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ELAN V. CYGNUS SUIT CHARGING TRANSDERMAL NICOTINE PATCH INFRINGEMENT

Executive Summary

ELAN V. CYGNUS SUIT CHARGING TRANSDERMAL NICOTINE PATCH INFRINGEMENT is based on a presumption of validity for Elan's U.S. method patent 4,946,853, issued on Aug. 7, 1990. The suit, filed May 10 in San Francisco federal court by Elan Transdermal Ltd., a subsidiary of the Irish firm Elan Corp., alleges that Cygnus Therapeutic Systems' nicotine patch infringes Elan's patent for a "method for the treatment of withdrawal symptoms associated with smoking cessation and preparations for use in said method." The suit alleges that the manufacture, let alone the sale and use of the Cygnus patch would infringe the Elan method patent. Elan filed an NDA for its nicotine TTS, Nicolan, in June 1989. Cygnus, which co-developed its product with Pharmacia Leo, the innovator of Nicorette prescription nicotine chewing gum, filed an NDA in December 1990. Marion Merrell Dow, a third potential competitor and the licensor of Nicorette gum, said Jan. 7 that it had just filed an NDA for a nicotine transdermal patch developed by Alza (Nicoderm). While Cygnus has acknowledged that a patent dispute may affect its ability to market its nicotine patch, the company also points out that it has an issued patent pertaining to a transdermal delivery system manufacturing process. Cygnus stated in its January 1991 initial public offering prospectus that it could face potential patent conflict over its transdermal nicotine patch that "may adversely affect the marketability" of Cygnus' product. "Although Cygnus believes that certain broad claims of the . . . Elan patent [are] invalid, there can be no assurance that the validity of these claims would not be upheld or that, in such event,licenses to the patent would be available on acceptable terms," the prospectus states. The company added that a "challenge by Cygnus to the validity . . . would have to overcome a legal presumption of validity." Cygnus' U.S. patent no. 4,915,950, issued in April 1990, covers the manufacturing of a "printed transdermal drug delivery device." The patent, the company maintains, fairly broadly covers a method of manufacture for toxic drugs such as nicotine that must be processed under special conditions. The Cygnus patch manufacturing process entraps nicotine in a solid matrix. The Redwood City, Calif. R&D firm also has filed for composition patents. Elan's suit also states that "35 USC Sec 271 (e)(1) does not exempt conduct oriented to obtaining both FDA clearance and clearance by agencies outside the United States. Nor does it exempt conduct oriented to obtaining FDA clearance as well as to inducing others to acquire marketing rights," the suit adds. Pharmacia, according to the Elan complaint, has completed Phase III trials in Europe and plans to file for European approval "in the first half of 1991." Further, the Cygnus prospectus notes that Pharmacia, which owns worldwide marketing rights to its product, "is negotiating with several major pharmaceutical companies to sublicense marketing rights to the Cygnus patch in North America." The timing of the suit follows closely a new marketing deal forged by Elan that appears to return to it worldwide rights except in the U.S. The company, which had granted worldwide marketing rights outside of Ireland to Warner-Lambert, announced May 3 that it has a new, unidentified, U.S. marketing partner ("The Pink Sheet" May 6, In Brief). Currently, Nicolan is approved only in Ireland. Elan is being represented in the case by the Menlo Park, Calif. office of the Alexandria, Va. firm Burns, Doane, Swecker & Mathis. Cygnus' counsel in the case is Wilson, Sonsini, Goodrich & Rosati (Palo Alto). Cygnus has not yet filed a response to the complaint.
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