The first application of a recent Supreme Court decision which appears to ease the way for declaratory judgment actions by ANDA filers could be in a case brought by Teva against Novartis regarding Famvir .

The Supreme Court's Jan. 9 decision in the MedImmune v. Genentech case tossed out the "reasonable apprehension" standard that had been applied to efforts to gain declaratory judgments.

Courts had held that firms seeking a court ruling (such as a generic firm wanting to have a patent declared invalid) needed to show "reasonable apprehension" that it would be sued anyway before being able to ask for declaratory judgment. However, the Supreme Court's decision found that the standard violated a number of precedents.

The language striking the test, which will have wide-ranging implications for how firms defend their patents, was contained in footnote 11 of the 8-1 ¹ ruling, which was written by Justice Antonin Scalia.

If ANDA holders are able to more easily seek declaratory judgments, it could accelerate the introduction of generics since firms could obtain certainty about their liability before launching a product.

Under provisions of the Medicare Modernization Act, declaratory judgments would also trigger first-filers' exclusivity and thereby eliminate bottlenecks hampering the entry of generics to market. Despite the 2003 law, that option has remained unavailable to subsequent filers because of courts' refusal to hear the cases (² Also see "Generic Exclusivity Forfeiture Provision Hits Snag In Courts; FTC Wants Fix" - Pink Sheet, 25 September, 2006., p. 15).

The impact of the Supreme Court's ruling will likely be first seen in the Teva v. Novartis case which is before the Federal Circuit now. Arguments in the case, which concerns Novartis' herpes treatment Famvir (famciclovir), were heard Oct. 4. The court could ask for a rehearing on the new precedent or may simply factor the ruling into its deliberations.

The circumstances of generic firms' efforts, and the specifics of each case, will impact how the new precedent is used by courts.

Interestingly, shortly before the Supreme Court struck down the "reasonable apprehension" standard, the high court chose not to hear another case (Apotex v. Pfizer) with implications for declaratory judgment actions.

In that case, Pfizer argued that Apotex should not be entitled to seek a declaratory judgment in part because of a recently-issued covenant in which Pfizer agreed not to sue Apotex (³ Also see "MedImmune High Court Decision Could Carry Extra Weight For Generic Firms" - Pink Sheet, 23 October, 2006., p. 18).

Although the court did not explain why it chose not to hear the case, its failure to grant cert suggests that brand firms may continue to have legal tactics at their disposal which could pre-empt declaratory judgment cases. Whether a covenant prevents a case from coming to trial will not be certain until it is used again by a brand firm.

The Supreme Court's ruling will also complicate licensing deals by pharma and biotech firms, with the likely result being increased litigation and more contingencies built into agreements. [Editor's note: The implications of the decision on licensing will be covered in more detail in the Jan. 22 edition of "The Pink Sheet."]

MedImmune's dispute with Genentech revolves around the firm's license of a Genentech patent covering a method of monoclonal antibody production for MedImmune's respiratory syncytial virus therapy Synagis (palvizumab).

Genentech had argued that because MedImmune continued to pay royalties under the licensing agreement, it faced no threat of harm and should not be allowed to challenge the patent.

The Supreme Court's decision concludes that "The rule that a plaintiff must destroy a large building, bet the farm, or (as here) risk treble damages and the loss of 80 percent of its business, before seeking a declaration of its actively contested legal rights finds no support in Article III."

Justice Clarence Thomas dissented from the opinion, arguing that the court has "consistently held that parties do not have standing to obtain rulings on matters that remain hypothetical or conjectural."

The Supreme Court remanded arguments on the merits of the patent to the lower courts. Genentech said in a statement that "We are confident in the strength of our intellectual property and intend to defend ourselves vigorously as the case progresses. ... We remain confident in the validity of the Cabilly patent."

- M. Nielsen Hobbs

Declaratory Judgments For Generic Firms May Be Easier After MedImmune Case

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