BIG WIN FOR LOSING GENERICS
Client AlertBy: Eric I. Abraham, Esq. and Christina Saveriano, Esq.
Successful brand plaintiffs typically seek to recoup their attorney’s fees from the losing generic company in Hatch-Waxman Act cases in the District of New Jersey by seeking a determination that the case represents an exceptional case under 35 U.S.C. § 285. When recently faced with such a motion, the Court in Otsuka Pharmaceutical Co., Ltd. v. Sandoz, 07-1000 (MLC)(LHG) held that Otsuka had failed to establish that the case was exceptional and declined to award fees to Otsuka after final judgment was entered in favor of Otsuka and against the ANDA holder defendants as to all issues of validity and enforceability of the patent at issue.
Otsuka contended that it was entitled to legal fees because the defendants had filed baseless Paragraph IV certifications and engaged in vexatious litigation. Analyzing the claim that the defendants had filed baseless Paragraph IV certifications, the court disagreed finding that the litigation was a “high-stakes case involving patent coverage of a so-called blockbuster drug.” The court further found that the factual and legal issues presented and the case history “were similar to those frequently encountered in this expensive area of pharmaceutical patent law.” Otsuka also argued that the defendants engaged in vexatious litigation because the defendants requested extensive and disproportionate discovery and that although it produced over 800,000 pages of documents, defendants admitted fewer than 10 documents at trial. Again, the court disagreed finding that Otsuka had failed to establish by a preponderance of the evidence that the case was exceptional. Specifically, the court held that Otsuka had failed to show that the case was anything besides characteristic of Hatch-Waxman litigation. The court explained that although the defendants’ arguments did not prevail, the arguments did not rise to the level of being “exceptionally meritless.” Rather, the defendants had put forth some good faith argument in favor of their positions. Additionally, the court held that the parties litigated the case reasonably and that it was a typical Hatch-Waxman case. Contrary to Otsuka’s assertions, the court found that the defendants acted reasonably based upon their discovery findings and that it is typical in Hatch-Waxman cases that the NDA holder possesses voluminous relevant evidence whereas the ANDA filer will possess only minimal relevant discovery. Further, the court held that a case is not rendered exceptional if the defendants’ argument changes in the face of discovery but that rather a change in position evidences that the defendants properly used discovery throughout the course of litigation.
In concluding that the case was not exceptional and that Otsuka was not entitled to fees, the court stated that a “fee award with a deterrent impact on generic pharmaceuticals and a compensatory effect on branded pharmaceuticals, particularly in a typical patent case, would run afoul of the policies underlying the Hatch-Waxman Act.” This decision serves to further the purpose of Hatch-Waxman litigation and protect ANDA filers from baseless fee demands following litigation when the case was litigated in typical fashion as it was in the Otsuka case. ANDA filers should be aware of this decision and its impact when faced with a similar request for an exceptional case determination and fees. Likely, the same theories that Otsuka relied upon will serve as a basis for rejection of an award in future cases in favor of ANDA holders.