IP News

Federal Circuit Rules That Filing an ANDA Is Not Willful Infringement

In Glaxo Group, Ltd. v. Apotex, Inc., No. 03-1575, 2004 U.S. App. LEXIS 15489 (Fed Cir. 2004), the Federal Circuit held that the act of merely filing an Abbreviated New Drug Application (ANDA) could not constitute willful infringement and reversed the attorneys' fees that were awarded by the district court.

Apotex, a generic drug manufacturer, filed an ANDA to receive approval to manufacture the generic version of the drug Ceftin', a patented antibiotic produced by Glaxo. However, Apotex did not begin manufacture of the drug or offer certification that the patent protecting Ceftin' was invalid or non-infringed, as is common in the ANDA application process. The Federal Circuit cited 35 U.S.C '271(e)(2), calling the act of filing an ANDA a “highly artificial act of infringement.” Further, the court noted that the only remedies to a patentee against an ANDA filer were moving the effective date of ANDA approval to a date after the patent expired, obtaining an injunction against the manufacture and use of the drug, and monetary damages only in the event the infringer manufactured or used the drug in the United States. The court stressed that without manufacture of the drug, the only monetary damages it would award were attorneys' fees.

With respect to attorneys' fees, the Federal Circuit, held that they were only to be awarded in “exceptional cases,” for instance where there was litigation misconduct or no basis for filing an invalidity certification as was the case in Yamanouchi Pharmaceutical Co. v. Danbury Pharmacal, Inc., 231 F.3d 1339 (Fed. Cir. 2001). In that case, the Federal Circuit awarded attorneys' fees not because filing an ANDA constituted willful infringement, but because the defendant in that case made baseless accusations of invalidity. Distinguishing the instant case, the court ruled that Apotex did not engage in any litigation misconduct, and as such, the mere filing of an ANDA application could not constitute willful infringement on it own.

NIH Rejects Compulsory License for AIDS Drugs

The National Institutes of Health (NIH) refused to exercise march-in rights under the Bayh-Dole Act, 35 U.S.C ”200-212 for the AIDS drug, Norvir', manufactured by Abbott Laboratories. The Bayh-Dole Act allows the NIH in certain circumstances to license or require a license to a patent obtained with federal funds. These circumstances include when the practical application of the patent subject matter has not been achieved in a reasonable time or if the NIH must intervene to alleviate health and safety concerns. Several members of Congress and a consumer advocacy group, Essential Inventions, argued that since Abbott raised the price of the drug from $1.71 a day to $8.57, that the subject of the patents obtained for the drug was not being practically applied, and, in the alternative, health and safety issues required the NIH to intervene.

The NIH ruled that Abbott had met the standard for achieving practical application since Norvir' had been widely available to patients for at least 8 years. The NIH also ruled that since the Federal Drug Administration approved the drug and there was no evidence that exercising march-in rights could alleviate any health and safety needs not already addressed by Abbott, Abbott met the statutory standards for health and safety. The NIH stated that the price of the drug did factor into the statutory standards for the Bayh-Dole Act, but would be best addressed by Congress because of the global implications of drug pricing.

Fraud on the PTO Leads to Loss of Antitrust Immunity

In Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc., No. 03-1472, 1473, 2004 U.S. LEXIS 14275 (Fed. Cir. 2004), the Federal Circuit held that by patenting a process that it knew to be in use, the patentee defrauded the PTO and lost immunity from antitrust prosecution. The court also held that it could properly determine an antitrust claim in the context of a declaratory judgment action. The case initiated as a result of a cease and desist letter, and Unitherm filed a declaratory judgment action arguing, among other things, the patents' validity, enforceability, and violations of antitrust law. The patents at issue dealt with a process for browning precooked meat, as in sausages. The district court granted and the Federal Circuit affirmed summary judgment for Unitherm with regard to invalidity and unenforceability due to the prior use and sale of the product under 36 U.S.C '102(b).

To prevail in removing the patentee's immunity from antitrust prosecution, the court stated that Unitherm had to establish several elements including that the patent was issued due to fraud, citing Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172 (1965). Using its own law, the Federal Circuit articulated the essential issue as “what behavior by the patentee in procuring or in enforcing a patent can strip the patentee of antitrust immunity.” The court justified using its own law because the outcome of such a determination would affect the protection of a patent, and, as such, was unique to patent law and under Federal Circuit jurisdiction.

First, the Federal Circuit had to determine whether a Walker Process claim could be brought under a declaratory judgment action, since, strictly speaking, the antitrust claims are based on enforcement of a patent procured by fraud. The Federal Circuit held the standards for jurisdiction of a declaratory judgment action were sufficient to determine the minimum level of enforcement needed to proceed with a Walker Process claim.

Next, the court determined whether fraud had been committed on the USPTO in obtaining the patent using the elements of common law fraud. Utilizing evidence from the validity portion of the case, the court held that the patentee had committed fraud on the USPTO by misrepresenting the inventor of the process, misrepresenting when the process had been used and sold, and filing and obtaining the patent based on these misrepresentations. As such, as a matter of Federal Circuit antitrust law, the court held that the patentee was stripped of its antitrust immunity and open to liability for antitrust violations under regional circuit law. However, applying 10th Circuit law, the court held that Unitherm failed to provide persuasive evidence on all the elements required and vacated the jury's finding of antitrust liability.

Federal Circuit Rules That Filing an ANDA Is Not Willful Infringement

In Glaxo Group, Ltd. v. Apotex, Inc., No. 03-1575, 2004 U.S. App. LEXIS 15489 (Fed Cir. 2004), the Federal Circuit held that the act of merely filing an Abbreviated New Drug Application (ANDA) could not constitute willful infringement and reversed the attorneys' fees that were awarded by the district court.

Apotex, a generic drug manufacturer, filed an ANDA to receive approval to manufacture the generic version of the drug Ceftin', a patented antibiotic produced by Glaxo. However, Apotex did not begin manufacture of the drug or offer certification that the patent protecting Ceftin' was invalid or non-infringed, as is common in the ANDA application process. The Federal Circuit cited 35 U.S.C '271(e)(2), calling the act of filing an ANDA a “highly artificial act of infringement.” Further, the court noted that the only remedies to a patentee against an ANDA filer were moving the effective date of ANDA approval to a date after the patent expired, obtaining an injunction against the manufacture and use of the drug, and monetary damages only in the event the infringer manufactured or used the drug in the United States. The court stressed that without manufacture of the drug, the only monetary damages it would award were attorneys' fees.

With respect to attorneys' fees, the Federal Circuit, held that they were only to be awarded in “exceptional cases,” for instance where there was litigation misconduct or no basis for filing an invalidity certification as was the case in Yamanouchi Pharmaceutical Co. v. Danbury Pharmacal, Inc., 231 F.3d 1339 (Fed. Cir. 2001). In that case, the Federal Circuit awarded attorneys' fees not because filing an ANDA constituted willful infringement, but because the defendant in that case made baseless accusations of invalidity. Distinguishing the instant case, the court ruled that Apotex did not engage in any litigation misconduct, and as such, the mere filing of an ANDA application could not constitute willful infringement on it own.

NIH Rejects Compulsory License for AIDS Drugs

The National Institutes of Health (NIH) refused to exercise march-in rights under the Bayh-Dole Act, 35 U.S.C ”200-212 for the AIDS drug, Norvir', manufactured by Abbott Laboratories. The Bayh-Dole Act allows the NIH in certain circumstances to license or require a license to a patent obtained with federal funds. These circumstances include when the practical application of the patent subject matter has not been achieved in a reasonable time or if the NIH must intervene to alleviate health and safety concerns. Several members of Congress and a consumer advocacy group, Essential Inventions, argued that since Abbott raised the price of the drug from $1.71 a day to $8.57, that the subject of the patents obtained for the drug was not being practically applied, and, in the alternative, health and safety issues required the NIH to intervene.

The NIH ruled that Abbott had met the standard for achieving practical application since Norvir' had been widely available to patients for at least 8 years. The NIH also ruled that since the Federal Drug Administration approved the drug and there was no evidence that exercising march-in rights could alleviate any health and safety needs not already addressed by Abbott, Abbott met the statutory standards for health and safety. The NIH stated that the price of the drug did factor into the statutory standards for the Bayh-Dole Act, but would be best addressed by Congress because of the global implications of drug pricing.

Fraud on the PTO Leads to Loss of Antitrust Immunity

In Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc., No. 03-1472, 1473, 2004 U.S. LEXIS 14275 (Fed. Cir. 2004), the Federal Circuit held that by patenting a process that it knew to be in use, the patentee defrauded the PTO and lost immunity from antitrust prosecution. The court also held that it could properly determine an antitrust claim in the context of a declaratory judgment action. The case initiated as a result of a cease and desist letter, and Unitherm filed a declaratory judgment action arguing, among other things, the patents' validity, enforceability, and violations of antitrust law. The patents at issue dealt with a process for browning precooked meat, as in sausages. The district court granted and the Federal Circuit affirmed summary judgment for Unitherm with regard to invalidity and unenforceability due to the prior use and sale of the product under 36 U.S.C '102(b).

To prevail in removing the patentee's immunity from antitrust prosecution, the court stated that Unitherm had to establish several elements including that the patent was issued due to fraud, citing Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172 (1965). Using its own law, the Federal Circuit articulated the essential issue as “what behavior by the patentee in procuring or in enforcing a patent can strip the patentee of antitrust immunity.” The court justified using its own law because the outcome of such a determination would affect the protection of a patent, and, as such, was unique to patent law and under Federal Circuit jurisdiction.

First, the Federal Circuit had to determine whether a Walker Process claim could be brought under a declaratory judgment action, since, strictly speaking, the antitrust claims are based on enforcement of a patent procured by fraud. The Federal Circuit held the standards for jurisdiction of a declaratory judgment action were sufficient to determine the minimum level of enforcement needed to proceed with a Walker Process claim.

Next, the court determined whether fraud had been committed on the USPTO in obtaining the patent using the elements of common law fraud. Utilizing evidence from the validity portion of the case, the court held that the patentee had committed fraud on the USPTO by misrepresenting the inventor of the process, misrepresenting when the process had been used and sold, and filing and obtaining the patent based on these misrepresentations. As such, as a matter of Federal Circuit antitrust law, the court held that the patentee was stripped of its antitrust immunity and open to liability for antitrust violations under regional circuit law. However, applying 10th Circuit law, the court held that Unitherm failed to provide persuasive evidence on all the elements required and vacated the jury's finding of antitrust liability.