Hatch-Waxman and BPCIA Developments in June 2018

07/06/2018
Client Alert

This month, we highlight significant developments in June 2018, including the Supreme Court granting certiorari in Helsinn, a $448 million disgorgement of profits award based on “sham” ANDA litigation, and Senator Hatch’s newly introduced “Hatch-Waxman Integrity Act of 2018.”

CASES

SUPREME COURT

The Secret Garden?
Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., 6/25/18 (S. Ct.)

The Supreme Court granted certiorari on the question of “[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.

What about the PTAB?
Lucia v. Securities and Exchange Commission, 6/21/18 (S. Ct.)

Lucia argued that SEC administrative law judges are “Officers of the United States” and thus subject to the Appointments Clause of the Constitution. The Court agreed. Under its precedent, to qualify as an “Officer,” an individual must occupy a “continuing” position established by law and exercise “significant authority pursuant to the laws of the United States.” The majority hewed closely to its decision in Freytag, holding that the SEC ALJ’s were analogous to the “special trial judges” of the United States Tax Court in Freytag.

FEDERAL CIRCUIT

Let me give you 130 million reasons why it’s not obvious
Impax Laboratories Inc. v Lannett Holdings Inc., 06/28/18 (Fed. Cir.) No. 2017-2020

The Federal Circuit affirmed the district court’s holding that the patent in suit was not invalid as obvious. After first noting that arguments based on alleged prior art not raised before the district court or in appellant’s opening brief were waived, the court turned to the obviousness contentions. Although a “close case,” the Federal Circuit deferred to the district court’s fact findings, which were not clearly erroneous. Moreover, the court was “especially persuaded” by the testimony of appellees’ expert, who opined that it would have been “absolutely counterintuitive to make an intranasal formulation of zolmitriptan, given that its activity primarily came from its metabolite.” The Federal Circuit also found that an “agreement between AstraZeneca and Impax covering the intranasal product and its patents for which the latter paid $130 million” was strong evidence of non-obviousness.

DISTRICT COURT

Respect my (lack of) authority
Allergan, Inc. v. Deva Holdings A.S., 05/31/18 (E.D. Tex.), Case No. 2:16-cv-1477-WCB – subscription required

The parties had moved to stay the case. Defendants submitted an unopposed motion to shorten the 30-month stay. Judge Bryson, sitting by designation, held that the district court lacked the authority to order the FDA to shorten the 30-month stay. “In sum, Deva has not pointed to statutory or regulatory authority, or any case law, showing that this Court may order the FDA to terminate the 30-month stay of Deva’s ANDA.” Moreover, while Deva represented that Allergan had provided written consent, “the proper course is for Deva to submit that consent to the FDA, which would have the authority under 21 C.F.R. § 314.107(b)(3)(vi) to terminate the stay and grant approval of Deva’s ANDA.”

No OTDP for Firazyr®
Shire Orphan Therapies LLC v. Fresenius Kabi USA, LLC, 06/05/18 (D. Del.) C.A. No. 15-1102-GMS

The district court held that Shire’s patent covering Firazyr® was not invalid for obviousness-- type double patenting. Conducting the OTDP analysis, the court first found that the claim at issue and the reference patent claim “differ substantially in their scope.” It then found that there was no motivation to alter the reference patent claim to arrive at the claimed compound. Secondary considerations also supported the court’s non-obviousness conclusion. The court also rejected defendant’s prosecution laches defense.

Take two: Dosing regimen patent eligible
Pernix Ireland Pain DAC v. Alvogen Malta Operations Ltd., 06/08/18 (D. Del.) Civil Action No. 16-139-WCB

In a reprise from last month, the district court (Judge Bryson, sitting by designation) rejected defendant’s motion for re-argument of the court’s May 15, 2018 summary judgment decision that certain claims were not invalid under section 101. “A claim to a method of treating an illness is typically more than an expression of a natural law; if it were otherwise, pharmaceutical patents would be hard to come by, as most methods of treatment using pharmaceuticals consist simply of the administration of a drug that affects the human body in a manner that is dictated by laws of nature.” Moreover, adding limitations to a claim that is patent eligible “does not convert the claim into one that is directed to unpatentable subject matter.”

Distinguishing crystal forms
Astellas Pharma Inc. v. Actavis Elizabeth LLC, 6/18/18 (D. Del.) Civil Action No. 16-905-JFB-CJB – subscription required

The magistrate judge recommended claim constructions to the district court in this polymorph patent litigation. Regarding the two crystal forms (α and β), the recommended construction was that each refers to a polymorphic crystal form “that can be distinguished from other forms by its characteristic peak(s) and DSC analysis as identified in the specification.” The term “main peaks” was construed to mean “peaks that are characteristic of the particular crystal form as distinguished from other crystal forms.” Moisture content limitations were interpreted as referring to moisture content prior to formulation.

PTO

All aboard the Vanda express

In its April 13, 2018 decision in Vanda Pharmaceuticals Inc. v. West-Ward Pharmaceuticals Int’l Ltd., the Federal Circuit held that claimed methods of using iloperidone to treat schizophrenia were patent eligible. On June 7, Deputy Commissioner Robert Bahr issued a memorandum to the patent examination corps indicating that the PTO’s “current subject matter eligibility guidance and training examples are consistent with the Federal Circuit’s decision in Vanda, with the understanding that: (1) ‘method of treatment’ claims that practically apply natural relationships should be considered patent eligible under Step 2A of the USPTO’s subject matter eligibility guidance; and (2) it is not necessary for ‘method of treatment’ claims that practically apply natural relationships to include nonroutine or unconventional steps to be considered patent eligible under 35 U.S.C. § 101.” Read more here.

Broad ranges don’t adequately describe endpoint
Grunenthal GmbH v. Antecip Bioventures II LLC, 6/22/08 (PTAB) Case PGR2017-00008 – subscription required

The Board found all claims unpatentable for lack of adequate written description. The claims were drawn to methods of treatment comprising orally administering about 80 to about 500 mg of zoledronic acid within a period of six months. There was no disclosure in the specification of the “about 80 mg” endpoint. Rather, that endpoint fell within certain disclosed ranges. “We conclude that the ’239 patent specification would not have directed a person of ordinary skill in the art to construct a range of ‘about 80 to about 500 mg of zoledronic acid within a six month period’ from the various broad ranges disclosed in the specification.”

ANTITRUST

Inference that in-house counsel intended to file sham ANDA litigation leads to $448 million disgorgement of Androgel profits remedy
Federal Trade Commission v. AbbVie Inc., 6/29/2018 (EDPa) Civil Action 14-05151 (HB)

The Federal Trade Commission alleged that AbbVie filed sham litigation to protect its Androgel franchise from generic entrants. The district court had previously concluded that those litigations were objectively baseless because the prosecution history “purposefully and not tangentially excluded isopropyl palmitate and isostearic acid as penetration enhancers equivalent to isopropyl myristate.” In this decision, the district court found that the litigations were also subjectively baseless. First noting a lack of clarity regarding the standard for subjective baselessness, the court concluded that “the FTC must prove [by clear and convincing evidence] that defendants had actual knowledge that the patent infringement suits here were baseless in order both to meet its burden under Omni Outdoor Advertising and PRE and to avoid interference with defendants’ First Amendment rights.” The court inferred intent by in-house patent counsel to file sham litigations, finding “by clear and convincing evidence” that AbbVie’s in-house counsel knew the litigations were baseless and that they acted in “bad faith.” The court rejected AbbVie’s contention that favorable settlements with generics were evidence that litigation was not baseless, saying that, while “Millions for Defense but not a Cent for Tribute” may be “admirable in many spheres of life,” it generally has “no applicability in the real world when lawsuits are being settled.” It then found the relevant market was transdermal testosterone replacement therapies (TTRT), and that AbbVie had monopoly power in that market. Assessing the equitable relief of disgorgement and the “but for” world, the court awarded monetary relief “in the amount of $448 million, which represents disgorgement of defendants’ ill-gotten profits from June 2013, when Perrigo would have entered the TTRT market, through August 2017.”

Business analyses in aid of settlement can be privileged
Federal Trade Commission v. Boehringer Ingelheim Pharmaceuticals, Inc., 6/19/18 (D.C. Cir) No. 16-5356

In 2009, the Federal Trade Commission began investigating what it described as a “pay-for-delay” settlement between Boehringer Ingelheim and Barr Pharmaceuticals. As part of that investigation, the FTC sought documents created by non-lawyer Boehringer employees communicated to the general counsel. The communications had a legal purpose, i.e. ensuring compliance with antitrust laws and negotiating a lawful settlement. But they also had a business purpose: negotiating a settlement on favorable financial terms. The district court sided with Boehringer, holding the documents to be privileged. The DC Circuit agreed. According to the court, the proper test is whether “one of the significant purposes” of the documents was to “obtain or provide legal advice.” Accordingly, that the documents “also served a business purpose” did not defeat the privilege claim because one of the significant purposes of the communications was to obtain or provide legal advice. The court was careful to note, however, that “the attorney-client privilege did not and does not prevent the FTC’s discovery of the underlying facts and data possessed by Boehringer and its employees.”

LEGISLATION

Parting shot from Senator Hatch

On June 11, Senator Hatch introduced the “Hatch-Waxman Integrity Act of 2018.” The bill would force ANDA, 505(b)(2), and biosimilar applicants to choose between filing IPRs and the litigation routes authorized by Hatch-Waxman and the BPCIA. Applicants would have to certify they have not used, nor will they use, the IPR or PGR mechanism. The bill also seeks to prevent actions such as the highly publicized efforts of Kyle Bass by making short-selling within 90 days of filing an IPR a manipulative or deceptive device under the Securities Exchange Act. Read more at Law360 and Senator Hatch’s website.

San Francisco partner Greg Chopskie contributed to the writing of this alert.

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