Celltrion Healthcare Co., Ltd. et al v. Kennedy Trust for Rheumatology Research
Filing
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opinion and order re: 20 MOTION: For the foregoing reasons, Kennedy's motion to dismiss is granted. Kennedy's motionfor a stay is mooted by this Court's decision. The Clerk of Court is directed to terminate thepending motion and to close this case. So Ordered (Signed by Judge Paul A. Crotty on 12/1/2014) (js)
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
ELECTI\.ONICALLY FILED
DOC#: - --·- - - DATE FlLED: 12- 1- JL.f
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CELLTRION HEALTHCARE CO,, LTD. and
CELLTRION, INC.,
14 Civ. 2256 (PAC)
Plaintiffe,
-against-
OPINION & ORDER
KENNEDY TRUST FOR
RHEUMATOLOGY RESEARCH,
Def
endant.
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HONORABLE PAUL A. CROTTY, United States District Judge:
Plaintiffs Celltrion Healthcare Co, Ltd. and Celltrion Inc. (collectively, "Celltrion" or
"Plaintiffs") bring this action against Defendant Kennedy Trust for Rheumatology Research
("Kennedy") for a declaratory judgment that three patents held by Kennedy are invalid because
of improper tactics used by Kennedy to obtain the patents. Celltrion seeks this declaration to
enable its biosimilar drug Remsima to enter the United States market. Defendants move to
dismiss the complaint for lack of subject matter jurisdiction, pursuant to Federal Rule of Civil
Procedure 12(b)(1 ); or for a stay pending the outcome of reexamination/reissue proceedings by
the U.S. Patent and Trademark Office ("PTO"). For the reasons that follow, Defendant's motion
to dismiss is granted.
BACKGROUND
A. The Parties
i.
Kennedy
Kennedy, "the pioneer in the discovery of methods of treating patients with rheumatoid
arthritis ("RA") and other auto-immune diseases," owns the three patents at issue in this
1
litigation: U.S. Patent Nos. 7,846,442 (the '"442 patent"), 8,298,537 (the "'537 patent"), and
8,383, 120 (the '" 120 patent"). Defendant Kennedy Trust's Memorandum in Support of its
Motion to Dismiss Plaintiff Celltrion's Complaint for Lack of Subject Matter Jurisdiction
Pursuant to Fed. R. Civ. P. 12(b)(l) ("Def. Mem."), at 5, 6. These patents cover methods of
treating rheumatoid arthritis "by administering a combination of an anti-TNFa antibody (such as
Remicade ®) and the known rheumatoid arthritis drug methotrexate." Complaint for Declaratory
Judgment ("Comp!."), at if 4. In 1998, Janssen Biotech, Inc. ("Janssen"), a licensee of Kennedy,
received FDA approval for its drug infliximab, which contains the monoclonal antibody cA2,
under the trademark Remicade. Def. Mem. at 7-8. Originally, the FDA approved Remicade to
treat Crohn's disease; in later years, Remicade was approved for the treatment of RA, ulcerative
colitis, ankylosing spondylitis, ps01iatic arthritis, and plaque psoriasis. Id. at 8.
ii.
Celltrion
Celltrion, a biopharmaceutical company that specializes in developing biosimilars, 1 has
spent several years, and large sums of money, developing Remsima, a biosimilar version of
Remicade. Comp!. if~ 19-22. Celltrion began developing Remsima in 2008 and has invested
more than $112 million in the process.
Id. ~
19. In 20 10, Celltrion applied for and received
approval from multiple countries to begin clinical trials for Remsima.
Id.~
25. Remsima has
since been approved in 4 7 nations, and approval is pending in 23 other countries. Id. ~ 29.
Celltrion began the process of obtaining FDA approval to market Remsima in the U.S. on July
10, 2013, when Celltrion met with FDA representatives to receive guidance on additional studies
1
A biosimilar is a biologic product which is highly similar to an already licensed "reference product." Plaintiffs'
Memorandum of Law in Opposition to Defendant Kennedy Trust's Motion to Dismiss the Complaint or Stay the
Action ("Pl. Mem."), at 3; 42 U.S.C. § 262(i)(2). Because of the complexity of the molecules that comprise biologic
drugs, it is impossible to demonstrate that a follow-on biologic is identical to an approved biologic. Def. Mem. at 4.
The FDA has not yet approved a biosimilar of an antibody drug. Comp!.~ 5.
2
needed. Id.
if 31.
At that meeting, the FDA recommended a short follow-up clinical trial. Id.
if
32. Celltrion successfully completed this trial, a bridging study comparing Remsima with
Remicade sourced from the E.U. and the U.S. , in March 2014. Id. Meanwhile, Celltrion
submitted an Investigational New Drug ("IND") application pursuant to section 505(i) of the
Federal Food, Drug, and Cosmetic Act on October 2, 2013, and the FDA accepted it on
November 18, 2013 . Id.
if 31.
Celltrion has scheduled a final meeting with the FDA, during
which Celltrion plans to finalize the specifics of its application, and Celltrion anticipates that the
FDA will approve Remsima for RA treatment in the first quarter of2015. Id.
if 33. 2
The patents
at issue are currently under reexamination and reissue proceedings before the PTO. Compl. iii!
41 , 42, 44.
B. The Biologics Price Competition and Innovation Act
Congress passed the Biologics Price Competition and Innovation Act (the "BPCIA") in 2009.
See 42 U.S.C. § 262. The BPCIA provides a statutory framework under which biologics
manufacturers may apply for, and obtain, a license by showing its product is a biosimilar to
another product, known as the "reference product." Id. § 262(i)(2), (k). This provides a quicker
and less expensive pathway for biosimilar manufacturers to obtain FDA approval for products
with "no clinically meaningful differences" from the reference product. Id. § 262(i)(2)(B). The
reference product receives exclusivity for a period of twelve years. Id. § 262(k)(7)(A).
The BPCIA contains a dispute resolution mechanism in order to ensure that patent
disputes are resolved prior to the end of the reference product's exclusivity period. Pl. Mem. at
3. Through this process, the BPCIA ripens otherwise unripe patent disputes and provides a
2
Because the existence of subject matter jurisdiction is assessed by considering circumstances present at the time of
the filing of the complaint, the Court disregards the patties' discussion of factual developments that have occurred
since Celltrion filed its complaint on March 31, 2014.
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pathway for the resolution of these disputes before the exclusivity period terminates, enabling
biosimilar products to enter the market promptly upon the expiration of exclusivity. Id.
Pursuant to this process, the applicant provides a copy of its application to the reference product
sponsor within twenty days after the application is accepted for review. 42 U.S.C. § 262(1)(2).
Within sixty days of receipt of this application, the reference product sponsor is to respond,
identifying patents for which an infringement claim "could reasonably be asserted." Id. §
262(1)(3)(A)(i). The parties then negotiate these claims in good faith and if, after fifteen days of
negotiations, the parties have not reached an agreement, the reference product sponsor may then
bring an action for patent infringement. Id. § 262(1)(6)(B). The applicant must also provide to
the reference product sponsor a notice of commercial marketing no later than 180 days before
marketing of the biosimilar is to commence, at which time the reference product sponsor may
seek a preliminary injunction against the applicant. Id. § 262(1)(8)(A). Neither party may bring
a declaratory judgment action while the process is under way; if the applicant fails to comply
with these procedures, the reference product sponsor may bring a declaratory judgment action,
but the applicant may not. Id. § 262(9)(A), (B). The BPCIA addresses the role of patent owners
in the provision discussing recipients of confidential information; the Act provides that " [a]
representative of the owner of a patent exclusively licensed to a reference product sponsor with
respect to the reference product and who has retained a right to assert the patent or participate in
litigation concerning the patent may be provided the confidential information, provided that the
representative informs the reference product sponsor and the ... applicant of ... [its] agreement
to be subject to the confidentiality provisions" of the Act. Id. § 262(1)(1 )(B)(iii).
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DISCUSSION
A. Applicable Law
Article III of the Constitution and the Declaratory Judgment Act impose the additional
jurisdictional requirement of an actual controversy. See Nike, Inc. v. Already, LLC, 663 F.3d 89,
95 (2d Cir. 2011). The Act provides that "[i]n a case of actual controversy," a federal court
"may declare the rights .. . of any interested party seeking such declaration." 28 U.S.C. §
2201 (a). The Second Circuit applies a totality-of-the-circumstances test to determine the
existence of a justiciable controversy in intellectual property cases. See Nike, 663 F.3d at 95
(citingMedimmune, Inc. v. Genentech, Inc., 549 U.S. 118, 126-27 (2007)). Under this test, the
court considers whether "the adversity of legal interests that exists between the parties is real and
substantial and admits of specific relief through a decree of a conclusive character, as
distinguished from an opinion advising what the law would be on a hypothetical state of facts."
Id. at 95-96 (citing Medimmune, 549 U.S. at 127) (internal quotation marks and alterations
omitted); Telebrands Corp. v. Exceptional Prods., 2011 WL 6029402, at *2 (D.N.J. Dec. 5,
2011) ("[T]he Court must decide 'whether the facts alleged, under all the circumstances, show
that there is a substantial controversy, between parties having adverse legal interests, of
sufficient immediacy and reality to warrant the issuance of a declaratory judgment."' (quoting
Medimmune, 549 U.S. at 127)). District courts "possess discretion in determining whether and
when to entertain an action under the Declaratory Judgment Act, even when the suit otherwise
satisfies subject matter jurisdictional prerequisites." 3M Co. v. Avery Dennison Corp., 673 F.3d
1372, 1376 (Fed. Cir. 2012) (citing Wilton v. Seven Falls Co., 515 U.S . 277, 282 (1996)).
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B. Analysis
1. Actual Case or Controversy
Kennedy argues that Celltrion has failed to establish the existence of an actual case or
controversy because it has not yet engaged in meaningful preparation to conduct potentially
infringing activity and it has not adequately demonstrated injury or the threat of injury. Def.
Mem. at 9-16. Celltrion counters that the dispute is ripe because Celltrion has substantially
prepared to bring Remsima to the U.S. market, and because Kennedy has previously litigated
against the Remsima antibody and has expressed an intent to pursue infringement claims against
Celltrion over Remsima. Pl. Mem. at 8-17. In support of this argument, CeUtrion points to the
amount of money it has invested in Remsima; the completion of its clinical trials; its close work
with the FDA; its manufacturing facilities; and its ability to have stockpiles ofRemsima prepared
upon receiving FDA approval. Pl. Mem. at 8-12.
While these steps exhibit a true intention to bring Remsima to the U.S. market, Celltrion
is simply too far from receiving FDA approval of Remsima for the exercise of declaratory
judgment jurisdiction to be proper. Kennedy outlines the numerous steps that would have to
occur for there to even be the potential for patent infringement here: Celltrion's application
would have to be accepted for review; Celltrion would have to become the first ever biosimilar
approved by the FDA; Celltrion's application would have to include cA2; Celltrion would have
to receive approval of Remsima for the same use as Remicade; and these events would have to
occur prior to the August 1, 2016 expiration date of the patent involved. Def. Mem. at 11-14.
Although these steps are not wholly speculative or unlikely, they demonstrate that any opinion of
the Court on the present claims would be largely based on the disfavored "hypothetical state of
facts." The parties spend a great deal of time arguing about the likely time frame of FDA
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approval, but neither side is able to show that its asserted time frame is more than speculation.
While the Court notes that Celltrion has invested substantial sums of money and has diligently
pursued U.S. approval, these approval preparations are simply not at a stage that can support a
declaratory judgment action.
Even were the aforementioned events to occur, Kennedy has not expressed a clear intent
to pursue infringement claims against Celltrion. See Prasco, LLC v. Medicis Pharm. Corp., 53 7
F.3d 1329, 1340 (Fed. Cir. 2008) ("The defendants' lack of any 'concrete claim of a specific
right' is an important factor weighing against a finding of an actual controversy, particularly
given that there has been no actual injury."). Celltrion argues that Kennedy has engaged in prior
litigation sufficient to show that it is likely that Kennedy will pursue litigation against Celltrion
over its patent rights. Pl. Mem. at 14-18. In support of this argument, Celltrion points to
Kennedy's counterclaims filed in foreign jurisdictions against Remsima; its infiingement suits
against other companies over the parent patents of those at issue here; and the fact that Kennedy
maintains a legal fund of£ 16.3 million, of which it spent £6.12 million on intellectual property
protection in 2012. Compl. iii! 45-52; PL Mem. at 17-18. Yet Kennedy argues that it has granted
licenses to Celltrion in Europe, Australia, and Hong Kong and has indicated a willingness to
grant Celltrion a license in the U.S. and Canada. See Def. Mem. at 14. Thi s difference of
opinion further demonstrates that the issue between the parties has not yet ripened into a
controversy. See SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372, 1379 (Fed. Cir.
2007) (declaratory judgment is appropriate in situations where "the parties had taken adverse
positions with regard to their obligations, each side presenting a concrete claim of a specific right
prior to the suit.").
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The parties h~re have not yet taken adverse positions. While "[p]rior litigious conduct is
one circumstance to be considered in assessing whether the totality of circumstances creates an
actual controversy," Prasco, 537 F.3d at 1341 , Celltrion has failed to show that the likelihood of
suit from Kennedy is presently so great as to demonstrate the existence of a live case or
controversy. Likewise, public statements regarding the patents owned by a patent owner, and
that it defends the patent it owns, "do not suffice to show an 'imminent threat"' oflitigation.
Sandoz Inc. v. Amgen Inc., 2013 WL 600069, at *2-3 (N.D. Cal. 2013).
Celltrion has not demonstrated that Kennedy has taken "a position that puts the
declaratory judgment plaintiff in the position of either pursuing arguably illegal behavior or
abandoning that which he claims a right to do." SanDisk Corp., 480 F.3d at 1381 . Considering
the totality of the circumstances present here, there is no justiciable controversy that gives rise to
declaratory judgment jurisdiction.
2. The BPCIA Framework
Even if the Court were to find that Celltrion had engaged in sufficient meaningful
preparation to market Remsima and that the threat of injury was sufficiently demonstrable, the
Court would still exercise its discretion to decline to hear this case in light of the existence of the
BPCIA statutory framework for the resolution of patent disputes in the licensing ofbiosimilars.
In enacting the BPCIA, Congress provided a dispute resolution mechanism specifically for
disputes arising out of the manufacture and marketing ofbiosimilars. The BP CIA seeks to
promptly and efficiently resolve patent disputes in order to ensure that approved biosimilars may
be sold in the U.S. as soon as they are ready for market. There is no reason to believe, and
Celltrion has failed to demonstrate or even allege, that the dispute resolution procedure
established by the BPCIA would be insufficient to resolve any patent disputes here.
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The only court to have addressed the propriety of a declaratory judgment action involving
a biosimilar prior to engagement with the BPCIA dispute resolution process held that failure to
comply with the information exchange requirements of the BPCIA barred the applicant from
bringing a declaratory judgment action against the reference product sponsor. See Sandoz, 2013
WL 6000069, at *2. Similarly, Celltrion's attempts to skirt the BPCIA' s dispute resolution
mechanisms while reaping the benefits of its approval process is improper. Indeed, the inherent
tension in Celltrion's position demonstrates why the Court should decline to exercise jurisdiction
here: Celltrion urges the Court that the case is ripe for review, yet argues that the BPCIA does
not apply because the time has not yet arisen for the parties to engage in the necessary
infonnation-exchange process. Pl. Mem. at 18-19. This position is untenable.
Celltrion argues that it would be an abuse of discretion for the Court to decline to
exercise jurisdiction because the BPCIA simply delays disputes and does not resolve them. In
addition, Celltrion argues that the instant dispute is not appropriate for the BPCIA pathway
because Kennedy is not the reference product sponsor, but the patent owner. Pl. Mem. at 18-22.
While it is true that the BPCIA envisions the dispute resolution process to involve the applicant
and the reference product sponsor, the BPCIA does provide for a level of involvement by the
patent owner, see 42 U.S .C. § 262(1)(3)(A), (l)(l)(B)(iii). Moreover, the procedures of the
BPCIA are designed to enable the narrowing of patent disputes and the crystallization of
infringement claims. As Kennedy asse1is, Celltrion's argument simply demonstrates that its
dispute against Kennedy is truly unripe: before Celltrion can market Remsima, it must resolve
any disputes regarding the patents involved with Janssen, the reference product sponsor. Def.
Reply at 6. Once the time for participation in the BPCIA dispute resolution process occurs, and
once any disputes between Celltrion and Janssen arise and are clarified, then a ripe case or
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controversy may exist between Celltrion and Kennedy. Prior to that time, subject matter
jurisdiction is lacking. As for Celltrion's delay argument, a federal court does not have
jurisdiction over a declaratory judgment action simply because the dispute may arise in the future
and the relevant statutory framework does not resolve it in a time frame to the plaintiff's liking.
The BPCIA purposefully keys its dispute resolution procedures to the occurrence of
certain events on the path to FDA approval. Celltrion has failed to show why this carefully
crafted and well-timed procedure should be avoided here. Should Celltrion have a ripened patent
dispute against Kennedy once it properly engages in the BPCIA dispute resolution procedures
and once it is further along the pathway towards approval of its biosimilar, Celltrion may litigate
those issues at that time.
CONCLUSION
For the foregoing reasons, Kennedy' s motion to dismiss is granted. Kennedy's motion
for a stay is mooted by this Court's decision. The Clerk of Court is directed to terminate the
pending motion and to close this case.
Dated: New York, New York
December 1, 2014
SO ORDERED
;£,~15
PAULA. CROTTY
United States District Judge
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