Source: https://www.patentdocs.org/hatch-waxman/
Timestamp: 2019-04-19 10:28:39+00:00

Document:
Like Sherlock Holmes' quiet dog, the significance of the Supreme Court's patent eligibility jurisprudence following their decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc. and Alice Corp. v. CLS Bank Int'l is that there hasn't been any. The Court has shown a similar reticence towards wading into the uncertain waters created by the Federal Circuit regarding the safe harbor created by the Hatch-Waxman Act, codified at 35 U.S.C. § 271(e)(1). Last Monday was the most recent instance of the Court's refusal to address how the lower courts have implemented these statutory provisions in denying certiorari in Cleveland Clinic Foundation v. True Health Diagnostics LLC and Classen Immunotherapies, Inc. v. Elan Pharmaceuticals Inc.
11. A method of assessing a test subject's risk of having atherosclerotic cardiovascular disease, comprising comparing levels of myeloperoxidase in a bodily sample from the test subject with levels of myeloperoxidase in comparable bodily samples from control subjects diagnosed as not having the disease, said bodily sample being blood, serum, plasma, blood leukocytes selected from the group consisting of neutrophils, monocytes, subpopulations of neutrophils, and sub-populations of monocytes, or any combination thereo[f]; wherein the levels of myeloperoxidase in the bodily from the test subject relative to the levels of [m]yeloperoxidase in the comparable bodily samples from control subjects is indicative of the extent of the test subject's risk of having atherosclerotic cardiovascular disease.
14. A method of assessing a test subject's risk of developing a complication of atherosclerotic cardiovascular disease comprising: determining levels of myeloperoxidase (MPO) activity, myeloperoxidase (MPO) mass, or both in a bodily sample of the test subject, said bodily sample being blood, serum, plasma, blood leukocytes selected from the group consisting of neutrophils and monocytes, or any combination thereof; wherein elevated levels of MPO activity or MPO mass or both in the test subject's bodily sample as compared to levels of MPO activity, MPO mass, or both, respectively in comparable bodily samples obtained from control subjects diagnosed as not having the disease indicates that the test subject is at risk of developing a complication of atherosclerotic cardiovascular disease.
15. The method of claim 14, wherein the test subject's risk of developing a complication of atherosclerotic cardiovascular disease is determined by comparing levels of my[elo]peroxidase mass in the test subject's bodily sample to levels of myeloperoxidase mass in comparable samples obtained from the control subjects.
1. Whether the court below erred in holding, contrary to Mayo, that a method involving natural phenomena is ineligible for patent protection if it claims known techniques that have been adapted for a new use and purpose not previously known in the art.
2. Whether Mayo authorizes a district court to invalidate valuable patent rights on the pleadings when there are disputed questions of fact, a disputed question of claim construction or scope, and/or an undeveloped evidentiary record, notwithstanding the presumption of patent validity and settled procedural and Seventh Amendment safeguards that ordinarily prevent the resolution of such disputed questions on the pleadings.
The Supreme Court decision in Merck v. Integra, 125 S.Ct. 2372 (2005) left uncertainty as to the enforceability of research tools under 35 U.S.C. §271(e)1. The Supreme Court commented in Footnote 7 on p. 2382, "We therefore need not and do not-express a view about whether, or to what extent, 35 U.S.C. §271(e)1 exempts from infringement the use of "research tools" in the development of information for the regulatory process." The CAFC has come to different conclusions on research tools used after marketing approval. Two CAFC panels arrived at opposite rulings (Momenta Pharmaceuticals, Inc. v. Amphastar Pharmaceuticals, Inc., 686 F.3d 1348 (Fed. Cir. 2012), (Momenta Pharm., Inc. v. Teva Pharm. USA, Inc., 809 F.3d 610, 620 (Fed. Cir. 2015). In the current case the two separate CAFC panels came to a different opinion on the applicability of Telectronics Pacing Sys. v. Ventritex, Inc., 982 F.2d 1520, 1523–24 (Fed. Cir. 1992) to a research tool.
1. The CAFC has developed a litmus test to determine when 35 U.S.C. §271(e)1 applies to research tools used after marketing approval. The litmus test was introduce[d] in Classen Immunotherapies, Inc. v. Biogen IDEC, 659 F.3d 1057 (Fed. Cir. 2011) "The statute does not apply to information that may be routinely reported to the FDA, long after marketing approval has been obtained. Id at 1070." In subsequent cases including the current case the CAFC has struggled with defining what constitutes "non-routinely" reported and thus protected by the safe harbor. The litmus test classifies something as "routine" if it is FDA required for ongoing FDA approval but "non-routine" if the post[-] marketing use is not required by the FDA. Is the CAFC's litmus test for research tools consistent with the law?
2. In this case, as opposed to Momenta's case, the court granted safe harbor because Elan's submissions to the FDA were deemed "non-routine" because they were necessary to update the Skelaxin product label and to change the FDA-approval process for generic versions of Skelaxin (Appx. 42a). What if the FDA recommends but does not require its use, is use still "routine"? Is this arbitrary?
3. As written and intended by Congress the safe harbor of 35 U.S.C. §271(e)1 is applied when (the whole) "invention" is used to for submission of data to the FDA. Is the CAFC's decision in this case to extend the safe harbor under 35 U.S.C. §271(e)1, to inventions where one or more but not all steps of an invention creates or uses data submitted to the FDA, consistent with the law?
4. Is the CAFC's decision to extend the safe harbor in this case to sale of product, where the product is claimed by process claims and where the process may utilize data submitted to the FDA, consistent with the law?
Denying certiorari petitions cannot be used to interpret the Court's views on whether the lower courts are properly applying its precedent; the Court frequently permits an issue to "percolate" through the courts and then chooses a case that, in their view provides a suitable vehicle for further clarification of the law. The Court has recently used this practice in other contexts (Gill v. Whitford; Benisek v. Lamone). In the meantime, however, patentees and the public await the time when the Court will deign to weigh in on either of these questions.
Last month, in Par Pharmaceutical, Inc. v. Luitpold Pharmaceuticals, Inc., Senior District Judge William H. Walls of the U.S. District Court for the District of New Jersey issued an amended opinion granting the motion for attorney fees of Defendants Luitpold Pharmaceuticals, Inc., Daiichi Sankyo, Inc., and Daiichi Sankyo Co., Ltd. ("Luitpold"). The District Court also awarded Luitpold $207,482.50 in fees and $4,580.93 in costs.
The decision arose out of a patent dispute between Plaintiffs Par Pharmaceutical, Inc., Par Sterile Products, LLC, and Endo Par Innovation Company, LLC ("Par") and Luitpold. Par is the assignee of patents for Adrenalin®, a product containing epinephrine for use in treating allergic reactions. Luitpold filed an ANDA seeking approval to market a generic version of Par's Adrenalin® product, and Par responded by filing suit against Luitpold.
In Luitpold's Answer to Par's Complaint, Defendants sought declaratory relief that, inter alia, it had not infringed Par's Adrenalin® patents and that the case was exceptional under 35 U.S.C. § 285. The District Court granted Luitpold's counterclaim of non-infringement, finding that Luitpold's ANDA formulations did not infringe Par's Adrenalin® patents. Luitpold then moved for attorney fees, contending, in part, that the Court should award fees because Par's theory of infringement was "objectively baseless" and Par had abused discovery to attempt to monitor Luitpold's competitive activities. Par argued that the case was not exceptional because, inter alia, Par had reason to believe Luitpold would change its drug formulation and Plaintiffs did not abuse discovery and received almost no substantive discovery in the case.
The District Court noted that to satisfy 35 U.S.C. § 285, Luitpold had to establish that Defendants were the prevailing party, the case was exceptional, and the requested fees were reasonable. With regard to the first inquiry, the Court noted that it had granted Luitpold's motion for judgment on the pleadings, resulting in the dismissal of Counts I-IV of Par's Complaint, and issued a declaration that Luitpold had not infringed Par's Adrenalin® patents. The Court noted that "[b]ecause Defendants 'receive[d] at least some relief on the merits, which alter[ed] the legal relationship of the parties,' they are prevailing parties under 35 U.S.C. § 285."
Even if Par's intention was limited to anticipated patent infringement by a possible future formulation of Luitpold's product, Par's claims were meritless because Par provided no basis for its allegations that absent declaratory relief, Par faced irreparable harm from Defendants' infringing activities. Par's claims for declaratory relief rested only on its own experience of the FDA approval process and speculation that the FDA would require Defendants to change their drug formulation in a manner that would infringe Par's patents. . . . Par failed to allege that Defendants were engaged in any specific activities to alter their drug formulation to infringe the patents-in-suit and even acknowledged in briefing that the focus of the case was to determine through discovery how Par intended to proceed through the FDA approval process.
With regard to Par's second contention, the Court noted that "upon filing of the Complaint, Par vigorously attempted to engage in overbroad discovery of highly confidential, competition information," requesting, inter alia, "all documents and information relating to Defendants' injectable epinephrine compositions, including past, current, and 'contemplated' formulations whether or not they contained ingredients that would infringe Par's patents." The Court also noted that Par had pursued "this overbroad information" despite Luitpold's testimony that it had not changed its drug formulation. According to the Court, "Par's conduct is not mitigated by Par's argument that it pursued this discovery mostly unsuccessfully." The Court therefore found the case to exceptional, stating that "Plaintiffs' unjustified maintenance of this suit and attempts to use discovery to police Defendants' future conduct makes an award of fees appropriate to the extent Defendants' fee request is reasonable."
The remainder of the opinion concerns the Court's calculation of fees, which were reduced for the reasons outlined in the opinion, and award of costs, which were awarded as requested.
Whether the safe harbor protects a generic drug manufacturer's bioequivalence testing that is performed only as a condition of maintaining FDA approval and is documented in records that must be submitted to the FDA upon request.
The case below, styled Momenta Pharmaceuticals, Inc. v. Teva Pharmaceuticals USA Inc. involved a District Court's determination that U.S. Patent No. 7,575,886 was not infringed by Teva nor by Amphastar and additional defendants in companion cases decided together. The claims at issue were directed to enoxaparin, an anticoagulant drug marketed since 1993 under the brand name Lovenox®. Momenta marketed the first generic version of the drug and sought to block additional generic entrants by asserting the '866 patent, which claimed methods for ensuring that each batch of the drug met quality standards. The District Court held that co-defendant Amphastar's activities alleged by Momenta to infringe the '886 patent fell within the scope of the § 271(e)(1) safe harbor as being "reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs . . ." under the statute.
[Section 271(e)(1)] provides that it is not an act of patent infringement for a generic drug maker to import or to test a patented drug in preparation for seeking FDA approval if marketing of the drug would occur after expiration of the patent . . . . This section does not permit the commercial sale of a patented drug by the party using the drug to develop such information . . . . The information which can be developed under this provision is the type which is required to obtain approval of the drug. . . . The purpose of sections 271(e)(1) and (2) is to establish that experimentation with a patented drug product, when the purpose is to prepare for commercial activity which will begin after a valid patent expires, is not a patent infringement [emphasis in opinion].
The opinion noted that while the contours of the safe harbor have been deemed broad (citing, inter alia, Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193, 202 (2005), Classen Immunotherapies, Inc. v. Biogen IDEC, 659 F.3d 1057, 1072 (Fed. Cir. 2011), and AbTox, Inc. v. Exitron Corp., 122 F.3d 1019, 1027 (Fed. Cir. 1997)), the safe harbor is not without boundaries. These exceptions include research tools not subject to FDA approval (Proveris Sci. Corp. v. Innovasystems, Inc., 536 F.3d 1256, 1265–66 (Fed. Cir. 2008)) and information "routinely reported" to the FDA post-approval (citing Classen). Earlier, the Federal Circuit had affirmed denial of Momenta's motion for preliminary injunction on the grounds that the movant was unlikely to prevail, but in light of a fuller record than had been available at the preliminary injunction stage, the Court was convinced that the FDA submissions relied upon by Amphastar were sufficiently "routine" that they fell outside the scope of the § 271(e)(1) safe harbor. The opinion contrasted the routine nature of the submissions made based on the use of Momenta's method with "non-routine submissions that may occur both pre- and post-approval, such as the submission of investigational new drug applications ('INDs'), new drug applications ('NDAs'), supplemental NDAs, or other post-approval research results." Because Amphastar's submissions using Momenta's patented technology were routine, they were not "reasonably related to the development and submission of information" as required by the statute to qualify for the safe harbor, and the District Court's decision to the contrary was clearly erroneous in the Federal Circuit's opinion. This decision was based in part on the panel's apprehension that deciding in Amphastar's favor would "result in manifest injustice" because it would be the first case to have § 271(e)(1) encompass "activities related to ongoing commercial manufacture and sale." The majority's conclusion was supported by the Federal government as amicus, wherein "the government argued that the routine use of a patented testing process in the commercial manufacture of a drug is not 'reasonably related to the development and submission of information to [the] FDA' and thus not shielded from liability by § 271(e)(1).'"
Denial of certiorari does not connote agreement by the Court, of course, but until the Court decides to address this issue the question of what activities are not within the safe harbor remains unclear, particularly with regard to ones such as safety testing that are performed post-approval (see "Supreme Court Denies Certiorari in Momenta Case").
Perhaps one of the most influential first year law school classes for the task of learning how to "think like a lawyer" is civil procedure. Particularly when the professor is bold enough to engage students on the intricacies of the topic, those intricacies can make for a challenging final exam. These experiences should come to mind for many antitrust lawyers when considering the Third Circuit's decision in Hartig Drug Co. v. Senju Pharmaceutical Co., where the Court applied subject matter jurisdiction principles to reverse a District Court's dismissal of Hartig's antitrust allegations on the pleadings.
The facts while relevant were not dispositive. At issue were the actions of Senju and its co-defendants, Kyorin Pharmaceutical Co and Allergan Inc. related to ANDA litigation over its medicated eyedrop products, Zymar (a 0.3% gatifloxacin solution) and Zymaxid (a 0.5% gatifloxacin solution). Allergan, pursuant to a license to U.S. Patent No. 6,333,045, filed NDAs for these products in 2003 and 2010, respectively; Hartig was a secondary purchaser of these drugs from Amerisource Drug Corp., who assigned its rights to Hartig.
[T]he Defendants engaged in a number of illegal practices to prevent or delay the introduction into the market of generic alternatives to Zymar and Zymaxid. First, the Defendants filed a baseless lawsuit against another pharmaceutical company, Apotex, claiming patent infringement and delaying FDA approval of that company's generic version of Zymar. Next, the Defendants engaged in so-called "product hopping" (A35) -- discouraging doctors from prescribing generic alternatives to the original 0.3% Zymar eyedrops by phasing out that product in favor of "new" 0.5% Zymaxid eyedrops. To buy time for that shift in marketing strategy, the Defendants prolonged the Apotex litigation by filing a frivolous motion for a new trial. They also asked the United States Patent and Trademark Office to reexamine claims of the '045 Patent, but failed to disclose material information both from the trial record in the Apotex case and from their own expert that undermined their reexamination claims. After the FDA approved Apotex's 0.3% gatifloxacin eyedrops, the Defendants sued Apotex a second time. Although the courts ultimately held that the Defendants' suit was barred by claim preclusion, Apotex was deterred from launching a generic competitor to Zymar. Since then, the Defendants have filed numerous lawsuits against competing drug manufacturers to bar the market entry of generic equivalents to both Zymar and Zymaxid.
Put more succinctly, Hartig argued that, but for Defendants' actions in violation of the Sherman Antitrust Act, generic versions of these eyedrops would have entered the marketplace after the patent on the drug itself expired in 2010 (specifically, "at least from June 15, 2010 until October 3, 2013"), based in part on Apotex's Paragraph III certification on that base patent and the asserted invalidity of the '045 patent.
Allergan filed a motion to dismiss based on Federal Rule of Civil Procedure 12(b)(1), that the Court did not have subject matter jurisdiction. Co-defendants Kyorin and Senju filed motions to dismiss under Rule 12(b)(6) that Hartig had failed to state a claim (Allergan later joined in this motion). Allergan's motion was based on its Distribution Services Agreement (DSA) with Amerisource that precluded that primary distributor from assigning its rights without Allergan's express written agreement. The Third Circuit's opinion notes that the DSA was not part of Hartig's complaint but was appended to Allergan's motion to dismiss (a factual point relevant to the Court's decision).
In considering this issue, the opinion sets out the distinctions between the two Rules, noting that "the 12(b)(6) standard affords significantly more protections to a nonmovant." In a Rule 12(b)(6) motion, the court properly considers "only the complaint, exhibits attached to the complaint, matters of public record, as well as undisputedly authentic documents if the complainant's claims are based upon these documents," citing Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010), and also must consider all allegations in the complaint as true as well as all reasonable inferences that can be drawn from them when taken in a light most favorable to the nonmovant. Rule 12(b)(1), on the other hand, provides the defendant the ability to present competing facts (i.e., the defense is not limited to the facts alleged in the complaint). The Plaintiff bears the burden of proof that jurisdiction is proper, and a court can consider all evidence without the presumptions that attach under Rule 12(b)(6); importantly here, a court can also consider evidence "outside the pleadings." Consequently, "a 12(b)(1) factual challenge strips the plaintiff of the protections and factual deference provided under 12(b)(6) review" according to the opinion.
First, [a plaintiff] must establish that it has suffered an "injury in fact," meaning a concrete and particularized invasion of a legally protected interest. Id. Second, it must establish a "causal connection between the injury and the conduct complained of -- the injury has to be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court." Id. . . . Third, it must show a likelihood "that the injury will be redressed by a favorable decision." Id. at 561.
Even if the Article III requirements for standing are satisfied, however, another prerequisite for standing is antitrust standing, which requires that the injury a plaintiff suffered was one "that the antitrust statute was intended to forestall," citing Barton & Pittinos, Inc. v. SmithKline Beecham Corp., 118 F.3d 178, 181 (3d Cir. 1997), quoting Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 538, 540 (1983). The opinion further explained that even if a plaintiff suffered injury as a result of an antitrust violation, if the standing requirement is not satisfied the antitrust laws do nor permit a plaintiff to be a "private attorney general" under the statute. And the opinion set out the distinction plainly: Article III jurisdiction "implicat[es] a court's subject matter jurisdiction" while antitrust standing affects "only the plaintiff's ability to succeed on the merits." Whether or not a plaintiff has antitrust standing does not implicate the subject matter jurisdiction under Article III according to the opinion, citing Ethypharm S.A. France v. Abbott Laboratories, 707 F.3d 223, 232 (3d Cir. 2013). And this distinction, according to the Court, is at the heart of the Supreme Court's explanation of the "direct purchaser rule" in Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), wherein the Court stated that "although indirect purchasers 'may have been actually injured by antitrust violations' through passed-on overcharges, the 'legislative purpose[s]' underlying the antitrust statutes would still be better served by limiting recovery to the direct purchasers paying those overcharges in the first instance." 431 U.S. at 746.
The significance of this distinction in this case stems in part from the Court's appreciation that "Allergan's motion to dismiss under Rule 12(b)(1) was always premised, at bottom, on Hartig's purported lack of antitrust standing," despite Allergan premising its motion on Rule 12(b)(1). This is not the correct question, according to the Court; for a motion to dismiss on an Article III basis the "case or controversy" standards are those enunciated by the Supreme Court in Lujan and the panel held that Hartig had satisfied these requirements.
The opinion closes with a discussion of whether Allergan and its co-defendants properly moved to dismiss Hartig's claims under Rule 12(b)(6) and found that they did not. This judgment turns on the differences in scope of the factual challenges permitted under each of these rules, and the Third Circuit panel recognized that the District Court relied on evidence regarding the DSA that would not be permitted in deciding a motion predicted on Rule 12(b)(6) (where all allegations in the complaint are taken as being true and all inferences drawn in the nonmovant's favor). And finally, while the panel acknowledged that the question of whether the District Court could have (or will in future) properly consider the DSA was not before it, the opinion suggests that this agreement is not sufficient under Pennsylvania law to strip Hartig of its capacity to bring suit under the antitrust laws.
The Court vacated the judgment below and remanded to the District Court, providing perhaps another opportunity for the parties to craft appropriate motions under the rules of civil procedure to effect their aims.
[C]oncerns have been raised that some brand-name companies are misusing an FDA program, known as the Risk Evaluation and Mitigation Strategy, to thwart that process by preventing the sale of samples of their product and refusing to allow generic competitors to participate in their Risk Evaluation and Mitigation Strategy protocol. These tactics result in blocking generic drug approval and keeping drug prices high for consumers. The Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act addresses this anticompetitive behavior by giving generic companies an opportunity to obtain relief in a timely fashion rather than through lengthy antitrust litigation.
The bill was referred to the Judiciary Committee, a sub-committee of which has already held a hearing on the subject matter the bill was introduced to address.
After an introductory section, the bill provides in Section 2 "Findings." In addition to encomiums to the effectiveness of the Drug Price Competition and Patent Term Restoration Act of 1984 (Public Law 98-417; 98 Stat. 1585) and the Biologics Price Competition and Innovation Act of 2009 (Subtitle A of title VII of Public Law 111-148; 124 Stat. 804), the bill asserts that "developers of generic drugs and biosimilar biological products  must be able to obtain quantities of the reference listed drug or biological product with which the generic drug or biosimilar biological product is intended to compete  for purposes of supporting an application for approval by the Food and Drug Administration." Moreover, the Findings state that, for those drugs subject to a "risk evaluation and mitigation strategy" or REMS, or a REMS with elements to assure safe use ("REMS with ETASU"), the FDA requires the branded/innovator and the generic/biosimilar to have "a single, shared system of elements [pursuant to (21 U.S.C. 355-1)] to assure safe use and supporting agreements, or secure a variance therefrom"
The problem, according to the bill's cosponsors, is that "certain license holders (i.e., branded drug and biologics companies) are preventing generic product developers from obtaining quantities of the covered product necessary for the generic product developer to support an application for approval by the Food and Drug Administration, including testing to show bioequivalence, biosimilarity, or interchangeability to the covered product, in some instances based on the justification that the covered product is subject to a risk evaluation and mitigation strategy with elements to assure safe use." And, according to the Director of the Center for Drug Evaluation and Research (CDER) at FDA, "some manufacturers of covered products have used REMS and distribution restrictions adopted by the manufacturer on their own behalf as reasons to not sell quantities of a covered product to generic product developers, causing barriers and delays in getting generic products on the market." The FTC has voiced similar concerns, and the Findings also allege that "certain license holders are impeding the prompt negotiation and development on commercially reasonable terms of a single, shared system of elements to assure safe use, which may be necessary for the generic product developer to gain approval for its drug or licensing for its biological product." While the antitrust laws provide one avenue for addressing this problem (insofar as it exists; the bill contains allegations but no examples of specific anticompetitive behavior), the bill contains the statement that it would be better to have "a more tailored legal pathway" which this bill is intended to provide. (In this regard, the drafters have included a provision later in the text of the bill that the causes of action and remedies provided by the bill are not intended to foreclose access to such antitrust remedies under appropriate circumstances (Sec. 3(d)(2)).
An eligible product developer [a generic drugmaker or biosimilar applicant] may bring a civil action against the license holder for a covered product [i.e., the generic or biosimilar drug] seeking relief under this paragraph in an appropriate district court of the United States alleging that the license holder has declined to provide sufficient quantities of the covered product to the eligible product developer on commercially reasonable, market-based terms.
(BB) the date on which the license holder received a copy of the covered product authorization issued by the Secretary in accordance with clause (ii).
The bill also permits an eligible product developer to submit a written request (Sec. 3(b)(1)(B)(ii)(I)) to the Secretary of Health and Human Services to obtain sufficient quantities of a covered product, which request shall be granted by the Secretary "not later than 90 days after the request  is received for a product subject to a REMS with ETASU." The sample of covered product will be sufficient to perform testing with or without human clinical trials as necessary. The license holder (NDA or BLA) will be absolved of any violation of the REMS for the covered products if the product is supplied under the Secretary's authorization. (Sec. 3(b)(1)(B)(ii)(III)).
The bill further contains, as an affirmative defense (Sec. 3(b)(1)(C)) to the cause of action created by the Act, provisions that absolve the NDA or BLA holder from liability where neither the license holder or any of its "agents, wholesalers, or distributors was engaged in the manufacturing or commercial marketing of the covered product"; and that none of the license holder or any of its "agents, wholesalers, or distributors otherwise had access to inventory of the covered product to supply to the eligible product developer on commercially reasonable, market-based terms.'' Alternatively, it will be an affirmative defense if the license holder or its "agents, distributors, or wholesalers" sells the product, without restrictions "explicit or implicit" against selling to an eligible product developer, and an eligible product developer could purchase the covered product "in sufficient quantities on commercially reasonable, market-based terms from the agents, distributors, or wholesalers of the license holder."
The bill also contains (Sec. 3(b)(1)(D)(i)) the following remedies for the eligible product developer: an order from the Secretary that the license holder must provide the eligible product developer with "sufficient quantities of the covered product on commercially reasonable, market-based terms" without delay; an award of attorneys' fees and costs; and a monetary award "sufficient to deter the license holder from failing to provide other eligible product developers with sufficient quantities of a covered product on commercially reasonable, market-based terms," provided that the license holder either delayed in providing the covered product "without a legitimate business justification" or the license holder failed to comply with an order by the Secretary under the statute. The amount of the monetary award is capped (Sec. 3(b)(1)(D)(ii)) at the revenue the license holder earned on the covered product (in its entirety) during a period beginning 31 days after the date the license holder received the request for the product or, for a product covered by a REMS with ETASU, 31 days after the later of when the license holder received the request or the Secretary's authorization order. The statutory term for calculating the maximum extent of the monetary award ends on the date the license holder provides the sufficient amount of the covered product. Thus, the bill provides incentives for the license holder to provide the sufficient quantities either upon request by the eligible product developer or as soon thereafter as possible.
In addition, the bill has provisions (Sec. 3(b)(2) et seq.) relating to failure of the license holder and the eligible product developer to reach agreement on "a single, shared system of elements to assure safe use with respect to the covered product" or where the license holder has refused to permit the eligible product developer to "join a previously approved system of elements to assure safe use with respect to that product." In order to prevail the eligible product developer must show that she has sought approval of a drug under Section 505(b)(2) or (j) or Section 351(k) referencing a covered product subject to a "REMS with ETASU that requires a single, shared system of elements to assure safe use with respect to the covered product"; that at least 120 days have elapsed from the date on which the eligible product developer "first initiated an attempt to reach an agreement with the license holder that would allow the product developer to participate in a single, shared system of elements to assure safe use"; and the license holder and eligible product developer have not reached agreement. Recovery is also dependent on the Secretary not waiving the requirement that the covered product be part of "a single, shared system." As in other parts of the statute, the remedy is an order from the Secretary to the license holder to "enter into a single, shared system of elements to assure safe use with the eligible product developer on commercially reasonable terms" or that the eligible product developer "join a previously approved system of elements to assure safe use with respect to the covered product on commercially reasonable terms." Recovery is also allowed if the Secretary waives the requirement. The remedies contained in the bill (Sec. 3(b)(2)(C)) include attorneys' fees and costs, as well as a monetary amount "sufficient to deter the license holder from failing to reach agreements that would allow other eligible product developers to participate in a single, shared system of elements to assure safe use on commercially reasonable terms." These remedies are available only upon a showing by the eligible product developer, by a preponderance of the evidence, that the license holder, not having any legitimate business justification, delayed entry of the eligible product developer into the "single, shared system of elements to assure safe use with respect to the covered product," or delayed securing a waiver from the Secretary, or failed to comply with the Secretary's order pursuant to the provisions of the bill. This portion of the bill (Sec. 3(b)(2)(C)(ii)) also contains maximums the eligible product developer can be awarded, which comprise no more than entirety of the revenue the license holder makes on the product from a time that is 121 days "after the date on which the product developer first initiated an attempt to reach an agreement with the license holder that would allow the product developer to participate in a single, shared system of elements to assure safe use with respect to the covered product" and ending on the date "on which the eligible product developer and license holder reached an agreement that would allow the product developer to participate in a single, shared system of elements to assure safe use with respect to the covered product." The final provisions of the bill (Sec. 3(c)) include a limitation on liability for the license holder, wherein "[a] license holder shall not be liable for any claim arising out of the failure of an eligible product developer to follow adequate safeguards to assure safe use of the covered product during development or testing activities described in this section, including transportation, handling, use, or disposal of the covered product by the eligible product developer."
Again according to Senator Grassley, the bill is supported by "consumer groups, generic drug manufacturers, antitrust experts, physicians, pharmacists, hospitals, insurers and other groups that advocate for lower-cost drugs, including: the Generic Pharmaceutical Association, AARP, the National Coalition on Healthcare, Consumers Union, Families USA, the Center on Medicare Advocacy, Public Citizen, the American College of Physicians, the American Hospital Association, the Healthcare Supply Chain Association, the National Association of Chain Drug Stores, the Pharmaceutical Care Management Association, Express Scripts, Blue Cross Blue Shield Association, the Premier Healthcare Alliance, the AFL-CIO, the American Federation of Teachers, the Public Sector Healthcare Roundtable and the UAW Retiree Medical Benefits Trust. With the exception of the GPhA these are all patient, consumer, or physicians' groups, all of which have a personal, economic and vested interest in getting generic or biosimilar drugs to market, without necessarily being overly concerned with the realities of producing any of these drugs or getting them to market (much less the commercial considerations involved). The Senators are doing what our system expects them to do, listen to their constituents. And while it is not impossible that sometimes it may look like branded and biologics companies are being obstructionist against their generic or biosimilar counterparts it is not always so, and Congress has the responsibility to ensure the litigation and sanctions envisioned by the statute are necessary to forestall any unnecessary delay that may occur (and are not excused by the express provisions of the bill). In view of the impending summer recess, followed by the Presidential and Congressional elections, it is unlikely that this bill will make it to the President's desk before November. But it is certainly a bellwether for what we can expect from the 115th Congress when it convenes early next year.
The 2016 BIO International Convention has already begun in San Francisco, but most of the sessions and forums get underway beginning on Tuesday, June 7, 2016. Patent Docs has been highlighting a few sessions or other opportunities, in thematic fashion, to help you navigate your way through the convention. For example, today, we focus on issues surrounding the use of inter partes reviews ("IPRs") at the Patent Trial and Appeal Board ("PTAB"), and on issues surrounding patent eligibility for biotechnology inventions. Of course, Patent Docs authors and contributors will be present at BIO as part of the MBHB contingent, and Patent Docs readers are encouraged to stop by the MBHB booth (#504) to discuss these sessions (or whatever other topic is of interest to you).
In the past three and a half years, IPR proceedings have been available for accused infringers, and just about anyone else, to challenge issued patents at the PTAB. Not surprisingly, their use has been a popular topic at recent BIO conventions. This year is no exception. First up in the Intellectual Property track is "Will the PTAB be a Road Block for Biotech? Lessons Learned from the First Three Years of Inter-Partes Review and Future Prospects." This session will take place at 2:15 PM on June 7 in Room West 3008. The description for the session notes that the PTAB has been invalidating claims and entire patents with a frequency that is alarming to those relying on patent protection in the Biotech space. Of course, most affected patents are in other fields, but this does not mean that biotech and pharma are being ignored. The panel will explore the various practices established by the PTAB, including claim construction and claim amendment practice, and the recent proposals for change to these procedures. In addition, the session will explore the intersection of PTAB and the BPCIA to see how IPRs are being used in the biosimilar context. The speakers on the panel are Teresa Stanek Rea, partner at Crowell & Moring LLP, former Acting Under Secretary of Commerce for Intellectual Property and former Acting Director of the U.S. Patent and Trademark Office; Michael Tierney, Lead Administrative Patent Judge at the PTAB, and Kevin Noonan, partner at McDonnell Boehnen Hulbert & Berghoff LLP (and Patent Docs co-author). The session will be moderated by William Kubetin, Managing Editor of Bloomberg BNA.
The Intellectual Property track has a second session that will address the issues of the PTAB and the BPCIA, but will also include issues related to the Hatch-Waxman statute. This session, entitled "Piecing Together the Hatch-Waxman, BPCIA and PTAB Puzzle: Revealing the Big Picture in Patent Challenges Brought in Multiple Fora," will take place in Room West 3008 at 3:30 PM on June 7, 2016. The description of this session notes that in 2015, there was a sizable increase in the number of IPR challenges to pharmaceutical and biotechnology patents. At least a part of this rise stems from the use of IPRs by generic drug companies and those preparing biosimilar drugs. IPRs can be seen as a parallel to district court litigation under the Hatch-Waxman Statute and as an alternative to the "patent dance" under the BPCIA. The session was "[d]esigned for corporate decision makers and practicing IP professionals," and promises to address the interplay between the PTAB and district court. The speakers for this session are Claire Vasios, Vice President of Intellectual Property for Alkermes Inc. and Lori Wolfe, Associate General Counsel, Specialty IP Litigation for Teva Pharmaceuticals USA, Inc. The session will be moderated by Nicholas Mitrostas of Goodwin Proctor.
A final session we will highlight in the Intellectual Property track will address how the Patent Office and U.S. Court system has been handling patent eligibility issues for biotechnology inventions. Entitled "Protecting Biomedical Innovation in a Shifting Patent-Eligibility Landscape," this session will take at 2:15 PM on June 8 in Room West 3008. The description of the session notes that the patent eligibility doctrine is not new, but that the Patent Office and Supreme Court have recently been invoking it to deny patent protection for otherwise "breakthrough" inventions. The judicially created subject matter exceptions of abstract ideas, laws of nature and natural phenomena are being used to exclude patents that are new and not obvious over the prior art. The panel promises to "discuss how stakeholders can maneuver the still-changing landscape in this challenging area and where it may be heading moving forward." The speakers on this panel include Robert Armitage, Consultant on IP strategy and policy matters (and former Senior Vice President and General Counsel at Eli Lilly and Company); Robert Bahr, Deputy Commissioner for Patent Examination Policy at the U.S. Patent Office, Gerard Devlin, Managing Counsel for IP Litigation, Office of General Counsel at Merck & Co., Inc., and Arthur Gajarsa, retired Federal Circuit Judge currently at Wilmer Hale. The session will be moderated by Teige Sheehan of Heslin Rothenberg Farley & Mesiti, P.C.
We look forward to seeing you this week at BIO 2016.
In January, the Federal Trade Commission issued a report on the terms of settlement agreements between branded and generic drug companies in ANDA litigation under the Hatch-Waxman Act, according to the provisions of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. While the Commission has been issuing these Reports since the MMA was enacted, this year's report is significant, because it is the first Report issued by the FTC after the Supreme Court's decision in FTC v. Actavis, which held that under some circumstances such settlement agreements containing so-called "reverse payments" could violate the antitrust laws.
• 20 of the settlements contained no provisions limiting generic entry.
What has changed is the number of these agreements containing reverse payment provisions, which "decreased significantly" (by about 50%). The trend is clear: there were 31 agreements containing reverse payment provisions in FY 2010, 28 in FY 2011, and 29 in FY 2013. The trend is most pronounced for "first filers," those generic manufacturers who are first to file an ANDA application. For first filers there were 18 agreements in FY 2011, 23 in FY 2012, and 13 in FY 2013, compared with 11 in FY 2014. There has also been a reduction in the number of settlements involving first filers containing agreements by the branded drug maker not to market an "authorized generic" in competition with the generic entrant. These provisions are particularly important to first filers, who get 180 days of market exclusivity if they successfully challenge the branded company's patents; competition by a "generic" form of the drug made by the branded manufacturer can greatly reduce the short-term profits (and hence economic incentives) for the generic entrant. There were 15 agreements containing such provisions filed in FY 2010, 11 in FY 2011, 19 in FY 2012, and 4 in FY 2013, compared with 5 in FY 2014.
Overall, the Report reveals that 81-87% of ANDA litigation settlement agreements filed in FY 2014 did not contain any compensation from the branded to the generic company and/or restrictions on generic market entry. These results show that the outcome desired by the FTC in a decade of challenging these agreements that culminated in the Court's Actavis decision have borne the desired fruit. Whether this outcome facilitates generic entry and reduced drug costs for consumers is a conclusion the data do not yet support.
The question of the extent to which the "safe harbor" against infringement as part of the Hatch-Waxman Act (set forth in 35 U.S.C § 271(e)(1)) extends to activities post-generic drug approval is unresolved, as evidenced by the different conclusions in Classen Immunotherapies, Inc. v. Biogen IDEC and Momenta Pharmaceuticals, Inc. v. Amphastar Inc. The issue once again came before the Court in Momenta Pharmaceuticals, Inc. v. Teva Pharmaceuticals USA Inc., in a decision handed down earlier this month; the decision provides another example of the Court setting forth the contours of the scope of the safe harbor.
(2) it becomes a trivial and nonessential component of another product.
The District Court rejected this contention, because the asserted claims were directed to methods for analyzing the product for quality control purposes and not methods of making the drug. In addition, the District Court found that Teva's use of the analytical methods claimed in the '866 patent fell within the safe harbor provisions of 35 U.S.C § 271(e)(1).
The situation was different with regard to Momenta's infringement allegations against Amphastar, inter alia, because Amphastar manufactured enoxaparin in the U.S. In this case, the District Court held that Amphastar's activities fell within the safe harbor provisions of the Hatch-Waxman Act.
The Federal Circuit affirmed the District Court's decision as to Teva (relating to infringement under § 271(g) but vacated the lower court's grant of summary judgment in Amphastar's favor, in an opinion by Judge Wallach joined by Judge Moore and in part by Judge Dyk, who also dissented in part. The portion of the decision related to (non)infringement under § 271(g) was straightforward: the '866 patent claims did not encompass methods of "making" the enoxaparin. Momenta argued that the quality control methods in the '886 patent claims were "a crucial interim step" in making the drug, because batches were chosen for "further process[ing]" into the finished drug product based on the results of these testing methods. Saying that these arguments were "not without merit," the Federal Circuit nevertheless held that the District Court's decision of non-infringement was "more consonant with the language of the statute, as well as with this court's precedent, to limit § 271(g) to the actual 'ma[king]' of a product, rather than extend its reach to methods of testing a final product or intermediate substance to ensure that the intended product or substance has in fact been made," based on an "ordinary meaning" interpretation of the statutory language. The Court cited Bayer AG v. Housey Pharm., Inc., 340 F.3d 1367, 1373 (Fed. Cir. 2003), and American Fruit Growers, Inc. v. Brogdex Co., 283 U.S. 1, 11 (1931), in support of their interpretation of the word "make."
The opinion notes that while the contours of the safe harbor have been deemed broad (citing, inter alia, Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193, 202 (2005), Classen Immunotherapies, Inc. v. Biogen IDEC, 659 F.3d 1057, 1072 (Fed. Cir. 2011), and AbTox, Inc. v. Exitron Corp., 122 F.3d 1019, 1027 (Fed. Cir. 1997)), the safe harbor is not without boundaries. These exceptions include research tools not subject to FDA approval (Proveris Sci. Corp. v. Innovasystems, Inc., 536 F.3d 1256, 1265–66 (Fed. Cir. 2008)) and information "routinely reported" to the FDA post-approval (citing Classen). Even though the Federal Circuit had earlier affirmed denial of Momenta's motion for preliminary injunction on the grounds that the movant was unlikely to prevail, this decision was not the "law of the case" nor was this panel bound by the earlier panel's decision, and that, in any event, courts had the ability to reconsider and come to a different conclusion. Here, the majority held that they were considering a fuller record than had been available at the preliminary injunction stage. That record was enough to convince the Court that the FDA submissions relied upon by Amphastar were sufficiently "routine" that they fell outside the scope of the § 271(e)(1) safe harbor.
The opinion contrasts the routine nature of the submissions made based on the use of Momenta's method with "non-routine submissions that may occur both pre- and post-approval, such as the submission of investigational new drug applications ('INDs'), new drug applications ('NDAs'), supplemental NDAs, or other post-approval research results." Because Amphastar's submissions using Momenta's patented technology were routine they were not "reasonably related to the development and submission of information" as required by the statute to qualify for the safe harbor, and the District Court's decision to the contrary was clearly erroneous in the majority opinion. This decision is based in part on the panel's apprehension that deciding in Amphastar's favor would "result in manifest injustice" because it would be the first case to have § 271(e)(1) encompass "activities related to ongoing commercial manufacture and sale."
In a footnote the opinion sets out the views of the government as amicus, wherein "the government argued that the routine use of a patented testing process in the commercial manufacture of a drug is not 'reasonably related to the development and submission of information to [the] FDA' and thus not shielded from liability by § 271(e)(1).'" While the decision is consistent with these sentiments, there is nothing in the opinion indicating that the government's views formed any basis for the opinion.
Judge Dyk dissented in part, over the question of whether Teva infringed under § 271(g). The grounds of his dissent are based in part on his disagreement with the majority's interpretation of Bayer v. Housey, which he believes is too limited and does not apply in this case. Specifically, the dissent contends that the patented method is used in the manufacturing process itself and becomes a part thereof, and thus should be encompassed in the "making" requirement contained in the statutory language. The dissent does not attempt to set forth any definitive rubrics on the question, which Judge Dyk recognizes must be considered on a "case-by-case" basis. Rather his dissent is based on his opinion that the majority misapplied the law in this instance, based at least in part on his understanding of the manufacturing process, complexity of the enoxaparin drug product and the need to rely on the patented testing methods to produce batches of the drug that conform with the standards set out by the FDA for the approved drug (which Judge Dyk characterizes as being "an integral part of the manufacturing of the enoxaparin drug product"). He finds legal support for his opinion in Bio-Tech. Gen. Corp. v. Genentech, Inc., 80 F.3d 1553, 1561 (Fed. Cir. 1996), and logical force in his perception that the majority's interpretation would lead to the "anomalous result" that "[p]atents on purification methods or the quality control method at issue here, which may be integral to the regulatory or commercial viability of a product, but which do not create or transform a product, combine components, or confer new properties, could be freely infringed simply by outsourcing those processes abroad." Congress could not have intended this result according to Judge Dyk and thus he dissents.
And in the District Court decision here (In re Lamictal Direct Purchaser Antitrust Litig. 18 F. Supp. 3d 560, 561 (D.N.J. 2014), the Court held that the Actavis decision was limited to instances where there was a cash payment from the brand company to the generic challenger.
A more definitive answer (for now) comes from the Third Circuit's decision issued last Friday in the appeal from the Lamictal case. And the answer is that Actavis is not limited to reverse payment settlement agreements having a cash transfer to the generic, but can also include other types of consideration, in particular a promise from the brand not to market an authorized generic during the 180-day exclusivity period (see opinion).
The Court's rationale (from a panel having no members in common with the panel that decided the K-Dur appeal that prompted Supreme Court review of reverse payment settlement agreements) illustrates the consequences of Justice Breyer's opinion. The case involved Teva's generic versions of Glaxo-SmithKline's (GSK) Lamictal® (lamotrigine) drug for epilepsy and bipolar disorder; the patent on the drug expired in 2008. The court considered the antitrust question in view of an earlier (January 2005) decision that claim 1 of the patent was invalid as anticipated by prior art. The settlement agreement contained three provisions where, in exchange for settling ANDA litigation asserting challenges to GSK's patents, Teva would be allowed to market generic lamotrigine chewables (an annual $50 million market), 37 months before patent expiry and tablets (an annual $2 billion market), at the end of the patent's term. (The difference in the times of entry and the sizes of the markets played a role in the Court rejecting the argument that the agreement was precompetitive due to early market entry of the generic drug.) In particular, the agreement contained a provision that Teva's generic tablets and chewables would not face competition from GSK's own "authorized generic." Plaintiffs here are a class of "direct purchasers" (i.e., wholesale drug sellers).
The Third Circuit panel vacated the District Court's grant of a motion to dismiss for failure to state a claim under Fed. R. Civ. Pro. 12(b)(6) and remanded. The Court rejected the argument that the Actavis decision should be limited to cash payments. Rather, the Court considered the benefit to generic challenger Teva arising from branded drug maker Glaxo SmithKline's agreement not to market an "authorized generic" version of lamotrigine during Teva's 180-day exclusivity period as part of a settlement agreement ending ANDA litigation between the companies. In making this determination the Court recognized that although there was no frank money payment from GSK to Teva, the complaint recited sufficient allegations that the Court should apply the "rule of reason" to plaintiffs' challenge to the agreement for violating Sections 1 and 2 of the Sherman Act. Important in its analysis was that GSK would be permitting Teva to be the sole generic entering a $2 billion market for Lamictal® capsules and that the value to Teva was "an unexplained large transfer of value from the patent holder to the alleged infringer" that implicated the rationale provided by the Supreme Court in its Actavis decision for subjecting the agreement to antitrust scrutiny under the rule of reason.
The Court specifically held that the "no-authorized generic" portion of the agreement "may represent an unusual, unexplained reverse transfer of considerable value from the patentee to the alleged infringer and may therefore give rise to the inference that it is a payment to eliminate the risk of competition" which were the types of agreements (albeit in the context of cash payments) that Actavis held were subject to antitrust scrutiny.
The Court's prejudices (consistent with the general anti-patent consensus that has arisen in this century) are reflected in how the Court begins it analysis, stating that patents are "the exception to the general rule against monopolies" and that "Patent Clause itself reflects a balance between the need to encourage innovation and the avoidance of monopolies which stifle competition without any concomitant advance in the 'Progress of Science and useful Arts,'" citing Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 146 (1989) (perhaps the first instance of the Court enunciating Justice Breyer's "Goldilocks" view of this need for balance in patenting). (It is illustrative that the Court cites in support of this balancing idea a passage from Areeda and Hovencamp's treatise, Antitrust Law, that states "Patent law . . . serves the interests of consumers by protecting invention against prompt imitation in order to encourage more innovation than would otherwise occur.") And the panel cited Justice Breyer's Actavis decision, specifically the cases cited therein (and rebutted by the Chief Justice in his dissent) to support these prejudices.
It seems to us that no-AG agreements are likely to present the same types of problems as reverse payments of cash. The no-AG agreement here may be of great monetary value to Teva as the first-filing generic. In Actavis, the Supreme Court recognized generally that the 180-day exclusivity period is "possibly 'worth several hundred million dollars,'" and may be where the bulk of the first-filer's profits lie.
There are also plausible indicia that this pattern held true here: the Amici States point out that "[p]ublic records show that generic sales of Lamictal in 2008 were some 671 million dollars," so the no-AG agreement "was clearly worth millions of dollars, if not hundreds of millions of dollars[,] to the generic."
The Court also rejected defendants' argument that the "no authorized generic" portion of the agreement was an exclusive license, inter alia because (in a footnote) the panel stated that the agreement was not an exclusive license and in the body of the opinion opined that licensing could not be used solely for anticompetitive effect.
The result of this decision is that, at least in the Third Circuit, the scope of agreements subject to the rule of reason (or at least not subject to being dismissed for failure to state a claim) includes those having "no authorized generics" provisions in addition to agreements involving cash payments to generic challengers from branded drug makers. This upsets several earlier decisions in this circuit, and it remains to be seen whether other circuits accept the panel's reasoning in considering this question.
The Hatch Waxman statute created a safe-harbor provision, found at 35 U.S.C. § 271(e)(1), that allows ANDA filers and others to practice patented inventions without fear of infringement liability, provided the acts are "solely for uses reasonably related to the development and submission of information" to the FDA. Even though the plain language of the statute appears to indicate that the exemption to infringement would be narrow, the Supreme Court and the Federal Circuit have been gradually expanding its scope. Earlier this week, the Federal Circuit continued this expansion in Classen Immunotherapies, Inc. v. Elan Pharmaceuticals, Inc. Not only does the safe-harbor provision apply to post-filing activity, as previous cases have indicated, but the safe harbor can also be sought by NDA holders that happen to practice someone else's patents for the purposes of FDA submissions.
It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention . . . solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.
The Supreme Court began the expansion of this provision in Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193 (2005). That case arose from a Federal Circuit appeal, in which that court held that the safe harbor did not apply to preclinical testing because it is too far removed, or "back down the chain of experimentation," for the development of submitted information to the FDA. The Supreme Court could not find support in the statute to exclude "certain information from the exemption on the basis of the phase of research in which it is developed or the particular submission in which it could be included." Id. at 202. Thereafter, preclinical data enjoyed the safe harbor.
With regard to post-FDA filing activity, the Federal Circuit initially indicated that it was not a "phase of research" entitled to the exemption. In Classen Immunotherapies, Inc. v. Biogen IDEC, presumably unrelated to the present case, a majority of the merits panel (then-Chief Judge Rader joined by Judge Newman) held that "routine" post-approval submissions are outside the safe harbor (over a vigorous dissent by Judge Moore). In the following case, Momenta Pharm. v. Amphastar Pharm., the roles were reversed, with Judge Moore finding herself in the majority (with Judge Dyk), and then-Chief Judge Rader filing a dissent. In this case, the Federal Circuit interpreted the statutory language broadly, stating that the "language unambiguously applies to submissions under any federal law, providing that the law 'regulates the manufacture, use, or sale of drugs.'" Therefore, according to current Federal Circuit jurisprudence, the safe harbor is not limited to pre-approval activities (Momenta); it is not limited to information that is actually submitted to the FDA, provided the FDA requires that records be maintained for possible inspection (Momenta); and it is okay if the information has alternative uses, such as for fund raising or other business purposes (Abtox, Inc. v. Exitron Corp.).
commercializing the newly identified product information based upon the analyzed data.
36. The method of claim 33, wherein the commercializing step comprises formatting the data relating to at least one new adverse event associated with exposure to, or use of the product, or documenting same, such that a manufacturer or distributor of the product must inform consumers, users or individuals responsible for the user, physicians or prescribers about at least one new adverse event associated with exposure to or use of the product.
59. A proprietary kit comprising (i) product and (ii) documentation notifying a user of the product of at least one new adverse event relating to the product, wherein determination of the new adverse event is based upon the data provided by the method of claim 36.
And if these claims appear to have patent eligibility issues, the Court pointed out that 35 U.S.C § 101 issues were not raised on appeal.
Elan had filed an NDA for metaxalone, a muscle relaxant, which it markets under the brand-name Skelaxin. In 2001, Elan learned that some third party studies called into question the designation of the metaxalone tablets. Elan responded by conducting additional clinical studies showing that the bioavailability of Skelaxin was significantly increased when administered with food. As a result, Elan filed a supplemental NDA (sNDA), and sought patent protection using this data, the claims of which were subsequently invalidated in another litigation. Classen sued Elan, alleging infringement of the '472 patent for studying the effects of food on bioavailability, using the data to identify a new use, and commercializing the new use. Elan argued that all of this activity was protected by 271(e)(1).
With regard to the clinical studies, the Federal Circuit held that "Elan's clinical study and its FDA submissions" were well within the scope of the protection. Elan had developed this information for submission to the FDA in order to change the product label, and the Court found this to be anything but "routine." This addressed any potential concerns of the impact of the Classen case. With regard to the patent filings and kits being developed, the Federal Circuit found that the District Court did not determine whether these post-filings activities would fall within the exemption. Therefore, the case was vacated and remanded.
Important in this decision, the Federal Circuit pointed out that the mere disclosure or use of the information would not be an "act of infringement." Also, the Court provided "the following observation" about the cases. First, filing a patent application is generally not an act of infringement. "It is the act of approaching an agency of the government in order to obtain a limited privilege and to fulfill a public." Second, the use of such information "submitted to the FDA on the product label after sNDA approval generally cannot be an infringement." In fact, the opposite is true -- it is required by law that this information be submitted to the FDA. But, the Court left open the question whether there was any use or commercializing which would not be exempt. For those answers, we will have to stay tuned.
Earlier this month, the Federal Circuit rendered a decision on damages in what may be the last of a long-running series of ANDA cases involving AstraZeneca's Prilosec® (omeprazole) franchise. As set forth in the opinion, AstraZeneca's lawsuit against Apotex was part of the "second wave" of ANDA litigation, wherein the District Court apportioned into two sets of four defendants from the eight ANDA filers sued by AstraZeneca in the Southern District of New York starting at the end of the last century. The disposition of these cases formed an important part of the Federal Circuit's determination that the District Court properly decided the damages question for all but the final six months of AstraZeneca's exclusive right to market Prilosec®.
(c) an outer layer disposed on said subcoating comprising an enteric coating.
(c) an enteric coating layer surrounding said subcoating layer, wherein the subcoating layer isolates the alkaline reacting core from the enteric coating layer such that the stability of the preparation is enhanced.
The District Court set forth the results of both the first wave (In re Omeprazole Patent Litig., 84 F. App'x 76 (Fed. Cir. 2003) ("Omeprazole I"), and In re Omeprazole Patent Litig., 483 F.3d 1364 (Fed. Cir. 2007) ("Omeprazole II")) and second wave (In re Omeprazole Patent Litig., 536 F.3d 1361 (Fed. Cir. 2008)) of ANDA litigation, wherein in the first wave only Kremers Urban Development Co. and Schwartz Pharma (collectively, "KUDCo") were found not to infringe the patents-in-suit due to changes in the patented omeprazole formulation. Here, Apotex entered the marketplace while the second wave of litigation was on-going (i.e., an "at risk" launch) and the District Court found (and the Federal Circuit affirmed) that the Apotex formulation infringed the patents in suit. Additionally, the Federal Circuit affirmed the District Court's determination that Apotex had not shown that the patents-in-suit were invalid.
The district court found that after those generic manufacturers entered the market, the price of generic omeprazole declined, but not significantly. However, the court found that the sales of Prilosec, Astra's prescription PPI drug, declined precipitously, both before 2002, when Prilosec was being replaced by Astra's newer prescription PPI drug, Nexium, and after 2002, when the generic manufacturers entered the market. Nonetheless, Astra continued to reap substantial revenues from Prilosec, which had net sales of $865 million in 2003, and $361 million in 2004.
After surveying the relevant data, the district court concluded that the price of generic omeprazole remained "relatively and uncharacteristically high" as of November 2003, due to the fact that only KUDCo was operating "freely and without the threat of litigation hanging over it." The district court therefore concluded that if Apotex had obtained a license from Astra in November 2003, it would have had "a golden opportunity to take significant market share away from both other generic manufacturers and perhaps even branded PPIs by launching at a lower price."
[A]s Apotex prepared to enter the market in 2003, it expected to experience roughly $581 million in sales during its first five years on the market, and that in the first year it expected to earn profits of $27 million at a profit margin of 92.5 percent. Moreover, the court found that Apotex knew that sales of its generic omeprazole would help Apotex sell its other pharmaceutical products. Accordingly, the court found that because Apotex "expected to (and did) make substantial profits from its sale of omeprazole, it would have been willing to pay a large share of those profits for the right to use [Astra's formulation] patents in 2003."
Finally, the District Court found that Apotex would not have been able to develop its own non-infringing omeprazole formulation "within a reasonable period of time" or copy others' formulations.
Taking these considerations into account, the District Court applied the factors relating to determining a reasonable royalty from Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), to arrive at a royalty rate of 50% of gross margins of Apotex's omeprazole sales. Included in these calculations were Apotex's expectations that it could expect a gross margin for omeprazole more than twice that of its other generic products, and that this expectation would be even higher if Apotex had licensed AstraZeneca's patents (which the Court found AstraZeneca would have been "especially reluctant" to do). This resulted in a damages judgment of $76,021,994.50 (plus prejudgment interest). Not surprisingly, this appeal followed.
[T]he benefits to Apotex, and the costs to Astra, of a license to the formulation patents would have been considerable. For its part, Apotex stood to (and did) garner immense profits from selling its generic omeprazole product. The district court found that even after a 50 percent royalty payment to Astra, Apotex would be left with a profit margin of 36 percent, which was "solidly in the range of 31 to 48% margins [Apotex] typically earned on its products at the time."
The inability for Apotex to "design around" AstraZeneca's patents was also a factor properly considered by the District Court according to the Federal Circuit. "When an infringer can easily design around a patent and replace its infringing goods with non-infringing goods, the hypothetical royalty rate for the product is typically low" said the panel, citing Grain Processing, 185 F.3d at 1347; see also Riles v. Shell Exploration & Prod. Co., 298 F.3d 1302, 1312 (Fed. Cir. 2002). The panel also credited with approval the District Court's consideration of licenses between AstraZeneca and Andrz (50-70% royalty) and Teva (54% royalty).
The Federal Circuit rejected Apotex's application of the "entire market value rule," wherein the generic company argued that damages should only be determined by that portion of the claimed invention that distinguished it from conventional components (in this case, the omeprazole molecule comprising the claimed formulation for which patent protection had expired). The panel stated that this rule applied "when small elements of multi-component products are accused of infringement . . . where the patented feature creates the basis for customer demand or substantially creates the value of the component parts," citing Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1318 (Fed. Cir. 2011). The District Court had found that "there is little reason to import [the entire market value] rule for multicomponent products like machines into the generic pharmaceutical context." While not willing to make a per se rule, the Federal Circuit concurred that the rule was not applicable here, because "Astra's patents cover the infringing product as a whole, not a single component of a multi-component product."
The Federal Circuit did agree with Apotex that the District Court erred in assessing damages using its reasonable royalty calculation for the period after the patents-in-suit expired, based on AstraZeneca's pediatric exclusivity period. The District Court had based its decision on its conclusion that, had Apotex obtained a license providing AstraZeneca with a reasonable royalty, that license would have applied to sales made during this period. The District Court erred, according to the panel, because the basis for royalties was AstraZeneca's patent exclusivity, not its regulatory exclusivity. The Federal Circuit did not, as Apotex urged, base its decision on purported violation of the Supreme Court's decision in Brulotte v. Thys Co., 379 U.S. 29 (1964), because in that case the public had the right to practice the patented invention because the patent had expired, and a license extending past patent expiry impermissibly and wrongfully leveraged the patent right against the licensee. Congress had authorized the extended exclusivity period; what Congress had not authorized was using the provisions of 35 U.S.C. § 284 as the basis for such damages. On these grounds the Federal Circuit reversed this portion of the District Court's damages determination and remanded for recalculation.
Late last month, the Federal Circuit handed Exela Pharma Sciences its latest defeat in litigation relating to its ANDA filing on Cadence Pharmaceuticals' injectable acetaminophen-based drug Ofirmev®, in Exela Pharma Sciences LLC v. Lee. This litigation was collateral to Exela's ANDA case against Cadence, and involved an attack on one of the underlying Orange Book listed patent, on the grounds that the Patent and Trademark Office had exceeded its statutory authority in granting the patent because it was not timely filed.
1. A method for preparing an aqueous solution with an active [principle of phenolic] nature susceptible to oxidation, which is paracetamol, while preserving for a prolonged period, comprising de-oxygenation of the solution by bubbling with at least one inert gas and/or placing under vacuum, until the oxygen content is below 2 ppm, and optionally the aforementioned aqueous solution with an active principle is topped with an inert gas atmosphere heavier than air and placed in a closed container in which the prevailing pressure is 65,000 Pa maximum, and the oxygen content of the aqueous solution is below 2 ppm, and optionally the deoxygenation of the solution is completed by addition of an antioxidant.
Revival of abandoned application, terminated reexamination proceeding, or lapsed patent.
(a) Unavoidable. If the delay in reply by applicant or patent owner was unavoidable, a petition may be filed pursuant to this paragraph to revive an abandoned application, a reexamination proceeding . . . , or a lapsed patent. A grantable petition pursuant to this paragraph must be accompanied by: . . .
(b) Unintentional. If the delay in reply by applicant or patent owner was unintentional, a petition may be filed pursuant to this paragraph to revive an abandoned application, a reexamination proceeding . . . , or a lapsed patent. A grantable petition pursuant to this paragraph must be accompanied by: . . .
37 C.F.R. § 1.137 (2000). Exela's argument on its face was simple: the statute required a showing (to the Director's satisfaction) that abandonment (through failure to comply by the deadline) was unavoidable, not just unintentional. Because SCR did not make such a showing (and the PTO did not require it), reviving the U.S. national phase application that resulted in the '218 patent was contrary to statute and outside the PTO's authority. Thus, Elexa argued, the patent was void ab initio (and they could not be precluded from having their ANDA granted and entering the marketplace based on this patent).
The PTO denied Exela's petition, and the company then sued in district court under the provisions of the Administrative Procedures Act. The District Court at first denied the Office's motion to dismiss under Fed. R. Civ. Pro. 12(b)(1) (lack of standing) and 12(b)(6) (failure to state a cause of action) but later granted the Office's motion based on an intervening decision by the 4th Circuit. This decision, Hire Order, Ltd. v. Marianos, 698 F.3d 136, 170 (4th Cir. 2012), held that "facial" challenges to agency action (i.e., inter alia that they are on their face outside the scope of the agency's statutory authority) must be brought within a six-year statute of limitations period under 28 U.S.C. § 2401(a), which period starts on the adoption date of the regulation. Because the Office had adopted its version of the regulation, 37 C.F.R. § 1.137 in 1982 the Court held that Elexa was barred from bringing its challenge now.
The Federal Circuit affirmed in a per curiam decision by Judges Newman and Dyk; former Chief Judge Rader had been on the panel at oral argument but has since left the bench. The per curiam opinion focused its discussion of the issues on the availability to a third party of judicial review on a granted patent. Exela stressed the provisions of the APA codified at 5 U.S.C. § 702 for the proposition that any "person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action" should have recourse to the courts for review. In addition to the statute, Exela cited Supreme Court case law to the effect that there is a "strong presumption that Congress intends judicial review of administrative action," citing Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667, 670 (1986), and later, Block v. Community Nutrition Institute" 467 U.S. 340, 350–51 (1984) ("'where substantial doubt about the congressional intent exists, the general presumption favoring judicial review of administrative action is controlling.'"). Exela's best argument was that the plain language of the statute, combined with the distinctions between unavoidable and unintentional abandonment in the PTO's own regulations, was sufficient evidence that the Office had acted outside its proper scope (ultra vires) and that without judicial review SCR (and Cadence) would be able to enforce the invalid '218 patent.
The Office's argument was less substantive but more procedurally straightforward: simply, "that there is no authority for third parties to collaterally challenge the correctness of PTO revival rulings" and thus Exela's challenge must fail even if the District Court was wrong in holding that its petition was time barred.
The panel agreed, saying that they saw no evidence that Congress intended to permit third parties to challenge agency action like the one Elexa brought in this case. The opinion applied Federal Circuit law, citing Helfgott & Karas, P.C. v. Dickinson, 209 F.3d 1328, 1334 (Fed. Cir. 2000), and distinguished the precedent cited by Elexa, Morganroth v. Quigg, 885 F.2d 843 (Fed. Cir. 1989). In that case the issue was whether a patent applicant could invoke judicial review of agency action regarding revival of an abandoned application (that answer is yes), which was clearly contemplated by the APA, and was thus not controlling with regard to the question before the Court of whether a third party could invoke the APA to seek judicial review on such a question. This conclusion was amply supported, according to the opinion, by "[t]he Patent Act's 'intricate scheme for administrative and judicial review of PTO patentability determinations,' and 'the Patent Act's careful framework for judicial review at the behest of particular persons through particular procedures.'" Pregis Corp. v. Kappos, 700 F.3d 1348, 1357 (Fed. Cir. 2012).
This portion of the opinion was unsurprising. Both remaining judges penned concurring opinions and in these the tale becomes more interesting. Judge Dyk's opinion is, perhaps predictably, the less traditional one and in fact calls into question the Federal Circuit's opinion in Aristocrat Technologies Australia Pty Ltd. v. International Game Technology, 543 F.3d 657 (Fed. Cir. 2008) (curiously, a case not cited or relied upon in the per curiam opinion). In that case, the Federal Circuit ruled that "a defendant in an infringement action could not assert improper revival of an abandoned patent application as a defense in that action." While stating that "[w]e need not decide here whether Aristocrat was correctly decided," and that "the Patent Act is inconsistent with third party APA review" (thus affirming the per curiam opinion regarding the question at hand), Judge Dyk took the time to "write separately to explain why [he thinks the Court's] decision in Aristocrat was problematic."
• The Aristocrat panel did not consider whether there is a presumption of judicial review of agency action, citing Sackett v. Envtl. Prot. Agency, 132 S. Ct. 1367, 1373 (2012); Bowen, 476 U.S. at 670; Block v. Cmty. Nutrition Inst., 467 U.S. 340, 348–49 (1984); see also 5 U.S.C. § 702 (conferring a general cause of action upon persons "adversely affected or aggrieved by agency action within the meaning of a relevant statute") to support his (not expressly stated) view that there is such a presumption. Judge Dyk apparently considers this presumption to have become stronger in light of the per curiam decision in this case, because without APA or any alternative mechanism the only remaining way for a third party to base a challenge on improper revival would be as an invalidity defense in an infringement action.
• The Judge also sees unfairness in the current state of the law, where a patent applicant can seek judicial review of an abandonment determination under Morganroth v. Quigg while an accused infringer cannot.
• Finally, Judge Dyk believes that the Aristocrat panel erred in limiting its consideration of "nonstatutory" invalidity defenses have been used with approval by courts, citing obviousness-type double patenting, patent misuse, and the "shop rights" doctrine as "well-established defense[s] not specified in the statute."
After reciting this litany Judge Dyk noted for the record that "[i]n the future, en banc action to reconsider Aristocrat may be appropriate."
If any prosecution irregularity or procedural lapse, however minor, became grist for a later assertion of invalidity, accused infringers would inundate the courts with arguments relating to every minor transgression they could comb from the file wrapper. This deluge would only detract from the important legal issues to be resolved -- primarily, infringement and validity.
Whether and to what extent a particular statute precludes judicial review is determined not only from its express language, but also from the structure of the statutory scheme, its objectives, its legislative history, and the nature of the administrative action involved.
In a complex scheme of this type, the omission of such a provision is sufficient reason to believe that Congress intended to foreclose [the action].
Also relevant to Judge Newman's assessment is that Congress has since amended § 371(d) to remove the requirement for unavoidability.
With all respect, my colleague errs in stating that such major substantive issues [antitrust violation, patent misuse, and shop right], each of which is a traditional defense, "cannot be so easily distinguished" from an excuse for a missed filing date. If judges cannot easily distinguish the significance of antitrust violation from a missed date, we must try harder.
These concurrences point out a developing problem with patent jurisprudence in this era. The Federal Circuit era was one characterized by increased stability in U.S. patent law. In recent times, over seemingly the entire scope of the law that stability has been eroded, primarily by the courts; e.g., see the district court's treatment of the Office's interpretation of 35 U.S.C. § 120 in Immersion Corp. v. HTC Corp. The issues Judge Dyk raises suggest that Patent Office practices of long standing will continue to come under attack; it may seem funny when Justice Kagan calls the Office "patent-happy" in open court, but it is another thing when challenges to how the Office has consistently interpreted the patent statute threaten the validity of thousands of patents. Patentees are entitled to some measure of stare decisis and settled expectations, and the Patent Office is entitled to deference (Chevron or otherwise) in support of patentees' quiet repose.
Can a Federal district court ever have subject-matter jurisdiction to hear a declaratory judgment action of non-infringement for a disclaimed patent? Of course, the Federal Circuit explained this week in the Apotex Inc. v. Daiichi Sankyo, Inc. case, at least if you are in the wild world of the Hatch-Waxman statute. In this case, Apotex was a second ANDA filer seeking to market a generic version of Daiichi's Benicar® drug product for treating hypertension. The first filer, Mylan Pharmaceuticals, Inc. (or Matrix Laboratories, which is now Mylan) was unable to invalidate one of the Orange Book listed patents during its ANDA litigation with Daiichi, so a judgment of infringement was entered against it. However, Daiichi disclaimed the only other listed patent -- one which would have been expired later. Nevertheless, despite requests for delisting, both patents were still found in the Orange Book. Thus, Apotex included a Paragraph III certification for the patent that had already been litigated, but was forced to include a Paragraph IV certification for the disclaimed patent. Not only did Daiichi not sue Apotex after receiving notification of the certifications, but it filed a motion to dismiss for a lack of case or controversy which the U.S. District Court for the Northern District of Illinois granted. Mylan also moved to intervene, but this was dismissed as moot. The Federal Circuit reversed, in part, because even though the patent was essentially non-existent, "Apotex has a concrete, potentially high-value stake in obtaining the judgment it seeks," and therefore a substantial controversy existed to warrant the issuance of a declaratory judgment.
This case is specific to Hatch Waxman litigation. Most of the analysis focused on the statute and the Congressional purpose in passing both the original statute, as well as the changes related to forfeiture of the 180-day generic exclusivity included in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ("the MMA"). However, case-or-controversy analysis is universal. The Court highlighted four considerations for this case: (1) whether the parties lack a concrete stake in the outcome of the declaratory judgment action in view of the patent disclaimer; (2) whether the alleged harm is traceable to Daiichi; (3) whether Apotex' failure to obtain tentative approval caused the case to be too contingent on future events; and (4) whether Apotex's alleged harm can even be redressed in view of the statutory scheme surrounding Mylan's generic exclusivity period.
The Federal Circuit quickly rejected the District Court's conclusion that the statutory disclaimer of the Orange-Book listed patent means there is no adversity between the parties. In this case, it is the listing of the patent that creates the "adverse concrete interests" in the outcome for all three parties (including Mylan). In other words, "by any common-sense measure, the parties have substantial, concreate stakes in whether Apotex secures the non-infringement judgment it seeks" to allow entry into the market. This stems in large part from the substantial revenue that Apotex stands to gain if it can obtain early approval, as well as the commensurate revenue that both Daiichi and Mylan stand to lose.
The Court also rejected Daiichi's argument that the harm is not traceable to it because the delayed entry of Apotex's generic drug product does not rest solely with Mylan and its period of generic exclusivity. Again, it is the listing that gave rise to the harm. If Daiichi's disclaimed patent, U.S. Patent No. 6,878,703 ("the '703 patent") were not listed in the Orange Book, Mylan would have only been left with a Paragraph III certification for U.S. Patent No. 5,616,599 ("the '599 patent") after losing at the district court. Without the '703 patent, Mylan would have been forced to forfeit its eligibility for the 180 days of generic exclusivity. Therefore, it was the patent that was as-of-then improperly listed in the Orange Book that was supporting Mylan's exclusivity period. It was this barrier that was caused by the "listing" that Apotex was seeking to eliminate through a declaratory judgment. The Court did clarify, though, that the propriety of the original patent listing was not important. Instead, "as long as it is 'likely, as opposed to merely speculative,' that the consequence would be the concreate one of advancing the date of approval by the FDA and market entry by Apotex."
The Court next considered whether the relief sought by Apotex would be too uncertain prior to its receiving tentative approval for its ANDA to support a declaratory judgment action. After all, the ultimate relief would depend on the action of a third party -- the FDA. However, the Federal Circuit noted that the "congressional judgment" found in the Hatch Waxman statute "makes clear that tentative approval for [the ANDA filer] is not a precondition to adjudicating the patent issue."
The filing of the ANDA is an "artificial act of infringement" that allows litigation to take place prior to FDA approval. In fact, nowhere in the statute is it suggested that approval is required -- rather it is the filing of the ANDA that is the act of infringement. To find otherwise, the Court continued, would be nonsensical. The ANDA applicant must include the certification in its ANDA, it must give prompt notice to the NDA holder, and the NDA holder has only 45 days in which to bring suit to obtain the statutory 30-month delay. It is unrealistic to think that approval (or tentative approval) will occur in these 45 days. "Accordingly," the Court concluded, "tentative approval of an ANDA is generally not a precondition to the existence of a case or controversy concerning patents listed in the Orange Book."
Finally, the Court looked to whether the declaratory judgment action could actually redress the harm faced by Apotex, specifically whether a judgment of non-infringement would trigger the forfeiture of Mylan's 180-day exclusivity. The cases before the MMA amendments are not necessarily applicable because many of the changes introduced by that statute were meant to address the problems resulting from the period of generic exclusivity. For example, before the MMA amendments, the first ANDA filer could essential "park" its exclusivity, thereby preventing any follow-on applicant from reaching market before the Orange Book listed patents expired. The MMA introduced various "forfeiture" provisions to make it possible for secondary ANDA filers to break through this roadblock.
One of these "forfeiture" events is a final, non-appeal decision that a patent is invalid or not infringed. Specially, the first filer has 75 days from the date that the first applicant or another applicant with "tentative approval" brings "an infringement action . . . against that applicant with respect to the patent or in a declaratory judgment action brought by the applicant with respect to the patent, a court enters a final decision from which no appeal (other than a petition to the Supreme Court for a writ of certiorari) has been or can be taken that that patent is invalid or not infringed." There are two conditions that must be met -- (1) there must be tentative approval and (2) there must be a finding of non-infringement. Apotex can therefore "trigger forfeiture in this case by obtaining the judgment it seeks here and by obtaining tentative approval . . . ." The Court rejected Mylan's assertion that the "tentative approval" must precede the initiation of a DJ action of non-infringement for a lot of the same reasons expressed above.
Because the Federal Circuit found that a case or controversy existed, it reversed the judgment of the District court. In addition, the Court reversed the denial of Mylan's motion to intervene. Mylan has a direct and immediate interest, and it stands to either gain or lose because of the "direct legal operation and effect of the judgment."
Is the ability to obtain personal jurisdiction against an ANDA filer for a Hatch-Waxman-type litigation going to become exceedingly more difficult? In the past, jurisdiction against such a defendant was often predicated on general jurisdiction, analyzing whether the party's contacts with the forum "are so continuous and systematic as to render it essentially at home in the forum State." Daimler AG v. Bauman, 134 S. Ct. 746, 761 (2014). The Supreme Court in the Daimler case made the finding of general jurisdiction for a foreign entity more difficult. Consistent with that holding, Judge Sleet in the AstraZeneca AB v. Mylan Pharmaceuticals, Inc. case found that an ANDA filer's contacts with Delaware were insufficient to confer general jurisdiction -- contacts that might have been sufficient previously. Nevertheless, Judge Sleet did find that the act of sending the paragraph IV notification to AstraZeneca in Delaware provided sufficient minimum contact for the Delaware court to exercise specific jurisdiction. Because this result is allegedly inconsistent with an outcome from a North Carolina District Court, Mylan sought certification for interlocutory appeal, which Judge Sleet granted on December 17, 2014 (Certification Order). In so deciding, the judge noted the huge volume of Hatch-Waxman cases pending in Delaware, and that therefore "immediate appeal may indeed advance the termination of this and other ligitation." Certification Order at FN 1. Needless to say, if the Federal Circuit disagrees with Judge Sleet's determination, this could have an immediate and sufficient impact on Hatch-Waxman cases in the state of Delaware, and potentially elsewhere.
The present case stems from Mylan's filing of two ANDAs to seek approval to market generic versions of AstraZeneca's ONGLYZA® and KOMBIGLYZETM drug products. The first of these is for saxagliptin hydrochloride tablets, and the latter is for saxagliptin hydrochloride and metformin hydrochloride extended release-release tablets. AstraZeneca filed suit in Delaware, alleging that the District Court had jurisdiction because Mylan "purposefully availed itself of the rights and benefits of Delaware law by engaging in systematic and continuous contacts with Delaware." Nevertheless, AstraZeneca failed to allege in its complaint that Mylan engaged in any specific activities in Delaware related to the present action, other than a generic statement that "this action arises from actions of Mylan directed toward Delaware." Instead, as in many similar cases, AstraZeneca pointed to the "regular and continuous" business transactions within the state, which included the selling of pharmaceutical products. Because Mylan derived substantial revenue from the sale of such products, it was alleged, Mylan had "availed itself of the privilege of conducting business within the State of Delaware." Moreover, Mylan had been previously sued in Delaware without objecting to personal jurisdiction and even asserting counterclaims (thereby availing itself of the court). This case was filed at about the same time as cases against several other ANDA filers, all of which were consolidated under the heading AstraZeneca AB v. Aurobindo Pharma., Ltd.
As a refresher of first-year Civil Procedure jurisprudence, the U.S. Constitution's due process clause requires that a defendant not located within a state must "have certain minimum contacts with it such that maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. State of Wash., Office of Unemployment Compensation & Placement, 326 U.S. 310, 316 (1945). There are two ways to satisfy this requirement -- the presence of specific or general jurisdiction. As suggested above, general jurisdiction can exist even if the cause of action arises outside of the forum state, provided that the party's contacts with the state are "so continuous and systematic as to render it essentially at home in the forum State." Last term, the Supreme Court in the Daimler case pointed out that being "at home" really only existed for a narrow set of circumstances, such as at the place of incorporation or the principal place of business. This effectively reduced the instances in which general jurisdiction exists. However, a court can still have specific jurisdiction over a case if "the litigation results from alleged injuries that 'arise out of or relate to'" activities that are purposefully directed to residents of the forum. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-73 (1985). Therefore, for example, in the Hatch-Waxman contact, any previous contacts that an ANDA-filer may have had with a particular state are irrelevant to the determination of specific jurisdiction. Instead, only contacts related to specifics of the case can be considered.
In the present case, Mylan is a West Virginia corporation. It prepared its two ANDAs in West Virginia and filed them in Maryland (where the FDA is located). Mylan is registered to do business in Delaware, and has appointed a registered agent to accept service of process in Delaware, both of which were required by the state. Otherwise, Mylan allegedly has no property or employees in Delaware. Because of these limited contacts with the state, Mylan challenged personal jurisdiction via a Motion to Dismiss. Departing from previous opinions, Judge Sleet determined that the common ways of finding general jurisdiction in the past were no longer viable in view of Daimler. For example, the Court noted that obtaining substantial revenue from drug sales in the state was no longer sufficient. If Delaware was able to assert general jurisdiction over Mylan, Judge Sleet explained, than that would permit the "exercise of general jurisdiction in every [s]tate," which was precluded by the Daimler case. Moreover, the Court rejected AstraZeneca's argument that Mylan consented to general jurisdiction by registering to do business in the state, because Daimler still requires minimum contacts in such circumstances (which still did not exist). Therefore, the Court found general jurisdiction did not exist.
Nevertheless, Mylan's motion to dismiss was denied because of specific jurisdiction. The only "specific" acts that the Court could point to were the filing of the ANDA and the sending of the notification letter into the state, but these were sufficient. Of course, the ANDA was not filed in Delaware, but Judge Sleet noted that the consequences of this "real act" of filing was (or will be) suffered in Delaware. This is partially because the Federal Circuit had already held that jurisdiction is not conferred in Maryland simply because the FDA is located there. The sending of the notice letter was probably more significant because, according to Judge Sleet, the cause of action arose from the receipt of this correspondence, which trigged the 45-day window to file suit. Moreover, the traditional notions of fair play and substantial justice weighed in favor of exercising specific jurisdiction because Mylan is no stranger to litigation in the state of Delaware. To hold otherwise would force AstraZeneca to bring the lawsuit in Mylan's state of West Virginia (which the Court found contrary to the "balance" established by Congress in the statute). Finally, the Court did consider that there were at least ten generic defendants, and resolution of each of these cases in a single district promoted judicial economy.
All eyes will be in the Federal Circuit to see how it addresses this issue of personal jurisdiction. Judge Sleet noted that he was not aware of any other judicial decisions regarding personal jurisdiction in Hatch-Waxman cases that considered the impact of the Daimler case. Because it could impact not only the present case, but may other litigations, the Court found certification appropriate. We will continue to monitor and report on the progress of the interlocutory appeal.

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