One of the most difficult issues in antitrust and patent law involves “pay for delay” or “reverse payment” settlements. Today, for the first time, the Supreme Court entered the fray, finding – in a 5-3 opinion written by Justice Breyer (with Justice Alito recused) that these agreements are not immune from antitrust scrutiny.
The settlements arise under the Hatch-Waxman Act, the law enacted by Congress in 1984 to foster drug innovation and challenges to invalid patents. Under the Act, the first generic to challenge a brand firm’s patent, claiming invalidity or noninfringement, obtains a valuable 180-day period of marketing exclusivity. This period, however, has encouraged brand firms to pay generics to drop their patent challenges and delay entering the market.
In the past decade, the Federal, Second, and Eleventh Circuits have upheld pay-for-delay agreements. They have emphasized the benefits of settlements, have claimed that payments fall within the “scope of the patent,” and have highlighted patents’ presumption of validity. In the summer of 2012, however, the Third Circuit created a circuit split by finding that pay-for-delay agreements were presumptively illegal.
Justice Stephen Breyer wrote for the majority in FTC v. Actavis.
On Monday, June 17, 2013, the United States Supreme Court issued its much-anticipated decision on so-called “reverse payments” in FTC v. Actavis, Inc. This decision will impact how brand name drug companies and generics enter into patent settlements to resolve pending patent litigation. In a nutshell, speaking for the majority, Justice Breyer wrote that there is no valid reason for the FTC to be denied the opportunity to pursue reverse payments as an antitrust violation. Breyer, who was joined by Justices Kennedy, Ginsberg, Kagan, and Sotomayor, determined that reviewing courts should apply the rule of reason when determining whether reverse payments violate antitrust law.
While the ruling will likely come as no shock to casual observers, or even to those who have long believed that these agreements were anticompetitive, it is a bit of a shock in that the decision seems to present an unrealistic utopian view of how challenges to reverse payments will be litigated. For reasons hardly explained, Breyer thinks that it will be largely unnecessary for reviewing courts to engage in complicated review of the patent or to engage patent issues, but at the heart of these cases is the underlying patent and associated patent laws that give brand name manufacturers significant and uncompromised rights to exclude.
Chief Justice Roberts explained in his dissent, who was joined by Justices Scalia and Thomas, that it was his view the decision of the majority “weakens the protections afforded to innovators by patents, frustrates the public policy in favor of settling, and likely undermines the very policy it seeks to promote by forcing generics who step into the litigation ring to do so without the prospect of cash settlements.”
Maybe it’s just me? In my 15 years of practicing patent law, I have never felt uncomfortable interviewing potential clients in order to obtain the essential information needed to file a patent application on their behalf. This was the case until now! Ever since March 19, 2013, I have been feeling slightly uncomfortable asking one question to some of my new clients. What is that question you ask? It is: “What was your household income in the preceding calendar year?” So, why am I asking a question that makes this Registered Patent Attorney sound more like a Certified Public Accountant? Answer: The AIA.
The Leahy-Smith America Invents Act (“AIA”), was signed by President Obama on September 16, 2011, after receiving overwhelming bi-partisan support by passing the House 304-117, and the Senate 89-9. The AIA has been recognized as the first major overhaul to the patent system in almost 60 years! Under the AIA, the USPTO now offers a three-tier pricing structure for a majority of its patent-related fees.
Headquartered in Armonk, NY, the International Business Machines Corporation, also known as IBM, is an international corporation involved in the development of business technology and computer consulting services. In terms of annual profits and number of employees, IBM is one of the top American companies in the technology sector. Recent announcements involving the upcoming development of mobile-based enterprise softwareshow IBM’s desire to continue providing computer solutions for the corporate world.
The U.S. Patent & Trademark Office deals with a heavy amount of paperwork each week that has been assigned to IBM, including both patents and applications. This week in IPWatchdog’s Companies We Follow series, we’ll take a look at the multinational technology corporation and some of the more intriguing applications and patents that have been published recently for the company.
Business interests and developments to enterprise software are seen in a number of applications we feature this week. One application assigned to IBM would protect a system of allocating software resources to a user’s network account once their presence is detected at a facility. An patent awarded by the USPTO protects an IBM invention involving a visual-based help tool for button icons within software applications.
The latest incarnation of the SHIELD Act was introduced on February 27, 2013, and changes direction as if the first iteration were waived off in disgust before it could even lower its gears. SHIELD Act 2, scuttles the “reasonable likelihood of succeeding” idea floated and introduces a new tool aimed at walling off the troll: a bond requirement. If the plaintiff is not an original inventor or assignee, did not make a substantial investment in practicing the invention, or is not a university, that troll must post a bond.
“Patty Sue Just Won’t Go Away.” So went a 2002 articlein the San Francisco Chronicle, one of a many articles spanning several years about Patricia McColm, a vexatious litigant blacklistedsince 1994. She was the Most Vexatious Pleader of the vexatious litigants. If she were a patent attorney, frightened examiners would give her a 100% allowance rate without amendments. If the anti-joinder provisions of the America Invents Act (“AIA”) applied to Patricia McColm, she would have her own clerk’s office.
One draws similarities between the problems presented by firms such as Intellectual Ventures, Acacia, and Lodsys and those presented by Ms. McColm, and a flurry of proposals were recently introduced in Congress.
To start, on August 2, 2012, a “bipartisan” bill was introduced in the House aimed to fix the perceived problems caused by patent trolls, or Non-Practicing Entities (“NPE”), entitled the “Saving High-Tech Innovators from Egregious Legal Disputes Act of 2012,” or the SHIELD Act. The main point of the bill was to make patent holders pay the fees of those they allege infringe to (1) invalidate the patent or (2) defend an infringement action.[i]
The Supreme Court unanimously ruled yesterday that isolated DNA is not patent eligible under 35 U.S.C. §101. SeeAssociation of Molecular Pathology v. Myriad Genetics. Or, put more precisely, the Court ruled that Myriad’s isolated DNA claims as written are not patent eligible. The Court further ruled that similar cDNA claims are for the most part patent eligible, seemingly because the information underlying the claimed molecule omits some content of the information which underlies the full gene.
Spoiler alert: If you are the type of person who enjoys reading about convoluted analogies to baseball bats, plucked leaves, mined gold and surgically removed livers, you are out of luck. Mercifully, and quite amazingly, the Court managed to avoid that morass.
A pivotal point is the question of whether Myriad was claiming information or a chemical compound. Of course, the unique thing about DNA is that it is both (i) a chemical compound comprised of carbon, oxygen, nitrogen, phosphorus and hydrogen, and can be bound to cellular proteins, and (ii) an informational blueprint for proteins which form the building blocks of every living thing.