Valeant Int’l Bermuda v. Spear Pharmaceuticals, Inc.

Case Name: Valeant Int’l Bermuda v. Spear Pharmaceuticals, Inc., Civ. No. 2:12-FtM-29SPC, 2012 U.S. Dist. LEXIS 141560 (M.D. Fla. Sept. 30, 2012) (Steele, J.)

Drug Product and Patent(s)-in-Suit: Carac^® (fluorouracil 0.5% cream); U.S. Pat. No. 6,670,335 (“the ’335 patent”)

Nature of the Case and Issue(s) Presented: The issue here concerns whether the plaintiffs sufficiently pled a declaratory-judgment count to state a valid cause of action. The plaintiffs in this case asserted counts alleging that the defendant had committed an act of patent infringement under 35 U.S.C. § 271(e)(2), which was not disputed, and a second claim under 28 U.S.C. § 2201, which the defendant sought to dismiss for lack of subject matter jurisdiction.

Plaintiff A.P. Pharma, Inc. is the owner of the ’335 patent, which it licenses to co-plaintiff Valeant International Bermuda on an exclusive basis (collectively, “Valeant”). Valeant markets Carac, a topical treatment of multiple actinic or solar keratoses of the face and anterior scalp. On July 29, 2011, defendant Spear Pharmaceuticals, Inc. (“Spear”) submitted an ANDA, along with a paragraph IV certification against the ‘335 patent, seeking approval to market and sell a generic version of Carac. In response, Valeant filed the instant suit.  

Why Spear Prevailed:  The Hatch Waxman Act allows for “artificial” acts of infringement. Under the legislation, the mere act of filing a Paragraph IV certification with an ANDA submission provides sufficient grounds for a brand name drug manufacturer to make an allegation of patent infringement against a generic manufacturer. The brand manufacturer is not required to establish that the defendant is actually carrying out any actual infringing conduct at the time the complaint is filed. A Paragraph IV certification is sufficient. This, the court found, was a relatively non-controversial subject.

But Valeant alleged a second count in its complaint seeking declaratory judgment that defendant’s future commercial conduct will infringe the ‘335 patent. Defendant filed a motion to dismiss and the question of subject matter jurisdiction arose. The court sided with Spear, finding that subject matter jurisdiction did not exist with respect to Valeant’s declaratory-judgment claim. Under the Declaratory Judgment Act, 28 U.S.C. § 2201, a party has standing to bring an action if an “actual controversy” exists. In Medimmune, the Supreme Court determined that a dispute must be “definite and concrete, touching the legal relations of parties having adverse legal interests,” such that the dispute is “real and substantial” and “admi[ts] of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.”

The court took issue with the manner in which Valeant pled its declaratory-judgment count. Specifically, the court held that plaintiff’s statement “’[a]n actual substantial and justiciable controversy exists . . .’ and the existence of a ‘concrete, real, and immediate dispute’ between the parties which creates ‘an actual case or controversy’ sufficient to satisfy Article III of the United States Constitution” was a mere conclusory allegation that was not entitled to a presumption of truth. Further, the court found that Valeant’s statements about Spear’s future conduct of preparing to manufacture and sell a generic version of Carac were largely bare assertions without specificity to support either the immediacy or reality requirement. In that regard, the court noted that the FDA may not grant approval of Spear’s ANDA until resolution of the action or expiration of the thirty months stay, and that Spear’s proposed generic product could change as it works its way through the FDA approval process. Allegations of hypothetical future conduct by a potential infringer failed to meet the requirement that a plaintiff plead facts establishing both “immediacy” and “reality.” Accordingly, the court granted Spear’s motion to dismiss Valeant’s declaratory judgment claim from the complaint.