Petition for Writ of Certiorari — AIDS Healthcare Foundation, Inc., Petitioner v. Gilead Sciences, Inc., et al.

No. _________

================================================================

In The

Supreme Court of the United States

-----------------------------------------------------------------AIDS HEALTHCARE FOUNDATION, INC.,

Petitioner,

v.

GILEAD SCIENCES, INC. and JAPAN TOBACCO INC.,

Respondents.

-----------------------------------------------------------------On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Federal Circuit

-----------------------------------------------------------------PETITION FOR WRIT OF CERTIORARI

-----------------------------------------------------------------DANIEL P. HIPSKIND

Counsel of Record

DORIAN S. BERGER

BERGER & HIPSKIND LLP

9538 Brighton Way

Suite 320

Beverly Hills, CA 90210

(323) 886-3430

dph@bergerhipskind.com

dsb@bergerhipskind.com

================================================================

COCKLE LEGAL BRIEFS (800) 225-6964

WWW.COCKLELEGALBRIEFS.COM

i

QUESTION PRESENTED

Many patients with HIV depend on lifesaving,

low-cost drugs provided by Petitioner AIDS Healthcare

Foundation, Inc. (“AHF”), a non-profit organization.

Respondent Gilead Sciences, Inc. has patented HIV

drugs including Tenofovir Alafenamide (“TAF”). In addition to its patents on TAF, Gilead also obtained five

years of exclusivity for drugs containing TAF from the

U.S. Food and Drug Administration (“FDA”). During

this five-year exclusivity period, AHF and its generic

drug suppliers are prevented from filing an application

with the FDA for approval of generic TAF. AHF seeks

to introduce generic TAF to its patients as soon as

possible (once Gilead’s exclusivity period runs out) but

is prevented from doing so by Gilead’s patents on TAF.

AHF filed a declaratory judgment action alleging invalidity of the patents, but the lower courts found that

AHF lacked jurisdiction. This case presents the following question:

In the context of patent cases involving pharmaceutical products, does the “actual controversy” requirement of the Declaratory Judgment Act, 28 U.S.C.

§ 2201(a), require a party seeking to introduce a generic drug product to file an application for FDA approval of that generic drug product before it can file

suit for declaratory relief for patent invalidity?

ii

PARTIES TO THE PROCEEDINGS

The petitioner is AIDS Healthcare Foundation,

Inc. The respondents are Gilead Sciences, Inc. and

Japan Tobacco, Inc.

iii

RULE 29.6 CORPORATE

DISCLOSURE STATEMENT

Petitioner does not have any parent corporations,

and no publicly held company owns 10 percent or more

of the stock of petitioner.

iv

TABLE OF CONTENTS

Page

QUESTION PRESENTED...................................

i

PARTIES TO THE PROCEEDINGS ...................

ii

RULE 29.6 CORPORATE DISCLOSURE

STATEMENT ...................................................

iii

TABLE OF CONTENTS ......................................

iv

TABLE OF AUTHORITIES .................................

vi

OPINIONS BELOW.............................................

1

JURISDICTIONAL STATEMENT ......................

1

CONSTITUTIONAL AND STATUTORY

PROVISIONS ...................................................

1

STATEMENT OF THE CASE..............................

2

A.

FACTUAL BACKGROUND .......................

4

B.

THE PRESENT ACTION AND DISTRICT

COURT’S DECISION ................................

8

THE FEDERAL CIRCUIT’S DECISION ....

10

C.

REASONS FOR GRANTING THE WRIT............ 11

A.

THE FEDERAL CIRCUIT’S DECISION

CONFLICTS WITH THIS COURT’S DECISIONS .................................................... 14

1) The Federal Circuit’s Decision Is Contrary to This Court’s Holdings on Article III and the Declaratory Judgment

Act, and a Return to a Test This Court

Already Rejected .................................. 14

v

TABLE OF CONTENTS – Continued

Page

2) The Appellate Court’s Application of

Its Rigid Rule Meant It Did Not Evaluate “All the Circumstances” of AHF’s

Declaratory Judgment Action ............... 17

B.

THE FEDERAL CIRCUIT’S RIGID RULE

REQUIRING AN APPLICATION FOR

FDA APPROVAL FOR DECLARATORY

JUDGMENT STANDING IS IRRECONCILABLE WITH ARTICLE III AND ESTABLISHED PATENT POLICY ................ 23

CONCLUSION..................................................... 26

APPENDIX

United States Court of Appeals for the Federal

Circuit, Opinion, May 11, 2018 ........................ App. 1

United States District Court for Northern the

District of California, Order, July 6, 2016 ..... App. 18

vi

TABLE OF AUTHORITIES

Page

CASES

Allen v. Wright, 468 U.S. 737 (1984) ..................... 11, 17

Benitec Australia, Ltd. v. Nucleonics, Inc., 495

F.3d 1340 (Fed. Cir. 2007) ................................. 12, 21

Cardinal Chem. Co. v. Morton Int’l, Inc., 508 U.S.

83 (1993) ..................................................................24

Cat Tech LLC v. TubeMaster, Inc., 528 F.3d 871

(Fed. Cir. 2008) ........................................................16

FTC v. Actavis, Inc., 570 U.S. 136 (2013) ....................13

Gen-Probe Inc. v. Vysis, Inc., 359 F.3d 1376 (Fed.

Cir. 2004) .................................................................15

Goodyear Tire & Rubber Co. v. Releasomers, Inc.,

824 F.2d 953 (Fed. Cir. 1987) ..................................20

Lear, Inc. v. Adkins, 395 U.S. 653 (1969) ....................23

Maryland Casualty Co. v. Pacific Coal & Oil Co.,

312 U.S. 270, 61 S. Ct. 510, 85 L. Ed. 826

(1941) ................................................................. 15, 17

MedImmune Inc. v. Genentech, Inc., 549 U.S. 118

(2007) ............................................................... passim

Medtronic, Inc. v. Mirowski Family Ventures,

LLC, 571 U.S. 191 (2014) ........................................13

Micron Tech., Inc. v. Mosaid Techs., Inc., 518 F.3d

897 (Fed. Cir. 2008) .................................................16

Pope Mfg. Co. v. Gormully, 144 U.S. 224 (1892) ..... 23, 24

Sandoz, Inc. v. Amgen, Inc., 773 F.3d 1274 (Fed.

Cir. 2014) ............................................... 12, 16, 17, 21

vii

TABLE OF AUTHORITIES – Continued

Page

Steel Co. v. Citizens for a Better Env’t, 523 U.S.

83 (1998) ..................................................................12

United States v. Glaxo Group Ltd., 410 U.S. 52

(1973) .......................................................................24

Vanguard Research, Inc. v. PEAT, Inc., 304 F.3d

1249 (Fed. Cir. 2002) ...............................................20

CONSTITUTIONAL PROVISIONS

U.S. Const. art. III, § 2 ..................................................1

STATUTES

21 U.S.C. § 355(j)(8)(B)(i)-(ii) ......................................22

28 U.S.C. § 1254(1) ........................................................1

28 U.S.C. § 1331 ........................................................ 1, 8

28 U.S.C. § 1338 ............................................................8

28 U.S.C. § 1338(a) ........................................................2

28 U.S.C. § 2201 ............................................................8

28 U.S.C. § 2201(a) ........................................................2

1

OPINIONS BELOW

The opinion of the United States Court of Appeals

for the Federal Circuit, App. at 1, is reported at 890

F.3d 986 (Fed. Cir. 2018). The District Court opinion

granting defendant’s/respondent’s motion to dismiss,

App. at 18, is reported at 2016 U.S. Dist. LEXIS 87578

(C.D. Cal. July 6, 2016).

------------------------------------------------------------------

JURISDICTIONAL STATEMENT

The Court of Appeals decision in this case was issued on May 11, 2018. This petition is thus timely. Jurisdiction is conferred by 28 U.S.C. § 1254(1).

------------------------------------------------------------------

CONSTITUTIONAL AND

STATUTORY PROVISIONS

Article III of the Constitution of the United States

provides in relevant part:

SECTION 2. The judicial Power shall extend to

all Cases, in Law and Equity, arising under

this Constitution, the Laws of the United

States. . . .

28 U.S.C. § 1331 provides:

The district courts shall have original jurisdiction of all civil actions arising under the

Constitution, laws, or treaties of the United

States.

2

28 U.S.C. § 1338(a) provides:

The district courts shall have original jurisdiction of any civil action arising under any

Act of Congress relating to patents, plant variety protection, copyrights and trademarks.

No State court shall have jurisdiction over

any claim for relief arising under any Act of

Congress relating to patents, plant variety

protection, or copyrights. . . .

28 U.S.C. § 2201(a) provides:

(a) In a case of actual controversy within its

jurisdiction, . . . any court of the United

States, upon the filing of an appropriate

pleading, may declare the rights and other legal relations of any interested party seeking

such declaration, whether or not further relief

is or could be sought. Any such declaration

shall have the force and effect of a final judgment or decree and shall be reviewable as

such.

------------------------------------------------------------------

STATEMENT OF THE CASE

This case challenges the lower courts’ treatment of

this Court’s decision in MedImmune Inc. v. Genentech,

Inc., 549 U.S. 118 (2007). In contrast to the flexible,

case-by-case test established by this Court in MedImmune, the District Court found that Federal Circuit jurisprudence requires a would-be competitor in the

pharmaceutical field to wait until it files an application

with the FDA for approval of its competing drug

3

product before it can maintain a suit seeking a declaratory judgment of patent invalidity.

Petitioner AIDS Healthcare Foundation (“AHF”)

is the largest non-profit provider of HIV and AIDS

medical care in the United States and one of the largest purchasers of drugs used to treat HIV and AIDS.

AHF provides large-scale HIV counseling and testing

services, early intervention services, HIV medical care,

research on HIV care and treatment, medical case

management, pharmacy services, referrals, and innovative client retention protocols. It operates 46

Healthcare Centers in the United States spread

throughout 14 states and the District of Columbia.

Worldwide, AHF has more than 938,000 patients and

clients.

Respondents Gilead Sciences, Inc. and Japan Tobacco Inc. own patents related to a lifesaving HIV drug,

Tenofovir Alafenamide (“TAF”).1 The first TAF-containing product, Genvoya, was released by Gilead in

November 2015. App. at 24. TAF itself is not a new

compound; it is a prodrug of the compound Tenofovir,

which was synthesized over 30 years ago. C.A.A. at

856. TAF is also not the first prodrug of Tenofovir. Several years before Respondents patented TAF, Gilead

patented a similar prodrug called Tenofovir Disoproxil

Fumarate (“TDF”). App. at 23. Despite similarities between TAF and TDF, TAF is a superior prodrug

1

The patents covering TAF are U.S. Patent Nos. 7,390,791

(owned by Gilead); 7,800,788 (owned by Gilead); 8,754,065 (owned

by Gilead); 8,148,374 (owned by Gilead); and 8,633,219 (owned by

Japan Tobacco). C.A.A. at 7.

4

formulation of Tenofovir because a smaller dose can be

utilized for the same therapeutic effect, thus reducing

bone and kidney toxicity. Id. Despite the clinical superiority of TAF, AHF maintains that each of the TAF patents are invalid in light of the minor and obvious

change in the Tenofovir prodrug.

A. FACTUAL BACKGROUND.

Tenofovir was discovered in 1984 by scientists in

Czechoslovakia. C.A.A. at 857. In its original formulation, Tenofovir had to be administered intravenously,

dramatically limiting its sales potential. App. at 23. In

1997, Gilead bought rights to sell Tenofovir and modified the chemical composition so it could be taken

orally. Id. That modified chemical composition is TDF,

which the FDA approved in 2001 and is marketed under the brand name Viread. C.A.A. at 857. TDF became

the backbone of many HIV treatment regimens. From

the outset, studies showed that TDF could cause significant kidney damage and bone toxicity. App. at 23.

The toxicity of TDF was alarming because HIV-infected patients would likely receive treatment for decades, meaning the toxicity would continue to increase

over time. The FDA took notice of the toxicity of TDF

and required Gilead to study whether TDF was harmful. C.A.A. 1454-55. The FDA repeatedly warned Gilead about its sales tactics regarding TDF. For example,

in 2002, the FDA said that Gilead salespeople had

falsely stated that TAF had “no toxicities,” was “benign,” and was “extremely safe.” Id. at 1462. In 2003,

the FDA required Gilead to retrain its sales

5

representatives about the side effects associated with

TDF. Id. at 1470.

Around the time it was under assault for misrepresenting the toxicity of TDF, Gilead began researching a different chemical version of Tenofovir, TAF.

Gilead began research studies on TAF in 2002, but it

did not publish the results of those studies until 2011.

App. at 23. Instead, Gilead publicly said it was discontinuing research on TAF compounds even as it filed

seven patent applications in 2004 and 2005 related to

using TAF to treat HIV. Id.

Gilead did not seek FDA approval for TAF until

2015, which was also the first time generic drug makers could legally introduce generic TDF. Id. at 24. Consequently, patients that might have been treated with

TAF, which was known to be effective and less toxic as

early as 2002, were forced to wait more than a decade

so that Gilead could profit from its patent and regulatory monopoly first on TDF and then on TAF for as long

as possible. Gilead waited until TDF was about to go

off patent to seek FDA approval and New Chemical

Entity exclusivity (“NCE exclusivity”) for TAF. NCE

exclusivity prevents anyone from filing for FDA approval of any TAF-containing product until late 2019.

Id. at 25.

TDF became a key component in many HIV treatment regimens, where it was combined with other

drugs. C.A.A. at 830-31. These combination drug treatments are known as Highly Active Antiretroviral Therapy (“HAART”). HAART is aimed at reducing a

6

patient’s viral load to maintain a patient’s immune

system. HAART regimens generally consist of three

drugs: two drugs from the class of drugs known as Nucleoside Reverse Transcriptase Inhibitors (“NRTIs”)

and one drug from classes of drugs known as NonNucleoside Reverse Transcriptase Inhibitors (“NNRTI”),

Protease Inhibitors (“PI”), or Integrase Nuclear Strand

Transfer Inhibitors (“INSTI”). Tenofovir is an NRTI.

Physicians regularly substitute different drugs in

these categories to tailor treatment to particular conditions and symptoms exhibited by patients.

Notably, even after Gilead made TAF available, it

did not release it as a standalone product (unlike TDF,

which Gilead released both as a standalone product

and as part of various combination drugs). C.A.A. 858.

Instead, Gilead entered into licensing agreements with

Japan Tobacco and others to sell fixed-dose combination therapies that enjoy the patent protections of not

only the weak TAF patents, but also patents that cover

the other pharmaceutical compounds in these combination drugs. Id. AHF’s inability to obtain TAF on its

own prevented AHF physicians from tailoring specific

HAART therapies with TAF to its patients.

AHF wants to introduce lower-cost, generic versions of TAF to its patients as soon as possible because

the prodrug is less toxic to patients than TDF. Respondents’ patents stand in the way. Consequently,

AHF sought to challenge the validity of Respondents’

TAF patents. However, the FDA granted TAF a fiveyear New Chemical Entity (“NCE”) exclusivity, which

means that AHF and generic drug makers are barred

7

by statute from submitting an Abbreviated New Drug

Application (“ANDA”) – traditionally the mechanism

used to trigger a declaratory judgment action because

it constitutes a statutorily created “artificial infringement” – until November 2019.

Because neither AHF nor its generic drug partners can file an ANDA, AHF undertook a number of

steps to speed the introduction of generic TAF, culminating in its filing of a declaratory judgment action

against Respondents. Those steps included: (1) requesting to place orders with pharmaceutical manufacturers to make a standalone TAF product (App. at

25); (2) requesting from Gilead a covenant not to sue

AHF relating to its activities directed to bringing generic TAF to market (Id. at 26); (3) providing written

notice to Teva North America, Autobindo Pharma

USA, Lupin Pharmaceuticals, and Sandoz, that AHF is

“ready and able to distribute a generic version of TAF

as a standalone compound (that would be used in a

combination HIV treatment regime) or a generic tablet

containing TAF” (C.A.A. at 841); (4) conducting an ongoing study of TAF in treating patients conducted by

Otto Yang (Scientific Director for AHF), Michael

Wohlfeiler (Chief of Medicine for AHF), and Robert

Heglar (Deputy Chief of Medicine for AHF) (Id. at 845);

(5) preparing clinicians and patients for treatments

that incorporate generic TAF (Id. at 842); (6) educating

the public, government agencies, hospitals, and advocacy organizations about generic TAF (Id.); (7) preparing for the distribution of HAART therapies

incorporating generic TAF (Id.); (8) notifying Gilead in

8

writing that AHF intends “to manufacture, purchase,

import and/or sell [TAF], which Gilead has claimed is

subject to patents assigned and/or licensed to Gilead;”

(Id. at 841) and (9) conducting analysis of potential

combination therapies for HIV that incorporate TAF

and drugs that are not part of Gilead’s fixed-dose combination tablets (Id. at 843).

B. THE PRESENT ACTION AND DISTRICT

COURT’S DECISION.

After undertaking actions to promote, purchase,

and distribute generic TAF, on April 11, 2016, AHF

filed a declaratory judgment action in the Northern

District of California, invoking the Declaratory Judgment Act, 28 U.S.C. § 2201, and seeking declarations

that Respondents’ patents were invalid.2 App. at 26.

The District Court had jurisdiction pursuant to 28

U.S.C. §§ 1331 and 1338.

Respondents moved to dismiss the action, arguing

that there was no justiciable controversy between the

parties under Article III and the Declaratory Judgment Act. The District Court’s decision said that the

TAF patents “served as barriers to entry for any generic” and “[a]ccordingly, [AHF] curbed or forestalled

investment in research, education, and preparation for

2

AHF’s complaint also sought relief for other alleged violations, including of the Sherman Act, the California Cartwright

Act, and California and Nevada unfair trade practices law. Those

issues are not before this Court.

9

the distribution of generic TAF products.” App. at 26.

The District Court explained that:

[T]he Federal Circuit’s interpretation of

Article III prevents challenges of patents in

district court at least until a generic drug

manufacturer has neared completion of a

product (and perhaps until the manufacturer

has “infringed” by seeking FDA approval).

This effectively extends NCE exclusivity

beyond its five-year period by tacking on

the time it takes to successfully challenge bad

patents covering the new chemical entity.

Id. at 31.

The District Court also recognized the important

policy goals that would be furthered by AHF’s declaratory judgment action:

If AIDS Healthcare were to succeed in clearing away the allegedly invalid patents, then

generic manufacturers would be all the sooner

poised to apply for FDA approval for TAF-containing products when the application period

opens in three-plus years. This would reduce

the barriers to speedily bringing low-cost effective drugs to victims of HIV and AIDS.

Id. at 30-31.

Nonetheless, the District Court found AHF lacked

Article III standing. The District Court explained:

If we were writing on a clean slate, this order

would hold that AIDS Healthcare, at least as

10

a purchaser seeking to encourage manufacturers to prepare to make TAF-containing

products as soon as Gilead’s NCE exclusivity

expires, could pursue its invalidity theories in

district court as the first step in solving a

multi-layered problem. . . . But our Federal

Circuit’s holdings insist that generic manufacturers must first wait until they can seek

FDA approval to sue to invalidate the relevant patents.

Id. at 30.

The District Court dismissed the case.

C. THE FEDERAL CIRCUIT’S DECISION.

The Federal Circuit (Newman, J., joined by Dyk

and Stoll, JJ.) affirmed the dismissal, holding that

“this action does not meet the requirements of the Declaratory Judgment Act.” App. at 2. The Court of Appeals rejected AHF’s argument that under this Court’s

decision in MedImmune, AHF has shown that “the

facts alleged, under all the circumstances, show that

there is a substantial controversy, between parties

having:” (1) “adverse legal interests” that (2) are “of

sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” MedImmune, 549 U.S.

at 127 (citation omitted). The Court of Appeals explained:

We note that the Hatch-Waxman statute

created an artificial act of infringement by the

filing of a certain abbreviated new drug application (“ANDA”); this is an explicit statutory

11

basis for litigation before actual infringement

occurs. Here, it is undisputed that no potential

generic producer had filed an ANDA for any

TAF-containing products at the initiation of

this action, for TAF’s New Chemical Entity

period of exclusivity forecloses such a filing

until November 2019; nor is there any other

basis for declaratory judgment jurisdiction.

The district court correctly concluded that

[AHF], “in its current posture, cannot invoke

any statutory relaxation of otherwise-applicable immediacy and reality requirements. . . .”

Id. at 9 (internal citations omitted).

------------------------------------------------------------------

REASONS FOR GRANTING THE WRIT

The Federal Circuit’s decision in this case adopts

a de facto rule that a declaratory judgment action seeking to invalidate patents covering a pharmaceutical

product covered by NCE exclusivity cannot occur until

an ANDA is filed. The Appellate Court’s reasoning effectively eliminates declaratory actions by parties during the NCE exclusivity period, even though no statute

or court ruling requires such a rigid test. In fact, this

Court’s decisions counsel the opposite – that “the

standing inquiry requires careful judicial examination

of a complaint’s allegations to ascertain whether the

particular plaintiff is entitled to an adjudication of the

particular claims asserted.” Allen v. Wright, 468 U.S.

737, 752 (1984). The Appellate Court’s decision gave

only token consideration to the balancing of factors

12

approach endorsed by this Court in MedImmune, as

well as the “irreducible constitutional minimum of

standing,” Steel Co. v. Citizens for a Better Env’t, 523

U.S. 83, 102 (1998). Instead, the Federal Circuit has

adopted an inflexible declaratory judgment requirement (i.e., filing an application for FDA approval) contrary to precedent.

Indeed, the Federal Circuit has repeatedly applied

a similarly unbending approach to declaratory judgment actions relating to pharmaceutical products

when FDA approval has not yet been sought. In Benitec Australia, Ltd. v. Nucleonics, Inc., 495 F.3d 1340

(Fed. Cir. 2007), the Federal Circuit said that the declaratory judgment plaintiff ’s

activities of developing and submitting information to the FDA related to human application of RNAi does not present a case or

controversy of sufficient immediacy and reality to warrant declaratory judgment jurisdiction over the enforceability of the ‘099 patent.

The fact that Nucleonics may file an NDA in

a few years does not provide the immediacy

and reality required for a declaratory judgment.

495 F.3d at 1348.

In Sandoz, Inc. v. Amgen, Inc., 773 F.3d 1274 (Fed.

Cir. 2014), the Federal Circuit explained, “we have

found no justiciability where a declaratory-judgment

plaintiff had not filed an application for the FDA approval required to engage in the arguably infringing

activity.” 773 F.3d at 1281.

13

The Federal Circuit’s approach to declaratory

judgment claims in the pharmaceutical industry results in the broad prohibition of declaratory judgment

actions until FDA approval is sought (such as filing an

ANDA). This rigid rule is squarely at odds with this

Court’s declaratory judgment standing decisions, as

well as the “patent-related policy of eliminating

unwarranted patent grants so the public will not

‘continually be required to pay tribute to would-be

monopolists without need or justification.’ ” FTC v.

Actavis, Inc., 570 U.S. 136, 151 (2013) (citation omitted).

Indeed, “the ‘public’ also has a ‘paramount interest in

seeing that patent monopolies . . . are kept within their

legitimate scope.’ ” Medtronic, Inc. v. Mirowski Family

Ventures, LLC, 571 U.S. 191, 203 (2014) (citation omitted). The Federal Circuit’s holding in this case harkens

back to its outmoded “reasonable apprehension” test

that MedImmune rejected. 549 U.S. at 132 n.11.

The Federal Circuit’s improper approach to declaratory judgment suits filed before a generic manufacturer submits an application with the FDA for

approval to market a generic pharmaceutical product

also affects millions of Americans who rely on the

speedy introduction of more affordable generic drugs

for lifesaving treatments. Here, in an effort to obtain

two separate windows of monopoly profits from the

Tenofovir compound, Gilead waited until the twilight

of its monopoly over TDF before introducing TAF. Now,

patients are faced with the often-difficult choice of continuing to use an inferior product (TDF) with heightened risks of bone and kidney toxicity or pay far more

for the superior TAF formulation. The Federal Circuit’s

14

approach toward standing in the context of pharmaceuticals rewards this exact type of manipulation of

patent filings and NCE exclusivity periods by allowing

drug companies, such as Gilead, to delay market entry

of safer or more effective drugs in an effort to extend

monopoly pricing on earlier, inferior drugs and reduce

generic competition.

As a result of the Federal Circuit’s rigid rule, parties that wish to enter the market with a generic drug

as soon as the drug companies’ NCE exclusivity period

ends cannot. As is the case here, even if a party is engaged in behavior that would confer declaratory judgment jurisdiction, the Federal Circuit’s rule requires

that party to wait to file a declaratory judgment action

to invalidate patents covering a pharmaceutical compound until it has filed an application for FDA approval of a competing drug product, a process which

cannot even begin to play out until the expiration of

the NCE exclusivity period.

A. THE FEDERAL CIRCUIT’S DECISION CONFLICTS WITH THIS COURT’S DECISIONS.

1) The Federal Circuit’s Decision Is Contrary to This Court’s Holdings on Article

III and the Declaratory Judgment Act,

and a Return to a Test This Court Already Rejected.

MedImmune teaches that bright line rules and

rigid requirements are inappropriate when analyzing

standing in a declaratory judgment suit: “Basically, the

question in each case is whether the facts alleged,

15

under all the circumstances, show that there is a substantial controversy, between parties having adverse

legal interests, of sufficient immediacy and reality to

warrant the issuance of a declaratory judgment.” 549

U.S. at 127 (citing Maryland Casualty Co. v. Pacific

Coal & Oil Co., 312 U.S. 270, 273, 61 S. Ct. 510, 85

L. Ed. 826 (1941)).

Before MedImmune, the Federal Circuit followed

the now rejected two-part test where a party could only

bring a declaratory judgment action when there was

both “(1) a reasonable apprehension on the part of the

declaratory judgment plaintiff that it will face an infringement suit; and (2) present activity by the declaratory judgment plaintiff which could constitute

infringement, or concrete steps taken with the intent

to conduct such activity.” Gen-Probe Inc. v. Vysis, Inc.,

359 F.3d 1376, 1380 (Fed. Cir. 2004) (citation omitted)

(overruled in part by MedImmune, 549 U.S. at 132

n.11).

In MedImmune, the declaratory judgment plaintiff had licensed the patent at issue and was paying

royalties. 549 U.S. at 121. Later, another patent issued

that the patentee asserted was covered under the license agreement. Id. at 122. The plaintiff continued to

pay royalties even though it thought the new patent

was invalid. Id. Because it continued to license the patents, no threat of infringement existed. Nonetheless,

this Court held that “under all the circumstances,” the

declaratory judgment plaintiff did not have to breach

its license agreement before commencing suit. Id. at

127, 137. Thus, even without an explicit threat of infringement, Article III standing existed.

16

The Federal Circuit has acknowledged that

MedImmune creates a “more lenient” standard that

“facilitates or enhances the availability of declaratory

judgment jurisdiction in patent cases.” Micron Tech.,

Inc. v. Mosaid Techs., Inc., 518 F.3d 897, 902 (Fed. Cir.

2008). It has also said that the “inquiry, focused on the

combination of immediacy and reality, involves no

brightline test.” Sandoz, 773 F.3d at 1277. In another

Federal Circuit case, the court explained there is “no

facile, all-purpose standard to police the line between

declaratory judgment actions which satisfy the case or

controversy requirement and those that do not.” Cat

Tech LLC v. TubeMaster, Inc., 528 F.3d 871, 879 (Fed.

Cir. 2008).

These Federal Circuit decisions pay lip service to

the teachings of MedImmune, but in the context of declaratory judgment actions filed by would-be competitors in the field of a pharmaceutical product (as is the

case here), the Appellate Court continues to improperly apply a rigid rule similar to the disallowed, preMedImmune “reasonable apprehension” test. The Federal Circuit’s opinions focus on whether the declaratory judgment plaintiff has filed for FDA approval of a

drug, creating a de facto rule that unless an ANDA or

other drug approval application has been filed, a court

has no declaratory judgment jurisdiction. The Federal

Circuit has stated:

[W]e have found no justiciability where a

declaratory-judgment plaintiff had not filed

an application for the FDA approval required

to engage in the arguably infringing activity.

On the other hand, where we have found a

17

case or controversy in the Hatch-Waxman setting, we have focused on the presence of an

application for the required FDA approval.

Sandoz, 773 F.3d at 1281.

As the District Court succinctly explained, “the

Federal Circuit . . . had never found a justiciable case

or controversy before a drug manufacturer had applied

for FDA approval.” App. at 29-30.

The absolute requirement that an application for

FDA approval like an ANDA must occur before Article

III standing attaches departs from this Court’s jurisprudence, which requires a nuanced, fact-intensive approach to the question of declaratory judgment

jurisdiction. See, e.g., Maryland Casualty, 312 U.S. at

273 (“The difference between an abstract question and

a ‘controversy’ contemplated by the Declaratory Judgment Act is necessarily one of degree, and it would be

difficult, if it would be possible, to fashion a precise test

for determining in every case whether there is such a

controversy.”); MedImmune, 549 U.S. at 132 n.11 (rejecting the Federal Circuit’s previous “apprehension of

suit” test); Allen, 468 U.S. at 752 (“[T]he standing inquiry requires careful judicial examination of a complaint’s allegations. . . .”).

2) The Appellate Court’s Application of Its

Rigid Rule Meant It Did Not Evaluate

“All the Circumstances” of AHF’s Declaratory Judgment Action.

The Federal Circuit affirmed the dismissal of

AHF’s lawsuit based on the court’s flawed belief that

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declaratory judgment jurisdiction exists only when an

application for FDA approval has been filed. The District Court explained that the “Federal Circuit’s interpretation of Article III prevents challenges of patents

in District Court at least until a generic drug manufacturer has neared completion of a product (and perhaps until the manufacturer has ‘infringed’ by seeking

FDA approval).”

Absent the Federal Circuit’s rigid rule, the District

Court would have reached a different conclusion and

found standing.

If we were writing on a clean slate, this order

would hold that AIDS Healthcare, at least as

a purchaser seeking to encourage manufacturers to prepare to make TAF-containing

products as soon as Gilead’s NCE exclusivity

expires, could pursue its invalidity theories in

district court as the first step in solving a

multi-layered problem. . . . But our Federal

Circuit’s holdings insist that generic manufacturers must first wait until they can seek

FDA approval to sue to invalidate the relevant patents. . . .

App. at 30-31.

The Federal Circuit adopted the District Court’s

reasoning, holding that AHF “fell short of the declaratory judgment requirements of immediacy and reality”

in part because “the Hatch-Waxman statute created an

artificial act of infringement by the filing of a certain

abbreviated new drug application (‘ANDA’); this is an

explicit statutory basis for litigation before actual

19

infringement occurs.” Id. at 9. The lower courts’ analyses improperly required an ANDA filing as a prerequisite for declaratory judgment jurisdiction.

As a result, the Federal Circuit did not analyze “all

the circumstances” that brought AHF to the point of

suing for declaratory judgment. A suit has Article III

standing when the “facts alleged, under all the circumstances, show that there is a substantial controversy,

between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance

of a declaratory judgment.” MedImmune, 549 U.S. at

127.

As to the “substantial controversy prong” of the

standing test, the Federal Circuit did not undertake

the intensive factual analysis required to determine if

an actual controversy exists between AHF and Gilead.

For example, Gilead has a history of lawsuits against

generic drug makers regarding TDF, the predecessor to

TAF. See, e.g., Gilead Sciences, Inc. v. Teva Pharms.

USA, Inc., et al., Case No. 10-cv-01796, Dkt. No. 1 ¶ 29

(S.D.N.Y.) (infringement action against generic maker

seeking to make tenofovir disoproxil fumarate (TDF));

Gilead Sciences, Inc. v. Lupin Limited, Case No. 12-cv06294, Dkt. No. 1 ¶ 13 (S.D.N.Y.) (infringement action

against generic maker seeking to make combination

drug that incorporated TDF); Gilead Sciences, Inc. v.

CIPLA Ltd., Case No. 12-cv-06351, Dkt. No. 45 ¶¶ 19,

44 (S.D.N.Y.) (infringement action against generic

maker seeking to make tablets containing TDF). The

Federal Circuit did not mention these lawsuits even

though a patentee’s “willingness to protect [its]

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technology” is relevant to the jurisdictional inquiry. See

Vanguard Research, Inc. v. PEAT, Inc., 304 F.3d 1249,

1255 (Fed. Cir. 2002) (finding Article III controversy

based, in part, on related trade secrets misappropriation suit); Goodyear Tire & Rubber Co. v. Releasomers,

Inc., 824 F.2d 953, 955 (Fed. Cir. 1987).

The Federal Circuit should have looked at Gilead’s

litigious history over TDF in combination with other

factors such as Gilead’s refusal to provide a covenant

not to sue and public statements that Gilead would enforce its patent rights, as part of a holistic analysis of

whether the parties had a “substantial controversy,”

consistent with MedImmune’s “all the circumstances”

standard. It did not. In dealing with whether the parties had a substantial controversy, the Federal Circuit

merely concluded that “an actionable legal interest is

not here present, for neither [AHF] nor any producer

of TAF products is infringing or preparing to infringe

any TAF patent.” App. at 13.

Similarly, the Federal Circuit failed to analyze “all

the circumstances” regarding the immediacy of the

conflict between AHF and Gilead. The Federal Circuit

said that the District Court found “significant uncertainty about the nature of any hypothetical product.”

Id. at 8-9. But, because the District Court was constrained by the Federal Circuit’s de facto requirement

that an ANDA be filed for declaratory judgment jurisdiction to exist, it did not analyze the particular facts

pleaded by AHF either. Instead, it explained:

21

The NCE exclusivity ensures that the first act

of “artificial infringement” (the filing of an

ANDA) will not occur until 2019, at the earliest, and any proposed generic product cannot

be approved until 2020. AIDS Healthcare’s efforts to get a product to market on the early

range of that timeline do not eliminate the uncertainty that the Federal Circuit identified

as fatal in Benitec and Sandoz.

Id. at 30.

The District Court based its conclusion not on the

particular facts before it, but on what it saw as the Federal Circuit’s rule that without an ANDA on file, AHF

could not maintain declaratory judgment jurisdiction.

The Federal Circuit agreed with that conclusion. Id. at

9. Such a circular, truncated analysis cannot be a substitute for engaging in the factual inquiry required by

MedImmune.

Had the lower courts analyzed “all the circumstances” pleaded by AHF, they would have seen that

there are significant factual differences between the

present case and Benitec and Sandoz that make this

case much more certain and immediate. In those cases,

the declaratory judgment plaintiffs were engaged in

clinical trials that may or may not succeed in front of

the FDA. Benitec at 1346; Sandoz at 1279-80. By contrast, the products AHF seeks to obtain and distribute

are generic versions of Respondent Gilead’s TAFcontaining products, meaning those products must be

bioequivalents (defined in part as where “the rate and

extent of absorption of the drug do not show a

22

significant difference from the rate and extent of absorption of the listed drug”). 21 U.S.C. § 355(j)(8)(B)(i)(ii). Put simply, the products AHF seeks must be functionally equivalent to Gilead’s products. Consequently,

there is no uncertainty about whether the products

would meet with FDA approval or be infringing.

Other factors also point to the certainty of AHF’s

lawsuit, but the Federal Circuit failed to analyze these

issues as well. For example, AHF’s preparations to introduce generic TAF include soliciting the manufacture and importation of generic TAF, conducting

research relating to generic TAF, and investigating

HAART regimens incorporating generic TAF. C.A.A. at

841-42. Every introduction of an HIV drug by Gilead

has led to the submission of ANDA applications from

generic drug manufacturers following the expiration of

NCE exclusivity. Id. at 1550-51. Notably, TAF’s predecessor, TDF, was subject to multiple ANDA filings. Id.

at 844. This history shows that generic entry for TAF

products is not just probable, it is certain.

Had the District Court or Federal Circuit analyzed

these factors, rather than adhere to the Federal Circuit’s flawed, rigid test, the lower courts could easily

have concluded that it is certain that generic drug

makers will file an ANDA for the various TAF drugs as

soon as Gilead’s NCE exclusivity period expires.

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B. THE FEDERAL CIRCUIT’S RIGID RULE

REQUIRING AN APPLICATION FOR FDA

APPROVAL FOR DECLARATORY JUDGMENT STANDING IS IRRECONCILABLE

WITH ARTICLE III AND ESTABLISHED PATENT POLICY.

Just as this Court in MedImmune rejected the

Federal Circuit’s holding that a contracting party to a

license agreement must first breach the agreement before bringing suit, it should similarly reject the Federal

Circuit’s rigid rule here that a declaratory judgment

action cannot be brought in the pharmaceutical context until an application for FDA approval is filed.

AHF has a real conflict with respondents. It is

working to introduce generic TAF prodrugs and

HAART therapies using TAF to its patients as soon as

Respondents’ drugs lose their NCE exclusivity at the

end of 2019. It is prevented from doing so by Respondents’ patents, which “serve as barriers to entry for any

generic” drug maker. App. at 26. If Respondents’ patents are invalidated, AHF can begin providing generic

drugs to patients as soon as TAF’s NCE exclusivity period ends.

This Court has repeatedly acknowledged the “important public interest in permitting full and free competition in the use of ideas which are in reality a part

of the public domain.” Lear, Inc. v. Adkins, 395 U.S. 653,

670 (1969). See also Pope Mfg. Co. v. Gormully, 144 U.S.

224, 234 (1892) (“It is as important to the public that

competition should not be repressed by worthless

24

patents, as that the patentee of a really valuable invention should be protected in his monopoly. . . .”);

United States v. Glaxo Group Ltd., 410 U.S. 52, 58

(1973) (quoting Pope Mfg.); Cardinal Chem. Co. v. Morton Int’l, Inc., 508 U.S. 83, 100 (1993) (emphasizing “the

importance to the public at large of resolving questions

of patent validity”). The Federal Circuit’s rigid rule

works against this important public policy.

The Federal Circuit reinforced its view that no declaratory judgment action is available until FDA approval can be sought, saying that AHF’s arguments

“warrant legislative consideration, not departure from

precedent.” App. at 16. However, it is the Federal Circuit who departed from precedent by creating a rigid

rule barring declaratory judgment suits before an application for FDA approval is filed. The Federal Circuit

has cited nothing in the Hatch-Waxman Act that prohibits declaratory judgment lawsuits until an ANDA

or other FDA submission is made. Nor did it make any

attempt to square its rigid rule rejecting declaratory

judgment actions until FDA approval is sought with

this Court’s decision in MedImmune or other Article III

cases. Filing an ANDA that creates an “artificial infringement” certainly is one way of triggering a controversy sufficient to establish declaratory judgment

standing, but nothing in the Hatch-Waxman Act or this

Court’s precedent says it is the only way.

Article III standing and declaratory judgment

subject matter jurisdiction are not patent-specific issues, and this Court should continue to police the Federal Circuit’s decisions applying basic federal statutes

25

and constitutional provisions – which apply in all judicial circuits – to ensure that the Federal Circuit’s misinterpretations of the law do not lead other courts of

appeals astray.

In the end, the main effect of the Federal Circuit’s

rigid rule on declaratory judgment standing in this

case is delaying the inevitable by kicking AHF’s dispute with Respondents down the road a few years. As

discussed supra, § A.2, as soon as an ANDA can be filed

on Respondents’ TAF drugs, litigation will undoubtably occur.3 Nothing will have changed about the content of the dispute between AHF and Gilead in those

three years. Nonetheless, Gilead will be able to extract

additional years of monopoly pricing for its products

while a new lawsuit challenging Respondents’ patents

winds its way through the courts, and AHF and its patients will have to suffer an additional three years of

either using a more toxic drug or paying monopoly

prices for a drug that does not deserve patent protection.

Only this Court can remove the Federal Circuit’s

rigid, bright line test and restore the meaning of

3

Of course, Respondents are likely to try to delay that litigation by paying the first generic challenger to withdraw its challenge. “This delay will be compounded by the likelihood that the

first generic manufacturer to challenge the patents [after filing an

ANDA that states the patents are invalid] can be expected to

withdraw that challenge as part of a settlement with Gilead or

Japan Tobacco, a story regularly told under the Hatch-Waxman

regime.” App. at 31.

26

Article III standing and the Declaratory Judgment Act

to their proper scope.

------------------------------------------------------------------

CONCLUSION

For the reasons stated, the petition for certiorari

should be granted.

Respectfully submitted,

DANIEL P. HIPSKIND

Counsel of Record

DORIAN S. BERGER

BERGER & HIPSKIND LLP

9538 Brighton Way

Suite 320

Beverly Hills, CA 90210

(323) 886-3430

dph@bergerhipskind.com

dsb@bergerhipskind.com