Supreme Court And Patents: What’s Not Happening

High court denies petition by Mylan to limit patent litigation venue and petition by Merck KGAA to address whether “on sale” bar to obtaining patent applies to non-public sales; Zarxio case to go to conference Friday.

Merck & Cie (a subsidiary of Merck KGAA) and Bayer AG struck out in their effort to get the US Supreme Court to review the “on sale” bar provision of the Patent Act, which prevents someone from seeking a patent on an invention that has been “on sale” for more than one year prior to the patent application. And Mylan Pharmaceuticals Inc. lost a bid to get the court to limit where brand-name drug makers can file infringement suits against generic manufacturers.

In Jan. 9 orders, the court denied petitions in these cases, which were closely followed by industry. The Pharmaceutical Research and Manufacturers of America had submitted briefs to the US Court of Appeals for the Federal Circuit in support of Merck KGAA and against Mylan. And the Generic Pharmaceutical Association filed a brief with the Supreme Court backing Mylan.

The disputes are among several biopharma-related cases the court has declined to take up this term. The court has yet to decide whether it will weigh in on the Federal Circuit’s interpretation of the biosimilars statute. It was scheduled to consider the Sandoz Inc. v. Amgen Inc. petition and the Amgen v. Sandoz conditional cross-petition at its Jan. 6 conference but the cases were re-distributed for its Jan. 13 conference.

Sandoz is challenging the Federal Circuit’s ruling that it had to wait for FDA approval of Zarxio (filgrastim-sndz), its biosimilar to Amgen’s Neupogen (filgrastim), before giving Amgen 180-day notice of its intent to launch. And Amgen is challenging the finding that the patent dance provisions of the Biologics Price Competition and Innovation Act are optional. The US Solicitor General advised the court to take up both petitions. (Also see "Biosimilar Launch Notification: Solicitor General Backs Pre-FDA Approval Notice" - Pink Sheet, 9 Dec, 2016.)

Non-Public Transactions Are ‘Factor’ In Assessing On-Sale Bar

The “on sale” bar dispute has been a contentious issue for the pharmaceutical industry. In July 2015, the Federal Circuit ruled in The Medicines Co. v. Hospira Inc. that TMC’s Agiomax (bivalirudin) patents are invalid under the “on sale” bar provision of the Patent Act since TMC had supplied Ben Venue Laboratories Inc. with active pharmaceutical ingredient to manufacture three validation batches of Angiomax. (Also see "Angiomax Generics Imminent After Court Rules Patents Are Invalid" - Pink Sheet, 2 Jul, 2015.)

The Department of Justice and US Patent and Trademark Office disagreed. In an amicus brief supporting review by the full court they asserted that the transactions between TMC and Ben Venue involved a sale of manufacturing services and not a sale of products. The Federal Circuit granted review of the panel decision. (Also see "Angiomax Patents: Should Contract Manufacturing Count As Commercial Sale?" - Pink Sheet, 9 Mar, 2016.) And the en banc court affirmed the panel’s ruling.

Merck & Cie and Bayer argued that Supreme Court review of their case, Merck & Cie v. Watson Laboratories Inc., was warranted to correct the Federal Circuit’s errant view of the on-sale bar.

“Many inventors, out of necessity or efficiency, rely on non-public dealings with manufacturers, wholesalers, and others to launch and bring inventions to the public market in anticipation of receiving patents on their inventions,” their petition states. “The Federal Circuit’s willingness to invalidate patents for inventors who engage in such a collaborative process, and to reduce the non-public nature of pre-launch transactions to a mere ‘factor’ to be considered, unsettles the fate of many patents, creates perverse incentive for inventors to file prematurely, and favors certain inventors over others.”

In Merck’s case, a district court found that Merck’s invention of a crystalline calcium salt of 5-methyl-(6S)-tetrahydrofolic acid (MTHF or Metafolin) used to manufacture the oral contraceptives Safyral and Beyaz had not been “on sale” due to confidential discussions Merck had with Weider Nutrition International Inc. for development and commercialization of Metafolin. The Federal Circuit reversed, finding that Merck’s discussions with Weider constituted a “premature commercial exploitation of its invention” that was sufficient to invalidate the patent under the on-sale bar.

In its brief opposing Merck & Cie’s petition, Watson (now Teva Pharmaceutical Industries Ltd.) argued that the Federal Circuit held in the TMC case that the confidentiality of an agreement is a factor in analyzing whether the agreement triggers the on-sale bar. “Petitioners’ argument – that confidential sales never trigger the on-sale bar – would allow inventors to begin commercializing their products well before applying for patent protection, simply by using confidentiality agreements to keep their sales quiet,” Watson said.

Brands Can File ANDA Suits Anywhere

In Mylan’s case, the company sought to dismiss infringement suits brought by Acorda Therapeutics Inc. and AstraZeneca AB in the District of Delaware on the grounds that the state of Delaware, and therefore the district court, could not exercise personal jurisdiction over Mylan.

The Federal Circuit ruled in March that Mylan’s filing of abbreviated new drug applications (ANDAs) is sufficient grounds for an infringement suit to be brought against the company in Delaware since Mylan would be marketing its generics in the state once they were approved. (Also see "Have Patent, Will Travel: Brand Firms Can File Infringement Suits Anywhere" - Pink Sheet, 18 Mar, 2016.)

Acorda sued Mylan for infringement of patents on its multiple sclerosis drug Ampyra (dalfampridine), and AstraZeneca brought suit against Mylan for infringing patents on its diabetes drugs Onglyza (saxagliptin) and Kombiglyze (saxagliptin/metformin).

PhRMA, the Biotechnology Innovation Organization and Teva submitted briefs to the Federal Circuit in support of Acorda and AstraZeneca. PhRMA asserted that if ANDA suits could only be filed in the defendant’s home turf, patent owners would be forced to litigate infringement suits in several different districts rather than concentrating litigation in a single forum.

Mylan has filed motions challenging jurisdiction in several other cases, including a suit brought by Teva in Delaware District Court alleging infringement of its multiple sclerosis drug Copaxone (glatiramer) 40/mg/mL injection.

In its cert petition, Mylan argued that the Supreme Court has previously held that a defendant’s “suit-related conduct” must have a substantial connection to the state where the suit is brought for the district court to have personal jurisdiction. It said its conduct in a suit following an ANDA filing occurs solely where the ANDA was prepared or filed. In this case, Mylan said, the ANDAs were prepared in West Virginia and filed in Maryland. (Also see "Mylan Wants Supreme Court To Limit Patent Litigation Venue" - Pink Sheet, 26 Sep, 2016.)

In an amicus brief in support of Mylan, the Generic Pharmaceutical Association argued that the Federal Circuit had carved out a new “ANDA exception” in which nationwide jurisdiction over a defendant drug company is based on nothing more than the filing of an ANDA, which the Federal Circuit assumes indicates infringing future sales.

“This is mistaken for two reasons. First, the future infringing sales will almost never occur,” GPhA stated. “Because of the automatic 30-month stay of FDA approval provided by the Hatch-Waxman Act, in the vast majority of cases there will either be an injunction against sales or a judgment of non-infringement or invalidity prior to any sales of a defendant’s ANDA product.

“Second, the Federal Circuit was wrong to assume that the filing of an ANDA reliably indicates future marketing, as there are many reasons an ANDA filer may ultimately not market its product.”

GPhA said the Federal Circuit’s rule ensures that ANDA litigation will remain concentrated in just two district courts. It noted that between 2009 and 2015, 73% of all ANDA suits were filed in either the District of Delaware or the District of New Jersey.