Merck & Co. v. Hi-Tech Pharmacal Co.

United States Court of Appeals for the Federal Circuit

2006-1401

MERCK & CO., INC.,

Plaintiff-Appellee,

HI-TECH PHARMACAL CO., INC.,

Defendant-Appellant

Robert L. Baechtold, Fitzpatrick, Cella, Harper & Scinto, of New York, New York,
argued for plaintiff-appellee. With him on the brief was Bruce M. Wexler.

William L. Mentlik, Lerner, David, Littenberg, Krumholz & Mentlik, LLP, of Westfield,
New Jersey, argued for defendant-appellant. With him on the brief was Roy H. Wepner.
Of counsel on the brief was Alfred B. Engelberg, of Palm Beach, Florida.

Appealed from: United States District Court for the District of New Jersey

Judge Mary L. Cooper
United States Court of Appeals for the Federal Circuit

2006-1401

MERCK & CO., INC.

Plaintiff-Appellee,

HI-TECH PHARMACAL CO., INC.,

Defendant-Appellant.

__________________________

DECIDED: March 29, 2007
__________________________

Before LINN, Circuit Judge, FRIEDMAN and PLAGER, Senior Circuit Judges.

LINN, Circuit Judge.

This case presents the question of whether a patent term extension under the

Hatch-Waxman Act, 35 U.S.C. § 156, may be applied to a patent subject to a terminal

disclaimer under 35 U.S.C. § 253, filed to overcome an obviousness-type double-

patenting rejection. Because the language of § 156 is unambiguous and fulfills a

purpose unrelated to and not in conflict with that of § 253, we hold that a Hatch-

Waxman term extension may be so applied.
I. BACKGROUND

Merck & Co, Inc. (“Merck”) is the inventor of TRUSOPT®, a drug used to treat

glaucoma. On June 26, 1987, Merck filed a patent application covering certain carbonic

anhydrase inhibitors, including dorzolamide, which is the active ingredient in

TRUSOPT®. That patent application eventually issued as United States Patent No.

4,797,413 (the “’413 patent”). During prosecution of the ’413 patent, the examiner

rejected all claims on the ground of obviousness-type double patenting over the claims

of an earlier patent also owned by Merck. That patent, U.S. Patent No. 4,677,115 (the

“’115 patent”), issued on June 30, 1987. To overcome this rejection, Merck filed a

terminal disclaimer under 35 U.S.C. § 253. The terminal disclaimer disavowed any term

of the ’413 patent that would extend beyond June 30, 2004, the original term of the ’115

patent (17 years from its date of issue). The filing of the terminal disclaimer was

accepted by the Examiner as overcoming the double-patenting rejection and, on

January 10, 1989, the ’413 patent was granted.

In 1994, the Uruguay Round Agreements Act (URAA) was enacted. That act

“harmonize[d] the term provision of United States patent law with that of our leading

trading partners which grant a patent term of 20 years from the date of filing of the

patent application.” Merck & Co. v. Kessler, 80 F.3d 1543, 1547 (Fed. Cir. 1996).

Under the URAA, the term of a patent then in force was amended to the greater of 20

years from its earliest effective filing date or 17 years from its date of issue. See 35

U.S.C. § 154(a)(2), (c)(1). The ’115 patent was subject to the URAA, and consequently,

its expiration date was reset by operation of law to December 12, 2004 (twenty years

from the filing date of the ’115 patent). Because the terminal disclaimer linked the

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expiration date of the ’413 patent to the term of the ’115 patent, the expiration date of

the ’413 patent likewise was reset to December 12, 2004.

Merck sought and received approval from the United States Food & Drug

Administration (“FDA”) to market TRUSOPT®. As part of the approval process, Merck

was required to submit information to the FDA on any patent that claims the approved

drug or method of using the drug, and for which a claim of patent infringement could

reasonably be asserted against an unauthorized party. See 21 U.S.C. § 355(b)(1). The

FDA publishes patent information on approved drug products in the “Orange Book,” a

shows that the ’413 patent covers TRUSOPT®. See Approved Drug Products with

Therapeutic Equivalence Evaluation (the “Orange Book”).

On March 20, 1997, at the request of Merck and pursuant to 35 U.S.C. § 156, the

Patent and Trademark Office (the “PTO”) extended the term of the ’413 patent based on

the period of regulatory review undertaken by the FDA of Merck’s TRUSOPT® drug.

The PTO granted the patent term extension for a period of 1233 days and calculated

the extension to run from the effective date of the terminal disclaimer, i.e., December

12, 2004. Based on the patent term extension, the expiration date of the ’413 patent

thus became April 28, 2008.

The patent infringement dispute at issue here began in August 2005, when Hi-

Tech Pharmacal Co., Inc. (“High-Tech”) filed with the FDA Abbreviated New Drug

Application Nos. 77-846 and 77-847 (“ANDA Nos. 77-846 and 77-847”) for a generic

version of a drug containing the active ingredient dorzolamide and used in drops for the

treatment of ocular hypertension. The Federal Food, Drug, and Cosmetic Act requires

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that an ANDA application contain a certification for each patent listed in the Orange

Book for the brand-name drug. This certification must state one of the following: (i) that

the required patent information relating to such patent has not been filed; (ii) that such

patent has expired; (iii) that the patent will expire on a particular date; or (iv) that such

patent is invalid or will not be infringed by the drug for which approval is being sought.

21 U.S.C. § 355(b)(2)(A). The ANDA applicant who certifies, under paragraph iv, that a

listed patent is invalid or not infringed, must, among other things, notify the patent owner

that it has filed an ANDA containing a patent challenge. 21 U.S.C. § 355(b)(3).

Pursuant to these rules, Hi-Tech sent a paragraph iv patent certification notice to Merck,

stating that Hi-Tech’s generic eye-drops do not infringe the ’413 patent. In response, on

January 18, 2006, Merck sued Hi-Tech for infringement pursuant to 35 U.S.C.

§ 271(c)(2)(A), alleging that the filing of ANDA Nos. 77-846 and 77-847 was an act of

infringement. Hi-Tech answered that the patent had expired on December 12, 2004

and was not enforceable after that date.

On March 1, 2006, Hi-Tech filed a motion to dismiss pursuant to Fed. R. Civ. P.

12(b)(6) on the ground that while its products were covered by the claims of the ’413

patent, the terminal disclaimer foreclosed the patent term extension and the ’413 patent

therefore expired on December 12, 2004. On April 3, 2006, Merck filed a cross-motion

for judgment on the pleadings on the ground that the terminal disclaimer did not

foreclose the Hatch-Waxman term extension, arguing that the reasoning of King

Pharmaceuticals, Inc. v. Teva Pharmaceuticals, Inc., 409 F. Supp. 2d 609 (D.N.J.

2006), should apply.

2006-1401 4
On April 25, 2006, the district court entered a final judgment, denying Hi-Tech’s

motion to dismiss and granting Merck’s motion for judgment on the pleadings. See

Merck & Co. v. Hi-Tech Pharmacal Co., Nos. 06-266 and 06-268 (D.N.J. Apr. 25, 2006).

The District Court adopted the reasoning of King Pharmaceuticals and enjoined Hi-Tech

from commercializing the drug claimed in the ’413 patent until the end of the patent term

extension, i.e., until April 28, 2008. See Merck, Nos. 06-266 and 06-268, slip op. at 2.

Hi-Tech timely appealed to this court. We have jurisdiction pursuant to 28 U.S.C.

§ 1295(a)(1).

II. DISCUSSION

A. Standard of Review

As with Rule 12(b)(6) motions, the question of whether a motion for judgment on

the pleadings was properly granted is a purely procedural question not pertaining to

patent law, to which this court applies the rule of the regional circuit. See C&F Packing

Co. v. IBP, Inc., 224 F.3d 1296, 1306 (Fed. Cir. 2000). The Third Circuit exercises

plenary review of such Rule 12(c) motions using the same standard as the district

court. E.g., CoreStates Bank, N.A. v. Huls Am., Inc., 176 F.3d 187, 193 (3d Cir. 1999).

The only debated question in this case—the scope of 35 U.S.C. § 156—is a question of

statutory construction, over which we also exercise plenary review. NTP, Inc. v.

Research In Motion, Ltd., 418 F.3d 1282, 1314 (Fed. Cir. 2005).

B. Analysis

In 1984, Congress enacted the Drug Price Competition and Patent Term

Restoration Act of 1984 (“Hatch-Waxman Act”), 98 Stat. 1585, which amended the

Federal Food, Drug, and Cosmetic Act and the patent laws. The issue in this case

2006-1401 5
concerns the proper interpretation of a portion of § 201 of the Hatch-Waxman Act,

codified at 35 U.S.C. § 156.

This provision established a patent term extension for patents relating to certain

products subject to regulatory delays that could not be marketed prior to regulatory

approval. Section 156 provides an extension of up to five years if certain conditions are

met. The conditions are set forth in the five numbered sub-paragraphs of § 156(a).

35 U.S.C. § 156 provides, in relevant part:

(a) The term of a patent which claims a product, a method of using a
product, or a method of manufacturing a product shall be extended in
accordance with this section from the original expiration date of the patent,
which shall include any patent term adjustment granted under section
154(b), if

(1) the term of the patent has not expired before an application is
submitted under subsection (d)(1) for its extension;

(2) the term of the patent has never been extended under subsection
(e)(1) of this section;

(3) an application for extension is submitted by the owner of record of the
patent or its agent and in accordance with the requirements of paragraphs
(1) through (4) of subsection (d);

(4) the product has been subject to a regulatory review period before its
commercial marketing or use;

(5)(A) except as provided in subparagraph (B) or (C) [not relevant in this
case], the permission for the commercial marketing or use of the product
after such regulatory review period is the first permitted commercial
marketing or use of the product under the provision of law under which
such regulatory review period occurred.

2006-1401 6
35 U.S.C. § 156(a) (emphasis added).

Hi-Tech does not challenge that the ’413 patent meets each of the enumerated

conditions of § 156 but rather contends that as a condition for the lifting of the double-

patenting rejection and thus the grant of the ’413 patent, Merck disclaimed any

extension of its term beyond the expiration of the ’115 patent and is thus foreclosed

from obtaining a term extension under § 156. Hi-Tech asserts that terminal disclaimers

are irrevocable and final because the disclaimer is the sine qua non for the grant of the

patent. Hi-Tech argues that to hold that a terminally disclaimed patent is not barred

from obtaining a term extension under § 156 would be contrary to the purpose behind

the use of terminal disclaimers because it would effectively uncouple the terminal

disclaimer from the original expiration date of the ’115 patent. Hi-Tech also argues that

such a holding would conflict with this court’s prior decisions regarding term extensions

and terminal disclaimers in Merck, 80 F.3d at 1543, and Bayer AG v. Carlsbad Tech.,

Inc., 298 F.3d 1377 (Fed. Cir. 2002). Finally, Hi-Tech argues that the PTO regulation

that authorizes extension of terminally disclaimed patents, 37 C.F.R. § 1.775, is invalid.

In opposition, Merck argues that § 156 unambiguously states that a patent term

“shall be extended” where the conditions enumerated are satisfied. Moreover, it argues

that § 156 makes no mention of terminal disclaimers under 35 U.S.C. § 253 and does

not prohibit the extension of a patent subject to a § 253 terminal disclaimer. Merck also

contends that the term extension provision of § 156 presents no conflict with the

terminal disclaimer provision of § 253 and that both sections serve unrelated and

independent purposes.

2006-1401 7
To address the question of whether a patent term extension under 35 U.S.C.

§ 156 may be applied to a patent subject to a terminal disclaimer, we turn first to the

language of § 156. See Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438 (1999)

(“As in any case of statutory construction, our analysis begins with ‘the language of the

statute.’ And where the statutory language provides a clear answer, it ends there.”)

(citations omitted).

While § 156 does not expressly reference terminal disclaimers, it does

enumerate other requirements that must be met to obtain a patent term extension. It

states that, if those requirements are met, the patent term “shall be extended.” See 35

U.S.C. § 156(a). Use of the word “shall” in a statute generally denotes the imperative.

See BlackLight Power, Inc. v. Rogan, 295 F.3d 1269, 1273 (Fed. Cir. 2002) (stating that

the word “shall” imposes a duty); Grav v. United States, 886 F.2d 1305, 1307-08 (Fed.

Cir. 1989) (stating that the use of the word “shall” indicates the action is mandatory);

Acuna v. United States, 479 F.2d 1356, 1360 (Ct. Cl. 1973) (same). Nothing in the

language of the statute states or suggests that the word “shall” does not mean exactly

what it says. Thus, use of the word “shall” indicates that if the enumerated list of

requirements is met, the patent term is entitled to be extended. While we find the

statutory language unambiguous, we note that the legislative history of the Hatch-

Waxman Act, see 130 Cong. Rec. 23765 and 24444 (1984), is consistent with our

interpretation. See United States v. Wells, 519 U.S. 482, 492 (1997) (noting that

legislative history is consistent with the Court’s interpretation of the plain and

unambiguous text of the statute); Whitfield v. United States, 543 U.S. 209, 210 (2005)

(same).

2006-1401 8
Hi-Tech’s construction ignores the word “shall” and does not represent the most

natural reading of the statutory language. It is not the construction of the statute to

which one comes most naturally from the flow of the words and sentences that are

used. See United States v. Nordic Village, Inc., 503 U.S. 30, 36 (1992) (stating that it is

a “settled rule that a statute must, if possible, be construed in such fashion that every

word has some operative effect”); Demko v. United States, 216 F.3d 1049, 1053 (Fed.

Cir. 2000); LSI Computer Sys., Inc. v. U.S. Int’l Trade Comm’n, 832 F.2d 588, 590 (Fed.

Cir. 1987) (stating that “this court will not bend or strain the words of a statute to change

its meaning unless there is a persuasive and clear showing that Congress did not intend

for the letter of the statute to prevail”) (internal quotation omitted).

Moreover, § 156 states that the Hatch-Waxman extension shall run from the

expiration date of the patent, as adjusted under section 154(b) to make up for certain

PTO delays. In turn, § 154(b)(2)(B) expressly excludes patents in which a terminal

disclaimer was filed from the benefit of a term adjustment for PTO delays. There is no

similar provision that excludes patents in which a terminal disclaimer was filed from the

benefits of Hatch-Waxman extensions. The express prohibition against a term

adjustment regarding PTO delays, the absence of any such prohibition regarding Hatch-

Waxman extensions, and the mandate in § 156 that the patent term shall be extended if

the requirements enumerated in that section are met, support the conclusion that a

patent term extension under § 156 is not foreclosed by a terminal disclaimer. See

Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U.S.

163, 168 (1993) (observing that an action that is expressly required under one federal

2006-1401 9
rule but not included among the enumerated actions from another federal rule indicates

that the action is not a requirement of the later federal rule).

Hi-Tech argues that a construction of the Hatch-Waxman Act that permits patent

term extensions for patents subject to terminal disclaimers ignores the fact that the

terminal disclaimer was a waiver of patent term and improperly uncouples the ’413

terminally disclaimed patent from the ‘115 patent. We disagree. The expiration date of

the patent set by the terminal disclaimer remains in place. The computation of a Hatch-

Waxman patent term extension is from the expiration date resulting from the terminal

disclaimer and not from the date the patent would have expired in the absence of the

terminal disclaimer. Any waiver of the term is thus not ignored or nullified because the

terminal disclaimer provides the date from which the patent term extension begins. The

purpose of the terminal disclaimer—to prevent extension of patent term for subject

matter that would have been obvious over an earlier filed patent—remains fulfilled by

virtue of the fact that the date from which any Hatch-Waxman extension is computed is

the terminally disclaimed date. At the same time, the purpose of the patent term

extension—to restore some of the patent term lost due to regulatory review—is also

satisfied.

The legislative history of § 156 indicates that Congress was aware of concerns

over the effects of extending related patents—at least as to parent, continuation, and

continuation-in-part patents—and chose to provide the patentee with the option to select

to extend the term of only one of either the parent patent or a continuation patent. See

130 Cong. Rec. 23765 (1984) (“[O]ne patent on a product, not necessarily the first, can

be extended but . . . the total exclusive market life of the product cannot exceed 14

2006-1401 10
years.”); id. at 24444 (“The one change involves the rules about which patents can be

extended. Under this amendment, the patent holder would be allowed to select the

patent to be extended. . . . I believe this amendment is acceptable because it gives the

patentholder the flexibility to select the most important patent for extension.”). Congress

chose not to limit the availability of a patent term extension to a specific parent or

continuation patent but instead chose a flexible approach which gave the patentee the

choice. We see no reason why a patentee should not have the same choice as

between an earlier patent and a later patent related by a terminal disclaimer.

Finally, we disagree with Hi-Tech’s argument that to interpret § 156 to permit

extension of terminally disclaimed patents conflicts with this court’s decisions in Merck

and Bayer. Merck dealt with the interplay between § 156 and the URAA, not the

interplay between § 156 and terminal disclaimers under § 253. In Merck, we held that

§ 156 “requires a more flexible interpretation of the phrase ‘original expiration date.’” 80

F.3d at 1551. We stated that “original expiration date” in § 156 “means no more than

that the expiration date has not been extended under [§ 156] and, thus, the phrase can

identify more than one date.” Id. In that case, we allowed the patent term as adjusted

by the URAA to be extended by the Hatch-Waxman Act. Bayer dealt with the interplay

between § 253 and the URAA and, like Merck, did not deal with the interplay between

§ 156 and terminal disclaimers under § 253. Although we held in Bayer that a terminal

disclaimer could not be withdrawn, we did not hold that the terminal disclaimer date

cannot be extended by a separate statutory provision. To the contrary, in Bayer, this

court held that a URAA term extension operates to extend the term of the related

terminally disclaimed patent as a matter of law. 298 F.3d at 1381-82. We stated that

2006-1401 11
“[b]ecause the URAA amendments automatically changed the expiration date of the

[parent patent] from October 1, 2002 to December 9, 2003, the expiration date of the

[terminally disclaimed patent], which is contingent upon the expiration date of the

[parent patent], also changed simultaneously to December 9, 2003. Id. at 1382-83.

Neither of these cases holds or suggests that the express provisions of § 156 are in any

way inapplicable to or limited by the presence in a patent of a terminal disclaimer.

For all of the foregoing reasons, we hold that a patent term extension under

§ 156 may be applied to a patent subject to a terminal disclaimer. We also reject Hi-

Tech’s assertion of invalidity of 37 C.F.R. § 1.775, the PTO regulation authorizing

Hatch-Waxman extensions of terminally disclaimed patents.

CONCLUSION

The judgment of the district court is

AFFIRMED.

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