Federal Circuit, August 6, 2014, 2013-1386

The U.S. Court of Appeals for the Federal Circuit affirmed summary judgment on two antitrust counterclaims brought by Mutual Pharmaceutical Co. (“Mutual”) against Tyco Healthcare Group (“Tyco”), while vacating summary judgment on two others.

In November 2006, Mutual filed an Abbreviated New Drug Application (“ANDA”) with the FDA to market the generic version of Tyco’s patented drug, Restoril (temazepam). In response to Mutual’s paragraph IV certification, Tyco filed an action alleging that Mutual’s ANDA infringed Tyco’s patents. On August 4, 2009, the district court granted judgment of noninfringement and Tyco filed a citizen petition with the FDA the following day. The FDA subsequently approved Mutual’s ANDA while denying Tyco’s citizen petition. In May 2010, the district court granted summary judgment on Mutual’s invalidity counterclaim and later lifted the stay of Mutual’s antitrust counterclaims.

Mutual brought four antitrust counterclaims alleging that: 1) Tyco’s infringement claim constituted sham litigation that subjected Tyco to antitrust liability for using illegitimate means to keep the Mutual product off the market, 2) No reasonable litigant could have expected Tyco’s patents to withstand a validity challenge, 3) Tyco’s citizen petition was a sham, and 4) Tyco’s infringement suit was the product of fraud within the meaning of the Walker Process. The District Court granted summary judgment in favor of Tyco on all four counterclaims.

On appeal, the Federal Circuit reinstated and remanded the infringement and citizen petition counterclaims for further consideration by the district court. The Federal Circuit however upheld the dismissal of the validity and Walker Process counterclaims.

With respect to the infringement counterclaim, the court held that Tyco’s theory of infringement could be deemed to be objectively baseless if it is demonstrated that it is “based on a theory contrary to what the underlying scientific principles dictate.” The court also concluded that there were disputed issues of fact regarding the citizen petition counterclaim. The court identified two facts as being “[p]articularly probative” in terms of whether the citizen petition was objectively basis: (1) the FDA’s denial of the petition in which it described the petition as wholly without merit, and (2) expert testimony that Tyco did not have a scientific basis from which to suggest that Mutual’s product would not be bioequivalent.