Dey Pharma, LP v. Sunovion Pharms. Inc.

Citation677 F.3d 1158,102 U.S.P.Q.2d 1710
Decision Date16 April 2012
Docket NumberNo. 2011–1507.,2011–1507.
PartiesDEY PHARMA, LP and Dey Inc., Plaintiffs–Appellees, v. SUNOVION PHARMACEUTICALS INC., Defendant–Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit

OPINION TEXT STARTS HERE

Elizabeth A. Leff, Frommer Lawrence & Haug LLP, of Washington, DC, argued for plaintiffs-appellees. With her on the brief were Edgar H. Haug and Sam V. Desai, of New York, NY.

Eric W. Dittmann, Paul Hastings, LLP, of New York, NY, argued for defendant-appellant. With him on the brief were Joseph M. O'Malley, Jr., Bruce M. Wexler and Preston K. Ratliff, II; Stephen B. Kinnaird, of Washington, DC.

Before BRYSON, DYK, and MOORE, Circuit Judges.

DYK, Circuit Judge.

Dey Pharma, LP and Dey Inc. (Dey) brought suit against Sunovion Pharmaceuticals, Inc. (Sunovion) seeking a declaratory judgment that Dey's generic pharmaceutical product does not infringe Sunovion's U.S. Patent No. 6,451,289 (“the '289 patent”), and that the '289 patent is invalid. The district court concluded that it had subject-matter jurisdiction over the action, and the parties thereafter stipulated to a final judgment of noninfringement. See Dey Pharma, L.P. v. Sunovion Pharms. Inc., No. 08–372 (D.Del. June 20, 2011) (final judgment); Dey LP v. Sepracor Inc., No. 08–372, 2009 WL 1043892 (D.Del. Apr. 16, 2009) (denying motion for certification); Dey, L.P. v. Sepracor, Inc., 595 F.Supp.2d 355 (D.Del.2009) (denying motion to dismiss).1 Sunovion appeals, challenging the district court's subject-matter jurisdiction. We affirm.

Background
I

This declaratory judgment action involves the Drug Price Competition and Patent Term Restoration Act of 1984, Pub.L. No. 98–417, 98 Stat. 1585 (“Hatch–Waxman Act), in which 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,” Andrx Pharms., Inc. v. Biovail Corp., 276 F.3d 1368, 1371 (Fed.Cir.2002). Under the Hatch–Waxman framework, a brand-name company seeking FDA approval of a new drug must file a new drug application (“NDA”) with the Food and Drug Administration (“FDA”), which must include information about patents “with respect to which a claim of patent infringement could reasonably be asserted.” 21 U.S.C. § 355(b)(1). The FDA publishes this patent information, see id., in a publication known as the “Orange Book.”

A generic company may then seek FDA approval using an abbreviated new drug application (“ANDA”) with a certification for each patent in the Orange Book, such as a paragraph III certification” (that approval is not sought until the patent expires) or a paragraph IV certification” (“that such patent is invalid or will not be infringed”). Id. § 355(j)(2)(A)(vii). If an ANDA contains only paragraph IV certifications, the ANDA may be approved unless the NDA holder sues the ANDA filer for patent infringement within 45 days. See id. § 355(j)(5)(B)(iii).2 The first generic company to file an ANDA containing a paragraph IV certification receives a 180–day exclusivity period from the date of its “first commercial marketing” before other generic companies will be approved by the FDA to enter the market. See 21 U.S.C. § 355(j)(5)(B)(iv). The 180–day period is not impacted by the NDA filer's decision not to sue a subsequent ANDA filer on patents listed in the subsequent filer's paragraph IV certifications.

Before the 2003 amendments to the Hatch–Waxman Act, the first generic filer's 180–day exclusivity period was triggered by either its “first commercial marketing” or a court judgment “holding the patent which is the subject of the certification to be invalid or not infringed.” 21 U.S.C. § 355(j)(5)(B)(iv) (2000). Under the 2003 amendments, the exclusivity period is only triggered by the first-filing generic's first commercial marketing, but the exclusivity period can be forfeited under certain conditions, including failure to launch after a final court judgment of noninfringement or invalidity. See Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”), Pub.L. No. 108–173, § 1102, 117 Stat.2066, 2457–60. For example, if a second ANDA filer obtained a final judgment that the patents were invalid or not infringed, then the first ANDA filer would forfeit its 180–day exclusivity period if it did not market the drug within 75 days. See 21 U.S.C. § 355(j)(5)(D). This change in the statutory trigger makes no difference to the issues in this case, and for simplicity we refer to a final judgment that triggers the 75–day countdown to forfeiture of the exclusivity period as a “trigger” of the 180–day exclusivity period.

Also before the 2003 amendments, “NDA holders employed several methods of delaying the early resolution of patent disputes.” Janssen Pharmaceutica, N.V. v. Apotex, Inc., 540 F.3d 1353, 1357 (Fed.Cir.2008). “For example, the brand drug company might have several patents listed in the ... Orange Book with respect to a particular drug. It could be in the company's interest to bring suit within 45 days on one patent and to hold the others in reserve.” Teva Pharms. USA, Inc. v. Novartis Pharms. Corp., 482 F.3d 1330, 1343–44 (Fed.Cir.2007) (quoting 149 Cong. Rec. 31,784 (2003) (statement of Sen. Edward Kennedy)). The benefits of this strategy were noted in the legislative history, including the threat of an infringement suit on the reserved patent against the first ANDA filer after it secured FDA approval, and the ability to delay triggering the first ANDA filer's exclusivity period by preventing adjudication of noninfringement or invalidity of the reserved patent. See 149 Cong. Rec. 31,784.

To address this problem, Congress specified that an ANDA filer who is not sued within 45 days could bring a declaratory judgment action under 28 U.S.C. § 2201 against the NDA holder, see 21 U.S.C. § 355(j)(5)(C), and that the federal courts would have declaratory judgment jurisdiction “to the extent consistent with the Constitution,” 35 U.S.C. § 271(e)(5). Under this amended Hatch–Waxman framework, if the first ANDA filer “parked” its 180–day exclusivity under an agreement with the brandname company, a subsequent ANDA filer could independently trigger the first filer's exclusivity period through a declaratory judgment action leading to a final judgment of invalidity or noninfringement, thereby accelerating the second ANDA filer's ability to market its drug.

II

This case involves such a declaratory judgment claim by the second ANDA filer (Dey) against the patent holder and NDA filer (Sunovion), designed to trigger the first ANDA filer's (Breath's) exclusivity period. The FDA approved Sunovion's NDA 20–837 for Xopenex in 1999. Sunovion listed three patents relating to Xopenex in the Orange Book: U.S. Patent No. 5,362,755 (“the '755 patent”), U.S. Patent No. 5,547,994 (“the '994 patent”), and the '289 patent.3 The ' 755 patent expires on March 25, 2013; the ' 994 patent expires on August 20, 2013; and the ' 289 patent expires on March 21, 2021.

In June 2005, Breath filed the first ANDA for generic Xopenex, which contained paragraph IV certifications for all three patents. In October 2005, Sunovion sued Breath for infringement of all three patents in a case that was transferred to the U.S. District Court for the District of Massachusetts. In May 2008, the suit was dismissed based on a settlement agreement between Sunovion and Breath. Sepracor Inc. v. Breath Ltd., No. 06–10043 (D.Mass. May 1, 2008). Under the settlement, Breath, by paying a license fee, may sell generic Xopenex under its ANDA starting on August 20, 2012 (or on the date of an earlier third-party commercial launch). See J.A. 187–88.

In July 2005, Dey filed a second ANDA for generic Xopenex, which also contained paragraph IV certifications for all three Orange Book patents. In February 2006, Sunovion sued Dey over two of the patents in the District Court for the District of Delaware, but Sunovion did not assert the '289 patent. Dey later filed a different ANDA on a “concentrate” version of Xopenex, and after Sunovion again sued Dey with respect to the two patents but not the ' 289 patent, the actions were consolidated in district court in December 2006. On June 20, 2008, Dey brought this declaratory judgment action, seeking a declaration that the '289 patent is invalid or not infringed by either ANDA product. In response, Sunovion provided Dey with a covenant not to sue on the '289 patent and moved to dismiss the declaratory judgment action for lack of subject-matter jurisdiction.

On January 30, 2009, the district court denied Sunovion's motion to dismiss in a thorough and well-reasoned opinion. Dey, 595 F.Supp.2d at 362–63. In accordance with our precedent, the court held that the covenant not to sue did not defeat declaratory judgment jurisdiction. See id. at 360, 362. The court also agreed with Dey that even if it invalidated the two Orange Book patents asserted by Sunovion, the '289 patent would remain a legal barrier to its ANDA approval, and that this potential barrier was a cognizable injury that could be redressed through the declaratory judgment action under our decisions in Caraco and Janssen, discussed below. See id. at 358–62 (citing Caraco Pharm. Labs., Ltd. v. Forest Labs., Inc., 527 F.3d 1278 (Fed.Cir.2008); Janssen, 540 F.3d 1353).

Pursuant to a stipulation of the parties, the district court entered a final judgment of noninfringement on June 20, 2011. Dey Pharma, L.P. v. Sunovion Pharms. Inc., No. 08–372 (D.Del. June 20, 2011). Sunovion timely appealed solely on jurisdictional grounds. This court has jurisdiction over the appeal under 28 U.S.C. § 1295(a)(1).

Sunovion's Delaware suit against Dey over the '755 and '994 patents is still pending. On February 14, 2012, the district court entered judgment following a jury verdict in favor of Sunovion on the infringement and invalidity claims. See Sunovion Pharms. Inc. v. Dey...

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