Pfizer and Ranbaxy Settle Lipitor Patent Litigation (mostly) Worldwide

Ranbaxy to Receive License in U.S. on November 30, 2011;

NEW YORK--(BUSINESS WIRE)--Pfizer Inc announced today that it has entered into an agreement with generics manufacturer Ranbaxy Laboratories Ltd. of India and certain of its affiliates to settle substantially all their patent litigation worldwide involving Lipitor, the world’s most-prescribed cholesterol-lowering medicine. Under the terms of the agreement, Ranbaxy will have a license to sell generic versions of Lipitor and Caduet in the United States effective November 30, 2011. Caduet is a medicine that combines the active ingredients of Lipitor and Norvasc and treats both high blood pressure and high cholesterol.

The settlement provides shareholders of Pfizer and Ranbaxy, as well as patients, with substantial certainty regarding the potential date – November 30, 2011 – for entry of a generic version of Lipitor in the United States. In addition, the agreement provides a license for Ranbaxy to sell generic versions of Lipitor on varying dates in seven additional countries: Canada, Belgium, Netherlands, Germany, Sweden, Italy and Australia. Pfizer and Ranbaxy have also resolved their disputes regarding Lipitor in Malaysia, Brunei, Peru and Vietnam.

The lawsuits between Pfizer and Ranbaxy regarding Lipitor and Caduet will be dismissed in the specified countries, and Ranbaxy will no longer contest the validity of Pfizer’s patents in the specified countries, including the United States, according to the agreement. The settlement also resolves all patent litigation with Ranbaxy relating to Accupril in the United States and Viagra in Ecuador.

“This agreement is a win-win-win because it is pro-patient, pro-competition and pro-intellectual property,” said Ian Read, president of Worldwide Pharmaceutical Operations for Pfizer. “The agreement provides patients with access to a generic product much earlier than if Ranbaxy were unsuccessful in obtaining approval for its product and overcoming the relevant patents. It provides substantial certainty regarding the timing of the entry of a generic version of Lipitor. Finally, the agreement clearly reaffirms the value and importance of intellectual property and this country’s well-balanced system of creating incentives to develop innovative medicines while at the same time establishing a strong generic drug business.”

“Without patents and rigorous defense of intellectual property rights, innovators would face significant challenges that could inhibit the discovery of new medicines,” Mr. Read added.

The settlement provides Ranbaxy with licenses to all the patents it needs to make the generic product and enables Ranbaxy to manufacture and launch a generic version of Lipitor prior to the expiration of the crystalline and amorphous patents.

The Lipitor patents involved in this agreement are the basic compound patent, which expires in the United States in 2010; the enantiomer patent, which expires in the United States in 2011; as well as various process and crystalline form patents, which expire in 2016 and 2017; and the combination patent for Caduet, which expires in 2018.

The settlement complies with all applicable laws, and does not contain any of the practices – such as “reverse payments” – that have been identified as of concern recently by the U.S. Federal Trade Commission.

Pfizer has been defending Lipitor patent challenges by Ranbaxy throughout the world since 2003. The agreement pertains solely to Ranbaxy and its affiliates and does not cover legal challenges to the Lipitor patents involving other generic manufacturers. However, Ranbaxy was the first generic challenger to the listed Lipitor patents and, as such, holds the rights to 180 days of marketing exclusivity in the United States.

The patent infringement litigation between Pfizer and Ranbaxy relating to Lipitor will continue in five other European countries -- Finland, Spain, Portugal, Denmark and Romania. Court cases involving the enantiomer patents are pending in Spain and Portugal, while an infringement action on the commercial process patent is pending in Finland. Patent cases involving the enantiomer patent are pending in Denmark and Romania.

Here's another nice example of cashing-in on pharmaceutical developments from the generic side of the equation - instead of selling the IP in a product - sell the whole company.

Daiichi Sankyo has recently made a bid for Ranbaxy, and even more interestingly, Pfizer is also rumoured to be making a bid.  The interesting thing about the Pfizer bid is that they have been suing Rambaxy in the global Lipitor dispute. 

So, I wonder to what extent Ranbaxy's role in Lipitor has figured in its attractiveness to Pfizer?  The Lipitor patent monopoly disappears in 2010-2011, and a generic version which can be launched a suitable period before patent expiry (as an authorized generic) will capture most of the generic market and make a big impact on maintaing Pfizer's market share in the product.

Current annual global sales of Lipitor are about $13 Billion and Pfizer iwould presumably have to bid more than Sankyo Daichi's $ 4.6 Billion.

So, let's assume that on generic entry, the global price for Lipitor drops by 50%.  That's a market of $6.5 Billion in annual global sales. 

If by launching before patent expiry with a Rambaxy-made generic, Pfizer can hold on to even 30% market share in the first year, then they will have paid for the entire purchase of Rambaxy within 5 years - from Lipitor sales alone (assuming a lowly 50% profit margin on Lipitor sales).    (There will be  some potential profit loss due to canabilisation of the market by the generic version, but I think this is covered by the low profit margin I've used.)

And that's just Lipitor - Rambaxy obviously have a lot more products on pharmacy shelves and in the pipeline (including a number of completely new chemical entities).

Sounds like a good idea to me - from Pfizer's perspective.

There are mixed views from Ranbaxy's perspective.

(This article is a summary of the issues discussed in Duncan’s 21 May 2008 presentation at the Generic Medicine Industry Association conference in Sydney Australia.)

The Glivec battle in India

Novartis’s ongoing stoush with the Madras High Court in India created quite a stir on the world stage late last year.  It concerns the patentability of the Beta crystalline form of Imatinib, the active pharmaceutical ingredient in the blockbuster drug Glivec (Gleevec).  (For those who are unaware, polymorphs are the various crystal forms of a material.)

The case derives from substantial changes to the Indian Patent Act made in 2005 and focuses on section 3(d) which bars from patentability certain types of patents which have traditionally been quite useful to innovator companies.  The section reads:

'The following are not inventions within the meaning of this Act,
...
‘the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.'

The case is currently mired in side issues about the constitutionality of the section and the proper composition of the Appeals Board which was to hear the appeal from the original patent office decision.  Please read our August 2007 article for further background on the case. 

International ramifications

One of the allegations that has been made by Novartis is that India’s section 3(d) does not comply with TRIPS.  The contrary argument (much propounded by Shamnad Basheer over at SpicyIP) is that it does, as it is merely an obviousness standard that member states are free to define in a manner consistent with their national policy.

The controversy has become even more acute since a number of other Asian countries have apparently foreshadowed that they will enact provisions similar to India’s 3(d).  These include the Philippines, Maldives, Pakistan, Sri Lanka, Vietnam, Indonesia, Malaysia and Bangladesh.

So how are things looking in other jurisdictions? 

A mixed bag...

United Kingdom criticises ‘try on’ patents

On 9 May 2008, the UK Court of Appeal handed down its decision in the Perindopril (Coversyl) beta polymorph patent case.  In essence, the patent was held to be obvious in light of a prior patent owned by the innovator (Servier) which disclosed an almost identical process to that required to form the beta polymorph.

The Judges were quite critical of the use of this patent to attempt to extend the monopoly period – saying that it was “invalid, and very plainly so’ and ‘It is the sort of patent which can give the patent system a bad name.’

Filing the beta polymorph patent was not the only thing that Servier has done to reinforce their IP position for the drug – they acquired to groups of synthetic process patents from Lupin in April and then October 2007 to add to their portfolio.

Australia – perindopril opposition dismissed, but what does it mean?

The same patent was the subject of an Opposition in Australia which was dismissed on 11 April this year.  This doesn’t mean that the Australian Patent Office thinks such patents are automatically valid, only that the grounds on which the opposition was run – that the amendment itself was bad – were insufficient.

United States – Detrol application by Hetero...

The issue of polymorph patentability is yet to be litigated at the CAFC, but the USPTO seems to still be content to issue polymorph patent claims.  The latest that I am aware of is Hetero’s tolterodine tartrate (Detrol) polymorph patent application – US 20050131067, which has been allowed with a claim 1 that reads:

1.       A crystalline tolterodine tartrate form 1, characterized by an x-ray powder diffraction spectrum having peaks expressed as 2 theta at about 11.9, 13.6, 14.2, 15.9, 16.9, 18.4, 18.8, 20.4, 22.0, 23.9, 25.4, 26.3 and 29.8 degrees.

Whether a District court, or the CAFC would uphold such a claim is a different matter altogether, particularly in light of the greater invalidity risk created by the US Supreme Court in the KSR v Teleflex decision on 30 April 2007.  (KSR basically made it easier to invalidate patents on the ground of obviousness.)

Strategic options

For innovators, each of these cases obviously serves as a roadmap as to what you can expect in these respective jurisdictions.  Careful attention to developments, and proactive steps will obviously be crucial.  You may, for example decide that it is worthwhile to seek amendments well before the time when you are currently expecting generic competition, and you will certainly need to reconsider the drafting and prosecution strategy for these patents.

Generic companies will obviously take heart from some of these developments.  However, you should not assume that just because a polymorph patent has been invalidated in one jurisdiction that another will in the same jurisdiction, or that even the equivalent patent will be invalidated in a different jurisdiction.  Instead, focus on understanding the underlying rationale for invalidation and deeply analyse the ways that this can be used in the jurisdictions of interest to you. 

In the Australian context (for this conference)...

As I wrote in my August 2007 article in IAM Magazine,  even at the best of times, Australia is a difficult place to invalidate a patent based on obviousness.  As mentioned in the article, this is due to the very narrow prior art base on which obviousness is tested there.  Consequently, the mere fact that a particular patent has been invalidated in another country based on obviousness does not mean that this will automatically happen in any other country, and least of all in Australia.  You will need to take a very careful look at the prior art used and whether it can be fitted into the narrow category of relevant prior art under the Australian test.

On the innovator side of the equation, I would be considering co-filing an Innovation patent (which is even harder to invalidate) which will at least provide 8 years of stronger protection.

Ok, so firstly, thanks to Securing Innovation and Patent Baristas who mentioned IP Think Tank in their appreciation posts - thanks guys.

Also - thanks so much to those blogs that have recently been linking back here:

The website has been updated to reflect the new entity and in response to feedback from various readers.  Most importantly, there's a new section for the IP Think tank content -  the blog and scorecards (podcasts to come as soon as we can - stay tuned).  Some other useful amendments have been to truncate the text on the front page of the blog to increase readability and categorize the scorecards to make them easier to browse.

Please do come and check out the changes, and as always, let me know what you think.

(Hat tip yet again to the incredible team at StressLimitDesign).

First up, I'll participate in a panel discussion entitled "Patents vs. patients: examining the effect of patent legislation on the pharmaceutical industry".

In a subsequent session, I will take the audience through what has been happening in India (and other countries) over the patentability of Glivec (Gleevec) crystalline forms and what it might mean for the future.

For those of you interested in the Australian pharmaceutical scene - I hope to see you there.

There are only 450 delegate places, and 250 are already taken.

I will be chairing the "IP in the lifesciences" breakout session on day 1. We're putting together some global and strategic issues for discussion, and it will be a lot of fun.

Please do take a look at the programme and the speakers - and I hope to see you there.

US $29 Billion in drugs come off patent this year - however that's the innovators' current markets - these products will all have multiple generic suppliers on patent expiry, and so with price competition, the actual markets will be much smaller.

The fruits go to those companies who don't wait for patent expiry before launching, and instead develop non-infringement or invalidity strategies.  High risk, but high reward.

Of course, the same forces apply in other industries too.  However, an exclusive originator as the supplier of a patent protected product is much less common.  Instead, there are usually one or more cross-licensing deals based on IP that would otherwise block new products from entering the market.  

It's interesting to think about how this latter model might apply to pharmaceuticals.  Something to explore, especially given that there is no longer a clear distinction between many of the 'innovator' and 'generic' companies.

GenericsWeb have arranged a great program and it promises to be a lot of fun. As usual, I'll be aiming to stimulate some lively discussion about IP Strategy - this time in the Pharmaceutical context.

I look forward to catching up with those of you who can make it.

For those who aren't aware, Novartis has other patents covering imatinib in similar ways. Take for example, WO 2007023182 for Delta and Epsilon Crystal Forms of Imatinib Mesylate.

From a strictly Indian perspective this might seem to border on the futile (in light of the restrictions imposed by section 3(d)). In fact, this looks set to be the case in some other countries as well (Philippines, Maldives, Pakistan, Sri Lanka, Vietnam, Indonesia, Malaysia and Bangladesh).

However, Novartis really has no other choice but to do this - the potential 'upside' is too high in all of those countries which will grant the patent applications. In many countries, the fact that a patent has been granted (irrespective of the validity status) can be used to strategic advantage. Take, for example China and Germany where infringement and invalidity are determined in separate courts, or the situation in many European countries where a preliminary injunction application will only assess infringement and give scant regard to validity.

Don't forget the potential enormous 'downside' to Novartis of allowing a competitor to obtain such patents first. Companies other than the innovator commence patenting various aspects of a molecule long before market authorisation is obtained. So they will certainly be looking into new crystalline forms which give the chance of the benefits a new Composition of Matter patent. (See my recent article: Pharmaceutical & Biotech Lifecycle Management (II); How does timing of 1st non-innovator patent affect the period of monopoly for a new drug?

Also - who knows? Even in those countries, these patents may get through - perhaps these crystalline forms will meet the 'enhancement of the known efficacy' test. If I was Novartis, I'd be learning from the current litigation over the beta form in preparation for my efforts on these other forms.

Some great things are in store for 2008 - more on that later.

IP Think Tank will take a short break and be back on Thursday 27 December.

In Intellectual Property Strategy, terrain can be anologised to a variety of strategic factors. One of the best is the legal environment of the country of interest (the legislation, case law, procedures and practice).

Unlike the terrain that Sun Tzu speaks of, it is possible in IP Strategy to shape the terrain as you go - one of the many reasons why IP Strategy is so fascinating.

One example is the online world and the balance between copyright infringement and fair use and how it impacts on content providers and ISPs. The RIAA and others are actively spending large sums of money to litigate so as to firstly define the terrain and secondly shape it in their favour as best they can.

A second example, which is beginning to take shape, is the area of biosimilar drugs (in essence - generic versions of biological drugs). Moves have been afoot for some time to lobby for the legislative bedrock. Next will be the litigation which will further shape the terrain over which producers of biosimilar products will have to move to get to market.

The upcoming allowance of a patent to a generic manufacturer which essentially protects any polymorphic form of tolterodine tartrate together with a carrier or diluent demonstrates that the quality of patent examination at the USPTO cannot be relied upon to filter out patent applications that are clearly not innovative from the eyes of a generic developer and that may significantly affect the level of generic competition to Pharmacia & Upjohn’s Detrol product post patent expiry.

GenericsWeb researches and monitors patent publications to assist in developing generic pharmaceuticals. Although many generics companies see this as an essential component of their development activities, some choose to focus on Orange Book listed patents and others filed by the innovator alone. This case clearly shows the latter option to be deficient, representing a significant risk to less informed generic developers. Similar cases, unfortunately, are highly likely unless the examination quality issues at patent offices around the world are addressed.

GenericsWeb’s Pipeline Developer report for Tolterodine identifies a PCT application entitled “Novel Polymorphs of Tolterodine Tartrate” filed in 2003 by Hetero Drugs Ltd of Hyderabad (IN), more than 5 years after approval of products containing Tolterodine Tartrate as a ‘white, crystalline powder’. This resulted in a corresponding US patent application which, if granted, will ordinarily run until 2023 - more than 10 years after the molecule patent that protects (and discloses methods for making) the Tolterodine Tartrate active ingredient per se.

A Notice of Allowability issued by the USPTO examiner on May 18th 2007 shows that claims to ‘A pharmaceutical composition comprising a polymorphic form of tolterodine tartrate and a pharmaceutically acceptable carrier or diluent’ have been approved for grant following the prosecution of this application. Claims to amorphous forms of Tolterodine tartrate per se are also considered allowable in the same notice.

Upon grant, which the public record shows to be imminent, this patent is expected to prevent any company other than Hetero from launching a generic version of Tolterodine as a tartrate salt in the USA. It could also be a cause for concern by the innovator Pharmacia & Upjohn, whose original product seemingly falls within the scope of the claims. Whilst the question of validity of the allowed claims can only be answered by extensive legal scrutiny, any experienced generic developer would be of the opinion that these claims lack any inventive step over the originator product approval data, and are not in the spirit of ‘innovation’ that the patent system is intended to reward. The quality of examination at the USPTO clearly needs improving.

Is this a fair use of the patent system? Are generic companies just playing the innovators at their own game? Is it possible for patent examination quality to improve?

GenericsWeb held it’s second Generic Pharmaceutical Patent Academy in London last week, where attendees from many parts of the world learned from a range of patent attorneys, lawyers and other experts specialising in the field of generics, and discussed patents in the context of the industry.

Of notable importance is the way in which EU legislation is interpreted in different member states.  Whilst an ECJ decision will often clarify a situation, this takes a great deal of time and is often specific to a particular point of law.  Meanwhile new regulations are interpreted in a variety of ways ensure that trading in the European Union is seemingly never going to be on a level playing field.

Some examples include the way in which SPCs are often based on different EU authorisation dates in different member states, granting of multiple SPCs on single products in certain member states, and the question over the scope of protection of an SPC granted on a process patent (where product patents were not allowable in those countries at the time of the ‘basic’ patent application).  Whilst we can form an opinion on how the legislation has been interpreted and how likely the prospects of a successful challenge are, the ultimate decision is often never known until the final court has ruled.

Attendees were also made aware of loose interpretation of The IP Enforcement Directive 2004/48/EC (implemented in UK, NL, BE, IT & ES) applied by the Dutch courts when granting ex-parte an innovator pharmaceutical company the right to conduct a pre-judgement search of a major generic company’s offices and servers, based on an ‘imminent risk’ that they would be infringing IP rights (based on a belief that the Generic had filed for marketing authorisations). Although a court later determined that the seizure was unlawful because there was no proof of intent to infringe the patents before they had expired, we learned that this decision is not binding on any other member state.

Such threats and uncertainty of litigation based on differing interpretation of EU Regulations clearly hampers the generic pharmaceutical industry in entering European markets as many smaller players are not prepared to take the litigation risk.  It also means that the EU is far from being a single, borderless market in terms of when and how generic pharmaceuticals can be developed, authorised and sold.

What do you think?  Can this be fixed or is this kind of uncertainty inherent in the EU system?  Should all generic players be expected to take risks to get on the market in Europe?

Pharmaceutical Lifecycle Management & IP acquisitions

This post presents some observations on recent developments in the area of IP acquisitions. Survier’s recent strategy reinforces how acquiring third party intellectual property can be an effective means to enhance one’s monopoly.   

Global IP Strategy - can you keep up?

The rate at which US patent applications have been published has grown dramatically since 1836.  But it is in the last 5 years that most changes have been witnessed in the IP space.  

A new era for intellectual property securities?

Sears and David Bowie provide the context within which IP securitisation is discussed. But the issue that is raised concerns the difficulty of assigning value to IP securities.    

China Labour Law and IP management

A brief discussion on the codification of the Labour Contract Law of China and the challenges it poses for companies with a global presence.

Patent interim injunctions, clearing the way and patent strategy

Whether or not to 'clear the way' for a new product launch is always an important consideration.

The argument is that it has been widely misused by interested parties to unnecessarily delay the patent application process.

So, when is it strategically useful to delay the grant of a competitor's patent? Here are some thoughts, what would you add?

• Eliminate the opponent's ability to obtain an injunction using the patent in question. (Damages will still be available in most countries from the date of publication.)
• In the United States (Pharmaceutical) Orange Book context, delaying grant of an opponent's patent (eg. with Rule 99) would mean the patent is not listed in the Orange Book and you don't have to file against it.
• To decrease the value of the competitor's IP portfolio. (Don't even think of doing this unless you have very good reason to.)
• etc

Many thanks.

Commentors

Allan J Main,  Ajay A Menezes, Andrew, Barbara Cookson, Ben Roxborough, Bruce Berman, China Law Blog, David MIrchin, Dirk Loop, Germany, Guru Nataraj, Jeremy Phillips, Jordan Hatcher, Julien Landré,  Leighton Howard,  Lindsaylobe, Martin Leeuwangh, Narayan, Peter Cebon, Riz Mohammad, Shamnad Basheer, Vaibhav Vutts, Victor Zalakos

Trackbacks

SeoEcom

The patent was held valid but not infringed in the suit against Cargill decided in the UK Patents Court on 10 October 2007.

All of the claims of the patent (EP0546090) pressed by Monsanto were restricted to either isolated DNA or a method for producing a genetically transformed plant. However, the alleged infringing material was soybean meal created after further processing of plants which were several generations beyond the original transformed plant. The imported goods bore little resemblance and were certainly not the direct result of the patented process.

No infringement, game over, thanks for playing.

What should Monsanto have done?

Here's one simple suggestion - what would you add?

File a further patent disclosing and claiming processes to produce the commercial products which would arise from the new technology. Some might suggest that this could have been added to the original patent specification. This is true but there is probably further work to be done to support the second application which should therefore obtain separate protection, and the consequent extension to the monopoly period. If you're concerned about the disclosure in the earlier application - fine - just adjust the timing of the first filing for the second patent. Oh, and draft the thing carefully.

At the start of the list of countries on each scorecard, there's now an 'All' button - click on this and you get a table listing details for all of the countries in alphabetical order.  For those familiar with my old, low tech site, this is similar to the format that the scorecards were originally presented in (though in a much more clunky way).  Feedback received made it clear that people wanted the flexibility to check individual countries while getting a quick overview as well. 

So now you have both.

Keep the suggestions coming, and thanks again for your contributions.

One of the many other interesting observations was the way that the period of monopoly can be enhanced by strategic acquisition of third party intellectual property (in this context, read 'patents'). It's been known for a while that such acquisitions might be useful, but what's interesting is that they are really coming to the fore.

A classic example of this was Servier's acquisition of a host of Perindopril (Coversyl) patents owned by Lupin last April. Here's an example of a generic company innovating around the synthetic process, filing patents and realising their commercial opportunity by selling the patents to the innovator (rather than through sales of the drug as a generic alternative). A nice alternativeto the straight generic play.

Well, Servier obviously liked what they saw, because it has just been reported by Forbes and the Business Standard that Servier has paid another 20 million Euro for more Lupin Perindopril patents.

This strategy only takes a fairly routine patent surveillance program by the innovator on its own product and a willingness to undertake due diligence on anything of interest. Interestingly, it doesn't have to only apply to innovators. I can imagine situations where one generic will acquire patents from another, or, heretical as it now seems, several generics may form a patent pool in order to collectively leverage their IP. (This is common in other industries and used to great effect.)

The 16 defendants are: Zentiva; Mylan; Taro Pharmaceuticals; Lupin; Moehs Iberica; Urquima; Orchid; Wanbury;Z hejiang  Huahai; USV Ltd.; Cadila; Ranbaxy; Dr. Reddy's Laboratories; Watson; Zambon andApotex.

As I mentioned in my earlier post - this is an interesting way for Teva to seek a shared monopoly with the innovator. The trite response is that, if they have filed patents, then they are entitled to enforce them. Of course.

What's really interesting, though, is that the scale of the attack on other generic companies is, to my knowledge unprecedented. Here we have a relatively new, aggressive approach to the generic side of the game. Traditionally, most generic pharmaceutical companies seem to have filed patents in order to ensure publication and freedom to operate, rather than setting out to obtain their own, separate monopoly alongside that of the innovator.

The strategy won't work in every situation, but here are some thoughts on what may be required - what would you add?

1. The innovator's process patents must have a lengthy monopoly period left to run (otherwise competitor generic companies will simpl follow the innovator's process);

2. The process described in the original Composition of Matter patent must be uneconomical at commercial scale (other wise the competitor companies will follow it once it has expired);

3. The company setting out to use this strategy must commence development very early to ensure earlier priority date than the inevitable swarm of competitors who will file patents according to the more usual timelines.

4. The patents must be such that together with the innovator's patent portfolio, they effectively block all readilly identifiable and commercially viable alternatives.

5. etc

You will also notice a few other improvements which are designed to make things easier - the scorecards page is easier to browse, the see all blog posts link is easier to find, etc.

Coming Soon will be the IP Thinktank Global Week In Review - a regular round up of top IP stories from across the globe.

Please keep the suggestions coming, and thanks again for your attention and contributions.

Regards

Duncan

In some jurisdictions, most notably the UK, a line of authorities has sprung up which requires the generic company to either obtain a declaration of non-infringement or revoke the patent prior to launch.

In the ongoing global Plavix litigation, the Australian Federal Court recently granted an interlocutory injunction to Sanofi stopping GenRx (now a subsidiary of Apotex) from launching until after the result at first instance - GenRx Pty Ltd v Sanofi-Aventis [2007] FCA 1485 (21 September 2007).

The judge granted the injunction even though he considered there to be a reasonably strong invalidity case. To their strategic disadvantage, GenRx waited until the day before obtaining Regulatory approval to sell the drug before commencing it's revocation action and evidently did not (or probably could not) deny infringement. Also telling to the Judge was that Apotex had lost equivalent litigation in the US and elsewhere. Although there it's quite likely that there will be an appeal, the reasoning is quite fact specific and unlikely to be broadly applicable.

To some this may seem like a high water mark in the well known 'clear the way' line of cases. However, on closer inspection, it's evident that GenRx made a few strategic errors which wrong footed them in court. As I mentioned in a recent post, the problem for GenTx is that they are now behind the game.

In other industries such as the High Tech area, the situation can be much more complex - there is usually at least some competition for a given product (with more similarities than those of drugs used for the same indication), and more patents owned by many parties will potentially cover any given product and all of its components. In this industry, believe me, freedom to operate clearance is not as clear cut as in Pharma. As a result, it seems unlikely that a 'clear the way' requirement will ever apply. The most common strategy is to prepare for it, but deal with any litigation if and when it arises. In these industries, there are usually myriad other strategic moves that can be made to neutralise the threat, or turn it into an opportunity. One I wrote about in April 2006 (in the context of responses to patent 'trolls') is a first class surveillance program coupled with the willingness to acqiure potentially useful / relevant IP.

What would you add?

So here's an interesting proposition - to invalidate a patent, trade mark or registered design (design patent), consider utilising a social network to leverage your chances.  The peer-to-patent project is a first example of this in the examination phase and patentlens is making inroads.  

A Company which needs to invalidate an IP right could create a contest or even a series of awards or bounties for thosewho come forward with valuable evidence, arguments and (in the case of patents), prior art.  This strategy would be equally useful for large companies on the wrong end of a license-enforcement (some would say 'patent troll') suit, as well as, for example, generic pharmaceutical companies seeking earlier market entry.  Such a strategy could not only turn up interesting documents, but potentially unpublished facts which could also affect validity.  

This strategy won't work in every situation, for example:

• One would have to very carefully think up the communication strategy and rules around the awards
• There's a real risk that running the program would divert too much management time.  
• Telling the world (or at least the network) that you would like help with your arguments is sometimes a very bad idea.  However, even this could be mitigated in certain circumstances.

Under what circumstances do you think such a strategy would be really useful?

"Opponents of amendments to Section 80 of the act said that if they are ratified, they would stop the government from being able to issue compulsory licenses for local manufacturers to produce drugs for public health emergencies, such as antiretrovirals for HIV/AIDS patients and antibiotics. The changes would also compel the government to negotiate directly with patent holders to obtain needed medicines.

“The amendments have not been thought through,” Nairobi-based IP lawyer Robert Lettington said. “It is not a good idea to cut off future options to respond to emergencies.”"

"Section 80 of Kenya’s Industrial Property Act 2001 enshrined the compulsory licensing provisions in national law. There have been repeated efforts to delete these provisions, initially by the state-run Kenya Industrial Property Institute, apparently because it offered no compensation to pharmaceutical firms whose products could be produced, under compulsory license, by state-approved companies, lawyers have said."

Many developing countries are not only issuing more compulsory licenses, but seriously considering whether to enact a section equivalent to India's now famed s 3(d).

I look forward to your thoughts.

(The first article in the series looked at whether generic products are being launched earlier than ever and some implications.)

This is the second in a series of articles on Pharmaceutical & Biotech Lifecycle Management, the first article looked at whether generics are launching earlier than ever.

The series comes from a pilot study I put together to test some views on the factors which affect success in the ongoing war between 'innovator' and 'generic' companies. In this article I look at how early non-innovator companies are filing patents covering a drug and the effect that this has on the period of monopoly for the drug.

Please join the discussion about this article at the equivalent blog post at IP Thinktank.

Background

The study looked at 15 of the globally top selling pharmaceutical products on the market today to identify possible trends which might explain, and potentially predict what can be done to affect the length of monopoly. Future articles will explore some of the other interesting findiings, and provide updates as more data and aspects of lifecycle management are analysed. (Raw patent filing data was supplied by the team at GenericsWeb.)

Other people are filing patents incredibly early

There's a pdf document with three slides which accompanies this article - you can find it at - http://duncanbucknell.com/articles/141/Pharmaceutical-and-Biotech-Lifecycle-Management-(II).

Slide 1 shows the time from marketing authorisation until the first non-innovator patent is filed. By 'non-innovators' or '3rd party', I mean companies other than the innovator for that particular drug.

The yellow markers each represent a different product. The X axis shows years of monopoly that the innovator has obtained in each instance while the Y axis shows the number of years away from Marketing authorisation.

The first thing to note about the slide is that the values are all negative. That's right - other people are filing patents covering a new pharmaceutical product before the innovator obtains Marketing Authorisation.

The second thing to note about Slide 1 is that there seems to be a reasonable trend upwards and to the right. In other words, the longest monopolies went to those products for which there was minimal delay between 3rd party patent filings and Marketing Authorisation. (Presumably this trend would continue above the X axis - so that a product for which there are no 3rd party patents prior to marketing authorisation would obtain a still longer monopoly - 25 years?)

Slide 2 shows the years from the priority date of the first API patent covering the molecule until the 1st non-innovator patent filing. The axes are the same as slide 1.

The clarity of the trend is less clear here - but there seems to be a suggestion that a delay in the filing of 3rd party patents enables a longer period of monopoly.

For those who have picked it up - yes there's an apparent anomoly in the graph - there are negative values - some 3rd party patents were filed before the original API patent. How could this happen? These are drugs which are second or third generation - so that earlier class-covering patents (for formulations, synthesis or medical methods) also cover the new molecule.

Slide 2 is another reminder as to why second or third generation drugs seldom have a very long period of monopoly. (Of course, they are often commercially very valuable notwithstanding this.)

Strategy
Is there a direct link between the date at which a 3rd party files a patent covering a new pharmaceutical and the years of monopoly that can be expected for that product?

Probably not.

Interestingly based on some other findings in the same study (to be discussed in a future article), it appears as though an accumulation of 3rd party patent holders (especially early on) tends to reinforce the innovator's monopoly and not detract from it. So the timing for the first 3rd party patent is not about this.

However, 3rd party patents are an indicator of the research activity being undertaken by other (usually sophisticated) entities in relation to the product. The earlier they become sophisticated about that product, the more likely they are to be able to successfully deal with any patent barriers put up to sustain a monopoly.

What to do?
Innovator companies should consider how they might delay the time until 3rd parties commence filing patents covering the new molecule. This may mean carefully (even more carefully?) screening company announcements, marketing materials, journal articles and other publications for a set period - even up to marketing authorisation. Public listing disclosure rules and the marketing department will obviously hamper the ability to do this, but my suggestion would be to at least consider it.

These findings tend to reinforce the trend by generic companies towards searching for and developing generic versions of products earlier in their lifecycle than would have been done in the past. The trick of course is to balance this against the investment required and the risk that the product will not be successful on the market. This is obviously particularly important given that the earliest patents are being filed before Marketing Authorisation.

Notes:

The distinction between 'innovator' and 'generic' companies is rapidly disappearing. Many traditional 'innovator' companies have their own generic subsidiaries, and of course will routinely allow authorized generic products. Similarly, the larger 'generic' companies are increasingly engaging in drug discovery and coming up with their own new chemical entities, and / or in-licensing products from smaller firms, etc.

This pilot study was designed to generate discussion, and so it has not been designed to be statistically bullet-proof. Consequently, you will not see R squared values on any of the lines of best fit - there are only 15 data points so far.

Iin this study, 'years of monopoly' was defined as time from first marketing authorisation in any country, until launch by a generic company in any country. (As we all know, the monopoly increases over time as marketing authorisation is granted in each country, and then decays over time as generic competitors are able to launch in new countries. So the measure used in this study is an indicator but not equivalent to the actual monopoly gained.)

I will do an India-focused post on IP Strategy every couple of weeks.

I look forward to the discussion over there and I'll bring relevant parts back here from time to time.

The conversations in July & August '07 have already been fantastic, and I really want to thank those who have added their valuable insights to the ongoing conversation:

Ajay A Menezes, Allan J Main, Ben Roxborough, David MIrchin, Guru Nataraj, Leighton Howard, Lindsaylobe, Martin Leeuwangh, Narayan,  Riz Mohammad, Shamnad Basheer, Vaibhav Vutts, and Victor Zalakos, 

Thanks so much and thank you to the many people who have newly subscribed by email or RSS over the past two months.

Here are the four posts which generated the most discussion - please feel free to add your comments:

1. Novartis' glivec battle with India - patentability of pharmaceutical extension patents (17 comments);

2. Big Blue proposes new type of patent right - the EIP (6 comments);

3. Lifecycle Management at risk? Will Asian countries follow India's 3(d) lead? (6 comments);

4. Patent litigation in India - uncommon and in need of reform? (6 comments)

I look forward to continuing the conversation in September and beyond.

The USITC (United States International Trade Commission) is the US border protection agency, or, in the words of the USITC:

An independent federal agency determining import injury to U.S. industries in antidumping, countervailing duty, and global and China safeguard investigations; directing actions against unfair trade practices involving patent, trademark, and copyright infringement; supporting policymakers through economic analysis and research on the global competitiveness of U.S. industries; and maintaining theU.S. Harmonized Tariff Schedule.

The USITC operates under section 337 of the Tariff Act of 1930 - (19 USC 1337) which states that unfair methods of competition and unfair acts in the importation of articles into the United States, or their sale for importation, or sale within the United States after importation, are unlawful. The most common form of complaint is patent infringement.

A famous, recent example, is the dispute between Broadcom and Qualcomm over Chipsets.

What's different about the USITC?
As Eric points out, the USITC will more readily grant an injunction than the US Courts. This is partly because the equitable considerations from eBay do not apply in USITC proceedings, and it is harder to obtain an injunction from a Court if the patentee is not itself using the patented invention. Other points of patent law do not apply in USITC proceedings either and these can be used to strategic advantage.

Unsurprisingly, there has been a sizeable jump in USITC proceedings in 2007 as compared to 2006.

However, the USITC can not award damages - but they can be sought in parallel Court proceedings.

Strategic implications?
IP Owners should be aware of this forum as a strategic option to obtain an injunction.
Companies importing goods into the US should include possible ITC proceedings in their freedom to operate analysis.

Everyone should be aware that the rules of engagement are different in ITC proceedings.

"What impact do you think the new US patent "continuation" rules will have on the pharma industry?"

With Mark's permission, I have reproduced our ensuring discussion below:

>>Duncan

Pharma patent families tend to have at least 4 or 5 US equivalents and usually 1 or so in other countries. So with 3 as of right Continuations and a couple supported by declarations, you would think they would be ok, on average.
So practically - it seems as though it won't make much difference to them. There are also ways to avoid the new Rules too - which are expensive, but maybe this won't be a problem.
I think smaller entities will be hurt much more than large pharma as it is a common strategy to bundle a few inventions in a single PCT application to save fees in the early stages They hope to be in a better position to pay to 'unbundle' the patents at or after National phase entry - which would be potentially problematic in light of the new rules.

>>Mark
Excellent points.
I think, "on average", pharma can live with the package. But what about the "non-average" inventions? What about the breakthroughs?
These lie well outside of the norm in terms of number of continuations, CIPs etc. that pharmas feel the need to file to protect them. I've seen issued patents that claimed priority to a string of 27 sequential CIPs. I've seen original provisionals that have over 100 child applications. How will pharma protect these types of inventions under the new rules?

>>Duncan
Thanks for your further comments. For these unusual situations (which are often predictable), the strategy will probably to file more originating applications in the US - fine if you have big pockets.

What do you think?

Paragraph 10 provides interesting guidance about obtaining leave to appeal from a first instance decision in a patent case in the UK:

"10. I would add this about permission to appeal in patent cases generally. Unless the case is very clear and can be understood sufficiently readily in an hour or so, the better course is normally for permission to be granted by the trial judge. For, unlike the trial judge, the Court of Appeal judge(s) who have to decide whether permission should be granted (where the trial judge has refused it) will not be immersed in the technology and evidence in the same way as the trial judge. Faced with but an incomplete understanding and a plausible skeleton argument seeking permission, the Court of Appeal will generally be likely to grant permission, even if later it discerns that the case is indeed clear."

Two guidelines stand out: (1) a plausible skeleton argument and (2) a case which can not be understood sufficiently readily in an hour or so.

The problem with (2) is that it is risky. If your argument is made complicated, you risk losing the judges altogether (whether it be due to technical jargon, or lack of sympathy) . It must be right that a clear, concise and easy to understand argument will win the day in the majority of cases.

Along with the latest blog post, case study and scorecard, you can now see a summary of the latest article from the site's home page.

On the blog home page, we've added a 'see all posts' link (under 'Blog Archive') so that you can browse all archived Blog posts (and the number of comments for each).

A new, comprehensive search function is also being developed along with a some other really useful things - so stay tuned.

Thanks again to the team at StressLimitDesign for all of their advice, enthusiasm and incredible service in helping with the site - a truly amazing group of people.

Maybe I should have added 'sue the USPTO now!' to my earlier list of strategic responses to the new rules?

A lot of people have been complaining about the new rules - it will be interesting to see who else takes up the call to arms being posted on some of the biggest US Patent blogs (see Dennis Crouch's list.)

Compulsory Licenses, (under Article 31 of TRIPS) have traditionally been ordered to enable access to medicines to people in developing countries who would otherwise not be able to afford them. The Licenses have typically been granted in respect of medicines to treat diseases such HIV/AIDS and other infectious diseases. The scorecard also tracks 'Paragraph 6' mechanisms - explained further at the Scorecard.

You can comment on this post about the scorecard, or contribute to the scorecard itself.

How do you know when you're in trouble?  Well, if you haven't got a well reasoned (and some would say lengthy) opinion from patent counsel which clears your conduct, then you should probably worry...

A unanimous en banc opinion of the CAFC handed down yesterday has further clarified what's required.  And in so doing, has made it still harder to prove willfulness. 

In essence, there must now be 'at least a showing of objective recklessness'.  To quote the judges:

"Accordingly, to establish willful infringement, a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent."

Make no mistake - this is big news for companies whose business models routinely put them on the wrong end of patent suits - generic pharmaceutical companies, and big technology companies who are frequently sued by patent licensing companies (some would use the term 'patent trolls'). 

Patentees should realise that whether the infringer in fact was objectively reckless is completely out of their hands.  Instead, the punitive element of a finding of willfulness is an unusual bonus brought about by the poor strategic conduct of their opponent.  Instead of decrying this decision, they would be better served to focus on changing the system to have a proportion of attorneys fees (legal costs) paid by the losing party as the normal practice in US patent litigation.  (See my comment at Patently'O.)

Thanks once again to Dennis at Patently'O for the ever-timely and brief though insightful report of this case.

It has also now been published at ipFrontline.

The article quotes an official in the Indian ministry of commerce & industries as saying -“We get a lot of enquiries from a host of countries about the provision. The Philippines has already amended its law on similar lines,”

Chapter II of Part II of the Philippines Intellectual Property Code deals with Patentability. I haven't seen an amendment to this Chapter which resembles section 3(d), but would be delighted to be pointed in the right direction.

Other countries named in the article included: the Maldives, Pakistan, Sri Lanka, Vietnam, Indonesia, Malaysia and Bangladesh.

See my earlier posts, discussion and article on section 3(d) which conclude that it won't be surprising if the PhRMA or a similar group gets involved in the near future...

Resources:

1. Indian Economic Times article
2. SpicyIP post

Recent Posts

• Thumb screws from the USPTO - strategic implications

• US / China TRIPS case goes to WTO panel - what about India?

Recent Articles:

• Novartis' Glivec battle with India - patentability of pharmaceutical extension patents
• Australia even more patent-friendly after High Court decision

Apart from amendments to the legislation (such as the change from first to invent to first to file) which are pending before congress, there are several sets of Rule changes, including:

1. Rules limiting continuations and requests for continued examination (RCE's) (due in the next few weeks).
2. Rules limiting the number of claims (to 10) being examined (due in the next few weeks).
3. Rules requiring more extensive Information Disclosure Statements (expected in early 2008).
4. Rules limiting the type and number of Markush (chemical structure) claims (recently published in proposed form).

As always, you can get plenty of analysis and more detail about the proposed amendments to the Act and Rules over at Patently'O.

Even if you haven't been following the hype, a quick scan through the proposed Rule changes makes it clear that the USPTO is trying to lessen its workload. Fine, but the effect is that patentees are being squeezed.

On the one hand they will be limited on the number of claims they can present for examination (and in pharmaceuticals and chemisty, further limited in Markush claims), but also limited in the number continuations that can be filed to recapture claims that could not be presented. Then, there's the increased burden of disclosure to the patent office which is drawing nigh.

So, here are a few quick thoughts on strategies to adopt to maximise patent protection in the US (assuming you have an endless budget...):

• File Continuations now, before the new Rules come into effect.
• Consider filing multiple originating patent applications to avoid the restriction on Continuations (obviously particularly important if you know or suspect that the specification may be argued by the USPTO to cover more than one invention).
• Take the time to prosecute the broadest possible claims first. (It has often been a strategy to file a Divisional or Continuation with narrower claims to get an issued patent relatively quickly. This may not be so popular with the new rules and may present problems to those who have a potential infringement to deal with.)
• Prepare in advance to argue the need for Continuation applications.
• Consider carefully the need to have more than 10 representative claims examined as against the downside (in later litigation) of the disclosure required in the patentability statement which must accompany such a request.
• Use the USPTO MPEP (Manual of Practice and Procedure) Rule § 710.06 (Office action contains some other error that affects applicant's ability to reply to the Office) - if you bring this to the attention of the USPTO within 1 month, the Office will restart the previously set period for reply to run from the date the error is corrected). Thanks to Patent Docs for this one.

What would you add?

“In pursuing this action, the United States is seeking to eliminate significant structural deficiencies that give pirates and counterfeiters in China a safe harbor to avoid criminal liability. The United States is also seeking to improve enforcement procedures at China's border, and to give copyright owners more tools to prevent the production of unauthorized copies in China."

The U.S. is alleging 3 violations of TRIPS (copy of the TRIPS agreement here):

1. The quantitative thresholds in China's criminal law that must be met in order to start criminal prosecutions or obtain criminal convictions for copyright piracy and trademark counterfeiting.
2. The rules for disposal of IPR-infringing goods seized by Chinese customs authorities. Those rules appear to permit goods to be released into commerce following the removal of fake labels or other infringing features, when WTO rules dictate that these goods normally should be kept out of the marketplace altogether.
3. The apparent denial of copyright protection for works poised to enter the market but awaiting Chinese censorship approval.

This is one of five WTO cases the United States has brought against China and the third case in which the U.S. has requested has requested a WTO dispute settlement panel. (More background at IP Dragon.)

The Novartis Glivec dispute (see also IP ThinkTank discussion) has highlighted another potential WTO TRIPS dispute, this time in relation to India and patents.

The pressure to do this has been increased by Tuesday''s Times of India article which suggests that the Indian Patent Act is a role model for other nations.

The question for Pharmaceutical lobby groups (such as PhRMA) then, is whether to put pressure on politicians in the U.S. or elsewhere to take a similar stance against India in relation to India's section 3(d).

A threshold question before that, is of course, do they have a case? What do you think?

Pharmaceutical & Biotech Lifecycle Management (I) - are generics launching earlier than ever?

won the Mondaq most popular article award for July 2007.

If you haven't yet had a chance to read it, please let me know what you think.

Other articles that have won the same award in earlier months were:

• (May 2007) - In Global IP Disputes - Don’t let your lawyers slavishly apply a legal ‘test’
• (January 2007) - In IP Strategy there’s an exception to every simple rule
• (December 2006) - IP strategy and regulatory controls - you don't have to be sued to get (generic) exclusivity in the US (Zocor returns)
• (November 2006) - IP Due Diligence - put simply™ - with the 6 T’s™ framework

A couple of weeks ago I was fortunate enough to listen to a podcast by Shamnad Basheer (from Spicy IP) on India and TRIPS compliance.  As he has repeatedly done on Spicy IP, in the podcast, Shamnad makes some prophetic statements about how the Novartis litigation is likely to turn out. 

The podcast is also packed with useful background information about the Indian pharmaceutical and patent systems. 

I highly recommend it.

As discussed in my earlier posts, (here and here), the patent is also currently the subject of an ex parte Re-Examination before the USPTO (not inter partes as I had assumed).  (As an aside, some jurisdictions would stay the Court proceedings pending the outcome of the patent office review, and I have to say that this can have strategic merit...)   

Nucleonics is clearly not satisfied with the CAFC decision, and is perhaps attempting to get the question of standing in Declaratory Judgment actions back before the Supreme Court.  
The next big questions is whether the CAFC will entertain an en banc review, which basically requires either (a) conflict with another CAFC decision or a Supreme Court decision, or (b) a question of exception importance.

Stay tuned, this isn't over by a long shot.