Patent Docs

ABA Webinar on Biosimilars and the BPCI Act

The American Bar Association (ABA) Section of Science and Technology, Section of Intellectual Property Law, and Center for Professional Development will be offering a live webinar entitled "Biosimilars and the BPCI Act: Where Are We Now and Where Are We Going?" on September 19, 2013 from 2:00 to 3:30 pm (Eastern).  Ken Burchfiel of Sughrue Mion, PLLC; John M. Engel of Engel & Novitt, LLP; William J. Simmons, Ph.D of Sughrue Mion, PLLC; and Krista Hessler Carver of Covington & Burling LLP address patent and regulatory issues which arose from implementation of the BPCI Act since its implementation and the FDA’s three draft guidance's.  IN particular, the panel will address the following issues:

• When to use biosimilar pathway in section 351(k) of the Public Health Service Act versus the biologics license application pathway in section 351(a);
• Regulatory pathway for biosimilars and FDA draft guidance on it, including study requirements and user fees;
• Interchangeability and state substitution laws;
• Evolving policy on naming of biosimilars;
• Issues in exclusivity for innovative biologics and implications for business strategies;
• The mechanics of the patent litigation process under the BPCIA; and
• Practical steps to prepare for the information exchange process.

The registration fee for the webcast is $95 for members of any of the sections sponsoring the webinar, $99 for government attorneys, $150 for ABA members, and $195 for the general public.  Those interested in registering for the webinar, can do so here or by calling 800-285-2221.

IPO Webinar on Post-grant Proceedings and Concurrent Litigation

The Intellectual Property Owners Association (IPO) will offer a one-hour webinar entitled "Filing a Post-grant Proceeding with Concurrent Litigation: Strategic Considerations" on September 4, 2013 beginning at 2:00 pm (ET).  A panel consisting of Erika Arner of Finnegan, Henderson, Farabow, Garrett & Dunner, LLP; Dion Bregman of Morgan, Lewis & Bockius LLP; Juliana Mirabilio, Senior Litigation Counsel at Oracle America will consider the key issues of stays, claim construction, estoppel, joinder, and settlement in post-grant proceedings and concurrent litigation.

The registration fee for the webinar is $120 (government and academic rates are available upon request).  Those interested in registering for the webinar can do so here.

Web Conference on Post-Grant Proceedings

Foley & Lardner will be offering a web conference entitled "Lessons from the Inaugral Year of New Post-Grant Patent Office Proceedings: What Separates the Winners from the Losers?" on September 10, 2013 from 1:00 to 2:00 pm (Eastern).  Featured panelists for the web conference will include C. Edward Polk, Jr., Chief Litigation Officer at Exela Pharma Sciences, LLC (former USPTO Associate Solicitor); Andrew S. Baluch of Foley & Lardner LLP (former expert legal advisor to the Under-Secretary & Director of the USPTO); and Stephen B. Maebius of Foley & Lardner LLP.  Topics to be covered in the web conference will include:

• How will Fresenius v. Baxter (Fed. Cir. 2013) impact post-grant proceedings?
• Coordinating parallel litigation, post-grant proceedings, and ex parte prosecution;
• What circumstances would make IPR/CBM/PGR a particularly effective arsenal in offensive or defensive strategy?
• Top 10 lessons gleaned from case proceedings to date and implications; and
• Discovery and estoppel implications.

While there is no cost to participate in the program, pre-registration is required.  Those interested in attending the webinar can register here.

The GAO Issues a Report on Patent Litigation Trends -- It Turns Out that the Sky Is Not Falling

By Andrew Williams --

As we have previously reported, the patent system is under attack, and has been for quite some time.  Generally, these attacks either begin with the assumption that the patent system is "broken," or that conclusion is reached after a review of anecdotal accounts of alleged patent abuses.  Rarely are these attacks supported by any actual numbers, and there has been a complete dearth of scientific or statistically based studies to support them.  Perhaps not coincidently, when passing the America Invents Act ("the AIA"), Congress attempted to rectify this situation by tasking the GAO (Governmental Accountability Office) to conduct a study of the consequences of litigation by non-practicing entities or patent monetization entities ("PMEs") (referred to more derogatorily in the mainstream press as "Patent Trolls").  The resulting report, entitled "Intellectual Property: Assessing Factors that Affect Patent Infringement Litigation Could Help Improve Patent Quality" ("GAO Report"), was sent to the congressional committees on August 22, 2013.  The Report itself contains some observations regarding the increase in patent litigation, some possible suggestions explaining these observations, and one recommendation:

We are recommending that the Secretary of Commerce direct the Director of PTO to consider examining trends in patent infringement litigation, including the types of patents and issues in dispute, and to consider linking this information to internal data on patent examination to improve the quality of issued patents and the patent examination process.

GAO Report, p. 46.  Even though this was an ambitious report, the GAO was upfront with the limitations of its research.  Indeed, the Report noted that the Comptroller General sent a letter to the chairs and ranking members of these congressional committees before the passage of the AIA, informing them that reliable data was either not already available or could not be obtained.  See id., p. 4 n.10.  Nevertheless, far from concluding that the patent system was "broken," the conclusions actually reached by the GAO suggest that even though there may have recently been an increase in low-quality patents, particularly related to software, it is not a cause for alarm.  In fact, the GAO noted trends in both the federal courts and the Patent Office that are already seeking to correct these perceived problems.

As background on the Report, section 34 of the AIA charges the Comptroller General to conduct a study that should include the following information:

(1)    The annual volume of litigation described in subsection (a) over the 20-year period ending on the date of the enactment of this act.

(2)    The volume of cases comprising such litigation that are found to be without merit after judicial review.

(3)    The impacts of such litigation on the time required to resolve patent claims.

(4)    The estimated costs, including the estimated cost of defense, associated with such ligation for patent holders, patent licensors, patent licensees, and inventors, and for users of alternate or competing innovations.

(5)    The economic impact of such litigation on the economy of the United States, including the impact on inventors, job creation, employers, employees, and consumers.

(6)    The benefit to commerce, if any, supplied by non-practicing entities or patent assertion entities that prosecute such litigation.

AIA, § 34(b).  Because of the aforementioned concerns regarding the existence (or lack thereof) of reliable data, the GAO reinterpreted the objectives of its study to be:

(1)    What is known about the volume and characteristics of recent patent litigation activity;

(2)    the views of stakeholders knowledgeable in patent litigation on what is known about the key factors that have contributed to recent patent litigation;

(3)    what developments in the judicial system may affect patent litigation; and

(4)    what actions, if any, has PTO recently taken that may affect patent litigation in the future.

GAO Report, p. 4.  This deviation is likely to draw criticisms that the GAO did not actually conduct the study they were tasked to perform.  However, in response to the GAO's previously noted concerns, Senator Leahy stated on the record that any resulting report should include any limitations on the data and methodology used.  See id., p. 4, n.10.  The GAO took this opening to develop its own objectives for the Report, which it believed were consistent with these noted limitations.  Id.

The data that the GAO used to assess recent patent litigation was obtained from Lex Machina, a firm that collects such data.  The Report indicated that Lex Machina used all data for patent infringement lawsuits filed between 2000 and 2011, and also selected a random, generalizable sample of 500 lawsuits -- 100 per year from 2007 to 2011.  This sample size allowed the GAO to make conclusions regarding each of these years with a margin of error of ± 10 percentage points for any particular year, but ± 5 percentage points for all of the years.  The GAO also used data obtained from speaking with 44 stakeholders, which included 10 representatives from operating companies who had been sued in recent years (including representatives from software, computer hardware, retailers, and pharmaceutical industries); 8 representatives from PMEs that had regularly sued others; 14 legal commentators, economists, and consultants; representatives from 2 universities, 2 patent brokers, 4 VCs, and 4 individual inventors.  The GAO clearly attempted to solicit the opinions of a representative cross-section of stakeholders.  Nevertheless, any results stemming from these interviews must be viewed with caution because of the size of the sample was necessarily small, and any data obtained is inherently limited by the biases of the particular stakeholders that were consulted.

Perhaps the most interesting results, and likely the most reliable, came from the GAO's analysis of the Lex Machina data.  The GAO found that patent lawsuits fluctuated slightly between 2000 and 2010, but in 2011 there was a 31% increase.  Contrary to the conventional wisdom, however, the GAO found that it was operating companies, not PMEs, that brought the majority of patent infringement lawsuits in the 2007 and 2011 timeframe.  See GAO Report, p. 17.  In fact, in that timeframe, PMEs and likely PMEs were found to have only brought 19 percent the studied lawsuits.  This number does appear to be increasing, with PMEs being found to be responsible for 24 percent of the lawsuits in 2011, but the Report did note that this increase was not statistically significant.  Perhaps the common perception regarding PMEs stems from the fact that they tended to sue more defendants per suit than operating companies.  For example, between 2007 and 2011, operating companies sued on average 1.9 defendants per suit, whereas for PMEs, the number was closer to 4.1 defendants on average.  In fact, the GAO found that PMEs in this timeframe had sued close to 1/3 of all defendants.  The GAO did attribute the increase in patent litigation to the type of patents, and not the entities brining suit.  In the 2007 to 2011 timeframe, 46% of all lawsuits involved software-related patents, with 64% of all defendants facing such suits.  Unfortunately, the GAO was not able to independently determine a cost for all of this litigation, either to the parties directly or to the industries involved.  Moreover, the Report noted that it was limited to cases that had been litigated, and therefore they were unable to determine the cost of patent assertion that occurred outside of the court system.

As for the remainder of the Report, even though the results of the stakeholder interviews should be viewed with caution, the observations and conclusions are informative.  There were three key factors identified that have likely contributed to the increase in recent patent infringement lawsuits:

(1)    unclear and overly broad patents;

(2)    the potential for disproportionately large damage awards; and

(3)    the increasing recognition that patents are a valuable asset.

GAO Report, p. 28.  The first factor relates to the alleged prevalence of low-quality patents.  This view was predominately related to software-related patents.  The Report identified several reasons why stakeholders believed that these software patents were overly broad.  First, the lack of clear terminology in the computer software industry has resulted in the use of unclear terminology in software patents.  Second, the use of functional language in such patents has allowed the patent owners in these industries to claim that their patents not only cover the small improvement described, but claim that they cover entire technologies or potential future technologies.  Third, even though patent infringement is strict liability (being unaware of a patent is not a defense to infringement), the presence of such broad patents results in more infringers that had no intent to so infringe.  Relatedly, some stakeholders pointed out that the sheer number of patents makes it difficult to search for those that might be relevant to a particular technology they are developing.  Also, even if the relevant patents are identified, it can be difficult to identify the owners, because the Patent Office does not currently require notification of changes in ownership.  Interestingly, even though some of the stakeholders interviewed blamed PMEs for the rise in patent infringement litigation, others did note that it was likely the prevalence of low quality patents that played a bigger factor.

The GAO Report did identify several trends that may have a positive impact on the identified increase in patent litigation.  First, the Report noted that the federal court system is implementing new initiatives to handle patent cases.  For example, in January 2011, Congress established a pilot program in certain districts to encourage expertise among district court judges.  So far, 14 federal districts have been designated to participate in this 10-year pilot program.  In addition, in September 2011, the Advisory Council for the Federal Circuit issued a model order to address e-discovery issues targeted to patent cases.  It is too early to tell, however, what impact these e-discovery rules will have.  Finally, the case law is evolving, and as a result could address some of these problems.  The Report highlighted recent decisions about what constitutes patentable subject matter, or what is required to satisfy the obviousness and definiteness requirements.  The Report noted that such decision could help combat the identified overly-broad and ill-defined patents.

The Report also noted that the Patent Office has taken steps to improve patent quality.  For example, in February 2011, the Patent Office issued supplemental guidelines related to the definiteness requirement.  These guidelines specifically addressed the examination of claims with functional language.  Also, in November 2011, the Patent Office began working with the software industry to address the issue of non-uniform terminology in software related patents.  In addition, the Office launched a new patent classification system in January 2013 called the Cooperative Patent Classification (CPC).  Finally, the Report noted that the Patent Office has been working to solve the issue of patent ownership transparency.  Of course, all of these initiatives are in addition to the Patent Office's implementation of the post-grant review proceedings that are mandated by the AIA.

As indicated at the outset, the only recommendation included in the Report was directed to the Patent Office.  Before the Report was sent to the congressional committees, the GAO sent a copy to the Patent Office to review.  Appendix II of the Report is a letter from Acting Under Secretary and Acting Director Teresa Stanek Rea to the GAO that commends them for their efforts, and concurs with the recommendation.  Specifically, the Patent Office's response to the recommendation was:

The USPTO appreciates GAO's recommendation.  The USPTO currently uses information relating to cases involved in patent litigation, and agrees that it would be appropriate to consider making better use of such information by examining trends in patent infringement litigation.  The USPTO also agrees that as part of its ongoing effort to improve the quality of issued patents and the patent examination process, it would be appropriate to consider linking trends in patent litigation to internal data on patent examination.

GAO Report, App. II.  Perhaps this recommendation, along with all of the identified initiatives, will help improve the quality of software patents, and as a result help to restore some faith in the U.S. patent system.

Myriad Moves to Dismiss Ambry's Antitrust Counterclaims on Noerr-Pennington Doctrine

By Kevin E. Noonan --

The Supreme Court, in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), has in recent years focused the requirements for pleadings under the Federal Rules of Civil Procedure and, concoimitantly, increased the scope of the bases a party can argue to dismiss a claim or counterclaim under Fed. R. Civ. Pro. 12(b)(6) for failure to state a legally cognizable claim.  In the latest development in the Myriad Genetics v. Ambry Genetics case, Myriad argues that this legal precedent, as well as the principles first enunciated by the Supreme Court in Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961), and Mine Workers v. Pennington, 381 U.S. 657 (1965) (known as the Noerr-Pennington doctrine), preclude Ambry from pursuing its counterclaims that Myriad violated Sections 1 and 2 of the Sherman Antitrust Act in bringing suit on several of its BRCA gene genetic diagnostics patents (see Myriad's Motion to Dismiss Antitrust Counterclaims).

Earlier this summer, Myriad sued Ambry for patent infringement for offering genetic diagnostic tests (including its BRCA1, BRCA2, BRCAPlus, BreastNext, OvaNext, and CancerNext products) that allegedly infringed claims of U.S. Patent Nos. 5,654,155; 5,709,999; 5,747,282; 5,750,400; 5,753,441; 5,837,492; 6,033,857; 6,951,721; and 7,250,497 (see "Myriad Genetics Files Suit Against Ambry Genetics for Genetic Diagnostic Testing of BRCA Genes").  Ambry answered, and in addition to denying Myriad's allegations asserted as affirmative defenses that Myriad's suit amounted to violations of the Sherman Act (see "Ambry Responds to Myriad Lawsuit").  In its counterclaims, Ambry asserted the following allegations in support of its Sherman Act allegations:

• Myriad is maintaining its monopoly in violation of the antitrust laws through "bad faith" enforcement of its patents,

• Myriad eschews considerations of affordability, test accuracy and recommendations for genetic testing,

• There exists significant opposition to Myriad's business model of patenting gene sequences and establishing a private database, and

• Myriad is aware that its asserted claims on BCRA1 and BCRA2 genes are invalid under recent Supreme Court and Federal Circuit cases.

Specifically, Count 1 of Ambry's counterclaims is brought under Section 2 of the Sherman Antitrust Act (against Myriad only).  According to this counterclaim:

126.  Myriad is willfully maintaining its monopoly through exclusionary conduct as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.  Myriad seeks to maintain its monopoly position through various anticompetitive conducts described above, including through the bad faith enforcement of its facially invalid patents.

127.  Myriad was aware before filing its Complaint in this action that the claims it was asserting are invalid per Myriad and Prometheus.

128.  Through its exclusionary and anticompetitive conduct, Myriad has acquired and maintained its monopoly in the relevant market for genetic testing for patients seeking analysis of their full BRCA1 and BRCA2 gene sequences.  Myriad has operated in this manner free from competition because of the high barriers to entry that exist in the market, including Myriad's invalid patents, the technological know-how to design and run genetic tests, and the actions of Myriad's employees.

Count 2 is brought under the Sherman Act for "attempted" monopolization for substantially the same market behavior, Ambry alleging that Myriad acted "with a specific intent to monopolize the relevant market through the assertion of facially invalid patent claims and the anticompetitive conduct of its employees."

Significantly, Ambry did not expressly assert that the patents were obtained through fraud, or that the litigation was brought as a sham, but rather that the effects of Myriad's assertion of patent claims Ambry asserts are invalid under recent Federal Circuit or Supreme Court precedent should incur antitrust liability.  This failure to allege fraud or sham litigation, as well as Myriad's disagreement with Ambry's characterization of the scope of judicial opinions on its patents, forms the basis of its motion to dismiss.  In its argument, Myriad first distinguishes pled facts, which are "accepted as true and viewed in the light most favorable to Defendant as the nonmoving party," citing 1-800 Contacts, Inc. v. Memorial Eye, P.A., Case No. 2:08-CV-983, 2010 WL 988524, at *2 (D. Utah Mar. 15, 2010), and legal conclusions, which are not.  Motions to dismiss are properly evaluated on the grounds that the asserted claim is "legally sufficient" and "plausible on its face," citing Iqbal.  Under the Iqbal standard, "a claim is facially plausible 'when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'"  Iqbal, 556 U.S. at 678.

Having set out this standard, Myriad then argues that its claims are immune from antitrust liability under the Noerr-Pennington doctrine, which immunizes actions constituting a petition to the government for redress of grievances.  Myriad's claims do not fall under the limited exceptions to the doctrine, according to Myriad, because they are not "objectively baseless" and the litigation is neither a sham nor an attempt to enforce patents obtained by fraud.  In particular, Myriad cites to cases, such as Asahi Glass Co., Ltd. v. Pentech Pharmaceuticals, Inc., 289 F. Supp. 2d 986, 993 (N.D. Ill. 2003), where courts have dismissed sham litigation allegations because "efforts to commercialize and/or enforce issued U.S. patents do not give rise to a claim of sham litigation absent unusual circumstances such as fraud or known invalidity:

A firm that has received a patent from the patent office . . . and thus enjoys the presumption of validity that attaches to an issued patent, is entitled to defend the patent's validity in court, to sue alleged infringers, and to settle with them, whatever its private doubts, unless a neutral observer would reasonably think either that the patent was almost certain to be declared invalid, or the defendants were almost certain to be found not to have infringed it, if the suit went to judgment.  It is not "bad faith" to assert patent rights that one is not certain will be upheld in a suit for infringement pressed to judgment and to settle the suit to avoid risking the loss of the rights.  No one can be certain that he will prevail in a patent suit.

(emphasis added in opinion).  Myriad asserts that its infringement allegations are "more than colorable" and that they are "substantially likely to prevail on [its] claim."

Expanding on this argument, Myriad argues that only the "extraordinary circumstances" of sham litigation is enough to vitiate Noerr-Pennington immunity.  However, mere allegations that litigation is a sham is not sufficient; rather, Myriad argues that the Supreme Court established a two-prong test for establishing that litigation is a sham, in Prof'l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 62 (1993) (abbreviated as "PREI" in Myriad's brief).  These prongs constitute an "objective" component, established by successfully challenging the legal viability of a claim, and a "subjective" component, based on the lawsuit's "economic viability" according to Myriad.  The "objectively baseless" standard requires a showing that "no reasonable litigant could realistically expect success on the merits" and that "[i]f an objective litigant could conclude that the suit is reasonably calculated to elicit a favorable outcome, the suit is immunized under Noerr, and an antitrust claim premised on the sham exception must fail," as this test has been applied, inter alia, in Bio Technology General Corp. v. Genentech, Inc., 267 F.3d 1325, 1333 (Fed. Cir. 2001); Cornucopia Prod., LLC v. Dyson, Inc., 881 F.Supp.2d 1086, 1102-03 (D. Ariz. July 27, 2012); Avery Dennison Corp. v. Continental Datalabel, Inc., Case No. 10c2744, 2010 WL 4932666, at *5-6 (N.D. Ill. Nov. 30, 2010), and Asahi Glass Co.

The existence of "probable cause" (of prevailing) is enough to defeat the objective prong of the standard, Myriad asserts, citing PREI ("The existence of probable cause to institute legal proceedings precludes a finding that an antitrust defendant has engaged in sham litigation . . . [and] irrefutably demonstrates that an antitrust plaintiff has not proved the objective prong of the sham exception.").  Satisfaction of this standard does not require certainty but rather "a reasonable belief that there is a chance that a claim may be held valid upon adjudication" which will be sufficient if the action is "one where 'a similarly situated reasonable litigant could have perceived some likelihood of success' [] "even in the absence of supporting authority where the action is 'based on an objectively good faith argument for the extension, modification, or reversal of existing law.'"

Applying these standards, Myriad argues that Ambry has not alleged, nor can Ambry "plausibly allege" that Myriad's suit is objectively baseless.  This argument is based on the parties' different interpretations of the Federal Circuit and Supreme Court opinions in AMP v. Myriad Genetics.  According to Myriad, "only one of the patent claims at issue in AMP -- claim 6 of U.S. Patent No. 5,747,282 -- is asserted against Ambry in this case, and that claim was upheld by the Supreme Court."  In addition, that claim was considered by the Federal Circuit on remand in view of the Supreme Court's decision in Mayo v. Prometheus and the Court found that this claim was "patent-eligible [] under §101 [and that] Mayo does not change that result."  Further, Myriad argues that the Supreme Court held that "all claims directed to 'cDNA' are patentable (an assertion that is at the least open to interpretation) and that the Court "specifically referenced claim 6 (of the '282 patent) with regard to patent eligibility as reciting cDNA.

With this background, Myriad then argues that "[t]o motion to dismiss, Ambry must allege sufficient facts to support its claim that it was objectively unreasonable for Myriad to have asserted claim 6 of the '282 Patent and other similar such claims in this lawsuit despite the fact that claim 6 was upheld by the Supreme Court and the Federal Circuit (twice)" which it cannot do because "'so long as at least one claim in the lawsuit has objective merit,' a lawsuit will not be deemed a sham," citing Trustees of Univ. of Penn. v. St. Jude Children's Research Hosp., Civil Action No. 12-4122, 2013 WL 1499518, at *12, __ F.Supp.2d __ (E.D. Penn. Apr. 12, 2013).  This is also true for the other claims Myriad asserts because they were duly issued by the U.S. Patent and Trademark Office and thus are entitled to a presumption of validity and were not challenged by the plaintiffs in the AMP litigation (and thus not invalidated by the Court).  And, in a footnote, Myriad cites the portion of the Court's Myriad opinion where Justice Thomas states that "this case does not involve patents on new applications of knowledge about the BRCA1 and BRCA2 genes.  Judge Bryson [of the Federal Circuit] aptly noted that, '[a]s the first party with knowledge of the [BRCA1 and BRCA2] sequences, Myriad was in an excellent position to claim applications of that knowledge.  Many of its unchallenged claims are limited to such applications.'"  AMP, 133 S.Ct. at 2120 (citing Ass'n for Molecular Pathology, 689 F. 3d at 1349)."  There is also no basis for the District Court to find Myriad's allegations on its remaining claims to be objectively baseless because, according to Myriad, the Federal Circuit had the opportunity to invalidate similar claims post-Mayo and did not.  Specifically, Myriad cites the second Federal Circuit opinion in the AMP v. Myriad case where the Court stated that:

[P]erforming operations, even known types of steps, on, or to create novel, i.e., transformed subject matter is the stuff of which most process or method invention consists.  . . .  Thus, once one has determined that a claimed composition of matter is patent-eligible subject matter, applying various known types of procedures to it is not merely applying conventional steps to a law of nature.

Ass'n for Molecular Pathology, 689 F. 3d at 1349 (emphasis added).  In summary, Myriad argues that:

The patent claims asserted by Plaintiffs in this action cover either synthetically made compositions of matter -- namely, specially-engineered synthetic DNA synthesized in a laboratory based upon knowledge about the BRCA1 and BRCA2 genes -- or methods of using such synthetic compositions, the patentability of which is expressly supported by Supreme Court and Federal Circuit authority.  While reasonable minds may be able to differ over the precise parameters of these decisions in an evolving area of law, labeling either side's view on such issues as "bad faith," "objectively baseless," or a "sham" is unsustainable.  Because Ambry's antitrust counterclaims are premised on just such facially implausible allegations, they are barred by Noerr-Pennington and should be dismissed.

This being district court litigation, it can be expected that the parties will continue to pursue procedural and substantive advantages in pressing their claims and counterclaims.  This case, and the issues surrounding patent eligibility of generic diagnostic testing, is not only far from over but it is only beginning, once again making overstated claims of "victory" by the opponents of gene patenting pathetically premature.

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

• "Amici Submit Brief in Support of Ambry Genetics and Gene by Gene," August 27, 2013
• "Ambry Responds to Myriad Lawsuit," August 7, 2013
• " Why Does Myriad Think It Can Win BRCA Gene Lawsuits?" July 30, 2013
• "Myriad Genetics Files Infringement Suit Against Gene by Gene for Genetic Diagnostic Testing of BRCA Genes," July 10, 2013
• "Myriad Genetics Files Suit Against Ambry Genetics for Genetic Diagnostic Testing of BRCA Genes," July 9, 2013
• "Association for Molecular Pathology v. Myriad Genetics, Inc. (2013)," June 13, 2013
• "Supreme Court Issues Decision in AMP v. Myriad," June 13, 2013

Amici Submit Brief in Support of Ambry Genetics and Gene by Gene

By Donald Zuhn --

Last week, the American Civil Liberties Union (ACLU), ACLU of Utah Foundation, Inc., Public Patent Foundation (PUBPAT), Association for Molecular Pathology (AMP), Breast Cancer Action, and AARP submitted an amici curiae brief in two infringement actions brought by Myriad Genetics, Inc. (and the University of Utah Research Foundation, Trustees of the University of Pennsylvania, HSC Research and Development Limited Partnership, and Endorecherche, Inc.) against Ambry Genetics Corp. and Gene by Gene, Ltd.  The amici brief was submitted in support of Ambry Genetics and Gene by Gene, which have opposed Myriad's motion for a preliminary injunction.  The brief notes that the ACLU and PUBPAT represented several individual and organizational plaintiffs, including fellow amici AMP and Breast Cancer Action, in Association for Molecular Pathology v. Myriad Genetics, Inc., where the Supreme Court held that a naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated.  Amici indicate that as a result of their participation in AMP v. Myriad, they are "well-positioned to inform this Court about the issues raised and decided in the AMP litigation and the public interest at stake in invalidating patents that create monopolies on genetic information."

As the brief notes, in AMP v. Myriad, several of the amici challenged fifteen claims in seven of Myriad's patents because Myriad had asserted those claims when sending cease-and-desist letters to other laboratories that were conducting genetic testing, and that "[t]he decision to focus on these claims was by no means a concession that any of Myriad's other claims is valid."  The brief also notes that the fifteen challenged claims can be subdivided into three groups:  nine claims directed to "isolated DNA," five claims directed to methods of screening BRCA1 or BRCA2 genes, and one claim directed to a method of screening potential therapeutics.  Amici point out that only the isolated DNA claims were before the Supreme Court, and as a result, "[t]he Federal Circuit's affirmance of the district court judgment striking the five method claims therefore stands as the law of the case, as does its ruling on the other method claim."

The brief indicates that Myriad has asserted six method claims and four primer claims in its motion for a preliminary injunction enjoining Ambry Genetics and Gene by Gene.  Noting that the asserted method claims all involve comparing a sequence from a patient sample to a reference sequence, the brief first points to representative claim 8 of U.S. Patent No. 5,753,441, which recites:

The method of claim 1 wherein a germline nucleic acid sequence is compared by amplifying all or part of a BRCA1 gene from said sample using a set of primers to produce amplified nucleic acids and sequencing the amplified nucleic acids.

The brief then sets forth claim 1 of the '441 patent, from which claim 8 depends, which recites:

A method for screening germline of a human subject for an alteration of a BRCA1 gene which comprises comparing germline sequence of a BRCA1 gene or BRCA1 RNA from a tissue sample from said subject or a sequence of BRCA1 cDNA made from mRNA from said sample with germline sequences of wild-type BRCA1 gene, wild-type BRCA1 RNA or wild-type BRCA1 cDNA, wherein a difference in the sequence of the BRCA1 gene, BRCA1 RNA or BRCA1 cDNA of the subject from wild-type indicates an alteration in the BRCA1 gene in said subject.

The brief then reminds the District Court that claim 1 was invalidated by the Federal Circuit in AMP v. Myriad, and suggests that "the question presented to this Court is whether a preliminary injunction should issue based on method claims that add routine, additional steps -- such as 'amplifying' using an unspecified set of primers and 'sequencing' -- to what is undoubtedly unpatentable subject matter."

In laying out their argument, amici contend that "[d]espite the unanimous rulings [by the Supreme Court] in Mayo and AMP, Myriad continues to aggressively defend its monopoly on examining the BRCA genes, pointing to patent claims that were not the subject of the previous suit but are clearly invalid under those decisions and the Federal Circuit's earlier ruling."  According to amici, the claims being asserted by Myriad are "clearly invalid" because they only add "routine, data-gathering steps such as 'amplifying' and 'sequencing'."

In discussing the impact of the impact of the Supreme Court's decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., amici explain that "Mayo described two key factors in determining whether a method is patent-eligible:  whether it is based on an inventive concept, and whether the patent ties up the use of the underlying natural phenomena," and conclude that the asserted claims "fail both tests."  With respect to the first test, amici argue that "the method here is even less inventive than the methods set out in Prometheus' claims [because] Myriad's method claim assesses pure biological facts that do not depend on the administration of a man-made drug for their existence."  As for the second test, amici argue that:

The Court's decision on this motion will also affect the ability to engage in basic scientific activities regardless of whether the laboratory professional is doing so for the purpose of providing breast and ovarian cancer risk testing for patients.  The patent claims that Myriad is asserting are not limited to that context.  Any scientist who engages in the basic steps of amplifying part of the BRCA1 gene and sequencing the amplified segment as part of a research study would violate these claims.  As a consequence, these patents prevent any scientist from examining or understanding the underlying law of nature -- whether a particular BRCA1 gene contains an alteration from the wild-type -- and using that law of nature in any way.

Amici also argue that the granting of a preliminary injunction would violate the First Amendment and Patent Clause of the U.S. Constitution by conferring upon Myriad exclusive control over a body of knowledge.  In particular, the brief contends that Myriad has used its exclusive rights "to amass an enormous amount of information critical to the health of every American," and that Myriad "refuses to allow others to obtain the information themselves by performing the basic methods at issue in this litigation, or to share the information with the medical and scientific communities."  Amici argue that "[t]he claims thus give entire control over a body of knowledge and over pure information to Myriad."

Amici further argue that a preliminary injunction would harm the public interest because "an injunction would allow Myriad to continue to impede our acquisition of greater knowledge about the BRCA1 and BRCA2 genes."  The brief again criticizes Myriad for refusing to share its BRCA1 and BRCA2 data with the scientific community, contending that "Myriad's conduct flies in the face of the professional ethical standards set out by the American Medical Association, which calls on laboratories, researchers and providers to publicly share data on genetic variants."  The brief concludes by suggesting that the District Court's decision on the preliminary injunction motions will "impact whether or not patients and their physicians and genetic counselors have the option of seeking testing from the numerous laboratories that are fully capable and willing to provide clinical testing of these genes and whether scientists can freely engage in research without fear of liability."

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

• " Why Does Myriad Think It Can Win BRCA Gene Lawsuits?" July 30, 2013
• "Myriad Genetics Files Infringement Suit Against Gene by Gene for Genetic Diagnostic Testing of BRCA Genes," July 10, 2013
• "Myriad Genetics Files Suit Against Ambry Genetics for Genetic Diagnostic Testing of BRCA Genes," July 9, 2013
• "Association for Molecular Pathology v. Myriad Genetics, Inc. (2013)," June 13, 2013
• "Supreme Court Issues Decision in AMP v. Myriad," June 13, 2013

White Paper Asserts That Existing Trade Agreements Provide No Data Exclusivity for Biologics

By Donald Zuhn --

In a white paper released earlier this month, Professor Brook Baker of the Northeastern University School of Law argues that current trade agreements do not provide data exclusivity for biologics, and therefore, that the twelve countries negotiating the Trans-Pacific Partnership Agreement (TPP) "can and should apply their minds to potential costs of treaty-mandated biologic exclusivity."  In determining that the data exclusivity provisions of existing trade agreements do not apply to biologics, Prof. Baker (at right) reviewed the North American Free Trade Agreement (NAFTA), which applies to the U.S., Mexico, and Canada, the United States-Peru Free Trade Agreement (US-Peru FTA), the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA), the Korea-United States Free Trade Agreement (KORUS), and the United States-Singapore Free Trade Agreement (US-Singapore FTA).  With the exception of the US-Singapore FTA, which Prof. Baker found to be ambiguous with respect to coverage, all of the other treaties contained data exclusivity provisions that applied only to pharmaceuticals involving new chemical entities (traditional small-molecule, chemically synthesized drugs), and not to pharmaceuticals that do not involve new chemical entities (biologics).

According to the white paper, the absence of data exclusivity provisions in these trade agreements (with the possible exception of the US-Singapore FTA) is significant because the Biotechnology Industry Organization (BIO) and United States Trade Representative (USTR) "want to have it both ways."  On the one hand, they:

[A]rgue repeatedly that biologics are different . . . , that they entail different therapeutic risks, that they are not protected by patents to the same extent as small-molecule medicines, that the research, development, registration, and manufacture of biologics all entail greater uncertainties, and thus that the bio-tech industry need different provisions on data/market exclusivity than that provided with respect to chemistry-based pharmaceutical right holders."

On the other hand, however, they argue that TPP negotiators need not worry about the U.S. proposal for a 12-year data exclusivity period for biologics because some of the countries involved in the negotiations "have already indirectly agreed to data exclusivity on biologics in previously trade agreements."  The white paper concludes that such an argument is "without merit."

Notwithstanding the paper's conclusion that current trade agreements do not provide data exclusivity for biologics, and despite acknowledging that "[t]reating biologics differently from traditional small-molecule, chemically synthesized products makes a lot of sense," Prof. Baker contends that the 12-year exclusivity period provided in the Biologics Price Competition and Innovation Act (BPCIA) is "excessive."  In particular, he advises TPP negotiators that they might want to "consider alerting the U.S. and its public to [the] fact that twelve years of data exclusivity for biologics in the TPP would bind the hands of Congress in the future -- it would lock-in an excessive period of data exclusivity through secret, closed-door negotiations, even while the Obama Administration and certain members of Congress are reconsidering wisdom of the existing legislation," adding that "[d]ata exclusivity for biologics, especially extra-long data exclusivity, is a fool's gamble."  The paper notes that the U.S. is intead expected to propose that a 12-year data exclusivity period for biologics be incorporated into the TPP.

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

• "BIO Reiterates Support for 12-Year Data Exclusivity Period for Biologics," August 20, 2013
• "Senators Back 12-Year Data Exclusivity Period for Biosimilars and President Obama (Once Again) Does Not," May 9, 2013
• "U.S. Negotiators on TPP -- Don't Trade Away the Biopharmaceutical Research Sector," September 30, 2012
• "Senators Support Inclusion of 12-Year Exclusivity Period in Free Trade Agreement," September 12, 2011
• "House Legislators Lobby to Exclude 12-Year Data Exclusivity Period from Free Trade Agreement," August 11, 2011

Court Report

By Sherri Oslick --

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

Purdue Pharmaceutical Products L.P. et al. v. TWi Pharmaceuticals, Inc.
1:13-cv-05999; filed August 22, 2013 in the Northern District of Illinios

• Plainiffs:  Purdue Pharmaceutical Products L.P.; Purdue Pharma L.P.; Transcept Pharmaceuticals, Inc.
• Defendant:  TWi Pharmaceuticals, Inc.

Purdue Pharmaceutical Products L.P. et al. v. TWI Pharmaceuticals, Inc.
2:13-cv-05003; filed August 20, 2013 in the District Court of New Jersey

• Plaintiffs:  Purdue Pharmaceutical Products L.P.; Purdue Pharma L.P.; Transcept Pharmaceuticals, Inc.
• Defendant:  Twi Pharmaceuticals, Inc.

The complaints in these cases are substantially identical.  Infringement of U.S. Patent Nos. 8,242,131 ("Methods of Treating Middle-of-the-Night Insomnia," issued August 14, 2012) and 8,252,809 ("Compositions for Treating Insomnia," issued August 28, 2012) following a Paragraph IV certification as part of TWI's filing of an ANDA to manufacture a generic version of Purdue's Intermezzo® (sublingual zolpidem tartrate, used to treat insomnia when middle-of-the-night awakening is followed by difficulty returning to sleep).  View the New Jersey complaint here.

Life Technologies Corp. et al. v. Rea et al.
1:13-cv-01046; filed August 21, 2013 in the Eastern District of Virginia

• Plaintiffs:  Life Technologies Corp.; Life Technologies (Israel) Ltd.; Applied Biosystems, LLC; Molecular Probes, Inc.
• Defendants:  Teresa Stanek Rea; Office of the General Counsel

Review and correction of the patent term adjustment calculation made by the U.S. Patent and Trademark Office for a series of 36 patents on the basis of improper termination of B-delay at the filing of a Request for Continued Examination.   View the complaint here.

Reckitt Benckiser Pharmaceuticals Inc. et al. v. Par Pharmaceutical Inc. et al.
1:13-cv-01461; filed August 20, 2013 in the District Court of Delaware

• Plaintiffs:  Reckitt Benckiser Pharmaceuticals Inc.; RB Pharmaceuticals Ltd.; MonoSol Rx LLC
• Defendants:  Par Pharmaceutical Inc.; IntelGenX Technologies Corp.; LTS Lohmann Therapy Systems Corp.

Infringement of U.S. Patent Nos. 8,475,832 ("Sublingual and Buccal Film Compositions," issued July 2, 2013) and 8,017,150 ("Polyethylene Oxide-Based Films and Drug Delivery Systems Made Therefrom," issued on September 13, 2011) following a Paragraph IV certification as part of Par's filing of an ANDA to manufacture a generic version of Reckitt Benckiser's Suboxone® (buprenorphine hydrochloride and naloxone hydrochloride sublingual film, used for the maintenance treatment of opioid dependence).  View the complaint here.

Teva Branded Pharmaceutical Products R&D Inc. et al. v. Perrigo Pharmaceuticals Co. et al.
1:13-cv-01441; filed August 16, 2013 in the District Court of Delaware

• Plaintiffs:  Teva Branded Pharmaceutical Products R&D Inc.; Teva Respiratory LLC; Norton (Waterford) Ltd.; Norton Healthcare Ltd.
• Defendants:  Perrigo Pharmaceuticals Co.; Perrigo Co.; Catalent Pharma Solutions LLC

Infringement of U.S. Patent Nos. 7,566,445 ("Medicinal Aerosols and Methods of Delivery Thereof," issued July 28, 2009), 7,105,152 ("Suspension Aerosol Formulations," issued September 12, 2006), 6,446,627 ("Inhaler Dose Counter," issued September 10, 2002), and 8,132,712 ("Metered-Dose Inhaler," issued March 13, 2012) following a Paragraph IV certification as part of Perrigo's filing of an ANDA to manufacture a generic version of Teva's ProAir® HFA Inhalation Aerosol (albuterol sulfate, used for the treatment or prevention of bronchospasm with reversible obstructive airway disease in patients 4 years of age and older and for the prevention of exercise-induced bronchospasm in patients 4 years of age and older).  View the complaint here.

Conference & CLE Calendar

August 28, 2013 - Versata v. SAP and Fresenius v. Baxter: Res Judicata and Collateral Estoppel in Post-grant Proceedings and Concurrent Litigation (Intellectual Property Owners Association) - 2:00 to 3:00 pm (ET)

August 29, 2013 - AIA Impact on Section 102 and Prior Art: Navigating the Expanded Scope of Prior Art and the AIA Exceptions (Strafford) - 1:00 to 2:30 pm (EDT)

September 15-17, 2013 - 41st IPO Annual Meeting (Intellectual Property Owners Association) - Boston, MA

September 16, 2013 - The European Unitary Patent: Strategic Considerations for a New Era (McDonnell Boehnen Hulbert & Berghoff LLP & Nederlandsch Octrooibureau) - Chicago, IL

September 17-18, 2013 - FDA Boot Camp*** (American Conference Institute) - Boston, MA

September 18, 2013 - Conflicts in Patent Prosecution: Avoiding the Ethical Pitfalls Minimizing Risks of Malpractice Liability and Ethics Sanctions (Strafford) - 1:00 to 2:30 pm (EDT)

September 23-24, 2013 - International Congress on Paragraph IV Litigation*** (Momentum) - New York, NY

September 26, 2013 - Supreme Court IP Review (IIT Chicago-Kent College of Law) - Chicago, IL

October 1, 2013 - 2013 Intellectual Property Continuing Legal Education Seminar (DuPont and the Widener University School of Law) - Wilmington, DE

October 3-4, 2013 - Paragraph IV Disputes*** (American Conference Institute) - Chicago, IL

October 15-17, 2013 - Business of Biosimilars*** (Institute for International Research) - Boston, MA

November 4-5, 2013 - FDA Boot Camp Devices Edition*** (American Conference Institute) - Chicago, IL

November 4-5, 2013 - Trade Secrets: Protecting Your Intellectual Capital and Confidential Business Information*** (American Conference Institute) - Chicago, IL

November 17-20, 2013 - Creating and Leveraging Intellectual Property in Developing Countries: A Power Tool for Social and Economic Growth*** (Companies and IP Commission and National IP Management Office of South Africa) - Durban, South Africa

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

IPO Webinar on Versata v. SAP and Fresenius v. Baxter

The Intellectual Property Owners Association (IPO) will offer a one-hour webinar entitled "Versata v. SAP and Fresenius v. Baxter: Res Judicata and Collateral Estoppel in Post-grant Proceedings and Concurrent Litigation" on August 28, 2013 beginning at 2:00 pm (ET).  A panel consisting of Bernard Knight, General Counsel of the U.S. Patent and Trademark Office; Jeffrey Kushan of Sidley Austin; and Scott Daniels of Westerman Hattori Daniels & Adrian will examine what happens when the Patent Trial and Appeal Board (PTAB) and the Federal Circuit come to different conclusions about the same patent at different times.  The panel will also consider the procedural stance of the two named cases, enumerate other conflicting situations that are likely to emerge, and discuss what legal principles will prevail to solve the resulting conundrums.

The registration fee for the webinar is $120 (government and academic rates are available upon request).  Those interested in registering for the webinar can do so here.

ACI FDA Boot Camp Devices Edition

American Conference Institute (ACI) will be holding its FDA Boot Camp Devices Edition conference on November 4-5, 2013 in Chicago, IL.  ACI faculty will help attendees:

• Master the basics of the application and approval processes, including 510(k) clearance and PMAs;
• Navigate the complexities of device regulations;
• Comprehend the structure of the FDA and the roles of the three major agency centers:  CDER, CBER, and CDRH;
• Develop a practical working knowledge of clinical trials and IDEs;
• Learn how devices are classified, monitored, and regulated;
• Recognize the pivotal role of labeling and learn how to avoid misbranding and off label promotion;
• See the importance of cGMPs and QSRs to the post-approval regulatory process; and
• Navigate the protocols of adverse events monitoring, product withdrawals, and recalls.

In particular, ACI's faculty will offer presentations on the following topics:

• The basics: Understanding and working with the FDA -- Jurisdiction, functions, organization, and operations;
• Overview of device regulation;
• Understanding clinical trials and the investigational device exemption (IDE);
• Navigating the 510(k) clearance process;
• Comprehending the premarket approval process (PMA);
• Complying with general post-market controls;
• Understanding FDA enforcement tools, policies, practices, and trends;
• Labeling and promotion;
• Medical device reporting;
• Guidance for navigating recalls and withdrawals; and
• Quality system regulation.

A pre-conference primer on the "Fundamentals of FDA Device Regulatory Law," will be offered on November 4, 2013 from 1:00 to 4:00 pm.  A post-conference master class on "Unique Regulatory Schemes for Specialized Devices: Medical Device Software and Social Media Considerations in Advertising and Promotion" will be offered from 2:00 to 5:00 pm on November 6, 2013.

An agenda for the conference can be found here, and more information regarding the workshop and master class can be found here.  A complete brochure for this conference, including an agenda, detailed descriptions of conference sessions, list of speakers, and registration form can be obtained here.

The registration fee is $2,295 (conference alone), $2,895 (conference and workshop or master class), or $3,295 (conference, workshop, and master class).  Those registering by September 6, 2013 will receive a $300 discount, and those registering by October 4, 2013 will receive a $200 discount.  Patent Docs readers who reference the discount code "PD 200" will receive $200 off the current price tier when registering.  Those interested in registering for the conference can do so here, by e-mailing [email protected], by calling 1-888-224-2480, or by faxing a registration form to 1-877-927-1563.

Patent Docs is a media partner of ACI's FDA Boot Camp Devices Edition conference.

ACI Trade Secrets Conference

American Conference Institute (ACI) will be holding a conference on "Trade Secrets: Protecting Your Intellectual Capital and Confidential Business Information" on November 4-5, 2013 in Chicago, IL.  The conference will allow attendees to:

• Define clearly to all employees what constitutes a trade secret and demonstrate that you have taken substantial measures to protect it;
•  Ensure that the contracts being used account for variances in state law;
•  Minimize the risks of tortious interference claims from the former employer;
•  Pursue criminal penalties as a method of trade secret misappropriation deterrence;
•  Protect overseas entities from computer hacking and trade secret theft; and
•  Secure an employee's hard drive until a computer forensic expert can properly image the hard drive.

In particular, ACI's faculty will offer presentations on the following topics:

• Creating value: Identifying trade secrets that are not the secret sauce -- Best practices for protecting valuable intellectual property;
• Devising a 50-state game plan: Practical strategies for keeping up with changing state laws and navigating conflicting jurisdictions;
• Spotlight on government initiatives: A DOJ led discussion;
• Insulating the company from liability when hiring employees from a competitor;
• The feds are watching: Raising the spectre of criminal liability for trade secret misappropriation;
• Navigating the challenges of the digital workplace: Developing comprehensive bring your own device (BYOD) and social medial policies;
• Developing offensive and defensive strategies in trade secret litigation;
• Moving information across borders: Protecting your IP rights and valuable trade secrets when working in other countries;
• Protecting trade secrets and confidential information during merger & acquisition transactions; and
• Utilizing forensics to capture a trade secrets thief.

In addition, two post-conference master classes will be offered on November 6, 2013.  The first, entitled "Drafting Enforceable Non-Compete & Non-Solicitation Agreements" will take place from 9:00 am to 12:00 pm, and the second, entitled "Employee Training: Developing an Effective Education and Exit Strategy to Protect Confidential Business Records Employee Training/Exit Interview/Pre-Screening Processes" will take place from 1:30 to 4:30 pm.

The agenda for the Trade Secrets conference can be found here.  More information regarding the post-conference master classes can be found here.  A complete brochure for this conference, including an agenda, detailed descriptions of conference sessions, list of speakers, and registration form can be obtained here.

The registration fee for the conference is $2,295 (conference alone), $2,895 (conference and one master class), or $3,295 (conference and two master classes).  Those registering by September 6, 2013 will receive a $300 discount, and those registering by October 4, 2013 will receive a $200 discount.  Patent Docs readers who reference the discount code "PD 200" will receive $200 off the current price tier when registering.  Those interested in registering for the conference can do so here, by e-mailing [email protected], by calling 1-888-224-2480, or by faxing a registration form to 1-877-927-1563.

Patent Docs is a media partner of the Trade Secrets conference.

The FTC Is at It Again

By Kevin E. Noonan --

In a move that will surprise almost no one (except perhaps members of the Supreme Court majority in FTC v. Actavis), the Federal Trade Commission has filed an amicus curiae brief with the District Court of New Jersey in In re Effexot XR Antitrust Litigation.  This time the issue is not that the parties, Wyeth (branded) and Teva (generic) have entered into a reverse payment settlement agreement in their ANDA litigation under the Hatch-Waxman Act.  Rather, the agreement the FTC now objects to involves Wyeth committing not to launch a so-called "authorized generic" form of its branded Effexor XR extended-release product.  As a consequence, Teva will forego entering the market with its generic product for two years, but will enter the market several years before it would otherwise be able to do so.

The FTC makes three arguments:

• The Supreme Court's Actavis controls and the District Court should apply "traditional" antitrust principles under the rule of reason to this agreement.

• The "no authorized generics" agreement as economic effects that will harm consumers.

• These economic effects amount to a restraint on trade that raises the same economic concerns as reverse payments and has an adverse effect on competition.

Ignoring the now standard incendiary language of the brief (replete with references, some of which the Commission gratuitously adds to language from the Court's Actavis opinion, to "monopoly profits" as if we were still living in the days of the oil barons), the FTC's argument comes down to whether the Supreme Court in Actavis banned cash settlement agreements or more generally ruled that settlement agreements in ANDA litigation should always garner antitrust scrutiny.  According to the FTC's brief, the Supreme Court "rejected a legal rule that conferred 'near automatic antitrust immunity' on patent settlements when the alleged anticompetitive restraints do not extend beyond the patent's expiration date."  (It should be noted that the "scope of the patent" test used by the Second, Eleventh, and Federal Circuits, and rejected by the Actavis majority, was significantly more detailed and nuanced than the FTC's characterization of it.)  The Commission in its argument bootstraps the Court's rejection of antitrust immunity for settlement agreements involving "large cash payments" to any exchange of other consideration, thus ignoring the reality that parties don't settle ANDA litigation (or any other kind) without some form of consideration.

One aspect of the agreements under consideration by the District Court is that Teva will get something it couldn't get in litigation:  an agreement that Wyeth will not launch a competitive authorized generic.  But this is just part of the consideration Teva will obtain for dropping its patent challenge, a challenge that represents a much bigger threat to Wyeth than winning the challenge presents for Teva.  That should not make the settlement seem nefarious but, applying the FTC's standards, it is sufficiently suspicious to warrant antitrust scrutiny because it is not limited to the Commission's narrow view of what should be permissible.

While the Commission is correct that the type of licensing agreement at issue in the Effexor case has economic implications, the Court did not decide in Actavis that such considerations were sufficient to raise antitrust scrutiny, and the FTC's position is certainly not mandated by the Court's Actavis opinion.  Indeed, Justice Breyer specifically envisioned that settlements in ANDA litigation would not be barred by his decision:

[T]he fact that a large, unjustified reverse payment risks antitrust liability does not prevent litigating parties from settling their lawsuit.  [ANDA litigation can be settled in] other ways, [] by allowing the generic manufacturer to enter the patentee's market prior to the patent's expiration, without the patentee paying the challenger to stay out prior to that point.

The Court's concern was not with settlements, but with excessive payments:

Where a reverse payment reflects traditional settlement considerations, such as avoided litigation costs or fair value for services, there is not the same concern that a patentee is using its monopoly profits to avoid the risk of patent invalidation or a finding of noninfringement.  In such cases, the parties may have provided for a reverse payment without having sought or brought about [] anticompetitive consequences.

And the Court expressly rejected the FTC's position that reverse payment settlement agreements should be presumptively illegal, stating that "the likelihood of a reverse payment bringing about anticompetitive effects depends upon its size, its scale in relation to the payor's anticipated future litigation costs, its independence from other services for which it might represent payment, and the lack of any other convincing justification."  A fortiorari a settlement that does not involve a large cash settlement should be even less suspect for antitrust purposes.

Such agreements are not, as the FTC alleges in its brief, an attempt to "easily circumvent" the Court's decision in Actavis, but rather are a rational (and predictable) effort to comply with the Court's admonition that ANDA cases be settled in ways that do not involve large cash payments from branded to generic drug companies for dropping their patent challenge.  The extent of the Commission's fixation on preventing transfer of anything of "value" is illustrated by the brief's equation of the licensing agreement here to "gold bullion, stocks or real estate," but that is not what the Court said raised legitimate antitrust concerns in reverse payment settlements of ANDA litigation.  What for the Commission is merely a means of "avoiding" a ban on settlements (that does not exist in the Court's opinion) can be at least equally seen as an agreement that falls within the scope of the "alternative" settlement arrangements that the Court impliedly sanctioned.

There is, apparently, one type of agreement that the Commission would sanction:  where "the parties in Hatch-Waxman patent litigation settle with an agreement that merely sets a date for the generic patent challenger's market entry before the patent expiration date, without more."  If this is what the Commission wanted, it had a ready way to get it:  it could have asked the Court to make this limitation plain and explicit.  Instead, it asked that the Court rule these agreements of any type to be presumptively illegal, a position the Court rejected (and, moreover, in a decision that suggests that settlement agreements of much broader scope should survive antitrust scrutiny).

The Federal Trade Commission, as many expected, cannot be trusted to adopt any reasonable interpretation of the antitrust laws when it comes to applying them in the Hatch-Waxman context.  Despite arguing to the Supreme Court that the problem was reverse payment agreements involving excessive settlement amounts from branded to generic companies, it is clear that the Commission will only be happy when all grounds for settlement in ANDA litigation have been eliminated.  As the Chief Justice warned in dissent in the Actavis case:

The irony of all this is that the majority's decision may very well discourage generics from challenging pharmaceutical patents in the first place.  Patent litigation is costly, time consuming, and uncertain.  . . .  Generics "enter this risky terrain only after careful analysis of the potential gains if they prevail and the potential exposure if they lose."  . . .  Taking the prospect of settlements off the table -- or limiting settlements to an earlier entry date for the generic, which may still be many years in the future -- puts a damper on the generic's expected value going into litigation, and decreases its incentive to sue in the first place.  The majority assures us, with no support, that everything will be okay because the parties can settle by simply negotiating an earlier entry date for the generic drug manufacturer, rather than settling with money.  . . .  But it's a matter of common sense, confirmed by experience, that parties are more likely to settle when they have a broader set of valuable things to trade.  [citations omitted.]

Sadly, the likely outcome of this ideological crusade against any settlement agreements in this type of litigation will be to reduce rather than promote generic drug competition.  When an agency puts on such blinders to practical reality it is hard to understand how they can believe they are acting in the public interest.

University of Utah v. Max-Planck-Gesellschaft zur Forderung der Wiessenschaften e.V. (Fed. Cir. 2013)

By Kevin E. Noonan --

The Federal Circuit, in a split decision, affirmed denial of motions to dismiss on jurisdictional grounds and Federal Court joinder rules in University of Utah v. Max-Planck-Gesellschaft zur Forderung der Wiessenschaften e.V et al., a decision likely to be reviewed by the Supreme Court (if only because the case implicates the Court's original jurisdiction over disputes between the states under Article III of the Constitution).

The case arose as an inventorship dispute over the "Tuschl" patents, U.S. Patent Nos. 7,056,704 and 7,078,196.  The University of Utah ("UUtah") was plaintiff, and defendants included the assignees and licensees of the patents, including the Max-Planck-Gesellschaft zur Forderung der Wiessenschaften e.V., Max-Planck-Innovation GmbH, Whitehead Institute for Biomedical Research, Massachusetts Institute of Technology, Alnylum Pharmaceuticals, Inc., and the University of Massachusetts ("UMass").  As set forth in the Federal Circuit's majority opinion, Dr. Thomas Tuschl, from the University of Massachusetts, filed for and obtained the patents-in-suit.  Dr. Brenda Bass, of the University of Utah, claimed that she disclosed the inventions claimed in the Tuschl patents at professional conferences attended by Dr. Tuschl.  UUtah alleges in the suit that Dr. Bass is the sole or at least a joint inventor and, after the defendants declined to correct inventorship by agreement UUtah filed suit under 35 U.S.C. 256 (as well as various state law claims).

Defendant U Mass argued in a motion to dismiss that the Supreme Court has original jurisdiction because the dispute was between two States (through their Universities), citing Article III, § 2, cl. 2 of the Constitution:  "In all Cases . . . in which a State shall be Party, the [S]upreme Court shall have original Jurisdiction."  In response, UUtah substituted four officials for UMass to avoid the original jurisdiction issue.  UMass then argued the case should be barred by sovereign immunity, and that UMass was an indispensible party (as an assignee).

District Court Judge Patti Saris denied defendants' motions to dismiss and defendants appealed.  The court based its denial of UUtah's original jurisdiction argument under Connecticut ex rel. Blumenthal v. Cahill, 217 F.3d 93, 98 (2d Cir. 2000) because, first, UUtah had amended its complaint to recite university officials rather than Massachusetts, and that correction of inventorship was not a "core sovereign interest" that rose to a dispute between the States.  The District Court also dismissed the argument that UUtah had failed to name UMass as an indispensible party because "neither UMass nor Defendants would be prejudiced by a judgment rendered in UMass's absence because UMass's interests would be adequately represented by the existing defendants, including the Named Officials" and that the remedy -- ordering the U.S. Patent and Trademark Office to correct inventorship -- would provide "adequate relief" with or without UMass.

The Federal Circuit affirmed, in a decision by Judge Reyna joined by Judge Wallach, and a dissent by Judge Moore.  The majority addressed the issues squarely:  whether inventorship disputes involving state university-assigned patents could properly be brought in federal court (instead of the Supreme Court) and whether the suit should be barred under sovereign immunity.  In affirming the District Court, the Federal Circuit majority almost ensured that the Supreme Court will have another opportunity to correct Federal Circuit patent jurisprudence.  Additionally, the majority held that the District Court did not grant defendants' motion to dismiss for failure to join an indispensible party because UMass was not indispensible in the action.

The majority begins its opinion recognizing the distinction between private assignees and the state, which "typically enjoys sovereign immunity."  This immunity does not extend to suits brought by one state against another, however, and States can sue individual citizens of other States without raising sovereign immunity issues with the State in which an individual defendant resides.  This is not the typical case, according to the Court, because there are States in both sides of the dispute.

The defendants raised three issues.  The first is jurisdictional:  according to defendants, the District Court did not have jurisdiction because a dispute between the States implicates the Supreme Court's original (and as noted by the majority, exclusive (28 U.S.C. § 1251(a)) jurisdiction.  This question the majority considers under the law of the regional (here, First) Circuit, which reviews decisions on motions to dismiss de novo.  Second, defendants argue that UMass is entitled to sovereign immunity as an "arm" of the State.  The question of whether Massachusetts has waived its immunity is a question of Federal Circuit law according to the majority, citing Regents of the Univ. of N.M. v. Knight, 321 F.3d 1111, 1124 (Fed. Cir. 2003), which review is also de novo.  Finally, defendants argued that UMass is an indispensible party and UUtah could not bring suit against the four University officials under Fed. R. Civ. Pro. 19(b), a question that the Court says is a matter to regional circuit law that in the First Circuit is decided under an abuse of discretion standard.

Having explicated the procedural niceties, the majority turned to the merits.  On the issue of original jurisdiction, the Court affirmed based on its determination that UMass is not a real party in interest.  Thus, the question for the majority was whether UUtah's suit is against the State of Massachusetts or individuals residing in Massachusetts (where the Supreme Court does not have original or exclusive jurisdiction under § 1251(b)(3)).  Having made this distinction based on the identity of the parties, the majority somewhat incongruously shifts to a discussion on the weight of the merits of the case before them:  "[w]hether original jurisdiction is appropriate depends upon 'the seriousness and dignity of the claim,' whether the 'named parties' have another forum 'where appropriate relief may be had,' and whether the case raises 'serious and important, federalism concerns," citing Illinois v. City of Milwaukee, Wis., 406 U.S. 91, 93-94 (1972); Wyoming v. Oklahoma, 502 U.S. 437, 451 (1992) and Mississippi v. Louisiana, 506 U.S. 73, 77 (1992).  The majority also relies on the Illinois case for the proposition that it is appropriate for them to "look behind the named parties and determine the real party in interest" in making their ruling.  The Supreme Court jurisdictional standard is that the state is "the real, substantial party in interest" wherein judgment in the matter would "operate against" the State and thus "adequate relie[f] cannot be granted without it," citing Pennhurst State School & Hosp. v. Halderman, 465 U.S. 89 (1984); Dugan v. Rank, 372 U.S. 609, 620 (1963); Cunningham v. Macon & Brunswick R. R. Co., 109 U.S. 446, 457 (1883); as well as Illinois.  The opinion also refers to cases where the State has been an indispensible party, not surprisingly under circumstances not before the Court here, as well as cases where the State was not an indispensible party (Illinois again).

Here, the Court asserted that UUtah is an arm of the State of Utah and that UMass is also an arm of the State; accordingly, as originally filed, UUtah's complaint might have implicated the Supreme Court's original and exclusive jurisdiction.  That is not the case before the Court, according to the majority; Utah amended its complaint by naming the four university officials rather than UMass, and thus there are no State defendants before the Court.  Thus the case is governed by § 1251(b)(3), not § 1251(a), and the Supreme Court does not have exclusive jurisdiction.  The mere identity of the named defendants is not sufficient to decide the question, however, as defendants contended that Massachusetts is a real party in interest because UMass's (intellectual) property is at issue and UUtah should not be able to avoid Supreme Court jurisdiction by the procedural gambit of substituting state officials for the State as defendants.  The majority agreed with the District Court that, under Cahill (paradoxically Second, not First, Circuit precedent) as well as "other Supreme Court precedent," the question of whether a State is a real party in interest is whether the question at issue "implicates the State's core sovereign interests" with a focus on "the seriousness and dignity of the claim" in cases that "implicate serious and important concerns of federalism."  Such "core sovereign interests" include "boundary disputes, disputes over water rights, and disputes over contracts between states" from relevant Supreme Court precedent.  (In an interesting twist in view of the likely trajectory of this case, then-Circuit Judge Sotomayor dissented in Cahill, finding that New York State was the real party in interest.)

Nevertheless, the majority applied the rubrics from Cahill in deciding that Massachusetts was not a real party in interest here and thus that the case did not fall under the Supreme Court's original and exclusive jurisdiction under Article III § 2, cl. 2, because even if "the alleged injury was caused by actions specifically authorized by State law," the inventorship issue did not implicate a "core sovereign interest" because the state officials are only defendants under Counts in the complaint directed solely to correcting inventorship.  The majority's reasoning was based on the inventorship issue being personal to the inventors, and because "States cannot be inventors," any question of inventorship is not a "core sovereign interest."  Additionally, the majority asserted that the defendants (and Judge Moore in dissent) "confuse the issue" by implicating ownership into the dispute.  While ownership and inventorship are "closely related," the majority refused to equate (without explanation) State ownership of patent rights with, for example, water rights or other property rights that do implicate "serious and important concerns of federalism" which would implicate a State's "core sovereign interests."  The majority also distinguished the Cahill dissent's reasoning on the grounds that the relief here, correction of inventorship by the PTO, will not compel Massachusetts to act (or not to act); inventorship can be corrected by the PTO without any participation by Massachusetts.  The majority conceded that Massachusetts would be a "proper" party if named but refused to acknowledge that it is an indispensible party because "[w]hile certain of UMass' interests may be 'more or less affected by the decision'" the majority apparently did not think they would be affected enough (applying an unenunciated standard).

The majority rejected the second issue, sovereign immunity, almost summarily: because this is not a suit "by citizens against a State" there was no sovereign immunity issue according to the majority, and thus no basis to reverse the District Court's refusal to dismiss.

Finally, the majority turned to whether Massachusetts is an indispensible party under Fed. R. Civ. Pro. 19(b).  That it would be feasible to join UMass is not the issue (the first prong of the test on whether a district court should dismiss under Rule 19); the issue is whether UMass is an indispensible party.  The majority's decision that it is not is entirely consistent with its reasoning regarding lack of original jurisdiction by the Supreme Court.  Here, the majority set out the four factors used in the First Circuit to decide the question:

(1) the extent to which a judgment rendered in the person's absence might prejudice that person or the existing parties;

(2) the extent to which any prejudice could be lessened or avoided by:

    (A) protective provisions in the judgment; (B) shaping the relief; or
(C) other measures;

(3) whether a judgment rendered in the person's absence would be adequate; and

(4) whether the plaintiff would have an adequate remedy if the action were dismissed for non-joinder.

These factors must be considered because there is "no per se rule that patent owners are automatically indispensable parties -- there is no patent-specific exception to Rule 19(b)" (a position that should garner approval from the Supreme Court if it considers the matter).  The majority held that the District Court did not abuse its discretion in ruling against defendants motion to dismiss, despite the fact that the lower court relied on precedent not from the First but from the Federal Circuit relying on Ninth Circuit law (Dainippon Screen Mfg. Co. v. CFMT, Inc., 142 F.3d 1266 (Fed. Cir. 1998)) because in the majority's view the reasoning in the Dainippon case was consistent with First Circuit law.  In Dainippon, a suit against a wholly owned subsidiary of a named party that was created as a holding company for the patent was permissible without joining the patent-owning subsidiary (over which the court did not have personal jurisdiction) because the subsidiary's interests were adequately represented by the named party.  Here, the majority held that UMass's interests were adequately represented by the other defendants, who had even more to lose (i.e., their exclusive ownership interests in the Tuschl patents) by an adverse judgment than the State.  Also, UMass had "handed sole and exclusive control of this suit over to Alnylam," a named party, so there was little or no prejudice to UMass or Massachusetts.  The prospective judgment, a change of inventorship by the USPTO, could be adequately rendered in the State's absence, and the alternative remedy (the Supreme Court exercising original jurisdiction) is not certain (and according to the majority unlikely).  In the face of these distinctions, the majority held that the District Court did not abuse its discretion in denying defendants' motion to dismiss for failure to join an indispensible party (albeit admonishing the District Court to resolve "fact intensive" questions regarding joinder under the circumstances that prevail when the base returns to the lower court for trial or further proceedings).

Judge Moore filed a vigorous dissent, based on her perception of error in the majority's determination that an inventorship dispute involving patents owned by state universities is not a "controversy between two or more States" and further for failing to hold a patent owner to be an indispensible party.  As to the first question, Judge Moore argued that the District Court lacked jurisdiction in what is at root a dispute between Utah and Massachusetts through their respective administrative arms in their state universities.  Judge Moore disagreed with the majority on the merits but her concerns are more importantly directed to institutional integrity.  Specifically, the question of whether the issues at stake in the litigation are sufficient for the Supreme Court to decide to exercise its original and exclusive jurisdiction is a different question of whether that jurisdiction exists, which to Judge Moore is a question whose answer comes directly from the plain language of the statute (28 U.S.C. § 1251(a)).  Even more important, however, is that whether the Court will exercise its jurisdiction is the prerogative of the Court, and lower courts cannot and should not act as gatekeepers in deciding which questions the Court will be able to consider based on the lower court's perception of whether the question involved a "core sovereign interest."  And the fact that UUtah and Dr. Bass had alternative avenues (such as filing their own application(s) and provoking an interference) is not a sufficient "perceived injustice" to permit the Federal Circuit or any lower court to usurp the Supreme Court's prerogatives regarding the exercise of its original jurisdiction.

Judge Moore also rejected the majority's view that UMass is not an indispensible party, and discredited the majority's conclusion that a change in inventorship for the Tuschl patents would not affect the State's interests.  In her view, the majority erred in straying from the Court's established precedent that patent owners are indispensible parties, and she disagreed with the majority's view that the other defendants can adequately represent the university's interests.  After all, she noted, UMass like many other universities garner considerable revenues from licensing their patents, and a decision by the other parties, for example, to settle by permitting Dr. Bass to be named as a co-inventor (or with even more dire consequences to UMass's interest, as a sole inventor) would negatively impact UMass's ability or opportunity to benefit from patent ownership (at least as against UUtah and its licensees if Dr. Bass is a co-inventor, and as against all its present licensees if Dr. Bass were to be found to be the sole inventor).

The majority's decision, particularly in the face of Judge Moore's dissent is likely to provoke Supreme Court review.  Despite the majority's obeisance to the concept that there is no "patent exception" to Rule 19(b), and thus that patent owners are not always indispensible parties, it is neither unreasonable or unforeseeable that defendants will file a petition for certiorari having a Question Presented along the lines of the following:

Whether the Federal Circuit erred in holding that lower courts are responsible in the first instance for deciding whether the Supreme Court has original and exclusive jurisdiction in disputes between two or more States acting through their state universities.

In view of the Court's history with reviewing Federal Circuit decisions over the past decade, it does not take a Supreme Court scholar to compute the likelihood of the Court granting such a certiorari petition.

University of Utah v. Max-Planck-Gesellschaft zur Forderung der Wiessenschaften e.V. (Fed. Cir. 2013)
Panel:  Circuit Judges Moore, Reyna, and Wallach
Opinion by Circuit Judge Reyna; dissenting opinion by Circuit Judge Moore