CAFC Dismisses Bid for PREP Act Protection Due to Lack of Jurisdiction Under Collateral Order Doctrine

“Clearly, the district court is contemplating further litigation will be necessary before a conclusive determination can be reached as to whether immunity is available to Puritan in this case…. This is not a ‘conclusive determination’ of the immunity issue.” – CAFC

CAFCThe U.S. Court of Appeals for the Federal Circuit on Tuesday, May 14, in a precedential opinion, dismissed an appeal by Puritan Medical Products of a district court denial of its partial motion to dismiss a patent infringement case brought by Copan Italia S.p.A and Copan Diagnostics Inc.

The case involved “flocked” swabs “for collecting biological specimens.” The claims cover “a rod [with] a tip covered with fiber with hydrophilic properties” that can absorb biological specimens. Copan holds several patents on flocked swabs and methods of using them. In the U.S. District Court for the District of Maine, Copan filed a patent infringement complaint against Puritan in June 2018, alleging Puritan directly and indirectly infringed and infringes several of its swab patents. As relief, Copan sought “damages caused to Plaintiff by Defendant’s unlawful acts of patent infringement,” as well as a permanent injunction. The case proceeded in 2018 and 2019 until March 10, 2020, when COVID-19 hit and the Secretary of Health and Human Services declared the COVID-19 pandemic a public health emergency, Under the Pandemic Readiness and Emergency Preparedness Act (PREP Act).

Both parties moved to stay litigation in May 2020. It was during that time there was a very high demand for flocked swabs because they were used for COVID-19 testing. The court granted the stay.

Puritan was awarded a contract with the United States Air Force to expand its facilities for manufacturing flocked swabs in June 2020 in accordance with the PREP act at the newly constructed P3 factory. Puritan said the contract provided the necessary funds to construct the new factory to manufacture its flocked swabs.

In its motion to dismiss, Puritan argued that it was immune from liability and suit for a portion of the accused product because the product was protected under the PREP Act. The district court denied the motion in June 2022 and Puritan appealed.

Copan said the PREP Act does not apply to claims for patent infringement; instead, the immunity it confers is limited to claims for “loss” due to physical harm (e.g., product liability claims). Copan argued if the PREP Act’s immunity provision reaches patent infringement claims, then it is unconstitutional. Finally, Copan insisted that Puritan’s “motion to dismiss [was] highly factual” and Copan “should be allowed to explore the factual basis for Puritan’s new allegations” of immunity before the district court should consider dismissal.

The district court denied Puritan’s motion to dismiss because Puritan had not shown that its flocked swabs were “covered countermeasures” under the PREP Act. Puritan had asked the court take judicial notice of what appeared to be a letter from the FDA regarding an Emergency Use Authorization (“EUA”) of a specific antigen test.  Puritan showed as evidence that its swabs were being used in COVID-19 tests.

However, the trial court disagreed saying, “the document does not mention Puritan, the P3 factory, or even flocked swabs.” It added that the letter did not indicate that the factory had been built, or any swabs manufactured, under  the Air Force contract. Therefore, the trial court concluded “that the Air Force contract did not support a conclusion that all flocked swabs created at P3 were related to a federal agreement or would be used in COVID-19 tests constituting covered countermeasures.”

 “In light of the evidentiary gaps” noted, the district court held that “dismissal of the amended complaint is not supported because the limited record . . . does not show that the PREP Act affirmative defense has been proven.”

The district court did grant Puritan’s motion to amend its answer to allow it to assert PREP Act immunity as a defense, one that would be subject to further argument.

On appeal to the Federal Circuit, Puritan argued the CAFC had jurisdiction under the “collateral order doctrine,” which describes “a limited exception to the general requirement that appellate jurisdiction arises only after a district court issues a final order.” To meet the criteria of the doctrine, the district court order must satisfy three conditions: “1] ‘conclusively determine the disputed question,’ [2] ‘resolve an important issue completely separate from the merits of the action,’ and [3] ‘be effectively unreviewable on appeal from a final judgment.’”

Copan countered that “the district court did not conclusively determine that Puritan lacks immunity under the PREP Act.” Instead,  it merely said that “Puritan has not demonstrated that it is entitled to immunity.”

The CAFC ultimately determined it lacked jurisdiction because the district court did not conclusively determine any issue.

Because the district court said that the record wasn’t adequate to allow it to make a finding that the swabs met the “covered countermeasure” criterion, the CAFC said that “[c]learly, the district court is contemplating further litigation will be necessary before a conclusive determination can be reached as to whether immunity is available to Puritan in this case…. This is not a ‘conclusive determination’ of the immunity issue.

The CAFC opinion also rejected Puritan’s bid for it to direct the district court to limit discovery to the immunity issue and to address its affirmative defenses before proceeding to patent discovery; it distinguished the cases Puritan pointed to from other circuits to argue that dismissal would be inconsistent with those decisions; and finally, it said Puritan was incorrect that the questions of fact relied upon to deny the motion to dismiss were forfeited because Copan didn’t dispute them. “Copan, in its briefing opposing the motion to dismiss, stated its belief that the record contained disputed issues of material fact,” the opinion said. The court therefore dismissed the appeal for lack of jurisdiction.

 

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