Several weeks ago the Patent Trial and Appeals Board seemingly decided that software is not patent eligible (see Did the PTAB Kill Software Patents?) at about the same time that the United States Supreme Court issued its much anticipated decision in AMP v. Myriad, which found non-naturally occurring, isolated DNA still nevertheless patent ineligible as a product of nature (see Supremes Rule Isolated DNA Patent Ineligible). This was at the same time that I was spending the month crisscrossing the Country from Chicago to Atlanta to San Francisco. It was a busy few weeks to be sure.
Just at the time when it seemed that the law of patent eligibility was been shook up and re-written in an etch a sketch manner, there also came word of an historic $2.15 billion patent infringement settlement. This settlement flew under my radar until now.
Several weeks ago Pfizer Inc. announced a $2.15 billion settlement was reached with Teva Pharmaceuticals Industries and Sun Pharmaceutical Industries for patent-infringement damages resulting from their launches of generic Protonix® in the United States. Protonix is a prescription drug prescribed for the short-term treatment a condition known as erosive esophagitis or erosive gastroesophageal reflux disease (GERD) and is caused by back up of stomach acid into the esophagus.
The settlement comes after a nearly 10-year legal battle in which Pfizer and Nycomed (now part of Takeda) sought to enforce the patent for its blockbuster acid reflux medicine. Pfizer subsidiary Wyeth and Takeda will divide the proceeds of the settlement with Pfizer receiving $1.376 billion and Takeda receiving $774 million. Collectively, this $2.15 billion patent infringement settlement is the largest patent settlement in history, dwarfing the $1.7 settlement achieved by Johnson & Johnson in 2010 and the $1.35 billion settlement achieved by hall-of-fame inventor Dr. Gary Michelson against Medtronic in 2005.
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At the time of the settlement announcement Amy W. Schulman, who is Executive Vice President and General Counsel of Pfizer said: “We are pleased with today’s settlement, which recognizes the validity and value of the innovation that led to Protonix.” Talk about understating! I bet Pfizer is pleased! Depending upon which source you consult, the largest patent verdict in history is approximately $1.7 billion, so a settlement of $2.15 billion easily eclipses any and all reported patent verdicts and has to make Pfizer and Takeda extremely happy. But thus is the new business reality where some blockbuster drugs can result in many hundreds of millions of dollars in sales each and every month.
Under the terms of the settlement, Teva and Sun will pay a total of $2.15 billion to compensate Wyeth and Takeda for the damages they suffered when Teva and Sun launched generic versions of Protonix prior to the January 2011 expiry of the patent for pantoprazole, the active ingredient in Protonix. These launches were determined by a jury in New Jersey federal court to violate United States Patent No. 4,758,579, which is owned by Takeda and was licensed exclusively to Wyeth in the United States. The parties reached the settlement shortly after the commencement of a trial to determine damages in the same New Jersey federal court.
In the Stipulated Dismissal and Order of Judgment signed on June 11, 2013, and entered by the Court on June 12, 2013, the defendants agreed that the ‘579 patent was valid, enforceable and infringed. Further, the parties agreed that all claims and counterclaims would be dismissed with prejudice, and that the District Court would retain jurisdiction for the purposes of enforcing the Settlement Agreement. All sides agreed to bear their own costs and fees, the parties waived their right to appeal and all protective orders remained in effect notwithstanding the dismissal of the action.
Teva will pay Wyeth and Takeda $1.6 billion and Sun will pay $550 million. Teva will pay $800 million in 2013 and the remaining $800 million by October 2014; Sun’s entire payment will be made in 2013. As part of the settlement, both Teva and Sun have admitted that their sales of generic pantoprazole infringed the patent that was held valid by the court.
“Today’s settlement reflects our resolve to enforce our patents both in and out of the courtroom,” Ms. Schulman said. “We are proud of the work of the scientific colleagues who developed this medicine and the lawyers who defended it.”
Editorial Note: Altana Pharma AG was named as a plaintiff in the case along with Wyeth. Altana Pharma was acquired by Nycomed in 2006. Nycomed was similarly acquired by Takeda Pharmaceuticals in 2011.