[author: Andrew Williams]

On Monday, in Dey Pharma, LP v. Sunovion Pharmaceuticals Inc., the Federal Circuit affirmed a District Court's conclusion that it had subject-matter jurisdiction over a declaratory judgment action of a second ANDA filer, and as a result also affirmed the District Court's final judgment of non-infringement (based on a stipulation of the parties).  This case follows the cases of Caraco Pharm. Labs. Ltd. v. Forest Labs, Inc., 527 F.3d 1278 (Fed. Cir. 2008), and Janssen Pharmaceutica, N.V. v. Apotex, Inc., 540 F.3d 1353 (Fed. Cir. 2008), in considering the scope of declaratory judgment jurisdiction for second ANDA filers in the context of Hatch-Waxman.  Of specific concern in all of these cases was the ability of a first ANDA filer to "park" their 180-day exclusivity by not marketing their ANDA product, and the affect such an action would have on the ability of a subsequent ANDA filer to bring a declaratory judgment against the NDA holder.

As background, in the Hatch Waxman scheme, a first ANDA filer to challenge the validity of the Orange Book listed patents, or the ability of the NDA holder to assert infringement of the patents, is entitled to 180 days of generic marketing exclusivity.  Under the present scheme, this exclusivity begins, or is triggered, when the first ANDA filer begins to market its generic product.  If instead, the first ANDA filer "parks" its 180 day exclusivity by not launching its ANDA product, the exclusivity period is never triggered.  And, without the trigger, no subsequently filed ANDAs can be approved by the FDA.  In an attempt to address this problem, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ("MMA") modified the statute to provide for forfeiture of the first filer's exclusivity period if it did not, among other things, market the drug within 75 days of a final judgment that all of the Orange Book patents are invalid or not infringed, whether brought by itself or a subsequent ANDA filer.  Congress contemplated that the NDA holder could chose not to sue a subsequent ANDA filer for infringement of any or all of the Orange Book listed patents, resulting in the forfeiture event from never occurring, and as a result, it specified in the statute that an ANDA filer could file a declaratory judgment action "to the extent consistent with the Constitution" (35 U.S.C. § 271(e)(5)).  Such a situation presented itself in Dey.  The Federal Court followed the Caraco case in finding that Dey, the second ANDA filer, properly brought a declaratory judgment action because subject-matter jurisdiction existed when the action was filed.  The Court also held that such jurisdiction might be rendered moot when the first ANDA filer actually launched its product, thereby triggering the exclusivity period, but that regardless of how imminent the launch was, Sunovion had not met its burden of establishing that the subject-matter jurisdiction was now moot.

The brand-name drug at issue in this case was XOPENEX®, with levosalbutamol as its active ingredient, which is marketed to treat or prevent bronchospasm in adults, adolescents, and children 6 years of age and older with reversible obstructive airway disease.  The NDA-holder, Sunovion, listed three patents in the Orange Book related to this drug product:  U.S. Patent No. 5,362,755 ("the '755 patent"), expiring on March 25, 2013; U.S. Patent No. 5,547,994 ("the '994 patent"), expiring on August 20, 2013; and U.S. Patent No. 6,451,289 ("the '289 patent"), expiring on March 21, 2021.  Breath filed the first ANDA in June 2005, which contained Paragraph IV certifications to all three patents.  Breath and Sunovion settled the subsequent litigation, with the parties agreeing that Breath could sell the generic product under its ANDA starting on August 20, 2012 (or earlier depending on a third-party commercial launch).  In July 2005, Dey filed the second ANDA, which also contained Paragraph IV certifications to all three listed patents.  However, Sunovion only asserted the '755 and '994 patents, causing Dey to bring a declaratory judgment action for the '289 patent.  Sunovion then provided Dey with a covenant not to sue (which would not result in a forfeiture event), and moved to dismiss the declaratory judgment action for lack of subject matter jurisdiction.  The District Court denied Sunovion's motion, and the parties stipulated to non-infringement.  Sunovion only appealed the jurisdictional issue to the Federal Circuit.

This case has facts that are almost indistinguishable from Caraco.  Caraco was decided based on the scheme that existed prior to the MMA, in which there were no forfeiture provisions, but the 180-day exclusivity period could also be trigged by a final judgment of invalidity and non-infringement, regardless of who obtained that judgment.  Therefore, even though the schemes were different, the practical result was similar in both.  In fact, the Court noted that this change in statutory trigger made no difference to the issues in this case.  The only argument that Sunovion advanced to support its assertion that subject-matter jurisdiction did not exist when Dey brought its declaratory judgment action was that success in the DJ action was insufficient to redress Dey's injury -- because Dey had to be successful in Sunovion's suit involving the '755 and '994 patents.  In other words, Sunovion appears to have argued that it was necessary to consider the two litigations involving the three Orange Book patents sequentially, not concurrently, because if Dey was not successful in the first suit, the declaratory judgment action would be unnecessary.  This argument has appeal when considering that while the parties were fighting over the jurisdiction of this case, the District Court entered a judgment in favor of Sunovion in the '755 and '994 litigation.  Post-trial motions were still being considered in that case, but judicial resources would be saved if the declaratory judgment case was postponed until a final judgment was rendered.  However, the analysis must begin by considering whether there was jurisdiction when the case was first filed.  If so, then jurisdiction will not be lost just because a companion case is at a further stage.  It is even more egregious in this case because it was Sunovion's actions in not asserting the '289 patent that gave rise to the multiple litigations.  Of course, should the '755 and '994 litigation reach a final judgment against Dey, it is possible that the Court would entertain a motion to dismiss on the grounds that the DJ case would then be moot.  However, those were not the facts before the Federal Circuit.

Sunovion also argued that even if jurisdiction existed when Dey filed the declaratory judgment action, it did not still exist when the case reached the Federal Circuit.  The basis of this argument was that, according to the agreement between Breath and Sunovion, Breath was going to be able to market its ANDA product soon.  In fact, there was insufficient time for even the '755 and '994 litigation to reach a final judgment before the August 20, 2012 launch date.  The Court, however, pointed out the flaw in Sunovion's logic -- Breath had not yet launched, and even though it appeared to have every incentive to launch in August, it is not certainty that it would.  In fact, the Federal Circuit noted that because it was Sunovion's "heavy" burden to bring forward information to establish that the case was now moot, merely pointing out the approaching date of a potential launch was insufficient to meet that burden.  The Federal Circuit all but guaranteed that situation would have resolved itself differently if Sunovion had brought the same motion after Breath actually went to market with its ANDA product.  Nevertheless, because Breath had not yet launched, the Court affirmed the judgment of non-infringement.

Dey Pharma, LP v. Sunovion Pharmaceuticals Inc. (Fed. Cir. 2012)
Panel:  Circuit Judges Bryson, Dyk, and Moore
Opinion by Circuit Judge Dyk