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Federal Circuit Interprets the BPCIA to Not Require Disclosure of Abbreviated BLA and Manufacturing Information by a Subsection (k) Applicant
Amgen Inc., v. Sandoz Inc., No. 2015-1499, 2015 U.S. App. LEXIS 12523 (Fed. Cir. Jul. 21, 2015) (Before Newman, Lourie, and Chen, J.) (Opinion for the court, Lourie, J.) (Concurring in part, dissenting in part, Newman, J.) (Dissenting in part, Chen, J.). Click Here for a copy of the opinion.
Amgen filed a biologics license application (“BLA”) and obtained FDA approval for its filgrastim product, Neupogen. Sandoz subsequently filed an abbreviated BLA (“aBLA”) under 42 U.S.C. § 262(k), seeking approval for a biosimilar (generic) version of Neupogen. Amgen sued Sandoz, asserting claims of (1) unfair competition under state law based on violations of the Biologics Price Competition and Innovation Act (“BPCIA”); (2) wrongful use of Amgen’s approved BLA; and (3) infringement of U.S. Patent No. 6,162,427, which claims a method of using filgrastim. Amgen alleged that Sandoz violated the BPCIA by failing to disclose its aBLA and manufacturing information as required by 42 U.S.C. § 262(l)(2)(A) and by prematurely giving a notice of commercial marketing under 42 U.S.C.§ 262(l)(8)(A), i.e. giving notice before the FDA approved its biosimilar product.
Sandoz counterclaimed for a declaratory judgment that it correctly interpreted and followed the BPCIA and that the ‘427 patent was invalid and not infringed. Amgen subsequently moved to enjoin Sandoz from launching its biosimilar product after FDA approval based on the alleged BPCIA violations. The district court granted partial summary judgment to Sandoz on its BPCIA counterclaim, denied Amgen’s preliminary injunction motion, and dismissed Amgen’s unfair competition and conversion claims. The district court held that (1) the BPCIA permits Sandoz to refuse disclosure of its aBLA and manufacturing information; and (2) Sandoz may give notice of commercial marketing before FDA approval. Amgen appealed.
Regarding the disclosure questions, section 262(l)(2)(A) of the BPCIA states that a subsection (k) applicant “shall provide” to the reference product sponsor (“RPS”) a copy of the aBLA and manufacturing information no later than 20 days after receiving FDA notification that the aBLA has been accepted for review. Although the term “shall” appears to mean “must” when the provision is read in isolation, it actually an optional disclosure, when the provision is read together with other provisions of the statute.
The Court pointed to 42 U.S.C. § 262 (l)(9)(C), which provides that “[i]f a subsection (k) applicant fails to provide the application and information required under paragraph (2)(A), the reference product sponsor [RPS], but not the subsection (k) applicant, may bring an action . . . for a declaration of infringement, validity, or enforceability of any patent that claims the biological product or a use of the biological product” (emphasis added). Thus, the BPCIA “contemplates that a subsection (k) application might fail to disclose the required information” and “sets forth the consequence for such failure.” The aBLA applicant can refuse disclosure, and by doing so refuse the negotiation procedure that the statute provides, before the RPS can bring a lawsuit. This refusal allows the RPS to sue for infringement of qualifying patents 20 or more days after the disclosure deadline, without waiting to attempt negotiate with an uncooperative adversary. From this reasoning the Court concluded that “shall” in paragraph (l)(2)(A) does not require Sandoz to disclose its aBLA and manufacturing information. Therefore, Sandoz did not violate the BPCIA when it took a path expressly contemplated by the BPCIA.
Regarding the notice question, the Court reversed the decision below and concluded that Sandoz’s first notice was insufficient. Under 42 U.S.C. § 262(l)(8)(A), a subsection (k) applicant “may only give effective notice of commercial marketing after the FDA has licensed its product.” Paragraph (l)(8)(A) provides that “[t]he subsection (k) applicant shall provide notice to the reference product sponsor not later than 180 days before the date of the first commercial marketing of the biological product licensed under subsection (k).” According to the Court, if Congress intended to allow notice of commercial marketing before licensure, it “could have used the phrase ‘the biological product that is the subject of’ the application” as it did in other provisions. In addition, notice given after FDA licensure, “once the scope of the approved license is known and the marketing of the proposed biosimilar product is imminent, allows the RPS to effectively determine whether, and on which patents, to seek a preliminary injunction from the court.” This effectively “ensures the existence of a fully crystallized controversy regarding the need for injunctive relief.” Sandoz’s first notice to Amgen, given before FDA approval, was therefore premature and ineffective.
Further, the Court concluded that “[p]aragraph (l)(8)(A) is a standalone notice provision” and unlike in paragraph (l)(2)(A), the term “shall” requires notice of commercial marketing to be given “to allow the RPS period of time to assess and act upon its patent rights.” Here, despite the premature notice, Sandoz also provided Amgen operative notice on the day it received FDA licensure. Accordingly, the premature notice was moot and was superseded by an effective notice. Further, Amgen and Sandoz were already in litigation, based on the original, albeit premature, marketing notice. However, the statutory 180-day stay of commercial marketing by Sandoz must run from the later and effective marketing notice (coinciding here with the FDA approval) and not from the earlier and premature notice. (A premature notice cannot shorten the 180-day stay.)
Based on the Court’s interpretation of the relevant provisions of the BPCIA, the Court affirmed the dismissal of Amgen’s unfair competition and conversion claims, vacated judgment on Sandoz’s BPCIA counterclaims, and remanded for the district court to consider the patent infringement claim and related counterclaims.
Judge Newman agreed with the majority’s interpretation of paragraph (l)(8)(A), namely “notice of issuance of the FDA license is mandatory, and that this notice starts the 180-day stay of commercial marketing.” However, she disagreed with the interpretation that the disclosure requirement in paragraph (l)(2)(A) is not mandatory. The declaratory action authorized in paragraph (l)(9)(C) is limited to “product” and “use” claims and “does not include manufacturing process patents.” In her view, a limited remedy of this kind could not properly be used to justify the majority’s interpretation of the term “shall” in (l)(2)(A).
Judge Chen agreed with the majority that the statute provides remedial measures for non-compliance with paragraph (l)(2). Therefore a subsection (k) applicant’s failure to supply the aBLA and manufacturing information is not a violation of the BPCIA. He disagreed with the majority that paragraph (l)(8) is a “stand alone provision with an inherent right to a 180-day injunction.” Viewing paragraph (l)(8) as indivisible from the preceding (l) sections, Judge Chen concluded that “(l)(8)’s vitality is predicated on the performance of the preceding steps in subsection (l)’s litigation management process” that arises as a result of a party filing an aBLA. Consequently, “a better reading of (l)(8) is that it does not apply . . . when the (k) applicant fails to comply with (l)(2). He also believed that consistent with the interpretation of “shall” in (l)(2), “shall” in (l)(8)(A) does not mean “must.”