"Clearing Out Invalid Patents" Insufficient for Declaratory Judgment Jurisdiction

May 15, 2018

In the recent AIDS Healthcare Foundation v. Gilead opinion, the Federal Circuit considered whether AHF’s desire to “‘clear out the invalid patents’ so that it ‘would have the ability then to partner with generic makers’” immediately upon expiration of the five-year NCE exclusivity for the antiviral agent tenofovir alafenamide fumarate (TAF) was sufficient to give rise to declaratory judgment jurisdiction. It was not.

AHF provides medical care to AIDS patients, including providing TAF products that AHF buys from Gilead. AHF filed a declaratory judgment action asserting that five patents covering TAF are invalid about two months after FDA approved the first TAF product. No unlicensed source was offering a TAF product or preparing to do so when the declaratory judgement action was filed.

AHF argued that in view of the lengthy time required to litigate patent validity, such litigation needed to start well in advance of expiration of the five-year NCE exclusivity. AHF also argued that declaratory judgment is appropriate because: (i) it is an indirect infringer of the TAF patents based on its requests to potential producers to provide the patented products, (ii) Gilead did not respond to AHF’s request for a covenant not to sue, creating a present controversy, and (iii) public policy favors invalidation of invalid patents.

These arguments were unavailing. In concluding that AHF had not established a case of actual controversy within the meaning of the Constitution and the Declaratory Judgment Act, the Federal Circuit noted particularly that AHF is not an infringer (indirect or otherwise), and the Hatch-Waxman statute already provides an artificial act of infringement (ANDA filing) that allows for adjudication of validity before infringement actually occurs.

This suit is one of several waged by AHF against Gilead. Only days before this decision, AHF filed personal injury and class action suits in a Los Angeles district court, accusing Gilead of shelving TAF to maximize profits and extend the sales of its existing drug tenofovir disoproxil fumarate.

AIDS Healthcare Found. v. Gilead Scis., Inc., No. 2016-2475 (Fed. Cir. May 11, 2018) http://www.latimes.com/business/la-fi-gilead-hiv-drug-lawsuit-20180509-story.html