Pay for Delay Settlement Creates Substantial Controversy Sufficient to Support Challenge to Lipitor® Patents

The court could exercise subject matter jurisdiction over a defendant generic drug manufacturer’s invalidity and noninfringement counterclaims directed to patents for which defendant had filed a Paragraph III certification (indicating that its generic drug would not go on the market until after expiration of the patents). A settlement agreement between plaintiff and another generic drug manufacturer who filed the first Paragraph IV certifications concerning the patents-in-suit created a concrete and imminent harm to defendant because it called for the first-to-file generic company to delay the commercial launch of its drug -- which in turn would delay the start of its 180-day period of market exclusivity -- for 20 months after one of the patents covering the drug expired. "[T]he injury [defendant] identifies is its inability to obtain FDA approval (and sell its product) between the . . . expiration of [one of plaintiff’s patents] and 180 days after the date [the first-to-file generic company] begins marketing its product sometime after [the 20-month delay called for in the settlement agreement]. The Federal Circuit has recognized, in the context of the Hatch-Waxman Act, that the creation of 'an independent barrier to the drug market' by a brand drug company 'that deprives [the generic company] of an economic opportunity to compete' satisfies the injury-in-fact and causation requirements of Article III standing. . . . Thus, [defendant] has alleged a potentially cognizable injury." Such injury was also sufficiently imminent because the 20-month delay was required by the settlement agreement. "[T]he alleged delay in marketing [the first-to-file generic company’s drug] is not a mere risk but a certainty. At the time that [defendant] filed its counterclaims, there was no doubt that, following the . . . expiration of the . . . patent, [defendant] would be precluded from obtaining FDA approval and going to market until at least [the end of the 20-month delay]."

Pfizer Inc. et al v. Apotex Inc. et al., 1-08-cv-07231 (ILND June 30, 2010, Memorandum Opinion & Order) (Dow, J.)