Patent Docs

JEC Holds Hearing on Drug Pricing; GPhA Lobbies for Follow-on Biologics Pathway

    By Donald Zuhn --

Last week, Senator Amy Klobuchar (D-MN) (at right) convened a hearing of the Joint Economic Committee (JEC), a bicameral Congressional Committee composed of ten members from both the Senate and the House of Representatives, to examine rising pharmaceutical prices and the impact of such price increases on the pharmaceutical market and patient medical bills.  During the hearing, entitled: "At What Cost?: Egregious Price Increases in the Pharmaceutical Drug Industry," the Committee heard statements from Senator Charles E. Schumer (D-NY), Chairman of the JEC, and Senator Klobuchar, as well as testimony from the parent of a young patient, the CEO of Minnesota Children's Hospital, and Madeline Carpinelli, a Research Fellow from the PRIME Institute at the University of Minnesota (which researches policy issues related to pharmaceutical economics).  According to the JEC website, the hearing was convened for the purpose of exploring the causes of recent price increases for rare disease therapeutics and the negative impact on affected families' fiscal stability and access to care.

Senator Schumer (at left) opened the hearing by offering one example of what he believed was an egregious increase in price -- he noted that the drug Matulane, which is used for treating Hodgkins Lymphoma, cost less than $70 per dose in late 2004, and then just six months later, jumped to $5,568 (an 8000% increase).  The JEC Chairman also noted that this astounding price increase was "not for a groundbreaking new drug [but rather was] for a drug that was put on the market in the 1960s."  Concluding that the creation of a regulatory pathway for follow-on biologics was "an important development for American consumers," Senator Schumer stated that he believed the next Administration would make the establishment of such a system a priority, and asserted that "[g]enerics and market competition works."

Ms. Carpinelli provided some of the most interesting testimony.  She noted that her analysis of drug prices between 1988 and 2008 showed "that certain drug products have experienced extraordinary price increases that are well beyond what would normally be expected in a competitive market" (see table entitled "Huge Drug Price Increases"), and further, that the number of branded drug products showing extraordinary price increases (i.e., a price change of more than 100% at a single point in time) had been rising sharply in recent years (see chart entitled "Extraordinary Price Increases are Becoming More Common").  Ms. Carpinelli explained that while brand name drug prices rose an average of 7.4% between 2006 and 2007 (as compared with a 2.9% rate of inflation over the same period), certain brand name drugs saw price increases that far exceeded the 7.4% average.  She pointed out, for example, that the price of Ambien rose 27.7% in 2007.  However, Ms. Carpinelli found that the increase in Ambien pricing paled in comparison with the 500% to 10,631% price increases observed for a handful of other branded drug products (interestingly, the 10,631% price increase was for a branded off-patent drug).

While noting that the "pharmaceutical market is extremely complex and vexing to most observers," Ms. Carpinelli suggested that extraordinary increases in drug pricing were likely the result of a drug company's "unique position in a market with respect to intellectual property, legal status, barriers to entry, [or] product features that offer a competitive advantage."  She also informed the JEC that "[t]he number and magnitude of these extraordinary price increases also raises the possibility that antitrust issues may be present."  Ms. Carpinelli, however, did not discount the possibility that the intellectual property and exclusivity status of these drug products may have facilitated the extraordinary price increases.  For example, she noted that some of the large price increases were associated with old drugs for which a patent covering a new use or new dosage form had been issued, thereby providing a period of market exclusivity for the drug product.

In response to the JEC hearing, the Generic Pharmaceutical Association (GPhA), which represents manufacturers and distributors of finished generic pharmaceuticals and bulk active pharmaceutical chemicals, issued a press release stating that "the availability of a workable pathway that provides timely patient access to safe, affordable and life-saving biogeneric medicines would save consumers and the health care system billions of dollars."  The GPhA noted that while generics represent 65% of the total prescriptions dispensed in the U.S., they only account for 20% of all dollars spent on prescription drugs.  GPhA President and CEO Kathleen Jaeger asserted that "safe and affordable biogenerics would allow [patients] to improve their lives while reducing their health care costs."  In support of her assertion, Ms. Jaeger cited a study commissioned by Insmed that estimates $67 billion to $108 billion in cost savings over 10 years, and $236 billion to $378 billion in cost savings over 20 years, for generic versions of the top twelve biologics covered by patents that have expired or will soon expire (see "Dr. Robert Shapiro Discusses Follow-on Biologics Report").  She also cited a Pharmaceutical Care Manufacturers Association (PCMA) study that estimated $14.9 billion in cost savings over a 10-year period for certain biopharmaceuticals in the top 200 Medicare Part B reimbursed categories, and an Express Scripts report estimating $71 billion in savings over 10 years for products in four therapeutic categories:  interferons, erythropoietin, growth hormone, and insulin.  Ms. Jaeger concluded that such cost savings could not be ignored, and necessitated the creation of a "workable approval pathway for biogenerics -- one without lengthy and overreaching market exclusivity provisions or patent extensions that simply result in an empty promise to patients."

Patent Reform Critic Says Legislation Would Be Costly and Counterproductive

    By Donald Zuhn --

In an article posted on the American.com website (the online version of The American magazine) on Tuesday, Dr. Aparna Mathur (at right), a Research Fellow at the American Enterprise Institute for Public Policy Research, argues that now is the time to begin lobbying against the patent reform bill that was taken off the Senate calendar in April (see "Courting Trouble on Patents").  Dr. Mathur, who co-authored an economic analysis of the apportionment of damages, post-grant opposition, and inequitable conduct provisions of the patent reform bills with Dr. Robert Shapiro (see "BIO CEO Provides Update on Patent Reform and Follow-on Biologics Legislation - Part I"), argues that if "controversial" patent reform legislation were passed by the next Congress, it "would do more harm than good, while leaving the basic contours of the problem unchanged."

In her "Memo to Congress," Dr. Mathur clearly sides with patent reformers who "allege that the USPTO is guilty of issuing low-quality patents that violate the criteria of 'novelty, non-obviousness, and utility,'" rather than the critics who have been seeking significant revisions to the Patent Act.  Dr. Mathur points to U.S. Patent No. 5,443,036, entitled "Method of Exercising a Cat," as but one example of a patent that "violat[es] the criterion of obviousness" and "fails the novelty test."

According to Dr. Mathur, the problem with the Patent Office's issuance of low quality patents is that such patents are difficult to challenge.  While a bad patent can be challenged via reexamination, Dr. Mathur notes that such proceedings are not very effective since only 10% of reexaminations result in patent revocation.  And while the alternative to reexamination -- patent litigation -- is often more effective, it is also quite costly (with estimates ranging from $500,000 to $3 million in costs per suit).

Dr. Mathur contends that a third option that would be created by patent reform legislation -- post-grant opposition proceedings -- would impose costs that far outweigh its benefits.  She asserts that "[i]n a litigious society like the United States, the demand for lawyers and paperwork would drive up costs and make the opposition proceeding extremely expensive."  Pointing to her patent reform study, Dr. Mathur states that "an opposition system in the United States would increase the costs of patent validation by nearly $16 billion over 10 years."

A post-grant opposition system would also "strike at the heart of what the patent system is designed to protect:  the incentive to innovate and invest" by resulting in a higher probability of patent revocation.  In her study, Dr. Mathur estimated that a post-grant opposition system, if implemented, would result in a 2.8% probability of patent revocation, whereas the current reexamination system only results in a 0.02% probability of patent revocation.  Thus, Dr. Mathur concludes that "[a]n opposition regime could significantly reduce investment in R&D and slow the pace of innovation."  More importantly, Dr. Mathur argues that a post-grant opposition system would not fix the "main problem" with U.S. patent system -- the issuance of low-quality patents.  Dr. Mathur asserts that only the USPTO can fix that.

FDA Makes Changes in Erythropoietin Labeling

    By Kevin E. Noonan --

The Food and Drug Administration posted a notice on its website today that further restricts prescription of two erythropoietin drugs (Amgen's Epogen®/Aransesp® and Johnson & Johnson's Procrit®) to cancer patients.  The notice is part of the FDA's ongoing safety review of these drugs, and is a "follow-up" to a January 3, 2008 Official Communication.

In the notice, the FDA announced that it will require what it terms "safety-related" changes in how these drugs are labeled.  The changes include replacing the Package Insert with a Medication Guide, and modifying particular sections of "the Boxed Warnings, Indications and Usage, and Dosage and Administration" portions of the package insert.  Specifically, the hemoglobin level at which the drugs should not be administered to cancer patients has been changed.  While the changes were developed by the FDA with Amgen's input and cooperation, the Agency and the company could not agree on the wording of a warning statement that these drugs are not intended for use in myelosuppressed patients where cure is the expected outcome, and statements relating to hemoglobin levels used to trigger initiation and termination of dosing.

The new labeling recommends that treatment should not be initiated until a patient's hemoglobin level falls to 10 grams per deciliter, and clarifies language suggesting that treatment be continued until hemoglobin levels of 12 grams per deciliter are produced.  The labels also recommend that the drugs not be used as "adjuvant" therapy, in combination with chemotherapy after surgical resection.  The FDA also decided to disregard a recommendation from its Oncologic Advisory Committee that these drugs not be used for certain types of cancer.

As reported today in The New York Times (see "Amgen Told to Reword Drug Label"), this is the first time the FDA has exercised its new authority under revisions to the Food, Drug and Cosmetic Act to mandate these types of labeling changes; previously the Agency was limited to negotiating with a drug manufacturer to accept a label change.  The changes were motivated by studies that suggested that the use of these drugs to treat anemia associated with chemotherapeutic treatment could be deleterious.  Despite this, Aransesp® has retained its traditionally strong sales; second quarter 2008 sales are reported to be $825 million.  And according to the Times this performance exceeded expectations on Wall Street.

The company has five days to appeal and fifteen days to submit supplemental labeling in compliance with the FDA's changes to the label.

TauRx Therapeutics and University of Aberdeen Present Data on Potential Alzheimer's Drug

    By Christopher P. Singer --

In a July 29, 2008 presentation at the Alzheimer's Association International Conference on Alzheimer's Disease (ICAD 2008) in Chicago, scientists involved in a collaboration between the University of Aberdeen and TauRx Therapeutics discussed data demonstrating that their candidate drug, rember, appears to slow the progress of the Alzheimer's disease.  According to a press release from the University of Aberdeen as well as TauRx's website, rember is a small molecule Tau Aggregation Inhibitor that targets the tangles (aggregates of abnormal fibres of tau protein) that form in nerve cells in the brains of Alzheimer's patients.

The data presented by the scientists indicated that patients receiving the therapeutic experienced an 81% reduction in cognitive decline over one year, and did not experience a significant decline in their mental function over the course of 19 months.  Brain imaging data performed by TauRx was said to suggest that the drug had the most significant effect in the regions of the brain thought to be critical for memory function and where the tangle density is typically high.

Dr. Claude Wischik, TauRx's Executive Chairman, and a Professor at the University of Aberdeen, characterized the Phase 2 clinical results as representing the first real hope that it may be possible to arrest progression of Alzheimer's disease.  Following up on this promising clinical data, TauRx is planning to begin a Phase 3 trial next year.  If the Phase 3 trial confirms the Phase 2 findings, the drug could be available by 2012.

Deputy Director Peterlin Announces Resignation

    By Kevin E. Noonan --

The U.S. Patent and Trademark Office announced today that Margaret Peterlin, Deputy Undersecretary of Commerce for Intellectual Property and Deputy Director of the USPTO will resign from her post some time in August.

Deputy Director Peterlin (at left) has been a controversial figure in the Office, in part because she apparently lacked qualifications long thought to be required for senior Patent Office management positions, and for her association with several of the controversial "new rules" packages promulgated by the Dudas regime.  She survived a court challenge to her appointment mounted by Greg Aharonian, noted intellectual property crusader; David Lentini and David Pressman, both patent attorneys and authors; and Steven Morsa, an inventor (see "Margaret Peterlin Gets to Keep Her Job").

This challenge, based on the provisions of 35 U.S.C. § 3(b)(1) that the person holding Ms. Peterlin's office must be a "citizen of the United States who has a professional background and experience in patent or trademark law," was dismissed by Judge James Robertson of the U.S. District Court for the District of Columbia, who ruled last December that the provisions of the statute did not confer a private cause of action with regard to Ms. Peterlin's alleged lack of statutory competence for her position.  The Court also held that, although the Administrative Procedures Act (APA) provided a cause of action, the patent statute was sufficiently vague about the standards for her position, and consideration of what qualifications might satisfy the standard were sufficiently subjective, that the decision of whom to appoint to the Deputy Director position was properly "committed to agency discretion by law."

Deputy Director Peterlin was often the official face of the Office, testifying successfully before Congress on major policy initiatives, including the worksharing (see "Lunch with Commissioner Doll") and telecommuting (see "Deputy Director Peterlin Testifies at House Hearing on Teleworking") initiatives.  But she also made some missteps in that role, including granting an interview with a Wall Street Journal reporter about the now-enjoined continuation and claims rules the day before they were published in the Federal Register, something that seemed in violation of the spirit if not the letter of the APA (see "Patent Office Announces That New Continuation and Claims Rules Will Be Published . . . Tomorrow").

The Patent Office press release announcing her departure was predictably effusive in its praise of Deputy Director Peterlin, saying that she "strategically positioned the USPTO as a leader in such important policy debates as patent modernization legislation, in which the USPTO played a lead role in forming and communicating the Administration's position."  Director Dudas (at right) called her "instrumental" to the Office's success during her tenure, pointing to her "insistence on data-driven decision-making" that "greatly improved the USPTO's business operations."  Perhaps in answer to her critics, Director Dudas also said that she "has tremendous understanding of IP issues and helped the Administration promote smart IP policies both on Capitol Hill and with IP offices around the world."

Deputy Director Peterlin in her own valedictory said she was "proud of the strides the agency has made and, for the first time in the USPTO's history, we are on track to meet 100% of our goals," those goals including "helping the organization reach a new level of excellence through effective delegation, continuous process improvement, transparency of operations and increased employee engagement."

While it has been reported elsewhere that at least part of the motivation for her departure includes the impending birth of her first child later this year, her decision to leave the Office now may also reflect an acknowledgement by the Deputy Director and the Administration that the time is almost over for achieving many of the "goals" they have had for U.S. patent law, including patent "reform" legislation and the numerous rules packages in limbo either in the courts or within the Administration, and that there is little more they can expect to do before the new President is inaugurated in January.  Having strongly objected to many of these policy goals, we wish Deputy Director Peterlin well, but cannot honestly say we are sorry to see her go.

Managing Intellectual Property Releases MIP 50

    By Donald Zuhn --

Managing Intellectual Property has released its sixth annual list of the most influential people in intellectual property (see "Politics, power and passion -- this year's MIP 50").  The MIP 50 appears in the magazine's July/August issue, and can also be found on the magazine's website (access to the online article requires a subscription or trial membership).  The list of intellectual property movers and shakers was decided by Managing IP reporters based on recommendations and research.  The top ten "individuals" on Managing IP's list include:

1.  "The avatar," Second Life

2.  Margot Fröhlinger, Director, European Commission DG Internal Market

3.  Sherry Knowles, Worldwide head of IP, GlaxoSmithKline - spearheaded the lawsuit against the USPTO regarding the Office's new continuation and claims rules.  The victory in Tafas/GSK v. Dudas could have an impact on other USPTO rules packages, such as the alternative claiming rules, which Knowles noted "change[s] the way chemical and pharmaceutical and biotech patent practice has taken place over the last 100 years and will make it impossible to prosecute a genus of chemical compounds."

4.  Jon Dudas, Director, USPTO - labeling the Director as a "controversial reformer," Managing IP noted that "he has been the target of criticism from those in the patent community who feel his lack of IP background has resulted in policies that may be harmful to US innovation."  In addition to the Office's new continuation and claims rules, currently on appeal before the Federal Circuit, the Director has also actively promoted the administration's applicant quality submissions (AQS) provision to the Senate patent reform bill.

5.  Li Qunying, Director of IPR division, General Administration of Customs, China

6.  Francis Gurry, Deputy Director-General, WIPO

7.  Kapil Sibal, Union Minister in the Ministry of Science and Technology, India

8.  Rhonda Steele, INTA president and Asia-Pacific marketing properties manager, Mars

9.  Chief Judge Paul Michel, U.S. Court of Appeals for the Federal Circuit - while the percentage and complexity of patent cases heard by the CAFC increases, the Chief Judge "rejects the notion that the [Supreme] Court has increased its focus on patent cases in recent years," noting that the Court actually heard more patent cases in 2001 and 2002 than in recent years.  The Chief Judge, however, concedes that recent Supreme Court cases have involved "fundamental issues."

10.  Ron Layton, Chief Executive, Light Years IP

Managing IP's list also includes a number of other individuals who will be familiar to Patent Docs readers -- and others who may not be familiar, but should be -- including:

11.  Jon Ungphakorn, campaigner and AIDS activist - a former member of Thailand's senate, Ungphakorn began working on AIDS issues in Thailand in 1989, and is now executive secretary of the AIDS Access Foundation and a member of the board of the government's Universal Health Insurance Programme.  He remains committed to compulsory licensing as the only means of access to drugs.

24.  Dan Ravicher, Legal Director, Public Patent Foundation - has been leading a challenge of three Wisconsin Alumni Research Foundation (WARF) stem cell patents.  Ravicher's group argued that "the three WARF patents were impeding scientific progress and driving vital stem cell research overseas."  According to Managing IP, the PUBPAT Legal Director has also been "outspoken about his support for the USPTO's enjoined rules package on claims and continuations, which have been the subject of considerable controversy among the patent community."  Speaking on the Tafas/GSK case, Ravicher told Managing IP that "[w]hile patent holders and patent attorneys may couch their arguments in terms of the public interest, in reality their interest is in their own profits and livelihoods, not in designing a patent system that fosters the overall rate of innovation."

25.  Susan Schwab, U.S. Trade Representative - manages the USTR's Office of Intellectual Property and Innovation, which produces the Special 301 report, a comprehensive annual review of the global state of IP rights protection and enforcement.  The 2008 report designated China and Russia as the main areas of concern, and included Venezuela, Argentina, Chile, India, Israel, Thailand, and Pakistan on the priority watch list.

29.  Patrick Leahy, Chairman, U.S. Senate Judiciary Committee - the Vermont Senator spent the past year seeking a compromise between the IT and telecommunications industries and the pharmaceuticals and biotechnology industries with respect to the Senate patent reform bill (S. 1145), which he introduced.  Senator Leahy characterized the removal of S. 1145 from the Senate calendar in April as "a missed opportunity."

33.  Jim Malackowski, President and CEO, Ocean Tomo - launched Ocean Tomo, which has become known for its public auctions of intellectual property, in 2003.  Sales at the spring 2008 auction totaled $19,629,500.

36.  Margaret Chan, Director-General, World Health Organization - has sought a resolution to the controversy over Thailand's decision to issue compulsory licenses for a range of anti-AIDS and anti-cancer drugs.

42.  Gary Griswold, President and CEO, 3M Innovative Properties - played a crucial role on U.S. patent reform discussions as chairman of the Coalition for 21st Century Patent Reform.

More detailed descriptions of the above individuals, as well as descriptions of the other members of the MIP 50, can be found in the Managing IP article. 

Court Report

    By Sherri Oslick --

About Court Report:  Each week we will report briefly on recently filed biotech and pharma cases, and a few interesting cases will be selected for periodic monitoring.

Shire LLC v. Actavis South Atlantic, LLC et al.
2:08-cv-00287; filed July 24, 2008 in the Eastern District of Texas

Infringement of U.S. Patent Nos. 5,326,570 ("Advanced Drug Delivery System and Method of Treating Psychiatric, Neurological and Other Disorders with Carbamazepine," issued July 5, 1994) and 5,912,013 (same title, issued June 15, 1999) following a Paragraph IV certification as part of Actavis' filing of an ANDA to manufacture a generic version of Shire's Carbatrol® (carbamazepine, used to treat epilepsy and trigeminal neuralgia).  View the complaint here.

AstraZeneca LP et al. v. Mylan Pharmaceuticals Inc.
1:08-cv-00453; filed July 22, 2008 in the District Court of Delaware

Infringement of U.S. Patent Nos. 6,423,340 ("Method for the Treatment of Inflammatory Bowel Diseases," issued July 23, 2002) and 5,643,602 ("Oral Composition for the Treatment of Inflammatory Bowel Diseases," issued July 1, 1997) following a Paragraph IV certification as part of Mylan's filing of an ANDA to manufacture a generic version of AstraZeneca's Entocort® EC (budesonide, used to treat mild to moderate Crohn's disease).  View the complaint here.

Cephalon Inc. et al. v. Barr Pharmaceuticals Inc. et al.
1:08-cv-00455; filed July 22, 2008 in the District Court of Delaware

Infringement of U.S. Patent Nos. 6,200,604 ("Sublingual Buccal Effervescent," issued March 13, 2001) and 6,974,590 (same title, issued December 13, 2005) following a Paragraph IV certification as part of Barr's filing of an ANDA to manufacture a generic version of Cephalon's Fentora® (fentanyl citrate buccal tablets, used to treat breakthrough pain in adult patients with cancer).  View the complaint here.

Astellas Pharma Inc. et al. v. Impax Laboratories, Inc.
5:08-cv-03466; filed July 18, 2008 in the Northern District of California

Infringement of U.S. Patent No. 4,703,063 ("Sulfamoyl Substituted Phenethylamine Derivatives and Process of Producing Them," issued October 27, 1987) following a Paragraph IV certification as part of Impax's filing of an ANDA to manufacture a generic version of Astellas' Flomax® (tamsulosin hydrochloride, used to treat benign prostatic hyperplasia, sold in the U.S. by Boehringer Ingelheim Corporation.  View the complaint here.

Hoffmann-La Roche Inc. v. Dr. Reddy's Laboratories, Ltd. et al.
2:08-cv-03607; filed July 18, 2008 in the District Court of New Jersey

Infringement of U.S. Patent No. 7,192,938 ("Method of Treatment Using Bisphosphonic Acid," issued March 20, 2007) following a Paragraph IV certification as part of an amendment to Dr. Reddy's ANDA to manufacture a generic version of Roche's Boniva® (150 mg once-monthly tablets) (ibandronate sodium, used to treat post-menopausal osteoporosis).  View the complaint here.

Apotex Inc. v. Shire LLC
2:08-cv-03598; filed July 17, 2008 in the District Court of New Jersey

Declaratory judgment of non-infringement and invalidity of U.S. Patent Nos. 5,326,570 ("Advanced Drug Delivery System and Method of Treating Psychiatric, Neurological and Other Disorders with Carbamazepine," issued July 5, 1994) and 5,912,013 (same title, issued June 15, 1999) in conjunction with Apotex's filing of an ANDA to manufacture a generic version of Shire's Carbatrol® (carbamazepine, used to treat epilepsy and trigeminal neuralgia).  View the complaint here.

Conference & CLE Calendar

August 11-12, 2008 - Advanced Patent Prosecution Workshop 2008: Claim Drafting & Amendment Writing (Practising Law Institute) - San Francisco, CA

August 10-15, 2008 - Advanced Courses (Patent Resources Group) - Washington, DC

September 11, 2008 - Developments in Pharmaceutical and Biotech Patent Law (Practising Law Institute) - New York, NY

September 11-12, 2008 - Current Issues in Complex IP Licensing (Law Seminars International) - Philadelphia, PA

September 15-16, 2008 - Biotech Patents*** (American Conference Institute)

September 21-23, 2008 - 2008 Annual Meeting (Intellectual Property Owners Association) - San Diego, CA

September 22-23, 2008 - USPTO Boot Camp: Patent Edition*** (American Conference Institute) - Alexandria, VA

September 22-23, 2008 - FDA Boot Camp*** (American Conference Institute)

September 22-23, 2008 - Patent Litigation 2008 (Practising Law Institute) - San Francisco, CA

September 23-24, 2008 - Biotech Patenting (C5) - London, England

October 6-7, 2008 - Patent Litigation 2008 (Practising Law Institute) - McLean, VA

October 7-8, 2008 - Global Patent Litigation*** (American Conference Institute) - New York, NY

October 15, 2008 - Developments in Pharmaceutical and Biotech Patent Law (Practising Law Institute) - San Francisco, CA

October 15-17, 2008 - Maximizing Pharmaceutical Patent Lifecycles*** (American Conference Institute) - New York, NY

October 23-24, 2008 - Patent Litigation 2008 (Practising Law Institute) - Chicago, IL

October 28-29, 2008 - Pharma/Biotech IP Due Diligence*** (C5) - Amsterdam, Netherlands

November 10-11, 2008 - Patent Litigation 2008 (Practising Law Institute) - Atlanta, GA

November 17-18, 2008 - Patent Litigation 2008 (Practising Law Institute) - New York, NY

November 19-20, 2008 - Paragraph IV on Trial*** (American Conference Institute) - New York, NY

***Patent Docs is a media partner of this conference or CLE

USPTO News: EFS-Web Customer Satisfaction Survey & New Online Contact Information System for Practitioners

    By Christopher P. Singer --

EFS-Web Survey

The U.S. Patent and Trademark Office is conducting a customer satisfaction survey relating to the experiences that registered users have had with EFS-Web.  The deadline for filling out the survey is 11:30 p.m. (EDT) on Sunday, July 27, 2008.  The USPTO estimates that the survey takes approximately 10 minutes to complete.  The survey can be accessed here or upon logging onto Private PAIR or as a registered EFS-Web user.

The survey includes multiple choice questions relating to organizational and individual practices and motivations for using EFS-Web, e-filing policies and practice, volume of filings, most beneficial and most difficult aspects of EFS-Web, general satisfaction with EFS-Web and EBC assistance, use habits, and other desired features.  After taking the survey, I realized (again) that because of EFS-Web, electronic filing has become a very reliable and convenient filing option for practitioners.  There is little doubt that it represents one of the most successful programs instituted by the USPTO in recent years.

For those unable to complete the survey by July 27, the USPTO always accepts feedback by e-mail to:  EFSFeedback@uspto.gov.  Further, the EBC Customer Service Center is always available to field any specific questions about EFS-Web, PAIR, PKI, or any other component of their e-Commerce initiatives at 866-217-9197 (toll-free) or 571-272-4100 or by e-mail at:  ebc@uspto.gov.

New Online System for Registered Practitioner Contact Information

The USPTO announced on July 25 that it plans to introduce a system that will allow registered practitioners to update their official address of record with the Office of Enrollment and Discipline (OED) through an online interface.  This system should eliminate delays and processing errors in updating information, reduce losses caused by mailings made to obsolete addresses, and ensure prompt receipt of critical communications from OED.  Further, as registered patent practitioners are required to update the OED regarding address changes, the on-line customer interface should make compliance with that requirement much easier.

To implement this program, the OED will send a letter containing the practitioner's user identification number to the official address currently listed on the official roster of registered patent attorneys and agents.  The user identification number, along with a separately-retrieved password, will allow the practitioner access to the practitioner's records through the OED customer interface.  The letter will be sent only to practitioners listed on the official roster of registered patent attorneys and agents, and only to the address in the roster.  So, if your current address information on the official roster (check here) is incorrect, you should complete the address change form (available here), and mail it to Mailstop OED, U.S. Patent and Trademark Office, P.O. Box 1450, Alexandria, Virginia 22313-1450.

ACI Paragraph IV on Trial Conference

American Conference Institute (ACI) will be holding its Paragraph IV on Trial conference on November 19-20, 2008 in New York.  At this conference, patent litigators experienced in representing both generic and brand name drug manufacturers will work through a mock trial based on a real world ANDA filing.  The mock trial, Yankee Branded Pharmaceuticals v. Metro Generic Pharmaceuticals, will allow attendees to hone advocacy and litigation skills in:

• Communicating with the judge in a clear and concise manner while presenting complex technical and scientific information to the court;
• Developing a cohesive and scientifically-supported theory to address issues raised by infringement, validity, and inequitable conduct claims during trial;
• Addressing prior art and discrepancies in the patented product's prosecution history in a manner that supports the theory of your case; and
• Handling expert and fact witnesses on the stand during direct and cross examination when testifying about sensitive product and company details.

The conference is structured as an actual trial based on an ANDA filing involving a compound and a formulation patent, during which ACI's faculty will conduct live demonstrations of direct and cross examinations.  ACI's faculty will also delve into the key issues at stake during trial, including:

• Infringement -- how to lay the proper foundation through your expert in order to build your case;
• Obviousness and anticipation -- tactics for handling prior art testimony and addressing arguments of validity and invalidity;
• Secondary considerations -- strategies for effectively presenting technical experts and communicating complex, scientific and technical information to the court; and
• Inequitable conduct -- dealing with testifying patent law experts and complicated prosecution records during trial.

In addition, two panels, one comprised of six jurists experienced in patent litigation, and the other composed of six in-house IP counsel representing both brand name and generic manufacturers, will share their commentary and insights into what factors they consider when deciding and engaging in Paragraph IV litigation.

An additional master class entitled:  "Litigator's master class on Paragraph IV pre-trial preparation:  Filing strategies, witness selection, motions and claim construction" will be offered on November 18, 2008.  During the master class, experienced patent litigators representing both brand name and generic manufacturers will discuss proven strategies for preparing for a Paragraph IV case.

The agenda and mock trial fact pattern for the Paragraph IV on Trial conference can be found here.  A complete brochure for this conference, including an agenda, list of speakers, mock trial fact pattern, and registration form can be downloaded here.

The registration fee ranges from $2,195 (conference alone) to $2,795 (conference and master class).  Those registering on or before September 12, 2008 will receive a $300 discount off the registration fee and those registering on or before October 24, 2008 will receive a $200 discount off the registration fee.  Those interested in registering for the conference can do so here, by calling 1-888-224-2480, or by faxing a registration form to 1-877-927-1563.

Patent Docs is a media sponsor of ACI's Paragraph IV on Trial conference.

C5 Biotech Patenting Conference

C5 (UK) will be holding its Biotech Patenting conference on September 23-24, 2008 in London, England.  The conference will allow attendees to:

• Analyze the practical impact of recent changes at the UK-IPO, EPO, and USPTO;
• Increase knowledge of developments in follow-on biologics and antibody technologies in the patent area;
• Manage the challenges posed by the conflicting legal approaches to gene patenting;
• Establish a successful global patent strategy and successfully protect biotech patents in China and India;
• Get the latest information on second medical use claims; and
• Tackle inventorship and patent entitlement disputes.

In particular, C5 faculty will offer presentations on the following topics:

• Critical update on legislative and policy developments at the UK-IPO and EPO;
• EPO insight:  An examiner’s perspective on biotech patent applications;
• Review of recent EPO and EU National Court biotech decisions;
• Impact of the EPC 2000 on medical use claims;
• Analysis of the latest decisions of the U.S. courts and their implications;
• Implications and status of the patent reform act;
• Obviousness determinations after KSR v. Teleflex;
• How to successfully obtain and enforce your biotech patents in China and India;
• Keynote presentation:  Judicial address from Federal Circuit Judge Randall Rader;
• Developing your patent strategy to develop competitive advantage, obtain maximum revenue and extend patent lifecycles;
• Unravelling the legal conflict in gene patenting in Europe;
• Comparison of the U.S. and European legal issues surrounding biosimilars:  Legislation, case law, and approvals to date;
• Case study on bringing and defending inventorship and patent entitlement actions; and
• Managing your biotech patent litigation:  In-house and outside counsel perspectives.

Two additional pre-conference workshops will be offered on September 22, 2008.  The first pre-conference workshop, entitled "Advanced Practical Workshop on Successfully Evaluating Freedom to Operate" and "Successfully Evaluating Freedom to Operate," will held from 8:30 am to 12:00 pm, and will cover the preparation and conduct of FTO searches, including how to analyze FTO search results and communicate them for the purposes of patent procurement and company reporting.  This workshop will use a real-life FTO case study to highlight key strategic points, including the design of the FTO search and drafting of the FTO report.  The second pre-conference workshop, entitled "How to Conduct Effective IP Due Diligence," will be held from 1:00 pm to 4:30 pm, and will provide step-by-step guidance on how to conduct thorough due diligence and ensure that costly mistakes that erode IP value are avoided.  In addition to providing information on key legal and business issues impacting IP due diligence, this workshop will provide insights on the essential components of a due diligence review, spotting IP red flags and managing the reporting process.

The agenda for the Biotech Patenting conference can be found here.  A complete brochure for this conference, including an agenda, list of speakers, and registration form can be downloaded here.

The registration fee for the conference is £1878.83 ($3,739.78), for the conference plus one workshop £2582.65 ($5,140.73), and for the conference plus both workshops £3286.48 ($6,541.69); attendees can also register for just one workshop for £703.83 ($1,400.96).  For those registering on or before August 26, 2008, the registration fee for the conference is £1643.83 ($3,272.02), for the conference plus one workshop £2347.65 ($4,672.96), for the conference plus both workshops £3051.48 ($6,073.93), and for just one workshop £703.83 ($1,400.96).  Those interested in registering for the conference can do so here, by calling +44 (0) 20 7878 6888, by faxing a registration form to +44 (0) 20 7878 6896, or by e-mailing marketing@C5-Online.com.

FDA Includes Genotyping Advisory in Black Box Warning

    By Kevin E. Noonan --

One of the promises of the genomics revolution of the late 20th Century is the advent of personalized medicine.  The belief was (and is) that the unfolding understanding of genetic variation stemming from sequence analysis of genes known or discovered to be involved in an individual's response to a drug would permit physicians to identify which patients should (and more importantly) should not receive a particular drug.  In addition to these benefits for individuals, the prospect of understanding how genetic variation affected drug responses was also believed to provide a way to screen populations of drug trial participants, to avoid clinical trial failures for pharmaceutical lead compounds because the trial population contained individuals whose genetic makeup was inappropriate for the drug.

Like a great deal of the biotechnology revolution, these prospects have not generally come to fruition.  There have been some applications of the personalized medicine paradigm (excessive toxicity of Camptosar® (irinotecan) for colon carcinoma is associated with the *28 variant of UGT1A1 enzyme, for example), but by and large most patients and their physicians do not test their genotype before taking (or prescribing) a drug.  This makes those instances where the genetic component is taken into account more noteworthy; the latest example involves GlaxoSmithKline's drug abacavir (structure at right), a reverse transcriptase inhibitor drug used widely for infection with the human immunodeficiency virus and its sequellae, acquired immune deficiency syndrome.  It is sold as Ziagen®, and is also a component in two other AIDS medications, Trizivir® (abacavir sulfate/lamivudine/zidovudine) and Epzicom® (abacavir sulfate/lamivudine).

The reason for genotype testing is simple:  the Food and Drug Administration has determined that administering the drug to people having the 'wrong' genotype can be life-threatening.  The problem is a severe allergic reaction in people with a particular variant gene in the human immunohistocompatibility complex.  This variant, HLA-B*5701, is associated with more than a 15-fold increase in the incidence of a hypersensitivity reaction (from 4% to 61%) when these patients are administered the drug, and prescreening for the variant reduces the incidence of hypersensitivity reactions from 7.8% to 3.4%.  Symptoms of the reaction range from the merely annoying (rash, nausea) to the severe (fever, breathing difficulties).

The FDA posted the following notice on its website earlier today:

FDA informed healthcare professionals that serious and sometimes fatal hypersensitivity reactions (HSR) caused by abacavir therapy are significantly more common in patients with a particular human leukocyte antigen (HLA) allele, HLA-B*5701.  FDA reviewed data from two studies that support a recommendation for pre-therapy screening for the presence of the HLA-B*5701 allele and the selection of alternative therapy in positive subjects.  Genetic tests for HLA-B*5701 are available and all patients should be screened for the HLA-B*5701 allele before starting or restarting treatment with abacavir or abacavir-containing medications.  Development of clinically suspected abacavir HSR requires immediate and permanent discontinuation of abacavir therapy in all patients, including patients negative for HLA-B*5701.

The association of this genetic variant with the hypersensitivity reaction was first reported in February by a multinational group including GSK researchers, in an article in the New England Journal of Medicine (see "HLA-B*5701 Screening for Hypersensitivity to Abacavir").

The drug currently bears this warning:

                                     WARNINGS

Hypersensitivity Reactions: Serious and sometimes fatal hypersensitivity reactions have been associated with ZIAGEN (abacavir sulfate).  Hypersensitivity to abacavir is a multi-organ clinical syndrome usually characterized by a sign or symptom in 2 or more of the following groups: (1) fever, (2) rash, (3) gastrointestinal (including nausea, vomiting, diarrhea, or abdominal pain), (4) constitutional (including generalized malaise, fatigue, or achiness), and (5) respiratory (including dyspnea, cough, or pharyngitis).  Discontinue ZIAGEN as soon as a hypersensitivity reaction is suspected.  Permanently discontinue ZIAGEN if hypersensitivity cannot be ruled out, even when other diagnoses are possible.  Following a hypersensitivity reaction to abacavir, NEVER restart ZIAGEN or any other abacavir-containing product because more severe symptoms can occur within hours and may include life-threatening hypotension and death.

Reintroduction of ZIAGEN or any other abacavir-containing product, even in patients who have no identified history or unrecognized symptoms of hypersensitivity to abacavir therapy, can result in serious or fatal hypersensitivity reactions.  Such reactions can occur within hours (see WARNINGS and PRECAUTIONS: INFORMATION FOR PATIENTS).

Lactic Acidosis and Severe Hepatomegaly: Lactic acidosis and severe hepatomegaly with steatosis, including fatal cases, have been reported with the use of nucleoside analogues alone or in combination, including ZIAGEN and other antiretrovirals (see WARNINGS).

The good news for GSK is that the percentage of the population bearing this variant is small -- about 5%.  The company also benefits from having a way of preventing this small percentage of patients from being harmed by the drug.  This may offset the negative consequences stemming from the FDA's intention to include the genotype advisory in a "black box" label for the drug, which alerts physicians to potentially significant side-effects but also can inhibit physicians from prescribing the drug in the first place.  Having a way to determine whether a particular patient falls outside the proscribed patient population should be sufficiently reassuring to physicians that prescriptions should not plummet as a consequence of the new labeling.

IPO Reports on Rising RCE Filings

    By Donald Zuhn --

The Intellectual Property Owners Association (IPO) reported today on data compiled by Esther Kepplinger, the Director of Patent Operations for Wilson Sonsini Goodrich & Rosati, which the IPO believes "has received little attention and has contributed to misunderstanding of patenting trends."  In particular, Ms. Kepplinger's analysis shows that Requests for Continued Examination (RCEs) rose from 8.3% in 1998 to 19.6% in 2007, while continuation and divisional filings remained relatively stable over the same period (continuation filings rose from 10.7% to 11%; divisional filings dropped from 5.1% to 4.8%).  Noting that the Patent Office currently counts an original application as one application and a subsequent RCE as a "second" application (with the original application counting as an abandoned application), the IPO argued that "[r]eported increases in U.S. patent filings of 9.2 percent in 2006 and 5.2 percent in 2007 would have been substantially smaller without the increase in RCEs," and further, that "[t]he highly-publicized decline in the USPTO’s 'allowance rate' . . . is attributable in part to the rise in RCEs, which results in more unallowed (i.e., abandoned) applications."

Ms. Kepplinger (at left) discussed her analysis on filing trends last month during a panel discussion at the Biotechnology Industry Organization (BIO) International Convention.  For more information regarding Ms. Kepplinger's presentation, Patent Docs readers are encouraged to refer to our report on the presentation (see "Docs at BIO: Panel Discusses Impact of USPTO Rules Changes and Patent Reform Legislation on Biotech Patenting").

USPTO News: PTO Extends and Expands Peer Review Pilot

    By Christopher P. Singer --

In a July 16, 2008 press release, the U.S. Patent and Trademark Office announced it will extend the duration, increase the maximum number of applications, and expand the scope of applications eligible to participate in its Peer Review Pilot program.  The extension and expansion became effective on July 16, 2008.

The Peer Review Pilot program is intended to encourage the public to review published patent applications and submit technical references and comments on what participants believe is the best prior art to consider during the examination of those applications.  Since its inception in June 2007, the pilot has been limited to patent applications in the computer-related arts (Technology Center 2100).  As of July 16th, the scope of the program is expanded to include applications in the automated business data processing technologies class 705 (business methods).  Those having technical expertise in computer and business methods-related arts and who register with peertopatent.org at their website will be eligible to review and submit information for up to 400 published patent applications.  The Peer-to-Patent Project is organized by the New York Law School's Institute for Information Law and Policy.

The pilot program is extended for an additional 12 months and will end on June 15, 2009.  According to the USPTO press release, companies that have participated in the Peer Review Pilot include IBM, Microsoft, Hewlett-Packard, Sun Microsystems, Intel, GE, Red Hat, Cisco, and Yahoo!, among others.

More information about this program, including the Official Gazette notice, can be found here.

USPTO News: PTO Issues Notice on Scope of Foreign Filing Licenses

    By Christopher P. Singer --

In a Notice published in the Federal Register (73 Fed. Reg. 42781) on Wednesday, July 23, 2008, the U.S. Patent and Trademark Office discussed the general scope of the foreign filing licenses that it issues.  While the Notice states that it serves to clarify the existing law and regulations, the USPTO was motivated to publish it in light of the Office "becoming aware that a number of law firms or service provider companies located in foreign countries are sending solicitations to . . . practitioners offering their services in connection with the preparation of patent applications to be filed in the United States."  The Notice reminds practitioners that the export of subject matter abroad pursuant to a USPTO-issue foreign filing license is limited to purposes related to the filing of foreign patent applications (see 37 C.F.R. § 5.15).  The Notice states unequivocally that a foreign filing license from the USPTO does not authorize exporting of subject matter abroad for the preparation of patent applications to be filed in the United States.

Accordingly, Applicants who consider exporting subject matter abroad for the preparation of patent applications to be filed in the United States should contact the Bureau of Industry and Security (BIS) at the Commerce Department in order to secure the appropriate clearances, as the USPTO's foreign filing licenses do not authorize this exportation.  This Bureau promulgates the Export Administration Regulations (EAR) which govern the export of a variety of goods and materials, including technical data.  More information regarding the EAR can be found at the Bureau's website, or the Bureau's Outreach and Educational Services Division, which can be contacted at 202-482-4811.

Those wishing to get further information regarding this Notice can contact Mr. Mike Carone, Supervisory Patent Examiner, Technology Center 3600 by telephone at 571-272-6873.

USPTO Files Opening Brief in Tafas v. Dudas Appeal

    By Donald Zuhn and Benjamin Huber --

Last Friday, the U.S. Patent and Trademark Office and USPTO Director Jon Dudas filed their opening brief in the Tafas v. Dudas appeal.  As we previously reported, the Patent Office and Director Dudas had until July 18th (i.e., sixty days from the May 19th docketing date) to serve and file their opening brief.  The Appellees -- Dr. Triantafyllos Tafas and SmithKline Beecham Corp., SmithKline Beecham PLC, and Glaxo Group Ltd. (GSK) -- now have until August 27th, absent any extensions, to file their brief.

By now, many patent practitioners are probably quite familiar with the sequence of events that led to the Patent Office's appeal.  Briefly, Dr. Tafas and GSK sought to enjoin the Patent Office from enforcing its new continuation and claims rules package, which was published last August.  The day before the rules package was set to take effect (strangely enough, on Halloween), Judge James C. Cacheris of the Eastern District of Virginia granted Dr. Tafas' and GSK's motions for a temporary restraining order and preliminary injunction.

Last April (this time on April Fool's Day), Judge Cacheris made the injunction permanent, finding that "the [continuation and claims] Rules are substantive in nature and exceed the scope of the USPTO's rulemaking authority under 35 U.S.C. § 2(b)(2)," Judge Cacheris voided the new rules.  Citing Merck & Co., Inc. v. Kessler, 80 F.3d 1543, 1550 (Fed. Cir. 1996), and two other CAFC cases that cite Merck, Judge Cacheris determined that the relevant case law was clear:  "Section 2(b)(2)'s authority is limited to rules governing the 'conduct of proceedings' before the Office, the USPTO does not have the authority to issue substantive rules, and it does not have the authority to make substantive declarations interpreting the Patent Act."  Judge Cacheris also determined that the continuation and claims rules were "substantive rules that change existing law and alter the rights of applicants such as GSK and Tafas under the Patent Act," and "constitute a drastic departure from the terms of the Patent Act as they are presently understood."  Judge Cacheris concluded his opinion by offering a thorough explanation as to why the cornerstones of the continuation and claims rules -- the 2+1 rule and 5/25 rule -- were indeed substantive rules (see "No April Fool's Joke -- Tafas and GSK Win on Summary Judgment").

In its opening brief, the Patent Office makes two main assertions:  first, that the Office acted within its rulemaking authority, and second, that the continuation and claims rules do not violate the relevant statutory provisions.  While the assertions themselves are unsurprising, the approach taken by the Patent Office represents an intriguing departure from the framework adopted by Judge Cacheris' opinion, and reveals at least a portion of the Office's appellate strategy.  Where Judge Cacheris focused mainly on the substantive nature of the continuation and claims rules, and explicitly avoided a determination regarding whether the Patent Office was entitled to any deference, the Office relies heavily on its belief that Chevron deference places the continuation and claims rules beyond reproach (Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984)).

By asserting that it is entitled to such deference, the Patent Office is attempting to shift the focus of the appeal towards the language of 35 U.S.C. § 2 and away from the likely effects of the continuation and claims rules.  In the Office's view of Chevron deference, the important question in the appeal is not whether the continuation and claims rules are procedural or substantive, but instead whether the rules fall within a permissible interpretation of the Patent Act.  Further, the PTO's brief does not stop at the notion that the Office is entitled to deference in the promulgation of the continuation and claims rules themselves.  Rather, the Patent Office argues that its own, expansive interpretation of the scope of its rulemaking authority, and its determination that the continuation and claims rules do not violate other provisions of the Patent Act, are both entitled to deference.  As such, the PTO's primary argument essentially asserts that the Office can decide that it has the authority to promulgate a set of rules, put those rules into effect, and declare the rules commensurate with any potentially adverse limitation imposed by statutes while remaining largely unchecked by the judiciary.

Apparently not content to use Chevron deference as a shield, the Patent Office also uses deference-based arguments to attack Judge Cacheris' opinion.  The Patent Office rejects outright Judge Cacheris' ruling that the continuation and claims rules fall outside the scope of the Office's rulemaking authority, asserting that the rules fit "comfortably within the terms of Section 2(b)(2)," because they merely govern the conduct of proceedings in the Office and facilitate the processing of patent applications.  Beyond simply challenging Judge Cacheris' view of the PTO's rulemaking authority, the Office asserts that Judge Cacheris erred by refusing to adopt the Office's own, conveniently broad view of its rulemaking authority.

For information regarding this topic, please see:

• "Save the Date -- Initial Scheduling of the Tafas/GSK v. Dudas Appeal," May 21, 2008
• "USPTO to Appeal Tafas/GSK v. Dudas," May 7, 2008
• "No April Fool's Joke -- Tafas and GSK Win on Summary Judgment," April 1, 2008
• "Judge Cacheris Takes GSK Case under Advisement," February 8, 2008
• "GSK Summary Judgment Hearing Set for Friday Morning," February 7, 2008
• "New Briefing Deadline Set In PTO Rules Case," December 18, 2007
• "Court Sets Summary Judgment Schedule in New Rules Case," December 3, 2007
• "No Discovery in New Rules Case," November 27, 2007
• "Tafas v. Dudas; SmithKline Beecham Corp. v. Dudas (E.D. Va. 2007)," October 31, 2007
• "USPTO Late to Its Own Party," October 31, 2007
• "GSK Secures Injunction," October 31, 2007 (includes links to Court's Order and Opinion)
• "GSK TRO/Preliminary Injunction Hearing," October 29, 2007
• "GSK Brings Out the Big Guns Opposing the New Continuation and Claims Rules," October 24, 2007
• "Hooray! - (Finally) the Big Dogs Have Joined the Hunt," October 11, 2007
• "Rules Challenger Amends Complaint and Withdraws PI Motion," September 11, 2007
• "Inventor Sues PTO to Prevent New Continuation and Claims Rules from Taking Effect," August 30, 2007

Eisai Co. v. Dr. Reddy's Laboratories, Inc. (Fed. Cir. 2008)

    By Kevin E. Noonan --

Sanity may be returning to the Federal Circuit's treatment of two issues, obviousness and inequitable conduct.  In Eisai Co. v. Dr. Reddy's Laboratories, Inc., the Court (in an opinion by Judge Rader joined by Judges Linn and Prost) affirmed the District Court's determination that the patent-in-suit, U.S. Patent No. 5,045,552 was not obvious and was not obtained through inequitable conduct.  In doing so, the Court illustrated how its approach to chemical obviousness has developed after KSR Int'l Co. v. Teleflex Inc. and suggested that its inequitable conduct analysis may be returning to the principles enunciated in Kingsdown Medical Consultants, Ltd. v. Hollister, Inc., 863 F.2d 867 (Fed. Cir. 1988) (en banc).

The '552 patent discloses and claims rabeprazole, a proton pump inhibitor that suppress gastric acid production by inhibiting action of the enzyme H+, K+ ATPase.  Eisai sells the sodium salt of rabeprazole as Aciphex® for duodenal ulcers, heartburn, and related disorders.  It has worldwide sales of more than $1 billion.  Eisai filed suit pursuant to notification from Defendants Dr. Reddy's Laboratories and Teva Pharmaceuticals that each company had filed an Abbreviated New Drug Application (ANDA) containing a Paragraph IV certification that the '552 patent was invalid and/or unenforceable.  (Mylan Laboratories, Inc. and Mylan Pharmaceuticals also filed ANDAs, but Eisai's lawsuit against those companies was stayed pending resolution of this action; Mylan agreed to be bound by the final judgments and any appeals in Eisai's lawsuit against Dr. Reddy's and Teva.)

Neither Defendant contested that filing an ANDA constituted infringement under the Hatch-Waxman Act, and both asserted the affirmative defense that the '552 patent was unenforceable for being obtained by Eisai through inequitable conduct.  In addition, Teva asserted that the '552 patent claims were invalid as being obvious over three prior art references.  The District Court granted summary judgment in Eisai's favor on infringement, invalidity, and inequitable conduct.  Infringement was not appealed by either Defendant.

Teva based its allegations that the '552 patent was obvious over three prior art references: 1) European Patent No. 0 174 726, claiming lansoprazole (see below); 2) U. S. Patent No. 4,255,431, claiming omeprazole; and 3) an article by Brändström et al., entitled "Structure Activity Relationships of Substituted Benzimidazoles."  Lansoprazole was disclosed in the '726 EP for treating ulcers, and differs from rabeprazole in having a trifluoroethoxy at the 4-position on the pyridine ring instead of a methoxypropoxy substituent:

Omeprazole differs more significantly in chemical structure, having a methoxy substituent at the equivalent 4-position:

The Brändström reference discloses a generic structure for anti-ulcerative compounds having a benzimidazole-sulfinylmethyl-pyridine core structure that encompasses lansoprazole, omeprazole, and rabeprazole:

The Federal Circuit adopted for the purposes of the appeal two properties of lansoprazole:  that it was twenty-fold more active than omeprazole in its anti-ulcer action, and that the trifluoroethoxy group improved lipophilicity "that would have made it desirable to the skilled artisan."

The Court took this as evidence that lansoprazole would have been considered a "lead compound" for the skilled artisan in the search for alternative anti-ulcer compounds.  Contrary evidence considered by the Court was testimony by Teva's expert that the data set forth in the '726 EP application would not permit the level of acid secretion to be determined.  Moreover, the District Court, and the Federal Circuit, considered the teachings of the '726 EP application that the trifluoroethoxy substituent provided "a special path to achieving lipophilicity," a desirable property for an anti-ulcer medication, something Teva's expert testified was supported by a separate prior art reference.  Another of Teva's experts refused to testify as to the relevance of the '726 EP application to the patentability of the '552 patent claims, and the Federal Circuit further noted that there was "no discernible reason for a skilled artisan to begin with lansoprazole only to drop the very feature, the fluorinated substituent, that gave this advantageous property."

The Federal Circuit articulated the following principles for applying the Supreme Court's KSR teachings to the question of chemical obviousness:

First, KSR assumes a starting reference point or points in the art, prior to the time of invention, from which a skilled artisan might identify a problem and pursue potential solutions.  Second, KSR presupposes that the record up to the time of invention would give some reasons, available within the knowledge of one of skill in the art, to make particular modifications to achieve the claimed compound.  See Takeda Chem. Indus. v. Alphapharm Pty., Ltd., 492 F.3d 1350, 1356 (Fed. Cir. 2007).  ("Thus, in cases involving new chemical compounds, it remains necessary to identify some reason that would have led a chemist to modify a known compound in a particular manner to establish prima facie obviousness of a new claimed compound.").  Third, the Supreme Court's analysis in KSR presumes that the record before the time of invention would supply some reasons for narrowing the prior art universe to a "finite number of identified, predictable solutions," 127 S. Ct. at 1742.  In Ortho-McNeil Pharmaceutical, Inc. v. Mylan Laboratories, Inc., 520 F.3d 1358, 1364 (Fed. Cir. 2008), this court further explained that this "easily traversed, small and finite number of alternatives . . . might support an inference of obviousness."  To the extent an art is unpredictable, as the chemical arts often are, KSR's focus on these "identified, predictable solutions" may present a difficult hurdle because potential solutions are less likely to be genuinely predictable.  (Emphasis added)

The Federal Circuit stated that the record showed no reasons why the skilled artisan would have identified modifying lansoprazole to substitute the lipophilicity-conferring trifluoroethoxy group as a predictable solution to the problem of providing an alternative anti-ulcer compound.  The Court characterized Teva's argument as relying on "unsupported assertions" that compounds other than lansoprazole, such as rabeprazole, would have been identified by the skilled artisan as an alternative anti-ulcer compound.  Thus, finding no genuine issue of material fact and no evidence that the District Court committed clear error, the Federal Circuit affirmed the finding that the '552 patent claims were non-obvious.

Turning to the question of inequitable conduct, the defendants raised five bases for their allegations:  first, that Eisai did not disclose a related, co-pending application that disclosed the "ethyl homolog" of rabeprazole; second, failing to disclose rejections in the related application alleged to be material to patentability; third, failing to disclose a prior art reference (WO 86/02646); fourth, by submitting a misleading declaration; and finally, concealing the existence of lansoprazole in the prior art.  The District Court found the materiality of the ethyl homolog application to be low, even in the face of Teva's allegation that its existence could have provoked an obviousness-type double patenting rejection.  Although the Federal Circuit stated that disclosure of the co-pending application would have been "prudent," Eisai's failure to do so was not inequitable conduct, according to the Federal Circuit because the low materiality of the application was coupled with a record "devoid of any real suggestion of intent to deceive."  Similarly, the District Court found, and the Federal Circuit agreed, that there was "no compelling evidence" of an intent to deceive relating to Eisai's failure to disclose the rejections asserted by the Examiner in the co-pending application.  This determination was based in part on the District Court's appreciation that filing separate applications on sufficiently-related subject matter in an effort to "hide" the existence of each of them from the Patent Examiner was "implausibly risky" in view of the likelihood that the same examiner would be assigned to both.  The District Court found the undisclosed reference to be merely cumulative to art of record during prosecution of the '552 patent.  Although the Court found the declaration at issue "highly material," it was unconvinced by the Defendants that the failure to disclose the relationship between the anti-ulcerative properties of rabeprazole and the "ethyl homolog" was material, characterizing the undisclosed information as "additional" and "unnecessary."  Moreover, there was a sufficient lack of any evidence of an intent to deceive to render "stillborn" the inequitable conduct allegation.  Finally, the lansoprazole allegation, which the District Court had dismissed on summary judgment, was supported by evidence of neither materiality nor an intent to deceive.

More important than the decision in this case regarding inequitable conduct was the Federal Circuit's discussion of the guiding principles of law it applied:

Inequitable conduct in prosecuting a patent application before the United States Patent & Trademark Office may take the form of an affirmative misrepresentation of material fact, a failure to disclose material information, or the submission of false material information, but in every case this false or misleading material communication or failure to communicate must be coupled with an intent to deceive.  Innogenetics, N.V. v. Abbott Labs., 512 F.3d 1363, 1378 (Fed. Cir. 2008).  Materiality, defined as "what a reasonable examiner would have considered important in deciding whether to allow a patent application," and intent are both questions of fact, and require proof by clear and convincing evidence.  Id.  To satisfy the "intent" prong for unenforceability, "the involved conduct, viewed in light of all the evidence, including evidence indicative of good faith, must indicate sufficient culpability to require a finding of intent to deceive."  Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 876 (Fed. Cir. 1988) (en banc) (citing Norton v. Curtiss, 433 F.2d 779 (CCPA 1970)).  Gross negligence is not sufficient.  Id.  This is a high bar.

Lately, it hasn't been a high bar.  Indeed, since Kingsdown, the Court has expanded the limits of the behavior it has considered amounts to inequitable conduct.  Examples of this expansion include improperly claiming small entity status (Nilssen v. Osram Sylvania, Inc.), improperly filing a petition to make special (General Electro Music Corp. v. Samick Music Corp.), failing to disclose that a declarant had been a paid consultant prior to filing an expert declaration under 37 C.F.R. § 1.132 (Ferring B.V. v. Barr Laboratories, Inc.), misjoinder of inventorship (PerSeptive Biosystems, Inc. v. Pharmacia Biotech, Inc.), and inaccuracies in an expert declaration (Aventis Pharma S.A. v. Amphastar Pharma, Inc.).  Judge Rader, who dissented in Aventis Pharma, here emphasized the need, in his opinion, for affirmative instances of "culpable conduct" rather that mere omissions, with the concomitantly more difficult need to discern evidence of intent from such conduct.  And Judge Rader is more clearly focused, in Aventis and in this opinion, on a defendant carrying the extraordinary burden of establishing inequitable conduct by clear and convincing evidence.

It remains to be seen whether Judge Rader's formulation of the proper boundaries of what constitutes inequitable conduct for the Federal Circuit will prevail.

Eisai Co. v. Dr. Reddy's Laboratories, Inc. (Fed. Cir. 2008)
Panel: Circuit Judges Rader, Linn, and Prost
Opinion by Circuit Judge Rader

More on USPTO Rulemaking Practices

    By Donald Zuhn --

Yesterday, we reported on the Patent Office's publication of a Notice in the Federal (73 Fed. Reg. 32559) requesting that interested members of the public comment on the Office's estimates for any additional burdens imposed on applicants by the new appeals rules.  In a departure from recent Patent Office practice, the Notice was published in the Federal Register but not on the Office's website, and in a departure from standard rulemaking procedure, the Notice was published on June 9, 2008, only one day before the appeals Final Rule Notice was published.

Following yesterday's report, David Boundy (at left), the Vice President of Intellectual Property for Cantor Fitzgerald L.P., wrote us to provide a few additional details regarding the USPTO rulemaking process.  With respect to the differences between Executive Order 12866 and the Paperwork Reduction Act (PRA), Mr. Boundy noted that the former requires an agency to account for all of the economic effects resulting from any rules changes, while the latter addresses only the costs relating to the gathering, organizing, storing, and submitting of information (i.e., the "paperwork" burden).  Mr. Boundy noted that over the past two years, the Patent Office has failed to recognize this distinction, and as a result has frequently failed to account for all economic burdens in its E.O. 12866 analyses.

Under E.O. 12866 (as well as a third agency rulemaking mandate, the Regulatory Flexibility Act), the Patent Office must account for any loss of, or reduction in, patent value or business investment that would result from a particular rules change.  In particular, the Office is required to submit all rules changes that have a greater-than-zero economic effect to the Office of Management and Budget (OMB) after writing the first draft of a Notice of Final Rulemaking, and then give the OMB a 90-day period in which to review the rules changes.  Once the 90-day period has passed, E.O. 12866 has no further impact on a particular rules package.

The PRA, on the other hand, creates a continuing obligation to analyze the paperwork burdens of a particular rules package.  Mr. Boundy noted that the claims and continuation rules -- which were permanently enjoined on April 1st in Tafas/GSK v. Dudas -- are being held up at the OMB on the basis of this continuing obligation.  So, even if the Patent Office is successful in its appeal, it will have to confront a patent community that is better prepared to argue excessive paperwork burdens.

Mr. Boundy pointed out that the Patent Office at present lacks the authority to enforce its new appeals rules because it has not yet received the OMB's blessing under the PRA (as indicated by the "OMB Control Number" that appears on most PTO forms).  Mr. Boundy noted that the Patent Office's obligations under the PRA are not too imposing -- the Office need only fairly and accurately account for the paperwork burdens imposed by a particular change in the rules.  After the Office has complied with this obligation, its up to the OMB to either sign off on the rules changes or let the Office know that the rules changes create an excessive paperwork burden.

With respect to the new appeals rules, Mr. Boundy suggests that the Patent Office has used a two-fold strategy to evade proper E.O. 12866 review by first concluding that the new appeals rules were not economically significant (thus sidestepping its obligation to "show its work" with regard to economic impact), and then by delaying its PRA review until now.

To those interested in submitting comments to the Patent Office in response to the June 9th Notice, Mr. Boundy advises that appropriate subject matter would include an evaluation of the fairness, objectivity, and reliability of the estimates in the Notice.  In particular, comments should focus on issues where the estimates in the Notice breach the requirements of the PRA (specifically the requirements set forth in 5 C.F.R. § 1320.8, .9, .11, and .12) or contravene the Office's own Information Quality Guidelines, which establish the ground rules for the Office's own PRA analysis (and which can be found here).

Teva to Acquire Barr

    By Sherri Oslick --

In a transaction merging two major players in the generic pharmaceutical arena, Teva Pharmaceutical Industries Ltd. and Barr Pharmaceuticals, Inc. announced late last week that they have entered into an agreement by which Teva will acquire Barr for $7.46 billion plus the assumption of $1.5 billion in debt.  The transaction is expected to close by the end of 2008, pending antitrust clearance and Barr stockholder approval.

Barr Pharmaceuticals, Inc., a holding company, operates through subsidiaries Barr Laboratories, Inc., Duramed Pharmaceuticals, Inc., and PLIVA d.d. and its subsidiaries.

Teva is the leading generic pharmaceutical company worldwide, and Barr the fourth largest.  Together, the two companies, totaling to over 500 currently marketed products and over 200 pending ANDA applications (including approximately 70 first to file Paragraph IV challenges), will hold nearly 25% of the market share for all U.S. generic companies, and just under 16% of the market share for all U.S. pharma companies.  The combined company will operate in more than 60 countries, employ about 37,000 people, and have an expected annual income of nearly $12 billion.

For additional information regarding the merger, please see:

• Teva's press release
• Barr's press release
• Barr's presentation to investors

USPTO Rulemaking Practices Being Called into Question (Again)

    By Kevin E. Noonan and Donald Zuhn --

The U.S. Patent and Trademark Office has attempted (with varying levels of success) to implement a number of new rules packages in the past two years, including new continuation and claims rules, alternative claiming rules, and IDS rules, but none of these rules packages has been implemented as yet.  One new rules package that has been published as a Final Rule in the Federal Register concerns changes in how rejected patent claims are appealed to the Board of Patent Appeals and Interferences (see "New Appeals Rules Published").  This is the agency Board charged with performing the administrative review required to trigger (if unsuccessful) an applicant's right to appeal, either to the District Court (under 35 U.S.C. § 145) or the Federal Circuit (under 35 U.S.C. § 141).  The Notice of Final Rule was published on June 10, 2008.

Despite publishing as a Final Rule, however, the Patent Office has yet to implement the new appeals rules, which is perhaps due to the Office's failure to follow proper procedures within the Executive Branch for this type of administrative agency rulemaking.  In particular, the Office failed to timely comply with the requirements of the Paperwork Reduction Act (PRA), which mandates that the Office analyze paperwork burdens imposed on applicants by any Office rulemaking.  The PRA directs the Office to submit its assessment of any added paperwork burdens to the White House Office of Management and Budget (OMB), and mandates that an agency proposing a new rule assess any additional burdens imposed by the rule "fairly, objectively, and accurately."

The Patent Office, it seems, did not perform the PRA assessment at the time the Notice of Proposed Rulemaking for the appeals rules package was published on June 30, 2007.  Indeed, because the new appeals rules were deemed by the Office "to be not significant for the purpose of Executive Order 12866," the Office appears to have simply sidestepped its obligation to provide a PRA assessment.  (Executive Order 12,866, which was first promulgated in 1993 under the Clinton Administration and amended twice -- in 2002 and 2007 -- by the current Bush Administration, requires that the Office account for the economic effects of a new rules package, unless that package is deemed to have effects that are "not significant.")  As a result, the Office did not request that the OMB grant its approval under the PRA until the day before the Notice of Final Rulemaking was published.  Now, it appears, the OMB has requested that the Office comply with the PRA.

Accordingly, on June 9, 2008 (the day before appeals Final Rule Notice was published), the Office published a Federal Register Notice (73 Fed. Reg. 32559), requesting that interested members of the public comment on the Office's estimates for any additional burdens imposed on applicants by the new appeals rules.  The Notice made public the Office's analyses, including its estimates on the number of appeals expected per annum as well as ancillary added costs (such as postage).  Curiously, the Office did not list the June 9, 2008 Notice on its website (see the "Federal Register Notices" column on the "News and Notices" page of the USPTO website) or any other forum for notifying the public.  While the June 9th Notice is sufficient under the Administrative Procedures Act, which was made law well before the advent of websites, it marks a departure from the Office's recent practice of posting such notices on its website.  In fact, the Office published a similar Notice regarding the alternative claiming rules a little more than four months ago (see "Patent Office Publishes Notice Regarding Impact of Proposed Markush Claims Rules on Small Entities" and "You Can't Fight the USPTO -- or Can You?").

Comments regarding the June 9th Notice must be submitted no later than August 8, 2008, and must be sent to Susan K. Fawcett, Records Officer, USPTO, Office of the Chief Information Officer, Customer Information Services Group, Public Information Services Division.  Comments received by the USPTO are supposed to be forwarded to the OMB without characterization or editing by the Office.

Whether the Office's actions in this instance evince an intention to reduce the amount of public participation in the OMB's PRA review, or are just another reflection of a "gang that couldn't shoot straight" performance level that has all too frequently characterized their actions over the past few years, two things are clear about the circumstances.  First, the OMB will not permit the Office to implement the new appeals rules until it has done its own PRA review, and second, the Notice gives concerned members of the patent public the opportunity to make their views known.  There is no evidence that the OMB is doing anything other than exercising its authority and fulfilling its responsibilities, or that anyone at the OMB has any reason to prevent the Office from implementing the new appeals rules in the absence of public comment challenging or refuting the Office's position that there is essentially no additional burden imposed by the new rules.  Thus, it is imperative that any member of the concerned patent public make those concerns known to the OMB within the comment period.

For those more inclined to see intent rather than ineptitude behind this latest example of the Office appearing less than above-board when dealing with the public (see "Docs at BIO: "Gotcha" Games Continue at USPTO"), prudence suggests that any comments be sent not only to Ms. Fawcett at the Office but to the OMB directly.  In doing so, it may be worthwhile to attach a cover letter to the following effect:

Susan_Dudley@omb.eop.gov
The Honorable Susan E. Dudley
Administrator
Office of Information and Regulatory Affairs
Office of Management and Budget
Washington, DC  20503

Re: Comments on Information Collection Request 0651-00xx (formerly 0651-0030), 72 Fed. Reg. 32559 (Jun. 9, 2008) for RIN 0651-AC12, Rules of Practice Before the Board of Patent Appeals and Interferences in Ex Parte Appeals, 73 Fed. Reg. 32938 (Jun. 10, 2008)

Dear Ms. Dudley:

Enclosed is a copy of a comment letter we filed on the U.S. Patent and Trademark Office's Information Collection Request for the Patent Office's recently-finalized Appeal Rule.

We are sending it to you separately to ensure that these comments are before the Office when making its determinations in this matter.  We believe that having these comments directly, without any input, recasting or characterization by the Patent Office will permit the OMB to fairly and accurately assess the objective and reproducible information presented therein.  In our view, the Patent Office has recently shown the tendency to recast or characterize public comment in ways that may not accurately reflect such information.  For example, in the Notice of Final Rulemaking for this very rule, the PTO repeatedly reformulated the public comments in a manner that appeared to make it easier to discount the commenter's concerns or assessments contrary to the Office's position.  In addition, for several comments the Office had no discernable response but simply failed to address the comment meaningfully.  Indeed, a recent Notice of Final Rulemaking states that the Patent Office refuses to implement the oversight principles in the OMB's Good Guidance Practices Bulletin, and refuses to provide supervisory enforcement to require employee compliance with the procedural requirements of the Patent Office's guidance document (72 Fed. Reg. at 46752, col. 2-3).

Thus, to ensure that our comments are accurately addressed, and that the Patent Office follows OMB's regulatory oversight, we have provided a separate copy to you.  You should confirm that whatever summary or response that the Patent Office provides to you accurately paraphrases the issues raised in our letter, and addresses them in a way that complies with various OMB guidelines.

We also write to bring to your attention our disagreement with the Patent Office's characterization of three major rules as all being "not significant" for purposes of Executive Order 12,866:  (a) this Appeal Rule (RIN 0651-AC12), (b) RIN 0651-AC00, Examination of Patent Applications that Include Claims Containing Alternative Language, 72 Fed. Reg. 44992 (August 10, 2007) ("Markush Rule"), and (c) RIN 0651-AB95 Changes to Information Disclosure Statement Requirements and Other Related Matters, 71 Fed. Reg. 38808 (July 10, 2006) ("IDS Rule").  We understand that the Patent Office was not permitted to make this designation for anything except rules that have essentially zero effect on the public.  But each of the three rules has effects - in paperwork and other compliance costs, loss of patent asset value, and loss of investment in innovation - that are easily several times the $100 million threshold for "economically significant" rules.  The IDS Rule alone imposes several billion dollars of paperwork burden, and the Appeal and Markush Rules would each impose hundreds of millions, or billions, of dollars of effect in lost asset value and investment.  We are troubled by assertions from the Patent Office to the OMB that these rules fall outside the scope of your review, based on this mischaracterization of the staggering economic effects of each of its rules.  In our view, the best course would be for the OMB to order the Patent Office to withdraw all three of these rules, and re-promulgate them (if the Office wishes to) only accompanied by a full Regulatory Impact Analysis on each.

We thank David Boundy of Cantor Fitzgerald for bringing this issue to our attention.