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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 2008

## Text

| Supreme ours w.o.
\\ Q ae. 08-624 NOV 6- 2008

RK
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,
V.

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.

8

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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CONSTITUTIONAL, STATUTORY, AND

B.
C.

REGULATORY PROVISIONS
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FACTUAL BACKGROUND. ..........cscececceseees 9
PROCEEDINGS BELOW. ...........cccececcescees 11

REASONS FOR GRANTING THE WRIT.. 15

a

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

1V

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

Vv

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

vl

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

1X

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

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STATUTES
is casninsscedsivdne vvincevsndessteseuuien 19
I a osnscacuesevensenovsnsessuctcacsesseevans 6, 20
21 U.S.C. § B55 (B)(1) oooceccccccccececcecseseevevseseeseeveees 6, 29
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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

xX

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)

Xl

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).

2

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).

3

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”).

4

(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

5
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

6
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.

7
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

8

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

9

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)

10

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:

11
[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

12

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

13
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

14

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.

15
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.

16

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.

17
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

18
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)

19

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

20

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.

21

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.

22
the FDA and because it granted Caraco a covenant
not to sue for infringement. App. 35a.

A

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

23
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.

24
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

25

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

26

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

27

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

28

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,

29
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.

30

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

——

31
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

32
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

33

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

34

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

35
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.

2a
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.

3a
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).

4a

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

5a
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].”)

6a

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

7a

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

8a

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

9a
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 i

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386020_0797%3A1. Public record. Not legal advice.