Judges: Mayer, Friedman (concurring), Gajarsa (author)

[Appealed from D.N.J., Judge Linares]

In Teva Pharmaceuticals USA, Inc. v. Novartis Pharmaceuticals Corp., No. 06-1181 (Fed. Cir. Mar. 30, 2007), the Federal Circuit reversed the district court’s decision dismissing the DJ action by Teva Pharmaceuticals USA, Inc. (“Teva”).

Novartis Pharmaceuticals Corporation (“Novartis”) holds a New Drug Application for its pharmaceutical Famvir®. Novartis listed five patents with the FDA in the Orange Book: U.S. Patent No. 5,246,937 (“the ’937 patent”), drawn to the active ingredient in Famvir®, famciclovir, and four other patents covering various methods of therapeutic use. In 1994, Teva filed an ANDA to market generic famciclovir tablets and certified under paragraph IV that its proposed product did not infringe the five listed Famvir® patents or that the patents were invalid. Novartis sued Teva within the statutory forty-five-day period for infringement of the ’937 patent alone. In response, Teva filed a DJ action on the four remaining method patents to declare the patents invalid or not infringed by Teva’s proposed product.

Novartis filed and the district court granted Novartis’s motion to dismiss Teva’s DJ action for lack of subject matter jurisdiction. Utilizing the Federal Circuit’s two-part DJ test as recited in Teva Pharmaceuticals USA, Inc. v. Pfizer, Inc., 395 F.3d 1324 (Fed. Cir. 2005) (“Pfizer”), the district court concluded that Teva had failed to show that it was under a reasonable apprehension of imminent suit.

In determining whether subject matter jurisdiction was proper, the Federal Circuit followed the standards recently articulated by the Supreme Court in MedImmune, Inc. v. Genentech, Inc., 127 S. Ct. 764 (2007), and looked to the legislative history and intent of the DJ provisions. Initially, the Federal Circuit acknowledged that, although the district court’s use of the two-part reasonable-apprehension-of-suit test was correct, the test had since been overruled by the Supreme Court in MedImmune, in which the test was characterized as conflicting with Supreme Court precedent.

In articulating the proper DJ jurisdictional standard, the Court noted that (1) jurisdiction under the DJ Act, 28 U.S.C. § 2201(a), extended to ANDA suits by 35 U.S.C. § 271(e)(5), requires an “actual controversy”; (2) the Supreme Court in MedImmune reaffirmed that the DJ Act’s “actual controversy” requirement is the same as the Article III “cases and controversy” requirement; and (3) thus, the standard inherently requires both that the plaintiff have standing and the issue be ripe. Taken together, the Federal Circuit concluded that “a declaratory judgment plaintiff is only required to satisfy Article III, which includes standing and ripeness, by showing under ‘all the circumstances’ an actual or imminent injury caused by the defendant that can be redressed by judicial relief and that is of ‘sufficient immediacy and reality to warrant the issuance of a declaratory judgment.’” Slip op. at 9 (citation omitted).

Following this MedImmune standard, the Federal Circuit determined that Teva has a justiciable controversy because under “all the circumstances,” it has a concrete injury-in-fact. Id. at 12. The Court disagreed with Novartis that because Novartis had neither filed suit nor threatened suit on the four method patents, there was no actual controversy. Instead, the Court found that by suing Teva on the ’937 patent, Novartis created an actual controversy by “placing into actual dispute the soundness of Teva’s ANDA and Teva’s ability to secure approval of the ANDA.” Id. The Court explained that Novartis’s failure to sue Teva on the method patents within the statutory forty-fiveday period does not preclude Novartis from later suing Teva during the life of the patents. Therefore, Teva remains under the threat of an infringement suit. The Court concluded that “[i]n light of Novartis’[s] pending suit on the same ANDA, this threat of litigation is a present injury creating a justiciable controversy.” Id. at 14.

Conceding that several of Teva’s grounds for alleging an “actual controversy” might not be sufficient standing alone, the Federal Circuit held that the circumstances taken as a whole establish a justiciable controversy. The Court proceeded to discuss three circumstances it found dispositive.

First, the Court noted that by listing its Famvir® patents in the Orange Book, Novartis represented that it could reasonably assert a claim of patent infringement on those patents if someone not licensed by Novartis engaged in the manufacture, use, or sale of generic famciclovir.

Second, because Teva’s ANDA filing was an act of infringement and, therefore, created a justiciable controversy for one party, it “logically follows that if such an action creates a justiciable controversy for one party, the same action should create a justiciable declaratory judgment controversy for the opposing party.” Id. at 15.

Third, the purposes of the Hatch-Waxman Act, the “civil action to obtain patent certainty” under 21 U.S.C. § 355(j)(5)(C), and the ANDA DJ provision under 35 U.S.C. § 271(e)(5), all support a finding that a justiciable controversy exists. The Federal Circuit explained that in the situation in which the patentee sues on less than all the ANDA certified patents, the patentee is afforded the thirty-month stay while relieved of its statutory duty to, in exchange for the stay, cooperate in the expeditious determination of the validity of all the patents. In essence, the patentee has insulated its other patents from validity challenges, thereby creating the exact uncertainty the DJ provisions were enacted to resolve. The Court noted that it is clear from the legislative history of 21 U.S.C. § 355(j)(5)(C) that this provision intended to grant DJ jurisdiction to virtually all situations where an ANDA filer has been sued for patent infringement and then files a DJ action on the remaining certified patents. In addition, the practical result of Novartis’s actions is to delay the introduction of generic drugs, further frustrating the purposes of the statutory provisions and arguing for a finding of a justiciable controversy. Finally, the fact that Teva may be subject to multiple suits based on the same ANDA by the same patentee creates a present and real harm relevant to the analysis.

After consideration of all the circumstances, the Federal Circuit concluded that Teva had suffered a direct injury—the uncertainty as to the legal status of its ANDA and, thus, its legal rights regarding its freedom to market its product. To hold otherwise would subject Teva to the exact type of uncertainty the DJ provisions were enacted to prevent. Therefore, Teva had succeeded in demonstrating a present injury sufficient for a justiciable DJ controversy.