JOLT Digest

Written by Mehdi Eddebbarh & Jack Burns
Edited by Albert Wang
Editorial Policy

I. Introduction

Patent law strives to stimulate innovation by awarding inventors a temporary monopoly over patented inventions.  Antitrust law seeks to ensure efficient competition, in part by restricting monopolistic behavior.  Perhaps the most scrutinized area of intersection between patent law and antitrust law is the proper treatment of “reverse payments,” also referred to as “pay-for-delay” settlements.  Arkansas Carpenters Health and Welfare Fund v. Bayer AG, 625 F.3d 779, 780 (2d Cir. 2010) (Pooler, J., dissenting).  These are settlement agreements in patent infringement litigation in which a patent holder pays the alleged infringer to concede the validity of the patent and refrain from entering the market.  Henry N. Butler & Jeffrey Paul Jarosch, Policy Reversal on Reverse Payments: Why Courts Should Not Follow the New DOJ Position on Reverse-Payment Settlements of Pharmaceutical Patent Litigation, 96 Iowa L. Rev. 57, 60 (2010).

Senators Chuck Grassley and Herb Kohl recently introduced legislation in Congress that would create a presumption that pay-for-delay deals in the pharmaceutical industry are illegal.  Additionally, there is currently a circuit split over the proper standard for determining whether reverse payment settlements are improper.  The Supreme Court has not spoken on the issue, and recently denied a petition for certiorari by the Plaintiffs-Appellants in Arkansas Carpenters Health and Welfare Fund v. Bayer AG challenging the reverse payment settlement in that case.  Amicus curiae supporting the petitioners included 32 state Attorneys General and the American Antitrust Institute.

This commentary will explain why Congress and the judiciary should continue to allow pioneer patent holders and firms challenging those patents to use reverse payment settlements to settle their disputes.  To that end, this commentary will explain the importance of recognizing the right to exclude granted by patent laws and discuss the judicial policy in favor of settlements.  Some courts have referred to this as the “exclusionary zone of the patent,” and have essentially found that because patents provide a monopoly, any anticompetitive effects stemming from the exclusion of generic manufacturers through settlements should be recognized as a valid outgrowth of rights inherent in the patent grant.

While recognition of those underlying policies provides significant deference to patent holders, it also provides an incentive for patent holders to conduct sham litigation to eliminate threats to the validity of weak patents.  Thus, Congress should amend the current regime to clarify that where a reverse payment is challenged, some scrutiny of the patent’s validity is necessary.  Further, Congress should amend the 180-day exclusivity period, currently granted only to the first generic firm to challenge a pioneer patent, to give a subsequent challenger the same benefit where the first challenger settles.  (more…)

Federal Circuit Rules Federal Law Trumps State Law in Interpretation of Patent Ownership Rights
By Flora Amwayi – Edited by Jonathan Allred

Abraxis Bioscience, Inc. v. Navinta LLC, 2009-1539, 2011 WL 873298 (Fed. Cir. Mar. 14, 2011)
Slip Opinion

The Federal Circuit denied a petition for an en banc rehearing of a Federal Circuit panel order dismissing Abraxis’ patent infringement case against Navinta. The court dismissed the case on the grounds that Abraxis did not have standing to sue for infringement since it did not own the patents at the time the original complaint against Navinta was filed. The original panel order hinged on whether interpretation of patent ownership should be governed by New York state law (as outlined in choice of law provisions) or by federal rules of patent ownership and assignment (Federal Circuit law). See 35 U.S.C. § 261.

By denying the en banc rehearing, the court affirmed the panel’s holding that the resolution of ownership and assignment question is an issue of Federal Circuit law since it determines a plaintiff’s standing to sue for patent infringement. In so holding, the court stated that “state law cannot retroactively override federal law to revive failed agreements.”

The Patent Law Blog provides an overview of the case. The Patent Prosecutor criticizes the decision as a refusal to correct the Federal Circuit’s intrusion into state contract law. (more…)

Federal Circuit Throws out $1.67 Billion Jury Verdict for Lack of Written Description
Centocor Ortho Biotech, Inc. v. Abbott Lab., No. 2010-1144 (Fed. Cir. Feb. 23, 2011)

By Katie Booth – Edited by Chinh Vo
Slip Opinion

The Federal Circuit recently ruled that a district court erred when it declined to grant the motion of defendant Abbott Laboratories (“Abbott”) for JMOL that the plaintiff’s asserted patent claims were invalid. In so holding, the court set aside a jury verdict of $1.67 billion in damages to plaintiff Centocor Ortho Biotech (“Centocor”) in the infringement suit concerning antibodies used to treat arthritis.

The Federal Circuit found that Centocor’s written description in its patent application was not adequate and conveyed merely a wish or plan to invent an antibody rather than constructive possession of that antibody. The court also held that Centocor’s disclosure of the TNF-α protein did not provide an adequate written description for all binding antibodies, since the protein was already known and the antibody claimed could not be routinely produced at the time of filing.

Patent Docs and Patently-O provide thorough overviews of the case. (more…)

Federal Circuit rules that prosecution laches requires evidence of prejudice
By Jonathan Allred – Edited by Elizabeth Akerman

Cancer Research Technology Ltd. v. Barr Laboratories, Inc., No. 2010-1204 (Fed. Cir. Nov. 9, 2010)
Slip Opinion

The Federal Circuit overturned the District Court of Delaware, which had ruled that the plaintiff’s patent was unenforceable for prosecution laches, and, in the alternative, invalid for inequitable conduct.

Prosecution laches is an equitable defense to infringement when the plaintiff has delayed the prosecution of a patent application unreasonably. In this case, the Federal Circuit held that prosecution laches requires a finding of prejudice – evidence that the accused infringer “invested in, worked on, or used the claimed technology during the period of delay” – in addition to an unreasonable delay in prosecution.

As the opinion notes, the usefulness of the doctrine will be limited now that patent terms are measured from the effective filing date and not the date of refilling.

The Federal Circuit also overturned the Delaware court’s ruling on inequitable conduct.

Patently-O offers a synopsis and disagrees with the dissent. Inventive Step summarizes the opinion. The Patent Prospector provides the text of the opinion with commentary sympathetic with the dissent interjected throughout. (more…)

By Dorothy Du

Facebook Plans to Fix Privacy Flaw that Allows “Apps” to Share User Information

The Wall Street Journal reports that Facebook applications (“apps”) have been transmitting user-IDs to dozens of third parties. These third parties include advertising and data-gathering companies, which use and sell the information. The Electronic Frontier Foundation reports that all of the top ten Facebook.com “apps,” including FarmVille and Mafia Wars, are guilty of such actions in violation of their web developer agreements with Facebook. User IDs give companies the ability to look up the user’s real name, friends’ names, and other data posted on the user’s public profile. The information leak was made possible by a browser standard that allows the apps to record the URL of the page from which the user came — information that includes the user ID — as the New York Times reports. Facebook has shut down some of the offending apps, but with 550,000 Facebook apps, the task of protecting users may prove difficult to achieve.

Wyeth Wins Latest In String of Suits Over Hormone Replacing Drug that Increases Cancer Risk

Wyeth, which was purchased by Pfizer Inc. in 2009, has won the latest in a string of suits over the health risks of Prempo, a hormone replacement drug for menopausal women, reports Bloomberg and ABC News. After deliberating for less than an hour, the jury found that Wyeth had properly disclosed the link between increased risk of cancer and Prempo and rejected the plaintiff’s claim of $3.5 million for pain, suffering, and emotional distress. Wyeth’s lawyers had argued that the drug’s label disclosed the link and that the studies did not conclusively show that the drug caused breast cancer. Wyeth has now won six of thirteen jury trials regarding the effects of Prempo since 2006, and has been granted motions to dismiss in more than 3,000 cases. Over 6 million women had already taken Prempo when a 2002 study by the Women’s Health Initiative showed that the drug increased the risk of cancer. The New York Times has cast Prempo into the spotlight once again with its report on a follow-up study of the 12,788 women who participated in the Women’s Health Initiative study, which revealed that cancers suffered after taking the drug also tend to be more advanced and deadly. Pfizer still faces over 8,000 lawsuits involving Prempo.

The NIH Licenses Its Patent on AIDS Drug to International Entity

The New York Times reports that the NIH has become the first patentee to license its patent on an AIDS drug to the Medicines Patent Pool, an international entity run by Unitaid, an independent agency founded at the United Nations in 2006. The drug, darunivir, is a potential third-line treatment for patients who have not experienced success with second-line AIDS medications, according to Doctors Without Borders. The “patent pool” has the potential to increase third world patients’ access to patented medicines by allowing drug companies to use pooled licenses to produce affordable, generic drugs. In return, the participating patent holders will receive royalties. However, this particular NIH patent will not enable drug companies to produce generic versions of darunivir because of additional patents on the drug held by Tibotec, a subsidiary of Johnson & Johnson.