Another post-MedImmune declaratory judgment jurisdiction decisionMarch 30, 2007

The Federal Circuit addressed the requirements for declaratory judgment jurisdiction in a published decision for the second time this week. This time the parties are pharmaceutical companies, but the result is the same: the lower court, applying the old "reasonable apprehension of suit" standard, found no jurisdiction, the Federal Circuit, applying a post-MedImmune standard reverses, finds that jurisdiction exists. According to the court, under the Declaratory Judgment Act:

a declaratory judgment plaintiff is only required to satisfy Article III, which includes standing and ripeness, by showing under "all the circumstances" an actual or imminent injury caused by the defendant that can be redressed by judicial relief and that is of "sufficient immediacy and reality to warrant the issuance of a declaratory judgment.

Here, there was an actual controversy. The plaintiff, who held five patents relating to a drug, only decided to file an infringement suit on one of the five. The defendant then filed for a declaratory judgment regarding the other four, related patents. This was sufficient to satisfy the requirement for declaratory judgment jurisdiction.

More details of the case after the jump.

Novartis holds five patents relating to its drug Famvir®. One, the '937 patent, is directed toward the drug itself, and the other four (the '763, '581, '893, and '304 patents) are directed toward various theraputic methods of use. In 2004, Teva Pharmaceuitcals filed an Abbreviated New Drug Application (ANDA) for a generic version of Famvir®. In its ANDA, Teva asserted that its generic would not infringe any valid and enforceable claim of the five Novartis patents. In response, Novartis sued Teva for infringement of only the '937 patent. Teva then filed for a declaratory judgment regarding the other four patents. Novartis moved to dismiss Teva's suit regarding the other four patents because Teva was not under an objectively reasonable apprehension of suit regarding those patents. The district court agreed, and dismissed the case for lack of jurisdiction.

The Federal Circuit first recognized that the lower court applied the correct test at the time of the decision, but that the intervening decision by the Supreme Court in MedImmune changed the situation. The court then analyzed several cases regarding the requirement for jurisdiction both under Article III and the Declaratory Judgment Act. In the end, the court stated that to create a "case or controversy" as required by Article III and the Declaratory Judgment Act, the plaintiff must show, under "all the circumstances," that there is "an actual or immediate injury caused by the defendant that can be redressed by judicial relief and that is of 'sufficient immediacy and reality to warrant the issuance of a declaratory judgment.'" (quoting MedImmune).

Applying that test to the facts at hand, the court easily found jurisdiction. Submission of an ANDA is considered an act of infringement. So, because Novartis' patents were listed in the Orange Book of approved drug products, Novartis would have had an immediate justiciable controversy when Teva filed its ANDA. According to the court: "It logically follows that if such an action creates a justiciable controversy for one party, the same action should create a justiciable declaratory judgment controversy for the other party." As a result of this, it appears that once an ANDA is filed, there is automatically declaratory judgment jurisdiction, unless the parties have an agreement that the generic manufacturer will not be sued on the patent(s).

The court was also not very happy with Novartis' plan to sue on one patent at a time. When a patent holder sues within 45 days after an ANDA is filed, FDA approval of the ANDA is automatically stayed for 30 months. Here, by only suing on one patent, the court believed Novartis was attempting to game the system, keeping additional patents "in reserve" while still getting the benefit of the 30 month stay. As stated by the court:

Novartis' '937 patent suit against Teva has invoked the statutory automatic 30-month stay and is concurrently insulating the four method patents from a validity challenge. In the statute, Congress explicitly required that in exchange for the 30-month stay, patentees were to "reasonably cooperate in expediting the action" of whether the paragraph IV patents were invalid or not infringed.

. . .

A central purpose of the Hatch-Waxman Act and the subsequent ANDA declaratory judgment amendment to that Act is "to enable competitiors to bring cheaper, generic . . . drugs to market as quickly as possible." Novartis' actions frustrate this purpose and create a basis for finding a justiciable controversy.

As a result, the finding of no case or controversy was reversed.

Senior Judge Friedman concurred in the judgment. He would have simply held that by placing the patents in the Orange Book, Novartis has asserted that an infringement claim could be asserted if an unlicensed, generic version of the drug was sold falling within the claims of the patents. Teva's ANDA filing included a paragraph IV certification that its generic drug would not infringe all five patents, which is a contrary assertion. As a result, there was an existing controversy, and jurisdiction exists.

To read the full decision in Teva Pharms. USA, Inc. v. Novartis Pharms. Corp., click here .

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