Shire Asks Federal Circuit to Reconsider API Supplier Liability
Shire has petitioned the Federal Circuit to rehear en banc its decision in Shire v. Amneal, where the Federal Circuit declined to hold an API manufacturer liable as an indirect infringer. Shire asked the court to address the question of whether a non-ANDA filer can be liable for future infringement under 35 U.S.C. § 271(e)(2) when its proposed activity would infringe under a traditional patent infringement analysis.
In the underlying decision, Shire LLC v. Amneal Pharmaceuticals, LLC et al., No. 14-1736 (Fed. Cir. Sept. 24, 2015), the Federal Circuit reversed the District of New Jersey’s holding that API manufacturer Johnson Matthey (JM) induced infringement of compound claims by providing API to co-defendant ANDA-holders. JM supplies the ANDA-holders with LDX dimesylate, the API in the attention deficit hyperactivity disorder (ADHD) drug Vyvanse®. The Federal Circuit concluded that JM could not be liable for inducement for API it sold to the ANDA defendants, because JM had not itself submitted the ANDA creating liability under § 271(e)(2). The Federal Circuit further held that sales of API to generic drug companies for their use in preparing tablets for purposes of an ANDA fall under the § 271(e)(1) safe harbor.
In its petition for rehearing, Shire argues that the Federal Circuit’s decision is contrary to its holding in Forest Labs. Inc. v. Ivax Pharm., Inc., 501 F.3d 1263 (Fed. Cir. 2007), where it held that the Hatch-Waxman Act provides for a finding of future induced infringement when there is a cooperative venture between an API supplier and an ANDA-filer. Shire states that the Forest court found that an API supplier induced infringement, pursuant to § 271(b), of a compound patent under § 271(e)(2) by actively inducing the acts of the ANDA filer that would constitute infringement upon approval of the ANDA. In the underlying decision, the Federal Circuit had distinguished Forest, explaining that Forest involved the scope of an injunction under § 271(e)(4), and was therefore inapposite.
Shire further argues that the decision conflicts with Federal Circuit precedent broadly applying § 271(e)(2) to future infringement. That is, non-ANDA filers have been held liable for patent infringement in the Hatch-Waxman context, including parent companies, affiliates, distributors, contract manufacturers, and API suppliers. In addition, Shire argues that that § 271(e)(1) safe harbor is irrelevant to future infringement under § 271(e)(2), because regardless of a supplier’s activities up until the point of the ANDA filing, the issue is the supplier’s induced future infringement via its cooperative venture with the ANDA filer.
Should the Federal Circuit rehear the decision, it could have considerable repercussions for API manufacturers. Finding for Shire would open the door to potential liability for a new class of infringers for any compound or composition claim directly infringed by a proposed ANDA product. However, it seems the court would be unlikely to accept Shire’s contention that this case is on all-fours with Forest. In Forest, the court was careful to explain that at that point of an ANDA lawsuit, neither the ANDA filer nor the API supplier was actually infringing. Rather, the supplier would induce infringement upon ANDA approval and commercial exploitation of the infringing product. Thus, the Forest court found it appropriate to enjoin the supplier from activities that induced acts of the ANDA filer that would constitute direct infringement upon ANDA approval—not that the API supplier was actually liable for induced infringement.