Baker Hostetler Patent Watch: Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S

Alerts / May 7, 2012

[A] generic manufacturer may employ [21 U.S.C. § 355(j)(5)(C)(ii)(I)] to force correction of a use code that inaccurately describes the brand's patent as covering a particular method of using the drug in question.

On April 17, 2012, in Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, the U.S. Supreme Court (Kagan*) reversed and remanded the U.S. Court of Appeals for the Federal Circuit judgment that reversed the district court's summary judgment for Caraco on its counterclaim under 21 U.S.C. § 355(j)(5)(C)(ii), requesting an order requiring Novo to change the use code in the FDA Orange Book for U.S. Patent No. 6,677,358, which related to treating noninsulin dependent diabetes mellitus with a repaglinide/metformin combination, in reference to Novo's drug Prandin® from U-968 to U-546 because the use code U-968 suggested that the '358 patent covered all three approved methods of using repaglinide even though it claimed only one approved method. The Supreme Court stated:

An ANDA applicant sued for patent infringement may bring a counterclaim "on the ground that the patent does not claim . . . an approved method of using the drug." The parties debate the mean-ing of this language. Novo (like the Federal Circuit) reads "not an" to mean "not any," contending that "the counterclaim is available only if the listed patent does not claim any (or, equivalently, claims no) approved method of using the drug." By that measure, Caraco may not bring a counterclaim because Novo's '358 patent claims the use of repaglinide with metformin. In contrast, Caraco reads "not an" to mean "not a particular one," so that the statute permits a counterclaim whenever the patent does not claim a method of use for which the ANDA applicant seeks to market the drug. On that view, the counterclaim is available here -- indeed, is available twice over -- because the '358 patent does not claim the use of repaglinide with TZDs or its use alone.

Truth be told, the answer to the general question "What does 'not an' mean?" is "It depends": The meaning of the phrase turns on its context. . . . and the statutory context here supports Caraco's position. As described earlier (and as Congress understood), a single drug may have multiple methods of use, only one or some of which a patent covers. The Hatch-Waxman Amendments authorize the FDA to approve the marketing of a generic drug for particular unpatented uses; and section viii provides the mechanism for a generic company to identify those uses, so that a product with a label matching them can quickly come to market. The statutory scheme, in other words, contemplates that one patented use will not foreclose marketing a generic drug for other unpatented ones. Within that framework, the counterclaim naturally functions to challenge the brand's assertion of rights over whichever discrete use (or uses) the generic company wishes to pursue. That assertion, after all, is the thing blocking the generic drug's entry on the market. The availability of the counterclaim thus matches the availability of FDA approval under the statute: A company may bring a counterclaim to show that a method of use is unpatented because establishing that fact allows the FDA to authorize a generic drug via section viii.

Consider the point as applied to this case. Caraco wishes to market a generic version of repaglinide for two (and only two) uses. Under the statute, the FDA could approve Caraco's application so long as no patent covers those uses, regardless whether a patent protects yet a third method of using the drug. Novo agrees that Caraco could bring a counterclaim if Novo's assertion of patent protection for repaglinide lacked any basis -- for example, if Novo held no patent, yet claimed rights to the pair of uses for which Caraco seeks to market its drug. But because Novo has a valid patent on a different use, Novo argues that Caraco's counterclaim evaporates. And that is so even though, once again, Caraco has no wish to market its product for that patented use and the FDA stands ready, pursuant to the statute, to approve Caraco's product for the other two. To put the matter simply, Novo thinks the counterclaim disappears because it has a patent for a method of use in which neither Caraco nor the FDA is interested at all. "It would take strong evidence to persuade us that this is what Congress wrought." That "not an" sometimes (but sometimes not) means "not any" is not enough.

Novo argues that our reading must be wrong because Congress could have expressly "impose[d] additional . . . qualifications" on the term "an approved method of us[e]" -- and indeed did so in another place in the statute. Novo points here to section viii itself, which applies when the brand's patent "does not claim a use for which the [ANDA] applicant is seeking approval." But the mere possibility of clearer phrasing cannot defeat the most natural reading of a statute; if it could (with all due respect to Congress), we would interpret a great many statutes differently than we do. Nor does Congress' use of more detailed language in another provision, enacted years earlier, persuade us to put the counterclaim clause at odds with its statutory context. That is especially so because we can turn this form of argument back around on Novo. Congress, after all, could have more clearly expressed Novo's proposed meaning in the easiest of ways -- by adding a single letter to make clear that "not an" really means "not any." And indeed, Congress used a "not any" construction in the very next subclause, enacted at the very same time. So if we needed any proof that Congress knew how to say "not any" when it meant "not any," here we find it. We think that sees, raises and bests Novo's argument. Our more essential point, though, has less gamesmanship about it: We think that the "not any" construction does not appear in the relevant counterclaim provision because Congress did not mean what Novo wishes it had. And we think that is so because Congress meant (as it usually does) for the provision it enacted to fit within the statutory scheme -- here, by facilitating the approval of non-infringing generic drugs under section viii.

Novo contends that Caraco's counterclaim must fail for another, independent reason: On its view (as on the Federal Circuit's), the counterclaim does not provide a way to correct use codes because they are not "patent information submitted by the [brand] under subsection (b) or (c)" of § 355. Once again, we disagree. The statute does not define "patent information," but a use code must qualify. It describes the method of use claimed in a patent. That fits under any ordinary understanding of the language. The more difficult question arises from the "submitted under" phrase. The subsections mentioned there (b) and (c) of § 355 -- require an NDA applicant to submit specified information: "the patent number and the expiration date of any patent" claiming the drug or a method of its use. According to Novo, only that information comes within the counterclaim provision. But subsections (b) and (c) as well govern the regulatory process by which brands provide additional patent information to the FDA, both before and after an NDA is approved. . . . So use codes fall within the counterclaim's ambit if the phrase "submitted under" reaches filings that not only subsections (b) and (c) themselves, but also their implementing regulations require. . .

"Patent information submitted . . . under subsection (b) or (c)" most naturally refers to patent in-formation provided as part of the "comprehensive scheme of regulation" premised on those subsections. It includes everything (about patents) that the FDA requires brands to furnish in the proceedings "subject to," "governed by," or conducted "by reason of the authority of " §§ 355(b) and (c). The breadth of the term "under" becomes particularly clear when compared with other phrases -- "described in" and "prescribed by" -- appearing in neighboring provisions. Those phrases denote a patent number and expiration date and nothing more. In contrast, the word "under" naturally reaches beyond that most barebones information to other patent materials the FDA demands in the regulatory process.

Once again, that congressional choice fits the broader statutory context. Use codes are pivotal to the FDA's implementation of the Hatch-Waxman Amendments -- and no less so because a regulation, rather than the statute itself, requires their submission. Recall that those Amendments instruct the FDA (assuming other requirements are met) to approve an ANDA filed with a section viii statement when it proposes to market a drug for only unpatented methods of use. To fulfill that charge, the FDA must determine whether any patent covers a particular method of use; and to do that, the agency (which views itself as lacking expertise in patent matters) relies on the use codes submitted in the regulatory process. An overbroad use code therefore throws a wrench into the FDA's ability to approve generic drugs as the statute contemplates. So it is not surprising that the language Congress used in the counterclaim provision sweeps widely enough to embrace that filing.

The statutory counterclaim we have considered enables courts to resolve patent disputes so that the FDA can fulfill its statutory duty to approve generic drugs that do not infringe patent rights. The text and context of the provision demonstrate that a generic company can employ the counterclaim to challenge a brand's overbroad use code. We accordingly hold that Caraco may bring a counterclaim seeking to "correct" Novo's use code "on the ground that" the '358 patent "does not claim . . . an approved method of using the drug" -- indeed, does not claim two. The judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.

If you have questions about the material presented above, please contact Dr. Lawrence M. Sung (lsung@bakerlaw.com or 202.861.1537) or any member of our Intellectual Property Team.

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