Opinion ID: 209444
Heading Depth: 3
Heading Rank: 1

Heading: Alphapharm

Text: On appeal, Alphapharm argues that its Paragraph IV letter was not baseless under structural obviousness law. Alphapharm asserts that its certification letter made out a prima facie case of obviousness and that, contrary to what the district court held, Alphapharm was not required to explain why a skilled artisan would have identified compound b as the lead compound in its certification letter. As evidence of what it argues was a reasonable chance to succeed, Alphapharm points to Judge Dyk's concurrence in the prior decision of this court. Alphapharm also argues that the fact that its original theory did not prevail at trial falls far short of clear and convincing evidence required for the district court to find that its certification letter was baseless. Alphapharm further claims that affirming the district court's ruling would chill challenges by generic drug companies to otherwise invalid patents by requiring the inclusion of every possible theory of invalidity in a certification letter rather than allowing an ANDA filer to develop its theories during the course of discovery. Similarly, Alphapharm argues that the district court erred in finding litigation misconduct because Alphapharm consistently argued an obviousness theory and merely honed its arguments in response to documents produced during discovery by Takeda. Alphapharm also disagrees with the court's characterization of certain of its evidence as an attempt to inject an inequitable conduct argument into the obviousness inquiry. Alphapharm and Mylan are supported in this appeal by amicus curiae, the Generic Pharmaceutical Association, who submitted a brief and was permitted to orally argue before the court. Amicus argues that failure to reverse the district court's finding of an exceptional case would deter generic applicants from presenting defenses at trial that were not included in their certification letters. Amicus asserts that changing defenses is normal conduct during litigation, especially in patent cases, when ANDA applicants prepare certification letters without the benefit of discovery. As a result, amicus argues, ANDA filers should be allowed to litigate the best available theories at trial, regardless of their inclusion in certification letters. Amicus asserts that if the district court decision stands, it will have a chilling effect on future ANDA patent challenges. Takeda responds that Alphapharm's argument, that it should benefit from a presumption of obviousness based on structural considerations, has already been rejected by this court. In addition, Takeda points out that Alphapharm's certification letter included scientific errors and that Judge Dyk's concurrence did not address the claim of the '777 patent specific to pioglitazone, the invalidity of which was necessary for Alphapharm's success. Finally, Takeda asserts that the record amply supports the district court's finding that Alphapharm presented constantly shifting, but always baseless, obviousness arguments. That finding, Takeda argues, supports the court's conclusion that Alphapharm's obviousness theories never had a good faith basis and thus warranted an exceptional case finding. As noted by Takeda, we have already held that the district court did not commit reversible error by refusing to apply a presumption of motivation to select compound b as the lead compound based on structural obviousness. See Takeda, 492 F.3d at 1360. Accordingly, although Alphapharm made brief reference to compound b in its Paragraph IV letter, it failed to provide any reason in its Paragraph IV letter to identify compound b as the lead compound and thus did not make out a prima facie case of obviousness based on the structural similarity between compound b and pioglitazone. Any support Alphapharm hopes to gain from Judge Dyk's concurrence is moreover lacking, as his opinion addressed the possible over-breadth of two claims in the '777 patent and not, as Alphapharm claims, structural obviousness based on the prior disclosure of compound b. Id. at 1364 (Dyk, J., concurring). Furthermore, although it seems reasonable to expect assertions of invalidity based on prior art to remain relatively consistent as the prior art should be known when the certification of invalidity is made, we do not believe that the district court faulted Alphapharm simply for changing its obviousness argument at trial from the theory advanced in the Paragraph IV letter. Rather, the court methodically examined a number of shortcomings in Alphapharm's Paragraph IV letter, which were made obvious by Alphapharm's constantly shifting set of arguments, that supported the finding that the certification was baseless. September Opinion, 459 F.Supp.2d at 236. The court noted the stark contrast between Alphapharm's focus on compound b as the lead compound at trial with its discussion in the certification letter of two other compounds disclosed in Sohda II and how, as a result, Alphapharm did not grapple with the many impediments evident in Sohda II for choosing compound (b) as a lead compound. Id. The court also catalogued scientific errors in Alphapharm's certification letter that the court saw as insidious and as underscoring that Alphapharm did not act with due care or in good faith in filing its certification. Id. at 237. The court found that other assertions in Alphapharm's Paragraph IV letter were baseless because of undisputed evidence of pioglitazone's superiority and that Alphapharm abandoned these arguments at trial because they were unsupportable, not because Alphapharm made a tactical decision regarding which argument should be emphasized at trial. Id. at 238. The court concluded that the deficiencies in Alphapharm's Paragraph IV letter were so glaring that they highlighted that Alphapharm acted in bad faith in filing its Paragraph IV certification. Id. at 239. The court also discussed in depth what it saw as Alphapharm's litigation misconduct. The court traced the many iterations of Alphapharm's theory of obviousness and pointed to Alphapharm's utter failure to account for the identification of compound b as the lead compound as required under structural obviousness law. Id. at 241. The court reasoned that Alphapharm had over two years to develop its obviousness arguments in its Paragraph IV letter, and its failure to explain why its Statement was so flawed and why its description of obviousness went through such a dramatic evolution was overwhelming evidence of Alphapharm's bad faith. Id. at 243. Finally, the court discussed assertions made by Alphapharm that were unrelated to the obviousness claim and created confusion, wasted valuable court time, and increased the burden of the litigation on the parties. Id. When considering the totality of the circumstances, the court stated bluntly, This case was not close. Id. at 244. The court's conviction in its findings could hardly be clearer. A number of different circumstances may support the finding of an exceptional case, including vexatious or unjustified litigation or frivolous suit, of which there must be clear and convincing evidence. Beckman, 892 F.2d at 1551. Indeed, one of the purposes of § 285 is to prevent `gross injustice' when the accused infringer has litigated in bad faith. Id. at 1552. In Yamanouchi Pharmaceutical Co. v. Danbury Pharmacal, Inc., we stated that [t]he joint operation of §§ 271(e) and 285 require the paragraph (2) infringer to display care and regard for the strict standards of the Hatch-Waxman Act when challenging patent validity.... The Hatch-Waxman Act thus imposes a duty of care on an ANDA certifier. 231 F.3d 1339, 1347 (Fed.Cir.2000). Alphapharm now argues that Yamanouchi 's duty of care language lays out a simple negligence standard. Alphapharm further contends that this standard conflicts with Beckman, which, Alphapharm argues, establishes the far higher threshold of gross negligence. Alphapharm is incorrect on both points. In the first place, Beckman does not set out a gross negligence standard. In Beckman, we stated that § 285 prevents gross injustice where a party has demonstrated bad faith and misconduct during litigation. Beckman, 892 F.2d at 1553. In addition, Yamanouchi does not establish a simple negligence standard, nor did the district court in this case apply such a standard. Although Yamanouchi states that ANDA applicants owe a duty of care under the Hatch-Waxman Act, it explained that applicants fail to meet this duty when they file baseless certifications. 231 F.3d at 1347. Thus, Yamanouchi does not stand for the proposition that ANDA applicants who are merely negligent can trigger § 285. In this case, the district court correctly found that Alphapharm's filing would amount to litigation misconduct supporting an exceptional case finding if it were baseless and if it fail[ed] to present even a prima facie case of invalidity in filing the paragraph IV certification. September Opinion, 459 F.Supp.2d at 232. Thus, the trial court did not apply a simple negligence standard but found Alphapharm's filing baseless. Moreover, the trial court found misconduct during litigation. Given the district court's familiarity with the parties and the issues and its thorough discussion of Alphapharm's certification letter and litigation strategy, we cannot say that the court committed clear error in finding that this was an exceptional case due in part to the misconduct of Alphapharm. See Beckman, 892 F.2d at 1552 & n. 1 (noting that the district judge was in the best position to monitor litigation strategy and find bad faith).