Saturday, May 12, 2018

AIDS HEALTHCARE FOUNDATION loses appeal at CAFC


An attempt by AIDS HEALTHCARE FOUNDATION at a DJ against Gilead failed:


Healthcare argued that in view of the lengthy time
consumed by litigating patent validity, such litigation
needed to start well in advance of expiration of the fiveyear
exclusivity period. See, e.g., AHF Br. 5; Dist. Ct. Op.
at *4–5. Healthcare filed this declaratory action in January
2016, two months after the FDA approved Genvoya®—the
first TAF-containing product to receive FDA
approval.



The outcome


This appeal is from the dismissal of a declaratory
judgment action filed by AIDS Healthcare Foundation,
Inc. (“Healthcare” or “AHF”) against Gilead Sciences, Inc.
et al. (“Defendants”) in the United States District Court
for the Northern District of California.1 On appellate
review, we conclude that this action does not meet the
requirements of the Declaratory Judgment Act.




The CAFC began its discussion:



Exercise of the Constitution’s judicial power is limited
to actual cases and immediate controversies. Muskrat v.
United States, 219 U.S. 346, 356 (1911). When this constitutional
requirement is not met, a court has no authority
to decide the issues presented, whatever the
“convenience and efficiency” of such judicial action.
Hollingsworth v. Perry, 133 S. Ct. 2652, 2661 (2013)
(quoting Raines v. Byrd, 521 U.S. 811, 820 (1997)); see
Muskrat, 219 U.S. at 356 (“[U]nless [the exercise of the
judicial power] is asserted in a case or controversy within
the meaning of the Constitution, the power to exercise it
is nowhere conferred.”).



Some of the issues in this case


The existence of a patent, without more, does not create
a case of actual controversy. See Prasco, LLC v.
Medicis Pharm. Corp., 537 F.3d 1329, 1339 (Fed. Cir.
2008) (“[J]urisdiction generally will not arise merely on
the basis that a party learns of the existence of a patent
owned by another or even perceives such a patent to pose
a risk of infringement, without some affirmative act by
the patentee.” (quoting SanDisk Corp. v. STMicroelectronics,
Inc., 480 F.3d 1372, 1380–81 (Fed. Cir. 2007))).

Healthcare presents several additional arguments for
declaratory jurisdiction, including that (1) Healthcare is
an indirect infringer of the TAF patents based on its
requests to potential producers to provide the patented
products; (2) Gilead’s non-response to Healthcare’s request
for a covenant not to sue created a present controversy;
and (3) public policy favors invalidation of invalid
patents and thus the testing of “weak” patents. The
district court, receiving all of Healthcare’s arguments,
correctly held that the declaratory judgment criteria were
not met.



No immediacy here:


Healthcare argues that it meets this requirement because
of the lengthy time required for patent litigation,
such that an immediate start is needed. However, the
time consumed by litigation of a speculative future controversy
does not provide the “immediacy and reality”
required for declaratory judgment actions
; nor is a declaratory
tribunal precluded from providing expedited relief
when such is warranted. In this case, where there is no
present infringement, no threat of or possibility of infringement
litigation, and no meaningful preparation to
infringe, the “immediacy and reality” criteria are not met.
See, e.g., Prasco, 537 F.3d at 1338–39

(...)

The district court observed the absence of evidence of
preparation to produce a product covered by any of the
TAF patents, and found “significant uncertainty about the
nature of any hypothetical product.” Dist. Ct. Op. at *5.
The uncertainty of whether future infringement might
occur at all weighs against the immediacy and reality
requirement of declaratory action. Matthews, 695 F.3d at
1328–29. In addition, precedent illustrates that the mere
possibility of future infringement does not meet the
immediacy and reality criteria, for “[a] party may not
obtain a declaratory judgment merely because it would
like an advisory opinion,” id. at 1329 (quoting Cat Tech,
528 F.3d at 881). For example, in Benitec Australia, Ltd.
v. Nucleonics, Inc., 495 F.3d 1340, 1349 (Fed. Cir. 2007),
this court held that a representation that the declaratory
plaintiff “expects to begin work shortly” on “potentially
infringing” activities was of insufficient immediacy to
support a declaratory action.



Also


Liability for induced infringement requires that some
other entity is directly infringing the patent. Power
Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc.,
843 F.3d 1315, 1331 (Fed. Cir. 2016).



Fina was distinguished


In Fina Research, the declaratory plaintiff was a foreign
entity that was manufacturing and selling an ingredient
of drilling mud abroad; the holder of United States
patents on compositions containing the drilling mud had
sent letters to the foreign producer, stating that the
patentee would sue for infringement if the ingredient
were introduced in the United States. The court held that
such a direct threat of suit against an existing product
and its producer established declaratory jurisdiction.
Fina Research, 141 F.3d at 1482–84; see also SanDisk,
480 F.3d at 1382 (describing how the presentation of “a
thorough infringement analysis” and “element-byelement”
product analyses created a case or controversy
supporting declaratory judgment jurisdiction). In contrast,
here the record does not refer to threats of litigation
on importation of existing product, or even an identification
of any product whose importation may violate Gilead’s
patent rights. No such TAF-containing products are
reported to exist.



As to policy arguments:


Healthcare argues that public policy is served by invalidation
of invalid patents, and thus supports immediate
challenge to the “weak” TAF patents. Yet the HatchWaxman
Act is already a balance of several policy interests,
seeking to preserve the patent incentive to invent
new drugs, while enabling validity challenge by ANDA
filers before actual infringement occurs. Andrx Pharm.,
Inc. v. Biovail Corp., 276 F.3d 1368, 1371 (Fed. Cir. 2002).
The present policy reflects a balance of several factors
and public interests; any policy change would require reexploration
of all aspects. Healthcare’s proposal of a
change in policy to facilitate challenge to drug patents
would warrant legislative consideration, not departure
from precedent. SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348,
1358 (2018) (“Policy arguments are properly addressed to
Congress, not this Court.”)


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