Federal Circuit Affirms Non-Infringement and Awards Sanctions in Patent Cases

The Federal Circuit recently issued two precedential decisions in patent cases.

In Galderma Laboratories v. Lupin, the court affirmed a district court’s decision that Lupin’s abbreviated new drug application (ANDA) did not infringe Galderma’s two patents.

As the Food and Drug Administration (FDA) explains,

An abbreviated new drug application (ANDA) contains data that is submitted to the FDA for the review and potential approval of a generic drug product. Once approved, an applicant may manufacture and market the generic drug product to provide a safe, effective, lower-cost alternative to the brand-name drug it references.

A generic drug product is comparable to an innovator drug product in dosage form, strength, route of administration, quality, performance characteristics, and intended use. All approved products, both innovator and generic, are listed in the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book).

As the court noted, “Galderma owns and markets Oracea® (doxycycline USP) 40 mg capsules as a treatment for papules and pustules associated with rosacea.”

The patents

are directed to a once-daily, oral pharmaceutical composition formulated as about 30 mg immediate release (IR) and about 10 mg delayed release (DR), doxycycline, and methods of treatment using the composition.

Lupin filed an ANDA to market a 40 mg doxycycline product, claiming bioequivalence to Oracea®.

Lupin submitted certifications under 21 U.S.C. § 355(j)(2)(A)(vii)(IV) that the Galderma Patents are invalid or would not be infringed by Lupin’s ANDA product.

It is an act of patent infringement to submit an ANDA seeking FDA approval to make and sell a patented drug.

In response, Galderma sued Lupin for infringement of its patents.

Claim 1 of the ’532 Galderama patent included the phrase “composition consisting of (i) an immediate release (IR) portion comprising a drug….”

The district court construed the term “immediate-release portion” to be “a functional limitation meaning any part of the claimed composition that releases drug immediately upon administration, with no enhanced, delayed or extended-release effect.”

The claim also includes “a delayed release (DR) portion…”

Lupin claimed that its product only had a one-stage process and thus didn’t infringe, and the Federal Circuit agreed.

In PS Products, Inc. v. Panther Trading Company, the Federal Circuit found that a district court didn’t err in awarding deterrence sanctions against PSP in the amount of $25,000.

PSP owns U.S. Design Patent No. D680,188, for a long-spiked electrode for a stun device.

PSP sued Panther, alleging it infringed the D’188 patent.

In 2022, Panther sent a Rule 11 letter and draft motion for Rule 11 sanctions to PSP’s attorney alleging:

(1) the infringement allegations were facially frivolous because the patented design and accused product were plainly dissimilar and

(2) venue was statutorily improper and the suit should not have been filed in Arkansas.

Panther also filed a motion to dismiss the patent infringement suit.

After filing the motion to dismiss, Panther discovered a prior art marketing brochure from PSP showing a design nearly identical to the one claimed in the D’188 patent.

Again, Panther wrote to PSP’s attorney, demanding that the patent infringement suit be dismissed in light of the prior art brochure.

PSP moved to voluntarily dismiss the case. Panther then demanded reimbursement for its attorney fees and expenses incurred in defending against the frivolous suit.

The district court granted Panther’s motion for attorney fees and costs totaling $43,344.88.

The district court subsequently ordered PSP and its attorney to jointly and severally pay an additional $25,000 in deterrence sanctions to the court. PSP challenged this award of sanctions.

PSP argued the district court lacked authority to award sanctions when it has already awarded attorney fees and costs under 35 U.S.C. § 285, which says: “The court in exceptional cases may award reasonable attorney fees to the prevailing party.”

PSP also argued that the district court applied the incorrect legal standard because the order didn’t state the sanctions were being imposed due to bad faith or fraudulent conduct.

The Federal Circuit noted that “District courts have the inherent power to control litigation by imposing sanctions appropriate to rectify improper conduct by litigants.”

The Federal Circuit also noted that “It is well-settled that § 285 does not preclude a district court from separately imposing sanctions or fees under another authority.”

The Federal Circuit stated:

We cannot conclude that the district court erred when it imposed sanctions due to PSP’s bad faith conduct, which it inferred “[b]ased upon the lack of legal merit of this action and [PSP’s] history of repeatedly filing meritless lawsuits in this district.

The court pointed out that

since 2010, PSP has filed twenty-five patent infringement lawsuits in the Eastern District of Arkansas. …PSP dismissed thirteen of those suits before or soon after answers were filed.

In each of these 25 lawsuits, “PSP incorrectly asserted venue based on the general venue statute, 28 U.S.C. § 1391, rather than the patent-specific venue statute, 28 U.S.C. § 1400.”

PSP’s lawyer admitted that he used the same complaint for each of the lawsuits and that this template complaint didn’t cite the correct venue statute.

Also,

In two instances where the district court adjudicated the motions to dismiss, PSP’s claims were either dismissed for failure to state a claim or lack of personal jurisdiction.

The court found that the facts of the case supported the award of sanctions.

First,

PSP’s complaint did not state a plausible claim for design patent infringement. To establish design patent infringement, a plaintiff must show an “ordinary observer” would be deceived into believing the accused product is the same as the patented design.

Here, said the court,

No ordinary observer would be deceived into believing Panther’s accused product is the same as the D’188 patented design…. No reasonable person could conclude that the facts of this case create a cause of action for design patent infringement.

Second,

PSP’s complaint cited the general venue statute, 28 U.S.C. § 1391, rather than the patent-specific venue statute, 28 U.S.C. § 1400.

Under 28 U.S.C. § 1400(b), the venue is proper “where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.”

The court found that Panther neither resides in nor has a regular and established place of business in Arkansas. The company resides in Maryland because it is incorporated there.

In sum, said the Federal Circuit,

While the district court did not individually analyze each of the twenty-five lawsuits, it was reasonable, given these facts, for the district court to infer PSP’s many other lawsuits mirroring this suit’s procedural posture were similarly meritless. Under these circumstances, the district court did not clearly err when it inferred bad faith from PSP’s history of filing meritless lawsuits.

Thus, the sanctions were merited.