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Filing of an ANDA Is a “Highly Artificial” Act of Infringement

July 27, 2004

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Last Month at the Federal Circuit - August 2004

Judges: Gajarsa (author), Schall, and Dyk

In Glaxo Group Ltd. v. Apotex, Inc., No. 03-1575 (Fed. Cir. July 27, 2004), the Federal Circuit (1) affirmed the district court’s finding that Apotex, Inc.’s (“Apotex”) filing of an ANDA infringed U.S. Patent Nos. 4,562,181 (“the ‘181 patent”) and 4,820,833 (“the ‘833 patent”) under 35 U.S.C. § 271(e)(2); (2) affirmed that the patents are not invalid; and (3) reversed the finding that Apotex’s ANDA filing constituted willful infringement.

Glaxo Group Limited and SmithKline Beecham Corporation (collectively “Glaxo”) owns patents directed to the drug, cefuroxime axetil. The ‘181 patent is directed to a highly pure amorphous form of cefuroxime axetil having superior bioavailability and stability when compared to the crystalline forms. Claim 1 recites in part “cefuroxime axetil in amorphous form . . . having a purity of at least 95% aside from residual solvents.” The related ‘833 patent claims a method of preparing “a highly pure, substantially amorphous form of cefuroxime axetil.”

Apotex’s generic drug is an amorphous coprecipitate comprising 90% cefuroxime axetil.

Under the Hatch-Waxman Act, a pioneer drug manufacturer having an approved NDA must list all patents claiming the drug in the “Orange Book.” If a generic company, with an obligation to consult the Orange Book, discovers that relevant patents are listed that have not expired or will not expire before the generic company markets its product, then the company must certify that such patents are either invalid or not infringed (“a paragraph IV certification”). 21 U.S.C. § 355(j)(2)(A)(IV). However, under a nowrepealed provision, a pioneer drug manufacturer having a drug approved under 21 U.S.C. § 357 was previously exempt from listing its patents in the Orange Book. As a result, any subsequent ANDA applicant could not file a certification under § 355(j)(2)(A). Because Glaxo did not list the ‘181 or ‘833 patents after obtaining § 357 approval, Apotex did not file the paragraph IV certification.

Glaxo filed a DJ action against Apotex, asserting anticipatory and “artificial” infringement under 35 U.S.C. § 271(e)(2)(A). The district court found infringement of the ‘181 patent claim to “cefuroxime axetil having a purity of at least 95%” based on Apotex’s ANDA, which stated that the products do not contain more than 1% impurities. The district court also determined that Apotex infringed the ‘833 patent method claims and held both the ‘181 and ‘833 patents as not invalid. Finally, the district court found Apotex’s infringement willful because it failed to obtain an opinion from competent patent counsel and, thus, did not exercise due care in its ANDA filing. As a result, Glaxo was awarded attorney’s fees.

On appeal, Apotex argued that “having a purity of at least 95%” covered only those formulations having at least 95% cefuroxime axetil. The Federal Circuit rejected this argument, reiterating the principle that a claim should rarely be construed to exclude a preferred embodiment. Glaxo’s preferred formulations included significant amounts of excipients that are routinely present in pharmaceuticals. Accordingly, the Federal Circuit affirmed the district court’s finding of noninfringement of the ‘181 and ‘833 patents. The Court also found that the ‘181 and ‘833 patents are not invalid.

The Federal Circuit, however, reversed the lower court’s finding that Apotex’s infringement was willful. Calling an ANDA filing a “highly artificial” act of infringement under 35 U.S.C. § 271(e)(2), the Federal Circuit noted a limited set of remedies available to Glaxo under § 271(e)(4), including monetary damages for actual commercial activity. Moreover, this section allows attorney’s fees only for exceptional cases. The Federal Circuit had previously limited the types of conduct that constituted an exceptional case, such as in Yamanouchi Pharmaceutical Co. v. Danbury Pharmacal, Inc., where an ANDA filer provided a baseless and wholly unjustified paragraph IV certification and engaged in litigation misconduct. There, the Federal Circuit instructed the trial court to avoid elevating the ANDA certification into a finding of willful infringement. The Courtfurther clarified that the award of attorney’s fees in Yamanouchi was based on misconduct and not on willful infringement.

Accordingly, the Federal Circuit held here that merely filing an ANDA application or certification cannot form the basis of a willful infringement finding, resulting in an award for attorney’s fees pursuant to § 271(e)(4). Because there was no evidence that Apotex engaged in any litigation misconduct, nor did Apotex file a baseless paragraph IV certification as in Yamanouchi, the Federal Circuit held that the district court committed clear legal error in finding willful infringement and awarding attorney’s fees.