Teva Pharmaceuticals Usa, Inc. v. Pfizer, Inc., 04-1186.

• Decision Date: 21 January 2005
• Docket Number: No. 04-1186.,04-1186.
• Parties: TEVA PHARMACEUTICALS USA, INC., Plaintiff-Appellant, v. PFIZER, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

395 F.3d 1324

TEVA PHARMACEUTICALS USA, INC., Plaintiff-Appellant, v. PFIZER, INC., Defendant-Appellee.

No. 04-1186.

United States Court of Appeals, Federal Circuit.

January 21, 2005.

COPYRIGHT MATERIAL OMITTED

Henry C. Dinger, Goodwin Procter LLP, of Boston, Massachusetts, argued for plaintiff-appellant. Of counsel on the brief was Thomas J. Meloro, Jr., Kenyon & Kenyon, of New York, New York.

Dimitrios T. Drivas, White & Case LLP, of New York, New York, argued for defendant-appellee. With him on the brief were Jeffrey J. Oelke and Adam Gahtan.

William A. Rakoczy, Rakoczy Molino Mazzochi LLP, of Chicago, Illinois, for amicus curiae Generic Pharmaceutical Association. With him on the brief was Lara E. Monroe-Sampson.

Sarah Lenz Lock, AARP Foundation Litigation, of Washington, DC, for amicus curiae AARP. With her on the brief was Bruce Vignery. Of counsel on the brief was Michael Schuster, AARP, of Washington, DC.

William L. Mentlik, Lerner, David, Littenberg, Krumholz & Mentlik, LLP, of Westfield, New Jersey, for amicus curiae IVAX Pharmaceuticals, Inc. With him on the brief was Roy H. Wepner.

Lawrence DeMille-Wagman, Attorney, Federal Trade Commission, of Washington, DC, for amicus curiae Federal Trade Commission. With him on the brief were William E. Kovacic, General Counsel; Susan A. Creighton, Director, Bureau of Competition; John F. Daly, Deputy General Counsel for Litigation; and Lore A. Unt, Counsel for Intellectual Property.

Before MAYER^*, CLEVENGER, and SCHALL, Circuit Judges.

SCHALL, Circuit Judge.

Teva Pharmaceuticals USA, Inc. ("Teva") is a manufacturer of generic pharmaceuticals. In July of 2002, it filed an Abbreviated New Drug Application ("ANDA") pursuant to the provisions of the Hatch-Waxman Amendments to the Federal Food, Drug and Cosmetic Act. In its ANDA, Teva sought the approval of the Food and Drug Administration ("FDA") to market its generic version of the drug sertraline hydrochloride. Sertraline hydrochloride is sold under the trade name Zoloft(R) by Pfizer, Inc. ("Pfizer"). Pfizer holds two patents relating to Zoloft(R): U.S. Patent No. 4,356,518 (the "'518 patent") and U.S. Patent No. 5,248,699 (the "'699 patent").

When Teva filed its ANDA, it also filed what is called in Hatch-Waxman parlance a "paragraph III certification." In that certification, Teva stated that it would not market its generic drug until the '518 patent expires. Simultaneously, Teva filed a Hatch-Waxman "paragraph IV certification." In that certification, Teva stated that its generic drug did not infringe the '699 patent or, alternatively, that the '699 patent is invalid. The '699 patent expires after the '518 patent. Pursuant to the provisions of the Hatch-Waxman Amendments, Pfizer had forty-five days from the date it received notice of Teva's paragraph IV certification to sue Teva for infringement of the '699 patent, and during that period the statute barred Teva from filing a declaratory judgment action against Pfizer based upon its ANDA.

On January 24, 2003, after Pfizer failed to sue Teva within the forty-five-day period following Pfizer's receipt of notice of the paragraph IV certification, Teva filed a declaratory judgment action against Pfizer in the United States District Court for the District of Massachusetts. In its suit, Teva sought a determination that its generic drug did not infringe Pfizer's '699 patent or that the claims of the '699 patent were invalid. On December 8, 2003, the district court dismissed Teva's suit for lack of jurisdiction. It did so on the ground that Teva had failed to establish that an actual controversy existed between it and Pfizer, as required under the Declaratory Judgment Act, 28 U.S.C. § 2201(a).¹ Teva Pharms. USA, Inc. v. Pfizer Inc., No. 03-CV-10167-RGS, 2003 WL 22888848 (D.Mass. Dec. 8, 2003).

Teva now appeals the decision of the district court, claiming that the court erred as a matter of law in holding that there was no actual controversy between it and Pfizer. The court determined that Teva failed to show that Pfizer had taken actions giving rise to a reasonable apprehension on its part that Pfizer would sue it for infringement of the '699 patent. Having considered the arguments of the parties and several amici,² we see no error in the district court's ruling that Teva failed to establish that an actual controversy existed between it and Pfizer. We therefore affirm.

BACKGROUND

I.

A. The Hatch-Waxman Amendments

The Hatch-Waxman Amendments were enacted as part of the Drug Price Competition and Patent Term Restoration Act of 1984, Pub.L. No. 98-417, 98 Stat. 1585 (codified at 21 U.S.C. §§ 355, 360cc, and 35 U.S.C. §§ 156, 271, 282). In the Amendments, 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).

In order to speed up the approval process for generic drugs, the Amendments provide that a generic drug manufacturer may submit an ANDA for approval by the FDA, rather than a full New Drug Application ("NDA"). The ANDA may rely on the safety and efficacy studies previously submitted as part of the NDA by demonstrating the generic drug's bioequivalence with the previously approved drug product. See 21 U.S.C. § 355(j)(2)(A). Under 35 U.S.C. § 271(e)(1), it is not an act of patent infringement to engage in otherwise infringing acts necessary to prepare an ANDA. However, section 271(e)(2) provides that a generic drug manufacturer infringes a patent by filing an ANDA to obtain approval for a generic drug product claimed by a valid and unexpired patent. 35 U.S.C. § 271(e)(2).

The Hatch-Waxman Amendments provide that NDA-holders must notify the FDA of all patents that "claim[ ] the drug for which the [NDA] applicant submitted the application ... and with respect to which a claim of patent infringement could reasonably be asserted...." 21 U.S.C. § 355(b)(1), (c)(2). The FDA lists such patents in the publication "Approved Drug Products With Therapeutic Equivalence Evaluations" (commonly referred to as the "Orange Book"). As part of the approval process, an ANDA applicant must make one of four certifications with respect to each patent listed in the Orange Book that claims the drug for which it is seeking approval: (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). These are commonly referred to as paragraph I, II, III, and IV certifications.

Upon filing a paragraph IV certification as part of an ANDA, an applicant must give notice to the patentee and the NDA holder. The notice must include a detailed statement of the factual and legal bases for the opinion of the applicant that the patent is invalid or will not be infringed. 21 U.S.C. § 355(j)(2)(B)(i). If the patentee files an infringement action within forty-five days after receiving notice of the paragraph IV certification, an automatic thirty-month "stay" goes into effect, during which the FDA cannot approve the ANDA unless the suit is resolved or the patent expires. 21 U.S.C. § 355(j)(5)(B)(iii). During this forty-five day period, the ANDA applicant is barred from filing a declaratory judgment action with respect to the patent at issue. Id. If no infringement action is filed during this forty-five day period, the FDA may approve the ANDA. Id.

The first ANDA applicant to file a paragraph IV certification enjoys a 180-day period of generic marketing exclusivity, during which the FDA may not approve a subsequent generic applicant's ANDA for the same drug product. 21 U.S.C. § 355(j)(5)(B)(iv). This provision provides an economic incentive for generic manufacturers to challenge the validity of listed patents and to "design around" patents to find alternative, non-infringing forms of patented drugs. Federal Trade Commission, Generic Drug Entry Prior to Patent Expiration: An FTC Study 57 (July 2002). The 180-day exclusivity period typically begins on the date of the first commercial marketing of the drug by the first applicant. 21 U.S.C. § 355(j)(5)(B)(iv). The original Hatch-Waxman Amendments provided that the commencement of the 180-day exclusivity period could also be triggered by "the date of a decision of a court ... holding the patent which is the subject of the certification to be invalid or not infringed."³ Id.

B. The 2003 Medicare Amendments

Congress recently enacted the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub.L. No. 108-173, 117 Stat.2066. The Act was signed into law on December 8, 2003. Title XI of the Act, entitled "Access to Affordable Pharmaceuticals," makes numerous changes in the Hatch-Waxman Amendments ("Medicare Amendments"). Among the changes is a provision for a "civil action to obtain patent certainty." 21 U.S.C. § 355(j)(5)(C) (Supp.2004). Pursuant to that provision, if the patentee or NDA-holder does not bring an infringement action within forty-five days after receiving notice of a paragraph IV certification, the ANDA applicant may bring a civil action for a declaratory judgment that the patent at issue is invalid or will not be infringed by the drug for which the applicant seeks approval. Id. In exchange, the ANDA applicant must make an offer of confidential access to its ANDA application so that the patentee or the NDA-holder can evaluate possible infringement. Id. The Medicare Amendments also provide that when the above circumstances are met, "courts of the United States shall, to the extent consistent with the Constitution, have subject matter jurisdiction in any action brought ... under section 2201 of title 28 for a declaratory...