Saturday, September 11, 2010

". . .A Glass, Darkly" II: Some (More) Of The Relevant Temodar® Facts And Law

I want to lay out a little more of the factual background, and law applicable to this case -- so that readers will get a better sense of the whole picture here. Indeed, to be fair, if I am going to criticize that Cardozo lecturer on patent law, for his "personalities and politics" style of legal analysis. . . I probably ought to set a different example, myself, right? Right. So here goes:

Importantly, in his oral argument on August 4, 2010, counsel for Teva pointed to the fact that legacy Schering-Plough (as New Merck's predecessor) certified to the PTO that 13 versions of the compound that became Temodar® (temozolomide) were particularly "active" -- in their promise as cancer-fighting chemical entities. That was in the as-amended patent application and subsequently-filed related papers. Such filings are essentially sworn statements to the US PTO.

In this case, though, of those supposed 13 "particularly active" variants, seven were not active, at all -- and two of the 13 hadn't even been tested by legacy Schering-Plough, when it made the sworn filing. So, only "six-of-13" -- or less than half -- of that sworn statement was even remotely accurate. And -- as to the two compound-variants in particular -- Schering must have known it was false. After all, Schering hadn't even begun tests (of any kind!) on those compounds, at the moment it swore they were "particularly active". Astonishing conduct, indeed.

Moreover, we must always remember that patents are an abberation of sorts, in our law: that is, they create monopolies -- something our law highly disfavors -- but only for a defined period of time. A period calculated, by the legislative branch, to amply reward those who take the initiative, and the risk to develop a novel compound (to be sure not only that their sunk costs are covered, but that they are so handsomely rewarded, that they will continue to seek new inventions). In these sorts of cases, the statute says 17 years. That is what the legislature decided was "enough" to amply reward such initiative.

Now, what has actually happened here -- with Temodar?

Well. . . one day, early next year (unless Teva prevails on appeal), New Merck will begin enjoying its 32nd consecutive year of monopoly power in this cancer market. Reasonable people, I think, would agree that a near-doubling of the monopoly timeframe cannot be what a statute written with the plain English command of 17 years intends.

So, I think Merck will lose here -- on appeal. Any other result would begin to look. . . well, collusive.

From Judge Sue L. Robinson's very cogent opinion below (a 40 page PDF file), then (with a backgrounder of sorts -- linking my earlier analysis of her opinion, here):

. . . .Prosecution laches is an equitable doctrine that "may render a patent unenforceable when it has issued only after an unreasonable and unexplained delay in prosecution," and may be applied even though a patent applicant complies with pertinent statutes and rules. Symbol Tech., Inc. v. Lemelson Med. Educ. & Research Found., 422 F.3d 1378, 1385 (Fed. Cir. 2005); In re Bogese, 303 F.3d 1362, 1367 (Fed. Cir. 2002). When addressing the issue of the burden of proof applied to prosecution laches, this Court has agreed with other district courts that “the preponderance of the evidence standard should apply. . . ."

. . . .As an equitable doctrine, there are no firm guidelines for determining when prosecution laches should render a patent unenforceable, and the determination is "subject to the discretion of a district court before which the issue is raised." Symbol Tech., 422 F.3d at 1385. Prosecution laches requires “an examination of the totality of the circumstances.” Id. at 1386. Factors district courts have considered to determine whether a delay in prosecution was unreasonable are (1) whether the prosecution history of the patentee’s patents is atypical of patents in that field or patents generally; (2) whether there are unexplained gaps in the prosecution history; (3) whether the patentee took any unusual steps to delay the application process; (4) whether a change in the patentee’s prosecution of the application coincided with or directly followed commercial developments or evolutions in the field of the claimed invention; and (5) whether legitimate grounds can be identified for the abandonment of prior applications. . . .

The trial court below did not, however, ultimately rest its conclusion solely on laches -- or failure to prosecute the patent -- it also set out facts to suggest that Schering-Plough, now known as New Merck -- engaged in "inequitable conduct" -- attempting to deceive the US Patent and Trademark Office. Included here -- explicitly -- is the "6-of-13 false certification" to the PTO (see my opening, above).

"Inequitable conduct" is a jaw-slackingly rare finding -- at least in big pharma cases. But, not inconsistent with what we've seen of Schering-Plough, as documented by this blog. And so, I suspect this ruling will stand -- on appeal.

How will the appellate court ultimately decide? Who knows? -- but for its part, Teva (as successor to Barr) had previously said it would have been ready to sell in the US by Q2 2010. That's about $360 million a year -- but the global Temodar franchise is about $1 billion a year. As I indicated, Teva is already selling a generic version of temozolomide in the United Kingdom. Over the last two decades, Schering-Plough (as Merck's predecessor) likely booked more than $20 billion in total worldwide Temodar revenue. In short, this is very, very big business -- with very high stakes.

We'll let you know when this appellate opinion is issued.

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