Supreme Court Rules in Patent Use Code Case; Reverses Federal Circuit Decision

By Kurt R. Karst –      

The wait is over.  In a unanimous decision delivered by Justice Elena Kagan (along with a concurring opinion from Justice Sonia Sotomayor) on April 17, 2012, the Court held in Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S that “[a] generic manufacturer may employ the counterclaim provision to force correction of a use code that inaccurately describes the brand’s patent as covering a particular method of using a drug.”  In doing so, the Court reversed the U.S. Court of Appeals for the Federal Circuit’s April 14, 2010 decision that the counterclaim provision may not be used to correct or delete an Orange Book-listed patent use code, and remanded the case back to the Federal Circuit. 

The counterclaim provision at issue in the case was added by the Medicare Modernization Act (“MMA”) and is at FDC Act §505(j)(5)(C)(ii)(I).  It states:

If an owner of the patent or the holder of the approved application under [FDC Act § 505(b)] for the drug that is claimed by the patent or a use of which is claimed by the patent brings a patent infringement action against the applicant, the applicant may assert a counterclaim seeking an order requiring the holder to correct or delete the patent information submitted by the holder under [FDC Act § 505(b)] or (c) 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.

(The MMA also added almost identical counterclaim provisions at FDC Act § 505(c)(3)(D)(ii)(I) applicable to 505(b)(2) application sponsors.)  We won’t get into all of the details of the case; we’ve posted on it before on several occasions – see here, here, here, and here.  So here’s the bottom line from the Court:

• “Congress understood that a drug may have multiple methods of use, not all of which a patent covers; and a section viii statement allows the FDA to approve a generic drug for unpatented uses so that it can quickly come to market.  The statute thus contemplates that one patented use will not foreclose marketing a generic drug for other unpatented ones.  Within this scheme, the counterclaim naturally functions to challenge the brand’s assertion of rights over whichever discrete uses the generic company wishes to pursue; the counterclaim’s availability matches the availability of FDA approval under the statute.”
• A patent use code qualifies as “patent information” that is submitted under FDC Act 505(b) and (c).
• The Court says that its reading of the counterclaim provision “gives content to both remedies” under FDC Act §505(j)(5)(C)(ii)(I): “It ‘delete[s]’ a listing from the Orange Book when the brand holds no relevant patent and ‘correct[s]’ the listing when the brand has misdescribed the patent’s scope.”
• The Court says that its decision is consistent with the circumstances surrounding the aftermath of the Federal Circuit’s decision in Mylan Pharmaceuticals, Inc. v. Thompson, 268 F. 3d 1323 (Fed. Cir 2001), in which the Federal Circuit held in a pre-MMA case that an action for Orange Book patent delisting was not available. 

In her concurring opinion, Justice Sotomayor raised an interesting scenario under which an NDA sponsor or patent owner does not file suit in response to a Paragraph IV certification.  After all, the counterclaim provision is available only in the context of a patent infringement lawsuit stemming from a Paragraph IV certification.  “[I]t is not clear what happens if the brand manufacturer does not file suit,” wrote Justice Sotomayor.  The counterclaim provision “[a]t best . . . permits the generic manufacturer to do what the scheme contemplates it should do—file an ANDA with a section viii statement— but only after expensive and time-consuming litigation.  A fix is in order, but it must come from Congress or FDA.”