Case or Controversy Exists Where Generic Manufacturer Seeks Declaratory Judgment of Non-Infringement of Orange Book-Listed Patent Disclaimed by Brand Manufacturer

Apotex Inc. v. Daiichi Sankyo, Inc., Nos. 2014-1282, 2014-1291 (Fed. Cir. Mar. 31, 2015)

    by Dunstan H. Barnes

Apotex, Inc. sued Daiichi Sankyo Co., Ltd. and Daiichi Sankyo, Inc. in the United States District Court for the Northern District of Illinois for a declaratory judgment of non-infringement of a Daiichi-owned, but Daiichi-disclaimed, patent, if Apotex were to manufacture or sell a generic drug bioequivalent of Daiichi’s Benicar®. On March 31, 2015, a three-judge Federal Circuit panel unanimously reversed the district court’s dismissal for lack of case of controversy. The Federal Circuit found that Apotex has a concrete, potentially high-value stake in obtaining a declaratory judgment, and that both Daiichi and generic manufacturer Mylan Pharmaceuticals, Inc. have a concrete, potentially high-value stake in denying Apotex that judgment and thereby delaying Apotex’s market entry.

The factual background is key to understanding the debate. Daiichi listed two patents covering Benicar® in the Orange Book. The first, U.S. Patent No. 5,616,599, covers the active ingredient of the drug, and expires on April 25, 2016. Because Daiichi provided the FDA with pediatric test results, the FDA must wait a further six months, until October 25, 2016, to approve a generic version of the drug. The second, U.S. Patent No. 6,878,703, covers methods of treatment, and expires on November 19, 2021.

In April 2006, Mylan filed an ANDA with a paragraph IV certification that both the ’599 and ’703 patents were invalid or not infringed by Mylan’s proposed generic drug. In July 2006, for reasons that remain unexplained, Daiichi disclaimed all claims of the ’703 patent, as permitted under 35 U.S.C. § 253. Daiichi then sued Mylan for infringing the ’599 patent. Only validity was disputed in the case, and after trial, the court upheld the validity of the ’599 patent and entered judgment of infringement against Mylan. With the validity of the ’599 patent intact, Mylan’s earliest date for market entry is October 26, 2016, six months after the ’599 patent expires. Note that as a result of the court’s decision, Mylan did not have a lawfully-maintained paragraph IV certification with respect to the ’599 patent.

In June 2012, Apotex filed its own ANDA with a paragraph III certification stating that the ’599 patent is valid and a paragraph IV certification that Apotex would not infringe the now-disclaimed ’703 patent. Essentially, Apotex sought approval to enter the market for generic versions of Benicar® at the same time as Mylan—on October 26, 2016.

The wrinkle is that Daiichi did not sue Apotex for infringing the disclaimed ’703 patent, and the FDA has not removed the ’703 patent from the Orange Book. Under § 355(j)(5)(B)(iv), because Mylan was the first ANDA filer and Mylan has lawfully maintained a paragraph IV certification regarding the ’703 patent, Mylan is presumptively entitled to 180 days’ exclusivity before facing competition from another generic manufacturer. Thus, if Mylan were to enter the market for generic version of Benicar® on October 26, 2016, it would presumptively be entitled to exclusivity until April 23, 2017.

By filing its declaratory judgment action, Apotex sought to enforce a provision provided in § 355(j)(5)(D)(i)(I)(bb)(AA) for forfeiture of Mylan’s 180-day exclusivity period if Mylan has not marketed its generic drug 75 days after a court has entered a final decision from which no appeal (certiorari aside) has been or can be taken that the ’703 patent is invalid or not infringed.

The parties did not dispute that allowing Apotex to enter the market earlier would likely transfer sales from Daiichi and Mylan to Apotex. But Daiichi maintained that there was no case or controversy because it could not assert its disclaimed ’703 patent against Apotex, and Mylan additionally argued that Apotex lacks a “tentative approval” from the FDA for its ANDA and thus any delayed-market-entry injury is unduly speculative.

The Federal Circuit found, in contrast to the district court, that a case or controversy did exist, because the drug sales over a potential six-month period of exclusivity are concrete and substantial. The court contrasted the present parties’ substantial, concrete stakes in a judgment of non-infringement with cases in which a case or controversy was missing because the plaintiffs had generalized or bystander interest in others’ compliance with law.

The Federal Circuit also provided a common sense reasoning regarding the fact that the now-disclaimed ’703 patent is the only barrier to Apotex entering the market at the same time as Mylan. Had Daiichi never listed the ’703 patent in the Orange Book, Mylan would not be eligible for an exclusivity period. Thus, Apotex seeks through its declaratory judgment action to eliminate the entry barrier created by Daiichi’s listing of the ’703 patent that Daiichi subsequently disclaimed.

Case or Controversy Exists Where Generic Manufacturer Seeks Declaratory Judgment of Non-Infringement of Orange Book-Listed Patent Disclaimed by Brand Manufacturer