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District of New Jersey Allows ANDA Filer's Declaratory Judgment Action to Proceed Despite Covenant Not to Sue

Date: April 13, 2014 || IP Updates

In an opinion last week, the U.S. District Court for the District of New Jersey stymied what appears to be an attempt by Purdue Pharma to prevent TWi Pharmaceuticals from obtaining a final judgment of noninfringement of all four Orange Book-listed patents on Intermezzo® (zolpidem tartrate).  A final judgment could trigger the marketing requirement of the first ANDA filer.  If the first filer does not market its product within 75 days of a final judgment, it will forfeit its 180-day exclusivity.

Purdue holds the NDA for Intermezzo®, a drug used to treat middle-of-the-night insomnia.  Four patents are listed in the Orange Book in connection with the NDA.  By the time TWi filed its ANDA, four other ANDAs had already been filed and presumably at least one of those is entitled to 180-day exclusivity.  Purdue sued TWi on only two of the patents, and granted TWi a covenant not to sue on the other two.  TWi filed a DJ counterclaim for noninfringement of all four Orange Book-listed patents.

As simplified by the court, TWi's DJ counterclaim is important because it "could potentially trigger the first ANDA filer's 180-day exclusivity period.  This would have the effect of expediting TWi's ability to market its generic version of Intermezzo®."

Purdue filed a motion to dismiss TWi's counterclaim, presenting three arguments that no case or controversy exists and therefore the court lacks jurisdiction: (1) the "covenant not to sue rendered moot any such controversy," (2) "the Court cannot redress TWi's alleged injury," and (3) "the dispute is not ripe in light of TWi's inability to obtain tentative approval."

In response to Purdue's mootness argument, the court stated, "[t]here is ample authority supporting the proposition that a later ANDA filer's declaratory judgment claims involving patents for which the patent holder has given a covenant not to sue are justiciable."  The court therefore held that "the binding principles the Federal Circuit set forth in Dey and Caraco compel this Court to conclude that Plaintiffs' covenant not to sue TWi on the '945 and '628 patents does not moot TWi's counterclaims seeking declaratory judgment that these patents are not infringed."

With regard to whether TWi's injury is redressable, Purdue argued that "a judgment favorable to TWi on the '945 and '628 patents will not redress any injury arising from delay in TWi's ability to market its generic version of Intermezzo® because such a judgment would not independently trigger the first ANDA filer's exclusivity period as TWi has not received tentative approval from the FDA to market its generic product."  In other words, Purdue argued that because "an applicant in TWi's position cannot trigger the first applicant's exclusivity period through a declaratory judgment action unless it has first received tentative approval," the court cannot redress TWi's purported injury.

The court noted that the Federal Circuit has not addressed whether a subsequent ANDA filer must first have tentative approval to maintain a declaratory judgment action like TWi's.  Nevertheless, it rejected Purdue's argument based largely on Judge Dow's decision in Seattle Children's Hospital v. Akorn (N.D. Ill. 2011).  The Akorn court recognized that the Hatch-Waxman Act "created a civil action to obtain patent certainty ("CAPC") that could be brought by an ANDA applicant at a time when it likely would not have tentative approval," indicating that other DJ actions similarly do not require that the ANDA filer must have tentative approval.  Following Akorn, the court held that tentative approval is not required for TWi to maintain its DJ counterclaim.

Finally, the court held that the case is indeed ripe, noting that "delaying judicial consideration of TWi's counterclaims could result in depriving TWi of the ability to trigger the first ANDA filer's 180-day exclusivity period, thus causing TWi to lose profits during the period of time it is excluded from the market.  Accordingly, the court found that "delay in resolving TWi's counterclaims will have an immediate and substantial impact on TWi."

Although not settled until the Federal Circuit weighs in, based on this case andAkorn it appears that the courts will permit ANDA filers to assert DJ counterclaims even before receiving tentative approval from the FDA and despite having a covenant not to sue from the patent owner.

Originally published on the Orange Book Blog. http://www.orangebookblog.com/2014/04/district-of-new-jersey-allows-anda-filers-declaratory-judgment-action-to-proceed-despite-covenant-no.html