In Takeda v. Mylan (07-1269;70), Alphapharm and Genpharm, along with Mylan and UDL Laboratories, tried to get out of paying the attorney fees.  A district court found the case to be exceptional awarded attorney fees in a case relating to Hatch-Waxman challenges made by Alphapharm and Mylan in connection with Takeda’s U.S. Pat. 4,687,777.

The Court of Appeals for the Federal Circuit said that because of the misconduct of Mylan and Alphapharm this was indeed an exceptional case.  Therefore, the district court did not abuse its discretion in awarding the attorney fees, expenses, and expert fees to Takeda amounting to $11,400,000 from Mylan and $5,400,000 from Alphapharm, with interest.

The ’777 patent covers the anti-diabetic drug pioglitazone, for which Takeda has enjoyed commercial success under the name ACTOS®.  Alphapharm and Mylan tried to get approval to produce generic versions of pioglitazone under the Hatch-Waxman Act.  Takeda then sued Alphapharm and Mylan for infringement.

Regarding Alphapharm, the trial court held that the Paragraph IV certification letter was “so devoid of merit and so completely fail[ed] to establish a prima facie case of invalidity that it must be described as ‘baseless.’”  Ouch!

The court also analyzed what it saw as Alphapharm’s litigation misconduct and found that this was “the exceptional case where an examination of the totality of the circumstances amply justifies, indeed compels, the award of attorneys’ fees.”

Then, the court hammered Mylan’s certification letter saying it was filed in bad faith and with no reasonable basis to claim the ’777 patent invalid.  The court discussed how Mylan argued in its Paragraph IV letter that the invention of pioglitazone was obvious based on Takeda’s disclosure of a compound in the ’200 patent and Sohda II (referred to as compound 16 and compound 14, respectively) only to abandon this theory entirely during the litigation.  In addition, the court discussed Takeda’s numerous allegations of litigation misconduct committed by Mylan in its pursuit of an inequitable conduct claim.

Alphapharm argued that its Paragraph IV letter was not baseless under structural obviousness law.  Alphapharm said that its certification letter made out a prima facie case of obviousness and that, contrary to what the district court held, Alphapharm was not required to explain why a skilled artisan would have identified compound b as the lead compound in its certification letter.

The court did not think much of this argument, stating:

… the court methodically examined a number of shortcomings in Alphapharm’s Paragraph IV letter, which were made obvious by Alphapharm’s “constantly shifting set of arguments,” that supported the finding that the certification was baseless. …  The court also catalogued scientific errors in Alphapharm’s certification letter that the court saw as “insidious” and as underscoring that Alphapharm “did not act with due care or in good faith” in filing its certification.  Id. at 237.  The court found that other assertions in Alphapharm’s Paragraph IV letter were baseless because of undisputed evidence of pioglitazone’s superiority and that Alphapharm abandoned these arguments at trial because “they were unsupportable, not because Alphapharm made a tactical decision regarding which argument should be emphasized at trial.”

Mylan argued that the district court based its finding of an exceptional case against Mylan on conjecture rather than requiring Takeda to show clear and convincing evidence.  Mylan also argued that the fact that it ultimately did not win on its claims does not render this case exceptional and that the district court’s decision to allow Mylan to assert its inequitable conduct claim demonstrates that it was not frivolous.

What did the court think of Mylan’s position?

We conclude that the court did not commit clear error in finding that Mylan’s misconduct contributed to this being an exceptional case.  In fact, Mylan’s invalidity argument in its certification letter appears even more baseless than Alphapharm’s.  …  We find it unsurprising, therefore, that the district court characterized Mylan’s defense of the merits of its Paragraph IV letter as “utterly frivolous.”  In light of the scientific errors present in Mylan’s certification letter, the fact that the court was unmoved by Mylan’s decision not to pursue this obviousness claim at trial can hardly be deemed clear error.

Ouch!

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