Welcome to Foley & Lardner’s Summer 2017 edition of ANDA & Biosimilars and the Law. In our Legal Developments section, we report on a number of decisions both from the Supreme Court and the Federal Circuit. This section includes articles on the Supreme Court’s TC Heartland LLC v. Kraft Foods Group Brands LLC decision relating to venue and the Supreme Court’s recent interpretation of sections of the Biologics Price Competition and Innovation Act (BPCIA) in Sandoz Inc. v. Amgen Inc., and also looks further at the issues now facing the Federal Circuit in the wake of the Supreme Court’s decisions. We also report on the Federal Circuit’s comments in Mylan Institutional LLC, et al. v. Aurobindo Pharma Ltd., regarding application of the doctrine of equivalents to chemical inventions. Additionally, in our IPR Practice section, we offer some insight as to the impact of IPRs on patents in the area of the life sciences. Through this newsletter, it is our goal to provide you with informative and engaging content. For more information, please also see the About Foley’s ANDA & Biosimilar Team section, where we provide an introduction to our team, as well as a brief description of the capabilities and backgrounds of several individuals at Foley.
By Jayita Guhaniyogi, Ramy E. Hanna, and Liane M. Peterson
In TC Heartland, the Supreme Court held that its 1957 decision in Fourco was still good law that limited the definition of “residence” under 28 U.S.C. § 1400(b) to the state of incorporation for domestic corporate defendants, thus reaffirming its position that the patent venue statute § 1400 (b) “is the sole and exclusive provision controlling venue in patent infringement actions, and is not to be supplemented by § 1391(c)”1. TC Heartland overturned decades of venue regime under the Federal Circuit’s 1990 decision in VE Holding that applied § 1391(c)’s definition of “resides” to § 1400(b)2. Pursuant to § 1391(c)(2), “[f]or all venue purposes, an entity... shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question...”
Following TC Heartland, the brand manufacturer, in the context of abbreviated new drug applications (ANDAs) under the Hatch-Waxman Act, or the reference product sponsor (RPS), in the context of abbreviated Biologic License Applications (aBLAs), under the Biologics Price Competition and Innovation Act (BPCIA) can bring infringement actions against domestic defendants in a district court only under two scenarios: (1) if the court sits in the defendant’s state of incorporation; or (2) if the court sits in a district (a) where the defendant has committed acts of infringement; and (b) where the defendant has “a regular and established place of business.” TC Heartland’s limited reading of § 1400(b) will inevitably shift the focus to the second alternate prong of § 1400.
The location of the infringing act will inevitably become an important source of litigation in future ANDA and biosimilar cases following TC Heartland. Because the artificial acts of infringement associated with the filing of an ANDA or aBLA occur prior to any commercial sale of an actual product, they present unique venue considerations. Due to the unique nature of ANDAs and aBLAs, TC Heartland will likely cause a focus shift to determining the location of act of infringement in such cases. In this context, how district courts have addressed specific personal jurisdiction is insightful.
The Federal Circuit has taken a broad and forward-looking position on specific personal jurisdiction in ANDA cases. In Acorda Therapeutics Inc. v. Mylan Pharm. Inc., the Federal Circuit found specific personal jurisdiction over the Mylan defendants because the act of ANDA filing indicates plans to engage in the future marketing of the proposed generic drugs in the forum state, and also finding that the paragraph IV certifications “confirm [the] plan to engage in real-world marketing” sufficient to fulfill the minimum contacts requirement for personal jurisdiction3. It is likely to be the subject of debate whether the act of filing the ANDA or aBLA should employ a prospective perspective for ascertaining an infringing act for venue is inevitable in a post TC Heartland era in ANDA and biosimilar litigation. Thus, focus on where the ANDA filer or aBLA applicant is likely to target sales or marketing efforts, based on past activities, may be highly relevant to determining the location of the infringing act for venue purposes.
Some district courts have also looked at past acts in determining specific personal jurisdiction. Although the location of where the ANDA product was developed and tested has been addressed in the context of specific personal jurisdiction, such activity is likely exempt under the “safe harbor” provisions of 35 U.S.C. § 271(e)(1) as “acts of infringement.” Similarly, the acts of preparing the ANDA and aBLA materials, strategic decisions concerning the applications, and signing would also likely be exempt under safe harbor. On the other hand, the acts of filing both the ANDA and the aBLA have been declared by Congress as “acts of infringement.”
Furthermore, in Acorda, the Federal Circuit expanded its interpretation of the act of filing the ANDA as confirming future intent to market the generic product throughout the United States. Mailing of the paragraph IV letter has been considered a critical factor and sometime sufficient by itself in finding specific personal jurisdiction in ANDA cases because it directly leads to the plaintiff’s cause of action4. Similarly, the aBLA applicant’s mailing of confidential materials when opting to participate in the patent dance should be considered an important factor in determining the location of the infringing act for venue in a post-TC Heartland era.
Several district courts use the location of where the claim arose as one of several private interest factors in analyzing venue transfer under 28 U.S.C. § 1404(a), which may be also be instructive for determining venue in ANDA cases. In reviewing where the claim arose for venue transfer in ANDA cases, the district courts apply a nearly identical set of factors when determining whether personal jurisdiction exists. In this context, district courts have started considering forward-looking activity, such as where the ANDA filer is likely to manufacture its generic product, consistent with future intent a position adopted by the Federal Circuit post Acorda5. Although the venue transfer analysis in ANDA cases does not typically rely on a “sales approach” because actual sales have yet to occur, the location where the ANDA filer or the aBLA applicant intends to sell and market their respective products based on past activity will nevertheless play a role in determining venue under § 1400(b).
TC Heartland’s narrow reading of § 1400(b) will also require analysis of where the defendant has a “regular and established place of business”6. The Federal Circuit has interpreted “regular and established place of business” as requiring “a permanent and continuous presence” and not necessarily “a fixed physical presence in the sense of a formal office or store ”7. Although several factors have emerged, the focus is on the “nature of the defendant’s presence with the district”8. Although a fixed physical presence is not essential, many courts have found that “the physical location over which defendant exercises control and where defendant engages in a substantial part of its ordinary business in a continuous manner” is sufficient. While registration as a foreign corporation to do business standing alone is not considered sufficient;” a physical office location, phone lines, employees, and/or bank accounts may be sufficient to qualify as a “regular and established business.”
Because of the unique artificial nature of infringement in ANDA and biosimilar cases, focus on actual sales and marketing efforts is inapplicable. In this context, lessons from how district courts have addressed general personal jurisdiction in ANDA cases may be insightful. Several factors emerge: (1) sale of past generic products; (2) marketing efforts directed to the district, including internet websites accessible from the district; and (3) registration to do business. Other factors that may be relevant in the ANDA and biosimilar context include: (a) license to distribute and manufacture drugs in the district; and (b) contracts with wholesalers and distributors within the district to market drugs9. Infringement complaints in non-ANDA cases filed after TC Heartland have already started covering in great detail factors including physical offices, websites that promote allegedly infringing product and services, and sales within the district10.
Impacting current cases, Supreme Court precedent suggests that TC Heartland should apply retroactively11. In pending cases, one of the critical questions that will apply is whether the defense of improper venue was properly preserved to avoid waiver under Rule 12. Fed. R. Civ. P. 12(h)(1) provides that a party that fails to preserve the defense by filing a Rule 12 motion to dismiss for improper venue, or a motion to transfer venue, or raising the defense in a responsive pleading, waives the right to object. Parties that have failed to adequately preserve the defense are likely to avail of Rule 15’s request for leave to amend pleadings. Finally, even if the Court determines there has been a waiver, an exception may apply based on an “intervening change” in the law. However, one district court has already refused to apply the “intervening change” exception, finding that TC Heartland was not a new rule, but rather, re-confirmed the viability of Fourco, which was always good law12.
Furthermore, because TC Heartland is limited to domestic corporations, the venue law is likely unchanged for foreign corporations13. As such, patent owners may elect to sue foreign parents in order to avail the broader reach over foreign entities for venue purposes. On the other hand, we may see an increase in the creation of U.S. subsidiaries for generic and biosimilar manufacturers with a physical office in a district of choice that would control the filing of the ANDA and aBLA applications.
ANDA and biosimilar cases involving the same product, patents, and multiple groups of defendants will likely see an upsurge in the number of protective suits filed in the different districts, depending on where individual defendants are incorporated.
Consequently, in an effort to conserve resources and avoid inconsistent results, there will likely be an increase in the use of judicial panels on Multidistrict Litigation (MDL) to consolidate pretrial proceedings to a single district under 28 U.S.C. § 1407. Historically, MDL panels have been used in ANDA cases to consolidate pretrial proceedings, representing an efficient way to litigate cases involving multiple defendants with similar issues14.
In declaratory judgement actions for invalidity or non-infringement, the general venue provision set forth in 28 U.S.C. § 1391 applies rather than 28 U.S.C. § 1400(b)15. As a consequence, the generic filer proceeding with a Declaratory Judgment action can still itself avail of the broader personal jurisdiction regime to support venue against the brand manufacturer.
Lastly, the proposed Senate Bill 2733 – Venue Equity and Non-Uniformity Elimination Act was introduced in 2016 in order to ensure fairness in patent venue cases, but it was not enacted. In a post TC Heartland regime, patent owners, brand manufacturers, RPSs, and other entities that support the broadening of §1400(b)’s reach are likely to advocate in support of reintroducing Senate Bill 2733 in the 115th Congress.
1 TC Heartland LLC v. Kraft Foods Group Brands LLC, 16-341, 2017 WL 2216934, at *5 (U.S. May 22, 2017) (quoting Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 229 (1957)).
2 VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990).
3 Acorda Therapeutics Inc. v. Mylan Pharm. Inc., 817 F.3d 755, 760, 761 (Fed. Cir. 2016), cert. denied sub nom. Mylan Pharm. v. Acorda Therapeutics, 137 S. Ct. 625 (2017).
4 See, e.g., AstraZeneca AB v. Mylan Pharm., Inc., 72 F. Supp. 549, 559 (D. Del. 2014), aff'd sub nom. Acorda Therapeutics Inc. v. Mylan Pharm. Inc., 817 F.3d 755, 559 (Fed. Cir. 2016).
5 Teva Pharm. USA, Inc. v. Sandoz Inc., CV 17-275(FLW), 2017 WL 2269979, at *7 (D.N.J. May 23, 2017).
6 French-Brown W.D., “TC Heartland’s Restraints on ANDA Litigation Jurisdiction,” Law360, March 29, 2016, at 2.
7 In re Cordis Corp., 769 F.2d 733, 737 (Fed. Cir. 1985).
8 MAGICorp. v. Kinetic Presentations, Inc., 718 F. Supp. 334, 337, 341 (D.N.J. 1989).
9 French-Brown W.D., “TC Heartland’s Restraints on ANDA Litigation Jurisdiction,” Law360, March 29, 2016, at 2-3.
10 See, e.g., Uniloc USA, Inc. et al. v. Apple Inc., Civ. A. No. 2:17-cv-00469, D.I. 1 at 1-2 (E.D.Tex. Jun. 2, 2017); Uniloc USA, Inc. et al. v. Google Inc., Civ. A. No. 2:17-cv-00465, D.I. 1 at 2-32- (E.D.Tex. Jun. 1, 2017).
11 Harper v. Virginia Dept. of Taxation., 509 U.S. 86, 97 (1993) (“When [the Supreme Court] applies a rule of federal law . . ., that rule is the controlling interpretation of federal law and must be given full retroactive effect in all cases still open on direct review and as to all events, regardless of whether such events predate or postdate our announcement of the rule.”).
12 Cobalt Boats, LLC v. Sea Ray Boats, Inc., et al., No. 2:15-cv-21, 2017 WL 2556679, at *3 (E.D. Va. June 7, 2017).
13 TC Heartland LLC v. Kraft Foods Group Brands LLC, 16-341, 2017 WL 2216934, at *7, n.2.
14 See, e.g., In re: Nebivolol (’040) Pat. Litig., 867 F. Supp. 2d 1354, 1355–56 (U.S. Jud. Pan. Mult. Lit. 2012); In re: Fenofibrate Pat. Litig., 787 F. Supp. 2d 1352, 1353 (U.S. Jud. Pan. Mult. Lit. 2011); In re Cyclobenzaprine Hydrochloride Extended-Release Capsule Pat. Litig., 693 F. Supp. 2d 409, 412, n.2 (D. Del. 2010); In re Rosuvastatin Calcium Pat. Litig., CIV. A. No. 07-805-JJF-LPS, 2008 WL 5046424, at *7 (D. Del. Nov. 24, 2008).
15 Pro Sports Inc. v. West, 639 F. Supp. 2d 475, 483 (D.N.J. 2009) (citing Horne v. Adolph Coors Co., 684 F.2d 255, 260 (3d Cir. 1982)).
By Courtenay C. Brinckerhoff, R. Jan Pirozzolo-Mellowes, and Ramy E. Hanna
The U.S. Supreme Court rendered its first interpretations of the biosimilar patent dispute resolution procedures of the Biologics Price Competition and Innovation Act (BPCIA), ruling largely in favor of Sandoz on both issues raised in Sandoz Inc. v. Amgen Inc. (No. 15-1039). The Court’s unanimous decision was authored by Justice Thomas. Justice Breyer wrote a concurring opinion that invites the U.S. Food and Drug Administration (FDA) to “depart from” or “modify” the decision if it “determines that a different interpretation would better serve the statute’s objectives.”
With regard to the first step of the patent dance, the Court held that the requirement that a biosimilar applicant share its biosimilar application with the reference product sponsor (in this case, Amgen) is not enforceable by an injunction under federal law. The Court left open the possibility that an injunction might be available under state law (here, California law), but also advised the Federal Circuit to consider on remand whether any state law remedies are preempted by federal law. With regard to the premarketing notice requirement, the Court held that the biosimilar applicant does not have to wait for FDA approval before giving 180-day premarketing notice, meaning that once a biosimilar is approved, it could be marketed as long as there are no preliminary injunctions stemming from any still-pending patent litigation.
The ruling, therefore, vacated-in-part and reversed-in-part the Federal Circuit decision, and remanded to the Federal Circuit for consideration of the state law issues.
Since 1991, Amgen has marketed filigrastim, a recombinantly produced human granulocyte colony-stimulating factor protein (C-CSF) under the brand name Neupogen®. Neupogen® is used in certain patients at risk of infection, such as those receiving chemotherapy. In May of 2014, Sandoz sought FDA approval of a biosimilar of Neupogen® (filgrasim-sndz or Zarxio®) under the BPCIA, by filing an abbreviated pathway application created by the BPCIA, such as an abbreviated Biologics Licensing Applications (aBLA) or subsection (k) application.
Similar to the Hatch-Waxman Act that governs traditional generic drugs, the BPCIA allows a biosimilar applicant to rely on the FDA’s previous approval of the reference product (e.g., the original biologic product); such that the biosimilar applicant does not need to provide clinical data demonstrating the safety and efficacy of its product. As summarized by the Supreme Court, the biosimilar applicant need only “show that its product is ‘highly similar’ to the reference product and that there are no ‘clinically meaningful differences’ between the two in terms of ‘safety, purity, and potency.’” Slip op. at 3 (quoting 42 U.S.C. §§ 262(I)(2)(A)(B)). As also recognized by the Court, a biosimilar application cannot be filed until the reference product has been approved for at least four years, and a biosimilar application cannot be approved until the reference product has been approved for at least 12 years. In this case, since Amgen’s Neupogen® product had been approved for more than 12 years before the BPCIA was enacted, those time periods were not relevant.
Sandoz notified Amgen of its biosimilar application, but did not provide a copy to Amgen and did not follow any of the other patent dispute resolution procedures of the statute. As to premarketing notice, Sandoz first notified Amgen of its intent to commercially market Zarxio® in July of 2014, before it was approved, and gave notice again when it became the first approved biosimilar product on March 6, 2015.
Amgen sued Sandoz in the United States District Court for the Northern District of California alleging, among other things, violation of California’s unfair competition laws and conversion based on Sandoz’s alleged failure to comply with the BPCIA. The district court ruled in favor of Sandoz, and found no violation of the BPCIA to support Amgen’s state law claims. The Federal Circuit affirmed the district court on the patent dance issue, but ruled that premarketing notice cannot be given until the FDA approves the biosimilar product.
Like the Hatch-Waxman Act, the BPCIA includes patent dispute resolution procedures, but the similarity ends there. The BPCIA lays out a multi-step, two-stage process that has been come to be known as the “biosimilar patent dance.” The patent dance:
Although Judge Lourie’s majority opinion for the Federal Circuit described the statute as “a riddle wrapped in a mystery inside an enigma,” Justice Thomas described it as providing “a carefully calibrated scheme for preparing to adjudicate, and then adjudicating, claims of infringement.”
The Supreme Court “agree[d] with the Federal Circuit that an injunction under federal law is not available to enforce § 262(l)(2)(A), though for slightly different reasons than those provided by the court below.” In particular, the Court disagreed with the Federal Circuit’s reading of 35 U.S.C. § 271(e)(2)(C)(ii) and the relevance of 35 U.S.C. § 271(e)(4) to the issue at hand, and determined instead that 42 U.S.C. § 262(l)(9)(C) is dispositive and sets forth the exclusive federal remedy for failing to provide a copy of the biosimilar application. The Court reasoned that “[t]he BPCIA’s carefully crafted and detailed enforcement scheme provides strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.” Slip op. at 12 (internal quotations omitted).
As noted above, however, the Court did not rule out the possibility that an injunction might be available under state law. On this point, the Court expressly declined to decide whether the application-sharing provision in 42 U.S.C. § 262(l)(2)(A) is “mandatory or conditional,” explaining that “the nature of the BPCIA’s requirements matters only for purposes of California’s unfair competition law, which penalizes ‘unlawful’ conduct.” Slip op. at 15. The Court found that the Federal Circuit “erred in attempting to answer that question by referring to the BPCIA alone.” Id. Thus, the Court directed the Federal Circuit to determine on remand “whether California law would treat noncompliance with § 262(l)(2)(A) as ‘unlawful,’” and “whether the BPCIA preempts any additional remedy available under state law for an applicant’s failure to comply with § 262(l)(2)(A).” In forcing the Federal Circuit to look further at California’s unfair competition laws, the Supreme Court left open whether Sandoz’s decision to take a path at least technically permitted by a federal statute can be a violation of state law, and, thus, give rise to remedies not available under the BPCIA.
On the premarketing notice issue, the Federal Circuit had read the reference in 42 U.S.C. § 262(l)(8)(A) to “the biological product licensed under subsection (k)” to mean that notice could not be given until the biosimilar product had been “licensed” (approved). The Supreme Court disagreed, finding that the phrase at issue “modifies ‘commercial marketing’ rather than ‘notice.’” The Court emphasized that the statute only includes one timing requirement—that the applicant give notice “at least 180 days prior to marketing its biosimilar”—while the Federal Circuit imposed “two timing requirements”—that the applicant give notice “after the FDA licenses the biosimilar and at least 180 days before the applicant markets the biosimilar.” In view of its interpretation, the Court held that a biosimilar applicant “may provide notice either before or after receiving FDA approval.”
Without going too far out on a limb, we believe it is unlikely that the Federal Circuit will find room for a state law-based injunction to enforce 42 U.S.C. § 262(l)(2)(A). Thus, we believe biosimilar applicants will continue to be able to choose how and when to address patent disputes. A biosimilar applicant who wants to resolve them early could share its application at the outset, to force the reference product sponsor to bring suit pursuant to the patent dance or face the limitations on remedies set forth in 35 U.S.C. § 271(e)(6)(B). A biosimilar applicant who wants to defer the patent issues could decide not to share its application, and perhaps challenge the patents in an inter partes review or post-grant review proceeding at the Patent Office, where it could take advantage of the lower burden of proof for invalidity. While a reference product sponsor could bring suit under 42 U.S.C. § 262(l)(9)(C) without having been given a copy of the biosimilar application, originators may prefer to postpone litigation until the biosimilar product is closer to approval, when the possible infringement issues will be more certain and when pending litigation could keep the biosimilar product off the market after approval.
As noted above, the Court’s decision on the premarketing notice issue will mean that biosimilar products could be marketed as soon as they are approved, as long as there are no preliminary injunctions stemming from any still-pending patent litigation. This possibility might encourage biosimilar applicants to participate in the patent dance, to increase the likelihood that all patent disputes will be resolved by the time the product is approved.
By R. Jan Pirozzolo-Mellowes and Courtenay Brinkerhoff
In Sandoz Inc. v. Amgen Inc., the Supreme Court held that 42 USC § 262(l)(9)(C) sets forth the exclusive federal remedy for failing to provide a copy of the biosimilar application to the reference product sponsor. Still, the Court directed the Federal Circuit to revisit Amgen’s state law claims to determine whether such conduct is “unlawful” under California’s unfair competition laws and/or whether the Biologics Price Competition and Innovation Act (BPCIA) preempts any remedies available under state law. Here, we consider how the Federal Circuit may address these issues.
Amgen’s state law claims were brought under California’s Unfair Competition Law (UCL), Cal. Bus. & Prof. Code § 17200 et seq. As damages, Amgen asserted, among other economic injuries, “lost money that was spent to monitor and respond to Defendants’ acts of unfair competition” and “lost profits and increased costs if Defendants are permitted to commercially market the Sandoz biosimilar product without satisfying their obligations under 42 USC § 262(l).”
When the Federal Circuit first addressed Amgen’s state law claims, it noted that UCL law remedies based on a violation of another law “are not available when the underlying law expressly provides that the remedies in that law are exclusive.” The court determined that “because “35 USC § 271(e)(4) provides ‘the only remedies which may be granted by a court’ for the alleged violation” of § 262(l)(2)(A), the district court had correctly dismissed Amgen’s unfair competition claim based on that provision of the BPCIA.
The Supreme Court, however, rejected the Federal Circuit’s reasoning based on 35 USC § 271(e)(4). In particular, the Supreme Court found that 35 USC § 271(e)(4) does not provide a remedy for violating § 262(l)(2)(A). Rather, the Supreme Court explained, “§ 271(e)(4) provides remedies only for artificial infringement,” i.e., for filing an abbreviated Biologics Licensing Applications (aBLA). “[I]t provides no remedy at all, much less an ‘expressly … exclusive’ one, for Sandoz’s failure to comply with §262(l)(2)(A),” which the Supreme Court emphasized is not itself an artificial act of infringement.
The Supreme Court also explained that whether Sandoz’s conduct is a violation of California’s UCL “is a state-law question,” and found that “the court below erred in attempting to answer that question by referring to the BPCIA alone.”
With regard to preemption, in its first decision, the Federal Circuit specifically declined to address the issue, stating, “Sandoz did not argue preemption as a defense to Amgen’s state law claims, and thus the district court did not consider that issue. We therefore do not address preemption in this appeal.” That said, the Federal Circuit did conclude that (a) Amgen’s unfair competition claim was based solely on the notion that Sandoz acted unlawfully by violating the BPCIA, and (b) Sandoz took “a path expressly contemplated by” the BPCIA and, therefore, did not violate the BPCIA.
While the Supreme Court held that § 262(l)(2)(A) is not enforceable by a federal injunction, it did not decide whether § 262(l)(2)(A) is “mandatory”–such that failure to comply might be “unlawful”–or “conditional”–that is, simply “a condition precedent to the information exchange process” of the patent dance. The Supreme Court reasoned that because this question “matters only for purposes of California’s unfair competition law,” it need not decide the issue.
Although the Supreme Court directed the Federal Circuit to address this issue on remand, there is little reason to believe the Federal Circuit will move away from its prior findings. For example, in its first decision, the Federal Circuit rejected Amgen’s contention that the disclosure requirements of § 262(l)(2)(A) are mandatory, rather than merely permissible. Instead, the Federal Circuit was persuaded by Sandoz’s contention that the disclosure requirements are “only a condition precedent to engaging in the information-exchange process of paragraphs (l)(3) through (l)(6)” of the BPCIA. Significantly, in looking at the statute as a whole, the Federal Circuit found that “mandating compliance with paragraph (l)(2)(A) in all circumstances would render paragraph (l)(9)(C) and 35 U.S.C. § 271(e)(2)(C)(ii) superfluous, and statutes are to be interpreted if possible to avoid rendering any provision superfluous.” Thus, the Federal Circuit seems to have already decided that § 262(l)(2)(A) is “conditional.”
If the Federal Circuit decided that the disclosure requirements of § 262(l)(2)(A) are not mandatory, the preemption issue would be moot. However, and interestingly, the Supreme Court invited the Federal Circuit to address the question of preemption in any event.
The Supreme Court has explained, “Congress’ power to preempt state law is derived from the Supremacy Clause of Art. VI of the Federal Constitution.” Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 208 (1985) (citing Gibbons v. Ogden, 9 Wheat. 1 (1824)). “Preemption of state law can be express or implied.” Roberts v. United Healthcare Servs., Inc., 206 Cal. Rptr. 3d 158, 164 (Cal. App. 2d Dist. 2016). In the absence of an express preemption clause, the question turns to whether preemption is implied. Preemption “is implied when courts infer a congressional intent to displace state law under one of three doctrines of ‘implied preemption’—namely, ‘field, conflict, or obstacle preemption.’” Id. When the federal regulation is comprehensive and leaves no room for state regulation, the doctrine of field preemption applies. Id. Conflict preemption exists where it is impossible to comply with state and federal law at the same time. Id. Obstacle preemption exists when state law serves to obstruct and interfere with Congress’ objectives in implementing the federal statute. Id.
Ultimately, “[t]he question whether a certain state action is preempted by federal law is one of congressional intent.” Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 137-38 (1990). Indeed, “‘[t]he purpose of Congress is the ultimate touchstone.’” Allis-Chalmers, 471 U.S. at 208 (quoting Malone v. White Motor Corp., 435 U.S. 497, 504 (1978) quoting Retail Clerks v. Schermerhorn, 375 U.S. 96, 103 (1963)). In conducting this inquiry, the Supreme Court has explained that to discern Congress’ intent it is necessary to look at the express language, purpose and structure of the statute. See Ingersoll-Rand, 498 U.S. at 138 (explaining how to discern Congressional intent).
When addressing this issue on remand, the Federal Circuit will have to be mindful of the Supreme Court’s finding that 35 U.S.C. § 271(e)(4) does not constitute an express preemption. Nevertheless, the Federal Circuit may determine that the BPCIA is so comprehensive that it leaves no room for state regulation, such that the doctrine of field preemption applies. On this point, the Federal Circuit also may consider Sandoz’s argument that Congress did not intend “a patchwork enforcement scheme” that might vary across the country where state law claims could be brought outside of the provisions of the BPCIA. Or, the court may determine that because failing to comply with § 262(l)(2)(A) is “expressly contemplated by” § 262(l)(9)(C) (as it found previously), then providing a remedy under state law would interfere with Congressional intent, such that obstacle preemption applies.
On the other hand, it may revisit Amgen’s argument that since the BPCIA does not expressly state that the remedies for failure to comply with § 262(l)(2)(A) are limited to those identified in § 262(l)(9), state law remedies are not preempted. On this point, Amgen argued that Congress knew how to specify when it intended the BPCIA to be exclusive–and did so in some circumstances–but did not do so with reference to § 262(l)(2)(A)/§262(l)(9).
The Supreme Court gave the Federal Circuit options as to how and whether to address these issues on remand. On the one hand, the Court said that “the Federal Circuit should determine whether California law would treat noncompliance with § 262(l)(2)(A) as ‘unlawful,” and then, “[i]f the answer is yes, .. proceed to determine whether the BPCIA preempts any additional remedy available under state law.” On the other hand, the Court said that the Federal Circuit is “free to address the preemption question first by assuming that a remedy under state law exists.” The Federal Circuit may prefer to decide the federal preemption issue in the first instance, to avoid interpreting state law when it is not necessary to do so.
By R. Jan Pirozzolo-Mellowes and Liane Peterson
In Mylan Institutional LLC, et al. v. Aurobindo Pharma Ltd., et al., Case No. 2017-1645, the Federal Circuit affirmed the district court’s grant of a preliminary injunction as to one of three patents-in-suit, while finding that there was error in granting the injunction with respect to the other two patents.
The patents-in-suit related to ISB, a dye used to map lymph nodes, with two of the patents (the ’992 and ’616 patents) directed to the process for preparing ISB, and one of the patents (the ’050 patent) directed to an ISB compound, “having a purity of at least 99.0% by [high performance liquid chromatography].” The patents-in-suit are owned by Apicore and exclusively licensed to Mylan.
Some years after Lymphazurin® (1% injectable solution of ISB) entered the market, Apicore developed an improved process for synthesizing ISB, and in 2004 partnered with Mylan’s predecessor (Synerx Pharma LLC) to develop and market a generic form of Lymphazurin®. In 2007, Apicore filed a patent application that led to the patents-in-suit. Relying on the new process for synthesizing ISB, Synerx (later acquired by Mylan) sought FDA approval—which was approved in 2010—to market a generic form of Lymphazurin®. Mylan was the only supplier of the 1% ISB product until Aurobindo entered the market in 2016.
Aurobindo sought FDA approval to market a generic form of Lymphazurin® and Mylan proceeded to sue Aurobindo and seek a preliminary injunction. In conducting the preliminary injunction analysis, the district court addressed the likelihood of success on the merits and concluded that Aurobindo likely infringed the ’992 and ’616 patents under the doctrine of equivalents. Meanwhile, the district court found that Aurobindo did not raise a substantial question as to the validity of the ’050 patent while giving credit to Mylan’s evidence of secondary considerations of non-obviousness. The district court went on to find that Apicore would be irreparably harmed in the absence of the injunction, that there was a causal nexus between the harm and the infringement, and that the balance of equities and public interest favored granting the preliminary injunction. The district court reasoned that the loss to Apicore of its business would impact its ability to fund ongoing research and development, and that the public interest in lower priced pharmaceuticals did not justify eliminating the exclusionary rights of patent owners.
In reviewing the district court’s decision, however, the Federal Circuit found “that the district court’s analysis of equivalence . . . was flawed, no doubt because of the sparse and confusing case law concerning equivalents, particularly the paucity of chemical equivalence case law, and the difficulty of applying the legal concepts to the facts.” As the Federal Circuit stated, this case is unusual given that it addresses the grant of a preliminary injunction based on the doctrine of equivalents, and further in view of the fact that the Federal Circuit considered the application of the doctrine of equivalents “not clear” as applied in the chemical arts.
The Federal Circuit discussed the two frameworks used to assess doctrine of equivalents: (1) the function, way, result test (FWR test) and (2) the insubstantial differences test. Noting that the FWR test is often not suited for non-mechanical cases, the Federal Circuit emphasized that the Supreme Court has “blessed the two equivalents tests,” and leaves to the lower courts the decision of which test to apply.
The Federal Circuit explained that in this particular case the district court erred in applying the FWR test, noting that the use of the FWR test is questionable with chemical compositions because often it is not possible to clearly evaluate the function of a chemical composition or the way it functions in the human body. Here, because the district court did not appropriately consider the way the oxidation worked, the FWR analysis was incomplete. What is particularly interesting in this case is the Federal Circuit’s statement that “the FWR test may be less appropriate for evaluating equivalence in chemical compounds if it cannot capture substantial differences between a claimed and accused compound.” The Federal Circuit provided further guidance, indicating that the insubstantial differences test might have been more appropriate to apply in this area. This is instructive and serves as a reminder to keep both tests in mind when addressing the application of the doctrine of equivalents to chemical compositions.
Given the defect in the application of the FWR test, the Federal Circuit concluded that the district court’s grant of a preliminary injunction based on the process patents was improper. However, because Aurobindo did not appeal the court’s finding that it more likely than not infringes the ’050 patent and because Aurobindo did not raise a substantial question as to the validity of the ’050 patent, the Federal Circuit affirmed the grant of the preliminary injunction premised on the ’050 patent alone.
By Ramy Hanna, Linae M. Peterson, and R. Jan Pirozzolo-Mellowes
Patent challengers have heavily relied on inter partes review (IPR) ever since its inception under the America Invents Act (AIA). However, while IPRs have been popular in certain technology areas since the beginning, interest in IPRs took longer to develop in the life sciences industry. The recent increased interest in IPRs in the life sciences industry raises some important questions. For example, are petitioners having an easier time prevailing at the PTAB than in District Court? In this article, we review data from Lex Machina to assess whether patent challengers have an easier time prevailing on the merits at the PTAB or in District Court when challenging pharma or biotech patents.
According to Lex Machina, between September 9, 2012 and June 21, 2017 235 cases with an ANDA tag reached resolution on the merits. Of those 235 cases the claimant (typically the patentee) prevailed 79.6% of the time and the defendant prevailed 20.4% of the time.
If all ANDA cases are considered, including cases that were settled, consolidated, otherwise disposed of, or are pending (1,716 cases); the claimant prevailed on the merits 11% of the time while the defendant prevailed on the merits 3% of the time.
By contrast, between September 16, 2012 and June 20, 2017 there have been 307 PTAB trials in the biotechnology and organic chemistry technology center. Of the cases that were resolved on the merits, the patent owner prevailed in upholding all claims or the PTAB denied institution in 72.4% of the cases that were decided. The petitioner, on the other hand, prevailed (i.e., where all claims were amended or found unpatentable) in 26.8% of such cases.1
Similarly, if procedural victories and patent disclaimers are included, the patent holder prevailed in 73.6% of the cases, while the petitioner prevailed in 25.7% of the cases.
Finally, if all filed PTAB trials are considered in the relevant time period (i.e., including settlements and/or cases where no trial resolution has been reached), then the patent holder prevailed in 29% of the cases on the merits (PTAB decision or denial of institution) or 35.2% if procedural victories are included. On the other hand, under the same assumptions, the petitioner prevailed in 10.7% of the cases on the merits or in 12.3% of the cases if patent owner disclaimers are included.
These numbers suggest that the patent challenger (i.e., the petitioner at the PTAB or defendant in district court litigation) seems to have slightly improved chances in the PTAB. However, this article does not address whether such difference is statistically significant. Likewise, these win rates do not take in to account Federal Circuit review of the decisions and the percentage of cases that are upheld or reversed. Moreover, other issues to consider include whether win rates are higher or lower for IPRs filed in connection with a co-pending litigation as compared to stand-alone IPRs, as well comparing win rates in the biotechnology and pharmaceutical sectors.
1There was one case that had a mixed finding and as such that case was not counted as a victory for either the patent holder or the petitioner.
By Stephen Maebius and Wenhua Yu
We reviewed a sub-group of two hundred and four (204) IPRs filed by generic drug companies against pharmaceutical patents to assess PTAB outcomes and key trends in dealing with this technology field. The survey captured IPR filings by fourteen (14) of the most active generic petitioners among the world’s top-20 generic drug companies. This study updates and expands findings from our earlier survey of this subgroup (see the June 2016 post here on PTAB Trial Insights). Detailed findings are presented in Fig. 1 below, as well our key findings in the following sections. One surprising trend revealed by this survey is a high institution rate (75%) against pharmaceutical patents, well above the average for all technologies.
Examining this group of IPRs, we found a surprisingly high institution rate of seventy five percent (75%), which is eight percent (8%) higher than the statistics from our prior survey and is at the high end of institution rates across all technologies. Notably, generic companies are achieving a significantly higher institution rate than the sixty three percent (63%) institution rate for the combined “biotechnology/pharma” category published by the USPTO in November 2016.
The current data pool has forty one (41) cases that have reached the final written decision (FWD) stage (see Fig. 2 below), allowing us to produce more reliable statistics on the invalidation rate. Particularly, the PTAB finds all claims patentable in thrifty nine percent (39%) of the cases, and all claims unpatentable in fifty nine percent (59%) of the cases. In a minority two percent (2%) of the cases, some claims are found patentable, while others unpatentable. The sixty one percent (61%) invalidation rate (combined all and some claims unpatentable) is significantly lower than the average eighty percent (80%) invalidation rate for other technologies. Therefore, while it may be easier for generic companies to have their IPRs instituted, the overall likelihood for them to walk away from the trial with at least one claim invalidated is actually lower. However, it is important to consider the following additional finding that there is also a high rate of settlement, which may skew the adverse final decision number lower.
The settlement rate remains high at about twenty two percent (22%) (combined pre- and post-institution settlements out of total outcomes) since our prior survey, with pre-institution settlements counting for fourteen percent (14%) of all outcomes (see Fig. 2 below). When multiple related patents are under attack by the same petitioner, which may be more common for pharmaceutical IPRs, patent owners tend to defend or settle them en masse. Particularly, twenty eight (28) out of the forty four (44) total settlements in the current data pool are between parties litigating multiple related patents before the PTAB. This kind of “batch” settlement may account for the higher settlement rate in our survey.
Out of the 204 pharma IPRs we surveyed, 73% (150) involved a parallel litigation where the IPR petitioner was a defendant in the litigation. In some cases, there were multiple parallel litigations involving the patent that was the subject of the IPR where the defendants chose not to file IPRs or join existing IPRs of the patent.
Out of the 150 pharma IPRs with parallel litigation, 26% (39) used a combination of a new firm as IPR counsel together with the litigation counsel who represented the patent owner, 17% (25) used a different firm as IPR counsel and litigation counsel was not listed of record in the IPR, and 57% (86) used the same firm for IPR counsel and the parallel litigation.
On the petitioner's side, out of the 150 pharma IPRs with parallel litigation, 35% (52) used a combination of a new firm as IPR counsel together with the litigation counsel, 29% (43) used a different firm as IPR counsel and litigation counsel was not listed of record in the IPR, and 37% (55) used the same firm for IPR counsel and the parallel litigation.
Thus, in the case of patent owners, 43% chose to involve an additional firm in the IPR. In the case of petitioners, 64% chose to involve an additional firm in the IPR.
A variety of factors may be behind the decisions to involve a specialist firm for the IPRs in addition to or instead of litigation counsel. The firm handling the litigation may not have sufficient IPR expertise. There may be a protective order that contains a prosecution bar, which may require a wall between the attorneys handling the IPR and the litigation (such walls can be implemented within a single firm in cases where an experienced IPR counsel is available in the same firm if they are not involved in the litigation). In all cases where an additional firm is involved, it is critical to coordinate strategy and keep arguments consistent.
The following figure shows the number of IPR petitions filed by the most active generic drug company petitioners to date:
The following figure shows the outcomes of IPR petitions filed by the most active generic drug company petitioners to date:
Foley & Lardner has extensive experience in the area of Life Sciences, including cross-disciplinary capabilities and industry experiences in fields such as Hatch-Waxman and other IP litigation, biologics, FDA regulatory matters, trials before the Patent Trial and Appeal Board, counseling and opinions, product pricing litigation, antitrust, technology transfer, marketing and promotion compliance, and reimbursement. Foley has over 60 attorneys in its Life Sciences and Industry Team who provide support to clients in these areas.
In particular, Foley’s Hatch-Waxman litigation team has handled over 15 cases in the past few years, including three trials in 2016 and 2017 in Delaware and New Jersey. Liane Peterson, Steven Rizzi, Jan Pirozzolo-Mellowes, Ramy Hanna, and Jayita Guhaniyogi are at the core of Foley’s practice and collectively provide a depth of litigation experience and life sciences backgrounds, including in the areas of biology, chemistry, biochemistry, molecular biology, and biomedical engineering. The team has handled cases involving solid oral dosage forms, injectables, transdermal products, including in areas of oncology, women’s health, hormonal products, and numerous other clinical areas.
Foley also has significant experience handling Patent Office Trials, including over 140 Inter Partes Review (IPR), Covered Business Method (CBM), Post Grant Review (PGR) proceedings, and derivation cases and hundreds of reexamination and interference cases across technologies. Among over 20 members, Steve Maebius, has significant experience handling Patent Office proceedings involving pharmaceutical patents, including IPRs, reexamination proceedings, and prosecution. Michael Houston, who holds a Ph.D. in Chemical Engineering, also focuses his practice on Patent Office proceedings and has handled matters involving various technical fields, including pharmaceuticals, biotechnology, chemicals and polymer processing.
Additionally Foley has extensive experience in the areas of patent prosecution and counseling. Among them, Courtenay Brinckerhoff has over 20 years of experience representing clients before the U.S. Patent Office, the Patent Trial and Appeal Board, and the U.S. Court of Appeals for the Federal Circuit. Ms. Brinkerhoff is the founder, editor, and primary author of Foley’s PharmaPatents blog and is well versed in all aspects of obtaining, defending, licensing, and enforcing patents in the life sciences area. Kristel Schorr also counsels clients with significant experience in the life sciences, pharmaceutical and biotechnology industry.
David Rosen and Nate Beaver both have extensive experience in handling regulatory matters, including a range of Food and Drug Administration (FDA) regulatory issues affecting prescription and over-the-counter pharmaceuticals. Mr. Rosen was employed by the FDA for 14 years where he gained significant experience involving virtually all aspects related to the drug approval process, combination products, jurisdictional issues and related compliance activities. Mr. Beaver focuses his practice on representing clients whose products and activities are regulated by the FDA, Drug Enforcement Administration, and the Federal Trade Commission. He has significant experience in FDA and Hatch-Waxman cases involving drug approvals, withdrawals, and other types of litigation involving FDA regulated products.
For more information about Foley & Lardner’s ANDA & Biosimilars practice, please feel free to contact any of the above-referenced individuals. Please also see Foley & Lardner’s additional online resources, including PharmaPatents, IP Litigation Current, and PTAB Trial Insights.