Tyco Healthcare et al. v. Mutual Pharm. et al., No. 2013-1386 (Fed. Cir.)
by Aaron F. Barkoff
In 2006, Mutual filed an ANDA for a generic version of Restoril (temazepam), including a paragraph IV certification to Tyco's U.S. Patent No. 5,211,954. Tyco filed suit against Mutual under 35 USC 271(e)(2), Mutual responded with antitrust counterclaims (which the court temporarily stayed pending resolution of the case), and the case proceeded to judgment.
The district court found in 2009 that Mutual did not infringe the '954 patent under section 271(e)(2) because Mutual's product, when manufactured to the ANDA's specification (i.e., where temazepam has a specific surface area of at least 2.2 m2/g), could not infringe the patent (which claims temazepam having a specific surface area of 0.65-1.1 m2/g).
On August 5, 2009, the day after the district court entered its judgment of noninfringement, Tyco filed a citizen petition urging the FDA to change the criteria for evaluating the bioequivalence of generic temazepam products in order to "help ensure therapeutic equivalence." On September 8, 2009, while the citizen petition was still pending, the FDA approved Mutual's ANDA. The FDA denied Tyco's citizen petition in its entirety five months later.
After the Federal Circuit affirmed the district court's later decision that the '954 patent was invalid for obviousness, the district court lifted the stay of Mutual's antitrust counterclaims. In an opinion on January 18, 2013, the district court granted summary judgment to Tyco on Mutual's counterclaims, which, according to the Federal Circuit, were based on four arguments:
- That Tyco's section 271(e)(2) infringement claim constituted sham litigation that subjected Tyco to antitrust liability for using illegitimate means to keep Mutual's product off the market.
- That no reasonable litigant could have expected Tyco's patent to withstand a validity challenge.
- That Tyco's citizen petition was a sham.
- That Tyco's infringement suit was the product of fraud under Walker Process.
In a 2-1 decision last week (over Judge Newman's dissent), the Federal Circuit affirmed two aspects of the district court decision and vacated two others. The court affirmed the summary judgment against Mutual's claim that no reasonable litigant could have expected Tyco's patent to be upheld as valid and affirmed the summary judgment against Mutual's Walker Process fraud claim. The court vacated the summary judgment that Tyco's infringement claim under 271(e)(2) was not sham and that Tyco's citizen petition to the FDA was not a sham.
The premise of Mutual's argument that Tyco's 271(e)(2) infringement claim was a sham was that Mutual's ANDA specified that the temazepam in Mutual's ANDA product would have a specific surface area outside of the range claimed in the '954 patent. The Federal Circuit stated that "it is not unreasonable for a patent owner to allege infringement under section 271(e)(2)(A) if the patent owner has evidence that the as-marketed commercial ANDA product will infringe, even though the hypothetical product specified in the ANDA could not infringe." But the court found that there was conflicting evidence concerning the specific surface area of the temazepam in Mutual's ANDA product, and remanded for the district court to "determine whether Mutual has shown that the subjective element of the sham-litigation test has been satisfied."
Similarly, the Federal Circuit found that there were disputed issues of fact precluding summary judgment with respect to whether Tyco's citizen petition was a sham. The court stated:
Particularly probative of whether the citizen petition was reasonable is the FDA's response, which denied the petition in terms indicating that, in the FDA's view, it was wholly without merit. The FDA found that Tyco had "provided no evidence from clinical trials, pharmacokinetic studies, bioequivalence testing, or any other source . . . . Instead the petition relies entirely on uncorroborated generalities and theoretical speculation to support its critical point."
The court also noted that "Mutual's expert reviewed the citizen petition and concluded that 'Tyco did not have a scientific basis to conclude that Mutual's production would not be bioequivalent to Restoril.'" The court concluded, "The testimony of Mutual's expert and the FDA's response to the citizen petition are sufficient evidence from which a reasonable finder of fact could conclude that Tyco's citizen petition was objectively baseless."
With regard to the subjective prong of the test, the Federal Circuit found it significant that Tyco filed the citizen petition just one day after the district court granted summary judgment of noninfringement. Mutual argued that "filing the citizen petition at that late date caused the FDA to delay the approval of Mutual's ANDA, and thus resulted in a further period of market exclusivity for Tyco." Mutual also pointed to an email from Tyco's R&D group stating that a temazepam formulation that was bioequivalent to Restoril could be made from temazepam having a different specific surface area. The court concluded, "The timing of the citizen petition and the email are sufficient evidence from which a reasonable finder of fact could determine that Mutual had satisfied the subjective element necessary to show that Tyco's citizen petition was a sham."
The Federal Circuit found, however, that there was an open issue "as to whether the filing of the citizen petition caused any antitrust injury to Mutual." Thus, the court remanded the case with instructions for the district court to "determine whether Mutual suffered an anticompetitive harm in the form of a delay in the approval of its ANDA due to the filing of Tyco's citizen petition with the FDA."
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