Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S

LII note: The U.S. Supreme Court has now decided Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S.


Does the counterclaim provision of the Hatch-Waxman Act authorize a generic drug manufacturer in a patent infringement suit to assert a counterclaim compelling the patent holder to modify an overly broad description of its patent?

Oral argument: 
December 5, 2011

Petitioner Caraco Pharmaceutical Laboratories, a generic drug manufacturer, sought FDA approval to market the diabetes drug repaglinide. Pursuant to the Hatch-Waxman Act's expedited FDA application process for generic drugs, Caraco certified that its drug label would not conflict with Respondent Novo Nordisk’s patented repaglinide-metformin use combination. Relying on Novo’s description of its patent, the FDA denied the certification. Caraco invoked the Act’s counterclaim provision to compel Novo to revert to a narrower patent description. The United States Court of Appeals for the Federal Circuit found that Caraco could not assert the counterclaim. Caraco argues that the Federal Circuit’s reading of the counterclaim provision is incorrect and that the purpose of the counterclaim provision—to “correct” misleading patent descriptions—supports reversal. Novo asserts that the statute plainly permits a counterclaim only if Novo’s patent does not claim any approved method of use. The Supreme Court’s reading of the counterclaim provision may affect healthcare costs and the generic drug manufacturing industry.

Questions as Framed for the Court by the Parties 

When the Food & Drug Administration (FDA) approves a drug for multiple uses, the Hatch-Waxman Act allows generic drug makers to avoid contested patent litigation by marketing generic versions of the drug solely for non-patented uses. The FDA lacks the authority and expertise needed to verify the patent information submitted by name-brand drug companies, however, so it defers to their descriptions of the scope of their patents. Such companies can therefore block the approval of generic drugs by submitting overbroad patent descriptions to the FDA, effectively extending their patents to cover non-infringing uses.

To combat this problem, the Act allows a “counterclaim seeking an order requiring the [patent] holder to correct or delete the patent information submitted by the holder . . . on the ground that the patent does not claim . . . an approved method of using the drug.” 21 U.S.C. § 355(j)(5)(C)(ii)(I). In a 2-1 decision that conflicts with this Court's precedents and recent D.C. Circuit authority, the Federal Circuit held that the counterclaim provision effectively authorizes only “delet[ing]” improperly listed patents, but not “correct[ing]” information that misrepresents the scope of the approved uses claimed by a patent. That ruling expressly invalidates longstanding FDA regulations defining “patent information,” which the FDA deems “essential” to administering the Act, without seeking the agency's views. The question presented is:

Whether this counterclaim provision applies where (1) there is “an approved method of using the drug” that “the patent does not claim,” and (2) the brand submits “patent information” to the FDA that misstates the patent's scope, requiring “correct[ion].”


The Hatch-Waxman Act expedites the process by which generic drug manufacturers can obtain approval from the Food and Drug Administration (“FDA”) to market generic drugs, and allows generic drug manufacturers to produce and market brand-name drugs for FDA-approved uses that are not covered by existing patents. When the generic manufacturer submits an abbreviated new drug application (“ANDA”), it may include a “section viii” certification stating that its label will not mention patented uses for the drug. In evaluating the section viii certification, the FDA relies on the patent holder’s (often the brand-name drug manufacturer) description of patents. Further, the Act provides that the brand-name manufacturer may bring a patent infringement action against the generic manufacturer claiming that the ANDA does infringe on the patent. The Act also contains a counterclaim provision allowing the generic manufacturer to seek a court order directing the brand name manufacturer to correct the patent information on file with the FDA.

Respondent Novo Nordisk A/S (“Novo”) produces and markets the drug repaglinide, which treats type 2 diabetes, under the name “Prandin”. Prandin has three FDA approved uses, including repaglinide by itself and repaglinide in combination with the drug metformin. The patent for the composition of repaglinide expired on March 14, 2009, but Novo holds U.S. Patent No. 6,677,358 (the “358 patent”) for the use of repaglinide with metformin, which expires in 2018.

When a brand-name manufacturer applies for FDA approval to sell a new drug, it must provide to the FDA the patent number and expiration date of any relevant patents. For patents that claim at least one method of using the drug, the FDA creates an individualized numerical “use code” for each description of use. When the FDA originally received Novo’s 358 patent information, it assigned the use code “U-546-Use of repaglinide in combination with metformin to lower blood glucose” to the patent.

In February 2005, Petitioner Caraco Pharmaceutical Laboratories, Ltd. (“Caraco”) filed an ANDA to market repaglinide. Caraco indicated in its application that the repaglinide composition patent would expire in 2009, and that the generic drug would not infringe on Novo’s 358 method-of-use patent. Novo sued Caraco for patent infringement in June 2005. Subsequently, in April 2009, Caraco amended the ANDA to add a section viii certification stating that its generic label would not mention the use of repaglinide with metformin. However, in May 2009, Novo submitted to the FDA an amended description of the 358 patent; the FDA replaced the U-546 use code with “U-968-A method for improving glycemic control in adults with type 2 diabetes mellitus.” The FDA accordingly rejected Caraco’s section viii certification, claiming that the application conflicted with the 358 patent use code.

In June 2009, Caraco invoked the counterclaim provision, seeking an injunction for Novo to amend its patent description back to the original U-546 use code. Caraco argued that the new use code was overly broad, because it implied that the 358 patent covered all three approved uses when it only covered the use of repaglinide with metformin. The United States District Court for the Eastern District of Michigan granted summary judgment for Caraco and ordered Novo to correct its description of the 358 patent. On appeal, the United States Court of Appeals for the Federal Circuit reversed, finding that the counterclaim provision is unambiguous and only available where the patent does not cover the drug in question or any of the approved methods of use. Additionally, the Federal Circuit found that the term “patent information” in the counterclaim provision refers only to the patent number and expiration date, thus precluding Caraco’s counterclaim to correct the patent’s use-code. Caraco appealed and the United States Supreme Court granted certiorari on June 27, 2011 to resolve the scope of the counterclaim provision.


At issue is the counterclaim provision of the Hatch-Waxman Act. The counterclaim provision allows generic drug companies to seek a judicial order requiring the original patent holder to “correct” or “delete” the “patent information” submitted by the patent holder on the ground that the patent does not claim “an [FDA-]approved method of using the drug.” The United States Court of Appeals for the Federal Circuit held that a generic drug company could not invoke the counterclaim provision when the original patent claims any FDA-approved method of using the drug, and when the proposed changes and corrections encompass more than patent number and expiration date. The Supreme Court must now determine whether to uphold the Federal Circuit’s ruling, or to order Respondent Novo Nordisk to correct its expanded description of the drug’s uses pursuant to the counterclaim provision.

Is Caraco Entitled to Bring a Counterclaim?

The parties disagree over the statutory interpretation of the counterclaim provision, particularly the meanings of “an approved method” and “patent information.” .According to Petitioner Caraco, it is entitled to bring a counterclaim because the provision’s plain language, legislative history, and statutory structures all point to the conclusion that Novo’s overly expansive use code description is within the contemplation of the provision. Novo, on the other hand, asserts that the plain language and legislative history of the counterclaim provision unambiguously deny Caraco the statutory basis to invoke the provision.

  1. Statutory Interpretation of “an approved method”

Caraco claims that the plain language of the statute indicates that the Federal Circuit incorrectly read “an approved method” as “any approved method.” Caraco argues that it can invoke the counterclaim provision because there are three FDA approved methods of using the drug repaglinide and Novo’s patent only claimed one of the approved uses. Because there are two unclaimed approved methods, Caraco states that it has carried its burden of proof under the provision by showing that Novo’s patent does not claim at least one approved method of using the drug. In other words, Caraco interprets “an approved method” as “one approved method.” Caraco argues that the meaning of “an” that is preceded by and qualified by a negative does not necessarily mean “any.” For example, Caraco asserts that the sentence “The cake did not rise because I did not include an ingredient” does not necessarily mean that the baker did not put in any ingredients, but only one of the ingredients.

On the other hand, Novo contends that the correct grammar usage should compel the court to read “an approved method” as “any approved method” because when “an” is “preceded and qualified by a negative,” standard grammar usage dictates the meaning of “an” to be “any.” Accordingly, in Novo’s view, a generic drug company can only counterclaim when the pioneering drug company’s patent does not cover any approved method of using the drug in question. Novo points out that its patent (for the use of repaglinide in combination with metformin) covers at least one FDA-approved method of use. Therefore, Novo asserts that, based on the plain language of the statute, Caraco cannot invoke the counterclaim provision.

In addition to its plain meaning argument, Caraco contends that the statutory structure of the counterclaim provision bolsters its position. Caraco points out that the burden of proof on whether the provision can be invoked falls on the generic drug company. Therefore, Caraco claims that it does not make much sense to ask a generic drug company to prove whether a pioneering company does claim any approved use as Novo suggests. Caraco asserts that a more natural reading of the statute would consider whether the generic drug company can point to an approved method that the pioneering company does not claim. Caraco argues that Novo is asking the court to read the statute backward.

Novo counters that its reading is not unnatural if the counterclaim provision is read in the context of the Hatch-Waxman Act as a whole, particularly its listing provision under 21 U.S.C. §355(b)(1). The listing provision, which requires patent holders to list uses of drugs, requires a method-of-use patent to claim at least a method of using the drug. Novo argues that the counterclaim provision should be read in parallel with the listing provision, and therefore that the counterclaim provision only exists to remove those patents that do not claim any approved method.

Caraco argues that, if the counterclaim provision only addresses the problem of an improperly listed patent, Congress had no need to include both the remedies of delisting and correction. Caraco suggests that, although improperly listed patents may have prompted Congress to consider providing a counterclaim provision, when Congress passed the bill it had a much broader purpose in mind and included the remedy of correction to address other forms of unanticipated manipulations by pioneering companies to extend the life of their patents. Therefore, Caraco argues that it should be allowed to invoke the counterclaim provision.

In response, Novo emphasizes the narrow use of the counterclaim provision by pointing to the legislative history of the provision. Novo argues that when Congress passed the provision, it was mainly concerned about pioneering companies abusing a 30-month stay period by repeatedly and indefinitely adding a new method-of-use patent relating to the underlying drug near the expiration date. Novo argues that these targeted patents did not involve different or better uses for the drug, but rather minor changes, such as the packaging color. Therefore, Novo contends that the counterclaim provision was adopted to address this narrow problem of patent holders using improperly listed patents to extend the expiration date, not to ward off broad descriptions in the use code.

  1. Statutory Interpretation of “patent information”

Caraco argues that Novo’s overbroad description in its patent use code triggers the counterclaim provision because the use code description is “patent information submitted by the holder".Caraco contends that a use code describes a patent’s method of use and therefore is information about a patent. In addition, Caraco believes that “patent information” includes all patent information submitted under FDA regulations, because the FDA requires other information in addition to patent number and expiration date. Furthermore, Caraco claims that Congress implicitly authorized the FDA’s interpretation of “patent information” by knowingly adopting language similar to FDA regulations. Finally, Caraco suggests that the use code is “submitted under” the Hatch-Waxman Act because the FDA has stated that the regulation to submit a use code derives its legal authority from the Act.

On the other hand, Novo insists on a strict reading of the statute and argues that the “patent information” refers only to the patent number and patent expiration date, not the use code description. Furthermore, Novo disputes Caraco’s position that “patent information” refers to any patent information submitted under FDA regulations. Novo argues that, even though the FDA chooses to publish more than just patent number and expiration date, the statute does not actually require FDA to publish all of that information. Therefore, Novo contends that, because Caraco wants Novo to amend the FDA's use code narrative, the counterclaim provision does not help Caraco.

If Caraco can Bring a Counterclaim, is Caraco Entitled to an Injunction Forcing Novo to Change its Code Use?

Caraco contends it is entitled to a judicial order compelling Novo to “correct” its amended use code description to its original form, because Novo’s use code description misled the FDA to believe that Novo’s patent claims all three approved methods (when in reality it only claims one use). Caraco points out that the newly amended description - “a method for improving glycemic control in adults with type 2 diabetes mellitus” - does not provide any meaningful description on the different uses of the patented compound. Thus, Caraco asserts that the new use code defeats the purpose of the use code regulation, which is to warn generic drug companies of claimed uses of a certain drug and of chemical compounds. Caraco concludes that, because Novo’s newly amended description defeats the purpose of FDA regulation, a judicial order reinstating its original description is an appropriate remedy in this instance.

On the other hand, Novo argues that, even if Caraco can invoke the counterclaim provision, Caraco has no need for a judicial remedy because the use code is not incorrect. Novo notes that, because the use code description is limited to only 240 characters, Caraco should not rely on the use code alone to gauge the scope of the patent. Additionally, Novo points out that an applicant may describe a method-of-use patent either by describing the drug’s use, as in Novo’s original use code, or by describing the drug’s indication (targeted disease and condition), as in Novo’s amended description. Therefore, Novo argues that, although the amended description is beneficial to Novo, the change is legal under the Hatch-Waxman Act.


This case will determine when generic drug companies can invoke the counterclaim provision of the Hatch-Waxman Act, 21 U.S.C. § 355(j)(5)(C)(ii)(I), to challenge as inaccurate patent descriptions brand-name manufacturers submit to the FDA. Petitioner Caraco argues that the counterclaim provision is available when the patent does not cover a proposed method-of-use, and that the Federal Circuit’s interpretation of the counterclaim provision is inconsistent with the use of similar language in the rest of the Hatch-Waxman Act. Respondent Novo counters that the plain language of the statute clearly indicates the counterclaim is not available because Novo’s patent does cover an approved method of use.

Balancing Lower Healthcare Costs with Incentives to Conduct Pharmaceutical Research

The AARP argues that a ruling for Novo will restrain competition, discourage generic companies from using the ANDA process, and lead to increased healthcare costs on an individual and national level. Moreover, the United States contends that a decision in favor of Novo would allow brand-name manufacturers to exploit a weakness that the Hatch-Waxman Act intended to remedy—the FDA’s need to rely on patent holders’ submissions due to a lack of competence and expertise in the patent field. The government asserts that companies like Novo will use overly broad patent descriptions and the FDA approval process to delay generics’ entry into the market, thereby extending the effectiveness of their patent monopoly beyond what Congress intended. AARP claims that these delays will harm consumers by driving up health care costs by billions of dollars.

On the other hand, Allergan, Inc. and other “innovator” or “branded” pharmaceutical companies (“Allergan”) stress that a decision in favor of Novo is in the public’s interest, as it would protect patent rights and encourage research and innovation in accordance with the Hatch-Waxman Act. Specifically, Allergan argues that a decision for Caraco will disincentivize branded manufacturers from finding new uses for existing drugs. Allergan asserts that allowing generic companies to market the same drug, simply by“carving out”any mention of a patented method of use, provides too little protection to the patent holder, since the market could substitute the generic for any use, whether patented or not. Allergan also notes the high expense involved in finding new uses for existing drugs and argues that a decision making it easier for generics to market a drug where a branded company has invested in research efforts to find new uses would discourage branded firms from investing in such innovative research.

Unintended Legal Consequences

Caraco points out that the Federal Circuit's decision may lead to absurd results—generics would be effectively unable to challenge brand-name companies’ overly broad patent use descriptions, and, because the FDA relies on these descriptions to rule on section viii certifications, it would be nearly impossible for generics to successfully claim under section viii that their application does not conflict with patented uses. The Generic Pharmaceutical Association, Inc. (“GPhA”) further asserts that this damage to the section viii process would severely harm the Hatch-Waxman Act’s goal of ensuring accurate use code descriptions by brand-name patent holders.

In response, Allergan argues that allowing generics to counterclaim on FDA use codes will produce extra litigation that fails to resolve the underlying patent infringement dispute. Allergan points out that the use codes at issue here are a FDA creation, and were not intended to be a point of debate under the Hatch-Waxman Act. Further,the Pharmaceutical Research and Manufacturers of America assert that generics have alternatives to the counterclaim provision at issue: Caraco could (1) directly challenge the FDA’s section viii decision under § 702 of the Administrative Procedure Act, or (2) petition the FDA for notice-and-comment rulemaking to heighten the FDA’s patent description requirements or to create a process for interested persons to challenge use codes.


The Supreme Court’s decision in this case will determine the conditions under which a party can invoke the counterclaim provision of the Hatch-Waxman Act. Petitioner Caraco argues that the counterclaim provision encompasses Novo’s overly expansive description of its method-of-use patent in its use code. On the other hand, Novo contends that Caraco has no statutory basis to counterclaim because the use code description was appropriate, and that the counterclaim provision only applies to correct or delete an improper patent name or number. Novo further argues that, even if Caraco could counterclaim, Novo’s newly amended use code description complied with all laws and regulations and needs no correction. The decision may impact the speed at which cheaper generic drugs reach the market, and the incentives for branded manufacturers to find new uses for existing drugs.

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