Patent Law Weblog
January 29-30, 2007 – Biotechnology 2007 (Law Seminars International) – San Francisco, CA
January 29-30, 2007 – BIO-Asia Partnering Conference (Biotechnology Industry Organization) – Tokyo, Japan
February 27-28, 2007 – Patent Portfolio Management (American Conference Institute) – New York, NY
April 16-18, 2007 – Biotechnology: Patent Prosecution, Licensing, Litigation &
Hatch-Waxman (Patent Resources Group) – Orlando, FL
Permanent Injunction Issued Against Abbott HCV Genotyping Test Kit
By Robert Dailey —
District Judge Barbara Crabb of the Western District of Wisconsin has issued a permanent
injunction against Abbott that halts worldwide sales of its HCV genotyping test
kits. In an opinion issued last week
(and reported on Patent Docs), the Court already held Abbott liable for
infringing U.S. Patent No. 5,846,704, owned by Innogenetics.
To receive a permanent injunction, a successful plaintiff
in a patent infringement suit must show that (i) it has suffered irreparable
harm; (ii) the remedies available at law are inadequate to compensate for that
harm; (iii) considering the balance of hardships between the plaintiff and
defendant, an equitable remedy is warranted; and (iv) the public interest would
not be harmed by the issuance of the permanent injunction.
In last week's opinion, the Court found that Innogenetics
had clearly satisfied the first three factors in the four-factor test. On the first factor, the Court found
irreparable harm because Abbott's products directly compete with the products
of the plaintiff's licensees (e.g., Bayer). On the second factor, Abbott had argued that the Plaintiff's prior
efforts to license its technology indicate its willingness to accept a purely
legal remedy to the dispute. Yet the
Supreme Court expressly rejected this line of reasoning in eBay Inc. v.
MercExchange L.L.C., 126 S. Ct. 1837, 1840 (2006). On the third factor, the Court held that Abbott recited no harms that
differed from those suffered by patent infringers generally.
The Court scheduled a separate hearing this week to hear
parties' evidence on the public interest factor. Abbott argued that Innogenetics could not
fill the market need for FDA-compliant test kits and that enjoining Abbott
would disrupt the HCV diagnostics services market. In an order issued this morning, Judge Crabb
rejected both of these contentions. The Court held that Innogenetics does have ample capacity to supply the market need
for HCV genotyping test kits. Furthermore, the Court found Abbott's market disruption claims to be
unpersuasive. Abbott sells 90% of its
infringing kits to a single customer – a laboratory that is already taking
steps to replace its use of Abbott's test kits.
Abbott also argued that 35 U.S.C. § 271(f) could not
prevent it from selling its products to foreign customers who could use its
kits to practice the plaintiff's patented method outside of the U.S. On a similar set of facts, however, the
Federal Circuit had already held that § 271(f) does apply to U.S.-based
companies that directly supply foreign customers with components that could be
used to infringe a U.S. method patent. See Union Carbide Chem. & Plastics Tech. Corp. v. Shell Oil Co., 425 F.3d 1366 (Fed. Cir. 2005). The permanent injunction, therefore,
encompasses all of Abbott's domestic and foreign sales of its HCV genotyping
kits.
Innogenetics, N.V. v. Abbott Labs., No. 05-C-0575-C (W.D.
Wis.)
Click here
for last week's opinion.
Click here
for this morning's permanent injunction order.
Patent Resources Group is providing a course entitled "Biotechnology: Patent Prosecution, Licensing, Litigation &
Hatch-Waxman" in Orlando on April 16-18, 2007. According to the PRG website, the course will
focus on:
A number of other courses are being offered by PRG the
week of April 16th in Orlando. Click
here for a
complete listing and description of the available courses. Continuing Legal Education credit is
available to those attending PRG's courses.
CytRx Corp. has announced that it has
contributed its RNA interference portfolio to RXi Pharmaceuticals Corp. CytRx owns 85% of RXi while the remaining 15%
will be owned by RXi's scientific advisory board. The members of the advisory board, subject to
consent from each member's employer, include Craig C. Mello, Ph.D., Gregory J. Hannon, Ph.D., Tariq M. Rana,
Ph.D., and Michael P. Czech, Ph.D. RXi will focus on developing RNAi therapeutics
for treating human diseases. According
to the press release, Tod Woolf, Ph.D. will be the Chief Executive Officer of
RXi.
Jason Derry, Ph.D., who graduated with honors from DePaul University College of Law, is a molecular biologist and founding author of Patent Docs.
By Kevin Noonan —
Back in the 1970's, Firesign Theater had a comedy album entitled "Everything You Know is Wrong." This seems to be the Supreme Court's current opinion on the Federal Circuit; the Court hasn't actually affirmed a CAFC decision since J.E.M. Ag Supply v. Pioneer Hi-Bred Int'l. Inc. in 2001.
The trend continues in MedImmune, Inc. v. Genentech, Inc., where the Court not only reversed the Federal Circuit's decision that the licensee, MedImmune, failed to state a case or controversy under Article III, but rejected the CAFC's GenProbe v. Vysis line of cases on the issue. In GenProbe, the Federal Circuit held that a licensee who believes it does not infringe the licensed patent, or that the patent is invalid, could not continue to pay royalties under the license and challenge validity or infringement by a declaratory judgment action. The CAFC distinguished Supreme Court precedent on licensee estoppel in Lear v. Adkins because in that case the licensee had refused to pay patent royalties. The Federal Circuit's precedent on the question left licensees with a Hobson's choice: continue to pay royalties on an invalid patent or one they did not infringe, or refuse to pay and run the risk of being liable for treble damages, attorney's fees, and an injunction.
The underlying dispute involved Synagis®, MedImmune's drug to prevent respiratory infections in infants and young children. MedImmune had licensed from Genentech a patent and (at the time) pending application related to recombinant expression of chimeric antibodies. The license terms provided that MedImmune agreed to pay royalties on such antibodies that "would, if not licensed under th[e] Agreement, infringe one or more claims of either or both [of the covered patents and] which have not expired nor been held invalid by a court or other body of competent jurisdiction." Upon grant of the application as a patent, Genentech informed MedImmune that it expected royalties under the patent for the Synagis® product. MedImmune paid, but only "under protest and with reservation of all [its] rights." The Court noted, in particular, that Synagis® represented 80% of MedImmune's revenue, and that failure to pay royalties would have left MedImmune liable for treble damages, attorney's fees, and a possible injunction against further sales of Synagis®.
MedImmune filed a declaratory judgment action, but the District Court below granted Genentech's motion to dismiss for lack of subject matter jurisdiction; specifically, because there was no "case or controversy" between the parties as required under Article III of the U.S. Constitution. This decision was based on controlling Federal Circuit precedent in GenProbe Inc. v. Vysis, Inc. In that case, the Federal Circuit held that the existence of the license "obliterate[d] any reasonable apprehension" that the licensee would be sued under the license, and hence took the case outside declaratory judgment jurisdiction under Article III. The Federal Circuit affirmed the District Court's dismissal of MedImmune's suit, at least in part because (as the Supreme Court noted) the three-judge panel hearing the appeal could not overturn the court's GenProbe precedent.
The Supreme Court, in an opinion written by Justice Scalia (Justice Thomas dissenting), noted that there would be no dispute had MedImmune taken the ultimate step of refusing to pay patent royalties, and that its own declaratory judgment jurisprudence had not always drawn "the brightest of lines" as to what did or did not fall properly within the scope of declaratory judgment jurisdiction. In reversing the CAFC, the Supreme Court pointed out that it had long been the case that a party did not need to put itself at risk when the issue was government action. Thus, a party that disputed a law (such as one prohibiting public distribution of leaflets; Steffel v. Thompson) could raise a case or controversy under Article III without having to violate the law and be at risk for prosecution ("the declaratory judgment procedure is an alternative to pursuit of the arguable illegal activity"; Rehnquist, A.J.). The principle was based on the existence of coercion, because the behavior that vitiated the threat of prosecution — compliance with the law — was coerced by the threat.
Turning to private causes of action, the Court referenced lower courts that had permitted subject matter jurisdiction in cases where a private party was in a position to coerce another's behavior. Justice Scalia did find one case, fortuitously enough, in the Court's precedence that appeared on point. In Altvater v. Freeman, the Court held there was subject matter jurisdiction under Article III's case and controversy requirement in a dispute involving patent royalty payments compelled under an injunction. In that case, the Court held that Federal Courts had jurisdiction to hear the declaratory judgment action by the plaintiff licensees on the validity of the underlying patent, even while paying "under protest" the patent royalties ordered by the injunction. Just as argued by MedImmune here, in Altvater the Court based subject matter jurisdiction on the peril involved with forcing the declaratory judgment plaintiffs to "risk not only actual but treble damages in infringement suits." The Altvater Court held that "the requirements of case or controversy are met where payment of a claim is demanded as of right and where payment is made, but where the involuntary or coercive nature of the exaction preserves the right to recover the sums paid or challenge the legality of the claim."
Applying the Altvater precedent to the instant case, the Court first rejected the distinction drawn by the Federal Circuit in GenProbe: that Altvater involved patent royalty payments compelled by an injunction. The proper analysis was not that the injunction was a form of government action that fell within Steffel v. Thompson-like exemptions. The Court noted that the Altvater Court did not base its decision on risks stemming from a contempt citation by the court, but rather (as here) on the risks of increased damages owed to the patentees for willful patent infringement (i.e., a private cause of action). The Court also distinguished Willing v. Chicago Auditorium Association, a case where the Supreme Court had denied subject matter jurisdiction. In that case, the declaratory judgment plaintiffs had applied for judicial imprimatur for tearing down a building in the face of a lease term preventing it. Justice Scalia distinguished the Willing precedent in part because the Declaratory Judgments Act was not law when Willing was decided. Without overruling Willing, the Court opined that it was "confident" that a different result would have been obtained had "the legal disagreement between the parties been as lively" as in this case.
The Court made short work of the other arguments presented by Genentech. The license was not just an "insurance policy" against a lawsuit. Moreover, the promise to pay royalties on patents that have not expired or been deemed invalid is not a promise not to seek a holding of the patent's invalidity. The Court also rejected application of the common law precept that a party could not challenge a contract while enjoying its benefits. While explicitly refusing to opine on whether its estoppel decision in Lear was predicated on that plaintiff having repudiated its license, the Court maintained that the principle did not apply since MedImmune was not challenging the validity of the contract but rather the validity of the underlying patents that formed the basis for the contractual obligation to pay royalties.
The Court thus held that a patent licensee could sue under the Declaratory Judgment Act for a determination of invalidity or non-infringement while continuing to pay patent royalties under the license, and that such a suit fulfilled the "cases or controversies" requirement of Article III. The result is a boon for those who believe (albeit with scant evidence) there are a plethora of invalid patents holding hostage unwilling licensees. The decision appears to bring some common sense to the question, since it is unlikely that either Lear or the Declaratory Judgments Act envisioned, sanctioned, or required the type of Catch 22 created by the Federal Circuit's jurisprudence. And the case gave the Supreme Court one more opportunity to reverse settled Federal Circuit precedent, a recently recurring pastime for the Court.
We all await the Court's decision in KSR v. Teleflex to see whether and to what extent this trend continues.
MedImmun, Inc. v. Genentech, Inc. (2007)
Opinion by Justice Scalia; dissenting opinion by Justice Thomas
By Kevin Noonan —
Illustrating once again distinctions between permanent
and preliminary injunctions in its jurisprudence, the Federal Circuit used a
combination of its patent-specific precedent and regional circuit law to affirm
a preliminary injunction against only one of three co-defendants. In Abbott Lab. v. Andrx Pharm., Inc., the Court held that one
co-defendant couldn't "piggy-back" its burden of showing a likelihood
of success on the merits for its invalidity or unenforceability defenses on a
successful showing of either defense made by another co-defendant, leading to
different outcomes for the parties.
Abbott sued Andrx Pharmaceuticals, Inc, Ranbaxy
Laboratories, Inc., and Teva Pharmaceuticals USA, Inc. for ANDA filings with the
FDA for generic versions of Abbott's Biaxin XL, an extended release formulation
of the antibiotic clarithromycin. Abbott
asserted against Andrx claims 1, 4, and 6 of U.S. Patent No. 6,010,718; claim 2 of
U.S. Patent No. 6,551,616, and claims 8 and 16 of U.S. Patent No. 6,872,407. The District Court granted Abbott's preliminary
injunction motion, holding that Abbott had established a likelihood of success
on the merits that Andrx infringed the claims at issue, and that Andrx had
failed to establish the likelihood that it would be successful in showing that
the claims were invalid. The District
Court's holding was limited to infringement under the doctrine of equivalents
for the '718 and '616 patents.
The bases for Andrx's appeal were two-fold: first, that the District Court was wrong, but
more importantly, that Abbott was collaterally estopped from asserting these
patent claims due to that court's denial of Abbott's preliminary injunction
motion as to the other defendants. Specifically, the District Court had denied the injunction as to Ranbaxy
on the grounds that Ranbaxy had shown a likelihood that it would be able to
establish at trial that the '616 and '407 patents were unenforceable for
inequitable conduct. The Court had also
denied the injunction as to Teva because it found Teva had shown the required
likelihood that claim 2 of the '616 patent was invalid for obviousness, and the
Federal Circuit had held, in Abbott's appeal of the District Court's decision
denying the injunction as to Teva, that Teva had raised a substantial question
of invalidity as to claims 2, 4, and 6 of the '718 patent.
Andrx's appeal was limited solely to the first prong of
the preliminary injunction standard: the
likelihood that Abbott would prevail on the merits of its patent infringement
case. Andrx's arguments on appeal were
based on Blonder-Tongue Laboratories v. University of Illinois Foundation, that
a patentee is collaterally estopped from asserting patent claims against a
defendant that had been found invalid or unenforceable against a different
defendant.
The Federal Circuit applied the law of the 7th Circuit
since the issue was not unique to patent law. First, the Federal Circuit distinguished Blonder-Tongue on the grounds
that the Supreme Court had emphasized the importance of the estoppel-creating
decision being a final determination on the merits. The patentee must have had the opportunity to
fully litigate the question of invalidity or unenforceability before a court
could preclude it from asserting its patent against another party. In addition, the collaterally-estopped issues
in the later case must be identical to those issues in the prior case.
Andrx acknowledged that Blonder-Tongue required a final
determination, but that the holding should be extended to preliminary
injunctions because these decisions are "final" as to the question of
whether Abbott was entitled to the preliminary injunction.
Under 7th Circuit law, preliminary injunctions were
recognized to be made on an incomplete record and to be tentative
determinations at best, being decided not on a conclusive determination but on
an estimate of the likelihood of success. The Federal Circuit found that there were "rare instances"
where the 7th Circuit would find estoppel in the absence of a final
determination. Under 7th Circuit law, those rare instances arose when the preliminary injunction determination raised
an "insuperable obstacle" to a plaintiff's success on the
merits.
The Court determined that those circumstances did not
apply. The Federal Circuit found that
the District Court in its denial of Abbott's motion for preliminary injunction
against Ranbaxy and Teva had not evinced the required intention to "firmly
and finally decide" the issues of invalidity and unenforceability. Under 7th Circuit law, therefore, the Federal
Circuit refused to find collateral estoppel against Abbott in its preliminary
injunction motion and affirmed.
Andrx's other contention was that the District Court was
incorrect, which the Federal Circuit reviewed under the abuse of discretion
standard. Andrx argued on appeal that
its product did not infringe because Abbott's patent claims recited the use of
a "pharmaceutically-acceptable polymer" whereas Andrx's ANDA generic
comprises glyceryl monostearate (GMS). The Federal Circuit construed the term "pharmaceutically-acceptable
polymer" in Abbott's claims and determined that Andrx's GMS was not
outside the scope of equivalents. In so
doing, the Court disagreed with the District Court's claim construction, and asserted
that the use of Markush language ("selected from the group consisting
of") in the specification did not have the limiting effect that such
language has in a claim. In addition,
the Court found that the patentee had used the term "means" in the
specification consistently when reciting explicit definitions, but had used the
word "is" when reciting examples of pharmaceutically-acceptable
polymers. In the Court's view, these
differences did not "unambiguously signify" that the patentee had
intended to be a lexicographer and limit the scope of the
pharmaceutically-acceptable polymers used in the invention. According to the Court, this determination
was supported by the testimony of both parties' experts, neither of whom
maintained that the language was explicitly definitional. Based on this more expansive meaning of the
term "pharmaceutically-acceptable polymer" in the claims, the Federal
Circuit found that the District Court had not abused its discretion in granting
the preliminary injunction based on the likelihood that Abbott would prevail on
the merits, that Andrx's generic clarithromycin formulation infringes Abbott's
claims under the doctrine of equivalents. In doing so, the Court explicitly rejected Andrx's contentions that a
finding of equivalents would vitiate the "pharmaceutically-acceptable
polymer" limitation, or violate the specific exclusion principle
(prohibiting a finding as an equivalent of a compound excluded from the claimed
limitation).
Abbott Lab. v. Andrx Pharm., Inc. (Fed. Cir. 2007)
Panel: Chief Judge Michel, Circuit Judge Prost, and District Judge Ellis
Opinion by Circuit Judge Prost
By Robert Dailey —
Last Friday the Federal Circuit refused Ariad's request
to hear its appeal of a pre-trial ruling in its district court litigation with
Amgen. In mid-2006, Amgen filed a
declaratory judgment action against Ariad in the U.S. District Court for the
District of Delaware.
Ariad responded by asking Judge Kent Jordan to dismiss
the suit for (i) failure to demonstrate the existence of an actual controversy
under the declaratory judgment standards, and (ii) for failure to join Harvard
and MIT as indispensable parties. Judge
Jordan denied Ariad's motion, but certified the issues for appeal. Friday's ruling requires cash-strapped Ariad
to return to district court and proceed with the litigation involving U.S.
Patent No. 6,410,516 (the '516 patent).
Ariad is also embroiled in protracted litigation over the
same patent with Eli Lilly & Co. in the District of Massachusetts. Although Ariad received a favorable jury
verdict last May on the infringement-related issues, the parties are still
awaiting the outcome of an August bench trial on invalidity and inequitable
conduct.
The '516 patent took a huge hit in September, however,
when the USPTO invalidated 160 of its 203 claims in a reexamination
proceeding. Ariad is in the process of responding
to the USPTO's findings.
Amgen Inc. v. Ariad Pharms., No. 1:06-cv-00259 (D. Del.).
Ariad Pharms. v. Eli Lilly & Co., No.
1:02-cv-11280-RWZ (D. Mass.).
Robert Dailey, Ph.D., is a physical chemist and a third-year law
student at the University of North Carolina at Chapel Hill. Dr. Dailey
was a member of MBHB's 2006 class of summer associates.
Genentech and
Seattle Genetics have announced an agreement involving the development and commercialization of a humanized
monoclonal antibody for treating hematologic malignancies, including multiple
myeloma, chronic lymphocytic leukemia, and non-Hodgkin's lymphoma. The antibody, SGN-40, is currently in Phase I
and II clinical trials. According to the
press release, Seattle Genetics will receive $60 million in up-front payment,
and may receive more than $800 million in milestone payments and increasing
royalties on sales of SGN-40 in the future.
Jason Derry, Ph.D., who graduated with honors from DePaul University College of Law, is a molecular biologist and founding author of Patent Docs.
Innogenetics Wins $7 Million Judgment Against Abbott for Infringing HCV Genotyping Method
By Robert Dailey —
Judge Barbara Crabb, in an opinion
issued last week,
rejected all of Abbott's post-trial motions and upheld an earlier $7 million
verdict against its diagnostics division for infringing an Innogenetics patent.
Innogenetics owns U.S. Patent Number 5,846,704 (the '704 patent), which is
directed to methods of genotyping the hepatitis C virus (HCV) by hybridizing
probes to a particular region of the HCV genome. Claim 1 covers:
1. A method of genotyping HCV present in a biological sample
comprising hybridizing nucleic acids in a biological sample with at least one
probe and detecting a complex as formed with said probe and said nucleic acids
of HCV, using a probe that specifically hybridizes to the domain extending from
the nucleotides at positions -291 to -66 of the 5' untranslated region of HCV.
Abbott sells HCV genotyping assays that perform the
claimed method using Realtime PCR.
Abbott argued that its assay does not infringe the patent
because Realtime PCR is an after-arising technology that was not known when
Innogenetics filed its initial parent application in 1992. The court provides several reasons for
rejecting this argument. First, SuperGuide Corp. v. DirectTV Enterprises, Inc., 358 F.3d 870 (Fed. Cir. 2004), holds
that "[t]he law does not require that the applicant describe in his
specification every conceivable and possible future embodiment of his
invention." Nevertheless, the court
provides no basis for distinguishing SuperGuide from cases in which the Federal
Circuit has held that a claim fails the written description requirement when
the patentee attempts to sweep after-arising technology into the claim's scope. See Chiron Corp. v. Genentech, Inc., 363 F.3d 1247
(Fed. Cir. 2004). Second, Realtime PCR
was already known in the art by 1992 and, therefore, does not qualify as
after-arising technology. Third, Abbott
made this argument for the first time at 9:30 p.m. on the eve of the trial
while submitting its proposed jury instructions. This contradicted Abbott's earlier averments
that it had no further theories of non-infringement. (Consequently, Judge Crabb prevented Abbott
from presenting this argument at trial.)
Abbott also argued that the '704 patent was invalid
because it was anticipated by and obvious in light of prior art directed to
detecting HCV in the 5' untranslated region (UTR). But the Innogenetics method had not merely
dealt with detecting HCV in the 5' UTR; their patent also taught how to
distinguish among (i.e., classify) different types and subtypes of HCV in the
5' UTR.
Abbott's obviousness argument rested on a combination of
prior art references. Yet Abbott offered
the court nothing more than an expert's conclusory statements of
obviousness. The court held that an
expert must at least explain how and why the asserted combination of references
renders the patent obviousness.
Abbott's anticipation argument was rejected by a jury,
whose verdict has now been upheld. This
portion of Abbott's case seems to have failed in part because Abbott refused to
offer its primary witness (a trained expert and the author of the asserted
prior art reference) as an expert. As a
mere fact witness, he was prevented from giving any opinion-related testimony
in court connected to the technology at issue. Relying on Day v. Consolidated Rail Corp., 1996 WL 257654 (S.D.N.Y.
1996), the court held that Abbott's decision to offer its "expert" as
a non-expert did not exempt the witness from the report requirement of Rule
26(a)(2)(B). (The Rule requires
witnesses who give opinion-related testimony on scientific or technical matters
to submit reports to the court during pre-trial discovery.) This left Abbott with little evidence to
bring before the jury.
The jury's damage award of $7 million was upheld and the
plaintiff's motion for treble damages was denied. Judge Crabb will issue a subsequent opinion
regarding the plaintiff's request for a permanent injunction.
Innogenetics v. Abbott Labs., No. 05-C-0575-C (W.D. Wis.).
In a January 2, 2007 press release, The Patent Board®
announced that it will provide The Patent Scorecard to The Wall Street Journal
on a weekly basis. The Wall Street Journal
plans to publish the information every Tuesday in the "Money & Investing"
section, and will be accessible through its online publication. Using its arsenal of
tools and metrics for analyzing patents and I.P. investment, The Patent Board®
generates The Patent Scorecard which includes categories such as patent
portfolio quality, technological strength, and breadth of impact. This feature will provide in-depth analysis
of the intellectual property of leading companies in 17 different industries. The Scorecard launched on January 2, 2007,
with a review of the consumer electronics sector. According to the press release, The Wall
Street Journal plans to profile other sectors in the upcoming weeks, including
the automotive, semiconductors, information technology, aerospace and defense,
and pharmaceuticals.
With the recent launch and success of the Ocean Tomo
300® Patent Index, as previously reported by Patent Docs, this weekly feature puts additional public spotlight on the
importance of corporate valuation and leveraging of its intellectual property.
More information about the Scorecard or The Patent
Board® can be found here.
Patent Docs 