Patent Docs

USPTO Continues to Modify System for Calculating PTA

    By Jori Fuller --
 
As some practitioners and applicants may have noticed, the U.S. Patent and Trademark Office has begun sending out decisions on Requests for Recalculation of PTA in view of the Federal Circuit's decision in Wyeth v. Kappos.  These decisions include a newly calculated PTA in view of Wyeth, and also include a Notice of Intent to Issue a Certificate of Correction.  Some practitioners and applicants may have also noticed that a few of the Office's recalculation decisions have been incorrect.  This is because the PTO has been improperly subtracting too much time for reductions under 37 C.F.R. § 1.704(c)(10) (an amendment after allowance under 37 C.F.R. § 1.312 or other paper submitted after allowance).  Fortunately, the PTO has recently discovered this error in the processing of recalculation decisions and has been sending out Notices informing the patentees of its mistake.  These notices include a new, corrected calculation of PTA which gives the patent a greater PTA than the previous notice, as well as a Notice of Intent to Issue a Certificate of Correction.

Vanderbilt Univ. v. ICOS Corp. (Fed. Cir. 2010)

    By Donald Zuhn --

Last month, in Vanderbilt Univ v. ICOS Corp., the Federal Circuit affirmed a decision of the District Court for the District of Delaware finding that Plaintiff-Appellant Vanderbilt University had failed to prove that Vanderbilt scientists Drs. Jackie Corbin, Sharron Francis, and Sekhar Konjeti were joint inventors of U.S. Patent Nos. 5,859,006 and 6,140,329.  The '006 and '329 patents are directed to compounds and methods for treating erectile dysfunction, including the compound tadalafil, a PDE5 inhibitor and the active ingredient in the drug Cialis®.

Drs. Corbin and Francis were among the first to discover PDE5, which is a phosphodiesterase enzyme that binds to and hydrolyzes cGMP.  In 1989, Glaxo Inc. entered into an agreement with Dr. Corbin to underwrite his research of cGMP analogs.  In 1990, Dr. Corbin sent an abstract to Glaxo Group Ltd. (a U.K.-based subsidiary of Glaxo Inc.) disclosing his discovery that the potency of cGMP analogs is enhanced by adding a phenyl ring at the 8-position.  Building upon their research on cGMP analogs, the Vanderbilt scientists modified a PDE inhibitor in 1991 by attaching a phenyl ring to the 8-position of the compound and an electron-donating hydroxyl group at the 4 position of the phenyl ring, thus creating a PDE inhibitor that was 160 times more potent at inhibiting PDE5 than the original compound.  In a letter to Vanderbilt's general counsel, Dr. Corbin disclosed possible therapeutic uses for the new PDE inhibitor, including the treatment of male impotence.

At the end of 1991, Dr. Corbin mentioned his work on PDE5 inhibitors to Dr. Barry Ross, a scientist at Glaxo Group Ltd., and in January of 1992, he sent a research proposal to Glaxo Group Ltd. outlining his test results.  In February, Drs. Corbin and Francis discussed the proposal with Dr. Ross, and later that month, Dr. Corbin sent a more detailed research proposal to Dr. Ross.  In March, Glaxo's research facility in France tested 26 compounds for PDE5 inhibition, and in early April, Dr. Ross forwarded copies of Dr. Corbin's detailed research proposal to certain Glaxo scientists at the French facility.  In late April, Glaxo scientists at the French facility tested another 29 compounds for PDE inhibition.  That testing led to the identification of a lead compound.  Dr. Alain Claude-Marie Daugan, the named inventor on the '006 and '329 patents, discovered tadalafil (at left) after modifying that lead compound.  Prior to the discovery of tadalafil, Glaxo assigned its interest in the compounds to Defendant-Appellee ICOS Corp.

In 2005, Vanderbilt brought suit against ICOS, seeking to correct inventorship of the '006 and '329 patents under 35 U.S.C. § 256 by adding Drs. Corbin, Francis, and Konjeti as joint inventors.  According to Vanderbilt, the identification of the lead compound by Glaxo scientists at the French facility could not have been accomplished without the use of Dr. Corbin's detailed research proposal, and tadalafil could not have been identified from that lead compound without relying on the Vanderbilt scientists' work.  The District Court, however, found for ICOS, determining that the Vanderbilt Scientists could not be co-inventors because they never "conceived the specific chemical structure of the compound claimed [i.e., tadalafil] or the compound with all of its components."  In support of its decision, the District Court cited Bd. of Educ. ex rel. Bd. of Trustees of Fla. State Univ. v. Am. BioScience Inc., 333 F.3d 1330 (Fed. Cir. 2003), which the Court said "precludes the result plaintiff seeks:  namely, that the contribution of a molecular scaffold in the context of one molecule . . . renders the disclosing party or parties inventors of a different family of molecules containing the same scaffold."  Notwithstanding this finding, the District Court noted that "[t]his is not to say that Corbin, Francis, and Konjeti did not make contributions to Daugan's inventive process; only that, under the applicable law, these contributions fall more into the category of 'prosaic' contributions because they did not conceive the invention as claimed."

On appeal, Vanderbilt argued that Dr Corbin's disclosure of his detailed research proposal to Glaxo Group Ltd. led to the identification by Glaxo scientists at the French facility of a lead compound incorporating the same molecular scaffold as Vanderbilt's PDE5 inhibitors.  At trial, ICOS initially argued that Glaxo scientists at the French facility independently discovered the compounds that were tested for PDE5 inhibition through their knowledge of the vasorelaxation effect of beta-carbolines, which was allegedly gleaned in part from a May 1992 paper.  However, Glaxo's internal records indicated that the compounds were first tested in April 1992, before that paper was published.  ICOS then "backed away" from this story and instead argued that the lead compound was identified in the April 1992 search by looking to the structure of a compound identified in Glaxo's earlier March 1992 search.  This second story was supported by the testimony of Glaxo's scientists at the French facility, who testified that they did not have any knowledge about the Vanderbilt scientists' research until June 1993, long after the April 1992 search had been performed.  In response, Vanderbilt argued that in view of its changing story, Glaxo lacked credibility, and Vanderbilt suggested that Glaxo's scientists used the detailed research proposal to guide their structure searches in April 1992.  In addition, Vanderbilt argued that the key modification to the lead compound that yielded tadalafil was the addition of an electron-donating substituent on the phenyl ring based upon the work of the Vanderbilt scientists.

Noting that "Vanderbilt admits that no direct evidence supports its claims to joint inventorship," and further, that ICOS countered Vanderbilt's arguments with direct evidence supporting its claim of sole identification of the lead compound and independent discovery of tadalafil, the Federal Circuit agreed with the District Court that Vanderbilt had failed to meet its burden of showing joint inventorship by clear and convincing evidence.  The Federal Circuit did agree with Vanderbilt that "the district court opinion contains some erroneous statements regarding the law of joint inventorship and a misunderstanding of the relevance of American BioScience to the facts of this case," but concluded that "[t]hese errors, however, do not affect the outcome of this appeal and are therefore harmless in context."  With regard to the District Court's "misunderstanding," the Federal Circuit noted that while "[t]he district court understood our decision in American BioScience to require that each co-inventor have an independent conception of the final compound for a chemical invention, . . . [s]uch an interpretation is clearly wrong under our established precedent.  Instead, a group of co-inventors must collaborate and work together to collectively have a definite and permanent idea of the complete invention."  The Federal Circuit also noted that "the district court's statement that 'the contribution of a molecular scaffold in the context of one molecule' could never rise to the level of joint inventorship for 'a different family of molecules containing the same scaffold' is in error."  Nevertheless, the Federal Circuit determined that:

[T]he district court, however, did not rest its opinion solely on this interpretation of our case law.  The district court correctly noted that conception requires identification of the specific chemical structure of the compound.  The parties agree that Dr. Daugan was the first to conceive of tadalafil.  After a careful review of the evidence, the district court concluded that the parties' respective stories about whether the Vanderbilt Scientists contributed to the identification of [Glaxo's lead compound] were "equally plausible" and that Vanderbilt failed to produce any evidence of joint invention of tadalafil.  For Vanderbilt to succeed in its inventorship claim, it must carry its burden of proof of demonstrating that the Vanderbilt Scientists contributed to the claimed invention with clear and convincing evidence.  See Hess v. Advanced Cardiovascular Sys., Inc., 106 F.3d 976, 980 (Fed. Cir. 1997).  The district court's findings demonstrate that under the correct legal test, Vanderbilt did not carry its burden.  Thus, any erroneous interpretations of our case law were harmless error.

In his opinion concurring in part and dissenting in part, Judge Dyk "respectfully dissent[ed] from the majority's conclusion that the district court's legal error was harmless," stating that the District Court's findings were "either contradictory or infected by the court's legal error."  Judge Dyk's disagreement lay not with Vanderbilt's argument concerning tadalafil, but rather with Vanderbilt's argument concerning Glaxo's identification of the lead compound.  Here, he notes that "[t]he district court found that the Vanderbilt scientists did in fact make contributions to Glaxo's work, a point the majority ignores."  Judge Dyk also pointed to ICOS' changing story regarding the identification of the lead compound at trial.  He concludes that:

There are two possible ways to interpret the district court's findings, either of which requires a remand.  The first is that the district court's findings are directly contradictory.  The court could not have properly found that the Vanderbilt scientists made a contribution to the identification of [Glaxo's lead compound] if it were "equally plausible" that they did not make a contribution.  . . .  The alternative is that the district court found that Vanderbilt did not establish by clear and convincing evidence that the Vanderbilt scientists' contributions were sufficient to make them joint inventors.  The problem with this interpretation of the finding is that it is obviously tainted by the district court's view that in order to be joint inventors, the Vanderbilt scientists must have "conceived the 'specific chemical structure of the compound' claimed or 'the compound with all of its components,' or communicated that compound to Glaxo."

Stating that "the district court found that the Vanderbilt scientists made some contribution, [but] has not told us exactly what that contribution was or why that contribution was not enough to make the Vanderbilt scientists joint inventors under the correct standard," Judge Dyk believed that the District Court's decision should have been vacated and remanded.

Vanderbilt Univ. v. ICOS Corp. (Fed. Cir. 2010)
Panel: Chief Judge Michel and Circuit Judges Clevenger and Dyk
Opinion by Circuit Judge Clevenger; concurring in part and dissenting in part opinion by Circuit Judge Dyk

Court Report

    By Sherri Oslick --

About Court Report:  Each week we will report briefly on recently filed biotech and pharma cases.

Medicis Pharmaceutical Corp. v. Nycomed US Inc. et al.
1:10-cv-00419; filed May 19, 2010 in the District Court of Delaware

• Plaintiff:  Medicis Pharmaceutical Corp.
• Defendants:  Nycomed US Inc.; Nycomed GmbH

Medicis Pharmaceutical Corp. v. Nycomed U.S. Inc. et al.
1:10-cv-04140; filed May 19, 2010 in the Southern District of New York

• Plaintiff:  Medicis Pharmaceutical Corp.
• Defendants:  Nycomed U.S. Inc.; Nycomed GMBH

The complaints in these cases are substantially identical.  Infringement of U.S. Patent Nos. 6,765,001 ("Compositions and Methods for Enhancing Corticosteroid Delivery," issued July 20, 2004), 7,220,424 (same title, issued May 22, 2007), and 7,217,422 (same title, issued May 15, 2007) following a Paragraph IV certification as part of Nycomed's filing of an ANDA to manufacture a generic version of plaintiff's Vanos® (fluocinonide cream, used to relieve inflammation and itching caused by certain skin conditions that respond to corticosteroids).  View the Delaware complaint here.

Sandoz Inc. v. Boehringer Ingelheim International GMBH et al.
3:10-cv-00437; filed May 19, 2010 in the Middle District of Florida

•  Plaintiff:  Sandoz Inc.
•  Defendants:  Boehringer Ingelheim International GMBH; Boehringer Ingelheim Pharmaceuticals, Inc. 

Declaratory judgment of unenforceability of U.S. Patent No. 4,886,812 ("Tetrahydro-Benzthiazoles, the Preparation Thereof and Their Use as Intermediate Products or as Pharmaceuticals," issued December 12, 1989) based on Sandoz's filing of an ANDA to manufacture a generic version of Boehringer's Mirapex® (pramipexole dihydrochloride, used for the treatment of the signs and symptoms of idiopathic Parkinson's disease).  View the complaint here.

Shire LLC et al. v. Actavis Elizabeth LLC et al.
1:10-cv-00397; filed May 12, 2010 in the District Court of Delaware

• Plaintiffs:  Shire LLC; Supernus Pharmaceuticals Inc.; Amy F.T. Arnsten PHD; Pasko Rakic MD; Robert D. Hunt MD
• Defendants:  Actavis Elizabeth LLC; Actavis Inc.

Infringement of U.S. Patent Nos. 5,854,290 ("Use of Guanfacine in the Treatment of Behavioral Disorders," issued December 29, 1998), 6,287,599 ("Sustained Release Pharmaceutical Dosage Forms with Minimized pH Dependent Dissolution Profiles," issued September 11, 2001), and 6,811,794 (same title, issued November 2, 2004) based on Actavis' filing of an ANDA to manufacture a generic version of Shire's Intuniv (guanfacine, used to treat attention-deficit hyperactivity disorder).  View the complaint here.

Novozymes A/S et al.. v. Danisco A/S et al.
3:10-cv-00251; filed May 11, 2010 in the Western District of Wisconsin

• Plaintiffs:  Novozymes A/S; Novozymes North America, Inc.
• Defendants:  Danisco A/S; Genencor International Wisconsin, Inc.; Danisco US Inc.; Danisco USA Inc. 

Infringement of U.S. Patent No. 7,713,723 ("Alpha Amylase Mutants with Altered Properties," issued May 11, 2010) based on Danisco's manufacture and sale of alpha amylase products including GC358.  View the complaint here.

AstraZeneca Pharmaceuticals LP et al. v. Anchen Pharmaceuticals Inc et al.
8:10-cv-00590; filed May 7, 2010 in the Central District of California

• Plaintiffs:  AstraZeneca Pharmaceuticals LP; AstraZeneca UK Ltd.
• Defendants:  Anchen Pharmaceuticals Inc; Anchen Inc.

Infringement of U.S. Patent Nos. 4,879,288 ("Novel Dibenzothiazepine Antipsychotic," issued November 7, 1989) and 5,948,437 ("Pharmaceutical Compositions Using Thiazepine," issued September 7, 1999) following a Paragraph IV certification as part of Anchen's filing of an ANDA to manufacture a generic version of AstraZeneca's Seroquel® XR (quetiapine fumarate, used to treat schizophrenia and bipolar disorder).  View the complaint here.

Pieczenik v. Idexx Reference Laboratories, Inc. et al.
3:10-cv-02327; filed May 7, 2010 in the District Court of New Jersey

• Plaintiff:  Dr. George Pieczenik
• Defendants:  Idexx Reference Laboratories, Inc.; Zymogenetics, Inc.; Zymogenetics, LLC; Millenium Pharmaceuticals, Inc.; Invitrogen Corp.; Howard Hughes Medical Institute; Centocor Ortho Biotech Products, L.P.; Centocor Ortho Biotech Services; Centocor Ortho Biotech, Inc.; Johnson & Johnson; Diversa Chemical Technologies (NJ), Inc.; Amgen USA, Inc.; Amgen Inc.; GE Healthcare Biosciences Bioprocess Corp; GE Healthcare Strategic Sourcing Corp.; GE Healthcare Inc.; Dyax Corp.; International Business Machines Corp.; Forest Laboratories, Inc.; Gilead Sciences, Inc.; Genzyme Corp.; Allergan USA, Inc.; Baxter Diagnostics Inc.; Abbott Laboratories; Abbott Laboratories, Inc.; Biogen Idec Inc.; Biogen Idec U.S. Corp.; Ortho-Mcneil Pharmaceutical, Inc.; Ortho-Mcneil, Inc.; Ortho-Mcneil Janssen Pharmaceuticals, Inc.; Perkinelmer Health Sciences, Inc.; The Dow Chemical Company (Delaware); The Dow Corning Corp.; The Dow Agrosciences LLC; Schering Berlin Inc.; Schering-Plough Products, Inc.; Schering Corp.; Schering-Plough Biopharma; Schering-Plough International, Inc.; Wyeth Pharmaceuticals Inc.; Wyeth Holdings Corp.; Corning Inc.; OSI Pharmaceuticals, Inc.; Onyx Pharmaceuticals, Inc.; John Does 1 Through 61

Pieczenik v. AstraZeneca Pharmaceuticals LP et al.
3:10-cv-02296; filed May 6, 2010 in the District Court of New Jersey

• Plaintiff:  Dr. George Pieczenik
• Defendants:  AstraZeneca Pharmaceuticals LP; Astraeneca LP; Novo Nordisk, Inc.; Antyra, Inc.; Solvay Chemicals, Inc.; Solvay Pharmaceuticals, Inc.; Aventis Pharmaceuticals Inc.; Aventis Inc.; Sanofi-Aventis U.S. Inc.; Sanofi-Aventis U.S. LLC; E.I. Dupont Denemours & Co.; Medimmune LLC; Glaxosmithkline LLC; Smithkline Beecham Corporation; Pharmacia Corp.; Pharmacia & Upjohn Co. LLC; Monsanto AG Products LLC; Monsanto Co.; John Does 1 Through 61

The complaints in these cases are substantially identical.  Infringement of U.S. Patent No. 5,866,363 ("Method and Means for Sorting and Identifying Biological Information," issued February 2, 1999) based on defendants' research, commercial and licensing activities, and patent filings in the area of peptide and antibody combinatorial libraries.  View the AstraZeneca complaint here.

Abbott Laboratories et al. v. Actavis Elizabeth LLC et al.
2:10-cv-02352; filed May 7, 2010 in the District Court of New Jersey

• Plaintiffs:  Abbott Laboratories; Fournier Laboratories Ireland Ltd.
• Defendants:  Actavis Inc.; Actavis Group HF; Actavis Elizabeth LLC

Infringement of U.S. Patent No. 7,259,186 ("Salts of Fenofibric Acid and Pharmaceutical Formulations Thereof," issued August 21, 2007) following a Paragraph IV certification as part of Actavis' filing of an ANDA to manufacture a generic version of Abbott's Trilipix® (choline fenofibrate delayedrelease, used to treat increased triglyceride levels).  View the complaint here.

Merck & Co, Inc. et al. v. Sandoz Inc.
2:10-cv-02308; filed May 6, 2010 in the District Court of New Jersey

• Plaintiffs:  Merck & Co, Inc.; Merck Sharp & Dohme Corp.
• Defendant:  Sandoz Inc.

Infringement of U.S. Patent Nos. 5,378,804 ("Aza Cyclohexapeptide Compounds," issued January 3, 1995) and 5,514,650 following a Paragraph IV certification as part of Sandoz's filing of an ANDA to manufacture a generic version of Merck's Cancidas® (caspofungin acetate, used to treat presumed fungal infections in febrile, neutropenic patients, candidemia and certain Candida infections, esophageal candidiasis, and invasive aspergillosis in patients who are refractory to or intolerant of other therapies).  View the complaint here.

Novo Nordisk Inc. et al. v. Lupin Ltd.
1:10-cv-03750; filed May 6, 2010 in the Southern District of New York

• Plaintiffs:  Novo Nordisk Inc.; Novo Nordisk A/S
• Defendant:  Lupin Ltd.

Infringement of U.S. Patent No. 6,677,358 ("NIDDM Regimen," issued January 13, 2004) following a Paragraph IV certification as part of Lupin's filing of an ANDA to manufacture a generic version of Novo Nordisk's PrandiMet® (repaglinide and metformin, used to treat type 2 diabetes).  View the complaint here.

Conference & CLE Calendar

May 24-25, 2010 - Hatch-Waxman Boot Camp*** (American Conference Institute) - San Diego, CA

May 24-26, 2010 - Pharmaceutical & Biotech Patent Litigation Strategies*** (Pharma IQ) - London, England

May 25, 2010 - "The Gene Uncertainty: What to Do After Myriad" (Intellectual Property Owners Association) - 2:00 PM (EST)

May 25, 2010 - Corporate Intellectual Property Law Conference (Law Bulletin) - Chicago, IL

May 26-27, 2010 - 7th International Forum on Freedom to Operate (C5) - Munich, Germany

June 1, 2010 - Biotechnology/Chemical/Pharmaceutical (BCP) Customer Partnership Meeting (U.S. Patent and Trademark Office) - Alexandria, VA

June 10, 2010 - "Patents and the Written Description Requirement: Meeting Section 112 Disclosure Obligations After Ariad v. Lilly" (Strafford) - 1:00 - 2:30 PM (EST)

June 11, 2010 - "The Future of U.S. Patent Law: An In-Depth Discussion on the Congress, the Courts, and the USPTO" (Patent Resources Group) - Alexandria, VA

June 16-18, 2010 - Fundamentals of Patent Prosecution 2010: A Boot Camp for Claim Drafting & Amendment Writing (Practising Law Institute) - New York, NY

June 21-22, 2010 - Follow-on Biologics (American Conference Institute) - New York, NY

June 20-22, 2010 - IP Business Congress (Intellectual Asset Management (IAM) magazine) - Munich, Germany

June 23-24, 2010 - Maximising Pharmaceutical Patent Life Cycles (C5) - London, England

July 7-9, 2010 - Fundamentals of Patent Prosecution 2010: A Boot Camp for Claim Drafting & Amendment Writing (Practising Law Institute) - San Francisco, CA

July 29-31, 2010 - Intensive Patent Law Training Workshop (Chisum Patent Academy) - Seattle, WA

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

Chisum Patent Academy Patent Law Training Workshop

The Chisum Patent Academy will offer its second annual Intensive Patent Law Training Workshop on on July 29-31, 2010 in Seattle, WA.  The workshop will focus on substantive patent law (patentability and enforcement) through analysis of critical Federal Circuit and Supreme Court decisions.  The 2009 syllabus can be viewed here; new material for the 2010 workshop will likely include business method patentability post-Bilski, written description requirement compliance post-Ariad, and the evolving landscape of inequitable conduct as reflected by the Federal Circuit’s recent grant of rehearing en banc in Therasense.

The workshop is team-taught in seminar style by Donald Chisum (at right), author of the treatise Chisum on Patents (LexisNexis), and Professor Janice Mueller (at left), author of Patent Law, 3d Edition (Aspen 2009).  The workshop's coverage is geared for junior patent attorneys, summer associates, engineers, scientists, paralegals, information specialists, and attorneys experienced in non-patent fields who desire an intensive introduction to patent law.

The registration fee for the workshop is $2,000; registration will be limited to a maximum of ten students.  A mail-in registration form for the workshop can be obtained here.  Additional information regarding the workshop can be found here.

Biotech/Pharma Docket

    By James DeGiulio --

Covidien's Patent for Restoril Found Obvious

Covidien PLC suffered a setback in its infringement suit with URL Pharma Inc. after the claims of its patent for sleep aid Restoril were found obvious.  In March 2007, Tyco Healthcare Group LP, now Covidien, brought suit against Pharmaceutical Holdings Corp., and its subsidiary Mutual Pharmaceuticals Co. Inc., now URL Pharma.  Covidien alleged that the defendants had infringed four patents for Restoril when they filed their ANDA with the FDA.  Three of those patents have expired, leaving only U.S. Patent No. 5,211,954 at issue in the case.  In August, the judge denied Covidien's motion to enjoin URL Pharma from marketing or selling a generic 7.5 mg temazepam product.

Judge Chesler of the U.S. District Court for the District of New Jersey found that the lower dose of temazepam was obvious based on the dosage range disclosed in the prior art, thus invaliding the two claims of the '954 patent for obviousness.  Covidien unsuccessfully argued that other prior art taught away from the lower dosage and that the lower dosage showed unexpected results.

Judge Chesler's opinion granting summary judgment for obviousness can be found here.  The corresponding order can be found here.

Genetic Technologies' Patent in Suit against Monsanto and Pioneer Hi-Bred Upheld on Reexamination

Genetic Technologies announced that the USPTO has upheld all the claims of U.S. Patent No. 5,612,179 in a reexamination action initiated June 30, 2009.  The '179 patent covers a method for facilitating the detection of specific gene variations and noncoding DNA.  The patent is at issue in an infringement suit against Monsanto Inc., Pioneer Hi-Bred International Inc., and other rival laboratories, where Genetic Technologies has accused the defendants of willfully infringing the '179 patent.  Genetic Technologies' complaint accuses the defendant laboratories of using the '179 patent in their genetic risk assessment services and to isolate certain genes in cows and soybeans.

The USPTO's decision will now make more claims available in Genetic Technologies' infringement case and any future assertion targets.  Genetic Technologies previously announced on February 16, 2010 that it intended to implement a new assertion program to vigorously defend its patents.  The company has recently settled litigation involving the '179 patent with Applera Corp., Gen-Probe, and Monsanto, with each company taking limited licenses to the technology.

Genetic Technologies' May 10, 2010 press release can be found here.

Merck and Glenmark Settle Zetia Patent Suit

Merck and Glenmark Pharmaceuticals Inc. have resolved a lawsuit over the reissued patent for Merck's cholesterol drug Zetia, with Glenmark getting permission to launch its proposed generic ahead of the asserted patent's expiration date on April 25, 2017.  Under the terms of the agreement, Glenmark will be able to launch its generic on December 12, 2016, or earlier under certain circumstances.

The settlement follows the recent order that certain claims of the reissued patent RE37,721 covering Zetia were invalid (see "Biotech/Pharma Docket," May 10, 2010).  Judge Linares vacated that April 19 order which granted Glenmark's motion for summary judgment and invalidated three of the reissued patent's claims.

The consent judgment can be found here.

James DeGiulio has a doctorate in molecular biology and genetics from Northwestern University and is a third-year law student at the Northwestern University School of Law.  Dr. DeGiulio was a member of MBHB's 2009 class of summer associates, and he can be contacted at [email protected].

In re Ciprofloxacin Antitrust Litigation (2d Cir. 2010)

    By Kevin E. Noonan --

On April 29th, the U.S. Court of Appeals for the Second Circuit ruled that the "pay-for-delay" agreement between defendants Bayer AG and several generic drugmakers (including The Rugby Group, Watson Pharmaceuticals Inc., and Barr Laboratories Inc.) were not illegal under U.S. antitrust law and prevailing precedent.  However, in a significant indication of the panel's sentiments on its opinion, it urged plaintiffs, including several trade unions and pharmacies, to request en banc review (apparently so the en banc court could do what a panel cannot, i.e., overturn prior precedent).  While this suggestion was cloaked in the language of procedure (that the earlier, precedential Tamoxifen decision was based on a motion to dismiss, while here the more developed record on summary judgment would provide the opportunity to "analyze the competing interests" of the parties), it is clear from the opinion that the panel was dissatisfied with having to affirm based on precedent rather than consider the legal and policy issues raised by plaintiffs below and again on appeal.

The opinion arose from plaintiffs' appeal of summary judgment for defendants by the U.S. District Court for the Eastern District of New York, that defendants were not guilty of violating Section 1 of the Sherman Act by agreeing to a "reverse exclusionary payment" settlement of patent infringement litigation.  The panel's opinion cited the earlier determination that such "reverse payments" were not illegal in Joblove v. Barr Labs., Inc., (In re Tamoxifen Citrate Antitrust Litigation), 466 F.3d 187, 208-12 (2d Cir. 2005).

As the consolidated case name indicates, the drug at issue is ciprofloxacin (or "Cipro"), a patented (U.S. Patent No. 4,670,444) antibiotic owned by Bayer.  The other defendants are generic drugmakers capable of making generic versions of Cipro who had filed ANDAs with the FDA to obtain regulatory approval for selling generic Cipro.  Under the provisions of the Hatch-Waxman Act (the Drug Price Stabilization and Patent term Restoration Act of 1984, Pub. L. No. 98-417, 98 Stat. 1585), Bayer sued each of these generic drugmakers to block FDA approval until the conclusion of the patent litigation.  35 U.S.C. § 271(e)(2)(A).  (The Court recognized that "the Hatch-Waxman Act redistributes the relative risks between the patent holder and the generic manufacturer, allowing generic manufacturers to challenge the validity of the patent without incurring the costs of market entry or the risks of damages from infringement.")

The terms of the "pay-for-delay" agreement between Bayer and Barr (the first ANDA filer) had Bayer paying Barr $49.1 million in a lump sum and then quarterly payments of from $12.5 million to $17.125 million until 6 months prior to patent expiry (for a total payment of $398.1 million), and a guarantee that the generic manufacturers could sell "brand name" Cipro for 6 months prior to the expiration date of the '444 patent.  Bayer received Barr's promise (and the promise of the other generic manufacturers) not to enter the marketplace with a generic version of Cipro and concessions regarding the validity and enforceability of the '444 patent, thereby ending the ANDA lawsuit.  Barr "reserved its right to reinstate its ANDA-IV [lawsuit] if Bayer's ['444] patent were later held to be invalid."  There were four later challenges (by Ranbaxy, Schein, Carlsbad, and Mylan) to the '444 patent, none of which were successful in invalidating it.

Plaintiffs responded with "over thirty antitrust lawsuits," which were consolidated in the Eastern District of New York for trial, granting defendants' summary judgment motion.  The panel quotes from the District Court opinion:

The ultimate question -- and this is the crux of the matter -- is not whether Bayer and Barr had the power to adversely affect competition for ciprofloxacin as a whole, but whether any adverse effects on competition stemming from the Agreements were outside the exclusionary zone of the '444 Patent.  It goes without saying that patents have adverse effects on competition.  However, any adverse effects within the scope of a patent cannot be redressed by antitrust law.

Specifically, the Court rejected what it called a "post hoc determination of potential validity" vel non of the '444 patent, which would be contrary to the statutory presumption of validity and "would work a revolution in patent law."  Further from the District Court's reasoning:

[I]n the absence of any evidence that the Agreements created a bottleneck on challenges to the '444 Patent, or that they otherwise restrained competition beyond the scope of the claims of the '444 Patent, the Agreements have not had any anti-competitive effects on the market for ciprofloxacin beyond that which are permitted under the '444 Patent.  The fact that Bayer paid what in absolute numbers is a handsome sum to Barr to settle its lawsuit does not necessarily reflect a lack of confidence in the '444 Patent, but rather the economic realities of what was at risk.  There is simply no precedent for plaintiffs' argument that the parties to a settlement are required to preserve the public's interest in lower prices.  Such a rule would only result in parties being less likely to reach settlements, aside from undermining well-settled principles of patent law.  Finally, to even attempt to quantify the public's interest in a patent settlement between private parties would require devaluing patents across the board, a result that would contravene the presumption of validity afforded by Congress and impact the very way patent licenses are handled in countless daily transactions.

In an interesting footnote, the Second Circuit explained that the "indirect purchaser plaintiffs" had included "Walker Process" antitrust claims, based on the willful assertion of an unenforceable patent, pursuant to Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 177 (1965).  Transfer was necessary because Walker Process claims "arise under" U.S. patent law and are thus within the exclusive province of the Federal Circuit.  That Court affirmed the District Court's grant of summary judgment for defendants.

In the instant case, the Second Circuit panel analyzed defendants' behavior in the context of the prohibitions of the Sherman Act.  15 U.S.C. § 1 et seq.  Its consideration of the question was informed by the opinions of other Circuit Courts of Appeal as well as the arguments put forward by the Federal Trade Commission, whose position is that reverse payment arrangements are per se illegal restraints of trade (see "FTC Disapproves of 'Pay-for-Delay' Drug Deals").  Putting it mildly, the Court notes that "[a]uthorities are divided on this question."  Notably, while academic commentators and FTC economists take the per se illegal view, most courts have applied the "rule of reason" and held that such agreements are not sufficiently anticompetitive (if at all) to raise antitrust liability (see "Reverse Payments in Generic Drug Settlements" - Part I, Part II, Part III).  The most relevant of these judicial determinations finding no antitrust liability is Joblove v. Barr Labs. Inc. (In re Tamoxifen Citrate Antitrust Litigation), 466 F.3d 187, 216 (2d Cir. 2005), being binding precedent on this Court.  In that case, the Second Circuit panel determined as a matter of law that the reverse-payment agreement was not anticompetitive to a degree that raised antitrust liability.  Here, the panel noted the similarities between the Tamoxifen Court's reasoning and the analysis supplied by the District Court here; in Tamoxifen the Court said:

Unless and until the patent is shown to have been procured by fraud, or a suit for its enforcement is shown to be objectively baseless, there is no injury to the market cognizable under existing antitrust law, as long as competition is restrained only within the scope of the patent.

Under the Tamoxifen precedent, there is a three-prong test for determining that a reverse payment agreement is legal:  "where (1) there was no restriction on marketing noninfringing products; (2) a generic version of the branded drug would necessarily infringe the branded firm's patent; and (3) the agreement did not bar other generic manufacturers from challenging the patent."

The opinion notes the binding nature of this precedent, and thus applies this test to the facts here.  The Court notes that there was no allegation that Bayer's assertion of the '444 patent was a sham or that Bayer procured the '444 patent by fraud.  Thus the Court says that "the only reasonable basis for distinguishing Tamoxifen would be if plaintiffs demonstrated that the settlement agreement here, unlike in Tamoxifen, exceeded the scope of the Cipro patent."  Which plaintiffs cannot do, of course, since a generic version of Cipro would "necessarily infringe" the '444 patent, so the exercise of the patent to exclude generic Cipro is precisely within the scope of the patent's exclusionary right.  In this regard the Court distinguished so-called "formulation patents," which are limited to certain formulations of an active pharmaceutical ingredient, with "compound patents" (such as the '444 patent), which encompass all formulations of a drug.  And while plaintiffs argued on appeal that the settlement agreement involved (or at least permitted) "manipulation" of the 180-day exclusivity period and precluded subsequent ANDA-IV challenges, there was no evidence to support these allegations (indeed, here there were four "subsequent" ANDA-IV challenges to the '444 patent).  And the Court noted that Barr forfeited its 180-day exclusivity period under the law in effect at that time (which required the ANDA filer to prevail in litigation invalidating an Orange Book-listed patent).

Perhaps as a hedge against the likelihood that legal arguments would prove unavailing, plaintiffs also argued on policy grounds that reverse payment settlements are contrary to the "purpose" of the Hatch-Waxman Act, i.e., "to make available more low cost generic drugs," citing H.R. Rep. No. 98-857, pt. 1, at 14 (1984), reprinted in 1984 U.S.C.C.A.N. 2647, 2647.  Market entry of generic drugs "arising from successful Hatch-Waxman challenges can result in significant savings to consumers," the plaintiffs contended, citing data contained in an amicus brief filed by AARP.  However, the panel held that such policy arguments could not be addressed by a panel, in view of the precedential Tamoxifen opinion.  And this situation prompted the panel to suggest "several reasons why this case might be appropriate for reexamination by our full Court."  These were enumerated as first, that the U.S. in an amicus brief "urged us to repudiate Tamoxifen."  The U.S. argued that "[t]his Court's Tamoxifen standard inappropriately permits patent holders to contract their way out of the statutorily imposed risk that patent litigation could lead to invalidation of the patent while claiming antitrust immunity for that private contract.  . . .  [T]his standard effectively bars considering whether the agreement might violate the antitrust laws, and so offers no protection to the public interest in eliminating undeserved patents."  The government would have such settlements be presumptively illegal unless a patentee could show that their cost does "not greatly exceed anticipated litigation costs."

The Court also noted that the "practice of entering into reverse exclusionary payment settlements has increased" since the Tamoxifen decision (14 settlements prior to the Tamoxifen decision, none of which contained reverse payment provisions, compared with 27 settlements after the decision, in which 20 contained reverse payment provisions.)  (It should be noted that these data were gleaned from amicus briefs arguing against the legality of reverse-payment provisions in settlement agreements.)  Also significant for the panel were remarks from Senator Orrin Hatch to the effect that he found reverse payment provisions "appalling."  Finally, and perhaps most significantly, the Court considered the Tamoxifen decision to have been based on "an unambiguous mischaracterization" of the law, specifically that the 180-day exclusivity period would be ceded by the first ANDA filer upon entering into a reverse payment-containing settlement of ANDA litigation.

The panel's sentiments, noted above, were patent in its conclusion:

In sum, as long as Tamoxifen is controlling law, plaintiffs' claims cannot survive.  Accordingly, we AFFIRM the judgment of the district court.  However, we believe there are compelling reasons to revisit Tamoxifen with the benefit of the full Court's consideration of the difficult questions at issue and the important interests at stake.  We therefore invite the plaintiffs-appellants to petition for rehearing in banc.

Although some groups have gone so far as to prepare (and make available online) amicus briefs in support of any request for rehearing plaintiffs may file, to date plaintiffs have not filed such a request.

DOJ, FTC and USPTO to Hold Workshop about Promoting Innovation

    By Sarah Fendrick --

The Department of Justice, Federal Trade Commission, and U.S Patent and Trademark Office have announced that they will be holding a joint public workshop on the intersection of patent policy and competition policy and its implications for promoting innovation.  The workshop will be held on May 26, 2010 and is open to the public.

The topics to be discussed at the workshop include how challenges posed by the patent backlog affect the competitive strategies of patent applicants and innovators, the impact of the Supreme Court's 2006 opinion in eBay Inc. v. MercExchange L.L.C. on permanent injunctions for patent infringement in district courts and at the U.S. International Trade Commission (USITC), and the role of patents in connection with industry standards and the impact such standards have on competition.

A full schedule of the workshop can be found here, and a webcast of the workshop can be viewed here.  Those interested in listening to the workshop can call 1-888-790-1808 (use the passcode 5956352).

USPTO Provides Contingency Option for EFS-Web

    By Donald Zuhn --

The U.S. Patent and Trademark Office announced today that it is providing a new contingency option for its electronic filing system (EFS-Web) for use when the primary portal to the EFS-Web has an unscheduled outage.  In a notice published in the Federal Register (75 Fed. Reg. 27986), the Office stated that effective immediately, the EFS-Web contingency option will permit EFS-Web users to sign-on as unregistered users to file new applications, national stage submissions under the Patent Cooperation Treaty (PCT) submitted with the basic national fee necessary to enter the national stage, requests for reexamination, and certain petitions, during an unscheduled outage of the primary portal to EFS-Web.

In the event of an unscheduled outage of the primary EFS-Web portal, the Office will post a notice of such outage and provide the link to EFS-Web Contingency Option on the EFS-Web webpage.  Ten types of documents may be filed electronically using the EFS-Web Contingency Option during outages of the primary portal:

1.  Provisional patent applications;
2.  Nonprovisional utility patent applications (including reissue utility patent applications);
3.  Nonprovisional design patent applications (including reissue design patent applications);
4.  International applications for filing in the U.S. Receiving Office;
5.  National stage submissions submitted with the basic national fee;
6.  Requests for ex parte reexamination for utility or design patents;
7.  Requests for inter partes reexamination for utility or design patents;
8.  Petitions to make special based on age;
9.  Petitions to accept an unintentionally delayed payment of maintenance fee; and
10.  Petition to make special under the accelerated examination program.

With respect to national stage submissions, the Office notes that if the Revenue Accounting and Management (RAM) system (for making online payments) is unavailable, users may pay the necessary national stage entry fees by including a written authorization to charge the desired fees together with the national stage submission or by sending the payment via Express Mail on the same date that the national stage submission is electronically filed.  The Office also notes that if the Patent Application Locating and Monitoring (PALM) system is unavailable, neither the EFS-Web nor the EFS-Web Contingency Option will permit national stage submissions to be filed (due to the inability to determine whether a previous national stage submission has been made for a given international application).  In the event of PALM system unavailability, applicants will be required to use hand-delivery or Express Mail to timely submit documents and fees for national stage entry.

Additional information regarding the EFS-Web Contingency Option can be found in the Federal Register notice or at the USPTO's EFS-Web Contingency webpage.

U.S. Trade Representative Releases Special 301 Report on Global IPR

    By Kevin E. Noonan --

At the end of last month, the U.S. Trade Representative, Ron Kirk, issued the 2010 Special 301 Report, which according to the USTR website "reflects the Administration's resolve to encourage and maintain effective [Intellectual Property Rights (IPR)] protection and enforcement worldwide" by identifying "a wide range of serious concerns, ranging from troubling 'indigenous innovation' policies that may unfairly disadvantage U.S. rightsholders in China, to the continuing challenges of Internet piracy in countries such as Canada and Spain, to the ongoing systemic IPR enforcement challenges in many countries around the world."

The Report is promulgated pursuant to Section 182 of the Trade Act of 1974, as amended by the Omnibus Trade and Competitiveness Act of 1988 and the Uruguay Round Agreements Act (enacted in 1994).  The Trade Representative is required under the Act to "identify those countries that deny adequate and effective protection for IPR or deny fair and equitable market access for persons that rely on intellectual property protection."  The Trade Representative has implemented these provisions by creating a "Priority Watch List" and "Watch List."  Placing a country on the Priority Watch List or Watch List is used to indicate that the country exhibits "particular problems . . . with respect to IPR protection, enforcement, or market access for persons relying on intellectual property."  These watch lists are reserved for countries having "the most onerous or egregious acts, policies, or practices and whose acts, policies, or practices have the greatest adverse impact (actual or potential) on the relevant U.S. products."

This report, on the state of intellectual property rights worldwide, identifies eleven countries on a "Priority Watch List" and another 29 on a "Watch List," all relating to deficiencies in intellectual property protection in these countries.  The Priority Watch List of the report lists China, Russia, Algeria, Argentina, Canada, Chile, India, Indonesia, Israel, Pakistan, Thailand, and Venezuela; the only country not on this list that was on the list last year is Israel.  (Israel's status is "pending" in the Report, which states that "Israel has entered into an understanding with the United States whereby it will address key outstanding IPR issues").  Countries on this list "do not provide an adequate level of IPR protection or enforcement, or market access to persons relying on intellectual property protection."  The Report "identifies a wide range of serious concerns, ranging from troubling 'indigenous innovation' policies that may unfairly disadvantage U.S. rights holders in China, to the continuing challenges of Internet piracy in countries such as Canada and Spain, to the ongoing systemic IPR enforcement challenges in many countries around the world.

This year, the Watch List names Belarus, Bolivia, Brazil, Brunei, Columbia, Costa Rica, Dominican Republic, Ecuador, Egypt, Finland, Greece, Guatemala, Italy, Jamaica, Kuwait, Lebanon, Malaysia, Mexico, Norway, Peru, Philippines, Poland, Romania, Spain, Tajikistan, Turkey, Turkmenistan, Ukraine, Uzbekistan, and Vietnam.  Countries not on the Watch List this year that were listed last year include Czech Republic, Hungary, Saudi Arabia, and Taiwan.

The Report notes that public response to a Federal Register Notice used to prepare the Report showed a "significant increase" over the number of responses filed in 2009, and provides access to these comments (www.regulations.gov, docket number USTR-2010-0003) as well as the testimony of 23 witnesses at a public hearing.  The Report notes some "positive accomplishments," including "improved efforts by trading partners the Czech Republic, Hungary, and Poland," all of which are not on this year's Watch List.

The Report discusses initiatives to strengthen IPR internationally, including the World Trade Organization, bilateral and regional initiatives, the Anti-Counterfeiting Trade Agreement, trade preference program reviews and "expanded international communication" efforts.  It also outlines international trends in counterfeiting and piracy "involving the mass production and sale of a vast array of fake goods, including items such as counterfeit medicines, health care products, food and beverages, automobile and airplane parts, toothpaste, shampoos, razors, electronics, batteries, chemicals, and sporting goods."  It notes that there are a "greater diversity in the types of goods that are being counterfeited, as well as the production of labels and components for these fake products," and a "rapid growth in the piracy of copyrighted products in virtually all formats, as well as counterfeiting of trademarked goods."  The Report also discusses Internet and digital piracy, facilitated by "increased availability of broadband Internet connections around the world."  These concerns are specifically noted in Brazil, Canada, China, India, Italy, Russia, Spain and Ukraine, including unauthorized retransmission of sporting events particularly in China and the Netherlands.  The Report also sets forth as a "growing area of concern" trademark infringement of country code top level domain name extensions.

As it did last year, the Report contains a section on "Intellectual Property and Health Policy," specifically relating to the 2001 Doha Declaration on the TRIPS Agreement.  The Report states that the U.S. "respects a country's right to protect public health, in particular, to promote access to medicines for all."  Accordingly, the Report states that the U.S. "respects our trading partners' rights to grant compulsory licenses" consistent with the provisions of the Doha Declaration, including provisions of the August 2003 agreement whereby countries are permitted to grant such compulsory licenses not only for producing pharmaceuticals for internal use but also for export to countries unable to produce drugs themselves.  Accordingly, the Report states that the U.S. "will work to ensure that the provisions of our bilateral and regional trade agreements are consistent with these views and do not impede the taking of measures necessary to protect public health."  On the other hand, the Report contains a section outlining the USTR's efforts to "reduce market access barriers faced by U.S. pharmaceutical and medical device companies in many countries," specifically calling out Japan, Poland, Algeria and Indonesia as countries of particular concern in this regard.

The Report contains in a final section a review of U.S. activities in the WTO to resolve disputes with countries such as China and the EU over trade issues.

Section II of Report is a detailed, country-by-country discussion for each country on the Priority Watch List and the Watch List, relating to the activities (or lack thereof) of each country that results in placement of that country on these lists.  Section III of the Report identifies "notorious markets" for places in the world where "[g]lobal piracy and counterfeiting continue to thrive."  These include several websites (TV Ants, B2B and B2C websites in China, Webhards in Korea, Allofmp3.com clones in Russia) and physical markets (Baidu, Lowu Market, Silk Market  and Yiwu in China; Bahia in Ecuador, Greenhills, Quiapo, Binondo, Makati Cinema Square, and 168 Mall in the Philippines; Gorbushka and Rubin Trade Center and Savelovskiy Market in Russia; Harco Glodok in Indonesia; Petrivka Market in Ukraine; Panthip Plaza, the Klong Thom, Saphan Lek and Baan Mor shopping areas, the Patpong and Silom shopping areas, the Mah Boon Krong (MBK) Center, the Sukhumvit Road area, Nehru Place, Palika Bazaar, Richie Street, Burma Bazaar Manish Market, Heera Panna, Lamington Road, the Mumbai Fort District, and Chandni Chowk in India; Tepito, Plaza Meave, Eje Central, Lomas Verdes, Pericoapa Bazaar, San Juan de Dios, Simitrio-La Cuchilla, and Pulgas in Mexico; La Salada in Argentina; and the Tri-Border Region between Paraguay, Argentina and Brazil).

The U.S. Trade Representative Report provides insights into both the concerns of U.S. IP rights holders and the Administration's intentions to work with, cajole, coerce, or threaten other countries to increase protection for IP rights of U.S. IP rights holders.  Western governments have been frustrated, particularly with regard to pharmaceutical products, in implementation of international trade treaties designed to increase IP rights protection.  As in earlier years, the Report is in some ways the answer to the question, "What are we going to do about it?"  So far, the honest answer seems to be "not enough."

For additional information regarding this and other related topics, please see:

• "New Administration, Same Result: U.S. Trade Representative's Section 301 Report," May 6, 2009
• "Congressmen Criticize U.S. Trade Representative over Special 301 Report," July 1, 2008
• "U.S. Continues Efforts to Protect Patent Rights Abroad," April 29, 2008

HIF Bio, Inc. v. Yung Shin Pharmaceuticals Industrial Co. (Fed. Cir. 2010)

    By Kevin E. Noonan --

It has been a staple of introductory civil procedure exams to include a complicated fact pattern that, at root, leads to a determination that the lawsuit should be dismissed for failure to state a claim for which relief can be granted.  The salience of such a fact pattern can be appreciated by the Federal Circuit's decision in HIF Bio, Inc. v. Yung Shin Pharmaceuticals Industrial Co., where after extensive proceedings in state and federal courts, including the U.S. Supreme Court, the ultimate determination is that the case should be dismissed.

The case arose from a discovery by two inventors of the effects of a chemical, designated YC-1, on a protein complex called HIF-1.  This protein complex stimulates blood vessel growth in tumors that express it.  The inventors believed that YC-1 could be useful as a cancer treatment by inhibiting blood vessel growth, which could "kill the tumor by starving it for oxygen and nutrients."  These inventors assigned their rights, including rights to a provisional application, to plaintiff HIF Bio, Inc.

According to the facts established in earlier proceedings, the two inventors discussed their research with another scientist, Dr. Teng, who provided the YC-1 necessary for the inventors to perform their experiments.  "As an academic courtesy," the opinion notes, the inventors provided this scientist with information about their work, including pre-publication drafts of scientific papers disclosing their results.  Without the inventors' knowledge, however, Dr. Teng disclosed these results to defendant Yung Shin Pharmaceuticals, a Taiwanese company, and more than one year before the inventors filed their provisional application Dr. Teng filed his own provisional application and later a PCT application, claiming the use of YC-1 as an anti-angiogenesis agent for use in treating cancer (and naming Yung Shin's President, Dr. Lee as a co-inventor), assigning his rights to Yung Shin.

The lawsuit was first brought in California state court, naming Drs. Teng and Lee, Yung Shin, and Carlsbad Technology, Inc. (CTI, a California company helping to commercialize the invention), as well as Yung Shin's patent counsel and another Taiwanese company Yung Zip Chemical Co.  Upon motion by CTI the case was moved to U.S. District Court for the Central District of California.  Among the twelve counts alleged in the complaint were a declaratory judgment for ownership and inventorship of "the invention" disclosed in Yung Shin's patent applications, a RICO count for conspiracy, and counts for "slander of title, conversion, actual and constructive fraud, intentional interference with contractual relations and prospective economic advantage, negligent interference with contractual relations and prospective economic advantage, breach of implied contract, unfair competition and fraudulent business practices, unjust enrichment-constructive trust, and permanent injunction."

The District Court dismissed CTI's motions under Fed. R. Civ. P. 12(b)(1) and 12(b)(6) and remanded the case to state court, holding that "the first and second causes of action claimed 'rights of inventorship and ownership of inventions [which] are valid state law claims'" and refusing to exercise supplemental jurisdiction over the state law claims.  CTI appealed to the Federal Circuit, which refused to recognize jurisdiction based on the panel's interpretation that review was barred under 28 U.S.C. § 1447(d), a decision overturned by the Supreme Court, which specifically held that the Federal Circuit had jurisdiction and that § 1447(d) did not bar appellate review.  The Court remanded the case to the Federal Circuit for further proceedings, which this opinion has now resolved.

The opinion, written by Judge Gajarsa and joined by Chief Judge Michel and Judge James F. Holderman of the Northern District of Illinois, sitting by designation, reviewed the District Court's refusal to exercise supplemental jurisdiction under an abuse-of-discretion standard (i.e., granting the district court substantial deference).  However, the opinion notes that the discretion not to exercise supplemental jurisdiction does not apply to any claims "arising under" federal law, citing Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318, 1328 (Fed. Cir. 1998), as well as several precedents from other circuit courts of appeal.  Moreover, the Federal Circuit reviewed the question of whether the District Court had jurisdiction without deference, being limited to "only to those cases in which a well-pleaded complaint establishes either that federal patent law creates the cause of action or that the plaintiff's right to relief necessarily depends on the resolution of a substantial question of federal patent law, in that patent law is a necessary element of the well-pleaded claims," citing Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 808-09 (1988).

Under these standards, the panel held that the District Court erred in refusing jurisdiction on the second cause of action, which sought a declaratory judgment that assignors of plaintiff HIF Bio were "the first and true inventors" of the invention, defined as the discovery that "YC-1 had the potential to become the first anti-angiogenic, anti-cancer agent to HIF-1."  The "case-or-controversy" arose, according to the complaint, from Drs. Teng and Lee filing (and having published) their PCT application claiming inventorship of the use of YC-1 for treating cancer.  Not helping the District Court were averments made by plaintiffs that "they are not contesting patents or patent applications, but are instead seeking declaratory judgment on the issue of inventorship under state common law."  In determining that the question of inventorship was a "valid state law claim" the District Court erred, according to the Federal Circuit.  The panel noted that this question was directly addressed in Univ. of Colo. Found. v. Am. Cyanamid Co., 196 F.3d 1366, 1372 (Fed. Cir. 1999), where the CAFC held that "the field of federal patent law preempts any state law that purports to define rights based on inventorship."  Policy rationales, including varying standards of inventorship between different states and the potential for different remedies for improper inventorship, any of which "might frustrate the dual federal objectives of rewarding inventors and supplying uniform national patent law standards."  The panel's interpretation was supported by the allegations made in the complaint, which all depended on inventorship of pending patent applications.  Therefore:

[T]he only possible theory upon which relief could be granted to the plaintiffs would be one in which determining the true inventor(s) of competing patent applications is essential.  Because inventorship is a unique question of patent law, the cause of action arises under § 1338(a).

However, the panel noted that these claims were for pending applications, thus making the complaint "tantamount to a request for either a modification of inventorship on pending patent applications or an interference proceeding," citing Larson v. Correct Craft, Inc., 569 F.3d 1319, 1325 (Fed. Cir. 2009).  However, this relief is not within the Court's purview, according to the panel; whether an interference is granted is a power invested in the Director of the Patent and Trademark Office and Undersecretary of Commerce under 35 U.S.C. §§ 116 and 135.  "While the question of who invented an invention disclosed in pending patent applications is a question of federal patent law, Congress, through §§116 and 135(a), has limited the avenues by which such inventorship can be contested," said the Court.  While admitting that some district courts have recognized a private cause of action under § 116, the Court takes this opportunity to "expressly hold" that § 116 of the patent statute does not contain a private cause of action to challenge inventorship of a pending application (the opportunity for which having increased dramatically upon publication of pending U.S. patent applications).  (And of course the Court does recognize the private cause of action provided by 35 U.S.C. § 356 for issued U.S. patents.)  As a result:

Given their proper import, §§ 116 and 135(a) preclude the district court from granting plaintiffs' requested relief -- a declaration of the "true" inventor of a pending patent application.  Accordingly, while the district court has jurisdiction over the cause of action, it should have dismissed the claim under Rule 12(b)(6) because no private right of action exists.  See Litecubes, LLC v. N. Light Prods., Inc., 523 F.3d 1353, 1361 (Fed. Cir. 2008) ("[If] the complaint fails to allege a cause of action upon which relief can be granted, this 'failure to state a proper cause of action calls for a judgment on the merits and not for a dismissal for want of jurisdiction.'" (quoting Bell v. Hood, 327 U.S. 678, 682 (1946))).

As for the remaining causes of action, which more readily fall within the ambit of state law, CTI contended that they all depend on the patent law issue recognized in count 2 of the complaint, inventorship of the patents in suit.  The panel notes that while inventorship is a question that "arises under" federal patent law, the Court's own precedent has cautioned that "a claim arises under the patent laws only if the inventorship issue is essential to the resolution of the claim," citing Bd. of Regents, Univ. of Tex. Sys., 414 F.3d at 1363 and Thompson v. Microsoft Corp., 471 F.3d 1288, 1291-92 (Fed. Cir. 2006).  Existence of "an alternative, non-patent theory" for relief "compels the conclusion" that the question does not arise under the patent laws and thus that the District Court was within the exercise of its sound discretion in refusing supplemental jurisdiction.  Of the remaining nine causes of action cited in the complaint for which inventorship was "essential" was slander of title, according to the panel.  Plaintiffs' burden is to establish that they invented the subject matter in Defendants' claims first, and that "public statements" (including publication of Defendants' PCT application) "are false and caused plaintiffs damage."  The opinion states that this cause of action "is indisputably a question of federal patent law," since it requires a determination of who was the correct inventor.  Accordingly, the District Court's decision to remand to state court rather than exercise supplemental jurisdiction was an abuse of discretion.  However, as above, the panel determines that the question of who is the correct inventor in a pending application is not within the proper jurisdiction of the District Court but of the Patent Office.  Thus, as with the two frank federal law claims, the District Court "should dismiss [the complaint] under Rule 12(b)(6) for failure to state a claim for which relief may be granted."

Nor were any of the other causes of action recited in the complaint sufficient to "arise under" the patent laws, "because each cause of action could be resolved without reliance on the patent laws."  Thus, the panel decision reversed the decision of the District Court not to exercise jurisdiction and remanded, with a mandate to dismiss the complaint under Fed. R. Civ. P. 12(b)(6) for failure to state a claim for which the Court could grant relief.

HIF Bio, Inc. v. Yung Shin Pharmaceuticals Industrial Co. (Fed. Cir. 2010)
Panel:  Chief Judge Michel, Circuit Judge Gajarsa, and Chief District Judge Holderman
Opinion by Circuit Judge Gajarsa

Image of HIF1A protein (above) by Emw, from the Wikipedia Commons under the Creative Commons license.

New USPTO Fee-Setting Bill Introduced in House

    By Donald Zuhn --

In the face of strong opposition, the House of Representatives declined to bring a bill that would provide the U.S. Patent and Trademark Office with fee-setting authority to the floor for a vote during today's legislative business session.  While the text of the bill had not been made available as of Monday, reports indicated that the legislation would have transferred fee-setting authority from Congress to the USPTO, but without prohibiting fee diversion to other government agencies (see "House to Vote on Bill That Would Give USPTO Fee-Setting Authority").  However, in response to opposition from a number of patent groups, including the Intellectual Property Owners Association (IPO), American Intellectual Property Law Association (AIPLA), and Coalition for 21st Century Patent Reform, the House decided instead to withdraw the legislation.

In place of the old bill, House Judiciary Committee Chairman John Conyers, Jr. (D-MI) and Ranking Member Lamar Smith (R-TX) introduced a new bill on Tuesday.  In a press release posted on the House Judiciary Committee's website, the two legislators announced that the new bill, entitled the "Patent and Trademark Office Funding Stabilization Act," would "assist[] our nation's inventors and innovative businesses by providing the United States Patent and Trademark Office (USPTO) with urgently needed resources for reliable and sustainable funding."  According to the press release, the bill would give the USPTO fee-setting authority, provide the Office with the authority to impose a 15% temporary surcharge for all of its fees, and prevent fees from being diverted away from the agency for unrelated government programs.

Chairman Conyers stated that the bill was "not intended to impact the negotiations over the larger patent bill pending in the Senate," adding that he and Rep. Smith "remain optimistic and hopeful about the prospects for passage this Congress of comprehensive patent reform."  Chairman Conyers and Rep. Smith assert that "[t]he USPTO is in the midst of a crisis," with the backlog of unexamined applications having ballooned to over 750,000 and "hundreds of millions of dollars in fees hav[ing] been diverted from the USPTO over the years."  Noting that "fee diversion robs the USPTO of valuable resources needed to hire and retain qualified examiners and address patent backlog issues," the pair contend that "[i]ncreased backlogs and poor patent quality affect not only the agency, they hurt American innovation, and delay our economic and jobs recovery."

A link to the text of the bill was provided in the Committee's press release.

House to Vote on Bill That Would Give USPTO Fee-Setting Authority

    By Donald Zuhn --

Earlier today, the Intellectual Property Owners Association (IPO) reported that new legislation that would provide the U.S. Patent and Trademark Office with fee-setting authority will be brought to the floor of the House of Representatives for a vote during its legislative business session on Tuesday.  The bill, entitled the "Patent and Trademark Office Fee Modernization Act of 2010," which has yet to be introduced and which is not yet available on THOMAS or OpenCongress, is nevertheless listed on the House's weekly calendar that can be found on a number of websites, including The Weekly Leader page at the Office of the Majority Leader's site.  According to The Weekly Leader, the bill is being sponsored by House Judiciary Chairman John Conyers Jr. (D-MI).

While the text for the bill has not been made public, the IPO report indicates that the legislation would transfer fee-setting authority from Congress to the USPTO.  The IPO report also indicates that the bill lacks a provision prohibiting fee diversion to other government agencies.  The IPO notes that the bill is scheduled to be taken up after 2:00 pm (Eastern) under the "suspension of the rules" procedure that limits floor debate.  Assuming that the legislation indeed lacks a provision prohibiting fee diversion, the organization has declared its opposition to the bill, stating that it "WILL MAKE IT MORE LIKELY THAT FEES WILL BE DIVERTED TO OTHER GOVERNMENT PROGRAMS -- A TAX ON INNOVATION" (capitalization in the original).

Two other organizations issued press releases regarding tomorrow's House vote.  In its own release, the American Intellectual Property Law Association (AIPLA) stated that it "opposes granting the USPTO fee-setting authority without ending the problem of fee diversion."  According to the AIPLA press release, the Patent and Trademark Office Fee Modernization Act of 2010 will give the USPTO Director the authority to increase fees, while lacking "any mechanism to ensure that those fees remain at the Office."  In its release, the "AIPLA emphatically opposes this legislation."  AIPLA President Alan Kasper adds that "[t]he time has come for Congress to once and for all provide the USPTO with the ability to more predictably and intelligently plan its fiscal operation by ending the possibility of fee diversion."  USPTO Director David Kappos, in his testimony before the House Judiciary Committee on May 5, noted that the Office planned to collect "between $146 and $232 million more than its appropriated amount in FY 2010," an amount that could be diverted away from the Office.

The press release also demonstrates the AIPLA's preference for the Senate approach to patent reform by declaring that the organization "supports a comprehensive approach to patent reform now working its way through the Congress, and not the piecemeal approach represented by this bill."  As part of the "piecemeal approach" being taken by the House, Rep. Darrell Issa (R-CA) introduced a false patent marking bill (H.R. 4954) in March that would amend 35 U.S.C. § 292(b) to permit "[a] person who has suffered a competitive injury as a result of a violation of this section may file a civil action in a district court of the United States for recovery of damages adequate to compensate for the injury" (see "False Patent Marking Bill Introduced in the House").  A nearly identical provision was added to the Senate's "comprehensive" patent reform bill (S. 515) by Manager's Amendment (see "Qui Tam Actions in Senate Sights").

The Coalition for 21st Century Patent Reform also issued a press release today announcing the group's opposition to the Patent and Trademark Office Fee Modernization Act of 2010.  Coalition Chairman Gary Griswold noted that the group of nearly 50 members from 18 diverse industry sectors opposed the bill because "[t]he nation needs legislation that guarantees that any fees paid by inventors will be used to process their applications."  According to the Coalition:

The Patent and Trademark Office Fee Modernization Act of 2010 fails to include the efficiency and quality enhancing provisions contained in the managers' amendment to S. 515, The Patent Reform Act of 2010, that would simplify the rules and procedures for granting patents, allow the public to provide patent examiners with relevant information before deciding whether a patent can be granted, and permit prompt challenges of newly issued patents to ensure they satisfy the rigorous standards for patenting.

The Coalition's release also states that "[o]ur country's inventors and innovators need comprehensive patent reform -- and so does the USPTO and our economy.  The agency needs more than money to solve its problems and properly manage patent applications."  A copy of a statement circulated by the Coalition to House members can be found here.

Ortho-McNeil Pharmaceutical, Inc. v. Lupin Pharmaceuticals, Inc. (Fed. Cir. 2010)

    By Kevin E. Noonan --

In Ortho-McNeil Pharmaceutical, Inc. v. Lupin Pharmaceuticals, Inc., the Federal Circuit has rendered a decision on the question of whether separate enantiomers can have "first commercial marketing or use" status for purposes of patent term extension under 35 U.S.C. § 156.

The Hatch-Waxman regime for patent term extension (the Drug Price Competition and Patent Term Restoration Act, codified in part at 35 U.S.C. § 156 et seq.) permits an extension of a patent that claims a drug that required regulatory approval prior to being put on the market.  One of the limitations on patents entitled to the extension is that regulatory approval be the "first commercial marketing or use"of the drug.  It is known that certain drugs exist as racemic mixtures of enantiomers, molecules that differ structurally by being mirror image arrangements of the same component atoms, and that these enantiomers can have differ physical, chemical, and biological properties.  Differences in the biological properties of these molecules can be striking:  due to the enantiomeric nature of biological molecules in a patient, it can be (and has frequently been) the case that one of the enantiomers possesses substantially all of the biological activity of the racemic mixture while the other enantiomer is far less biologically active (and can be totally inactive).  This raises the question of the status of separated enantiomers as "new drug products" and whether they can be "first commercial marketing or use" if the racemate has previously been granted market approval, pursuant to 35 U.S.C. § 156(a)(5)(A).  An example of one such situation is Prilosec® (racemic omeprazole) and Nexium® (the S enantiomer thereof).  The Federal Circuit answered this question in the affirmative in its decision rendered on May 10th.

This case involves the antibiotic levafloxicin (marketed as Levaquin®), which is the stereospecifically-synthesized levorotatory enantiomer of ofloxacin, a racemic mixture.  Daiichi Sankyo, owners of the patent in suit (U.S. Patent No. 5,053,407) and their licensee filed suit against Lupin in response to Lupin's ANDA filing, pursuant to 35 U.S.C. § 271(e)(2).  Lupin stipulated to infringement, validity, and enforceability of the '407 patent, contending only that the Patent Office and FDA had improperly granted Daiichi an 810 patent term extension under § 156 of the patent statute.  Relevant to the District Court's decision in Daiichi's favor, and the Federal Circuit's affirmance, the '407 patent specifically claims levafloxicin (i.e., this enantiomer was determined to be patentable over the existence of ofloxacin in the prior art) and the FDA required Daiichi to satisfy the requirements of an NDA for levafloxacin as for a new chemical entity (NCE).  The District Court accorded "great deference" to the PTO's determination that levafloxacin was a different drug product than ofloxacin under the terms of the statute, pursuant to the regulatory framework upheld in Glaxo Operations UK Ltd. v. Quigg, 894 F.2d 392, 399 (Fed. Cir. 1990), where patent term was extended on a patent claiming a new ester of a previously-approved drug comprising salts of the same acid.

Both at trial and in the appeal, Lupin argued that since levafloxacin was the "active ingredient" of ofloxacin, and was present in the racemate, it was in essence the "same" drug product both as levafloxacin and ofloxacin, and thus the patent claiming levafloxacin (the '407 patent) should not be entitled to patent term extension.  Daiichi argued, and the Federal Circuit agreed, that both the PTO and FDA had consistently treated separate enantiomers to be different drug products than racemic mixtures thereof.  That the FDA required Daiichi to obtain "full regulatory approval" and that the PTO found levafloxacin to be independently patentable over ofloxacin were used by Daiichi to support its argument.  The argument was supported by expert testimony of Dr. David Lin, a former FDA official (Director of the Division of New Drug Chemistry at the FDA), that:

'in each and every instance in which it has considered the question, the FDA has described a racemate as a single active ingredient, distinct from its enantiomers, and each enantiomer as a single active ingredient distinct from the other and from the racemate,' Lin Decl. ¶20, J.A. 1280 (including examples and Orange Book descriptions, at Lin Decl. Ex. C, J.A. 1278-1439)

The Federal Circuit, in an opinion by Judge Newman joined by Judges Rader and Linn, agreed with Daiichi and the District Court that the '407 patent term was properly extended because levafloxacin was the "first commercial marketing or use" of this drug regardless of its existence as a component (even the active component) of previously approved and marketed ofloxacin.  "We discern no basis for challenging these established FDA and PTO practices.  The FDA and PTO practices are in accordance with Glaxo, where the court held that 'product' as used in §156(a) is the active ingredient present in the drug."  The Court also held that amendments to the statute enacted in 2007, wherein "an applicant 'for a non-racemic drug containing as an active ingredient (including any ester or salt of the active ingredient) a single enantiomer that is contained in a racemic drug approved in another application' to, under certain conditions, 'elect to have the single enantiomer not be considered the same active ingredient as that contained in the approved racemic drug'" did not mandate that the PTO or FDA change their practices regarding approval of separate enantiomers and patent term extensions of patents specifically claiming such enantiomers.  This interpretation, according to Judge Newman's opinion, "would change the long-standing term-extension policy of the FDA and the PTO; such a far-reaching change is not achieved by legislative silence."

In addition to clarifying (or at least putting the Federal Circuit's imprimatur upon) the status of separate enantiomers to obtain independent patent protection and be entitled to patent term extension for "first commercial marketing or use" as new drug products, the Court's decision may provide a boon to "evergreening" efforts by pharmaceutical companies marketing drugs comprising racemic mixtures of enantiomers.  This is not a panacea, of course, at least because in the wake of the Supreme Court's KSR v. Teleflex decision the Federal Circuit has determined that patents for separated enantiomers can be invalidated on obviousness grounds (compare, for example, Aventis Pharma Deutschland GmbH v. Lupin, Ltd. with Sanofi-Synthelabo v. Apotex, Inc.).  But under the right circumstances (for example, as here where separation of the enantiomers is difficult or impossible), the capacity for separate enantiomer patents to be eligible for patent term extension provides more incentives for companies marketing drugs comprising racemic mixtures of enantiomers to expend R&D (and marketing) efforts and capital on such separations (or stereospecific syntheses).  In a world of finite resources, these efforts can be expected to siphon resources away from new drug development.  While this may be smart business (and in view of the unpredictability of new drug development, drug companies may not be able to spurn such opportunities), it may not be in the best interest of further pharmaceutical innovation.

Ortho-McNeil Pharmaceutical, Inc. v. Lupin Pharmaceuticals, Inc. (Fed. Cir. 2010)
Panel:  Circuit Judges Newman, Rader, and Linn
Opinion by Circuit Judge Newman