Silvergate Pharmaceuticals v. Bionpharma: The relevance of offers of confidential access under the Hatch-Waxman statute and awards for attorney fees

In Silvergate Pharmaceuticals, Inc. v. Bionpharma Inc., the US District Court for the District of Delaware decided an open question regarding pre-filing investigation and attorney fees under Title 35 of the US Code, Section 285, and offers of confidential access (OCAs) under the Hatch-Waxman framework.

On May 26, 2022, defendant Bionpharma Inc. filed a renewed motion for attorney fees pursuant to Section 285 after prevailing at trial against plaintiff Azurity Pharmaceuticals Inc. (Azurity is the successor-in-interest to the named plaintiff Silvergate Pharmaceuticals, Inc.) Bionpharma argued that Azurity filed suit only to delay Bionpharma’s market entry and in relevant part, took an unreasonable position regarding a claim limitation directed to a chemical buffer because the plaintiff did not review Bionpharma’s abbreviated new drug application (ANDA) before filing suit. The judge’s October 4, 2024 denial of Bionpharma’s Section 285 motion provides useful guidance as to how both new drug application (NDA) holders and ANDA filers may conduct themselves before commencing litigation.

Case background

When the manufacturer of a generic drug includes a Paragraph IV certification against patents listed in the US Food and Drug Administration (FDA)’s Orange Book, the Hatch-Waxman statute requires the generic manufacturer to make an OCA for the NDA holder to review the ANDA. 21 U.S.C. § 355(j)(5)(C)(i)(III). The statute permits the generic manufacturer to impose “such restrictions as to persons entitled to access, and on the use and disposition of any information accessed, as would apply had a protective order been entered for the purpose of protecting trade secrets and other confidential business information.” Id. If the NDA holder accepts the OCA terms, the NDA holder can review the ANDA to evaluate the strength of the generic manufacturer’s noninfringement positions. Although the NDA holder does not have to accept the OCA, the US Court of Appeals for the Federal Circuit has been clear that a plaintiff’s failure to conduct an adequate pre-suit patent infringement investigation can sometimes support an award of attorney fees. See eg, ThermoLife Int’l LLC v. GNC Corp., 922 F.3d 1347 (Fed. Cir. 2019).

Azurity markets an oral liquid dosage form of a medication with the active ingredient enalapril under the trade name Epaned®. Bionpharma filed an ANDA with the FDA seeking approval to market a generic version of Epaned® with a Paragraph IV certification and communicated to Azurity that Bionpharma believed its ANDA product would not infringe Azurity’s Orange Book patents. Azurity’s patents covering Epaned® required that the claimed medicament contain a buffer comprising specific concentrations of citric acid and sodium citrate.

Court rules Azurity’s rejection of Bionpharma’s OCA was reasonable

In litigation, Azurity conceded that the buffer limitations were not literally present in the Bionpharma ANDA product, but it argued that the ANDA product satisfied the buffer claim limitations under the doctrine of equivalents. After a five-day bench trial in 2021, the district court determined in relevant part that due to amendments and arguments made by Azurity during prosecution of the asserted patent claims, Azurity disclaimed any buffer other the citrate buffer explicitly claimed.

After trial, Bionpharma moved for fees and argued that Azurity lacked a legitimate theory to overcome prosecution history estoppel regarding the citrate buffer claim limitations. Bionpharma further argued that Azurity lacked interest in the merits of Bionpharma’s defenses by refusing to review Bionpharma’s ANDA before filing suit.

The district court noted that Bionpharma had offered to provide Azurity with the ANDA before any lawsuit was filed, subject to certain confidentiality conditions. The court also found that Azurity’s rejection of Bionpharma’s OCA was reasonable, rejecting Bionpharma’s contention that the OCA terms Azurity initially rejected were essentially identical to the terms to which Azurity acceded during litigation. Here, the court noted that Azurity ultimately accessed the ANDA with a less extensive limitation on Azurity’s outside counsel’s ability to conduct patent prosecution and perform regulatory work before the FDA.

Silvergate highlights potential costly pitfall for NDA holders and ANDA filers

Litigants are encouraged to keep this ruling in mind when negotiating pre-filing access to a potential adversary’s ANDA. One of the reasons Azurity avoided liability for attorney fees was because Azurity could show that the terms of the protective order it agreed to were less restrictive than the OCA terms it initially rejected.

A prudent NDA holder will not agree to terms in a protective order that mirror the terms of an OCA that the NDA holder rejected earlier unless the NDA holder can justify the change in position. Otherwise, a court may infer that the initial OCA rejection was pretextual, and pretextual OCA rejection may be evidence of a lack of pre-filing diligence. An ANDA filer may consider the objective reasonableness of the terms of its OCA when deciding whether to bring a motion under Section 285 for lack of pre-filing diligence.

To find out more about the implications of this ruling, please contact any of the authors or your usual DLA Piper relationship attorney.