Recent Developments In Parties Obligations In Hatch-Waxman Act Litigation Brian V. Slater Presented at American Conference Institutes Maximizing Pharmaceutical Patent Life Cycles, New York, October 7, 2009

FITZPATRICK, CELLA, HARPER & SCINTO © 2009 | 2 Obligations of Parties in ANDA Cases During suit, ANDA ¶IV filers and patentees both have the same obligations: –to not go forward on baseless or frivolous positions under Fed. R. Civ. P. 11 –to reasonably cooperate in expediting the action. 21 U.S.C. § 355(j)(5)(B)(iii). Before suit, ANDA ¶IV filers and patentees have different obligations as a result of Hatch-Waxman scheme

FITZPATRICK, CELLA, HARPER & SCINTO © 2009 | 3 ANDA ¶IV Filers Pre-suit Duty of Care An ANDA ¶IV filer must certify patent is not infringed or invalid to the best of his knowledge. 21 U.S.C. § 355(j)(2)(A)(vii). The Hatch-Waxman Act thus imposes a duty of care on an ANDA certifier. Yamanouchi Pharm. Co., Ltd. v. Danbury Pharmacal, Inc., 231 F.3d 1339, 1347 (Fed. Cir. 2000). Violation of duty may constitute exceptional case supporting award of attorney fees to prevailing party under 35 U.S.C. §§ 271(e)(4), 285: –Yamanouchi, 231 F.3d at 1347 (attorneys fees award where baseless ¶IV cert. and chemistry errors in pre-suit opinion). –Filing of ANDA alone cannot support willful infringement finding for purpose of awarding attorney fees. Glaxo Group Ltd. v. Apotex, Inc., 376 F.3d 1339, 1350 (Fed. Cir. 2004).

FITZPATRICK, CELLA, HARPER & SCINTO © 2009 | 4 Takeda Chem. Indus., Ltd. v. Mylan Labs., Inc., 549 F.3d 1381 (Fed. Cir. 2008) CAFC affirmed award of $16.8 million in attorneys fees after failed obviousness challenge to patent on Actos®, based on –baseless certification letters with scientific errors that failed to present even a prima facie obviousness case; and –litigation misconduct, including: switching to obviousness theory that failed to explain why prior art compound would be considered the lead raising untimely advice of counsel defense asserting frivolous inequitable conduct claims

FITZPATRICK, CELLA, HARPER & SCINTO © 2009 | 5 Takeda Chem. Indus., Ltd. v. Mylan Labs., Inc., 549 F.3d 1381 (Fed. Cir. 2008) CAFC rejected argument that Yamanouchi improperly sets forth a simple negligence standard for attorneys fees awards in ANDA cases –Rather, Yamanouchi held that applicants fail to meet duty of care when they file baseless certifications. Takeda, 549 F.3d at CAFC rejected argument that decision would chill other ANDA patent challenges by requiring inclusion of every theory in ¶IV notice –District court did not fault litigants merely for changing theories but for baseless ANDA filings and litigation in bad faith. Id. at Cert. denied October 5, 2009

FITZPATRICK, CELLA, HARPER & SCINTO © 2009 | 6 Patentees Pre-suit Obligations Patentees complaint -- like every court paper -- must meet Rule 11 requirements that –to the best of the persons knowledge, information and belief, formed after an inquiry reasonable under the circumstances: It is not being presented for any improper purpose The claims and legal contentions are warranted by existing law or a nonfrivolous extension thereof The factual contentions have evidentiary support or likely will have evidentiary support after further investigation/discovery In the context of patent infringement actions, we have interpreted Rule 11 to require, at a minimum, that an attorney interpret the asserted patent claims and compare the accused device with those claims before filing a claim alleging infringement. Q-Pharma, Inc. v. Andrew Jergens Co., 360 F.3d 1295, 1300 (Fed. Cir. 2004).

FITZPATRICK, CELLA, HARPER & SCINTO © 2009 | 7 Celgene Corp. v. KV Pharm. Co., 2008 U.S. Dist LEXIS (D.N.J. July 22, 2008) Patentee allegedly conducted no pre-suit investigation other than to determine that the ANDA was filed. District Court declined to find Rule 11 violation: –The pre-filing requirements stated in Q-Pharma make sense only in the context of a typical patent infringement case, and not in the context of a Hatch-Waxman ANDA case. Id. at *7. –Because the Act has made the act of submitting an ANDA itself an act of infringement, in a Hatch-Waxman ANDA case, the attorney can conduct a reasonable and competent inquiry into the act of infringement by investigating whether a relevant ANDA has been filed. Id.

FITZPATRICK, CELLA, HARPER & SCINTO © 2009 | 8 Celgene Corp. v. KV Pharm. Co., 2008 U.S. Dist LEXIS (D.N.J. July 22, 2008) –Celgene and its attorneys had no pre-filing obligation to investigate whether KV's methylphenidate drug actually infringed Celgene's patents. Id. at *8. –To hold otherwise would put pharmaceutical patent owners in an untenable position Id. at *10. It would require patent owners to perform infringement analysis on possibly nonexistent product. Patent owner has only 45 days to make what is likely to be a highly technical infringement analysis, and decide whether to sue. Id.

FITZPATRICK, CELLA, HARPER & SCINTO © 2009 | 9 Summary of Pre-Suit Obligations ANDA ¶IV filer has duty of care based on statute, the violation of which may lead to attorney fees award if it loses Under Celgene, patentees pre-suit obligations are satisfied by investigating whether a relevant ANDA has been filed Remains to be seen whether other courts will follow Celgene or will require further investigations, and if so, what type of investigation

FITZPATRICK, CELLA, HARPER & SCINTO © 2009 | 10 Modification of the 30-Month Stay –21 U.S.C. § 355(j)(5)(B)(iii) provides 30-month stay of FDA approval of ANDA if suit is brought within 45-day window District courts have discretion to shorten or lengthen the 30- month stay where either party to the action failed to reasonably cooperate in expediting the action. Id. –In Andrx Pharmaceuticals, Inc. v. Biovail Corporation, 276 F.3d 1368 (Fed. Cir. 2002), the CAFC held that district court could not use a partys allegedly improper conduct at the FDA as a reason to modify the 30-month stay

FITZPATRICK, CELLA, HARPER & SCINTO © 2009 | 11 Eli Lilly & Co. v. Teva Pharms USA, Inc., 557 F.3d 1346 (Fed. Cir. 2009) Facts: –Teva modified particle size specification of its API and method of measuring particle size eight months before trial –Teva subsequently produced new samples and 27,000 pages, some of which were produced after close of fact discovery District Court extended the 30-month stay to provide Lilly with a reasonable time for its expert to test and report on the samples and for Lilly to prepare for trial. Eli Lilly, 557 F.3d at 1350.

FITZPATRICK, CELLA, HARPER & SCINTO © 2009 | 12 Eli Lilly & Co. v. Teva Pharms USA, Inc., 557 F.3d 1346 (Fed. Cir. 2009) CAFC affirmed extension of 30-month stay finding that district court did not abuse its discretion –Trial courts, thus, may shorten or extend the thirty-month statutory period based on the parties' uncooperative discovery practices before the court. Id. at Judge Prost dissented: –District court failed to make findings that Teva failed to reasonably cooperate in expediting the action

FITZPATRICK, CELLA, HARPER & SCINTO © 2009 | 13 Modification of the 30-Month Stay - Summary Modification of the 30-month stay is within the district courts discretion. Actions outside the litigation cannot lead to modification of the 30-month stay (e.g., FDA proceedings) Discovery delays can lead to modification of the 30-month stay. The extent of discovery violations required for modification is unsettled.

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