ITC Issues Limited Exclusion Order on Botox Products, Partially Reverses Trade Secret Finding

By Eileen McDermott
December 17, 2020

“The ITC affirmed with modification the FID’s findings with respect to subject matter jurisdiction, standing, domestic industry as to BOTOX®, and trade secret existence and misappropriation as it relates to Medytox’s manufacturing processes, but reversed the FID’s finding that a trade secret exists with respect to Medytox’s bacterial strain.”

In September, the International Trade Commission (ITC) decided to review an initial final determination (FID) in the Matter of “Certain Botulinum Toxin Products, Processes for Manufacturing or Relating to Same and Certain Products Containing Same,” Investigation No. 337-TA-1145, a complaint filed by Allergan against Botox products made by Daewoong and its partner, Evolus, a “performance beauty company”. On Wednesday, the ITC issued a Final Determination in the case, finding that the sale and importation of the products into the United States violated Section 337 of the U.S. Tariff Act.

The Commission issued a Limited Exclusion Order (LEO) prohibiting importation of the products by Daewoong and Evolus for a period of 21 months, as well as a cease and desist order against Evolus preventing the Company from selling, marketing, or promoting the products in the United States for a period of 21 months. However, the Commission reversed the FID’s finding that a trade secret exists with respect to Medytox’s bacterial strain.

Final Initial Determination

The investigation was instituted on March 6, 2019 based on a complaint filed by Medytox Inc. of Seoul, South Korea; Allergan Limited of Dublin, Ireland; and Allergan, Inc. of Irvine, California. The FID was issued on July 6, 2020, wherein the ALJ found that certain products sold by the Korean drugmaker Daewoong and its partner Evolus, Inc. violated section 337 through their importation and sale in the United States of a botulinum neurotoxin product “by reason of the misappropriation of trade secrets.”

In particular, the ALJ ruled in favor of Allergan and Medytox in the initial determination and recommended that, “if a violation is found, the Commission issue: (1) a limited exclusion order barring entry of certain botulinum toxin products that are imported, sold for importation, and/or sold after importation by respondents Daewoong and Evolus; and (2) a cease and desist order against Evolus.” The judge asserted that a market-allocation agreement between Allergan and Medytox, which provided Allergan an exclusive license on Medytox’s products in the U.S., was “sufficient to tie Allergan’s domestic industry to Medytox’s trade-secret misappropriation grievance with Daewoong in Korea.”

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Respondents’ Petition

Daewoong and Evolus (collectively, respondents) filed a petition requesting that the ITC review the FID. In the request, the respondents asserted that the FID erroneously concluded that the ITC had subject matter jurisdiction over such a “foreign dispute about exclusively foreign alleged trade secrets.” The request also asserted that Allergan did not have independent standing because “it did not own, exclusively license, or possess the alleged trade secrets” and it had no connection to the alleged trade secrets or misappropriation. In addition, the respondents alleged that the FID’s determination that Medytox’s strain was a trade secret constituted an error of fact and law. Additionally, the petition noted that it was legal error to conclude that “Allergan’s proffered investments in MT10109L and Botox establish domestic industries” because the investments were not substantial under the proper analysis. The respondents also alleged that the FID erred in concluding that there was an established injury to Botox because the FID incorrectly focused on “whether there was harm to the Botox franchise generally, as opposed to the collective test of whether there was harm to the proffered Botox domestic investments.”

Final Determination

After reviewing several requested statements on the public interest, the Commission decided to review the FID and ultimately affirmed in part and reversed in part. Specifically, the Commission affirmed with modification the FID’s findings with respect to subject matter jurisdiction, standing, domestic industry as to BOTOX®, and trade secret existence and misappropriation as it relates to Medytox’s manufacturing processes, but reversed the FID’s finding that a trade secret exists with respect to Medytox’s bacterial strain. The full opinion and reasoning will not be released for several weeks.

In a statement released yesterday, Evolus said that the ITC’s order preventing import, sale and marketing of its Botox product, Jeuveau, in the United States for 21 months is a reduction from the 10-year recommendation by the ALJ in July 2020. However, there is no immediate impact to the availability of Jeuveau, added the statement, and “the decision is not final until the 60-day presidential review period is complete during which time the Company plans to fund a bond to allow for the continued sales and marketing of Jeuveau® in the United States.”

David Moatazedi, President and Chief Executive Officer of Evolus, said: “In my experience, it’s uncommon for intellectual property disputes to result in a pharmaceutical product being restricted from the market. We remain committed to finding a resolution to this legal matter, including reasonable settlement terms with Allergan’s new owner, AbbVie, and Medytox.”

In a comment sent to IPWatchdog, a spokesperson for Daewoong said:

 We are surprised by this decision, which would be a significant blow to an American company, will cost U.S. jobs amid the recession and will hurt consumer choice, innovation, and healthy competition in this marketplace. We look forward to a formal review by the Administration in hopes that the President will reverse this decision and side with doctors, patients, and other free market voices who are concerned about this dangerous and costly precedent that would threaten future development of potentially life-saving therapies and other important medical advances.

 

This article was updated on December 17 to include a statement from Daewoong.

The Author

Eileen McDermott

Eileen McDermott is the Editor-in-Chief of IPWatchdog.com. Eileen is a veteran IP and legal journalist, and no stranger to the intellectual property world, having held editorial and managerial positions at several publications and industry organizations. She has acted as editorial consultant for the International Trademark Association (INTA), chiefly overseeing the editorial process for the Association’s twice-monthly newsletter, the INTA Bulletin. Eileen has also served as a freelance editor for the World Intellectual Property Organization (WIPO); as senior consulting editor for the Intellectual Property Owners Association (IPO) from 2015 to 2017; as Managing Editor and Editor-in-Chief at INTA from 2013 to 2016; and was Americas Editor for Managing Intellectual Property magazine from 2007 to 2013.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 2 Comments comments.

  1. TFCFM December 18, 2020 11:59 am

    Article: “The full opinion and reasoning will not be released for several weeks.

    It’s surely difficult to report a rationale that isn’t made available.

    A possible hint, however, can be found in the Respondent’s Reply Brief to the Commission’s questions-on-review dated 16 Oct 2020:

    The respondents argue that the complainants (and their expert witnesses) have admitted that the strain claimed to be a “trade secret” is identical (or, at least, substantially identical) to a well-known and publicly-available strain that is also held by multiple others.

    I have no way to know whether the respondents’ assertion is accurate. If it is, though, that would suffice as an explanation of why the strain itself is not a trade secret, while a process employing that strain might well still be.

    Stay tuned.

  2. Jonathan R Stroud December 22, 2020 11:54 am

    It’s worth noting that the ALJs and Commission have never, to my knowledge, issued anything other than a 10-year exclusion order for a trade secret misappropriation. The important thing that remains to be seen in the unsealed version is still whether misappropriation happening entirely within a foreign country is actionable in the ITC. If so, there are many, many more claims that can be brought before the commission.