Federal Circuit Considers Pharmaceutical Research Exception, Finds No Case or Controversy
In Benitec Australia, Ltd. v. Nucleonics, Inc., the Federal Circuit affirmed a district court’s judgment dismissing Nucleonic’s declaratory judgment counterclaims against Benitec for lack of subject matter jurisdiction after the district court granted Benitec’s motion to dismiss its infringement claims without prejudice. In reaching its decision, the Federal Circuit evaluated the standard for declaratory judgment at two time periods: (1) at the time the declaratory judgment counterclaims were initially filed, and (2) at a later time after intervening events had affected the parties’ relationship.
With regard to the first time period, the Federal Circuit noted that at the time Nucleonics filed its counterclaims for declarations of invalidity and unenforceability, Benitec’s patent infringement claims were pending. Thus, because Nucleonics had been charged with infringement of Benitec’s U.S. Patent No. 6,573,099 (which is directed to RNA-based disease therapy), there existed a case or controversy adequate to support jurisdiction at that time.
With regard to the second time period, the Federal Circuit noted that it had previously rejected the argument that subsequent events cannot divest a trial court of jurisdiction. In this case, the district court and Federal Circuit considered a number of intervening events, including: (1) Benitec had withdrawn its infringement claims, (2) Benitec had given Nucleonics a covenant not to sue, and (3) Nucleonics was not close to filing a New Drug Application (NDA) for its RNA drug products.
Considering point (3), the Federal Circuit commented that the Supreme Court’s Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193 (2005) “read[] expansively the pharmaceutical research exception of § 271(e)(1)”:
“It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention…solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.” 35 U.S.C. § 271(e)(1).
In view of the Supreme Court’s decision in MedImmune, Inc. v. Genentech, Inc., 127 S. Ct. 764 (2007) (which was decided after oral arguments in this case), the Federal Circuit stated that a party seeking to base jurisdiction on the Declaratory Judgment Act bears the burden of proving that the facts alleged, "‘under all the circumstances, show that there is a substantial controversy, between the parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.'" Applying that standard to the case at hand, there was no case or controversy adequate to support declaratory judgment, because:
“The parties have now both taken the position that Nucleonics’s present activities related to the human medical application of RNAi are, in light of § 271 and the Supreme Court’s decision in Merck, not infringing and cannot become infringing until after Nucleonics files a new drug application (“NDA”) with the U.S. Food and Drug Administration (“FDA”). Nucleonics does not even anticipate filing an NDA before ‘at least 2010-2012, if ever.’ Therefore, Nucleonics’s activities of developing and submitting information to the FDA related to human application of RNAi does not present a case or controversy of sufficient immediacy and reality to warrant declaratory judgment jurisdiction over the enforceability of the ’099 patent. The fact that Nucleonics may file an NDA in a few years does not provide the immediacy and reality required for a declaratory judgment.”
Comments:
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This case should have considerable interest to the many Maryland pharmaceutical companies that are involved in developing new drugs and that anticipate filing NDAs in the future, as well as to patent holders seeking a dialog with those companies about licensing and infringement issues.
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Other recent cases in which the Federal Circuit has considered the application of the standards set forth in MedImmune for determining declaratory judgment jurisdiction: Teva Pharmaceuticals USA, Inc. v. Novartis Pharmaceuticals Corp., 482 F.3d 1330 (Fed. Cir. 2007), and Sandisk Corp. v. STMicroelectronics NV, 480 F.3d 1372 (Fed. Cir. 2007).
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Cite to slip opinion: Benitec Australia, Ltd. v. Nucleonics, Inc., No. 06 Civ 1122 (Fed. Cir. July 20, 2007) (Dyk, J., dissenting)
