Summary
rejecting argument that listing patent in Orange Book amounts to a patentee's declaration of its intention to sue
Summary of this case from Glaxo Group Limited v. Dr. Reddy's Laboratories, Ltd.Opinion
CIVIL ACTION NO. 03-CV-10167-RGS
December 8, 2003
MEMORANDUM AND ORDER ON DEFENDANT'S MOTION TO DISMISS
On January 24, 2003, Teva Pharmaceuticals USA, Inc. (Teva), a manufacturer of generic pharmaceuticals, brought this declaratory judgment action against Pfizer Inc., seeking a determination that its generic version of sertraline hydrochloride would not infringe Pfizer's patented version of the drug, which is sold under the trade name Zoloft®. On March 10, 2003, Pfizer moved to dismiss the action, arguing that the court lacked subject matter jurisdiction because of the absence of an actual controversy between the parties. On November 6, 2003, the court heard oral argument on the motion to dismiss.
After the initial briefing, the parties filed supplemental briefs to address a recent decision in a nearly identical case, Dr. Reddy's Laboratories. Ltd, v. Pfizer Inc., 2003 WL 21638254 (D.N.J., July 8, 2003).
The Hatch-Waxman Act
This dispute arises under the Hatch-Waxman Amendments to the Federal Food, Drug and Cosmetic Act (FFDCA), the complexities of which were explained by the Federal Circuit in Andrx Pharmaceuticals. Inc. v. Biovail Corp., 276 F.3d 1368, 1370-1371 (Fed. Cir. 2002), as set out below.
Under the Drug Price Competition and Patent Term Restoration Act of 1984, Pub.L. No. 98-417, 98 Stat. 1585 (1984), codified at 21 U.S.C. § 355, 360cc, and 35 U.S.C. § 156, 271, (the "Hatch Waxman Amendments" to the Federal Food, Drug and Cosmetic Act ("FFDCA")), Congress struck a balance between two competing policy interests: (1) inducing pioneering research and development of new drugs and (2) enabling competitors to bring low-cost, generic copies of those drugs to market. Under the Hatch Waxman Amendments, a manufacturer that seeks to market a generic drug may submit an ANDA [Abbreviated New Drug Application] for approval by the FDA, rather than submitting a full New Drug Application ("NDA") concerning the safety and efficacy of the generic drug, and it may rely on safety and efficacy studies previously submitted by the pioneer manufacturer by submitting information showing the generic drug's bioequivalence with the previously approved drug product. See 21 U.S.C. § 355(j)(2)(A).
Also under the Hatch-Waxman Amendments, a pioneer drug manufacturer that holds an approved NDA is required to notify the FDA of all patents that "claim[ ] the drug for which the [NDA] applicant submitted the application. . . ." 21 U.S.C. § 355(b)(1), (c)(2). The FDA lists such patents in its Approved Drug Products With Therapeutic Equivalence Evaluations (otherwise known as the "Orange Book"). Under 35 U.S.C. § 271(e)(1), it is not patent infringement to conduct otherwise infringing acts necessary to prepare an ANDA. Under section 271(e)(2), however, a generic drug manufacturer infringes a patent by filing an ANDA to obtain approval for a generic drug product claimed by a valid and unexpired patent. As part of the approval process, an ANDA applicant must make a certification addressing each patent listed in the Orange Book that claims the drug. 21 U.S.C. § 355(j)(2)(A)(vii). . . . [T]he ANDA applicant must certify that (I) no such patent information has been submitted to the FDA; (II) the patent has expired; (III) the patent is set to expire on a certain date; or (IV) the patent is invalid or will not be infringed by the manufacture, use, or sale of the new generic drug for which the ANDA is submitted. 21 U.S.C. § 355(j)(2)(A)(vii) (I-IV). These are commonly referred to as paragraph I, II, III, and IV certifications.
When an ANDA contains a paragraph IV certification, the ANDA applicant must give notice to the patentee and the NDA holder and provide a detailed basis for its belief that the patent is not infringed, invalid, or unenforceable. 21 U.S.C. § 355(j)(2)(B)(i); 21 C.F.R. § 314.95(c)(6). The patentee then has forty-five days to sue the ANDA applicant for patent infringement, and the ANDA applicant may not file a declaratory judgment during this time (based on the filing of the ANDA application). 21 U.S.C. § 355(j)(5)(B)(iii). If the patentee does not sue, the ANDA will be approved. If the patentee does file suit, the PDA may not approve the ANDA until expiration of the patent, resolution of the suit, or thirty months after the patentee's receipt of notice, whichever is earlier.
The internal statutory citations to the FFDCA in Andrx were substantially modified by the recent revision of the Medicare law. The Medicare amendments, however, do not alter the substance of the ANDA process.
The FFDCA provides an incentive to the first drug manufacturer who files an ANDA paragraph IV certification challenging a patent listed in the Orange Book. Under section 355(j)(5)(B)(iv), a 180-day period of marketing exclusivity is triggered by "the Secretary['s] receiv[ing] notice from the [first ANDA applicant] of [its] first commercial marketing of the drug" or by "a decision of a court in an action described in [ 21 U.S.C. § 355(j)(5)(B)(iii)] holding the patent which is the subject of the certification to be invalid or not infringed."Minnesota Mining and Mfg. Co. v. Barr Laboratories. Inc., 289 F.3d 775, 778 (Fed. Cir. 2002).
FACTS
Pfizer holds two patents on Zoloft ®: U.S. Patent No. 5,248,699 (the `699 patent), and U.S. Patent No. 4,356,518 (the `518 patent). The `518 patent will expire on June 30, 2006. The `699 patent expires on September 28, 2010. Pfizer has listed both patents in the Orange Book.
The `518 patent was to expire on December 30, 2005. The FDA, however, granted Pfizer a six month pediatric exclusivity extension.
In July of 2002, Teva filed an ANDA, pursuant to 21 U.S.C. § 355(j), seeking the FDA's approval to market its generic version of sertraline hydrochloride. Teva also filed a paragraph III certification stating that it would not market the generic until Pfizer's `518 patent expired on June 30, 2006. Teva simultaneously filed a paragraph IV certification contending that its generic does not infringe the `699 patent or, alternatively, that the `699 patent is invalid. On January 24, 2003, Teva filed this Complaint seeking a declaratory judgment of invalidity/non-infringement.
There is a third related Pfizer patent which is not implicated by Teva's filing.
Teva was not the only manufacturer to file a sertraline hydrochloride ANDA. In 1999, Zenith Goldline Pharmaceuticals, Inc., now known as Ivax, filed the first sertraline hydrochloride ANDA. Like Teva, Ivax filed a paragraph III certification disclaiming any intention of selling the drug prior to the expiration of the `518 patent, as well as a paragraph IV certification challenging the `699 patent. As the first ANDA filer, were Ivax to prevail in the patent action, it would have been entitled under section 355(j)(5)(B)(iv) of the Act to a 180-day market exclusivity period. That period would begin to run either on the date of the first commercial sale of the generic drug, which given the paragraph III certification, would be June 30, 2006, or on the date of a court decision invalidating the `699 patent. In response to the ANDA, Pfizer brought an infringement action against Ivax within the forty-five day "stay-put" period mandated by section 355(j)(5)(B)(iii). Pfizer and Ivax then settled the case, with Ivax taking the rights to the exclusivity period. According to Teva, the settlement gives Pfizer a vested interest in protecting Ivax's exclusivity rights. This is so, because unless an intervening court decision opens the market further, Zoloft ® will face only one generic drug competitor during the exclusivity period.
After Ivax filed its ANDA, Dr. Reddy's Laboratories (DLR) filed its own sertraline hydrochloride ANDA. Like Ivax and Teva, DLR challenged the `699 patent but not the `518 patent. Pfizer opted not to file suit against DRL within the "stay-put" period, causing DRL to bring an action for declaratory judgment in the district court in New Jersey. Pfizer then filed a motion to dismiss, similar in all respects to the motion pending before this court. On July 7, 2003, Judge Pisano allowed Pfizer's motion, holding that DRL had not demonstrated a reasonable apprehension of suit and that as a result no actual controversy existed between the parties. Dr. Reddy's Laboratories. Ltd, v. Pfizer Inc., 2003 WL 21638254, at *6 (D.N.J., July 8, 2003).
DISCUSSION
"Under the Declaratory Judgment Act, 28 U.S.C. § 2201 (a) (1994), a district court has jurisdiction over a declaratory judgment action only when there is an `actual controversy.'" Amana Refrigeration. Inc. v. Quadlux. Inc., 172 F.3d 852, 855 (Fed. Cir. 1999). "For an actual controversy to exist, `[t]here must be both (1) an explicit threat or other action by the patentee, which creates a reasonable apprehension on the part of the declaratory plaintiff that it will face an infringement suit, and (2) present activity which could constitute infringement or concrete steps taken with the intent to conduct such activity.'"Id. "Even if there is an actual controversy, the district court is not required to exercise declaratory judgment jurisdiction, but has discretion to decline that jurisdiction." EMC Corp. v. Norand Corp., 89 F.3d 807, 810 (Fed. Cir. 1996). Hence, two question are before the court. Has Teva satisfied the two prongs of the "actual controversy" test and, if so, should the court exercise jurisdiction?
It is clear that Teva has satisfied the second prong of the test by filing the ANDA. See Glaxo. Inc. v. Novopharm. Ltd., 110 F.3d 1562, 1569 (Fed. Cir. 1997). ("[Section] 271(e)(2) provided patentees with a defined act of infringement [filing an ANDA] sufficient to create case or controversy jurisdiction to enable a court to promptly resolve any dispute concerning infringement and validity."). See also Andrx Pharmaceuticals. Inc., 276 F.3d at 1371 ("[U]nder section 271(e)(2), . . . a generic drug manufacturer infringes a patent by filing an ANDA to obtain approval for a generic drug product claimed by a valid and unexpired patent.").
Section 271(e)(2) was intended to define a technical act of infringement for jurisdictional purposes to permit patent holders to bring suit against an ANDA filer within the forty-five day "stay-put" period. Conversely, the same jurisdictional act of infringement serves the ANDA filer when it seeks to file a declaratory judgment action after the forty-five day period expires. As Judge Pisano pointed out inDr. Reddy's Laboratories, at *5, Pfizer's reliance onTelectronics Pacing Systems. Inc. v. Ventritex. Inc., 982 F.2d 1520, 1527 (Fed. Cir. 1992), and Bristol-Myers Squibb Co. v. Ivax Corp., 77 F. Supp.2d 606, 619 (D.N.J. 2000), is misplaced asTelectronics is factually distinct, and Bristol-Myers Squibb did not address the import of section 271(e)(2).
Whether Teva satisfies the first prong of the "actual controversy" test, requiring "an explicit threat or other action by the patentee, which creates a reasonable apprehension on the part of the declaratory plaintiff that it will face an infringement suit," is more problematic. "To put a putative infringer in reasonable apprehension of suit does not require an express charge of infringement and threat of suit; rather, such apprehension may be induced by subtler conduct if that conduct rises `to a level sufficient to indicate an intent [on the part of the patentee] to enforce its patent,' i.e., to initiate an infringement action." EMC Corp., 89 F.3d at 811.
Teva, like DRL in Dr. Reddy's Laboratories, argues that Pfizer's actions (or inactions) to date have created a reasonable apprehension of suit. Teva cites the following indices of aggression: (1) Pfizer has listed the `699 patent in the Orange Book; (2) Pfizer has refused to grant Teva a covenant not to sue; (3) Pfizer has aggressively asserted its patent rights against alleged infringers of other of its patents; (4) Pfizer sued Ivax, the first generic manufacturer of sertraline hydrochloride; and (5) it is in Pfizer's self-interest "to leave a cloud of litigation" hanging over Teva as a means of protecting Ivax's 180-day exclusivity period.
Teva also argues that Pfizer returned without testing samples of the generic that Teva had mailed to Pfizer's counsel after the suit was filed. "Pfizer knows that testing would force its hand — either it would be required to tell Teva that it does not infringe its patent and provide it with a covenant not to sue, or to come clean with its intention to sue Teva for infringement." Teva Supplemental Memorandum, at 2. Whatever force this argument might have in the abstract — Pfizer maintains that it has no legal obligation to undertake an investigation of a competitor's product — it does not change the fact that it was Teva, and not Pfizer, who precipitated the product testing issue. Pfizer simply chose not to respond. This can hardly be considered conduct that exemplifies a "degree of adverseness" sufficient to trigger an actual controversy. EMC Corp., 89 F.3d at 811-812. Cf. Shell Oil Co. v. AmocoCorp., 970 F.2d 885, 888 (Fed. Cir. 1992) (no apprehension of suit where patentee was approached by declaratory judgment plaintiff, and patentee did no more than defend the validity of its patent during negotiations).
Like Judge Pisano in Dr. Reddy's Laboratories. I find that Teva has not satisfied the first prong of the "actual controversy" test. Teva argues that by listing a patent in the Orange Book, a patentee has declared its intention to sue any potential infringer. A blanket inference to this effect would cover every patent holder who listed a patent, thereby eliminating the second prong of the test. A patent holder may have reasons to sue for infringement, and all things depending, reasons not to sue.
Teva also points to Pfizer's refusal to enter a covenant not to sue. According to Teva, Pfizer has no reason not to sign the covenant (if it does not intend to sue) and by refusing to do so, has indicated its belief that it has substantive grounds on which to bring suit. Finally, Teva maintains that Pfizer's foot-dragging in declaring its intentions one way or another is simply intended to forestall a court decision that might prematurely start the running of Ivax's market exclusivity period. The bottom line is that there is nothing in the FFDCA that requires Pfizer to respond one way or another to Teva's request for a covenant not to sue. Nor is the fact that Pfizer may have an interest in seeing Ivax preserve its six-month quasi-monopoly relevant, given the intent of the Hatch-Waxman Amendments to encourage challenges to market-dominating pharmaceutical patents by so rewarding first filers. If anything, Pfizer's self-interest in protecting Ivax's exclusivity period makes the prospects of a lawsuit against Teva (or anyone else) even more remote.
Pfizer argues that this is a case of the pot calling the kettle black as Teva's obvious motive in filing this action is to rob Ivax of the benefits of its first filer status.
Thus, all that remains is Teva's belief that it will be sued because Pfizer sued Ivax. This subjective belief does not amount to "an explicit threat or other action by the patentee" indicating the imminence of a lawsuit. Amana Refrigeration. 172 F.3d at 855 (emphasis added). It may well be, as Teva alleges, that Pfizer has outmaneuvered Teva by effectively partnering with Ivax. If so, Teva's frustration is understandable. But there is nothing in the FFDCA that makes Pfizer's conduct actionable.
ORDER
For the foregoing reasons, Pfizer's motion to dismiss isALLOWED. The dismissal will be entered without prejudice.
SO ORDERED.