United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Decided June 6, 2006
No. 06-5105
APOTEX, INC.,
APPELLANT
v.
FOOD & DRUG ADMINISTRATION, ET AL.,
APPELLEES
TEVA PHARMACEUTICALS USA, INC., ET AL.,
INTERVENORS
On Motion for Summary Affirmance
______
Appeal from the United States District Court
for the District of Columbia
(No. 06cv00627)
Jay P. Lefkowitz, Steven A. Engel, John C. O’Quinn, and
Michael D. Shumsky filed the motion for summary affirmance
and the reply thereto for intervenor Teva Pharmaceuticals USA,
Inc.
Arthur Y. Tsien, William A. Rakoczy, and Christine J. Siwik
filed the opposition for appellant.
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Before: HENDERSON, TATEL, and BROWN, Circuit Judges.
Opinion for the Court filed PER CURIAM.
PER CURIAM: This case is the latest flare-up in a long-
running dispute between the Food and Drug Administration
(FDA) and several generic drug manufacturers as to what
qualifies under the Hatch-Waxman Act as “a decision of a court
. . . holding [a challenged] patent . . . to be invalid or not
infringed.” 21 U.S.C. § 355(j)(5)(B)(iv) (2000) (amended
2003). The stakes are high: any such decision triggers the start
of a 180-day exclusivity period during which one generic
manufacturer—the first to file an abbreviated new drug
application (ANDA) with FDA—can market its product without
competition from other manufacturers. We assume familiarity
with this complicated regulatory scheme, which we have
described in detail elsewhere. See Mova Pharm. Corp. v.
Shalala, 140 F.3d 1060, 1063-65 (D.C. Cir. 1998).
The present dispute arises out of a 1998 FDA decision
finding that a district court order dismissing a patent suit for lack
of subject matter jurisdiction could not qualify as a “court
decision” sufficient to trigger the exclusivity period. An
aggrieved generic drug manufacturer, Teva Pharmaceuticals,
challenged FDA’s decision, which we set aside because “FDA[]
fail[ed] to explain adequately its refusal to treat the . . . dismissal
as a triggering ‘court decision.’” Teva Pharms., USA, Inc. v.
FDA, 182 F.3d 1003, 1012 (D.C. Cir. 1999) (Teva I). We
flagged three issues for FDA’s attention. First, and most
important, we observed that “the significance of a court’s
‘decision’ or ‘holding’ often lies in its preclusive effect,” id. at
1008, and pointed out that
the . . . dismissal [for lack of jurisdiction] appears to
meet the requirements of a triggering ‘court decision’
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because [the] court had to make a predicate finding with
respect to whether [the patent holder] would ever sue
[the generic drug manufacturer] for infringement in
order to conclude that there was no case or controversy
between the parties. . . . On remand, of course, the FDA
will have the opportunity to explain why it fails to meet
them.
Id. at 1009. Second, we noted that FDA never explained why a
decision holding a patent unenforceable was a triggering court
decision, but that a dismissal based on a finding of
unenforceability was not. Id. at 1009-10. And third, we
explained that FDA’s position appeared to conflict with an
internal agency guidance document as well as Granutec, one of
the agency’s earlier decisions. See Granutec, Inc. v. Shalala,
No. 97-1873, 1998 WL 153410 (4th Cir. Apr. 3, 1998)
(reviewing FDA’s Granutec decision). Teva I, 182 F.3d at
1010-11.
On remand, FDA reached the same conclusion. This time
around, however, it justified its decision by establishing a hard-
and-fast rule: the agency will never look beyond the face of a
court order to ascertain whether it qualified as a triggering court
decision. Because a dismissal for lack of subject matter
jurisdiction does not, on its face, make any “holding” on the
invalidity, noninfringement, or unenforceability of a patent,
FDA found that the dismissal did not trigger exclusivity. As an
“explanation” in support of this rule, FDA submitted a short
affidavit from Douglas Sporn, then director of the Office of
Generic Drugs. In his affidavit, Sporn gave just one reason for
the new rule, namely, that a more sophisticated inquiry “could
place an unbearable burden upon [FDA] staff and would require
a substantial use of [FDA]’s limited resources” because “[FDA]
lacks the expertise to make accurate determinations about the
legal effect, such as estoppel, of representations relating to
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patents that are not embodied in a court decision.” Sporn Aff.
at 6, reprinted in Tsien Decl. Ex. F. We rejected this self-
serving justification in Teva II, explaining that “FDA did not
meaningfully address [the] question [posed in Teva I] on
remand.” Teva Pharms., USA, Inc. v. FDA, No. 99-5287, 2000
WL 1838303, at *1 (D.C. Cir. Nov. 15, 2000) (Teva II).
Several years later, Teva filed the first ANDA to market a
generic version of Pravachol, a Bristol-Myers Squibb Co.
(BMS) product, in ten, twenty, and forty milligram tablets.
BMS’s patent on the Pravachol molecule expired on April 20,
2006, at which point Teva expected to roll out its product and
take advantage of its 180-day exclusivity period. But one of
Teva’s competitors had other plans. In an effort to trigger
Teva’s 180-day exclusivity period long before Teva could
market its generic product, Apotex, Inc., appellant herein, filed
suit against BMS in the Southern District of New York in
October 2003 seeking a declaratory judgment that its own
generic version of Pravachol did not violate various BMS
patents. Although BMS moved to dismiss the complaint for
lack of subject matter jurisdiction, BMS and Apotex ultimately
resolved the dispute by agreeing to a “stipulation and order”
stating that BMS had no intention of suing Apotex and that the
complaint should be dismissed “for lack of subject matter
jurisdiction.” Stipulation & Order at 3, Apotex Inc. v. Bristol-
Myers Squibb Co., No. 04 CV 2922 (S.D.N.Y. July 23, 2004),
reprinted in Tsien Decl. Ex. I. The district court signed the
“stipulation and order” on July 23, 2004.
Apotex then asked FDA whether the signed stipulation
qualified as a triggering court decision. Believing itself bound
by substantive holdings it saw in Teva I and Teva II, FDA
replied that the signed stipulation did qualify and that Teva’s
180-day exclusivity period had long since run its course.
Determined not to lose its exclusivity period, Teva filed suit
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challenging FDA’s decision. In Teva Pharmaceuticals USA,
Inc. v. FDA, 441 F.3d 1, 5 (D.C. Cir. 2006) (Teva III), we held
that “FDA mistakenly thought itself bound by our decisions”
and that its “error render[ed] its decision arbitrary and
capricious.”
On remand from Teva III, FDA reversed itself, finding
Apotex’s “stipulation and order” insufficient to trigger Teva’s
180-day exclusivity. Justifying this reversal, it re-adopted its
earlier rule that a triggering “court decision” must include an
“actual ‘holding’ . . . evidenced by language on the face of the
court’s decision showing that the determination of invalidity,
noninfringement, or unenforceability has been made by the
court.” Letter from Gary Buehler, Dir., Office of Generic
Drugs, to Tammy McIntire, Apotex Corp. 2 (Apr. 11, 2006),
reprinted in Tsien Decl. Ex. A (Buehler Letter). Given the
vagaries of patent law and FDA’s lack of expertise in patent
matters, the agency explained that inquiring into the estoppel
effects of representations embodied in district court opinions
would spawn litigation and lead to unpredictability in the
marketplace. Concluding that “[i]t is in the public’s interest, as
well as FDA’s own interest, to have exclusivity triggering
determinations governed by a legal regime that is clear and
easily administered,” id. at 14, FDA found that the “stipulation
and order” never triggered the 180-day exclusivity period.
Apotex filed suit challenging FDA’s decision as arbitrary
and capricious, and the district court granted Teva’s motion to
intervene. Apotex then moved for a temporary restraining order
and a preliminary injunction forbidding FDA from allowing
Teva to begin exclusive marketing of a generic version of
Pravachol. The district court denied the motion, reasoning that
Apotex had no chance of prevailing on the merits:
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Not only did the agency’s fifteen-page, single-spaced
remand decision thoughtfully deconstruct the
multifaceted implications of the estoppel and
holding-on-the-merits approaches, but it also sufficiently
addressed each of the three concerns raised in Teva I and
recalled in Teva III. There is no “want of reasoned
decisionmaking” here.
Apotex, Inc. v. FDA, No. 06-cv-00627, slip op. at 29-30 (D.D.C.
Apr. 19, 2006).
Apotex now appeals, and Teva has moved for summary
affirmance. On April 24, 2006 we denied Apotex’s request for
a stay pending appeal. Apotex, Inc. v. FDA, No. 06-5105 (D.C.
Cir. Apr. 24, 2006). We now summarily affirm the district
court’s refusal to grant the preliminary injunction.
Apotex argues that “FDA’s decision merely regurgitates the
same tired explanations and rationales that this Court previously
rejected” in Teva II, Apotex’s Emergency Mot. for Injunctive
Relief Pending Appeal 6, and that therefore it has a strong
likelihood of demonstrating the decision’s unreasonableness.
We disagree.
Apotex correctly points out that we rejected FDA’s previous
effort to adopt the rule that a holding of invalidity,
noninfringement, or unenforceability must be evident on the
face of a court order. See Teva II, 2000 WL 1838303. But we
never suggested such a rule was untenable; rather, we found that
it “fail[ed] for want of reasoned decisionmaking.” Id. at *2. In
sharp contrast to the decision at issue in Teva II, FDA’s rejection
of Apotex’s “stipulation and order” as a triggering court
decision addressed concerns identified in Teva I. Indeed, FDA
provided entirely new justifications for declining to look beyond
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the face of a court order. To be sure, those justifications share
a common premise with the drain-on-resources rationale laid out
in the Sporn affidavit—that “applying the estoppel standard
articulated by the Teva I court would often require FDA to
resolve factually intensive questions with little guidance from
the courts on how to apply the facts to the law.” Buehler Letter
8. But the validity of this premise is not in question. FDA is
indisputably correct that equitable estoppel in the patent law
context rarely presents pure issues of law amenable to easy
resolution. As FDA pointed out, the Federal Circuit has
established a context-specific three-element inquiry into whether
patent holders are equitably estopped from enforcing their
patents. See A.C. Aukerman Co. v. R.L. Chaides Constr. Co.,
960 F.2d 1020, 1028 (Fed. Cir. 1992) (en banc). We have little
doubt that applying this standard would force FDA, an agency
lacking patent law expertise, to resolve borderline questions
about the estoppel effects of patent-holder declarations.
As FDA sees it, the uncertainty inherent in an estoppel-
based inquiry would lead to two inter-related problems, neither
of which relates to the drain-on-resources rationale set forth in
the quite brief Sporn affidavit the agency relied on in Teva II.
First, FDA believes that the uncertainty would “undermin[e]
marketplace certainty and interfer[e] with business planning and
investment.” Buehler Letter 14. And second, FDA worries that
forcing it to parse court decisions will invite fruitless litigation
from generic drug manufacturers seeking to trigger, or to avoid
triggering, exclusivity periods. In FDA’s view,
[w]ere [the agency] to adopt a standard less objective
and clear than the “holding-on-the-merits” standard, the
opportunities for disputes regarding the tripping of the
court decision trigger would increase. . . . Encouraging
highly-interested and well-financed litigants to pursue
ever-finer distinctions, ever farther removed from the
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language of the statute and from its purposes, does not
advance the public’s interest. It offers no guarantee of
more rapid generic drug approvals, only a high
likelihood of delay due to litigation . . . .
Id. In our view, these perfectly reasonable propositions
adequately support FDA’s position that an estoppel-based
approach to the court decision trigger is ill-advised.
Apotex also argues that FDA’s decision cannot stand
because the agency failed to address a concern discussed in
Teva I, namely, a possible inconsistency between its holding-on-
the-merits approach and Granutec. Apotex is wrong. Not only
did FDA address the Granutec issue, but it did so persuasively
by pointing out that the summary judgment order at issue in
Granutec was “clearly a holding on the merits of patent
noninfringement as a matter of law.” Buehler Letter 12; see also
Teva II, 2000 WL 1838303, at *3 (Edwards, J., dissenting) (“It
is clear from the face of the summary judgment order at issue in
Granutec that the court there had issued a decision on the
merits.”). By contrast, the “stipulation and order” here, as well
as the dismissal for lack of subject matter jurisdiction at issue in
Teva I, make no such holding on their faces.
Next, Apotex argues that FDA cannot justify treating court
decisions that include a patent holder’s promise not to sue
differently from decisions explicitly holding a patent
unenforceable. But we see nothing inconsistent about FDA
saying on the one hand that a court order holding a patent
unenforceable will trigger the 180-day period, and on the other
that it will not look beyond the face of a court order to see if the
patent may be unenforceable because of one of the party’s
representations. While Apotex’s claim might have merit if FDA
failed to explain why it chose to adopt such a rule, here it
provided an ample explanation.
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Finally, Apotex contends that FDA’s interpretation
“nullifies” the declaratory judgment mechanism underlying the
Hatch-Waxman Act. As Apotex observes, no generic
manufacturer can maintain an action against a patent holder who
has promised never to sue for infringement since, under settled
Federal Circuit case law, any such promise would relieve the
challenger of a reasonable apprehension of suit and moot a
declaratory judgment action. See Super Sack Mfg. Corp. v.
Chase Packaging Corp., 57 F.3d 1054, 1058 (Fed. Cir. 1995).
According to Apotex, this creates an anomalous situation:
although a patent might be unenforceable because of a patent
holder’s representations, no court would have jurisdiction to
render a holding to that effect. This arguable anomaly, however,
nullifies nothing in the Hatch-Waxman Act. Congress knew that
federal courts lack jurisdiction where no case or controversy
exists, yet it nonetheless chose to make the exclusivity trigger “a
decision of a court . . . holding the [challenged] patent . . . to be
invalid or not infringed.” 21 U.S.C. § 355(j)(5)(B)(iv) (2000)
(amended 2003). Congress’s regulatory scheme thus depends in
large measure on whether courts can maintain jurisdiction over
patent suits. If a court cannot constitutionally assert jurisdiction,
then certainly one reasonable view is that it cannot issue a
“decision” that “holds” anything. This is FDA’s position, and
while it may not reflect the only possible interpretation of the
court decision trigger, see Teva I, 182 F.3d at 1012 (noting that
“FDA is likely correct that [an estoppel-based] interpretation is
not the only permissible construction of the ‘court decision’
requirement”), it is in no way inconsistent with the plain
language of the statute. See Ariz. Pub. Serv. Co. v. EPA, 211
F.3d 1280, 1287 (D.C. Cir. 2000) (“As long as the agency stays
within Congress’ delegation, it is free to make policy choices in
interpreting the statute, and such interpretations are entitled to
deference.” (internal quotation marks and alterations omitted)).
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In short, Apotex has little likelihood of succeeding on the
merits of its claim. See CityFed Fin. Corp. v. Office of Thrift
Supervision, 58 F.3d 738, 746 (D.C. Cir. 1995) (requiring the
moving party to “demonstrate . . . a substantial likelihood of
success on the merits”). Thus having no need to address the
other preliminary injunction factors, see City of Las Vegas v.
Lujan, 891 F.2d 927, 935 (D.C. Cir. 1989) (affirming district
court’s denial of preliminary injunction without addressing
irreparable injury because appellant had insufficient likelihood
of success on the merits), we affirm the district court’s order and
remand for further proceedings consistent with this opinion.
So ordered.