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Abbott Laboratories v. Matrix Laboratories

November 5, 2009

ABBOTT LABORATORIES PLAINTIFF,
v.
MATRIX LABORATORIES, INC., MATRIX LABORATORIES, LTD., AND MYLAN, INC. DEFENDANTS.



The opinion of the court was delivered by: Judge Robert M. Dow, Jr.

MEMORANDUM OPINION AND ORDER

Plaintiff, Abbott Laboratories ("Abbott"), filed this lawsuit on March 13, 2009. The case is based on the Hatch-Waxman amendments to the Food, Drug, and Cosmetic Act. Abbott' s complaint [1] alleges that Defendants infringed two of Abbott' s patents when Defendants filed an Abbreviated New Drug Application ("ANDA") with the Food and Drug Administration ("FDA"). Defendants'ANDA included certifications asserting that two of Abbott' s patents are invalid. Those certifications constitute acts of infringement under the Patent Act.

Before the Court is Defendants' motion to stay [39]. In that motion, Defendants ask the Court to: (i) stay this action for five years, (ii) toll the running of the 30-month limitations in 21 U.S.C. § 355(j)(5)(B)(iii), and (iii) provide that the stay be lifted upon a showing of good cause. As the parties have recognized [see 44], Defendants essentially request an "administrative stay." In addition to citing concerns about the premature use of judicial resources, Defendants argue in their memorandum of law [41] that without a stay they could lose out on Hatch-Waxman's 180-day market exclusivity period, which Congress included to provide an incentive to challenge suspect patents. Moreover, because of another aspect of their ANDA application, the earliest that Defendants could market their generic drug is 2016. In its response [45], Abbott argues that the harms that Defendants foresee are speculative and that delaying the action may make it more difficult to litigate the disputed patents' validity in the future.

For the reasons set forth below, Defendants'stay motion [39] is granted. The action is stayed until July 1, 2014; the limitations period under 21 U.S.C. § 355(j)(5)(B)(iii) will be tolled during the pendency of the stay; and the stay may be lifted or modified at any time, upon a showing of good cause.

I. Background on the FDCA and the Hatch-Waxman Act

Protecting the public health was Congress' s "overriding purpose" in enacting the Food, Drug, and Cosmetic Act (21 U.S.C. § 301 et seq.) (the "FDCA"). United States v. An Article of Drug . . . Bacto-Unidisk . . ., 394 U.S. 784, 798 (1969). Before a new drug can be introduced into interstate commerce, a person must gain the approval of the Secretary of Health and Human Services. 21 U.S.C. § 355(a). To gain the Secretary's approval, a New Drug Application ("NDA") must include safety and efficacy studies. 21 U.S.C. § 355(b)(1). The Hatch-Waxman Act can speed up the process because it permits a generic manufacturer in certain circumstances to use a pioneer drug manufacturer' s safety and efficacy studies as part of an Abbreviated New Drug Application ("ANDA"), rather than requiring the generic manufacturer to submit an NDA.

As part of the statutory scheme, Hatch-Waxman requires a pioneer drug manufacturer to notify the FDA of all patents that claim an NDA drug. 21 U.S.C. §§ 355(b)(1) & (c)(2). The FDA lists these patents in its "Orange Book." Eli Lilly & Co. v. Teva Pharm., 557 F.3d 1346, 1348 (Fed. Cir. 2009). When a generic manufacturer files an ANDA, it must make one of four certifications with respect to the pertinent patents: "(I) that such patent information has not been filed, (II) that such patent has expired, (III) [a certification] of the date on which such patent will expire, or (IV) that such patent is invalid or will not be infringed by the manufacture, use, or sale of [the generic drug]." 21 U.S.C. § 355(j)(2)(A)(vii) (providing that the certifications must be made "in the opinion of the applicant and to the best of his knowledge[] with respect to each patent which claims the listed drug").

The only two types of certifications that are at issue here are Paragraph III certifications and Paragraph IV certifications. If an ANDA filer makes a Paragraph III certification, the earliest that the ANDA application can be approved is the date on which the Paragraph III patent expires. 21 U.S.C. § 355(j)(5)(B)(ii). If an ANDA filer makes a Paragraph IV certification, it is deemed to have engaged in an act of patent infringement. 35 U.S.C. § 271(e)(2). However, if the patent holder does not bring suit for patent infringement within 45 days, then the ANDA approval is effective immediately (unless, as is the case here, there also are Paragraph III certifications whose dates have not yet been reached). See 21 U.S.C. §§ 355(j)(5)(B), (j)(5)(B)(iii). If an ANDA filer makes a Paragraph IV certification and the patent holder does bring suit for infringement, then the ANDA generally will not be approved for 30 months. 21 U.S.C. § 355(j)(5)(B)(iii).

II. Legal Standard on a Motion to Stay

District courts have the inherent power to manage their dockets, including the authority to stay proceedings. "[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants."See, e.g., Tex. Independent Producers & Royalty Owners Ass'n v. EPA, 410 F.3d 964, 980 (7th Cir. 2004) (quoting Landis v. N. Am. Co., 299 U.S. 248, 254 (1936)). Courts often consider the following factors when deciding whether to stay an action: (i) whether a stay will unduly prejudice or tactically disadvantage the non-moving party, (ii) whether a stay will simplify the issues in question and streamline the trial, and (iii) whether a stay will reduce the burden of litigation on the parties and on the court. Tap Pharm. Prods., Inc. v. Atrix Labs., Inc., 2004 WL 422697, at *1 (N.D. Ill. Mar. 3, 2004). "[I]f there is even a fair possibility that the stay * * * will work damage to some one else," the party seeking the stay "must make out a clear case of hardship or inequity in being required to go forward." Landis, 299 U.S. at 255. The interest of all parties must be weighed, and the decision to stay an action is not made lightly. Home Ins. Co. v. Coastal Lumber Co., 575 F.Supp. 1081, 1083 (N.D. Ga. 1983). The nature of the inquiry dictates that, although factors are useful, mechanical application of factors is not. Cf. Landis, 299 U.S. at 255 (rejecting one "formula" as "too mechanical and narrow").

III. Analysis

A. Undue Prejudice or Tactical Disadvantage

Consideration of the appropriate factors weighs in favor of issuing a stay in this case. First, there is no evidence that delaying the litigation will unduly prejudice or tactically disadvantage Abbott. Under Hatch-Waxman, initiating a patent suit generally bars approval of an ANDA application for 30 months. 21 U.S.C. § 355(j)(5)(B)(iii). In other words, by filing a patent lawsuit, the pioneer drug manufacturer can maintain its hold over the market for the pioneer drug. Therefore, Abbott could suffer prejudice if any motion for a stay were not accompanied by an order tolling the 30-month limitations period. But for tolling, the 30-month period could run during the pendency of the stay. However, Defendants'motion to stay the action has been accompanied by a request that the Court toll the limitations period.

Abbot suggests that Defendants' stay request is contrary to the duty imposed by the Hatch-Waxman Act "to reasonably cooperate in expediting" the pending litigation. See 21 U.S.C. ยง 355(j)(5)(B)(iii). To be sure, as another court has observed, Defendants "cannot feasibly argue that [they are] reasonably cooperating in expediting the action when [they have] asked the court to stay the proceedings." Novartis Corp. v. Dr. Reddy's Labs., Ltd., 2004 WL 2368007, at *3 (S.D.N.Y. Oct. 21, 2004). However, as the Novartis Court recognized, Hatch-Waxman provides a remedy: in its discretion the Court may extend the thirty-month period or, as in Novartis, toll that period during the stay. Id. at *3-4; cf. Andrx Pharm., Inc. v. Biovail Corp., 276 F.3d 1368, 1374-74 (Fed. Cir. 2002) (holding that the district court erred in adjusting the thirty-month period set forth in Section 355(j)(5)(B)(iii) on the basis of allegedly infringing conduct before the FDA and explaining that the statutory authority to shorten or lengthen the thirty-month period "is addressed only to delay related to the particular infringement action"). In short, the Court concludes that the combination of its inherent authority to exercise control over cases pending ...


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