Letter from AmeriKat: Judge Koh declares Takeda takes it too far with Mylan Dexilant declaration

The AmeriKitten may be one paw down,
but thankfully has nine lives to go.

"Yes, yes, it has been a while" says the AmeriKat.  But with the English IP judges and barristers having fled the un-airconditioned climes of London for the predictable meadows of southern France, the AmeriKat has finally been able to peek her head up without the fear of a court hearing only just missing her whiskers.  Of course, she did not then factor crushing her paw in a heavy door (together with a bushel of other calamities), so although back to her reporting, she is doing so sans a left paw.  But thankfully, you only need a right paw to trawl through an Order from a US judge in the latest "originator v generic" battle and talk-to-type will do the rest.  And without further ado....

Earlier this month, US District Judge Koh ordered that Takeda could not proceed with its claims for declaratory judgment that Mylan will infringe its patent that protects its acid reflux drug, Dexilant.  Judge Koh, who was made globally famous when she presided in the Apple v Samsung dispute, stated that to do so would essentially be going overboard. But before we get into her reasons, let's provide some context.

Background

Congressman Henry Waxman -
the second half of the
Hatch-Waxman Act

Like the EMA in Europe, under the Food Drug and Cosmetic Act (FDCA), a drug manufacturer is required to submit a New Drug Application to the Food and Drug Administration (FDA) for approval.  In conjunction to the trial and safety information contained within the dossier, the applicant also submits the patent number and expiration of any patent that covers that drug (i.e. any patent which the patentee could use to sue a generic for infringement).  Once the drug is approved, it is listed with the relevant patent information in what is known as the Orange Book.  The Hatch-Waxman Act amended the FDCA to provide for the Abbreviated New Drug Application (ANDA) process.  This allows drug manufacturers to obtain FDA approval for generic versions of previously approved drugs but without having to go through the rigmarole and expense of the testing required for the NDA.  When a generic submits an ANDA, they must provide one of four possible certifications for each patent listed in the Orange Book as follows:  (i) that no patent information has been filed, (ii) that the patent has expired, (iii) that the patent will expire on a specific date, or (iv) the patent is invalid or will not be infringed by the manufacture, use or sale of the generic drug.

This latter certification is called "Paragraph IV certification".  If a generic makes this certification, then they are required to give the originator notice of the certification and why they consider the patent is invalid or will not infringe.  A Paragraph IV certification also means that the patent owner may sue the generic applicant under Section 271(e)(2) of Title 35 within 45 days of receiving notice.  This act then triggers a 30-month stay of FDA approval and the ANDA.  A bit like the European concept of the Bolar Exemption, the generic applicant has a safe harbor in respect of its use of the patent for the purposes of obtaining regulatory approval.  However, although not liable for acts for the purposes of obtaining regulatory approval, once an ANDA has been filed, such a filing constitutes an act of infringement if the purpose of the application is to thereafter engage in the commercial manufacture, use or sale of a drug claimed in the patent or patents before the expiration.  The infringement for the paper act of filing the ANDA for these purposes is designed to create an artificial act of infringement for the purposes of establishing jurisdiction in the federal courts (Eli Lilly v Medtronic (1990) and Glaxo v Apotex (2004)).  It therefore makes it possible for a patentee "to determine whether, if a particular drug were put on the market, it would infringe the relevant patent" (BMS v Royce (1995)).  Therefore, in American legalese, this provision has been deemed to be "primarily a jurisdictional-conferring statute that establishes a case or controversy in a declaratory judgment action" (Apotex).

Takeda takes action, Mylan seeks to dismiss

Mylan submitted an ANDA seeking approval to market a generic version of Dexilant - which is used for the treatment and prevention of digestive ulcers.  Mylan made a Paragraph IV certification and notified Takeda that certain of its Orange Book patents are invalid, unenforceable or would not be infringed by Mylan's intended drug.  Takeda filed two infringement cases against Mylan involving certain patents (seven in total) relating to Dexilant.  Mylan counterclaimed in respect of an eighth Orange Book patent.  Takeda's infringement suits meant that the 30-month stay was triggered which meant that Mylan would be kept off the market until January 2016 unless Mylan wins these cases.  On 21 January 2014, Takeda then commenced a third action subject to this post and presently before Judge Koh.  This patent infringement action was in respect of Takeda's US Patent No 7,339,064 (the "064 Patent") which claims crystalline forms of benximidazole derivatives in a pharmaceutical composition for treating and preventing digestive ulcers.  Takeda claims that this patent claims "hydrate and sesquihydrate crystal forms of dexlansoprazole", which is the active ingredient in Dexilant.  However, the '064 Patent is not listed in the Orange Book as Takeda has not submitted the required data to the FDA to show that these crystal forms are bioequivalent to the crystal form in Dexilant.

Takeda therefore:

(i) alleged that Mylan infringed the '064 Patent for the paper act of filing the ANDA pursuant to Section 271(e)(2) (i.e. that the purpose of filing the ANDA was to launch pre-expiry of the patent); and
(ii) sought a declaration pursuant to the Declaratory Judgment Act, under Section 271(a)-(c) that Mylan will directly or indirectly infringe the '064 Patent.    

Mylan applied to dismiss the declaration for lack or subject-matter jurisdiction or to terminate the automatic 30-month stay.

The Question

Mylan applied to dismiss the declaration.   Actions under the Declaratory Judgment Act require the party to show an actual and substantial controversy of "sufficient immediacy and reality to warrant the issuance of a declaratory judgment"  (MedImmune v Genentech (2007)).  The courts of have substantial discretion in whether to decide to declare the rights of litigants in accordance with the principles of "sound judicial administration"  (Elecs. for Imaging v Coyle (2005)).

The question before Judge Koh was whether an originator may simultaneously assert a claim for infringement under section 271(e)(2) and a claim pursuant to the Declaratory Judgement Act. The law on this is unsettled.  As Judge Koh wrote in her order:

"The Federal Circuit has not resolved this issue. Moreover, the Federal Circuit has not addressed the question of whether district courts may exercise jurisdiction over a claim asserting future infringement of a non-Orange Book patent under the Declaratory Judgment Act when such a claim is based solely on the filing of an ANDA by a generic manufacturer. "

The Answer:

Judge Koh warning against
throwing in the "kitchen sink"
in patent litigation

In short, Judge Koh agreed with Mylan and dismissed the declaratory action.  As she stated

"As discussed below, the legal precedent regarding these questions is unsettled. However, even assuming that a sufficiently immediate and real controversy exists for purposes of [the declaratory action], the Court exercises its discretion to decline declaratory judgment jurisdiction because [the declaratory action] is duplicative of [the infringement action] and serves no useful purpose in this case."

Her reasons were as follows:

• The very act of submitting an ANDA is an act of infringement (Teva v Novartis (2007))
• Infringement suits under Section 271(e)(2) should not be treated differently then patent infringement suits under Section 271(a) (Abbott Labs v Torpharm (2007))
• In Teva the Federal Circuit considered whether Teva could pursue its claims for declarations of non-infringement in respect of four of Novartis's unasserted Orange Book patents (Novartis had only sued in respect of one).  In that case the court held that Teva's ANDA filing created an immediate controversy for all Orange Book patents and that the originator could not shield those patents from litigation by electing not to assert them.  Teva therefore indicates that the filing of an ANDA with a Paragraph IV certification and the assertion of an Orange Book patent always creates an immediate and real controversy.  
• The filing of an ANDA also permits the originator to file a Section 271(e)(2) infringement claim for patents that are not listed in the Orange Book.  A similar outcome was reached in recent litigation between Takeda and other generic manufacturers in respect of Dexilant. 
•  Some district courts have permitted originators to maintain declaratory actions against a generic manufacturer (see e.g. the Second Circuit in Cephalon v Watson (2009)).   However, other courts declined jurisdiction in similar claims.  
• In light of the unsettled precedent, Judge Koh did not wade into the murk of decided whether an immediate and real controversy existed, but chose to point to her discretion as the reason for declining declaratory judgment jurisdiction.  
• The main discretionary factor for consideration was whether entertaining the declaratory action would prove useful or worthwhile in clarifying and settling the legal dispute.  
• Judge Koh found no useful purpose for hearing the declaration action.  
• The purpose of Section 271(e)(2) was to create an artificial act of infringement in order to permit the resolution of infringement disputes arising from the ANDA process.  This, stated Judge Koh, suggested that an infringement suit under the Declaratory Judgment Act was not otherwise available to originators or, at the very least, is unnecessary in light of Section 271(e)(2).  
• Further, the declaration action would not serve a useful purpose or help settle the case as the declaratory action was essentially a duplication of Section 271(e)(2).  Although Takeda argued at the hearing that the declaratory action offered "extra protection" by providing damages for any actual infringement by Mylan after the FDA approves the ANDA and before final resolution of the litigation, the judge held that damages are nevertheless part of the package with Section 271(e)(2).  There is no relief that Takeda could be awarded in the declaratory action that they could not also obtain if they won under Section 271(e)(2).  
• As such, the declaratory action would be redundant as the court already has jurisdiction over Takeda's infringement claims under the Hatch-Waxman Act.

Comment

The kitchen sink - not to be
thrown lightly in the 9th Circuit

There are two immediate take home points from this decision:  First, declaratory actions filed on the basis of "extra protection" will not be entertained if they do not provide any useful purpose or assist in settlement.  If they are a duplication of the infringement actions, then adding "kitchen-sink" patent declarations will not provide fruitful for a patentee.  Second, the case law in this area is still a mess.  Until it is fully wrangled with and clarified by the Federal Circuit or Supreme Court, litigants may expect judges to rely heavily upon their discretion in determining whether to entertain declaratory actions in similar originator-generic battles.