Patent Docs

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.

Ortho-McNeil Pharmaceutical, Inc. v. Mylan Pharmaceuticals, Inc. et al.
1:08-cv-00101; filed April 9, 2008 in the Northern District of West Virginia

Infringement of U.S. Patent No. RE39,221 ("Composition Comprising a Tramadol Material and Acetaminophen and Its Use," issued August 1, 2006) following a paragraph IV certification as part of Mylan's filing of an ANDA to manufacture a generic version of Ortho-McNeil's Ultracet® (tramadol hydrochloride and acetaminophen, used to treat acute pain).  View the complaint here.

Procter & Gamble Co. v. Teva Pharmaceuticals USA Inc.
1:08-cv-00191; filed April 4, 2008 in the District Court of Delaware

Infringement of U.S. Patent No. 5,583,122 ("Pharmaceutical Compositions Containing Geminal Diphosphonates," issued December 10, 1996) following a paragraph IV certification as part of Teva's filing of an ANDA to manufacture a generic version of P&G's Actonel® (risedronate sodium, used to treat and prevent postmenopausal osteoporosis) co-packaged with calcium carbonate tablets.  View the complaint here.

Sanofi-Aventis Deutschland GmbH et al. v. Glenmark Pharmaceuticals Inc., USA et al.
2:08-cv-01658; filed April 3, 2008 in the District Court of New Jersey

Infringement of U.S. Patent No. 5,721,244 ("Combination of Angiotensin-Converting Enzyme Inhibitors with Calcium Antagonists As Well As Their Use in Drugs," issued February 24, 1998) following a paragraph IV certification as part of Glenmark's amendment of their ANDA (adding additional dosage forms) to manufacture a generic version of plaintiffs' Tarka® (trandolapril and verapamil hydrochloride, used to treat hypertension).  View the complaint here.

Conference & CLE Calendar

April 25, 2008 - Patent Claim Construction (Law Seminars International) - Atlanta, GA

April 30, 2008 - Public PAIR and Data-Mining Requests Webcast (U.S. Patent and Trademark Office)

April 30-May 1, 2008 - Pharma/Biotech Collaborative Agreements (American Conference Institute) - San Francisco, CA

May 15, 2008 - The Federal Circuit: A National Court of Appeals: Addressing New Challenges (U.S. Court of Appeals for the Federal Circuit) - Washington, DC

May 28-30, 2008 - PharmaBiotech IP Summit (Worldwide Business Research) - Philadelphia, PA

June 16, 2008 - Prior Art & Obviousness 2008: The PTO and CAFC Perspective on Patent Law Sections 102 & 103 (Practising Law Institute) - San Francisco, CA

June 17-20, 2008 - BIO International Convention (Biotechnology Industry Organization) - San Diego, CA

June 23, 2008 - Multilateral Patents (Law Seminars International) - San Francisco, CA

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

Hoffmann-LaRoche Can't Wait, Files Notice of Appeal to the Federal Circuit

    By Kevin E. Noonan --

Hoffmann-LaRoche has apparently given up its attempts to convince Judge William Young to lift an injunction preventing it from selling its Mircera® drug product (a form of recombinant EPO that has been covalently linked to polyethylene glycol), and has filed a Notice of Appeal with the Court of Appeals for the Federal Circuit.

On October 23, 2007, Amgen procured a jury verdict that Mircera® infringed several Amgen patents (see "Amgen Survives Another EPO Challenge"), and the District Court granted Amgen a preliminary injunction on February 28, 2008.  In granting the injunction, Judge Young indicated that Amgen had clearly fulfilled three of the four factors mandated for consideration by the Supreme Court in eBay Inc. v. MercExchange, L.L.C., (Amgen's asserted claims were infringed and not invalid; Amgen's injury would not be adequately compensated merely with money damages; and the balance of the hardships weighed in favor of granting the injunction).  However, the District Court did not decide in Amgen's favor as to the fourth prong, the public interest, particularly in view of Roche's representations of the advantages of its Mircera® product over Amgen's version of EPO (including inter alia less frequent dosing; see "Long-Acting Drug for Dialysis Anemia Equivalent to Weekly Agent").

The District Court set five conditions that Roche needed to fulfill before it would lift the injunction, and Roche ultimately agreed to all the Court's conditions (see "Roche Agrees to Court's Conditions for Modifying Preliminary Injunction").  Amgen responded by informing the District Court that it intended to pursue its right to a jury determination of the money damages it is entitled to should Roche launch under a modified injunction, stating that the Court did not have the power to deny Amgen its statutorily-defined profits, and that Amgen would also seek treble damages for any Roche sales made pursuant to the Court's order as constituting willful infringement.  And the District Court further postponed a final decision on lifting the injunction on March 31, 2008, issuing an order that it intended to appoint a special master to consider the question of how dosing and pricing of Amgen's and Roche's products should be compared.  The District Court gave the parties 15 days to submit a list of "agreed" candidates to be appointed special master, and then the Court intended to give that candidate another 60 days to make the inquiries necessary to provide his or her findings to the Court.  Only after at least a 75-day delay could the Court be expected to make its ruling.  Presumably, this order has been mooted by Roche's appeal (since Judge Young originally set a timetable for considering lifting the injunction conditioned on the parties not filing a notice of appeal to the Federal Circuit).

In addition to its public interest argument, Roche can be expected to respond to Amgen's arguments submitted to the District Court on March 14th (see "Will the Federal Circuit's Pfizer v. Teva Decision Spell the End of Amgen's Patent Rights to Recombinant Human Erythropoietin?") regarding the effect of the Federal Circuit's Pfizer, Inc. v. Teva Pharmaceuticals USA, Inc. decision on the propriety of the preliminary injunction and the underlying competence of Amgen's verdict that its claims are not invalid.  The Federal Circuit in Pfizer construed the scope of the "safe harbor" provisions of 35 U.S.C. § 121 to be limited to divisional applications and not to include continuation-in-part applications; it did not directly decide the question with regard to continuation applications.

Amgen argued that this decision has no bearing on the District Court's decision that Amgen's patents-in-suit are not invalid under the judicially-created obviousness-type double patenting doctrine.  Amgen also argued that its applications were not CIPs but continuations, and that the Pfizer decision was limited to precluding the § 121 safe harbor from encompassing CIP applications.  Amgen further argued that its patents-in-suit were continuation applications in name only, and satisfied the conditions of the statute for benefitting from the safe harbor ("later application[s] carved out of a pending application," containing claims to "a distinct and independent invention" and "disclosing and claiming only subject matter disclosed in the earlier or parent application").  Finally, Amgen argued that the Pfizer decision is inconsistent with Federal Circuit precedent, with regard to continuation applications, in Applied Materials, Inc. v. Adv. Semiconductor Materials Am., Inc., 98 F.3d 1563 (1996) and Symbol Technologies, Inc. v. Opticon, Inc., 935 F.2d 1569 (Fed. Cir. 1991), and that the Court is bound by the earlier decisions, citing Newell Cos. v. Kenney Mfg. Co., 864 F.2d 757, 765 (Fed. Cir. 1988) ("This court has adopted the rule that prior decisions of a panel of the court are binding precedent on subsequent panels unless and until overturned in banc.  Where there is direct conflict, the precedential decision is the first.").  Roche no doubt disagrees, and the controversy adds yet another ground for its attack on Amgen's patents, its verdict, and its injunction.

For additional information regarding this topic, please see:

• "Will the Federal Circuit's Pfizer v. Teva Decision Spell the End of Amgen's Patent Rights to Recombinant Human Erythropoietin?" March 31, 2008
• "Court Still Cannot Decide on Amgen's Permanent Injunction," March 26, 2008
• "Amgen Inc. v. International Trade Commission (Fed. Cir. 2008)," March 20, 2008
• "Roche Agrees to Court's Conditions for Modifying Preliminary Injunction," March 20, 2008
• "Roche's Mircera® Remains Off the Market (For Now)," March 2, 2008
• "Amgen Survives Another EPO Challenge," October 28, 2007

USPTO News: Webcast Regarding Public PAIR Issues

    By Christopher P. Singer --

Recently, the U.S. Patent and Trademark Office announced that it will hold a webcast on April 30, 2008 at 3:00 pm (EDT) in order to address various issues concerning Public PAIR.  In particular, the Office will address the recent access and response time problems that Public PAIR has faced resulting from of downloads of large amounts of data.  The PTO will address its initial efforts to address this problem using the verification code "reCAPTCHA" security measure (see "USPTO e-Commerce Update and Public PAIR Verification System"), and will discuss potential long-term solutions to the problem.

The PTO is explicitly requesting public input regarding this issue in order to be sure that any permanent system solution will still be able to meet the needs of the IP community.  For those interested in viewing the webcast, you only need to enroll (free) for the event at this link.  Public comments and questions regarding the process of gathering information and requirements of the Public PAIR system can be e-mailed to the following address:  PAIR_webcast@uspto.gov.

BIO Commends Senator Specter for Patent Reform Stance

    By Donald Zuhn --

On April 1st, we reported on a statement issued by Biotechnology Industry Organization (BIO) President and CEO Jim Greenwood (at right) disputing a report from the Coalition for Patent Fairness that the Senate patent reform bill (S. 1145) would be coming to a vote in the next few weeks.  Earlier today, Mr. Greenwood issued a new statement on the patent reform bill, "applaud[ing] the continuing efforts of Senator Arlen Specter (R-PA) [at left] to improve and strengthen the Patent Reform Act (S. 1145) to ensure that this legislation promotes continued U.S. leadership in innovation and treats all industries fairly."  Mr. Greenwood criticized the Senate bill for continuing to include "key provisions that would jeopardize many economic sectors, such as biotechnology, that rely on strong patent protection to help fuel American economic growth," and commended Senator Specter for rejecting these provisions.  As to whether the Senate bill in its present form should come to a vote, Mr. Greenwood argued that "[t]his is not a risk that the Senate should take at a time when we need to do all we can to support innovative, growth-oriented American industries and a fragile U.S. economy."  Mr. Greenwood continued to offer BIO's support "to improve the existing bill to preserve the underlying strength of our nation’s patent system."

Cantor Fitzgerald VP Comments on Markush Rules

    By Donald Zuhn --

Last month, we reported on the U.S. Patent and Trademark Office's supplementary notice concerning its Alternative Claims Notice of Proposed Rule Making (frequently referred to as Markush rules).  While the Patent Office asserted that the new alternative claims rules "involve rules of agency practice and procedure for which prior notice and an opportunity for public comment are not required pursuant to 5 U.S.C. 553 (or any other law), and thus neither a regulatory flexibility analysis nor a certification under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) is required under 5 U.S.C. 603," the Patent Office nevertheless decided to "subject the proposed rules to a regulatory flexibility analysis to provide a further opportunity for comment on the small business impact of the proposed rules."  As we noted in an earlier report, comments on the alternative claims rules were due on or before April 9, 2008.

Yesterday, we received a copy of the comments submitted by David Boundy (at left), the Vice President of Intellectual Property for Cantor Fitzgerald L.P.  In his letter, Mr. Boundy concluded that "[t]he PTO’s rulemaking procedure for the Continuations, Claims, IDS, Appeal and Markush Rules violated the Regulatory Flexibility Act, the Paperwork Reduction Act, 5 C.F.R. § 1320.01 et seq., and Executive Order 12,866," and contended that the still pending IDS, alternative claims, and appeals rules packages "should be withdrawn."

The Regulatory Flexibility Act requires an agency to “make a reasonable good faith effort” to address the costs that a regulation would impose on small entities.  According to Mr. Boundy, "[s]o much is omitted from the [PTO's supplementary notice], and what is considered is considered on such a flimsy basis, as to raise genuine questions whether the PTO can meet even the most lenient standard of 'reasonable good faith.'"

With respect to the Office's obligations under the Paperwork Reduction Act, Mr. Boundy notes that "the entire thrust of the Markush Rule is to compel applicants to file more patent applications, at an acknowledged paperwork cost of about $10,000 each, in an acknowledged minimum number of at least 13,000 per year -- totaling about $130 million per year," and he argues that "[t]he PTO’s refusal to account for the staggering Paperwork costs of the divisional applications required by the Markush Rule is beyond the pale."  In a comment perhaps directed to those members of Congress who would confer additional authority upon the Patent Office, Mr. Boundy challenges the Office to "explain to Congress why [it] has done such a poor job of complying with its Paperwork Reduction Act responsibilities," and "explain to Congress how it can exercise authority under proposed 'Applicant Quality Submissions' any more responsibly than it has exercised authority under existing law."

Executive Order 12,866 requires that the Patent Office account for the economic effects of the alternative claims rules, unless the rules are deemed to have effects that are "not significant."  Mr. Boundy explains that "[t]he designation 'not significant' is reserved for regulations that have only minor consequences and elicit little or no controversy, such as housekeeping actions."  With respect to the alternative claims rules, Mr. Boundy contends that "it seems certain that a minimum of 100,000 additional applications will be required if applicants are to avoid regulatory burdens of lost patent protection," and that at $16,000 per application (the PTO's own estimate), "the burdens of the Markush rule cognizable under E.O. 12,866 are $16 billion per year."  As a result, the alternative claims rules exceed the $100 million threshold for an "economically significant" rule.

Mr. Boundy concludes his letter by addressing information that came to light only as a result of the GSK case.  In particular, he notes that "[w]hen the PTO produced its documents in the Tafas v. Dudas litigation, the absence of any consideration by the PTO of any factor economically-relevant to the public became starkly clear by the absolute absence of any analysis of economic effects on applicants in the administrative record."  According to Mr. Boundy, the omission of such an analysis is an indictment of senior PTO management, who he asserts are "no longer trusted by the PTO’s customer base."  He adds that senior PTO management has:

convinced the patent bar that they have no understanding of the patent system, are unwilling or unable to look at any effect that would occur outside the PTO’s four walls . . . and have too little respect for the rule of law to be able to avoid the legal fiasco that led to the PTO’s defeat . . . in Tafas v. Dudas.

For Mr. Boundy, the ultimate solution is to find "PTO management that can demonstrate sufficient understanding of the issues to earn the trust of stakeholders," rather than to support management that continues to force "economically-irrational rulemaking" upon the patent community.

Antigenics Announces First-Ever Approval for "Personalized" Cancer Treatment

    By Mark Chael --

On April 8th, Antigenics Inc. announced that the Russian Ministry of Public Health had approved Oncophage® for the treatment of intermediate-risk kidney cancer.  According to Antigenics, Oncophage® is derived from a discrete tumor and contains the antigenic fingerprint of the cancer cells that make up that particular tumor, making Oncophage® "personalized" to fight against recurrence of the tumor.  Treatment with Oncophage® after full or partial removal of a tumor is designed to reprogram the body’s immune system to attack remaining cancer cells and new cancer cells with the corresponding antigenic fingerprint.

The company has over 50 U.S. patents covering the Oncophage® platform technology, including U.S. Patent No. 7,309,491, and no doubt a number of pending patent applications worldwide.

According to some reports, Oncophage® failed to lower the overall risk of relapse in a Phase III trial, but it helped 60 percent of people stay in remission longer if they had an intermediate risk of recurrence.  This treatment has received fast track and orphan drug designations from the U.S. Food and Drug Administration (FDA) for both kidney cancer and metastatic melanoma, but it has yet to be fully approved for use anywhere outside of Russia.  The company plans on seeking European approval later this year and is in ongoing discussions with the FDA for approval in the U.S.

Oncophage®, also called vitespen and formerly called HSPPC-96, is derived from proprietary heat shock protein technology developed at Antigenics and elsewhere.  The personalized cancer vaccine is generated after full or partial resection of a tumor, which is then shipped to Antigenics for processing.  At Antigenics, heat shock protein gp96 and associated peptides are isolated from the tumor and processed for re-introduction into the patient as a putative cancer vaccine.  If successfully prepared from the tumor, the vaccine is normally ready for injection into the patient within 6 to 8 weeks following surgery.

Antigenics is publicly traded on the NASDAQ exchange under the symbol AGEN.

Ortho-McNeil Pharmaceutical, Inc. v. Cobalt Pharmaceuticals Inc. (Fed. Cir. 2008)

    By Donald Zuhn --

Last week, the Federal Circuit issued an opinion in Ortho-McNeil Pharmaceutical, Inc. v. Mylan Laboratories, Inc.  In Mylan Laboratories, the Federal Circuit determined that the District Court for the District of New Jersey properly construed claim 1 of U.S. Patent No. 4,513,006, owned by Plaintiff-Appellee Ortho-McNeil Pharmaceutical, Inc., to encompass Ortho-McNeil's epilepsy drug topiramate, and affirmed the District Court's decision to (1) permanently enjoin Defendants-Appellees Mylan Laboratories, Inc. and Mylan Pharmaceuticals, Inc. (Mylan) from infringing the '006 patent, (2) dismiss Mylan's invalidity defenses based on obviousness, inequitable conduct, and non-enablement, and (3) reset the effective date of Mylan's Abbreviated New Drug Application (ANDA).  A full discussion of Mylan Laboratories can be found here.

On the same day that the Federal Circuit issued its decision in Mylan Laboratories, it also issued a nonprecedential opinion in a companion case: Ortho-McNeil Pharmaceutical, Inc. v. Cobalt Pharmaceuticals Inc.  In this case, Defendant-Appellant Cobalt Pharmaceuticals Inc. (Cobalt) stipulated that it would be bound by the District Court's final judgment order in Mylan Pharmaceuticals.  Although Cobalt retained its right to appeal, it also stipulated that the appeal would be based on the record in Mylan Pharmaceuticals.  Thus, in affirming the District Court's judgment against Mylan, the Federal Circuit affirmed the District Court's judgment against Cobalt.

Cobalt attempted to present an additional argument on appeal; namely, that claim 1 is rendered indefinite by the use of the term "may be."  The Federal Circuit, however, declined to consider this argument in view of Cobalt's stipulation that its appeal be based on the record in Mylan Pharmaceuticals.

Ortho-McNeil Pharmaceutical, Inc. v. Cobalt Pharmaceuticals Inc. (Fed. Cir. 2008)
Nonprecedential disposition
Panel: Chief Judge Michel and Circuit Judges Rader and Linn
Opinion by Circuit Judge Rader

Codon Devices and Blue Heron Biotechnology Settle Patent Suit

    By Sherri Oslick --

Last week, Codon Devices Inc. and Blue Heron Biotechnology agreed to settle their pending lawsuit in which Codon alleged that a series of patents licensed to Codon were infringed through Blue Heron’s manufacture and use of its GeneMaker® gene synthesis platform.  As reported here, the suit was filed on March 14, 2007 in the District Court of Delaware.

Under the terms of the settlement, Codon has granted Blue Heron a release with respect to past activity as well as a perpetual, fully-paid sublicense to continue to use error correction technology as currently employed in Blue Heron’s commercial gene synthesis activities.  Additionally, Codon is to request that the Court dismiss the complaint with prejudice.  No financial terms were disclosed.

For additional information regarding the settlement, please see:

• Blue Heron's press release
• "Blue Heron Denies Infringement," March 19, 2007

EPO Search Fee Increase

    By Christopher P. Singer --

On April 1, 2008, the European Patent Office (EPO) began increasing fees associated with the searches it performs when acting as the International Searching Authority (ISA) for international applications filed through the PCT.  The fee increased to $2496 which represents nearly a 10% increase from the prior fee of $2274.  The USPTO announced the fee increase in a Notice dated March 31, 2008.

While the more highly publicized claims fee increase (also effective April 1, 2008) for EP applications will have a greater impact on prosecution costs in Europe specifically, the fee associated with the search will impact any international application filed on or after April 1, 2008 that designates the EPO as the international searching authority.

Commerce Secretary "Entirely Wrong" on Inequitable Conduct Reform

    By Donald Zuhn --

Last week, we reported on a letter sent by Secretary of Commerce Carlos Gutierrez to Senators Patrick Leahy and Arlen Specter, in which the Secretary reaffirmed the Bush Administration's support for the Applicant Quality Submission (AQS) provision of the Senate patent reform bill (S. 1145).  In addition, Secretary Gutierrez linked the AQS provision with inequitable conduct reform, stating that the Administration "strongly opposes any statutory changes to the doctrine of inequitable conduct in the absence of a strong provision requiring Applicant Quality Submissions."  According to Secretary Gutierrez, if Congress were to tackle inequitable conduct without also implementing AQSs, this "would merely invite fraud on the patent system."

The Intellectual Property Owners Association (IPO), which we have noted has been encouraging its members to contact their Senators and voice their opposition to the AQS provision, has released a statement concerning Secretary Gutierrez' comments on inequitable conduct.  In particular, the IPO has called the Secretary's comments on inequitable conduct "entirely wrong."  According to the IPO:

Inequitable conduct reform seeks to eliminate frivolous charges of fraud.  AQSs without inequitable conduct reform would create a fertile new ground for frivolous charges of fraud, but inequitable conduct reform without AQSs would not invite “fraud on the patent system.”  The benefits of inequitable conduct reform do not depend on AQSs.

The IPO reasserted its strong opposition to the AQS provision and its strong support for inequitable conduct reform.

Caraco Pharmaceutical Laboratories, Ltd. v. Forest Laboratories, Inc. (Fed. Cir. 2008)

    By Kevin E. Noonan --

The echoes of the Supreme Court's recent spate of reversing the Federal Circuit continue to reverberate, and perhaps nowhere so loudly as in the Federal Circuit's developing declaratory judgment jurisprudence.  Or perhaps it would be more accurate to say in the total collapse of that jurisprudence:  in a series of decisions since the Supreme Court's famous "footnote 11" calling the Federal Circuit's declaratory calculus into question in MedImmune, Inc. v. Genentech, Inc., the Federal Circuit has not just reversed its direction but has created the impression that there are no set of operative facts that would convince the Court that it should deny jurisdiction to a declaratory judgment plaintiff.

Caraco Pharmaceutical Laboratories is the latest decision to turn the law of declaratory judgment on its head.  The declaratory judgment defendants, Forest Laboratories, gave Caraco a covenant not to sue, which should have vitiated any application of Justice Scalia's rationale for disfavoring the Federal Circuit's previous "reasonable apprehension of suit" test -- that a party should not have to "bet the farm" on its business in order to avoid paying a royalty for a license to an invalid patent.  Despite the covenant, however, the Federal Circuit (in a judgment written by Judge Gajarsa and joined by Judge Proust, Senior Judge Friedman dissenting) found that there was an Article III "case or controversy" between the parties and that the District Court had jurisdiction to hear Caraco's suit and should not have granted Forest's motion to dismiss under Fed. R. Civ. P. 12(b)(1).

The suit involved U.S. Patent No. 6,916,941, which Forest listed in the Orange Book in support of its FDA-approved Lexapro® drug product for treating depression, pursuant to the provisions of the Hatch-Waxman Act (21 U.S.C. § 355(b)(1), (c)(2)).  The '941 patent covers crystalline particles of the active drug product, escitalopram oxalate, having a particular size range; dosage forms containing particles in this size range; and methods of manufacturing particles in this size range.  Importantly, the '941 patent expires in 2023, extending Forest's "right to exclude" generic competitors by 11 years (Forest has another Orange Book-listed patent, U.S. Patent No. RE34,712 directed to the active drug product per se, that expires in 2012).

The opinion relies on the Federal Circuit's previous decision in Teva Pharmaceuticals USA, Inc. v. Novartis Pharmaceuticals Corp.:

A justiciable declaratory judgment controversy arises for an ANDA filer when a patentee lists patents in the Orange Book, the ANDA applicant files its ANDA certifying the listed patents under paragraph IV, and the patentee brings an action against the submitted ANDA on one or more of the patents.  The combination of these three circumstances is dispositive in establishing an actual declaratory judgment controversy as to all the paragraph IV certified patents, whether the patentee has sued on all or only some of the paragraph IV certified patents.

Here, Forest maintained its action against Caraco on the '712 patent.  Also relevant to the CAFC's decision is that Caraco was not the first ANDA filer; Ivax, the earlier filer, had lost the action brought by Forest on the '712 patent and thus the 180-day exclusivity right would only be triggered if both the '712 and '941 patents were invalidated or expired.  Moreover, Ivax's status as the first ANDA filer prevented Caraco (or any other later ANDA filer) from entering the market before Ivax.

As a consequence:

where the first Paragraph IV ANDA filer fails to trigger its own exclusivity period, a subsequent Paragraph IV ANDA filer can only obtain FDA approval before the relevant Orange-Book-listed patents expire by obtaining a judgment that those patents are invalid or not infringed.  Such a judgment is required to trigger the first Paragraph IV ANDA filer's exclusivity period and thus allow the FDA to approve the subsequent Paragraph IV ANDA 181 days after the triggering event.

Only by obtaining a judgment of noninfringement on both the '712 and '941 patents can Caraco trigger Ivax's 180-day exclusivity period, which currently prevents the FDA from approving Caraco's ANDA.  Without a judgment of noninfringement on the '941 patent, even if Caraco prevailed against Forest in the separate infringement action on the '712 patent, Caraco would not be able to activate Ivax's exclusivity period via the court-judgment trigger of 21 U.S.C. § 355(j)(5)(B)(iv)(II) (2000).  Moreover, until Ivax's exclusivity period expires, the FDA cannot approve Caraco's ANDA.  See 21 U.S.C. § 355(j)(5)(B)(iv) (2000).  Thus, terminating this action without a judgment with respect to infringement on the '941 patent could delay FDA approval of Caraco's ANDA and thereby exclude Caraco from the drug market, even if its generic drug does not infringe the '941 patent.  In these circumstances, Forest's covenant not to sue Caraco does not eliminate the controversy between the parties.

The Federal Circuit also assessed whether Caraco satisfied the other requirements for "case or controversy" between the parties under the Supreme Court's three-part test: "(1) the plaintiff has standing, Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992), (2) the issues presented are ripe for judicial review, Abbott Labs. v. Gardner, 387 U.S. 136, 149 (1967), and (3) the case is not rendered moot at any stage of the litigation, United States Parole Comm'n. v. Geraghty, 445 U.S. 388, 397 (1980)."  With regard to standing, the CAFC found that Caraco had established "injury-in-fact" traceable to Forest, insofar as Forest's unilateral decision to grant Caraco the covenant not to sue prevents Caraco's ANDA from being approved by the FDA, and judgment would resolve the issue.  The issues between the parties are ripe for decision, because there are no additional facts would affect the court's capacity to decide the issues between the parties, and delay would adversely affect Caraco.  Finally, the controversy has not been rendered moot.

The Federal Circuit also noted the distinction between a covenant not to sue in a typical infringement context (where the recipient of the covenant from the licensee would be able to enter the market as a result) and here, where the ANDA regulatory scheme changes the result:  unless Caraco can challenge the validity of the '941 patent, Ivax's 180-day exclusivity period will not begin and FDA will not approve Caraco's ANDA.

It is clear that the CAFC recognized a potential for abuse in this situation, where an NDA filer can list more than one patent in the Orange Book, and if successful against a first ANDA challenger, can effectively forestall generic competition until its Orange Book listed patents expire, so long as it can prevent at least one of the Orange Book-listed patents from being challenged by granting a covenant not to sue to a subsequent ANDA filer.  However, in trying to avoid this outcome, the Federal Circuit has significantly expanded (yet again) declaratory judgment jurisdiction.  And there is an argument that this outcome was contemplated by Congress but not adopted:  from the legislative history:

We fully expect that, in almost all situations where a generic applicant has challenged a patent [by filing an ANDA with a Paragraph IV certification] and not been sued for patent infringement, a claim by the generic applicant seeking declaratory judgment on the patent will give rise to a justiciable "case or controversy" under the Constitution.  We believe that the only circumstance in which a case or controversy might not exist would arise in the rare circumstance in which the patent owner and brand drug company have given the generic applicant a covenant not to sue, or otherwise formally acknowledge that the generic applicant's drug does not infringe.

(emphasis in original).  Remarkably, the Federal Circuit interprets these statements (by Senator Kennedy) as supporting its result:

Given this background, Senator Kennedy's comments only emphasize Congress's intent that the jurisdiction of federal courts to resolve CAPCs [civil action to obtain patent certainty; See 21 U.S.C. § 355(j)(5)(C)] would extend to the limits of the Constitution.  35 U.S.C. § 271(e)(5).  Moreover, it is ultimately the province and duty of the judicial department, not Congress, to discern the limits of Article III jurisdiction.  See Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177 (1803).

And the CAFC seems solicitous of the consequences of it decision on Forest (ironically, in a footnote 11 of its own):

Although we do not so decide, it appears that if Forest would submit to a consent decree that the drug described in Caraco's ANDA does not infringe the '941 patent, such a decree would redress Caraco's alleged injury-in-fact just as well as any other court judgment.  Thus, if Forest's objective in granting the covenant not to sue on the '941 patent was to avoid costly litigation with Caraco, this might be the best approach to resolve the controversy between the parties.

It is possible (but not likely) that the Supreme Court intended to reduce the barriers to declaratory judgment jurisdiction by, on the one hand voicing its disapproval of the Federal Circuit's "apprehension of imminent suit" test, while espousing a "totality of the circumstances" test that provided little firm guidance besides judicial platitudes like:

whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.

MedImmune, Inc. v. Genentech, Inc., 127 S. Ct. 764, 771 (quoting Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941)).  However, it is a fair question to ask whether the Federal Circuit's response (effectively reducing whatever barriers the "totality of the circumstances" test might leave standing) is either proportionate to the Supreme Court's suggestions or counter to the Constitutional mandate that Article III courts must use caution when exercising jurisdiction.

The dissent raises the additional issues that the ills the majority seeks to remedy are speculative:  there is "no basis to conclude that the first-filing generic manufacturer will, or is likely to, delay bringing its product to market after the '712 patent expires."  Moreover, any such delay would imperil the first-filing generic manufacturer's market exclusivity term.  Finally, the dissent accuses the majority of assuming that Caraco will prevail (although the majority calls into question the soundness of the latter charge).

Innovator drug companies are facing a host of legal and economic challenges, at home and abroad.  These include the fallout from the Medimmune decision, which raised the possibility for a licensee at any time to challenge a licensed patent.  After Caraco, even agreeing not to sue a generic manufacturer will not be enough to prevent continued challenges to their exclusive positions.

Caraco Pharmaceutical Laboratories, Ltd. v. Forest Laboratories, Inc. (Fed. Cir. 2008)
Panel: Circuit Judge Gajarsa, Senior Circuit Judge Friedman, and Circuit Judge Prost
Opinion by Circuit Judge Gajarsa; dissenting opinion by Circuit Judge Friedman

Additional information regarding this case can be found at the Orange Book Blog .

Novartis Acquires 25% Stake in Alcon from Nestlé

    By Christopher P. Singer --

In April 7, 2008 press releases from Novartis AG and Alcon Inc., the companies announced that Novartis has reached an agreement with Nestlé S.A. which provides Novartis with the right to acquire majority ownership of Alcon Inc.  Nestlé currently owns 77% of the outstanding shares of Alcon.  The structure of the agreement allows for Novartis' acquisition of Alcon through two purchases from Nestlé.  The initial purchase step, which is expected to be completed in the second half of 2008, calls for Novartis to acquire a 25% stake in Alcon (about 74 million shares) at a per share price of $143.18 (about $11 billion).  The second purchase step provides option rights for Novartis to acquire, and Nestlé to sell, the remaining 52% Alcon stake held by Nestlé between January 2010 and July 2011.  The maximum share price for the second purchase is reported to be $181.

Alcon is the world's largest and most profitable eye care company with 2007 annual sales of $5.6 billion.  Alcon researches, develops, and manufactures a variety of pharmaceutical, surgical and consumer eye care products used to treat diseases, disorders and other conditions of the eye.

Ortho-McNeil Pharmaceutical, Inc. v. Mylan Laboratories, Inc. (Fed. Cir. 2008)

    By Donald Zuhn --

Last week, the Federal Circuit determined that the District Court for the District of New Jersey properly construed claim 1 of U.S. Patent No. 4,513,006 to encompass Plaintiff-Appellee Ortho-McNeil Pharmaceutical, Inc.'s epilepsy drug topiramate, and affirmed the District Court's decision to (1) permanently enjoin Defendants-Appellees Mylan Laboratories, Inc. and Mylan Pharmaceuticals, Inc. (Mylan) from infringing the '006 patent, (2) dismiss Mylan's invalidity defenses based on inequitable conduct, obviousness, and non-enablement, and (3) reset the effective date of Mylan's Abbreviated New Drug Application (ANDA).

Ortho-McNeil manufactures and sells TOPAMAX®, which is used to treat epilepsy and which comprises the active ingredient topiramate.  Ortho-McNeil researcher Dr. Bruce Maryanoff invented topiramate during a search for new antidiabetic drugs, discovering that the reaction intermediate topiramate had unexpected anticonvulsant properties.

Seeking approval to market generic topiramate, Mylan filed an Abbreviated New Drug Application (ANDA) with the FDA.  In response, Ortho-McNeil filed an infringement suit under 35 U.S.C. § 271(e)(2) in the District Court of New Jersey.

Following a Markman hearing, the District Court rejected Mylan's construction of claim 1 as excluding topiramate.  On summary judgment, the District Court also rejected Mylan's affirmative defenses of invalidity based on obviousness and non-enablement and unenforceability due to inequitable conduct.  As a result of these determinations, the District Court enjoined Mylan from infringing the '006 patent and reset the effective date of Mylan's ANDA.

On appeal, Mylan argued that the District Court improperly construed the word "and" in claim 1 of the '006 patent, which recites:

 

According to Mylan, the phrase "R2, R3, R4 and R5 are independently hydrogen or lower alkyl and R2 and R3 and/or R4 and R5 together may be a group of formula (II)" in claim 1 specifies two independent limitations:

[1] R2, R3, R4 and R5 are independently hydrogen or lower alkyl and
[2] R2 and R3 and/or R4 and R5 together may be a group of formula (II),

both of which must be met for a compound to infringe the claim.  In topiramate (at left), R2 and R3 and R4 and R5 together are a group of formula (II), and therefore, none of R2, R3, R4 and R5 are hydrogen or lower alkyl.  Mylan argues that when claim 1 is properly construed, it does not encompass topiramate.

The Federal Circuit disagreed with Mylan's construction, finding that the District Court properly interpreted claim 1.  According to the CAFC, the term "and appears in conjunction with the adverbs independently and together," and therefore, "links alternatives that occur under the different conditions of independence or togetherness."  In other words, R2, R3, R4 and R5 need not always be hydrogen or lower alkyl.

In support of this construction, the Federal Circuit noted that if the term "and" were construed to require a conjunctive meaning, dependent claims 2, 5, 9, and 10 would be rendered meaningless.  The CAFC also noted that the specification supported the above construction.  Finally, while stating that it need not consult extrinsic evidence, given the plain language of claim 1, the dependent claims, and the specification, the Federal Circuit pointed out that "dictionary definitions of [the term] and, while most often listing the additive sense as the most common usage of the term, also show usage of the term to connote alternatives."

With respect to the issue of unenforceability, the Federal Circuit rejected Mylan's argument that during prosecution of the '006 patent, Ortho-McNeil made statements about prior art compounds that were inconsistent with its own testing of those compounds.  Instead, the CAFC agreed with the District Court that Ortho-McNeil "merely accurately characterizes the references as claiming limited utility."

The Federal Circuit also rejected Mylan's arguments for invalidity.  As to obviousness, the CAFC stated that "this invention, contrary to Mylan's characterization, does not present a finite (and small in the context of the art) number of options easily traversed."  Moreover, "the ordinary artisan in this field would have had to (at the time of invention without any clue of potential utility of topiramate) stop at that intermediate and test it for properties far afield from the purpose for the development in the first place (epilepsy rather than diabetes)."  As to Mylan's assertion that claims 6-8 are not enabled, the Federal Circuit again agreed with the District Court, stating that it would not require undue experimentation to determine an "anticonvulsively effective amount" of topiramate.

Finally, with respect to Mylan's argument that the District Court's order resetting the effective date of Mylan's ANDA was inconsistent with 21 U.S.C. § 355(j)(5)(B)(iii), the Federal Circuit determined inter alia that 21 U.S.C. § 355 is directed to the FDA and does not limit a court's authority to reset the effective date of an ANDA that is approved before the court grants a preliminary injunction or finds infringement, as in the instant case.

Ortho-McNeil Pharmaceutical, Inc. v. Mylan Laboratories, Inc. (Fed. Cir. 2008)
Panel: Chief Judge Michel and Circuit Judges Rader and Linn
Opinion by Circuit Judge Rader

Additional information regarding this case can be found at the Orange Book Blog and Patently-O.