Teva v. Eisai: Subsequent Paragraph IV Filers Have Standing When Commencement of First-Filer’s Exclusivity Period is Delayed

In Teva v. Eisai, the Federal Circuit held that a subsequent Paragraph IV filer has standing when a patent listed in the Orange Book causes a delay in the triggering of a first filer’s exclusivity period and prevents the subsequent filer from bringing a generic drug to market.

The Hatch-Waxman Act grants a generic drug-maker 180 days market exclusivity when the drug-maker files an “Abbreviated New Drug Application” (ANDA) and a “Paragraph IV” certification for a drug covered by a patent listed in the Orange Book.  After the first-filer’s exclusivity period ends, subsequent Paragraph IV filers may also market the generic drug.  Under 21 U.S.C. § 355(j)(5)(B)(iv), two events may trigger the exclusivity period, whichever occurs first:  (1) the first-filer commercially markets the generic drug, or (2) a court finds that the patent listed in the Orange Book is invalid or not infringed.

Eisai has FDA approval of its New Drug Application (NDA) for donepezil, a drug used to treat dementia in Alzheimer’s disease patients.  Five Eisai patents listed in the Orange Book cover donepezil.  Ranbaxy was the first to file an ANDA for generic donepezil.  For one of the five Eisai patents, the ‘841 patent, Ranbaxy filed a Paragraph III certification which restricts Ranbaxy from marketing a generic of donepezil until the ‘841 patent expires.  Of the remaining four patents, Ranbaxy filed Paragraph IV certifications which indicate that Ranbaxy believes its drug does not infringe the patents or the patents are invalid.

Subsequently in 2005 and 2007, Teva and its division Gate Pharmaceuticals (Gate) filed two separate ANDAs and Paragraph IV certifications for all five Eisai patents.  A Paragraph IV certification is considered an act of patent infringement under Hatch-Waxman.  35 U.S.C. § 271(e)(2).  Of the five patents, the ‘841 patent has been asserted against Teva and Gate by Eisai in a separate litigation.  In that litigation, Eisai was granted a preliminary injunction against Teva and Gate, restricting their ability to market generic donepezil.  Eisai v. Teva, No. 05-5727 (D.N.J. Mar. 28, 2008) (opinion and order granting preliminary injunction).  Here, Teva seeks declaratory judgment (DJ) that its generic donepezil does not infringe the remaining four Orange Book patents.

At trial, the district court granted Eisai’s motion to dismiss the case for lack of subject matter jurisdiction.  The court agreed with Eisai that there was no controversy because the preliminary injunction in the separate litigation already prevented Teva from marketing the generic.  Additionally, Eisai filed statutory disclaimers with the USPTO that disclaimed enforcement of two patents and established covenant-not-to-sue agreements on the other two patents.  However, despite these disclaimers and agreements, the four patents remain listed in the Orange Book.

The Federal Circuit reversed the district court’s dismissal, relying on Caraco v. Forest Labs, 527 F.3d 1278 (Fed. Cir. 2008)Caraco established that a subsequent Paragraph IV filer may bring a DJ action against an NDA holder who lists a patent in the Orange Book because “but-for” the Orange Book listing, the Paragraph IV filer would not be delayed in receiving FDA approval.  The delay causes the Paragraph IV filer to suffer an injury that is “fairly traceable” to the defendant NDA holder and is therefore appropriate for a DJ action.  Furthermore, if an Orange Book listing creates an “independent barrier” requiring a court judgment of invalidity or non-infringement for a Paragraph IV filer to enter the market, then the Paragraph IV filer has been deprived of an economic opportunity to compete.

The Federal Circuit also distinguished Janssen v. Apotex, 540 F.3d 1353 (Fed. Cir. 2008), where a subsequent Paragraph IV filer unsuccessfully brought a DJ action in order to trigger the first filer’s exclusivity period.  In Janssen, while the DJ action was pending, the subsequent Paragraph IV filer stipulated to the validity, infringement, and enforceability of another Orange Book patent covering the same drug.  Therefore, even if the DJ action succeeded, the stipulation and not the Orange Book listing prevented the subsequent filer from marketing the generic drug.

Since Teva and Gate had not stipulated to the validity, infringement, or enforceability of any of the donepezil patents, the court applied Caraco.  The court also noted that the preliminary injunction granted in the ‘841 patent litigation may only temporarily prevent Teva and Gate from marketing generic donepezil, and no final judgment as to the validity, infringement, or enforceability of the ‘841 patent had been made.

The Federal Circuit also found that the district court’s dismissal of the suit was an abuse of discretion under the Declaratory Judgment Act.  The district court (1) erred in concluding that it lacked subject matter jurisdiction and using that as a basis for declining jurisdiction, and (2) erred in concluding that the multiple ANDA’s and relationship between Teva and Gate signaled “improper gamesmanship.”

Writing for Patent Docs, Kevin Noonan noted that the case shows the interplay between the “complex” and “perhaps Byzantine” Hatch-Waxman regulations with other statutory mandates.  Despite the complexity, this case expands a subsequent Paragraph IV filer’s ability to trigger the first filer’s exclusivity period, potentially allowing more generic drugs to reach the public quickly.