Patent Baristas

Apotex Inc. must be confident the patent on Plavix will be held invalid. In a gutsy move for a generic drug maker, Apotex (the Welterweight from Winnipeg) started shipping a generic copy of the blood thinner Plavix in the U.S., ahead of a likely patent infringement trial. A New York judge has denied a request for a temporary restraining order. For an injunction, the drug makers need to prove that their patent infringement action is likely to win on the merits, that they will be irreparably harmed by sale of the generic, and that it is in the public’s best interest to stop the generic’s release.

This is the latest development in a legal morass that has developed between Apotex and the brand name drug co-marketers, Sanofi-Aventis SA and Bristol-Myers Squibb Co., after their deal that would have delayed bringing a generic to market for another five years was blocked.

Earlier, Apotex agreed to delay selling its drug until 2011, the year that the patent protecting Plavix expires, in return for a minimum of $40-million from Bristol and Sanofi. In return, Apotex would be allowed to introduce its version of Plavix before the patent expired sometime in 2011.

However, the U.S. Federal Trade Commission and state attorneys-general rejected the three-way deal, leading to a criminal investigation by the Department of Justice. The DOJ’s Antitrust Division has already served subpoenas on Bristol, its CEO and another executive.

Under the revised settlement agreement that the attorneys general rejected, Bristol and Sanofi could collect damages equal to 40-50% of Apotex’s net sales of the generic drug. In addition, the companies waived their right to seek triple damages under applicable patent laws if they were to prevail in the pending patent litigation.

As described in the 10-Q filing by Bristol-Myers Squibb, the settlement terms included that in the event of Regulatory Denial, the litigations will be resumed, and:

If the litigation results in a judgment that the ‘265 patent is not invalid or unenforceable, Sanofi agrees that its actual damages for any past infringement by Apotex, up to the date on which Apotex is enjoined, will be 50% of Apotex’s net sales of clopidogrel products if Sanofi has not launched an authorized generic and 40% of Apotex’s net sales if Sanofi has launched an authorized generic. Sanofi further agrees that it will not seek increased damages under 35 U.S.C.§284.

There’s quite a bit at stake, though, given last year’s sales of Plavix of $6.3 billion. That’s a lot of $4-a-day pills.

The FTC has looked into “reverse payment” deals before, where brand-name pharmaceutical companies pay generic drug makers to keep generics off the market. According to the FTC, half of the top 20-selling brand-name drugs are covered under such deals, and lawsuits have been filed challenging deals that delay generic versions of Lipitor, Celebrex and Protonix.

At least a dozen U.S. lawsuits have also been filed against Bristol, Sanofi and Apotex on behalf of direct purchasers over trying to keep a cheaper generic version of Plavix off the market. A trial on the patent had been set for June and was cancelled because of the earlier settlement. No new date has been set.

The disputed patent, U.S. Patent No. 4,847,265 (the ’265 patent), covers Plavix’s main ingredient and does not expire until 2011. The first patent covering Sanofi’s oral antiplatelet chiral drug clopidogrel bisulfate (US 4,529,596), was filed in 1983 and expired in July 2003, and claims both enantiomers and their mixture, whereas the ‘265 patent, due to expire in 2011, claims only the (+)-enantiomer.

The earlier patent claimed, but did not describe, the (+)- and (–)-enantiomers, although it states that “the invention relates both to each enantiomer and their mixture.” In the description of the activities of each enantiomer in the ‘265 patent, data show that the (+)-enantiomer is pharmacologically superior in activity and less toxic than both the (–)-form and the racemate. Apotex claims the ‘265 patent is either invalid or would not be infringed by its proposed generic product.

Contrary to earlier signs, this latest round of events may portend that the ability of patent holders to settle disputes may be moving away from favoring branded drug firms.

Get ready to rumble.

Like a bad penny, the Bayer AG And Bayer Corporation v. Housey Pharmaceuticals, Inc. case just keeps turning up. This time, the Court of Appeals for the Federal Circuit (06-1083) upheld a finding of inequitable conduct after vacating the earlier finding and remanding the case to give the district court an opportunity to provide additional support for its decision.

The District Court found U.S. Patent Nos. 4,980,281 (the ’281 patent), 5,266,464 (the ’464 patent), 5,688,655 (the ’655 patent), and 5,877,007 (the ’007 patent) unenforceable due to the inequitable conduct of Dr. Gerard M. Housey, the named inventor on all four patents.

This appeal is the second time Housey Pharmaceuticals has asked this court to reverse the district court’s inequitable conduct determination. After the district court’s earlier decision, Bayer AG v. Housey Pharm., Inc. (Bayer I), the Fed Circuit felt that the reasons given by the district court for finding Dr. Housey’s testimony not credible were insufficient to support the court’s conclusion. On remand, the district court provided further support regarding the lack of data for Dr. Housey’s “soft agar” experiment (the Table 3 experiment).

The district court said that while the lack of data itself is not evidence of inequitable conduct, Dr. Housey was not forthcoming about that data. The district court explained the contradictions between Dr. Housey’s testimony at trial and his pretrial deposition testimony. Regarding the number of incubators used in the laboratory, the district court emphasized that whatever that number may be, several experiments shared “incubator space,” yet none of Dr. Housey’s colleagues seemed to be able to remember any experiment conducted in that shared space.

The district court concluded: “I continue to believe that the clear and convincing evidence of record supports my conclusion that Dr. Housey is not credible and that he committed inequitable conduct before the PTO by presenting fabricated experimental results that were material to the issuance of the patents in suit.”

In review, the Federal Circuit stated that:

“[I]nequitable conduct includes affirmative misrepresentation of a material fact, failure to disclose material information, or submission of false material information, coupled with an intent to deceive.” Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178 (Fed. Cir. 1995). These elements must be shown with clear and convincing evidence. Id. This court reviews a determination of inequitable conduct for abuse of discretion and reviews the underlying factual issues of materiality and intent for clear error. Bristol- Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226, 1234 (Fed. Cir. 2003).

Housey suffered a death by a thousand cuts as one witness testified that he believed that Dr. Housey had invented numbers. Also, the declaration that Dr. Housey submitted purporting to confirm the validity of the data in Table 3 provided now raw data or detail – only Dr. Housey’s statement that he performed the experiment and obtained the claimed results.

The Federal Circuit was not moved this time and held:

While this court has identified deficiencies in Housey’s individual arguments, Housey faces a more serious challenge: in order to prevail, it must establish that the district court lacked a sufficient basis for finding that Dr. Housey lacked credibility. Thus, even if, for example, the district court erred regarding the existence of 24-well plates, that error alone would not require reversal. When this court vacated Bayer I, it did so because all the bases for the district court’s determination were erroneous. See Bayer II, 128 Fed. Appx. at 767. Before this court for the second time, Housey has fallen well short of establishing that the district court’s credibility determination amounted to clear error.

The district court gave a nod to the testimony of Dr. Housey’s former lab colleagues, who testified that they did not see Dr. Housey perform the “soft agar” experiment and that they did not believe he could have done so without their knowledge. The district court was thus entitled to credit this evidence which, taken with the court’s other reasons for disbelieving Dr. Housey’s contrary testimony, supports the court’s finding of inequitable conduct.

No word yet on what this means to still pending U.S. Pat. Appl. Ser. No. 11/170,465, a continuation-in-part of U.S. Ser. No. 07/154,206, which is now U.S. Pat. No. 4,980,281.

Pfizer learned the hard way not to take dependent claim form for granted. The Court of Appeals for the Federal Circuit, in Pfizer et al. v. Ranbaxy Laboratories (06-1179), held that a violation of § 112, ¶ 4 renders a patent invalid even if it would have been merely objected to (and not rejected) by the U.S. Patent Office.

Earlier, a Delaware District Court ruled that Pfizer can exclusively sell Lipitor until 2011 after finding that Ranbaxy Laboratories Ltd.’s generic version of Lipitor (atorvastatin) infringes on two Pfizer patents. Ranbaxy failed to prove Pfizer’s patents were invalid or unenforceable so Pfizer’s patents would remain in force until 2010 and 2011. Pfizer owns U.S. Patent Nos. 4,681,893 (‘893 patent) and 5,273,995 (‘995 patent) which cover Lipitor. Ranbaxy notified Pfizer that it had filed an abbreviated new drug application seeking to sell a generic version of the drug, and a paragraph IV certification, asserting that its proposed generic product would not infringe either the ‘893 patent or the ‘995 patent. Pfizer then filed a patent infringement suit against Ranbaxy in the Delaware federal court.

Ranbaxy appealed the rulings by the district court: (1) that claim 1 of the ‘893 patent was infringed; (2) that the ‘893 patent term extension was not proven invalid; (3) that claim 6 of the ‘995 patent was infringed; (4) that claim 6 was not proven invalid for failure to comply with § 112, ¶ 4; as anticipated or obvious; or for non-statutory double patenting; and (5) that the ‘995 patent was not proven unenforceable due to inequitable conduct.

The Federal Circuit agreed with the district court’s claim construction of claim 1 of the ‘893 patent, we affirm the finding of infringement and also affirmed the ruling that the ‘893 patent term extension was not invalid. However, with respect to the ‘995 patent, the court reversed on the question of invalidity under § 112, ¶ 4.

As for the ‘995 patent, Pfizer only asserted dependent claim 6. The relevant claims are:

1. Recites the following compounds: (1) atorvastatin acid; or (2) atorvastatin lactone; or (3) pharmaceutically acceptable salts thereof.

2. A compound of claim 1 which is atorvastatin acid.

6. The hemicalcium salt of the compound of claim 2.

With respect to the ‘995 patent, the court focused on the question of validity under 35 U.S.C. § 112, ¶ 4, which provides:

Subject to the following paragraph [concerning multiple dependent claims], a claim in dependent form shall contain a reference to a claim previously set forth and then specify a further limitation of the subject matter claimed. A claim in dependent form shall be construed to incorporate by reference all the limitations of the claim to which it refers.

However, Pfizer only asserted dependent claim 6 of the ‘995 patent. Ranbaxy asserted that the district court erred in refusing to invalidate claim 6, even though it does not incorporate by reference all the limitations of the claim to which it refers and then specify a further limitation of the subject matter, as required by § 112, ¶ 4. In other words, claim 6 does not narrow the scope of claim 2; instead, the two claims deal with non-overlapping subject matter.

The district court explicitly recognized that “there may be a technical problem in the drafting of claim 6.” Yet, it declined to find that this drafting problem is sufficient to render the claim invalid if the claim is read consistently with its meaning to those skilled in the art because it was unable to find any Federal Circuit precedent applying § 112, ¶ 4 to invalidate a patent.

The district court understood § 112, ¶ 4 “to be limited to matters of form, rather than matters of substance,” noting that the PTO treats a claim that fails to comply with this provision “as a matter to be addressed through an objection” rather than rejected as unpatentable. While the district court found that claim 6 was unambiguous to the extent that the patentee intended to claim the hemicalcium salt of atorvastatin acid, the court recognized that “[a]s a matter of standard chemical nomenclature, chemists typically refer to a salt of an acid, even though they are aware that the complete acid is technically no longer present in the salt form.”

Unfortunately, the Court of Appeals pointed to Curtiss-Wright Flow Control Corp., which suggests that a violation of § 112, ¶ 4 renders a patent invalid just as violations of other paragraphs of § 112 would in holding that “reading an additional limitation from a dependent claim into an independent claim would not only make that additional limitation superfluous, it might render the dependent claim invalid” for failing to add a limitation to those recited in the independent claim, as required by 35 U.S.C. § 112, ¶ 4. Since claim 6 could have been properly drafted either as dependent from claim 1 or as an independent claim – i.e., “the hemicalcium salt of atorvastatin acid” the Federal Circuit said it “should not rewrite claims to preserve validity.”

The court then noted that claim 6 fails to “specify a further limitation of the subject matter” of the claim to which it refers because it is completely outside the scope of claim 2. The court held that it must reverse the district court and hold claim 6 invalid for failure to comply with § 112, ¶ 4. The Federal Circuit then affirmed-in-part, reversed-in-part and remanded so the district court can modify the permanent injunction in a manner consistent with this opinion.

This means that Pfizer has patent protection on the main Lipitor drug until March of 2010 but the loss of the second Pfizer patent, which would have protected the drug until June of 2011, eliminates 15 months of patent protection for a drug with sales of $12.2 billion in 2005. If Pfizer can’t find a way to reverse the decision, it stands to lose billions of dollars in potential sales.

Johnson & Johnson’s Alza drug unit sued Wyeth (Alza Corporation v. Wyeth, Wyeth Pharmaceuticals, Inc. Case No. 9:06-cv-00156-RHC), saying that Effexor XR infringes a patent for a method of administering antidepressants.

Effexor is Wyeth’s biggest product and the world’s best-selling antidepressant. Global sales of the drug were $918 million in the second quarter and $3.5 billion for all of 2005. Effexor XR® (venlafaxine HCl), is a once-a-day extended-release version of the antidepressant, approved for the treatment of major depressive disorder, generalized anxiety disorder, social anxiety disorder and panic disorder.

Alza owns a patent 6,440,457, issued August 27, 2002, for a controlled release version of antidepressants. The ‘457 patent contains a single claim to:

1. A method for administering a drug to the gastrointestinal tract of a human, wherein the method comprises: (a) admitting orally into the human a dosage form comprising a drug of the formula: [1-[2-(dimethylamino)-1-(4-methoxyphenyl)ethyl]cyclohexanol] which drug possess antidepressant therapy and the dosage form comprises a member selected from the group consisting of a sustained-release dosage form and a controlled-release dosage form; and, (b) administering the drug from the dosage form over an extended period of time in a therapeutically responsive dose to produce the antidepressant therapy.

In the lawsuit was filed July 26 in federal disctrict court in the Eastern District of Texas, Alza says the Wyeth drug is administered in that patented method. Wyeth says the ‘457 patent doesn’t cover its drug.

The patent suit is not the reason Wyeth had “homicidal ideation” added to the drug’s label as one of its rare adverse events.

After decades of hype and false starts, the National Science Foundation forecasts that $1 trillion worth of nanotech products will be on the market by 2015. This year, corporations and governments will spend more than $11 billion on nanotechnology research, according to Cientifica, a London-based consulting firm.

Last year, venture firms invested $496.5 million in nanotech-related companies, 21 percent more than in 2004, and sales of products incorporating nanotechnology totaled $32 billion, according to an estimate by Lux Research. A more significant signal that nanotech has arrived may be that in March, San Francisco-based Global Crown Capital LLC started a $250 million nanotechnology-focused hedge fund, the first of its kind. The 2006 U.S. Budget provides over $1 billion for the multi-agency National Nanotechnology Initiative (NNI), bringing the total NNI investment to $4.7 billion.

Nanotechnology is the understanding and control of matter at dimensions of roughly 1 to 100 nanometers, where unique phenomena enable novel applications. Encompassing nanoscale science, engineering and technology, nanotechnology involves imaging, measuring, modeling, and manipulating matter at this length scale. At the nanoscale, the physical, chemical, and biological properties of materials differ in fundamental and valuable ways from the properties of individual atoms and molecules or bulk matter.

The National Science Foundation predicts that the global marketplace for goods and services using nanotechnologies will grow to $1 trillion by 2015, and there are already over 500 products being sold that claim they are made with nanoscale or engineered nanomaterials. These include products like self-cleaning windows, automobile paint, sunscreens, and tennis rackets. In the future, a marriage of nano and biotechnology will likely create a whole new generation of drugs, biomedical devices, and other products.

Nanomedicine has been defined as the monitoring, repair, construction and control of human biological systems at the molecular level, using engineered nanodevices and nanostructures. Current applications of nanotechnology in medicine involve engineered molecules to develop drugs, drug delivery techniques, diagnostics, medical devices and enhanced gene therapy and tissue engineering procedures. “Nanosizing” is a term developed in the pharmaceutical industry to describe how some previously approved products with particle sizes greater than 100 nm are being produced with smaller particle sizes, in order to change certain physical and performance characteristics, such as pharmacokinetic profile (i.e. the rate and extent of absorption and clearance from the body).

Blurring the issue is that many companies are doing small-size chemistry, biology and materials science and adding the ‘nano’ prefix to sex up their research. At the nano- scale, much of traditional physics guidelines don’t apply and key properties of materials can suddenly change. But since many molecules are that size, lots of traditional chemistry, molecular biology, materials science and other disciplines can be included under the “nano” definition.

As we reported earlier, an increase in nanotech patent filings has overwhelmed the USPTO, which totaled 4,996 U.S. issued patents through 2005. However, it has issued many patents with imprecise terms like “nanorod” and “nanowire,” so that patents are issuing with broad, overlapping claims, making for some difficult litigation later if commercialization ever materializes.

Patent litigators, however, report an increase in orders for BMWs (just kidding).

On the downside, with such a fragmented market, few investors are going to be able to understand the competitive landscape. Therefore, many investors might be tempted to believe a patent means more than it does, setting some investors up for a big loss. Very often small cap, nano-companies can skyrocket or plummet on the mere mention of a new patent.

In what could signal a sea change at the USPTO, according to a new report from Lux Research, the rate of new nanotech patent issuances stalled at 4% in 2005 after exceeding 20% in the last few years. At the same time, however, the number of public patent applications for nanotechnology continued to increase, growing by 52% to 2,714 outstanding nanotech patent applications. It doesn’t take a genius to see a huge backlog coming at the USPTO. The pendency rate – the time from the submission of a nanotech patent application to the issuance of a patent – is now nearly four years on average up from two and half years in 1993.

In their report, Lux determined that certain areas, like carbon nanotube and quantum dot applications in electronics and healthcare/cosmetics applications nanomaterials (e.g., dendrimers, ceramic nanoparticles, and metal nanoparticles) represent battles worth fighting because of the broad applicability of these materials to a number of large addressable markets. Time will tell if many of the laboratory-stage experiments will turn into salable products.

Also, as previously described, there remain constant concerns about the safety of nanomaterials since the cosmetics and food industries are deep into emerging nanotechnologies. It is estimated that about one-third of nanoproducts are intended to be ingested or applied to the skin, with no apparent strategy to assess general risks posed by nanomaterials, according to a report by Woodrow Wilson International Center for Scholars’ Project on Emerging Nanotechnologies.

The report calls for spending $50 million annually on nanosafety studies and lays out a strategic plan for assessing long- and short-term risks to human health and to the environment that nanotech might pose. To date, the FDA has no knowledge of reports of adverse reactions related to the “nano” size of resorbable drug or medical device products. The FDA has not established its own formal definition for nanotech, though the agency participated in the development of the NNI definition of “nanotechnology.” Using that definition, nanotechnology relevant to the FDA might include research and technology development that both satisfies the NNI definition and relates to a product regulated by FDA.

We doubt, however, that nanotech will run amuck in creating the “gray goo” (or “global ecophagy“) scenario.

The Nanotech Report, 4th Edition is available for $4,795 from Lux Research’s Nanotechnology Strategies advisory service.

Stratagene Corporation announced that it was informed that a jury determined that Invitrogen Corporation’s U.S. Patent No. 4,981,797 (issued Jan. 1, 1991) (the ’797 patent) is valid and that Stratagene infringed that patent by making and selling its competent E. coli cell products (Invitrogen Corporation vs. Stratagene; United States District Court for the Western District of Texas).

The jury awarded 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.

Earlier, the district court granted Stratagene’s motion for summary judgment finding that Invitrogen’s aforementioned patent was not infringed by Stratagene. As we reported, on an earlier remand from the CAFC, the District Court, on summary judgment, determined that Biocrest Manufacturing, L.P., Stratagene Holding Corporation, and Stratagene, Inc. (collectively Stratagene) infringed the ‘797 patent, and that the ’797 patent was not invalid for indefiniteness, although it was invalid because of public use under 35 U.S.C. § 102(b).

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 CAFC decided that the trial court had correctly construed the term “improved competence.” The CAFC noted that the term required only a general increase in competence, as compared with that generally obtained when cells are prepared by either (1) growing the cells at 37°C, rendering them competent, and freezing them, or (2) growing the cells at 37°C, rendering them competent, and not freezing them. The CAFC also noted that the trial court had incorrectly construed “growing.” The CAFC then construed that term to permit preparatory steps in advance of step (a), including growth of E. coli at a temperature outside the range in step (a).

On remand, 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). In January 2004, the district court granted partial summary judgment to Invitrogen based on the determination that Stratagene’s then-existing manufacturing process infringed Invitrogen’s patent, however the court also determined that Invitrogen’s patent was invalid. Stratagene then changed its manufacturing process for competent cell products to a non-infringing method. Invitrogen appealed the decision again and in October 2005 the Federal Circuit Court reversed the district court’s findings in part stating that ” there is no evidence that Invitrogen received compensation for internally, and secretly, exploiting its cells. The fact that Invitrogen secretly used the cells internally to develop future products that were never sold, without more, is insufficient to create a public use bar to patentability.” The case was remanded back to district court.

The final judgment has not been rendered by the court since it is looking at the appropriateness of the damages determined by the jury and the potential for enhanced damages. Stratagene could still appeal this verdict.

Two recent articles this past week highlight issues that question the validity of FDA approval of new drugs. This is on the heels of the spotlight on Big Pharma’s efforts to circumvent the Hatch-Waxman provisions designed to encourage generic company challenges to weak drug patents, and alleged abuse of the citizen petition process. In sum, one might be left wondering if the politics (read $) of new drugs and Big Pharma have overshadowed legitimate government functions of approving safe drugs and preserving patent rights for only the truly innovative.

The New York Times reported Monday that scientific advisors to the review process may have conflicts of interest that may jeopardize the integrity of the approval process. According to the article, critics have “complained for years” that those who sit on FDA approval boards often have “deep financial ties to drug makers.” The FDA often relies heavily on advisory boards for making decisions regarding drug approval. As a result, advisory board recommendations can have great influence on both the approval of the drug, and the stock price of the company that manufactures the drug. According to the FDA, however, finding qualified scientific advisors without financial ties is not as easy as it sounds.

Regardless, the FDA is currently debating new rules that would serve a policing function for who can sit on advisory boards. One proposed mechanism would be to exclude advisors who are paid directly by drug maker’s marketing departments. That seems to be a fair start.

Reuters, in an article posted last Friday, reports results of a somewhat alarming survey conducted by the “liberal-leaning Union of Concerned Scientists.” The study reports that about 15% of FDA scientists say they have been “wrongly asked to withhold or alter information or their conclusions in agency documents.” 17% said that they had been asked to report incomplete, inaccurate or misleading information to the public, industry, or other government officials. Perhaps most surprising, a stunning 40% said they feared retaliation if they “voiced concern about product safety in public.” While these numbers are indeed unsettling, one has to wonder whether there is any basis in FDA spokeswoman Susan Bro’s comments that the survey was a “counter-productive exercise based on leading questions and innuendo.”

Regardless, in light of Big Pharma’s recent practices of marketing branded drugs as generics (so-called “authorized generics”), paying generic manufacturers to stay out of the market during infringement litigation (“reverse payments”), and the alleged misuse of citizen’s petitions by drug manufacturers, my view would be that the FDA would be best served by keeping its nose clean while the ruckus dies down.

In an article written a few years back, I’d noted that combining different forms of representation — litigating and prosecuting, litigating and opinining, and so on — created risk. David Hricik, How Things Snowball: The Ethical Responsibilities and Liability Risks Arising from Representing a Single Client in Multiple Patent-Related Representations, 18 Geo. J. Legal Ethics 421 (2004).

One key risk I noted that arose when a law firm combined both an opinion on and the litigation of a patent was the risk of broad waiver of work product of trial counsel. Id. (“Teh greatest risk that an opining-litigator creates is taht work product — including, in some courts’ views, even work product which was never received by the client from anyone at the lawyer’s firm — will be discoverable.”) A brand new case out of California has shown that risk to be real — and raises even more significant questions about reliance on advice of counsel defenses.

In Informatica Corp. v. Bus. Objects Data Integration, Inc., 2006 WL 2038461 (N.D. Cal. July 14, 2006), the district court, after lengthy briefing by the parties, concluded that it was the infringer’s state of mind that mattered, and so held that it was irrelevant whether trial counsel was the same person who gave the opinion, or even whether trial counsel was in the same firm as opinion counsel. Instead, the court reasoned:

This Court, after weighing all the persuasive authority, concludes that the Federal Circuit has the final word in a patent case on the subject of the scope of waiver of attorney-client privilege and the work product protection for discovery relevant to a substantive issue after assertion of the advice-of-counsel defense. The court in Echostar makes it crystal clear that attorney-client communications on the subject of the opinion BODI relies on for its defense are subject to waiver, as well as documents, including work product, which reference these communications. Similarly, both pre- and post-filing work product is potentially relevant to the alleged infringer’s intent where there is an allegation of continuing infringement and are therefore also subject to waiver. However, only work product which has either been communicated to the alleged infringer or refers to communications is relevant to intent and therefore subject to waiver by assertion of the advice-of-counsel defense.

This Court finds that, according to the analysis in Echostar, what is significant is the state of mind of BODI and not the affiliation of BODI’s attorneys, and that privilege has been waived with respect to pertinent communications and work product of all counsel in this case. Attorney legal opinions, impressions and trial strategy unrelated to the opinion on which BODI relies may be redacted from documents to be produced to Informatica. The Federal Circuit in Echostar cautioned that the parties should protect such information.
*8 Still, we must emphasize that such communications may contain work product of the second kind-legal analysis that was not communicated. In those situations, the parties should take special care to redact such information, and if necessary the district court may review such material in camera.
In re EchoStar, 448 F.3d at1304.

While opinion counsel and trial counsel can be walled off from each other, the immurement is immaterial–what matters, according to the decision by the Federal Circuit in Echostar, is the state of mind of BODI.

For all the above reasons, Informatica’s motion to compel further responses from BODI is granted. This Court finds that, by asserting advice of counsel as a defense to a charge of willful infringement of Informatica’s patents, BODI waived privilege for both pre-and post-filing pertinent attorney-client communications and work product. Under the analysis in Echostar, it is immaterial whether BODI’s opinion counsel and trial counsel are from the same firm, different firms or are even the same person. What matters is that:

1. BODI relies on advice of counsel as a defense to Informatica’s charge that it willfully infringed Informatica’s patents;

2. Therefore, BODI waives privilege for communications with counsel on the subject of the opinion or advice on which it relies as well as work product on that subject communicated to BODI or which refers to communications on that subject;

3. Informatica alleges that BODI continues to infringe Informatica’s patents;

4. Therefore Informatica is entitled to information subject to waiver which BODI received even after Informatica filed its complaint;

5. The categories of information which BODI must turn over to Informatica include (a) attorney-client communications with any counsel on the subject of the opinion or advice on which BODI relies; (b) work product communicated to BODI on that same subject; (c) work product which reflects any communication on that subject.

Attorney legal opinions, impressions and trial strategy unrelated to the opinion on which BODI relies may be redacted from documents to be produced to Informatica.

All responsive discovery which is being withheld as privileged for which privilege has been waived as discussed above shall be produced within twenty days of the e-filing of this order. BODI shall at the same time produce a privilege log for all other withheld documents, in compliance with the decision in In re Grand Jury Investigation, 974 F.2d 1068, 1070 (9th Cir.1992), citing Dole v. Milonas, 889 F.2d 885, 888 n. 3, 890 (9th Cir.1989).

Wow.

This post is by David Hricik, a guest here, who is a professor at Mercer University School of Law in Macon, GA. He isn’t part of the firm that sponsors this site.