United States District Court, N.D. Illinois, Eastern Division
August 13, 2004.
ABBOTT LABORATORIES, an Illinois Corporation, and CENTRAL GLASS COMPANY LTD. a Japanese Corporation, Plaintiffs,
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.
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.
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 "reality" element was not met because the device sold
could differ from the device used for clinical trials, the device
did change during clinical trials, and Venitrex was prohibited by
the FDA from distributing sales literature or seeking orders.
Id. at 1527.
However, in our case, Defendant's ANDA has already been
approved, which distinguishes this case from the defibrillator
device in Telectronics, where the device was only in the
clinical testing stage. The product is primed for the market per
its approved ANDA. Defendant cannot contend that a product in the
early stages of development can be readily compared to a product
that is already approved for the market.
Defendant also cites Sierra Applied Sciences, Inc. v. Advanced
Energy Industries, Inc., a case in which the plaintiff could not
prove that the design of the defendant's 150 kW power supply was
substantially fixed, especially regarding its potentially
infringing characteristics, at the time the complaint was filed.
363 F.3d at 1379-80. The power supply was in an early stage of
development, and it would be potentially several years before the
product would be available for sale, which could result in even
more design changes. Id. at 1380.
Defendant errs in comparing product development of a power
supply with that of a generic drug, especially in light of the ANDA process. One
purpose of the ANDA process and 35 U.S.C. § 271(e)(1) is to
expedite the arrival of generic drugs on the market by protecting
the limited use of patented drugs for development and submission
to the FDA, which allows for the generic manufacturer to have
regulatory approval before expiration of the patent.
Intermedics, Inc. v. Ventritex, Inc., 775 F. Supp. 1269,
1272-73 (N.D. Cal. 1991). The approved ANDA is the final
product that will be marketed when the patent expires (or in this
particular case, in December 2005, per the arbitral award), and
Defendant's approved ANDA includes packaging in a lined aluminum
Defendant states that it "intends to go to market on the
sevoflurane product described in its current ANDA," but that
there is "no guarantee that the packaging of that hypothetical
product will not change between now and December 2005." (Def.'s
Reply Mem. Supp. Mot. Dismiss at 5.) However, the court in Lang
stated that a "concern that the alleged future infringer might
alter its course of conduct or discontinue it altogether should
not cause a dismissal any more than it should in a suit by the
accused infringer." 895 F.2d at 764. Based on Defendant's
approved ANDA, the product that will be marketed by Defendant is
generic sevoflurane in a lined aluminum container. Even though it
is not "guaranteed" that Defendant will use such packaging,
failure to do so will require Defendant to amend its ANDA
(especially in light of the potentially harmful degradation
problems with sevoflurane), as packaging information is required
when filing. See 21 C.F.R. § 314.94 (2004) (stating content
requirements for ANDA include packaging requirements under
pertinent provisions of 21 C.F.R. § 314.50(d)). Indeed, had
Defendant not been prevented from entering the market as a result
of an arbitration award (which Defendant attempted but failed to vacate), it is
hard to believe that Defendant would not currently be producing
generic sevoflurane (utilizing the sevoflurane manufacturing line
which it has in place) in lined containers per its approved ANDA.
The Court is guided by the Federal Circuit decision in Sierra,
because given a finding of noninfringement in this case the
product introduced to the Court is most likely the same product
that would be marketed by the Defendant. See 363 F.3d at 1379
(quoting Int'l Harvester, 623 F.2d at 1216) (noting that 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.'") Because Defendant is likely to
market generic sevoflurane in December 2005, and likely as well
to use a lined aluminum container, the "reality" element of the
Lang test is met in this case. If Defendant amends its ANDA
filing to change packaging, eliminating the container lined with
a potential Lewis acid inhibitor that could potentially infringe
the '492 patent, then this case would most likely become
nonjusticiable, as the "reality" prong would not be met. See
Abbott Labs. v. Baxter Pharm. Prods., Inc., No. 00 C 5939, 2002
WL 467151, at *2 (N.D. Ill. Mar. 27, 2002) (holding that Baxter's
withdrawal of plastic containers from its ANDA submission that
would potentially infringe Abbott's 6,074,668 patent covering
storage of sevoflurane in plastic containers made alleged
Defendant next argues that the "immediacy" prong of the Lang
test is not satisfied because the gap in time in this case from
filing of the complaint to potential infringement is almost
twenty-two months. The period of time between the date on which
the complaint was filed and the date when potentially infringing
activities will begin are important under the "immediacy" element. Sierra,
363 F.3d at 1378-79. "The greater the length of this interim period, the more
likely the case lacks the requisite immediacy." Id. at 1379.
This time period is not an absolute factor, and "a court must
examine the totality of the circumstances." RDP Techs., Inc. v.
N-Viro Int'l Corp., No. Civ. A. 00-697-RRM, 2001 WL 1083762, at
*5 (D. Del. Sept. 17, 2001); see also Lang, 895 F.2d at 764
(comparing the "immediacy" element with that of the "reasonable
apprehension" element of a patent declaratory action where the
plaintiff is the threatened infringer); Arrowhead Indus. Water,
Inc. v. Ecolochem, Inc., 846 F.2d 731, 736 (Fed. Cir. 1988)
(noting that in a patent declaratory action where the plaintiff
is the threatened infringer, the court must consider the
"totality of the circumstances" in determining whether the
defendant's conduct creates a reasonable apprehension that it
will enforce its patent).
Defendant supports its argument with the holding in Lang v.
Pacific Marine and Supply Co. that a nine-month delay between
the filing of the complaint and the completion of the hull for a
ship was not sufficient to meet the requirements of an "actual
controversy." 895 F.2d at 764-65. However, the court noted "the
accused infringers had not distributed sales literature, prepared
to solicit orders, or engaged in any activity indicating that the
ship would soon be ready for sea." Id. at 765.
Defendants' reliance on the specific holding in Lang is not
convincing based on the facts of this case. Lang involved the
construction of a ship, while the case at hand involves the
packaging for a generic drug already approved by the FDA. The
nine-month limit in Lang cannot be imposed on this case. The
Lang court considered the fact that the accused infringers had
not engaged in any marketing activity when discussing the
nine-month limitation under the immediacy requirement. Id. In
this case, Defendant is prepared to sell generic sevoflurane after getting approval of an
ANDA, and the nine-month limitation cannot therefore be applied.
Defendant also looks to Sierra Applied Sciences, Inc. v.
Advanced Energy Industries, Inc. for support, where the Federal
Circuit found that the "immediacy" requirement was not met in a
case concerning a power supply. 363 F.3d at 1379. The court noted
that the power supply at issue was not built and operational
until about a year after the case was filed, exceeding the
nine-month period from Lang. Id. The power supply was not even
mentioned in interrogatories six months after the case was filed.
Id. Moreover, there was no existing or draft advertising
literature for the power supply. Id.
Again, reliance on the holding in Sierra based on those
specific facts is unpersuasive in this case. Sierra involved a
product still in the development stage, not even identified at
the time of filing, while the issue in this case is a product
that has already undergone testing and is prepared for the
market. The Federal Circuit in Sierra also noted that marketing
efforts had not been made by the potential future infringer in
its analysis of the "immediacy" element, further distinguishing
this case, as the time and cost involved in filing an ANDA
indicate an intent to market generic sevoflurane.
Furthermore, as Plaintiffs cite, the Federal Circuit in
Novopharm determined that jurisdiction existed where there was
an approximate seventeen-month delay between filing of the suit
and actual infringement. 110 F.3d at 1571. Glaxo sued Novopharm
on July 22, 1994 seeking a declaratory judgment that Novopharm
would infringe on a Glaxo patent if and when it imported the
infringing product following approval of its ANDA. Id. at 1564.
The court decided that the delay met the "immediacy" requirement
because Novopharm had sent a letter indicating that it intended
to market the infringing product after December 5, 1995 (before expiration of Glaxo's patent), and
that FDA approval of Novopharm's ANDA was imminent. Id. at
Plaintiffs also support their position by citing Glaxo Group
Ltd. v. Apotex, Inc., where the district court found that a
thirteen to nineteen-month delay between the filing of the suit
and infringement met the immediacy requirement of Lang.
130 F. Supp. 2d at 1008-09. Glaxo filed suit in September 2000 seeking a
declaration that Apotex would infringe Glaxo's patent on an
antibiotic as a result of Apotex's ANDA filing in April 2000.
Id. at 1007-08. Approval of the ANDA would take anywhere from
eighteen to twenty-four months, resulting in approval before the
expiration of Glaxo's patent. Id. at 1007. Based on the ANDA
filing, Apotex's refusal to reply to demand letters from Glaxo
regarding potential infringement issues, and "the enormous amount
of money at stake," the court concluded that Apotex would enter
the market as soon as possible and that the "immediacy" element
from Lang was satisfied. Id. at 1009.
The case at hand is much closer factually to Novopharm and
Apotex than to Lang and Sierra. Defendant already has an
approved ANDA, and has indicated an intention to market the
product in December 2005, when the Plaintiffs' license will have
expired per the arbitral award. Based on the totality of the
circumstances, including the fact that in this case the ANDA is
already approved and the arbitral award sets a definite date of
infringement, the "immediacy" element of Lang is satisfied by
the twenty-two-month delay from the filing of the complaint to
potential infringement. The Court notes that this delay is
acceptable based only on the specific facts of this case, and is
not meant to extend the allowable time frame in other potential
declaratory judgment cases in which the patentee seeks a
declaration of infringement against a potential future infringer.
This Court denies Defendant's motion to dismiss for lack of subject
Defendant has also moved, in the alternative, to stay this case
pending the outcome of case no. 01 C 1867, which involves
infringement of the '176 patent. Defendant claims that certain
facts from case no. 01 C 1867 could have a collateral estoppel
effect on issues in this case, and that invalidity,
unenforceability and claim indefiniteness issues regarding the
'176 patent will "most assuredly" place issues with respect to
the '492 and '859 patents into "much sharper relief." These are
weak arguments, at best, as issued patents are presumed valid per
28 U.S.C. § 282, regardless of the validity of related patents,
and clear and convincing evidence is required to show otherwise.
See Dana Corp. v. Am. Axle & Mfg., Inc., 279 F.3d 1372, 1375
(Fed. Cir. 2002) (noting that presumption of patent validity can
only be overcome by clear and convincing evidence); Enzo
Biochem, Inc. v. Calgene, Inc., 188 F.3d 1362, 1379 (Fed. Cir.
1999) ("While evidence of invalidity regarding the claims of one
patent may certainly apply to those of another, a party may not
avoid its burden of proof by making a blanket statement that its
proofs with respect to one patent apply to another and not
provide a formal analysis as to why that is true.") The key issue
in case no. 01 C 1867 is the "effective amount" terminology used
in the '176 patent, which is not an issue in this case. The
resolution of case no. 01 C 1867 will not necessarily resolve the
issues involved here. Accordingly, the motion to stay is denied. CONCLUSION
For the foregoing reasons, the Court denies Defendant's motion
to dismiss for lack of subject matter jurisdiction and denies
Defendant's alternative motion to stay this case pending the
outcome of case no. 01 C 1867 [doc. nos. 9-1 and 9-2].
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