Modification of the 30-Month Stay - Fitzpatrick, Cella, Harper & Scinto

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Recent Developments In
Parties’ Obligations In
Hatch-Waxman Act Litigation
Brian V. Slater
Presented at American Conference Institute’s
Maximizing Pharmaceutical Patent Life Cycles,
New York, October 7, 2009
Obligations of Parties in ANDA Cases
 During suit, ANDA ¶IV filers and patentees both have the same
obligations:
– to not go forward on baseless or frivolous positions under Fed. R.
Civ. P. 11
– to “reasonably cooperate in expediting the action.” 21 U.S.C.
§ 355(j)(5)(B)(iii).
 Before suit, ANDA ¶IV filers and patentees have different obligations as
a result of Hatch-Waxman scheme
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ANDA ¶IV Filer’s Pre-suit Duty of Care
 An ANDA ¶IV filer must certify patent is not infringed or invalid “to the
best of his knowledge”. 21 U.S.C. § 355(j)(2)(A)(vii).
 “The Hatch-Waxman Act thus imposes a duty of care on an ANDA
certifier.” Yamanouchi Pharm. Co., Ltd. v. Danbury Pharmacal, Inc., 231
F.3d 1339, 1347 (Fed. Cir. 2000).
 Violation of duty may constitute “exceptional case” supporting award of
attorney fees to prevailing party under 35 U.S.C. §§ 271(e)(4), 285:
– Yamanouchi, 231 F.3d at 1347 (attorneys fees award where
baseless ¶IV cert. and chemistry errors in pre-suit opinion).
– Filing of ANDA alone cannot support willful infringement finding for
purpose of awarding attorney fees. Glaxo Group Ltd. v. Apotex,
Inc., 376 F.3d 1339, 1350 (Fed. Cir. 2004).
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Takeda Chem. Indus., Ltd. v. Mylan Labs., Inc., 549 F.3d 1381 (Fed.
Cir. 2008)
 CAFC affirmed award of $16.8 million in attorneys fees after failed
obviousness challenge to patent on Actos®, based on
– baseless certification letters with scientific errors that failed to
present even a prima facie obviousness case; and
– litigation misconduct, including:
 switching to obviousness theory that failed to explain why prior
art compound would be considered the “lead”
 raising untimely advice of counsel defense
 asserting “frivolous” inequitable conduct claims
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Takeda Chem. Indus., Ltd. v. Mylan Labs., Inc., 549 F.3d 1381 (Fed.
Cir. 2008)
 CAFC rejected argument that Yamanouchi improperly sets forth a
simple negligence standard for attorneys fees awards in ANDA cases
– Rather, Yamanouchi held that applicants fail to meet duty of care
when they file baseless certifications. Takeda, 549 F.3d at 1388.
 CAFC rejected argument that decision would “chill” other ANDA patent
challenges by requiring inclusion of every theory in ¶IV notice
– District court did not fault litigants merely for changing theories but
for “baseless ANDA filings and litigation in bad faith.” Id. at
1389-90.
 Cert. denied October 5, 2009
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Patentee’s Pre-suit Obligations

Patentee’s complaint -- like every court paper -- must meet Rule 11
requirements that
– “to the best of the person’s knowledge, information and belief, formed after
an inquiry reasonable under the circumstances”:


It is not being presented for any improper purpose

The claims and legal contentions are warranted by existing law or a
nonfrivolous extension thereof

The factual contentions have evidentiary support or likely will have
evidentiary support after further investigation/discovery
“In the context of patent infringement actions, we have interpreted Rule 11 to
require, at a minimum, that an attorney interpret the asserted patent claims
and compare the accused device with those claims before filing a claim
alleging infringement.” Q-Pharma, Inc. v. Andrew Jergens Co., 360 F.3d 1295,
1300 (Fed. Cir. 2004).
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Celgene Corp. v. KV Pharm. Co., 2008 U.S. Dist LEXIS 55700 (D.N.J.
July 22, 2008)
 Patentee allegedly conducted no pre-suit investigation other than to
determine that the ANDA was filed.
 District Court declined to find Rule 11 violation:
– “The pre-filing requirements stated in Q-Pharma make sense only in
the context of a typical patent infringement case, and not in the
context of a Hatch-Waxman ANDA case.” Id. at *7.
– “Because the Act has made the act of submitting an ANDA itself an
act of infringement, in a Hatch-Waxman ANDA case, the attorney
can conduct a reasonable and competent inquiry into the act of
infringement by investigating whether a relevant ANDA has been
filed.” Id.
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Celgene Corp. v. KV Pharm. Co., 2008 U.S. Dist LEXIS 55700 (D.N.J.
July 22, 2008)
– “Celgene and its attorneys had no pre-filing obligation to investigate
whether KV's methylphenidate drug actually infringed Celgene's
patents.” Id. at *8.
– To hold otherwise would “put pharmaceutical patent owners in an
untenable position” Id. at *10.
 It would require patent owners to perform infringement analysis
on “possibly nonexistent product”.
 Patent owner has only 45 days to make what is likely to be a
“highly technical infringement analysis,” and decide whether to
sue. Id.
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Summary of Pre-Suit Obligations
 ANDA ¶IV filer has duty of care based on statute, the violation of which
may lead to attorney fees award if it loses
 Under Celgene, patentee’s pre-suit obligations are satisfied by
investigating whether a relevant ANDA has been filed
 Remains to be seen whether other courts will follow Celgene or will
require further investigations, and if so, what type of investigation
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Modification of the 30-Month Stay
– 21 U.S.C. § 355(j)(5)(B)(iii) provides 30-month stay of FDA approval
of ANDA if suit is brought within 45-day window
 District courts have discretion to shorten or lengthen the 30month stay where “either party to the action failed to
reasonably cooperate in expediting the action.” Id.
– In Andrx Pharmaceuticals, Inc. v. Biovail Corporation, 276 F.3d
1368 (Fed. Cir. 2002), the CAFC held that district court could not
use a party’s allegedly improper conduct at the FDA as a reason to
modify the 30-month stay
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Eli Lilly & Co. v. Teva Pharms USA, Inc., 557 F.3d 1346 (Fed. Cir.
2009)
 Facts:
– Teva modified particle size specification of its API and method of
measuring particle size eight months before trial
– Teva subsequently produced new samples and 27,000 pages,
some of which were produced after close of fact discovery
 District Court extended the 30-month stay to
 “provide Lilly with a reasonable time for its expert to test and
report on” the samples and for Lilly to prepare for trial. Eli Lilly,
557 F.3d at 1350.
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Eli Lilly & Co. v. Teva Pharms USA, Inc., 557 F.3d 1346 (Fed. Cir.
2009)
 CAFC affirmed extension of 30-month stay finding that district court did
not abuse its discretion
– “Trial courts, thus, may shorten or extend the thirty-month statutory
period based on the parties' uncooperative discovery practices
before the court.” Id. at 1350.
 Judge Prost dissented:
– District court failed to make findings that Teva failed to reasonably
cooperate in expediting the action
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Modification of the 30-Month Stay - Summary
 Modification of the 30-month stay is within the district court’s discretion.
 Actions outside the litigation cannot lead to modification of the 30-month
stay (e.g., FDA proceedings)
 Discovery delays can lead to modification of the 30-month stay.
 The extent of discovery violations required for modification is unsettled.
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