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Cephalon Ordered to Pay Anchen's Attorney Fees for Maintaining Suit Despite Having No Evidence of Infringement

By Aaron Barkoff

In re: Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litigation, No. 09-MD-2118-SLR (D. Del.)

Under 35 U.S.C. § 285, a court may, in "exceptional cases," award attorney fees to the prevailing party.  In an Order filed on January 12th, the district court presiding over the ANDA litigation involving AMRIX granted Anchen's motion for attorney fees, concluding that Cephalon's decision to maintain its suit against Anchen after it knew that Anchen's ANDA product did not infringe made the case exceptional.

Anchen filed its motion for attorney fees last May, after the district court granted final judgment of noninfringement in favor of Anchen.  Anchen argued in its motion that Cephalon's suit was baseless from the start, but the court disagreed:

Plaintiffs' complaint provides the basis on which the suit was filed.  Plaintiffs' complaint explains that "the Anchen Paragraph IV Notice letters . . . fail to comply with the requirements of 21 U.S.C. § 355(j)(2)(B)(iv)(II) because, inter alia, they contain very limited information about the generic formulation for which Anchen filed ANDA No. 91-281.  For example, the Anchen Paragraph IV Notice letters do not list any of the ingredients in the proposed generic versions."  Having been unable to come to an agreement with Anchen on the conditions under which they could procure or view a copy of ANDA No. 91-281, plaintiffs opted to file suit in order to obtain the information (and then prove that infringement was occurring as suspected).

The court decided, however, that Cephalon should have dropped its suit once it knew that Anchen's ANDA product was noninfringing.  Cephalon argued that it was within its rights to maintain the suit because Anchen was proceeding to trial on a "sham" formulation, and if a final judgment of noninfringement was granted to Anchen "the Court would no longer have had jurisdiction to police Anchen's compliance with its promise not to reformulate, and Plaintiffs would have had no assurance that Anchen would not immediately reformulate its product in a manner that would infringe by, for example, simply copying Plaintiffs' product in order to obtain quick FDA approval."

The court rejected Cephalon's argument, concluding, "there are safeguards against the end-run [Cephalon] feared."  Specifically, according to the court, "when an ANDA filer makes an alteration or amendment to its application, for example, by changing the drug's formula, the FDA requires ANDA filers to provide a new Paragraph IV Certification and re-notice the patent holder and drug owner."  The court dismissed Cephalon's concern "that another Paragraph IV Certification may not be required by the FDA" because Cephalon failed to explain "why or under what circumstances they would not be re-noticed (and, thus, have another opportunity to sue for infringement) if Anchen reformulated its drug."  The court concluded, "Without some explanation of how this fear would become reality, the court declines to accept plaintiffs' justification for maintaining suit."

Accordingly, the court granted Anchen's motion for fees.  The court cited AstraZeneca v. Dr. Reddy's in support of the rule that maintenance of a suit despite a lack of evidence of infringement makes a case exceptional.  The court assessed attorney fees from September 2010, "a date by which plaintiffs opted to maintain a suit with clear knowledge that Anchen's product, as formulated, did not infringe."  In support of its decision to assess fees from September 2010 forward, rather than from the beginning, the court explained, "plaintiffs did not originally file a frivolous suit; the suit became unjustifiable once plaintiffs declined to acknowledge that there was no need to maintain the suit in order to police Anchen's conduct."

RELATED READING:

• OBB post on May 2011 trial decision

Full post as published by Orange Book Blog: At the Intersection of Patent Law and FDA Law on January 22, 2012 (boomark / email).