IP Law Alert : Intellectual Property Lawyers & Attorneys : Gibbons Law Firm : Copyrights, Patent Infringement, Unfair Competition

For years, the average person who heard the phrase “knock offs” would immediately think of counterfeit versions of brand name luxury goods. While counterfeiters continue to target those types of goods, they are by no means the most nefarious or sophisticated category of counterfeiters. Counterfeiters have effectively targeted almost every type of consumer product imaginable, including the drugs and medical diagnostic devices that consumers rely on for their health and safety.

Consumers and pharmaceutical companies are not the only ones facing this growing concern. Pharmacies, hospitals, doctors, insurance companies, and others who are involved in marketing, distributing, or purchasing pharmaceutical and medical device products are at risk.

On June 18, 2013, the Gibbons Institute of Law, Science & Technology at Seton Hall Law School will present a CLE program featuring industry leaders who will provide an overview of the counterfeit drug problem and discuss strategies to combat counterfeiters in the United States and worldwide.

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Pharmaceutical counterfeiting poses a threat to consumers and harms both the reputation and financial condition of pharmaceutical companies. On Tuesday, June 18, the Gibbons Institute of Law, Science & Technology will be hosting "Managing Counterfeiting Issues in the Pharmaceutical Industry," from 5:00 - 7:00 pm at Seton Hall Law School in Newark, NJ.

This program will identify practical, anti-counterfeiting strategies and discuss how drug companies can develop and implement tailored "best practices" to deter and combat counterfeiters.

Panelists for this program include:

• Catherine A. Begley, Regional Security Director for the North America Region, Merck
• Kathleen H. Dooley, Partner, McGuireWoods LLP
• Owen J. McKeon, Director, Intellectual Property Department, Gibbons P.C.
• David W. Opderbeck, Professor of Law and Director, Gibbons Institute of Law, Science & Technology
• Estelle J. Tsevdos, Ph.D., Director, Intellectual Property Department, Gibbons P.C.  

The panelists will discuss the use of technology in inventory tracking and product authentication, various employee training programs that can help companies avoid counterfeiting and how to develop comprehensive investigative and enforcement strategies.

Registration for the program starts at 4:30 pm, with the panel discussion at 5:00 pm and a networking reception following the program at 7:00 pm. The $30 program fee includes food, beverages, parking and 2.0 NY & NJ CLE Credits.

For additional information or to register, please click here.

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We previously reported on the battle over so-called “pay-for-delay” settlements, which puts the pharmaceutical industry versus the Federal Trade Commission (“FTC”) before the Supreme Court, to decide the legality of reverse payments in Hatch-Waxman cases. The case is FTC v. Actavis, Inc., et al.

Last week, the Gibbons Institute of Law, Science & Technology, among 16 other amici, filed briefs in support of respondents and the lawfulness of these payments. The other amici included: Antitrust Economists; Bayer AG and Bayer Corp.; Health Economics and Law Professors; Mediation and Negotiation Professionals; Law Professors Gregory Dolin, Kent Bernard, et al.; The American Intellectual Property Law Association; Enavail, LLC; The Generic Pharmaceutical Association]; Intellectual Property Owners Association; Merck & Co., Inc.; National Association of Manufacturers; Pharmaceutical Research and Manufacturers of America (Phrma); New York Intellectual Property Law Association; Shire plc; Washington Legal Foundation; Generic Manufacturers Upsher-Smith Laboratories, Inc.; Teva Pharmaceuticals USA, Inc.; Ranbaxy Pharmaceuticals, Inc.; Mylan Pharmaceuticals Inc.; and Impax Laboratories, Inc.

The next stop: oral argument before the Supreme Court on March 25. Stay tuned . . . .

Jillian A. Centanni is an Associate in the Gibbons Intellectual Property Department.

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As the so-called pay for-delay case is ripening for Supreme Court oral argument on March 25, 2013, on Tuesday a bi-partisan group of senators introduced legislation meant to strongly deter such arrangements.

The introduction of the bill, known as the "Preserve Access to Affordable Generics Act," follows an annual FTC report disclosing 40 potential pay-for-delay deals struck in the 2012 fiscal year — a jump from 28 such deals in 2011. The goal of the bill is "to prohibit brand name drug companies from compensating generic drug companies to delay the entry of a generic drug into the market." Such reverse payments (payments made by branded pharmaceutical patent holders to generic challengers to postpone market entry) are considered lawful by some, and anti-competitive by others, including the FTC.

The proposed bill would establish a presumption that a drug related patent infringement settlement agreement has an anticompetitive effect and is unlawful if:

(i) an ANDA filer receives anything of value; and
 

(ii) the ANDA filer agrees to limit or forego research, development, manufacturing, marketing, or sales of the ANDA product for any period of time.

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On Monday, the Supreme Court denied the petition for writ of certiorari filed by Apotex seeking review of the Federal Circuit’s May 7, 2012, ruling that affirmed the District Court of New Jersey’s judgment that Otsuka’s patents covering its blockbuster drug Abilify© are valid and not obvious.

In that ruling, the Federal Circuit found no error in the District Court’s application of the so-called lead compound test; an analytical framework in chemical art cases that seeks -- in an obviousness inquiry under 35 U.S.C. § 103 -- to determine whether a POSA (“person of ordinary skill in the art”) would select the proffered prior art as a “lead compound.” Specifically, in a lead compound analysis, the Court will consider:

the hypothetical person of skill in the art’s identification of a lead compound, structural differences between the proposed lead compound and the claimed invention, motivation or teachings in the prior art to make the necessary changes to arrive at the claimed invention, and whether the person of skill in the art would have a reasonable expectation of success in making such structural changes.

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We recently reported that during the August doldrums the Federal Trade Commission (FTC) proposed for comment amendments to the Hart-Scott-Rodino rules that would require reporting of licensing agreements under which a patent holder grants an “exclusive” license, but retains the limited right to manufacture solely for the recipient of the patent rights, or a right to assist in developing and commercializing the product covered by the patent (“co-rights”) and the value of the license exceeds the HSR minimum (currently $68.2 million).

On the last day of the comment period, the Pharmaceutical Research and Manufacturers of America (PhRMA), whose membership includes most large developers and manufacturers of branded drugs, filed a 47-page comment objecting to the proposed Rulemaking.

According to PhRMA, “[t]he proposed rules constitute an unprecedented attempt by the agency to increase the HSR Act requirements for a single industry.” PhRMA’s most fundamental concerns are that: (1) “the HSR Act is a statute of general application that must be applied even-handedly to all ‘persons,’ except as Congress expressly authorized.” Nothing in the Act empowers the FTC to increase the reporting burdens for a single industry; (2) “The proposed discriminatory treatment of the pharmaceutical industry … directly conflicts with the principles of non-discrimination in antitrust enforcement espoused by the U.S. antitrust agencies globally;” (3) the proposed rules fail to comply with the Administrative Procedures Act because there is no basis for the discriminatory treatment of the industry, and the proposed rulemaking “fails to point to any evidence to justify such adverse discrimination.” Indeed, PhRMA states, “the types of intellectual property licensing transactions targeted by the proposed amendments are by no means limited to the pharmaceutical industry,” and “frequently occur in many other industries where innovators may turn to third parties to collaborate on development and commercialization”; and (4) the proposal fails to comply with the Paperwork Reduction Act.

How much weight will PhRMA’s comments carry? We will continue to follow and report.

Anthony A. Dean is Counsel to the Gibbons Business & Commercial Litigation Department.

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In a recent “not for publication” Memorandum Opinion and Order relating to Reckitt Benckiser’s (“RB”) over-the-counter cough syrup, Delsym® (dextromethorphan polistirex), United States Magistrate Judge Douglas E. Arpert of the District of New Jersey found that RB failed to establish trade secret misappropriation, unfair competition, and tortious interference with business expectations claimed against Tris Pharma, following a four-day bench trial.

The case stemmed from RB’s allegations of patent infringement based on Tris’ Abbreviated New Drug Application with the FDA for a generic version of dextromethorphan polistirex. RB later amended its complaint to add counts relating to allegations that a former employee of a RB predecessor had access to and improperly used trade secrets relating to the Delsym® manufacturing process, formulations, and other private R&D information. Years after working for the RB predecessor, this employee was responsible for the development of Tris’ generic version of Delsym®. (In earlier rulings, the Court dismissed a breach of contract count and granted Tris’ motion for summary judgment of non-infringement.)

Regarding RB’s claim for trade secret misappropriation, the Court determined that RB failed to establish that it had an ownership interest in an alleged trade secret;  that the purported critical elements of the purported trade secret were not known to the public; and that the Tris employee disclosed any trade secret or confidential information in the course of his employment at Tris. (See slip op. at 70-73.) Regarding the former employee’s obligations, the Court noted that “absent a covenant not to compete, an employee may freely use the experience gained on one job for a subsequent company” (id. at 72), and that “an employee cannot be prohibited from using general knowledge and expertise for a future employer.” (Id.) The Court likewise ruled that RB’s unfair competition claim failed for similar reasons as the trade secret misappropriation count, and added that RB failed to establish that defendants acted in bad faith. (Id. at 73-74.) Finally, the Court determined that RB failed to establish the elements of their tortious interference claim, including any malicious intent by Tris. (Id. at 74-75.)

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Is the sale or assignment of a patent reportable? The Hart-Scott Rodino Antitrust Improvements Act of 1976 (“HSR”) and related rules require that all acquisitions of voting securities or assets exceeding a threshold amount be reported to the Federal Trade Commission (“FTC”), as well as the Antitrust Division of the Department of Justice. The current threshold is $68.2 million.

Although the statute and rules are silent on the subject, the FTC staff has consistently taken the position that a sale or assignment of a patent is an asset sale subject to reporting if the dollar threshold is exceeded. Likewise, an exclusive license that conveys all significant rights under the patent also is reportable. Until now, however, a license that conveyed the rights to make, use and sell the invention, while reserving a right to manufacture to the patent holder, was not viewed as exclusive and was not reportable. (The value of an exclusive license, according to FTC informal interpretations, can be either the gross, undiscounted sum of future royalties, if determined, or, if royalty amounts are speculative, then the fair market value.)

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Gibbons P.C. is again proud to announce a two-day program for Pharmaceutical Management at the Rutgers University Blanche and Irwin Lerner Center for Pharmaceutical Studies in Newark, NJ. The program, which is open to the public, includes in-depth presentations relating to topics including intellectual property, regulatory, financial and marketing issues relating to the pharmaceutical industry, as well as drug development and the role of biotechnology in pharmaceutical development.

Gibbons P.C. will sponsor the luncheon on July 19th from 12:00 - 1:10 PM immediately after which veteran Gibbons IP Department attorneys will give presentations on issues germane to the pharmaceutical industry. Charles A. Gaglia, Jr., Esq. will discuss the importance of patents to the industry and how patents are obtained and enforced. Sheila F. McShane, Esq. will follow with a presentation concerning the interrelation of patent and regulatory issues and rights and the Hatch-Waxman Act. Ms. McShane also will discuss the balance among patent rights, generic competition and the government agencies involved therein.

For more information on the program, click here.

Those interested in this important program should contact the Rutgers Business School-Newark, 1 Washington Park, Room 464, Newark, NJ 07102, (973) 353-1234.

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Gibbons is proud to once again sponsor lunch at the Rutgers Business School’s Blanche and Irwin Lerner Center for Pharmaceutical Management Studies Program on Thursday, April 26, and Friday, April 27, at Rutgers Business School - Newark, One Washington Park, Room 1027, 10th Floor.

Prior to the lunch on April 26, Charlie Gaglia and Sheila McShane of the Gibbons Intellectual Property Department will present, “Patents and Intellectual Property Rights" from 10:50 am - 12:05 pm.

The two-day program will address timely topics in the pharmaceutical industry, including the regulatory environment; intellectual property issues; marketing, biotech emergence; financial performance metrics; managed care and drug development.

The full agenda for this insightful two-day program can be viewed here.

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In AstraZeneca Pharms. LP. v. Apotex Corp., the Federal Circuit ruled that an Abbreviated New Drug Application (“ANDA”), filed under § 355(j)(2)(B)(ii) and limited to FDA approved, but unpatented uses of a medication, is not an act of infringement of Orange Book-listed patents covering approved but different uses of the same medication. The Court did find that Plaintiff’s allegation that its listed patents are infringed was sufficient to establish subject matter jurisdiction over the generic Defendants.

As we previously wrote, AstraZeneca and its co-plaintiffs (“AstraZeneca”) had sued ten generic drug companies alleging patent infringement under the Hatch-Waxman Act, relating to methods of treatment using Crestor®. The lower court had dismissed the infringement claims, ruling that it lacked subject matter jurisdiction because AstraZeneca had not presented a valid § 271(e)(2) claim based on the ANDA filings alone. The court also dismissed AstraZeneca’s other 271(e)(2) infringement claims as premature. That claim alleged that because the FDA will require the defendants to amend their ANDAs at some point in the future to include all FDA-approved indications, including those covered by the patents-in-suit, infringement under § 271(e)(2) would occur.

On appeal, the Federal Circuit reversed the subject matter jurisdiction decision, finding that jurisdictional requirements are met once a patent owner alleges that another’s filing of an ANDA infringes its patent under § 271(e)(2). Also, the court held that this threshold determination does not depend on the ultimate merits of the claims.

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Coming off a year that included the Smith-Leahy “America Invents Act,” 2012 portends to have some significant developments in IP law.

Decisions for IP practitioners and industry to watch for include:

• the Supreme Court’s decision in Caraco Pharm. Labs. Ltd. v. Novo Nordisk A/S, regarding “use codes” and section viii carve-outs under the Hatch-Waxman Act;
• the Supreme Court’s decision in Mayo v. Prometheus, regarding patentable subject matter, post-Bilski; and
• the Federal Circuit’s upcoming en banc decisions in McKesson and Akamai, regarding joint infringement liability.

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Last week in Warner Chilcott Labs Ireland Ltd. v. Mylan Pharms., the Federal Circuit vacated a grant of preliminary injunction in a Hatch-Waxman case by the District Court of New Jersey. The Federal Circuit acted after the lower court granted a preliminary injunction without either holding an evidentiary hearing or making any findings as to the defendants’ invalidity defense.

The case arises out of Mylan’s filing of an ANDA to market a generic version of Doryx. One month before the 30-month stay expired and Mylan having received tentative approval from the FDA, Warner Chilcott moved for a preliminary injunction against a possible at risk-launch by Mylan. Warner Chilcott’s infringement case turned on whether Mylan’s ANDA product had a “stabilizing coat” as required under the patent in suit. The parties submitted briefs and expert witness declarations, and the court heard oral arguments from both parties on the traditional four factors for injunctive relief: irreparable harm; likelihood of success on the merits; balance of hardships; and the public interest. However, the court did not hold a live evidentiary hearing to hear the testimony of the battling experts, citing scheduling demands and a pressing criminal trial. Instead, the court deferred addressing those issues until the upcoming bench trial. In addition, the court also declined to make any factual determinations as to Mylan’s invalidity challenge. Ultimately, the lower court acknowledged that there were questions of facts to be resolved on the issue of a “stabilizing coat” and it enjoined Mylan from marketing its ANDA product until after trial on the merits.

The Federal Circuit vacated and remanded the lower court’s decision. Writing for the court, Justice O’Malley held that it was an abuse of discretion under established Third Circuit law to grant a preliminary injunction without holding an evidentiary hearing when there were unresolved issues of fact in dispute. In addition, the Federal Circuit also faulted the lower court for making only passing reference to Mylan’s invalidity challenge, and its likelihood of success, without providing an adequate factual record for appellate review.

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Oral argument was recently heard before the Federal Circuit in the appeal of AstraZeneca Pharms. LP. v. Aurobindo Pharma Ltd. AstraZeneca, along with IPR Pharmaceuticals, Inc., and The Brigham and Women’s Hospital, Inc., (“Plaintiffs) sued ten generic drug companies alleging infringement of US Patent Nos. 6,858,618 (“the ‘618 patent”) and 7,030,152 (“the ‘152 patent”) under the Hatch-Waxman Act. These patents claim methods of treatment using rosuvastatin calcium, which Plaintiffs market as Crestor®.

The ten generic drug companies had filed abbreviated new drug applications (“ANDA”) with the U.S. FDA seeking to market generic versions of the drug to treat nonfamilial hypercholesterolemia, homozygous familial hypercholesterolemia or hypertriglyceridemia, uses which were not covered by the two method of use patents, but were FDA approved uses.

Plaintiffs alleged that Defendants’ generic tablets, if approved by the FDA, will be prescribed and administered to human patients according to the Crestor® label to treat heterozygous familial hypercholesterolemia (“HeFH”) and for the primary prevention of cardiovascular disease, which uses will constitute direct infringement of the ‘618 and ‘152 patents, respectively. As noted, the ANDA filed by the Defendants did not embody a use claimed in the patents. Plaintiffs alleged the claimed uses will occur nonetheless because the generic label will mirror the Crestor® label, and will be uses that Defendants know or should know will occur. Therefore, Defendants will actively induce, encourage, aid and abet this prescription and administration, with knowledge and specific intent that these uses infringe Plaintiffs’ rights under the ‘618 and ‘152 patents.

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Gibbons P.C. will once again sponsor lunch at the upcoming Rutgers University/Blanche and Irwin Lerner Center for Pharmaceutical Management Studies Program on Thursday, October 27, from 12:00 - 1:00 pm at Rutgers Business School - Newark.

Prior to the luncheon, from 10:30 am - 12:00 pm, Gibbons attorneys Charles A. Gaglia, Jr. and Sheila F. McShane will present, "Patents and Intellectual Property Rights," a discussion of recent legal developments and trends affecting the pharmaceutical industry.

The full agenda for this two-day program may be viewed here.

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The Federal Circuit’s Myriad Genetics decision, Ass’n for Molecular Pathology v. U.S. Patent and Trademark Office, 99 U.S.P.Q. 2d 1938 (Fed. Cir. 2011), which invalidated most of the method claims in the patents at issue, brings to mind a concern about the value of method claims, particularly to the pharmaceutical industry.

The Myriad Genetics patents at issue included two types of method claims relating to human genetics: one involved determining whether a female patient had abnormal BRCA1/2 genes by comparison of BRCA1/2 gene and BRCA 1/2 RNA from the patient’s tumor sample to those from a non-tumor sample; the second was an activity screening method for anticancer drugs that compared the growth of a host cell transformed with a cancer-causing BRCA gene in the presence and absence, respectively, of the test compound.

The practice of these method claims abroad would not necessarily raise an infringement issue in the U.S. because neither type entails the importation into the U.S. of a product that would potentially infringe the Myriad Genetics composition claims or method claims. Rather, only data from the results of the method claims need be imported. The methods could be practiced in the absence of a claim to the BRCA genes themselves since the technology for isolating the genes, their sequences and the means of transforming host cells therewith are within the skill of the art.

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The Federal Circuit recently found that intervening rights can apply to a claim that has been narrowed by argument only during a reexamination.

In Marine Polymer Technologies, Inc. v. HemCon, the Federal Circuit recently found that narrowing a claim by argument only changes the substantive scope of the claim for purposes of intervening rights. Specifically, a claim term that is changed during reexamination without changing a word in the claim can still substantively narrow the scope of a claim. Therefore, upon reissue of the patent, an infringer would have “… absolute intervening rights with respect to products manufactured before the date of reissue.”

Marine Polymer alleged infringement of certain claims of its U.S. Patent No. 6,864,245 (the “’245 Patent”). During the district court Markman proceedings, the definition of only one claim term, biocompatible p-GlcNAc, was in dispute. The term “biocompatible” appears in every claim of the ’245 Patent. Both plaintiff and defendant proposed term constructions. The District Court reject their proposals and adopted its own, concluding that biocompatible p-GlcNAc meant “polymers… with low variability, high purity, and no detectable biological reactivity as determined by biocompatibility tests.” Based on this claim construction, the district court granted summary judgment of literal infringement for all of the seven asserted claims.

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On Tuesday, September 6, 2011, the Senate invoked cloture on H.R. 1249, also known as the America Invents Act, making it almost a done deal for passage of this Act. One reason that this bill has succeeded over its predecessors is that, with one major exception, there is little difference between the House and Senate versions. The passage of H.R. 1249 will mark the culmination of a 6-year process to pass patent reform legislation that started with H.R. 2795.

The USPTO has provided a summary of the key provisions of H.R. 1249. One provision omitted from this bill but present in failed predecessors is the issue of damages. This generated significant opposition in the past. While H.R. 1249 is not without detractors, it reflects the compromise reached among individual inventors, universities, large and small business concerns. The most controversial provisions in the bill are the following:

• First Inventor to File. Transitions from a “first-to-invent” to a “first-inventor-to-file” patent system while maintaining a 1-year grace period for disclosures by the inventor.

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The Federal Circuit’s recent decision in AstraZeneca LP v. Apotex Inc. illustrates the tension that generic drug manufacturers may face between complying with FDA labeling requirements and avoiding trespassing on others’ patent rights. In that decision, the Federal Circuit affirmed the District Court of New Jersey’s ruling enjoining Apotex’s “at risk” launch of a generic version of an inhaled corticosteroid for asthma patients. In short, AstraZeneca owned a method patent on once-daily dosing of the drug at issue. Although Apotex omitted all references to once-daily dosages from its product label, it was required by the FDA to include “downward titration” language that encouraged patients to reduce their daily intake of the drug to the lowest dose that provides a beneficial effect. AstraZeneca argued that this language induced patients to infringe its method patent, and the court agreed.

For its part, Apotex argued that it lacked the specific intent required to induce infringement because its product label did not instruct patients to engage in the infringing once-daily dosing, and because its instructions allowed for non-infringing use of the drug. The Federal Circuit was not persuaded. Rather, it agreed with the lower court that the language encouraging reduced intake would necessarily result in some users engaging in AstraZeneca’s patented method. The court also found that Apotex’s attempt to design its label around the infringing use showed that it had the requisite knowledge and intent to induce infringement.

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Recently, the U.S. District Court for the Southern District of New York ruled that a generic drug manufacturer may not be required to provide advance notice to the innovator of their intent to launch at-risk a competing product. This decision is noteworthy in that it contrasts with the practice in the District Court of New Jersey where at least one generic company has been ordered to provide advance notice to the brand companies of an impending at-risk launch.

In Teva et al. v. Sandoz, Inc., 08-7611 (S.D.N.Y. October 12, 2010), the district court for the Southern District of New York, denied Teva's request for 10 days advance notice of Sandoz’s launch at risk of a generic version of Copaxone®. The court held that, “[w]hile other courts may have, in other circumstances, ordered generic drug makers to provide another party with notice of its intent and ability to launch, the Court finds that it is unnecessary to do so here.” The court found that Sandoz had no legal obligation to provide Teva with advance notice, particularly since there are no regulatory impediments by the FDA barring entry of Sandoz’s generic product. As such, the court held that ordering Sandoz to provide advance notice would effectively require it to disclose confidential business information to Teva. The court also dismissed Teva’s argument that advance notice could potentially avoid “saddling” the court with an emergency request for a temporary restraining order, noting that Fed. R. Civ. P. 65 sufficiently addresses any such concerns.

Lisa H. Wang is an Associate in the Gibbons Intellectual Property Department.

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Recently certain members of the patent law bar have expressed surprise that the Federal Circuit has used the written description requirements of 35 U.S.C. §112, first paragraph to invalidate patents such as the University of California’s patent directed to insulin in Regents of the University of California v. Eli Lilly & Co., and Genentech’s patent directed to production of human growth hormone in Genentech, Inc. v. Novo Nordisk A/S. This issue has come to the forefront again in Ariad’s pending per curiam appeal from the Federal Circuit decision in Ariad Pharms., Inc. v. Eli Lilly & Co., vacated and rehearing en banc granted. Oral argument in the case was held on December 7, 2009. In the case under appeal, the Ariad patent was held not to meet the written description requirements of 35 U.S.C. §112, first paragraph.

The surprise of the patent bar to the Federal Circuit’s use of this written description requirement and the dual nature of this requirement to invalidate patents reminds me of the exclamation of the police chief in the movie Casablanca, upon being handed his winnings from roulette, “I’m shocked, shocked to find that gambling is going on here.” Written description and the dual requirements of 35 U.S.C. § 112 first paragraph for written description have been the bulwark of United States prosecution, especially interference practice for at least 35 years.

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Several bills are currently pending in Congress establishing expedited marketing approval pathways for biosimilar drugs. The proposed pathways are analogous to the pathway for small molecule chemical drugs established by the passage of the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Act. The Hatch-Waxman Act includes a data exclusivity provision whereby the FDA is prohibited from approving a competitor’s drug application relying on the innovator’s data for a statutory period of time. Recent debates concerning the biosimilar bills have focused on the data exclusivity period. These debates highlight the differences between biological drugs and small molecule chemical drugs and why a longer exclusivity period may be necessary to fill the “patent protection gap.”

Debate on Data Exclusivity Period

Under the Hatch-Waxman Act, a five-year exclusivity period is permitted for a new chemical entity. A three-year exclusivity period is permitted for new clinical investigations of small molecule drugs and other exclusivity periods are granted as incentives to develop drugs for children or small patient populations. With regard to biosimilars, proposals on data exclusivity terms have ranged from no exclusivity period to over 12 years. House bill H.R. 1427 sponsored by Representative Henry Waxman provides for five years of exclusivity while H.R. 1548 sponsored by Representative Anna Eshoo provides for an exclusivity period of up to 14.5 years. An FTC report questions whether any data exclusivity period is necessary, suggesting that existing patent protection and market-based pricing would offer sufficient incentive for biological drug development. The Biotechnology Industry Organization (BIO) counters that the FTC’s report failed to account for the advantage given to follow-on companies who rely on the innovator’s development and research work. In addition, BIO also notes that reliance on patent protection for biological drugs may be inadequate since the biosimilar regulatory approval pathway creates a “patent protection gap.”

Patent Protection Gap

According to BIO, a “patent protection gap” exists because a biosimilar drug is not required to be the “same” as the innovator drug. Representative Waxman’s bill requires only that the biologically similar drug have “no clinically meaningful differences between the biological product and the referenced product would be expected in terms of the safety, purity and potency if treatment were to be initiated with the biological product instead of the referenced product.” In other words, if the biosimilar drug is shown to have no “clinically meaningful difference” when compared to the innovator drug, it can theoretically gain approval even though the biosimilar drug may be different in structure, administration, or mechanism of action.

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Is an end coming for reverse payment settlements of Hatch-Waxman litigations?

The FTC, like Wile E. Coyote chasing The Road Runner, has been doggedly challenging settlements between brand name pharmaceutical companies and generics to resolve Hatch-Waxman litigations. Reverse payments settlements, which the FTC calls “pay-for-delay” deals, where Hatch-Waxman litigations are settled by the brand name drug company’s payment to the generics to stay off the market, have been the main target of the FTC since the late 1990’s. The FTC’s position is that reverse payments impermissibly thwart less expensive generic drugs from timely reaching consumers. While there is a circuit court split on the issue, the recent trend of courts, including the Federal Circuit, has been that reverse payments are acceptable because they are “within the exclusionary zone of the patent and thus [cannot] be redressed by federal antitrust law.” In re Ciprofloxacin (“Cipro”) Hydrochloride Antitrust Litig., 544 F.3d 1323, 1327 (Fed. Cir. 2008), cert. denied 129 S. Ct. 2828 (2009).

The Supreme Court has yet refused to weight in on reverse payments, denying certiorari this past summer despite the FTC’s, and, more recently, the DOJ’s entreaties to take up the issue in the Cipro case. Previously, the DOJ had remained on the sidelines in reverse payment fights, but under the Obama administration’s guidance, the DOJ is now advocating that reverse payments be prohibited. The DOJ’s position on the issue has struck the path for the new kid on the block in the war on reverse payments: Congress.

In Cipro, DOJ’s briefing to the Supreme Court advocated a presumption shift: that a prima facie antitrust claim for reverse payments could be established by showing only that the settlement was a result of consideration provided to the generic by the branded patentee, accompanied by the generic withdrawal of its challenge. The prima facie case could then, however, be rebutted upon a showing that reverse settlement did not unreasonably restrain competition.

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