Federal Circuit decision highlights perils of attempting to circumvent 30-month Hatch Waxman stay through PTAB proceedings

When IPRs were first created in 2012, many in the generic industry heralded the end of Hatch Waxman’s 30 month stay.  A generic drug company could simply invalidate the branded drug company’s patents at the Patent Trial and Appeal Board (“PTAB”), and file its abbreviated new drug application (“ANDA”) without fear of a lawsuit or triggering Hatch Waxman’s 30 month stay.  A Federal Circuit decision last week in Argentum Pharm. LLC v. Novartis Pharm. Corp., No. 2018-2273, 2020 U.S. App. LEXIS 13034 (Fed. Cir. Apr. 23, 2020) highlights just how perilous that thinking is. 

Argentum was originally one of seven generic drug companies to petition the PTAB for an inter-partes review of Novartis’ U.S. Patent No. 9,187,405 (“the ‘405 patent”).  The ‘405 patent is a method of use patent that covers the approved use of Novartis’ anti-cancer drug Gilenya® (a/k/a fingolimod). After the PTAB affirmed the validity of the patent, the seven generic petitioners appealed the PTAB’s decision to the Federal Circuit; six eventually settled; Argentum was left as the only company pursuing the appeal.

Argentum’s problem was that it had not yet filed an ANDA for its generic version of Gilenya®, and Federal Courts are constrained under Article III of the United States Constitution to hear actual “cases” and “controversies.”  Courts occasionally allow generic drug companies to pursue litigation before their drug is approved by the Food and Drug Administration.  Altaire Pharm., Inc. v. Paragon Bioteck, Inc., 889 F.3d 1274 (Fed. Cir. 2018).  However, as a general rule, a generic drug company faces an uphill battle proving that it has a concrete dispute with an innovative drug company when it has not yet applied for FDA approval, and the innovator has never sued or threatened to sue the generic.  Momenta Pharm., Inc. v. Bristol-Myers Squibb Co., 915 F.3d 764 (Fed. Cir. 2019). 

The generic drug company can pursue its patent challenge at the PTAB, because the PTAB is an administrative body within the United States Patent and Trademark Office, but it cannot pursue its case in Federal Court – even in an appeal from a PTAB decision – because the jurisdiction of Federal Courts under Article III of the United States Constitution is limited to actual cases and controversies.

In Argentum, the Federal Circuit agreed with Novartis that it lacked jurisdiction to hear the appeal.  Argentum had no right to challenge the PTAB’s affirmance of Novartis’ patent at the PTAB.

Argentum argued that a case or controversy did exist because it would certainly be sued for patent infringement once it filed its ANDA and, if the Federal Circuit declined to hear the appeal, Argentum would suffer from the broad estoppel rules applied by the PTAB in IPR proceedings.  Those rules preclude parties from raising the same issue in a second IPR proceeding, even when a different patent or different patent claims in involved.  Rimfrost AS v. Aker Biomarine Antarctic AS, IPR2018-01178, Paper 34 (PTAB Jan. 13, 2020).  By declining to hear the appeal, the Federal Circuit thus denied Argentum any review of the PTAB’s decision affirming the ‘405 patent, and guaranteed that Argentum would suffer the same result in a case involving the same issues.

The case highlights the risk of an ill-considered IPR by a generic drug company.  A generic drug company should think twice before challenging the validity of a patent in an IPR, particularly when it has not yet filed an ANDA to the FDA.