Patent Baristas

Robert Ambrogi’s LawSites is running a LawSites Poll: Your Top Legal Blog. Deemed “an experiment”, Robert hopes to use the poll to deal with the flood of law blogs.

Robert wants to know:

What is the one law-related blog you feel you must read as regularly as possible? No fair naming your own. From your responses, I hope to find guidance in deciding which blogs should be on my own must-read list.

I’ll have to give this some thought. How can I narrow down the choices to just one? Check out the site and submit your top blog, using whatever criteria you wish. And remember, it’s Patent Baristas at http://patentba…

Many are asking what will happen if Democrats take control of the House and Senate. While I’m not interested in taking sides, I think that the issue is certainly on everyone’s mind at the moment since it could effect how business is done after the elections. In the end, I think that the issues will effect things very much on a an industry-by- industry, and even a company-by-company, basis. Having said that, it’s clear that one industry with a particular interest in politics is the pharmaceutical industry.

Pharma companies and the pharmaceuticals industry association, PhRMA, have been among those funneling the most money into political campaigns this year. The pharmaceuticals/health products industry has pumped $14,794,226 into election campaigns so far in 2006. A lot of dough but far off the $29,445,451 spent in 2002 (Note: The Bipartisan Campaign Reform Act, enacted after the 2002 elections, bans the national political parties from raising soft money).

According to an analysis done by the New York Times last week, blue chip corporate action committees funneled 67 per cent of their funding to Republican candidates in the first nine months of this year, and 33 per cent to the Democrats. In the first 18 days of October, though, Democrats were getting 43 per cent of all contributions, the biggest last-minute shift from one party to another since 1994. One of the most significant shifts has been made by Pfizer, which until September was giving 67 per cent of its donations to the Republicans, but in October Democrats were in receipt of 59 per cent.

The Washington Times reports that the most visible confrontation between the parties is forming around the Democrats’ push to require the government to use its negotiating power to lower prescription-drug costs for Medicare patients. The 2003 Medicare law prohibits the government from negotiating with companies to lower the price of drugs for beneficiaries. Democrats hope to set up a single drug plan under Medicare that allows the government to negotiate prices. Democrats would then use the savings from lowered prices to close the coverage gap in the drug benefit. Sometimes referred to as the doughnut hole, annual coverage stops once drug costs reach $2,250. Coverage resumes when costs hit $5,100.

Republicans argue that prescription-drug plans are competing with each other to serve Medicare beneficiaries and thereby are lowering drug costs. Many say that price negotiations will not solve Medicare’s financial problems. A Washington Post editorial points out that while the federal health program for veterans uses its purchasing power to secure drugs at prices lower than the average obtained by the private insurers that administer the Medicare benefit, it is not a fair comparison. The veterans’ program keeps prices down partly by delivering three-quarters of its prescriptions by mail. In addition, having the government set drug prices could lead to yet more pharmaceutical lobbyists and campaign spending making the problem of campaign influence worse, not better. Finally, under the current Medicare plan, retirees can choose to pay more for branded medicines or premium services or they choose to save money through lower benefits. Many argue that the current plan hasn’t had enough time to shake out.

Is gridlock the answer?

In the end, no party is going to end up with any strong majority so don’t look for big changes. Besides, many point out that what Wall Street really wants is gridlock. What Wall Street wants is stability and stability and gridlock are synonymous right now. A congress that is constained from acting may be good for everyone.

In Go Medical v. Inmed Corp, the Federal Circuit reviewed the decision of the US District Court for the Northern District of Georgia concerning patent invalidity, trademark infringement and damages awards related to licensing of a patented catheter. The urinary catheter had been licensed to Medical Marketing Group (MMG) by Go Medical. The Federal Circuit, affirming the lower courts findings that the patent was invalid and trademark infringement and damages, reversed the lower court’s award of contract damages, citing misapplication of the Lear doctrine.

In Lear Inc. v. Adkins, 395 U.S. 653 (1969), the Supreme Court held that a licensee was not estopped from challenging the validity of the licensor’s patent. Under the Lear doctrine, as applied by the Federal Circuit in Studiengesellschaft Kohle, MBH v. Shell Oil Co., 112 F.3d 1561 (Fed. Cir. 1997), a licensee will not be relieved from paying royalties until the date the licensee first challenges the validity of the patent. The licensee must first i) actually cease payment of royalties, and ii) provide notice to the licensor that the reason for ceasing payment of royalties is because it has deemed the relevant claims of the patent to be invalid.

The Federal Circuit, in reviewing the district courts opinion, held that the lower court had failed to properly apply this standard. During the course of the agreement between Go Medical and MMG as licensee, Go Medical sued a third party (Bard) for infringement of the patent. The patent was found invalid. Several months after this decision, MMG notified Go Medical that they believed they no longer had a contract because the district court had found the ‘259 patent invalid, and began placing royalty payments “in an escrow account, until such time as the appeal [was] decided.” The district court held that MMG was relieved of the obligation to pay any royalties– not after the date of the letter– but immediately following the finding of patent invalidy during Go’s litigation with the third party. The Federal Circuit held that this application of Lear was in error, and remanded for a recalculation of the contract damages.

The Federal Circuit accused MMG of “trying to have it both ways,” in urging Go Medical to sue Bard from infringement, then benefiting from the later reversal of invalidity. Tthe Federal Circuit also found it significant that while MMG urged Go Medical to sue the third party, MMG failed to file its own declaratory judgment suit to challenge the patent’s validity. Further, Federal Circuit noted that the letter itself failed to state that the reason for ceasing payment of royalties was that the MMG deemed the ‘259 patent invalid. The Court held that, even if the letter had been sufficient to consitutue the requisitre notice under Lear, the district court still erred in finding that Lear relieved MMG from all royalty payments immediately following the judgment of invalidity in the action involving the patent holder and a third party, prior to the letter sent by MMG.

Thus, Go Medical makes clear that a licensor cannot merely look towards litigation with a third party in ceasing royalty payments to a licensor, assuming that a finding of invalidity relieves the duty to pay under a license. Rather, as set forth by Kohle and Go Medical, a licensee is relieved of the royalty payments under Lear only if payment of royalties is actually ceased, and clear notice is given to the licensor stating that the relevant claims are believed invalid. Only from this date can a licensee be relieved of paying royalties under a license.

India’s leading Para IV challenger – Dr. Reddy’s Laboratories (DRL) has finally zeroed down to settle its pending Para IV patent litigation with GlaxoSmithKline (GSK) over the blockbuster anti-migraine drug, Imitrex, generically known as Sumatriptan Succinate which is worth around US $ 890 million in sales in the U.S. market. GSK, under the terms of agreement, has agreed to grant an authorized generic (AG) status to DRL for its Imitrex tablets in the U.S. market which would eventually allow DRL to launch its authorized generic in the last quarter of 2008 ahead of the expiration of the pediatric exclusivity on the U.S. Patent # 5,037,845. After Merck’s blockbuster drugs, Zocor & Proscar, Imitrex is third in a row to fall in DRL expanding authorized generic portfolio. As far as DRL is concerned, it is undoubtly a win situation, both on strategic and financial frontier. This settlement strategically gives DRL an advantage over other generic manufacturers and financially reduces DRL’s legal burden of fighting expensive patent litigations. But what made GSK to go about settling it?

Sumatriptan Succinate and Orange Book Status

Sumatriptan succinate is broadly covered by the U.S. Patent No. 4,816,470 (the genus patent) within the Markush Structural Formula I and in particular claimed by the U.S. 5,037,845 (the species patent). The genus patent was subject to 35 U.S.C. § 156 and received an extension of the patent term for the period of 275 days, extending the original expiration date from March 28, 2006 to December 28, 2006. Both genus and species patents also received additional six months pediatric exclusivity, extending patent validity period till June 28, 2007 (genus patent) and February 06, 2009 (species patent). In addition to genus and species patents, Orange Book also lists three more U.S. patents for pharmaceutical compositions and method of treating migraine running out patent protection from September 2012 to July 26, 2016 (including six months pediatric exclusivity). These patents are as follows.

U.S. Patent # 5,863,559 (the ‘559) directed to a pharmaceutical composition for oral administration comprising a compressed film-coated tablet comprising a tablet core containing 25 to 200mg of 3-[2-(dimethylamino)ethyl]-N-methyl-1H-indole-5-methanesulphonamide succinate (1:1) salt as active ingredient, and a pharmaceutically acceptable carrier or excipient and a film coating on said tablet core wherein the film coating is applied to the tablet core in an amount of from 2 to 5% w/w of the tablet.

U.S. Patent # 6,020,001 (the ‘001 patent) directed to a pharmaceutical composition for oral administration comprising a film-coated tablet containing 3-[1-(dimethylamino)ethyl]-N-methyl-1H-indole-5-methanesulphonamide succinate (1:1) salt as active ingredient, and a pharmaceutically acceptable carrier or excipient.

U.S. Patent # 6,368,627 (the ‘627 patent) directed to a method of treating or prophylactically treating a human suffering from migraine which comprises oral administration of a pharmaceutical composition comprising a film-coated solid dosage form of 3-[2-dimethylamino)ethyl]-N-methyl-1H-indole-5-methanesulfonamide or a pharmaceutically acceptable salt or solvate therefore as active ingredient.

DRL Eyes Sumatriptan!

In December 2003, DRL filed an abbreviated new drug application (ANDA) with U.S. FDA seeking marketing approval for its generic version of Imitrex tablet, along with Para IV certification on four of the five O.B. listed patents for Imitrex tablets. After receiving notification for DRL, GSK subsequently sued DRL and filed patent infringement lawsuit in the U.S. District Court for the Southern District of New York alleging patent infringement of the species patent. Later six other generic companies also filed ANDAs for Imitrex but of those only Cobalt Pharmaceuticals certified Para IV certification for the species patent, challenging its validity. GSK filed infringement suit against Cobalt in the U.S. District Court for the Southern District of New York. In February 2005, GSK also filed a patent infringement suit against Spectrum Pharmaceutical in the U.S. District Court for the District of Delaware, alleging infringement of the species patent. However, Spectrum filed ANDA for marketing approval for sumatriptan injection.

GSK’s Unexpected Move

In the meantime, GSK made a surprising and unexpected move by filing Disclaimer and Dedication with the USPTO for the ‘559, ‘001 and ‘627 patents under 35 U.S.C. § 253 and thereby dedicating to the public the entire term of the said patents. The dedication was filed on August 16, 2004 and subsequently notified in Official Gazette on November 02, 2004.

It is expressly provided under 37 CFR § 1.321(a) that “a patentee owning the whole or any sectional interest in a patent may disclaim any complete claim or claims in a patent. In like manner any patentee may disclaim or dedicate to the public the entire term, or any terminal part of the term, of the patent granted. Such disclaimer is binding upon the grantee and its successors or assigns.” This is furthermore a right that is guaranteed by U.S. patent statute as provided under 35 U.S.C. § 253 that “a patentee, whether of the whole or any sectional interest therein, may, on payment of the fee required by law, make disclaimer of any complete claim, stating therein the extent of his interest in such patent. Such disclaimer shall be in writing, and recorded in the Patent and Trademark Office; and it shall thereafter be considered as part of the original patent to the extent of the interest possessed by the disclaimant and by those claiming under him. In like manner any patentee or applicant may disclaim or dedicate to the public the entire term, or any terminal part of the term, of the patent granted or to be granted.”

GSK also asked the U.S. FDA to delist the ‘559 and ‘627 patents from the Orange Book but the FDA refrained from delisting the said patents in the light of petitions filed by Ranbaxy and Ivax against the delisting of Orange Book listed patents for Simvastatin. Moreover, referring USPTO ‘Patent Maintenance Fees’ section, the ‘627 patent has already expired on April 10, 2006 due to non-payment of maintenance fees.

Who Played Smart Enough?

Considering that GSK already dedicated the ‘559, ‘001 and ‘627 patents to the public under 35 U.S.C. § 253 and likely to run-out patent protection for its species patent in February 06, 2009, it seems to be that GSK has made a smarter move than DRL. By allowing DRL to launch Imitrex as an authorized generic in the last quarter of 2008, GSK has well avoided a DRL attack on the validity of the species patent.

Today’s post comes from Varun Chhonkar, Senior Officer – Patents with J.B. Chemicals & Pharmaceuticals Ltd., Mumbai, India (varun.chhonkar[at]jbcpl.com). © Varun Chhonkar.

After a jury determined that Stratagene infringed on Invitrogen’s U.S. Patent No. 4,981,797 by making and selling its competent E. coli cell products (see earlier note), the court has now entered judgment awarding Invitrogen $16.2 million plus prejudgment interest, as well as reasonable attorney fees to be determined by the court. The judgment included a court-ordered enhancement of the original damages awarded by the jury due to the court’s determination of Stratagene’s willful infringement of Invitrogen’s patent. The court also entered an injunction against further infringement by Stratagene.

The new decision by the United States District Court for the Western District of Texas awarded Invitrogen treble damages, which approximately triples the earlier jury award. Invitrogen had moved for entry of judgment based on the jury’s verdict, moved that the enhanceable portion of the damage award ($4,759,779.60) be trebled pursuant to 35 U.S.C. § 284, moved for an award of prejudgment interest under 35 U.S.C. § 284, and moved to have the case deemed “exceptional” pursuant to 35 U.S.C. § 285 and for leave to submit evidence of its attorneys’ fees and costs. The court entered its order disposing of all pending motions after having previously determined as a matter of law that Stratagene infringes claims 1, 2, 4, 5, 7, 8, 11, 14 and 15 of United States Patent No. 4,981,797, and that Stratagene’s indefiniteness defense should be dismissed as a matter of law.

The earlier jury award gave Invitrogen a 15% royalty rate on sales between the years 1997 and 2004 (for a total of $7.8 million in damages) and found Stratagene to have willfully infringed the patent only between the years 1997 and 2001. The jury found that Invitrogen was not entitled to lost profits because Stratagene has had a non-infringing manufacturing process for competent cells. Stratagene had previously modified its process for manufacturing competent E. coli cell products and Stratagene products sold in recent years and currently offered for sale will not be affected by the jury verdict.

The ‘797 patent involves the introduction of foreign, recombinant DNA molecules into receptive E. coli cells to improve the cells’ “competence,” i.e., their ability to take up and establish exogenous DNA and replicate this DNA as they multiply. A cell that accepts alien DNA is called a transformable cell. Claim 1 of the ‘797 patent claims:

A process for producing transformable E. coli cells of improved competence by a process comprising the following steps in order: (a) growing E. coli in a growth-conductive medium at a temperature of 18°C to 32°C; (b) rendering said E. coli cells competent; and (c) freezing the cells.

Stratagene made thirty-four competent E. coli cell lines by a process “including the steps of incubating cells at 37°C, growing the cells in a fermenter at 26°C, and freezing the cells.” Invitrogen sued Stratagene for infringement and the district court construed the claims and then granted Stratagene’s summary judgment motion of non-infringement. Invitrogen appealed, disputing the lower court’s construction of both “improved competence” in the preamble and “growing” in step (a).

The district court found literal infringement of the ’797 patent; decided that Claim 1 was not indefinite under 35 U.S.C. § 112, 2; and found the claims invalid under the public use provision of 35 U.S.C. § 102(b).

Stratagene said it had previously modified its process for manufacturing competent E. coli cell products and Invitrogen had agreed that Stratagene products sold in recent years and currently offered for sale will not be affected by the jury verdict.

Stratogene said it will appeal, challenging the finding of validity of the patent, the appropriateness of the damages determined by the jury and the award of attorney’s fees.

Eisai Co., Ltd. (Headquarters: Tokyo, President and CEO: Haruo Naito) and Eisai Inc. (Headquarters: New Jersey, Chairman and CEO: Hajime Shimizu) today announced that they received court decisions on ANDA-related summary judgement motions for Aciphex® (Active Ingredient Name: rabeprazole sodium, Product Name in Japan: Pariet®) on October 6, 2006 (U.S. Eastern time). Eisai won summary judgement for patent validity in its lawsuit against Teva and Dr. Reddy’s over generic Aciphex (rabeprazole). Eisai looks forward to the trial and will vigorously defend its Aciphex® patent in order to protect the company’s interests.

Aciphex is a proton-pump inhibitor indicated for the treatment of ulcers and had sales of $1.2 billion last year. Aciphex® has been shown to have a rapid onset of action and a reliable inhibitory effect on acid secretion related to duodenal ulcers and gastroesophageal reflux disease, which are confirmed in clinical studies. Aciphex® was launched in the U.S. in 1999 and is currently marketed worldwide. Aciphex® has a well-established safety profile. The most common side effect possibly related to Aciphex® is headache.

The opinion by Judge Gerard E. Lynch of the Southern District of New York granted Eisai’s summary judgement motion confirming the validity of the Aciphex® composition of matter patent in its ruling. The judgement states that Eisai’s U.S. Patent No. 5,045,552, would not have been obvious because there was no teaching, suggestion, or motivation to combine three prior art references. The Southern District Court reserved ruling on the enforceability arguments until after trial.

Motion for summary judgement is a request made by the defendant in a civil case. Asserts that the plaintiff has raised no genuine issue to be tried and asks the judge to rule in favor of the defense. Typically made before the trial. “Each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof” i.e., with the manner and degree of evidence required at the successive stages of the litigation.” Id. In order to defeat a summary judgement motion, the nonmoving party may not simply rely on his pleadings but must present some evidence on every material issue for which he will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).

Like any motion, a motion for summary judgement educates the opponent. Education is for the classroom, not in the courtroom. Unless the purpose is to inform the court of the law in advance of trial, motion practice is only successful if the defendant or the movant wins. This is true because filing motions informs the opponent about the intricacies, theories as well as the strategies behind the case. If the movant for motion for summary judgement loses the motion, the opponent enjoys the advantage of knowing what your defenses or theories are, and how you intend to implement them. But there is another reason: filing motions informs the court and opposing counsel of the strengths and weaknesses of the case.

If one is trying to settle the case, then bringing the motion may be justified. But if that’s not the case, then showing weaknesses may cause the litigation to drag on. It is often better to say nothing than to say something in an unconvincing fashion. Weaknesses are better left for the spontaneity of trial, as opposed to the deliberative process inherent in motion practice. An affirmative defense can achieve much more than a failed summary judgement motion or a motion to dismiss. The burden of proof in a summary judgement motion initially centers on the burden of production rather than the risk of non-persuasion. In other words, the thing which matters the most is… what facts you are required to muster to establish you are entitled to judgement as a matter of law.

What this means to the person seeking summary judgement is that, as the movant, he must anticipate what the other party’s proof will be. In move for summary judgement, one should show that the uncontradicted facts entitle you to judgement as a matter of law. On the other hand, one should presume that the opponent will attempt to create a disputed fact issue. Therefore, the movant need more than pleadings to win a summary judgement motion (i.e., requests to admit, depositions, affidavits). Once the party seeking summary judgement produces the evidence necessary to establish entitlement to judgement as a matter of law, the burden of production shifts to the party opposing the motion, who may not merely rely on the pleadings, but is required to come forth with some facts which create a material disputed issue of fact. At this point, with respect to summary judgement, it depends whether you are a plaintiff or defendant. If you are the former and opposing the motion, you must provide some factual basis that arguably contradicts the pleadings and affidavits of your opponent as well as shows the elements of your cause of action which would, if believed, entitle you to judgement as a matter of law. If you don’t produce such evidence, you are going to lose the motion.

Summary judgement can be an early demise for an unsuspecting litigant. Its primary function is to let a trial court fathom whether there is any question of material fact to be tried by the court or a jury and, if not, whether your client is entitled to judgement as a matter of law. At the same time, if utilized carelessly, this procedure can give an early view to an opponent’s case, theory(ies), and strategy. The utilization of, and responses to, motions for summary judgement should be undertaken with thoughtfulness, care and a command of the discovery rules that can make summary judgement a reality for your clients.

Today’s post comes from Gautam Bakshi and Ashu Gautm Bakshi, registered patent agents with the Government of India. Manager – IPR, Intas Biopharmaceuticals Ltd., Ahmedabad, Gujarat, India (Gautam.Bakshi – at – intasbiopharma.co.in).

Unlike patent rights, copyright rights spring automatically upon being written (fixed in tangible form) without registration. The general rule is that copyrights are owned by the individual who created the work or copyrightable subject matter. The author of a creative work (including a software application) owns the entire copyright in that work. Ordinarily, the person who created the work is the author. For purposes of the issues addressed here, the only exceptions to the general rule of an author owning the copyright in the creative work are (1) joint authorship, and (2) works made for hire.

Joint authorship happens when several people work together to create a single work. Under this scenario, a joint work may be created under the Copyright Act. The Copyright Act defines a joint work as “a work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole.” Under this definition, both authors must intend that their contributions be combined, and this intention must exist at the time the contribution is created. It is not necessary, however, that the contributions be of equal effort or value nor is it necessary that the joint authors work in the same physical area or at the same time.

The second exception to the general copyright rule that the author owns the copyright is that of a work made for hire. In a work made for hire situation, the author of the work is no longer the individual who created the work. Instead, the author is considered to be the entity that hired the actual creator of the work (such as a corporation for whom the author works as an employee).

The U.S. “work made for hire doctrine” provides two exceptions. The first is that works created by an employee within the scope or his or her employment are considered works of authorship of and owned by the employer. The second is that the copyright in works created by independent contractors and other non-employees (and employees outside the scope of their employment) can be owned by the commissioning party only if two conditions are satisfied: the independent contractor signs the appropriate instrument, and the work itself fits within one of enumerated categories in the Copyright Act.
This becomes a crucial issue because a work is considered a work made for hire, you are the author and owner of the work. If the work is not a work made for hire, you have no copyright ownership in the work. Your ability to use the work would therefore depend on the specific terms of the agreement with the contractor, or upon the concept of an implied license to use the work. If you are forced to rely on an implied license, you may find you only have limited rights to alter, update, copy, transform, or use the work for which you paid.

The results reached by copyright law and the U.S. Supreme Court may run counter-intuitive to what you think. You hired the contractor, you told the contractor what to build, you managed the project with the contractor, and you paid the contractor the agreed-upon price for the application. If that was done without a written agreement, you have an implied license to use the application (the details of that implied license being in question) and no more. The contractor has the ability to resell the application and keep all the money, reuse the application on a project for your biggest competitor, and otherwise take the benefit of the code written while performing this application development work and reuse that to the consultant’s sole benefit.

Where the works made for hire doctrine does not apply to the application at hand, a specific transfer of ownership must be in the consulting contract. The attached sample contract transfers ownership from the consultant to you. The language used is not can be varied but it is important, however, that the transfer of ownership be explicit and in writing.

Accordingly, it is possible that the copyright in software created by an independent contractor is not owned by the hiring company even if an instrument has been executed because the work may not fit within one of the statutory categories. In such case, the hiring company must acquire rights by written assignment.

Even though copyrights arise automatically, as a general rule, the copyright in U.S. works must be registered with the U.S. Copyright Office before bring suit can be brought against an infringer. Works registered within five years of first publication are entitled to the benefit of certain presumptions that can be beneficial in litigation as well as settlement. In addition, only if the work is registered within three months of first publication is eligibility preserved to recover attorneys’ fees and statutory damages in the event that the copyright owner prevails in the litigation. Due diligence should ascertain the date and fact of registration.

If the technology involves software, copyrights may come back to bite you in two important ways. First, if the program is developed by company employees and/or consultants, are agreements in place to ensure the software is a “work made for hire” that the company owns, or alternatively that has been properly assigned to the company? Second, have steps been taken to ensure that the software does not incorporate copyrighted works of others, for example, by incorporation of open source works which are in fact not in the public domain and are owned by another party? Whether the company has full ownership rights to its copyrights would be a key factor in determining the value of its IP portfolio and thus its attractiveness as an investment.

It is common practice for programmers to use readily available source code that can be downloaded and incorporated into the software they are developing. Using open source software (OSS) in this manner can be very efficient. Unfortunately, there are many misconceptions about OSS and the legal uses of OSS are not always well understood. It’s important to know that OSS is not generally not “public domain” software that is free for the taking. Most OSS provides for some limitations on use, most typically the ability to incorporate it into other application, to modify it and to redistribute it. Often, OSS will incorporate a general public license that does not permit the OSS code to be incorporated into a proprietary product. Depending upon the terms of the original license, if the OSS code is incorporated into a company’s software product, the company may need to provide the same rights of use to anyone who receives a copy of the software that the OSS vendor gave the company under the general public license. In effect, a general public license can cause the OSS code can turn proprietary software into open source software or will require a re-write to remove the OSS.

Software copyright due diligence is made more difficult due to recent cases holding that certain aspects of a computer program may not be protected as copyrightable authorship. These aspects include elements of the program which are already in the public domain; elements of the program which are dictated by “efficiency” and elements of the program which are dictated by “external factors.” As a result, copyright registrations should need to be handled differently, and as a result of that, copyright due diligence must be conducted in light of these new developments.

The copyright in a work can be divided and can be assigned in whole or in part by the copyright owner. Therefore, it is important to verify that the party granting specific rights has the rights to grant the acquiring company.

Sample Copyright Assignment Form 

Authorized generics — brand pharmaceutical products masquerading as generics — are an increasingly common brand tactic aimed at discouraging generic companies from challenging questionable brand patents. With GlaxoSmithKline (GSK) and Dr. Reddy’s having settled their litigation over generic Imitrexâ„¢, and the parties agreeing that Dr. Reddy’s will sell an authorized generic version of Imitrexâ„¢ in late 2008, before GSK’s patents on Imitrexâ„¢ expire in February, 2009, the issue of authorized generics is in the forefront once again. The effect of the same on the health of the Generics market structure in US and its ramifications pertaining to Anti-trust laws in US are to be seen in due course of time. The controversies and issues surrounding the very concept of authorized generics seem far away from melting down easily.

Imitrex, is a selective 5-hydroxytryptamine1 receptor subtype agonist and is used to treat headaches. It had sales of $890 million last year. Dr. Reddy’s can sell an authorized generic version of Imitrex tablets in doses of 25 mg, 50 mg and 100 mg respectively. Dr. Reddy’s Laboratories Ltd. though has settled a patent litigation with GlaxoSmithKline PLC (GSK.LN), but the Indian pharmaceutical company’s financial gains from the deal are likely to be limited. Under the deal, Dr. Reddy’s will be allowed to sell exclusively an authorized generic version of Glaxo’s migraine medication Imitrex, or sumatriptan succinate, in the U.S. before the patent expires in February 2009. The settlement of Dr. Reddy’s challenge of the Imitrix patent is subject to government approval. The Indian company’s foothold on the generic version of Imitrex, which had sales of $890 million in the U.S. in the year ending June 30, may be short-lived. Other companies have also challenged the Imitrex patent and, if they win their cases, Dr. Reddy’s won’t be able to sell the drug exclusively. Also the addition won’t significantly boost Dr. Reddy’s bottom line as this will not add any value, it is just marketing the drug…bottom line (net profit) accretion will not be higher than $7 million to $10 million in fiscal year 2009. But it will provide Dr Reddy’s with a steady stream of revenues in the months before the patent expires. (Source: MarketWatch).The Indian drug maker expects to start selling sumatriptan succinate tablets in the U.S. in the fourth quarter of calendar year 2008, the notice said. The settlement of the dispute is mild positive for GlaxoSmithKline, because it should provide reasonable time to switch patients to a newer product, Trexima.

Authorized generic (AG) is a pharmaceutical product that was originally marketed and sold by a brand company, but is relabeled and marketed under a generic product name. One problem with AGs is that they do not have to abide by the 180-day market exclusivity provision granted by the Hatch-Waxman Act to the first generic on the market. AGs could thus undercut the public policy rationale underlying the Hatch-Waxman Act, and have the potential of threatening the generic industry as a whole. An AG, also known as “authorized copy” or “brand-in-bottle,” may be marketed by the brand company itself or through a subsidiary, or the brand company may license the product to another company for marketing in return for royalties. The AG is sold at a lower cost, and as an alternative, to the branded product. The brand companies may choose to launch an authorized generic for a variety of reasons, including settling patent litigation with a generic company by partnering with it, to participate in the generic market once generic competition starts, or to maintain manufacturing capacity for the drug substance or the drug product. For example, of the 57 largest selling drugs in the United States, more than 30 are scheduled to loose patent protection by 2008, representing total sales of more than $60 billion. The launching of AGs allows the branded companies to maintain cash flow, albeit at a lowered rate, once generic competition starts. Similarly, generic companies may choose to partner with the brand company to launch an AG to settle litigation, to market a product they otherwise might not have been able to enter, or to increase their product portfolio.

The economic and other tangible benefits of the six-month exclusivity are significantly reduced by the introduction of the authorized generic products. The entry of a second generic reduces the revenues of the first generic company by about 80%. The introduction of AG during the 180-day exclusivity period is similar to two generic companies competing for the same market, and reduces the benefit to the paragraph IV ANDA filer.

The fact that authorized generics may compete with ANDA generic products, even during the 180-day exclusivity period was affirmed by the U.S. District Court for the District of Columbia in Teva Pharmaceuticals v. FDA (D.D.C. December 23, 2004), and by the U.S. Court of Appeal for the District of Columbia Circuit (June 3, 2005). The generic company will have to show that the introduction of AG is a willful anti-competitive conduct that prevents the generic from fairly competing in the relevant market for the drug. Factually, AGs do not prevent a generic version from being introduced into the market; AGs decrease the revenues and the profits of a generic during the exclusivity period. The generic company is thus able to enter the market, but will likely not reap the economic and non-tangible benefits of being a paragraph IV filer. The launch of every paragraph-IV generic expected to be a blockbuster has been met with the availability of an AG since the fall of 2003. This has financially hurt the generic companies, and could work against the public policy of the Hatch-Waxman Act by removing the economic incentive from challenging the validity and enforceability of weak patents.

In February 2006, a federal law closed another loophole that brands use to benefit from authorized generics. The new law contains a provision that will require brand pharmaceutical companies to include authorized generics in the “best price” calculation that is provided to the Centers for Medicare and Medicaid Services. Due to an ambiguity in the current law, some brand companies were not required to include authorized generics in their best price calculation, diverting government and taxpayer savings. According to some estimates, the new provision could save taxpayers $150 million over five years. The change will go into effect in January 2007. (Source: Generic Pharmaceutical Association (GPhA))

Today’s post comes from Gautam Bakshi and Ashu Gautm Bakshi, registered patent agents with the Government of India. Manager – IPR, Intas Biopharmaceuticals Ltd., Ahmedabad, Gujarat, India (Gautam.Bakshi – at – intasbiopharma.co.in).