IP News

Federal Circuit Grants Petition for Interlocutory Appeal

On Feb. 6, 2009, the Federal Circuit granted Sandoz, Inc.'s petition for an interlocutory appeal in the case of Shire LLC v. Sandoz, Inc., Misc. Docket No. 893. Sandoz petitioned the court to hear the issue of whether a patentee who settles an earlier infringement case after a Markman ruling has issued is precluded under the doctrine of collateral estoppel from relitigating claim-construction issues determined in the prior case. In its summary judgment order, the district court acknowledged two previous holdings from different district courts addressing the patents-in-suit, taking opposite positions regarding issues affecting the claim construction in this case. No. 07-cv-00197 (D. Col.). The Colorado district court refused to give preclusive effect to the first court's claim construction, but granted Sandoz's motion to certify on the ground that the issue could be dispositive as to the infringement of at least one of the patents in the case.

Construction of 35 U.S.C. '271(f)

On March 6, 2009, the Federal Circuit granted St. Jude Medical, Inc.'s petition for rehearing en banc in Cardiac Pacemakers, Inc. v. St. Jude Medical, Inc., 2008 U.S. App. LEXIS 25475 (Fed. Cir. Dec. 18, 2008). The 2008 Federal Circuit panel decision had rejected St. Jude's argument that 35 U.S.C. '271(f) did not apply to method claims. Specifically, the court had stated:

St. Jude urges us to hold that the Supreme Court's decision in Microsoft Corp v. AT&T Corp., 550 U.S. 437 (2007) overturns this court's prior precedents that have held that '271(f) applies to method claims. We do not agree. As St. Jude admits, the Supreme Court 'left open the question of whether Section 271(f) applies to method claims.' St. Jude would have us extend the reasoning behind the Supreme Court's decision in AT&T to overturn this court's decision in Union Carbide Chems. & Plastic Tech. Corp. v. Shell Oil Co., 425 F.3d 1366 (Fed. Cir. 2005) ' As a panel, we cannot reverse the holding of another panel of this court.

The court granted St. Jude's petition for hearing en banc, vacated the Dec. 18, 2008 opinion, reinstated the appeal, and requested the parties file new briefs addressing the question: “Does 35 U.S.C. '271(f) apply to method claims, as well as product claims?”

District Court Did Not Abuse Discretion in Extending 30-Month Stay

In Eli Lilly & Co. v. Teva Pharms. USA, Inc., No. 2009-1071, the Federal Circuit held that the district court did not abuse its discretion in extending the statutory 30-month stay of 21 U.S.C. '355(j)(5)(B)(iii), preventing the FDA from finally approving Teva's Abbreviated New Drug Application (“ANDA”).

Lilly holds the New Drug Application (“NDA”) for raloxifene hydrochloride (“raloxifene”) tablets, which it markets under the name Evista'. Lilly lists 12 patents that claim Evista in the FDA's Orange Book. Teva filed a paragraph IV ANDA and notified Lilly of its contentions on May 16, 2006. Lilly then brought suit alleging that Teva's ANDA infringed four method patents of its 12 listed Orange Book patents for using raloxifene to prevent or treat postmenopausal osteoporosis. On Sept. 25, 2006, the district court entered a scheduling order setting the close of discovery for Aug. 18, 2008 and trial for March 9, 2009 ' four months after expiration of the 30-month statutory stay. In February 2007, Lilly amended its complaint to assert infringement of three additional patents, which covered raloxifene particle size and formulation.

On July 8, 2008, Teva amended its ANDA to include a new particle-size measuring methodology. It disclosed this amendment to Lilly on July 10, 2008 and provided it three batch samples between July 28 and Sept. 17, 2008 (one month after the close of fact discovery). By Sept. 5, 2008, Teva also provided Lilly with 27,000 pages of related documentation.

On Sept. 17, 2008, Lilly moved the district court under 21 U.S.C. '255(j)(5)(B)(iii) to extend the statutory 30-month stay due to Teva's alleged discovery violations, prejudicing Lilly's trial preparation. The court granted Lilly's motion, and Teva immediately appealed.

The Federal Circuit affirmed the extension of the statutory 30-month stay, finding that the district court did not abuse its discretion because there was sufficient evidence in the record that Teva had failed to reasonably cooperate in expediting the action. Specifically, the Federal Circuit found that there was evidence Teva had altered its proposed generic raloxifene hydrochloride tablets late in the litigation and had delivered samples after the close of discovery. Teva argued that the court's opinion in Andrx Pharms., Inc. v. Biovail Corp., 276 F.3d 1368 (Fed. Cir. 2002) showed that the district court erred in extending the 30-month stay. In that case, during the litigation, NDA holder Biovail acquired an exclusive license to a second patent that allegedly claimed the subject matter of its NDA. Biovail changed its manufacturing process to fall within the claims of the second patent, which it submitted to the FDA for listing in the Orange Book. Andrx immediately filed a paragraph IV certification, and Biovail brought suit on the second patent, triggering a second 30-month stay. Pursuant to Andrx's motion, the district court found that Biovail had intentionally impeded and delayed the expeditious resolution of the patent actions between it and Andrx and shorted the second statutory 30-month stay. The Federal Circuit in that case found the district court's ruling to have been an abuse of discretion, because it based its decision on Biovail's positions before the FDA.

The Federal Circuit distinguished Andrx on the grounds that in the instant case, the district court extended the statutory 30-month stay based on its findings that Teva had not cooperated in expediting the patent litigation in its court. As opposed to the situation in Andrx, the court reasoned that the district court's findings were not based on the parties' FDA filings.

Judge Sharon Prost dissented, arguing first that the matter was one of statutory construction and should be reviewed de novo. Judge Prost reasoned that even under an abuse of discretion standard, the district court's decision should not stand because it never made any factual conclusions that Teva “failed to reasonably cooperate in expediting the action.” Judge Prost reasoned that instead, the district court determined that a stay was justified: 1) to provide Lilly a sufficient opportunity to identify the nature and composition of the raloxifene product as Teva intends for it to be sold, and 2) to give Lilly a reasonable amount of time to allow its expert to test and report on the altered raloxifene samples provided by Teva and for Lilly to assess and utilize that information and analysis in preparation for trial. Judge Prost reasoned that neither of these reasons remotely resembled the statutorily required finding.

Copyright Spat over Obama Image

On Feb. 9, 2009, Shepard Fairey filed a declaratory judgment complaint in the U.S. District Court for the Southern District of New York, seeking a declaratory judgment that his images of President Obama, widely recognized as “Obama Progress” and “Obama Hope,” do not infringe any copyrights held by the Associated Press and are protected by the Fair Use Doctrine. On March 11, 2009, the AP answered Fairey's complaint and counterclaimed for copyright infringement. The AP's counterclaim alleges that Fairey has a long history as an artist of willfully copying photographs without giving attribution to the photographer, but at the same time has a long history of enforcing his copyrights against others. The AP further alleges that Fairey's Obama Hope and Obama Progress images were copied directly from an AP photograph of Obama and that those copied photographs had been consciously taken at a specific moment in time in order to capture a unique image of President Obama. The case is pending before Judge Alvin K. Hellerstein of the Southern District of New York, Civ. Action No. 09-01123.

Howard J. Shire is a partner and Matthew Berkowitz is an associate in the New York office of Kenyon & Kenyon LLP.

Federal Circuit Grants Petition for Interlocutory Appeal

On Feb. 6, 2009, the Federal Circuit granted Sandoz, Inc.'s petition for an interlocutory appeal in the case of Shire LLC v. Sandoz, Inc., Misc. Docket No. 893. Sandoz petitioned the court to hear the issue of whether a patentee who settles an earlier infringement case after a Markman ruling has issued is precluded under the doctrine of collateral estoppel from relitigating claim-construction issues determined in the prior case. In its summary judgment order, the district court acknowledged two previous holdings from different district courts addressing the patents-in-suit, taking opposite positions regarding issues affecting the claim construction in this case. No. 07-cv-00197 (D. Col.). The Colorado district court refused to give preclusive effect to the first court's claim construction, but granted Sandoz's motion to certify on the ground that the issue could be dispositive as to the infringement of at least one of the patents in the case.

Construction of 35 U.S.C. '271(f)

On March 6, 2009, the Federal Circuit granted St. Jude Medical, Inc.'s petition for rehearing en banc in Cardiac Pacemakers, Inc. v. St. Jude Medical, Inc., 2008 U.S. App. LEXIS 25475 (Fed. Cir. Dec. 18, 2008). The 2008 Federal Circuit panel decision had rejected St. Jude's argument that 35 U.S.C. '271(f) did not apply to method claims. Specifically, the court had stated:

St. Jude urges us to hold that the Supreme Court's decision in Microsoft Corp v. AT&T Corp., 550 U.S. 437 (2007) overturns this court's prior precedents that have held that '271(f) applies to method claims. We do not agree. As St. Jude admits, the Supreme Court 'left open the question of whether Section 271(f) applies to method claims.' St. Jude would have us extend the reasoning behind the Supreme Court's decision in AT&T to overturn this court's decision in Union Carbide Chems. & Plastic Tech. Corp. v. Shell Oil Co. , 425 F.3d 1366 (Fed. Cir. 2005) ' As a panel, we cannot reverse the holding of another panel of this court.

The court granted St. Jude's petition for hearing en banc, vacated the Dec. 18, 2008 opinion, reinstated the appeal, and requested the parties file new briefs addressing the question: “Does 35 U.S.C. '271(f) apply to method claims, as well as product claims?”

District Court Did Not Abuse Discretion in Extending 30-Month Stay

In Eli Lilly & Co. v. Teva Pharms. USA, Inc., No. 2009-1071, the Federal Circuit held that the district court did not abuse its discretion in extending the statutory 30-month stay of 21 U.S.C. '355(j)(5)(B)(iii), preventing the FDA from finally approving Teva's Abbreviated New Drug Application (“ANDA”).

Lilly holds the New Drug Application (“NDA”) for raloxifene hydrochloride (“raloxifene”) tablets, which it markets under the name Evista'. Lilly lists 12 patents that claim Evista in the FDA's Orange Book. Teva filed a paragraph IV ANDA and notified Lilly of its contentions on May 16, 2006. Lilly then brought suit alleging that Teva's ANDA infringed four method patents of its 12 listed Orange Book patents for using raloxifene to prevent or treat postmenopausal osteoporosis. On Sept. 25, 2006, the district court entered a scheduling order setting the close of discovery for Aug. 18, 2008 and trial for March 9, 2009 ' four months after expiration of the 30-month statutory stay. In February 2007, Lilly amended its complaint to assert infringement of three additional patents, which covered raloxifene particle size and formulation.

On July 8, 2008, Teva amended its ANDA to include a new particle-size measuring methodology. It disclosed this amendment to Lilly on July 10, 2008 and provided it three batch samples between July 28 and Sept. 17, 2008 (one month after the close of fact discovery). By Sept. 5, 2008, Teva also provided Lilly with 27,000 pages of related documentation.

On Sept. 17, 2008, Lilly moved the district court under 21 U.S.C. '255(j)(5)(B)(iii) to extend the statutory 30-month stay due to Teva's alleged discovery violations, prejudicing Lilly's trial preparation. The court granted Lilly's motion, and Teva immediately appealed.

The Federal Circuit affirmed the extension of the statutory 30-month stay, finding that the district court did not abuse its discretion because there was sufficient evidence in the record that Teva had failed to reasonably cooperate in expediting the action. Specifically, the Federal Circuit found that there was evidence Teva had altered its proposed generic raloxifene hydrochloride tablets late in the litigation and had delivered samples after the close of discovery. Teva argued that the court's opinion in Andrx Pharms., Inc. v. Biovail Corp. , 276 F.3d 1368 (Fed. Cir. 2002) showed that the district court erred in extending the 30-month stay. In that case, during the litigation, NDA holder Biovail acquired an exclusive license to a second patent that allegedly claimed the subject matter of its NDA. Biovail changed its manufacturing process to fall within the claims of the second patent, which it submitted to the FDA for listing in the Orange Book. Andrx immediately filed a paragraph IV certification, and Biovail brought suit on the second patent, triggering a second 30-month stay. Pursuant to Andrx's motion, the district court found that Biovail had intentionally impeded and delayed the expeditious resolution of the patent actions between it and Andrx and shorted the second statutory 30-month stay. The Federal Circuit in that case found the district court's ruling to have been an abuse of discretion, because it based its decision on Biovail's positions before the FDA.

The Federal Circuit distinguished Andrx on the grounds that in the instant case, the district court extended the statutory 30-month stay based on its findings that Teva had not cooperated in expediting the patent litigation in its court. As opposed to the situation in Andrx, the court reasoned that the district court's findings were not based on the parties' FDA filings.

Judge Sharon Prost dissented, arguing first that the matter was one of statutory construction and should be reviewed de novo. Judge Prost reasoned that even under an abuse of discretion standard, the district court's decision should not stand because it never made any factual conclusions that Teva “failed to reasonably cooperate in expediting the action.” Judge Prost reasoned that instead, the district court determined that a stay was justified: 1) to provide Lilly a sufficient opportunity to identify the nature and composition of the raloxifene product as Teva intends for it to be sold, and 2) to give Lilly a reasonable amount of time to allow its expert to test and report on the altered raloxifene samples provided by Teva and for Lilly to assess and utilize that information and analysis in preparation for trial. Judge Prost reasoned that neither of these reasons remotely resembled the statutorily required finding.

Copyright Spat over Obama Image

On Feb. 9, 2009, Shepard Fairey filed a declaratory judgment complaint in the U.S. District Court for the Southern District of New York, seeking a declaratory judgment that his images of President Obama, widely recognized as “Obama Progress” and “Obama Hope,” do not infringe any copyrights held by the Associated Press and are protected by the Fair Use Doctrine. On March 11, 2009, the AP answered Fairey's complaint and counterclaimed for copyright infringement. The AP's counterclaim alleges that Fairey has a long history as an artist of willfully copying photographs without giving attribution to the photographer, but at the same time has a long history of enforcing his copyrights against others. The AP further alleges that Fairey's Obama Hope and Obama Progress images were copied directly from an AP photograph of Obama and that those copied photographs had been consciously taken at a specific moment in time in order to capture a unique image of President Obama. The case is pending before Judge Alvin K. Hellerstein of the Southern District of New York, Civ. Action No. 09-01123.

Howard J. Shire is a partner and Matthew Berkowitz is an associate in the New York office of Kenyon & Kenyon LLP.