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Federal Circuit Holds that ITC’s Trademark Decisions Are Not Binding on District Courts, Creating a Potential Circuit Split

The U.S. International Trade Commission, a quasi-judicial independent agency based in Washington, D.C., is a common forum for patent, trademark, and trade secret disputes. The Federal Circuit has long held that the ITC’s rulings on patent infringement and validity issues do not have preclusive effect on later district court proceedings.

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Awards of Attorney Fees in ANDA Infringement Suits


Time to Read: 4 minutes Practices: Intellectual Property

Background

Under only very limited circumstances can a US patent holder make out a claim of infringement against a party that has not actually practised the patented invention. The most prominent of these circumstances arises with the filing of an abbreviated new drug application (ANDA) with the US Food and Drug Administration. Section 271(e)(2) of the Patent Act provides in relevant part:

"It shall be an act of infringement to submit-

(A) an application under Section 505(j) of the Federal Food, Drug, and Cosmetic Act...for a drug claimed in a patent or the use of which is claimed in a patent...[i]f the purpose of such submission is to obtain approval under such act to engage in the commercial manufacture, use, or sale of a drug...claimed in a patent before the expiration of such patent."(1)

The remedies available to the innovator company under Section 271(e)(4) are as follows:

"For an act of infringement described in paragraph (2) -

(A) the court shall order the effective date of any approval of the drug...to be a date which is not earlier than the date of the expiration of the patent which has been infringed,

(B) injunctive relief may be granted...and

(C) damages or other monetary relief may be awarded against an infringer only if there has been commercial manufacture, use, offer to sell, or sale within the United States or importation into the United States of an approved drug...

The remedies provided by subparagraphs (A), (B), and (C) are the only remedies which may be granted by a court for an act of infringement described in paragraph (2), except that a court may award attorney fees under Section 285."(2)

As addressed by the US Supreme Court in Eli Lilly& Co v Medtronic, Inc, these sections offer patentees an infringement remedy against a "highly artificial" act of infringement - the filing of an ANDA.(3) The court went on to explain that these provisions serve a "very limited and technical purpose" - that is, "to enable the judicial adjudication upon which the ANDA and paper NDA schemes depend".(4)

Due to the unique nature of infringement actions under Section 271(e)(2), attorneys fees are seldom awarded. Indeed, it would seem difficult to find wilfulness or other extraordinary circumstances on the basis of an application alone. Nonetheless, in Yamanouchi PharmaceuticalCo Ltd v Danbury Pharmacal, Inc the Federal Circuit upheld the Southern District of New York's award of attorneys fees, but cautioned that the defendant's entire conduct justified the award.(5)

Decision

On July 27 2004 the Federal Circuit returned to this issue in Glaxo Group Ltd v Apotex, Inc.(6) The Federal Circuit affirmed in part a decision of the Northern District of Illinois finding that Apotex's filing of an ANDA infringed US Patents 4,562,181 and 4,820,833, and reversed that judgment to the extent it found Apotex's infringement wilful based on its filing of an ANDA.

The patents are assigned to Glaxo and are embodied commercially in Ceftin, a very successful antibiotic. In 2000 Apotex filed an ANDA seeking approval to market a generic version of Ceftin. Anticipating infringement, Glaxo brought a declaratory judgment action against Apotex under 35 United States Code Section 271(e)(2)(A).

The district court issued a preliminary injunction against Apotex, and later found infringement and validity after a bench trial. Additionally, the district court found Apotex's infringement to be wilful and awarded attorneys fees under 35 United States Code Section 285. Specifically, the district court found that Apotex did not exercise due care in filing its ANDA, because Apotex did not receive an opinion from competent patent counsel.

On appeal, the Federal Circuit noted that it has limited the types of conduct which may give rise to such awards of attorneys fees under Section 271(e)(4). Specifically, Circuit Judge Gajarsa explained that the court's exceptional case finding in Yamanouchi was warranted by the defendant's "baseless and 'wholly unjustified' paragraph IV certification in an ANDA filing...combined with litigation misconduct". Extrapolating from that holding, the court held that:

"as suggested by Yamanouchi...the mere fact that a company has filed an ANDA application or certification cannot support a finding of wilful infringement for purposes of awarding attorneys fees pursuant to 35 United States Code Section 271(e)(4)."

Gajarsa concluded that the district court "erred in hanging a finding of wilfulness on such a special-purpose peg".

Comment

In light of the Federal Circuit's opinion in Glaxo, it appears that the court has limited any future findings of wilfulness based on the filing of an ANDA to the facts of Yamanouchi. At a minimum, practitioners may expect that only extraordinary conduct will prompt another court to label a Section 271(e)(2) infringement case "exceptional".

Endnotes

(1) 35 USC § 271(e)(2) (2003).

(2) 35 USC § 271(e)(4) (2003).

(3) 496 US 661, 678 (1990).

(4) Id.

(5) 231 F 3d 1339 (Fed Cir 2000).

(6) 2004 WL 1660960, 03-1575 (Fed Cir July 27 2004).

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