Philip Brooks' Patent Infringement Updates

District Court Denies Preliminary Injunction for Generic Allegra

Teva announced in a press release on Friday, January 27, 2006 a favorable court decision regarding its generic version of Allegra.

Teva Pharmaceutical Industries Ltd. (Nasdaq:TEVA) announced today that the U.S. District Court for the District of New Jersey has denied a motion filed by Aventis Pharmaceuticals, Inc. and Albany Molecular Research, Inc. for a preliminary injunction related to Teva's Fexofenadine Hydrochloride Tablets, the AB-rated generic equivalent of Aventis' antihistamine Allegra® Tablets.

On September 6, 2005, Teva and Barr announced that they had entered into an agreement and launched the Fexofenadine Hydrochloride Tablet products. Under the agreement, Barr took the regulatory steps necessary to permit Teva to obtain final U.S. Food and Drug Administration approval of Teva's Fexofenadine Hydrochloride Tablets and to sell the product within Barr's 180-day exclusivity.

In June 2004, Barr and Teva were granted summary judgment of non-infringement with respect to three patents, and were granted summary judgment of invalidity on an additional patent in the case in April 2005. Several patents remain in the litigation. A trial date has not been set.

Senate to Get Rule 11 Amendment

The Friday, January 27, 2006 ABA Journal eReport stated:

The U.S. Senate will have another shot at legislation to amend Rule 11 of the Federal Rules of Civil Procedure and make sanctions mandatory against those parties and attorneys who file frivolous lawsuits.

The measure would make Rule 11 sanctions mandatory rather than discretionary, as they are now. Other provisions would:

• Eliminate the current 21-day "safe harbor" provision that gives attorneys three weeks to withdraw lawsuits deemed frivolous.
• Require personal-injury plaintiffs to file claims in the county or federal district court in which they reside or where the "alleged injury or circumstances giving rise to the personal injury claim allegedly occurred."
• Impose severe penalties on serial Rule 11 violators by establishing a three-strikes rule under which, if a federal district judge determines an attorney has violated Rule 11 three or more times, the judge "shall suspend that attorney from the practice of law in that federal district court for one year."

Schwartz [general counsel to the American Tort Reform Association and the Lawsuit Abuse Reform Coalition] adds that the bill doesn’t have a "perfect" chance to clear the Senate because it is "still pretty new, and the Senate calendar is very crowded."

However, even if the measure doesn’t clear the Senate, the push for the litigation likely will continue. Beth Frigola, Smith’s [U.S. Rep. Lamar Smith, R-Texas, reintroduced the Lawsuit Abuse Reduction Act in January 2005] press secretary, says: "If the Senate doesn’t take it up this next session of Congress, we will reintroduce it in the next session of Congress, which will begin in January 2007."

Call for a New Patent and Trademark Trial Court System

Todd Mayover makes the case in a post from his IP Counsel Blog that Congress should create a separate patent and trademark trial court system to improve the fairness for patent and trademark litigation cases.

He notes several weaknesses in the current federal court system in dealing with such cases:

1. Federal judiciary is overloaded with cases;
2. Use federal court rules that don't always fit infringement cases well;
3. Forum shopping has arisen as a result of different treatment for patentees; and
4. Insufficient level of sophistication for complex technology issues.

Read his complete argument here.

You Invent It...We Protect It! Adds Host

In a 24-7 press release today:

Intellectual property attorney John Pemberton from the Law Office of Steven Leavitt, L.L.P. joins fellow registered Patent Attorney Steven Leavitt and Jillian Freed as co-host of the popular Internet Invention radio show "You Invent It...We Protect It" on wsRadio live Thursdays 11am PST /2pm EST. Access YouInventIt.com RADIO for more details!

Every Inventor's dream resource, You Invent It,.. We Protect It! is an interactive hour long panel formatted, call in, program that answers the question, "What in the world do I do with my invention?" and other related Patent, Trademark, Copyright and Licensing questions. "You Invent It,.. We Protect It!" premiered at its new home on wsRadio.com, January 17, 2006 with John as a permanent addition. Prior to this, John was a popular panelist with his weekly well liked segment "Wacky Patent of the Week!"

Willful Infringement and Opinions of Counsel

See Donald Templin's article entitled, "Willful Infringement and Opinions of Counsel" presented four years ago at the 40th Annual Conference on Intellectual Property, held by the Law Institute for Law and Technology - Center for American and International Law.

Don is head of Haynes and Boone's Business Litigation section and a client.  He obtained a judgment of willful infringement in a jury trial of a patent infringement case in Dallas.

A vital consideration for any party accused of patent infringement is to avoid a finding of willful infringement and the possibility of enhanced damages, if infringement is found. The most important piece of evidence for a fact finder to consider on this issue is an opinion of counsel or the absence of an opinion of counsel. Such an opinion may conclude that there is no infringement or that the patent is invalid or unenforceable. A well-reasoned opinion may create a presumption that any infringement is not willful. The absence of such an opinion may create a presumption that any infringement is willful.

Drug Patent Deals Raise FTC Concerns

Stephen Albainy-Jenei of Patent Baristas provides a very detailed update on the latest news in the reverse payments area.

The U.S. Federal Trade Commission (FTC) is concerned about the recent use of anti-competitive drug patent deals in light of recent court rulings, which may spur drug companies to step up a practice of paying generic rivals to keep alternatives off the market.

The FTC has filed a series of lawsuits challenging patent settlement agreements between major drugmakers and their generic rivals. The agency contends that in some cases those settlements stifle competition because drugmakers are paying generics to stay out of the market.

Under federal law, drugmakers are allowed to seek U.S. Food and Drug Administration approval for generic versions of brand-name drugs before a drug's patent expires. They must certify that the patent is invalid or will not be infringed by the new generic version.

The decision in Schering-Plough makes it very difficult (if not impossible) for parties challenging patent settlements to do so based on the terms of the settlement itself (i.e., the inclusion of a reverse payment). Plaintiffs will need to show that the generic company’s product did not infringe on a valid patent – a high hurdle to get over indeed.

Read the entire post here.

E-mail Notification Now Available

I received a request from a regular reader last week to add e-mail notification to this blog.

Upon checking with the Customer Support folks at TypePad, I learned that there are several vendors that offer this service.  Here are a few to check out:
   
    http://www.feedblitz.com
    http://www.kbcafe.com/rmail.aspx
    http://signup.alerts.msn.com/brochure/index.html
   
These services will provide you with some code for to put on your weblog to allow people to subscribe. To add this code to your TypePad site, use the method described here:

    http://support.typepad.com/cgi-bin/typepad.cfg/php/enduser/std_adp.php?p_faqid=35

Effective immediately, you can now sign up for e-mail notification of new posts at Philip Brooks' Patent Infringement Updates by entering your email address in the box just above the calendar on the right-hand side of the page.  If you have any comments on how the notification service works after you sign-up (pro or con), please let me know.

Power Supply Patent Infringement Case Expands

As reported in SMPS Power Supply Industry News and a Power-One, Inc. press release:

Power-One, Inc. (NASDAQ:PWER)...announced [on December 15, 2005] that it recently expanded its current patent infringement lawsuit against Artesyn Technologies, Inc. (NASDAQ:ATSN) by adding two additional patent applications to the body of intellectual property being asserted in the litigation. The newly added patent applications are United States Patent Application Publication No. 2004/0123164A1 (USPTO Serial Number 10/326,222) and United States Patent Application Publication No. 2004/0093533A1 (USPTO Serial Number 10/293,001). Additionally, Power-One filed a lawsuit on December 14, 2005 against Silicon Laboratories Inc. (NASDAQ:SLAB), for infringement of United States Patent Nos. 6,936,999 (the '999 patent, issued August 30, 2005) and 6,949,916 (the '916 patent, issued September 27, 2005), and of the two patent applications mentioned above. The proceedings involving Artesyn and Silicon Laboratories are filed in the United States District Court for the Eastern District of Texas, Marshall Division.

In its Complaint against Silicon Laboratories, Power-One alleges that Silicon Laboratories is infringing the patents and patent applications by making, using, selling, or offering to sell its Si825x family of digital power supply controllers. The Si825x products are marketed noting, among other features, a PMBus compliant hardware interface. The lawsuit seeks compensatory damages and a permanent injunction to prohibit Silicon Laboratories from making, using, selling or offering to sell infringing products, including the Si825x products.

Power-One is represented in the suit by Fish & Richardson.

Price Erosion and Reasonable Royalty Models

Dr. Roy J. Epstein, an economic expert in Belmont, Massachusetts, states on his website:

There are increasing demands for better economic models to help the patent damages expert develop more reliable analyses. For example, the Federal Circuit recently made it clear in Crystal Semiconductor v. TriTech that the common practice of asserting price erosion independently of the lost sales claim is not credible and is unlikely to be acceptable in the future. Recent ABA Litigation Roundtable discussions also reveal growing concern that the Georgia Pacific factors are no longer adequate to determine a reasonable royalty.

Dr. Epstein's economic research integrates the key insights from economics, accounting, and statistics into coherent and powerful tools for calculation of patent infringement damages. His PERLS (Price Erosion and Lost Sales) model, recently published in the AIPLA Quarterly Journal, is a lost profits analysis that is insulated from the Federal Circuit's criticism in Crystal Semiconductor.

PERLS lost profits = Market share lost profits + price erosion % times patent holder's revenue + price erosion % times market share lost sales + price elasticity adjustment

He has also developed FIRRM (Financial Indicative Running Royalty Model), which uses modern principles of corporate finance to extend the Georgia Pacific reasonable royalty analysis. This research was done with his colleague Prof. Alan J. Marcus, a widely cited expert in corporate finance, and was published in the JPTOS.  It is based on standard principles of discounted cash flow ("DCF") investment analysis in corporate finance. The maximum reasonable royalty extracts the difference in net present value between the infringing project and the infringer's next best alternative.

AstraZeneca to Appeal Decision in U.S. Patent Litigation

AstraZeneca announced today in a press release:

...that it has received a decision of Judge Rodney Sippel of the U.S. District Court for the Eastern District of Missouri in litigation titled In Re Metoprolol Succinate Patent Litigation. This case is a consolidation of the company’s cases against defendants KV Pharmaceutical Company, Andrx Pharmaceuticals LLC, Andrx Corporation, and Eon Labs Manufacturing, Inc. The decision was issued in response to motions by all parties argued on November 16-17, 2005, regarding the validity, enforceability and infringement of two of the U.S. patents associated with TOPROL-XL® (metoprolol succinate) extended release tablets.

In its decision, the Court found that the patents asserted by AstraZeneca in this litigation -- the compound patent (U.S. Patent Number 5,081,154; ) and the composition patent (U.S. Patent Number 5,001,161) that cover TOPROL-XL® are invalid. The Court also found that the patents asserted by AstraZeneca in the litigation are unenforceable. AstraZeneca disagrees with and is disappointed by these conclusions. The Company maintains that both patents are valid and enforceable and will appeal the Court’s decision. Both patents are due to expire on September 17th 2007.  Sales for TOPROL-XL in the US in 2005 were $1,291 million.