After Teva Pharmaceuticals appealed the dismissal of its declaratory judgment action in District Court, the United States Court of Appeals for the Federal Circuit has taken a fresh new look at things in light of the Supreme Court’s decision in MedImmune, Inc. v. Genentech, Inc., 127 S. Ct. 764 (2007).

Because the district court relied on the Fed Circuit’s earlier two-part declaratory judgment test for patent non-infringement, it found that Teva failed to establish a reasonable apprehension of imminent suit and that it therefore lacked jurisdiction over the declaratory judgment action. Finding that its declaratory judgment test for non-infringement or invalidity “conflicts” with the Supreme Court, the Fed Circuit reversed.  See Teva Pharmaceuticals v. Novartis (06-1181).

Basically, Novartis has a New Drug Application for three strengths of the drug Famvir® in which Novartis listed five patents in the Orange Book, each of which covers and is directed to various aspects of Famvir®, including U.S. Patent Nos: 5,246,937; 5,840,763; 5,866,581; 5,916,893; and 6,124,304. The ’937 patent is directed to the active ingredient in Famvir®, famciclovir, while the remaining Orange Book patents are directed to methods of therapeutic use (“method patents”) of Famvir®. The ’937 patent expires in 2010, but the related therapeutic use patents do not expire until 2014-15.

In 2004, Teva filed an Abbreviated New Drug Application with the FDA for generic famciclovir tablets in which Teva certified under paragraph IV that its drug did not infringe any of the five Novartis Famvir® Orange Book patents or that the patents were invalid. Novartis brought an infringement suit against Teva on the ’937 patent alone and did not include in the action the related therapeutic use patents. The infringement suit is pending in District Court.

In light of the suit, Teva brought a declaratory judgment action on the four remaining method patents in order to settle everything at once or “patent certainty.” Title 21 U.S.C. § 355(j)(5)(C) is a 2003 amendment to the ANDA statute entitled “civil action to obtain patent certainty.” Under this provision, if the patentee or NDA holder does not bring an infringement suit within 45 days after receiving notice of a paragraph IV certification, the ANDA applicant may bring a civil action for a declaratory judgment that the patent at issue is invalid or will not be infringed by the drug for which the ANDA was submitted. Like MedImmune, Teva argued that it would have been left with the Hobson’s choice of either launching at risk of liability for patent infringement or foregoing the opportunity.

Novartis argued that Teva had no reasonable apprehension that it would be sued by Novartis for infringing the four method patents. In response, Teva argued that: (1) Novartis had already sued Teva on the underlying composition patent; (2) listing patents in the Orange Book established infringement as a matter of law; (3) Novartis had a history of aggressively suing generic drug companies; and (4) Novartis had declined to give Teva a covenant not to sue.

The district court dismissed Teva’s declaratory judgment action using the Fed Circuit’s earlier two prong “reasonable-apprehension-of-imminent-suit” test from Pfizer in stating that Teva had failed to establish a reasonable apprehension of imminent suit and that the district court therefore lacked jurisdiction over the declaratory judgment action.

The Declaratory Judgment Act requires a case of actual controversy. In MedImmune, the Court found that its precedent “did not draw the brightest of lines between those declaratory-judgment actions that satisfy the case-or-controversy requirement and those that do not.” Id. Instead of applying a bright line, the Court stated that its decisions required:

… that the dispute be “definite and concrete, touching the legal relations of the parties having adverse legal interests”; and that it be “real and substantial” and “admi[t] of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.”

In MedImmune, the Court re-affirmed the correct standard for determining a justiciable declaratory judgment action: “Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between the parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”

In reviewing this case in light of MedImmune, the Fed Circuit found that under “all the circumstances” as found in this case, Teva has an injury-in-fact and therefore has a justiciable Article III controversy.

Novartis came up with the disingenuous argument that there is no actual controversy between it and Teva on the four method patents in spite of Teva’s paragraph IV certifications of the four method patents because Novartis has not filed suit nor threatened to sue Teva on the method patents. Novartis claimed that the suit on the ’937 patent is an entirely different controversy.

The court pooh-poohed this for the following reasons:

First, Novartis listed its Famvir® patents in the Orange Book. By doing this, Novartis represented that it had an infringement claim.

Second, Teva submitted its ANDA certifying that it did not infringe Novartis’ Famvir® Orange Book patents or that the patents were invalid. The very act of submitting an ANDA is an act of infringement.

Third, an actual controversy is seen from the combination of three statutory provisions: 1) the “civil action to obtain patent certainty” under 21 U.S.C. § 355(j)(5)(C); 2) the ANDA declaratory judgment provision under 35 U.S.C § 271(e)(5); and 3) the purpose of the Hatch-Waxman Act. The “civil action to obtain patent certainty,” which was enacted in 2003 is designed to prevent patentees from “gaming” the Hatch-Waxman Act.

Fourth, Novartis’ pending infringement litigation against Teva on Teva’s submitted ANDA is an Article III controversy.

And fifth, the possibility of future litigation that Novartis created by electing to challenge Teva’s ANDA on only one of the five Orange Book listed Famvir® patents contributes to finding that Teva has a justiciable declaratory judgment controversy.

In reversing, the court held that:

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. In the statute, Congress explicitly required that in exchange for the 30-month stay, patentees were to “reasonably cooperate in expediting the action” of whether the paragraph IV patents were invalid or not infringed.

Senior Circuit Judge Friedman concurred with the findings but stated:

In these unusual circumstances, where the Supreme Court went out of its way to state its disagreement with our “reasonable apprehension of imminent suit” test, which was not an issue in the case before it, it appears incumbent on us to stop using that test and hereafter to apply the general declaratory judgment standards that the Supreme Court applied in MedImmune.

 

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