Korlym: Will Teva prevail on its motion to dismiss the amended complaint?

Zachary Silbersher

We previously wrote about Corcept’s ($CORT) amended complaint in its Hatch-Waxman patent litigation against Teva ($TEVA) regarding Korlym®.  On July 27, Teva filed another motion to dismiss.  Corcept opposed the motion on August 21, and Teva filed its reply on August 28.  The motion is now fully briefed.  Who will prevail?

As we previously discussed, Corcept’s amended complaint added more meat to its allegations that Teva’s generic Korlym® will infringe the ‘495, ’348 and ‘526 patents.  Nevertheless, Corcept’s infringement allegations remains strained.  Teva’s motion to dismiss makes a strong case that there cannot be any infringement because Teva’s proposed label says nothing to suggest that Teva’s proposed generic will infringe these patents.  The ‘495 patent is directed to differentially diagnosing between two types of Cushing’s syndrome, and ‘348 and ‘526 patents are directed to optimizing a patient’s blood levels for mifepristone to greater than 1300 ng/mL actually testing serum levels.  On its face, Teva argues, its label says nothing about doing any of these things.

Taking a bird’s eye view, given that Teva’s label does not appear to speak to any of the asserted patents, it seems unlikely that Corcept will prevail in this litigation.  That, however, does not mean that Teva will prevail on its motion to dismiss.  A motion to dismiss, particularly in a patent-infringement suit, is typically an uphill battle.  Teva, as the party making that motion, carries a heavy burden.  Corcept is not required to prove its case at this stage.  Rather, it is only required that allege a case that is plausible, and if so, it should be permitted to collect the evidence required to prove its case at a later stage.

Corcept’s argument on the ‘495 patent is the most compelling.  Corcept’s amended complaint alleges that Korlym® is indicated for treating certain patients who have either failed surgery or are not candidates for surgery, and Teva’s proposed label includes the same indication.  Likewise, Corcept alleges that because the lable will instruct doctors to determine whether a patient is a candidate for surgery, that will cause those doctors to infringe the ‘495 patent.  And that will indirectly cause Teva to infringe.

That may or may not be true.  In other words, it is not clear if discovery will show that the ‘495 patent is the only method for determining if patients are candidates for surgery.  Nor is it clear at this stage that any doctors will use the method disclosed in the ‘495 patent, rather than other methods.  Yet, there is a nevertheless very real risk that the Judge nonetheless concludes that she cannot make this determination without the aid of discovery and expert opinion, and thus that Corcept has otherwise made a plausible case for infringement.  That Corcept may eventually lose the case because those expert opinions cannot support Corcept’s initial allegations does not mean that the Court will grant Teva’s motion to dismiss the case at this early stage.

Moreover, Corcept also makes a strong argument that Courts should not consider the generic’s proposed label on a motion to dismiss.  There is precedent to support this argument.  This is a technical legal argument that may carry the day for Corcept on this motion.  But if so, it may be cold comfort for Corcept.  Teva could request some form of expedited discovery on dispositive issues that will tee up this motion again, but with the benefit of Teva’s label and expert opinion, within a few short months. 

On the ‘348 and ‘526 patents, Corcept’s amended complaint fares much worse on making any substantial allegations that plausibly suggest that Teva’s proposed generic will infringe these patents.  Notably, contrary to the ‘495 patent, Corcept essentially alleges that it should be permitted to collect discovery to show that these patents are infringed, without necessarily giving any reasons why.  

There is precedent holding that a patent plaintiff in a Hatch-Waxman case does not need to allege much beyond the patent number and that a Paragraph IV certification was filed to make it past a motion to dismiss.  That said, frivolous complaints cannot be filed.  But even if the Court dismisses the case on the ‘348 and ‘526 patents, but allows the case to go forward on the ‘495 patent, then that is likely bad news for Teva.  The case would still have to go forward on at least one patent.

Interestingly, Corcept drops a small bomb at the end of its complaint.  It states that it has submitted an amended label for Korlym® to the FDA that will prescribe measuring and optimizing blood levels in a manner required by the ‘348 and ‘526 patents.  This is a hail mary attempt, and if it really carried any weight, it would be front and center in Corcept’s opposition, not tacked on at the end.  Courts are technically not supposed to consider documents outside of the complaint on a motion to dismiss.  Submitted label amendments, which may or may not even be approved, and which may or may not have the evidence to back them up, are not the type of allegations—buried at the end of a brief, let alone in the amended complaint itself—that are typically successful in defeating a motion to dismiss.  Therefore, the Court is unlikely to give much weight to Corcept’s pending label amendments.

Corcept’s opposition spends a lot of time arguing that Teva’s motion should necessarily fail by virtue of the simple fact that Teva filed a Para. IV certification against the patents.  Corcept argues that Teva had another option, namely, to file a section viii statement.  A section viii statement is typically used when a generic wishes to carve out an indicated use for a drug, and therefore, does not wish to challenge any patents covering that use. 

Yet, Teva persuasively dismantles this argument as essentially a legal red herring that smacks of Corcept’s attempt to deflect attention from the fact that its infringement case rests upon thin reeds.  The Hatch-Waxman statute prescribes that when a generic files a Para. IV certification, that constitutes an artificial act of infringement.  It is artificial because no product has yet to be sold, so not actual infringement has yet to occur.  In most other contexts, the brand would thus lack standing to sue for infringement.  Yet, that is the entire point of the Hatch-Waxman statute—to provide a mechanism for brands and generics to resolve patent hurdles before the drug hits the market.  It was never intended to be an end run around Rule 11 or the requirement that a brand must nevertheless set forth a plausible case of infringement in its complaint.

At this stage, briefing is complete on Teva’s motion.  The Court may or may not schedule an oral argument prior to deciding the motion.  That oral argument could be highly indicative of where the Court is leaning.  The Court set the motion for September 4, but the docket entry simultaneously stated that the motion may be decided without a hearing.  That entry is pro forma, and not a firm indication of anything.  At this point, the motion is before the Court, and it could be either ruled on or scheduled for oral argument at any time.  At Markman Advisors, if an oral argument is scheduled, we are considering attending the hearing.