Caraco Pharm. Labs Ltd. v. Forest Labs. Inc.

527 F.3d 1278 (Fed. Cir. 2008)

The Federal Circuit recently held that a unilateral covenant not to sue a competitor did not prevent a generic drug applicant from bringing a declaratory judgment action challenging the brand company’s patent. The court concluded that an actual and justiciable controversy existed for the purposes of bringing a declaratory judgment action because the patent holder, Forest, had listed two patents in the Food and Drug Administration’s Orange Book with its New Drug Application (NDA), but used one, the ‘941 patent, to prevent a generic from entering the market for the underlying drug.

Under the Hatch-Waxman Act, a generic drug manufacturer may file an Abbreviated New Drug Application (ANDA) to get approval to market its product while relying on safety and efficacy data submitted by the patent holder’s NDA. The generic company may file the ANDA if it can show that the proposed product is the bioequivalent to the drug submitted under the NDA. Ivax was the first company to file an ANDA in response to Forest’s NDA and, therefore, was granted a 180-day generic exclusivity period.

After Forest sued Ivax for infringement of only one of the listed patents, Ivax, as well as subsequent ANDA filers including Caraco, was enjoined from entering the market until 2012 unless Ivax’s 180-day exclusivity period was triggered by some other event, such as a court finding noninfringement of the listed patents. Subsequently, Caraco filed suit against Forest, complaining that the Orange Book publication prevented it from entering the generic drug market because it could not get FDA approval of its ANDA. By not suing Ivax for infringement of the ‘941 Patent, and because Ivax had taken no action to trigger its exclusivity period itself, other generics could not enter the market without a court decision declaring the ‘941 patent noninfringed or invalid. Therefore, the Federal Circuit concluded that a declaratory judgment decision would redress the plaintiff’s injury because a judgment of noninfringement would trigger Ivax’s 180-day exclusivity period and allow Caraco to enter the market.

The Court further noted that even though the covenant not to sue would eliminate any reasonable apprehension of an infringement suit, which would normally prevent the court from exercising declaratory judgment jurisdiction, a controversy existed because Forest’s actions in listing the patent in the Orange Book still effectively prevented the generic company from entering the market.