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Filing of Hatch-Waxman Suit and Citizen Petition Could Be Basis for Antitrust Claim


In an important decision addressing the interface between patent and antitrust issues in the Hatch-Waxman context, the Federal Circuit in Tyco Healthcare Group LP v. Mutual Pharm. Co., No. 2013-1386, slip op. at 21 (Fed. Cir. Aug. 6, 2014) held that neither a branded company's filing of a patent infringement lawsuit under the Hatch-Waxman Act nor the company's filing of a Citizen Petition with the FDA were immune from antitrust scrutiny. The Court declined to find the filing of a Paragraph IV certification, itself a technical act of patent infringement under 35 USC § 271(e)(2)(A), precluded a finding of antitrust liability under the "sham litigation" exception to the Noerr-Pennington doctrine. The Court also held that the "sham" litigation exception was not limited to litigation but could also include administrative procedures such as Citizen Petitions.

Tyco, the maker of sleep aid Restoril, filed suit against Mutual for patent infringement of its Orange Book listed patent after Mutual filed an ANDA for a generic version of Restoril, which included a Paragraph IV certification. In its notice letter, Mutual informed Tyco that its proposed product did not infringe the Orange Book patent because the patent claims required a formulation with a specific surface area within a particular range, while Mutual's ANDA product had a specific surface area far in excess of the claimed range. Mutual counterclaimed that Tyco's suit was a sham litigation brought to prevent the FDA from approving Mutual's product for 30 months under 21 U.S.C. § 355(j)(5)(B)(iii). The District Court of New Jersey granted judgment of noninfringement on the basis set forth in the ANDA certification. The following day, Tyco filed a Citizen Petition asking the FDA to increase the bioequivalence standard for generic versions of Restoril. The district court later granted summary judgment of invalidity, which was affirmed by the Federal Circuit. The district court then granted summary judgment in favor of Tyco on Mutual's counterclaims for violation of the antitrust laws related to the filing of the lawsuit and the Citizen Petition.

On appeal by Mutual from that decision, the Federal Circuit considered whether the litigation was a "sham" on the ground that the assertion of patent infringement was objectively baseless in view of the fact that the information provided in its ANDA certification concerning the specific surface area fell well outside the claimed range. Yet, the Federal Circuit stated that a "reasonable expectation of a favorable outcome" can nevertheless occur if the ANDA is based on faulty testing or screening procedures, and that it is not unreasonable to allege infringement if the patentee has evidence that the product as intended to be marketed will infringe even though the "hypothetical" product specified in the ANDA could not infringe. In particular, Tyco argued that Mutual used different conditions to determine the specific surface area than were used in the patent. However, the Federal Circuit credited Mutual's expert who testified that conditions closer to the patent conditions would actually increase the measured specific surface area and remanded to the district court for further inquiry into whether the lawsuit was objectively baseless. Notably, against a vigorous dissent by Judge Newman, the majority held that the technical act of infringement associated with the filing of an ANDA with a Paragraph IV certification does not preclude a possible finding that the assertion of infringement was objectively baseless.

The Federal Circuit also considered whether Tyco's filing of a Citizen Petition with the FDA challenging the standards by which the bioequivalence of Mutual's generic product should be measured was a "sham" designed to delay Mutual's entry into the market. First, the Court held that the district court applied the incorrect legal standard in determining that a "sham" allegation applies only to litigation and not to administrative procedures such as Citizen Petitions. Second, the Court found that disputed issues of fact remained concerning whether Tyco's Citizen Petition was objectively baseless given the timing of its filing – one day after the noninfringement judgment lifted the 30-month stay – and the fact that the FDA found it to be wholly without merit. The Court remanded for a determination of whether Mutual suffered any anticompetitive injury in the form of delay for approval of its ANDA due to the filing of the Citizen Petition.

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Craig P. Lytle
Associate – Washington, D.C.
Phone: +1 202.624.2533