By Kevin E. Noonan —
Over the past year, the Federal Circuit has addressed on many occasions the scope of the "case or controversy" requirement for a court to have jurisdiction under Article III of the Constitution. Several of these decisions have been directed to the proper jurisdictional scope of declaratory judgment actions filed in ANDA cases, where a generic drug company has filed its ANDA on a drug having at least one patent listed by the innovator in the FDA Orange Book. These cases include Caraco Pharmaceutical Laboratories, Ltd. v. Forest Laboratories, Inc. and Merck & Co. v. Apotex, Inc. Continuing this trend is the Court's decision, issued last Thursday, in Janssen Pharaceutica, N.V. v. Apotex, Inc.
The dispute arose over Janssen's branded antipsychotic drug Risperdal®, having three patents listed in the Orange Book: U.S. Patent No. 4,804,663 on the risperidone compound itself; U.S. Patent No. 5,453,425 on aqueous solutions of risperidone (Risperdal® is an oral solution of risperidone), and U.S. Patent No. 5,616,587 for methods of making said aqueous solutions. Teva was the first generic company to file an ANDA on Risperdal®; its ANDA contained a Paragraph III certification on the '663 patent (wherein Teva deferred approval of its ANDA until the '663 patent expired); Janssen did not file suit against Teva on the '425 or the '587 patents. As the first ANDA filer, Teva was thus entitled to a 180-day exclusivity period, which would begin on June 29, 2008 (a date six months after the expiration date of the '663 patent due to an additional six-month pediatric exclusivity period; see Patent Docs report on Merck & Co. cases).
Apotex filed its ANDA several years after Teva, and initially filed Paragraph IV certifications on the '425 and 587 patents; in January 2006, Apotex filed a Paragraph IV certification on the '663 patent. This provoked Janssen to file suit pursuant to 35 U.S.C. § 271(e)(4); Janssen did not sue Apotex on the '425 and '587 patents. Apotex responded to Janssen's suit with counterclaims for a declaratory judgment on non-infringement of these two unasserted patents. Janssen granted Apotex a covenant not to sue on the '425 and '587 patents, and Apotex stipulated that the '663 patent was not invalid or unenforceable and infringed by its ANDA. Despite this, Apotex refused to withdraw its counterclaims, and the District Court on Janssen's motion dismissed for lack of subject matter jurisdiction.
The Federal Circuit affirmed, in an opinion written by Judge Moore and joined by Judge Rader and Chief Judge Michel. In its opinion, the Court addressed the three grounds Apotex asserted in support of jurisdiction: first, that it would be unable to promptly launch its product upon expiration of the '663 patent; second, that FDA approval of its product was being "indefinitely delayed"; and third, that the covenant not to sue did not protect its upstream suppliers or downstream customers. The Court found no merit in any of these arguments.
Apotex's first argument was based on the advantages it might obtain should the '425 and '587 patents be invalidated. Under the Hatch-Waxman regime, as amended by Title XI of the Medicare Prescription Drug, Improvement and Modernization Act of 2003, Pub. L. No. 108-173, § 1102(a), 117 Stat. 2066, 2457-60, Teva's 180-day exclusivity would be triggered either by (1) Teva's first sale of generic risperidone or (2) invalidation of the '425 and '587 patents. Should Apotex be able to invalidate these unasserted patents prior to Teva's ANDA approval date (i.e., June 29, 2008), the 180-day period would begin before Teva could launch its generic product. Thus, if properly timed, Apotex would be able to launch its product as early as the end of the pediatric exclusivity period; otherwise, the earliest Apotex could launch would be 180 days after the end of the pediatric exclusivity period (during which time, significantly, Teva would be the exclusive generic risperidone product on the market).
Apotex argued that the Court's decision in Caraco Pharmaceutical Laboratories, Ltd. v. Forest Laboratories, Inc. was controlling. In the Caraco case, innovator Forest listed two patents in the Orange Book, but sued first ANDA filer Ivax on only one of them; this patent was found not invalid or unenforceable and infringed. When Caraco filed its subsequent ANDA, Forest filed suit only on the same, previously-litigated patent, and granted Caraco a covenant not to sue on the unasserted patent. The Court noted that in the Caraco case, finding jurisdiction would permit Caraco to obtain a declaratory judgment on both patents, which (like here) would trigger the 180-day exclusivity period for the first ANDA filer (Ivax). However, the Court noted that in the Caraco case, triggering Ivax's exclusivity period would permit Ivax to launch at an earlier time and thus allow Caraco to obtain its own FDA approval at an earlier time, resulting in increased competition at an earlier time. Without the declaratory judgment, Caraco would be excluded from entering the marketplace even if the asserted patent was found to be invalid or unenforceable.
The Federal Circuit contrasted the situation before it with Caraco, because here Apotex stipulated the validity of the '663 patent, which was the impediment to first ANDA filer Teva obtaining FDA approval, launching its product, and triggering its 180-day exclusivity period. The Court said that the harm to Apotex stemmed directly from Teva's 180-day exclusivity period, which prevented Apotex from entering the market, and that the timing of this exclusivity period depended on the validity, enforceability, and infringement of the '663 patent, to which Apotex had stipulated. Moreover, the Court held that the mere existence of Teva's 180-day exclusivity period did not raise a case or controversy under Article III because that period was expressly contained in the statute "as an incentive to challenge suspect Orange Book listed patents." The statute expressly provides this period of exclusivity, which the Court said was "important to generic pharmaceutical companies as it promotes patent challenges by enabling a generic company a period to recover its investment in these challenges." Thus, the Court rejected Apotex's first argument in support of jurisdiction because the 180-day exclusivity period was a legitimate part of the statutory scheme and the intent of Congress to "balance [the] two competing interests in the pharmaceutical industry: '(1) inducing pioneering research and development of new drugs and (2) enabling competitors to bring low-cost, generic copies of those drugs to market.'"
Apotex next argued that it was subject to indefinite delay in launching its product, because while Teva's exclusivity period could begin on June 29, 2008, Teva was not compelled to launch on that date; indeed, the parties stipulated that Teva had not launched as of the date of the oral hearing, July 7, 2008. Looking at the timing of the events in the District Court below, the Federal Circuit said that on the date the District Court entered final judgment, November 2, 2007, Apotex's claim that Teva might unduly delay launching its product, and triggering its 180-day exclusivity period, past June 29, 2008, was too uncertain and speculative to support declaratory judgment jurisdiction. The Court stated that this result was consistent with its Caraco decision, as well as Supreme Court precedent, including Medimmune, Inc. v. Genentech, Inc., which required that a dispute must be "definite and concrete" and "real and substantial" to support the exercise of a district court's subject matter jurisdiction. Citing Prasco, LLC, the Federal Circuit said that Medimmune ""did not change the bedrock rule that a case or controversy must be based on a real and immediate injury . . . an objective standard that cannot be met by a purely subjective or speculative fear of future harm."
Finally, the Federal Circuit rejected Apotex's third argument on appeal, that the covenant not to sue did not protect the upstream suppliers or downstream customers. The Court found the suppliers protected by the express language of the covenant, that Janssen would not sue Apotex for "manufacturing" or "having manufactured" infringing risperidone formulations; the term "having manufactured," in the Court's view, expressly encompassed "all suppliers and affiliates involved in the manufacturing process." As for Apotex's customers, the Court found that the covenant contained language that "Janssen would not sue or otherwise seek to hold Apotex's customers and distributors liable." Thus, the Court found that by its express terms the covenant not to sue protected not only Apotex but its suppliers and customers.
Janssen Pharmaceutica, N.V. v. Apotex, Inc. (Fed. Cir. 2008)
Panel: Chief Judge Michel and Circuit Judges Rader and Moore
Opinion by Circuit Judge Moore
Patent Docs 
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