Apotex Inc. v. Daiichi Sankyo, Inc.

Statutory disclaimer of a patent alone does not eliminate “case or controversy” declaratory-judgment jurisdiction.

Spring 2015

Robins Kaplan GENERICally Speaking: A Hatch-Waxman Litigation Bulletin

Case Name:  Apotex Inc. v. Daiichi Sankyo, Inc., 2014-1282, -1291 2015 U.S. App. LEXIS 5134 (Fed. Cir. Mar. 31, 2015) (Circuit Judges Taranto, Mayer, and Clevenger presiding; Opinion by Taranto, J.) (Appeal from N.D. Ill., Coleman, J.)

Drug Product and Patent(s)-in-Suit: Benicar® (olmesartan medoxomil); U.S. Patents Nos. 5,616,599 (“the ’599 patent”) and 6,878,703 (“the ’703 patent”) 

Nature of the Case and Issue(s) Presented:  Daiichi markets Benicar® for the treatment of hypertension and it listed the patents-in-suit in the FDA’s Orange Book as relating to that drug. The ’599 patent covers the active ingredient olmesartan medoxomil, expires on April 25, 2016, and is subject to a six month extension up to October 25, 2016, based on the submission of data relating to the drug’s effects on children. The ’703 patent covers methods of treatment, and expires on November 19, 2021.

Both Mylan and Apotex sought approval from the FDA to market generic olmesartan medoxomil.  Mylan was the first applicant. After receiving Mylan’s paragraph IV certification notice letter, Daiichi disclaimed all claims of the ’703 patent for reasons that remain unclear. Daiichi did, however, pursue infringement allegations against Mylan related to the ’599 patent. That case went to trial and the court concluded that the ’599 patent was valid and infringed, and entered a judgment to that effect which was later affirmed by the Federal Circuit. Two years after the Mylan, Apotex filed its ANDA with the FDA. The ANDA was filed pursuant to a paragraph III certification accepting the result of the Mylan, as well as a paragraph IV certification stating that its product would not infringe Daiichi’s disclaimed ’703 patent. Daiichi did not file suit after having received Apotex’ notice letter. But Apotex sued Daiichi, seeking a declaratory judgment of non-infringement with respect to the disclaimed ’703 patent. Daiichi filed a motion to dismiss the case and Mylan sought to intervene in order to seek the same relief from the district court.

The district court granted Daiichi’s motion to dismiss Apotex’ declaratory judgment suit for lack of case or controversy, and denied Mylan’s motion to intervene as moot. Apotex appealed the dismissal of its suit, and Mylan cross-appealed the denial of its motion to intervene, and the Federal Circuit reversed.

Why Apotex and Mylan Prevailed:  Concerning the district court’s denial of Mylan’s motion to intervene, the Federal Circuit held that Mylan clearly had a stake in the litigation between Apotex and Daiichi because Apotex sought to cause a forfeiture of Mylan’s presumed market exclusivity period, which Mylan had a concrete monetary interest in retaining. The Federal Circuit found that Mylan’s interest was of such a direct and immediate character that Mylan would either gain or lose by the direct legal operation and effect of the judgment sought by Apotex. Therefore, the district court’s denial of Mylan’s motion to intervene was reversed.

Next, the Federal Circuit addressed the district court’s dismissal of Apotex’ complaint for lack of case or controversy. The Federal Circuit first addressed Daiichi’s argument that its statutory disclaimer of the ’703 patent meant that there was no case or controversy between it and Apotex. The Federal Circuit did not agree, finding that the patent disclaimer eliminated only one potential legal barrier to Apotex’ ability to sell its generic product sooner rather than later. Another factor was the listing of the patent in the Orange Book, with its consequence of preventing FDA approval during Mylan’s presumptive exclusivity period. The Federal Circuit held that Daiichi (and the district court) were wrong that Daiichi’s disclaimer of the ‘703 patent itself eliminated a case or controversy. Had Daiichi not listed the ’703 patent in the Orange Book, the ’599 patent would have been the only listed patent, and Mylan would have no right to an exclusivity period because it lost its challenge to the ’599 patent. As of 2003, a first filer’s eligibility for marketing exclusivity is based on its ability to lawfully maintain a paragraph IV certification. Because Mylan lost its challenge based on the ’599 patent, its sole basis for eligibility for market exclusivity was the listing of the ’703 patent by Daiichi.

The Federal Circuit next considered whether tentative FDA approval for Apotex’ drug was a prerequisite for there to be a case and controversy. It was not. The legislative intent makes clear that tentative approval for Apotex was not a precondition to adjudicating the patent issue. When a generic manufacturer seeks to enter the market, the concrete stakes are the market sales upon entry. The Federal Circuit found it persuasive that the statute authorizing litigation upon filing of an ANDA did not require tentative FDA approval as a precondition: the filing of the ANDA, with a paragraph IV certification, was itself deemed an act of infringement. Accordingly, tentative approval of an ANDA was generally not a precondition to the existence of a case or controversy concerning patents listed in the Orange Book. In general, case or controversy conclusions do not depend on whether the patent owner or the ANDA applicant initiated the litigation, the latter specifically authorized by Congress to bring a declaratory judgment action if the former does not sue. The Federal Circuit held that the facts here did not provide any context-specific reason tied to statutory provisions that would distinguish it from other cases where the Federal Circuit had held that tentative FDA approval was necessary to satisfy the Article III standing requirement.

Next, the Federal Circuit addressed justiciability based on statutory provisions governing forfeiture of the exclusivity period. The parties did not dispute that Mylan was entitled to an exclusivity period based on its paragraph IV certification related to the ’703 patent and Daiichi’s listing of that patent in the Orange Book. The parties also did not dispute that the only way that Apotex could enter the market prior to the expiration of Mylan’s period of exclusivity was as a result of forfeiture of the exclusivity period by Mylan under § 355(j)(5)(D)(ii), based on a defined “forfeiture event.” Accordingly, the Federal Circuit held that Apotex could trigger forfeiture by obtaining the non-infringement judgment it was in the process of trying to attain. Thus, a case or controversy existed. After legislation was passed in 2003, certain forfeiture events allowed a second ANDA filer to enter the market before the first ANDA filer’s period of exclusivity ended. One such event was the first filer’s “failure to market” “by the later of” two dates. One of those dates was specified as the earlier of 75 days after the first filer’s effective date for approval or 30 months after the first filer submitted its application. With respect to the 75-day provision, there are two requirements for forfeiture: (i) a court must have entered a final decision of non-infringement that is no longer appealable (except to the Supreme Court); and (ii) a later filer must have received tentative approval. The first filer forfeits its exclusivity if it has not entered 75 days after either of those two requirements is satisfied. Under the interpretation of the statute favored by the Federal Circuit, Apotex could trigger forfeiture by obtaining the declaratory judgment and by obtaining tentative approval from the FDA, if it did both early enough in relation to Mylan’s market entry. Mylan disagreed with this interpretation, instead arguing that that the second filer must have tentative approval before it could initiate a declaratory judgment action. The Federal circuit rejected Mylan’s interpretation, finding that it lacked support in the statutory text, context and policy.

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