Patent Baristas

In his official capacity as Director of the USPTO, Jon Dudas, along with Yeda Research and Development Co., was recently named as a defendant in an action filed by Enzo Therapeutics. The complaint, filed July 3 in the U.S. District Court for the Eastern District of Virginia, details Enzo’s unsuccessful efforts to establish co-pendency of two US applications via filing a Petition to Revive.

The suit stems from an interference between junior party Sehgal and senior party Revel (real parties-in-interest Enzo Therapeutics and Yeda Research and Development, respectively). Because of an inadvertent failure to file a Three-month Petition for Extension of Time, Sehgal’s U.S. application 06/255,215 (the ‘215 application)– to which Enzo intended to claim priority– was deemed abandoned. The continuation application US 06/634,998 (the ‘998 application) was therefore found not co-pending with the earlier application. The Board denied Enzo’s Petition to Revive the ‘215 application, and priority of invention was awarded to Revel.

According to the complaint, Enzo asserts that the Board of Patent Appeals and Interferences violated the PTO’s regulations, abusing their discretion by deciding the Petition to Revive, and that the Director had unreasonably withheld or delayed action on both plaintiff’s 183 Petition (the accompanying petition to waive the requirement for a terminal disclaimer) and the Petition to Revive.

In its Complaint, Enzo asserts that the PTO was required to give deference to representations made in the Petition to Revive concerning a delay or inquire further into the matter:

In accordance with M.P.E.P. § 711.03(c)II.C, the PTO “relies upon the applicant’s duty of candor and good faith and accepts that statement that ‘the entire delay in filing the required reply from the due date for the reply until the filing of a grantable petition pursuant to 37 C.F.R. § 1.137(b) was unintentional’ without requiring further information in the vast majority of petitions under 37 C.F.R. § 1.137(b).”

The PTO “is almost always satisfied as to whether ‘the entire delay… was unintentional’ on the basis of statement(s) by the applicant or representative explaining the cause of the delay accompanied at most by copies of correspondence relevant to the period of delay.” M.P.E.P. §711.03(c)II.C.

Even if an applicant’s statement is not accepted, then the PTO “… reserves the authority to require further information concerning the cause of abandonment and the delay in filing a petition to revive …” M.P.E.P. § 711.03(c)II.C.

The PTO did not request further information concerning the cause of abandonment of the ‘215 application or delay in filing the Petition to Revive.

In the absence of a request for further information, the statement in the signed Petition to Revive that “the entirely delay in filing the required reply from the due date for the reply until the filing of a grantable petition pursuant to this paragraph was unintentional” should be deemed as accepted by the PTO.

Paragraphs 33-37 of the Complaint.

Enzo asserts that the Board violated PTO regulations and exceeded its authority by denying the Petition to Revive without forwarding to the Office of the Deputy Commissioner for Patent Examination Policy. Enzo further charges the Board with abuse of discretion for failing to accord proper weight to statements made in the Petition to Revive, relying instead on an unrecorded conference call between the Attorney for Sehgal and a judge in a “he-said”-“she-said” fashion.

The facts as set forth by Enzo suggest that intentional abandonment would be absurd. Enzo, in its complaint, points to the file history of the ‘215 patent and its progeny to show subsequent filings requesting a continuation application accompanied by copies of the ‘215 application; amendments to claim priority to the ‘215 parent application; acceptance by the PTO of Sehgal’s request for a continuation application as evidenced by a notation on the front cover of the continuation application and the PTO Filing Receipt; and an express request by Sehgal for the abandonment of the ‘215 parent application when the continuation was filed.

In Enzo’s words:

A registered patent practitioner would never “intentionally” cause a parent application to become prematurely abandoned and then, at the same time, file a “continuation” application (including an express request to abandon the parent on that date); the two acts are entirely inconsistent and thus the non-filing of the petition for extension of time resulting in premature abandonment could only have resulted from a clearly unintentional error. (Paragraph 57 of the Complaint.)

Enzo has asked the court to reverse the decision of the Board, expunging from the record all of the Board’s findings, and remand the case to the Board for further administrative proceedings. Enzo has further requested that the Court compel the Director to decide the 183 Petition and forward the Petition to Revive to the Office of the Deputy Commissioner for Patent Examination Policy to promptly decide the Petition.

Download the Complaint Part 1.

Download the Complaint Part 2

Thanks to Tom Scott of Hunton & Williams LLP for a copy of the complaint.

In a bit of shameless self-promotion, we simply must announce that the Patent Baristas were ranked (again!) in the 2006 Edition of Chambers USA, a publication that ranks attorneys and their practices based upon peer and client review.

Chambers USA touts the Intellectual Property Department as known for their “exceptional” attention to detail and impeccable biomedical knowledge. Frost Brown Todd LLC is said to boast one of the top Intellectual Property practices in the region. Clients use adjectives such as “impeccable”, “genius”, “simply superb”, and “quite excellent” in describing Stephen Albainy-Jenei, Karlyn Schnapp, Steven Goldstein, David Schmit, and Joseph Dreitler.

From Chambers:

This team “understands academic culture and speaks the language of the scientist-inventor.” The firm is hoping to build on its strengths in patent litigation and the biomedical sector with a concerted push in trademark and copyright matters; this was boosted by the arrival of IP lawyers from Jones Day. The team has a healthy line in advising startups and managing cutting-edge issues for institutional clients like Ethicon. It eclipses the competition in the area of medical devices and recently handled several matters relating to spinal implants. Attorneys are active for hospitals and universities. Clients declare: “They do an excellent job of protecting and managing our creative assets .” They also “prompt us and let nothing fall through the cracks .” In a recent highlight, the team has been representing iPix in a patent infringement lawsuit concerning imaging technology on real estate Web sites.

The arrival of Joseph Dreitler from Jones Day is a triumph for the team. His trademark and copyright expertise will undoubtedly rejuvenate the firm’s IP roots. He recently successfully defended Joel Hyatt and former Vice President Al Gore against a trademark lawsuit attempting to scupper the launch of a new cable channel, CurrentTV. Chair of IP Steven Goldstein has over 30 years’ experience of patent prosecution under his belt and the useful experience of being former in-house counsel at Procter & Gamble. His background in biochemistry is invaluable to his pharmaceuticals-focused practice. The centerpiece of his year was succeeding in an EPO opposition proceeding involving a patent on the H. pylori assay. David Schmit concentrates on IP litigation and recently completed a case involving trade dress, trademark and unfair competition issues for toy companies making magnetic games. With his biotechnology background, Stephen Albainy-Jenei “speaks the language of scientists and communicates extremely well with them,” say clients. He has been busy developing a substantial patent portfolio for a pharmaceutical company’s treatment for inflammatory ailments. Karlyn Schnapp “always does an excellent job ,” in part thanks to her PhD in organic chemistry. She does opinion work for pharmaceutical companies and her clientele ranges from corporate and university researchers to entrepreneurial startups. Nicole Vickroy Hickey is now in-house counsel for Abbott Laboratories.

The qualities on which rankings are based include technical legal ability, professional conduct, client service, commercial awareness/astuteness, diligence, commitment, and other qualities valued by the client. Editorial comment is also derived from the research, with quotations used when they sum up the prevailing opinion of the market. The rankings and editorial comment about attorneys are independent and objective. Inclusion in the guide is based solely on the research team’s findings. For the current Global directory, over 6,500 of these interviews were conducted covering 170 countries. They were carried out by a team of 30 full-time researchers over a period of 12 months.

Now, if only we could win a Bloggy Award…

See more in the Frost Brown Todd LLC Profile

As part of its ongoing efforts to reduce its workload instead of expanding to meet increased demand, the U.S. Patent and Trademark Office (USPTO) announced a new proposal for the patent application review process. Under the new proposal, patent applicants would be required to provide the USPTO with the most relevant information related to their inventions in the early stages of the review process.

Apparently, the current obligation to inform patent examiners of all information known to be material to patentability of the invention claimed by the applicant is just not enough. Now, they don’t want to have to read anything. With the proposed changes, patent examiners would not have to review documents that do not directly relate to the claimed invention, or that duplicate other information already submitted.

In a bad case of blaming the victim, the USPTO says it “has observed that applicants sometimes provide information in a way that hinders rather than helps timely, accurate examination. For example, some applicants send a very large number of documents to the examiner, without identifying why they have been submitted, thus tending to obscure the most relevant information. Additionally, some applicants send very long documents without pointing out what part of the document makes it relevant to the claimed invention.” The USPTO claims that the proposed rule change is designed “to discourage submission of information that is unimportant or does not add something new for the examiner to consider.”

Gee, I wonder why an applicant would want to send along references that may not directly relate to the invention? I’m sure this has nothing to do with the fact the applicant risks losing the entire patent in litigation under some claim of “inequitable conduct” (the standard greeting that any two patent lawyers use upon meeting) if they happen to forego sending some tangentially related reference.

In summary from the USPTO:

To encourage submission of relevant information to the patent examiner promptly and in a way that brings the most important information to the attention of the examiner, the USPTO is proposing to eliminate all fees associated with submitting an IDS. Under the proposal, applicants in most cases would be permitted to send up to twenty documents without additional explanation, if these documents are provided to the USPTO before the examiner sends a first communication to the applicant.

Were an applicant to submit more than twenty documents, or wait until after the patent examiner’s first communication has been sent, the applicant would face increasing requirements to provide more detailed information about the documents and how they relate to the claimed invention. Applicants could be required to point out what part of the document makes it important, to identify specific claims to which a document applies, to clarify how a document adds new information not already considered by the examiner, or explain why the claims are patentable in light of the information provided.

So, under the proposal, applicants would still be able to send in as many documents as they choose. However, they will suffer the dire consequences of piling up mounds of prosecution history estoppel.

What’s next, applicants will have to draft their own Office Actions and rejections and then be held accountable if they make a difficult judgment call or “mischaracterize” an issue?

See the whole enchilada here.

The University of Alabama in Huntsville (UAH) announced the settlement of their suit against Nektar Therapeutics and Dr. Milton Harris, the founder of Nektar Alabama and a former employee of UAH, in exchange for a total cash payment of $25 million.

Under the terms of the agreement, Nektar and Dr. Harris have jointly made an upfront payment totaling $15 million to UAH. In addition, Nektar will pay UAH the sum of $1 million per year for ten years. UAH currently plans to apply the funds towards its endowment and to fund scholarships for the entire campus, including chemistry and biology programs. In exchange, UAH has agreed to dismiss all claims related to the Nektar PEGylation patent portfolio and Nektar has agreed to dismiss all counterclaims.

UAH had sued Nektar Therapeutics AL and Nektar Therapeutics in United States District Court for patent infringement, breach of contract license, violation of the Alabama Trade Secrets Act and unjust enrichment. Harris and another researcher developed a PEGylation technology, which was patented by UAH. PEGylation technology is based on the use of non-toxic polyethylene glycol (PEG) polymers, which can be attached to most major drug classes, including proteins, peptides, antibody fragments, small molecules, and other drugs and is used in eight approved products in the U.S. and/or Europe today.

With PEGylation technology, polyethylene glycol (PEG) polymer chains are attached to a drug, which sustain bioavailability by protecting the drug molecules from immune responses and other clearance mechanisms. In an aqueous medium, the long, chain-like PEG molecule is heavily hydrated and in rapid motion. This motion causes the PEG to prevent the interference of other molecules.

The university entered a royalty agreement with Harris for products developed out of the discovery, and Harris created Shearwater Polymers, a company bought by Nektar in 2001 for $197 million in cash and stock, to pursue manufacturing of PEG-related products. UAH claimed that Harris, without UAH’s knowledge, made a number of other discoveries related to the PEG technology in the following years and patented 28 of them and that Harris was required to notify UAH of any discovery related to the original PEG patent, and the lawsuit contends that the patents are “obvious derivatives” of and “equivalent” to the original PEG patent.

After the Supreme Court refused to hear the Federal Trade Commission v. Schering-Plough case, Senators Herb Kohl (D-WI), Patrick Leahy (D-VT), Chuck Grassley (R-IA) and Charles Schumer (D-NY) have introduced legislation to explicitly prohibit brand-name drug manufacturers from using pay-off agreements to keep cheaper generic equivalents off the market.

In 2005, two appellate court decisions overturned FTC’s long-standing position against this practice and upheld settlements that include such pay-offs. The current decision in Schering-Plough makes it very difficult (if not impossible) for parties challenging patent settlements to do so based on the terms of the settlement itself (i.e., the inclusion of a reverse payment). Plaintiffs will need to show that the generic company’s product did not infringe on a valid patent – a very difficult path to go.

The Supreme Court dismissal of the FTC’s latest appeal spurred the introduction of the “Preserve Access to Affordable Generics Act” (S. 3582) in which Section 5 of the Federal Trade Commission Act (15 U.S.C. 45) would be amended to include:

It shall be considered an unfair method of competition affecting commerce under subsection (a)(1) for a person, in connection with the sale of a drug product, to directly or indirectly be a party to any agreement resolving or settling a patent infringement claim in which (a) an ANDA filer receives anything of value; and (b) the ANDA filer agrees not to research, develop, manufacture, market, or sell the ANDA product for any period of time.

Nothing in this subsection shall prohibit a resolution or settlement of patent infringement claim in which the value paid by the NDA holder to the ANDA filer as a part of the resolution or settlement of the patent infringement claim includes no more than the right to market the ANDA product prior to the expiration of the patent that is the basis for the patent infringement claim.

A recent FTC report found that in the six months following the 2005 court decisions, there were three settlement agreements in which the generic company received compensation and agreed to a restriction on its ability to market the product. Additionally, the FTC found that at least seven settlement agreements made in 2006 included a pay-off from the brand manufacturer in exchange for a promise by the generic company to delay entry into the market. According to a study released by Pharmaceutical Care Management Association (PCMA), health plans and consumers could save $26.4 billion over the next five years by using the generic versions of 14 popular drugs that are scheduled to lose their patent protections before 2010.

But is a restraint on settlements really in anyone’s best interest? Our legal system likes settlement. It even encourages it. Do we want companies to instead be forced to fight legal battles to the death?

The question comes down to whether an agreement between a pharmaceutical patent holder and a would-be generic competitor, in which the patent holder makes a substantial payment to the challenger for the purpose of delaying the challenger’s entry into the market, is an unreasonable restraint of trade. Unfortunately, things are never so simple. What really constitutes an unreasonable restraint of trade?

Generic-drug companies regularly make legal challenges to brand-name companies’ patents in the hopes of getting their generic versions on the market more quickly. They have little to lose. For the cost of a lawsuit, the generic company gets a shot at millions (perhaps billions) of dollars in revenue. The threat of a lawsuit claiming that the brand-name drug companies patent is invalid is close to being held at gunpoint since a jury may find the patent invalid and the drug company will be left twisting in the wind.

The Act as introduced does not take into account the fact that often the issues are muddy waters without a clear right or wrong answer. Patent invalidity suits often come down to a nuanced, battle of experts trying to decide what some hypothetical person skilled in the art would or would not have found obvious a decade or two ago. Having these matters put in front of a jury can feel a lot like a game of Russian roulette. Therefore, the drug company will often decide to resolve the dispute out of court, with the generic companies agreeing to give up their claims in exchange for cash settlements. The generic versions of the drugs then enter the market when the patents expire. But, the alternative would be for the companies to continue legal battles through endless appeals.

The Preserve Access to Affordable Generics Act would seem to remove incentives to settle disputes and cause more resources to be devoted to litigation.

See the text of S. 3582 here.

Bristol-Myers Squibb and Sanofi-Aventis announced that in response to concerns raised by the Federal Trade Commission (“FTC”) and state attorneys general to the previously announced proposed settlement the companies reached with Apotex relating to patent infringement litigation on Plavix(R) (clopidogrel bisulfate), the companies and Apotex have amended the agreement. Plavix, a blood thinner, is the world’s second-best selling drug. Review of the modified agreement by the FTC and state attorneys general continues.

Among other revisions, under the terms of the modified agreement, Apotex’s license to manufacture and sell its FDA approved clopidogrel bisulfate product in the United States would be effective on June 1, 2011, rather than September 17, 2011, as disclosed in the press release issued by the companies on March 21, 2006.

In the original deal, Apotex agreed to settle the litigation in exchange for at least $40 million and received a licence to sell a generic version of Plavix in September 2011, eight months earlier than the patent’s maximum lifespan.

The FTC has challenged similar arrangements, arguing that they are anti-competitive and hurt consumers, and asked the Supreme Court to hear a case involving Schering-Plough in which a similar deal was struck. Although the Supreme Court declined to take on that case, the FTC has signalled that it will continue to strike down deals between big drug companies and generic manufacturers that involve so-called “reverse payments”.

There is no assurance that the revised agreement will address all of the concerns of the FTC and state attorneys general and there remains a significant risk that antitrust clearance will not be obtained.

Teva Pharmaceuticals announced that it launched a generic version of the antibiotic Biaxin® (clarithromycin) XL Filmtabs® following the decision rendered on Thursday June 22, 2006 by the U.S. Court of Appeals for the Federal Circuit vacating a June 2005 ruling which had granted Abbott’s motion for a preliminary injunction related to the product.

However, Abbott then filed an emergency motion in the U.S. District Court for the Northern District of Illinois to enjoin Teva from further sales of the product pending additional appeals despite the preliminary injunction being vacated. Teva then agreed to refrain from further sales of this product pending the outcome of the motion.

Teva contends that the preliminary injunction order is no longer in effect because the Federal Circuit, in a 2-1 decision, vacated the preliminary injunction. However, under the Federal Rules of Appellate Procedure and applicable case law, that opinion is not final and has no effect on the injunction unless and until a mandate has been issued by the Federal Circuit to the District Court and no such mandate has been issued, and no such mandate will issue at least until 7 days after Abbott’s (planned) petition for rehearing has been decided. Therefore, the preliminary injunction order remains in effect and Abbott is entitled to prevent Teva from violating the preliminary injunction order, in order to maintain the status quo. Abbott also wants the court to hold Teva in contempt and sanction it for violating the preliminary injunction order.

Andrx, also sued by Abbott, has filed a motion to vacate the District Court’s preliminary injunction order arguing that since Abbott has not established a likelihood of success on the merits per the Federal Circuit and that with generic competition entering the market, including Abbott’s own authorized generic, Abbott is no longer entitled to a presumption of irreparable harm. Teva’s removal of the generic from the marketplace will hurt Andrx’s chances based on the “pre-existing generic” argument.

Andrx also cites Abbott plans to come to market with its own generic version of Biaxin® XL (i.e., an authorized generic) if another party has launched a generic version of Biaxin® XL already. So far, Abbott’s Opposition to the Motion remains sealed. We’ll keep you posted on further developments.

On Thursday, Pfizer announced that it plans to introduce a generic version of its antidepressant Zoloft in the United States as soon as a rival generic hits the market, which could be as early as Saturday (in what is known as the sale of an “authorized generic”). The patent on Zoloft expires in two days.

Pfizer spokesman Paul Fitzhenry confirmed that Pfizer’s Greenstone unit is ready to launch a generic version of Zoloft, also known by its active ingredient sertraline, “if and when others release” their generic versions of the drug.

A generic company that is first to break a branded drug’s patent is awarded a 180-day period of exclusivity over other generics. But an authorized generic can compete in this period. “Generic companies are aggravated because it means they don’t get a 180-day period of market exclusivity,” said Ira Loss, an analyst at Washington Analysis.

Teva inherited the rights to generic Zoloft through its acquisition of Ivax Corp. earlier this year. Ivax received Food and Drug Administration approval in December 2004 to sell a generic version of Zoloft after the patent expires, and 180 days of marketing exclusivity upon launch. However, the exclusivity period does not apply to authorized generics.

By launching their own generic products, branded companies hope to hang on to a bigger portion of sales from the drugs they developed and discourage generic companies from making aggressive, early patent challenges. Generic companies, however, say they are not deterred.

As more blockbuster drugs lose patent protection, greater attention has become focused on the practice of branded drug makers allowing “authorized generics,” or unbranded versions of branded drugs they control, to compete with dedicated generic drug makers. Over the next five years, brand-name prescription drugs representing about $50 billion in annual sales are scheduled to lose patent protection.

Teva downplayed the news, probably still stinging from Merck’s decision last week to sell its generic Zocor at prices well below other generic competitors, made through special deals with health care companies. (Teva has the 180-day exclusivity period for Zocor which went off-patent last Friday). Pfizer has not announced whether or not it will follow the same pricing strategy as Merck did for Zocor. If it does, do you think the FDA will stand up and take notice and put an end to these bad days for the generics?