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Medeva Pharma Suisse A.G., Warner Chilcott Pharmaceuticals Inc., and v. Par Pharmaceutical

March 28, 2011

MEDEVA PHARMA SUISSE A.G., WARNER CHILCOTT PHARMACEUTICALS INC., AND WARNER CHILCOTT COMPANY, LLC, PLAINTIFFS,
v.
PAR PHARMACEUTICAL, INC., AND EMET PHARMACEUTICALS, LLC, DEFENDANTS.



The opinion of the court was delivered by: Wolfson, United States District Judge:

*FOR PUBLICATION*

OPINION

Presently before the Court is a motion by Plaintiffs Medeva Pharma Suisse A.G., Warner Chilcott Pharmaceuticals Inc., and Warner Chilcott Company, LLC (collectively referred to as "Plaintiffs") to dismiss Defendants Par Pharmaceutical, Inc.'s and Emet Pharmaceuticals, LLC's (collectively referred to as "Defendants'") counterclaim for declaratory judgment regarding the validity of Plaintiffs' United States Patent #5,541,171 ("'171 Patent"). Plaintiffs move to dismiss the counterclaim, pursuant to Fed. R. Civ. P. 12(b)(1), on the ground that Defendants lack standing to bring the counterclaim based upon Plaintiff's offering of a covenant not to sue Defendants on the '171 Patent. For the reasons that follow, the Court finds that Defendants lack standing to seek declaratory judgment with regard to the '171 Patent. Accordingly, Plaintiff's motion is granted, and Defendants' counterclaim for declaratory judgment under the '171 Patent is dismissed.

I. Background

Plaintiffs are makers of the brand name drug Asacol®, which is a drug approved by the Food and Drug Administration ("FDA") and listed under NDA No. 19-651 in the Orange Book.*fn1 Answer, ¶ 19. Plaintiffs are also owners of the '171 Patent and another related patent, United States Patent #5,541,170 ("'170 Patent"), which are both listed in the Orange Book in association with Asacol®. Counterclaim, ¶ 13. In October 2007, Roxane Laboratories, Inc. ("Roxane") filed an Abbreviated New Drug Application ("ANDA") requesting approval to market generic versions of Asacol®, which prompted Plaintiffs to first file an infringement action against Roxane in a separate suit pending before this Court. Counterclaim, ¶ 22. Pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act (the "Act"), a generic drug company like Roxane may submit an ANDA as part of a streamlined FDA approval process for the generic drug.*fn2

After the suit against Roxane was filed, on or before June 22, 2010, Defendants filed their own ANDA with the FDA, seeking approval to market their generic versions of Asacol®. Answer, ¶ 22. Upon notice of Defendants' ANDA application, Plaintiff filed the instant action on August 5, 2010, alleging that the ANDA infringed upon the '170 Patent. Noticeably, Plaintiffs made no claim that Defendants' ANDA infringed upon the '171 Patent.

To counter, Defendants filed CAPC counterclaims under 35 U.S.C. § 271(e)(5) for declaratory judgment of non-infringement or invalidity with respect to both the '170 Patent and the '171 Patent, in order to resolve all patent-related uncertainties related to their ANDA in the same lawsuit.*fn3 In response, Plaintiffs offered Defendants a covenant-not-to-sue, presently or in the future, for the '171 Patent. Plaintiffs claim that the Covenant resolves all uncertainties with regard to the '171 Patent, and now move to dismiss Defendants' counterclaim for the '171 Patent, contending that the Covenant deprives Defendants of standing. In Plaintiff's view, the Covenant effectively redresses all injuries Defendants may suffer with respect to the '171 Patent. Defendants oppose the motion, asserting that there is standing because the Covenant does not address all of Defendants' potential injuries arising out of the '171 Patent.

II. Standard of Review

A party may move for dismissal pursuant to Fed. R. Civ. P. 12(b)(1) based on lack of subject matter jurisdiction. A challenge to a plaintiff's standing is a challenge to subject matter jurisdiction. Pa. Prison Soc'y v. Cortes, 622 F.3d 215, 229 (3d Cir. 2010). Under Article III of the Constitution, because courts may only adjudicate "cases and controversies," a party must have standing to bring a claim in court. To establish standing, a party must show that 1) he suffered some actual or threatened injury as a result of illegal conduct by the defendant; 2) the injury can be fairly traced to the challenged action; and 3) the injury is likely to be redressed by a favorable decision. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167, 180-81 (2000).

When faced with a Rule 12(b)(1) challenge to jurisdiction, the court "must start by determining whether [it is] dealing with a facial or factual attack to jurisdiction. If [it] is a facial attack, the court looks only at the allegations in the pleadings and does so in the light most favorable to the plaintiff." U.S. ex rel. Atkinson v. PA. Shipbuilding Co., 473 F.3d 506, 514 (3d Cir. 2007). "If [it] is a factual attack, however, it is permissible for a court to review evidence outside the pleadings." Id. "[T]he trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case." Mortensen v. First Federal Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). A jurisdictional challenge is a factual challenge if "it concerns not an alleged pleading deficiency, but rather the actual failure of [plaintiff's] claims to comport with the jurisdictional prerequisites." U.S. ex rel. Atkinson, 473 F.3d at 514.

In the instant matter, Plaintiffs make a factual challenge to jurisdiction, arguing that Defendants lack injury-in-fact to seek a declaratory judgment under the '171 Patent. As such, the Court will consider all relevant evidence in determining its authority to hear the case.

III. Discussion

Defendants bring their counterclaims pursuant to the Declaratory Judgment Act, which provides that: "[i]n a case of actual controversy within its jurisdiction ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration ...." 28 U.S.C. § 2201(a). Despite the "virtually unflagging obligation of the federal courts to exercise the jurisdiction given them," Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976), the discretionary language of the Declaratory Judgment Act means federal courts have "no compulsion to exercise [the] jurisdiction" the statute grants. Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 494 (1942). In other words, the statute "confers a discretion on the courts rather than an absolute right upon the litigant." Wilton v. Seven Falls Co., 515 U.S. 277, 287 (1995). Thus, "[i]n the declaratory judgment context, the normal principle that federal courts should adjudicate claims within their jurisdiction yields to considerations of practicality and wise judicial administration." Id. at 288.

According to the U.S. Supreme Court, the proper standard for ascertaining whether a declaratory judgment action satisfies Article III's standing requirement is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of ...


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