Tag Archives: Clayton Sherman Acts Temodar Wholesale Pharmacies Triple Damages For Monopoly Pricing At Risk Generics September 2009 Bloomberg March 17 April 1 September 11 2010

“. . .A Glass, Darkly” II: Some (More) Of The Relevant Temodar® Facts And Law

I want to lay out a little more of the factual background, and law applicable to this case — so that readers will get a better sense of the whole picture here. Indeed, to be fair, if I am going to criticize that Cardozo lecturer on patent law, for his “personalities and politics” style of legal analysis — I probably ought to set a different example, myself, right? Right. So here goes:

Importantly, in his oral argument on August 4, 2010, counsel for Teva pointed to the fact that legacy Schering-Plough (as New Merck’s predecessor) certified to the PTO that 13 versions of the compound that became Temodar® (temozolomide) were particularly “active” — in their promise as cancer-fighting chemical entities. That was in the as-amended patent application and subsequently-filed related papers. Such filings are essentially sworn statements to the US PTO.

In this case, though, of those supposed 13 “particularly active” variants, seven were not active, at all — and two of the 13 hadn’t even been tested by legacy Schering-Plough, when it made the sworn filing. So, only “six-of-13” — or less than half — of that sworn statement was even remotely accurate. And — as to the two compound-variants in particular — Schering must have known it was false. After all, Schering hadn’t even begun tests (of any kind!) on those compounds, at the moment it swore they were “particularly active“. Astonishing conduct, indeed.

Moreover, we must always remember that patents are an abberation of sorts, in our law: that is, they create monopolies — something our law highly disfavors — but only for a defined period of time. A period calculated, by the legislative branch, to amply reward those who take the initiative, and the risk to develop a novel compound (to be sure not only that their sunk costs are covered, but that they are so handsomely rewarded, that they will continue to seek new inventions). In these sorts of cases, the statute says 17 years. That is what the legislature decided was “enough” to amply reward such initiative.

Now, what has actually happened here — with Temodar?

Well. . . one day, early next year (unless Teva prevails on appeal), New Merck will begin enjoying its 32nd consecutive year of monopoly power in this cancer market. Reasonable people, I think, would agree that a near-doubling of the monopoly timeframe cannot be what a statute written with the plain English command of 17 years intends.

So, I think Merck will lose here — on appeal. Any other result would begin to look. . . well, collusive.

From Judge Sue L. Robinson’s very cogent opinion below (a 40 page PDF file), then (with a backgrounder of sorts — linking my earlier analysis of her opinion, here):

. . . .Prosecution laches is an equitable doctrine that “may render a patent unenforceable when it has issued only after an unreasonable and unexplained delay in prosecution,” and may be applied even though a patent applicant complies with pertinent statutes and rules. Symbol Tech., Inc. v. Lemelson Med. Educ. & Research Found., 422 F.3d 1378, 1385 (Fed. Cir. 2005); In re Bogese, 303 F.3d 1362, 1367 (Fed. Cir. 2002). When addressing the issue of the burden of proof applied to prosecution laches, this Court has agreed with other district courts that “the preponderance of the evidence standard should apply. . . .”

. . . .As an equitable doctrine, there are no firm guidelines for determining when prosecution laches should render a patent unenforceable, and the determination is “subject to the discretion of a district court before which the issue is raised.” Symbol Tech., 422 F.3d at 1385. Prosecution laches requires “an examination of the totality of the circumstances.” Id. at 1386. Factors district courts have considered to determine whether a delay in prosecution was unreasonable are (1) whether the prosecution history of the patentee’s patents is atypical of patents in that field or patents generally; (2) whether there are unexplained gaps in the prosecution history; (3) whether the patentee took any unusual steps to delay the application process; (4) whether a change in the patentee’s prosecution of the application coincided with or directly followed commercial developments or evolutions in the field of the claimed invention; and (5) whether legitimate grounds can be identified for the abandonment of prior applications. . . .

The trial court below did not, however, ultimately rest its conclusion solely on laches — or failure to prosecute the patent — it also set out facts to suggest that Schering-Plough, now known as New Merck — engaged in “inequitable conduct” — attempting to deceive the US Patent and Trademark Office. Included here — explicitly — is the “6-of-13 false certification” to the PTO (see my opening, above).

“Inequitable conduct” is a jaw-slackingly rare finding — at least in big pharma cases. But, not inconsistent with what we’ve seen of Schering-Plough, as documented by this blog. And so, I suspect this ruling will stand — on appeal.

How will the appellate court ultimately decide? Who knows? — but for its part, Teva (as successor to Barr) had previously said it would have been ready to sell in the US by Q2 2010. That’s about $360 million a year — but the global Temodar franchise is about $1 billion a year. As I indicated, Teva is already selling a generic version of temozolomide in the United Kingdom. Over the last two decades, Schering-Plough (as Merck’s predecessor) likely booked more than $20 billion in total worldwide Temodar revenue. In short, this is very, very big business — with very high stakes.

We’ll let you know when this appellate opinion is issued.

“Through A Glass, Darkly”: SeekingAlpha’s Temodar® ‘291 Patent Spat Predictions

Many here will recall that I’ve been reporting on the Temodar® patent spats for almost two years now — as the so-called ‘291 patent, licensed to Merck, wends its way through our federal trial, and appellate, court systems. Most will also recall that Merck struck a pay-to-delay deal with Teva, to 2013, to keep Teva from launching in the US, in return for undisclosed payments — while the appeals are sorted out. Teva is already selling a generic version of temozolomide (the chemical name for Temodar) in the United Kingdom.

Last night, a patent lawyer, and lecturer, at the Cardozo School of Law published a Temodar ‘291 patent spat opinion piece over at SeekingAlpha (do go read it all), in which — based largely on his feelings about the meta-trends in such litigation — he concluded that Merck would win on appeal, and thus he wrote “I expect Merck will win the appeal and thus be able to keep Teva’s generic version of the drug off the market until 2013. . . .” Interesting. I have just a few problems with his “prediction” analysis, here.

First — as I pointed out above, Merck has already bought that right, contractually from Teva, in a pay for delay deal; but more importantly, the ‘291 patent (with extensions) runs through late-2014 — not 2013.

So his “prediction” is actually. . . only an affirmation of past-fact — the fact that Merck already bought Teva off through 2013. Next, rather than discussing the law — he spends most of his column space describing the personalities and politics of the case — openly suggesting that this decision will be made as “largely a beauty contest and we all know that beauty lies in the eye of the beholder. . .” Personally, I believe federal appellate decisions are made on the law — not the personalities. That’s enough said, about that. He reaches a “Merck will win” conclusion, despite the fact that — at oral argument, on August 4, 2010 — Merck’s lawyer never even got “out of the gate“, before the three judge panel effectively tattooed him with very-hostile questioning, about Merck’s licensor having engaged in a nine year delay in prosecuting the ‘291 patent. A delay the lower court found to be evidence of laches and inequitable conduct. The three-judge panel specifically asked about “the public’s right” here — to avoid paying higher prices for what would amount to 32 years, for Temodar. Yes, I think the law — as suggested by the oral argument dialogue — will decide this case. Judge Sue L. Robinson will be affirmed on appeal.

Even though the SeekingAlpha author comes out in favor of Merck, he does devote the end of his column to describing why he might be wrong — in predicting a Merck win. Here’s that portion — but do go read all of his piece, for yourself:

. . . .The ‘291 patent application process took roughly 10 years and during that time, CRT was not providing substantive responses to rejections being made by the PTO. The District Court judge was not unjustified in holding that such was an unreasonable delay. Just because I disagree with her, does not mean I think her finding was ludicrous or outlandish. It’s a judgment call and reasonable minds can disagree. Similarly, the District Court judge’s decision on inequitable conduct is based on how meaningful she thought the omitted study was to the merits of the patent application. She thought it was very meaningful, and I think not so much. The Court of Appeals judges could very well side with the District Court judge. And, in fact, Court of Appeals judges often give deference to District Court judges, because District Court judges spend much more time with a case when it is going through the trial stage than appellate court judges spend with it at the appeals stage, so often District Court judges have a better sense of all the details of the case and can make better judgment calls as to which witnesses are more believable, trustworthy, etc. . . .

As ever, I’ll keep you posted. Here is a direct link to the mp3 file — of the oral argument, from August 4, 2010. Once you arrive, click the Oral Arguments Audio Recordings bar, at the bottom — then, on the resulting screen, in the search box, type the word “Barr“. Choose the first result — and listen right in (a 40 minute audio file). Then, make your own call, based on the arguments. It’s that easy.