When a patentee (the “brand”) files suit under the applicable provision of the Hatch-Waxman Act (“the Act”), 35 U.S.C. § 271(e)(2)(A), against a generic company (the “generic”) that has submitted an ANDA with a paragraph IV certification, the FDA cannot approve the ANDA for 30 months from the date of the patentee’s receipt of the so-called notice letter. 21 U.S.C. § 355(j)(5)(B)(iii). The court can lengthen or shorten the stay due to the lack of cooperation by the generic or the brand, respectively, or a preliminary injunction against the generic. Id. Thus, the length of the stay is subject to equitable considerations.
The generic will often seek to prevail early in the litigation and thereby end the 30-month stay and obtain marketing approval for the generic product. The Act explicitly addresses the effect of a generic’s win in district court action on the 30-month stay.
(I) [I]f before the expiration of [the 30-month] period the district court decides that the patent is invalid or not infringed. . ., the [FDA] approval shall be made effective on ?
(aa) the date on which the court enters judgment reflecting that decision. …
21 U.S.C. § 355(j)(5)(B)(iii) (I)
Accordingly, where the generic prevails, the entry of district court judgment terminates the 30-month stay. Significantly, the pendency of an appeal does not delay FDA approval.
Where the generic loses at trial, but prevails on appeal, the 30-month stay also terminates.
(II) [I]f before expiration of [the 30-month] period the district court decides that the patent has been infringed –
(aa) if the judgment of the district court is appealed, the approval shall be made effective on
(AA) the date on which the court of appeals decides that the patent is invalid or not infringed. …
21 U.S.C. § 355(j)(5)(B)(iii) (II)
Under the Act, a decision of a district court or court of appeals is required to end the 30-month stay.
The question arises as to the effect on the 30-month stay of a decision of the PTAB in an IPR invalidating the pertinent claims of the asserted patent. A recent decision of the Federal Circuit is particularly relevant. See ePlus, Inc. v. Lawson Software, Inc., 2014 WL 3685911, (Fed. Cir. July 25, 2014). There, e-Plus, Inc. (“ePlus”) sued Lawson Software, Inc. (“Lawson”) for infringement of the ?683 and ?172 patents. In its initial decision, the district court held various claims of the two patents-in-suit valid and infringed, and the court enjoined Lawson from selling certain products. On appeal, the Federal Circuit affirmed the validity and infringement of only one claim ? claim 36 ? of the ?683 patent and remanded the case to the lower court to make any necessary modifications to the injunction. ePlus v. Lawson Software, Inc., 700 F.3d 509 (Fed. Cir. 2012). On remand, the district court modified the injunction and found Lawson in civil contempt for its violation. Lawson appealed both the injunction and the contempt rulings. During the pendency of that appeal, the PTO completed a reexamination of the ‘683 patent and cancelled claim 36 as invalid. The PTO’s decision was affirmed by the Federal Circuit. In re ePlus, Inc., 540 Fed. App’x 998 (Fed. Cir. 2013) (per curium)
In Lawson’s latest appeal, the Federal Circuit unanimously held that the injunction must be vacated because “[i]t is well established that an injunction must be set aside when the legal basis for it has ceased to exist,” Id. at *4, and any rights “previously conferred” by the patent “ceased to exist” when the PTO’s decision was affirmed. Id. at *5. The majority also vacated the monetary penalties for violating the injunction. Thus, after a Federal Circuit affirmance of a PTO decision invalidating a patent, that patent “no longer confers any rights that support an injunction against infringement.” Id.
A decision of the PTO in a typical reexam or the PTAB in an IPR will probably not affect the 30-month stay of FDA approval. In ePlus, neither party apparently argued that the PTO’s decision terminated the injunction. See also Fresenius USA, Inc. v. Baxter Int. Inc., 733 F.3d 1369 (Fed Cir. 2013). It would appear that a “court decision” is required, especially when examining the wording of the section of Act quoted above. Thus, a generic sued under 35 U.S.C. § 271(e)(2)(A) could file a motion for summary judgment of invalidity after the PTAB’s decision invalidating all relevant claims. If granted, §355(1)(5)(B)(iii) (I)(aa) dictates that the 30-month stay would terminate when the district court grants the motion and enters judgment for the generic. If the case had been stayed pending the PTAB’s decision, the stay would need to be lifted to allow the generic to file for summary judgment. The brand, however, could petition the district court to stay the action or continue the stay (if one had been entered) while it appeals the PTAB’s decision. This stay ? even if granted ? might not preclude a ruling on the motion as it would be argued that any stay would frustrate the intent of the Act to allow generic approval following a district court judgment of invalidity.
If the generic that prevailed in the PTAB had not been yet sued by the brand, it would not be subject to the 30-month stay. However, FDA approval would be stayed when the generic files its ANDA. In advance of its ANDA filing, the generic might consider filing a declaratory judgment action to secure the necessary district court judgment. If the brand had already sued other generics, they would undoubted rely on the PTAB’s decision in seeking their own summary judgments of invalidity. Were any of their motions granted, the 30-month stays would terminate, even though these particular generics were not involved in the IPR.
After an IPR decision invalidating the claims asserted in a Hatch-Waxman action, a motion for summary judgment of invalidity may be the most efficient way for a generic to terminate the 30-month stay. But what if the brand pursues a Federal Circuit appeal and manages to have the related district court action stayed before judgment is entered? As noted above, it could be argued that this should not prolong the 30-month stay. But assuming that the 30-month stay was still in place, would a Federal Circuit decision affirming the PTAB’s holding of invalidity terminate the stay? Significantly, the Act specifies that a successful appeal by the generic from a district court decision terminates the stay. Under ePlus, however, it could be argued that a decision of the Federal Circuit from a PTAB decision invalidating the asserted patent should have the same effect. There, after the affirmance of the PTO’s invalidity holding, the court held that the patent “no longer confers any rights that support an injunction against infringement.” If similar reasoning were applied to an appeal of a PTAB’s ruling, the 30-month stay would terminate once the Federal Circuit holds the patent invalid. But this remains to be seen.