By Kevin E. Noonan --
Federal Circuit jurisprudence on whether an Article III case or controversy exists continues to evolve regarding the extent to which federal district courts can exercise jurisdiction in patent cases, most recently in Merck & Co. v. Apotex, Inc. (nonprecedential).
The dispute was over Apotex's ANDA filing for a generic version of Merck's Fosamax® drug for treating osteoporosis. At issue were Merck's Orange Book-listed patents for Fosamax®, including U.S. Patent Nos. 4,621,077 (claiming the active ingredient, alendronate sodium), 5,358,941, 5,681,590, 5,849,726, 6,008,207, 6,090,410, and 6,194,004 (claiming various formulations of Fosamax® tablets), and 5,994,329, 6,015,801, and 6,225,294 (claiming Fosamax® dosing schedules). Apotex filed a Paragraph III certification for the '077 patent, which expired on August 6, 2007, and Paragraph IV
certifications for Merck's other Orange Book-listed patents (which expire on different dates from 2012-2018). Merck filed suit within 45 days of Apotex notifying them of its filing, and Apotex counterclaimed for a declaratory judgment of non-infringement. However, before trial, Merck granted Apotex a covenant not to sue on all the patents-in-suit:
Merck unconditionally represents, stipulates, agrees, and covenants that it will not sue Apotex for infringement of, or otherwise assert, enforce, or hold Apotex liable for infringement of any of the '941, '590, '726, '207, '410, '004, '329, '801, and '294 patents based on the importation, manufacture, use, sale, or offer for sale of the alendronate sodium tablets that are the subject of and described in Apotex's ANDA No. 077-982.
Merck's acquiescence was not enough for Apotex to be able to market generic Fosamax®, however, because Teva Pharmaceuticals was the first ANDA filer. Although Merck prevailed in its ANDA litigation against Teva, the final judgment in that litigation (limited to the '077 patent) permitted Teva's 180-day market exclusivity term to begin on February 6, 2008, barring Apotex from entering the market until August 5, 2008. Finally, the FDA decided to lift the 30-month approval stay imposed upon Merck's ANDA litigation filing, originally set to expire on August 24, 2008, to coincide with the end of Teva's market exclusivity on August 5.
Having given Apotex the covenant not to sue, Merck moved to dismiss on the grounds that there was no longer a case or controversy between the parties. Apotex in response moved to amend its complaint to include a claim for Sherman Act violations. The District Court granted Merck's motion and denied Apotex's motion, and the appeal followed.
In their unanimous decision, the panel (Gajarsa, Friedman and Proust) cited the Court's decision in Caraco Pharm. Labs, Ltd. v. Forest Labs., Inc. at the same time, mentioning that the Court had denied Caraco's petition for rehearing and rehearing en banc. Judge Gajarsa, writing for the panel, noted that the injury-in-fact alleged by Apotex -- delay in marketing generic Fosamax® -- was "not fairly traceable" to Merck in view of the covenant not to sue. The existence of the covenant by itself was not enough, according to the opinion citing Caraco. In this case, the Federal Circuit's decision was based on two factual distinctions with Caraco. First was the FDA decision to lift the thirty-month stay when the District Court dismissed the case. Second, unlike in Caraco, the first ANDA filer in this case -- Teva -- had triggered the 180-day exclusivity period by entering the market on February 6, 2008. Thus, the delay in entering the market is not (and, once Merck granted its covenant, was not) attributable to Merck, but was a consequence of the statutory exclusivity granted to Teva as the first ANDA filer. Thus, there was no longer a case or controversy between the parties, and the Federal Circuit affirmed the District Court's dismissal.
The Federal Circuit also affirmed the District Court's denial of Apotex's motion to amend its complaint to include its antitrust counterclaim. Applying regional (Third Circuit) law, the CAFC noted that Fed. R. Civ. Pro. 15(a) provides that courts "should freely grant leave [to amend] when justice so requires." Reasons for not granting leave include "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.," citing Foman v. Davis, 371 U.S. 178, 182 (1962). Here, the panel agreed with the District Court that Apotex "failed to allege facts sufficient to support its antitrust counterclaim, and that Apotex's antitrust allegations were 'bald and conclusory.'" The District Court's denial was thus not an abuse of discretion, according to the Federal Circuit.
Merck & Co. v. Apotex, Inc. (Fed. Cir. 2008)
Nonprecendential disposition
Panel: Senior Circuit Judge Friedman and Circuit Judges Gajarsa and Prost
Opinion by Circuit Judge Gajarsa
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