Supreme Court Expands Generic Drug Manufacturers' Right to Challenge Scope of Patents
By Elettra Bietti – Edited by Lauren Henry
Caraco Pharmaceutical Laboratories, Ltd. v Novo Nordisk A/S, No. 10–844 (U.S. April 17, 2012)
The Supreme Court reversed the Federal Circuit Court of Appeals’ ruling that denied a generic manufacturer the right to compel a brand manufacturer to correct misstatements regarding uses covered by a patent when those corrections would have allowed the generic manufacturer to market their generic drug.
The Court held that a generic manufacturer may rely on 21 U.S.C. § 355(j)(5)(C)(ii)(I), which grants a statutory counterclaim to generic manufacturers sued for patent infringement, to compel a brand manufacturer to modify a use code if it wrongly describes a patent as covering uses which it does not in fact cover. In so holding, the court slightly shifts balance of power in the pharmaceutical industry away from patentees and toward generic manufacturers.
Patently-O provides an overview and describes it as an example of a “nuanced” Supreme Court case. Alison Frankel, writing for Reuters, notes that the decision represents a slight victory for generic manufacturers over the brands.
To market a generic drug, generic manufacturers (here Caraco) must satisfy the Food and Drug Administration (FDA) that their drug does not infringe the brand name manufacturer’s (here Novo) patents. To facilitate the assessment, brand manufacturers are required to submit descriptions of the scope of their patents, called use codes. The FDA assumes the information contained in those codes to be accurate, but it may not be so. The issue in the case was whether Caraco had standing to bring a counterclaim against Novo to challenge the accuracy of the information that Novo provided in its use code. Caraco conceded that Novo retained a patent that covers one use of the drug, but argued that they could sue to force correction regarding two other FDA-approved uses. Novo insisted that so long as their patent covered at least one use, Caraco had no standing to sue for correction. The Court sided with Caraco and held that a generic manufacturer may take advantage of the statutory counterclaim provision to compel a brand manufacturer to modify a use code that erroneously describes a patent as covering uses which it does not in fact cover. There remains a factual dispute as to whether Novo’s use code is erroneous.
In holding as it did, the Court (per Justice Kagan) interpreted the text of the counterclaim clause as a whole, concluding that in spite of being ambiguous, “the text and context of the provision demonstrate that a generic company can employ the counterclaim to challenge a brand's overbroad use code.” In so holding, the Court rejected Novo’s argument that the clause was enacted only to respond to the ruling in Mylan Pharmaceuticals, Inc. v. Thompson, 268 F. 3d 1323, which declared it impossible for an improperly listed patent to be deleted from the Orange book. The court held that such a narrow reading of the enactment would be mistaken, as Mylan was only a symptom of a broader problem that Congress sought to fix: generic companies were generally without remedies to challenge inaccurate brand patent listings.
Justice Sotomayor filed a concurring opinion in which she prompted the FDA to regulate patent listings directly.
The case is significant in that it represents a slight shift in the Supreme Court’s approach in favor of generic manufacturers, and shows the Court’s recognition that generic defendants must be provided with remedies to defend themselves in patent infringements suits when these are due to negligent or intentionally erroneous patent filings contained in use codes. In addition, Justice Sotomayor’s concurrence deserves notice as encompassing potential avenues for reform.