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Disclaimed Patent No Bar to DJ Action in Hatch-Waxman Litigation: Federal Circuit
Practical Law Legal Update 4-607-5209 (Approx. 6 pages)
Disclaimed Patent No Bar to DJ Action in Hatch-Waxman Litigation: Federal Circuit
by Practical Law Intellectual Property & Technology
| Published on 02 Apr 2015 • USA (National/Federal) |
In Apotex, Inc. v. Daiichi Sankyo, Inc., the US Court of Appeals for the Federal Circuit reversed the district court's dismissal of Apotex, Inc.'s Hatch-Waxman declaratory judgment action seeking a judgment of noninfringement of a Daiichi Sankyo, Inc. patent by Apotex's generic drug despite Daiichi's previous disclaimer of the patent.
On March 31, 2015, the US Court of Appeals for the Federal Circuit issued an opinion in Apotex, Inc. v. Daiichi Sankyo, Inc. reversing, among other things, the US District Court for the Northern District of Illinois' dismissal of Apotex, Inc.'s complaint for lack of a case or controversy (Nos. 2014–1282, 2014–1291, (Fed. Cir. Mar. 31, 2015)). In its case or controversy ruling, the Federal Circuit concluded that Apotex has a concrete, potentially high-value stake in obtaining a declaratory judgment that Apotex will not infringe a patent owned by Daiichi Sankyo, Inc. by making and selling a particular generic drug, even though Daiichi previously disclaimed that patent.
Background
Daiichi is the owner of two patents relating to its Benicar hypertension drug listed in the Orange Book:
- US Patent No. 5,616, 599 (the '599 Patent), which covers the drug's active ingredient, olmesartan medoxomil.
- US Patent No. 6,878,703 ( the '703 Patent), which covers methods of treatment.
Mylan, a generic drug manufacturer, sought to market a generic olmesartan medoxomil product and filed an Abbreviated New Drug Application (ANDA) in April 2006 certifying under Paragraph IV that both the '599 Patent and the '703 Patent were invalid or would not be infringed by Mylan's proposed drug. In July 2006, Daiichi disclaimed all of the '703 Patent claims and asked the FDA to remove the '703 Patent from the Orange Book. Daiichi also sued Mylan for infringing the '599 Patent and prevailed. As a result, the earliest that Mylan could enter the market with its generic product is October 25, 2016.
In June 2012, Apotex filed its own ANDA for generic olmesartan medoxomil and included two certifications:
- A Paragraph III certification accepting the results of Daiichi's suit against Mylan concerning the '599 Patent.
- A Paragraph IV certification stating that Apotex's product would not infringe the '703 Patent.
Daiichi did not sue Apotex for infringing the '703 Patent and the FDA had not removed the '703 Patent from the Orange Book. However, Apotex sought a declaratory judgment that its generic product would not infringe the disclaimed '703 Patent.
Even though Daiichi had disclaimed the '703 Patent, Apotex argued that it has a concrete stake in obtaining the declaratory judgment because under the Hatch-Waxman Act, the requested judgment would allow it to enter the market earlier than it could without the judgment. Specifically, Apotex noted that:
- Since Mylan was the first ANDA filer and has maintained a Paragraph IV certification concerning the '703 Patent, Mylan is presumptively entitled to an exclusivity period before facing competition from another generic olmesartan medoxomil manufacturer (see 21 U.S.C. § 355(j)(5)(B)(iv)). This exclusivity period would end on April 23, 2017.
- Mylan would forfeit this exclusivity period if:
- it had not marketed its drug 75 days after appeal rights from the litigation are exhausted (certiorari aside); and
- Apotex has obtained tentative approval for its generic product (see 21 U.S.C. § 355(j)(5)(D)). This would allow Apotex to enter the market substantially before April 23, 2017 if the judgment came soon enough.
Daiichi argued that no controversy exists because it cannot assert the disclaimed '703 Patent.
Mylan argued that:
- Redress of Apotex's delayed market entry injury is unduly speculative before tentative approval is obtained.
- A second ANDA filer must have obtained tentative FDA approval when it brought the declaratory judgment action to cause forfeiture of the first ANDA filer's exclusivity period.
The district court:
- Granted Daiichi's motion to dismiss the complaint because it concluded that neither Daiichi nor Apotex held any meaningful interest in the disclaimed patent.
- Denied Mylan's motion to intervene as moot.
Outcome
The Federal Circuit reversed both the district court's dismissal of Apotex's complaint and denial of Mylan's motion to intervene. In its analysis of the motion to dismiss, the Federal Circuit determined that there was a case or controversy noting that the parties are fighting over the amount and division of revenue from sales of olmesartan medoxomil. Since, in this case, non-infringement is not in dispute, the determination of whether the district court should have dismissed Apotex's complaint is based on whether Apotex will be harmed by delaying a decision and the degree of uncertainty about whether a decision is needed. The Federal Circuit analyzed these issues by focusing on the following questions, whether:
- Daiichi's disclaimer means that the parties lack concrete stakes in the declaratory judgment dispute.
- The alleged harm is traceable to Daiichi.
- The real-world impact is too contingent on the FDA's tentative approval of Apotex's ANDA.
- The Hatch-Waxman Act provisions would block Apotex even if it receives the requested judgment.
Disclaimer of the Patent
The Federal Circuit brushed aside Daiichi's argument concerning the patent disclaimer noting that the parties are fighting over olmesartan medoxomil sales. Although the patent disclaimer eliminates one potential barrier to Apotex's sales of the generic drug, the patent's listing in the Orange Book affects Apotex's ability to make those sales. In addition, the Federal Circuit noted that once Apotex enters the market, Daiichi and Mylan will probably lose sales of olmesartan medoxomil. Therefore, the Federal Circuit concluded that the parties have substantial, concrete stakes in whether Apotex obtains the non-infringement declaratory judgment it seeks.
Harm Traceable to Daiichi
The Federal Circuit noted that if it were not for Daiichi listing the '703 Patent in the Orange Book, Mylan would have no exclusivity period. Therefore, regardless of whether Daiichi acted contrary to the standard for listing the '703 Patent in the Orange Book, Daiichi is responsible for Mylan's current exclusivity period, which Apotex seeks to end with this action.
The Federal Circuit also noted that:
- Apotex's action does not depend on whether the '703 Patent listing was proper.
- The Hatch-Waxman Act does not suggest that an exclusivity period forfeiture depends on the original listing's propriety.
However, the Federal Circuit pointed out that it is not deciding whether:
- Responsibility for the exclusivity period is a necessary condition for a case or controversy.
- It is enough that a requested non-infringement judgment would lead the FDA to allow market entry that would have concrete revenue-transferring effects on all parties.
Uncertainty of Relief for Apotex
The Federal Circuit addressed whether the prospect of relief is too uncertain because even if Apotex prevails on its declaratory judgment claim, it still requires FDA approval of its ANDA to market its generic product. In reaching its conclusion that the prospect for relief was not too uncertain, the Federal Circuit considered whether Congress created justiciability even where there was some uncertainty. Specifically, the Federal Circuit pointed out that under the Hatch-Waxman Act, litigation:
- Upon the filing of an ANDA does not require tentative FDA approval as a precondition.
- May be instituted well before tentative approval.
Therefore, tentative FDA approval is not a precondition to the existence of a case or controversy concerning patents listed in the Orange Book.
Specific Statutory Provisions Governing Forfeiture of the Exclusivity Period
Daiichi and Mylan also argued that the Hatch-Waxman Act provisions concerning forfeiture of Mylan's exclusivity period would not be triggered by a judgment in this case. However, the Federal Circuit concluded that Apotex can trigger forfeiture by obtaining the non-infringement judgment it seeks and thus concluded that a case or controversy exists. Specifically, it reviewed 21 U.S.C. § 355(j)(5)(D)(i)(I)(bb) as having two requirements for forfeiture:
- A court must have entered a final non-infringement decision that is no longer appealable (certiorari aside).
- The second (or later) filer must have received tentative approval.
Therefore, Apotex can trigger forfeiture of Mylan's exclusivity period by obtaining both the judgment it seeks and tentative FDA approval early enough in relation to Mylan's market entry. In reaching this conclusion, the Federal Circuit rejected Mylan's argument that tentative approval must be obtained before initiation of the declaratory judgment action noting that the statutory context and policy point to this rejection. For example, the Federal Circuit noted that:
- Its reading of the statute serves the policy of triggering forfeiture when a second filer is ready to launch.
- It would be arbitrary to require tentative approval earlier.
Practical Implications
The Federal Circuit's decision is important because of its analysis of certain provisions of the Hatch-Waxman Act and the real-world effects of the situation concerning these parties. Counsel for both patent owners and generic manufacturers should be aware of this decision because of its implications concerning other litigation under the Hatch-Waxman Act and the potential ability of generic manufacturers to pursue a declaratory judgment action to enter the market earlier than the patent owner may have previously anticipated.