PATENT CASE OF THE WEEK

Amneal Pharmaceuticals LLC v. Almirall, LLC, Appeal No. 2020-1106 (Fed. Cir. June 4, 2020)

In the Federal Circuit’s only precedential case this week, the Court addressed issues relating to attorneys’ fees and costs on appeal pursuant to 35 U.S.C. § 285. This was the first time the Court has addressed the applicability of Section 285 to appeals from IPRs. Almirall sought such an award after Amneal voluntarily dismissed its appeal of a final written decision issued in an inter partes review proceeding on a patent that was later at issue in a related Hatch-Watchman district court litigation.

As background, Almirall markets ACZONE, a prescription medication for the treatment of acne. The FDA’s Orange Book lists two patents owned by Almirall as claiming ACZONE: U.S. Patent Nos. 9,161,926 (“the ’926 patent”) and 9,517,219 (“the ’219 patent”). In 2018, Amneal filed petitions for IPR with the Patent Office seeking to invalidate certain claims of Almirall’s Orange Book-listed patents; the IPR on the ’926 patent was initiated. In February 2019, Amneal, in seeking regulatory approval to market a generic version of ACZONE, filed its Abbreviated New Drug Application with the FDA and submitted Paragraph IV certifications for both patents. As a result, Almirall sued Amneal in federal district court, alleging infringement of only the ’219 patent; Amneal filed a counterclaim seeking declaratory judgment that the ’926 patent is invalid and not infringed. After the suit was filed, the parties entered into settlement discussions, and Almirall offered to enter into a covenant-not-to-sue on the ’926 patent, contingent on dismissal of the IPR on the ’926 patent. The parties were unable to reach a settlement, and the IPR on the ’926 patent went to trial, concluding in a final written decision finding the challenged claims of the ’926 patent not unpatentable. Amneal appealed, but subsequently filed a motion to voluntarily dismiss the appeal. Almirall agreed that the appeal should be dismissed, but opposed the motion to dismiss in order to move for attorneys’ fees and costs incurred during the time between the date settlement negotiations were terminated and the date of trial in the ’926 patent IPR, along with fees and costs for filing the opposition to the voluntary motion to dismiss the appeal.

Almirall argued that it was entitled to the fees and costs requested based on Amneal’s unreasonably continuing to litigate the ’926 patent IPR after the covenant-not-to-sue was offered, and after Almirall had asked the FDA to remove the ’926 patent from the Orange Book. Specifically, Almirall argued that the Federal Circuit is a “court” authorized by section 285 to award fees in exceptional cases, including for fees incurred in the ’926 patent IPR before the appeal was filed. Relying on Sullivan v. Hudson, 490 U.S. 877 (1989) and Therasense, Inc. v. Becton, Dickinson & Co., 745 F.3d 513, 516-17 (Fed. Cir. 2014), Almirall argued that fees could be awarded for administrative proceedings that are “intimately tied to the resolution of the judicial action and necessary to the attainment of the results Congress sought to promote by providing for fees.” Further, Almirall argued that under Therasense, it was entitled to those fees because in that case, the Court held that a “case” under section 285 should be viewed more as an inclusive whole.

The Court disagreed with Almirall’s arguments. Analyzing for the first time the extent to which section 285 applies to IPR appeals, the Court explained that appeals from the Patent Trial and Appeal Board (“PTAB”) are different. To start, the Court’s predecessor, whose opinions are binding on the Court today, and which heard appeals from the Patent Office but not from the district courts, on several occasions refused to read section 285 as pertaining to such administrative proceedings. Further, the plain meaning of section 285’s reference to the “court” speaks only to fees incurred “during, in close relation to, or as a direct result of, judicial proceedings,” and this language is inconsistent with Almirall’s position that the Court should award fees for work done in Patent Office proceedings before the Federal Circuit has ever asserted its jurisdiction. Nor, the Court explained, is this a “case” that qualifies as one of the narrow classes of administrative proceedings that qualify for fees under Sullivan or Therasense because these Patent Office proceedings do not fall under the class of cases “where ‘a suit has been brought in court,’ and where ‘a formal complaint within the jurisdiction of a court of law’ remains pending and depends for its resolution upon the outcome of the administrative proceedings.” As such, the Court held that Almirall was impermissibly seeking fees that were incurred for work at the Patent Office before this case was commenced. The Court also denied Almirall’s request for fees in connection with drafting its opposition to Amneal’s motion because its contentions as to Amneal’s alleged unreasonable behavior to support such an award had nothing to do with conduct before the Court, and instead related solely to work before the Patent Office.

The opinion can be found here.

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