Opinion ID: 184499
Heading Depth: 3
Heading Rank: 3

Heading: Does a Literal Reading Produce Absurd Results?

Text: The FDA contends that the statute should not be readliterally, because such a reading would produce results thatare clearly inconsistent with the intent of Congress in enacting the statute. We do not think that it is sufficiently clearthat Congress intended the win-first reading of the statuteto justify disregarding the most natural reading of the statutory text. We begin by setting aside the problems of the first applicant who is never sued or who loses his lawsuit. The FDAmay or may not be right that a literal reading of the statuteto permit a first applicant to receive an exclusivity period inthese situations would be inconsistent with the statutoryscheme; we do not decide this question. As we have alreadypointed out, the fatal flaw in the FDA's absurd resultsargument is that the agency could have addressed these two(supposedly) problematic situations without imposing thebroad win-first rule by creating narrower exceptions to sec__________ 10 The FDA said only that [o]ne comment said the rule, asdrafted, created an incentive for frivolous claims of patent invalidityor noninfringement because it would give ANDA applicants exclusivity even if the applicant was unsuccessful in defending againstthe patent owner's lawsuit. The comment would replace the phrase'to be sued within 45 days' with 'and to successfully defend a suitbrought within 45 days.' The FDA agrees and has amendeds 314.107(c) accordingly. Abbreviated New Drug ApplicationRegulations, 59 Fed. Reg. 50,338, 50,353 (1994). tion 355(j)(5)(B)(iv) for the no suit and lost suit cases. Indeed, the FDA has come close to doing so already. As forfirst applicants who are never sued, the initial draft of 21C.F.R. s 314.107(c)(1) contained, instead of the successfuldefense requirement, only a requirement that the first applicant have been sued for patent infringement within 45 daysof the patent owner's receipt of notice in order to be eligiblefor the statutory period. Abbreviated New Drug ApplicationRegulations, 54 Fed. Reg. 28,872, 28,929 (1989). This language would have corrected the problem of first applicantswho are never sued (and only that problem).11 As to first applicants who lose their suits, Mova observed atoral argument that one of the FDA's current regulationssuggests a possible way of addressing this problem (andindeed may already have solved it). That regulation providesthat, if an ANDA applicant who makes a certification underparagraph IV later loses its patent-infringement suit, it mustamend its ANDA to make a new certification under paragraph III, and provides that the ANDA will then no longerbe considered to be one containing a certification underparagraph [IV]. 12 The FDA claims that the regulation does __________ 11 Even this may not be the narrowest way of resolving theunderlying problem. After all, Congress may have intended toreward the first ANDA applicant for his enterprise whether or nothe is later sued; the statutory scheme only runs into problems ifthe first applicant never starts selling his product. An alternativemight be to prescribe a period within which a first applicant whohas not been sued must bring his product to market in order tobenefit from the exclusivity period. 12 The relevant regulation provides: An applicant who has submitted a certification under paragraph (a)(12)(i)(A)(4) of this section and is sued for patent infringement within 45 days of the receipt of notice sent under s 314.95 shall amend the certification if a final judgment in the action against the applicant is entered finding the patent to be infringed. In the amended certification, the applicant shall certify under paragraph (a)(12)(i)(A)(3) of this section that the patent will expire on a specific date. Once an amendment or letter for the change has been submitted, the application will no not have the effect of rendering the exclusivity period inapplicable after such an amendment, and of course we owe deference to the agency on the interpretation of its own regulations.13 But even if the present version of the regulation doesnot accomplish the desired end, the FDA could presumablydraft a regulation that did so. The FDA did not choose to adopt these narrower ap- proaches; instead, it adopted the win-first reading of thestatute, which deviated from the literal language of thestatute by allowing an application to be approved while thefirst applicant's lawsuit was pending and before either statutory trigger had been satisfied. In analyzing the successfuldefense requirement, then, we must ask whether the win-firstreading is needed to avoid a result demonstrably at oddswith the intentions of [section 355(j)(5)(B)(iv)'s] drafters. Ron Pair Enterprises, 489 U.S. at 242. The FDA did not explain its decision to adopt the win-firstapproach (instead of a narrower approach) in issuing itsregulation, see 59 Fed. Reg. 50,338, 50,353 (1994), and it hasnot presented any argument for that approach in this litigation. There is, however, a compelling argument for the winfirst approach, which is advanced by Mylan. What if the first __________ longer be considered to be one containing a certification under paragraph (a)(12)(i)(A)(4) of this section. If a final judgment finds the patent to be invalid and infringed, an amended certification is not required. 21 C.F.R. s 314.94(a)(12)(viii)(A). 13 The FDA said at oral argument that its regulation is intendedonly for housekeeping purposes, and that it should not be read toaffect the application of section 355(j)(5)(B)(iv). We owe substantial deference to an interpretation by the FDA of its own regulations, which has controlling weight unless it is plainly erroneous orinconsistent with the regulation. S.G. Loewendick & Sons, Inc. v.Reich, 70 F.3d 1291, 1294 (D.C. Cir. 1995) (quoting Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994)). We confess to notunderstanding how the FDA can reconcile its reading with thelanguage of its own regulation, but stress that this issue has notbeen briefed and is not necessary to the decision in this case. applicant does a poor job of designing its product to avoidinfringing the patent-holder's patent, and the second applicant does a much better job? The first applicant would thenbe sued for infringement by the patent-holder, but the secondapplicant would not. Indeed, this is exactly what Mylanclaims happened in the present case (although Mova vigorously contests this claim). In such a situation, a literal reading of the statute admittedly produces a strange result. The second applicant, eventhough it has designed its product well and avoided suit, isbarred from selling its product until the first applicant'slawsuit finishes (maybe years later). The ingenious secondapplicant is thus harmed, and the public is deprived of thefruits of its ingenuity--a result seemingly at odds with Congress's apparent purposes, in enacting section 355(j)(5)(B)(iv),of rewarding innovation and bringing generic drugs to marketquickly. Indeed, the first applicant could even collude withthe original patent-holder to prolong their litigation, andthereby keep the second applicant's drug off the marketindefinitely.14 Yet we are not persuaded that this third anomaly sufficesto show that a literal reading of the statute leads to resultsmanifestly inconsistent with the intent of Congress. Thelegislative history of section 355(j)(5)(B)(iv) is limited, andfails utterly to specify or even provide any signals as towhether Congress intended that a second ANDA applicantwho was not sued for patent infringement would have to waituntil one of the statutory triggers was satisfied, or instead be __________ 14 An amicus brief filed by Biovail Corporation Internationaldramatically illustrates an analogous risk, not necessarily involvingcollusion. Biovail was the second applicant to file a paragraph IVANDA for a generic version of a heart medication. Biovail was notsued by the pioneer drug company. The first applicant and thepioneer drug company are now in litigation, and, Biovail claims, thepioneer is paying the first applicant some $10 million per quarter inexchange for the first applicant's agreement not to sell its productafter the 30-month waiting period expires. Under these circumstances, neither party would seem to have maximum incentive tobring the litigation to a close. able to immediately market its product. Congress may verywell never even have thought about this question. But it isnot inconceivable that Congress meant what the statute says,i.e., that the second applicant would have to wait for the firstlawsuit to finish. The fact that a patent-holder fails to sue anANDA applicant does not necessarily mean that it has concluded that the applicant did a good job of designing aroundits patent. The patent-holder might have simply made amistake, and negligently failed to file suit (or filed a few daysafter the end of the 45-day window). If a second ANDAapplicant who is not sued by the patent-holder is allowed toimmediately market its product, then the patent-holder'serror will have unfairly deprived the first applicant of thebenefits of the exclusivity period. Moreover, even if thesecond applicant is sued, the successful-defense requirementwill allow him to receive FDA approval immediately once the30-month waiting period expires. Given the nature of litigation, the first applicant's patent-infringement suit could easilytake longer than thirty months. The successful-defense requirement may therefore have the effect of allowing manyANDA applicants to sell their products without regard to theexclusivity period, a result that Congress might not haveintended.15 Additionally, there may be other ways in which a secondapplicant with a better product can bring that product tomarket before the first lawsuit terminates. Amicus curiae,Teva Pharmaceutical Inc. (Teva), has pointed to one possibility. Teva observes that the court-decision trigger, by itsterms, can be satisfied by any decision of a court in an actiondescribed in clause (iii) holding the patent which is thesubject of the certification to be invalid or not infringed. Teva claims that the actions described in clause (iii) are not __________ 15 Under the FDA's regulation, once a later applicant's drug hasbeen approved, it will apparently remain on the market even if theexclusivity period later begins to run. The regulation only appliesthe 180-day exclusivity period to ANDAs that are subsequent to asuccessful defense by the first applicant, 21 C.F.R. s 314.107(c)(1),and an ANDA that has already been approved does not fall in thiscategory. limited to infringement suits by the patent-holder, becausethe last two sentences of clause (iii) say: Until the expiration of forty-five days from the date the notice made under paragraph (2)(B)(i) is received, no action may be brought under section 2201 of Title 28 for a declaratory judgment with respect to the patent. Any action brought under section 2201 shall be brought in the judicial district where the defendant has its principal place of business or a regular and established place of business. 21 U.S.C. s 355(j)(5)(B)(iii). Thus, Teva says, a declaratoryjudgment action provides an alternative way of satisfying thecourt-decision trigger. An ANDA applicant who doesn't wantto wait for the first applicant's patent infringement litigationto finish can bring its own declaratory judgment actionagainst the patent-holder, and, if the second applicant prevails, the court-decision trigger will be satisfied, and it will beallowed to market its product. Teva's argument is elegant and textually persuasive. Italso provides a particularly appropriate solution in cases inwhich the second applicant has done a better job of designingaround the pioneer drug manufacturer's patent than the firstdid: in such cases, the second applicant should find it (relatively) easy to win a declaratory judgment action against thepatent-holder. Teva's reading thus rewards those applicants(and only those applicants) who have built a better mousetrap. Teva's reading is not, however, flawless. One difficulty isthat the 180-day exclusivity period will seemingly always goto the first applicant, no matter whose suit satisfies the courtdecision trigger; the statute provides that any applicationsafter the first one shall be made effective not earlier thanone hundred and eighty days after the court-decision triggeris satisfied. 21 U.S.C. s 355(j)(5)(B)(iv).16 It seems odd toreward the first applicant if some later applicant was the __________ 16 This is the most natural reading of the statute, but we do notnecessarily find that it is the only permissible reading. party that actually prevailed in the patent-infringement litigation.17 Mylan has also noted what may be a more serious fly in the(patented) ointment. In order to satisfy the Constitution'scase or controversy requirement, a party filing a declaratoryjudgment action must show that there is a controversy ofsufficient immediacy and reality to warrant the issuance of adeclaratory judgment. Federal Express Corp. v. Air LinePilots Ass'n, 67 F.3d 961, 964 (D.C. Cir. 1995) (quotingMaryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S.270 (1941)). To employ Teva's declaratory-judgment device,a party would therefore need to demonstrate a reasonableapprehension of facing a lawsuit. Federal Express Corp., 67F.3d at 964. The Federal Circuit has exclusive jurisdictionover appeals in actions for patent infringement. 28 U.S.C.s 1292(c). Under the Federal Circuit's caselaw, a declaratory judgment plaintiff must be able to point to some conductby the patent-holder that suggests that the plaintiff is at riskof being sued; the fact that the patent-holder has sued othersis pertinent, but not always conclusive. See West Interactive Corp. v. First Data Resources, 972 F.2d 1295, 1297-98(Fed. Cir. 1992). An ANDA applicant seeking to bring adeclaratory judgment action might have difficulty in meetingthis test, especially if the patent-holder disclaims any intention of bringing suit.18 __________ 17 Indeed, the first applicant may still be enmeshed in patentinfringement litigation when the 180-day period begins, and therefore be unable to take advantage of the exclusivity period. 18 One way of eliminating strategic behavior of this kind might befor the FDA to provide by regulation that a court decision rulingthat an ANDA applicant cannot reasonably anticipate suit by apatent-holder is equivalent, for purposes of section 355(j)(5)(B)(iv),to a ruling that the patent is invalid or not infringed. After all, thepurpose of the scheme set up by section 355(j)(5)(B) is to allow thepatent-holder an opportunity to defend its patent. If the patentholder declines even to create enough adversity to support adeclaratory judgment action, it might well be fair to deem thepatent-holder to have conceded noninfringement, at least for purposes of the statutory scheme. Certainly, there would be no danger The problem of the meritorious second applicant is a realone, but the successful-defense requirement is too blunt aninstrument to solve it. The requirement cannot be reconciledwith the literal language of the statute, and alters the statutory scheme in a number of ways that do not clearly servecongressional intent. We do not, of course, foreclose theFDA from attempting to address the problem of the meritorious second applicant in some narrower way, as long as thatsolution conforms to the statute. For now, however, we arepresented with the successful-defense requirement, and weuphold the district court's decision to enjoin the FDA's enforcement of that requirement.