Gibbons Institute of Law, Science & Technology Files Amicus Brief in "Pay-for-Delay" Case Before Supreme Court

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.

NJ Seeks Partner to Create Life Sciences/Healthcare IT Accelerator

The New Jersey Economic Development Authority (EDA) has announced its search for a private partner to manage the launch of a Life Sciences/Healthcare IT Accelerator.

According to yesterday’s EDA Press Release, New Jersey is looking for a business partner to oversee the Accelerator, whose goal is to use the region’s business acumen to engender innovation and entrepreneurship. This announcement follows the recent enactment of the New Jersey Angel Investor Tax Credit Act, an investment stimulus measure for high tech start ups that provides investment incentives for “angel investors.”

In 2010, New Jersey successfully launched its first technology accelerator, TechLaunch, premised on nurturing companies focused on advancing technology through investment and industry expertise. The newly announced Life Sciences/Healthcare IT Accelerator will follow this model and be based at EDA’s North Brunswick, New Jersey-based Commercialization Center for Innovative Technologies (CCIT).

It is anticipated that the EDA will issue a Request for Proposals at the end of this month for partner companies interested in competing to manage the Accelerator. The solicitation will be available at www.njeda.com. Additional details about the program are set forth in the Press Release, and are available from the BioNJ Office at 609-890-3185 or e-mail at BioNJ@BioNJ.org.

Once a partner is selected and the program is launched, the New Jersey Accelerator plan will afford intensive training, mentorship and seed investment as well as business networking opportunities to the ten or so selected company participants. The training would culminate in a formal technology and business presentation to various investors.

In sum, the Life Sciences/Healthcare IT Accelerator will capitalize on the synergies of New Jersey’s business community to spur additional economic development and growth in the region.

New Jersey Law to Stimulate High Tech Investment

This past week, Governor Christie signed into law S. 581, entitled the “New Jersey Angel Investor Tax Credit Act.” The new law is designed to stimulate investment in New Jersey’s high tech start ups by providing investment incentives for “angel investors.”

The law provides credits against corporation, business and gross income taxes for investing in New Jersey’s emerging technology businesses, including: advanced computing; advanced materials; biotechnology; electronic devices; information technology; life sciences; and mobile communications, among others. Angel investors in these start-ups will be eligible for tax credits equal to 10 percent of their investments, up to a maximum allowed credit of $500,000 for the tax year. Other criteria for the start-ups require that they employ fewer than 225 employees, 75 percent of whom must work in New Jersey. The overall program has an annual cap of $25 million.

As the comments to the new law recognize: “[A]ngel investors can play a vital part in New Jersey’s economic recovery.... [According to a 2010 research paper], start-up firms receiving angel capital have a significantly higher rate of survival, faster growth, and superior access to fundraising outside the angel group than early-stage firms devoid of angel financing.”

This latest initiative follows in step with a 2011 Jones Lang LaSalle report, which we reported last year, ranking New Jersey second for biotechnology strength among U.S. states.


Ralph A. Dengler is a Director in the Gibbons Intellectual Property Department. Thomas J. Bean, a Director in the Gibbons Intellectual Property Department, co-authored this post.

DNJ Rejects Double-Patenting Claim

Last week, in Gilead Sciences, Inc. v. Natco Pharma Ltd., the District of New Jersey ruled on summary judgment that Gilead Sciences did not unlawfully extend its patent protection on oseltamivir (Tamiflu), a neuraminidase inhibitor used to treat the flu, covered by U.S. Patent No. 5,763,483 (“the ’483 patent”). Natco Pharma sought to invalidate the ‘483 patent for obviousness-type double patenting in its attempt to market a generic version of Tamiflu prior to the patent’s expiration. Natco had alleged, inter alia, that the claims of the ’483 patent were invalid due to obviousness-type double-patenting over Gilead’s later issued U.S. Patent No. 5,952,375 (“the ’375 patent”).

Obviousness-type double-patenting is a judicially created doctrine that seeks to preclude an inventor from unjustifiably extending patent protection beyond the statutory limit. The relevant inquiry requires a two-step analysis: first, as a matter of law, a court construes the claim in the earlier patent and the claim in the later patent and determines any differences; second, a court decides if the differences between the two claims demonstrate a patentable distinction. Slip op. at 5, citations omitted.

Here, District of New Jersey Judge Susan A. Wigenton was presented with the nuanced-question of whether a later-issued, but earlier-expiring patent can be used as a reference to invalidate an earlier-issued, later-expiring patent. Id. Gilead’s ‘375 patent issued in September 1999 and claimed priority over a family of patent applications dating as far back as February 1995. The ‘483 patent issued in June 1998 from an application filed in December 1995. Analagous questions were previously considered by the District of Delaware last year. See Abbott Labs. v. Lupin Ltd., 2011 WL 1897322 (D. Del. May 19, 2011); Brigham & Women’s Hosp. Inc. v. Teva Pharm. USA, Inc., 761 F. Supp. 2d 210 (D. Del. 2011). And, similar disputes can be expected going forward due to practical anomalies now arising from enactment of the Uruguay Round Agreements Act of 1994 (the “URAA”), which changed the length of patent terms in the United States from the former period of 17 years calculated from the date of patent grant, to 20 years from the earliest effective filing date (effective June 8, 1995)).

The Court agreed with Gilead -- and the above-listed District of Delaware opinions -- that a later-issued, earlier-expiring patent cannot invalidate an earlier-issued, later-expiring patent on the basis of obviousness-type double patenting. The Court reasoned that the ’375 patent cannot serve as a reference patent since it was issued after, and terminates before, the ’483 patent, and therefore does not unlawfully extend Gilead’s right to exclusivity. Accordingly, the Court found that the lifespan of Gilead’s patents was not a result of gamesmanship, but instead resulted from changes to the patent laws.


Todd M. Nosher is an Associate in the Gibbons Intellectual Property Department. Ralph A. Dengler, Counsel to the Gibbons Intellectual Property Department, co-authored this post.

Supreme Court Takes on Myriad

As anticipated, the Supreme Court has granted certiorari in Association for Molecular Pathology v. Myriad Genetics, et al. (the “Myriad” case) to review the Circuit Court’s opinion. The Court previously granted certiorari to vacate and remand the Federal Circuit’s Myriad decision for reconsideration in view of the Court’s 2012 decision in Mayo Collaborative Services, et al. v. Prometheus Laboratories, Inc. (“Mayo”). Notwithstanding Mayo, the Federal Circuit reached the same result on remand as its initial decision.

We previously posted on various developments underlying the “Myriad” case. Prior to the certiorari grant, the Federal Circuit had held that isolated DNA sequences from human BRCA 1 and BRCA 2 genes are patentable subject matter under 35 U. S. C. §101. Specifically, the Federal Circuit reasoned that DNA sequences in their isolated state “are not the same molecules as DNA as it exists in the body; human intervention in cleaving or synthesizing a portion of native chromosomal DNA imparts on that isolated DNA a distractive chemical identity from that possessed by native DNA.” This was enough for the Federal Circuit to find patentable subject matter.

Myriad is assured to be one of the most followed cases on the Court’s docket this year. Of particular interest will be the Court’s consideration and application of its Mayo decision to the issues it now faces in Myriad.

Gibbons will continue to track future developments in this case from party briefing -- and the inevitable scores of amicus briefs likely to be filed -- through oral argument and final decision.


Todd M. Nosher is an Associate in the Gibbons Intellectual Property Department. Ralph A. Dengler, Counsel to the Gibbons Intellectual Property Department, co-authored this post.

Will the Supreme Court Weigh in on Reverse Payments in ANDA Cases?

We previously reported on developments in various United States Courts of Appeal decisions concerning reverse payments in Hatch-Waxman litigation settlements - that is, payments made by branded pharmaceutical patent holders to generic challengers to postpone market entry of the generic product.

Most recently, as we reported here, the Third Circuit in In re K-Dur Antitrust Litig. bucked prior holdings of the Eleventh, Second, and Federal Circuits, ruling that a reverse payment is prima facie evidence of an antitrust violation and, therefore, serves as evidence of unreasonable restraints of trade. In light of the Third Circuit’s divergent decision from other circuit precedent, many predicted a subsequent Petition for Certiorari.

As expected, Merck & Co. recently filed its Petition for a Writ of Certiorari, citing this split of circuit authority as the compelling factor favoring a review by the Supreme Court.

Gibbons will continue to track the status of this pending petition and other developments relating to reverse payments. Of particular interest will be whether the Federal Trade Commission (“FTC”) opts to file its own Petition for a Writ of Certiorari in connection with the Eleventh Circuit’s decision upholding a reverse payment in FTC v. Watson Pharmaceuticals, Inc., No. 10-12729 (11th Cir. Apr. 25, 2012). Stay tuned for more on these important developments.


Todd M. Nosher is an Associate in the Gibbons Intellectual Property Department.

Update - Hatch-Waxman Settlements: The FTC Regains Traction After Third Circuit Rules That Reverse Payments Violate Antitrust Law

As a follow-up to a previous article, the FTC has finally gotten an Appeals Court to take its view of reverse payments - Wile E. Coyote won this one. The FTC previously unsuccessfully attempted multiple avenues to invalidate reverse payments as part of Hatch-Waxman settlements - via the District Courts, proposed legislation, state court systems, and even the Supreme Court - but the Third Circuit has finally bitten, setting a clear circuit split.

Will the Supreme Court now step in? It could not have a clearer invitation - both the Third and Eleventh Circuits have analyzed the exact settlement agreement with resulting opposite holdings. Cf. Schering-Plough Corp. v. FTC, 402 F.3d 1056 (11th Cir. 2005).

This week, the Third Circuit Court of Appeals held that reverse payments (sometimes referred to as “pay-to-delay”) as part of the settlement of Hatch-Waxman litigations are evidence of unreasonable restraints of trade. Specifically, the Court in In re K-Dur Antitrust Litig. found that a settlement payment made by a pharmaceutical patent holder to a generic challenger - where there was an agreement to postpone market entry in exchange for the payment - constitutes prima facie evidence of an antitrust violation.

Five circuits previously addressed the legality of reverse payment settlements in Hatch-Waxman actions. While earlier decisions in the D.C. Circuit and the Sixth Circuit held reverse payment settlements to be illegal, those decisions were based on agreements that extended beyond the scope of the patents-in-suit. See Andrx Pharms., Inc. v. Biovail Corp. Int’l, 256 F.3d 799 (D.C. Cir. 2001); and In re Cardizem CD Antitrust Litig., 332 F.3d 896 (6th Cir. 2003). The Eleventh, Second and Federal Circuits held that reverse payments, if limited to the exclusionary zone of the patent, were acceptable. The Third Circuit in In re K-Dur Antitrust Litig., without qualification, held that reverse payments between patent holders and generic competitors constitute prima facie evidence of an antitrust violation. In its decision, the Third Circuit squarely rejected the “scope of the patent test” as limiting antitrust law, and held that reverse payments are contrary to public policy and Supreme Court precedent.

In reaching its decision, the Third Circuit placed a premium on public policy issues, stressing the importance of the Court in eliminating weak patents. Its view is that the scope of the patent test tends to protect companies with bigger wallets, that could pay off multiple challengers rather than risk losses in litigation. The Court rejects the scope of the presumption of patent validity, stating that “this presumption is intended merely as a procedural device and not a substantive right of the patent holder.” Slip op. at 27. The Court views patent validity as simply a “legal conclusion reached by the Patent Office,” noting that many patents are later found to be invalid or not infringed. Id.

The Third Circuit also emphasized the underlying goal of Hatch-Waxman - to “increase the availability of low cost generic drugs.” Slip op. at 31. In rejecting any analysis of the patent suit, the Court instead adopted the FTC’s view that any payment represents a quid pro quo for deferring entry beyond that which would have occurred as part of a reasonable litigation compromise. Id. at 33. The Court also sought to buttress its decision with the Supreme Court’s decision in Edward Katzinger Co. v. Chi. Metallic Mfg. Co., analogizing reverse payments with the situation where a licensor cannot be estopped from challenging a patent with a violative price fixing provision. Slip op. at 29 (citing 329 U.S. 394 (1947)).

The Third Circuit decided to enter the fray and has set up a clear circuit split, thus inviting the Supreme Court to join the issue. Practitioners should consider the ramifications of this decision for clients on both sides of the negotiation table. Gibbons P.C. will continue to track this reverse payment issue, including the likely certiorari petitions to the Supreme Court.


Sheila F. McShane is a Director in the Gibbons Intellectual Property Department. Jillian A. Centanni, an Apprentice in the Gibbons Intellectual Property Department, co-authored this post.

Save the Date: Rutgers Pharmaceutical Management Program, July 19-20, 2012

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.

Mark Your Calendars: Pharmaceutical Management Studies Program, October 27-28

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.