By Jason Rantanen
Teva Pharmaceuticals USA, Inc. v. Eisai Co. (Fed. Cir. 2010)
Panel: Rader, Dyk, and Prost (author)
A company seeking to market a generic version of a previously approved pharmaceutical product must file and receive approval of an Abbreviated New Drug Application (ANDA). One aspect of the ANDA, called a "Paragraph IV Certification," involves an assertion that each of the patents for that drug listed in the Orange Book is invalid and/or not infringed. The first manufacturer to file a Paragraph IV Certification is entitled to 180 days of generic marketing exclusivity; until the first-filer's exclusivity period has run, the FDA may not approve ANDA applications by other manufacturers who have filed Paragraph IV certifications for the same patent. The first-filer's exclusivity period can be triggered by either (1) its commercial marketing of the drug; or (2) entry of a court judgment finding the patent invalid or not infringed.
Eisai holds the New Drug Application for donepezil, and owns five patents listed for this product in the Orange Book. Of these five patents, one (the '841 patent) was the subject of separate litigation that produced a preliminary injunction barring Teva from marketing a generic version of donepezil until the expiration of the '841 patent in November 2010. With respect to the remaining four patents, Ranbaxy Laboratories was the first to file a Paragraph IV certification; thus, because Ranbaxy's exclusivity period had not yet run, approval of Teva's ANDA was barred.
To remedy this issue, Teva brought a declaratory judgment action against Eisai on the remaining four patents, seeking to trigger the exclusivity period. Ultimately, there was no question as to whether Teva infringed the patents: Eisai had filed a statutory disclaimer for two of them, effectively canceling their claims, and had entered into a covenant not to sue Teva on the remaining two patents. Nevertheless, all four patents continued to be listed in the Orange Book, precluding approval of Teva's ANDA.
After the Declaratory Judgment action was filed, Eisai moved to dismiss on the ground that Teva had failed to establish the existence of an Article III case or controversy. The district court agreed, dismissing the case for lack of jurisdiction. Teva appealed.
The Federal Circuit reversed the dismissal. With respect to the jurisdictional issue, the court focused on two cases: Caraco Pharmaceutical Laboratories, Ltd. v. Forest Laboratories, Inc., 527 F.3d 1278 (Fed. Cir. 2008) and Janssen Pharmaceutica, N.V. v. Apotex, Inc., 540 F.3d 1353, 1359 (Fed. Cir. 2008). Looking to Caraco, the court explained that:
the generic drug company’s injury (i.e., exclusion from the market) is fairly traceable to the defendant’s actions because “but-for” the defendant’s decision to list a patent in the Orange Book, FDA approval of the generic drug company’s ANDA would not have been independently delayed by that patent. 527 F.3d at 1292; see 21 U.S.C. § 355(j)(5)(B)(iv). When an Orange Book listing creates an “independent barrier” to entering the marketplace that cannot be overcome without a court judgment that the listed patent is invalid or not infringed—as for Paragraph IV filers—the company manufacturing the generic drug has been deprived of an economic opportunity to compete. Id. at 1293; see also 21 U.S.C. § 355(j)(5)(B)(4). A declaratory judgment redresses this alleged injury because it eliminates the potential for the corresponding listed patent to exclude the generic drug from the market.
Slip. Op. at 11. On the other hand, as in Janssen, where a generic manufacturer agrees that an Orange Book patent is valid, enforceable, and infringed, that generic manufacturer lacks standing to pursue a declaratory judgment action against other Orange Book patents for that drug because it cannot market its product even if the exclusivity period runs.
Applying this framework, the court concluded that Teva had established an actual controversy. The court distinguished Janssen on the ground that the preliminary injunction associated with the '841 patent was necessarily preliminary, and there was no final determination as to the validity, infringement or enforceability of the '841 patent. Thus, although Teva could not currently market its product, the preliminary injunciton did not eliminate the existence of a controversy.
With respect to the discretionary component of the Declaratory Judgment Act, the Federal Circuit concluded that the district court had abused its discretion in declining jurisdiction, both because it had relied on its determination that it lacked subject matter jurisdiction as well as being unsupported by the facts.