Court Opinion

ID: 9495001
Source: CourtListenerOpinion
Date Created: 2023-08-05 15:52:09.61253+00
Date Added: 2024-06-11T17:56:45.674204
License: Public Domain

GAJARSA, Circuit Judge,
concurring in judgment.
I agree with the majority that the judgment of the district court should be affirmed; however, I disagree with their attempt to impose an administrative requirement by an expansive interpretation *785of two of our prior decisions. The majority fails to address the key issues in this appeal and adds an entire layer of administrative complexity to create a sizeable procedural Gordian knot.
On the one hand, the majority affirms the lower court because it did not abuse its discretion in dismissing the action with prejudice after determining that the notice sent to 3M by Barr was in compliance with 21 U.S.C. § 355(j)(2)(B)(ii). Maj. Op. at 783. On the other hand, the majority holds that section 355(j)(2)(B)(ii) cannot be enforced by a private party in a patent infringement action but must be enforced in the context of the Administrative Procedure Act (“APA”). Maj. Op. at 782-83. It is inconsistent to say that the trial court did not abuse its discretion in finding the notice sufficient in a non-APA action and thereby dismissing the action with prejudice, and then to conclude that the sufficiency of notice cannot be considered outside the context of the APA. If it is the case that the sufficiency of the notice cannot be considered, then the appropriate remedy is not to affirm the dismissal with prejudice but to remand to the district court to either stay the action pending administrative review of the sufficiency, or dismiss the action without prejudice so that it can be brought after the FDA has reviewed the sufficiency of the notice. Either way, affirming the district court implicitly condones its authority to assess the sufficiency of the notice. Moreover, the determination of who has authority to eon-sider the sufficiency of notice is not necessary to resolve the issue before us. Once this court decides that there has been no abuse of discretion, the case is resolved. Furthermore, the issue of who can properly determine the sufficiency of notice was not raised below and was not briefed before us. Therefore, the holding with respect to the determination of section 355(j)(2)(B) is unadulterated sophistry.
The majority opinion fails to recognize the requirements of the specific policies expressed by the Congress when it enacted the Abbreviated New Drug Application (“ANDA”) statutory scheme, 21 U.S.C. § 355(j). The statute was an attempt by the Congress to balance the competing interests between the patented drug and the generic drug manufacturers. In order to create an incentive for generic manufacturers, Congress provided the first manufacturer to successfully challenge a drug patent with a 180-day exclusivity period.

I. The Definition of “Court Decision”

The relevant statutory provision 21 U.S.C. § 355(j)(5)(B)(iv)(II)1 has been interpreted to mean that the exclusivity period is triggered by a court decision finding that the patent is either invalid or not infringed. The Food and Drug Administration (“FDA”) recognized that a “court decision” for purposes of triggering the exclusivity period in 21 U.S.C. § 355(j)(5)(B)(iv) is not limited to actions involving the first ANDA filer, as did the *786District of Columbia Circuit, in Teva Pharmaceuticals v. FDA, 182 F.3d 1003, 1009, 51 USPQ2d 1432, 1437 (D.C.Cir.1999) (stating that a dismissal for lack of case or controversy of a declaratory judgment suit for noninfringement brought by a second ANDA filer “would appear to meet the requirements of a ‘court decision’ ”). The majority wisely agrees. Maj. Op. at 780. The reason that “court decision” must be interpreted so that the exclusivity period can be triggered by a court decision of noninfringement or invalidity involving a subsequent ANDA filer, is that allowing first ANDA filers to hold up all the generic drug manufacturers for an indefinite amount of time would stifle Congress’s attempt to expedite the marketing of generic products. The provision allowing a second ANDA filer to trigger the period by a “court decision” comports with the statute and the intent of Congress.

II. The Availability of a “Court Decision”

The Congressional policy with respect to generic drugs is clear: generic manufacturing of a drug should be allowed as soon as it is determined that it does not violate patent rights. Given this policy, the statute’s provisions on the exclusivity period should not be read to reach nonsensical results. It should not be the case that a second ANDA filer whose method may infringe a patent can bring a suit that can trigger the exclusivity period, while a second ANDA filer whose method clearly does not infringe a patent cannot. In an effort to avoid this potential problem that has not yet been addressed by this court, Barr Labs, in this case, availed itself of the opportunities provided by the statutory scheme, by giving notice (albeit ambiguous) and inducing 3M to bring an action against them. The majority today, instead of addressing the correct interpretation of the statutory scheme and quelling the need for anyone to exploit the system, places another hurdle before the ANDA filers who clearly do not infringe: they must now survive administrative challenge to their paragraph IV certification notice before they can obtain a favorable judgment. There is no doubt that this process will increase the time period required to resolve these time-sensitive cases because district court infringement suits will need to be stayed pending administrative proceedings or may not be brought if the NDA patentee avails himself of the APA procedures proposed by the majority.

III. The Creation of an Unnecessary Administrative Quagmire

Today the majority extends the requirement of Mylan Pharmaceuticals, Inc. v. Thompson and Andrx Pharmaceuticals, Inc. v. Biovail Corp. beyond the necessary demands of the statute. Mylan, 268 F.3d 1323, 60 USPQ2d 1576 (Fed.Cir.2001); Andrx, 276 F.3d 1368, 61 USPQ2d 1414 (Fed.Cir.2002). In both of those cases the issue was whether or not the FDA had taken proper action in listing patents in the Orange Book. In Mylan, the ANDA applicant sued the FDA and the New Drug Application (“NDA”) holder alleging that the pertinent patent had been improperly listed in the Orange Book. Mylan, 268 F.3d at 1328, 60 USPQ2d at 1580. This court held that there was no private cause of action for de-listing a patent. Id. at 1332, 268 F.3d 1323, 60 USPQ2d at 1583. In Andrx, the ANDA applicant had complained before the district court that the FDA and the NDA patentee had improperly listed a patent in the Orange Book in violation of the APA and that they improperly stayed approval of Andrx’s ANDA based on the patentee’s filing of a new patent, which the FDA said triggered a new 30-month stay period. Andrx, 276 F.3d at 1373-74, 61 USPQ2d at 1415-16. *787This court held that Mylan did not preclude an APA challenge to the listing of a patent, but such a challenge was not properly brought in this case. Id. at 1378-80, 61 USPQ2d at 1421-22. It also held that the district court did not have authority, in an infringement action as opposed to an action under the APA, to shorten the stay period because of alleged improper conduct before the FDA. Id. at 1376, 276 F.3d 1368, 61 USPQ2d at 1419-20. Both cases dealt with an action that alleged improper conduct by the FDA or between the paten-tee and the FDA. Thus it was logical to conclude that the FDA and the district court should have the first opportunity to resolve the matter. In this case, however, there is no improper conduct before the FDA. The plaintiffs do not complain of an improper interaction between the defendants and the FDA. The alleged improper conduct according to 3M is the failure of the notice sent by Barr Labs to 3M. The FDA plays no role in the disputed matter. There is no statutory or regulatory requirement that the notice be sent to the FDA. Mylan and Andrx should not govern the case because in each of their instances FDA action was involved. Therefore the majority, by its blanket dicta, creates an unnecessary barrier to ANDA applicants that is totally outside of the statute.
Moreover, the proposed shift of the burden to the FDA is not required. The majority now metamorphosizes into an APA action the sufficiency of the statutory notice requirement, failing to perceive that under subparagraph 355(j)(2)(B)(i) an applicant who makes a paragraph IV certification “shall include in the application a statement that the applicant will give notice required by clause (ii) to—
(i) each owner of the patent ... and
(ii) the holder of the approved [NDA] application.... ”
The statute does not require the notice to be filed with the FDA, the body now given the task of adjudicating its sufficiency. Moreover, the FDA regulations, which are in compliance with the statute, state that “[a] copy of the notice itself need not be submitted to the agency.” 21 C.F.R. § 314.95 (2001). This court is imposing its own independent requirement that the notice be subject to an APA proceeding. We are substituting our interpretation of the statute over the FDA’s regulatory requirement by such an imposition.
Indeed the FDA has stated that the sufficiency of the notice is an issue to be resolved by the applicant and the patent owner without involvement of the FDA. The FDA published responses to comments about the proposed notice rules in the Federal Register. With respect to 21 C.F.R. § 314.52, which is almost identical to 21 C.F.R. § 314.95 but relates to the filing of subsequent NDAs which may infringe listed patents instead of ANDAs which may infringe listed patents, the FDA stated:
18. FDA received three comments on proposed § 314.52(c) regarding the content of a notice of certification of invalidity or noninfringement of a patent.... In general, the statute requires a notice of certification of invalidity or nonin-fringement of a patent to state that an application has been submitted and to include “a detailed statement of the factual and legal basis of the applicant’s opinion that the patent is not valid or will not be infringed.” (See section 505(b)(3)(B) and 355(j)(2)(B)(ii).) The proposed rule listed the type of information FDA considered necessary to enable patent owners to decide whether to sue for patent infringement. The list at proposed §§ 314.52(c) and 314.95(c) generated substantial debate, as reflected in the comments, as to the details to be *788included in a notice. The agency is neither prepared nor required to become involved in issues concerning sufficiency of notice for purposes of enforcing patent law. Therefore, FDA has revised both §§ 314.52(c) and 314.95(c) so that the detailed statement of the factual and legal basis behind the applicant’s opinion that the patent is invalid, unenforceable, or will not be infringed must include: (1) For each claim of the patent alleged not to be infringed, a full and detailed explanation why the claim is not infringed; and (2) for each claim of a patent alleged to be invalid or unenforceable, a full and detailed explanation of the grounds supporting the allegation. These provisions, as revised, paraphrase the statutory language. The sufficiency of the notice, for purposes of patent enforcement, is an issue to be resolved by the applicant and the patent owner or the holder of the approved application.
Abbreviated New Drug Application Regulations; Patent Exclusivity Provisions, 59 Fed.Reg. 50338, 50342 (October 3, 1994) (emphasis added).
With respect to § 314.95, which relates to AND As, the FDA stated:
54. One comment recommended that FDA revise the regulation by adding a mechanism whereby FDA or the United States Patent and Trademark Office would review notices of certification of invalidity or noninfringement. The comment would have FDA suspend the 45-day period provided by section 505(j) (4) (B) (iii) of the act until FDA or the United States Patent and Trademark Office determined that the notice was sufficient.
FDA declines to adopt the comment. As stated elsewhere in this preamble, FDA lacks expertise in patent law. Moreover, neither FDA nor the United States Patent and Trademark Office currently has access to the additional resources that would be necessary to review these notices, and a patent certification review system would subject the agency’s decisions to questioning that would require further resource expenditures and create delays in the statutoi~y patent certification and challenge process.
The agency does note, however, that in cases where the notice was deemed inadequate by the patent owner or exclusive patent licensee and where the ANDA applicant subsequently amends the notice, the agency may, if the applicant amends its ANDA with a written statement that the date of receipt of the amended notification should be considered the date of receipt of notice, use the date of the amended notification to begin the 45-day statutory period for institution of an action for patent infringement (see 54 FR 28872 at 28888; see also § 314.95(f)).
60. FDA received five comments regarding the exact contents of a notice of certification of invalidity or noninfringement of a patent....
As noted above in comment 18, the agency did not anticipate that the list in proposed § SUp. 95(c) would generate the debate reflected in the comments and, again, reiterates that the agency does not have the expertise or the desire to become involved in issues concerning patent law and sufficiency of notice. Therefore, FDA has revised § 314.95 to require that the detailed statement of the factual and legal basis behind the applicant’s opinion that the patent is invalid, unenforceable, or will not be infringed include the following: (1) For each claim of a patent alleged not to be infringed, a full and detailed explanation why the claim is not infringed; and (2) *789for each claim of a patent alleged to be invalid or unenforceable, a full and detailed explanation of the grounds supporting the allegation (see §§ 314.52(c)(6)(i) and (c)(6)(h) and 314.95(e)(6)(i) and (c)(6)(h)). Disputes involving the sufficiency of the notice must be resolved by the applicant, patent owner, and holder of the approved application rather than by action on the part of FDA
61. FDA also received five comments opposing the use of a referee or designated intermediary under proposed § 314.95(c)(6)(ih). The proposal would have required an ANDA applicant to describe a mechanism for disclosing the formulation or composition of the proposed drug product to the patent owner or to a “designated intermediary who will act as a referee” on the subject of patent invalidity or noninfringement. The comments said that the concept was legally unauthorized and interfered with the traditional judicial process for resolving patent disputes.

FDA agrees that traditional processes for resolving patent disputes, which do not involve the agency’s regulations, are appropriate under these circumstances. Therefore, the agency has deleted the provision in its entirety.

Id. at 50349-50 (emphasis added).
Thus, there is no doubt that FDA has no intention of entering into disputes over the sufficiency of the notice, and indeed is unqualified to do so. The statute is shent on the question of who determines the sufficiency of notice. Given such a statutory ambiguity, this court must defer to the agency’s reasonable interpretation of the statute. Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843-44, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The FDA has reasonably interpreted the statute to mean that the FDA should not review the sufficiency of the notice. This court must defer to that interpretation.

TV. The Declaratory Judgment as the “Court Decision”

The majority’s addition of new administrative obstacles certainly deters Barr-like behavior, but it does so by creating a disincentive to challenging drug patents. Yet the problem with Barr’s type of “hoodwinking” is not that we do not want companies to challenge drug patents. The problem is that there is no sense in making second ANDA filers go through this labyrinth to trigger the exclusivity period that they have every right to trigger. Congress wanted second ANDA filers to be able to manufacture their drugs quickly if they could prove noninfringement. In a case where proving noninfringement is effortless, it should be a simple process.
Appellants argue that it would be frivolous for someone in Barr’s position to seek a declaratory judgment of noninfringement. Therefore, appellants assert, Barr would have no standing to bring a declaratory judgment action.2 This misses the logic of the statute. Because Congress has mandated a court decision in order to trigger the exclusivity period, it is incumbent upon second ANDA filers who clearly do not infringe to obtain a court decision. This is in accordance with the congressional purpose. They can do this in one of two ways: by being sued for infringement or by seeking a declaratory judgment.
Congress contemplated the availability of a declaratory judgment action in this context. Subsection (j)(5)(B)(iii) states:
*790(iii) If the applicant made a certification described in subclause (IV) of paragraph (2)(A)(vii), the approval shall be made effective immediately unless an action is brought for infringement of a patent which is the subject of the certification before the expiration offoHy-five days from the date the notice provided under paragraph (2)(B)(i) is received. If such an action is brought before the expiration of such days, the approval shall be made effective upon the expiration of the thirty-month period beginning on the date of the receipt of the notice provided under paragraph (2)(B)(i) or such shorter or longer period as the court may order because either party to the action failed to reasonably cooperate in expediting the action, except that—
(I) if before the expiration of such period the court decides that such patent is invalid or not infringed, the approval shall be made effective on the date of the court decision,
(II) if before the expiration of such period the court decides that such patent has been infringed, the approval shall be made effective on such date as the court orders under section 271(e)(4)(A) of Title 35, or
(III) if before the expiration of such period the court grants a preliminary injunction prohibiting the applicant from engaging in the commercial manufacture or sale of the drug until the court decides the issues of patent validity and infringement and if the court decides that such patent is invalid or not infringed, the approval shall be made effective on the date of such court decision.
In such an action, each of the parties shall reasonably cooperate in expediting the action. 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. § 366(j)(6)(B)(iii) (Supp. V 1999) (emphasis added). This language indicates that while a declaratory judgment action is not available for ANDA filers during the forty-five day period, it is available after that period.
This court has repeatedly articulated the requirements for a declaratory judgment action in patent suits.
In declaratory judgment patent suits, there are two prerequisites for establishing the existence of a case or actual controversy between the parties: first, the defendant must have engaged in conduct giving rise to a reasonable apprehension on the plaintiffs part that it will face an infringement suit or the threat of one if it commences or continues the activity in question; second, the plaintiff must have actually produced the accused device or have actually prepared to produce it.
Cordis Corp. v. Medtronic, Inc., 835 F.2d 859, 862, 5 USPQ2d 1118, 1120 (Fed.Cir.1987) (citing, inter alia, Jervis B. Webb Co. v. Southern Sys., Inc., 742 F.2d 1388, 1398-99, 222 USPQ 943, 949 (Fed.Cir.1984)); see also Sandt Tech., Ltd. v. Resco Metal and Plastics Corp., 264 F.3d 1344, 1356 n. 4, 60 USPQ2d 1091, 1098 n. 4, (Fed.Cir.2001). The second prong of the test has been characterized as requiring “present activity which could constitute infringement or concrete steps taken with the intent to conduct such activity.” BP Chems. Ltd. v. Union Carbide Corp., 4 *791F.3d 975, 978, 28 USPQ2d 1124, 1126 (Fed.Cir.1993).
Given that Congress contemplated the availability of declaratory judgment actions for ANDA filers, as seen in subsection (j)(5)(B)(iii), the language of 21 U.S.C. § 355(b)(1) setting forth the requirements for filing a NDA is not coincidental. That section states, in pertinent part that:
The applicant shall file with the application the patent number and the expiration date of any patent which claims the drug for which the applicant submitted the application or which claims a method of using such drug and with respect to which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner engaged in the manufacture, use, or sale of the drug.
21 U.S.C. § 355(b)(1) (emphasis added). Thus, by the terms of the statute, filing an NDA application meets prong one of the declaratory judgment case or controversy requirement, because filing the application requires the patentee to maintain that an infringement suit could “reasonably be asserted” against one who “engages in the manufacture, use or sale of the drug.” This is “conduct giving rise to a reasonable apprehension on the plaintiffs part that it will face an infringement suit or the threat of one.” Cordis, 835 F.2d at 862, 5 USPQ2d at 1120.
Prong two is also met by statutory terms under 35 U.S.C. § 271 which defines submitting an ANDA application under § 355(j) for a drug claimed in a patent or the use of which is claimed in a patent to be an act of infringement. Eli Lilly and Co. v. Medtronic, Inc., 496 U.S. 661, 678, 110 S.Ct. 2683, 110 L.Ed.2d 605 (1990). This clearly meets the test as a “present activity which could constitute infringement.”
Therefore, the logical conclusion, which also solves the dilemma in this case, is to make it clear that a declaratory judgment suit is available for ANDA filers who are not sued by the NDA patentee within the 45-day period. The two acts of (1) a pat-entee listing a patent in the Orange Book through the filing of a NDA, and (2) a generic manufacturer filing an ANDA, together meet the case or controversy requirement so as to allow a declaratory judgment action of noninfringement.
It is noteworthy that the District of Columbia Circuit, which also handles a large number of ANDA cases, has suggested an alternative method of explaining the availability of declaratory judgment actions in this context. In Mova Pharmaceutical Corp. v. Shalala, the court stated,
[T]he Federal Circuit has had no occasion to decide whether there is “a controversy of sufficient immediacy and reality” to support a declaratory judgment action, ... when the plaintiff requires a judgment under section 355(j)(5)(B) in order to bring its product to market. It is possible that such a statutorily-created bottleneck, coupled with the statute’s express reference to declaratory judgment actions as a means of relieving that bottleneck, might suffice to allow a plaintiff to show the existence of a “case or controversy” without demonstrating an immediate risk of being sued.
140 F.3d 1060, 1073 n. 18, 46 USPQ2d 1385, 1396 n. 18 (D.C.Cir.1998) (citations omitted). Therefore, the inability to market a product without a court decision may create sufficient case or controversy for purposes of a declaratory judgment action. Certainly, in cases such as this, there is a controversy over whether a triggering decision is permissible, and the parties have much at stake in that determination.
Whether the basis for a case or controversy for declaratory judgment purposes is *792the statutory threat and injury or the bottleneck, any resolution which does not allow for declaratory judgments in this context would result in the noninfringing methods being unable to trigger the exclusivity period, while the more ambiguous methods, causing a court action to be brought, would trigger the exclusivity period. The alternative, permitting declaratory judgment actions for paragraph IV certifiers, addresses the heart of the issue and cuts away the Gordian knot created by the majority. The sufficiency of a paragraph IV certification notice will rarely be challenged when there is no incentive to evade the notice. These additional administrative requirements imposed by the majority become unnecessary. I do not accept the majority’s need to decide this case on such a digression.

V. The Majority’s Loose Ends

In addition, Part VII of the majority opinion continues its illogical pursuit by positing numerous issues that it does not decide, including the standing of parties to bring an APA administrative proceeding before the FDA. If we do not decide them, then all of these observations and conclusions are advisory and dicta. It is unnecessary to delineate them in order to decide this appeal.
Because I find the majority’s holding to be inconsistent with the goals established by Congress and inconsistent with the internal logic of the statute, I concur in judgment only.

. 21 U.S.C. § 355(j)(5)(B)(iv) states in pertinent part:
(iv) If the application contains a certification described in subclause (IV) of paragraph (2)(A)(vii) and is for a drug for which a previous application has been submitted under this subsection continuing such a certification, the application shall be made effective not earlier than one hundred and eighty days after—
(I) the date the Secretary receives notice from the applicant under the previous application of the first commercial marketing of the drug under the previous application, or
(II) the date of a decision of a court in an action described in clause (iii) holding the patent which is the subject of the certification to be invalid or not infringed, whichever is earlier.
21 U.S.C. § 355(j)(5)(B)(iv) (Supp. V 1999).

. The irony of using the argument that the invention is so easily avoided as to create a frivolous declaratory judgment action as a way of preventing competitors from marketing their product appears to be lost on 3M.