Dey Pharma, LP v. Sunovion Pharma. Inc.

Case Name: Dey Pharma, LP v. Sunovion Pharma. Inc., 677 F.3d 1158(Fed. Cir. Apr. 16, 2012) (Circuit Judge Bryson, Dyk, and Moore presiding; Opinion by Dyk) (Appeal from D. Del., Stark, J.)

Drug Product and Patent(s)-in-Suit: Xopenex® (levalbuterol); U.S. Pat. No. 6,451,289 ("the '289 patent")

Nature of the Case and Issue(s) Presented: In June 2005, Breath Ltd. ("Breath") filed the first Paragraph IV ANDA for generic Xopenex. Sunovion Pharma. Inc.("Sunovion") sued Breath, asserting three patents listed in the Orange Book -including the '289 patent - and in 2008, the case settled. Also in 2005, Dey Pharma LP, a subsidiary of Mylan, filed the second Paragraph IV ANDA for generic Xopenex. Sunovion sued Dey in 2006 over two of the Orange Book-listed patents, but Sunovion did not assert the '289 patent, which was the last of the three Orange Book patents to expire. On June 20, 2008, Dey brought a declaratory judgment action seeking a declaration that the '289 patent was invalid or that its ANDA products did not infringe the patent. In response, Sunovion provided Dey with a covenant not to sue on the '289patent and moved to dismiss the declaratory judgment action for lack of subject matter jurisdiction. The district court denied Sunovion's motion, holding that the covenant did not defeat declaratory-judgment jurisdiction. It Found that even if Dey invalidated the two Orange Book patents Sunovion Asserted, the '289 patent "would remain a legal barrier to its ANDA approval, and that this potential barrier was a cognizable injury that could be addressed through the declaratory judgment action...." The parties thereafter stipulated to a final judgment of noninfringement. Sunovion took the instant appeal in order to challenge the district court's subject matter jurisdiction. The Federal Circuit affirmed.

Why Dey Prevailed: The Court's opinion cited two pertinent decisions concerning declaratory judgment jurisdiction: Caraco Pharma. Labs., Ltd. v. Forest Labs., Inc.,527 F.3d 1278 (Fed. Cir. 2008); and Janssen Pharmaceutica, N.V. v. Apotex, Inc.,540 F.3d 1353 (Fed. Cir. 2008). In Caraco, the first ANDA filer, Ivax, was entitled to launch upon the expiration of the earlier-expiring patent (there were two Orange Book patents; Forest did not sue Ivax under the later-expiring patent). The NDA holder Forest sued Caraco, the second ANDA filer, for infringement of that same patent. Caraco then brought a declaratory judgment action over the later-expiring patent. The Federal Circuit in Caraco held: (i) that there was declaratory-judgment jurisdiction at the time of suit because the ANDA holder's actions were potentially excluding non-infringing generic drugs from the market; and (ii) the action was not mooted by Forest's covenant not to sue Caraco over the later-expiring patent because only a court judgment of noninfringement or invalidity would trigger Ivax's exclusivity period and accelerate Caraco's market entry. The facts were analogous in Janssen,except that Apotex, the second ANDA filer, stipulated to the validity, infringement, and enforceability of the earlier-expiring patent. Thus, there was no immediate controversy: Apotex's success on the later-expiring patents would not trigger the exclusivity period of the first ANDA filer, Teva, because the earlier-expiring patent was still in play, though Teva would launch upon its expiration.

Based on Caraco,the Federal Circuit held that the district court had declaratory-judgment jurisdiction over Dey's claim when it was brought because Dey alleged that the later-expiring '289 patent excluded it from selling its generic product. Even though two other Orange Book patents were blocking Dey's market entry, the '289 patent did so also and this gave rise to an actual controversy between Sunovion and Dey as to that '289 patent. On the issue of whether declaratory-judgment jurisdiction remained even after Sunovion provided Day with a covenant-not-to-sue on the '289 patent, Sunovion argued that the courts should not allow a declaratory action challenging any Orange Book patent to proceed unless all actions challenging the Orange Book patents can be completed before the date of potential generic entry will arrive and, in Sunovion's view, deprive the district court of jurisdiction. The Federal Circuit, however, disagreed with Sunovion's assumption based on the date of potential generic entry. The Court held that the district court will not lose jurisdiction simply because the period of possible first generic market entry arrives. Even after Breath is entitled to launch, the possibility remains that Breath will not do so. If Breath chooses to delay triggering its 180-day exclusivity period, Dey and other generics could potentially be kept off the market until the expiration of the '289 patent in 2021, absent a judgment of non-infringement or invalidity. Article III requires that "an actual controversy must be extant at all stages of review," and therefore the question of whether a controversy exists at a later stage of the proceeding is governed by the mootness doctrine. Having said that, the Court pointed out that Sunovion conceded at oral argument that this case will not be moot until Breath actually goes on the market in a way that would trigger its 180-day exclusivity period. Because the district court had declaratory-judgment jurisdiction at the time Dey filed its '289-related claim, and that claim was not rendered moot by Sunovion's covenant-not-to-sue, the district court's judgment of non-infringement was affirmed.