Microsoft word - caraco pharmaceutical labs ltd v. forest labs inc.doc

Keywords: subject matter jurisdiction; covenant not to sue; generic drugs; ANDA
General: The Federal Circuit finds declaratory judgment jurisdiction despite covenant not to sue.

Caraco Pharmaceutical Labs. Ltd. v. Forest Labs. Inc.
Forest Labs Inc. (“Forest”) owns two patents related to Lexapro, an antidepressant. These patents,
U.S. Patent Nos. RE34,712 (“the 712 patent”) and 6,916,941 (“the ‘941 patent”), are listed in the
“Orange Book,” which is the FDA publication that provides notice of any patents that cover an
FDA-approved drug.
The Hatch-Waxman Act governs the approval of new and generic drugs. As part of the process
for applying for approval for a generic drug with an Abbreviated New Drug Application
(“ANDA”), a generic drug company must provide a certification (“paragraph IV certification”) to
the FDA that either the generic drug does not infringe the listed Orange Book patents or that the
patents listed in the Orange Book are invalid or unenforceable. As incentive for generic drug
companies to file an ANDA, the first approved ANDA for a drug is guaranteed an initial 180-day
period of co-exclusivity with the patent holder. The 180-day period of exclusivity begins either on
the date that the first ANDA filer begins marketing the drug or on the date of a final court decision
finding that the relevant Orange Book patents invalid or not infringed. In addition, in order to
facilitate the early resolution of disputes between generic and brand name drug companies, the
mere filing of an ANDA constitutes an act of patent infringement.
Caraco Pharmaceutical Labs. Ltd. (“Caraco”) was not the first company to be sued by Forest over
the Lexapro patents. The first ANDA applicant to file paragraph IV certifications to the '712 and
'941 patents was Ivax Pharmaceuticals (“Ivax”). Accordingly, Ivax is entitled to 180 days of
market exclusivity, which will begin either on the day it begins marketing its drug or on the day a
court determines that both the '712 and '941 patents are invalid or not infringed, whichever comes
first. Forest sued Ivax on the '712 patent but not the '941 patent. Last year, the Federal Circuit
affirmed a district court decision that the '712 patent is valid and infringed. Thus, Ivax is enjoined
from marketing its generic Lexapro until 2012, the expiration date of the ‘712 patent, and all
subsequent ANDA applicants are blocked by Ivax's 180-day exclusivity.
After Ivax's ANDA filing, Caraco filed its own ANDA with paragraph IV certifications to the '712
and '941 patents. Forest sued Caraco on the '712 patent but not the '941 patent. Caraco then filed
a complaint seeking a declaratory judgment that its generic version of Lexapro does not infringe
the '941 patent. Forest moved to dismiss on the grounds that the action did not present a "case" or
"controversy" as required by Article III of the Constitution. Forest then unilaterally granted
Caraco an irrevocable covenant not to sue for infringement of the '941 patent. Due to the
covenant not to sue, the district court dismissed Caraco's complaint for lack of jurisdiction.
II. Issue
Does Caraco have a declaratory judgment controversy? Caraco Pharmaceutical Labs. Ltd. v. Forest Labs. Inc. III. Discussion

A. Yes. The Federal Circuit reversed the District Court’s dismissal of Caraco’s complaint for The court determined that Caraco has standing for three reasons. First, according to the court, Caraco alleges a judicially cognizable injury-in-fact: Caraco’s injury is being excluded from selling a non-infringing product because Forest has taken actions that delay the FDA from approving Caraco's ANDA. Second, Caraco's injury is traceable to Forest: Forest's listing of the '712 and '941 patents in the Orange Book effectively denies Caraco an economic opportunity to enter the marketplace unless Caraco can obtain a judgment that both those patents are invalid or not infringed by its generic drug. Third, Caraco's injury is redressible by a favorable judgment: “If Caraco obtains a favorable judgment that the drug described in its ANDA does not infringe Forest's '941 patent, then it will only need a judgment of invalidity or noninfringement on Forest's '712 patent in order to activate Ivax's exclusivity period and obtain FDA approval as swiftly as possible.” Only by obtaining a judgment of noninfringement on both the '712 and '941 patents can Caraco trigger Ivax's 180-day exclusivity period, which currently prevents the FDA from approving Caraco's ANDA. Without a judgment of noninfringement on the '941 patent, even if Caraco prevailed against Forest in the separate infringement action on the '712 patent, Caraco would not be able to activate Ivax's exclusivity period via the court-judgment trigger. Moreover, until Ivax's exclusivity period expires, the FDA cannot approve Caraco's ANDA. Thus, terminating this action without a judgment with respect to infringement on the '941 patent could delay FDA approval of Caraco's ANDA and thereby exclude Caraco from the drug market, even if its generic drug does not infringe the '941 patent. In these circumstances, Forest's covenant not to sue Caraco does not eliminate the controversy between the parties. IV. Conclusions
In ruling for Caraco, the Federal Circuit may have offered a solution to the problem whereby subsequent ANDA applicants are barred from approval when a first ANDA applicant settles litigation and the innovator refuses to sue subsequent filers. Caraco Pharmaceutical Labs. Ltd. v. Forest Labs. Inc.

Source: https://fyiplaw.com/publications/CaracaovForest.pdf