Life Sciences Legal Insights

Seeds of Exhaustion: Monsanto Is Coming to the United States Supreme Court

By: Michael Shuster

On October 5, the United States Supreme Court agreed to review the case Bowman v. Monsanto Co., Docket No. 11-796 (USSC 2012). The high court will be taking on the question of patent exhaustion in seeds, specifically Monsanto's "Roundup Ready" seeds. Monsanto sells the seeds, which grow into plants resistant to the herbicide glyphosate, aka Roundup. Bloomberg coverage of the case highlights the legal issues surrounding the conditional sale exemption, a doctrine adopted by the Federal Circuit, allowing patent holders to enforce their rights against buyers downstream.

We don't have the briefs yet, or for that matter the amici briefs which will no doubt be plentiful and fascinating, but we can gather from the questions presented by the parties in favor of and opposition to the writ that this could well be a seminal patent case (apologies for the pun). Law professor, Dennis Crouch, covers the latest developments in the case on the Patently-O blog.

Bowman argues that he is entitled to the patent exhaustion doctrine. That is to say that after the original authorized sale of the seeds Monsanto's patent rights are extinguished, which is how the patent exhaustion works in most other products. Of course as a practical matter this means that a farmer needs to buy Monsanto's seeds only once, because every subsequent generation of seeds germinated from the plants sprouting from the originals are free and unencumbered by the patent rights that belong to the original generation. Bowman asks the Supreme Court to find that the Federal Circuit erred when it created, in Bowman's view, "an exception to the doctrine of patent exhaustion for self-replicating technologies."

Monsanto argues that it owns patent rights in a genetically modified plant, and the fact that it is a self-replicating living organism is irrelevant because the patent rights "are independently applicable to each generation of soybeans embodying the invention, such that a grower who, without authorization from Monsanto, creates a new generation of genetically modified soybeans infringes Monsanto's patents."

It is never a good idea to attempt to predict a Supreme Court outcome, especially before the briefs have even been filed, but given the Court's recent track record on life science patents this may not yield a good outcome for Monsanto.

Generic Drug Testing “Safe Harbor” Expanded by Recent Court Decision to Include Post-approval Activities Under Hatch-Waxman

By: Michael Shuster

The August 2012 decision in Momenta Pharmaceuticals v. Amphastar Pharmaceuticals, Inc. has expanded the “safe harbor” provisions of Hatch-Waxman, with serious implications for the pharma and biotech industries.

Hatch-Waxman contains a "safe harbor" provision for the use of patented inventions "reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs.” 35 U.S.C. § 271(e)(1)

Generally understood as a provision permitting companies to test or experiment with patented inventions prior to an FDA submission - such as a generic drug maker prior to submission of an ANDA - the provision's scope has expanded over the years.

The biochemical facts of the Momenta v. Amphastar case are involved, but it boils down to a conflict between two generic producers of the anti-coagulant drug enoxaparin (brand name: Lovenox). Momenta, which had received FDA approval for its ANDA on enoxaparin in July 2010 owns a patented method for ensuring enoxaparin's bioequivalence to Lovenox. Amphastar's ANDA was approved by FDA in September of 2011. Momenta alleged that Amphastar was in ongoing violation of the Momenta patents in determining the bioequivalence of its own version of enoxaparin. Without establishing bioequivalence, generics cannot be legally marketed.

Momenta was granted a preliminary injunction, but the Court of Appeals for the Federal Circuit vacated, reasoning that Amphastar's batch testing of its enoxaparin for purposes of establishing bioequivalence fell under the Hatch-Waxman safe harbor. The majority found that Amphastar's ongoing testing was part of a system of required record keeping for FDA, and thus brought the testing within Hatch-Waxman safe harbor.

A strong dissent from Chief Judge Rader suggests that we have not heard the end of this case. Perhaps further appeal and an en banc hearing may be in store. 

Supreme Court Allows Generic Manufacturers to Challenge Use Codes

By: David Tellekson, Ewa Davison

On April 17, 2012, the U.S. Supreme Court issued a unanimous decision in Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S, holding that a generic drug manufacturer may file a counterclaim to force correction of an overbroad use code that encompasses unclaimed methods of using the drug at issue. In interpreting the text of 21 U.S.C. § 355(j)(5)(C)(ii)(I), the Court gave substantial weight to ensuring that the Food and Drug Administration fulfills its statutory duty to approve non-infringing generics in accord with Congressional intent. Brand manufacturers are advised to review active use codes to ensure that they reasonably reflect the scope of any claimed methods of use.

Learn more about the Court’s ruling in Caraco Pharmaceutical Laboratories v. Novo Nordisk.

California Supreme Court to Hear Cipro "Pay-For-Delay" Case

By: Ewa Davison, David Tellekson

The California Supreme Court will review the legality of so-called “pay-for-delay” settlements, whereby brand-name pharmaceutical manufacturers pay other companies to delay release of a generic version of a patented drug. Although the California Supreme Court will be making its determination under state law, a decision finding all such agreements illegal would have a national impact.

The “pay-for-delay” agreement at issue here settled a patent infringement lawsuit filed by Bayer AG and its subsidiary after Barr Laboratories, Inc., sought to market a generic version of the antibiotic ciprofloxacin hydrochloride, commonly known as Cipro. Under the terms of the 1997 agreement, Barr agreed not to market a generic version of Cipro until after expiration of U.S. Patent No. 4,670,444, in return for which Bayer paid Barr almost $400 million. The ’444 patent, which claims the ciprofloxacin hydrochloride molecule, expired in 2003.

USPTO Regulations Could Impose Steep Fees on Patent Reexamination

By: Michael Shuster

Today the USPTO published in the Federal Register its proposed rulemaking with regard to implementation of the America Invents Act (AIA). The proposed rules cover Inter Partes Review, Post-Grant Review, and a plethora of other AIA implementation issues. Interested parties have 60 days to comment on the proposed rules. Links to the Federal Register entries can be found on the USPTO website.

While these proceedings will provide litigation alternatives, they are also costly and could put additional strain on the USPTO. The fees associated with these proceedings are based on estimates by the American Intellectual Property Law Association, but the amounts may be misleading, as the agency did not define what goes into the preparation, and the complexity of proceedings can depend on what invalidity arguments are at issue, the amount of prior art and other factors.

From our perspective, it would be better to propose a range of costs than a number that could be too low in some instances or too high in other instances. However, the fees are still far below the cost of litigation. For a cash-constrained company, these proceedings give them options to challenge a patent without taking on the burden of full-blown litigation. Even if a company has the means to take on litigation, these proceedings allow it to strategically plan when it should opt for litigation and when it should counter with less costly post-grant and inter partes reviews.

While the USPTO fees may seem steep to many companies, the procedures do provide more options when contesting a patent. The proposed system provides companies with more tools available to challenge patents that they believe lack validity and more flexibility with respect to matching the appropriate proceeding with their business strategy.

Recent Cases Raise Bar for Approving Generics

By: Michael Shuster

The Hatch-Waxman Act, a federal law passed in 1984, was designed to streamline the process for bringing generic drugs to market. Under the law, generic drug manufacturers may file an abbreviated new drug application (ANDA) with the FDA toward approval for generic versions of already-approved drugs.

Such filings are founded on bioequivalence studies instead of clinical studies. In the filings, generic manufactures also must certify that the listed drug is not patented, that the patent has expired or that the patent is invalid or will not be infringed by the generic drug.