DNJ Court Grants Motion to Dismiss Based on Covenant Not to Sue

In Teva Branded Pharmaceutical Products R&D, Inc. v. Cipla Ltd., the United States District Court for the District of New Jersey recently granted the plaintiff, Teva Branded Pharmaceutical Products R&D, Inc.’s (“Teva”), motion to dismiss certain claims and counterclaims for lack of subject matter jurisdiction based on a covenant not to sue between Teva and defendant Cipla Ltd. (“Cipla”).

The consolidated case is a Hatch-Waxman litigation involving several patents covering Teva’s Qvar® inhaler product. Originally, there were seven patents in dispute between the parties, but after Teva granted covenants not to sue for three of the patents to defendants Cipla and Aurobindo, the court entered stipulations and orders dismissing the parties’ claims and defenses as to those three patents. Thereafter, Teva provided defendants Cipla and Aurobindo each a covenant not to sue as to United States Patent No. 10,086,156 (“the ’156 patent”), another one of the original seven patents in dispute. Following the covenants not to sue, Teva and Aurobindo stipulated to the dismissal of the claims and counterclaims regarding the ’156 patent, but Teva and Cipla could not come to an agreement regarding the language for an order dismissing their respective claims and counterclaims. Consequently, Teva filed a motion to dismiss the claims and counterclaims relating to the ’156 patent.

The court granted Teva’s motion, finding the facts analogous to the Federal Circuit’s decision in Janssen Pharmaceutica, N.V. v. Apotex, Inc., 540 F.3d 1353 (Fed. Cir. 2008). In Janssen, the Federal Circuit affirmed the district court’s decision dismissing a defendant’s counterclaims with respect to two patents for which the plaintiff provided the defendant with a covenant not to sue. The court concluded that it lacked subject matter jurisdiction over the counterclaims because, even if the defendant were to prove that those patents were invalid, it would be unable to obtain FDA approval of its ANDA product until the expiration of another patent, for which the defendant had already stipulated to validity, infringement, and enforceability.

In the present matter, the District Court noted that like the case with the defendant in Janssen, a favorable ruling for Cipla with respect to the ’156 patent would not allow Cipla to launch its ANDA product because of the covenants not to sue that were granted with respect to other patents in the litigation. In order to launch, Cipla would also need to obtain findings with respect to those patents. Citing the Supreme Court’s ruling in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 n.7 (2007), the District Court found its conclusion consistent with the jurisdictional rule that “a litigant may not use a declaratory-judgment action to obtain piecemeal adjudication of defenses that would not finally and conclusively resolve the underlying controversy.”

Gibbons will continue to monitor and report developments in patent litigation in the District of New Jersey.

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