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Federal Circuit Confirms Innovators Must Sue Blind When Biosimilar Makers Withhold Information

On August 10, 2017, the Federal Circuit issued its decision in Amgen v. Hospira. It dismissed Amgen’s interlocutory appeal from a discovery order on jurisdictional grounds and denied a writ of mandamus ordering the district court to compel manufacturing discovery for patents that Amgen did not assert against Hospira’s biosimilar of Epogen.  In denying Amgen’s request for mandamus, the Federal Circuit explained that Amgen did not establish an indisputable right to Hospira’s manufacturing information and therefore did not meet the requirement for mandamus. The decision has important implications for innovator companies that do not receive needed information under the Biologics Price Competition and Innovation Act of 2009 (BPCIA): innovators need to sue blind or risk not obtaining discovery for unasserted patents.  The Federal Circuit also confirmed that Rule 11 is satisfied in such blind lawsuits due to an applicant’s withholding of information. 

The litigation arises out of Hospira’s plans to market a biosimilar of Amgen’s Epogen. During the information exchanges under the BPCIA, Hospira did not supply information about the cell culture process it uses to produce its Epogen biosimilar.  Amgen then sued Hospira on two of its patents, but held off on suing on its cell culture patents until it obtained manufacturing information in litigation.  Amgen sought information about Hospira’s cell culture process in discovery, but Hospira refused, arguing that the BPCIA did not provide a basis for discovery for unasserted patents.  Hospira also argued that discovery for unasserted patents is not relevant to the litigation and therefore not permitted under the Federal Rules. Judge Andrews of the District of Delaware agreed with Hospira.  Amgen appealed from the order although the case was not yet final arguing that it would be precluded from protecting its patent rights without the discovery.  The Federal Circuit asked the parties to brief whether it had jurisdiction for the appeal, in addition to addressing the merits.

In its decision, the Federal Circuit held that it did not have jurisdiction over Amgen’s immediate appeal from Judge Andrews’ discovery order, and then proceeded to discuss why Amgen did not have a clear and indisputable right to discovery for unasserted patents and therefore to a writ of mandamus ordering Judge Andrews to compel discovery.  The Federal Circuit agreed with Hospira that the Federal Rules provide for discovery relevant to asserted patents, not unasserted patents.  The court then explained that nothing in the BPCIA or in its prior decision interpreting the BPCIA “supplants” the rules governing discovery in federal court.  

Amgen had argued that the BPCIA and the Federal Circuit’s 2015 Amgen v. Sandoz decision, its first to interpret the BPCIA, provided an independent basis for discovery.  In Sandoz, the Federal Circuit stated that an innovator that does not receive a biosimilar maker’s application and manufacturing information during the BPCIA’s information exchanges “can access the required information through discovery.”  The Federal Circuit explained that its statement simply acknowledged what is true: information can be obtained in discovery in a patent infringement action.  It clarified that its “statement did not purport to hold that the usual rules governing discovery do not apply in the BPCIA context.” 

Amgen had also argued that it could not assert its cell culture media patents as it would be risking later being subject to sanctions under Rule 11 for asserting baseless claims of patent infringement.  The Federal Circuit rejected Amgen’s theory for two reasons.  First, it noted that the “rule expressly permits factual allegations that ‘will likely have evidentiary support after a reasonable opportunity for further investigation or discovery.’”  As a result, the Federal Circuit explained that “if a sponsor forms a belief based on an inquiry limited by an applicant’s withholding of information, the sponsor has still satisfied Rule 11.”

Second, the Federal Circuit noted that on the facts of this case, where the parties engaged in the BPCIA’s information exchanges to some extent, Amgen may have been able to obtain Hospira’s noninfringement contentions as to cell culture patents if Amgen had included those patents on its list of patents that “could reasonably be asserted.”  But Amgen did not do so.  The Federal Circuit explained that if a biosimilar applicant “fails to comply with its obligation” to provide its noninfringement contentions as to the listed patents as required by the BPCIA, the innovator “would have a reasonable basis for asserting a claim of patent infringement.”   The decision therefore confirms that an innovator benefits from listing its patents, regardless of whether a biosimilar maker complies with its obligation to respond with its positions as to those patents or not. 

The Federal Circuit’s decision was expected following the Supreme Court’s recent decision in Sandoz v. Amgen.  The Supreme Court held that the BPCIA’s requirement that a biosimilar maker provide the innovator company with its biosimilar application and manufacturing information was not enforceable under federal law.  The decision therefore made it highly unlikely that the Federal Circuit would hold that the BPCIA provided an independent basis for discovery in federal court for unasserted patents. 

The lesson of the Federal Circuit’s ruling, as well as the Supreme Court’s decision, is also clear: an innovator company that receives incomplete or no information during the BPCIA’s information exchanges risks not being able to protect its patent rights if it does not assert patents, even without information, that may be infringed.