In Dey Pharma, LP v. Sunovion Pharmaceuticals Inc., the main issue before the US Court of Appeals for the Federal Circuit was whether the district court had subject-matter jurisdiction to hear a declaratory judgment action brought by a second filer of an Abbreviated New Drug Application (ANDA) for approval of a generic version of an approved drug.

Under the Hatch-Waxman Act, a branded drug manufacturer seeking FDA approval of a new drug must file a New Drug Application (NDA) with the FDA. The NDA must include information about patents relating to the drug in an FDA publication called the Orange Book. A generic company may then seek FDA approval of a generic version of the branded drug by filing an ANDA with certifications about each Orange Book listed patent. In a paragraph IV certification, the ANDA filer certifies that the patent is invalid or will not be infringed.

The first ANDA filer receives a 180-day exclusivity period before the FDA approves other generic companies to enter the market. This exclusivity period can be forfeited under certain conditions, such as where the first ANDA filer fails to commercially launch its product after a final judgment that the patents are invalid or not infringed. To avoid a branded drug manufacturer from delaying the early resolution of patent disputes, an ANDA filer who is not sued within 45 days may bring a declaratory judgment action against the branded drug manufacturer. This allows a subsequent ANDA filer to independently trigger the first filer's exclusivity period thereby accelerating the second ANDA filer's ability to market its drug.

The FDA approved Sunovion's NDA for Xopenex in 1999. Sunovion listed three patents, including US Patent No. 6,451,289 ('289 Patent), in the Orange Book.

In June 2005, Breath filed the first ANDA for generic Xopenex, which contained paragraph IV certifications for the three listed patents. Sunovion sued Breath for infringement of the three patents. The parties reached an agreement that allowed Breath to pay a license fee and then sell generic Xoponex under its ANDA starting on August 20, 2012.

In July 2005, Dey filed the second ANDA for generic Xopenex, which also contained paragraph IV certifications for the three listed patents. Sunovion sued Dey over two of the patents, but not the '289 patent. Dey later filed a different ANDA after another version of Xopenex. Sunovion again sued Dey on the two patents but not on the '289 Patent. The district court consolidated the two actions.

Dey then brought a declaratory judgment action, seeking a declaration that the '289 patent is invalid or not infringed by either ANDA product. In response, Sunovion provided Dey with a covenant not to sue on the '289 Patent and moved to dismiss the declaratory judgment action for lack of subject-matter jurisdiction. The district court denied the motion to dismiss because even if Dey invalidated the other two Orange Book patents, the '289 Patent would still be a barrier to Dey's ANDA approval and this barrier is an injury that can be redressed by a declaratory judgment action.

Under the parties' stipulation, the district court entered a final judgment of noninfringement. Sunovion appealed only the subject-matter jurisdiction issue to the Federal Circuit.

The Federal Circuit affirmed the district court exercise of subject-matter jurisdiction to hear the declaratory judgment action. In reaching this conclusion, the court relied on Caraco Pharm. Labs., Ltd. v. Forest Labs., Inc. In that case, the NDA holder sued the second ANDA filer for infringement of one of two Orange Book listed patents. The second ANDA filer brought a declaratory judgment action over the unasserted Orange Book listed patent. To trigger the first ANDA filer's 180-day exclusivity period, the Federal Circuit concluded that the second ANDA filer would need to succeed in both the declaratory judgment action and the separate infringement action. The Federal Circuit therefore held that there was declaratory jurisdiction because the NDA holder's actions were potentially excluding non-infringing generic drugs from the market.

In this case, Sunovion argued that declaratory judgment did not exist in 2008 when Dey brought its declaratory judgment action because success in the declaratory judgment action would not have sufficiently redressed Dey's injury since Dey would still have needed to succeed in Sunovision's separate infringement litigation. The Federal Circuit disagreed and relied on the holding in Caraco stating that eliminating one patent barrier is sufficient for declaratory jurisdiction as long as litigation is also pending that could eliminate the other barriers.

Sunovion then argued that declaratory jurisdiction no longer existed when the case reached the Federal Circuit because:

The Federal Circuit reasoned that even after Breath is entitled to launch its generic product it is possible that Breath will choose not to do so. If Breath chooses to delay triggering its 180-day exclusivity period, Dey and other generics could potentially be kept off the market until the expiration of the '289 Patent, absent a judgment of noninfringement or invalidity. Additionally, Sunovion conceded that this case will not be moot until Breath actually goes on the market in a way to trigger its 180-day exclusivity period.

Branded drug manufacturers may not be able to delay a final resolution on all Orange Book listed patents by not suing ANDA filers on all of those patents to delay triggering the first ANDA filer's exclusivity period. Instead, the second ANDA filer may file a declaratory judgment action in district court to seek to trigger the first ANDA filer's exclusivity period.

The Federal Circuit's ruling should help ensure timely marketing of generic drugs.