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

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.

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