Midway through his U.S. Supreme Court oral argument last December in Caraco Pharmaceutical Labs v. Novo Nordisk, Winston & Strawn’s Jim Hurst disentangled himself from a barrage of questions from the court, hoping to return to a skeptical point raised by Justice Antonin Scalia.
The focus on Scalia was deliberate. The U.S. Court of Appeals for the Federal Circuit’s 2010 decision siding with with Novo Nordisk had relied on strict constructionism, Scalia’s favored approach to statutory interpretation. For his client Caraco to win, Hurst knew he would need to convince Scalia and his intellectual cohorts on the bench to adopt a different philosophy. “We responded by framing our arguments, both in our papers and at oral argument, in a way that we hoped would appeal to those justices,” he told us in an e-mail. The high court’s ruling in the case on Tuesday leaves no doubt that he succeeded.
In a 9-0 decision by Justice Elena Kagan, the court reversed the Federal Circuit, finding that Novo Nordisk must revise a patent description it provided to the Food and Drug Administration about its diabetes drug Prandin. The decision allows Caraco, a subsidiary of Sun Pharmaceutical Industries, to market a generic version of the $230 million dollar-a-year drug. More importantly, the ruling strengthens generic drug makers’ ability to use a counterclaims provision under the Hatch-Waxman Act to force branded drug companies to correct patent information that they supply to the FDA. That, in turn, should make it easier for generics to get their own drugs on the market.
Caraco faced a familiar dilemma for generic drug companies. Novo Nordisk’s main patent for Prandin had expired, and Caraco was eager to roll out its low-cost generic version. Novo, however, still had one so-called “method-of-use” patent for Prandin. That patent only covered one of the three FDA-approved methods of prescribing the drug, so in 2005 Caraco sought FDA approval to market its generic version for the two other approved uses.
Novo Nordisk responded by suing Caraco to block the generic and amending its regulatory filings to claim that its patent actually covered all three FDA-approved uses for Prandin. Caraco availed itself of a 2002 amendment to the Hatch-Waxman Act that lets generics counterclaim that a brand-name rival company filed misleading information with the FDA. After a three-week trial in 2009, a Winston trial team led by Hurst won an injunction forcing Novo to scale back its claims. Caraco started to roll out its generic, but then Novo’s counsel at Gibson, Dunn & Crutcher convinced the Federal Circuit to set aside the injunction. The Supreme Court granted cert last summer, setting the stage for a December 2011 showdown between Hurst and Gibson Dunn appellate virtuoso Mark Perry.
Interestingly, the oral argument hinged on two words in the counterclaim provision of the Hatch-Waxman Act: “not” and “an.” The statute says that a generic company can force a brand-name drug company to correct the patent information it submitted to the FDA only when the patent “does not claim an approved method of using the drug.” The Federal Circuit, siding with Perry, took a very literal interpretation of that phrase. It ruled that an injunction can only be issued when the method-of-use patent does not claim any FDA-approved uses of the drug. That spelled defeat for Caraco, since Novo’s patent claimed one FDA-approved use.
Chief Federal Circuit Judge Randall Rader’s interpretation was a bit too literal, Hurst argued in December. Read in the context of the rest of the statute, he asserted, the counterclaim provision actually allows generic drug companies to market their drugs for all FDA-approved uses not claimed in a brand-name drug’s patent. “There are many ways to use the word ‘an’ after the word ‘not’ where it clearly does not mean ‘any’. . .the context speaks volumes,” Hurst told the Justices. He then rattled off some examples, like “my cake fell because I did not include an ingredient.”
Hurst told us Thursday that many of those examples, some of which ended up in the final opinion, came from a dinner table conversation his co-counsel, Winston partner Steffen Johnson, had with his family. That family dinner ended up being a “real breakthrough,” said Hurst.
“You could easily read that isolated passage [in the statute] as meaning ‘not any’ as Novo argued,” Hurst said in an e-mail. “But you could read the text our way too, which was key to winning over the struct constructionists.” Zeroing in on Justice Scalia at oral arguments probably didn’t hurt either.