NOVO NORDISK v. CARACO PHARMACEUTICAL LABORATORIES

• Citation: 601 F.3d 1359
• Decision Date: 14 April 2010
• Docket Number: No. 2010-1001.,2010-1001.
• Parties: NOVO NORDISK A/S and Novo Nordisk, Inc., Plaintiffs-Appellants, v. CARACO PHARMACEUTICAL LABORATORIES, LTD., and Sun Pharmaceutical Industries, Ltd., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

601 F.3d 1359

NOVO NORDISK A/S and Novo Nordisk, Inc., Plaintiffs-Appellants, v. CARACO PHARMACEUTICAL LABORATORIES, LTD., and Sun Pharmaceutical Industries, Ltd., Defendants-Appellees.

No. 2010-1001.

United States Court of Appeals, Federal Circuit.

April 14, 2010.

Mark A. Perry, Gibson, Dunn & Crutcher LLP, of Washington, DC, argued for plaintiffs-appellants. With him on the brief were Josh A. Krevitt, of New York, NY; Wayne Barsky, of Los Angeles, CA; and Michael A. Sitzman, of San Francisco, CA.

James F. Hurst, Winston & Strawn LLP, of Chicago, IL, argued for defendants-appellees. With him on the brief were Charles B. Klein and Scott H. Blackman, of Washington, DC; David S. Bloch, of San Francisco, CA. Of counsel was Andrew Nichols, of Washington, DC.

Before RADER, CLEVENGER, and DYK, Circuit Judges.

Opinion for the court filed by Circuit Judge RADER. Concurring opinion filed by Circuit Judge CLEVENGER. Dissenting opinion filed by Circuit Judge DYK.

The United States District Court for the Eastern District of Michigan entered an injunction directing Novo Nordisk A/S and Novo Nordisk, Inc. (collectively, "Novo") to request the U.S. Food and Drug Administration ("FDA") to replace Novo's patent use code U-968 listing for Prandin® in the Orange Book with the former U-546 listing. Because Caraco Pharmaceutical Laboratories, Ltd. ("Caraco") does not have a statutory basis to assert a counterclaim requesting such injunctive relief, this court reverses and vacates the injunction.

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; 35 U.S.C. §§ 156, 271), as amended by the Medicare Prescription Drug Improvement and Modernization Act of 2003, Pub.L. No. 108-173, 117 Stat.2066 (2003) (collectively, the "Hatch-Waxman Act"). The Hatch-Waxman Act strikes a balance between two potentially competing policy interests—inducing pioneering development of pharmaceutical formulations and methods and facilitating efficient transition to a market with low-cost, generic copies of those pioneering inventions at the close of a patent term. See Andrx Pharms., Inc. v. Biovail Corp., 276 F.3d 1368, 1371 (Fed.Cir.2002).

Title 21 prohibits sale of a new drug without FDA approval. 21 U.S.C. § 355(a). To obtain that approval, a pioneering manufacturer must file a new drug application ("NDA"), containing clinical studies of the drug's safety and efficacy. 21 U.S.C. § 355(b)(1). As part of the NDA process, the manufacturer must also identify all patents that claim the drug or a method of use:

The applicant shall file with the application the patent number and the expiration date of any patent which claims the drug for which the applicant submitted the application or which claims a method of using such drug and with respect to which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner engaged in the manufacture, use, or sale of the drug.

21 U.S.C. § 355(b)(1)(G) (emphases added).

If the patent information described in subsection (b) of this section could not be filed with the submission of an application under subsection (b) of this section..., the holder of an approved application shall file with the Secretary the patent number and the expiration date of any patent which claims the drug for which the application was submitted or which claims a method of using such drug and with respect to which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner engaged in the manufacture, use, or sale of the drug.

21 U.S.C. § 355(c)(2) (emphases added).

The FDA has authority to promulgate regulations for the efficient enforcement of these provisions. 21 U.S.C. § 371. Under those regulations, a pioneering manufacturer files with the FDA the patent number and the expiration date of any applicable patents by submitting Form 3542a ("Patent Information Submitted with the Filing of an NDA, Amendment, or Supplement") or Form 3542 ("Patent Information Submitted Upon and After Approval of an NDA or Supplement"). 21 C.F.R. § 314.53 (2009). If the patent claims one or more methods of using the NDA drug, Forms 3542a and 3542 require a description of each of those processes. Id. This description is commonly known as the "use code narrative." The FDA assigns a unique number, known as a "use code," to each description. The FDA publishes a list of drugs, along with the applicable patents and their associated use codes, in its Approved Drug Products With Therapeutic Equivalence Evaluations, commonly known as the "Orange Book."

A manufacturer that seeks to market a generic copy of these listed drugs may submit an abbreviated new drug application ("ANDA"). 21 U.S.C. § 355(j). The ANDA process streamlines FDA approval by allowing the generic manufacturer to rely on the safety and efficacy studies of a drug already listed in the Orange Book upon a showing of bioequivalence. 21 U.S.C. § 355(j)(2)(A)(iv).

As part of the ANDA process, a generic manufacturer must make a certification addressing each patent identified in the Orange Book pertaining to its drug. 21 U.S.C. § 355(j)(2)(A)(vii). Specifically, the generic manufacturer must select one of four alternatives permitting use of the patented product or process: (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 generic drug. 21 U.S.C. § 355(j)(2)(A)(vii).

Often pharmaceutical formulations have multiple uses and applications. After expiration of the patent on the composition itself, only some of those uses may enjoy continued protection as patented methods. If a generic manufacturer wishes to seek FDA approval for a use not covered by a method-of-use patent for a listed drug, it must make a "section viii statement." 21 U.S.C. § 355(j)(2)(A)(viii). Along with the section viii statement, the generic manufacturer must submit a proposed label to the FDA that does not contain the patented method of using the listed drug. When considering approval of these requests for a use not covered by a patent, the FDA relies on the applicable patent's use code narrative to determine the scope of the patented method. Applications for FDA Approval to Market a New Drug, 68 Fed. Reg. 36676, 36682 (June 18, 2003). The FDA approves the section viii statement only where there is no overlap between the proposed carve-out label submitted by the generic manufacturer and the use code narrative submitted by the pioneering manufacturer. Id.

The Hatch-Waxman Act facilitates early resolution of disputes between pioneering and generic manufacturers. To achieve this objective, the Act makes a Paragraph IV certification into an act of patent infringement. 35 U.S.C § 271(e)(2). A generic manufacturer that files a Paragraph IV certification must give notice to the patentee and the NDA holder and provide a detailed basis for its belief that the patent is invalid or not infringed. 21 U.S.C. § 355(j)(2)(B)(i). The patentee then has forty-five days to sue the generic manufacturer for infringement. 21 U.S.C. § 355(j)(5)(B)(iii). If the patentee does not sue, the FDA may approve the ANDA. If the patentee sues, 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. 21 U.S.C. § 355(j)(5)(B)(iii). The court entertaining this suit has discretion to order a shorter or longer stay if "either party to the action fails to reasonably cooperate in expediting the action." Id.

The Hatch-Waxman Act enables a generic manufacturer in a Paragraph IV suit to assert a counterclaim challenging the accuracy of the "patent information" submitted to the FDA:

The ANDA applicant may assert a counterclaim seeking an order requiring the holder to correct or delete the patent information submitted by the holder under subsection (b) or (c) of this section on the ground that the patent does not claim either—

(aa) the drug for which the application was approved; or

(bb) an approved method of using the drug.

21 U.S.C. § 355(j)(5)(C)(ii)(I). This counterclaim provision was not part of the original Hatch-Waxman Act. Rather the Medicare Prescription Drug Improvement and Modernization Act of 2003, Pub.L. No. 108-173, 117 Stat.2066 (2003) added this counterclaim provision to permit challenges to patent information at the FDA. The interpretation of this counterclaim provision is the central issue in this case.

II.

Novo markets and distributes the drug repaglinide under the brand name PRANDIN. PRANDIN is an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes (non-insulin dependent diabetes mellitus). The FDA has approved PRANDIN for three uses: (1) repaglinide by itself (i.e., monotherapy); (2) repaglinide in combination with metformin; and (3) repaglinide in combination with thiazolidinediones ("TZDs"). Novo Nordisk, Inc. holds the approved NDA for PRANDIN.

The Orange Book lists two patents for PRANDIN. U.S. Patent No. RE 37,035 (the "'035 patent") claims, inter alia, the chemical composition of repaglinide. The '035 patent expired on March 14, 2009. U.S. Patent No. 6,677,358 (the "'358 patent") claims, inter alia, repaglinide in combination with metformin:

A method for treating non-insulin dependent diabetes mellitus (NIDDM) comprising administering to a patient in need of such treatment repaglinide in combination with metformin.

'358 patent, claim 4. The '358 patent expires on June 12, 2018. Novo Nordisk A/S owns the '358 patent. Novo does not own patents claiming the other two approved methods of using repaglinide to treat type 2 diabetes. The FDA initially assigned the '358 patent...