Bristol-Myers Squibb Co. v. Royce Laboratories, Inc.

Citation36 USPQ2d 1641,69 F.3d 1130
Decision Date01 November 1995
Docket NumberBRISTOL-MYERS,No. 95-1502,95-1502
Parties, 36 U.S.P.Q.2d 1641 SQUIBB COMPANY and E.R. Squibb & Sons, Inc., Plaintiffs-Appellants, v. ROYCE LABORATORIES, INC., Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Robert J. Brookhiser, Howrey & Simon, Washington, DC, argued for plaintiffs-appellants. With him on the brief were Robert L. Baechtold, Fitzpatrick, Cella, Harper & Scinto, New York City, and Donald J. Barrack, Bristol-Myers Squibb Company and E.R. Squibb & Sons, Inc., Princeton, New Jersey.

Milton A. Bass, Bass & Ullman, P.C., New York City, argued for defendant-appellee. With him on the brief were Jacob Laufer and James N. Czaban.

Before SCHALL, Circuit Judge, COWEN, Senior Circuit Judge, and BRYSON, Circuit Judge.

SCHALL, Circuit Judge.

Bristol-Myers Squibb Company and E.R. Squibb & Sons, Inc. (collectively, "Bristol") own United States Patent No. 4,105,776 (the "'776 patent"), which claims the drug captopril. In this action, Bristol appeals from the August 24, 1995 order of the United States District Court for the Southern District of Florida in Bristol-Myers Squibb Co. v. Royce Labs, Inc., No. 95-1682-CIV-DAVIS, 1995 WL 568395. In its order, the court granted the motion of Royce Laboratories, Inc. ("Royce") pursuant to Fed.R.Civ.P. 12(b)(6) to dismiss, for failure to state a claim upon which relief could be granted, Bristol's suit charging Royce with infringement of the '776 patent. The court also granted Royce's motion to set aside the statutory bar against the Food and Drug Administration ("FDA") approving Royce's abbreviated new drug application ("ANDA") for a generic version of captopril. We reverse and remand.

BACKGROUND
I.

Two laws are at issue in this case: The Drug Price Competition and Patent Term Restoration Act, Pub.L. No. 98-417, 98 Stat. 1585 (1984) (codified as amended at 21 U.S.C. Sec. 355 (1994) and 35 U.S.C.A. Sec. 271(d)-(h) (West Supp.1995)) (the "Hatch-Waxman Act"); and the Uruguay Round Agreements Act, Pub.L. No. 103-465, 108 Stat. 4809 (1994) (codified as amended at 35 U.S.C.A. Sec. 154 (West Supp.1995)) (the "URAA"). We begin with the statutory scheme.

A. The Hatch-Waxman Act

The Hatch-Waxman Act amended the Federal Food, Drug, and Cosmetic Act, Pub.L. No. 52-675, 52 Stat. 1040 (1938), (codified as amended at 21 U.S.C. Secs. 301 et seq. (1994)) (the "FDCA"), as well as the patent laws, in several important respects. Under the FDCA, the FDA is responsible for determining whether a generic drug product should be approved for sale to the public. 21 U.S.C. Sec. 355(a). Pursuant to the Hatch-Waxman Act, a pharmaceutical manufacturer seeking expedited FDA approval to market a generic version of a patented drug may submit an ANDA. 21 U.S.C. Sec. 355(j). An applicant submitting an ANDA must certify one of four things: (1) that the drug for which the ANDA is submitted has not been patented (a "paragraph I" certification); (2) that any patent on such drug has expired (a "paragraph II" certification); (3) the date on which the patent on such drug will expire, if it has not yet expired (a "paragraph III" certification); or (4) that the patent on such drug "is invalid or that it will not be infringed by the manufacture, use, or sale of the new drug" for which the ANDA is submitted (a "paragraph IV" certification). 21 U.S.C. Sec. 355(j)(2)(A)(vii)(I)-(IV). When an applicant submits an ANDA that contains a paragraph IV certification, it must give the owner of the relevant patent notice of the certification. 21 U.S.C. Sec. 355(j)(2)(B).

The Hatch-Waxman Act provides generally that "[i]t shall not be an act of infringement to make, use, or sell a patented invention ... solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs." 35 U.S.C.A. Sec. 271(e)(1). Inclusion of a paragraph IV certification in an ANDA, however, is deemed an act of infringement. The statute, referring to an ANDA containing a paragraph IV certification, states: "It shall be an act of infringement" to submit an application under 21 U.S.C. Sec. 355(j) "for a drug claimed in a patent ... if the purpose of such submission is to obtain approval ... to engage in the commercial manufacture, use, or sale of [the] drug ... before the expiration of [the] patent." 35 U.S.C.A. Sec. 271(e)(2)(A).

If an ANDA contains a paragraph I or a paragraph II certification, and all applicable scientific and regulatory requirements have been met, FDA approval of the ANDA is effective immediately. 21 U.S.C. Sec. 355(j)(4)(A), (B)(i). If the ANDA contains a paragraph III certification, and all applicable scientific and regulatory requirements have been met, approval is effective on the patent expiration date stated in the certification. 21 U.S.C. Sec. 355(j)(4)(A), (B)(ii).

If the ANDA contains a paragraph IV certification, and all applicable scientific and regulatory requirements have been met, approval Thus, the Hatch-Waxman Act strikes a balance between the interests of a party seeking approval of an ANDA and the owner of a drug patent. On the one hand, the manufacture, use, or sale of a patented drug is not an act of infringement, to the extent it is necessary for the preparation and submission of an ANDA. On the other hand, once it is clear that a party seeking approval of an ANDA wants to market a patented drug prior to the expiration of the patent, the patent owner can seek to prevent approval of the ANDA by bringing a patent infringement suit. While it is pending, such a suit can have the effect of barring ANDA approval for two and a half years.

of the ANDA "shall be made effective immediately" unless the patent owner brings an action for infringement under 35 U.S.C.A. Sec. 271(e)(2)(A) within forty-five days of receiving the notice required by 21 U.S.C. Sec. 355(j)(2)(B). 21 U.S.C. Sec. 355(j)(4)(B)(iii). The Hatch-Waxman Act further provides that, when a patent owner brings a section 271(e)(2)(A) infringement action, the FDA must suspend approval of the ANDA. Id. The suspension continues--and the FDA cannot approve the ANDA--until the earliest of three dates: (i) if the court decides that the patent is invalid or not infringed, the date of the court's decision; (ii) if the court decides that the patent has been infringed, the date that the patent expires; or (iii) subject to modification by the court, the date that is thirty months from the patent owner's receipt of notice of the filing of the paragraph IV certification. 21 U.S.C. Sec. 355(j)(4)(B)(iii)(I)-(III); 35 U.S.C.A. 271(e)(4)(A).

B. The URAA

President Clinton signed the URAA on December 8, 1994, implementing the participation of the United States in the General Agreement on Tariffs and Trade. Section 532(c) of the URAA is the provision of the act that is applicable to this case. It provides as follows:

(c) Continuation.--

(1) Determination.--The term of a patent that is in force on or that results from an application filed before the date that is 6 months after the date of the enactment of the Uruguay Round Agreements Act shall be the greater of the 20-year term as provided in subsection (a), or 17 years from grant, subject to any terminal disclaimers. 1

(2) Remedies.--The remedies of sections 283, 284, and 285 of this title shall not apply to Acts which--

(A) were commenced or for which substantial investment was made before the date that is 6 months after the date of the enactment of the Uruguay Round Agreements Act; and

(B) became infringing by reason of paragraph (1).

(3) Remuneration.--The acts referred to in paragraph (2) may be continued only upon the payment of an equitable remuneration to the patentee that is determined in an action brought under chapter 28 and chapter 29 (other than those provisions excluded by paragraph (2)) of this title.

35 U.S.C.A. Sec. 154(c). Thus, the URAA creates a limited safe harbor for persons who commenced particular acts, or made substantial investment toward commission of those acts before June 8, 1995 (the date six months after the URAA was enacted), which acts became infringing because of the extension of the patent period by the URAA. Under the URAA's safe harbor provision, a patent owner may not assert the traditional remedies of 35 U.S.C. Secs. 283, 284, and 285 (1988) for qualifying acts of infringement committed during the period of a patent's extension (the "Delta" period). See 35 U.S.C.A. Sec. 154(c)(2). The patent owner is entitled to an equitable remuneration, however, for such acts. See 35 U.S.C.A. Sec. 154(c)(3).

II.
A. Royce's ANDA

As noted above, the '776 patent claims the drug captopril. Captopril, which is commercially marketed under the trademark "Capoten," is used to treat hypertension, heart failure, diabetic nephropathy (kidney disease resulting from diabetes), and left ventricular dysfunction following myocardial infarction. When it was first issued, the expiration date of the '776 patent was August 8, 1995. The URAA, however, extended the term of the patent to February 13, 1996.

Royce planned to begin selling a generic version of captopril after the August 8, 1995 expiration date of the '776 patent. In anticipation of this, it submitted an ANDA to the FDA on June 26, 1994. In its ANDA, Royce included a paragraph III certification stating that the '776 patent would expire on August 8, 1995. After the URAA went into effect, however, the FDA, in a response to a citizen petition, ruled that paragraph IV certifications should be submitted for all generic drugs sought to be sold after the original patent expiration date and before the extended expiration date (i.e., during the Delta period). Royce amended its ANDA to include a paragraph IV certification.

In its paragraph IV certification, Royce did not state that the '776 patent was invalid or that the claims of the patent did not cover Royce's generic captopril....

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