Takeda v. Mylan: High-Cost Generic Drugs from Baseless Paragraph IV Certifications

The Hatch-Waxman Act provides trial courts with discretion to award attorney fees in exceptional cases involving patent infringement based on ANDA filings. Specifically, ” 271(e)(4) and 285, taken together, provide that reasonable attorney fees may be awarded to the prevailing party in exceptional cases regarding infringement based on filing a Paragraph IV certification. In addition, trial courts may invoke their inherent powers to award additional amounts, such as expert fees. Whether a case is exceptional is an issue of fact requiring clear and convincing evidence, subject to review for clear error, whereas an award of attorney and expert fees in an exceptional case is at a court's discretion, subject to review for abuse of discretion.

The Federal Circuit has previously affirmed a trial court's award of attorney fees where a generic drugmaker was found to have filed and litigated a baseless Paragraph IV certification. Specifically, in Yamanouchi v. Danbury, the Federal Circuit indicated that under the Hatch-Waxman Act an ANDA applicant certifying under Paragraph IV must exercise “due care” with regard to notifying a patentee of the legal and factual basis for invalidity of a patent, and that a particular ANDA applicant failed to meet its duty by filing a baseless certification and subsequently advocating the arguments therein in litigation, thereby committing misconduct. 231 F.3d 1339 (Fed. Cir. 2000). The Yamanouchi opinion provided a useful base line regarding factual circumstances that might support an award of attorney fees, but left several issues unresolved. First, the opinion may have created some ambiguity regarding whether its “due care” language implied the existence of a negligence standard with respect to filing of a certification by an ANDA applicant. Second, the opinion left unaddressed the question of whether an ANDA applicant might avoid a finding of an exceptional case by essentially abandoning, at the start of litigation, arguments of a baseless certification, thereby limiting fact-finding about the substance of the certification. Third, the issue of what circumstances might support an award of expert fees was also left unaddressed.