By Kevin E. Noonan --
The Federal Circuit has been redefining its declaratory judgment jurisdiction jurisprudence ever since the Supreme Court's Medimmune, Inc. v. Genentech, Inc. decision. These cases have included SanDisk Corp. v. STMicroelectronics, Inc., Teva Pharmaceuticals USA, Inc. v. Novartis Pharmaceuticals Corp., Benitec Australia, Ltd. v. Nucleonics, Inc., Caraco Pharmaceutical Laboratories, Ltd. v. Forest Laboratories, Inc., and just last week, Prasco LLC v. Medicis Pharmaceutical Corp. The trend continues, albeit in a nonprecedential opinion, in Merck & Co. v. Apotex Inc. In a per curiam decision from a panel made up of CAFC Judges Mayer and Linn and Judge Susan Illston, district court judge from the Northern District of California, sitting by designation, the Federal Circuit affirmed dismissal of invalidity and non-infringement counterclaims against Orange Book patents that had been disclaimed by the patentee prior to a lawsuit triggered by Apotex's ANDA filing. However, in making its determination the Court did not fully and definitively address whether disclaimer of the patents would preclude such an action from raising a "case or controversy" that admits of "specific relief through a decree of a conclusive character" sufficient for proper exercise of the district court's jurisdiction under Article III of the U.S. Constitution.
The patent dispute concerned generic market entry in competition with Merck's branded Trusopt® and Cosopt® glaucoma medications. Merck, the NDA holder for these medications, had listed three patents -- U.S. Patent Nos. 4,797,413, 6,248,735, and 6,316,443 -- in the FDA's Orange Book. Hi-Tech Pharmacal Co. was the first generic company to file an ANDA for these products, along with a Paragraph IV certification that the patents were invalid or would not be infringed by its generic drug, in accordance with the provisions of the Hatch-Waxman Act (35 U.S.C. §§ 156, 271, and 282). Merck filed suit, pursuant to the provisions of 35 U.S.C. § 271(e)(2), asserting just the '413 patent; Merck, shortly after filing suit, disclaimed the '735 and '443 patents as provided in 35 U.S.C. § 253. Merck prevailed against Hi-Tech, and the FDA barred allowance of Hi-Tech's ANDA until six months after expiration of the '413 patent, in accordance with Merck's six-month pediatric market exclusivity extension. (Pursuant to 21 U.S.C. § 355(a), the FDA has the authority to request than an NDA holder perform pediatric studies on the effect of an approved drug. If the NDA holder performs such studies, the Agency can extend the term of a patent-holder's exclusivity for an additional six months after Orange Book patents have expired. In this case, that date was October 28, 2008). Because it did not prevail, Hi-Tech lost its 180-day market exclusivity for being the first ANDA filer as to the '413 patent. But because Merck chose to disclaim the other two Orange Book listed patents, Hi-Tech "prevailed" as to those patents and was thus entitled to market exclusivity as the only approved generic provider of Trusopt® and Cosopt®. This exclusivity period would commence once Merck's extended market exclusivity period expires on October 28th.
However, the regulatory scheme embodied in the Hatch-Waxman Act was amended by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (21 U.S.C.§ 355(j()(5)(D)(i)) to provide for forfeiture of the 180 day market exclusivity period for a first ANDA filer who does not timely launch after all legal impediments have been cleared (see 21 U.S.C.§ 355(j()(5)(D)(i)(I)(aa) and (bb)). Apotex filed its ANDA about 6 months after Hi-Tech filed its own, with its own Paragraph IV certification, and Merck filed suit under the statute. Even though Merck based its lawsuit on assertion of the '413 patent alone, Apotex included counterclaims of non-infringement and invalidity for the '735 and '443 patents that Merck had already disclaimed. Apotex also agreed to be bound by the final judgment in the Merck v. Hi-Tech action over the '413 patent, and thus is equally barred from launching its generic products until October 28, 2008. In addition, provided Hi-Tech does not forfeit, Apotex will be prohibited from market entry for an additional 180 days in view of Hi-Tech's status as the first ANDA filer.
Apotex's strategy, according to the CAFC's opinion, was to provoke a forfeiture by Hi-Tech. The forfeiture-triggering event would be a decision in Apotex's favor that the '735 and '443 patents are invalid and not infringed, and Hi-Tech's failure to launch (being precluded by FDA's court-mandated stay on regulatory approval until the pediatric extension of market exclusivity expires). If Apotex prevailed, Hi-Tech would have only 75 days to market its generic products or lose exclusivity. The critical date for this scenario to work was August 14, 2008.
The Federal Circuit upheld the District Court's dismissal of Apotex's counterclaims directed towards the '735 and '443 patents on both jurisdictional and practical grounds. "As a practical matter," opined the Court, they were not in a position to provide "realistic relief." In view of the timing of the appeal, and the necessity for the District Court to act in response to the CAFC's decisions, the Federal Circuit said that "[e]ven with prompt action, the final judgment sought by Apotex cannot be provided in time to be meaningful." This practical limitation on the Court's ability to act in sufficient time to effect Apotex's strategy had as a jurisdictional consequence that there no longer remained a justiciable controversy between the parties that could be provide "specific relief through a decree of a conclusive character." Thus, the judgment of dismissal was affirmed.
It is interesting to note that the Court did not address whether the disclaimer was by itself sufficient to destroy Article III justiciability over the case. Presumably, this is because deciding whether the disclaimed patents were invalid or not infringed was still part of a "case or controversy" -- the problem, of course, is that it was not a controversy between the parties to the lawsuit, but between one party and a third-party competitor. The Court did not have the inclination to hear this objection, and maybe it was never argued. But it seems clear that the disclaimer here destroyed any case or controversy between either Merck and Hi-Tech or Merck and Apotex, and that the only remaining dispute was between the two defendants.
Merck & Co. v. Apotex, Inc. (Fed. Cir. 2008)
Nonprecedential disposition
Panel: Circuit Judges Mayer and Linn, and District Judge Illston
Per curiam
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