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ABBOTT LABORATORIES v. BAXTER HEALTHCARE CORP.

August 13, 2004.

ABBOTT LABORATORIES, an Illinois Corporation, and CENTRAL GLASS COMPANY LTD. a Japanese Corporation, Plaintiffs,
v.
BAXTER HEALTHCARE CORP., a Delaware Corporation, Defendant.



The opinion of the court was delivered by: RONALD GUZMAN, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiffs Abbott Laboratories and Central Glass Company Ltd. have sued Defendant Baxter Healthcare Corp. for alleged infringement of U.S. Patent No. 6,677,492 ("the '492 patent") and U.S. Patent No. 6,444,859 ("the '859 patent"). Defendant has moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(1), or in the alternative, to stay this case pending the outcome of case no. 01 C 1867. For the reasons provided in this Memorandum Opinion and Order, the Court denies Defendant's motion to dismiss for lack of subject matter jurisdiction and denies Defendant's motion to stay.

FACTS

  This complaint arises out of an Abbreviated New Drug Application ("ANDA") filed by Defendant in June 2000 seeking approval to sell generic sevoflurane in aluminum containers lined with an epoxyphenolic liner. Sevoflurane is a fluorine-based inhalation anesthetic first developed by Defendant in the mid-1960s. It is used as a general anesthesia for patients undergoing surgery and accounted for more than fifty percent of sales of all anesthetics capable of being inhaled in 2000. The original patent on sevoflurane has long since expired, and due to a complicated licensing agreement, Abbott Laboratories is the sole seller of sevoflurane in the United States. However, Abbott has several patents for inhibiting degradation of liquid sevoflurane by Lewis acids, which can result in harmful by-products. In order to prevent degradation, Abbott determined that a Lewis acid inhibitor (one of which is water) could be added to the sevoflurane. Abbott's U.S. Patent No. 5,990, 176 ("the '176 patent") teaches that to stop degradation, an effective stabilizing amount of Lewis acid inhibitor must be added to the sevoflurane. The '176 patent is at issue in pending case no. 01 C 1867, in which Abbott filed for infringement under the Hatch-Waxman Act.

  This case stems from two separate patents — the '492 patent and the '859 patent. The '492 patent claims a method for storing sevoflurane in a container having an interior wall coated with a Lewis acid inhibitor. The '859 patent claims a method of preventing degradation of sevoflurane by using at least 150 parts per million of a Lewis acid inhibitor. Defendant's ANDA was approved on July 2, 2002 for a generic sevoflurane product with a water content of 130 parts per million or less, and the specification states that the generic sevoflurane will be sold in aluminum containers lined with an epoxyphenolic liner. The '492 patent was issued on January 13, 2004, and the '859 patent was issued on September 3, 2002. Plaintiff in this case seeks a declaratory judgment under 28 U.S.C. § 2201 that Defendant will infringe the '492 patent and the '859 patent in December 2005, the earliest that Defendant can market sevoflurane as a result of an arbitral ruling, which was subsequently challenged by Defendant and upheld by this Court. See Abbott Labs. v. Baxter Int'l, Inc., Nos. 01 C 4809, 01 C 4839, 2002 WL 467147, at *5-6 (N.D.Ill. Mar. 27, 2002), aff'd, 315 F.3d 829 (7th Cir. 2003), cert. denied, 124 S. Ct. 387 (2003). This case was filed on February 2, 2004, almost twenty-two months before Defendant would be able to market its generic product.

  DISCUSSION

  A defendant can move to dismiss under Rule 12(b)(1) by challenging the subject matter jurisdiction of the court based on the sufficiency of the allegations in the complaint (a facial attack), or by challenging the factual basis for subject matter jurisdiction (a factual attack). Cedars-Sinai Med. Ctr. v. Watkins, 11 F.3d 1573, 1583 (Fed. Cir. 1993). When a facial attack is made, the allegations in the complaint are accepted as true and all reasonable inferences are drawn in favor of the plaintiff. Ezekiel v. Michel, 66 F.3d 894, 897 (7th Cir. 1995). If the motion denies or contradicts the allegations of jurisdiction in the complaint, the movant is making a factual attack. Cedars-Sinai, 11 F.3d at 1583. When a factual attack is made, the court may look beyond the allegations in the complaint to determine whether subject matter jurisdiction exists. Ezekiel, 66 F.3d at 897.

  Defendant launches a factual attack on jurisdiction because it argues that Plaintiffs' characterization of this case as reviewable by this Court under the Declaratory Judgment Act, 28 U.S.C. § 2201, is incorrect.

  In the patent arena, potential infringers, to "clear the air of infringement charges," have historically used declaratory judgments under 28 U.S.C. § 2201 to declare that the patent will not be infringed or that the patent itself is invalid. Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1362 (Fed. Cir. 2001). However, patentees can also attempt to declare their rights under § 2201 against parties that will allegedly infringe in the future. Lang v. Pacific Marine & Supply Co. Ltd., 895 F.2d 761, 763 (Fed. Cir. 1990). Under § 2201, an "actual controversy" must exist between the parties, and Lang outlines two elements required for a patentee against an alleged infringer to satisfy this requirement: 1) the alleged infringer "must be engaged in activity directed toward making, selling, or using . . . or be making meaningful preparation for such activity"; and (2) the alleged infringer "must indicate a refusal to change the course of its actions in the face of acts by the patentee sufficient to create a reasonable apprehension that a suit will be forthcoming." Id. at 764. The first element looks to the alleged infringer's conduct to determine whether the controversy is sufficiently real and substantial and has been labeled the "reality" element, while the second element requires that the controversy is of "sufficient immediacy" and has been labeled the "immediacy" element. Id.; see Amgen, Inc. v. Hoechst Marion Roussel, Inc., 3 F.Supp. 2d 104, 112 (D. Mass. 1998).

  The "reality" element is met if the design of the potentially infringing product has been substantially fixed, especially the features that would potentially infringe, at the time the complaint was filed. Sierra Applied Scis., Inc. v. Advanced Energy Indus., Inc., 363 F.3d 1361, 1379 (Fed. Cir. 2004). The greater the variability of a potentially infringing feature, the more likely the suit will be advisory and "detached from eventual reality." Id. For a decision to be anything other than an advisory opinion, it must be established "`that the product presented to the court is the same product which will be produced if a declaration of noninfringement is obtained.'" Id. (quoting Int'l Harvester Co. v. Deere & Co., 623 F.2d 1207, 1216 (7th Cir. 1980)). Moreover, the possibility that the design of a product might change is not alone enough to defeat jurisdiction. Lang, 895 F.2d at 764; Interdigital Tech. Corp. v. OKI Am., Inc., 845 F. Supp. 276, 284 (E.D. Penn. 1994).

  Defendant contends that the "reality" element is not met because there is no guarantee that it will ultimately market a sevoflurane product in the United States, and even if it did market sevoflurane, the packaging may change between the filing of the complaint and December 2005, when it would be permitted to enter the market.

  Defendant cites Abbott Laboratories v. Zenith Laboratories, Inc. ("Zenith") in support of its contention that it may not ultimately market sevoflurane in the United States. 934 F. Supp. 925 (N.D. Ill. 1995). In that case, the plaintiff was claiming that the defendant was taking action toward making, selling, or using of a generic form of HYTRIN because the defendant sought FDA approval to market generic HYTRIN. Id. at 937-38. However, the court specifically noted that FDA approval was not granted at the time declaratory judgment was requested, and there was no guarantee that FDA approval would be granted on any particular date in the future. Id. at 938. Accordingly, the court stated that a request for FDA approval does not necessarily mean that the defendant will not change its course of actions and decide against marketing the drug, thereby failing to meet the "reality" element of the Lang test. Id.

  Zenith can be distinguished from our case because the Defendant Baxter had already received approval of its ANDA at the time that the complaint was filed. Plaintiffs cite Glaxo Group Ltd. v. Apotex, Inc. ("Apotex"), in which the district court stated that the filing of an ANDA for an antibiotic "means that defendant is ready or has at least made meaningful preparations to be ready to market the allegedly infringing product." 130 F. Supp. 2d 1006, 1008 (N.D. Ill. 2001). In addition, the Federal Circuit in Glaxo, Inc. v. Novopharm, Ltd. ("Novopharm") noted that "systematically attempting to meet the applicable regulatory requirements" by filing an ANDA indicated an intent to enter the market. 110 F.3d 1562, 1571 (Fed. Cir. 1997). Novopharm also states that declaratory relief "is directed to the time after the ANDA is approved, when § 271(e)(1) no longer provides a shelter against infringement liability." Id. at 1571. Apotex and Novopharm both support the proposition that the filing of an ANDA indicates intent to enter the market, and Novopharm further indicates that the approval of an ANDA is sufficient to trigger an action for declaratory relief. See also Amgen, 3 F. Supp. 2d at 113 (noting that the issuance by the FDA of a product license would show good cause to reopen declaratory judgment claim); Andrx Pharms. Inc. v. Biovail Corp. Int'l, 256 F.3d 799, 808 (D.C. Cir. 2001) (indicating in an antitrust suit that a party "could have alleged its intent and preparedness to enter the market by claiming that FDA approval was probable" even without ANDA approval itself). Moreover, Defendant challenged the findings of an arbitration panel that would prevent entry into the market until December 2005, further evidence of its intent to enter the market. Abbott Labs. v. Baxter Int'l, Inc., 2002 WL 467147, at *5-6.

  Defendant suggests that even if it does enter the generic sevoflurane market, the packaging used may not be a lined container, and therefore the controversy would not meet the "reality" prong of the Lang test. To support this contention, Defendant cites Telectronics Pacing Systems, Inc. v. Ventritex, Inc. a case in which the Federal Circuit held that a defibrillator device that had only begun clinical trials did not satisfy the "reality" requirement because there was no certainty that the device approved would be the same device being used for clinical trials. 982 F.2d 1520, 1527 (Fed. Cir. 1992). Venitrex, pursuant to an Investigational Device Exemption from the FDA, began clinical trials in July 1989 and sold defibrillator devices at cost in order to obtain data for pre-market FDA approval. Id. at 1521. Telectronics sought a declaratory judgment that Venitrex's activity would infringe Telectronic's patents when its clinical testing exception ended. Id. at 1522. The court found that the ...


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