The above-titled article by Rahul Guha, Jian Li, and Andrea L. Scott appeared as the cover article for the May/June 2009 print issue of Landslide (a publication of the ABA Section of Intellectual Property Law). The following is an excerpt from the article:
Under the 1984 Hatch-Waxman Act, a generic drug manufacturer may seek FDA approval to enter a market before patents on the branded drug expire by claiming that the relevant patents are invalid or not infringed. Since the Act’s passage, the share of generic manufacturers’ Abbreviated New Drug Applications (ANDAs) that make such claims has been increasing substantially. The result has been an increase in patent infringement litigation by branded drug manufacturers against generic manufacturers.
When an accused infringer attacks a patent as invalid, the patent holder may need to establish that the patented invention is “nonobvious.” The Supreme Court decision in Graham v. John Deere Co. first structured a three-part test for determining the nonobviousness of a patent. In addition to examining evidence on the intrinsic or scientific features of an invention, the Court in Graham also expressly approved the use of “secondary” considerations such as the commercial success of an invention in the nonobviousness determination. Other secondary considerations that have been considered by the courts include copying by competitors, fulfillment of a long-felt need, failures of others, and the extent of licensing of the patented invention.
From an economic perspective, commercial success supports a conclusion of nonobviousness because it suggests that an economic incentive existed to produce the invention. Thus, if the invention was obvious, it would have been brought to market sooner by some other party in response to that incentive. Some of the economic indicators that have traditionally been accepted by the courts as proof of commercial success include significant levels of and rapid growth in sales and market share of the patented product.
In the presence of scientific evidence that the therapeutic attributes of a drug flow from the patent, several types of economic analyses can be conducted to support a conclusion that the commercial success is due to the patent’s claimed invention. This includes sales that respond to new information about drug benefits, sales that respond to patented formulation improvements, and favorable formulary placement based on therapeutic considerations. When evaluating the contribution of marketing efforts to the success, it is important to account for several factors that drive marketing intensity. In particular, marketing intensity is normally higher early in the product life cycle and for later entrants and will increase in response to new information about product quality. Finally, marketing serves an important function in disseminating information about the therapeutic benefits of pharmaceuticals. Ultimately, those benefits, and not marketing, are likely to determine whether or not it is a commercial success.
Read the full article here.