending doctors to hospitals, giving seminars, and detailing, marketing, and advertising Coreg®.

Further, Teva showed that once generic carvedilol entered the market in September 2007, and continuing beyond 2007, doctors continued prescribing carvedilol (be it Coreg® or a generic) in the same manner as they had prior to the generics' entrance, as they based their prescription decisions on the various factors addressed above without relying on Teva's--or any other generic manufacturers'--label.  GSK's expert, Dr. McCullough, testified that he had not read Teva's generic label before he started writing prescriptions for carvedilol.  As GSK concedes, prior to the generics' entrance into the market in 2007, physicians already knew how to use carvedilol for treating CHF.  Three cardiologists testified at trial . . . and all three agreed that even in September 2007, when generic companies (including Teva) began selling carvedilol, doctors relied on guidelines and research, as well as their own experience, in addition to GSK marketing.  None viewed generic labeling, including Teva's label, as impacting prescribing behavior.

As Teva correctly notes, no direct evidence was presented at trial that any doctor was ever induced to infringe the '000 patent by Teva's label (either skinny or full).  There was no direct evidence that Teva's label caused even a single doctor to prescribe generic carvedilol to a patient to treat mild to severe CHF.  Hence, in order to uphold the verdict, the Court must find in the record substantial evidence to render it reasonable for the jury to have inferred that at least one doctor was so induced.  GSK, as the verdict winner, is entitled to the benefit of all reasonable inferences that may be drawn from the evidence presented to the jury.  The Court's determination, however, is that--given the dearth of evidence that doctors read and understand and are affected by labels, and given the vast amount of evidence that doctors' decisions to prescribe carvedilol during the relevant periods were influenced by multiple non-Teva factors--such an inference was an unreasonable one for the jury to have drawn.

The court distinguished more typical ANDA cases that involve a method-of-use patent, in which the patent owner alleges inducement of infringement before a generic launch and the court heavily relies on the proposed ANDA label when evaluating the inducement claim:

For instance, GSK directs the Court to Sanofi v. Watson Laboratories Inc., 875 F.3d 636, for the proposition that the marketing of a generic drug with labeling that encourages infringement can be viewed as causing infringement despite the fact that the innovator company published the results of clinical studies and promoted the patented use.  That case does not persuade the Court to reach a different conclusion than described above.  Sanofi involved the ordinary Hatch-Waxman framework, where a claim of induced infringement is filed before the generic has launched its product, and necessarily, before the generic has even attempted to communicate with any direct infringer.  In those cases, as this Court held during earlier portions of this case, the focus must be on intent, rather than actual inducement.  Here, by contrast, GSK filed its case almost seven years after Defendants launched their generic carvedilol products into the market.  Hence, GSK's inducement claims are not premised on a hypothetical, but instead must be supported by sufficient evidence as to what actually happened during the relevant time period.  This Court has decided that reliance on a label and speculation about what may occur in the future cannot substitute for actual evidence about what has actually occurred in the past when, as in this case, there has been a period of actual, past conduct that is pertinent to infringement.

This case is relatively unique--particularly because it involved an at-risk launch.  It will be interesting to see how the case affects litigation strategies used in other ANDA cases involving method-of-use patents.  And we will certainly be paying attention to the inevitable appeal.

Federal Circuit Holds That Specific Personal Jurisdiction Exists Anywhere an ANDA Applicant Intends to Market its ANDA Product

Acorda Therapeutics v. Mylan Pharms., 2015-1456 (Fed. Cir. March 18, 2016)

AstraZeneca v. Mylan Pharms, 2015-1460 (Fed. Cir. March 18, 2016)

    by Alex Menchaca

Where is an ANDA applicant subject to personal jurisdiction when the only act of infringement is "artificial" infringement under 35 U.S.C. § 271(e)(2)(A)? This question has generated a great deal of interest recently--especially since the Supreme Court's Daimler decision two years ago. In a precedential opinion on Friday, the Federal Circuit answered the question and determined that personal jurisdiction exists in any state where the ANDA applicant intends to market its product--essentially everywhere in the United States.

Mylan filed ANDAs in connection with Ampyra® (dalfampridine), Onglyza® (saxagliptin), and Kombiglyze® (saxagliptin/metformin). Acorda markets Ampyra® for the treatment of multiple sclerosis while AstraZeneca markets Onglyza® and Kombiglyze® for the treatment of type 2 diabetes. Both Acorda and AstraZeneca sued Mylan in Delaware, and Mylan filed motions to dismiss for lack of personal jurisdiction in both cases.

Both motions were denied. In the dalfampridine case, Judge Stark held that Mylan was subject to both general and specific personal jurisdiction. In the saxagliptin case, Judge Sleet held that Mylan was subject to specific personal jurisdiction, but not general personal jurisdiction. Mylan sought and obtained interlocutory review by the Federal Circuit of both of those orders. The appeal attracted six amicus filings, including briefs from GPhA, Teva, BIO, and PhRMA.

The Federal Circuit majority opinion limited its analysis to specific personal jurisdiction. The court began with the rule from International Shoe:  specific personal jurisdiction may be exercised over a defendant "when the defendant has certain minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Further, "the minimum contacts requirement focuses on whether the defendant's suit-related conduct creates a substantial connection with the form State."

In short, the Federal Circuit held that specific personal jurisdiction may be exercised over Mylan because "the minimum-contacts standard is satisfied by the particular actions Mylan has already taken--its ANDA filings--for the purpose of engaging in that injury-causing and allegedly wrongful marketing conduct in Delaware."

The fact that the infringement at issue in the cases was "artificial" infringement under 35 U.S.C. § 271(e)(2)(A) was used by the Federal Circuit to support its holding. The court explained that this statute is directed to the real-world consequence of marketing a generic in competition with the brand name drug: "concrete, non-artificial acts of infringement." Having determined that infringement under section 271(e)(2)(A) carries real-world consequences (and is more than an "artificial" construct), the Federal Circuit analogized the lawsuits against Mylan for intended future actions to "suits for retrospective relief based on past acts" and noted that the Supreme Court has defined minimum contacts in those retrospective contexts:

In a formulation worded to address suits for retrospective relief based on past acts, the Supreme Court has said that the minimum-contacts requirement is met when the defendant "purposefully directed" activities at the forum, and the litigation results from alleged injuries that "arise out of or relate to" those activities.

The Federal Circuit explained that Mylan's ANDA filings constituted activities purposefully directed at Delaware and that the lawsuits resulted from injuries that the plaintiffs would sustain by Mylan's activity:

Mylan's ANDA conduct is "suit-related" and has a "substantial connection" with Delaware because the ANDA filings are tightly tied, in purpose and planned effect, to the deliberate making of sales in Delaware (at least) and the suit is about whether that in-State activity will infringe valid patents. Thus, Mylan's ANDA filings constitute formal acts that reliably indicate plans to engage in marketing of the proposed generic drugs. Delaware is undisputedly a State where Mylan will engage in that marketing if the ANDAs are approved. And the marketing in Delaware that Mylan plans is suit-related: the suits over patent validity and coverage will directly affect when the ANDA can be approved to allow Mylan's Delaware marketing and when such marketing can lawfully take place.

Although the majority opinion did not address the issue of general personal jurisdiction, Judge O'Malley's concurring opinion did. Judge O'Malley wrote that a straightforward application of Supreme Court precedent also establishes general personal jurisdiction in these cases. It may be, however, that the question of general personal jurisdiction is now moot given the court's analysis of specific personal jurisdiction.

Case or Controversy Exists Where Generic Manufacturer Seeks Declaratory Judgment of Non-Infringement of Orange Book-Listed Patent Disclaimed by Brand Manufacturer

Apotex Inc. v. Daiichi Sankyo, Inc., Nos. 2014-1282, 2014-1291 (Fed. Cir. Mar. 31, 2015)

    by Dunstan H. Barnes

Apotex, Inc. sued Daiichi Sankyo Co., Ltd. and Daiichi Sankyo, Inc. in the United States District Court for the Northern District of Illinois for a declaratory judgment of non-infringement of a Daiichi-owned, but Daiichi-disclaimed, patent, if Apotex were to manufacture or sell a generic drug bioequivalent of Daiichi’s Benicar®. On March 31, 2015, a three-judge Federal Circuit panel unanimously reversed the district court’s dismissal for lack of case of controversy. The Federal Circuit found that Apotex has a concrete, potentially high-value stake in obtaining a declaratory judgment, and that both Daiichi and generic manufacturer Mylan Pharmaceuticals, Inc. have a concrete, potentially high-value stake in denying Apotex that judgment and thereby delaying Apotex’s market entry.

The factual background is key to understanding the debate. Daiichi listed two patents covering Benicar® in the Orange Book. The first, U.S. Patent No. 5,616,599, covers the active ingredient of the drug, and expires on April 25, 2016. Because Daiichi provided the FDA with pediatric test results, the FDA must wait a further six months, until October 25, 2016, to approve a generic version of the drug. The second, U.S. Patent No. 6,878,703, covers methods of treatment, and expires on November 19, 2021.

In April 2006, Mylan filed an ANDA with a paragraph IV certification that both the ’599 and ’703 patents were invalid or not infringed by Mylan’s proposed generic drug. In July 2006, for reasons that remain unexplained, Daiichi disclaimed all claims of the ’703 patent, as permitted under 35 U.S.C. § 253. Daiichi then sued Mylan for infringing the ’599 patent. Only validity was disputed in the case, and after trial, the court upheld the validity of the ’599 patent and entered judgment of infringement against Mylan. With the validity of the ’599 patent intact, Mylan’s earliest date for market entry is October 26, 2016, six months after the ’599 patent expires. Note that as a result of the court’s decision, Mylan did not have a lawfully-maintained paragraph IV certification with respect to the ’599 patent.

In June 2012, Apotex filed its own ANDA with a paragraph III certification stating that the ’599 patent is valid and a paragraph IV certification that Apotex would not infringe the now-disclaimed ’703 patent. Essentially, Apotex sought approval to enter the market for generic versions of Benicar® at the same time as Mylan—on October 26, 2016.

The wrinkle is that Daiichi did not sue Apotex for infringing the disclaimed ’703 patent, and the FDA has not removed the ’703 patent from the Orange Book. Under § 355(j)(5)(B)(iv), because Mylan was the first ANDA filer and Mylan has lawfully maintained a paragraph IV certification regarding the ’703 patent, Mylan is presumptively entitled to 180 days’ exclusivity before facing competition from another generic manufacturer. Thus, if Mylan were to enter the market for generic version of Benicar® on October 26, 2016, it would presumptively be entitled to exclusivity until April 23, 2017.

By filing its declaratory judgment action, Apotex sought to enforce a provision provided in § 355(j)(5)(D)(i)(I)(bb)(AA) for forfeiture of Mylan’s 180-day exclusivity period if Mylan has not marketed its generic drug 75 days after a court has entered a final decision from which no appeal (certiorari aside) has been or can be taken that the ’703 patent is invalid or not infringed.

The parties did not dispute that allowing Apotex to enter the market earlier would likely transfer sales from Daiichi and Mylan to Apotex. But Daiichi maintained that there was no case or controversy because it could not assert its disclaimed ’703 patent against Apotex, and Mylan additionally argued that Apotex lacks a “tentative approval” from the FDA for its ANDA and thus any delayed-market-entry injury is unduly speculative.

The Federal Circuit found, in contrast to the district court, that a case or controversy did exist, because the drug sales over a potential six-month period of exclusivity are concrete and substantial. The court contrasted the present parties’ substantial, concrete stakes in a judgment of non-infringement with cases in which a case or controversy was missing because the plaintiffs had generalized or bystander interest in others’ compliance with law.

The Federal Circuit also provided a common sense reasoning regarding the fact that the now-disclaimed ’703 patent is the only barrier to Apotex entering the market at the same time as Mylan. Had Daiichi never listed the ’703 patent in the Orange Book, Mylan would not be eligible for an exclusivity period. Thus, Apotex seeks through its declaratory judgment action to eliminate the entry barrier created by Daiichi’s listing of the ’703 patent that Daiichi subsequently disclaimed.

Federal Circuit Revives Mutual's Antitrust Counterclaims Arising From Temazepam ANDA Litigation

Tyco Healthcare et al. v. Mutual Pharm. et al., No. 2013-1386 (Fed. Cir.)

    by Aaron F. Barkoff

In 2006, Mutual filed an ANDA for a generic version of Restoril (temazepam), including a paragraph IV certification to Tyco's U.S. Patent No. 5,211,954.  Tyco filed suit against Mutual under 35 USC 271(e)(2), Mutual responded with antitrust counterclaims (which the court temporarily stayed pending resolution of the case), and the case proceeded to judgment.

The district court found in 2009 that Mutual did not infringe the '954 patent under section 271(e)(2) because Mutual's product, when manufactured to the ANDA's specification (i.e., where temazepam has a specific surface area of at least 2.2 m²/g), could not infringe the patent (which claims temazepam having a specific surface area of 0.65-1.1 m²/g).

On August 5, 2009, the day after the district court entered its judgment of noninfringement, Tyco filed a citizen petition urging the FDA to change the criteria for evaluating the bioequivalence of generic temazepam products in order to "help ensure therapeutic equivalence."  On September 8, 2009, while the citizen petition was still pending, the FDA approved Mutual's ANDA.  The FDA denied Tyco's citizen petition in its entirety five months later.

After the Federal Circuit affirmed the district court's later decision that the '954 patent was invalid for obviousness, the district court lifted the stay of Mutual's antitrust counterclaims.  In an opinion on January 18, 2013, the district court granted summary judgment to Tyco on Mutual's counterclaims, which, according to the Federal Circuit, were based on four arguments:

1. That Tyco's section 271(e)(2) infringement claim constituted sham litigation that subjected Tyco to antitrust liability for using illegitimate means to keep Mutual's product off the market.
2. That no reasonable litigant could have expected Tyco's patent to withstand a validity challenge.
3. That Tyco's citizen petition was a sham.
4. That Tyco's infringement suit was the product of fraud under Walker Process.

In a 2-1 decision last week (over Judge Newman's dissent), the Federal Circuit affirmed two aspects of the district court decision and vacated two others.  The court affirmed the summary judgment against Mutual's claim that no reasonable litigant could have expected Tyco's patent to be upheld as valid and affirmed the summary judgment against Mutual's Walker Process fraud claim.  The court vacated the summary judgment that Tyco's infringement claim under 271(e)(2) was not sham and that Tyco's citizen petition to the FDA was not a sham.

The premise of Mutual's argument that Tyco's 271(e)(2) infringement claim was a sham was that Mutual's ANDA specified that the temazepam in Mutual's ANDA product would have a specific surface area outside of the range claimed in the '954 patent.  The Federal Circuit stated that "it is not unreasonable for a patent owner to allege infringement under section 271(e)(2)(A) if the patent owner has evidence that the as-marketed commercial ANDA product will infringe, even though the hypothetical product specified in the ANDA could not infringe."  But the court found that there was conflicting evidence concerning the specific surface area of the temazepam in Mutual's ANDA product, and remanded for the district court to "determine whether Mutual has shown that the subjective element of the sham-litigation test has been satisfied."

Similarly, the Federal Circuit found that there were disputed issues of fact precluding summary judgment with respect to whether Tyco's citizen petition was a sham.  The court stated:

Particularly probative of whether the citizen petition was reasonable is the FDA's response, which denied the petition in terms indicating that, in the FDA's view, it was wholly without merit.  The FDA found that Tyco had "provided no evidence from clinical trials, pharmacokinetic studies, bioequivalence testing, or any other source . . . .  Instead the petition relies entirely on uncorroborated generalities and theoretical speculation to support its critical point."

The court also noted that "Mutual's expert reviewed the citizen petition and concluded that 'Tyco did not have a scientific basis to conclude that Mutual's production would not be bioequivalent to Restoril.'"  The court concluded, "The testimony of Mutual's expert and the FDA's response to the citizen petition are sufficient evidence from which a reasonable finder of fact could conclude that Tyco's citizen petition was objectively baseless."

With regard to the subjective prong of the test, the Federal Circuit found it significant that Tyco filed the citizen petition just one day after the district court granted summary judgment of noninfringement.  Mutual argued that "filing the citizen petition at that late date caused the FDA to delay the approval of Mutual's ANDA, and thus resulted in a further period of market exclusivity for Tyco."  Mutual also pointed to an email from Tyco's R&D group stating that a temazepam formulation that was bioequivalent to Restoril could be made from temazepam having a different specific surface area.  The court concluded, "The timing of the citizen petition and the email are sufficient evidence from which a reasonable finder of fact could determine that Mutual had satisfied the subjective element necessary to show that Tyco's citizen petition was a sham."

The Federal Circuit found, however, that there was an open issue "as to whether the filing of the citizen petition caused any antitrust injury to Mutual."  Thus, the court remanded the case with instructions for the district court to "determine whether Mutual suffered an anticompetitive harm in the form of a delay in the approval of its ANDA due to the filing of Tyco's citizen petition with the FDA."

District of New Jersey Allows ANDA Filer's Declaratory Judgment Action to Proceed Despite Covenant Not to Sue

Purdue Pharm. Products v. TWI Pharms., No. 12-5311 (D.N.J.)

    by Alex Menchaca

In an opinion last week, the U.S. District Court for the District of New Jersey stymied what appears to be an attempt by Purdue Pharma to prevent TWi Pharmaceuticals from obtaining a final judgment of noninfringement of all four Orange Book-listed patents on Intermezzo® (zolpidem tartrate).  A final judgment could trigger the marketing requirement of the first ANDA filer.  If the first filer does not market its product within 75 days of a final judgment, it will forfeit its 180-day exclusivity.

Purdue holds the NDA for Intermezzo®, a drug used to treat middle-of-the-night insomnia.  Four patents are listed in the Orange Book in connection with the NDA.  By the time TWi filed its ANDA, four other ANDAs had already been filed and presumably at least one of those is entitled to 180-day exclusivity.  Purdue sued TWi on only two of the patents, and granted TWi a covenant not to sue on the other two.  TWi filed a DJ counterclaim for noninfringement of all four Orange Book-listed patents.

As simplified by the court, TWi's DJ counterclaim is important because it "could potentially trigger the first ANDA filer's 180-day exclusivity period.  This would have the effect of expediting TWi's ability to market its generic version of Intermezzo®."

Purdue filed a motion to dismiss TWi's counterclaim, presenting three arguments that no case or controversy exists and therefore the court lacks jurisdiction: (1) the "covenant not to sue rendered moot any such controversy," (2) "the Court cannot redress TWi's alleged injury," and (3) "the dispute is not ripe in light of TWi's inability to obtain tentative approval."

In response to Purdue's mootness argument, the court stated, "[t]here is ample authority supporting the proposition that a later ANDA filer's declaratory judgment claims involving patents for which the patent holder has given a covenant not to sue are justiciable."  The court therefore held that "the binding principles the Federal Circuit set forth in Dey and Caraco compel this Court to conclude that Plaintiffs' covenant not to sue TWi on the '945 and '628 patents does not moot TWi's counterclaims seeking declaratory judgment that these patents are not infringed."

With regard to whether TWi's injury is redressable, Purdue argued that "a judgment favorable to TWi on the '945 and '628 patents will not redress any injury arising from delay in TWi's ability to market its generic version of Intermezzo® because such a judgment would not independently trigger the first ANDA filer's exclusivity period as TWi has not received tentative approval from the FDA to market its generic product."  In other words, Purdue argued that because "an applicant in TWi's position cannot trigger the first applicant's exclusivity period through a declaratory judgment action unless it has first received tentative approval," the court cannot redress TWi's purported injury.

The court noted that the Federal Circuit has not addressed whether a subsequent ANDA filer must first have tentative approval to maintain a declaratory judgment action like TWi's.  Nevertheless, it rejected Purdue's argument based largely on Judge Dow's decision in Seattle Children's Hospital v. Akorn (N.D. Ill. 2011).  The Akorn court recognized that the Hatch-Waxman Act "created a civil action to obtain patent certainty ("CAPC") that could be brought by an ANDA applicant at a time when it likely would not have tentative approval," indicating that other DJ actions similarly do not require that the ANDA filer must have tentative approval.  Following Akorn, the court held that tentative approval is not required for TWi to maintain its DJ counterclaim.

Finally, the court held that the case is indeed ripe, noting that "delaying judicial consideration of TWi's counterclaims could result in depriving TWi of the ability to trigger the first ANDA filer's 180-day exclusivity period, thus causing TWi to lose profits during the period of time it is excluded from the market.  Accordingly, the court found that "delay in resolving TWi's counterclaims will have an immediate and substantial impact on TWi."

Although not settled until the Federal Circuit weighs in, based on this case and Akorn it appears that the courts will permit ANDA filers to assert DJ counterclaims even before receiving tentative approval from the FDA and despite having a covenant not to sue from the patent owner.