Federal Circuit Upholds Declaratory Judgment Jurisdiction Over Subsequent ANDA Litigation

In Dey Pharma, LP v. Sunovion Pharmaceuticals, Inc., the Federal Circuit affirmed the district court’s determination that it could exercise jurisdiction over a declaratory judgment action brought by a subsequent ANDA filer. This case follows earlier decisions in Teva Pharmaceuticals USA, Inc. v. Eisai Co., Ltd., Caraco Pharmaceutical Laboratories, Ltd. v. Forest Laboratories, Inc. and Janssen Pharmaceutica, N.V. v. Apotex, Inc., which I discussed in this article, and addresses the circumstances under which a subsequent ANDA filer can bring a declaratory judgment action to challenge Orange Book listed patents when the first ANDA filer has not yet entered the market.

The Hatch-Waxman ANDA Framework

The Orange Book

When a brand manufacturer obtains FDA approval for a new drug product, it submits to the FDA a list of relevant patents and their expiration dates. The FDA publishes this information in its “Approved Drug Products With Therapeutic Equivalence Evaluations,” a/k/a, the Orange Book.

A generic drug manufacturer may seek FDA approval to market a generic version of an approved drug by filing an Abbreviated New Drug Application (ANDA). An ANDA must include a certification regarding each patent listed in the Orange Book for the product at issue. Relevant to this case is the “paragraph IV” certification, which is an assertion that the listed patent is invalid or will not be infringed by the generic product.

ANDA Litigation

According to the Hatch-Waxman Act, the filing of an ANDA with a paragraph IV certification constitutes an act of patent infringement.  The FDA will approve the generic drug notwithstanding the Orange Book listed patent(s) unless the patent owner brings an infringement action against the ANDA applicant within 45 days of receiving notice of the paragraph IV certification. If the patent owner commences such ANDA litigation, the FDA will not approve the drug for thirty months (this is often referred to as a “thirty month stay”), unless the litigation is resolved earlier.

If the patent holder does not bring suit within 45 days, the ANDA filer can bring a declaratory judgment action to adjudicate the validity and/or infringement issues. This 45-day time period applies to both the first ANDA filer and subsequent ANDA filers.

180 Day Exclusivity Period

In order to incentivize generic manufacturers to challenge possibly invalid patents, the Hatch-Waxman Act awards a first ANDA filer who has made a paragraph IV certification with a 180 day exclusivity period.  That is, the FDA will not approve a subsequent ANDA until 180 days after first ANDA filer has commercially marketed the drug product at issue.

The 180 day exclusivity period can be forfeited if, for example, the generic manufacturer fails to enter the market within 75 days of a final judgment that the relevant patent(s) is(are) invalid or not infringed, whether that judgment is obtained in a litigation involving the first ANDA filer or a subsequent ANDA filer. Thus, if the first ANDA filer reaches an agreement with the brand manufacturer to not enter the market (thereby “parking” its exclusivity period), a subsequent ANDA filer can force the first ANDA filer to enter the market (or forfeit its exclusivity period) by challenging the Orange Book listed patents itself.

The ANDA Proceedings

The product at issue is Xopenex, a fast-acting drug for the treatment of bronchospasm caused by asthma or chronic obstructive pulmonary disease .  The Orange Book lists three patents for Xopenex:

1. U.S. Patent 5,362,755, which expires March 25, 2013
2. U.S. Patent 5,547,994, which expires August 20, 2013
3. U.S. Patent 6,451,289, which expires March 21, 2021

Breath was the first ANDA filer, and made paragraph IV certifications against all three patents. Sunovion brought suit on all three patents, but the ANDA litigation was settled by an agreement between the parties. According to the terms of the settlement agreement, Breath may begin selling generic Xopenex on August 20, 2012.

Dey was the second ANDA filer, and made paragraph IV certifications against all three patents. Sunovion brought suit against Dey on the first two patents, but not on the ’289 patent. Dey then brought a declaratory judgment action regarding the ’289 patent. In response, Sunovion provided Dey with a covenant not to sue, and then moved to dismiss the declaratory judgment action for lack of subject matter jurisdiction.

The district court denied Sunovion’s motion, the parties stipulated to noninfringement, and Sunovion appealed the jurisdiction issue.

The Federal Circuit Decision

As in Teva, the Federal Circuit noted that declaratory judgment jurisdiction is governed by MedImmune, Inc. v. Genentech, Inc., which provides that a justiciable ”case or controversy” exists when “‘the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.’” The court referred to Caraco and Janssen as being pertinent to the specific issues raised in this case. (These cases are discussed in more detail in this article.)

The Federal Circuit cited Caraco for the principle that a covenant not to sue does not moot declaratory judgment jurisdiction, “because only a court judgment of noninfringement or invalidity” would trigger the first ANDA filer’s exclusivity period and have an impact on Dey’s ability to enter the market.

Indeed, as summarized by the Federal Circuit, Sunovion’s “only argument against finding that declaratory jurisdiction existed [when Dey filed its declaratory judgment action] is that success in the declaratory judgment action alone is insufficient to redress Dey’s injury because Dey would still need to succeed in the separate infringement litigation over the other Orange Book patents.” But, the Federal Circuit addressed a similar fact pattern in Caraco, and found declaratory judgment jurisdiction to exist. Likewise, the court noted that here ”a favorable declaratory judgment for Dey on the ’289 patent will eliminate the potential for that patent to exclude Dey from the market, and Dey would then only need a judgment of invalidity or noninfringement on the other Orange Book patents to trigger Breath’s exclusivity period.” Thus, the Federal Circuit concluded

eliminating one barrier is sufficient for declaratory jurisdiction, so long as litigation is also pending that could eliminate the other barriers.

Having determined that declaratory judgment jurisdiction existed when Dey filed its declaratory judgment action, the Federal Circuit considered whether declaratory judgment jurisdiction still exists. Sunovion had two arguments on this issue:

1. “as a practical matter, the separate litigation over the ’755 and ’994 patents cannot be concluded by a final judgment before Breath is entitled to launch its generic product on August 20, 2012.”
2. “once Breath is entitled to launch its generic product, there will no longer be a case or controversy necessary to support declaratory judgment jurisdiction”

The Federal Circuit summarized Sunovion’s position as being that

the court should not allow a declaratory action challenging any Orange Book patent to proceed unless all actions challenging the Orange Book patents can be completed before the date of potential generic entry will arrive and, in Sunovion’s view, deprive the district court of jurisdiction.

The court rejected this position for several reasons. First, the court noted that there is no guarantee that Breath will enter the market on August 20, 2012. “If Breath chooses to delay triggering its 180-day exclusivity period, Dey . . . could potentially be kept off the market until the expiration of the ’289 patent in 2021, absent a judgment of noninfringement or invalidity.”

The court distinguished its holding in Janssen that “a possible delay in the future of a first Paragraph IV ANDA filer in launching its generic product does not give rise to declaratory judgment jurisdiction” based on the “difference between finding that a controversy exists to initiate a suit and determining that the controversy has become moot.” The court explained:

If a party to an appeal suggests that the controversy has, since the rendering of judgment below, become moot, that party bears the burden of coming forward with the subsequent events that have produced that alleged result.

The Federal Circuit determined that Sunovion had not met this burden.  Indeed, the court agreed that “this case will not be moot until Breath actually goes on the market in a way that would trigger its 180-day exclusivity period.”

The court therefore affirmed the district court’s determination that it could exercise jurisdiction over Dey’s declaratory judgment action and its judgment of noninfringement.

Looking Beyond ANDA Litigation

While this case may be helpful to ANDA litigants in that it addresses the declaratory judgment jurisdiction question in yet another fact pattern, it also may be of interest to biotech and personalized medicine companies who are closely following the Myriad “isolated DNA” case. This is because while the Federal Circuit determined that at least one plaintiff in Myriad satisfied the standing requirement necessary to support jurisdiction, Myriad has raised an issue as to whether a change in that plaintiff’s employment has eliminated his standing. (I wrote more about this issue here.) While the Federal Circuit’s discussion of mootness in this case may not apply directly to the question of standing, it indicates that Myriad will have to present strong arguments and evidence on standing if it is going to prevail on that issue.