Intellectual property management: Patent Litigation

PATENT
1.INTRODUCTION :
A Patent is a set of exclusive rights granted by a state to an inventor or his
assignee for a
fixed period of time in exchange for a disclosure of an invention.
The procedure for granting patents, the requirements placed on the patentee and
the extent ofthe exclusive rights vary widely between countries according to
national laws andinternational agreements. Typically, however, a patent
application must include one or moreclaims defining the invention which must
be new, inventive, and useful or industriallyapplicable. In many countries,
certain subject areas are excluded from patents, such asbusiness methods and
mental acts. The exclusive right granted to a patentee in most countriesis the
right to prevent or exclude others from making, using, selling, offering to sell
orimporting the invention.
Patent usually refers to a right granted to anyone who invents or discovers any
new anduseful process, machine, article of manufacture, or composition of
matter, or any new anduseful improvement thereof. The additional qualification
utility patents is used in countriessuch as the United States to distinguish them
from other types of patents but should not beconfused with utility models
granted by other countries. Examples of particular species ofpatents for
inventions include biological patents, business method patents, chemical
patentsand software patents.

Patent infringement is the commission of a prohibited act with respect

to a patented invention without permission from the patentholder.
Permission may typically be granted in the form of a licence. The
definition of patent infringement may vary by jurisdiction, but it typically
includes using or selling the patented invention. In many countries, a use
is required to be commercial (or to have acommercial purpose) to
constitute patent infringement.[citation needed]

School of pharmacy and technology management

Intellectual property management: Patent Litigation

The scope of the patented invention or the extent of protection[1] is

defined in the claims of the granted patent. In other words, the terms of
the claims inform the public of what is not allowed without the permission
of the patent holder.
Patents are territorial, and infringement is only possible in a country
where a patent is in force. For example, if a patent is filed in the United
States, then anyone in the United States is prohibited from making,
using, selling or importing the patented item, while people in other
countries may be free to make the patented item in their country. The
scope of protection may vary from country to country, because the
patent is examined by the patent office in each country or region and
may have some difference of patentability, so that a granted patent is
difficult to enforce worldwide.
Elements of patent infringement
Typically, a party which manufactures, imports, uses, sells, or offers for
sale patented technology, during the term of the patent and within the
country that issued the patent, is considered to infringe the patent.
The test varies from country to country, but in general it requires that the
infringing party's product (or method, service, and so on) falls within one
or more of the claims of the patent. The process employed involves
"reading" a claim onto the technology of interest. If all of the claim's
elements are found in the technology, the claim is said to "read on" the
technology; if a single element from the claim is missing from the
technology, the claim does not literally read on the technology and the
technology does not infringe the patent with respect to that claim.
In response to allegations of infringement, an accused infringing party
will generally assert one or more of the following:

 it was not practicing the patented invention;

 it was not performing any infringing act in the territory covered by
the patent;
 the patent has expired;
 the patent (or the particular claim(s) alleged to be infringed) is
invalid, because the invention in question does not
meet patentabilityor includes a formal defect, rendering the patent
invalid or unenforceable;
 it has obtained a license under the patent;

School of pharmacy and technology management

Intellectual property management: Patent Litigation

 the patent holder is infringing patent rights belonging to the

accused infringing party, and the party may resolve the dispute in
settlement or cross-licensing.
 In the 60 years since India's independence, the domestic
pharmaceutical industry has been shaped primarily by regulation.
Initially, multinationals had a near monopoly on pharmaceuticals.
They imported and marketed complete formulations in India,
mainly low-cost generics along with a few highly priced specialty
drugs. When the government increased pressure to deter the
import of finished products, multinationals set up formulating units
and continued importing bulk drugs.
 In the 1960s, the Indian government laid the foundation for a
domestic pharmaceuticals industry by promoting the state-
owned Hindustan Antibiotics Ltd. and Indian Drugs and
Pharmaceuticals Ltd. for the manufacture of bulk drugs. However,
the multinationals maintained their lead because of their technical
expertise, financial muscle, and ability to move innovations from
one market to another. The high cost of original research, the
sophisticated scientific knowledge needed and a lack of financing
options worked against the private-sector Indian companies.
 This state of affairs changed with the 1970 Indian Patent Act,
whereby substances used in foods and pharmaceuticals were not
granted product patents. Process patents were granted for a
period of five years from the date of grant or seven years from the
date of filing, whichever was earlier. Process modifications were
easier to accomplish, and there was a rapid influx of domestic
manufacturers. These companies generally started with bulk drugs
and gradually progressed into complete medications. The
multinationals were constrained by their parent companies' product
ranges but the Indian producers could make almost anything. Not
paying product patent royalties cut the cost of local manufacture
and helped Indian producers thrive.
 Shortly thereafter, the Drugs Price Control Order put a ceiling on
prices of certain mass-usage formulations. Since selling at such
low prices could cause discontent in their home markets,
multinationals dramatically curtailed new product launches, further
boosting India's domestic players.

School of pharmacy and technology management

Intellectual property management: Patent Litigation

 Under the Foreign Exchange Regulations Act in the late 1970s, the
multinationals had to reduce their stakes in Indian ventures to
40%, or comply with certain export obligations and keep their
equity stake at 51%. Many multinationals preferred not to do
business in that climate – another shot in the arm for India's
pharmaceutical industry.
 In 1986, Reddy's started operations on branded formulations.
Within a year Reddy's had launched Norilet, Reddy's first
recognized brand in India. But, thanks to its superior process
technology, Reddy's scored a big success with Omez, its branded
omezaprole – ulcer and reflux oesophagitis medication – launched
at half the price of other brands on the Indian market at that time.

TYPES OF PATENT INFRINGEMENTS

Infringement can be direct, indirect, or contributory. Anyone who makes, uses, or

sells the patented invention is a direct infringer. If a person actively encourages another
to make, use, or sell the invention, the person so inducing is liable for indirect
infringement. Contributory infringement can be committed by knowingly selling or
supplying an item for which the only use is in connection with a patented invention.
Good faith or ignorance is no defense for direct infringement, but it can be for indirect or
contributory infringement.

The remedies for infringement consist of:

1. Injunctive relief,
2. damages (including treble damages for willful infringement),
3. attorneys' fees in some cases, and
4. court costs.
Patent Infringement By the Government 
Patent infringement, by the Government, of privately owned patents, is governed by 28
U.S.C. 1498, which provides that a suit against the Government in the U.S. Court of
Federal Claims is the exclusvie remedy for patent holders who allege their patented
invention has been infringed by the U.S. Government or by one acting for the
Government. The primary purpose of this statute is to protect and relieve contractors
from any liability for infringement by the owner when an invention is used by or
manufactured for the United States. By virtue of this statute, the Government may be
held liable to the patent owner for payment of the "reasonable and entire compensation"
for its unauthorized use of the patent. Unlike a private party, however, the Government
cannot commit the tort of "patent infringement." Governmental use of a patented
invention is viewed as an eminent domain taking of a license under the patent and not
as a tort.

The Government may delegate its eminent domain power over patents to contractors
acting on its behalf. This is accomplished through inclusion of the "Authorization and
Consent" clause in the contract [FAR clause 52.227-1]. This clause is usually included in
research and development contracts and is a very significant power to grant to a
contractor as it makes the Government responsible for the contractors' infringement of

School of pharmacy and technology management

Intellectual property management: Patent Litigation

any patents during the course of performance of the contract; the patent owner must
bring her/his action against the Government, not the contractor.

Sometimes the Government does not wish to fully delegate its eminent domain
power to a contractor. This is accomplished by inclusion in the contract of the
"Patent Indemnity" clause [FAR clause 52.227-3] which obligates the contractor
who infringes a patent to indemnify the Government for any liability it incurs.

[edit]Indirect infringement
Under certain jurisdictions, there is a particular case of patent
infringement called "indirect infringement." Indirect infringement can
occur, for instance, when a device is claimed in a patent and a third
party supplies a product which can only be reasonably used to make the
claimed device.
Legislation for different countries
[edit]Japan
Infringement under the patent law in Japan is defined by Article 101 of
Patent Act (Act No. 121 of 1959),[2] which shows the following acts shall
be deemed to constitute infringement of a patent right or an exclusive
license:

 (i) where a patent has been granted for an invention of a product,

acts of producing, assigning, etc., importing or offering for
assignment, etc. any product to be used exclusively for the producing
of the said product as a business;
 (ii) where a patent has been granted for an invention of a product,
acts of producing, assigning, etc., importing or offering for
assignment, etc. any product (excluding those widely distributed
within Japan) to be used for the producing of the said product and
indispensable for the resolution of the problem by the said invention
as a business, knowing that the said invention is a patented invention
and the said product is used for the working of the invention;
 (iii) where a patent has been granted for an invention of a process,
acts of producing, assigning, etc., importing or offering for
assignment, etc. any product to be used exclusively for the use of the
said process as a business; and

School of pharmacy and technology management

Intellectual property management: Patent Litigation

 (iv) where a patent has been granted for an invention of a process,

acts of producing, assigning, etc., importing or offering for
assignment, etc. any product (excluding those widely distributed
within Japan) to be used for the use of the said process and
indispensable for the resolution of the problem by the said invention,
knowing that the said invention is a patented invention and the said
product is used for the working of the invention as a business.
[edit]United Kingdom
Main article: Patent infringement under United Kingdom law
Infringement under United Kingdom patent law is defined by Section
60 of the UK Patents Act 1977 (as amended), which sets out the
following types of infringement:

 Where the invention is a product, by the making, disposing of,

offering to dispose of, using, importing or keeping a patented product.
 Where the invention is a process, by the use, or offer for use
where it is known that the use of the process would be an
infringement. Also, by the disposal of, offer to dispose of, use or
import of a product obtained directly by means of that process, or the
keeping of any such product whether for disposal or otherwise.
 By the supply, or offer to supply, in the United Kingdom, a person
not entitled to work the invention, with any of the means, relating to
an essential element of the invention, for putting the invention into
effect, when it is known (or it is reasonable to expect such
knowledge) that those means are suitable for putting, and are
intended to put, the invention into effect in the United Kingdom.
[edit]United States
Main article: Patent infringement under United States law
In United States law, an infringement may occur where the defendant
has made, used, sold, offered to sell, or imported an
infringing invention or its equivalent.[3] One also commits indirect
infringement if he actively and knowingly induces another to infringe, and
is liable for that infringement. Types of "indirect infringement" include
"contributory infringement" and "induced infringement."
No infringement action may be started until the patent is issued.
However, pre-grant protection is available under 35 U.S.C. § 154(d),
which allows a patent owner to obtain reasonable royalty damages for

School of pharmacy and technology management

Intellectual property management: Patent Litigation

certain infringing activities that occurred before patent's date of

issuance. This right to obtain provisional damages requires a patent
holder to show that (1) the infringing activities occurred after the
publication of the patent application, (2) the patented claims are
substantially identical to the claims in the published application, and (3)
the infringer had "actual notice" of the published patent application.
The Patent Reform Act of 2009 will, if enacted, make changes such as
tightening the definition of "willful" infringement and limit infringement
cases to states where the defendant's business operates.
[edit]Clearance search, and clearance, validity and enforceability
opinions
A clearance search, also called freedom-to-operate search or
infringement search,[4] is a search done on issued patents or on
pending patent applications to determine if a product or process
infringes any of the claims of the issued patents or pending patent
applications. A clearance search may also include expired art that acts
as a 'safe harbor' permitting the product or process to be used based on
patents in the public domain. These searches are often performed by
one or more professional patent searchers who are under the direction
of one or more patent attorneys.
A clearance search can be followed by a clearance opinion, i.e. a legal
opinion provided by one or more patent attorneys as to whether a given
product or process infringes the claims of one or more issued patents or
pending patent applications. Clearance opinions may be done in
combination with a "validity and enforceability" opinion. A validity and
enforceability opinion is a legal opinion as to whether a given patent is
valid and/or enforceable. In other words, a validity opinion is a legal
opinion or letter in which a patent attorney or patent agent analyzes an
issued patent and provides an opinion on how a court might rule on its
validity or enforceability.[5] Validity opinions are often sought before
litigation related to a patent. The average cost of a validity opinion
(according to one 2007 survey) is over $15,000, with an infringement
analysis adding an additional $13,000.[6]
The cost of these opinions for U.S. patents can run from tens to
hundreds of thousands of dollars (or more) depending upon the
particular patent, the number of defenses and prior art references, the

School of pharmacy and technology management

Intellectual property management: Patent Litigation

length of the prosecution file history, and the complexity of the

technology in question.
An exculpatory opinion (setting forth reasons the patent is not
infringed, or providing other defenses such as prior use, intervening
rights, or prior invention) is also possible.
[edit]Patent infringement insurance
Patent infringement insurance is an insurance policy provided by one or
more insurance companies to protect either an inventor or a third party
from the risks of inadvertently infringing a patent.
For inventors, patent infringement insurance covers legal costs in case
they have to sue an infringer to enforce their patent.
For third parties, patent infringement insurance covers their legal costs in
case they are sued for patent infringement by an inventor.
Patent infringement insurance is generally considered too expensive to
be worth it. The premiums must be high, however, due, at least in part,
to the high legal costs of patent infringement cases. A typical patent
infringement case in the US costs 1 - 3 million dollars in legal fees for
each side. This is despite the fact that 99% of all patent infringement
cases are settled.[citation needed] Legal fees in pharmaceutical cases can run
30 million dollars or more, although this should be contrasted with the
fact that billions of dollars may be at stake.[citation needed]
In June 2006, a Study for the European Commission on the feasibility of
possible insurance schemes against patent litigation risks was
published.[7] The report concluded that the continuation of the status quo
with very little, disproportionately expensive, bespoke patent litigation
insurance (PLI) would not meet any objectives for a feasible insurance
scheme. Instead, only a mandatory scheme was considered to be viable
in order to provide the economic and technical benefits to the EU and
individual patentees which would arise from a widespread PLI scheme.
[edit]Piracy

Since the 1840s, the expression "patent pirate" has been used as
a pejorative term to describe those that infringe a patent and refuse to
acknowledge the priority of theinventor. Samuel F. B. Morse, inventor of
the telegraph, for example, complained in a letter to friend in 1848 [8]

School of pharmacy and technology management

Intellectual property management: Patent Litigation

I have been so constantly under the necessity of watching the

movements of the most unprincipled set of pirates I have ever
known, that all my time has been occupied in defense, in putting
evidence into something like legal shape that I am the inventor of
the Electro-Magnetic Telegraph!! Would you have believed it ten
years ago that a question could be raised on that subject?
Those who accuse others of being patent pirates say that they take
advantage of the high cost of enforcing a patent to willfully infringe
valid patents with impunity, knowing that the average small inventor
does not have the financial resources required to enforce their patent
rights.[citation needed] In the US, for example, an inventor must budget $1
million or more in order to initiate patent litigation. They say that
patent pirates also take advantage of countries where patent rights
are difficult to enforce and willfully infringe in those countries.[citation
needed]

Ironically, the term "pirate" has also been used to describe patent
owners that vigorously enforce their patents.[9] (See also patent troll)
Thus whether one deliberately infringes a patent or whether one
vigorously enforces a patent, they may be referred to as a pirate by
those that feel they are overstepping their bounds.
[edit]Threat to bring a patent infringement action
"A threat to bring a patent infringement action is highly likely to
influence the commercial conduct of the person threatened, which is
why the law of some countries, including the UK, provides that the
making of a groundless threat to sue is, within certain carefully
prescribed limits, an actionable wrong in itself." [10] This however is
not the case in the United States.
Although brand-name pharmaceutical companies routinely procure patents on
their innovative medications, such rights are not self-enforcing. Brand-name
firms
that wish to enforce their patents against generic competitors must commence
litigation in the federal courts. Such litigation ordinarily terminates in either a
judgment of infringement, which typically blocks generic competition until such
time
as the patent expires, or a judgment that the patent is invalid or not infringed,
which
typically opens the market to generic entry.
As with other sorts of commercial litigation, however, the parties to

School of pharmacy and technology management

Intellectual property management: Patent Litigation

pharmaceutical patent litigation may choose to settle their case. Certain of these
settlements have called for the generic firm to neither challenge the brand-name
company’s patents nor sell a generic version of the patented drug for a period of
time.
In exchange, the brand-name drug company agrees to compensate the generic
firm,
often with substantial monetary payments over a number of years. Because the
payment flows counterintuitively, from the patent proprietor to the accused
infringer,
this compensation has been termed a “reverse” payment.
Commentators have differed markedly in their views of reverse payment
settlements. Some observers believe that they are a consequence of the
specialized
patent litigation procedures established by the Hatch-Waxman Act. Others have
concluded that when one competitor pays another not to market its product,
such a
settlement is anti-competitive and a violation of the antitrust laws.

Pharmaceutical Patent Litigation

Settlements: Implications for Competition
and Innovation
The increasing costs of health care have focused congressional attention upon
both the development and public availability of prescription drugs. Congress
has
long recognized that the patent system has an important role to play in the
pharmaceutical industry in each respect. The Drug Price Competition and Patent
Term Restoration Act of 1984,1 commonly known as the Hatch-Waxman Act,2
in part
reformed the patent laws to balance incentives for innovation and competition
within
the pharmaceutical industry. Congress subsequently amended this legislation on
several occasions, most recently via the Medicare Prescription Drug,
Improvement,
and Modernization Act of 2003.3
Recently, congressional attention has been directed towards one aspect of the
patent system, the settlement of pharmaceutical patent litigation. Although
brandname
pharmaceutical companies commonly procure patents on their innovative
products and processes, such rights are not self-enforcing. If a brand-name drug
company wishes to enforce its patents against generic competitors, it must
pursue
litigation in the federal courts.4 Such litigation ordinarily terminates in either a

School of pharmacy and technology management

Intellectual property management: Patent Litigation

judgment of infringement, which typically blocks generic competition until such

time
as the patent expires, or a judgment that the patent is invalid or not infringed,
which
typically opens the market to generic entry.
As with other sorts of commercial litigation, however, the parties to
pharmaceutical patent litigation may choose to settle their case.5 Certain of
these
settlements call for the generic firm to neither challenge the brand-name
company’s
patents nor sell a generic version of the patented drug. In exchange, the brand-
name
drug company agrees to make cash payments to the generic firm. This
compensation
has been termed an “exclusion”6 or “exit”7 payment or, because the payment
flows counterintuitively, from the patent proprietor to the accused infringer, a
“reverse”
payment.”8
Commentators differ markedly in their views of reverse payment settlements.
Some observers believe that they result from the specialized patent litigation
procedures established by the Hatch-Waxman Act.9 Others conclude that when
one
competitor pays another not to market its product, such a settlement is
anticompetitive
and a violation of the antitrust laws

Patent Disputes Under the Hatch-Waxman Act

Patent Fundamentals
In order to obtain patent protection, individuals and firms must prepare and
submit applications to the U.S. Patent and Trademark Office (USPTO) if they
wish
to obtain patent protection.16 USPTO officials, known as examiners, then
assess
whether the application merits the award of a patent.17 Under the Patent Act of
1952,18 a patent application must include a specification that so completely
describes
the invention that skilled artisans are able to practice it without undue
experimentation. The Patent Act also requires that applicants draft at least one
claim
that particularly points out and distinctly claims the subject matter that they
regard
as their invention.19
While reviewing a submitted application, the examiner will determine whether

School of pharmacy and technology management

Intellectual property management: Patent Litigation

the claimed invention fulfills certain substantive standards set by the patent
statute.
Two of the most important patentability criteria are novelty and
nonobviousness. To
be judged novel, the claimed invention must not be fully anticipated by a prior
patent,
publication or other knowledge within the public domain.20 The sum of these
earlier
materials, which document state-of-the-art knowledge that is accessible to the
public,
is termed the “prior art.” To meet the standard of nonobviousness, an invention
must
not have been readily within the ordinary skills of a competent artisan based
upon the
teachings of the prior art.21
If the USPTO allows the application to issue as a granted patent, the owner or
owners of the patent obtain the right to exclude others from making, using,
selling,
offering to sell or importing into the United States the claimed invention.22 The
term
of the patent is ordinarily set at twenty years from the date the patent application
was
filed.23 Patent title therefore provides inventors with limited periods of
exclusivity
in which they may practice their inventions, or license others to do so. The grant
of
a patent permits inventors to receive a return on the expenditure of resources
leading
to the discovery, often by charging a higher price than would prevail in a
competitive
market. In the pharmaceutical industry, for example, the introduction of generic

FDA Approval Procedures

Although the award of a patent claiming a pharmaceutical provides its owner
with a proprietary interest in that product, it does not actually allow the owner
to
distribute that product to the public. Permission from the FDA must first be
obtained.25 In order to obtain FDA marketing approval, the developer of a new
drug
must demonstrate that the product is safe and effective. This showing typically
requires the drug’s sponsor to conduct both preclinical and clinical
investigations.26

School of pharmacy and technology management

Intellectual property management: Patent Litigation

In deciding whether to issue marketing approval or not, the FDA evaluates the
test
data that the sponsor submits in a so-called New Drug Application (NDA).
Prior to the enactment of the Hatch-Waxman Act, the federal food and drug law
contained no separate provisions addressing marketing approval for independent
generic versions of drugs that had previously been approved by the FDA.27 The
result was that a would-be generic drug manufacturer had to file its own NDA
in
order to sell its product.28 Some generic manufacturers could rely on published
scientific literature demonstrating the safety and efficacy of the drug by
submitting
a so-called paper NDA. Because these sorts of studies were not available for all
drugs, however, not all generic firms could file a paper NDA.29 Further, at
times the
FDA requested additional studies to address safety and efficacy questions that
arose
from experience with the drug following its initial approval.30 The result was
that
some generic manufacturers were forced to prove once more that a particular
drug was safe and effective, even though their products were chemically
identical to those of previously approved pharmaceuticals.

Some commentators believed that the approval of a generic drug was a

needlessly costly, duplicative, and time-consuming process.31 These observers
noted
that although patents on important drugs had expired, manufacturers were not
moving to introduce generic equivalents for these products due to the level of
resource expenditure required to obtain FDA marketing approval.32
In response to these concerns, Congress enacted the Hatch-Waxman Act, a
statute that has been described as a “complex and multifaceted compromise
between
innovative and generic pharmaceutical companies.”33 Its provisions included
the
creation of two statutory pathways that expedited the marketing approval
process for
generic drugs. The first of these consist of Abbreviated New Drug Applications,
or
ANDAs. An ANDA allows an independent generic applicant to obtain
marketing
approval by demonstrating that the proposed product is bioequivalent to an
approved
pioneer drug, without providing evidence of safety and effectiveness from
clinical

School of pharmacy and technology management

Intellectual property management: Patent Litigation

data or from the scientific literature. The second are so-called § 505(b)(2)
applications, which are sometimes still referred to as “paper NDAs.” Like an
NDA,
a § 505(b)(2) application contains a full report of investigations of safety and
effectiveness of the proposed product. In contrast to an NDA, however, a §
505(b)(2) application typically relies, at least in part, upon published literature
providing pre-clinical or clinical data.
The availability of ANDAs and § 505(b)(2) applications often allow a generic
manufacturer to avoid the costs and delays associated with filing a full-fledged
NDA.
They may also allow an independent generic manufacturer, in many cases, to
place
its FDA-approved bioequivalent drug on the market as soon as any relevant
patents
expire.34
As part of the balance struck between brand-name and generic firms, Congress
also provided patent proprietors with a means for restoring a portion of the pate

term that had been lost while awaiting FDA approval. The maximum extension
period is capped at a five-year extension period, or a total effective patent term
after
the extension of not more than 14 years.35 The scope of rights during the period
of
extension is generally limited to the use approved for the product that subjected
it to
regulatory delay.36 This period of patent term extension is intended to
compensate
brand-name firms for the generic drug industry’s reliance upon the proprietary
preclinical
and clinical data they have generated, most often at considerable expense to
themselves.37
Resolution of Patent Disputes
During its development of accelerated marketing approval procedures for
generic drugs, Congress recognized that the brand-name pharmaceutical firm
may be
the proprietor of one or more patents directed towards that drug product. These
patents might be infringed by a product described by a generic firm’s ANDA or
§
505(b)(2) application in the event that product is approved by the FDA and sold
in
the marketplace. The Hatch-Waxman Act therefore established special
procedures

School of pharmacy and technology management

Intellectual property management: Patent Litigation

for resolving patent disputes in connection with applications for marketing

generic
drugs.
In particular, the Hatch-Waxman Act states that each NDA applicant “shall file”
a list of patents that the applicant believes would be infringed if a generic drug
were
marketed prior to the expiration of these patents.38 The FDA then lists these
patents
in a publication titled Approved Drug Products with Therapeutic Equivalence
Evaluations, which is more commonly known as the “Orange Book.”39 Would-
be
manufacturers of generic drugs must then engage in a specialized certification
procedure with respect to Orange Book-listed patents. An ANDA or § 505(b)(2)
applicant must state its views with respect to each Orange Book-listed patent
associated with the drug it seeks to market. Four possibilities exist:
(1) that the brand-name firm has not filed any patent information with respect to
that drug;
(2) that the patent has already expired;
(3) that the generic company agrees not to market until the date on which the
patent will expire; or(4) that the patent is invalid or will not be infringed by the
manufacture, use or
sale of the drug for which the ANDA is submitted.40
These certifications are respectively termed paragraph I, II, III, and IV
certifications.41
An ANDA or § 505(b)(2) application certified under paragraphs I or II is
approved
immediately after meeting all applicable regulatory and scientific
requirements.42 An
independent generic firm that files an ANDA or § 505(b)(2) application
including a
paragraph III certification must, even after meeting pertinent regulatory and
scientific
requirements, wait for approval until the drug's listed patent expires.43
The filing of an ANDA or § 505(b)(2) application with a paragraph IV
certification constitutes a “somewhat artificial” act of patent infringement under
the
Hatch-Waxman Act.44 The act requires the independent generic applicant to
notify
the proprietor of the patents that are the subject of a paragraph IV
certification.45 The
patent owner may then commence patent infringement litigation against that
applicant.
Generic Exclusivity

School of pharmacy and technology management

Intellectual property management: Patent Litigation

In order to encourage challenges of pharmaceutical patents, the Hatch-Waxman

Act provides prospective manufacturers of generic pharmaceuticals with a
potential
reward. That reward consists of a 180-day exclusivity period awarded to the
first
ANDA applicant to file a paragraph IV certification.46 Once a first ANDA with
a
paragraph IV certification has been filed, the FDA cannot issue marketing
approval
to a subsequent ANDA with a paragraph IV certification on the same drug
product
for 180 days. Because market prices could drop considerably following the
entry of
additional generic competition, the first paragraph IV ANDA applicant could
potentially obtain more handsome profits than subsequent market entrants–
thereby
stimulating patent challenges in the first instance.

As originally enacted, the Hatch-Waxman Act stipulated that the first paragraph
IV certification triggered entitlement to the 180-day generic exclusivity period.
The
ANDA applicant need take no further steps whatsoever. In particular, the statute
did
not require the generic applicant to pursue a favorable judgment with respect to
the
challenged patent, seek FDA approval of the ANDA, or market its generic
product
once the FDA granted marketing approval.48 Some commentators believed that
the
legislation led to abuses by certain first paragraph IV ANDA applicants, who
“parked” their period of exclusivity in order to bar generic competition, rather
than
actively pursue the marketing of their own generic products. As pharmaceutical
patent expert Alfred Engelberg has asserted:
Experience has shown that the first ANDA applicant to file a patent challenge
may never trigger the start of the 180-day period, thereby blocking the FDA
from
granting approval to any generic product. More often than not, the first generic
challenger will enter into a lucrative cash settlement with the patent owner that
results in a judgment in favor of the patent and prohibits the challenger from
marketing a product under its ANDA until the patent expires. Therefore, the
180-
day exclusivity period never starts. And no subsequently filed ANDA can be

School of pharmacy and technology management

Intellectual property management: Patent Litigation

approved unless a final judgment adverse to the patent is obtained by one of the
subsequent applicants. But even in that circumstance, the winning party would
be compelled to wait 180 days before enjoying the fruits of its victory and
would
not receive any exclusivity of its own. This result is dictated by the fact that,
under the language of the statute, the 180 days of exclusivity belong solely to
the
first challenger and not to the first winner.49
When Congress amended the Hatch-Waxman Act in 2003, it responded to this
concern over “bottlenecking” by generic firms. The Medicare Prescription
Drug,
Improvement, and Modernization Act (MMA) established a number of
“forfeiture
events” that, if triggered, cause a first paragraph IV ANDA applicant to lose its
entitlement to the 180-day generic exclusivity.50 Among the forfeiture events
are: (1)
failure to market its product promptly; (2) failure to obtain FDA approval to
market
the generic drug in a reasonably timely manner; and (3) all of the certified
patents
that entitled the applicant to the 180-day generic exclusivity period have
expired.51
If the first paragraph IV ANDA applicant forfeits its exclusivity, then this
period does
not “roll over” to the second such applicant. In that event, no generic firm
enjoys
exclusivity at all.52 The possibility of forfeiture was intended “to prevent the
practice
of ‘parking’ the exclusivity period and to force generic manufacturers to market.

Other alternatives are also possible. Legislation could establish a presumption

of either legality or illegality under the antitrust laws, along with consideration
of
relevant factors to be weighed by the courts. Such factors might include the
scope
of the asserted patent, the legitimacy of the litigation position of the two parties,
the
size of the payment made by the patent holder, and whether the settlement
allows the
generic firm to market a competing product prior to the patent’s expiration.125
Such
legislation could effectively codify the antitrust treatment of settlements of
pharmaceutical patent litigation by the Second and Eleventh Circuits, or instead

School of pharmacy and technology management

Intellectual property management: Patent Litigation

provide somewhat more stringent oversight of reverse payment settlements.

The settlement of pharmaceutical patent litigation forms an important issue
because such litigation is itself important to our public health system. Our
patient
population relies upon brand-name drug companies to develop new medicines,
but
it also relies upon generic firms to increase access to such medications once
they
have been developed. The Hatch-Waxman Act provides for patent litigation
between
these two traditional rivals as a primary vehicle through which these competing
demands are mediated. When concluded in a manner that comports with
antitrust
principles, such settlements may further the public policy goals of encouraging
the
labors that lead to medical innovation, but also distributing the fruits of those
labors.

EXAMPLES

AstraZeneca filed a patent infringement complaint against India-based

Sun Pharma for planning to market a generic formulation of its
intravenous acid reflux disease treatment Nexium IV.

Reportedly, the British-Swedish pharma major had filed two lawsuits

against Sun Pharma and its US subsidiary on February 26 in a federal
court in Trenton, New Jersey, and on March 1 in Detroit.

US FDA approved Nexium (Esomeprazole Magnesium) in 2005. Its

patents are valid in the US till 2014. Nexium is said to be the largest
selling drug for AstraZeneca, with global sales of close to $5bn.
Reportedly, the drug had sales of $2.84 bn in the US market in 2009.

Cephalon sues Watson for patent infringement

* Infringement charge affects sleep disorder drug Nuvigil

School of pharmacy and technology management

Intellectual property management: Patent Litigation

Cephalon Inc (CEPH.O), which makes the sleep disorder drug Nuvigil,
has filed suit against generic drugmaker Watson Pharmaceuticals Inc
(WPI.N), charging Watson with patent infringement.
The suit, dated Jan. 5, was filed in U.S. District Court for the District of
Delaware, and charges that a generic version of Nuvigil, known as
armodafinil, that was developed by Watson, infringes a Cephalon patent.
Cephalon said in its suit that Watson filed an application with U.S.
regulators to approve the manufacture and sale of armodafinil capsules
in 50 mg, 100 mg, 150 mg, 200 mg and 250 mg dosage strengths.
Watson notified Cephalon on Nov. 24 that it had filed an application to
market generic armodafinil products prior to the expiration of certain
patent claims.
Cephalon is seeking a permanent injunction that would prevent Watson
from selling any generic armodafinil products prior to the patent
expiration and any additional dates of exclusivity.
Global Pharma major Eli Lilly has filed a patent infringement law suit
against Indian drug maker Dr Reddy’s Laboratories in an US court.

According to the petition filed by Eli Lilly , Dr Reddy’s filing of an

abbreviated new drug application (ANDA) for approval to manufacture a
generic version of its Gemzer drug infringes US Patent laws.

Gemzer (Gemcitabine Hydrochloride Injection) is used to treat cancers

of pancreas, lung, breasts and ovaries.

The USA Patents and Trademarks Office had issued patent certificate to
Eli Lilly for the drug in November 1995 that will expire in November 2012
followed by a six-months exclusive marketing rights.

Incidentally, Eli Lily is also in a legal tussle with Sun Pharmaceuticals

over the same drug. It filed an appeal in an US Court of Appeals against
Sun Pharma over the alleged patent infringement and awaiting
judgement.

Eli Lilly in its suit filed in District Court of Southern District of Indiana has
sought to restrain Dr Reddy’s from manufacturing Gemcitabine
Hydrochloride injection.

As per the procedure, Dr Reddy’s which filed ANDA with USFDA had
intimated Eli Lilly about its filing in August.

School of pharmacy and technology management

Intellectual property management: Patent Litigation

Dr Reddy’s has been marketing Gemcitabine drug under brand name-

Cytogem in India, Russia and some other CIS countries.

The US market for Gemcitabine injection (200 mg and 1 gm -single use

vial) is estimated be be about USD 700 million.

Officials at Dr Reddy's were not available for comment.

Meanwhile, in an another case in June, an US court had passed an

injunction order on Dr Reddy’s Labs from launching its generic version of
Allegra D24 in that country.

Based on a request filed by Albany Molecular Research Inc and Sanofi-

Aventis US, the U.S. District Court of New Jersey had granted a
Preliminary Injunction on the launch of Allegra-D 24..

School of pharmacy and technology management