The Federal Circuit recently heard oral arguments in Allergan’s appeal of its second patent infringement action seeking to preclude Apotex from launching a generic version of Zymar, a pinkeye treatment.

Allergan initially sued Apotex back in 2007 under the Hatch-Waxman Act. Apotex prevailed in that action, with the District Court finding that the asserted claims were invalid as obvious. While that action was pending, Allergan filed a request for reexamination of the patent-in-suit with the PTO, seeking to have the claims examined in light of the prior art and arguments that arose during the first litigation against Apotex. The patent-in-suit survived reexamination and included one amended claim and several new claims, which were narrower in scope than those of in the original patent.

With the reexamination complete, Allergan sued Apotex again for the same generic product that was the subject of the first litigation, alleging infringement of the amended claim and the new claims of the reexamined patent. Apotex moved to dismiss the second action for res judicata, also known as claim preclusion. Claim preclusion applies when there is a final judgment on the merits in a prior suit involving the same parties and the same cause of action. In the patent context, two causes of action are the same if the accused products are substantially the same and the patent claims being asserted are substantially the same.

In opposing Apotex’s motion to dismiss, Allergan argued that the second suit was not barred by claim preclusion because the asserted patent claims were new and not involved in the first litigation. The District Court rejected this position and dismissed the action because the same patent was at issue in both cases and Allergan could have asserted the new claims in the first litigation by narrowly construing the claims, but chose not to do so.

The Federal Circuit’s decision in this case should be carefully watched by generic drug companies. Should Apotex prevail, branded companies cannot take a second bite at the apple by submitting their patents into reexamination with the intention of re-litigating claims against generics after the generic has successfully defended infringement actions under the Hatch Waxman Act.