AIDS Healthcare Foundation, Inc. v. Gilead Sciences, Inc., et al.

AIDS Healthcare Foundation, Inc. v. Gilead Sciences, Inc., et al.


Decided: May 11, 2018

Case Summary

Tenofovir alafenamide fumarate (TAF) is an antiviral drug that may be combined with other antiviral drugs to treat AIDS. The FDA has approved at least three products that include TAF.

Defendants Gilead Sciences, Japan Tobacco, Johnson & Johnson and Janssen Sciences all either own patents, or are licensees of patents that cover TAF-containing drugs.

Plaintiff AIDS Healthcare Foundation (AHF) does not manufacture or sell drugs; instead, it provides health services—including antiviral drugs—to persons who have AIDS. AHF had reached out to several generic drug makers and asked them to make generic TAF-containing drugs, but none were willing to enter the market because of the existence of the TAF patents. AHF had also asked defendant Gilead for a covenant not to sue, but Gilead did not respond.

AHF then filed a declaratory judgment action against the defendants to “clear out the invalid [TAF] patents” so it would “have the ability to partner with generic drug makers and purchase generic TAF as soon as it could be available.” The District Court dismissed the action, noting that both Article III of the Constitution and the Declaratory Judgment Act (28 USC §2201) require the existence of a justiciable controversy—including a showing that the defendants’ conduct has injured AHF, a connection between defendants’ alleged conduct and AHF’s injury, and “sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” Here, because AHF did not manufacture TAF-containing drugs and generic manufacturers were unwilling to do so, there was no threat or possibility of infringement litigation, and therefore no basis for declaratory judgment jurisdiction.

In its appeal to the United States Court of Appeals for the Federal Circuit (Federal Circuit), AHF presented the following arguments that an actual controversy existed between it and the defendant manufacturers: (1) AHF has or will induce infringement of the TAF patents based on its requests to potential producers to provide the patented products; (2) its dispute with the defendants meets the immediacy requirement because patent litigation takes years; (3) Gilead’s non-response to AHF’s request for a covenant not to sue created a present controversy; and (4) public policy favors invalidation of invalid patents and thus the testing of “weak” patents.

The Federal Circuit rejected AHF’s inducement argument, noting that to be liable for inducement there must be a direct infringer; and because no generic drug company makes TAF-containing drugs, there can be no direct (or induced) infringement.

And regarding AHF’s argument that it meets the immediacy requirement because of the lengthy time required for patent litigation, the panel said that where there is no present infringement, no threat of or possibility of infringement litigation, and no meaningful preparation to infringe, the “immediacy and reality” criteria are not met.

Finally, the panel also said that Gilead’s refusal to give AHF a covenant not to sue—absent some other threatening action—did not give rise to declaratory judgment jurisdiction; and it said that AHF’s argument that public policy favors the testing of weak patents in declaratory judgment actions should be addressed to Congress, not to the courts.

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2018-6 Case summary of AIDS Healthcare 2
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