We’ve talked about patent zombies here before. Now how about a zombie patent?
On March 31, the Court of Appeals for the Federal Circuit issued its decision in Apotex Inc. v. Daiichi Sankyo, Inc. The case was a grueling three-sided fight between an original drugmaker and two generic drugmakers over the legal effect of a paperwork error at the Food and Drug Administration that kept a legally “dead” patent on the books.
The core question was whether generic drugmaker Apotex could sue the original drugmaker Daiichi for declaratory judgment that Daiichi’s legally dead (but still on the books) patent was really dead.
The problem was that federal courts only have jurisdiction where there is a justiciable case or controversy. Here, there was no controversy: everybody agreed that Daiichi’s patent could not be enforced. But under the law, Apotex could start selling its generic drug much sooner if it got a declaratory judgment that the patent would not be infringed. Was that enough to get the case into court?
Judge Richard Taranto wrote for the three-judge panel, concluding that Apotex could in fact sue. The requirements for federal jurisdiction and standing were met, the court ruled, because despite the lack of controversy over the patent itself, there was still a valuable legal right at stake.
The case was governed by the Hatch-Waxman pharmaceutical patent framework, as amended in 2003. Patent cases in general are not known for being especially easy to decipher. But Hatch-Waxman patent cases take on a special opacity. The citations alone can be eye-watering.
For example, a key provision in this case was 21 U.S.C. § 355(j)(5)(D)(i)(I)(bb)(AA), which governs the relevant exclusivity period.
(Go on, follow that link and see if you can figure out how the exclusivity period is determined.)
The facts are as headache-inducing as the law, but here are the essentials:
Drugmaker Daiichi holds two patents on the drug olmesartan, which treats high blood pressure. One patent expires in 2016 while the other expires in 2021. Daiichi has disclaimed the later-expiring patent (US Patent 6,878,703), rendering that patent null and void.
Thus, generic drugmakers should be able to start making and selling olmesartan in 2016.
But the FDA keeps a record of all patents on approved drugs, called the Orange Book. If a patent on a drug is listed in the Orange Book, the FDA won’t approve a generic version.
The FDA should have removed the second patent from the Orange Book when Daiichi disclaimed the patent. But for some unknown reason, it did not. And that failure to remove the patent from the Orange Book had some odd legal effects.
The first generic drugmaker to apply for the right to market a future generic version, Mylan, had filed a certification contesting the patent’s validity.
In enacting (and later amending) Hatch-Waxman, Congress wanted to give generic drugmakers a strong incentive to challenge bad patents. Rather than paying money or handing out fancy trophies, Congress decided to give a drugmaker who challenges a patent an exclusivity period during which no other drugmaker can market a generic version: a temporary duopoly.
So in this case, because it challenged the patent, Mylan would get a 180-day period during which it could market its generic version of olmesartan without any competition except for the original drugmaker. But under the statute, it would forfeit that 180-day period if a third drugmaker got a declaratory judgment against the patent.
And that sets up the bizarre shell game in this case. Daiichi had already irrevocably disclaimed the patent: the patent had legally ceased to exist. But because the patent was still listed in the Orange Book, Mylan still had a 180-day exclusivity period as its reward for challenging the now-void patent.
Since the underlying purpose of Hatch-Waxman was to get generic drugs to market quickly, Judge Taranto concluded that it would make no sense to interpret the statute as preventing a suit like Apotex’s. The Apotex suit would precisely serve the purpose of the statute in clearing the way for faster, wider generic competition.
But in deciding that the courts could hear Apotex’s claim, the Federal Circuit significantly expanded the scope of subject-matter jurisdiction in patent law: a court can now hear a suit for declaratory judgment against a patent even when there is no controversy about the patent at all.
The case now returns to the Northern District of Illinois, where it is likely that Apotex will quickly get a declaratory judgment of non-infringement and be able to offer its own generic olmesartan in 2016.
By: Samuel Henderson
Valparaiso University Law School
J.D. Candidate, 2016