Generic Firms Must Pay Actos Legal Fees, Partly Because Of Claim Flip-Flops

In deciding for Takeda, judge says Mylan and Alphapharm also disregarded court orders and used faulty witnesses during their patent challenges.

Takeda and generic challengers Mylan and Alphapharm will meet with a Manhattan court magistrate in the coming weeks to work out the amount of legal fees Takeda is entitled to recoup following the firms' failed challenges to the Actos patent.

Federal Judge Denise Cote ruled Sept. 20 that Takeda is entitled to the fees.

"How much it costs depends a lot on how much is at risk, and this case involves probably a million documents and a tremendous amount of effort, so it would be, I think, in the millions," Takeda attorney David Conlin, an intellectual property partner with Edwards Angell Palmer & Dodge, told "The Pink Sheet" DAILY. Conlin called the award of legal fees "very rare."

The "fees motion" stems from patent infringement action against the generic drug manufacturers earlier this year. In February, the same court found Takeda's patent on the type 2 diabetes therapy Actos (pioglitazone) was valid and infringed by Mylan's and Alphapharm's ANDAs (¹ (Also see "Actos Patent Found Non-Obvious" - Pink Sheet, 22 Feb, 2006.)).

"Beyond their baseless [Paragraph IV] certifications, Alphapharm and Mylan each engaged in other litigation misconduct," Cote ruled.

Among her findings, Cote says that Mylan was focused more on being first to file a pioglitazone ANDA than on making the case against the patent's validity. She described how the company sent a place holder to stand in line at FDA for weeks, and then commissioned a small law firm to produce its Paragraph IV filing in 16 hours when the time came.

"Mylan completely abandoned its Paragraph IV theory of invalidity and proceeded to trial on a contorted claim that Takeda had engaged in inequitable conduct before the Patent & Trademark Office," she continues.

However, Mylan "was unable to identify any material misstatement in Takeda's [patent] application"; relied on an "expert for issues on which he was not qualified to opine"; "asserted that [a compound] was the closest prior art when it knew it was not"; and "lacked any theory or evidence of Takeda's intent to mislead the PTO."

"Alphapharm's certification, which asserted invalidity due to obviousness, was deeply flawed, and Alphapharm revised its theory again and again in a futile effort to state a prima facie case of obviousness," Cote writes.

The company then "abandoned the articulation of obviousness" and attempted to convert its patent attack to an inequitable conduct claim, Cote says. "Because Alphapharm had not pleaded an inequitable conduct claim, Alphapharm's attempts to insert these issues created confusion, wasted valuable court time and increased the burden of the litigation on parties."

In addition, an expert witness called by the company, "delivered a series of opinions that were completely undercut by a careful examination for the prior art and the application of sound science."

[Publisher's Note: The prospect of having to pay attorneys' fees is just one of the challenges facing generics in the current environment. F-D-C Reports is hosting an audio conference on October 12, 2006, entitled"Patentbusters: The Uncertain Future of Branded and Generic Drugs in the Wake of Plavix and Apotex." For more details please visit: ² http://www.fdcreports.com/audio/.]

The generics' "litigation misconduct" supports an "exceptional case" finding under the law and "fully justifies the award of attorneys' fees," Cote says. "The framework established by Congress for accelerating the approval process for generic versions of established drugs...is not an invitation to frivolous, bad faith attacks on patents."

The judge's words echo statements Pfizer CEO Jeffrey Kindler made during a Jan. 19 earnings call. "We continue to believe that policymakers should examine a system in which generic companies can take as many 'shots on goal' as they wish," Kindler, who was then general counsel, said. "Our only course is to aggressively defend our patents and stand for the principles we believe in, on behalf of the patients we serve and the future of medical innovation."

The February decision in the main case is under appeal, and the generics are expected to appeal the decision regarding legal fees, Conlin said. The patent infringement appeal will be heard in the Federal Circuit Court in Washington, D.C.

There are few precedents for the award of attorneys' fees in drug patent cases. In a 2003 case involving Forest Laboratories and Abbott, a district court found Forest did not infringe Abbott's Survanta patents. The court found the case to be "exceptional," warranting the assessment of attorneys' fees against Abbott. Abbott appealed, and the decision was reversed in the federal court of appeals.

Simiarly, a federal appeals court in 2004 overturned a lower court's order for Apotex to pay attorneys' fees to GlaxoSmithKline in a Ceftin patent dispute (³ (Also see "ANDA Filing Alone Is Not “Willful Infringement” Under Waxman/Hatch – Court" - Pink Sheet, 27 Jul, 2004.)).

But in 2001, a court found Ivax' Zenith Goldline subsidiary willfully infringed Lilly's nizatadine ( Axid ) patent and ordered Ivax to pay attorneys' fees.

-Shirley Haley ([email protected])