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IP Alert: Declaratory Judgment Jurisdiction May Be Available Even When Patent Was Disclaimed

April 3, 2015

On March 31, in Apotex, Inc. v. Daiichi Sankyo, Inc., the Court of Appeals for the Federal Circuit held that the plaintiff could maintain an action for declaratory judgment of non-infringement even though the defendant had disclaimed the disputed patent. This case provides an explication of an interesting aspect of the case-or-controversy requirement for declaratory judgment jurisdiction.

The Apotex case was an appeal from a Hatch-Waxman dispute concerning the antihypertension drug Benicar. Daiichi Sankyo, the developer of the drug, obtained two patents, U.S. Patents 5,616,599 and 6,878,703, and listed both patents in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the “Orange Book.” The patents are alleged to cover the active ingredient in Benicar and methods of treating hypertension using Benicar, respectively. 

In April 2006, Mylan Pharmaceuticals, a competitor of the plaintiff Apotex, filed an Abbreviated New Drug Application (ANDA) for a generic version of Benicar. As part of its application, Mylan submitted a “paragraph IV” certification asserting that both the ’599 and ’703 patents were invalid or would not be infringed. 

Shortly thereafter, Daiichi disclaimed all claims of the ’703 patent and requested removal of the ’703 patent from the Orange Book. Despite Daiichi Sankyo’s request, however, the FDA did not remove the patent from the Orange Book. 

Daiichi then brought a successful suit against Mylan for infringement of the ’599 patent. Under Hatch-Waxman rules, because the ’703 patent was disclaimed and the ’599 patent has been upheld in court against Mylan, Mylan’s earliest date of market entry is October 25, 2016, which is six months after the expiration of the ’599 patent.

In June of 2012, Apotex filed its own ANDA, which included a paragraph IV certification that the ’703 patent would not be infringed by Apotex’s product. Under Hatch-Waxman rules, if Apotex becomes the first ANDA filer to successfully challenge the ’703 patent and receive a judgment of noninfringement, Apotex will be entitled to its own 180-day exclusivity period. 

Daiichi Sankyo did not sue Apotex for infringement of the ’703 patent. Instead, Apotex sought a declaratory judgment of non-infringement. Mylan moved to intervene, and both Mylan and Daiichi Sankyo moved to dismiss Apotex’s complaint. The district court granted Daiichi Sankyo’s motion, holding that there was no “case or controversy” in light of the disclaimer of the ’703 patent.

On appeal, the Federal Circuit reversed. The court observed that under the earlier Supreme Court case MedImmune, Inc. v. Genentech, Inc., a party seeking standing before the federal courts must demonstrate that its injury is 1) concrete, particularized, and actual or imminent; 2) fairly traceable to the challenged action; and 3) likely to be redressed by the relief requested. The court concluded that Apotex did indeed have standing. Specifically, the court held that while there was no dispute between Apotex and Daiichi as to infringement of the ’703 patent, there did exist a dispute relating to the right to earn revenues from the sale of the drug. 

In this regard, the court found a plausible basis for Apotex to assert that Daiichi Sankyo’s inclusion of the ’703 patent in the Orange Book had harmed Apotex. Under Hatch-Waxman rules, the FDA will not grant approval of a new drug over a patent listed in the Orange Book while an earlier ANDA filer (Mylan, in this case) retains a presumptive marketing exclusivity period. The court held that “by any common-sense measure, the parties have substantial, concrete stakes in whether Apotex secures the non-infringement judgment it seeks to advance its entry into the market.”

The Federal Circuit next concluded that Apotex’s alleged injury was fairly traceable to Daiichi’s actions. The court explained that had Daiichi not listed the ’703 patent in the Orange Book, only the ’599 patent would be listed and Mylan would not presently be holding presumptive exclusivity, having lost its challenge of the ’599 patent. As the court expressed it, “Daiichi’s act of listing the ’703 patent in the Orange Book created the entry barrier that Apotex, through a declaratory judgment, seeks to eliminate.” The court further concluded that the injury was redressable, after conducting a lengthy analysis of the Hatch-Waxman Act.

Daiichi Sankyo argued that without FDA approval or tentative approval, relief of Apotex’s harm by the declaratory judgment of non-infringement would be merely speculative. The court rejected this argument, holding that “tentative [FDA] approval for Apotex is not a precondition to adjudicating the patent issue.” The court observed that the law specifically permits resolution of a patent dispute well before any FDA approval because “the filing of the ANDA, with a paragraph IV certification, is itself deemed an act of infringement.” 

The Apotex decision demonstrates that parties may still be found adverse to each other in a patent dispute even if the patentee has disclaimed all interest in the patent. Although the decision turns on some of the finer points of the Hatch-Waxman legislation, the case is instructive more generally in that it illustrates that a case or controversy may exist even for an expired patent or a patent otherwise no longer in force.

For more information on this decision, please contact Fitch Even partner Allen E. Hoover.

--Written by Fitch Even attorney Christian C. Damon 

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