Top Developments in Hatch-Waxman Litigation for March 2018

04/12/2018
Client Alert

This month, we highlight several significant cases including Celgene Corp. v. Hetero Labs Ltd. and Regeneron Pharmaceuticals, Inc. v. Merus N.V. as well as new legislation proposed in both houses of Congress with respect to IPRs.

Cases

Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc. (S.Ct.)
Helsinn filed a petition for a writ of certiorari in the Supreme Court raising the question “[w]hether, under the Leahy-Smith America Invents Act, an inventor’s sale of an invention to a third party that is obligated to keep the invention confidential qualifies as prior art for purposes of determining the patentability of the invention.” According to the petition, the Federal Circuit wrongly construed the statute by holding that, under the AIA, “public disclosure of the existence of a commercial sale invalidates a patent, even if the claimed invention itself remains secret and is not ‘available to the public.’” Before the AIA was enacted, a person was not entitled to a patent if the invention was “on sale in this country” before the critical date. The AIA amended the statute to bar patentability if the invention was “on sale, or otherwise available to the public” before the critical date. Helsinn asserts that the addition of the phrase “otherwise available to the public” informs the meaning of the “on sale” language, requiring that such sales make the claimed invention available to the public. In other words, Helsinn argues that secret sales no longer trigger the on-sale bar after the AIA. Both the AIPLA and IPO have filed amicus briefs urging the Supreme Court to review the case.

Celgene Corp. v. Hetero Labs Ltd. (DNJ 03/02/18; Civil Action No. 17-3387 (ES) (MAH))
In yet another Mylan venue challenge, the district court denied defendant Mylan’s motion to dismiss for improper venue. While finding that Mylan does not reside in New Jersey, the court joined other district courts in following Judge Stark’s reasoning in Bristol-Myers Squibb Co. v. Mylan Pharms., Inc., No. 17-379, 2017 U.S. Dist. LEXIS 146372 (D. Del. Sept. 11, 2017) (holding that acts of infringement in the Hatch-Waxman context include non-speculative actions the ANDA applicant intends to take if it receives final approval of its ANDA). The court ordered discovery regarding whether Mylan has a regular and established place of business in New Jersey. The court also denied Mylan’s related motions to dismiss for lack of subject-matter jurisdiction and failure to state a claim.

Juno Therapeutics, Inc. v. Kite Pharma (CD Cal 03/08/18; CV 17-07639 SJO (RAOx)) – subscription required
In this non-ANDA case, the district court granted plaintiff’s motion to dismiss counterclaims and strike affirmative defenses. As to the non-infringement and invalidity counterclaims, the district court held that they were insufficient to provide notice under Twombly and Iqbal. Similarly, the affirmative defenses of unclean hands, invalidity, and non-infringement were insufficiently pled to provide fair notice of the factual bases for the defenses. The court did grant leave to amend. The court also denied defendant’s motion to stay the proceedings pending the appeal of the PTAB’s decision that the asserted claims were not obvious over the cited prior art.

Shire LLC v. Abhai LLC (D. Mass. 03/22/18; 1-15-cv-13909 (WGY))
The district court found that defendant infringed plaintiffs’ patents. Of more interest, the court granted in part plaintiffs’ motion for sanctions after defendant disclosed corrected stability data during the trial and ordered the Clerk to direct “a certified copy of this opinion to the General Counsel of the FDA.” Defendant’s conduct “reflects an appalling lack of awareness of a litigant’s responsibility to our justice system … The FDA would be well advised to take notice of this pervasive corporate unwillingness to play by the rules.” The court, however, rejected Shire’s request for $2.75 million in fees, and ordered plaintiffs to submit a revised claim for fees and costs limited to 1) time wasted dealing with the inaccurate stability and dissolution data, 2) discovering the litigation misconduct, and 3) addressing the revised data.  The court also sanctioned defendant $30,000, payable to the clerk of the court, because the litigation misconduct caused an unnecessary drain on judicial resources.

Regeneron Pharmaceuticals, Inc. v. Merus N.V. (S.D.N.Y. 03/26/18; 14-cv-1650(KBF))
The district court granted defendant’s motion for attorney fees, expert fees, and costs following remand from the Federal Circuit (see Regeneron Pharm., Inc. v. Merus N.V., 864 F.3d 1343 (Fed. Cir. 2017) (affirming imposition of adverse inference regarding the intent prong of inequitable conduct as sanction for litigation misconduct). Setting forth numerous instances of plaintiff’s litigation misconduct, and referring to them as “shenanigans throughout discovery and, indeed, up to the eve of trial,” the district court found that the award of fees and costs was appropriate, including attorney fees incurred in defending the Federal Circuit appeal.

GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc. (D. Del. 03/28/18; C.A. No. 14-878-LPS-CJB
The district court granted defendant’s motion for JMOL of no induced infringement, wiping out a jury award of $234,110,000 in lost profits and $1,400,000 in reasonable royalty damages. According to the court, to prove inducement, GSK was required to prove by a preponderance of the evidence that “Teva's alleged inducement, as opposed to other factors, actually caused the physicians to directly infringe.” (Emphasis in original.) The court found that neither sufficient nor substantial evidence supported the jury verdict of inducement to infringe. As to both a “skinny label” and “full label” period, “Teva's uncontroverted evidence of alternative factors that caused physicians to prescribe carvedilol in an infringing manner cannot be ignored.” Two footnotes are worth mentioning. In footnote 14, the court distinguished Federal Circuit case law regarding inducement to infringe in ANDA cases because those cases concerned the “ordinary Hatch-Waxman framework” with its forward-looking analysis, as opposed to “what actually happened” in this case. Second, in footnote 16, the court set forth the parties’ policy arguments concerning the potential impact of the court’s decision on the Hatch-Waxman framework, and stated its “hope[ that] neither side is correct in its predictions as to the dire consequences of the Court's ruling” which did not impact that ruling.

PTO

Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc. (Fed. Cir. 03/28/18, Appeal Nos. 2018-1638, -1639, -1640, -1641, -1642, -1643)
The Federal Circuit stayed the pending IPR proceedings until the day after oral argument in the appeal concerning the Tribe’s sovereign immunity claim because “the appeals divested the Board of jurisdiction over the aspects of the case on appeal.” Oral argument before the Federal Circuit will be held in June, and the Federal Circuit will address at that time whether the stay will remain in effect or be lifted.

Legislation

Senator Claire McCaskill (D-Mo.) and four others introduced legislation designed to prevent companies from selling their patents to Native American tribes to use tribal immunity to shield them from IPRs. The bill is entitled “The Preserving Access to Cost Effective Drugs,” or the PACED Act. According to its sponsors, the bill will “restore the power of the PTAB and federal courts, and the International Trade Commission, to review patents regardless of sovereign immunity claims made as part of sham transactions.”

Read more here.

U.S. Representatives Bill Foster (D-Ill.) and Steve Stivers (R-OH) introduced a bill, H.R. 5340, the Support Technology and Research for Our Nation's Growth and Economic Resilience, or STRONGER, Patents Act. The bill would change the burden of proof in IPRs and other post-grant proceedings, to require proof of invalidity by clear and convincing evidence. It would also allow post-grant challenges such as IPRs only by those parties sued on the challenge patent. The bill would also establish a presumption of entitlement to an injunction when infringement is found.

Read more here.

Other

On March 8, the European Commission issued its eighth report on its monitoring of patent settlements in the pharmaceutical sector. This report covers settlements entered into in 2016. According to the report, only 11% of the reported settlements limited generic entry and showed a “value transfer” from the “originator” to a generic company. According to the Commission, “[m]ost of the settlements (89% in 2016) fall into categories that prima facie raise no need for competition law scrutiny. Companies, in most cases, are able to settle their disputes in a manner that is typically considered unproblematic from a competition law perspective.”

Chart - Patent Settlements Per Category January - December 2016

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