Petition for Writ of Certiorari — Forest Laboratories, Inc. v. Caraco Pharmaceutical Laboratories, Ltd. (No. 08-624)

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IN THE Wilitam K. Suter, Cierk

Supreme Court of the United States

FOREST LABORATORIES, INC., FOREST LABORATORIES

HOLDINGS, LTD., AND H. LUNDBECK A/S,

Petitioners,

CARACO PHARMACEUTICAL LABORATORIES, LTD.,

Respondent.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Federal Circuit

PETITION FOR WRIT OF CERTIORARI

Gerald J. Flattmann, Jr. KENNETH W. STARR

Christine Willgoos

KIRKLAND & ELLIS LLP

Citigroup Center

153 East 53rd Street

New York, NY 10022-4611

(212) 446-4800

November 6, 2008

VWALSON-EPES PRINTING CC, INC

Counsel of Record

KIRKLAND & ELLIS LLP

777 S. Figueroa St.

Los Angeles, CA 90017

(213) 680-8400

Jeffrey Bossert Clark

Nathan S. Mammen

William H. Burgess

Elen Lin

KIRKLAND & ELLIS LLP

655 Fifteenth St., N.W

Washington, D.C. 20005

(202) 879-5000

AR oO A AEN tt Ae

— (202) 789-0096 — WASHINGTON, D. C. 20002

QUESTIONS PRESENTED

1. Whether a form of declaratory judgment called

a “civil action to obtain patent certainty,” 21 U.S.C.

§ 355g)(5)(C), premised on an underlying cause of

action for patent infringement, remains justiciable

under Article III of the Constitution after the

ploneering drug company defendant holding the

patent irrevocably covenants not to sue the generic

drug company plaintiff for infringement of the

patent at issue.

2. Whether the causation necessary to support

constitutional standing exists where the claimed

injury in fact traces to a patent holder’s compliance

with a mandatory patent listing obligation imposed

by a federal statute and backed by criminal sanction.

CORPORATE DISCLOSURE STATEMENT

Pursuant to Rule 29.6 of the Rules of this Court,

petitioners hereby state that:

(1) Forest Laboratories, Inc. does not have a

parent corporation, and no publicly held corporation

owns 10% or more of Forest Laboratories, Inc.’s

stock.

(2) Forest Laboratories Holdings, Ltd. is a wholly

owned subsidiary of Forest Laboratories, Inc. Forest

Laboratories, Inc. is the only publicly held

corporation that owns 10% or more of Forest

Laboratories Holdings, Ltd.’s stock.

(3) H. Lundbeck A/S does not have a parent

corporation and no publicly held corporation owns

10% or more of H. Lundbeck A/S’s stock.

ill

TABLE OF CONTENTS

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PEERED BOE IT cc ciceinnssuaceosscensavanssasesiavens 5

FRE hE serine pcanvnveccysdvtsenshtawineweibie +)

CONSTITUTIONAL, STATUTORY, AND

REGULATORY PROVISIONS

CF HE ao thescndcacteesinseranpretirianerids 6

FACTUAL BACKGROUND. ..........cscececceseees 9

PROCEEDINGS BELOW. ...........cccececcescees 11

REASONS FOR GRANTING THE WRIT.. 15

II.

III

CONTRARY TO SUPREME COURT AND

CIRCUIT DECISIONAL LAW, THE

FEDERAL CIRCUIT’S DECISION FINDS

STANDING WHERE NO “LEGALLY

PROTECTED INTEREST” IS AT STAKE. .. 17

CONTRARY TO SUPREME COURT AND

CIRCUIT LAW, THE FEDERAL

CIRCUIT’S DECISION FINDS STANDING

WHERE CAUSATION IS FAIRLY

TRACEABLE ONLY TO CAUSES

BEYOND THE DEFENDANTS’ CONTROL. 25

-THE ISSUES IN THIS CASE ARE

EXCEPTIONALLY IMPORTANT TO

PHARMACEUTICAL INNOVATION AND

THE NATION S ECONOMY. ......c.ccoccccce- 31

CAPO UR REI scstbniseg-ieeiven peneeeaindea nica ccieeaee

CONTENTS OF APPENDIX

Document Page

Majority Opinion of the Court of Appeals

SN i II dis anid cade eubialbanseeerueeaetes la

Dissenting Opinion of Judge Daniel M.

Friedman

I Ws So oa cola died tn envepdedovaxacioresouauenes 38a

Order of the Court of Appeals on

Petition for Rehearing

Ne i chica cdunsnnincensancseurmemceonnen 44a

Order of the District Court

I es ME csi a vencen yaenoesencyh cataanedeencenuas 47a

Transcript of Proceedings in the

District Court

Ee ID ope peicegriceesscnreresiseeviauaeneaaeer 49a

Complaint

CY BO, FIFI ED ososcicnctncececcosesecccesesevecowss 80a

Covenant Not to Sue

OE BO ED cc caressed cs dagascuteundonwessevesniauesns: 102a

Pertinent Statutory and Regulatory

ONIN oevkns oy sneeectacusscapaversieasaeovareceantoenens 106a

TABLE OF AUTHORITIES

Page(s)

Allen, v. Wright,

ee ee aspects eh iapcntson ecco ceettanleabonins 28

Alliance Against IFQs v. Brown,

84 F.3d 343 (9th Cir. 1996)........ ebnenatie eee. 18

Amana Refrigeration, Inc. v. Quadlux,

172 F.36 S62 (ree. Cir. 1999) ........................... 21

Andrx Pharms., Inc. v. Biovail Corp. Int'l,

256 F.3d 799 (D.C. Cir. 2001),

cert. denied, 535 U.S. 931 (2002)............0.... 31-32

Apotex, Inc. v. Pfizer, Inc.,

125 F. App’x 987 (Fed. Cir. 2005)..................... 21

Ashwander v. TVA, ;

ee Ey ee Cr iiiscinntacaunvcmecinemicmonsns 33-34

Association for Retarded Citizens of Dallas v.

Dallas County Mental Health & Mental

Retardation Ctr. Board of Trs.,

TS F.3d SOE Chee Car. 1G). .....0.cccceccccccoseses-.s... 19

AT&T Mobility, LLC v. National Ass'n for

Stock Car Auto Racing, Inc.,

ee Be Seb Ee es 18

Benttec Austl., Ltd. v. Nucleonics, Inc.,

496 F.34 1340 (ed. Car. BO07) «..<..0e<ccecseseenss::. 21

Bronson v. Swensen,

500 F.3d 1099 (10th Cir. 2007)................... 26, 27

Caraco Pharm. Labs., Ltd. v. Forest Labs., Inc.

eh me” Bt eg: Fi” ee eee 5

Catholic Social Serv. v. Shalala,

12 F.3d 1123 (D.C. Cir. 1994).....0..ceeeee. eee 23

TABLE OF AUTHORITIES (Cont.)

Claybrook v. Slater,

111 F.3d 904 (D.C. Cir. 1997)

Club Italia Soccer & Sports Org., Inc. v.

Charter Twp. of Shelby, Mich..,

470 F.3d 286 (6th Cir. 2006)

Day v. Bond,

500 F.3d 1127 (10th Cir. 2007)

Duke Power Co. v. Carolina Enuvt'l. Study

Group, Inc., 438 U.S. 59 (1978)

Eli Lilly & Co. v. Medtronic, Inc.,

496 U.S. 661 (1990)

Forest Labs., Inc. v. Ivax Pharms., Inc.,

501 F.3d 1263 (Fed. Cir. 2007)

Fulani v. Brady,

935 F.2d 1324 (D.C. Cir.1991)

Hickman v. Block,

81 F.3d 98 (9th Cir. 1996)

Holmes Group, Inc. v. Vornado Atr

Circulation Sys., Inc., 535 U.S. 826 (2002)

Hughes Aircraft Co. v. Jacobsen,

525 U.S. 432 (1999)

Illinois Citizens Comm. for Broad. v. FCC,

EE Bee rt CEPA. CR. TTS) onc cceccsaccccccsssccccencs 20

vil

TABLE OF AUTHORITIES (Cont.)

Page(s)

In re Asbestos Litig.,

90 F.3d 963 (5th Cir. 1996),

vacated, 521 U.S. 1114 (1997),

remanded to 134 F.3d 668 (5th Cir. 1998),

rev'd sub nom Ortiz v. Fibreboard Corp..,

527 U.S. 815 (1999)

Intellectual Prop. v. TCI Cablevision of

Cal., Inc., 248 F.3d 1333 (Fed. Cir. 2001).. 21, 23

Int'l Primate Prot. League v.

Administrators of Tulane

Educ. Fund, 500 U.S. 72 (1991) 19, 22-23, 25

Janssen Pharmaceutica, N.V. v. Apotex, Inc.,

540 F.3d 1353 Ged. Cw. @008).................... 24-25

In re Joint E. & S. Dist. Asbestos Litig.,

78 F.3d 764 (2d Cir. 1996)

Lujan v. Defenders of Wildlife,

504 U.S. 555 (1992) passim

McConnell v. FEC,

540 U.S. 93 (2003) 17, 19, 25

MedImmune, Inc. v. Genentech, Inc.,

127 S.Ct. 764 (2007)

Merck KGaA v. Integra Lifesciences I, Ltd.,

545 U.S. 193 (2005)

Morlan v. Universal Guaranty Life Ins. Co.,

298 F.3d 609 (7th Cir. 2002)

Morrow v. Microsoft Corp.,

499 F.3d 1332 Ged. Cir. 2007)............ccscessiseee 23

vili

TABLE OF AUTHORITIES (Cont.)

Page(s)

Mova Pharm. Corp. v. Shalala,

140 F.3d 1060 (D.C. Cir. 1998).................3-4, 7-8

Mylan Pharm., Inc. v. Shalala,

81 F.Supp.2d 30 (D.D.C. 2000)

Neese v. Johanns,

518 F.3d 215 (4th Cir. 2008)

Ortiz v. Fibreboard Corp.,

527 U.S. 815 (1999)

Paradise Creations, Inc. v. UV Sales,

315 F.3d 1304 (Fed. Cir. 2003)

Pichler v. UNITE,

542 F.3d 380 (3d Cir. 2008)

Potthoff v. Morin,

245 F.3d 710 (8th Cir. 2001)

Raines v. Byrd,

521 U.S. 811 (1997)

Rodriguez v. United States,

480 U.S. 522 (1987)

Salt Inst. v. Leavitt,

440 F.3d 156 (4th Cir. 2006)

Simon v. Eastern Ky. Welfare Rights Org.,

426 U.S. 26 (1976)

Steel Co. v. Citizens for a Better Env't,

523 U.S. 83 (1998)

Super Sack Mfg. Corp. v. Chase Packaging

Corp., 57 F.3d 1054 (Fed. Cir. 1995),

cert. denied, 516 U.S. 1093 (1996)..........00.0...... 21

TABLE OF AUTHORITIES (Cont.)

Page(s)

Teva Pharm. Indus. Ltd. v. Crawford,

BI FiO GL CB).C.. Wir. BOOB).....ccccvccscvcccescevcccess 31

Teva Pharm. USA, Inc. v. Novartis Pharm.

Corp., 482 F.3d 1330 (Fed. Cir. 2007).......... 4, 20

Valley Forge Christian College v. Americans

United for Separation of Church & State, Inc.,

EN i EE ED... cncesnneccvevevernecsvdncnseseoncts 17

Warth v. Seldin,

0 BO ee ) passim

Willis v. GAO,

448 F.3d 1341 (Fed. Cir. 2006)................... 25, 26

CONSTITUTIONAL PROVISION

SE. MET, EEL, © ZS, Cl. Bivessscccccnsccevecsonerse passim

STATUTES

is casninsscedsivdne vvincevsndessteseuuien 19

I a osnscacuesevensenovsnsessuctcacsesseevans 6, 20

21 U.S.C. § B55 (B)(1) oooceccccccccececcecseseevevseseeseeveees 6, 29

ee MEER), © GOOLE) .............ccccscceees rmabaracdatied 7,29

Nee ei acs tisvokeusvevusexesussubenareecinenies 7

OE) 7

21 U.S.C. § 355G)(2)(A)(Vii (TV) .............ccresceesereeeeess 7

21 U.S.C. § 355G)(5)(B)(iv) (2000) ........ 7-8, 9, 29, 32

TABLE OF AUTHORITIES (Cont.)

Page(s)

BA. WAG. Be hen ckiccvsencsaccnsnsscvdvesecanses 1, 8, 19

BE UETE.G.. © SG vik cvnidaiiadestnsavevasextosenserseevnds 8

28 U.S.C. § 1254(1)

28 U.S.C. § 1295(a)(1)

BO UBC, © LBOG IID occsvarceviesscversevvascciiocexeens 15, ;

35 U.S.C. § 271(e)(2)

SG UGS. © BTID wicsiesstxicerccectsececinns 2, 6, 9, 21,

REGULATIONS

21 C.F.R. § 314.150(a)(2)(v) (1999)

21 C.F.R. § 314.53(b) (2004)

21 C.F.R. § 314.53(c) (2004)

21 C.F.R. § 314.53(c)(2)()(Q) (2004)

21 C.F.R. § 314.53(f) (2004)

RULES

Sup. Ct. R. 10(a)

Sup. Ct. R. 14.1(f

SESSION LAWS

Drug Price Competition and Patent Term

Restoration Act of 1984, Pub. L. No. 98-417,

98 Stat. 1585 (1984)

TABLE OF AUTHORITIES (Cont.)

Page(s)

Medicare Prescription Drug, Improvement,

and Modernization Act of 2003, Pub. L. No.

108-173, 117 Stat. 2066 (2003) ................... 1, 8-9, 14

SECONDARY SOURCES

Congressione! Budget Office, HOW INCREASED

COMPETITION FROM GENERIC DRUGS HAS

AFFECTED PRICES AND RETURNS IN THE

PHARMACEUTICAL INDUSTRY (1998) ..............cceceeee. 35

Pharmaceutical Research & Manufacturers of

America, PHARMACEUTICAL INDUSTRY PROFILE

RANE Lape RON LR Re ON ORAM SPM NE NE eR uNON LOD 34-35

INTRODUCTION

In a case of extreme significance to the entire

pharmaceutical industry, a divided panel of the

Federal Circuit has interpreted the Hatch-Waxman

Act! in a manner that upsets the careful balance

Congress established in that landmark statute as

between providing incentives for pioneering

companies—such as Petitioner Forest (collectively

Forest Laboratories, Inc., Forest Laboratories

Holdings, Ltd., and H. lLundbeck A/S)—and

encouraging the entry of generic enterprises—such

as Respondent Caraco Pharmaceutical. In doing so,

the panel has upset settled law and tugged at

foundational principles of judicial power under

Article III of the Constitution. Sweepingly

interpreting this Court’s decision two Terms ago in

MedImmune, Inc. v. Genentech, Inc., 127 S. Ct. 764

(2007), the divided panel—over a sharp dissent by

Judge Daniel Friedman—did great violence to the

congressionally ordained structure erected almost a

generation ago by Hatch-Waxman. This will usher

in an era of destabilizing and countevproductive

patent litigation. Review is warranted now.

The Hatch-Waxman Act stands at the interface of

the patent statutes and the approval process for

pioneer and generic drugs under the food and drug

laws. Notwithstanding its profound importance to

the whole of the pharmaceutical industry, Hatch-

1 This is the name commonly used to refer to the Drug Price

Competition and Patent Term Restoration Act of 1984, Pub. L.

No. 98-417, 98 Stat. 1585 (1984), as amended by the Medicare

Prescription Drug, Improvement, and Modernization Act of

2003, Pub. L. No. 108-173, 117 Stat. 2066 (2003).

Waxman has been considered by this Court only

twice in the statute’s 24-year lifespan.2 Even with

those two decisions, however, never before has this

Court addressed a question arising under the core

provisions of the Hatch-Waxman Act, let alone such

a case presenting grave concerns under Article III of

the Constitution.

Contrary to a large body of law holding that

covenants not to sue moot suits premised on the

relevant cause of action to which the covenant

relates, a divided Federal Circuit panel held in this

case that a new type of declaratory judgment suit

created by Hatch-Waxman changed the previously

clear Article III consequences of such covenants. To

our knowledge, never before has a court stripped a

class of litigants of their pre-existing right to avoid

suit by granting an enforceable covenant not to

sue—thereby functionally conscripting them as

unwilling litigants—especially in the absence of a

clear directive from Congress to do so.

The Federal Circuit thought its result was

supported by this Court’s decision two terms ago in

MedImmune. But MedImmune did not involve

Hatch-Waxman or its newly devised declaratory

judgment suits designed to probe the boundaries of

Article III. See 35 U.S.C. § 271(e)(5) (authorizing

unique form of declaratory judgment action “to the

2 See Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193

(2005) (holding preclinical studies fell within the Section

271(e)(1) exception to patent infringement for uses reasonably

related to developing and submitting information to the FDA

for purposes of that agency’s regulation of drugs); El: Lilly &

Co. v. Medtronic, Inc., 496 U.S. 661 (1990) (considering whether

this drug-based exception also applied to medical devices).

extent consistent with the Constitution”). To the

contrary, MedImmune held only that a _ patent

licensee could pay royalties under protest without

mooting its mght to bring a declaratory judgment

action to determine whether the licensed patent was

valid and not infringed. Nothing in that decision

speaks to whether Hatch-Waxman - declaratory

judgment actions remain justiciable means to resolve

a dispute about infringement after the patent holder

grants a covenant not to sue.

For decades, the lower courts and the Food and

Drug Administration (“FDA”) have been grappling

with the complexities Hatch-Waxman creates for

patent litigation. That this Court’s intervention is

needed to clarify the operation of Hatch-Waxman—

and the application of Article III to its regime—is

loudly testified to by the invalidation of numerous

Hatch-Waxman FDA regulations and interpretations

leading up to the adoption of Hatch-Waxman Act-

specific declaratory judgment suits.

In one of the cases invalidating an FDA

regulation, the D.C. Circuit suggested that

declaratory judgment suits might smooth the rough

edges of Hatch-Waxman. Surveying the potential

pitfalls of such a purported solution, however, the

court recognized:

[Generic drug company] Mylan has also

noted what may be a more serious fly in the

3 See, e.g., Mova Pharm. Corp. v. Shalala, 140 F.3d 1060, 1074

(D.C. Cir. 1998) (invalidating FDA's “successful defense” Hatch-

Waxman regulation); Mylan Pharm., Inc. v. Shalala, 81 F.

Supp. 2d 30, 42, 47 (D.D.C. 2000) (invalidating a different FDA

Hatch-Waxman regulation construing the statutory phrase “a

decision of a court”).

(patented) ointment. In order to satisfy the

Constitution’s case or controversy

requirement, a party filing a declaratory

judgment action must show that there is a

controversy of sufficient immediacy and

reality to warrant the issuance of a

declaratory judgment.

Mova, 140 F.3d at 1073 (internal quotation marks

omitted).

Notwithstanding such a_= cautionary note,

Congress decided to adopt precisely such a

declaratory judgment solution in 2003 to the

problems emergent in the Hatch-Waxman regime.

See Teva Pharm. USA, Inc. v. Novartis Pharm.

Corp., 482 F.3d 1330, 1335 (Fed. Cir. 2007)

(discussing Congress’s creation of the so-called “civil

action to obtain patent certainty’).

The Mova court actually saw two related “flies in

the ointment” for expanded use of declaratory

judgments under Hatch-Waxman: (1) the Federal

Circuit’s “reasonable apprehension of suit” limitation

on when declaratory relief is viable in patent suits;

and (2) the Article III requirement of a “Case or

Controversy.” MedImmune eliminated the former as

an obstacle. 127 S. Ct. at 774 n.11. But

MedImmune did not address, much less resolve, the

entirely distinct question of the limits of Hatch-

Waxman declaratory judgment actions as cabined by

Article IIT.

Accordingly, there is an urgent need for this

Court to authoritatively construe the Hatch-

Waxman form of declaratory judgment action and

resolve the constitutional question MedIJmmune did

not resolve. This case should be chosen as the

vehicle because of its exceptional importance to the

business community. At the en banc stage,

representatives of all of the major interests

regulated or touched by Hatch-Waxman asked the

Federal Circuit to reconsider its erroneous decision:

ploneer drug companies, a leading generic drug

company, as well as pharmaceutical and biotechnical

trade associations. Urging rehearing, this broad

coalition of shared interests argued vigorously that

the divided panel’s decision radically rebalanced

congressionally designed incentives to innovation

and for the introduction of generic competition, while

expanding the uses of Hatch-Waxman declaratory

judgment suits beyond the bounds of _ the

Constitution and of congressional intent. Indeed,

one of Caraco’s generic competitors was alarmed

that the Federal Circuit’s decision robs generic

companies of the benefits Congress intended to

confer on the first generic companies to challenge

pioneer patents. Left unchecked, the decision will

trigger a new wave of litigation the drafters of

Hatch-Waxman did not remotely intend.

OPINIONS BELOW

The Federal Circuit’s decision is reported at 527

F.3d 1278 (Fed. Cir. 2008) and reprinted in the

Appendix (“App.”) at la. The order of the United

States District Court for the Eastern District of

Michigan dismissing for lack of subject matter

jurisdiction is reprinted at App. 47a.

JURISDICTION

The court of appeals rendered its decision on

April 1, 2008, and denied a timely petition for

rehearing and rehearing en banc on June 24, 2008.4

App. 45a. On September 12, 2008, Chief Justice

Roberts extended the time for filing this petition to

and including November 6, 2008. This Court has

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

CONSTITUTIONAL, STATUTORY, AND

REGULATORY PROVISIONS INVOLVED

Article III, Section 2, Clause 1 of the Constitution

provides in relevant part that “[t]he judicial Power

shall extend to all Cases, in Law and Equity [and]

Controversies ....” Pursuant to Court Rule 14.1(f),

pertinent statutory provisions are reprinted in the

Appendix at 106a-110a.

STATEMENT OF THE CASE

A. STATUTORY BACKGROUND

1. The Hatch-Waxman Act governs the approval

of all drugs introduced into interstate commerce. 21

U.S.C. § 355(a). Under the Act, a pioneer drug

company must obtain approval from the FDA for a

new drug by submitting a New Drug Application

(“NDA”). Pioneer applicants are required to file with

the FDA the patent number and expiration date of

all patents that claim the drug or claim a method of

using the drug, if a claim of patent infringement

could reasonably be asserted were the drug to be

manufactured, used, or sold by another. 21 U.S.C.

§ 355(b)(1). The FDA iS’ then assigned a ministerial

duty to list these patents in a publication commonly

4 The court of appeals granted a 14-day extension of time in

which to file a petition for rehearing and rehearing en banc.

known as the “Orange Book.” Drugs approved by the

FDA are referred to as “listed drugs.” 21 U.S.C.

§ 355g)(2)(A)G). The patents listed in the Orange

Book for each listed drug are referred to as “listed

patents.” See 21 C.F.R. § 314.53(f.

Failure to submit the patent information is a

ground for denying NDA approval. 21 U.S.C.

§ 355(e)(4); 21 C.F.R. § 314.150(a)(2)(v) (1999); 21

C.F.R. § 314.53(b),(c) (2004). Indeed, failure to

provide an accurate and complete submission of

patent information subjects the holder to potential

criminal liability. 21 C.F.R. § 314.53(c)(2)G)(Q)

(2004).

2. The Hatch-Waxman Act streamlines approval

for generic versions of listed drugs by allowing

generic drug manufacturers to submit = an

“Abbreviated New Drug Application” (“ANDA”). 21

U.S.C. § 355G). If an ANDA applicant desires

approval to market a generic version of the listed

drug prior to expiration of a patent covering the

listed drug, the ANDA applicant must include a

certification that the patent covering the listed drug

is invalid or not infringed by the drug that is the

subject of the ANDA. 21 U.3.C.

§ 355(j)(2)(A)(vii)(IV). This is known as a

“Paragraph IV” certification. Submission of a

Paragraph IV certification constitutes an “artificial”

act of infringement. 35 U.S.C. § 271(e)(2); Eli Lilly,

496 U.S. at 676.

The first applicant to submit an ANDA for a

listed drug that includes a Paragraph IV

certification against a listed patent is eligible to

receive 180 days ot exclusive generic marketing. 21

U.S.C. § 355G)(5)(B)(iv) (2000). “We will call this

Edenic moment of freedom from the pressures of the

marketplace the statute’s ‘exclusivity period.”

Mova, 140 F.3d at 1064-65. The FDA may not

approve any subsequent ANDA until after this 180-

day exclusivity period has expired. The purpose of

the exclusivity period is to incentivize generic drug

companies to take on the economic and litigation

risks inherent in challenging pioneer patents. Id. at

1075. The exclusivity period begins to run (1) when

the first Paragraph IV ANDA filer commercially

markets its drug (the commercial marketing trigger),

or (2) on the date of a court decision holding the

patent that was the subject of the certification to be

invalid or not infringed (the court-judgment trigger).

21 U.S.C. § 355()(5)(B)(iv) (2000).

3. In 2003, Congress enacted the Medicare

Prescription Drug, Improvement, and Modernizaton

Act of 2003 (“Medicare Modernization Act”). See

supra n.l. The Medicare Modernization Act

amended the Hatch-Waxman Act by adding a new

provision for a “civil action to obtain patent

certainty” (hereafter “CAPC’”). 21 U.S.C.

§ 355G)(5)(C). Under this provision, if the holder of

the NDA for a listed drug does not bring an

infringement action within 45 days of receiving

notice of a Paragraph IV certification for that drug,

the ANDA applicant may bring a civil action for a

declaratory judgment that the patents at issue are

invalid or not infringed. 21 U.S.C. § 355G)(5)(C)(a).5

®° The Medicare Modernization Act also revised the framework

under which the first Paragraph IV filer can forfeit its

exclusivity period if it‘'does not market a drug within specified

periods of time. 117 Stat. at 2457-60, Section 1102. These

forfeiture provisions, however, do not apply to ANDAs (such as

the ANDA relevant to this case) containing Paragraph IV

The Medicare Modernization Act provides that

federal courts have subject matter jurisdiction over

such declaratory judgment actions “to the extent

consistent with the Constitution.” 35 U.S.C.

§ 271(e)(5). The purpose of this expression of intent

was to test the boundaries of this new form of

declaratory judgment against Article III. See App.

10a-11la (relying on statement of Senator Kennedy).

B. FACTUAL BACKGROUND

; Forest markets the blockbuster drug

Lexapro® (“Lexapro”), which is used to treat

depression and generalized anxiety disorder. As

part of the mandatory process for avoiding penalties

and obtaining FDA approval for Lexapro, Forest

filed the necessary information concerning two

patents with the FDA: U.S. Patent No. Re. 34,712

(the ’712 patent) anc U.S. Patent No. 6,916,941 (the

"941 patent).

Ivax Pharmaceuticals, inc. (“Ivax”) was the first

ANDA applicant to file a Paragraph IV certification

for the ’712 and ’941 patents. App. 12a. Ivax is

therefore eligible for up to 180 days of generic

market exclusivity for each patent, which will begin

to run on the earlier of (1) the day Ivax begins

marketing its generic drug or (2) the day a court

determines that, for each such patent at issue, the

patent is invalid or not infringed. See 21 U.S.C.

§ 355(j)(5)(B)(iv) (2000).

In response to Ivax’s Paragraph IV certification,

certifications that were filed before December 8, 2003. 117

Stat. at 2460, Section 1102(b)

which represents an act of infringement under 35

U.S.C. § 271(e)(2), Forest sued Ivax for infringement

of the ’712 patent. Ivax counterclaimed that the ’712

patent was invalid and unenforceable. Forest

prevailed completely in that litigation, obtaining a

judgment that the °712 patent was valid and

enforceable, along with a stipulation that Ivax’s

ANDA infringed that patent. App. 12a-13a. This

judgment was affirmed in its entirety on appeal.

Forest Labs., Inc. v. lvax Pharms., Inc., 501 F.3d

1263 (Fed. Cir. 2007).

3. In May 2006, Caraco Pharmaceutical

Laboratories, Ltd. (“Caraco”) filed ANDA 78-219 for

Lexapro with the FDA. This ANDA included a

Paragraph IV certification for the ’712 and ’941

patents. App. 15a-16a. Caraco’s was the third

Paragraph IV certification on the ’712 patent and the

seventh Paragraph IV certification on the ’941

patent. In response to ANDA 78-219, Forest sued

Caraco for infringement of the ’712 patent (but not

the ’941 patent). App. 16a. That litigation is

ongoing.

When Forest did not sue Caraco for infringement

of the ’941 patent, Caraco filed a separate action

seeking a declaration that its ANDA did not infringe

the °941 patent. App. 16a, 83a. Caraco did not

contest the validity of the ’941 patent. Id.

Forest then moved to dismiss Caraco’s

declaratory judgment action for lack of jurisdiction.

App. 17a. Forest later granted Caraco an irrevocable

covenant not to sue for infringement of the ’941

patent to confirm that no case or controversy existed

between Forest and Caraco. The covenant provided

as follows:

[Forest] hereby covenants itself and all

successors in interest to the ’941 patent not

to sue Caraco for any alleged infringement

(whether direct or indirect) or violation of the

941 patent based on Caraco’s filing of ANDA

78-219 or any commercial manufacture, use

sale, or offer for sale or importation of the

generic products described by ANDA 78-219.

App. 19a-20a; 103a-104a.

C. PROCEEDINGS BELOW

On May 31, 2007, the district court granted

Forest’s motion to dismiss. App. 47a. Ruling from

the bench, the court explained that because Forest

had granted Caraco a covenant not to sue, Caraco

suffered no risk of being sued for infringement and

its complaint was “asking for the same relief as they

already have.” Hence, a controversy no longer

existed under Article I]I, App. 77a-78a, and Caraco

could not be found liable for infringement.

A divided panel of the Federal Circuit reversed.

The majority held that, despite the covenant not to

sue, “Caraco’s declaratory judgment action presents

a continuing Article III controversy” because, “in the

context of the Hatch-Waxman framework, Forest’s

covenant not to sue did not eliminate the controversy

between the parties.” App. 2a.

Addressing the three constitutional requirements

for standing, see Steel Co. v. Citizens for a Better

Env’, 523 U.S. 83, 102-03 (1998), the Federal Circuit

first concluded that there was an _ injury-in-fact

because Caraco was being excluded from the drug

market by the ‘941 _ patent. App. 24a-25a.

Specifically, because Ivax was the first ANDA-filer

with respect to Lexapro, Caraco could not enter the

market for generic Lexapro until Ivax’s 180-day

exclusivity period had expired. App. 26a-27a. A

subsequent Paragraph IV ANDA filer such as Caraco

can trigger Ivax’s exclusivity period only by

obtaining a judgment that the ’941 patent is either

invalid or not infringed. App. 27a-28a.

Second, the Federal Circuit concluded that

Caraco’s injury is traceable to Forest. The court

stated that “Forest’s listing of the ’712 and ‘941

patents in the Orange Book effectively denies Caraco

an economic opportunity to enter the marketplace

unless Caraco can obtain a judgment that both

patents are invalid or not infringed by its generic

drug.” App. 27a. The court concluded that Forest's

listing, rather than the Hatch-Waxman Act, caused

Caraco’s injury by preventing Caraco from entering

the marketplace. Id.

Third, the Federal Circuit concluded _ that

Caraco’s injury is redressable by a declaratory

judgment that the 941 patent is not infringed. App.

27a-28a. According to the court of appeals, “[ilf

Caraco obtains a favorable judgment that the drug

described in its ANDA does not infringe Forest’s 941

patent, then it will only need a judgment of

invalidity or noninfringement on Forest's ’712 patent

in order to activate Ivax’s exclusivity period and

obtain FDA approval as swiftly as possible.” App.

28a.6 The Federal Circuit emphasized that its

® The dissenting judge took issue with that claim (see below).

In addition, on September 2, 2008, after the decision here

issued, a new patent issued for Lexapro—U.S. Patent No.

7,420,069 (“O69 patent’). The issuance of this new patent

underscores both that Caraco is not close to market entry, and

reading of the purposes of the CAPC declaratory

action created by Congress in 2003 was consistent

with the “remarks of Senator Kennedy.” App. 30a.

Addressing the other two justiciability doctrines,

the Federal Circuit concluded that Caraco’s

declaratory judgment claim was ripe and not moot.

App. 3la-36a. Although the court below conceded

that Forest’s covenant “would moot Caraco’s case” if

a threat of an infringement lawsuit “was the only

action allegedly taken by Forest that effectively

excluded Caraco from the marketplace,” App. 34a

(emphasis added), the panel nevertheless concluded

that the covenant did not moot this case because

“Caraco is alleging that it has been denied entry to

the market in a manner that is unique to the Hatch-

Waxman context.” App. 35a.

Judge Friedman dissented. Although agreeing

that Caraco’s declaratory judgment claim “stems

from and is based upon particular provisions of the

Hatch-Waxman Act,” not from any danger of

damages for infringement, App. 38a, Judge

Friedman maintained that Caraco’s declaratory

judgment claim was unripe because it was based on

contingencies that may never come to pass (such as a

victory by Caraco in pending patent litigation with

Forest over the ’712 patent). App. 40a-41la.

Judge Friedman further opined that’ the

that the Federal Circuit mistakenly believed that the exclusive

source of Caraco’s market exclusion is Forest’s purportedly

discretionary decision to list the '941 patent in the Orange

Book. Notably, Caraco has also failed to file a Paragraph IV

certification on the '069 patent (listed September 23, 2008),

though Forest has already received nine such certifications

from other generic companies

majority’s “theory” was inconsistent with Congress’s

policy judgment to favor the first ANDA filer. App.

40a. In the absence of an “indication that [Senator

Kennedy’s] statements reflected the views of the

majority of the committee or of the Senate, or the

sponsors of’ the Medicare Modernization Act in

2003, the dissenting judge was unwilling to conclude

that such statements were an “adequate basis for

determining the scope and meaning of this

legislation.” App. 4la. Judge Friedman also pointed

out that the majority was glossing over Senator

Kennedy’s express caveat: “We believe that the only

circumstance in which a case or controversy might

not exist would arise in the rare circumstance in

which the patent owner and brand drug company

have given the generic applicant a covenant not to

sue....” App. 42a.

Overall, in light of Forest’s covenant not to sue,

Judge Friedman would have held that, “under all

the circumstances,” there was not a “substantial

controversy, between parties having adverse legal

interests, of sufficient immediacy and reality to

warrant the issuance of declaratory judgment.”

App. 4la. (quoting MedJmmune, 127 S. Ct. at 771).

Forest sought en banc review or panel rehearing.

Numerous amicus briefs were filed in support of

rehearing.’ Although it called for a response, the

Federal Circuit ultimately denied the petition.

7 In addition to support by Ivax, the generic first ANDA filer,

Forest had the support of pioneer drug companies Merck & Co.,

Inc. and Pfizer, Inc., industry trade associations the

Pharmaceutical Research and Manufacturers of America and

the Biotechnology Industry Organization, and the public

interest organization, the Washington Legal Foundation.

REASONS FOR GRANTING THE WRIT

The Federal Circuit's exclusive appellate

jurisdiction over patent disputes, 28 U.S.C. §

1295(a)(1), (a)(4), precludes the emergence of a split

among the Circuits on the questions presented.

Compare S. Ct. R. 10(a). Nevertheless, the path by

which the Federal Circuit reached its conclusion ran

roughshod over decisions of this Court, while feeding

circuit splits and intra-circuit divisions within the

Federal Circuit itself.

Despite conceding that a viable infringement

action was terminated by virtue of the covenant not

to sue, see App. 34a, the Federal Circuit’s conceptual

framework required it to recast the familiar cause of

action for patent infringement as a cause of action

Congress has never seen fit to create. App. 35a-36a.

Hatch-Waxman’s operation is thus __ seriously

distorted. Additionally, this judicial legerdemain

ignores the bedrock constitutional requirement that

a valid injury in fact sufficient to support standing

exists only where such injury results from invasion

of a “legally protected interest.” Lujan v. Defenders

of Wildlife, 504 U.S. 555, 560 (1992). And a “legally

protected interest” here is nothing other than a

congressionally created cause of action. Since at

least one other Circuit has also recently announced,

in derogation of Lujan, that the legal protectability

requirement confuses standing with the merits, this

Court should intervene to clarify that Lujan applies

equally to complex regulatory regimes like Hatch

Waxman. There is no standing to press claims for

redress for an injury based on a nonexistent cause of

action.

The Federal Circuit decision also violated this.

Court’s case law by cavalierly tracing causation to

actions by third parties not before the court. Here,

the court of appeals held that Forest’s decision to hist

its "941 patent in the Orange Book caused Caraco’s

injury. But Forest’s action was mandatory, not

discretionary. It is not Forest’s purported listing

decision (in reality a listing obligation) that

prevented Caraco from freely entering the relevant

drug market. Instead, it was Congress’s decision to

exclude Caraco from the market for the purpose of

favoring the first ANDA filer (here Ivax) that is the

cause of Caraco’s claimed injury.

Other Circuits have found that no standing exists

when causation for an alleged injury traces to

sovereign legal action, rather than to discretionary

private action. The Federal Circuit’s decision in this

case conflicts with those rulings.

This petition should be granted for the further

reason that the decision below threatens to subvert

Article ITI and to destabilize the careful balance

Congress struck amoung the rights of pioneer drug

companies, ANDA first filers, and subsequent ANDA

filers. In its quest to serve the laudable goal of

speeding the introduction of generic drugs into the

market, the Federal Circuit lost sight of the stopping

points in the Hatch-Waxman regime and the law of

justiciability. Together, those intertwined

requirements serve to protect the substantial

investments in innovation ploneer companies incur,

as well as the large risks ANDA first filers accept

when they attempt to prove a listed patent is either

invalid or not infringed.

I. CONTRARY TO SUPREME COURT AND CIRCUIT

DECISIONAL LAW, THE FEDERAL CIRCUIT’S

DECISION FINDS STANDING WHERE NO-

“LEGALLY PROTECTED INTEREST” IS AT

STAKE. ;

1. This Court has repeatedly held that not every

injury is sufficient to create a constitutional case or

controversy. See, e.g., Raines v. Byrd, 521 U.S. 811,

825-26 (1997); Valley Forge Christian Coll. ov.

Americans United for Separation of Church & State,

Inc., 454 U.S. 464, 485-86 (1982). To the contrary,

an injury must be actionable in order to give rise to

constitutionally cognizable injury. This is a corollary

of the point that not every “case” or “controversy”

’ can give rise to Article III jurisdiction. Instead, “the

Constitution’s central mechanism of separation of

powers depends largely upon common understanding

of what activities are appropriate to legislatures, to

executives, and to courts.” Lujan, 504 U.S. at 559-

60.

Consider McConnell v. FEC, 540 U.S. 93 (2003).

In that case, certain plaintiffs challenged a

particular provision of the Bipartisan Campaign

Finance Reform Act that relaxed prior limits on

“hard money” contributions. That particular

subgroup of plaintiffs argued that this statutory

expansion of contribution limits injured them by

reducing their ability to participate in elections on

an equal footing based merely on their economic

status. The majority held that the plaintiffs lacked

standing because the ability to compete in an

election only so long as all participants have equal

resources is not a “legally cognizable right.” Jd. at

227. See also Warth v. Seldin, 422 U.S. 490, 500

(1975) (standing “often turns on the nature and

source of the claim asserted.”).

The lower courts have largely followed the

instruction of this Court to test assertions of injury

for standing purposes to determine if they are

premised upon a valid cause of action. Take, for

instance, the Fourth Circuit’s opinion in Salt

Institute v. Leavitt, 440 F.3d 156 (4th Cir. 2006).

Salt Institute held that since the Information

Quality Act created no private right of action and

there was no common law cause of action to correct

false information, the absence of any legally

cognizable cause of action required the suit to be

dismissed for want of standing. /d. at 158-59.

8 See also Pichler v. UNITE, 542 F.3d 380, 390-92 (3d Cir.

2008) (following Lujan); Neese v. Johanns, 518 F.3d 215, 219

(4th Cir. 2008) (same); AT&T Mobility, LLC v. National Ass’n

for Stock Car Auto Racing, Inc., 494 F.3d 1356, 1360-62 (11th

Cir. 2007) (same); Morlan v. Universal Guar. Life Ins. Co., 298

F.3d 609, 621 (7th Cir. 2002) (Posner, J.) (“The possession of a

legally protectable interest is a prerequisite to suing because

otherwise the possessor of that interest would find himself

unable to enforce it if another person, an officious intermeddler,

had brought suit to enforce it (like a bounty hunter) first.”);

Potthoff v. Morin, 245 F.3d 710, 717-18 (8th Cir. 2001) (“an

abstract constitutional right is not justiciable unless a legally

protectible interest is at stake”); Claybrook v. Slater, 111 F.3d

904, 906-07, 909 (D.C. Cir. 1997) (following Lujan); Alliance

Against IFQs v. Brown, 84 F.3d 343, 351-52 (9th Cir. 1996)

(rejecting particular cause of action under the Magnuson Aci

where the fishermen’s claimed injury was based on an interest

belonging to the State of Alaska and thus not “an invasion of a

legally protected interest . . . of the [plaintiffs].”) Gnternal

quotation omitted); /n re Joint E. & S. Dist. Asbestos Litig., 78

F.3d 764, 780 (2d Cir. 1996) (following Lujan); Associatton for

Retarded Citizens of Dallas v. Dallas County Mental Health &

Mental Retardation Ctr. Bd. of Trs., 19 F.3d 241, 244 (5th Cir.

1994) (same)

Or consider Day v. Bond, 500 F.3d 1127 (10th

Cir. 2007), which addressed whether a Kansas law

granting in-state tuition benefits to illegal aliens was

preempted by a federal immigration statute. The

Tenth Circuit held there was no standing because

the immigration statute did not give rise to a private

right of action: “The merits issue is whether [the

Kansas statute] is preempted by 8 U.S.C. § 1623.

The standing question is whether § 1623 creates a

private cause of action. Each of these issues is

separate and independent... .” Jd. at 1136-39.

The same is true here. The merits question is

whether Caraco’s generic Lexapro would infringe

Forest’s 941 patent. The standing question is

whether the civil action to obtain patent certainty

(“CAPC”) in 21 U.S.C. § 355Gg)(5)(C) creates a private

right of action apart from redressing disputes over

infringement. The tw questions are fully distinct,

and the Federal Circuit was wrong to conclude that

injury divorced from what is exclusively an

infringement cause of action can _ support

constitutional standing.

% Day v. Bond, which applies the analysis required by this

Court's cases should be contrasted with outlier decisions, which

reflect confusion about how to act on the principle that

standing and merits analysis should be kept separate. See, e.g.,

Club Italia Soccer & Sports Org., Inc. v. Charter Twp. of

Shelby, Mich., 470 F.3d 286 (6th Cir. 2006). In that case, the

Sixth Circuit assailed a district court decision that had held

“because Plaintiff does not allege a legally protectable interest,

Plaintiff does not have standing.” Jd. at 292. According to the

Sixth Circuit, “[t]his conclusion improperly grafts the standing

inquiry onto the merits of Plaintiffs due process claim.” dd.

Such an analysis harkens back to the outdated view that the

existence of a legally protected mght is irrelevant to

2. The Federal Circuit’s principal error was to

devise a cause of action of its own making, premised

on a nonexistent right to seek review of any action

by a pioneer drug company that contributed to

preventing a generic company frem marketing its

drug as soon as possible. Relying on its earlier

decision in Novartis, 482 F.3d at 1345, the Federal

Circuit noted that “the Hatch-Waxman framework

presents a different set of circumstances than those

which underlie an ordinary infringement action.”

App. 24a. In most situations, the panel majority

reasoned, the competitor of a patent holder can enter

the market freely, but under Hatch-Waxman market

entry must be authorized by the FDA. See 21 U.S.C.

§ 355(a). Thus, according to the panel, any action

which contributes to “preventing the FDA from

approving the ANDAs of generic drug manufacturers

is a sufficient Article III injury-in-fact.” App.

24a-25a.

This analysis effectively created a private right of

action on the part of subsequent ANDA filers to sue

for any action or inaction by a pioneering drug

company that contributes to Hatch-Waxman’s

exclusion of generics from the marketplace while the

180-day exclusivity period for a first ANDA filer has

not yet been triggered. But this newly minted,

judicially created cause of action hardly resembles

the civil action to obtain patent certainty created by

Congress. Instead, CAPCs authorize only suits over

demonstrating injury in fact. Illinois. Citizens Comm. for

Broad. v. FCC, 515 F.2d 397, 413 (D.C. Cir. 1975) (separate

statement by Bazelon, J., explaining why he voted in favor of

en banc review). Movement in the lower courts in the direction

of that discredited approach should be halted.

actual disputes concerning patent infringement or

validity. 35 U.S.C. § 271(e)(5). Hence, once Forest

gave Caraco a covenant not to sue, the CAPC right of

action was terminated as a_ constitutionally

cognizable controversy. See infra n.10. (Validity of

the ’941 patent was never in play because Caraco

never even sought to challenge that patent on

invalidity grounds.)

3. Recognizing that the covenant not to sue was

problematic for its theory of standing, the Federal

Circuit conceded that “liJf a threat of suit was the

only action allegedly taken by Forest that effectively

excluded Caraco from the marketplace, the covenant

not to sue would moot Caraco’s case and divest the

district court of Article III jurisdiction.” App. 34a

(emphasis added).!° But, “in a manner that is

unique to the Hatch-Waxman context,” Forest

injured Caraco because it listed the ’941 patent with

10 This analytical move also allowed the panel majority to avoid

running afoul of a long line of cases holding that the granting of

a covenant not to sue for infringement moots a declaratory

judgment action to resolve an infringement dispute. See

Apotex, Inc. v. Pfizer, Inc., 125 F. App’x 987, 987 (Fed. Cir.

2005) (per curiam); Intellectual Prop. Dev., Inc. v. TCI

Cablevision of Cal., Inc., 248 F.3d 1333, 1340-41 (Fed. Cir.

2001); Amana Refrigeration, Inc. v. Quadlux, Inc., 172 F.3d

852, 855 (Fed. Cir. 1999); Super Sack Mfg. Corp. v. Chase

Packaging Corp., 57 F.3d 1054, 1060 (Fed. Cir. 1995), cert.

dented, 516 U.S. 1093 (1996). Indeed, just the year prior to

handing down the decision in this case, the Federal Circuit had

held that this line of cases did not depend on the “reasonable

apprehension of suit” test disapproved in MedJmmune. Benitec

Austl., Ltd. v. Nucleonics, Inc., 495 F.3d 1340, 1346 (Fed. Cir.

2007). Even applying MedImmune, Benitec reached the same

essential conclusion. Yet the decision below did not

distinguish, or even cite, Benitec.

the FDA and because it granted Caraco a covenant

not to sue for infringement. App. 35a.

This ignores the critical fact that the only adverse

action cognizable under the CAPC form of action in

this case (where Caraco did not pursue a theory of

patent invalidity) was a suit for infringement. Any

other actions by Forest, no matter how injurious,

cannot support standing because only a suit to

declare rights in an infringement controversy can

support constitutional standing. While Congress

provided that the CAPC action should be interpreted

as broadly as possible consistent with the bounds of

Article III, see 35 U.S.C. § 271(e)(5), the Federal

Circuit erred in converting that interpretive

instruction into an authorization to create a

freestanding cause of action for any injury

experienced by ANDA filers traceable in any respect

to the blocking patent holder.

4. The only way the panel’s decision here could

be correct is if injury “in the air” were sufficient to

support Article II] jurisdiction. It is not. Jn re

Asbestos Litig., 90 F.3d 963, 1020 & n. 70 (5th Cir.

1996) (Smith, J., dissenting) (“[S]tanding analysis

does not operate in a vacuum: The allegation of a

cause of action frames the inquiry .... we must

examine the pleadings to determine what cause of

action the plaintiff has alleged and whether his

allegations of injury, in the context of that cause of

action, satisfy Article III standards.”).1! See also

11 The petition for certiorari was granted in Jn re Asbestos

Litigation, with the decision being vacated and remanded for

reconsideration on statutory grounds in light of Amchem

Products, Inc. v. Windsor, 521 U.S. 591 (1997). After remand,

reversal by Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), of

International Primate Prot. League v. Administrators

of Tulane Educ. Fund, 500 U.S. 72, 77 (1991)

(“[S]tanding is gauged by the specific common-law,

statutory or constitutional claims that a party

presents.”); Catholic Social Serv. pv Shalala, 12 F.3d

1123, 1125 (D.C. Cir. 1994) (similar); Lujan, 504

U.S. at 580 (Kennedy, J., concurring) (“In my view,

Congress has the power to define injuries and

articulate chains of causation that will give rise to a

case or controversy where none existed before... .”).

5. The decision below also is in conflict with the

Federal Circuit’s prior decisions. See Morrow ov.

Microsoft Corp., 499 F.3d 1332, 1340-41 (Fed. Cir.

2007) (party that held insufficient rights in a patent

lacked standing to sue because “[the plaintiff] 1s not

the party to which the statutes grant judicial relief

.... [the plaintiff] suffers no legal injury in fact to

the patent’s exclusionary rights.”) (citing Warth);

Paradise Creations, Inc. v. UV Sales, Inc., 315 F.3d

1304, 1308 (Fed. Cir. 2003) (plaintiff lacked Article

III standing because it had insufficient legal interest

in the patent to be considered “the patentee” under

the Patent Act). Indeed, the author of this very

opinion previously recognized that standing can only

be founded upon the assertion of a viable cause of

action. Intellectual Prop. Dev., Inc. v. TCI

Cablevision of Cal., Inc., 248 F.3d 1333, 1346 (Fed.

Cir. 2001) (Gajarsa, J.) (relying on Lujan, stating

“TCI-California is correct in its assertion that Article

Iil standing to sue in this case derives solely from

the Fifth Circuit majority, fully vindicated the pre- and post-

remand dissents of Judge Smith, albeit on grounds of a lack of

“statutory standing.” Jd. at 831.

the Patent Act.”).

In like manner, in a decision released just this

September addressing a fact pattern very similar to

‘this case, a different panel of the Federal Circuit

appeared to recognize, in conflict with the holding

here, the absence of a legally cognizable injury. In

Janssen Pharmaceutica, N.V. v. Apotex, Inc., 540

F.3d 13853 (Fed. Cir. 2008), the innovator

pharmaceutical company (Janssen) listed three

patents in the Orange Book and _ successfully

defended against challenges brought by the first

Paragraph IV ANDA filers to the earliest-expiring

patent. Jd. at 1357-58. In subsequent litigation

between the innovator and another generic (Apotex),

the generic stipulated that the earliest-expiring

patent was valid and not infringed, and the

innovator gave the generic a covenant not to sue on

the other two patents. /d. at 1358-59. In that case,

the Federal Circuit held that the generic’s

declaratory judgment claims with respect to the

latter two patents were moot. Id. at 1360-61. The

court stated that “Apotex’s inability to launch its

generic ... because of Teva’s 180-day exclusivity

period is not a cognizable Article III controversy, but

a result envisioned by the Hatch-Waxman Act.” Id.

(emphasis added).

The only significant difference between Janssen

and this case—and the basis on which the Janssen

panel purported to distinguish this case—is that

Forest and Caraco are litigating Forest’s earliest-

expiring patent on Lexapro—the '712 patent—in a

separate action. Id. at 1361. In _ petition-for-

rehearing briefing, neither side in the Janssen

litigation found this distinction entirely tenable.

The losing generic company, of course, protested that

the instant case and Janssen were indistinguishable.

But even prevailing party Janssen, the innovator

drug company, argued in the alternative that the

Federal Circuit decision here should be overruled in

Janssen because both this suit and that suit are

beyond the reach of Article II]. Nevertheless, the

Federal Circuit denied Apotex’s petition for

rehearing on October 29, 2008.

The ineluctable conclusion to be drawn from this

cacophony of Federal Circuit precedent is that the

court is deeply confused about the protectable-right

requirement of Lujan, both generally and in the

vitally important context of the Hatch-Waxman Act.

Even when the Federal Circuit acknowledges the

importance of legally protected rights to standing

issues, it does not necessarily deploy the correct

analysis. See Willis v. GAO, 448 F.3d 1341, 1349

(Fed. Cir. 2006) (only client had legally protected

right to statutory attorney’s fees and hence “the

attorney [seeking to recover fees] fails to satisfy the

requirements of prudential standing’) (emphasis

added). The emphasis in McConnell, Lujan,

International Primate, and Warth on legally

protected rights was not premised on prudential

standing. To the contrary, it was premised upon the

foundational requirements of Article III.

II. CONTRARY TO SUPREME COURT AND CIRCUIT

LAW, THE FEDERAL CIRCUIT’S DECISION

FINDS STANDING WHERE CAUSATION IS

FAIRLY TRACEABLE ONLY TO CAUSES

BEYOND THE DEFENDANTS’ CONTROL.

1. The Federal Circuit held that Caraco’s injury

is “fairly traceable” to Forest t :cause “if Forest had

not listed its '712 and °941 patents in the FDA’s

Orange Book as valid patents covering the drug

described in its NDA for Lexapro, then [the Hatch-

Waxman Act] would not independently delay

Caraco’s ANDA from being approved by the FDA.”

App. 26a. “Such but-for causation,” the court

concluded, “is sufficient to satisfy the traceability

requirement of Article III standing.” Jd. (citing Duke

Power Co. v. Carolina Envtl. Study Group, Inc., 438

U.S. 59, 74-78, 81 n.26 (1978)).

In the full context ‘of this case, however, the

Federal Circuit’s reliance on “but-for” causation is in

tension with decisions of the Tenth Circuit and D.C.

Circuit. See Bronson v. Swensen, 500 F.3d 1099

(10th Cir. 2007); Fulani v. Brady, 935 F.2d 1324

(D.C. Cir. 1991). Those courts have rejected but-for

causation as sufficient to establish standing where,

as here, the complained-of conduct leads to injury

only by virtue of its combination with other, more

dominant causes traceable to sovereign acts.

In Bronson, the plaintiffs filed a civil rights

action against a county clerk for refusing to issue a

marriage license that would have resulted in a

polygamous union in violation of state criminal law.

500 F.3d at 1101. Although conceding that the clerk

had no power to initiate criminal prosecutions, the

plaintiffs argued that their injury was traceable to

the county clerk because if the clerk issued a

marriage license, then they arguably would be free

from fear of criminal prosecution. Jd. at 1110-11.

The Tenth Circuit rejected plaintiffs’ arguments

because they were based on allegations that they

would receive collatera! benefits (freedom from

criminal prosecution) if the clerk granted the license,

not on any injury caused by the clerk. 7d. at 1111.

Likewise, in Fulani, a minor-party presidential

candidate brought an action against the Internal

Revenue Service challenging the tax-exempt status

of the Commission for Presidential Debates, which

had excluded her from the 1988 presidential debates.

935 F.2d at 1325. Under Federal Election

Commission rules, the Commission could sponsor

the debate only if it received tax-exempt status. Id.

at 1325, 1330. The D.C. Circuit concluded that

Fulani lacked standing to bring her challenge

because the “IRS’s actions caused her alleged injury

only due to other intervening causal factors,”

including the FEC’s regulations and Commission’s

actions. /d. at 1331. Even though Fulani’s suit

against the IRS, if successful, would have resulted in

the Commission no longer being able to hold debates

that excluded her as a participant, the D.C. Circuit

rejected the argument that because Fulani’s injury

might be redressed by judgment against the IRS, the

IRS must be deemed the cause of her injury.

In this case, by contrast, the Federal Circuit has

taken the position that because Caraco’s victory in a

declaratory judgment suit against Forest could

ameliorate Caraco’s injury of delay in market entry,

Forest’s actions to grant a covenant not to sue and

its compliance with the Hatch-Waxman Act listing

mandate must be the causes of Caraco’s injury. But

the Federal Cuircuit’s holding that a _party’s

mandatory compliance with a statute can give rise to

actionable injury by another party cannot be squared

with the judgments of the Tenth and D.C. Circuits.

Those courts properly recognize that Article III

standing requires that the injury that is the subject

of the suit be caused by the defendant that the

plaintiff is suing. Accord Lujan, 504 U.S. at 560-61

(“[T]here must be a causal connection between the

injury and the conduct complained of—the injury

has to be ‘fairly . . . tracefable] to the challenged

action of the defendant, and not .. . th{e} result [of]

the independent action of some third party not

before the court.”) (emphasis added) (quoting Simon

v. Eastern Ky. Welfare Rights Org., 426 U.S. 26, 41-

42 (1976)).

In Allen v. Wright, 468 U.S. 737 (1984), Simon,

and Warth, this Court held that the plaintiffs’

injuries were not “fairly traceable” to the defendants

where the chain of causation was broken by the

actions of independent third parties. In Allen and

Simon, the plaintiffs sued officers of the IRS,

alleging that the Service’s unlawful grants of tax

exemptions to third parties led to the plaintiffs

suffering injuries at the hands of the third parties.

See Allen, 468 U.S. at 746 (explaining the chain of

causation alleged in the complaint); Simon, 426 U.S.

at 32-33 (same). In Warth, the plaintiffs alleged that

a city’s zoning ordinance led to their injury by

making it more difficult for third parties to confer

benefits on them. 422 U.S. at 495-97.

2. There is simply no basis for concluding that

Forest’s actions are the real cause of the injury the

Federal Circuit posited Caraco suffers—exclusion

from the market for generic Lexapro. This is true for

several reasons.

First, the primary source of Caraco’s inability to

sell generic Lexapro is the Hatch-Waxman Act bar

blocking the FDA from approving Caraco’s ANDA

until 180 days after (1) Ivax begins marketing its

generic products; or (2) for each patent at issue,

issuance of a decision of non-infringement or

invalidity. 21 U.S.C. § 355()(5)(B)(Giv) (2000). That

obstacle, however, is not of Forest’s making. Rather,

it is the result of Congress’s decision to encourage

early challenges to patents listed in the Orange Book

by rewarding the first generic to file a Paragraph IV

certification, which inevitably comes at the expense

of subsequent-filer generics. In this case, Ivax was

the first filer on the 941 patent. Caraco wus the

seventh. Hence, by congressional decree, Caraco

must wait until Ivax’s exclusivity period has elapsed.

Second, Forest’s challenged conduct—the listing

of its patents in the Orange Book—is required by

statute. 21 U.S.C. § 355(b)(1). Had Forest failed to

list either of its patents, it would be subject to

various penalties, including withdrawal of its own

NDA approval and authorization to sell. See 21

U.S.C. § 355(e)(4); 21 C.F.R. § 314.150(a)(2)(v)

(1999); 21 C.F.R. § 314.53(b),(c) (2004). Indeed, the

Hatch-Waxman listing obligation is backed forcefully

by potential criminal sanctions. See 21 C.F.R.

§ 314.53(c)(2)()(Q) (2004) (failure to provide an

accurate and complete submission of patent

information in an NDA subjects the holder to

criminal lability for perjury). Thus, to the extent

that Forest’s listing of its patents caused Caraco’s

injury, that is the consequence of yet another set of

choices made by Congress, or by the FDA pursuant

to delegated authority under Hatch-Waxman.

Third, as explained in Section I, supra, even if

Forest’s decision to avoid the expense and disruption

of litigation concerning the ’941 patent were a minor

contributing cause of injury to Caraco, such a cause

is not legally actionable. The reason is that Forest

has no enforceable duty to refrain from granting

irrevocable covenants not to sue and because, on the

flip side of that point, Caraco has no valid cause of

action to force Forest to retract its covenant.

3. The Federal Circuit majority accuses Forest of

“gaming” the Hatch-Waxman Act system. App. 9a.

Not so. It is wrong to presume that every decision by

a pioneer drug holder to litigate regarding only one

‘of its patents constitutes strategic behavior.

Avoiding the costs, uncertainty, and disruption of

litigation are legitimate ends in themselves.

Apparently, the court below thought that it was

empowered to assume that any action by a pioneer

drug company which might contribute to the delay of

the introduction of generic competition violated

Congress’s purposes in enacting Hatch-Waxman and

the Medicare Modernization Act amendments. App.

8a (discussing a pioneer drug company’s “strong

incentive to avoid litigation” so as to delay the onset

of a first ANDA filer’s exclusivity period).

But “no legislation pursues its purposes at all

costs. ... [I]t frustrates rather than effectuates

legislative intent simplistically to assume _ that

whatever furthers the statute’s primary objective

must be the law.” Rodriguez v. United States, 480

U.S. 522, 525-526, (1987) (per curiam). The Federal

Circuit majority itself recognized this when it

pointed out that the purpose of Hatch-Waxman was

to balance the interests of pioneer and generic drug

companies. App. 3a. But by elevating a minor cause

and ignoring the more dominant causes of the

Hatch-Waxman restriction on market entry and the

Act’s requirement to list patents in the Orange Book,

the majority below took it upon itself to rebalance

Congress’s pohcy choices as inherent in the limits on

the cause of action for infringement as established in

the CAPC form of suit. Or, as dissenting Judge

Friedman recognized, “|t]o the extent that Congress

may conclude that particular judicial interpretations

——

of the Act thwart the purposes of the legislation, it is

for Congress, not this court, to make whatever

changes in the Act it deems appropriate.” App. 42a.

Ill. THE ISSUES IN~_ THIS CASE ARE

EXCEPTIONALLY IMPORTANT To

PHARMACEUTICAL INNOVATION AND THE

NATION’S ECONOMY.

1. The Federal Circuit’s decision threatens to

disrupt the careful balance of incentives Congress

created to ensure that the public will benefit from

receiving the most pharmaceutical innovation at the

lowest cost. The divided panel’s decision creates a

precedent of generalized significance concerning the

effect of covenants not to sue on all future CAPC

actions under the Hatch-Waxman Act, and thus will

apply to all relevant patent disputes in this area. 28

U.S.C. § 1295(a)(1), (a)(4); Holmes Group, Inc. v.

Vornado Air Circulation Sys., Inc., 535 U.S. 826, 829

(2002).

The landmark Hatch-Waxman legislation

amended both the food and drug and the patent laws

to strike a careful balance between two competing

policy objectives: (1) inducing innovators to make

the investments necessary to develop new drugs, and

(2) enabling generics to bring lower-cost versions of

those drugs to market in a timely fashion. See Teva

Pharm. Indus. Ltd. v. Crawford, 410 F.3d 51, 54

(D.C. Cir. 2005); Andrx Pharms., Inc. v. Biovail

Corp. Intl, 256 F.3d 799, 802 (D.C. Cir. 2001), cert.

dented, 535 U.S. 931 (2002).

In furtherance of the latter objective, Congress

encouraged generics to chailenge innovators’ patents

as soon as possible by offering the incentive of 180

days of generic market exclusivity to the first ANDA

filer. See 21 U.S.C. § 355G)(5)(B)Qv) (2000).

Importantly, Congress chose to protect the 180-day

exclusivity period by forbidding the FDA from

approving the applications of other generics. Jd.

In the case at hand, the panel majority may have

chosen to discount the value Congress placed upon

incentives to first filers because it had the ex post

knowledge that Ivax’s patent litigation against

Forest had failed. But that kind of post hoc analysis

is improper because the incentives for first filers to

bring patent challenges inevitably have to be set ex

ante behind a veil of ignorance as to whether

particular patent litigation will succeed or fail.

From a “Monday-morning quarterback” perspective,

it is easy to see why a court might want to give a

chance to other generics to take their own separate

shots at piercing a patent. But it frustrates the will

of Congress to do anything other than faithfully and

vigorously enforce the 180-day market exclusion the

Article I branch estepblished to incentivize first filers

to mount patent challenges. Cf. Hughes Aircraft Co.

v. Jacobsen, 525 U.S.. 432, 447 (1999) (“[Blecause

ERISA is a comprehensive and reticulated statute,

and is enormously complex and detailed, it should

not be supplemented with extratextual remedies.”)

(citations and internal quotation marks omitted).

In this case, Ivax lunged at the _ incentive

Congress established and assumed the substantial

risk of bringing the first challenge to Forest’s

patents. Caraco, by contrast, choose to fall back

deep into the queue. It waited a year to become the

seventh ANDA filer to challenge Forest's 941 patent.

Given Ivax’s initiative and Caraco’s opportunistic

choice of waiting to see how infringement litigation

between Forest and Ivax played out, Forest’s

willingness to avoid further litigation by granting a

covenant not to sue, together with the limited cause

of action for infringement or invalidity created in the

Medicare Modernization Act, add up to the

nonexistence of an Article III controversy. In short,

no tears should be shed for Caraco. Had it been the

first ANDA filer, it would not be in a position where

it lacks a viable cause of action and _ thus

constitutional standing.

2. If the Federal Circuit’s decision is allowed to

stand, it will cause serious marketplace harm,

diluting the incentives Congress created for both

innovators and first-out-of-the-gate generics.

First, 1nnovators like Forest will be forced to

defend themselves in neediess litigation against

generics they have already promised not to sue.

Indeed, the Federal Circuit never considered the

practical implications of its holding. Can Forest be

conscripted against its will to litigate against

Caraco? Does interpreting the statute to have the

effect of drafting Forest into an_ involuntary

litigation role raise constitutional questions? Are

there interpretations of Hatch Waxman that would

avoid such an unprecedented interference in private

litigation, in the fashion of Ashwander v. TVA, 297

U.S. 288, 348 (1936) (Brandeis, J.) (“[I]t is a cardinal

principle that this Court will first ascertain whether

a construction of the statute is fairly possible by

which the_ [constitutional] question may be

avoided”)? No satisfactory answers were provided

(or even ventured) to these questions by the Federal

Circuit.

Second, the boldest risk-taking generics most

favored by Congress, such as Ivax, will witness a

severe reduction of their incentives to engage in

costly patent challenges. As it explained in its

amicus brief in support of rehearing below, “Ivax has

a strong interest in protecting the exclusivity

incentive against unproductive and _ self-serving

challenges like Caraco’s.” Br. Amicus Curiae of Ivax

Pharm., Inc. in Support of Rehearing at 3. “If

generic companies can bring declaratory judgment

actions directed to patents that they have no risk of

infringing, and by so doing eliminate a competitor’s

marketing exclusivity, they will do so at every

opportunity.” Jd. at 2-3. The serious practical

problem, which Congress wisely calibrated the

Hatch-Waxman regime to account for, is that a

sidelines-sitting opportunist like Caraco has far less

“skin in the game” than an incentivized challenger

like Ivax.

Indeed, the balance of incentives Congress offered

to innovators and generics is critically important to

the public interest. In 2007, the American

pharmaceutical industry spent an estimated $58.8

billion on research and development of new drugs.

See Pharmaceutical Research & Manufacturers of

America, PHARMACEUTICAL INDUSTRY PROFILE 2

(2008). On the other side of the scales, a 1998 study

estimated that generic drugs save consumers

between $8 and 10 billion per year. See

Congressional Budget Office, HOW INCREASED

COMPETITION FROM GENERIC DRUGS HAS AFFECTED

PRICES AND RETURNS IN THE PHARMACEUTICAL

INDUSTRY 31 (1998). In a poor exchange, the Federal

Circuit's decision weakens the incentives in both

sectors of the pharmaceutical industry so as to

reward laggard generics. This is irrational and

contrary to Congress’s democratic choices (which are

protected by the bulwark of Article III). Most

importantly, in undermining the incentives both to

the development of new pioneering drugs and efforts

by bold generics to weed out weak patents from the

system, the divided panel decision below will

inexorably inflict net harm on consumers and the

public health.

CONCLUSION

For the foregoing reasons, the petition for

certiorari should be granted.

Respectfully submitted,

Gerald J. Flattmann, Jr. KENNETH W. STARR

Christine Willgoos Counsel of Record

KIRKLAND & ELLIS LLP KIRKLAND & ELLIS LLP

Citigroup Center 777 S. Figueroa St.

153 East 53rd Street Los Angeles, CA 90017

New York, NY 10022- (213) 680-8400

4611

(212) 446-4800 Jeffrey Bossert Clark

Nathan S. Mammen

Wilham H. Burgess

Ellen Lin

KIRKLAND & ELLIS LLP

655 Fifteenth St., N.W.

Washington, D.C. 20005

(202) 879-5000

November 6, 2008

APPENDIX

TABLE OF CONTENTS

Document

Majority Opinion of the Court of Appeals

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Dissenting Opinion of Judge Daniel M.

Friedman

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Order of the Court of Appeals on

Petition for Rehearing

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Order of the District Court

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Transcript of Proceedings in the

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(May 30, 2007) .........:c.ccccccsscsessecsesecccerees

Complaint

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CARACO PHARMACEUTICAL

LABORATORIES, LTD.,

Plaintiff-Appellant,

Vv.

FOREST LABORATORIES, INC.,

Forest Laboratories Holdings, Ltd., and H.

Lundbeck A/S, Defendants-Appellees.

No. 2007-1404.

United States Court of Appeals, Federal Circuit.

April 1, 2008.

Rehearing and Rehearing En Banc

Denied June 24, 2008.

James F. Hurst, Winston & Strawn, LLP, of

Chicago, IL, argued for plaintiff-appellant. With

him on the brief were Derek J. Sarafa and Samuel S.

Park. Of counsel on the brief were Steffen N.

Johnson and Luke W. Goodrich, of Washington, DC.

Gerald J. Flattmann, Jr., Kirkland & Ellis LLP,

of New York, NY, argued for defendants-appellees.

With him on the brief were John M. Desmarais,

Christine Willgoos, and Benjamin A. Lasky. Of

counsel was Peter J. Armenio.

Before GAJARSA, Circuit Judge, FRIEDMAN,

Senior Circuit Judge, and PROST, Circuit Judge.

Opinion for the court filed by Circuit Judge

GAJARSA. Dissenting opinion filed by Circuit

Judge FRIEDMAN.

GAJARSA, Circuit Judge.

This is an action brought under the Declaratory

Judgment Act, 28 U.S.C. §§ 2201, 2202, and the

provision of the Hatch-Waxman Act establishing

civil actions for patent certainty, 21 U.S.C.

§ 355(j)(5)(C). Plaintiff-Appellant Caraco

Pharmaceutical Laboratories, Ltd. (“Caraco”)

appeals a decision of the United States District

Court for the Eastern District of Michigan

dismissing its declaratory judgment action for

noninfringement against Defendants-Appellees

Forest Laboratories, Inc., et al., (“Forest”). Caraco’s

action was dismissed for lack of Article III

jurisdiction on the grounds that it had been rendered

moot when Forest unilaterally granted Caraco a

covenant not to sue for infringement of the patent-

in-suit, U.S. Patent No. 6,916,941. However, in the

context of the Hatch-Waxman framework, Forest’s

covenant not to sue did not eliminate the controversy

between the parties. Accordingly, we hold that

Caraco’s declaratory judgment action presents a

continuing Article III controversy, and reverse and

remand for further proceedings.

I BACKGROUND

This case arises under the Hatch-Waxman Act, !

which governs the Food and Drug Administration’s

(“FDA”) approval of new and generic drugs. The goal

of the Act is to “[strike] a balance between two

competing policy interests: (1) inducing pioneering

research and development of new drugs and

(2) enabling competitors to bring low-cost, generic

copies of those drugs to market.” Andrx Pharms.,

Inc. v. Biovail Corp., 276 F.3d 1368, 1371 (Fed. Cir.

2002). The following five aspects of the Hatch-

Waxman framework are relevant to this case.

_ First, a pioneering drug company must obtain

FDA approval! for its drug by submitting a New Drug

Application (“NDA”). See 21 U.S.C. § 355(a), (b). As

part of the NDA process, the drug company must

inform the FDA of all patents covering its drug or

the methods of using the drug, “with respect to

which a claim of patent infringement could

reasonably be asserted if a person not licensed by the

owner engaged in the manufacture, use, or sale of

the drug.” See 21 U.S.C. § 355(b)(1), (c)(2). The FDA

lists all such patents in a publication titled the

“Approved Drug Products With Therapeutic

Equivalence Evaluations.” This publication is

commonly known as the “Orange Book.” Drugs

1 The Hatch-Waxman Act is the name commonly used to refer

to the Drug Price Competition and Patent Term Restoration

Act of 1984, Pub. L. No. 98-417, 98 Stat. 1585 (1984) (codified

at 21 U.S.C. §§ 355, 360(cc) (2000), 35 U.S.C. §§ 156, 271, 282

(2000)), as amended by the Medicare Prescription Drug,

Improvement, and Modernization Act of 2003, Pub. L. No. 108

173, 117 Stat. 2066 (2003).

approved by the FDA are known as “listed drugs.”

See 21 U.S.C. § 355()(2)(A)(i).

Second, to facilitate the\development of generic

versions of listed drugs, the Hatch-Waxman Act

provides an Abbreviated New Drug Application

(“ANDA”) process for generic drug manufacturers.

See 21 U.S.C. § 355()). The ANDA process

streamlines FDA approval of generic drugs by

allowing applicants to rely on the results of the

safety and efficacy studies that supported the FDA’s

approval of a listed drug. See id.; Eli Lilly & Co. v.

Medtronic, Inc., 496 U.S. 661, 676, 110 S. Ct. 2683,

110 L. Ed.2d 605 (1990). Under the ANDA process,

a generic drug company must submit information to

show, inter alia, that its generic drug and the

relevant listed drug share the same _ active

ingredients and are _ bioequivalent. 21 U.S.C.

§ 355(G)(2)(A) Qi), (iv). In addition, generic drug

companies must submit one of four certifications

addressing each Orange-Book-listed patent covering

the listed drug. Specifically, the ANDA filer must

certify —

(1) that [the required] patent information has

not been filed [with the FDA],

(If) that such patent has expired,

(III) of the date on which such patent will

expire, or

(IV) that such patent is invalid or will not be

infringed by the manufacture, use, or sale

of the new drug for which the application is

submitted

21 U.S.C. § 355()(2)(A)(vil). If a generic drug

company seeks to market a generic version of a

listed drug before the expiration of Orange-Book-

hsted patents covering that drug, it must file a

certification under 21 U.S.C. § 355(j)(2)(A)(vii) (IV),

i.e. a “Paragraph IV certification.” See Eli Lilly, 496

U.S. at 677, 110 S. Ct. 2683. All Paragraph IV

ANDA filers must provide notice of their Paragraph

IV certification to both the patent owner and the

NDA holder. 21 U.S.C. § 355(j)(2)(B). This notice

must set forth a “detailed statement of the factual

and legal basis for the opinion of the applicant that

the patent is invalid or will not be infringed.” 21

U.S.C. § 355G)(2)(B)av) dD.

Third, the Hatch-Waxman Act facilitates the

early resolution of patent disputes between generic

and pioneering drug companies by providing that the

mere act of filing a Paragraph [IV ANDA constitutes

an act of patent infringement. 35 U.S.C. § 271(e)(2);

Eli Lilly, 496 U.S. at 678, 110 S. Ct. 2683. The Act

states that “it shall be an act of infringement” to

submit an ANDA “if the purpose of such submission

is to obtain approval... to engage in the commercial

manufacture, use, or sale of a drug... claimed ina

patent or the use of which is claimed in a patent

before the expiration of such patent.” 35 U.S.C.

§ 271(e)(2). As this court has explained, “§ 271(e)(2)

is designed to create an artificial act of infringement

for purposes of establishing jurisdiction in the

federal courts.” Glaxo Group Ltd. v. Apotex, Inc., 376

F.3d 1339, 1351 (Fed. Cir. 2004) (emphasis in

original); see also Eli Lilly, 496 U.S. at 678, 110 S.

Ct. 2683 (“Quite obviously, the purpose of

subsection[ |] (e)(2) ... 1s to enable the judicial

adjudication upon which the ANDA . scheme|[ ]

depend{s].”)

Fourth, to incentivize ANDA filers to challenge

the validity of listed patents or design around those

patents as early as possible, the Hatch-Waxman Act

provides that the first ANDA applicant to file a

Paragraph IV certification (“first Paragraph IV

ANDA filer”) shall enjoy a 180-day period of generic

marketing exclusivity. See 21 U.S.C.

§ 3559)(5)(B) Gv). Until the first Paragraph IV

ANDA filer’s exclusivity period expires, the FDA

may not approve a later-filed Paragraph IV ANDA

based on the same NDA (hereinafter a “subsequent

Paragraph ITV ANDA”). /d. Importantly, the first

Paragraph IV ANDA filer is entitled to the 180-day

exclusivity period whether or not it establishes that

the NDA holder’s Orange-Book-listed patents are

invalid or not infringed by the drug described in its

ANDA; all that is required is that the first

Paragraph IV ANDA filer submit a substantially

complete ANDA that contains a Paragraph IV

certification. 21 U.S.C. § 355()(5)(B)(iv)(I1) (bb).

The Hatch-Waxman Act provides that the 180-

day period of exclusivity begins either on the date

that the first Paragraph IV ANDA filer begins

marketing its generic drug, or on the date of a final

court decision finding the relevant Orange-Book-

listed patents invalid or not infringed, whichever

comes first. See 21 U.S.C. § 355G)(5)(B)(iv) (2000)2;

2 In 2003, Congress replaced the provisions governing the

commencement of the 180-day exclusivity period with a new

regime under which the first Paragraph [LV ANDA filer can

forfeit its exclusivity period if it fails to market its drug within

a certain time. See 21 U.S.C. § 355G)(5)(D): see also Pfizer, 395

F.3d at 1329. The amendment was part of the Medicare

Prescription Drug, Improvement, and Modernization Act of

2003, Pub. L. No. 108-173, 117 Stat. 2066 (2003) (“Medicare

see also Teva Pharms. USA, Inc. v. Pfizer, Inc., 395

F.3d 1324, 1328 (Fed. Cir. 2005) (“Pfizer”). In other

words, the applicable statutory provisions provide

for two methods of triggering the first Paragraph IV

ANDA filer’s 180-day exclusivity period: (1) a

commercial-marketing trigger pursuant to 21 U.S.C.

§ 355(G)(5)(B)(iv)() (2000) and (2) a court-judgment

trigger pursuant to 21 U.S.C. § 355q)(5)(B)avwdD

(2000). Only the first Paragraph ITV ANDA filer can

trigger its 180-day exclusivity period via_ the

commercial-marketing trigger. See 21 U.S.C.

§ 355G9)(5)(B)(Giv)(). However, subsequent Paragraph

IV ANDA filers can trigger the first Paragraph IV

ANDA filer’s 180-day exclusivity period via the

court-judgment trigger. Minn. Mining & Mfg. Co. v.

Barr Labs., Inc., 289 F.3d 775, 780 (Fed. Cir. 2002)

(“3”) (holding that the first Paragraph IV ANDA

filer’s 180-day exclusivity period can be triggered by

a court judgment obtained by a_ subsequent

Paragraph IV ANDA filer).

Modernization Act” or “MMA”), which was enacted on

December 8, 2003. Pfizer, 395 F.3d at 1328-29. Despite these

changes, the MMA contained a_ grandfather provision

specifying that the amendments do not apply to Paragraph IV

ANDAs filed before the date of enactment of the MMA. See

MMA § 1102(b). The amendments also do not apply if another

generic drug company had filed a Paragraph TV ANDA for the

same hsted drug before the date of enactment of the MMA. 7d.

In this case, a generic drug company, namely Ivax

Pharmaceuticals, Inc., filed a Paragraph IV ANDA in August

2003, before the December 2003 enactment of the MMA. Thus,

the MMA amendments to the provisions governing the

commencement of 180-day exclusivity period are inapplicable to

this case

Since the FDA cannot approve subsequent

Paragraph IV ANDAs until the first Paragraph IV

ANDA filer’s 180-day exclusivity period expires, the

date on which the exclusivity period is triggered is

critical to NDA holders and subsequent Paragraph

IV ANDA filers. On the one hand, subsequent

Paragraph IV ANDA filers have a strong incentive to

generate a triggering event allowing the FDA to

approve their subsequent Paragraph IV ANDAs 181

days after the triggering event. On the other hand,

NDA holders have a strong incentive to prevent a

triggering event, because subsequent Paragraph IV

ANDAs cannot be approved until the exclusivity

period expires. Moreover, because subsequent

Paragraph [V ANDA filers can only activate the first

Paragraph [IV ANDA ffiler’s 180-day exclusivity

period through the - court-judgment trigger,

subsequent Paragraph IV ANDA filers have a strong

incentive to challenge the NDA holder’s Orange-

Book-listed patents in court. Conversely, NDA

holders have a strong incentive to avoid litigation

that would trigger the first Paragraph ITV ANDA

filer’s exclusivity period and allow the FDA to

approve subsequent Paragraph [IV ANDAs 181 days

after the triggering event.

For example, if a first Paragraph [IV ANDA filer

is found lable in a § 271(e)(2) infringement action or

simply fails to market its generic drug, then it has

not triggered its own exclusivity period through the

court-judgment trigger or the commercial-marketing

trigger. In that case, a subsequent Paragraph IV

ANDA filer must generate a_ court-judgment

triggering event in order to activate the first

Paragraph IV ANDA filer’s 180-day exclusivity

period. 21 U.S.C. § 355g)(5)(B)Gv)(T) (2000); 3M,

289 F.3d at 780. More precisely, the subsequent

Paragraph IV ANDA filer must obtain a judgment

that the NDA ho!ver’s Orange-Book-listed patents

are invalid or noi infringed by the drug described in

its subsequent Paragraph [V ANDA. 21 U.S2Z.

§ 355(4)(5)(B)(iv) ID (2000). However, if the NDA

holder can prevent the subsequent Paragraph IV

ANDA filer’s court challenge, it can delay FDA

approval of the subsequent Paragraph IV ANDA and

thus delay the subsequent Paragraph IV ANDA

filer’s entry into the market. See 21 U.S.C. § 355(a)

(providing that “[n]o person shall introduce or

deliver for introduction into interstate commerce any

new drug, unless an approval of an [NDA or ANDA|]

is effective with respect to such a drug”) Indeed, an

NDA holder could thus delay any subsequent

Paragraph IV ANDA filer from entering the market

until the NDA holder’s Orange-Book-listed patents

expire.?

The fifth and final aspect of the Hatch-Waxman

Act relevant to this case is the “civil action to obtain

patent certainty” (“CAPC”). See 21 U.S.C.

§ 355Gg)(5)(C). The CAPC is designed to prevent

NDA holders from “gaming” the Hatch-Waxman Act

by forestalling the resolution of patent disputes with

ANDA filers. Teva Pharms. USA, Inc. v. Novartis

Pharms. Corp., 482 F.3d 1330, 1342 (Fed. Cir. 2007)

(“Novartis”). Under the CAPC provisions, if the

NDA holder fails to sue a Paragraph [IV ANDA filer

within 45 days, the ANDA filer can sue the NDA

3 Generic drug companies can obtain immediate FDA approval

of their drugs when the relevant Orange-Book-listed patents

expire by submitting a Paragraph III ANDA certifying that the

patents will expire on that date. See 21 U.S.C

§ 355qg)(2)A)(viddID

10a

holder to obtain a declaratory judgment that the

relevant Orange-Book-listed patents are invalid or

not infringed. 21 U.S.C. § 355G)(5)(C).

In addition, Congress extended federal

jurisdiction over CAPCs “to the extent consistent

with the Constitution.” 35 U.S.C. § 271(e){5).

Accordingly, federal courts have jurisdiction over

CAPCs to the extent that they present an Article III

case or controversy. Novartis, 482 F.2d at 1342.

Congress explained the need for broad federal

jurisdiction over CAPCs as follows:

[W]hen generic applicants are blocked

by a first generic applicant’s 180-day

exclusivity, the brand drug company

could choose not to sue those other

generic applicants so as to delay a final

court decision that could trigger the

“failure to market” provision and force

the first generic to market.[4]

4 The discussion here refers to the “failure to market” provision

of the Hatch-Waxman Act, 21 U.S.C. § 355(G)(5)(D), under

which the first Paragraph IV ANDA filer can forfeit its 180-

day exclusivity period by failing to market its generic drug.

Section 355()(5)(D) replaced the 180-day exclusivity period

triggering provisions that are applicable to this case, i.e. 21

U.S.C. § 3559)(5)(B)(iv) (2000), including the court-judgment

trigger. See supra note 2 (discussing MMA § 1102(b), 117 Stat.

at 2460). Although the legislative discussion here refers to the

amended 180-day provisions, this distinction 1s inconsequential

because under both the original and amended 180-day

provisions, the ability of subsequent Paragraph IV ANDA filers

to obtain FDA approval depends on the date of a final court

decision holding the relevant Orange-Book-listed patents

nvalid or not infringed. Thus, Senator Kennedy's remarks

lla

In ... these ... circumstances,

generic applicants must be able to seek

a resolution of disputes involving all

patents listed in the Orange Book with

respect to the drug immediately upon

the expiration of the 45-day period. We

believe there can be a case or controversy

sufficient for courts to hear these cases

merely because the patents at issue have

been listed in the FDA Orange Book,

and because the statutory scheme of the

Hatch-Waxman Act relies on _ early

resolution of patent disputes. The

declaratory judgment provisions in this

bill are intended to encourage such

early resolution of patent disputes.

149 Cong. Rec. S15885 (Nov. 25, 2003) (remarks of

Sen. Kennedy, ranking member of U.S. Senate

Committee on Health, Education, Labor, and

Pensions) (emphasis added).

Il. FACTS

A. Forest’s NDA for Lexapro®

Forest holds an approved NDA for its drug

Lexapro®, which is used to treat depression and

generalized anxiety disorder. Forest currently faces

no generic competition for Lexapro®. Forest Labs.,

Inc. v. Ivax Pharms., Inc., 438 F. Supp. 2d 479, 494

(D. Del. 2006).

concerning the brand name drug company’s incentive to delay

such court decisions are equally applicable to this case.

12a

As part of the process for filing its Lexapro®

NDA, Forest listed two patents in the FDA’s Orange

Book, namely: U.S. Patent Nos. Re. 34,712 (“the

"712 patent”) and 6,916,941 (“the ’941 patent”). The

"712 patent includes claims covering substantially

pure forms of escitalopram, the active ingredient of

Lexapro®. The ’941 patent generally covers

crystalline particles of escitalopram oxate of a

particular size range, as well as dosage forms

containing particles of this size range, and methods

of manufacturing particles in this size range. The

"712 patent expires in 2012; the 941 patent expires

in 2023.

B. The First Paragraph IV Challenge to

Forest’s Orange-Book-Listed Patents for

Lexapro® and the Consequences for

Subsequent Paragraph IV ANDA Filers

The first ANDA applicant to file a Paragraph IV

certification for Forest’s ’712 and ’941 patents was

Ivax Pharmaceuticals, Inc. (“Ivax”). Accordingly,

Ivax is entitled to 180 days of generic market

exclusivity, which will begin either on the day it

begins marketing its generic drug, or on the date a

court determines that the ’712 and ’941 patents are

invalid or not infringed — whichever comes first. See

21 U.S.C. § 355(j)(5)(B)(iv) (2000).

Forest responded to Ivax’s Paragraph IV ANDA

by suing Ivax for infringement of the ’712 patent, the

earlier of the two patents to expire. Ivax

counterclaimed that the '712 patent was invalid.

Despite suing Ivax on the '712 patent, Forest did not

sue Ivax for infringement of the ’941 patent. By

holding the ’941 patent in reserve, Forest insulated

l3a

itself from an _ invalidity or noninfringement

challenge by Ivax.° Ultimately, Forest defeated

Ivax’s counterclaim of invalidity on the ’712 patent

and obtained a judgment that the drug described in

Ivax’s ANDA infringed the ’712 patent, which was

affirmed by this court in Forest Labs., Inc. v. Ivax

Pharms., Inc., 501 F.3d 1263 (Fed. Cir. 2007).

In sum, after filing a Paragraph IV certification

for both the ’712 and ’941 patents in its ANDA, Ivax

failed to obtain a court judgment that either the ’712

or the 941 patent is invalid or not infringed by the

drug described in its ANDA. Because Ivax has not

obtained a judgment that both of Forest’s Orange-

Book-listed patents are invalid or not infringed by

the generic drug described in its ANDA, Ivax failed

to trigger its 180-day exclusivity period via the

court-judgment trigger, 21 U.S.C.

§ 355G9)(5)(B)Gv) UD (2000).

In addition, because the generic drug described in

Ivax’s ANDA was found to infringe the ’712 patent,

Ivax cannot trigger its 180-day exclusivity period via

the commercial-marketing trigger, 21 U.S.C.

§ 355G)(5)(B)Gv)() (2000), until the °712 patent

2 As will be discussed in more detail later, in Novartis this

court held that where an NDA holder brings an infringement

suit against a Paragraph IV ANDA filer on only one of several

Orange-Book-listed patents covering its NDA, the ANDA filer

has standing to seek a declaratory judgment on any of the NDA

holder’s remaining Orange-Book-listed patents for that NDA.

482 F.2d at 1346. However, Novartis had not been decided at

the time of Forest and Ivax’s dispute, and in any case, Ivax

never sought a declaratory judgment that Forest’s '941 patent

was invalid or not infringed by its generic drug, see Ivax

Pharms., Inc., 501 F.3d at 1265.

14a

expires in 2012. Indeed, the district court

specifically enjoined Ivax from “making, using,

offering to sell or selling within the United States, or

importing into the United States any products that

infringe the ’712 patent, including the [drug]

products referred to in [Ivax’s ANDA] until such

time as the ’712 patent expires... .” Forest Labs.,

Inc. v. Ivax Pharms., Inc., No. 03-891-JJF (D. Del.

Nov. 3, 2006) (Judgment Order). As a result, Ivax

cannot activate its exclusivity period via the

commercial-marketing trigger until the ’712 patent

expires.

With Ivax no longer able to trigger its exclusivity

period, only two pathways remain open. to

subsequent Paragraph IV ANDA filers who seek to

trigger Ivax’s exclusivity period before the ’712

patent expires in 2012. First, a subsequent

Paragraph IV ANDA filer could obtain a court

judgment invalidating the ’712 patent, which would

allow the FDA to approve Ivax’s drug. With FDA

approval, Ivax would be legally free to sell its generic

drug, and its exclusivity period would be triggered

on the day of its first commercial marketing. See 21

U.S.C. § 355G)(5)(B)(iv)(1) (2000) (the “commercial-

marketing trigger’). Second, a _ subsequent

Paragraph IV ANDA filer could trigger Ivax’s

exclusivity period immediately—regardless of when

Ivax begins marketing its drug—via the court-

judgment trigger, 21 U.S.C. § 355g)(5)(B)Qv)d1)

(2000). However, because Ivax was the first

Paragraph IV ANDA filer with respect to both the

‘712 and '941 patents, a subsequent Paragraph IV

ANDA filer can only activate Ivax’s exclusivity

period via the court-judgment trigger by obtaining a

judgment that both the ’712 and ‘941 patents are

invalid or not infringed.

15a

If a subsequent Paragraph IV ANDA filer is not

able to pursue either of these two pathways to

triggering Ivax’s exclusivity period, then Ivax’s

exclusivity period cannot begin until the ’712 patent

expires in 2012. Moreover, assuming there has been

no other triggering event by that time, Ivax’s

exclusivity period will not be triggered on the date

the ’712 patent expires unless Ivax actually begins

marketing its generic drug on that date. Even if

Ivax does so, the FDA will still be restricted from

approving any subsequent Paragraph IV ANDA

until 181 days after the date the ’'712 patent

expires.© See 21 U.S.C. § 355(j)(5)(B)(iv).

In short, absent an event triggering Ivax’s

exclusivity, all subsequent Paragraph IV ANDA

filers, including Caraco, will be denied entry to the

drug market for a_ significant time. These

subsequent Paragraph IV ANDA filers will be

precluded from the market regardless of whether the

generic drugs described in their ANDAs infringe

Forest’s Orange-Book-listed patents and regardless

of whether Forest’s patents are valid.

C. Caraco’s Subsequent Challenge to Forest’s

Orange-Book-Listed Patents for Lexapro®

In May 2006, Plaintiff-Appellant Caraco filed an

ANDA for generic escitalopram that included a

6 When the '712 patent expires, subsequent Paragraph IV

ANDA filers will not be able to obtain immediate FDA approval

by filing a Paragraph II! certification; obtaining FDA approval

by filing a Paragraph III certification will not be an option until

Forest’s other Orange-Book-listed patent covering Lexapro®,

the ‘941 patent, expires in 2023. See 21 U.S.C.

§ 3559)(2)(A) (wid CID.

16a

Paragraph IV certification for Forest’s °712 and ’941

patents for Lexapro®. Under 35 U.S.C. § 271(e)(2),

this constituted a technical act of infringement of

both patents. Forest sued Caraco for infringement of

the °712 patent in a lawsuit filed in the Eastern

District of Michigan, Forest Labs., Inc., uv. Caraco

Pharm. Labs., Ltd., Case No. 2:06-EV-13143-BAF-

MKM.’ As of the time of this writing, the parties’

litigation with respect to the ’712 patent 1s ongoing.

Despite suing Caraco for infringement of the ’712

patent, Forest did not sue Caraco on the ’941 patent.

However as discussed above, under the Hatch-

Waxman framework Caraco has an _ economic

interest in determining whether the ’941 patent is

invalid or not infringed by the drug described in its

ANDA, because only a judgment of invalidity or

noninfringement with respect to both the ’712 and

941 patents can trigger Ivax’s exclusivity period.

See 21 U.S.C. § 355G)(5)(B)av)(IT (2000).

Accordingly, Caraco filed a separate action under the

Declaratory Judgment Act, 28 U.S.C. §§ 2201, 2202,

and the Hatch-Waxman provision establishing the

CAPC, 21 U.S.C. § 355G)(5)(C), seeking a declaratory

judgment that the drug described in its ANDA does

not infringe Forest’s 7941 _ patent. Caraco’s

7 Tt should be noted that by suing Caraco for infringement of

the '712 patent, Forest triggered the automatic 30-month stay

of FDA approval provided in 21 U.S.C. § 355G)(5)(B)({ii1).. Under

§ 3559)(5)(B) Gn), “fi]f the patentee files an infringement action

within forty-five days after receiving notice of the paragraph IV

certification, an automatic thirty-month “stay” goes into effect,

during which the FDA cannot approve the ANDA unless the

suit is resolved or the patent expires.” Pfizer, 395 F.3d at 1328.

17a

declaratory judgment action with respect to the ’941

patent is the case presently on appeal.

Shortly after Caraco sued Forest for a declaratory

judgment on the ’941 patent, Forest filed a motion to

dismiss Caraco’s action pursuant to Fed. R. Civ. P.

12(b)(1) on the grounds that the action did not

present a “case” or “controversy” as required by

Article III of the Constitution. In its motion, Forest

argued that there was no controversy because

Caraco did not have a reasonable apprehension of

suit on the ’941 patent. At the time Forest filed its

motion, this court’s most recent precedent governing

the justiciability of declaratory judgment suits

applied the reasonable-apprehension-of-suit test to

determine whether a justiciable controversy existed.

See, e.g., Pfizer, 395 F.3d at 1332. However, as is

discussed in more detail below, even before Forest

filed its motion, the Supreme Court found the

reasonable-apprehension-of-suit test inconsistent

with its precedent. MedImmune, Inc. v. Genentech,

Inc., 549 U.S. 118, n.11, 127 S. Ct. 764, 774 n.11, 166

L. Ed. 2d 604 (2007). The Court explained in

MedImmune that whether a declaratory judgment

action presents an Article III controversy must be

determined based on “all the circumstances,” not

merely on whether the declaratory judgment

plaintiff is under a reasonable apprehension of suit.

Id. at 771.

In addition, after Forest filed its motion to

dismiss but before the district court made its ruling,

this court issued its decision in Novartis, 482 F.3d

1330. As in the present case, the issue in Novartis

was whether a Paragraph IV ANDA filer’s

declaratory judgment action against an NDA holder

presented a_justictable Article III case’ or

18a

controversy. Id. at 1335. In Novartis, Teva

Pharmaceuticals USA, Inc. (“Teva”) was the first

ANDA applicant to file a Paragraph IV certification

on all five Orange-Book-listed patents covering an

FDA approved drug owned _ by § Novartis

Pharmaceuticals Corp. (“Novartis”). Jd. at 1334.

Although Teva had filed a Paragraph IV certification

for all five of Novartis’ Orange-Book-listed patents,

Novartis only brought suit under 25 U.S.C.

§ 271(e)(2)(A) for infringement of one of those

patents.® Jd.

After Novartis filed suit, Teva brought a separate

action against Novartis on the four remaining

Orange-Book-listed patents. Jd. at 1335. However,

the district court dismissed Teva’s declaratory

judgment action for lack of a justiciable controversy

on the grounds that Teva had no reasonable

apprehension of suit on the four remaining Orange-

Book-listed patents. Jd. ‘This dismissal was the

subject of the appeal in Novartis. Id. On appeal, the

court observed that the Supreme _ Court’s

MedImmune decision had abrogated the reasonable-

apprehension-of-suit test, Novartis, 482 F.3d at

1339, and applying the Supreme Court’s all-the-

circumstances test, the court found that there was a

justiciable controversy between the parties, Jd. at

1346. In reaching this decision, the court held

that—

8 Even though Novartis only sued Teva on one of its Orange-

Book-listed patents, this was sufficient to trigger a 30-month

stay barring Teva’s ANDA from approval under 21 U.S.C.

§ 3559)(5)(B) iii). Novartis, 482 F.3d at 1340 n.5.

19a

A justiciable declaratory judgment

controversy arises for an ANDA filer

when a patentee lists patents in the

Orange Book, the ANDA applicant files

its ANDA certifying the listed patents

under paragraph IV, and the patentee

brings an action against the submitted

ANDA on one or more of the patents.

The combination of these’ three

circumstances is dispositive in

establishing an actual declaratory

judgment controversy as to all the

paragraph IV certified patents, whether

the patentee has sued on all or only

some of the paragraph IV certified

patents.

Id. at 1344.

In thus applying the all-the-ciarcumstances test to

a declaratory judgment action between an ANDA

filer and a pharmaceutical patentee, the Novartis

decision eliminates Forest’s argument that Caraco’s

declaratory judgment action should be dismissed

because Caraco had no reasonable apprehension of

suit on the ’941 patent. After the Novartis decision

issued, Forest unilaterally granted Caraco an

irrevocable covenant not to sue for infringement of

the 941 patent. Forest’s stated goal in granting the

covenant to Caraco was “to confirm” that there was

no case or controversy between the parties regarding

the ‘941 patent. Forest’s covenant provides, in

relevant part:

[Forest] hereby covenants itself and all

successors in interest to the ‘941 patent

not to sue Caraco for any alleged

20a

infringement (whether direct = or

indirect) or violation of the "941 patent

based on Caraco’s filing of ANDA 78-

219 or any commercial manufacture,

use, sale, offer for sale or importation of

the generic products described by

ANDA 78-219.

Notably, despite giving Caraco this covenant not

to sue, Forest refused to concede that the ’941 patent

was invalid or not infringed by the drug described in

Caraco’s ANDA. In fact, Forest hinged its entire

argument for dismissal on the covenant not to sue,

stating: “There is no controversy because we gave a

covenant not to sue.” The district court agreed,

stating from the bench that “[t]here’s a covenant not

to sue on the ’941 so there’s not going to be any loss,

there’s no threat of lawsuit.” Transcript of Hearing

on Motion to Dismiss at 31 (May 30, 2007) (emphasis

added). On this basis, the district court ruled that

there was no Article III controversy and granted

Forest’s motion to dismiss. Notably, there is no

indication in the record that the district court

considered either the Supreme Court’s MedJmmune

decision or this court’s Novartis decision when

making this ruling.

lil. ANALYSIS

A district court’s dismissal of a declaratory

judgment action for lack of jurisdiction presents a

question of law that this court reviews de novo.

Novartis, 482 F.3d at 1335.

Our starting point in analyzing Caraco’s appeal is

the Declaratory Judgment Act, 28 U.S.C. § 2201(a),

under which Caraco filed this suit. The relevant text

of the Act provides:

2la

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.

28 U.S.C. § 2201(a). It is well established that the

phrase “actual controversy” in § 2201(a) includes any

controversy over which there is Article III

jurisdiction. Aetna Life Ins. Co. v. Haworth, 300 U.S.

227, 239-40, 57 S. Ct. 461, 81 L. Ed. 617 (1937)

(noting that “the word ‘actual’ is one of emphasis

rather than of definition”). In addition, with respect

to declaratory judgment actions brought by

Paragraph IV ANDA filers against NDA holders to

establish noninfringement or invalidity of Orange-

Book-listed patents, Congress’ has _— specifically

granted federal courts subject matter jurisdiction “to

the extent consistent with the Constitution.” 35

U.S.C. § 271(e)(5). Thus, federal courts have subject

matter jurisdiction over such actions to the extent

that they present an Article II] case or controversy.

See Novartis, 482 F.3d at 1337.

In MedImmune, the Supreme Court reaffirmed

the proper standard for determining whether a

declaratory judgment action satisfies the Article III

case or controversy requirement. 127 S. Ct. at 771.

Specifically, the Court framed the _ justiciability

inquiry as “whether 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.” Id.

22a

(quoting Md. Cas. Co. v. Pac. Coal & Oil Co., 312

U.S. 270, 273, 61 S. Ct. 510, 85 L. Ed. 826 (1941)).

In addition, the Supreme Court emphasized that

Article III requires that the dispute be “definite and

concrete, touching the legal relations of parties

having adverse legal interests’; and that it be ‘real

and substantial’ and ‘admi[t] 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.” Id.

(quoting Aetna Life Ins., 300 U.S. at 240-41).

In Novartis this court held that we must “follow

MedImmune’s teaching to look at all the

circumstances’ to determine whether [an action for a

declaratory judgment of noninfringement or patent

invalidity presents} a justiciable Article’ III

controversy.” 482 F.3d at 1339. Accordingly,

Novartis acknowledged that this court’s reasonable-

apprehension-of-suit test was overruled’ by

MedImmune. Id.; see also SanDisk Corp. uv.

STMicroelectronics, Inc., 480 F.3d 1372, 1380 (Fed.

Cir. 2007). The reasonable-apprehension-of-suit test

required “both (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

an activity.” Novartis, 482 F.3d at 1339. Following

MedImmune, proving a reasonable apprehension of

suit 1s only one of many ways a patentee can satisfy

the Supreme Court’s more- general _all-the-

circumstances test to establish that an action

presents a justiciable Article III controversy.

23a

In applying the all-the-circumstances test to

Caraco’s declaratory judgment action, we are guided

by the Supreme Court’s three-part framework for

determining whether an action presents a justiciable

Article III controversy. In particular, an action is

justiciable under Article III only where (1) the

plaintiff has stand ng, Lujan v. Defenders of Wildlife,

504 U.S. 555, 560, 112 S. Ct. 2130, 119 L. Ed. 2d 351

(1992), (2) the issues presented are ripe for judicial

review, Abbott Labs. v. Gardner, 387 U.S. 136, 149,

87 S. Ct. 1507, 18 L. Ed. 2d 681 (1967), and (3) the

case 1s not rendered moot at any- stage of the

litigation, United States Parole Comm'n. v. Geraghty,

445 U.S. 388, 397, 100 S. Ct. 1202, 63 L. Ed. 2d 479

(1980). For the following reasons, we hold that

Caraco’s declaratory judgment action satisfies these

requirements and presents a justiciable Article III

controversy.

A. Standing

The Supreme Court has explained that the

“irreducible constitutional minimum of standing”

contains the following three requirements:

First and foremost, there must be

alleged (and ultimately proved) an

“Injury in fact”—a harm suffered by the

plaintiff that is “concrete” and actual or

imminent, not “conjectural” or

“hypothetical.” Second, there must be

causation—a fairly traceable connection

between the plaintiffs injury and the

complained-of conduct of the defendant.

And third, there must be

redressability—a likelihood that the

requested relief will redress the alleged

injury.

24a

Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83,

102-03, 118 S. Ct. 1003, 140 L. Ed. 2d 210 (1998)

(internal citations omitted).

1. Caraco Alleges a Judicially Cognizable

Injury-in-Fact

In this case, as in most declaratory judgment

actions in the patent context, Caraco’s alleged

injury-in-fact is a “restraint on the free exploitation

of non-infringing goods,” Red Wing Shoe Co., Inc. v.

Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1360

(Fed. Cir. 1998). Here, Caraco alleges it is being

excluded from selling a non-infringing product

because Forest has taken actions that delay the FDA

from approving Caraco’s ANDA. See Novartis, 482

F.3d at 1340 (observing that an ANDA filer suffers

the requisite injury-in-fact where its ability to secure

approval of its ANDA has been prevented by an NDA

holder).

As this court expleined in Novartis, the Hatch-

Waxman framework presents a different set of

circumstances than those which underlie an

ordinary infringement action: “Ordinarily, a

potential competitor in other fields is legally free to

market its product in the face of an adversely-held

patent. In contrast, under the Hatch-Waxman Act

an ANDA filer ... is not legally free to enter the

market [without FDA approval].” 482 F.3d at 1348.

Indeed, 21 U.S.C. § 355(a) provides that “[n]o person

shall introduce or deliver for introduction into

interstate commerce any new drug, unless an

approval of an [NDA or ANDA)] is effective with

respect to such a drug.” Thus, by preventing the

FDA from approving the ANDAs of generic drug

manufacturers, pharmaceutical patentees’_ like

Forest can potentially exclude non-infringing generic

25a

drugs from the market. If Caraco is correct that its

generic drug does not infringe Forest’s "2°41 patent,

then it has a right to enter the generic drug market,

and its exclusion from the generic drug market by

Forest’s actions is a sufficient Article III injury-in-

fact. Moreover, the fact that Forest’s actions can

only exclude Caraco from the drug market in the

context of the Hatch-Waxman framework does not

render Caraco’s injury any less “concrete, actual or

imminent.” Steel Co., 523 U.S. at 102-03.

In sum, Caraco alleges that it has been

“restrainfed from] the free exploitation of non-

infringing goods,” Red Wing Shoe, 148 F.3d at 1360.

This is exactly the type of injury-in-fact that is

sufficient to establish Article III standing under our

caselaw. See id.; see also Novartis, 482 F.3d at 1345

(explaining that an NDA holder’s use of an Orange-

Book-listed patent to exclude a generic drug maker

from the market creates “the exact type of

uncertainty of legal rights that the ANDA

declaratory judgment action [i.e. the CAPC, 21

U.S.C. § 355G)(5)(C)] was enacted to prevent”).

9 Even before the MedImmune and Novartis decisions, the

District of Columbia Circuit came to a similar conclusion. See

Mova Pharm. Corp. v. Shalala, 140 F.3d 1660, 1073 n.18 (D.C.

Cir. 1998). In Mova, the court made the following observation:

{T]he Federal Circuit has had no occasion to

decide whether there is “a controversy of

sufficient immediacy and reality” to support a

declaratory judgment action, when the

plaintiff requires a judgment under section

3559)(5)(B) in order to bring its product to

market. It 1s possible that such a statutorily-

created bottleneck, coupled with the statute’s

26a

2. Caraco’s Injury Is Traceable to Forest

Caraco’s injury is also “fairly traceable [to] the

complained-of conduct of the defendant,” Steel Co.,

523 U.S. at 102-03. It is not the Hatch-Waxman Act

or the FDA framework that prevents Caraco’s ANDA

from being approved by the FDA, but rather Forest’s

actions in the context—i.e. “under all the

circumstances,” MedIimmune, 127 S. Ct. at 771—of

the Hatch-Waxman framework. Simply put, if

Forest had not listed its ’712 and ’941 patents in the

FDA’s Orange Book as valid patents covering the

drug described in its NDA for Lexapro®, then 21

U.S.C. § 355()(5)(B) (av) (2000) would not

independently delay Caraco’s ANDA from being

approved by the FDA. Such but-for causation is

sufficient to satisfy the traceability requirement of

Article III standing. See Duke Power Co. v. Carolina

Enotl. Study Group, Inc., 438 U.S. 59, 74-78, 81 n.26,

98 S. Ct. 2620, 57 L. Ed. 2d 595 (1978).

As discussed above, where the first Paragraph IV

ANDA filer has failed to trigger its own 180-day

exclusivity period, the NDA _ holder’s listing of

Orange-Book patents delays a subsequent

Paragraph IV ANDA filer from entering the

marketplace indefinitely. Moreover, this delay

occurs even if the drug described in the subsequent

express reference to declaratory judgment

actions as a means of relieving that

bottleneck, might suffice to allow a plaintiff to

show the existence of a “case or controversy”

without demonstrating an immediate risk of

being sued.

Id. (internal citation omitted).

27a

Paragraph IV ANDA does not infringe the Orange-

Book-listed patents. Here, Forest’s listing of the ’712

and ’941 patents in the Orange-Book effectively

denies Caraco an economic opportunity to enter the

marketplace unless Caraco can obtain a judgment

that both those patents are invalid or not infringed

by its generic drug. Under these circumstances,

Forest’s listing of the 941 patent (the patent-in-suit)

in the Orange-Book creates an independent barrier

to the drug market that deprives Caraco of an

economic opportunity to compete. It is well

established that the creation of such barriers to

compete satisfies the causation requirement of

Article III standing. See, e.g., Ne. Fla. Chapter,

Associated Gen. Contractors of Am. v. Jacksonville,

508 U.S. 656, 666, 113 S. Ct. 2297, 124 L. Ed. 2d 586

(1993) (holding that the “imposition of [a] barrier” to

bid for certain government contracts satisfied the

injury-in-fact and causation requirements of Article

III standing); Clements v. Flashing, 457 U.S. 957,

962, 102 S. Ct. 2836, 73 L. Ed. 2d 508 (1982) (holding

that the imposition of an “obstacle to [plaintiff's]

candidacy for higher judicial office” satisfied the

injury-in-fact and causation requirements of Article

III standing); Zenith Radio Corp. v. Hazeltine

Research, Inc., 395 U.S. 100, 124-25, 89 S. Ct. 1562,

23 L. Ed. 2d 129 (1969) (holding that the plaintiff

had standing to sue where it alleged that it had been

denied a share of the market).

3. Caraco’s Injury Is Redressible by a

Favorable Judgment

Finally, Caraco’s injury-in-fact is redressible by a

declaratory judgment that the ’941 patent is not

28a

infringed.109 A favorable judgment in this case

would clear the path to FDA approval that Forest’s

actions would otherwise deny Caraco—namely,

using the court-judgment trigger of 21 U.S.C.

§ 355(4)(5)(B)av)TD (2000) to activate Ivax’s

exclusivity period. If Caraco obtains a favorable

judgment that the drug described in its ANDA does

not infringe Forest’s "941 patent, then it will only

need a judgment of invalidity or noninfringement on

Forest’s ’712 patent in order to activate Ivax’s

exclusivity period and obtain FDA approval as

swiftly as possible. Thus, a favorable judgment in

this action would eliminate the potential for the "941

patent to exclude Caraco from the drug market.1!1

*& * *

In sum, Caraco’s declaratory judgment action

satisfies the injury-in-fact, causation, and

redressibility requirements of standing. Moreover,

even beyond satisfying the requirements of Article

Ill standing, Caraco’s action is consistent with the

basic purpose of the Declaratory Judgment Act. As

this court has previously explained, “the purpose of

10 Caraco’s injury-in-fact would also be redressed by a

judgment that the ’941 patent is invalid, but Caraco has not

sought a judgment of invalidity in this case.

1] Although we do not so decide, it appears that if Forest would

submit to a consent decree that the drug described in Caraco’s

ANDA does not infringe the ‘941 patent, such a decree would

redress Caraco’s alleged injury-in-fact just as well as any other

court judgment. Thus, if Forest’s objective in granting the

covenant not to sue on the ‘941 patent was to avoid costly

litigation with Caraco, this might be the best approach to

resolve the controversy between the parties.

29a

the Declaratory Judgment Act ... in patent cases is

to provide the allegedly infringing party relief from

uncertainty and delay regarding its legal rights.”

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

824 F.2d 953, 956 (Fed. Cir. 1987); see also Novartis,

482 F.3d at 1336 n.2 (“The Declaratory Judgment

Act and 35 U.S.C. § 271(e)(5) ‘serve[j the policies

underlying the patent laws by enabling a test of the

validity and infringement of patents that are ...

being used only as .. . scarecrows.” (quoting

Arrowhead Indus. Water, Inc. v. Ecolochem, 846 F.2d

731, 735 (Fed. Cir. 1988))).

In claiming that it has been denied the right to

sell non-infringing generic drugs, Caraco has alleged

precisely the type of injury that the Declaratory

Judgment Act is designed to remedy. See Goodyear

Tire & Rubber Co., 824 F.2d at 956; Red Wing Shoe,

148 F.3d at 1360; see generally E. Borchard,

Declaratory Judgments 803-04 (2d ed. 1941)

(discussing the history of the Declaratory Judgment

Act). In particular, Caraco alleges that Forest’s

actions exclude it from the market without ever

subjecting Forest’s ‘941 patent to a _= court

determination of its scope.l12 Caraco essentially

argues that Forest’s actions may allow it to “use a

restricted [i.e. narrowly drafted] patent to justify

much wider claims of infringement,” E. Borchard,

supra, at 803-04. Indeed, Caraco claims that it is

being excluded from the drug market by Forest’s '941

patent even though the generic drug described in its

ANDA may not infringe the ’941 patent.

5 p ;

12 As noted earlier, in the present action Caraco does not seek

a judgment that the ‘941 patent is invalid

30a

Finally, Caraco’s declaratory judgment action is

also consistent with the basic goal of the Hatch-

Waxman Act, which is to balance the need for

pharmaceutical innovation with the need for generic

drug competition. Andrx Pharms., Inc., 276 F.3d at

1371. As previously noted, a significant part of this

carefully crafted dialectic balance is encouraging the

early resolution of patent disputes when subsequent

Paragraph IV ANDA filers are “blocked by a first

generic applicant’s 180-day exclusivity.” See 149

Cong. Rec. S15885 (Nov. 25, 2003) (remarks of Sen.

Kennedy).13

13 Both the dissent and Forest contend that the legislative

history of the Hatch-Waxman Act supports the argument that

the covenant not to sue moots any and all controversy with

Caraco. The legislative history to which the dissent and Forest

cite are the following remarks by Senator Edward Kennedy:

We fully expect that, in almost ali situations

where a generic applicant has challenged a

patent [by filing an ANDA with a Paragraph IV

certification] and not been sued for patent

infringement, a claim by the generic applicant

seeking declaratory judgment on the patent will

give rise to a justiciable “case or controversy”

under the Constitution. We believe that the only

circumstance in which a case or controversy

might not exist would arise in the _ rare

circumstance in which the patent owner and

brand drug company have given the generic

applicant a covenant not to sue, or otherwise

formally acknowledge that’ the _— generic

applicant's drug does not infringe.

149 Cong. Rec. S15885 (Nov. 25, 2003) (remarks of Sen.

Kennedy, ranking member of U.S. Senate Committee on

Health, Education, Labor, and Pensions) (emphasis added).

3la

B. Ripeness

Whether an action is “ripe” requires an

evaluation of “both the fitness of the issues for

judicial decision and the hardship to the parties of

withholding court consideration.” Abbott Labs., 387

U.S. at 149, 87 S. Ct. 1507. As to the first prong, an

action is fit for judicial review where further factual

development would not “significantly advance [a

court’s] ability to deal with the legal issues

presented.” Natl Park Hospitality Ass'n v. Dep't of

Interior, 538 U.S. 803, 812, 123 S. Ct. 2026, 155 L.

Ed. 2d 1017 (2003). As to the second prong,

withholding court consideration of an action causes

hardship to the plaintiff where the complained-of

conduct has an “immediate and substantial impact”

on the plaintiff. Gardner v. Toilet Goods Ass’n, 387

Despite the arguments of the dissent and Forest, Senator

Kennedy's remarks regarding the effect of a covenant not to sue

were made when this court applied a “reasonable

apprehension-of-suit” test as the sole test for whether an action

seeking a declaratory judgment of invalidity or

noninfringement presented a justiciable Article III controversy.

See, e.g., Pfizer, 395 F.3d at 1332. Under the reasonable

apprehension-of-suit test, a covenant not to sue would

eliminate the controversy between the parties because the

generic drug applicant would no longer have a reasonable

apprehension of suit by the patentee. However, as discussed

earlier, this singular approach to the justiciability§ of

declaratory judgment actions was struck down by the Supreme

Court in MedImmune, 127 S. Ct. at 774 n.11. Given this

background, Senator Kennedy's comments only emphasize

Congress's intent that the jurisdiction of federal courts to

resolve CAPCs would extend to the limits of the Constitution

35 U.S.C. § 271(e)(5). Moreover, it is ultimately the province

and duty of the judicial department, not Congress, to discern

the limits of Article [II jurisdiction. See Marbury v. Madison, 5

U.S. (1 Cranch) 137, 177, 2 L. Ed. 60 (1803)

32a

U.S. 167, 171, 87 S. Ct. 1526, 18 L. Ed. 2d 704

(1967).

In this case, both prongs of the ripeness inquiry

are satisfied. First, additional factual development

would not advance the district court’s ability to

decide Caraco’s action for a declaratory judgment of

noninfringement. Caraco has a complete generic

drug product that has been submitted to the FDA for

approval, and no additional facts are required to

determine whether this drug product infringes the

claims of Forest’s 941 patent. Second, if Caraco’s

drug does not infringe Forest’s 941 patent, then

withholding court consideration of Caraco’s

declaratory judgment action has the “immediate and

substantial impact” of forestalling Caraco’s ability to

activate Ivax’s exclusivity period through the court-

judgment trigger of 21 U.S.C. § 355(G)(5)(B)(iv) (11)

(2000).14 As noted earlier, only a judgment of

14 The dissent concludes that delaying resolution of this suit

will have no immediate and substantial impact on Caraco

Indeed, the dissent states that the majority opinion “is highly

speculative and conjectural, and involves uncertain legal issues

that have not yet been resolved.” With all due respect, we

disagree. The dissent offers three main reasons to support its

conclusion, and we will address each in turn

First, the dissent states that there is “no basis to conclude that

the first-filing generic manufacturer will, or is likely to, delay

bringing its product to market after the ‘712 patent expires.”

We agree. What the dissent fails to recognize, however, is that

the injury upon which Caraco’s suit is premised is the delay (in

triggering Ivax’s exclusivity period) between now and when the

‘712 patent expires in 2012, not any delay (in triggering Ivax’s

exclusivity period) after the "712 paternt expires. Thus, the

dissent is in error when it notes that our analysis requires

speculating as to when Ivax decides to market its drug after the

‘712 patent expire

33a

invalidity or noninfringement with respect to both

the °712 and ’941 patents can trigger Ivax’s

exclusivity period pursuant to 21 U.S.C.

§ 355(j)(5)(B)(iv)(I]) (2000). Thus, if Caraco’s drug

does not infringe Forest’s "941 patent, then delaying

court consideration of Caraco’s declaratory judgment

action on the ‘941 patent delays the date on which

the FDA is authorized to approve Caraco’s ANDA.

Specifically, Caraco would be delayed until at least

181 days after the 712 patent expires in 2012.

Because Caraco cannot market its generic drug

without FDA approval, being delayed from resolving

its claim to noninfringement of the °941 patent

Second, the dissent states that we assume that a first

Paragraph [IV ANDA filer who unreasonably delays in

marketing its drug cannot lose its right to exclusivity. The

dissent is incorrect. Our conclusion that the first filer in this

case, i.e. [vax, cannot forfeit its exclusivity period is not based

on an assumption, but rather the texts of the Hatch-Waxman

Act and the MMA. See discussion supra note 2. As discussed,

the MMA amendments to the Hatch-Waxman Act include a

grandfather provision that specifically exempts a certain class

of Paragraph IV ANDA filers, including Ivax, from being

subject to the MMA's 180-day exclusivity forfeiture provisions.

Accordingly, it cannot plausibly be argued that Ivax may

nevertheless forfeit its exclusivity period.

Third, the dissent states that our analysis “assumes that

[Caraco] will prevail in its non-infringement claim — an

uncertain assumption at best.” We make no such assumption,

nor need we. A plaintiff need not prove it will prevail on the

merits of its case in order to prove that it has standing to bring

the case. Steel Co., 523 U.S. at 89 (“It is firmly established in

our cases that the absence of a valid (as opposed to arguable)

cause of action does not implicate subject-matter jurisdiction,

1.e., the courts’ statutory or constitutional power to adjudicate

the case.”).

34a

creates a potential for lost profits. Accordingly,

Caraco’s action is ripe for judicial review.

C. Mootness

The mootness doctrine requires that the requisite

personal stake that is required for a party to have

standing at the outset of an action must continue to

exist throughout all stages of the action. Geraghty,

445 U.S. at 397, 100 S. Ct. 1202. The Supreme

Court has articulated the mootness standard as

follows:

Simply stated, a case is moot when the

issues presented are no longer “live” or

the parties lack a legally cognizable

interest in the outcome. Where one of

the several issues presented becomes

moot, the remaining live issues supply

the constitutional requirement of a case

or controversy.

Powell v. McCormack, 395 U.S. 486, 496-97, 89 S. Ct.

1944, 23 L. Ed. 2d 491 (1969) (internal citations

omitted). The question here is whether Forest’s

unilateral covenant not to sue Caraco on the ’941

patent renders Caraco’s declaratory judgment action

moot.

To be sure, Forest's covenant not to sue

eliminates any reasonable apprehension of suit on

the ‘941 patent. If a threat of suit was the only

action allegedly taken by Forest that effectively

excluded Caraco from the marketplace, the covenant

not to sue would moot Caraco’s case and divest the

district court of Article II] jurisdiction. See, e.yg.,

Super Sack Mfg. Corp. v. Chase Packaging Corp., 57

F.3d 1054, 1058-59 (Fed. Cir. 1995). But see Fort

30a

James Corp. v. Solo Cup Co., 412 F.3d 1340, 1347-49

(Fed. Cir. 2005) (holding that a patentee’s covenant

not to sue an alleged infringer after a jury verdict of

noninfringement did not moot the alleged infringer’s

counterclaim for unenforceability). However, Caraco

does not only allege that it has a reasonable

apprehension of suit on the "941 patent. Caraco also

alleges that the listing of the 941 patent in the

Orange Book effectively prevents Caraco from

entering the drug market. Essentially, Caraco is

alleging that it has been denied entry to the market

in a manner that is unique to the Hatch-Waxman

context.

Clearly, in the ordinary infringement context,

even when a patentee maintains that its patents are

valid and infringed by a potential defendant, a

covenant not to sue allows the recipient to enter the

marketplace. Indeed, a covenant not to sue on a

patent ensures that the covenant’s recipient will not

be liable for damages or subject to an injunction for

infringement of that patent. However, in the Hatch-

Waxman context, regardless of a covenant not to sue,

a generic drug manufacturer cannot enter the

market without FDA approval. Moreover, an NDA

holder's covenant not to sue a subsequent Paragraph

[IV ANDA filer does not affect the FDA’s authority to

approve the ANDA. As discussed above, where the

first Paragraph IV ANDA filer fails to trigger its own

exclusivity period, a subsequent Paragraph IV

ANDA filer can only obtain FDA approval before the

relevant Orange-Book-listed patents expire’ by

obtaining a judgment that those patents are invalid

or not infringed. Such a judgment is required to

trigger the first Paragraph [IV ANDA _ filer’s

exclusivity period and thus allow the FDA to

approve the subsequent Paragraph [IV ANDA 181

36a

days after the triggering event. Under these

circumstances, even after a covenant not to sue has

been granted, the dispute as to infringement or

invalidity of the relevant Orange-Book-listed patents

constitutes “a substantial controversy, between

parties having adverse legal interests, of sufficient

immediacy and reality to warrant the issuance of a

declaratory judgment.” MedImmune, 127 S. Ct. at

771.

Here, Forest’s covenant not to sue Caraco does

not allow Caraco to enter the generic drug market.

Only by obtaining a judgment of noninfringement on

both the ’712 and ’941 patents can Caraco trigger

Ivax’s 180-day exclusivity period, which currently

prevents the FDA from approving Caraco’s ANDA.

Without a judgment of noninfringement on the ’941

patent, even if Caraco prevailed against Forest in

the separate infringement action on the ’712 patent,

Caraco would not be able to activate Ivax’s

exclusivity period via the court-judgment trigger of

21 U.S.C. § 355G)(5)(B)Gv)dD (2000). Moreover,

until Ivax’s exclusivity period expires, the FDA

cannot approve Caraco’s ANDA. See 21 U.S.C.

§ 355(4)(5)(B)Qv) (2000). Thus, terminating this

action without a judgment with’ respect to

infringement on the ’941 patent could delay FDA

approval of Caraco’s ANDA and thereby exclude

Caraco from the drug market, even if its generic

drug does not infringe the °941 patent. In these

circumstances, Forest's covenant not to sue Caraco

does not eliminate the controversy between the

parties.

In sum, Caraco’s declaratory judgment action

presents an Article III controversy as to whether the

drug described in Caraco’s ANDA infringes Forest's

37a

Orange-Book-listed "941 patent. This controversy is

not premised only upon a threat of an infringement

suit. A controversy also exists because Forest’s

actions effectively prevent the FDA from approving

Caraco’s ANDA and thus exclude Caraco from the

drug market. Forest’s covenant not to sue does not

eliminate the controversy with Caraco, because the

controversy can only be resolved by a judgment that

determines whether Forest’s 941 patent is infringed

by the drug _ described in Caraco’ss ANDA.

Accordingly, we hold that this action presents an

ongoing Article III case and controversy.

IV. CONCLUSION

For the foregoing reasons, we reverse the district

court’s decision dismissing Caraco’s declaratory

judgment action and remand (for _§ further

consideration.

REVERSED AND REMANDED

38a

FRIEDMAN, Senior Circuit Judge, dissenting.

I would affirm.

A. In most instances an alleged infringer seeks a

declaratory judgment of non-infringement or patent

invalidity to protect itself from a subsequent judicial

determination that has a_ significant adverse

financial impact upon the infringer. The present

case involves no such danger or possibility, since the

covenant not to sue precludes Forest (the proprietary

manufacturer) from subjecting Caraco (the generic

manufacturer) to damages for infringement of the

"941 patent.

Here Caraco’s reason for seeking a declaratory

judgment of non-infringement is quite different. Its

concern is not that it may be sued for infringement if

it markets its generic version of the patented drug,

but that unless it can obtain a present judicial

determination of that issue, its ability to enter the

market may be delayed. This claim stems from and

is based upon the particular provisions of the Hatch-

Waxman Act.

Under that Act someone seeking to market a

generic version of a _ patented drug files an

Abbreviated ifew Drug Application (known as an

“ANDA”). The filing of an ANDA constitutes an act

of infringement. If, within forty-five days of

receiving a notice of such filing that alleges that the

patent on the drug is invalid or that the proposed

generic drug does not infringe the patent, the

proprictary manufacturer sues’ the ~ generic

39a

manufacturer for infringement, the Food and Drug

Administration cannot approve the ANDA for thirty

months. The Act also provides that the first generic

manufacturer to file an ANDA covering the patented

drug has the exclusive right to sell such generic

product for 180 days following the first sale of the

generic product or a court decision holding the

patent invalid or not infringed. This provision,

under which the 180-day period of exclusivity is

triggered by a judicial decision holding the patent

invalid or not infringed, is the basis for Caraco’s

contention that there was an actual case or

controversy before the district court despite Forest’s

covenant not to sue for infringement.

The theory, as I understand it and as the court

apparently views it, is that the other generic

manufacturers who filed first might not begin to sell

their generic product upon either the expiration of

the thirty month stay period or of the patents, and

because the generic manufacturers cannot begin

selling their products until 180 days after the first-

filing generic manufacturer begins its sales, the

result of such earlier filing by the’ generic

manufacturer may be to delay Caraco’s ability to

begin marketing its product for a substantial period,

or even indefinitely. Caraco thus contends, and the

court holds, that it should be able to invoke the

alternative statutory triggering mechanism for the

180-day exclusivity period—a judicial determination

of patent non-infringement or _invalidity—by

maintaining its declaratory-judgment litigation.

This argument is_ highly” speculative and

conjectural, and involves uncertain legal issues that

have not yet been resolved.

40a

I have no basis for concluding that the first-filing

generic manufacturer will, or is likely to, delay

bringing its product to market after the ’712 patent

expires. Indeed, such delay would seem inconsistent

with that manufacturer’s being the first to file its

ANDA—a situation it presumably sought to give it

the competitive advantage of having the exclusive

right to sell its generic products for the first 180-

days after that product went on the market.

The argument also assumes that the 180-day

exclusivity period would not begin to run until the

generic manufacturer actually begins marketing its

product, and any delay in such marketing will

simply defer the beginning of the 180-day period. It

could plausibly be argued, however, that despite the

seemingly absolute nature of the statutory 180-day

exclusivity, a generic manufacturer that

unreasonably delays the commencement of

marketing after the thirty month period and the

patent term have expired, loses its right to

exclusivity. Indeed, although the issue has not been

raised in this appeal, it could be argued that the

thirty month period itself terminates if, after

triggering that period -by suing the generic

manufacturer for infringement after it files its

ANDA, the proprietary manufacturer in effect

vitiates such action by executing a covenant not to

sue for infringement and dismissing its infringement

sult.

Finally, Caraco’s argument assumes that it will

prevail in its non-infringement claim—an uncertain

assumption at best.

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

118, 127 S. Ct. 764, 771, 166 L. Ed. 2d 604 (2007),

4la

the Supreme Court recently stated that “the

question in each case is whether 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.” Considering all the circumstances here, |

answer that question negatively.

B. The court twice cites the legislative history of

the Hatch-Waxman Act. The “history” that it cites,

however, consists exclusively of statements during

the debate on the legislation made by Senator

Kennedy, whom it describes as the “ranking

member’ of the Senate committee.

Senator Kennedy, however, was not a sponsor of

the legislation. There is no indication that his

statements reflected the views of the majority of the

committee or of the Senate, or the sponsors of the

legislation. In my view, Senator Kennedy's

statements do not provide an appropriate or

adequate basis for determining the scope and

meaning of this legislation. See Garcia v. United

States, 469 U.S. 70, 76, 105 S. Ct. 479, 83 L. Ed. 2d

472 (1984) (“In surveying legislative history we have

repeatedly stated that the authoritative source for

finding the Legislature’s intent lies in the

Committee Reports on the bill, which ‘represen[t] the

considered and collective understanding of those

Congressmen involved in drafting and studying

proposed legislation.’ We have eschewed reliance on

the passing comments of one Member, and casual

statements from the floor debates.” (citations

omitted)).

42a

If, however, Senator Kennedy’s comments are an

appropriate source for determining the meaning of

the statute, I would give considerable weight to his

statement quoted in footnote 14 of the court’s

opinion, that: “We believe that the only

circumstance in which a case or controversy might

not exist would arise in the rare circumstance in

which the patent owner and brand drug company

have given the generic applicant a covenant not to

sue, or otherwise formally acknowledge that the

generic applicant’s drug does not infringe.” I do not

agree with the court that this statement “only

emphasize[s] Congress’s intent that that jurisdiction

of federal courts to resolve CAPCs would extend to

the limits of the Constitution.”

C. The court contends that its decision is

appropriate and necessary to avoid a defeat of the

objectives Congress sought to achieve in the Hatch-

Waxman Act that, it concludes, would result from

permitting a proprietary manufacturer to use

covenants not to sue to_ preclude’ generic

manufacturers from obtaining declaratory

judgments on patent infringement and validity. To

the extent that Congress may conclude _ that

particular judicial interpretations of the Act thwart

the purposes of the legislation, it is for Congress, not

for this court, to make whatever changes in the Act

it deems appropriate.

Although I disagree with the court’s substantive

rulings, | agree with the court’s apparent rejection of

Forest’s contention that Caraco’s appeal was

frivolous and seeking sanctions of therefor. The

appeal presents important questions under the

Hatch-Waxman Act that this court has. not

43a

previously decided. Under no circumstances could

the appeal fairly be characterized as frivolous.

Indeed, it is difficult to see how an appeal in which

the appellant prevails and the appellate court adopts

its contentions could be so des _zibed.

Perhaps Forest made the frivolity contention

under the misguided belief that by doing so it was

enhancing its prospects of success on the merits. If

that was its view, it was sadly mistaken. In making

the frivolity argument, which occupied five pages of

its brief, Forest’s counsel was neither helping his

chent’s case nor aiding the court in performing its

appellate function. In my view, a lawyer who makes

such a contention of frivolity—and at the close of his

oral argument, Forest’s counsel stated he continued

to characterize this appeal as frivolous—engages in

sanctionable conduct.

44a

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

No. 2007-1404

CARACO PHARMACEUTICAL LABORATORIES,

LTD.,

Plaintiff-Appellant,

versus

FOREST LABORATORIES, INC.,

FOREST LABORATORIES HOLDINGS, LTD.,

AND H. LUNDBECK A/S.

Defendants-Appellees,

Appeal from the United States District Court for

the Eastern District of Michigan in Case No. 07-CV-

10737, Chief Judge Bernard A. Friedman.

ORDER

45a

NOTE: This order is nonprecedential.

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

ORDER

A combined petition for panel rehearing and for

rehearing en banc having been filed by the

Appellees,” and a response thereto having been

invited by the court and filed by the Appellant, and

the petition for rehearing and response, having been

referred to the panel that heard the appeal, and

thereafter the petition for rehearing en banc and

response having been referred to the circuit judges

who are in regular active service,

UPON CONSIDERATION THEREOF, it is

ORDERED that the petition for panel rehearing

be, and the same hereby is, DENIED and it is

further

ORDERED that the petition for rehearing en

banc be, and the same hereby is, DENIED.

* Amici curiae, Pfizer Inc.: Washington Legal Foundation;

Merck & Co., Inc.; Pharmaceutical Research and

Manufacturers of America, et al.; and Ivax Pharmaceuticals,

Inc. were granted leave to file briefs in support of the Appellees

combined petition for panel rehearing and for rehearing en

banc.

46a

The mandate of the court will issue on July 1,

2008.

FOR THE COURT,

__/s/Jan Horbaly/JB _

Jan Horbaly

Clerk

Dated: 06/24/08

cc: James F. Hurst

Gerald J. Flattmann, Jr.

All Amici

CARACO PHARMA V FOREST LABS, 2007-1404

(DCT - 07-cv-10737)

47a

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

CARACO PHARMACEUTICAL

LABORATORIES, LTD.,

Plaintiff, Civil Action No.

07-CV-10737-DT

vs.

FOREST LABORATORIES, HON. BERNARD A.

INC., et al., FRIEDMAN

Defendants,

ORDER GRANTING DEFENDANTS’ MOTION

TO DISMISS FOR LACK OF SUBJECT

MATTER JURISDICTION

(DKT. NO. 8)

On May 30, 2007, this matter came before the

Court on Defendants’ Motion to Dismiss for Lack of

Subject Matter Jurisdiction. A hearing was held and

oral argument heard. For the reasons stated on tlic

record,

IT IS ORDERED that Defendants’ Motion to

Dismiss for Lack of Subject Matter Jurisdiction is

granted.

48a

IT IS FURTHER ORDERED that Plaintiff's

Complaint is dismissed.

/s/Bernard A. Friedman

BERNARD A. FRIEDMAN

CHIEF UNITED STATES DISTRICT

JUDGE

Dated: May 31, 2007

Detroit, Michigan

I hereby certify that a copy of the foregoing

document was served upon counsel of record by

electronic and/or first-class mail.

/s/Carol Mullins

Case Manager to Chief Judge Friedman

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UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

CARACO PHARMACEUTICAL

LABORATORIES, LTD.,

Plaintiff, Case Number:

—v— 07—-10737

FOREST LABORATORIES,

INC., et al.,

Defendants,

DEFENDANTS’ MOTION TO DISMISS FOR

LACK OF SUBJECT MATTER JURISDICTION

BEFORE THE HONORABLE

BERNARD A. FRIEDMAN

UNITED STATES DISTRICT JUDGE

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238 U.S. Courthouse & Federal Building

231 West Lafayette Boulevard West

Detroit, Michigan 48226

WEDNESDAY, MAY 30TH, 2007

APPEARANCES:

For the Plaintiff: Derek Sarafa, Esq.

Raymond Ruthledge [sic], Esq.

For the Defendants: Gerald J. Flattmann, Esq.

Court Reporter: Joan L. Morgan, CSR

Official Court Reporter

Proceedings recorded by mechanical stenography.

Transcript produced by computer-assisted

transcription.

Detroit, Michigan

Wednesday, May 30th, 2007

THE CLERK: Calling Caraco Pharmaceutical

Laboratories versus Forest lLaboratomes, case

number 07-10737.

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THE COURT: Good afternoon.

MR. SARAFA: Judge, a little housekeeping before

we go to the case.

THE COURT: Housekeeping.

MR. SARAFA: My colleague, Sam Park, whom I

have known, four or five years, he would be a tribute

to the Bar here in the Eastern District of Michigan.

I'd lke to take this opportunity to move his

admission.

(Attorney Admission, not on record.)

THE COURT: Appearances.

MR. FLATTMANN: Your, Honor, good

afternoon.

Gerald Flattmann, from Kirkland & Ellis, for the

defendants in case, Forest and Lundbeck. With me

are my colleague, Christine Woogis [sic] (ph.), Mr.

Ron King from the Clark Hill firm. Also from Forest

Laboratories, Eric Bagadino {sic] (ph.) as patent

counsel.

THE COURT: Thank you.

MR. BOLTON: Jordan Bolton from Clark Hull.

MR. SARAFA: Derek Sarafa, for Caraco

Pharmaceutical. With me is my colleague, Sam

Park, Ray Ruthledge [sic], local counsel. Also the

general counsel of Caraco, Steven Walker.

THE COURT: Okay. Defendants’ Motion.

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MR. FLATTMANN: Thank you, your Honor.

Your Honor, this is a Motion to Dismiss for lack

of subject matter jurisdiction, and we are the

declaratory judgment defendant in this particular

case.

Your Honor, the motion before you I would

submit presents a question that’s actually a pretty

simple one on the facts that are raised by Caraco’s

declaratory judgment complaint. It’s a question of

whether that complaint alleges case or controversy

between the parties under Article III of the

Constitution. Or, it’s really asking you to issue an

impermissible advisory opinion.

Here, the facts are clear that Caraco is secking

an impermissible advisory opinion on a moot

question. And it’s doing that as a means to an end.

You know, we talked about the Hatch-Waxman

framework report, and one of the most important

parts of that Hatch-Waxman framework is the 180

days of exclusivity that’s given to the generic filer

that decides to take the first risk in challenging a

patent and becomes the first filer of an ANDA, an

Abbreviated New Drug Application.

Caraco was not that party here. That party was

Ivax Pharmaceuticals which did take that risk with

regard to both the ‘712 patent which is before you in

another case, and on the 941 patent that we’re

discussing today.

Now, that wasn’t an Ivax exclusivity, it’s Ivax’s

and Ivax’s alone. And what Caraco is trying to do

with this declaratory judgment complaint is_ to

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trigger Ivax’s 180 days. One of the ways it can

trigger that is through a judgment of non-infringing.

That’s one of the many ways that it can be done. And

they’re looking to do that here in order to sort of

make an end —

THE COURT: What’s your — your real bottom

line is covenant not to sue.

MR. FLATTMANN: That’s right, your Honor.

THE COURT: And you haven’t done it, and you

have 13 or 14 others and you haven't done it there.

The real bottom line is there’s no controversy.

MR. FLATTMANN: There’s no controversy here.

THE COURT: Is that your bottom line?

MR. FLATTMANN: That’s my bottom line.

THE COURT: Okay.

MR. FLATTMANN: There’s one count in the

complaint, your Honor. It’s a declaratory judgment

of a non-infringement claim.

THE COURT: On the ’941.

MR. FLATTMANN: Of the ’941.

THE COURT: And you've had 14 or 13 other

people that are doing the same thing and you

haven’t sued them.

MR. FLATTMANN: I haven’t sued them.

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THE COURT: Any indication you’re going to sue

these folks?

MR. FLATTMANN: Well, we can’t sue them. We

just gave them a covenant not to sue which forever

estops us.

THE COURT: Isn't that your best shot? That’s

what the bottom line is —

MR. FLATTMANN: It’s simple. That’s all there

is to it.

THE COURT: That’s how I see it.

MR. FLATTMANN: And they’re asking for an

advisory opinion. And I could go on and tell you

about the Supreme Court cases that have come down

that they’ve tried to use to sort of leverage or

bootstrap themselves into future customers here, but

the fact remains there’s only claim in their DJ

complaint and it’s gone, it’s mooted.

THE COURT: Okay.

MR. FLATTMANN: Okay.

THE COURT: I want to see the chart.

MR. SARAFA: Judge, the covenant not to sue

absolutely does not resolve the controversy, okay,

and it’s absolutely clear in Novartis and it’s clear in

MedImmune, the only way you could rule in their

favor on the point, your Honor, is if you ignored

those two decisions, period .

THE COURT: Doesn't it differentiate —

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MR. SARAFA: No, it can’t and I'll tell you why.

It’s very simple.

Here is the language from the Novartis decision.

There’s no question — there’s no question in binding

authority, your Honor. There’s no question — this is

just the language from the case, your Honor. There’s

no question —

THE COURT: Oh, you want me to read it. Okay.

MR. SARAFA: There’s no question binding

authority, your Honor. There’s no question it is

identical in every respect, they agree, with the

exception of the covenant not to sue —

THE COURT: With the exception of the covenant

not to sue.

MR. SARAFA: Your Honor, look at the language

of the case. Now, the case considered five factors,

five factors, okay? Here’s what it says in three of

them.

“A justiciable declaratory judgment

controversy arises for an ANDA filer when

(1)a patentee lists patents in the Orange

Book...”

That’s undisputed, that’s the case here.

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‘“(2) The ANDA applicant files its ANDA

certifying the listed patents under paragraph

1 eee"

No dispute.

“(3) The patentee brings an action against the

submitted ANDA on one or more of the

patents...”

No dispute.

And then the case says,

“The combination of these three circumstances

is dispositive in establishing an _ actual

declaratory judgment controversy as to all the

paragraph IV certified patents, whether the

patentee has sued on all or only some of the

paragraph [V certified patents.”

Your Honor, that ends the inquiry.

THE COURT: Whoa, Whoa. Go back to three for

a second.

MR. SARAFA: Three.

THE COURT: “The patentee brings an action

against the submitted ANDA...”

MR. SARAFA: And there’s no dispute on that.

THE COURT: “'-.0n one or more of the

patents.”

MR. SARAFA: Yes, they agree. They’ve done it.

They've sued on the '712. They have brought an

action.

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Your Honor, there’s no dispute. You can ask Mr.

Flattmann, right now —

THE COURT: Go on.

MR. SARAFA: There’s no dispute.

Judge, dispositive. Dispositive means that’s the

end of the inquiry. Now, your Honor, this was not a

case where the Court didn’t consider the possibility

of a covenant not to sue. There were two other

circumstances the Court considered. One was the

legislative history, and the other was the existence

or non-existence of a covenant not to sue. Here’s

what the Court said as to that. It didn’t say it was

dispositive, Judge. It said, that a covenant not to

sue is a fifth circumstance contributing to a finding

that Teva has the justiciable declaratory judgment

controversy. Contributed.

And in the same opinion it tells you that these

three factors are dispositive, Judge. It can’t be any

clearer than that. Cannot be any clearer than that.

The decision — your Honor has obviously read the

decision and I encourage you to read it again, your

Honor. There are no two ways about it. The

decision did not hinge on the existence or non-

existence of a covenant not to sue.

And what is more, your Honor, it couldn’t

possibly because the Supreme Court in MedImmune

just rejected the exact argument that they're making

here, the exact argument in the MedImmune

decision that’s only a few months old, Judge.

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What happened in that case was the party that

brought the declaratory judgment action had a fully

paid up license. Now in the law and there’s case law

on this, a paid up license is the same as a covenant

not to sue. Same thing. Same thing. Case law is

clear on this point. We get a license, you’re saying

you don’t sue me and I give you money. It’s the same

thing as a covenant not to sue.

The declaratory judgment defendant or the

patent holder in that case could not have brought a

cause of action. There was no underlying cause of

action that they could have brought against the

licensee. It was impossible.

In fact, the Supreme Court said quite clearly that

the risk of being sued was, and I quote, “At least

remote, if not, is non-existent.” As long as those

payments are made there ts no risk that respondents

will seek to enjoin petitioner. Yet, the Supreme

Court went on to say, there was still a controversy in

a case that is basically a covenant not to sue, the

effective equivalent of a covenant not to sue. The

Court recognized jurisdiction can exist, “even though

the very reason the plaintiff sought declaratory relief

was that the defendant had given no indication he

would file suit.”

So, Judge, respectfully, the covenant not to sue is

not the Novartis decision which its binding on your

Honor, did hinge upon it. The idea that a covenant

can moot the controversy has been rejected by the

MedImmune Court and, more importantly, Judge, it

doesn’t remove the controversy. The Novartis

decision was very clear. The controversy is just not

infringement or non-infringement. The controversy

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is whether or not our ANDA can be approved so we

can sell a generic version of our drug — a generic

version of Lexapro.

And the opinion in Novartis was exceedingly

clear on that point. Here’s what they said. Here’s

what the Novartis court said — he’s trying to make

it out to be a situation where there’s just one case

and there’s one count, but that argument was

expressly made and rejected in Novartis. Here’s

what Novartis, Judge.

THE COURT: Tell me where you’re reading,

because I’m reading the section — I’ve got the case

right here.

MR. SARAFA: Okay. I don’t know which version

your Honor as, but —

THE COURT: I have the West law —

MR. SARAFA: Okay.

THE COURT: Just tell me where it is.

MR. SARAFA: Judge, if you look under head

note 2223.

THE COURT: Which version do you have?

MR. SARAFA: I have — I think it’s West law.

THE COURT: What page’?

MR. SARAFA: On mine, it’s page 11.

THE COURT: Okay.

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MR. SARAFA: On the left-hand column.

I want to be clear on this, Judge, what they’re

saying is, there’s one count, and that count is mooted

by a covenant. And what the Novartis court

specifically explained it, you don’t look at it like that,

that’s not the controversy. The controversy is both

cases. The controversy is getting our ANDA

approved. Here’s what the Court said,

“While it is true that the suit on the 937” —

THE COURT: £You’re reading where? The

middle of page 11?

MR. SARAFA: Middle of the way down on the

left-hand column, starting with “While.”

THE COURT: Okay starting with —

MR. SARAFA: “While it is true...”

THE COURT: Okay, give it to me.

MR. SARAFA: Here’s what it says,

“While it is true, that the suit on the

‘937 patent is a different ‘case’ than

Teva’s declaratory judgment action...”

same circumstance we have here.

“Novartis created a present and actual

‘controversy by choosing to sue under

35 U.S.C. 271 (e) (2) (A) on Teva's single

act of infringement, thereby placing

into actual dispute of the soundness of

Teva’s ANDA, and Teva's ability to

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secure approval of the ANDA. ‘Thus,

while Teva’s declaratory judgment

action and the pending 937 suit “are

different ‘cases’ they arise from the

same controversy created when

Novartis listed its Famvir patents in

the Orange Book. Teva submitted its

ANDA certifying all five Famvir

patents under paragraph IV, and

Novartis sued Teva challenging the

submission of Teva’s ANDA.”

Judge, this case came out two months ago. It’s

indisputably binding on your Honor, and what it

said is the controversy is not infringement or non-

infringement. The controversy is whether or not our

ANDA can be approved. And that makes sense,

Judge. The whole reason we have this lawsuit is so

we can get onto the market with our generic version

of the product. And then provide in the covenant not

to sue, it doesn’t eliminate that controversy it

exacerbates it, Judge, it makes it worse because they

know that if they do that, we can’t get an order

stating that we don’t infringe. Judge, they admit we

don’t infringe the ’941 patent. They’ve admitted it.

All we need is an order from your Honor saying it’s

dismissed on that basis. If they have nothing to lose

here, Judge, why are they fighting tooth and nail to

get this dismissed on the basis of a lack of subject

matter jurisdiction.

I urge you to ask Mr. Flattmann that same

question because this could be over in about 20

seconds, Judge. I move for summary judgment, they

don’t resist, your Honor grants the order, they don’t

spend any expenses. If they don’t have anything at

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stake, Judge, why don’t we do that and — if your

Honor will just indulge me for a few minutes.

I tried for a security, Judge. It’s somewhere it

the range of 20 billion to 70 billion dollars. They say

they don’t have a horse in this race. Your Honor, it’s

just not true. It’s just absolutely untrue. If they

didn’t have a horse in this race, if they didn’t want to

spend the money being, quote, unquote, dragged into

pointless litigation, what they would do is provide us

what we need, an order saying we don’t infringe.

Why are we doing it, Judge? Let me show you: the

"712 patent which they have asserted against us

expired in 2005. The 941 patent they agree we don’t

infringe, expires in 2023. The reality is, Judge,

these ten years right here, we can’t go to market

because of this patent that they agree we don’t

infringe. And for them, this equates to about 70

million dollars because if there’s generic competition

during that time, Judge, what that means is they

will lose 80 to 90 percent of their revenues, their

revenues are about. 5 to 60 billion dollars a year. It’s

about 70 billion.

Now, Judge, if Ivax loses their case on the °712

patent, they lose that exclusivity. And what th

should mean for us is if we win on the ’712 patent

which is the only patent they claim we infringed, we

ought to be able to market. So what are they doing

here? They’re using this patent and by not asserting

it, they are getting the benefit of a monopoly

protection anywhere tn the range from an additional

10 to 15 years.

Now, it’s possible, it’s possible that Ivax could

launch after the expiration of the '712 patent, and

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we would launch six months after that. But what

does that mean, Judge? That means we win

tomorrow on the ’712 patent. We win tomorrow on

the only patent they’re asserting against us. We still

can’t go to market. We still can’t go to market

because of this unasserted patent.

And, Judge, this is something of their own

making. They listed the patent in the Orange Book.

They took the statutory protection of the Hatch-

Waxman Act including the 30-month stay and

everything else that goes with it —

THE COURT: Tell me why you can’t go to

market.

MR. SARAFA: Very simple, Judge. We can’t go

to market until 180 days after the expiration of

{vax’s exclusivity. And what that means is if lvax

wins their suit, good for them. More power tc them.

They get that exclusivity —

THE COURT: For a 180 days.

MR. SARAFA: They’re making it sound like

we re doing something improper, we’re not.

THE COURT: Okay.

MR. SARAFA: If they win, they get it.

THE COURT: Okay, what if they don’t get it?

MR. SARAFA: They’ve already lost, okay, so —

and if they lose on appeal, then the ’712 is not — it

doesn’t impair us.

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THE COURT: Right.

MR. SARAFA: Okay.

THE COURT: Why does the ’941 —

MR. SARAFA: Because they have exclusivity on

both. They have exclusivity on the ’941 and the ’712.

But, Judge, why would they get the benefit of the —

why would they get the benefit of the exclusivity on

the 941? They can’t even come to market because

the ’712 is locked.

THE COURT: And they get exclusivity on the

"941 why?

MR. SARAFA: Because they were the first to file

on that.

THE COURT: Do they get that forever or just for

the 180 days?

MR. SARAFA: The 180 days. Sc what that

means, Judge, is because of this patent, which they

agree we don’t infringe, we can’t launch for 180 days

after the expiration of that patent, we’re in 2023

Judge, please —

THE COURT: Well, wait. Even today since you

don’t infringe if you want to do it and you have the

authority to do it, you could do it.

MR. SARAFA: No, we couldn't.

THE COURT: Why not?

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MR. SARAFA: We can’t do it because the way —

because we're barred by law. The FDA cannot

approve our ANDA under those circumstances.

THE COURT: All right.

MR. SARAFA: Judge, why should they be

entitled to a monopoly profit to billions of dollars —

THE COURT: That’s not the issue. The issue is

not -—— .

MR. SARAFA: Okay. Why should we be harmed

to the tune of tens of millions of dollars or hundreds

of millions of dollars —

THE COURT: Still not the issue. Why do I have

jurisdiction? It’s not an equity.

MR. SARAFA: Very simple, Judge. You have

jurisdiction because the fact that their listing of this

in the Ora

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