As we previously reported here and here, Celltrion filed suit against Genentech seeking declaratory judgment that a number of patents relating to Herceptin® (trastuzumab) and Rituxan® (rituximab) are non-infringed, invalid, and/or unenforceable. In response, Genentech filed a motion to dismiss in both cases arguing that the case was statutorily barred under the BPCIA. On May 9, 2018, the Court granted both of the motions.

To better understand the parties’ positions and the Court’s ruling, a brief recap of the patent dance portion of the BPCIA is helpful. Following the FDA’s acceptance of an abbreviated Biologic Licensing Application, the applicant (here, Celltrion) provides the reference product sponsor (here, Genentech) with a copy of that application. After receipt of the application, the reference product sponsor provides the applicant with a list of patents that it believes to be infringed. The applicant then sends the reference product sponsor a claim-by-claim analysis of why it believes the asserted patents are not infringed by the biosimilar product, are invalid, or are otherwise not enforceable. The reference product sponsor then responds to the applicants arguments. Once those exchanges are complete, the parties must negotiate in good faith to identify the patents that will be subject of immediate patent infringement litigation. The parties have 15 days to complete these negotiations. If an agreement cannot be reached, the applicant must identify the number of patents that it wishes to litigate, and that number sets the limit on the patents-in-suit. The parties then exchange the lists of patents that each party believes should be litigated and the reference product sponsor may then bring suit.

The BPCIA also sets limits on the remedies available to an applicant in the event it does not comply with any of the various steps in the patent dance. For example, if the applicant does not provide a copy of its application to the reference product sponsor, then the applicant cannot bring a declaratory judgment action. Similarly, the applicant is barred from bringing a declaratory judgment action if it does not serve the various required disclosures, e.g., the number of patents it wishes to litigate or the list of patents it believes should be litigated, on the reference product sponsor.

Returning to Genentech’s motion(s) to dismiss, the thrust of the motions was that Celltrion’s declaratory judgment actions were barred due to Celltrion failing to comply with its obligations during the “patent dance” portion of the BPCIA. According to Genentech, Celltrion failed to engage in the required good faith negotiations that must occur following Genentech’s initial disclosure of the patents it believed Celltrion’s product would infringe. Genentech alleged that although it initially identified 40 patents, it subsequently proposed reducing the number of patents it would assert based on Celltrion’s responses. Genentech asserted that Celltrion responded by stating it wished to litigate all 40 patents and filing the declaratory judgment action.

Celltrion counters that although Genentech proposed narrowing the number of patents in suit, it purported to reserve its right to assert infringement of the other identified patents. According to Celltrion, this “created unacceptable legal uncertainty” and for this reason, it wished to litigate all 40 patents. Celltrion also explained that it provided Genentech with a notice of commercial marketing when it brought the declaratory judgment action. According to Celltrion, service of a notice of commercial marketing triggers a new wave of the patent dance that allows either party to bring a declaratory judgment action to settle any patent disputes remaining at the time of the notice.

The Court disagreed with Celltrion, and found that the declaratory judgment suits were clearly barred by the BPCIA. In both suits, the Court noted that Celltrion failed to identify the number of patents it wished to litigate and failed to exchange a list of patents that it believed should have been in the suit with Genentech. The Court found Celltrion’s explanation for its actions unavailing. Celltrion argued that it notified Genentech that it wished to litigate all of the patents originally identified, and thereby simultaneously fulfilled its obligation to negotiate, set the number of the patents in dispute, and rendered a subsequent list exchange redundant. However, the Court found that because the requirement to negotiate in good faith is in one section of the statute and the identification of the number of patents-in-suit/list of patents exchange is in another, “no single statement or gesture can satisfy the requirements of both sections simultaneously.” The Court thus concluded that Celltrion had improperly conflated a number of discrete steps and exchanges that are mandated by the statutory framework. The Court also found that even assuming Celltrion’s interpretation of the statute was correct, Celltrion had erred by presupposing disagreement during the negotiation phase gave it the power to unilaterally terminate the patent dance. Moreover, the Court concluded that even if negotiations had not been fruitful, the statute requires the list exchange and empowers Genentech, and not Celltrion, to file suit.

The Court also disagreed that Celltrion’s service of a notice of commercial marketing permitted Celltrion to bring the declaratory judgment action. According to the Court, the BPCIA contains three distinct statutory bars that each apply to a different factual circumstance where an applicant fails to comply with the statute. Service of a notice of commercial marketing only lifts one of those statutory bars, i.e., where the parties have fully complied with all of the statutory steps. If the list exchange step (among others spelled out in the statute) is not completed, then a separate bar applies, and the filing of a notice of commercial marketing cannot lift it.

In its order dismissing the case, the Court permitted Celltrion to file an amendment complaint. However, the basis for the Court’s dismissal was that Celltrion did not comply with certain steps in the statute, and, notwithstanding Celltrion’s explanation of its actions, there does not appear to be a dispute between the parties as to what actions did and did not occur. Meanwhile, Genentech has filed patent infringement suits based on the same Celltrion abbreviated Biologic Licensing Applications in New Jersey and Delaware.