Patent Baristas

George M. Wallace at a fool in the forest brought a special April Fool’s Blawg Review Prequel to his Blawg Review #51, which was then held (for real?) on his Declarations and Exclusions blog.

He makes special note of f/k/a . . . ., where next week’s Blawg Review host David Giacalone asks: “do lawyers choose to be unhappy?”. Perhaps they do “by buying into the Big Lie that Big Law is the only true source of success in our profession.” David opines: “Wanting less money and needing less prestige will go a long way toward nurturing healthy and happy attitudes.” Strong words in light of the recent up-tick in the associate starting salary arms race (Note: Offer not applicable in the Midwest.)

And finally, we’ll note that Time magazine offers a nice overview of the issues behind eBay v. MercExchange that I’ll mention despite the use of the title Patently Absurd, which is the literary equivalent of scraping fingernails across a blackboard.

The article highlights how political the patent game has become with eBay hiring big-gun lobbyists in Washington, such as the Ashcroft Group, a lobbying shop run by former U.S. Attorney General John Ashcroft. Juleanna Glover Weiss, an ex-press secretary for Vice President Dick Cheney, is registered as an eBay lobbyist on “patent reform.”

Expect more fun to come out of patent reform as politicians get involved.

By April Balatro
Staff Writer
Saturday, April 1, 2006

Google Inc. (NASDAQ:GOOG) announced it has agreed to acquire Patent Baristas, an intellectual property law blog for the biotechnology and pharmaceutical industries, for $1.3 billion in stock and other consideration.

Patent Baristas offers innovative intellectual property blogging that connects millions of people around the world with bio/pharma chat every day. Through its freshly brewed look, Patent Baristas provides news and witty commentary on intellectual property law from the biotechnology, pharmaceutical and chemical fields. Engagingly cleaver, the Patent Baristas shine a bright spotlight on the absurdities that prevail in intellectual property law today.

In announcing the deal Friday, which had been rumored for weeks, Google said the acquisition of the Cincinnati-based Patent Baristas would strengthen Google’s IP presence in the global marketplace. Plus, it’s keen to open several new lines of java-based business. In the future, Google plans to integrate the Patent Baristas’ technology into the Google AdWords platform, creating a new coffee-themed ad distribution channel for Google advertisers.

“Google is committed to exploring new ways to extend targeted, measurable advertising to other forms of media,” said Tim Armstrong, vice president of Advertising Sales, Google. “We anticipate that this acquisition will bring new ad dollars and accountability to the patent field by combining Google’s expansive network of advertisers with the Patent Baristas’ talented blogging team and innovative writing style. We look forward to working together to continue to grow and improve the ecosystem of the bio/pharma industries.”

The purchase comes as a surprise to few, as industry watchers have long floated the possibility of this exact acquisition, suggesting that the deal was just a matter of time considering where Google was headed with its plans to broaden its intellectual property base.

Dr. Eric Schmidt, Google’s chairman and chief executive officer, said on a conference call that he was excited about the company picking up such a strong group of bloggers and the worldwide audience of over 31,000 monthly readers. “We believe the next big thing is to capitalize on intellectual property and the key to that is going to be services like Patent Baristas,” Schmidt said. “With their trademark savage wit and a sassy attitude to match, this deal is right for us.”

“We are excited to be joining one of the most innovative companies in the world,” said Stephen Albainy-Jenei, President and Chief Blogger of Patent Baristas, Inc. “We are bringing together complementary visions of simplicity, efficiency, and barbed wit to the intellectual property scene. Google also provides free coffee to its employees.”

The deal represents a heady zenith for Albainy-Jenei, who founded the fast-growing Patent Baristas in 2004. Last seen shopping for ocean-front property, Albainy-Jenei is expected to continue to head up the Baristas and will report to Google CEO Schmidt and join Google’s senior executive team, the companies said.

The companies said Monday that the deal, subject to approval from regulators and stockholders, would provide more efficient, targeted and measurable marketing and advertising through the Internet and other media. The deal, the companies said, “will create the worldwide leader in online intellectual property chat.” The acquisition is expected to close in the fourth quarter 2006.

Regulators at the Federal Trade Commission and the European Commission expressed serious doubts about the deal alleging that the combined company could reduce competition in the intellectual property arena. “It is illegal for a monopolist to lock others out of the market and we’ll be looking very hard at this proposal to see if it violates Section 5 of the FTC Act or even our own sense of decency,” says William Bear, the director of FTC’s bureau of competition. “Although they’re viciously funny and snappy dressers, we’re not convinced that the Baristas know beans about anything.”

Transaction and Financial Information

Under the terms of the imaginary merger agreement, Google will acquire all of the outstanding equity interests in Patent Baristas, a privately held company, for total up-front consideration of $150 million in Starbuck’s coupons. In addition, Google will be obligated to make additional contingent cash payments from time to time if certain product integration, net revenue and advertising inventory targets are met over the next three years. The maximum amount of potential contingent payments is $1.15 billion over the next three years. Since these contingent payments are based on fantasy, actual payments may be substantially lower. The acquisition is subject to customary closing conditions. Google anticipates that the acquisition will close in the fourth quarter 2006. Substantially all of the payments will be accounted for as part of the purchase price for the transaction.

Safe Harbor

This press release contains forward-looking statements and satire that involve risks, uncertainties and down-right falsities, including statements regarding the actual amount of contingent payments that may be made pursuant to the transaction, Google’s expectation that the acquisition of Patent Baristas will bring new ad dollars and improve Google’s operating performance, Google’s plans to integrate the Patent Baristas technology into the Google AdWords platform following the consummation of the acquisition, and the expectation that the Baristas will even show up for work. Such statements are just pretend and involve risks and uncertainties such that an actual acquisition may differ materially. Factors that could cause actual results to differ from our make-believe expectations include the failure to (1) accurately estimate the amount of the contingent payments because of mistaken assumptions or predictions about the ability of the Patent Baristas to achieve the performance targets described above, (2) receive regulatory approval for the acquisition, (3) successfully integrate Patent Baristas and its bloggers into our organization and achieve expected synergies, (4) compete successfully in this highly competitive and rapidly changing marketplace in which we have no significant previous experience and (5) provide decent enough coffee to retain key bloggers. These and other falsehoods are detailed from time to time in our periodic reports that are filed with the Securities and Exchange Commission.

Google is a registered trademark of Google Inc. All other company and product names may be trademarks of the respective companies with which they are associated.

Barista Stephen Albainy-Jenei is also a patent attorney and Member of Frost Brown Todd LLC. When not serving up patent chat over a cup of java, he’s working closely with biotechnology and emerging growth companies to brew up successful technology transactions.

Contact:
Google-Patent Baristas, Inc.
baristas@patentbaristas.com

© Copyright 2006.

The Federal Trade Commission (FTC) is considering conducting a study to analyze the use and likely short- and long-run competitive effects of authorized generic drugs in the prescription drug marketplace. An authorized generic is chemically identical to a particular brand-name drug, but the brand-name manufacturer authorizes it to be marketed in a generic version.

In the United States, the Food and Drug Administration (FDA) must approve the marketing of any pharmaceutical drug, whether brand-name or generic. The Hatch-Waxman Act establishes the regulatory framework under which the FDA may approve a generic drug to be marketed. Typically, a brand-name drug obtains FDA approval through a New Drug Application (NDA), and a generic drug manufacturer obtains FDA approval through an Abbreviated New Drug Application (ANDA) in which it may be allowed to rely on the clinical data first submitted by the brand-name drug manufacturer.

To encourage generic entry as soon as is warranted, the Hatch-Waxman Act allows generic drug manufacturers, in certain circumstances, to market a generic drug prior to the expiration of claimed patent protection for the corresponding brand-name drug. To be permitted to do so, a generic drug manufacturer must first submit a paragraph IV ANDA in which it certifies that (a) its generic drug will not infringe patents listed in the FDA’s Orange Book, as claiming the relevant brand-name drug product, and/or (b) the relevant Orange Book patents are invalid.

If the paragraph IV ANDA leads to litigation, then 30 months after the litigation was filed (or after final decision in the litigation, if earlier), the FDA may authorize the marketing of the generic drug under the ANDA application. At that point, the first-filed paragraph IV ANDA applicant becomes entitled to a 180-day marketing exclusivity period, during which the FDA cannot approve any other, later-filed paragraph IV ANDA for a generic drug corresponding to the same brand-name drug product. This protects the first FDA-approved paragraph IV ANDA applicant from competition with other generic ANDA applicants during this time.

The 180-day marketing exclusivity period does not preclude competition from NDA-approved “authorized generics,” however. An authorized generic is chemically identical to a particular brand-name drug, which the brand-name manufacturer authorizes to be marketed in a generic version under the NDA-approval that the FDA granted for the brand-name drug. The brand-name manufacturer either sells the authorized generic itself through a subsidiary or licenses a generic firm to sell the authorized generic.

In recent years and with increasing frequency, brand-name drug manufacturers have begun to market authorized generic drugs at precisely the same time that a paragraph IV generic is beginning its period of 180-day marketing exclusivity. In the short run, the entry of an authorized generic drug may benefit consumers by creating additional competition that lowers generic prices further than if only the paragraph IV generic were marketed. Many generic manufacturers assert, however, that in the long run, consumers will be harmed because an expectation of competition from authorized generics will significantly decrease the incentives of generic manufacturers to pursue entry prior to patent expiration.

The FTC now proposes to undertake a study to examine both the likely short-term competitive effects of authorized generic drug entry and, to the extent possible, the likely long-term impact of entry by authorized generic drugs on competition by generic manufacturers.

Comments on the FTC’s “Authorized Generic Drug Study” will be accepted until June 5, 2006.

See additional information in the Federal Register Notice.

The USPTO is proposing changes to the rules of practice relating to ex parte and inter partes reexamination. The USPTO is proposing to provide for a patent owner reply to a request for reexamination prior to the Examiner’s decision on the request. Currently, most requests are allowed and the new procedures may help cut down the number of reexams by giving the patent holder a chance to argue that no new substantial question of patentability exists.

The Office is also proposing to prohibit supplemental patent owner responses to an Office Action in an inter partes reexamination without a showing of sufficient cause.

No public hearings will be held. Comments on the proposed change are due by May 30, 2006 and can be sent to the USPTO at: AB77.comments@uspto.gov or fax to: 571.273.7710.

See the Proposed Revisions here.

In an exciting exchange at the Supreme Court, lawyers for MercExchange and eBay squared off in the battle for and against injunctions. The Court heard oral arguments yesterday in a crucial intellectual property case where the outcome could hinge on whether the justices think eBay is an evil patent infringer or the innocent victim of a so-called “patent troll”

In 2003, eBay lost an infringement action to MercExchange when a jury awarded MercExchange $35 million – although the judge reduced the award by $5.5 million and denied MercExchange an injunction, saying the smaller company would not face “irreparable harm” without it.

The district judge reasoned that, among other things, MercExchange was not practicing the patents and was willing to license its technologies to other companies. The judge also cited “growing concern over the issuance of business-method patents” as a reason that an injunction would not be in the public interest.

However, the U.S. Court of Appeals for the Federal Circuit reversed the ruling last year, saying MercExchange was entitled to an injunction because a “general concern” about business-method patents did not justify “the unusual step of denying injunctive relief.” eBay’s lawyers argued that the appeals court’s ruling is too inflexible to encompass the fast-changing world of software technologies.

eBay also argued that MercExchange wouldn’t be harmed if eBay continued to offer the service while it tried to design around the patents since MercExchange didn’t use its patents and could eventually be compensated with additional monetary damages if the infringing continued.

On Wednesday, the Supreme Court justices seemed to back the necessity for injunctions with Justice Antonin Scalia firing out that “We’re talking about a property-right here; all he’s asking for is ‘give me my property back.’ “

Injunctions, of course, are critical to the pharmaceutical industry, which has a huge stake in patenting drugs that take years to develop and needs easy access to injunctions.

A decision is expected by July. In the meantime, the USPTO has handed down another Non-Final rejection in the patent at issue in the course of re-examination. In the 105 page Office Action, the Examiner contends that claimed invention was obvious over the cited art.

More will be forthcoming.

The Baristas will be hosting the next exciting episode of the Carnival of Biotechnology on April 10th. The Carnival of Biotechnology is a regular roundup of the best blog posts on biotechnology. The carnival is guest-hosted by different sites, ensuring diversity in content and viewpoints. Biotechnology topics to submit include:

• Finance and business development
• Law
• Regulations and Politics
• Science
• Investing
• Careers
• U.S. Clusters and Global Trends
• Editorial Direction

Submit your posts at BlogCarnival.com. Please feel free to pass along any sites that you think should be considered. Since I’ll be at BIO2006 on Monday, April 10, you’ll need to get your posts in early – I’ll have to post the Carnival on the 9th.

If you’re interested in hosting the Carnival, drop an email to admin@biotechblog.com.

[Note to rethink(IP): We promise to not let it become some bloated, link-whore-optimized vestigial detritus left stinking up the internet.]

Medtronic filed a patent infringement lawsuit in Ireland against Guidant Corp.’s Vision and Xience stents (tiny tubes that prop open arteries) alleging that the stents infringe patents licensed to Medtronic from Evysio Medical Devices, a Canadian company. Medtronic is seeking an injunction and monetary damages.

This is high-stakes for both Medtronic and Guidant as they try to muscle into the $6 billion U.S. market for drug-coated stents – now the domain of Johnson & Johnson and Boston Scientific. Lawsuits have also been filed in U.S. District Court in northern California and in France. A French court ruled that Guidant’s Vision stent may infringe the Evysio patents. Guidant’s Vision stent is the foundation of their Xience drug-eluting stent.

Patent woes are also posing trouble for Boston Scientific, which in January agreed to buy Guidant for $27 billion. A successful fight in Ireland where Vision is manufactured, for example, could put the Xience European launch at risk. There is argument, though, about whether the latest patent claims are note-worthy or are simply a footnote in the competitive $5 billion to $6 billion stent business.

Some analysts suggest Medtronic’s patent suits are really an effort to create bargaining chips to benefit its own stent project. Medtronic is marketing a drug-coated stent internationally called Endeavor, and hopes to bring it to the U.S. in 2007. However, the company doesn’t currently have access to “rapid exchange,” a key delivery system that’s now the favored way to install stents. If Medtronic can create a strong case against Guidant’s product, it can later agree to drop that case in return for access to rapid exchange.

The two most common types of delivery system in the United States are over-the-wire and Rapid Exchange (“RX”). Over-the-wire delivery systems employ a long guidewire and require two operators to implant the stents. In contrast, the RX delivery system employs a shorter guidewire that can be handled by a single operator. RX delivery systems currently are preferred by physicians.

Johnson & Johnson, which had planned to buy Guidant before Boston Scientific won a bidding war, holds patents for the family of drugs used on the Guidant and Abbott stents.

In a Sign o’ the Times, Sanofi-Aventis and Bristol-Myers Squibb have reached a settlement agreement with Apotex in the patent infringement lawsuit pending between the parties in the US District Court. The suit relates to the validity of a composition of matter patent for clopidogrel bisulfate, the active ingredient in Plavix.

Plavix is one of the three top-selling drugs in the world with sales of $5.4 billion. In Sanofi’s suit against Apotex and Dr. Reddy in the U.S. Apotex and Dr. Reddy argued that the patent for the active ingredient, which expires in 2011, is not sufficiently different from another Sanofi patent that expired two years ago.

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 a later patent (US 4,847,265), 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.

Under the terms of the proposed settlement, Sanofi-Aventis will grant Apotex a royalty-bearing license under the ‘265 patent to manufacture and sell its FDA-approved clopidogrel bisulfate product in the United States, and Apotex would agree not to sell another clopidogrel product in the United States until the effective date of the license.

Keep in mind that the proposed settlement is subject to certain conditions, including antitrust review and clearance by the Federal Trade Commission and state attorneys general. There is a risk that antitrust clearance won’t be obtained. Sanofi and Bristol-Myers have approached Dr. Reddy’s to discuss a possible settlement of this matter, too.

The growing ability of patent holders to settle disputes could be a sign that things are moving more in favor of branded drug firms on patents after years of aggressive attack from generic firms. This follows the victories last year by Pfizer with its patent on Lipitor and Eli Lilly with its patent on Zyprexa.