In an effort to market its generic version of Pfizer’s blockbuster drug Zoloft, Teva Pharmaceuticals USA, Inc. (“Teva”) sued Pfizer Inc. (“Pfizer”) challenging a patent on that drug. Specifically, Teva sued Pfizer for a declaratory judgment that its generic version of sertraline hydrochloride would not infringe Pfizer’s patents on the drug Zoloft. Pfizer moved to dismiss for lack of subject matter jurisdiction, arguing that there was no actual controversy between the parties as required for such jurisdiction. The district court granted the motion to dismiss.

The district court applied the two-prong test for determining whether there is jurisdiction over an action brought under the Declaratory Judgment Act, 28 U.S.C. §2201. For an actual controversy to exist, this test requires that there must be: 1) an explicit threat or other action by the patentee, which creates a reasonable apprehension on the part of the declaratory plaintiff that it will face an infringement suit; and, 2) present activity which could constitute infringement or concrete steps taken with the intent to conduct such activity. The district court readily found that Teva satisfied the second prong of this test, noting that Teva filed an abbreviated new drug application (“ANDA”) seeking the Food and Drug Administration’s approval to market its generic version of sertraline hydrochloride and explained that the filing of an ANDA constitutes a technical act of infringement sufficient to create case or controversy jurisdiction to enable a court to resolve infringement and validity disputes. However, as to the first prong, the district court rejected Teva’s arguments that the actions by Pfizer created a reasonable apprehension of suit.

The Federal Circuit followed the district court’s analysis and affirmed the ruling of the district court on January 21, 2005 in Teva Pharmaceuticals USA, Inc. v. Pfizer, Inc., Case No. 04-1186 (Fed. Cir.). In a 2-1 decision, the Court of Appeals panel decided that a declaratory judgment plaintiff in a patent case must demonstrate a “reasonable apprehension” of suit to establish Article III jurisdiction. The case involved the Hatch-Waxman Act. In essence, the court held that the fact that there was an Orange Book filing did not create a reasonable apprehension of suit. Hatch-Waxman requires listing all patents in the Orange Book, which is essentially a listing of patents, to which claims of infringement “could be reasonably asserted”. However, the court held that more is required for an actual controversy than the existence of an adversely held patent.

The Federal Circuit also examined whether the Medicare Amendments by Congress in the Medicare Prescription Drug, Improvement and Modernization Act of 2003 altered the test in the Hatch-Waxman setting. The court ruled, however, that because the district court did not issue its opinion until December 8, 2003, the date these amendments were enacted, the declaratory judgment provisions applied. The Court said that the amendments by Congress did not contain language automatically conferring subject matter jurisdiction anytime a patent is listed in the Orange Book, a Paragraph IV certification is filed, and a patentee fails to sue within 45 days of receiving notice of the certification. The statute is clear that courts shall have subject matter jurisdiction “to the extent consistent with the Constitution.”

Last year, the Federal Trade Commission (“Commission or FTC”), the AARP, the Generic Pharmaceutical Association and IVAX Corporation filed amicus briefs in support of Teva’s appeal. The FTC filed a very interesting amicus brief suggesting that in particular circumstances under Hatch-Waxman, the court should accept jurisdiction because the generic firm suffers injury independent of the threat of infringement suit as the 180 day period has economic significance. The courts rejected that argument.

Last month, on February 11, the Commission authorized the staff to file a brief as amicus curiae in support of Teva’s petition for rehearing or rehearing en banc. The FTC’s brief stated that the panel majority’s decision conflicted with two prior decisions of the Federal Circuit and one decision of the U.S. Supreme Court. The Commission vote authorizing the staff to file the amicus brief was 4-0-1, with Commissioner Pamela Jones Harbour recused.

Authored by:
Camelia Mazard