Teva Pharmaceuticals USA, Inc. v. Novatis Pharmaceuticals Corp. (Fed. Cir. 2007)

The Federal Circuit Continues Its Capitulation on Declaratory Judgment Actions

    By Kevin E. Noonan ---

In its MedImmune, Inc. v. Genentech, Inc. decision, the Supreme Court suggested in dicta that the Federal Circuit's "reasonable apprehension of (imminent) suit" test was in conflict with Supreme Court precedent, but limited this dicta to a footnote.  The Federal Circuit, feeling the lash once again from a Court that has reversed its decisions in whole or in part in all but one instance since Markman v. Westview Instruments, Inc., has responded by wholesale abandonment of its earlier jurisprudence, a trend that continues in Teva Pharmaceuticals USA, Inc. v. Novatis Pharmaceuticals Corp.

In this case, Teva appealed dismissal of its declaratory judgment action before the District Court, which had used the Federal Circuit's pre-MedImmune holding in Teva Pharmaceuticals USA, Inc. v. Pfizer Inc. as its basis for dismissing the suit.  The dispute is over Novartis' FAMVIR® genital herpes drug.  Novartis listed five patents in the FDA "Orange Book" for this drug, four of which have claims for therapeutic uses that expire 4-to-5 years after the drug product patent itself.  Teva filed an ANDA with a Paragraph IV certification, claiming that its generic famciclovir product either did not infringe or that the patents Novartis listed in the Orange Book are invalid.  Although Novartis brought suit within the statutory 45-day period, it did so solely on the product patent, U.S. Patent No. 5,246,937 (the '937 patent) that expires in 2010.  Teva responded by filing a declaratory judgment action against Novartis over the four remaining Orange Book-listed patents.  Teva based this action on the provisions of the Hatch-Waxman Act, as amended in 2003 regarding "patent certainty," that permitted an ANDA applicant to file a declaratory judgment action against a patentee who did not file suit within 45 days of the Paragraph IV certification.  21 U.S.C. § 355(j)(5)(C) and 35 U.S.C. § 271(e)(5).  The district court dismissed this lawsuit, based on the Federal Circuit's pre-MedImmune "reasonable apprehension of (imminent) suit" test.

The Federal Circuit explicitly stated its conclusion that its earlier jurisdictional precedent had been "overruled by . . . an intervening . . . Supreme Court decision," on the basis of the dicta found in footnote 11 of the MedImmune decision.  On that basis, the Court analyzed the jurisdictional facts before the district court, explicitly applying the "all the circumstances" test of Maryland Casualty Co. v. Pacific Coal & Oil Co., one of the cases cited by the Supreme Court in its precedent-setting footnote.  Using this test, the Federal Circuit determined that the facts in this case devolve to the question of whether Teva asserted an injury in fact.  The Court found that Teva had done so, citing affirmative actions by Teva or Novartis.  First, Novartis listed the four method patents in the Orange Book, which provides affirmative notice of the risk of a patent infringement lawsuit by practice of the patent claims.  21 U.S.C. § 355(b)(1).  Second, Teva filed its ANDA containing a Paragraph IV certification that all the listed patents are invalid or not infringed, which is defined as an infringing act by statute.  35 U.S.C. § 271(e)(2).

The Court also considered the language and purpose of the Hatch-Waxman act itself (explicitly including 35 U.S.C. § 271(e)(5)) and the 2003 amendments (21 U.S.C. § 355(j)(5)(C)).  In its view, the Court believed Novartis was attempting to "game" the Hatch-Waxman system, stating:

By filing a lawsuit on only one its five patents certified under paragraph IV in Teva's ANDA, Novartis has tried to simultaneously leverage the benefits provided to a patentee under the Hatch-Waxman Act and avoid the patentee's accompanying responsibilities.  Novartis' '937 patent suit against Teva has invoked the statutory automatic 30-month stay and is concurrently insulating the four method patents from a validity challenge.

Preventing this type of activity was the motivation behind the 2003 Amendments, according to the Court:

The mere fact that neither the patent owner nor the brand drug company has brought a patent infringement suit within 45 days against a generic applicant does not mean there is no "case or controversy."  The sole purpose of requiring the passage of 45 days is to provide the patent owner and brand-name drug company the first opportunity to begin patent litigation.  Inaction within the 45-day period proves nothing, as there are tactical reasons why a patent owner or brand drug company might refrain from bringing suit on a patent within 45 days.

For example, the brand drug company might have several patents listed in the Food and Drug Administration's Orange Book with respect to a particular drug.  It could be in the company's interest to bring suit within 45 days on one patent and to hold the others in reserve.  149 Cong. Rec. S15885 (Nov. 25, 2003; Senator Kennedy's comments)

(emphasis in the Court's opinion).  A fourth consideration was the already-pending litigation between the parties on the '937 patent as a factor in favor of its determination that Teva had an injury-in-fact sufficient to support declaratory judgment jurisdiction.  The Court cited the 30-month statutory stay resulting from his lawsuit as an injury, since Teva was thus prohibited from entering the marketplace by statute once Novartis filed its infringement action under the '937 patent.  Finally, the Damoclean sword of future patent infringement liability created by Novartis when it chose to sue on only the '937 patent was a factor considered by the Court to raise declaratory judgment jurisdiction, analogous to the "bet the farm" risks cited by the Supreme Court in its MedImmune decision.

This result is consistent with the Court's determination that footnote 11 in MedImmune recited the death knell to its "reasonable apprehension of imminent suit" test for declaratory judgment jurisdiction.  Writing in concurrence, Judge Friedman arrived at the majority's outcome by a much simpler calculus:  he considered Novartis's listing of its five patents in the Orange Book, and Teva's Paragraph IV certification of non-infringement or invalidity, to be sufficient to raise an actual controversy between the parties.  The Federal Circuit's efforts in the majority opinion illustrate the lengths to which it now appears ready, willing, and indeed anxious to go to affirmatively demonstrate that its jurisprudence is in compliance with relevant Supreme Court precedent.

Teva Pharm. USA, Inc. v. Novatis Pharm. Corp (Fed. Cir. 2007)
Panel: Circuit Judge Mayer, Senior Circuit Judge Friedman, and Circuit Judge Gajarsa
Opinion by Circuit Judge Gajarsa
Concurring opinion by Senior Circuit Judge Friedman

Additional information regarding this case can be found at the Orange Book Blog and Patently-O.

Comments

[William M. Melvin]

TEVA - Your ANDA #976373 for CARVEDILOL has
received tentative approval by FDA. Can you
please advise me the date of your tentative approval? Also, I am 83 and on COREG 6.25mg
that costs me $144. for 30-day supply. Am
anxious for your generic to be marketed. When do you anticipate final FDA approval?
Do you intend to market CARVEDILOL within 75
days of approval in order to have 180 of
exclusivity? Would appreciate your reply.

[richard]

I am the inventor of new drug