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

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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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 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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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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