An Article III Controversy Exists Where A Patent Holder Unilaterally Grants A Covenant Not To Sue To A Subsequent ANDA Filer And The Covenant Potentially Delays That Filer's Market Entry

In Caraco Pharmaceutical Laboratories, Ltd. v. Forest

Laboratories, Inc., No. 07-1404 (Fed. Cir. Apr. 1, 2008),

the Federal Circuit reversed the district court's dismissal

for lack of Article III jurisdiction Caraco Pharmaceutical

Laboratories, Ltd.'s ("Caraco") DJ action,

holding that an Article III controversy still existed between

the parties despite Forest Laboratories, Inc.'s

("Forest") unilateral grant to Caraco of a covenant

not to sue for patent infringement.

Under the Hatch-Waxman Act, a pharmaceutical drug company

intending to market a new drug must submit an New Drug

Application ("NDA") and provide a list of patents

covering the drug. The FDA then lists this information in the

"Orange Book." Drug companies seeking to market a

generic version of any listed drug must submit to the FDA an

ANDA, along with at least one certification. One such

certification is a "Paragraph IV," which certifies

that the listed patent is invalid or will not be infringed by

the manufacture, use, or sale of the new drug. Filing a

Paragraph IV constitutes patent infringement under the Act.

The first Paragraph IV ANDA filer receives a 180-day period

of market exclusivity, wherein the FDA cannot approve any other

ANDA covering the listed drug. An ANDA filer can start tolling

of this period either by (1) initiating commercial marketing of

its drug, or (2) obtaining a final judgment of noninfringement

or invalidity of the Orange-Book-listed patents. Subsequent

ANDA filers can also trigger tolling and thereby speed their

own market entry, but only under the second option.

Furthermore, NDA holders must commence suit against the ANDA

filer within forty-five days. If not, the ANDA filer can sue

for a DJ that the relevant Orange-Book-listed patents are

invalid or not infringed. Forest owns two patents, U.S. Patent

Nos. Re. 34,712 ("the '712 patent") and 6,916,941

("the '941 patent"), listed in the Orange Book as

covering escitalopram, the active ingredient of its drug

Lexapro. The '712 patent expires in 2012 and the

'941 patent expires in 2023. Ivax Pharmaceuticals, Inc.

("Ivax") filed the first Paragraph IV certification

against Forest, certifying that both patents were invalid or

not infringed.

Forest sued Ivax for infringement of the '712 patent

only, and Ivax counterclaimed for invalidity. Forest prevailed

both at the district court and on appeal, thereby preventing

Ivax from triggering its 180-day exclusivity period prior to

the '712 patent's expiration in 2012.

In May 2006, Caraco filed an ANDA for generic escitalopram

that...