DJ Jurisdiction Exists Even If The Action May Later Become Moot

This article previously appeared in Last Month at the Federal Circuit, May, 2012.

Judges: Bryson, Dyk (author), Moore

[Appealed from D. Del., Judge Stark]

In Dey Pharma, LP v. Sunovion Pharmaceuticals Inc., No. 11-1507 (Fed. Cir. Apr. 16, 2012), the Federal Circuit affirmed the district court's holding that Sunovion Pharmaceuticals Inc.'s ("Sunovion") proffered covenant not to sue Dey Pharma, LP ("Dey") did not divest the district court of subject matter jurisdiction over Dey's DJ action, despite the possibility that the action could later become moot.

Sunovion manufactures and sells Xopenex, an FDA-approved drug used to prevent or relieve breathing difficulties resulting from asthma and chronic obstructive pulmonary disease. Breath Ltd. ("Breath") filed the first ANDA, with Paragraph IV certifications for all of the nonexpired, Orange-Book-listed patents for Xopenex: U.S. Patent Nos. 5,362,755 ("the '755 patent"); 5,547,994 ("the '994 patent"); and 6,451,289 ("the '289 patent"). Sunovion sued Breath, asserting infringement of all three patents, but the parties settled, entitling Breath to enter the market with its generic on a certain date or the date of an earlier third-party commercial launch.

Subsequently, Dey filed a second ANDA, also with Paragraph IV certifications for the same three patents. Sunovion sued Dey, asserting infringement of only the '755 patent and the '994 patent, but not the '289 patent—the last to expire of the three patents. Dey filed a DJ action that the '289 patent is invalid or not infringed. The DJ action was "designed to trigger" Breath's exclusivity period, thereby hastening the FDA's approval of Dey's ANDA and, in turn, Dey's market entry. Sunovion responded by offering Dey a covenant not to sue and filing a motion to dismiss the DJ action for lack of subject matter jurisdiction. The district court denied Sunovion's motion to dismiss, holding that (1) covenants not to sue do not defeat DJ jurisdiction; and (2) even if the district court found the '755 patent and the '994 patent invalid or not infringed, the '289 patent would remain a legal barrier to FDA approval of Dey's ANDA, which is a cognizable injury properly addressed by a DJ action. The parties stipulated to a final judgment of noninfringement, and Sunovion appealed, disputing only the district court's holding on subject matter jurisdiction.

"What Sunovion ignores is that there is a difference between finding that a controversy exists to initiate a...