United States: Case Or Controversy Exists In Declaratory Judgment Action Of Non-Infringement For Disclaimed Patent

Apotex Inc., v. Daiichi Sankyo, Inc., No. 2014-1282, -1291, 2015 U.S. App. LEXIS 5134 (Fed. Cir. Mar. 31, 2015) (Taranto, J.). Click Here for a copy of the opinion.

Daiichi filed an NDA for olmesarta medoxomil (Benicar), a hypertension drug, and listed two of its patents, U.S. Pat. Nos. 5,616,599 and 6,878,703, in the Orange Book. Subsequently, Mylan filed an ANDA with a paragraph IV Certification, seeking to market a generic version of Benicar. Daiichi responded in part by disclaiming all claims of the '703 patent and requesting its removal ("delisting") from the Orange Book, which the FDA has not yet done.

Daichii initiated Hatch-Waxman litigation against Mylan. After a full trial, the district court upheld the validity of the '599 patent and entered judgment of infringement against Mylan. Consequently, the earliest Mylan can enter the market is October 25, 2016, six months after the expiration date of the '599 patent (which include 6 months of Patent Term Extension). In addition, because Mylan was the first ANDA filer to maintain a Paragraph IV Certification regarding the '703 patent, Mylan claims a 180-day exclusivity period starting on Oct. 25, 2016. 21 U.S.C. § 355(j)(5)(B)(iv)(II)(bb). Mylan benefits from this exclusivity period despite Daiichi's disclaimer and regarding the still Orange Book listed '703 patent.

Apotex filed an ANDA with a Paragraph III Certification (conceding validity and infringement of the '599 patent) and Paragraph IV Certification (alleging non-infringement of the '703 patent). Daichii did not sue on the disclaimed '703 patent. Apotex then brought a declaratory judgment action against Daiichi alleging that the Apotex product could not infringe the disclaimed '703 patent. Mylan moved to intervene, which the court denied. The district court dismissed Apotex's declaratory judgment claims, finding there could be no case or controversy over a disclaimed patent.

On appeal, the Federal Circuit reversed on both the denial of Mylan's intervention and the dismissal of Apotex's declaratory judgment action. Mylan has a right to be a party in this case because Apotex's declaratory judgment, if granted, would cause a forfeiture of Mylan's presumed market-exclusivity period. Therefore Mylan has a concrete monetary interest in the outcome of the case.

In holding that there was a sufficient case or controversy, the Court concluded: "the stakes over which the parties are vigorously fighting are concrete and substantial: the amount of revenue there will be from sales of olmesartan medoxomil, and who will get what portions of it, during a period of at least six months." Daiichi and Apotex also have concrete interests in the truncation or preservation of Mylan's exclusivity period.

The Court also reasoned that Apotex's delayed entry to the market (after Mylan) was "fairly traceable" to Daiichi's listing of the '703 patent in the Orange Book. If Daiichi never listed the '703 patent, Mylan would have no exclusivity period, since it lost its challenge to the '599 patent. Daiichi, therefore, was responsible for Mylan's exclusivity period.

Tentative FDA approval for Apotex's proposed drug was not a necessary predicate for Apotex to have a ripe case or controversy in connection with its patent dispute with Daiichi. Specifically, "the statute authorizing the litigation upon filing of an ANDA nowhere requires tentative FDA approval as a precondition: the filing of the ANDA, with a Paragraph IV Certification, is itself deemed an act of infringement." In addition, the patent owner must bring suit within 45 days to obtain a 30-month delay in any effective date of approval for the ANDA. Evidently, the statute "contemplates litigation well before such tentative approval."

Finally, the Court concluded that a declaratory judgment could "redress" the harm to Apotex, i.e., it could ultimately cause a forfeiture of Mylan's 180-day exclusivity period. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) added several forfeiture provisions relating to the 180-day first filer exclusivity. As applied to this case, forfeiture requires: (1) "the court must have entered a final decision of non-infringement that is no longer appealable"; and (2) "the second filer [Apotex] must have received tentative approval." If the first filer failed to enter the market within 75 days after these two requirements are satisfied, it is said to have forfeited its exclusivity rights. Therefore, Apotex could cause a forfeiture by obtaining a declaratory judgment and receiving a tentative approval before the date when Mylan has FDA approval to make its first sale. The Court also rejected Mylan's argument that tentative approval must precede the declaratory judgment action.

Because a case or controversy existed for all of these reasons, the Federal Circuit reversed.

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