In the decision in Celltrion Healthcare v. Kennedy Trust for Rheumatology Research  issued earlier this week, Judge Cotty of the Southern District of New York declined to exercise declaratory judgment jurisdiction in a case that would have permitted Celltrion Healthcare to expedite the patent challenges that stand in the way of the launch of its proposed biosimilar, Remsima®. Celltrion Healthcare has obtained regulatory approval of Remsima® in dozens of countries, and filed its initial 315(k) application in August 2014, about five months after it filed the declaratory judgment action at issue. Celltrion has spent over $100 million developing the product, and understandably hoped to get a head start on the patent dispute.

While Celltrion’s product was in the very advanced stages of development, and the patentee, Kennedy Trust for Rheumatology Research, had enforced related patents in other countries, the Court declined to exercise declaratory judgment jurisdiction.

The Court first analyzed whether there was an Article III case or controversy that was ripe for adjudication. The Court noted the many events that had to occur before Celltrion would be permitted to market the proposed biosimilar.[1] The Court also dismissed Kennedy Trust’s past enforcement efforts because of the possibility that the parties might enter into a license agreement, since Kennedy Trust had done so in other countries. As an offer to license a specific patent typically gives rise to declaratory judgment jurisdiction, it is unclear whether this possibility alone would be enough to defeat declaratory judgment jurisdiction.

While one may debate whether the Court should have found the issue ripe for adjudication, the Court went on to hold that even if there was a real case or controversy it would exercise its discretion to decline declaratory judgment jurisdiction. And this is perhaps the more problematic aspect of the ruling for other biosimilar manufacturers hoping to short-circuit the long and expensive wait for biosimilar patent litigation under the BPCIA. The Court discussed how Congress carefully crafted legislation that set a timeline and framework for disputes such as the one at issue to follow, and saw no justification for entertaining such disputes under a different timeline.

Thus, another effort to expedite the biosimilar pathway has fallen flat, and the availability of validity challenges at the USPTO continues to take on a greater importance for biosimilar products, albeit with much greater stakes (e.g. estoppel) and potential shortcomings (potential loss of exclusivity through a patent license if the challenge advances too far and the USPTO declines to dismiss the action).

[1] Many of these “obstacles” have not occurred under the traditional 505(j) pathway, but the “case or controversy” analysis is nonetheless satisfied because the mere filing of an ANDA has been declared an act of infringement. Here, the application had not yet been filed at the time of the Complaint. As the infringement inquiry often implicates the proposed labeling included with the application, this may be more than an arbitrary fact.