Tyco Healthcare Grp. LP v. Mutual Pharm. Co., Inc., 762 F.3d 1338 (Fed. Cir. Aug. 6, 2014) (Newman (dissent-in-part), BRYSON, Moore) (D.N.J.: Chesler) (4 of 5 stars)

Federal Circuit reverses summary judgment of no sham litigation related to an infringement suit and FDA citizen’s petition but affirms summary judgment of no Walker Process fraud.

Sham Litigation (Infringement Case): The patents covered formulations for treating insomnia with a specific dosage and surface area per gram. The patentee asserted them in a Hatch-Waxman case against a defendant whose ANDA had data showing the generic product had a surface area outside the claims at one temperature. The patentee’s infringement theory was that, when measured at a higher temperature, the ANDA product’s surface area fell within the claimed range. The patentee’s suit was not a sham simply because the ANDA suggested noninfringement because, under Elan and Glaxo, “it is not unreasonable for a patent owner to allege infringement under section 271(e)(2)(A) if the patent owner has evidence that the as-marketed commercial ANDA product will infringe, even though the hypothetical product specified in the ANDA could not infringe.” Slip op. at 10. Nevertheless, factual issues precluded summary judgment because it was unclear the patentee’s testing actually suggested infringement. The higher temperature seemed to physically alter the drug, skewing the results. Without such alteration, the ANDA, even if wrong, “would appear to be wrong in a way that does not help” the patentee. Id. at 12.

The sham litigation claim could not, however, proceed on a theory that the patentee’s validity positions were objectively baseless. “Given the presumption of patent validity and the burden on the patent challenger to prove invalidity by clear and convincing evidence, it will be a rare case in which a patentee’s assertion of its patent in the face of a claim of invalidity will be so unreasonable as to support a claim that the patentee has engaged in sham litigation.” Slip op. at 12. Although the claimed dosage fell within prior art ranges, the patentee presented evidence of teaching away and pointed to gaps in the prior art regarding whether the dosage would be effective. Those arguments, while unsuccessful, weren’t baseless.

Sham Litigation (Citizen Petition): The patentee also petitioned the FDA to adopt stricter parameters for bioequivalence that would be harder for the generic to meet. The two-part test for sham litigation applied equally to this FDA filing, and factual issues precluded summary judgment. Both the FDA’s explanation when denying the petition and expert testimony suggested it was objectively baseless because there was no scientific basis to suggest the generic would not be bioequivalent. Moreover, one could infer subjective bad faith based on (1) the petition’s timing (it was filed the day after the non-infringement judgment) and (2) the patentee’s internal email suggesting it was possible to make a non-infringing but bioequivalent product. Nevertheless, unresolved issues about whether the petition caused antitrust injury (e.g., delaying FDA approval) had to be addressed on remand.

Walker Process: The defendant’s Walker Process claim—which alleged the original applicant procured the patents by fraud and the subsequent patentee/ANDA plaintiff knew of the fraud—was properly dismissed. Nothing suggested the ANDA plaintiff knew of the fraud. At most, the plaintiff knew there would be a strong validity challenge.

Dissent: Judge Newman would find no antitrust liability whatsoever. She suggested an ANDA infringement suit is never a sham because the defendant seeks ANDA approval for a product with supposedly identical safety and efficacy to the patentee’s product. She criticized that majority for potentially exposing future patentees to antitrust liability if they do not produce evidence of teaching away or unexpected results. And she argued the citizen petition should not give rise to antitrust liability where it communicated public information that the ANDA product “is not the same” as the patentee’s.