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DJ Jurisdiction Exists Even If the Action May Later Become Moot

April 16, 2012
Ehrenfried, Mindy L.

Decision icon Decision

Last Month at the Federal Circuit - May 2012

Judges: Bryson, Dyk (author), Moore

[Appealed from: D. Del., Judge Stark]

In Dey Pharma, LP v. Sunovion Pharmaceuticals Inc., No. 11-1507 (Fed. Cir. Apr. 16, 2012), the Federal Circuit affirmed the district court’s holding that Sunovion Pharmaceuticals Inc.’s (“Sunovion”) proffered covenant not to sue Dey Pharma, LP (“Dey”) did not divest the district court of subject matter jurisdiction over Dey’s DJ action, despite the possibility that the action could later become moot.

Sunovion manufactures and sells Xopenex, an FDA-approved drug used to prevent or relieve breathing difficulties resulting from asthma and chronic obstructive pulmonary disease. Breath Ltd. (“Breath”) filed the first ANDA, with Paragraph IV certifications for all of the nonexpired, Orange-Book-listed patents for Xopenex: U.S. Patent Nos. 5,362,755 (“the ’755 patent”); 5,547,994 (“the ’994 patent”); and 6,451,289 (“the ’289 patent”). Sunovion sued Breath, asserting infringement of all three patents, but the parties settled, entitling Breath to enter the market with its generic on a certain date or the date of an earlier third-party commercial launch.

Subsequently, Dey filed a second ANDA, also with Paragraph IV certifications for the same three patents. Sunovion sued Dey, asserting infringement of only the ’755 patent and the ’994 patent, but not the ’289 patent—the last to expire of the three patents. Dey filed a DJ action that the ’289 patent is invalid or not infringed. The DJ action was “designed to trigger” Breath’s exclusivity period, thereby hastening the FDA’s approval of Dey’s ANDA and, in turn, Dey’s market entry. Sunovion responded by offering Dey a covenant not to sue and filing a motion to dismiss the DJ action for lack of subject matter jurisdiction. The district court denied Sunovion’s motion to dismiss, holding that (1) covenants not to sue do not defeat DJ jurisdiction; and (2) even if the district court found the ’755 patent and the ’994 patent invalid or not infringed, the ’289 patent would remain a legal barrier to FDA approval of Dey’s ANDA, which is a cognizable injury properly addressed by a DJ action. The parties stipulated to a final judgment of noninfringement, and Sunovion appealed, disputing only the district court’s holding on subject matter jurisdiction.

The Court first analyzed whether DJ jurisdiction existed at the time Dey filed its DJ action. Sunovion argued that DJ jurisdiction did not exist, because even if Dey secured success in the DJ action, Dey would still need to succeed in establishing invalidity or noninfringement of the other two Orange-Book-listed patents in order to trigger Breath’s exclusivity period. Finding the facts “materially identical” to those in Caraco Pharmaceutical Laboratories, Ltd. v. Forest Laboratories, Inc., 527 F.3d 1278 (Fed. Cir. 2008), the Court rejected Sunovion’s argument and stated that “simply eliminating one barrier [to market entry] is sufficient for declaratory jurisdiction, so long as litigation is also pending that could eliminate the other barriers.” Slip op. at 11.

The Court then turned to whether DJ jurisdiction continued to exist after Dey filed its DJ action. In arguing against continuing DJ jurisdiction, Sunovion reasoned that pursuant to their settlement agreement, Breath could launch its generic before the pending litigation between Sunovion and Dey over the ’755 patent and the ’994 patent reached final conclusion, thereby extinguishing the case or controversy. The Court rejected Sunovion’s argument, explaining that although Breath could launch its generic on the agreed-upon date, no guarantee exists that Breath will launch its generic on that date. Thus, if Breath delays its launch (i.e., delays triggering its 180-day exclusivity period), Dey and other subsequent ANDA filers would be barred from the market, unless they obtain a court judgment of invalidity or noninfringement.

Finally, the Court noted that “[w]hat Sunovion ignores is that there is a difference between finding that a controversy exists to initiate a suit and determining that the controversy has become moot.” Id. at 14. The Court found Sunovion failed to meet “the heavy burden” of coming forth with evidence of mootness, in light of Sunovion’s admission that the case will not become moot until Breath actually launches its generic. Accordingly, the Court held that because DJ jurisdiction existed when Dey filed its action, “the case may proceed until rendered moot.” Id. at 15.

Summary authored by Mindy L. Ehrenfried, Esq.