United States District Court, District of New Jersey
July 7, 2003
DR. REDDY'S LABORATORIES, LTD. AND DR. REDDY'S LABORATORIES, INC. PLAINTIFFS,
PFIZER INC. DEFENDANT.
The opinion of the court was delivered by: Joel A. Pisano, District Judge.
OPINION [ Page 2]
Defendant Pfizer Inc. ("Pfizer") moves to dismiss this Complaint for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. Plaintiff Dr. Reddy's Laboratories ("DRL") seeks a declaratory judgment pursuant to 28 U.S.C. § 2201 that its generic version of setraline hydrochloride does not infringe upon U.S. Patent No. 5,248,699 (the "`699 patent"). Defendant Pfizer currently markets the brand name version of setraline hydrochloride. Zoloft, which is covered both by the `699 Patent and U.S. Patent No. 4,356,518 (the "`518 patent").
I. Statement of Facts
Zoloft, which has been approved by the FDA for the treatment of mood and anxiety disorders. is covered by two different United States patents; the `518 patent and the `699 patent. The `518 patent is directed towards the compound setraline itself, and this patent expires on December 30, 2005. The `699 patent covers setraline in a particular crystalline form ("Form I polymorph") and expires on September 28, 2010. Pfizer has filed both of these patent numbers and expiration dates in the "Orange Book," properly known as Approved Drug Products with Therapeutic Equivalence Evaluations.*fn1 Because FDA has granted a six month extension on exclusivity for the Zoloft product for the treatment of the pediatric population, any generic version of setraline hydrochloride product may not be marketed and sold to the public until June 30, 2006.
Plaintiff DRL has filed an Abbreviated New Drug Application ("ANDA") and seeks to market and sell a generic version of setraline in tablet form. By filing the ANDA, the maker of [ Page 3]
the generic version of the drug must demonstrate that the new drug is bioequivalent to the brand name version of the drug already approved by FDA through a New Drug Application ("NDA"). 21 U.S.C. § 355(j)(2). A party that files an ANDA seeking approval to market a generic version of a drug covered by patents listed in the Orange Book must include a certification with respect to every listed patent. 21 U.S.C. § 355(j)(2)(A)(vii); 21 C.F.R. § 314.94.
DRL made a "paragraph III certification" with respect to the `518 patent. 21 U.S.C. § 355(j)(2)(A)(vii)(III). The paragraph III certification indicates that the `518 patent covers the drug, will expire in December 2005, and that DRL will not market its generic product until the expiration of the patent. Because the FDA has granted a six month exclusivity extension to Pfizer for the Zoloft product, DRL may not receive FDA final approval to market its setraline tablets until June 30, 2006, at the earliest.
DRL made a "paragraph IV certification" with respect to the `699 patent, which expires on September 28, 2010. DRL's certification regarding the `699 patent is a representation that this patent is invalid, unenforceable. and/or will not be infringed by DRL's generic setraline product. 21 U.S.C. § 355 (j)(2)(A)(vii)(IV). The basis of this certification is DRL's representation that its generic setraline tablets are a particular crystalline form ("Form II polymorph") that is not covered by the claims in the `699 patent (covering Form I polymorphs). Based on this ANDA submission, DRL would not be required to wait until the expiration of the `699 patent in 2010 before marketing its generic setraline product.
In 1999, Ivax (a manufacturer of generic drugs) submitted an ANDA application to the FDA to market a generic setraline tablet, and filed a paragraph IV certification with respect to the `699 patent, and a paragraph III certification with respect to the `518 patent. Ivax (then Zenith [ Page 4]
Goldline) notified Pfizer on December 17, 1999 of this ANDA application and the paragraph IV certification with respect to the `699 patent. Within 45 days of this notification, Pfizer filed suit against Ivax alleging infringement of the `699 patent,*fn2 and the parties eventually settled this dispute.*fn3 The terms of the settlement agreement itself neither advance nor delay the date on which Zenith sought to market its generic product. Pfizer did not file an infringement action against DRL within 45 days after being notified of the paragraph IV certification regarding the `699 patent.
II. Standard for Declaratory Judgment
The Declaratory Judgment Act permits a court in a case of actual controversy within its jurisdiction to "declare the rights and other legal relations of any interested party seeking such declaration." 28 U.S.C. § 2201 (a). Even when an actual controversy exists, the assumption of this jurisdiction rests within "the unique and substantial discretion" of federal courts, as the "statute provides that a court `may declare the rights and other legal relations of an interested party[.]'" Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995) (citing 28 § 2201(a)). In any event, the Declaratory Judgment "may not be a medium for securing an advisory opinion in a controversy which has not arisen." Coffman v. Breeze Corps. Inc., 323 U.S. 316, 324 (1945) (citations omitted). [ Page 5]
The Federal Circuit has held jn patent cases that an actual controversy exists where there is "both (1) an explicit threat or other action by the patentee, which creates a reasonable apprehension on the part of the declaratory plaintiff that it will face an infringement suit, and (2) present activity which could constitute infringement or taken with the intent to conduct such activity." Amana Refrigeraton, Inc. v. Quadlux, Inc., 172 F.3d 852, 855 (Fed. Cir. 1999) (quoting BP Chems. v. Union Carbide Corp., 4 F.3d 975, 978 (Fed Cir. 1993)).*fn4 In showing a reasonable apprehension of facing an infringement suit, the plaintiff does not need to demonstrate an actual or expressly threatened lawsuit, but must demonstrate "conduct that rises to a level sufficient to indicate an intent [of the patentee] to enforce its patent, i.e., to initiate an infringement action." EMC Corp. v. Norand Corp., 89 F.3d 807, 811 (Fed. Cir. 1996) (citations omitted). However, subjective impressions of the plaintiff are insufficient to satisfy the requirement, and the court must find objective facts considering the "totality of the circumstances" at the time the complaint was filed. Arrowhead Indus. Water v. Ecolochem, 846 F.2d 731, 736 (Fed. Cir. 1988).
The second prong of this test requires infringement activity, or meaningful preparation along with the intent to commit infringing activity. The allegations supporting such a declaratory action must demonstrate an "immediate and real controversy" that would convey jurisdiction under the Declaratory Judgment Act. Telectronic's Pacing Sys. v. Ventritex, Inc., 982 F.2d 1520, 1527 (Fed. Cir. 1992). This prong insures that the plaintiff has a "true interest to be protected," [ Page 6]
and prevents courts from issuing advisory opinions about events that are merely foreseeable. Arrowhead, 846 F.2d at 736. However, the Federal Circuit has also affirmed the finding of no case or controversy jurisdiction if the allegedly infringing product was "years away from potential FDA approval" and the manufacturer was prohibited during that time from committing acts that would constitute infringement. Id. at 1526-27.
III. DRL's Allegation of an Immediate and Real Controversy
DRL must demonstrate that there is an immediate and real controversy that would allow this Court to exercise jurisdiction under the Declaratory Judgment Act. Pfizer contends that DRL's allegations do not support an actual controversy finding because DRL does not have "immediate intention and ability" to produce generic setraline. Bristol-Myers Squibb Co. v. Ivax Corp., 77 F. Supp.2d 606, 618 (D.N.J. 2000). Furthermore, Pfizer argues that DRL is "years away from potential FDA approval" and thus does not have the ability to commit a potentially infringing act. Def.'s Reply Mem. Br. at 3 (citing Telectronics, 982 F.2d at 1527). Because DRL may not receive final FDA approval for its ANDA application until at least June 30, 2006, when the `518 patent exclusivity period expires, DRL's allegations "lacked sufficient immediacy and reality to meet the actual controversy' requirement under the Declaratory Judgment Act," according to Pfizer. Id.
However, Pfizer does not properly address the entire immediate and real controversy prong of the test for case or controversy jurisdiction under the Declaratory Judgment Act. This requirement can be satisfied by either "present activity which could constitute infringement or concrete steps taken with the intent to conduct such activity." Amana Refrigeration, 172 F.3d at 855. While Pfizer relies upon a Federal Circuit case regarding a claim of future patent [ Page 7]
infringement of a mechanical device and other decisions from this district, the Hatch-Waxman Act itself specifically defines the submission of an ANDA application as an act of infringement when the purpose of the filing is to engage in the manufacture and sale of a drug claimed in a patent that has not expired. 35 U.S.C. § 271 (e)(2)(A). In interpreting the plain language of this statute, this Court is mindful that when "the terms of a statute are unambiguous, judicial inquiry is complete, except in rare and exceptional circumstances." Rubin v. United States, 449 U.S. 424, 430 (1981).
The Federal Circuit has interpreted this statutory provision as defining infringement to meet the case or controversy requirement under the Declaratory Judgment Act. In Glaxo v. Novopharm, 110 F.3d 1562, 1569 (Fed. Cir. 1997), the circuit explicitly stated "§ 271(e)(2) provided patentees with a defined act of infringement sufficient to create case or controversy jurisdiction to enable a court to promptly resolve any dispute concerning infringement and validity." The court recognized that this statutory definition of infringing activity was premised upon the future marketing and sale of the product, and the determination was whether future approval of the ANDA would ultimately infringe upon the patent. There is no principled reason to distinguish a declaratory action for noninfringement in this situation from the converse situation in Novopharm of a patentee suing for future infringement based upon the ANDA. See Dupont Merck Pharm. Co. v. Bristol-Myers Squibb Co. 62 F.3d 1397, 1402 (Fed. Cir. 1995) (finding that the filing of a paragraph IV certification for a patent in me submission of an ANDA is infringement). Thus, DRL's present activity of filing an ANDA to produce generic setraline along with a paragraph IV certification for the `699 patent is present activity which constitutes infringement because such activity is defined as infringement under 35 U.S.C. § 271 (e)(2).
Pfizer contends that DRL's submission of an ANDA does not constitute infringement or [ Page 8]
meaningful preparation for infringing activity because the ANDA cannot receive FDA approval until June 30, 2006 when the patent expires. Pfizer upon Telectronics pacing Sys. v. Ventritex, 982 F.2d 1520 (Fed Cir. 1992), where the Federal Circuit affirmed a finding of no jurisdiction where a patentee filed suit for infringement based on a device undergoing clinical trials and was "years away from potential FDA approval." Id. at 1527. Contrary to the facts presented in Telectronics, DRL has in this instance committed acts that are defined in the Hatch-Waxman Act as infringement. Furthermore, the decision in Telectronics was based on the possibility that the eventual device as modified might significantly be changed at the end of clinical trials. In this instance. DRL prepared and filed an ANDA submission and filed a paragraph IV certification with respect to the `699 patent. In making this submission, DRL committed a technical act of infringement in stating that their product would be bioequivalent to Zoloft, and then represented that it would not infringe upon the `699 patent, or that the patent was invalid
Pfizer further relies upon a case from this district which allegedly supports the proposition that even an ANDA applicant might not demonstrate sufficient immediacy to create a justiciable case or controversy. In Bristol-Myers Squibb Co. v. Ivax Corp., 77 F. Supp.2d 606, 619 (D.N.J. 2000), the court found no jurisdiction because of the failure to demonstrate the requisiste immediacy. In that case. the party defending a counterclaim for declaratory judgment for noninfringement had filed a supplemental NDA, which delayed any approval for the initial ANDA applicant until 2004. Furthermore, the court did not address the plain language of the statute defining the submission of an ANDA as an act of infringement, nor the controlling authority from the Federal Circuit which has interpreted the filing of a paragraph IV certification with an ANDA [ Page 9]
submission as technical infringement.*fn5
Because the Plaintiff has adequately demonstrated that there is a real case or controversy at issue in the litigation by the submission of an ANDA, this Court finds that the infringement prong of the case or controversy test for jurisdiction has been met, and will address the second prong of reasonable apprehension of litigation.
IV. Reasonable Apprehension of Litigation
Plaintiff DRL must show a specific threat or other action by Pfizer that would create reasonable apprehension of suit in order meet the second prong of the test for case or controversy jurisdiction under the Declaratory Judgement Act.*fn6 This standard does not require direct threats of suit, but the words and actions of the patentee may indirectly place the declaratory plaintiff in reasonable apprehension of suit. BP Chems. Ltd., 4 F.3d at 979. While mindful to consider all the circumstances, the District Court may only find an actual controversy based upon the objective actions of the patentee, not the subjective impressions of the plaintiff. Indium Corp of America v. Semi-Alloys, Inc., 781 F.2d 879, 883 (Fed. Cir. 1985). The objective actions of the patentee must rise "`to a level sufficient to indicate an intent to enforce its patent', i.e., to initiate an infringement action." EMC Corp, 89 F.3d at 811 (citation omitted).
In support of its assertion that this Court may exercise jurisdiction, DRL lists several key [ Page 10]
factors which taken together create a reasonable apprehension of suit. These factors include: (1) Pfizer has listed the `699 patent in the Orange Book, indicating that a generic form of Zoloft could infringe its patent: (2) Pfizer currently refuses to provide DRL with a covenant not to sue and has shown hostility towards DRL in public statements; (3) Pfizer has aggresively asserted its patent rights in other situations: (4) Pfizer has sued Ivax, the first generic manufacturer of setraline, alleging infringement of' the `699 patent: (5) Pfizer has an incentive to create a "bottleneck" with generic setraline production. and delay the clock for the 180 day exclusivity period for the first generic manufacturer, Ivax. Notably. DRL does not make any factual allegations showing that, Pfizer has publicly commented or acted with regards to DRL's ANDA submission, other than a refusal to concede its legal rights with regards to the `699 patent.
By listing the `699 patent in the Orange Book, Pfizer has indicated that a future generic setraline product may infringe upon this patent. DRL argues that the submission of an ANDA itself creates a reasonable apprehension of litigation from the listed patent holder, citing for support a concurring opinion from the Federal Circuit on the issue. See Minnesota Mining & Manufacturing Co. v. Mfg.,Co. v. Barr Labs., 289 F.3d 775, 791 (Fed. Cir. 2002) (Gajarsa, J., concurring).
However, the rationale of' this opinion is based upon the fact that a patentee could reasonably assert a claim against a non-licensed manufacturer or marketer of the drug based upon the listing of the `699 patent in the Orange Book. In the absence of strong objective evidence "sufficient to indicate intent to initiate an enforcement action," the mere listing of multiple patents does not create declaratory judgment jurisdiction, especially in light of the fact that DRL cannot put its generic setraline to market until at least June 2006. EMC Corp., 89 F.3d at 811 (citation [ Page 11]
omitted). In fact, the objective evidence of Pfizer's intentions with regards to DRL's anticipated setraline product is that DRL has filed a paragraph IV certification with regards to the `699 patent, and Pfizer has not sued for infringement within the 45 day period provided by 21 U.S.C. § 355 (j)(5)(B)(iii).*fn7 While the purpose of the Declaratory Judgment Act may be to prevent, patent owners from brandishing the "sheathed sword" over the head of future competitors, the listing of patents in the Orange Book should not subject patent owners to defending non-infringement or invalidity without a chance to make a real investigation into whether the patent is actually infringed.*fn8
DRL has not alleged objective words or actions by Pfizer that demonstrate an intent to enforce its patent rights with regards to generic setraline either through explicit threats or "indirect threats or actions that place the declaratory plaintiff in reasonable apprehension of suit." BP Chems, 4 F.3d at 979. While DRL points to the listing of the `699 patent in the Orange Book as evidence, this occurred before DRL submitted the ANDA to the FDA for approval and the settlement of the lawsuit between DRL and IVAX regarding the `699 patent. The only action or communication regarding generic setraline between Pfizer and DRL was the refusal by Pfizer to give a convenant [ Page 12]
not to sue with regards to the `699 patent. which is not dispositive as to giving a reasonable apprehension of suit to the declaratory plaintiff. See BP Chems., 4 F.3d at 980 (refusal to give assurances that the patentee will not enforce its patent is relevant but not dispositive).
Weighing all of the circumstances, Pfizer refusal to provide this covenant is perfectly reasonable in light of their need to make a fair investigation into DRL's representation that its setraline product would be a Form II polymorph not covered by the claims in the `699 patent.*fn9 Beyond Pfizer's need to investigate DRL's setraline product, DRL does not even have the ability to produce and market this product until June 2006. Therefore, Pfizer's refusal to give this covenant is not persuasive objective evidence that DRL has a reasonable apprehension of suit.
DRL also argues that Pfizer's decision to sue IVAX for infringement of the `699 patent in January 2000, after IVAX submitted an ANDA for a setraline product, provides an objective basis for a reasonable apprehension of suit.*fn10 While "[r]elated litigation may be evidence of a reasonable apprehension," Shell Oil Co. v. Amoco Oil Co., 970 F.2d 885, 888 (Fed. Cir. 1992), the circumstances surrounding Pfizer's lawsuit against IVAX could suggest that Pfizer will not sue DRL regarding the `699 patent. Firstly, DRL argues in its own brief that Pfizer's interest is not to sue IVAX for infringement because a court decision might trigger the 180 day exclusivity period for the first generic entrant on the market (Pl.'s Opp. to Def.'s Mot. to Dismiss at 23). While DRL seeks to demonstrate that Pfizer is waiting until the last possible moment in 2006 before suing for [ Page 13]
infringement of the `699 patent, it also tacitly concedes that DRL currently faces no reasonable apprehension of suit. Furthermore, the terms of the settlement between Pfizer and IVAX actually support the conclusion that Pfizer will not sue DRL with regards to the `699 patent. Because the settlement allows IVAX to begin marketing its generic setraline product at the end of the expiration of the `518 patent.*fn11 Pfizer has not been to able to delay the entry of a generic competitor through infringement litigation. Because the `699 patent was also at issue in that lawsuit, DRL cannot show that this related litigation was evidence of Pfizer's desire to delay the entry of generic competition through litigation.
Beyond this previous lawsuit, DRL also relies upon the alleged animosity of Pfizer executives and Pfizer's history of "aggressive assertion" of its patent rights against generic manufacturers. While DRL provides some quotations from Pfizer's CEO and other representatives about DRL, none of these remarks are directed towards DRL's attempts to produce a generic version of setraline. In the same regard, Pfizer's history of enforcing its patent rights does not provide any indication of Pfizer's intentions with regards to the `699 patent and DRL's generic setraline product. Neither argument demonstrates any evidence that DRL has an objective reasonable apprehension of suit by Pfizer. Furthermore, Pfizer failed to sue DRL within the statutory 45 day period after the paragraph IV certification for the `699 patent, thus providing some evidence that Pfizer does not intend to sue DRL.
All of the evidence listed by DRL that allegedly creates a reasonable apprehension of suit. does not approximate "a level sufficient to indicate an intent [on the part of the patentee] to enforce its patent." Shell Oil Co., 970 F.2d at 887. The only direct communication from Pfizer regarding [ Page 14]
the `699 patent and the DRL generic setralic product was simply a refusal to provide assurances that Pfizer would not sue. In weighing all of the circumstances, this refusal is entirely reasonable in light of the fact that Pfizer would need to have an adequate chance to investigate whether the generic product from DRL was truly a Form II polymorph. There is no rationale why the refusal to advise DRL three and a half years before its generic setraline product could possibly enter the market creates a reasonable apprehension that Pfizer will enforce its patent.*fn12 Weighing all of the circumstances, DRL has not fully persuaded this Court that there is a reasonable apprehension of litigation creating a case or controversy allowing this Court to exercise jurisdiction.
Finally, DRL argues that the unresolved issue of when the period of Ivax exclusivity will serves as an independent basis for this Court to exercise jurisdiction in order to resolve a "statutory bottleneck." (Pl.'s. Opp. to Mot. to Dismiss at 24-25) Regardless of whether a statutory bottleneck is sufficient to create case or controversy jurisdiction, the purpose of resolving the triggering of the exclusivity period is to prevent the first ANDA filer from blocking subsequent generic entrants into the market because of "protracted litigation." Minnesota Mining & Manuf. Co., 289 F.3d at 780. In this instance, the terms of the settlement agreement between IVAX and Pfizer make it clear that IVAX may begin marketing its generic setraline after the expiration of the `518 patent. Rather than Pfizer "manipulating the start date of IVAX exclusivity" (Pl.'s. Opp. At 24), DRL wishes to trigger [ Page 15]
the 180 day exclusivity period before IVAX begins to actually market its product, thus negating the benefits conferred upon the first generic entrant as an incentive to encourage generic producers of drugs. While claiming this is a "statutory bottleneck" preventing "full generic competition," DRL seeks to nullify the statutory' benefit given as an incentive for generic companies who take, the greatest risk of being the first generic entrant on the market. This argument is entirely unpersuasive as a basis for this Court to exercise jurisdiction.
Defendant Pfizer seeks to dismiss DRL's action for declaratory judgment of noninfringement pursuant to 28 U.S.C. § 2201, the Declaratory Judgment Act. This Court is vested with "unique and substantial discretion in deciding whether to declare the rights of the litigants" under the Declaratory Judgment Act. Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995). Because of the uncertainty whether DRL can truly' demonstrate a reasonable apprehension of suit, and in order to allow Pfizer time to investigate a final form of DRL's product to ascertain whether it infringes upon the `699 patent, this Court exercises its discretion and declines to entertain this action under the Declaratory' Judgment Act. The Court dismisses this complaint without prejudice. This case is closed.
Before the Court is Defendant's motion for dismissal pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. For the reasons stated in the accompanying opinion and for good cause shown, this Court declines to exercise jurisdiction over this action pursuant to 28 U.S.C. § 2201. IT IS
ON THIS 7th day of July, 2003.
ORDERED that this action is DISMISSED WITHOUT PREJUDICE. This case is CLOSED.