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Supreme Court to Consider Civil Procedure Issues in Two Patent Cases
By Marina Shvarts – Edited by Dorothy Du

Hyatt v. Kappos, 625 F.3d 1320 (Fed. Cir. 2010)
Petition for Writ of Certiorari hosted by scotusblog.com

Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, 601 F.3d 1359 (Fed. Cir. 2010)
Petition for Writ of Certiorari hosted by scotusblog.com

In Kappos v. Hyatt, the Court will consider whether a patent applicant who is seeking to overturn a Patent and Trademark Office (“PTO”) decision in a Section 145 civil action may introduce new evidence that could have been, but was not, presented to the PTO, and when new evidence is introduced, whether the district court can decide related factual questions de novo or whether it must give deference to the PTO’s prior decision.

In Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, the Court will consider the extent of a generic drug manufacturer’s rights to file a counterclaim under the Hatch-Waxman act seeking an order to require the patent holder to correct or delete the patent information submitted to the FDA that misstates the scope of the patent.

Patent Docs summarizes the Federal Circuit en banc decision in KapposPatent Docs also discusses the Federal Circuit holding in Caraco Pharmaceutical Laboratories.

Kappos v. Hyatt

A patent applicant who is dissatisfied with the decision of the Board of Patent Appeals and Interferences can either appeal to the Court of Appeals for the Federal Circuit or file a civil action in a district court pursuant to 35 U.S.C § 145 (“Section 145 Action”). The Federal Circuit reviews the decision based on the record before the PTO. The district court can determine whether the applicant “is entitled to receive a patent for his invention . . . . as the facts in the case may appear.” 35 U.S.C. § 145. The Federal Circuit considered what limitations exist on the applicant’s right to introduce new evidence in district court that has not been considered by the PTO. In an en banc decision written by Judge Moore, the court held that a patent applicant may introduce new evidence that has not been considered by the PTO, rejecting the PTO’s position that only “new evidence that could not reasonably have been provided to the agency in the first instance” could be admitted. Furthermore, the Federal Circuit held that when new evidence is introduced, the district court owes no deference to the PTO’s finding and must consider the issue de novo. However, the court explained that the proceeding is not completely de novo because issues not considered by the PTO cannot be raised at the district court level, and if new evidence is not introduced, the court must review the action on the administrative record.

Judge Dyk, dissenting, argued that the proper standard of review should be governed by the Administrative Procedure Act (“APA”), which requires judicial review on the agency record and submission of all relevant evidence to the agency in deference to the agency’s expertise. 5 U.S.C. § 706. The Supreme Court will have to reconcile the tension between the APA and Section 145.

Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S

In order to obtain FDA approval, drug manufacturers must submit a New Drug Application (NDA) disclosing safety and efficacy data, as well as all existing patents on the drug and methods of use. The manufacturer must describe each of the patented uses in a “use narrative,” each of which is assigned a use code by the FDA. The FDA relies on the use narratives submitted by the pioneer manufacturers to determine the scope of the patents and does not independently verify the accuracy of the use code description. Generic manufacturers requesting FDA approval must indicate that they are permitted to use the patented drug or process because the patent has expired, is about expire, is invalid, or has not been submitted. 21 U.S.C. § 355(j)(2)(A)(vii). The Hatch-Waxman Act allows the generic drug manufacturers to file a counterclaim seeking an order to correct or delete the patent information submitted by the holder “on the ground that the patent does not claim either (aa) the drug for which the application was approved; or (bb) an approved method of using the drug.” 21 U.S.C. § 355(j)(5)(C)(ii)(I).

The specific dispute in this case arose when generic drug manufacturer Caraco filed an abbreviated new drug application (ANDA) for the diabetes drug repaglinide. Novo Nordisk, the brand manufacturer, holds an expired patent on the compound and a current method of use patent on the use of repaglinide in combination with metformin (‘358 patent.) The FDA has approved two other uses of the drug that do not fall within the scope of Novo Nordisk’s patents. Novo Nordisk’s use code claimed the use of repaglinide in combination with metformin; thus the FDA granted Caraco’s application for the use of repaglinide alone. Novo Nordisk subsequently amended the use code description to a “method for improving glycemic control in adults with type 2 diabetes mellitus.” The FDA determined that the Caraco’s manufacture of repaglinide would infringe Novo Nordisk’s patent pursuant to the new code. Following this change, Caraco filed a counterclaim under the Hatch-Waxman Act, alleging that the new use code, which extended the scope of the ‘358 patent to include all approved FDA uses when it only claimed one, was overbroad. The Federal Circuit held that Caraco could not file to amend the use code because the counterclaim provision of the Hatch-Waxman Act was limited only to cases where no approved method of using the drug is claimed.

The significance of this case is emphasized in Judge Gajarsa’s dissent to the Federal Circuit’s refusal to granten banc review. The court’s interpretation of the act would severely inhibit the ability of generic manufacturers to enter the market with drugs with non-infringing uses.

The Supreme Court will review whether the Act’s counterclaim provision is available where there is an approved method of using a drug that the patent does not claim and where patent information misstates the patent’s scope.

Marina Shvarts is a 2L at Harvard Law School.

Posted On Jul - 13 - 2011 Comments Off

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