Wyeth v. Lupin: Maryland District Court Denies Motion to Dismiss

Posted on September 21, 2007 by Brian Wm. Higgins

     In Wyeth v. Lupin, Ltd. and Lupin Pharmaceuticals, Inc., No. 07, Civ. 0632 (D. Md Sep. 11, 2007), the District Court for the District of Maryland denied Baltimore-based Lupin Pharmaceuticals, Inc.'s (LPI) motion to dismiss an action against it and its parent, Mumbai, India-based Lupin Ltd. (Lupin), brought by pharmaceutical giant Wyeth. In reaching its decision, the District Court concluded that "when a wholly-owned U.S. subsidiary of a foreign corporation exists to distribute foreign-produced generic drugs in the U.S. and is actively involved in the ANDA process, the subsidiary also 'submits' an ANDA application" making it subject to the Hatch-Waxman Act like its parent.

     This case began when Lupin filed an Abbreviated New Drug Application (“ANDA”) with the FDA seeking approval to market a generic version of EFFEXOR® in the U.S. Under the Hatch-Waxman Act, the filing of an ANDA is an act of infringement. Accordingly, Wyeth, which owns U.S. Patents 6,274,171; 6,403,120; and 6,419,958 for venlafaxine hydrochloride (marketed by Wyeth as EFFEXOR® XR capsules), sued LPI and Lupin within the statutory 45-day period after receiving Lupin's "Paragraph IV" Notice Letter on January 30, 2007.

LPI's Motion to Dismiss

     LPI moved, under F.R.C.P. Rule 12(b)(6), to dismiss the complaint against it, arguing that under the Hatch-Waxman Act, the only act of direct infringement under 35 U.S.C. § 271(e)(2)(A) was Lupin's filing of the ANDA with the FDA. Wyeth sought to maintain LPI in the lawsuit, arguing that there is no “one-defendant-per-ANDA” rule under the Hatch-Waxman Act. LPI, Wyeth said, acted in concert with Lupin to violate Wyeth’s patents.

     The District Court began its analysis by noting that Lupin had made the same arguments, unsuccessfully, in Aventis Pharma Deutschland GMBH v. Lupin Ltd., 403 F. Supp. 2d 484, 494 (E.D. Va. 2005). In that case, the district court found:

"LPI’s relationship with Lupin was that of a subsidiary of the applicant and that subsidiary
submitted the ANDA application to the FDA as agent on the foreign company’s behalf."

     The Maryland District Court also noted that in the Aventis case, LPI had countersigned Lupin's ANDA, which provided further indication that LPI was more than a “mailbox” for Lupin’s U.S. business interests. The District Court then distinguished the present case from SmithKline Beecham Corp. v. Geneva Pharms., Inc., 287 F. Supp. 2d 576 (E.D. Pa. 2002), where an innovator sought to amend it complaint by adding a third-party manufacturer that was supplying an active ingredient for the generic drugs at issue in the disputed ANDA. Concluding that LPI had not met its burden, the Maryland District Court then found:

"LPI is actively involved with filing Lupin’s ANDAs with the FDA, and marketing and distributing the approved generic drugs in the United States. LPI’s role in filing the ANDA is distinct from the future promises of support made by the third-party manufacturers in the SmithKline cases. The Court does not read § 271(e)(2) as broadly as the Aventis court, which placed significance on LPI’s countersignature as part of its agent-principal relationship with Lupin. But when a wholly-owned U.S. subsidiary of a foreign corporation exists to distribute foreign-produced generic drugs in the U.S. and is actively involved in the ANDA process, the subsidiary also 'submits' an ANDA application."

     LPI also moved, unsuccessfully, to dismiss the induced infringement claims against it. In its analysis of LPI's arguments, the District Court noted that the Federal Circuit has recognized a cause of action for induced infringement under § 271(e)(2), Allergan, Inc. v. Alcon Labs., Inc., 324 F.3d 1322, 1331 (Fed. Cir. 2003) (per curiam), and also acknowledged that other district courts before and after Allergan have disagreed about whether inducement liability exists for entities that were not the named ANDA filers (citing S.D. New York., D. of Delaware, N.D. West Virginia, E.D. Pennsylvania, N.D. Illinois). Based on the pleadings in this case, the Court sided with Wyeth: 

"Wyeth has sufficiently alleged that LPI actively induced infringement under § 271(e)(2). Wyeth alleges that LPI was actively involved in the ANDA submission process, aided and
abetted the inducement of the patents-in-suit, and upon FDA approval, will infringe the patents-in-suit 'by making, using, offering to sell, selling and/or importing' Lupin’s proposed generic capsules. As Wyeth’s claim is not foreclosed by § 271(e)(2) and has adequately alleged an inducement claim against LPI, Wyeth has satisfied the notice pleading requirements."

Held:  LPI's motion to dismiss was denied.

Comments:

  • Had the Maryland District Court decided this matter differently, Wyeth would be left suing a foreign entity in a U.S. forum (Maryland) where personal jurisdiction would be based on Lupin's filing of its ANDA with the FDA (which just happens to be located in Rockville, MD), and based on whatever other contacts Lupin has in the forum through its subsidiary, LPI.  See Personal Jurisdiction and the Foreign Defendant, by Lisa Savitt and Melissa Pierre for a good summary of personal jurisdiction issues related to foreign defendants.

  • It's unclear from this case whether a U.S. subsidiary that exists simply to distribute foreign-produced generic drugs in the U.S. and is not actively involved in the ANDA process would prevail on a motion to dismiss in Maryland.
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Pharma, Biotech See Value In Patents, But Software? Not So Much

Posted on August 14, 2007 by Brian Wm. Higgins

Summary:  A recent survey asked corporations "Overall, has your company made money from the patent system?"  Pharma and biotech companies responded with a resounding "Yes."

 

In a survey conducted August 7, 2007, University of Missouri School of Law Associate Professor and Patently-O blawger Dennis Crouch asked companies whether they had made money from the patent system.  His published results showed that:

"On average, pharmaceutical companies see patents as a profit center while software companies see patents as an overall loser. (At 95%CI, Software & EE results each differ significantly from Pharm results)."

The survey results are based on responses from 131 corporate employees who claim to be "highly involved with their company patents."  See the Overall, has your company made money from the patent system? survey for details and graphical results. 

Comments:

  • Although the survey was admittedly non-scientific, the responses and trends are consistent with anecdotal evidence that I am familiar with:  in general, chemical, pharmaceutical and biotechnology companies see value in their patent portfolios more so than, say, software companies (especially those with financial services software patents).

  • The explanation for the survey results?  It largely depends on whom you ask.  Bio and pharma companies invest significant sums of money to develop a single drug or biologic candidate that may or may not receive market approval.  They want to recoup that investment, and the exclusivity of a patent grant represents a means to achieve that goal. 

  • This survey should come as no surprise (okay, maybe a little surprise) to a majority of the estimated 300 Maryland companies operating in the biotechnology and pharmaceutical sectors of the economy. 

  • FYI:  Maryland, has the fourth largest cluster of biotechnology companies among states in the U.S. (Source: Ernst & Young, Beyond Borders, Global Biotechnology Report 2006).  Many of them consistently rank among the top entities in Maryland receiving patents from the PTO each year (see Patenting By Geographic Region: Maryland, 2005).

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Federal Circuit Considers Pharmaceutical Research Exception, Finds No Case or Controversy

Posted on July 24, 2007 by Brian Wm. Higgins

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: 

  • 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. 


  • 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).


  • Cite to slip opinion:  Benitec Australia, Ltd. v. Nucleonics, Inc., No. 06 Civ 1122 (Fed. Cir. July 20, 2007) (Dyk, J., dissenting)


  • Others commenting on this case:  Patently-O and 271 Blog
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