Apotex Inc. v. Alcon Research, Ltd.
Seeking a court to enforce an agreed-upon settlement agreement does not bestow that court with subject matter jurisdiction because there is no Article III case or controversy.
April 26, 2017
Case Name: Apotex Inc. v. Alcon Research, Ltd., No. 16-3145-WTL-MJD, 2017 U.S. Dist. LEXIS 27016 (S.D. Ind. Feb. 27, 2017) (Lawrence, J.)
Drug Product and Patent(s)-in-Suit: Pataday® (olopatadine); U.S. Patents Nos. 6,995,186 (“the ’186 patent”) and 7,402,609 (“the ’609 patent”)
Nature of the Case and Issue(s) Presented: Apotex sought to market a generic version of the drug olopatadine, which was marketed by Defendants under the name Pataday. Interventor Barr filed the first ANDA to market generic olopatadine. Its ANDA contained a Paragraph IV certification to the patents-in-suit, and it therefore earned 180-day generic drug exclusivity. Barr’s ANDA received final approval. Apotex was a subsequent ANDA filer, and it had received tentative approval, but the FDA could not give Apotex final approval until Barr’s 180-day exclusivity period expires.
In 2009, Alcon sued Barr alleging infringement. Alcon and Barr settled the case. Alcon also sued Apotex, and the parties settled. The settlement agreement provided Apotex with a license to the patents-in-suit, but despite the license, Apotex could not, and still as of the action still could not, launch its generic product because of Barr’s exclusivity right. Bar’s exclusivity would not be triggered until Barr were to begin marketing its generic product. However, Barr faced statutory forfeiture provisions. With those provisions in mind, the Apotex/Alcon settlement agreement provided that if Barr failed to launch its generic olopatadine product by July 1, 2016, Apotex had the right to file a declaratory judgment action seeking a declaration that, effective December 29, 2016, Apotex’s ANDA product would not infringe the patents because it would be a licensed product; that Alcon would not oppose the entry of a final judgment to that effect; and that Alcon waived its right to appeal any such judgment. It was that declaratory judgment action that was before the Court.
Shortly after filing this lawsuit, the parties filed an Agreed Motion for Court Approval of Consent Judgment Pursuant to Stipulation in which they asked the Court to enter a consent judgment containing various declarations. Barr then filed a motion to intervene as a party defendant for the purpose of challenging the court’s subject matter jurisdiction. Specifically, Barr challenged whether the case or controversy requirement of Article III was satisfied. The court granted Barr’s motion to dismiss.
Why Barr Prevailed: Apotex presented several reasons for why the court had jurisdiction over this case. First, it argued that it was simply asking the court to enter a consent judgment agreed upon as part of the settlement of a case, and that even after settlement jurisdiction remains with the district court to enter a consent judgment. While true, that presupposed the position that the requested consent judgment was for the purpose of resolving an actual dispute by changing the legal relationship between the parties.
Next, Apotex argued that the court had jurisdiction to enforce and otherwise interpret the settlement agreement because the parties agreed that the federal and state courts of Indiana shall have exclusive jurisdiction in all matters arising under the agreement and the infringement suit had not been dismissed with prejudice. The court, however, found several “fundamental” problems with this argument. First, this was not the case in which the settlement agreement was reached: had the judge in the Apotex patent action retained jurisdiction to enforce the settlement agreement, any enforcement would have occurred in that case, not a newly filed case. Second, retaining jurisdiction to enforce a settlement agreement meant retaining jurisdiction to resolve disputes over the settlement agreement, but there was no such dispute present in this case. Third, the judge in the Apotex patent action did not retain jurisdiction to enforce the settlement agreement.
Apotex also argued that precedent specifically dealing with subject matter jurisdiction in ANDA cases supported its position that there is a justiciable dispute in this case. In particular, Apotex relied on the Federal Circuit’s holding in Caraco Pharm. Labs., Ltd. v. Forest Labs., Inc., 527 F.3d 1278, 1290 (Fed. Cir. 2008). But the court held that there was a critical difference between the situation in Caraco and the instant case. In Caraco, there was an actual dispute between the parties: whether Caraco’s generic product were infringing the patent-in-suit. That dispute remained unchanged by Forest’s covenant not to sue. In this case, there was no longer a dispute between the parties as to whether Apotex’s generic product were infringing Alcon’s patents. That dispute was definitively resolved by the settlement agreement. Unlike Caraco, Apotex did not dispute the fact that, but for its license, its generic product would infringe Alcon’s patents, and Alcon did not dispute the fact that the license eliminates the infringement. The parties in this case had not had adverse legal interests since they’d entered into the settlement agreement in the Apotex patent litigation, and this new declaratory judgment action did not present any controversy to be resolved.
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