Patent Docs

EU Pharmaceutical Law Forum

April 25, 2015

Informa Life Sciences will be holding its 24th Annual EU Pharmaceutical Law Forum on May 19-21, 2015 in Brussels, Belgium. The conference will offer presentations on the following topics:

• Feedback from the EU Commission on competition law (keynote presentation) — to be presented by a representative from DG Competition, European Commission;
• Reverse payment patent settlements;
• Examining recent EU merger control cases in the pharmaceutical industry;
• Assessing pricing: Discounts and rebates;
• Review of high profile national cases/decisions in competition law;
• Unified Patent Court: Feedback from the European Commission (keynote presentation) — to be presented by Michael Koenig, Deputy Head of Unit, European Commission;
• Unified Patent Court: Feedback from private practice;
• Cross-border relief for patent infringement – should the practice be encouraged? Lessons learned from pemetrexed;
• Understanding European patent litigation and SPC's;
• Lifecycle management with respect to IP, competition law and regulatory frameworks;
• Second medical use claims (evening seminar);
• 2015 – 50 years of EU pharmaceutical legislation — an area where law does not stand still;
• Transparency of clinical trial data, regulatory data and prices plus a review of the clinical trials regulation;
• Pricing and reimbursement and market access in the EU: Pharmaceutical and medical devices;
• The EU Data Protection Regulation — Where do we stand?
• Update on IP regulatory rights: What’s new?
• Examining unlicensed use and off-label use;
• Adaptive licensing and early access to medicines;
• Transparency with regard to the relationship with healthcare professionals;
• Innovative stakeholder (customer and patients) engagement;
• Feedback from the EU Commission on the EU regulatory framework for medical devices (keynote presentation) — to be presented by Erik Hansson, Deputy Head of Unit, EU Commission;
• IVDs and revisions to the regulation;
• Biosimilars and the regulatory frameworks (evening seminar);
• Detailing effective negotiation strategies;
• Examining commercial intellectual property issues in collaboration and licensing agreements;
• The importance of due diligence;
• Obligations to exploit;
• Assessing the financial aspects of licensing and collaboration agreements;
• Dealing contractually with 3rd party IP rights;
• The European Unified Patent from a transactional and property perspective;
• Structuring the alliance management in licensing deals: A legal and commercial perspective;
• Negotiating and drafting termination provisions; and
• Asset centric corporate structures (evening seminar).

A complete brochure for this conference, including an agenda, detailed descriptions of conference sessions, list of speakers, and registration form can be obtained here.

Registration fee packages for the forum can be found here. Those interested in registering for the conference can do so here, by e-mailing registrations@informa-ls.com, by calling +44(0) 20 7017 7481, or by faxing a registration form to +44(0) 20 7017 7823.

Patent Docs is a media partner of the EU Pharmaceutical Law Forum.
Fine-structure Genetic Mapping of Human Population in Britain

April 23, 2015

By Kevin E. Noonan —

One of the consequences of the explication of human genomic DNA by the Human Genome Project and related efforts has been a better understanding of anthropological history, i.e., how the human population has changed geographically over time. This better understanding has been set forth in broad strokes based on mitochondrial DNA differences in historical and contemporary human populations (leading to the "African Eve" hypothesis of human ancestry) as well as analyses of Y-chromosome polymorphism (or lack of it; Genghis Khan has a frightfully large number of descendants). References to this part of the human story are many and include Deep Ancestry by Spencer Wells (National Geographic: 2006), and The Seven Daughters of Eve: The Science that Reveals our Genetic Ancestry by Brian Sykes (Carrol & Graf: 2002).

Recently a group of researchers from the U.S., U.K and Australia have conducted another type of study, looking at the fine structure of human population diversity in England. These results were reported in Nature in an article entitled "The fine-scale genetic structure of the British Population," Nature 519: 304-314 (19 March 2015); doi:10.1038/nature14230. These authors* showed what the authors termed "a rich and detailed pattern of genetic differentiation with remarkable concordance between genetic clusters and geography," based on genome-wide single nucleotide polymorphism (SNP) analyses of "a carefully chosen geographically diverse sample of 2,039 individuals." The results include maps of where Anglo-Saxon influence is strongest (and where it is absent) and reveal evidence of migrations from the European continent that predate the Roman conquest. The authors also report that the non-Saxon regions of Britain were populated by "genetically differentiated subgroups" of people of Celtic ancestry possessing greater genetic diversity than heretofore appreciated.

The populations studied were from throughout Great Britain (as conventionally defined to include England, Scotland, Wales and Northern Ireland) and comprised a data set termed the People of the British Isles (PoBI). By using samples from rural areas wherein all four grandparents of living study participants lived within 80 km of each other, the authors assert that they had "effectively sample[d] DNA from the grandparents" (who had an average date of birth in 1885). The study also interrogated the same SNP patterns from 6,209 samples from ten continental European countries from 500,000 SNPs.

The authors reported that "[t]he correspondence between the genetic clusters and geography [was] striking: most of the genetic clusters are highly localized, with many occupying non-overlapping regions." As set forth in the Figure, 17 clusters were chosen for convenience of the analysis. The clustering and their integrity is shown for Cornwall and Devon, where the genetic clusters "closely match" existing county boundaries and (perhaps less surprisingly) in Orkney, the region off the northern coast of Scotland, reflecting the contributions of Norse Viking "settlers."

The article also supplies a "tree" reflecting the relationships between the clusters, which the authors describe as follows:

The coarsest level of genetic differentiation (that is, the assignment into two clusters) separates the samples in Orkney from all others. Next the Welsh samples separate from the other non-Orkney samples. Subsequent splits reveal more subtle differentiation (reflected in the shorter distances between branches), including separation of north and south Wales, then separation of the north of England, Scotland and Northern Ireland from the rest of England, and separation of samples in Cornwall from the large English cluster. There is a single large cluster (red squares) that covers most of central and southern England and extends up the east coast. Notably, . . ., this cluster remain[ed] largely intact and contains almost half the individuals (1,006) in [the] study.

The authors correctly point out that the genetic differentiation they detect is small and the differentiation between clusters is "subtle." When compared with existing European populations the genetic results showed ancestry in all clusters from western Germany, Flemish Belgium, northwestern France, Denmark, southern France and Spain. Norwegian ancestry was found disproportionately in the Orkney-derived clusters ("and to a lesser extent the clusters involving Scotland and Northern Ireland") and Swedish groups were found in the ancestry profiles of other British clusters.

The authors conclude that:

The clustering [shown inter alia in Fig. 1] is notable both for its exquisite differentiation over small distances and the stability of some clusters over very large distances. Genetic differentiation within the UK is not related in a simple way to geographical distance. Examples of fine-scale differentiation include the separation of: islands within Orkney; Devon from Cornwall; and the Welsh/English borders from surrounding areas. The edges between clusters follow natural geographical boundaries in some instances, for example, between Devon and Cornwall (boundaries the Tamar Estuary and Bodmin Moor), and Orkney is separated by sea from Scotland. However, in many instances clusters span geographic boundaries; for example, the clusters in Northern Ireland span the sea to Scotland.

These conclusions support a reconstruction about how migrations produced the modern British distribution:

The authors were able to interpret these results to give a picture about how migrations of various groups has changed over time:

[T]he earliest migrations whose descendants survive to make a substantial contribution to the present population are best captured by three groups in our European analyses, GER6 (western Germany), BEL11 (Belgium), and FRA14 (north-western France). These groups still contribute to current patterns of population differentiation []. Other European groups may reflect early migrations into the UK, but with smaller contribution, including SFS31 (southern France/Spain), at least part of DEN18 (Denmark), and possibly parts of Norway and Sweden. A subsequent migration, best captured by FRA17 (France), contributed a substantial amount of ancestry to the UK outside Wales. []Migrations represented by FRA12 essentially only affect Wales and Northern Ireland and/or Scotland. We also see clear signals of some of the known historical migrations and settlements, including the Saxons (GER3, northern Germany, and probably much of DEN18, Denmark) and the Norse Vikings (NOR53–NOR90).

Finally, these researchers applied more sophisticated genetic analytical techniques (related to the rate of decay of shared haplotype segments) to assess population admixture, and found "strong evidence (P < 0.01) that the largest Orkney cluster (Orkney 1) was influenced by a recent (about 29 generations ago, or in 1100 A.D.) admixture event with an overall contribution of ~25% of the DNA from groups in Norway."

The article also notes that the known historical migration events frequently have less of a genetic impact that might be presumed; for example, the authors reported seeing "no clear genetic evidence of the Danish Viking occupation and control of a large part of England" and "no evidence of a general 'Celtic' population in non-Saxon parts of the UK." Rather, with regard to the Celtic populations in Britain the article reports "there were many distinct genetic clusters in these [non-Saxon] regions, and the Welsh clusters "represent populations that are more similar to the early post-Ice-Age settlers of Britain than those from elsewhere in the UK."

The article closes by reminding readers that such genetic studies "can augment archaeological, linguistic and historical approaches to understanding population history" and also "complements them, in providing evidence relating to the bulk of ordinary people rather than the successful elite."

* Stephen Leslie (Murdoch Childrens Research Institute, Royal Children's Hospital, University of Melbourne, Department of Mathematics and Statistics, Victoria, Australia and University of Oxford, Department of Oncology, Oxford UK), Bruce Winney (University of Oxford, Department of Oncology, Oxford UK), Garrett Hellenthal (University College London Genetics Institute, London UK), Dan Davison (Counsyl, South San Francisco, California), Abdelhamid Boumertit (University of Oxford, Department of Oncology, Oxford UK), Tammy Day (University of Oxford, Department of Oncology, Oxford UK), Katarzyna Hutnik (University of Oxford, Department of Oncology, Oxford UK), Ellen C. Royrvik (University of Oxford, Department of Oncology, Oxford UK), Barry Cunliffe (University of Oxford, Institute of Archaeology, Oxford), Wellcome Trust Case Control Consortium 2, International Multiple Sclerosis Genetics Consortium, Daniel J. Lawson (University of Bristol, Department of Mathematics, Bristol UK), Daniel Falush (College of Medicine, Swansea University, Swansea UK), Colin Freeman (The Wellcome Trust Centre for Human Genetics, Oxford UK), Matti Pirinen (University of Helsinki, Helsinki, Finland), Simon Myers (University of Oxford, Department of Statistics, Oxford UK), Mark Robinson (University of Oxford, University Museum of Natural History, Oxford UK), Peter Donnelly (University of Oxford, Department of Statistics, Oxford UK) & Walter Bodmer (University of Oxford, Department of Oncology, Oxford UK)
A Modest Proposal (or Two)

April 22, 2015

By Kevin E. Noonan —

Any observer of the interaction between the Federal Circuit and the Supreme Court over the past decade has recognized that the Court has become increasingly critical of the Federal Circuit's patent jurisprudence and of patents and patent law in general. This attitude approaches disdain in many instances, for example when Justice Kagan declares that the U.S. Patent and Trademark Office is "patent happy," or when Justice Alito says in a published opinion that "[t]he Federal Circuit's analysis fundamentally misunderstands what it means to infringe a method patent," or when the Chief Justice states in open court "Well, [appellate courts] don't have a choice, right? They can't say, I don't like the Supreme Court rule so I'm not going to apply it, other than the Federal Circuit"" (to chuckles all around). (This situation must be particularly galling to the Federal Circuit, tasked as it is with trying to apply the Court's "less than pellucid" patent law opinions.)

The consequence of this tussle between the courts is that 30 years of relative certainty has evaporated in seemingly an instant. An honest assessment of the current level of certainty in patent law is that there is much more uncertainty concerning eligibility and enforceability of issued patents; eligibility and patentability of pending applications; and the value of patents for licensing, which negatively impacts, inter alia, technology transfer from universities and other research institutions by suppressing the bargaining power of innovators when negotiating with corporations better positioned to bring useful products to market for the benefit of the populace. And thus the reason why the Founders gave Congress the power to grant patents ("to Promote . . . Progress of . . . the Useful Arts") is thwarted for apparently no good purpose.

One strand of the Court's thinking is clear: relying on legal academic theories having little empirical support (like the "Tragedy of the Anticommons"), the Court believes that patents are like the various items of furniture in "Goldilocks": you can have too much patenting or too little patenting, as stated in the two most recent decisions related to biotech and pharma patent law:

"As we have recognized before, patent protection strikes a delicate balance between creating 'incentives that lead to creation, invention, and discovery' and 'imped[ing] the flow of information that might permit, indeed spur, invention.'"

Justice Thomas, Myriad

"Patent protection is, after all, a two-edged sword. On the one hand, the promise of exclusive rights provides monetary incentives that lead to creation, invention, and discovery. On the other hand, that very exclusivity can impede the flow of information that might permit, indeed spur, invention . . ."

Justice Breyer, Mayo v. Prometheus

And, of course, the only people who know the correct balance are the members of the Court; this didn't work with regard to pornography and it certainly does not work for patent law precisely because it is certainty-destroying (besides being impractical). Indeed, it only makes sense if the Court purposefully wishes to return to the days when Justice Jackson could correctly state that "the only valid patent is one which this Court has not been able to get its hands on." Jungerson v. Ostby & Barton Co., 335 U.S. 560, 572 (1949) (Jackson, J., dissenting)

The Court's antipathy to patents, patent law and the Federal Circuit ultimately extends (intentionally or not) to how Congress has exercised the patent power. For example, the Court seems to think that "mere" discovery is not enough, despite the explicit recitation in the statute that "[w]hosoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title." 35 U.S.C. § 101. And unlike earlier embodiments of the Court, there is little acknowledgement of or compliance with Congress's intent that "anything under the sun made by man" should be patent-eligible. This raises the question of why this is so; after all, the Court is perfectly aware of the limits of its Constitutional role, as set forth by the Chief Justice in his opinion affirming Congress's power to implement the various aspects of "Obamacare" (National Federation of Independent Business v. Sebelius, 567 U.S. ___ (2012)):

Our permissive reading of these powers is explained in part by a general reticence to invalidate the acts of the Nation's elected leaders. "Proper respect for a co-ordinate branch of the government" requires that we strike down an Act of Congress only if "the lack of constitutional authority to pass [the] act in question is clearly demonstrated." United States v. Harris . . . . Members of this Court are vested with the authority to interpret the law; we possess neither the expertise nor the prerogative to make policy judgments. Those decisions are entrusted to our Nation's elected leaders, who can be thrown out of office if the people disagree with them. It is not our job to protect the people from the consequences of their political choices.

Perhaps it is this simple: in rendering decisions on Obamacare, or the "milk" cases familiar to any first year law student studying the Commerce Clause, the Court is determining whether Congress's actions fall within the scope of an enumerated power. The right to grant patents, in contrast, is an enumerated power of Congress:

The Congress shall have the power to promote the Progress of Science and useful Arts, by securing for limited times to Authors and Inventors the exclusive Rights to their respective writings and Discoveries. U.S. Const. art. I, sec. 8, cl. 8.

And maybe the Court feels it has a responsibility to scrutinize more carefully how Congress implements this power (including how the Patent Office exercises and the Federal Circuit interprets this power). The plenary effect of this review has led us to the present state of the law; again as stated by Justice Jackson:

Reversal by a higher court is not proof that justice is thereby better done. There is no doubt that if there were a super-Supreme Court, a substantial proportion of our reversals of state courts would also be reversed. We are not final because we are infallible, but we are infallible only because we are final. Brown v. Allen, 344 U.S. 443, 540 (1953) (concurring)

It is important to keep this finality in mind when thinking about how best to address the further reaches of the Court's recent patent jurisprudence, to try to reestablish some contact between the Constitution's mandate that the patent laws promote progress and the Court's assiduous efforts to the contrary.

Taking a page from Hippocrates, it is certainly the case that whatever is done must not make the situation worse. When thinking about actions that Congress could take, the wrong approach could lead precisely to this unwanted outcome, because nothing short of a Constitutional amendment could reverse a decision negating an Act of Congress that attempted to force the Court to overrule its recent precedent. And that, of course, will never happen.

History can in this instance be a guide, and one relevant historical fact is how P.J. Federico and Giles Rich wrote the portion of the 1952 Patent Act codified as Section 103, which introduced obviousness as a statutory requirement for patentability. The concept of obviousness (stated in other terms) had been introduced into U.S. patent law by the Court in Hotchkiss v. Greenwood (1850), where the Court said:

Unless more ingenuity and skill in applying the old method . . . were required in the application of it to [the new product of the method] than were possessed by an ordinary mechanic acquainted with the business, there was an absence of that degree of skill and ingenuity which constitute essential elements of every invention. In other words, the improvement is the work of the skillful mechanic, not that of the inventor.

This language is frighteningly reminiscent of language in the Court's recent Mayo and Myriad decisions, insofar as it renders patentability categorical: if the basis for obtaining a patent is on the existence vel non of an inventor, this is not so far from the current Court's categorical decisions about the existence of an invention.

Messrs. Rich and Federico avoided this outcome by directing the Court's attention to the underlying basis for their unease about "inventions" that were the product of efforts by a mere mechanic, by drafting a requirement that the claims not be obvious (a determination based on the content of the prior art, albeit still not providing the clearest basis for making a decision on patentability). That Section 103's drafters were successful can be ascertained from the Court's first post-1952 decision on this new part of the statute:

In [Section] 103 of the 1952 Patent Act Congress added the statutory nonobvious subject matter requirement, originally expounded in Hotchkiss, which merely codified judicial precedents requiring a comparison of the subject matter sought to be patented and the prior art, tying patentable inventions to advances in the art. Although 103 places emphasis upon inquiries into obviousness, rather than into "invention," the general level of innovation necessary to sustain patentability remains unchanged under the 1952 Act.

Graham v. John Deere, 383 U.S. 1 (1966). With these precedents in mind there may be a way to find a middle course that can accommodate the Court's needs to cabin the patent right and innovators' needs for certainty in patent law. The first area is in "natural products" patenting, where the Court (for the first time) extended a preclusion against patenting for compounds that were "merely" isolated. Although the Court ostensibly rendered an extremely limited decision ("We merely hold that genes and the information they encode are not patent eligible under § 101 simply because they have been isolated from the surrounding genetic material") that hasn't been how it has been interpreted. The Court's language "suggests" (or "mandates") interpretations putting the patent-eligibility of previously patent-eligible subject matter ("merely" isolated antibiotics, antibodies, vitamins, etc.) at risk. This can be better appreciated by the effect of the PTO's decision on the patent-eligibility of 1355 (small molecule) drugs approved by the FDA between 1981-2010, wherein about 75% of antibacterial drugs and almost 80% of small molecule anticancer drugs were natural products or derivatives of natural products and would have been unpatentable under the Office's first guidance implementing the Court's decisions. This cannot be what the Court intended, and it is up to the patent community to help remedy what the Court has recently wrought.

One way to do so would be to include a new section 35 U.S.C. § 100(j):

The term "composition of matter" as used herein encompasses a chemical or other product found or derived from nature provided that the composition has been changed from its natural state in its structure, function, purity, or use.

This language might be sufficient to mollify the Court's concerns about patenting natural products, because it parallels the Court's own language in Chakrabarty, wherein the standard for patent-eligibility was that the invention is "a product of human ingenuity 'having a distinctive name, character [and] use,'" Hartranft v. Wiegmann, 121 U.S. 609 (1887). This is provided, of course, that this Court is as willing as the Court in 1966 to accept that Congress had within its enumerated power the right to make this determination.

The other item of the Court's jurisprudence that has "disturbed the settled expectations" of the patent community is the Mayo v. Prometheus decision. Containing an explanation of its reasoning less straightforward than the Court's decision in Myriad, the Court conflated Sections 101, 102 and 103 of the Patent Act in reaching its decision and seemingly reintroduced the inchoate concept of "inventiveness" into patent law. More problematically, the Court's analysis seemed to contravene the holding in Diamond v. Diehr (1981) that claims must be considered "as a whole." And failing to hold true to the Diehr standard has permitted district courts, and even the Federal Circuit to declare claims invalid under Section 101 based on a determination that a claim consists of a "natural law, physical phenomenon or abstract idea" plus nothing "more" than what are "routine, conventional and well-understood" applications of the natural laws or uses of the natural products. See, e.g., PerkinElmer, Inc. v. Intema Ltd.; Ariosa v. Sequenom; Genetic Technologies Ltd. v. Labcorp; and Univ Utah Res. Found. v. Ambry Genetics (Myriad III).

This situation leads to the second proposal, for a new section 35 U.S.C. § 282(d):

When assessing a defense to infringement that a patent claim does not satisfy the requirements of §§ 101, 102 or 103 of this chapter, the invention must be considered "as a whole" and not by its individual limitations. The conventionality of individual limitations shall not be the basis for a determination that a claim is invalid under said §§ 101, 102 or 103.

Additional sections of the statute, or rules promulgated by the Office, may be needed to ensure the same standard is applied during patent prosecution. But, like the proposal for Section 101, this change in the law finds support, at least, under Diehr and thus may pass muster at the Court should they be challenged.

If the past decade has shown the patent community nothing else, it is that innovation cannot be held hostage to political or doctrinaire whims of any branch of government. The idea in 1982 that U.S. patent law needed consistency was a good one; it failed only because it did not recognize that the biggest source of inconsistency would be the Supreme Court. It is a lesson that needs to be well learned, accommodated and its outcome overcome if the U.S. is to retain its lead in global innovation and the economic benefits arising from this innovation.

Note: This post was adapted from a panel discussion at the Spring 2015 BIO IPCC meeting held on April 15-17 in St. Louis, MO.
Amgen v. Sandoz Update — BIO Files an Amicus Brief at the Federal Circuit

April 21, 2015

By Andrew Williams —

On March 19, 2015, U.S. District Judge Seeborg of the Northern District of California denied a motion for a preliminary injunction filed by Amgen to prevent the imminent launch by Sandoz of a biosimilar version of NEUPOGEN^® (filgrastrim). In so doing, the Court ruled that the disclosure and notice provisions of the Biologics Price Competition and Innovation Act ("BPCIA") were not mandatory. The Court entered final judgment on March 25, and two days later Amgen filed an appeal with the U.S. Court of Appeals for the Federal Circuit. According to a subsequent order in the District Court, the Federal Circuit granted an unopposed motion filed by Amgen to expedite briefing, and the parties have requested that the Appeals Court hear the matter in June.

As this case is one of first impression for the interpretation of the relevant provisions of the BPCIA, the Biotechnology Industry Organization ("BIO") filed an amicus brief last week at the Federal Circuit. In addition, two other briefs were filed by Janssen Biotech, Inc., owner of the BLA for Remicade® (infliximab), and Abbvie Inc., owner of the BLA for Humira®. It is unclear, however, whether Abbvie's corrected brief was actually properly filed. In this post, we review the amicus brief filed by BIO.

BIO began by highlighting the fact that it represents more than 1,100 member companies and research organizations, from start-ups to Fortune 500 companies. Not surprising, therefore, the brief focused on the balance struck during the establishment of the statutory pathway found in the BPCIA, which was meant to balance the interests of the biosimilar applicants and the reference product sponsors. Indeed, after noting that BIO played a leading role in the efforts to establish the BPCIA, it focused much attention on the desire of both biosimilar applicants and reference product sponsors to handle any litigation surrounding relevant patents in an expeditious manner. Because it is essentially of first impression, BIO urged the Court to not only consider the impact on this case, but on all "the circumstances to which this statute must be applied for the coming decades."

BIO first explained that in developing the BPCIA, the Hatch-Waxman Act was used as a guide, even if all of the provisions were not copied. One place of commonality was the creation of a "scheme to provide a meaningful opportunity to resolve patent disputes before product launch" (emphasis in original). This includes an artificial act of infringement prior to actual sales, and a required notification that an ANDA or biosimilar application has been filed. The acts differ, of course, in that the BPCIA adds a series of patent exchanges (the so-called "patent dance"). In addition, the reference product is entitled to 12 years of data exclusivity to preserve the incentives for biomedical research.

BIO's main argument was that "the BPCIA's notice procedure (a first notice upon acceptance and second notice prior to commercial marketing) balance the interest of biologic reference product sponsors and biosimilars to address the needs of both for a significant and real opportunity to resolve patent issues prior to the launch of the biosimilar." In fact, in the other biosimilar actions to date (relating to Amgen's Enbrel® (etanercept) product and Remicade®), both the biosimilar applicants and reference product sponsors cited the desire for "a prompt, real opportunity to resolve patent disputes before launch of the biosimilar." In the Enbrel action, Sandoz filed a declaratory judgment ("DJ"), because it allegedly sought a final district court judgement before commercial marketing in order to avoid a potential billion dollar damages claim. However, as we reported, the Federal Circuit upheld the dismissal of the action for lack of subject matter jurisdiction. Similar DJ actions were filed in the matters involving Remicade®, with similar results (one voluntary dismissal, and two motions to dismiss granted by the District court, reported here). Nevertheless, one of those DJ plaintiffs, Celltrion, had argued that the BPCIA provides a mechanism to ensure the expeditious resolution of the patent issues. In case it was not clear, the interests of both the reference product sponsor and the biosimilar applicant were encompassed within the statutory scheme of the BPCIA because it provides an expeditious pathway to resolve any potential patent infringement issues.

In an attempt to paint a similar picture that both parties to the instant action also valued the balance of the BPCIA, BIO pointed to statements by Sandoz highlighting Congress's stated goal of allowing for the resolution of "potential patent disputes prior to the launch of the biosimilar product . . . " (emphasis in original). Nevertheless, no matter the language used, it is clear that Sandoz was satisfied with circumventing these procedures notwithstanding the lack of patent certainty that would result. Indeed, Sandoz has only agreed to refrain from launching its biosimilar product until May 11, 2015, even though the Federal Circuit will certainly have not decided this case by that time.

Interestingly, BIO refers to both the disclosure provisions and the commercial marketing provisions as "notices" — "(1) notice upon application and (2) notice of commercial marketing." Therefore, in a way, Sandoz satisfied both "notice" aspects by informing Amgen via letter that its biosimilar application had been accepted and that it intended to market upon FDA approval. However, BIO did not suggest that Sandoz had satisfied the statutory requirement, because the only form in which notice of application can be provided is through the disclosure of the application and other essential information. Otherwise, as BIO explained, if the biosimilar applicant withholds its application and does not otherwise provide notice, the reference product sponsor may never learn that such an application was filed. "It makes little sense for Congress to devise a carefully orchestrated process for exchanging information, and identifying and enforcing patents that might only begin if the reference product sponsor serendipitously discovered from public sources that a biosimilar application has been filed."

Moreover, the 180-day notice of commercial marketing, under the BPCIA, "effectuates litigation on patents that were listed but not part of the early stage litigation" (emphasis in original). As such, the statute specifies that this notice must occur at the end of the patent dance, not before it has even begun. BIO also pointed to the statute's requirement that this "notice" be with regard to the "licensed" product, not simply with any biosimilar application that has been filed with the FDA. To be a licensed product, it must have FDA approval.

Finally, in response to the arguments below that the 180-day notice period amounts to a de facto extension of the data exclusivity, BIO asserted that this is simply not true. Instead, the patent disputes were meant to be resolved during the final 8 years of data exclusivity — which should be plenty of time for a decision on the merits. In other words, the 180-day notice should normally be provided well before exclusivity expires. Just because scenarios exist where the 180-day notice cannot be provided with sufficient time does not make the statute unfair. "The biosimilar applicants' choice of when to file the application or to defer the litigation over listed patents until 'late stage' preliminary injunction litigation comes with timing consequences." For biologics such as in this case, where the drug has been on the market so long that there is no data exclusivity remaining, "a notice of commercial marketing would provide a modest 6-month respite before commercial launch of the approved biosimilar product to resolve patent disputes before biosimilar launch . . . ." That this timing might not be optimal for all applicants is of no moment.

We will continue to monitor this case and report on the briefing of other parties in subsequent posts.
Legislation Introduced in House to Eliminate Uncertainty Regarding AIA Grace Period

April 20, 2015

By Donald Zuhn —

Last week, legislation was introduced in the House of Representatives that would amend 35 U.S.C. § 102(b) "to correct the drafting problem in the Leahy-Smith America Invents Act relating to the grace period." The bill, entitled the "Grace Period Restoration Act of 2015" (H.R. 1791), was sponsored by Rep. James Sensenbrenner (R-WI) and co-sponsored by Rep. John Conyers, Jr. (D-MI).

As set forth in a summary of the bill provided by the sponsors, the AIA replaced the previous grace period with a new version providing that certain disclosures that occur less than one year before a patent application filing could be considered as prior art, thereby defeating patent rights. The summary contends that "[t]he prior grace period that encouraged early sharing of knowledge was replaced with a system that actually discourages early publication." In particular, the bill's proponents assert that:

The AIA includes language regarding the scope of the grace period during which an inventor who discloses an invention to the public may decide within a one-year period whether to make a patent application filing. The language is ambiguous. To make matters more confusing, the regulatory reading of the AIA by the U.S. Patent and Trademark Office does not comport with the clear intent of the AIA sponsors.

In order "to clarify that the grace period is truly a grace period" and remove uncertainty relating to the AIA grace period, the sponsors note that their bill would:

• protect an inventor against disclosures by anyone after the inventor has made a public disclosure of the claimed invention in a "printed publication"
• apply to any and all of an inventor's acts that are public disclosures that jeopardize right to a patent
• remove prior art under both sections 102 and 103 of the Patent Act

In particular, the bill would amend § 102(b) by adding the following text:

(3) DISCLOSURES BY ANY PERSON AFTER PUBLIC DISCLOSURE OF A CLAIMED INVENTION BY AN INVENTOR.
    (A) DEFINITIONS.—In this paragraph—
        (i) the term "covered person", with respect to a claimed invention, means—
            (I) the inventor;
            (II) a joint inventor; or
            (III) another who obtained the claimed invention directly or indirectly from the inventor or a joint inventor; and
        (ii) the term "relevant section 112(a) requirements" means the requirements for a specification under section 112(a) other than the requirement to set forth the best mode of carrying out the invention.
    (B) PUBLIC DISCLOSURE.—A disclosure by any person shall not be prior art to a claimed invention under subsection (a) or section 103 if—
        (i) the disclosure is made under subsection (a)(1) or effectively filed under subsection (a)(2) 1 year or less before the effective filing date of the claimed invention; and
        (ii) before the disclosure described in clause (i) is made or filed, and 1 year or less before the effective filing date of the claimed invention, the claimed invention is publicly disclosed in a printed publication by a covered person in a manner that satisfies the relevant section 112(a) requirements.
    (C) DETERMINATION THAT PUBLIC DISCLOSURE WOULD HAVE SATISFIED SPECIFICATION REQUIREMENTS.—In determining under subparagraph (B) whether a claimed invention was publicly disclosed in a printed publication by a covered person in a manner that satisfied the relevant section 112(a) requirements—
        (i) only the state of the art known on and before the date of the disclosure may be considered; and
        (ii) satisfaction of the relevant section 112(a) requirements may be—
            (I) established by 1 or more public disclosures in printed publications made by a covered person during the period of 1 year or less between—
                (aa) the disclosure by the covered person described in subparagraph (B)(ii); and
                (bb) the effective filing date of the claimed invention; and
            (II) supported by statements under declaration or oath relating to the existence and content of the public disclosure or disclosures in printed publications described in subclause (I).
    (D) PRESUMPTION OF VALIDITY.—An applicant for a patent shall present to the Patent and Trademark Office, before the Patent and Trademark Office issues a notice of allowance of the application for the patent, each disclosure under subparagraph (C)(ii)(I) and any statement under subparagraph (C)(ii)(II) in order for the section 112(a) support provided by each such disclosure or statement under subparagraph (C)(ii) to be taken into account under the section 282(a) presumption of validity of an issued patent.
    (E) CERTAIN DISCLOSURES NOT PRIOR ART.—A disclosure described in paragraph (1)(A), (2)(A), or (2)(C) shall not be prior art to a claimed invention under this paragraph.
    (F) PROCEDURES.—The Patent and Trademark Office may establish procedures to carry out this paragraph.

Among the findings outlined in the legislation, the bill notes that:

(1) Language in the Leahy-Smith America Invents Act . . . and regulations and examination guidelines issued by the United States Patent and Trademark Office implementing provisions of that Act have created uncertainty regarding the scope of the 1-year grace period during which an inventor who discloses an invention to the public may decide whether to file a patent application for the invention . . . .
(2) The regulatory reading of the Leahy-Smith America Invents Act does not comport with the intent of the sponsors of that Act.

The legilsation particularly focuses on the impact of the AIA grace period on institutions of higher education and government laboratories, which the bill asserts "perform[] more than 50 percent of all basic research in the United States."

The legislation, which was introduced in the House on April 14, was then referred to the House Judiciary Committee. A companion bill is expected to be introduced in the Senate by Senator Tammy Baldwin (D-WI) and David Vitter (R-LA).
Court Report

April 19, 2015

By Sherri Oslick —

About Court Report: Each week we will report briefly on recently filed biotech and pharma cases.

1474971 Ontario, Ltd. v. Allergan, Inc. et al.
1:15-cv-03372; filed April 26, 2015 in the Northern District of Illinois

• Plaintiff: 1474971 Ontario, Ltd.
• Defendants: Allergan, Inc.; Actavis, PLC.; Allergan Sales, LLC

Infringement of U.S. Patent No. 6,806,251 ("Method of Treating Pain," issued October 19, 2004) based on Allergan's alleged promotion of the use of Botox for the treatment of back pain. View the complaint here.

Medicis Pharmaceutical Corp. v. Apotex Inc. et al.
1:15-cv-02676; filed April 15, 2015 in the District Court of New Jersey

• Plaintiff: Medicis Pharmaceutical Corp.
• Defendants: Apotex Inc.; Apotex Corp.

Infringement of U.S. Patent Nos. 5,908,838 ("Method for the Treatment of Acne," issued June 1, 1999), 7,790,705 ("Minocycline Oral Dosage Forms for the Treatment of Acne," issued September 7, 2010), 7,919,483 ("Method for the Treatment of Acne," issued April 5, 2011), 8,252,776 ("Minocycline Oral Dosage Forms for the Treatment of Acne," issued August 28, 2012), and 8,268,804 ("Method for the Treatment of Acne," issued September 18, 2012) following a Paragraph IV certification as part of Apotex's filing of an ANDA to manufacture a generic version of Medics' Solodyn® (minocycline hydrochloride extended release tablets, used to treat acne). View the complaint here.

Sanofi-Aventis U.S. LLC et al. v. Fresenius Kabi USA, LLC
3:15-cv-02631; filed April 13, 2015 in the District Court of New Jersey

• Plaintiffs: Sanofi-Aventis U.S. LLC; Aventis Pharma S.A.; Sanofi
• Defendant: Fresenius Kabi USA, LLC

Infringement of U.S. Patent No. 8,927,592 ("Antitumoral Use Of Cabazitaxel," issued January 6, 2015) following a Paragraph IV certification as part of Fresenius' filing of an ANDA and an NDA (under § 505(b)(2) of the Food, Drug and Cosmetic Act) to manufacture a generic version of Sanofi's Jevtana® (cabazitaxel injection, used in combination with prednisone for the treatment of patients with hormonerefractory metastatic prostate cancer previously treated with a docetaxel-containing treatment regimen). View the Accord complaint here.

Teva Pharmaceuticals USA, Inc. et al. v. Doctor Reddy's Laboratories Ltd. et al.
1:15-cv-00306; filed April 10, 2015 in the District Court of Delaware

• Plaintiffs: Teva Pharmaceuticals USA, Inc.; Teva Pharmaceutical Industries Ltd; Teva Neuroscience Inc; Yeda Research and Development Co., Ltd.
• Defendants: Doctor Reddy's Laboratories Ltd.; Doctor Reddy's Laboratories Inc.; Mylan Pharmaceuticals Inc.; Mylan Inc.; Sandoz Inc.; Momenta Pharmaceuticals Inc.; Synthon Pharmaceuticals Inc.; Synthon B.V.; Synthon s.r.o; Amneal Pharmaceuticals LLC

Infringement of U.S. Patent No. 8,969,302 ("Low Frequency Glatiramer Acetate Therapy," issued on March 3, 2015) in conjunction with defendants' filing of an ANDA to manufacture a generic version of Teva's Copaxone® (glatiramer acetate injection, used for the reduction or frequency of relapses in patients with relapsing-remitting multiple sclerosis). View the complaint here.

United States Department of Health and Human Services et al. v. Cipla Ltd. et al.
2:15-cv-02571; filed April 10, 2015 in the District Court of New Jersey

• Plaintiffs: United States Department of Health and Human Services; Board of Trustees of the University of Illinois
• Defendants: Cipla Ltd.; Cipla USA, Inc.

Infringement of U.S. Patent Nos. 7,470,506 ("Fitness Assay and Associated Methods," issued December 30, 2008) and 8,597,876 ("Method of Treating HIV Infection," issued December 3, 2013), both licensed to Janssen, following a Paragraph IV certification as part of Cipla's filing of an amendment to its ANDA (adding an additional dosage strength) to manufacture a generic version of Janssen's Prezista® (darunavir, used to treat human immunodeficiency virus (HIV-1) infection). View the complaint here.

Janssen Products LP et al. v. Cipla Ltd. et al.
1:15-cv-00307; filed April 10, 2015 in the District Court of Delaware

• Plaintiffs: Janssen Products LP; Janssen Sciences Ireland UC
• Defendants: Cipla Ltd.; Cipla USA Inc.

Janssen Products, L.P. et al. v. Cipla Ltd. et al.
2:15-cv-02549; filed April 9, 2015 in the District Court of New Jersey

• Plaintiffs: Janssen Products, L.P.; Janssen Sciences Ireland UC
• Defendants: Cipla Ltd.; Cipla USA, Inc.

The complaints in these cases are substantially identical. Infringement of U.S. Patent Nos. 7,700,645 ("Pseudopolymorphic Forms of a HIV Protease Inhibitor," issued April 20, 2010), 7,126,015 ("Method for the Preparation of Hexahydro-furo-[2,3-b]furan-3-ol," issued October 24, 2006), 7,595,408 ("Methods for the Preparation of (3R,3aS,6aR)hexahydro-furo[2,3-b]furan-3-ol," issued September 29, 2009), and 8,518,987 ("Pseudopolymorphic Forms of a HIV Protease Inhibitor," issued August 27, 2013) following a Paragraph IV certification as part of Cipla's filing of an amendment to its ANDA (adding an additional dosage strength) to manufacture a generic version of Janssen's Prezista® (darunavir, used to treat human immunodeficiency virus (HIV-1) infection). View the New Jersey complaint here.

Elan Pharma International Ltd. v. Actavis Laboratories UT, Inc. et al.
2:15-cv-02528; filed April 8, 2015 in the District Court of New Jersey

• Plaintiff: Elan Pharma International Ltd.
• Defendants: Actavis Laboratories UT, Inc.; Actavis, Inc.; Actavis PLC

Infringement of U.S. Patent No. 6,899,890 ("Bioadhesive Drug Delivery System," issued May 31, 2005) following a Paragraph IV certification as part of Actavis' filing of an ANDA to manufacture a generic version of Elan's Clindesse®(clindamycin phosphate vaginal cream, used to treat bacterial vaginosis). View the complaint here.
Conference & CLE Calendar

April 19, 2015

April 21, 2015 – U.S. Biosimilars (American Conference Institute) – Munich, Germany

April 21, 2015 – CincyBIO conference (CincyIP) – Cincinnati, OH

April 23, 2015 – "Key Trade Secret Developments in 2015" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CT)

April 24, 2015 – Ethics in the Practice of Intellectual Property Law (The John Marshall Law School Center for Intellectual Property, Information & Privacy Law) – Chicago, IL

April 27-29, 2015 – M&A and Strategic Alliances in the Life Sciences Industries*** (American Conference Institute) – New York, NY

April 27-28, 2015 – Paragraph IV Disputes conference*** (American Conference Institute) – New York, NY

April 30, 2015 – "Interim Guidance on Patent Subject Matter Eligibility" (American Bar Association) – 1:00 to 2:30 pm (ET)

May 12, 2015 – "Patent Prosecution: Leveraging Declarations to Strengthen Patents Against Post-Grant Proceedings" (Strafford) – 1:00 to 2:30 pm (EDT)

May 12, 2015 – 31st Annual Joint Patent Practice Seminar (Connecticut, New Jersey, New York, and Philadelphia Intellectual Property Law Associations) – New York, NY

May 19, 2015 – "Best Practices for Cost-Effective Filing of PCT and EPO Patent Applications" (Technology Transfer Tactics) – 1:00 to 2:00 pm (Eastern)

May 20, 2015 – "Never Been a Better Time (For IP) Than Right Now?" (Intellectual Property Owners Association (IPO) European Practice Committee) – London, UK

***Patent Docs is a media partner of this conference or CLE
Webinar on Best Practices for PCT and EPO Filings

April 18, 2015

Technology Transfer Tactics will be offering a webinar entitled "Best Practices for Cost-Effective Filing of PCT and EPO Patent Applications" on May 19, 2015 from 1:00 to 2:00 pm (Eastern). Jeffrey M. Sears, Associate General Counsel and Chief Patent Counsel, Columbia University and Robert Alderson and Corrado Fioravanti of Jacobacci and Partners will provide expert guidance on getting the most out of foreign filings so you can extend protection to more of your IP. The panel will address the following topics:

• Factors to consider when deciding whether to file international patents
• Which technologies you should definitely protect internationally, and which ones would be a waste of time
• Expert tips for reducing the costs of foreign filing
• Best practice advice for interacting with and managing overseas attorneys
• Step-by-step guidance regarding:
    – the PCT timeline
    – relevant dates and deadlines
    – filing during the national phase
• Cost comparisons between PCT, EPO and direct filing options
• What's new in Europe and why Austria is the "Delaware" of the Unitary Patent

The registration fee for the webinar is $197. Those interested in registering for the webinar, can do so here.
IPO Conference on Perception of IP in Europe

April 18, 2015

The Intellectual Property Owners Association (IPO) European Practice Committee will be hosting a one-day conference entitled "Never Been a Better Time (For IP) Than Right Now?" on May 20, 2015 in London, UK. The conference will begin with discussions on the EU IP Action plan and Art 123(2) at the EPO followed by discussions in the afternoon about UPC and opt-out. The conference will include sessions on the following topics:

• Is There a Changing Perception Towards IP in Europe?
• Is There a Changing Perception Towards Art 123(2) at the EPO?
• The UPC and Opt-Out: What to Do With Your Portfolio?
• Panel Discussion: The UPC and Opt-Out

A program for the conference, including an agenda and list of speakers can be found here. The registration fee for the conference is $125. Those interested in registering can do so here.
AstraZeneca AB v. Apotex Corp. (Fed. Cir. 2015)

April 16, 2015

By Kevin E. Noonan —

Earlier this month, the Federal Circuit rendered a decision on damages in what may be the last of a long-running series of ANDA cases involving AstraZeneca's Prilosec® (omeprazole) franchise. As set forth in the opinion, AstraZeneca's lawsuit against Apotex was part of the "second wave" of ANDA litigation, wherein the District Court apportioned into two sets of four defendants from the eight ANDA filers sued by AstraZeneca in the Southern District of New York starting at the end of the last century. The disposition of these cases formed an important part of the Federal Circuit's determination that the District Court properly decided the damages question for all but the final six months of AstraZeneca's exclusive right to market Prilosec®.

There were two patents in suit, U.S. Patent Nos. 4,786,505 and 4,853,230. Claim 1 of the '505 patent reads as follows:

An oral pharmaceutical preparation comprising:
    (a) a core region comprising an effective amount of a material selected from the group consisting of omeprazole plus an alkaline reacting compound, an alkaline omeprazole salt plus an alkaline reacting compound and an alkaline omeprazole salt alone;
    (b) an inert subcoating which is soluble or rapidly disintegrating in water disposed on said core region, said subcoating comprising one or more layers of materials selected from among tablet excipients and polymeric film-forming compounds; and
    (c) an outer layer disposed on said subcoating comprising an enteric coating.

And claim 1 of the '230 patent reads as follows:

A pharmaceutical preparation comprising:
    (a) an alkaline reacting core comprising an acid-labile pharmaceutically active substance and an alkaline reacting compound different from said active substance, an alkaline salt of an acid labile pharmaceutically active substance, or an alkaline salt of an acid labile pharmaceutically active substance and an alkaline reacting compound different from said active substance;
    (b) an inert subcoating which rapidly dissolves or disintegrates in water disposed on said core region, said subcoating comprising one or more layers comprising materials selected from the group consisting of tablet excipients, film-forming compounds and alkaline compounds; and
    (c) an enteric coating layer surrounding said subcoating layer, wherein the subcoating layer isolates the alkaline reacting core from the enteric coating layer such that the stability of the preparation is enhanced.

The District Court set forth the results of both the first wave (In re Omeprazole Patent Litig., 84 F. App'x 76 (Fed. Cir. 2003) ("Omeprazole I"), and In re Omeprazole Patent Litig., 483 F.3d 1364 (Fed. Cir. 2007) ("Omeprazole II")) and second wave (In re Omeprazole Patent Litig., 536 F.3d 1361 (Fed. Cir. 2008)) of ANDA litigation, wherein in the first wave only Kremers Urban Development Co. and Schwartz Pharma (collectively, "KUDCo") were found not to infringe the patents-in-suit due to changes in the patented omeprazole formulation. Here, Apotex entered the marketplace while the second wave of litigation was on-going (i.e., an "at risk" launch) and the District Court found (and the Federal Circuit affirmed) that the Apotex formulation infringed the patents in suit. Additionally, the Federal Circuit affirmed the District Court's determination that Apotex had not shown that the patents-in-suit were invalid.

The District Court determined damages based on calculation of a reasonable royalty, which the parties agreed was the proper basis. The results of the outcomes of these litigations on the price of omeprazole (branded and generic) is informative, and stands in marked contrast to the perception that generic drug formulations automatically and immediately result in lower drug prices:

The district court found that after those generic manufacturers entered the market, the price of generic omeprazole declined, but not significantly. However, the court found that the sales of Prilosec, Astra's prescription PPI drug, declined precipitously, both before 2002, when Prilosec was being replaced by Astra's newer prescription PPI drug, Nexium, and after 2002, when the generic manufacturers entered the market. Nonetheless, Astra continued to reap substantial revenues from Prilosec, which had net sales of $865 million in 2003, and $361 million in 2004.

After surveying the relevant data, the district court concluded that the price of generic omeprazole remained "relatively and uncharacteristically high" as of November 2003, due to the fact that only KUDCo was operating "freely and without the threat of litigation hanging over it." The district court therefore concluded that if Apotex had obtained a license from Astra in November 2003, it would have had "a golden opportunity to take significant market share away from both other generic manufacturers and perhaps even branded PPIs by launching at a lower price."

Moreover, the District Court found that at the time Apotex began selling its generic product the market for omeprazole had not been completely "genericized," defined as "when [third-party payers] impose a 'maximum allowable cost,' which is the maximum amount they will pay for a particular prescription drug [which is t]ypically, based on the generic price of the drug." (The District Court also found that AstraZeneca's introduction of "over-the-counter" Prilosec® did not affect the prescription price of the drug.) And regarding Apotex's expectations:

[A]s Apotex prepared to enter the market in 2003, it expected to experience roughly $581 million in sales during its first five years on the market, and that in the first year it expected to earn profits of $27 million at a profit margin of 92.5 percent. Moreover, the court found that Apotex knew that sales of its generic omeprazole would help Apotex sell its other pharmaceutical products. Accordingly, the court found that because Apotex "expected to (and did) make substantial profits from its sale of omeprazole, it would have been willing to pay a large share of those profits for the right to use [Astra's formulation] patents in 2003."

Finally, the District Court found that Apotex would not have been able to develop its own non-infringing omeprazole formulation "within a reasonable period of time" or copy others' formulations.

Taking these considerations into account, the District Court applied the factors relating to determining a reasonable royalty from Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), to arrive at a royalty rate of 50% of gross margins of Apotex's omeprazole sales. Included in these calculations were Apotex's expectations that it could expect a gross margin for omeprazole more than twice that of its other generic products, and that this expectation would be even higher if Apotex had licensed AstraZeneca's patents (which the Court found AstraZeneca would have been "especially reluctant" to do). This resulted in a damages judgment of $76,021,994.50 (plus prejudgment interest). Not surprisingly, this appeal followed.

The Federal Circuit affirmed in large part and reversed with regard to damages incurred during AstraZeneca's pediatric exclusivity period, in an opinion by Judge Bryson joined by Judges O'Malley and Clevenger. In doing so, the Court reviewed the damages award itself for clear error, and its methodology for abuse of discretion, citing Aqua Shield v. Inter Pool Cover Team, 774 F.3d 766, 770 (Fed. Cir. 2014), and Ferguson Beauregard/Logic Controls, Div. of Dover Res., Inc. v. Mega Sys., LLC, 350 F.3d 1327, 1345 (Fed. Cir. 2003). The Court rejected many of Apotex's arguments in view of those arguments' disregard for "many of the detailed findings made by the district court in support of the court's determination of the reasonable royalty in this case," and for making arguments directed to lost profits rather than a reasonable royalty. Also:

[T]he benefits to Apotex, and the costs to Astra, of a license to the formulation patents would have been considerable. For its part, Apotex stood to (and did) garner immense profits from selling its generic omeprazole product. The district court found that even after a 50 percent royalty payment to Astra, Apotex would be left with a profit margin of 36 percent, which was "solidly in the range of 31 to 48% margins [Apotex] typically earned on its products at the time."

The inability for Apotex to "design around" AstraZeneca's patents was also a factor properly considered by the District Court according to the Federal Circuit. "When an infringer can easily design around a patent and replace its infringing goods with non-infringing goods, the hypothetical royalty rate for the product is typically low" said the panel, citing Grain Processing, 185 F.3d at 1347; see also Riles v. Shell Exploration & Prod. Co., 298 F.3d 1302, 1312 (Fed. Cir. 2002). The panel also credited with approval the District Court's consideration of licenses between AstraZeneca and Andrz (50-70% royalty) and Teva (54% royalty).

The Federal Circuit rejected Apotex's application of the "entire market value rule," wherein the generic company argued that damages should only be determined by that portion of the claimed invention that distinguished it from conventional components (in this case, the omeprazole molecule comprising the claimed formulation for which patent protection had expired). The panel stated that this rule applied "when small elements of multi-component products are accused of infringement . . . where the patented feature creates the basis for customer demand or substantially creates the value of the component parts," citing Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1318 (Fed. Cir. 2011). The District Court had found that "there is little reason to import [the entire market value] rule for multicomponent products like machines into the generic pharmaceutical context." While not willing to make a per se rule, the Federal Circuit concurred that the rule was not applicable here, because "Astra's patents cover the infringing product as a whole, not a single component of a multi-component product."

The Federal Circuit did agree with Apotex that the District Court erred in assessing damages using its reasonable royalty calculation for the period after the patents-in-suit expired, based on AstraZeneca's pediatric exclusivity period. The District Court had based its decision on its conclusion that, had Apotex obtained a license providing AstraZeneca with a reasonable royalty, that license would have applied to sales made during this period. The District Court erred, according to the panel, because the basis for royalties was AstraZeneca's patent exclusivity, not its regulatory exclusivity. The Federal Circuit did not, as Apotex urged, base its decision on purported violation of the Supreme Court's decision in Brulotte v. Thys Co., 379 U.S. 29 (1964), because in that case the public had the right to practice the patented invention because the patent had expired, and a license extending past patent expiry impermissibly and wrongfully leveraged the patent right against the licensee. Congress had authorized the extended exclusivity period; what Congress had not authorized was using the provisions of 35 U.S.C. § 284 as the basis for such damages. On these grounds the Federal Circuit reversed this portion of the District Court's damages determination and remanded for recalculation.

AstraZeneca AB v. Apotex Corp. (Fed. Cir. 2015)
Panel: Circuit Judges O'Malley, Clevenger, and Bryson
Opinion by Circuit Judge Bryson

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