The district court in Salix Pharmaceuticals, Ltd. et al v. Norwich Pharmaceuticals, Inc., Civil Action No. 20-430-RGA (D. Del.) was asked to decide a rather unusual issue in Hatch-Waxman litigation: whether carving out the infringing use of a generic drug after trial would allow a generic drug to enter market with labeling limited to the non-infringing use.   

Salix markets Xifaxan, which is a rifamycin antibacterial indicated for travelers’ diarrhea, hepatic encephalopathy (HE), and irritable bowel syndrome with diarrhea (IBS-D). Norwich submitted ANDA 214369 with a Paragraph IV certification, seeking to market a generic version of Xifaxan with the same indications as Xifaxan. Salix sued and, at trial, three groups of patents were at issue: patents directed to the treatment of HE ("the HE Patents"), patents directed to the treatment of IBS-D ("the IBS-D Patents"), and patents directed to rifaximin form β ("the Polymorph Patents"). 

Following a bench trial, the district court determined that the HE Patents were not invalid and were infringed while the IBS-D Patents and the Polymorph Patents were invalid.  

The parties disputed the form of the final judgment, with Norwich arguing that the final judgment should order the FDA approval date for “Norwich's ANDA with proposed labeling containing [the HE indication]” as the expiry date of the HE patents, rather than expressly referring to just “Norwich's ANDA No. 214369.” Salix Pharms., LTD v. Norwich Pharms., Inc., Civil Action No. 20-430-RGA, dkt. 192 at 1. In rejecting Norwich's argument, the district court explained that Norwich's ANDA submission was an act of infringement under 35 U.S.C. § 271(e)(2)(A), which makes it “an act of infringement to submit” an ANDA “for a drug claimed in a patent or the use of which is claimed in a patent,” because its proposed ANDA has the infringing HE indication. Id. at 2. Thus, under 35 U.S.C. § 271(e)(4), “the court shall order the effective date of any approval of the drug . . . involved in the infringement to be a date which is not earlier than the date of the expiration of the patent which has been infringed.” Id. The court noted that although Norwich may seek to carve out the HE indication, it is immaterial, because that label was not before the court. Accordingly, judgment was entered ordering FDA not to approve Norwich's ANDA No. 214369 before the last expiration of the HE Patents. 

Thereafter, Norwich filed an amended ANDA that purported to “carve out everything relating to the HE indication” and asked the district court to modify the final judgment under Rule 60(b) by limiting the order to the HE indication. Salix Pharms., LTD v. Norwich Pharms., Inc., Civil Action No. 20-430-RGA, 2023 U.S. Dist. LEXIS 86257, at *2 (D. Del. May 17, 2023). This would essentially allow FDA to approve Norwich's amended ANDA and require Salix to seek an injunction.  

The district court denied the Rule 60(b) motion on several grounds. The district court found that Rule 60(b) was not applicable because there was no significant change in circumstances that warranted a modification of the judgment under Rule 60(b)(5). The court also explained that “[i]t is not a simple matter to determine whether an ANDA applicant has successfully carved out language from a label to turn infringement into non-infringements.” Id. at *5. In addition, the court stated that “Rule 60(b) ‘does not allow relitigation of issues that have been resolved by the judgment’” and Norwich cannot now seek a way around the final judgment through Rule 60(b). Id. at *6. The court explained that “it just seems wrong [] that Defendant can litigate a case through trial and final judgment based on a particular ANDA, and then, after final judgment, change the ANDA to what it wishes it had started with, and win in a summary proceeding.” Id.

On appeal, Norwich raised two arguments: first, the district court, in issuing its final judgment, misinterpreted 35 U.S.C. § 271(e)(4)(A), which only requires delaying approval of the infringing use; second, the district court improperly denied its Rule 60(b) motion. 

The Federal Circuit rejected both arguments. With respect to the statutory interpretation of Section 271(e)(4)(A), the court explained that the act of infringement under Section 271(e)(2)(A) is not “the potential use of Norwich’s rifaximin for HE” but "the submission of the ANDA that included an infringing use." Salix Pharms., Ltd. v. Norwich Pharms. Inc., Nos. 2022-2153, 2023-1952, Slip. Op. at 19 (Fed. Cir. Apr. 11, 2024). Thus, “[t]hat the ANDA further recited a non-patent-protected indication does not negate the infringement resulting from the ANDA’s submission.” Id. Accordingly, the district court properly ordered FDA to delay final approval of Norwich’s infringing ANDA submission. Id.

With respect to the district court's denial of Norwich's Rule 60(b) motion, the Federal Circuit found that a district court has discretion to allow amending a final judgment. Id. at 20. In this case, the district court “reasonably held that consideration of the amended ANDA would be inequitable and inappropriate.” Id. at 20-21. It agreed with the district court that “simply asserting that a patented indication has been carved out of an ANDA application does not necessarily satisfy the judgment or entitled the applicant to direct entry to the market.” Id. at 21.

Takeaways

The Salix decision underscores the importance of specifying the appropriate relief in the final judgment. Under the Federal Circuit's Salix decision, amending an ANDA by carving out the infringing use after trial is unlikely to get the generic approved for the non-infringing use where the final judgment specifies the ANDA.   

Both the district and appellate courts emphasized that Norwich “simply assert[ed] that it carved out the HE indication and provid[ed] the court with the amended label” but “'presented no evidence in support of its assertion' that the amended ANDA would no longer infringe the HE patents." Id. It is highly unlikely that Norwich could have provided sufficient evidence to support its belief that its amended ANDA no longer infringes the HE Patents—at least not without additional discovery and adjudication. Infringement is a question of fact and determining whether a carved out label would infringe often involves a number of factual issues that require discovery and trial.

In affirming the district court's interpretation of Section 271(e)(4)(A), the Federal Circuit stated that “the [district court's] order appropriately said nothing that would prevent approval of a new non-infringing ANDA.” Salix Pharms., Nos. 2022-2153, 2023-1952, Slip. Op. at 19. Of course, instead of amending an existing ANDA, a generic applicant may file a new ANDA with the carved-out label under 21 USC§ 355(j)(2)(A)(viii). However, in addition to any regulatory burdens that it may impose, this approach does not eliminate the possibility of a new litigation because whether a carved out label infringes “is not a simple matter.”