Eli Lilly and Co. v. Teva Pharmaceuticals Usa

• Decision Date: 24 February 2009
• Docket Number: No. 2009-1071.,2009-1071.
• Citation: 557 F.3d 1346
• Parties: ELI LILLY AND COMPANY, Plaintiff-Appellee, v. TEVA PHARMACEUTICALS USA, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

557 F.3d 1346

ELI LILLY AND COMPANY, Plaintiff-Appellee, v. TEVA PHARMACEUTICALS USA, INC., Defendant-Appellant.

No. 2009-1071.

United States Court of Appeals, Federal Circuit.

February 24, 2009.

Charles E. Lipsey, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., of Reston, VA, argued for plaintiff-appellee. With him on the brief were David S. Forman, Howard W. Levine, Laura P. Masurovsky, Jennifer A. Johnson, and J. Derek McCorquindale, of Washington, DC. Of counsel on the brief were James P. Leeds and Gilbert T. Voy, Eli Lilly and Company, of Indianapolis, IN.

Jordan A. Sigale, Loeb & Loeb LLP, of Chicago, IL, argued for defendant-appellant. With him on the brief were Edward H. Rice and Marina N. Saito.

Before MICHEL, Chief Judge, RADER and PROST, Circuit Judges.

Opinion for the court filed by Circuit Judge RADER. Dissenting opinion filed by Circuit Judge PROST.

RADER, Circuit Judge.

Finding that Teva Pharmaceuticals USA, Inc., ("Teva") "recast its product more than eighteen months after it provided the original sample to Lilly and only eight months before trial is set to commence," the United States District Court for the Southern District of Indiana extended the statutory thirty-month stay of 21 U.S.C. § 355(j)(5)(B)(iii) (2003), preventing the U.S. Food and Drug Administration ("FDA") from finally approving Teva's Abbreviated New Drug Application ("ANDA"). Eli Lilly & Co. v. Teva Pharms. USA, Inc., No. 1:06-cv-1017, 2008 WL 4809963, at *4-5 (S.D.Ind. Dec.29, 2008) ("Extension Order"). Because the trial court did not abuse its discretion, this court affirms.

I

This case arises 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 (2003); 35 U.S.C. §§ 156 (2002), 271 (2003)) (collectively, the "Hatch-Waxman Act"). Plaintiff-Appellee Eli Lilly & Company ("Lilly") sued Teva for patent infringement under 35 U.S.C. § 1 et. seq. and 28 U.S.C. §§ 2201-02.

The Hatch-Waxman Act strikes a balance between the sometimes-competing policy interests of inducing pioneering research and development of new drugs and enabling production of low-cost, generic copies of those drugs. A manufacturer that seeks to market a generic drug may submit an ANDA for approval by the United States Food and Drug Administration ("FDA"), rather than submitting a full New Drug Application ("NDA") showing the safety and efficacy of the generic drug. Thus, the generic manufacturer may rely on safety and efficacy studies of the pioneer manufacturer upon showing the generic drug's bioequivalence with the previously approved drug product. 21 U.S.C. § 355(j)(2)(A) (2003).

The Hatch-Waxman Act also requires a pioneer drug manufacturer 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) (2003). The FDA lists such patents in its Approved Drug Products With Therapeutic Equivalence Evaluations, known as the "Orange Book". Under 35 U.S.C. § 271(e)(2), a generic 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). The Hatch-Waxman Act specifies the certification alternatives, (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) (2003). These are commonly referred to as paragraph I, II, III, and IV certifications.

When an ANDA certifies under paragraph IV, the applicant must provide the patentee a detailed basis for its belief that the patent is not infringed, that it is invalid, or that it is unenforceable. 21 U.S.C. § 355(j)(2)(B) (2003). The patentee then has forty-five days to sue the ANDA applicant for patent infringement. 21 U.S.C. § 355(j)(5)(B)(iii). If the patentee does not sue, the FDA may proceed to approve the ANDA. If the patentee does file suit, the FDA 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. Id. The court entertaining the suit has discretion under the statute to order a shorter or longer stay if "either party to the action fail[s] to reasonably cooperate in expediting the action." Id.

In this case, Lilly holds the approved NDA for raloxifene hydrochloride ("raloxifene") tablets. This product is marketed under the brand name Evista® for the treatment and prevention of postmenopausal osteoporosis. Lilly lists twelve patents that claim Evista® in the Orange Book.

Teva filed an ANDA with the FDA in early 2006, seeking approval to manufacture and market generic raloxifene. As part of its ANDA, Teva filed paragraph IV certifications. On May 16, 2006, Teva notified Lilly of its paragraph IV certifications.

Lilly sued Teva on June 29, 2006, alleging that Teva's ANDA infringed four method patents of its twelve listed Orange Book patents for using raloxifene to prevent or treat postmenopausal osteoporosis: U.S. Patent Nos. RE38,968 ("the '968 patent"), RE39,049 ("the '049 patent"), RE39,050 ("the '050 patent"), and 6,906,086 ("the '086 patent"). The FDA then stayed approval of Teva's ANDA for thirty months, from the date that Lilly received Teva's paragraph IV notifications, expiring on November 16, 2008. Extension Order, 2008 WL 4809963 at *1.

On September 25, 2006, the district court entered a scheduling order, setting a trial date of March 9, 2009—four months after expiration of the thirty-month statutory stay. In February 2007, Lilly amended its complaint to assert that Teva infringed three additional Evista® patents— U.S. Patent Nos. 6,458,811 ("the '811 patent"), 6,797,719 ("the '719 patent"), and 6,894,064 ("the '064 patent")—covering raloxifene particle size and formulation.

On July 8, 2008, Teva amended its ANDA to include a new particle-size measuring methodology for the active pharmaceutical ingredient in its proposed raloxifene tablets. Extension Order, 2008 WL 4809963 at *2. Teva disclosed this amendment to Lilly on July 10, 2008, and provided it three batch samples on July 28, August 19, and September 17, 2008. The district court, however, previously set a discovery deadline of August 18, 2008. Id. at *4 n. 2. By September 5, 2008, Teva also provided Lilly with 27,000 pages of related documentation. Moreover, the district court ordered Teva to produce additional raloxifene samples to Lilly by December 15, 2008, in response to Lilly's motion to compel discovery.

On September 17, 2008, Lilly moved the district court under 21 U.S.C. § 355(j)(5)(B)(iii) to extend the statutory thirty-month stay due to Teva's alleged discovery violations, prejudicing Lilly's preparations for trial. Extension Order, 2008 WL 4809963 at *1. Lilly alleged that Teva "fail[ed] to `reasonably cooperate in expediting the action' ... as evidenced by Teva's last-minute alteration of its proposed drug product and its `multiple delays in producing critical discovery ... [which have] adversely affected Lilly's infringement case and trial preparation.'" Extension Order, 2008 WL 4809963 at *2 (citing Lilly Mot. for Ext. of Stat. Stay at I-2) (second alteration in the original). Lilly also alleged that Teva prejudiced its preparations for trial by not timely disclosing its plans to alter the particle-size measuring methodology of its proposed raloxifene tablets. Id. Teva allegedly began changing its particle-size measuring methodology as early as November 2007 with the goal of avoiding infringement of Lilly's asserted patents.

On October 6, 2008, Lilly moved the district court for a temporary restraining order ("TRO") and preliminary injunction to prevent Teva from launching its product on November 16, 2008, after expiration of the statutory thirty-month stay. The court granted Lilly's motion on October 29, 2008, to extend the statutory thirty-month stay until the beginning of trial on March 9, 2009. Extension Order, 2008 WL 4809963 at *6. Lilly's motions for a TRO and preliminary injunction were thus denied as moot. Id. at *6 n. 5.

Given the urgency of Teva's situation, just weeks before trial, it filed a motion in this court for an expedited appeal from the district court's order. Because the district court continued the injunction against the FDA, preventing it from finally approving Teva's ANDA until March 9, 2009, this court has jurisdiction over this appeal under 28 U.S.C. § 1292(a)(1).

II

The standard of review in this case is abuse of discretion in both the United States Courts of Appeals for the Federal and Seventh Circuits. See Rick's Mushroom Serv., Inc. v. United States, 521 F.3d 1338, 1342 (Fed.Cir.2008) ("We review a denial of a request for additional discovery for abuse of discretion."); Gile v. United Airlines, 95 F.3d 492, 495 (7th Cir.1996) ("[W]e review a district court's discovery determinations for an abuse of discretion."). Therefore, this court need not decide the question of which jurisdiction's law applies and will apply an abuse of discretion standard to its analysis.

"A district court would necessarily abuse its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence." Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990). While extending the thirty-month statutory stay, the district court found,

In light of the fact that Teva has recast its product more than eighteen months after it provided the original sample to Lilly and only eight months before trial is set to commence, we find...