|||UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term, 1999
|||Docket No. 99-9501
|||April 4, 2000
|||SMITHKLINE BEECHAM CONSUMER HEALTHCARE, L.P.,
WATSON PHARMACEUTICALS, INC., WATSON LABORATORIES, INC., AND CIRCA PHARMACEUTICALS, INC.,
|||Helene D. Jaffe, Weil, Gotshal & Manges Llp (Bruce S. Meyer, Jonathan
Bloom, Elizabeth R. Forminard, and Randi S. Singer, of counsel), New York,
New York, for Plaintiff-Appellant. Joseph P. Lavelle, Howrey & Simon,
Washington, D.C. (Matthew J. Moore, Howrey & Simon; Barry S. White and
James K. Stronski, Frommer Lawrence & Haug Llp, New York, New York,
of counsel), for Defendants-Appellees. Mary Jo White, United States Attorney
for the Southern District of New York, New York, New York (Heidi A. Wendel
and Gideon A. Schor, Assistant United States Attorneys; David W. Ogden,
Acting Assistant Attorney General; William B. Schultz, Deputy Assistant
Attorney General; Douglas N. Letter and H. Thomas Byron III, Attorneys,
Appellate Staff, Civil Division, Department of Justice, Washington, D.C.,
of counsel), filed a brief amicus curiae, on behalf of the United States
of America. Gary L. Yingling, McKenna & Cuneo, L.L.P. (Rebecca L. Dandeker,
of counsel), Washington, D.C., filed a brief amicus curiae, on behalf of
the National Pharmaceutical Alliance. Professor William F. Patry, Benjamin
N. Cardozo School of Law, New York, New York, filed a brief amicus curiae,
on behalf of Pharmacia and Upjohn, Inc.
|||Before: Winter, Chief Judge, Jacobs, and Katzmann, Circuit Judges.
|||The opinion of the court was delivered by: Winter, Chief Judge
|||Argued: January 13, 2000
|||Appeal from an order of the United States District Court for the Southern
District of New York (Denny Chin, Judge) dissolving a preliminary injunction
that prevented Watson Pharmaceuticals from infringing upon SmithKline's
copyrighted label used on its Nicorette gum in Watson's marketing of a competitive
nicotine gum. Because the FDA required Watson to use the infringing label
in selling its drug, the injunction effectively prevented Watson from making
sales. We hold that the Hatch-Waxman Amendments to the Federal Food, Drug,
and Cosmetic Act require generic drug sellers to use labeling that may infringe
a copyright in the label of the pioneer drug. We further hold that, as a
result, copyright liability cannot attach to Watson's use of SmithKline's
label. We therefore affirm.
|||This appeal arises out of a copyright action alleging infringement of
appellant's copyright in a user's guide and audiotape developed for its
Nicorette-brand gum. Appellees, in obtaining approval to sell a competing
generic nicotine gum product, were directed by the Food and Drug Administration
("FDA") to use labeling almost identical to appellant's copyrighted
guide and tape. The FDA acted pursuant to the Hatch-Waxman Amendments to
the Federal Food, Drug, and Cosmetic Act ("FFDCA"), see Drug Price
Competition and Patent Term Restoration Act of 1984 § 101, 21 U.S.C. § 355(j)
("Hatch-Waxman Amendments"). Judge Chin initially enjoined appellees
from selling or shipping its nicotine gum with the infringing label. See
SmithKline Beecham Consumer Healthcare, L.P. v. Watson Pharms., Inc., 63
F. Supp. 2d 467, 473 (S.D.N.Y. 1999) ("SmithKline I"). Subsequently,
the district court determined that the balance of the hardships tilted in
favor of appellees and dissolved its earlier injunction, see SmithKline
Beecham Consumer Healthcare, L.P. v. Watson Pharms., Inc., No. 99 Civ. 9214,
1999 WL 1243894, at *5-*7 (S.D.N.Y. Dec. 22, 1999) ("SmithKline II"),
and SmithKline appealed.
|||Appellees cannot be liable for copyright infringement because the Hatch-Waxman
Amendments require generic drug producers to use the same labeling as was
approved by the FDA for, and is used by, the producer of the pioneer drug.
We therefore affirm.
|||Appellant SmithKline Beecham Consumer Healthcare, L.P. ("SmithKline")
manufactures and sells Nicorette nicotine polacrilex gum ("Nicorette"),
an over-the-counter ("OTC") product designed to help smokers overcome
the cigarette habit. The FDA administrative history of Nicorette, which
was the subject of a patent, is as follows. On January 13, 1984, SmithKline
obtained FDA approval to sell 2 mg strength Nicorette for prescription-only
use. Later, on June 8, 1992, the FDA approved prescription-only use of 4
mg Nicorette. Finally, on February 9, 1996, the FDA approved both 2 mg and
4 mg Nicorette for OTC sale. Pursuant to 21 U.S.C. § 355(c)(3)(D)(iv), SmithKline
obtained a three- year period of exclusivity -- essentially an extension
of the effective term of SmithKline's Nicorette patent based on additional
clinical testing -- for OTC sale of Nicorette.
|||SmithKline's user's guide and audiotape were developed in the course of
its research into producing a method of, and product for, quitting smoking.
To obtain approval for the OTC sale of Nicorette, SmithKline submitted various
versions of the guide and tape to the FDA for review. See 21 U.S.C. § 355(b)(1)(F)
(requiring application for approval of drug to include "specimens of
the labeling proposed to be used for such drug"). Between July 1993
and February 1996, SmithKline made approximately 70 changes to the guide
and the tape at the FDA's request. Most of the changes related to factual
matters, safety, and efficiency. The tape and guide were ultimately included
as part of Nicorette's FDA-approved OTC labeling. On April 21, 1998, SmithKline
registered a federal copyright for the guide and audiotape script. On February
9, 1999, the day when its exclusivity period for Nicorette expired, SmithKline
registered a copyright for the words and music on the tape.
|||Shortly thereafter, appellees Watson Pharmaceuticals, Inc., Watson Laboratories,
Inc., and Circa Pharmaceuticals, Inc. (collectively "Watson")
obtained FDA approval for the OTC marketing of a generic version of nicotine
gum intended to compete directly with Nicorette. To obtain that approval
from the FDA, Watson had to comply with the requirement imposed by the Hatch-Waxman
Amendments that "the labeling proposed for [its] new drug [be] the
same as the labeling approved for" Nicorette. 21 U.S.C. § 355(j)(2)(A)(v);
see also 21 C.F.R. § 314.127(a)(7) ("FDA will refuse to approve an
abbreviated application for a new drug under section 505(j) of the act [if]
. . . . [i]nformation submitted in the abbreviated new drug application
is insufficient to show that the labeling proposed for the drug is the same
as the labeling approved for the listed drug . . . ."). Thus, Watson's
generic nicotine gum was "accompanied by a user guide and audio tape
that [we]re virtually identical to SmithKline's." SmithKline I, 63
F. Supp. 2d at 469.
|||Before Watson could sell its product to the public, SmithKline initiated
the present copyright action, alleging willful infringement of its guide
and tape. The district court granted a preliminary injunction that effectively
stopped Watson from shipping or selling its product. See id. at 473. The
district court relied on a March 1999 FDA letter recounting that the agency
had explained to Watson that "the `same labeling' requirement d[oes]
not require that the generic's behavioral support materials be identical
to the innovator's materials" and indeed that "generic sponsors,
like all other sponsors of nicotine-based smoking cessation aids, have discretion
to design their own audio support materials." Id. at 470. Based on
this representation, the district court "concluded that the FDA would
have permitted Watson to use a user's guide and audio tape that deviated
to some extent from SmithKline's materials . . . [and] that were sufficiently
different in wording and otherwise to avoid copyright concerns." SmithKline
II, 1999 WL 1243894, at *3.
|||Subsequently, the FDA altered its position. In the face of the preliminary
injunction, Watson revised its guide and tape to render them "comparable,
but not identical, to SmithKline's." Id. However, on November 23, 1999,
the FDA rejected the revised user guide. The FDA "advised Watson that
it would approve a revised version of Watson's `previously approved labeling,'
i.e., the virtually identical user's guide previously approved by the FDA."
Id. To assist Watson, the FDA "marked up a copy of the previously approved
user guide" and bracketed certain portions of text which could be in
appropriate cases deleted or "substituted with new text . . . . similar
to the original in tone, content and length." Id. Nevertheless, the
bracketed guide gave Watson "very little leeway to deviate from the
previously approved user guide." Id. In essence, therefore, the FDA
"determined that Watson had to copy verbatim substantially all of the
text used in the SmithKline" user's guide. Id. at *4.
|||In December, representatives of the FDA attended a conference with the
district court, at which time the court asked the FDA to "`revisit'
the question of whether portions of Watson's proposed user's guide could
be rewritten to change the text `a little bit' to address the copyright
concerns." Id. On December 15, the FDA wrote the court and advised
that it had "decline[d] to change its approach to Watson's labeling"
and that it could not address copyright concerns because it "ha[d]
never been directed by Congress to consider potential copyright rights in
approving generic drug labeling." Id. In a supplemental decision issued
the same day, the FDA "adhered to its decision to require Watson to
copy verbatim most of the SmithKline" user guide. Id.
|||In light of the FDA's position, the district court dissolved the preliminary
injunction, citing also Watson's efforts to revise its materials, the prejudice
caused Watson by delay, and the public interest in a generic nicotine gum
product. See id. at *5-*7. We granted SmithKline's motion for a stay and
expedited the appeal.
|||A preliminary injunction may issue only if the plaintiff demonstrates
irreparable harm, and either a likelihood of success on the merits, or sufficiently
serious questions going to the merits to make them a fair ground for litigation
and a balance of hardships tipping decidedly in its favor. See Otokoyama
Co. v. Wine of Japan Import, Inc., 175 F.3d 266, 270 (2d Cir. 1999). We
may overturn a district court's decision to dissolve a preliminary injunction
only if it constitutes an abuse of discretion, "which usually involves
either the application of an incorrect legal standard or reliance on clearly
erroneous findings of fact." ABKCO Music, Inc. v. Stellar Records,
Inc., 96 F.3d 60, 64 (2d Cir. 1996); accord Niagara Hooker Employees Union
v. Occidental Chem. Corp., 935 F.2d 1370, 1374 (2d Cir. 1991).
|||In ruling on an interlocutory appeal, we generally "will go no further
into the merits than is necessary to decide the interlocutory appeal."
American Cyanamid Corp. v. Connaught Lab., Inc., 800 F.2d 306, 310 (2d Cir.
1986) (quoting Hurwitz v. Dirs. Guild of Am., Inc., 364 F.2d 67, 70 (2d
Cir. 1966)). However, "this rule is subject to a general exception
- [we] may dismiss the complaint on the merits if [our] examination of the
record . . . reveals that the case is entirely void of merit." Id.
(dismissing trademark infringement action on appeal of preliminary injunction
(quoting Hurwitz, 364 F.2d at 70)). This appeal falls within that exception.
|||We do not doubt that SmithKline has demonstrated the existence of substantial
issues under the copyright laws, at least when they are considered in isolation.
See 17 U.S.C. §§ 101 et seq. SmithKline's guide and tape are creative works
in which it has a substantial investment, and they are integral to both
the marketing and use of Nicorette. Watson's guide and tape are concededly
in large part copies of SmithKline's copyrighted materials. Moreover, Watson
intends to use the guide and tape in marketing a product in direct competition
with SmithKline's gum. Absent more, the propriety of a preliminary injunction
would seem clear.
|||Watson asserts that this copying, having been dictated by the FDA, is
a "fair use" protected under 17 U.S.C. § 107. The United States,
in its amicus curiae brief, argues instead that in submitting its copyrighted
materials for FDA approval, SmithKline gave the FDA an implied, nonexclusive
license to permit or require generic drug applicants to copy the user's
guide and audiotape in their own nicotine gum packaging.
|||Neither fair use nor implied license is clearly a defense in the present
circumstances. Watson's use of SmithKline's copyrighted works in its labeling
is rather different from the sorts of copying traditionally deemed to constitute
a fair use, e.g., copying for "purposes such as criticism, comment,
news reporting, teaching . . ., scholarship, or research." See 17 U.S.C.
§ 107. Moreover, courts have found implied licenses only in "narrow"
circumstances where one party "created a work at [the other's] request
and handed it over, intending that [the other] copy and distribute it."
Effects Assocs., Inc. v. Cohen, 908 F.2d 555, 558 (9th Cir. 1990); see also
Korman v. HBC Fla., Inc., 182 F.3d 1291, 1293 (11th Cir. 1999) (determining
that plaintiff gave defendant radio station implied, nonexclusive license
to use jingles she had written for station).
|||However, we see little need for further examination of these possible
defenses. *fn1 If either were to prevail,
some new law, essentially judge-made, would have to be fashioned. In our
view, the case can more easily be disposed of on the straightforward ground
that the Hatch-Waxman Amendments to the FFDCA not only permit but require
producers of generic drugs to use the same labeling as was approved for,
and is used in, the sale of the pioneer drug, even if that label has been
copyrighted. Because those Amendments were designed to facilitate rather
than impede the approval and OTC sale of generic drugs, the FDA's requirement
that Watson use much of SmithKline's label precludes a copyright infringement
action by SmithKline. SmithKline's copyright claim is therefore meritless,
and we need not address either the fair use or implied license defenses.
|||The FFDCA prohibits the sale of drugs that are not first approved by the
FDA. See 21 U.S.C. § 355(a); Weinberger v. Hynson, Westcott & Dunning,
Inc., 412 U.S. 609, 612-13 (1973). To gain FDA approval, manufacturers of
new drugs must generally submit a "new drug application" ("NDA")
that demonstrates the drug's safety and efficacy for its intended uses.
See 21 U.S.C. § 355(b). The NDA must include, inter alia, drug samples,
proposed labeling, and the results of clinical safety and efficacy tests.
See id.; see also 21 C.F.R. § 314.50.
|||Generic drugs are identical to pioneer drugs that have previously obtained
FDA approval; they can be marketed once the pioneer drug's patent protection
and FFDCA exclusivity periods expire. See H. Rep. No. 98-857, Part I, at
16 (1984), reprinted in 1984 U.S.C.C.A.N. 2647, 2649; see also 21 U.S.C.
§ 355(j)(2)(A)(vii). In 1984, the Hatch-Waxman Amendments were enacted "to
make available more low cost generic drugs by establishing a generic drug
approval procedure for pioneer drugs . . . ." 1984 U.S.C.C.A.N. at
2647. The Amendments provided that, rather than filing a complete NDA, manufacturers
of generic drugs need complete only an "abbreviated new drug application"
("ANDA"), which could essentially piggy-back on the pioneer drug's
human clinical trials and labeling. See 1984 U.S.C.C.A.N. at 2649.
|||The Hatch-Waxman Amendments reflect the FDA's view that clinical retesting
of generic drugs was "unnecessary and wasteful because the drug ha[d]
already been determined to be safe and effective," as well as "unethical
because it [would] require that some sick patients take placebos and be
denied treatment known to be effective." Id. Bypassing redundant human
testing would also speed up FDA approval for generic entrants and thus introduce
price competition more rapidly once the pioneer producer's patent and exclusivity
periods expired. See Mead Johnson Pharm. Group v. Bowen, 838 F.2d 1332,
1333 (D.C. Cir. 1988) (interpreting congressional purpose of Hatch-Waxman
Amendments to be "increas[ing] competition in the drug industry by
facilitating the approval of generic copies of drugs").
|||Except for human clinical tests, the ANDA requires a manufacturer to submit
to the FDA the same items as required in the NDA, see 21 U.S.C. § 355(j)(2)(A)(vi);
1984 U.S.C.C.A.N. at 2649 ("The only difference between a NDA and an
ANDA is that the generic manufacturer is not required to conduct human clinical
trials."), as well as information to show that the generic drug has
the same active ingredients, means of administration, dosage form, strength,
pharmacological or therapeutic class, and labeling as the already-approved
pioneer drug, and that the generic drug does not infringe any outstanding
patents. See generally 21 U.S.C. § 355(j)(2)(A).
|||With specific regard to labeling, the Hatch-Waxman Amendments require
that an ANDA "show that the labeling proposed for the [generic] drug
is the same as the labeling proposed for the [pioneer] drug . . . except
for changes required because of [approved] differences [between the pioneer
and generic drug] or because the [generic] drug and [pioneer] drug are produced
or distributed by different manufacturers." 21 U.S.C. § 355(j)(2)(A)(v).
The FFDCA defines "label" and "labeling" for these purposes
as "a display of written, printed, or graphic matter upon the immediate
container of any article" or "accompanying such article,"
21 U.S.C. § 321(k) & (m), which the FDA has broadly interpreted to include
"[b]rochures, booklets, . . . sound recordings, . . . and similar pieces
of printed, audio, or visual matter descriptive of a drug." 21 C.F.R.
|||Applying the Hatch-Waxman Amendments to the present appeal, SmithKline's
copyright claim fails. First, its copyrighted user's guide and audiotape
constitute "labeling" for purposes of the Hatch-Waxman Amendments.
SmithKline has not contended otherwise and understandably so. The guide
and tape clearly fall within the statutory and regulatory definitions quoted
immediately above. Moreover, they were submitted to the FDA as part of SmithKline's
quest for administrative approval of OTC sales of Nicorette. The guide and
tape were approved only after more than two years of administrative consideration
and after that consideration had led to some 70 changes in the guide and
tape at the FDA's request.
|||Second, the FDA's requirement that Watson use copious amounts of SmithKline's
copyrighted material is not a misapplication of the Hatch- Waxman Amendments.
As noted, the Amendments require that the labeling for the generic drug
be the "same" as the labeling for the pioneer drug. See 21 U.S.C.
§ 355(j)(2)(A)(v). To be sure, as SmithKline noted at oral argument, "same"
may be something less than "identical." However, where the language
of a document is the "same" as that of a copyrighted work, the
former usually infringes the latter. Certainly, a legislative drafter would
believe that a sameness requirement would lead to the creation of works
that would easily fall within the copyright law's infringement test of "substantial
similarity." See, e.g., Hamil Am., Inc. v. GFI, 193 F.3d 92, 99 (2d
Cir. 1999) ("To prove infringement, a plaintiff with a valid copyright
must demonstrate that: (1) the defendant has actually copied the plaintiff's
work; and (2) the copying is illegal because a substantial similarity exists
between the defendant's work and the protectible elements of plaintiff's."
(internal quotation marks omitted)), cert. denied., 120 S. Ct. 1171 (2000).
*fn2 Indeed, the legislative history of
the Hatch-Waxman Amendments suggests that whatever difference may exist
between "same" and "identical" is narrow and intended
to prevent misstatements rather than infringement: [A]n ANDA must contain
adequate information to show that the proposed labeling for the generic
drug is the same as that of the listed drug. The Committee recognizes that
the proposed labeling for the generic drug may not be exactly the same.
For example, the name and address of the manufacturers would vary as might
the expiration dates for the two products. Another example is that one color
is used in the coating of the listed drug and another color is used in that
of the generic drug. The FDA might require the listed drug maker to specify
the color in its label. The generic manufacturer, which has used a different
color, would have to specify a different color in its label. H. Rep. No.
98-857, Part I, at 22 (1984), reprinted in 1984 U.S.C.C.A.N. 2647, 2655.
|||Third, if SmithKline's copyright claim has merit, then Watson cannot realistically
use the ANDA process to sell its generic nicotine gum because it will either
have to change the label and lose FDA approval or be enjoined from using
a label that infringes SmithKline's copyright. We are thus faced with a
conflict between two statutes. The Hatch-Waxman Amendments require generic
drug producers to use labeling that will infringe upon copyrights in labels
of pioneer drugs. The Copyright Act seems to prohibit such copying. However,
applying the familiar canon that, where two laws are in conflict, courts
should adopt the interpretation that preserves the principal purposes of
each, see, e.g., Zenith Elecs. Corp. v. Exzec, Inc., 182 F.3d 1340, 1347
(Fed. Cir. 1999) ("Unless Congress clearly indicates which of two statutes
is to prevail in event of conflict, our responsibility is to interpret and
apply them `in a way that preserves the purposes of both and fosters harmony
between them.'" (quoting Vornado Air Circulation Sys., Inc. v. Duracraft
Corp., 58 F.3d 1498, 1507 (10th Cir. 1995))),
*fn3 the conflict is less stark and more easily resolved than it might
|||The purposes of the Hatch-Waxman Amendments would be severely undermined
if copyright concerns were to shape the FDA's application of the "same"
labeling requirement. The Amendments were intended to facilitate the introduction
of generic competitors once a pioneer drug's patent term and exclusivity
periods had ended by allowing the generic producer to piggy-back upon the
pioneer producer's successful FDA application. For example, human testing
by the generic producer is not required because it would be time-and-resource-consuming
even though redundant. For the very same reason, the creation and approval
of new labels is avoided by the "same" labeling requirement. If
labels that were "substantially similar" to copyrighted labels
on pioneer drugs had to be avoided, the administrative process of approving
a new label would, in cases like the present one, drain the resources of
the FDA and generic producer -- not to mention the problem of successive
generic producers avoiding infringement of multiple copyrighted labels.
Avoiding such infringement would also delay the introduction of the generic
product without advancing public health and safety to any perceptible degree.
For that reason, Congress left no room for such redundant proceedings and
adopted the "same" labeling requirement. The FDA cannot be faithful
to that requirement, however, without requiring labels that will often violate
copyrights. If copyright law were to prevail, producers of generic drugs
will always be delayed in -- and quite often prohibited from -- marketing
the generic product, results at great odds with the purposes of the Hatch-Waxman
|||No such severe undermining of the purpose of the copyright laws would
follow from the rejection of SmithKline's claim, however. The creation of
labels to be approved by the FDA, such as SmithKline's user's guide and
audio tape, is ancillary to the FDA's administrative process. The creativity
of the author is focused not only on pleasing and medicating ultimate consumers
but also on obtaining the administrative approval of labeling necessary
to FDA approval of a drug that will be protected from competition both for
the period of the patent term and FFDCA exclusivity periods. *fn4
|||Our point here is not only that Congress would have provided explicitly
that the Hatch-Waxman Amendments trump the copyright laws had it foreseen
the statutory conflict exposed by the present action, although we firmly
believe that to be obvious. Our point is also that the profit sought by
the creator of the pioneer drug label flows primarily from the administrative
approval of the drug and the patent and exclusivity periods free from competition
that follow. The pertinent purpose of the copyright laws -- to encourage
the production of creative works by according authors a property right in
their works so that authors will not have to share profits from their labors
with free riders, see, e.g., Mazer v. Stein, 347 U.S. 201, 219 (1954) ("The
economic philosophy behind the [copyright] clause . . . is the conviction
that encouragement of individual effort by personal gain is the best way
to advance public welfare . . . ."); see also Twentieth Century Music
Corp. v. Aiken, 422 U.S. 151, 156 (1975) ("[T]he ultimate aim is, by
this incentive, to stimulate artistic creativity for the general public
good."); cf. Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 586
(1994) (emphasizing that "some works are closer to the core of intended
copyright protection than others" in assessing fair use defense to
claim that parody infringed on valid copyright) -- is not seriously implicated
by allowing the "same" labeling requirement to trump a copyright
under the Hatch-Waxman Amendments. *fn5
It is simply not conceivable that, if we reject SmithKline's claim, pioneer
drug producers will so fear the copying of labels by future generic drug
producers that some pioneer producers -- or even one of them -- will lack
the incentive to create labeling needed for FDA approval.
|||We emphasize that we do not read the Hatch-Waxman Amendments to repeal
other rights under the Copyright Act of copyright owners in SmithKline's
circumstances. Even though such an owner cannot enforce its copyright against
generic drug manufacturers who are required by the Hatch-Waxman Amendments
to copy labeling and who do no more than that, it still retains a copyright,
if otherwise valid, in the label and might well pursue copyright claims
against potential infringers in other circumstances, e.g., use of the copyrighted
material in non-labeling advertisements.
|||Because recognition of SmithKline's claim here would severely undermine
the Hatch-Waxman Amendments while its dismissal would not impair the copyright
laws, we affirm and direct dismissal of SmithKline's complaint for failure
to state a claim. *fn6 The stay is lifted
|||*fn1 The implied license issue is somewhat
superfluous in that the license would have to be inferred from the Hatch-
Waxman requirement that copyright labels be infringed. If that view of Hatch-
Waxman is correct, as the present opinion holds, then the outcome is dispositively
determined without further discussion of the doctrine of implied license.
|||*fn2 Some courts have held that infringement
of a copyright in commercial labeling must involve verbatim or near- verbatim
copying. See, e.g., Sassafras Enters., Inc. v. Roshco, Inc., 889 F. Supp.
343, 345 (N.D. Ill. 1995) (in copyright labeling claim, "[a]bsent verbatim
or near- verbatim copying, no infringement exists"). However, this
heightened standard typically involves a copyrighted label of a "fact-
based work," id. at 347, and SmithKline's guide and tape are substantially
more creative than the typical commercial labels afforded copyright protection.
We need not decide whether the traditional "substantial similarity"
infringement test or a heightened "verbatim or near- verbatim"
test applies to the instant case. As discussed infra, the plain language
of the Hatch- Waxman Amendments, their legislative history, and their interpretation
by the FDA all require manufacturers of generic drugs to copy the labeling
of pioneer drugs "near- verbatim" to obtain ANDA approval, and
this statutory mandate necessarily trumps any copyright interest in the
label at issue.
|||*fn3 In addition to looking to conflicting
statutes' principal purposes, courts have traditionally given weight to
statutes' priority of enactment and specificity in reconciling conflicts.
See, e.g., FDA v. Brown & Williamson Tobacco Corp., No. 98- 1152, 2000
WL 289576, at *13 (Mar. 21, 2000) ("The classic judicial task of reconciling
many laws enacted over time, and getting them to `make sense' in combination,
necessarily assumes that the implications of a statute may be altered by
the implications of a later statute. This is particularly so where the scope
of the earlier statute is broad but the subsequent statutes more specifically
address the topic at hand. . . . [A] specific policy embodied in a later
federal statute should control our construction of the earlier statute,
even though it has not been expressly amended." (internal quotation
marks, brackets, and citations omitted)). Here, of course, both time of
enactment and specificity favor our interpretation: the Hatch- Waxman Amendments
were enacted subsequent to the Copyright Act of 1976, and the Copyright
Act's broad generality contrasts with the Hatch- Waxman Amendments' specific
generic drug approval scheme.
|||*fn4 Indeed, Congress enacted the Hatch-
Waxman Amendments as a partial amendment to the patent laws. It extended
patent length for drugs to accommodate the delay caused by the FDA's testing
process and slightly weakened patentholders' rights by permitting prospective
manufacturers of generic drugs to engage in preliminary testing pursuant
to ANDAs before pioneer drugs' patents or terms of exclusivity had fully
expired. See 1984 U.S.C.C.A.N. at 2714 & n.20.
|||*fn5 Although commercial labeling is
clearly copyrightable, see 1 Nimmer on Copyright § 2.08[G], at 2- 135 ("It
is clear that [17 U.S.C. §] 102(a)(5) includes prints and labels used for
articles of merchandise under the general protection accorded to pictorial,
graphic and sculptural works." (citing H.R. Rep. No. 94- 1476, at 54
(1976) ("There is no intention whatever to narrow the scope of the
subject matter now characterized in section 5(k) as `prints and labels used
for articles of merchandise.'"))), it has been recognized that the
"danger lurking in copyright protection for labels is that the tail
threatens to wag the dog proprietors at times seize on copyright protection
for the label in order to leverage their thin copyright protection over
the text . . . on the label into a monopoly on the typically uncopyrightable
product to which it is attached." Id. § 2.08[G], at 2- 138. "Used
in that fashion, the copyright serves `primarily as a means of harassing
competitors,' and thus fails `nine times out of ten.'" Id. at 2- 139.
Here, although the labeling at issue is more creative than that in the "familiar"
commercial labeling cases, see Sassafras, 889 F. Supp. at 345, SmithKline's
copyright claim is arguably weaker than even the typical commercial labeling
case, because the copyrighted text was submitted to obtain FDA approval
and consequent market exclusivity.
|||*fn6 Even though SmithKline cannot enforce
its copyrights against generic drug manufacturers who are required by the
FDA to copy its labeling pursuant to the Hatch- Waxman Amendments, SmithKline
retains its copyright in the user's guide and audiotape. SmithKline might
well pursue copyright claims against potential infringers in other circumstances,
e.g., use of the copyrighted material in non- labeling advertisements.
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