Caraco Pharmaceutical Laboratories v. Forest Laboratories (CAFC 2007-1404)

In a strategic move, Forest sued Caraco on one of two patents relevant to Caraco's ANDA filing, so Caraco filed a declaratory judgment motion on the other. In reflection of last spring's Teva v. Novartis CAFC ruling, which made DJ motions a snap, Forest gave Caraco an irrevocable covenant not to sue for infringement on the other patent. The district court dismissed Caraco's DJ, but the CAFC majority reversed.

It seems now that a patent listing in the Orange Book signals open season on the patent, with no "quiet title" recourse for the patent holder. The Orange Book lists details of every FDA-approved drug.

The majority ruling written by Judge Gajarsa provides an excellent primer on the Hatch-Waxman Act patent crap shoot.

The interesting twist is that Caraco wasn't first in line for making a generic version, so would have had to wait at least six months while Ivax, another generic maker who had filed the first ANDA, had first dibs on the generic version after generics are allowed. Caraco thus wanted to preemptively strike the patents dead.

Dissenting Judge Friedman caught the drift, and would have turned away Caraco's DJ play.

In most instances an alleged infringer seeks a declaratory judgment of non-infringement or patent invalidity to protect itself from a subsequent judicial determination that has a significant adverse financial impact upon the infringer. The present case involves no such danger or possibility, since the covenant not to sue precludes Forest (the proprietary manufacturer) from subjecting Caraco (the generic manufacturer) to damages for infringement of the '941 patent.

Here Caraco's reason for seeking a declaratory judgment of non-infringement is quite different. Its concern is not that it may be sued for infringement if it markets its generic version of the patented drug, but that unless it can obtain a present judicial determination of that issue, its ability to enter the market may be delayed. This claim stems from and is based upon the particular provisions of the Hatch-Waxman Act.

More detailed coverage in the Orange Book Blog, who expects further developments in this significant case law development, notably an en banc rehearing.