Patent litigation in the pharma and biotech sphere

May 2017  |  FEATURE  |  INTELLECTUAL PROPERTY

Financier Worldwide Magazine

Intangible assets, such as patents and trademarks, are key drivers of value in the biotech and pharmaceutical industries. Protecting and enforcing patents can be a difficult task, but it is a challenge which must be met. As evidenced by the increase in the number of commercial disputes over the last decade, biotech and pharma firms are taking steps to monitor and enforce their intellectual property (IP) rights, with many turning to litigation.

In one case involving Indian generic pharmaceutical firm Aurobindo Pharma and US giant Mylan, Mylan has won a ruling which will force Aurobindo to stop selling Isosulfan Blue in the US. Judge Robert W Schroeder III of the US District Court for the Eastern District of Texas said Aurobindo’s sales of Isosulfan Blue, a diagnostic imaging agent used to locate cancer, infringed patents covering Mylan’s own Isosulfan blue product. As a result, Judge Schroeder blocked Aurobindo from continuing to sell its product.

In another case in March, Aurobindo secured a ruling against New Jersey-based Reckitt Benckiser on a generic version of Reckitt’s cough and cold drug, Mucinex DM. Mucinex and Mucinex DM have both been successful products for Reckitt, generating sales revenue of over $300m in 2015 in the US, making it one of the most popular over-the-counter cough and cold brands in the US.

Evolving patent legislation

China recently enacted a substantial reform of its IP rights regime, applying a focus on patent protection. It has created specialised IP courts, partly as a response to international criticism of the country’s previous IP regime. Some foreign companies, daunted by the delays and costs common in US and European IP courts, have found Chinese courts quicker and more efficient for initiating patent infringement proceedings.

Despite the reforms, enforcing patent rights in China can be a difficult task. In a recent example, the Supreme People’s Court of China rejected the appeal of US pharma company Eli Lilly and Co. against Changzhou Watson Pharmaceutical Co. Ltd. in a longstanding patent infringement case in June 2016.

In the US, the Food and Drug Administration (FDA) also revised and clarified regulations governing new drug applications in late 2016. The FDA’s new regulations also govern the way pharmaceutical patent information is processed in a final rule designed to match recent court decisions and limit patent litigation on generics. The FDA’s final rule also establishes a 30-day period during which the new drug application holder is required to substantively respond to a patent listing dispute. The rule also dictates which court orders or scenarios would trigger the end of a required 30-month stay, put in place when a patent holder sues a generic maker over an abbreviated new drug application.

2017 will also see changes to patent protection in Europe, when the Unitary Patent Court (UPC) and the Unitary Patent come online later in the year. Years in the making, the Unitary Patent and the UPC will completely overhaul patent litigation across the continent. Under the current system, companies must register and enforce their patents in all European Member States; the UPC however, will harmonise patent protection across the European Union (EU). The creation of the first pan-European civil court represents a sea change in European patent enforcement and will generate challenges and opportunities for patent holders not only in pharma and biotech, but across all industries. For the pharma industry, however, the introduction of cross-border patent coverage and enforcement is particularly important and will generate considerable cost savings.

However, the Unitary Patent may give rise to a potentially damaging vulnerability for the pharma industry: the spectre of central revocation proceedings could allow generic companies to destroy originator patents in one fell swoop.

Though the UK’s decision to leave the EU has cast doubt on the Unitary Patent, there is political will within the European bloc to keep the UK onside, regardless of a so-called ‘hard Brexit’. For the UK, however, the question of the Unitary Patent and the UPC will be controversial given that the EU’s patent reforms will increase oversight of the European Court of Justice, an institution the UK government has claimed it will leave in the future. Reconciling the UK’s position with the UPC and the European Patent Office (EPO) will be one challenging aspect of Brexit negotiations.

According to the EPO, the number of European patent applications rose to over 296,000 last year, fuelled mainly by companies from China and South Korea. The EPO granted 96,000 patents in 2016, 40 percent more than in 2015 and the most in its history.

2017 may be a year of uncertainty for patent litigation in the pharma and biotech industry. With new legislative measures taking effect and jurisdictions becoming active, organisations must take steps to protect their patents and optimise their litigation strategies.

© Financier Worldwide

BY

Richard Summerfield