Inter Partes Review and Forfeiture of 180-Day Generic Drug Exclusivity

An article published by Law360 and co-authored by H. Keeto Sabharwal and Dennies Varughese of Sterne Kessler Goldstein & Fox PLLC, and Kurt R. Karst of Hyman Phelps & McNamara PC, examines whether, and to what extent, a successful Inter Partes Review (“IPR”) challenge by a subsequent ANDA sponsor might cause a forfeiture of 180-day exclusivity under the failure-to-market forfeiture provisions at FDC Act § 505(j)(5)(D)(i)(I) added by the 2003 Medicare Modernization Act.

The IPR proceedings present a new wrinkle in patent litigation and were created with the September 16, 2011 enactment of the Leahy-Smith America Invents Act (“AIA”).  The U.S. Patent and Trademark Office (“PTO”) has already taken several steps to implement the new IPR procedures.  As Mr. Sabharwal and Mr. Varughese explained in a 2012 article, the IPR is an administrative patent challenge proceeding at the PTO that serves as a parallel or alternative to district court litigation to adjudicate patentability of issued patents.  (The IPR procedures replaced the old inter partes re-examination procedures.)  IPR petitions are filed with the PTO’s Patent Trial and Appeal Board (“PTAB”), which adjudicates the cases.  The PTAB has already received at least three relevant IPR petitions relating to Hatch-Waxman cases – two concerning patents on moxifloxacin (IPR2013-00012 and IPR2013-00015), and another concerning a patent on fosamprenavir (IPR2013-00024).

Under the failure-to-market 180-day exclusivity forfeiture provisions, there must be two events (i.e., “bookends”) to calculate a “later of” event between items (aa) and (bb).  The first bookend date under item (aa) is the earlier of the date that is 75 days after ANDA approval or 30 months after ANDA submission.  The (bb) part of the equation (i.e., the other bookend) provides that the (bb) date is “the date that is 75 days after the date as of which, as to each of the patents with respect to which the first applicant submitted and lawfully maintained a [Paragraph IV] certification qualifying the first applicant for the 180-day exclusivity period,” one of three events occurs – two of which are relevant here:

(AA) In an infringement action brought against that applicant with respect to the patent or in a declaratory judgment action brought by that applicant with respect to the patent, a court enters a final decision from which no appeal (other than a petition to the Supreme Court for a writ of certiorari) has been or can be taken that the patent is invalid or not infringed.

(BB) In an infringement action or a declaratory judgment action described in [FDC Act § 505(j)(5)(D)(i)(I)(bb)(AA)], a court signs a settlement order or consent decree that enters a final judgment that includes a finding that the patent is invalid or not infringed.

The (AA) and (BB) court decision events under item (bb) can be triggered in patent infringement litigation by “the first applicant or any other applicant (which other applicant has received tentative approval).”

While a final, unappealed district court judgment of patent invalidity would operate to trigger forfeiture under the failure-to-market forfeiture provisions, it is unclear whether patent nullification by the PTAB in an IPR proceeding would similarly qualify to trigger forfeiture  According to the authors of the new paper:

Under a strict reading, one might argue that a PTAB decision would not qualify because the decision would not be from “an infringement action … or declaratory judgment action,” as recited in the statute. Instead, IPR is a post-issuance challenge to the patent, which necessarily does not involve claims of patent infringement.

And the same argument may apply to any Federal Circuit affirmance of a PTAB decision.  Although such a Federal Circuit affirmance would be a final court decision, it arguably would not be from “an infringement action … or declaratory judgment action.” Even so, a PTAB nullification decision may nevertheless form the basis for further district court action that could lead to forfeiture.  A Federal Circuit affirmance, at the very least, would be binding on a district court and would form the basis for a simple motion for entry of
judgment in a district court action that could then trigger forfeiture. And because this district court judgment would be based on a Federal Circuit ruling, it is unlikely to be appealed.

Once final, judgment would trigger the 75-day window period leading up to the forfeiture.

Of course, this is still all speculation; however, as the PTAB begins to make IPR decisions, it seems likely that the issue will ripen and need to be addressed.