In a case involving intellectual property, antitrust and constitutional law, the US Court of Appeals for the Federal Circuit upheld dismissal of a declaratory judgment action for failing to meet the immediacy and reality requirements of the Declaratory Judgment Act. Aids Healthcare Foundation, Inc. v. Gilead Sciences, Inc., et al, Case No. 16-2475 (Fed. Cir., May 11, 2018) (Newman, J).

AIDS Healthcare Foundation (AHF) is a provider of medical care to persons with AIDS that relies on drugs such as tenofovir alafenamide fumarate (TAF), an antiviral agent. Defendants produce or sell drugs containing TAF and have patents or are licensees of patents on TAF and its combination products. AHF brought suit requesting a declaratory judgment on five patents purportedly covering TAF with the ultimate intention of clearing the path to enable partnership and rapid deployment of generic TAF as soon as the five-year New Chemical Entity exclusivity expired.

Such deployment typically involves lengthy delays as the patent owner in these circumstances often commences lengthy infringement litigation. Further, companies would need time to prepare to produce a new generic. According to AHF, if it waited until exclusivity actually expired, and actual patent infringement occurred, generic TAF could be delayed for years. AHF reached out to a number of generic makers to encourage the production of generic TAF but received no response, which it attributed to fear of liability relating to the TAF patents. Thus, AHF argued that its interest in purchasing generic TAF and its encouragement of others to produce generic TAF provided a case and controversy. AHF asked for a declaratory judgment, seeking a finding that the five patents covering TAF were invalid so that generic makers could begin the process of preparing to produce generic TAF.

The district court ruled that AHF's actions in encouraging others to produce generic TAF products, and its interest in buying such products, did not create an actual case for declaratory judgment controversy. AHF appealed.

The Federal Circuit affirmed the dismissal: "Exercise of the Constitution's judicial power is limited to actual cases and immediate controversies." Here, the potential future infringement of a patent did not suffice. Even considering the potential for delay due to litigation, the central requirements of immediacy and reality could not be met by a "speculative future controversy." According to the court, the case presented "no present infringement, no threat or possibility of infringement litigation, and no meaningful preparation to infringe."

The Court pointed instead to an explicit statutory basis for the suit AHF wanted to bring: the Hatch-Waxman Act. Through the Hatch-Waxman Act, a drug manufacturer can fill out an abbreviated new drug application (ANDA) prior to actual infringement, thereby creating an artificial act of infringement and a basis for a suit before actual infringement. The facts in this case, however, are "undisputed that no potential generic producer had filed an ANDA for any TAF-containing products."

Practice Note: When seeking a declaratory judgment, practical timing considerations are unlikely to overcome the immediacy and reality requirements of the Declaratory Judgment Act. Instead, in generic drug cases, an ANDA application through the Hatch-Waxman Act is the statutory path to relief.

Putting The Declaratory Judgment Cart Before The Hatch-Waxman Horse

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