Updated April 17, 2012, 11:42 a.m. ET.

Supreme Court Sides With Generic Drug Makers .


The U.S. Supreme Court handed a victory to generic-drug companies Tuesday, ruling they can file certain legal counterclaims against brand-drug companies in an effort to get their cheaper copycat medicines on the market.

The court, in an opinion written by Justice Elena Kagan, ruled unanimously that generic-drug makers should be allowed to challenge the way brand-name manufacturers describe their patents to the Food and Drug Administration.

The decision overturned an appeals-court ruling that said generic makers can't bring those legal claims against brand rivals.

The generics argued that their brand rivals, if left unchecked, can describe their patents broadly in FDA submissions as a way to shut out possible generic competition, even for unpatented uses of a drug.

Brand-drug companies said allowing the counterclaims could lead to costly litigation and undermine patent protection for innovative drugs that are costly to develop.

The controversy arises when the FDA considers a drug maker's application to market a generic drug. As part of that process, the agency considers whether the proposed generic will infringe on a branded drug's patents. To determine infringement, FDA relies on use codes submitted by the brand company that describe the scope of their patents. The agency doesn't independently verify the accuracy of companies' patent submissions.

As Justice Kagan noted, "the breadth of the use code may make the difference between approval and denial of a generic company's application."

At issue was an appeal by Caraco Pharmaceutical Laboratories, a unit of Sun Pharmaceutical Industries Ltd., which is seeking to introduce a generic version of Novo Nordisk A/S's NVO +1.42%diabetes drug Prandin.

One Novo Nordisk patent on the drug compound has expired, but the company holds a second patent, which doesn't expire until 2018, that involves the use of the drug in combination with another medicine.

The FDA has approved three uses for the drug. Caraco wants to introduce a generic version for the two uses that aren't patented. The company said it couldn't do so because Novo Nordisk's description of its patent to the FDA was so broad that it prevented the agency from approving a generic version of the drug.

A Sun spokesperson called Tuesday's ruling "a very important victory" for the company and the generic industry as a whole.

Novo has said its FDA submission is correct. Company representatives didn't immediately respond to a request for comment.

The case is Caraco Pharmaceutical Laboratories v. Novo Nordisk, 10-844.

Write to Brent Kendall at brent.kendall@dowjones.com

Supreme Court Sides With Generic Drug Maker - WSJ.com