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The First Paragraph IV ANDA Filer’s Potential Delay in Launching Generic Product Does Not Create DJ Jurisdiction for Subsequent ANDA Filer

September 04, 2008

Decision icon Decision

Last Month at the Federal Circuit - October 2008

Judges: Michael, Rader, Moore (author)

[Appealed from: D.N.J., Judge Cavanaugh]

In Janssen Pharmaceutica, N.V. v. Apotex, Inc., No. 08-1062 (Fed. Cir. Sept. 4, 2008), the Federal Circuit affirmed the district court’s dismissal of Apotex, Inc.’s (“Apotex”) DJ suit in favor of Janssen Phamaceutica, N.V. and Janssen, L.P. (collectively “Janssen”).

Janssen holds an approved NDA for its drug Risperdal® Oral Solution. The FDA Orange Book listed U.S. Patent Nos. 4,804,663 (“the ’663 patent”); 5,453,425 (“the ’425 patent”); and 5,616,587 (“the ’587 patent”). The ’663 patent covers the drug’s active compound risperidone. The ’425 and ’587 patents cover specific aqueous solutions of risperidone and methods for preparing those solutions. The ’663 patent expired recently. The ’425 and ’587 patents are still in force.

Teva Pharmaceuticals USA, Inc. (“Teva”) was the first ANDA applicant to file a Paragraph IV Certification under the Hatch-Waxman Act, challenging only the ’425 and ’587 patents. Janssen did not file suit against Teva on these two patents. As the first ANDA filer, Teva is entitled to 180 days of generic market exclusivity, during which the FDA will not approve a later-filed Paragraph IV ANDA based on the same drug.

Apotex submitted its own ANDA after Teva, challenging all three of Janssen’s patents. Janssen sued Apotex for infringing the ’663 patent but not the ’425 and ’587 patents. Apotex counterclaimed for DJ of noninfringement of the two unasserted patents. Janssen moved to dismiss these counterclaims on the ground that the action did not present a case or controversy. Later, Janssen granted Apotex a covenant-not-to-sue with respect to the ’425 and ’587 patents, then requested that Apotex withdraw its counterclaims. Apotex refused. The district court granted Janssen’s motion to dismiss Apotex’s counterclaims for lack of subject matter jurisdiction, and Apotex appealed.

On appeal, Apotex argued that it was suffering three actual and continuing injuries that created a substantial controversy of sufficient immediacy to warrant the issuance of a DJ: (1) Apotex was unable to promptly launch its own generic product and compete in the market upon expiration of the ’663 patent; (2) the FDA approval of Apotex’s product was indefinitely delayed; and (3) Apotex’s affiliates, suppliers, or downstream customers faced uncertainty because Janssen’s covenant-not-to-sue did not cover them. The Court rejected all three arguments.

First, the Court rejected Apotex’s argument that, absent a DJ with respect to Janssen’s ’425 and ’587 patents, Apotex suffered a cognizable harm because it was unable to launch its generic product immediately upon the expiration of Janssen’s ’663 patent. Without a DJ, Teva’s 180-day exclusivity will commence when it launches its product after the ’663 patent expires. Apotex may then enter the market 181 days after expiration of the ’663 patent. If, however, Apotex is successful in its DJ action, Teva’s 180-day exclusivity will begin at a time that Teva is unable to launch its product and Apotex may enter the market when the ’663 patent expires.

The Court distinguished the current case from its recent ruling in Caraco Pharmaceutical Laboratories v. Forest Laboratories, 527 F.3d 1278 (Fed. Cir. 2008), which Apotex argued was controlling. In Caraco, the patentee listed two patents in the Orange Book, but sued both the first ANDA filer and the subsequent ANDA filer on only one patent, and also granted the subsequent ANDA filer a covenant-not-to-sue on the unasserted patent. The Federal Circuit held in Caraco that the DJ claim brought by the subsequent ANDA filer, under the Hatch-Waxman Act, presented a justiciable Article III controversy because finding jurisdiction would have permitted the subsequent ANDA filer to obtain DJ on both patents and triggered the 180-day exclusivity period. In the current case, however, the Court noted that Apotex stipulated to the validity, infringement, and enforceability of Janssen’s ’663 patent. Therefore, the Court held that while the harm that created a justiciable Article III controversy in Caraco was present when Apotex filed its counterclaims, that harm ceased to exist upon Apotex’s stipulation. Even if Apotex successfully invalidated the ’425 and ’527 patents, it could not obtain FDA approval until the expiration of the ’663 patent because of its stipulations with respect to that patent. Thus, Apotex was being excluded from the market not by the two Janssen patents it was challenging, but by Teva’s 180-day exclusivity period, which was not a cognizable Article III controversy but a result envisioned by the Hatch-Waxman Act.

Second, the Court rejected Apotex’s argument that, absent a DJ action, it was subject to indefinite delay in launching its generic product until Teva’s 180-day exclusivity period is triggered. The Federal Circuit found that at the time the district court entered final judgment in this case, Apotex’s alleged harm of indefinite delay was too speculative to create an actual controversy to warrant issuance of a DJ. Thus, the Court held that a possible delay in the future of a first Paragraph IV ANDA filer in launching its generic product does not give rise to DJ jurisdiction.

Third, the Court rejected Apotex’s argument that Janssen’s covenant-not-to-sue was deficient because it did not protect Apotex’s affiliates, suppliers, and downstream customers. Citing language of the agreement, the Court found that Janssen’s covenant-not-to-sue expressly covered all suppliers and affiliates involved in the manufacturing process, and all of Apotex’s customers, including downstream customers. Thus, the Court held that the convenant-not-to-sue was not deficient.