France v. Abbott Labs.

• Decision Date: 23 January 2013
• Docket Number: No. 11–3602.,11–3602.
• Citation: 707 F.3d 223
• Parties: ETHYPHARM S.A. FRANCE, Appellant v. ABBOTT LABORATORIES.
• Court: U.S. Court of Appeals — Third Circuit

707 F.3d 223

ETHYPHARM S.A. FRANCE, Appellant

v.ABBOTT LABORATORIES.

No. 11–3602.

United States Court of Appeals,Third Circuit.

Argued Sept. 25, 2012.

Filed: Jan. 23, 2013.

Carlos T. Angulo, Esq., Dwight P. Bostwick, Esq. [Argued], Zuckerman Spaeder, Washington, DC, Austen C. Endersby, Esq., Gregory B. Williams, Esq., Fox Rothschild, Wilmington, DE, for Appellant.

Sean M. Brennecke, Esq., Klehr Harrison Harvey Branzburg, David J. Margules, Esq., Bouchard, Margules & Friedlander, Wilmington, DE, William F. Cavanaugh, Jr., Esq. [Argued], Chad J. Peterman, Esq., Thomas W. Pippert, Esq., Edward R. Tempesta, Esq., Timothy Waters, Esq., Patterson, Belknap, Webb & Tyler, New York, NY, Stuart N. Senator, Esq., Jeffrey I. Weinberger, Esq., Munger, Tolles & Olson, Los Angeles, CA, for Appellee.

Before: McKEE, Chief Judge, JORDAN, and VANASKIE, Circuit Judges.

OPINION OF THE COURT

JORDAN, Circuit Judge.

Ethypharm S.A. France (“Ethypharm”) appeals the judgment of the United States District Court for the District of Delaware granting Abbott Laboratories (“Abbott”) summary judgment on Ethypharm's antitrust and state law claims. Although the District Court ruled in Abbott's favor, it had earlier denied Abbott's motion to dismiss, a motion premised on the assertion that Ethypharm lacked standing to bring antitrust claims under §§ 1 and 2 of the Sherman Antitrust Act. Abbott has pressed its standing argument on appeal, and we conclude that the District Court erred in holding there is antitrust standing in this case. Because Ethypharm's state law claims have not been argued on appeal, the District Court's judgment on those claims will remain undisturbed, but we will vacate the District Court's grant of summary judgment as to the federal claims and will remand with directions that they be dismissed for Ethypharm's lack of standing.

I. BackgroundA. Facts¹

Ethypharm is a privately held French corporation that develops and manufacturespharmaceutical drug products. The drug at issue in this case is a fenofibrate ² developed and manufactured by Ethypharm and carrying the brand name Antara®. Because, as Ethypharm observes, entry into the United States pharmaceutical market requires “substantial time and resources,” it does not sell Antara directly in the United States. (J.A. at 122.) Instead, its business model was to “enter into a license and distribution agreement with a company in the United States.” (J.A. at 122.) Thus, in 2001, it entered into a Development, License, and Supply Agreement (“DLS”) with Reliant Pharmaceuticals, Inc. (“Reliant”), an American company, pursuant to which Reliant would sell Antara in this country. The DLS stated that Ethypharm would provide Reliant with the finished pharmaceutical product, or, at Reliant's option, the drug in bulk, which could then be encapsulated.

Reliant “was responsible for obtaining regulatory approval for the drug, preparing appropriate packaging material, and then marketing the drug through the efforts of a large, motivated, and experienced sales force.” (J.A. at 122.) To that end, the DLS granted exclusive rights to Reliant in the United States and allowed it to seek approval with the U.S. Food and Drug Administration (“FDA”) to market and sell Antara.³ Ethypharm explains in its Complaint ⁴ that Reliant's role in exclusively marketing, selling, and obtaining FDA approval for Antara was critical because, without the “mechanism of the license and distribution agreement, Ethypharm would be foreclosed from the United States market.” (J.A. at 122.) Thus, without Reliant's, or some similar distributor's, willingness to take on the risk and expense of gaining FDA approval and marketing Antara, the drug could never have reached the United States market.

Consistent with the DLS, Reliant sought FDA approval of Antara pursuant to § 505(b)(2) of the Food, Drug, and Cosmetics Act (“FDCA”). 21 U.S.C. § 355(b)(2). Reliant thus began the process of complying with the complex regulatory regime that governs how pharmaceuticals come to market in the United States. Before a drug can be released, it must be approved by the FDA pursuant to the FDCA, 21 U.S.C. §§ 301 et seq. The manufacturer of a new branded drug must submit detailed safety and efficacy data for the drug to the FDA in a New Drug Application (“NDA”). Id. § 355(a), (b)(1). The NDA must also list “the patent number and the expiration date of any patent which claims the drug ... or which claims a method of using such drug.” Id. § 355(b)(1). After approval, information about the branded drug, including patent information, is published by the FDA in a publication entitled “Approved Drug Products with Therapeutic Equivalence Evaluations,” which is generally called the “Orange Book,” after the color of its cover. See generally FDA Electronic Orange Book, http:// www. accessdata. fda. gov/ scripts/ cder/ ob/ default. cfm (last visited Dec. 3, 2012).

The Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch–Waxman Act”), codified at 21 U.S.C. §§ 355, 360cc and 35 U.S.C. §§ 156, 271, 282, provides a framework for the introduction of generic versions of previously approved branded drugs. Under that framework, a generic manufacturer may submit an Abbreviated New Drug Application (“ANDA”) to the FDA. 21 U.S.C. § 355(j). The ANDA process allows the generic manufacturer to incorporate efficacy and safety data submitted to the FDA in the NDA for a branded drug, as long as the generic drug is shown to be bioequivalent to that branded drug. Id. § 355(j)(2)(A).

There is also a third kind of application that a drug manufacturer may use to obtain FDA approval, and that is the route Reliant chose for Antara. Under § 505(b)(2) of the FDCA, a drug manufacturer may file an NDA for a drug that is not entirely new but is not simply a generic version of a branded drug. For drugs that have changes from a branded drug, such that an ANDA application is unavailable, but whose changes are so slight that a manufacturer may rightly rely on the “full reports of investigations,” 21 U.S.C. § 355(b)(1), of the original drug to establish the new drug's safety and efficacy, an NDA may be filed pursuant to § 505(b)(2), even though those investigations “were not conducted by or for the applicant and ... the applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted,” id. § 355(b)(2). The § 505(b)(2) applicant must submit additional data to the FDA that demonstrates that any differences between the original drug and the § 505(b)(2) drug will not affect the § 505(b)(2) drug's safety and efficacy. See21 C.F.R. § 314.54(a) (providing that § 505(b)(2) applications must provide data that supports any modification of the drug from the relied upon NDA). But, having done that, a § 505(b)(2) applicant can avoid preclinical and certain human studies necessary in full NDA applications.

Finally, much as when filing an ANDA application, a § 505(b)(2) applicant must certify whether its drug will infringe any patents listed in the Orange Book. 21 U.S.C. § 355(b)(2)(A). Those certifications are as follows: “(i) that such patent information has not been filed (ii) that such patent has expired, (iii) of the date on which such patent will expire, or (iv) that such patent is invalid or will not be infringed by the manufacture, use, or sale of the new drug for which the application is submitted....” Id. § 355(b)(2)(A)(i)-(iv).

Rather than conducting its own clinical studies, Reliant depended on the data of another, already approved, fenofibrate drug called TriCor®, which was developed by a French company named Laboratories Fournier (“Fournier”) and distributed by Abbott in the United States.⁵ Antara received FDA approval in November 2004, and Reliant began marketing the drug in February 2005. Reliant chose not to make a certification under § 505(b)(2)(A)(iv) that Antara did not infringe any patents in the Orange Book or that those patents were invalid, but elected to market Antara immediatelyafter gaining FDA approval.⁶ That marketing exposed Reliant to a possible infringement suit from Abbott, making Reliant's launch of Antara “at risk.” ⁷ In a prophylactic maneuver, Reliant filed a declaratory judgment action in the United States District Court for the District of Delaware in June 2004, seeking a declaration of noninfringement with respect to four of Abbott's fenofibrate patents, U.S. Patent Nos. 6,074,670 (the “'670 patent”), 6,277,405 (the “'405 patent”), 6,589,552 (the “'552 patent”), and 6,652,881 (the “'881 patent”). Reliant also argued that the patents were unenforceable due to inequitable conduct. Abbott counterclaimed for infringement of two of the four patents. Despite that lawsuit, Antara's net sales in 2005 were $23.5 million, and for the first half of 2006 they were $18.9 million.

In April 2006, Abbott and Reliant settled their patent dispute. Fournier, TriCor's developer, was also a party to the settlement. The three entered into a Settlement Term Sheet (“STS”) providing that Abbott and Fournier would grant a non-exclusive license to Reliant for the patents that were the subject of the lawsuit, along with U.S. Patent No. 4,895,726 (the “'726 patent”), another fenofibrate patent. ( See J.A. at 247 (“Abbott and Fournier would grant Reliant a nonexclusive license ... under the [patents] to exploit [Antara ⁸] in the United States....”).) In exchange, “Reliant would make quarterly royalty payments to Abbott and Fournier in the total amount of 7% of Net Sales.” ⁹ (J.A. at 248.) If, however, Reliant was acquired or it sold off the Antara portion of its business,¹⁰ the new owner would not receive the benefit of a 7 percent royalty; instead, “the License Fee ... would increase to 10% of Net Sales.” ( Id.) Relevant here, § 8 of the STS (the “Restricted Entity provision”) provided that:

The license would contain additional customary terms and conditions including, without limitation, the...