Category: Biotech & Cleantech

Patent Safe Harbor Applies To Supplemental New Drug Applications

On May 13, 2015, the Federal Circuit confirmed in Classen Immunotherapies, Inc. v. Elan Pharmaceuticals, Inc. that the safe harbor provisions of 35 U.S.C. § 271(e)(1) can shield post-FDA approval activities from liability for patent infringement when the activities generated information that was submitted to the FDA to support a supplemental New Drug Application andCitizen’s Petition. However, the Federal Circuit remanded the case to the district court to determine whether other allegedly infringing activities, such as using the information to file a patent application, also were shielded by the statute.

The Claims At Issue

The patent at issue was Classen’s U.S. 6,584,472, directed to a method for accessing and analyzing data on a commercially available drug to identify a new use of that drug, and then commercializing the new use. Claim 36 (which depends from claim 33, which was canceled during reexamination) is representative of the asserted method claims, and claim 59 is representative of the asserted kit claims:

33. A method for creating and using data associated with a commercially available product, wherein the method comprises the steps of:
accessing at least one data source, comprising together or separately, adverse event data associated with exposure to or use of the product and commercial data regarding marketing, sales, profitability or related information pertaining to the product;
analyzing the accessed data to identify (i) at least one new adverse event associated with exposure to or use of the product, (ii) at leastone new use for the product responsive to identification of the at least one new adverse event, and (iii) the potential commercial value of the at least one new use for the product; and
commercializing the newly identified product information based upon the analyzed data.

36.  The method of claim 33, wherein the commercializing step comprises formatting the data relating to at least one new adverse event associated with exposure to, or use of the product, or documenting same, such that a manufacturer or distributor of the product must inform consumers, users or individuals responsible for the user, physicians or prescribers about at least one new adverse event associated with exposure to or use of the product.

59.  A proprietary kit comprising (i) product and (ii) documentation notifying a user of the product of at least one new adverse event relating to the product, wherein determination of the new adverse event is based upon the data provided by the method of claim 36.

Footnote 1 of the Federal Circuit decision states, “Because issues of validity are not before us in this appeal, we express no opinion as to whether the asserted claims cover patent ineligible subject matter in light of the Supreme Court’s decision in Alice Corp. v. CLS Bank International, 573 U.S. __, 134 S. Ct. 2347 (2014).”

Procedural Background

Classen asserted U.S. Patent No. 6,584,472 against Elan, alleging that Elan infringed the patent by (i) studying the effect of food on the bioavailability of the FDA-approved muscle relaxant Skelaxin, (ii) using the clinical data to identify a new use for the drug, and (iii) commercializing the new use. In particular, after Skelaxin was approved, Elan conducted clinical studies on the effect of the drug when administered with or without food, and then submitted the results to the FDA when seeking approval of a supplemental New Drug Application (“sNDA”) to revise the labeling for Skelaxin and in a Citizen’s Petition proposing changes to the approval requirements for generic versions of Skelaxin. Additionally, Elan filed patent applications based on the new clinical data and sold kits with the revised label containing information derived from the data.

The U.S. District Court for the District of Maryland granted Elan’s motion for summary judgment of non-infringement, finding that Elan’s activities were “reasonably related to the submission of information” under the Federal Food, Drug, and Cosmetic Act (FDCA), and were therefore protected by the safe harbor provision of 35 U.S.C. § 271(e)(1). Classen appealed to the Federal Circuit.

The Federal Circuit Decision

The Federal Circuit decision was authored by Judge Lourie and joined by Chief Judge Prost and District Judge Gilstrap (of the Eastern District of Texas) sitting by designation.

On appeal, Classen argued that Elan’s activities are not exempt under the safe harbor because they involved merely “routine” post-approval reporting to the FDA, which the Federal Circuit held in its 2011 decision in Classen Immunotherapies, Inc. v. Biogen IDEC lies outside the scope of the § 271(e)(1) safe harbor.

This statute provides in relevant part:

It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention . . . solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs . . . .

In Classen v. Biogen, the court indicated that the safe harbor applies only to pre-marketing activities, and held that the safe harbor “does not apply to information that may be routinely reported to the FDA, long after marketing approval has been obtained.” However, a year later in Momenta Pharmaceuticals, Inc. v. Amphastar Pharmaceuticals, Inc., the Federal Circuit held that the safe harbor can shield post-approval activities from giving rise to liability for patent infringement where the information submitted to the FDA “is necessary both to the continued approval of the ANDA and to the ability to market the … drug.” Thus, it is not surprising that in this case the Federal Circuit noted that the statutory language does not “categorically exclude post-approval activities from the ambit of the safe harbor.”

Turning to the activities at issue, the Federal Circuit found that post-approval studies conducted to support an sNDA “serve similar purposes as pre-approval studies in ensuring the safety and efficacy of approved drugs.” Thus, the court reasoned, “As an integral part of the regulatory approval process, those activities are ‘reasonably related to the development and submission of information’ under the FDCA, 35 U.S.C. § 271(e)(1), and are therefore exempt from infringement liability.” The court  therefore concluded that the post-approval clinical trials, sNDA and Citizen’s Petition “clearly fall within the scope of the safe harbor.”

Although the Federal Circuit remanded to the district court to determine whether Elan’s activities related to “reanalyzing the clinical data to identify patentable information and filing patent applications are commercial activities outside the scope of the safe harbor,” and whether “selling Skelaxin with the revised label that contained the information derived from the clinical study” infringed the Classen kit claims, the court took it upon itself to “assist the district court in its analysis of infringement . . . [by] mak[ing] the following observations of the record:”

  • Filing a patent application is generally not an infringement of a patent

  • Filing a patent application is not commercialization of an invention, and so a method claim requiring commercialization is likely not infringed by Elan’s actions

  • Placing information submitted to the FDA on a product label generally cannot be an act of infringement.

Given these “observations,” it seems unlikely that the district court will find that Elan infringed the claims at issue.

The Wide Mouth of the Safe Harbor

This decision is one of many Federal Circuit decisions that broadly construe the safe harbor of § 271(e)(1). Indeed, less than one year after the court seemed to draw a bright line around the scope of the safe harbor that excluded post-approval activities, the court blurred that line in Momenta and now it has erased it further in this case.

The Commercial Value of Patent Applications

Although the Federal Circuit’s “observation” that filing a patent application generally is not an act of infringement may be correct, we question its suggestion that filing a patent application is not a commercial activity. To the contrary, filing a patent application can be an essential step of a commercialization plan, and can increase the commercial value of the invention. On the other hand, we would agree that it is unusual that a patent could be infringed by “commercializing … information,” as recited in the Classen patent.

FDA Issues Final Guidance on Biosimilars

Shortly after approving the first biosimilar under the abbreviated approval pathway created by the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), the FDA has recently issued 3 final guidances regarding biosimilars. Biological products, or “biologics,” are pharmaceutical products created from biological sources. Unlike chemically synthesized pharmaceuticals, biologics are isolated from natural sources, and are typically more complex than conventional pharmaceutical drugs.

The BPCIA provides abbreviated pathways for the FDA to approve two types of follow-on biologics: biosimilar and interchangeable biological products. Similar to the 1984 Hatch-Waxman Act’s abbreviated pathway for pharmaceuticals, the BPCIA allows a sponsor to seek approval of a “biosimilar” product under section 351(k) of the Public Health Service Act (“PHS Act”) by relying on certain existing scientific knowledge about the safety, purity, and potency of the reference product. The BPCIA defines “biosimilar” as (1) “highly similar to the reference product notwithstanding minor differences in clinically inactive components” and (2) having “no clinically meaningful differences between the biosimilar product and the reference biological product in terms of the safety, purity, and potency of the product.” To meet the higher standard of “interchangeability,” the application must further show (1) the biosimilar is expected to produce the same clinical result as the reference product and (2) a patient can switch back and forth between the biosimilar and the reference product with no adverse effects.

The BPCIA provides abbreviated pathways for the FDA to approve two types of follow-on biologics

The FDA has been slow to accept and approve biosimilar applications, which has left open questions about how to establish biosimilarity and interchangeability under the statutory definitions. On April 28, 2015, the FDA finalized three draft guidances originally published in 2012:

  • Biosimilars: Questions and Answers Regarding Implementation of the Biologics Price Competition and Innovation Act of 2009

  • Scientific Considerations in Demonstrating Biosimilarity to a Reference Product

  • Quality Considerations in Demonstrating Biosimilarity of a Therapeutic Protein Product to a Reference Product

The new guidances provide insight into the FDA requirements for establishing biosimilarity.

Biosimilars: Questions and Answers Regarding Implementation of the Biologics Price Competition and Innovation Act of 2009

This final guidance addresses three categories of commonly asked questions regarding FDA implementation of the BPCIA: (1) biosimilarity or interchangeability; (2) definitions relevant to the BPCIA; and (3) exclusivity. With regard to biosimilarity or interchangeability, the guidance states that a proposed biosimilar may have a different formulation, delivery device, or container closure than the reference product under certain circumstances. Additionally, the guidance discloses conditions permitting an applicant to obtain licensure for fewer than all routes of administration, presentations, and conditions of use for which the reference product is licensed. Further, the guidance describes conditions in which a sponsor may support biosimilarity using comparative data with a non-U.S.-licensed product or extrapolated clinical data designed to support a different condition of use. The guidance additionally instructs applicants how to describe the “strength” of a proposed injectable biosimilar. Finally, the guidance states that a biosimilar product that cites a reference product subject to the Pediatric Research Equity Act must include a pediatric assessment unless the applicant initially seeks approval as an interchangeable biological product.

With regard to the BPCIA’s definition of “biological product,” the guidance discloses the FDA’s regulatory definitions of “protein” and “chemically synthesized polypeptide.” Additionally, it defines when a proposed biological product is considered to be within the same “product class” as previously approved protein products.

With regard to exclusivity, the guidance instructs applicants and sponsor to search an online database to identify whether the reference product is subject to unexpired orphan exclusivity. The FDA will not approve a biosimilar during the 7-year exclusivity period.

Scientific Considerations in Demonstrating Biosimilarity to a Reference Product
This final guidance provides an overview of the FDA’s recommendations for establishing biosimilarity and discusses in detail relevant scientific principles for designing data and information to show biosimilarity. The FDA stresses that it will apply a totality-of-the-evidence approach in its assessment of biosimilarity and will use a risk-based approach to evaluate all data and information submitted. The FDA further emphasizes that the information sufficient to demonstrate biosimilarity will be determined on a product-specific basis.

The BPCIA requires an application to include analytical, animal, and clinical studies demonstrating that the biological product is “biosimilar” to a single reference product. As discussed above, the application must establish the product is “highly similar” to the reference product and has “no clinically meaningful differences.” Although the reference product must be U.S.-licensed, the application may rely on data from comparative studies with a non-U.S. licensed comparator product if the data is scientifically relevant. Because the FDA has discretion to determine what data is required to establish biosimilarity in a particular application, it encourages sponsors of the application to meet with the FDA early during product development to discuss adequate scientific justifications.

The FDA encourages sponsors to use a three step approach to develop evidence necessary to establish biosimilarity.

First, the sponsor should characterize the structural and functional aspects of both the proposed product and the reference product to identify potentially clinically relevant safety or efficacy risks. Structural analyses must use “state-of-the-art technology” to analyze multiple representative lots and show the proposed product will encode the same primary amino acid sequence as the reference product. Any minor modifications must be explained by the sponsor. The structural analyses for all relevant characteristics of the protein product (such as primary, secondary, tertiary, and quaternary structure; posttranslational modifications; and biological activities) must also be included. The FDA further recommends structural analysis of the finished dosage form to assess the effect of excipients or any other formulation effects. In vitro and/or in vivo functional assays must also be used to evaluate the pharmacologic activity of protein products.

Second, the sponsor should demonstrate safety and biosimilarity through animal studies. These studies generally do not establish safety, but are relevant to support the demonstration of biosimilarity through evidence of PK and PD measures. Nevertheless, animal toxicity and immunogenicity studies may be useful where uncertainty about safety remains after the initial structural and functional characterization.

Third, the sponsor should conduct comparative human PK and PD studies and a clinical immunogenicity assessment of the two products in an appropriate study population. The sponsor should discuss study proposals and overall clinical development plan with the FDA before initiating such studies. A sponsor should provide adequate scientific justification for choices in study design, population, endpoints, and other parameters. Human PK and PD measures comparing the proposed product to the reference product are typically fundamental to demonstrate biosimilarity. Even where relevant PD measures are not available, sensitive PD endpoints may be assessed. The FDA further expects at least one comparative clinical study regarding immunogenicity in order to assess the safety and effectiveness of the proposed product. The overall immunogenicity assessment should consider the nature of the immune response, the clinical relevance and severity of consequences, the incidence of immune responses, and the population being studied. Generally, the FDA expects studies to present statistical evidence that the proposed product is neither significantly inferior nor superior to the reference product. An applicant may provide sufficient scientific justification to extrapolate clinical data to support a determination of biosimilarity for various indications.

If there is uncertainty at each step, the sponsor should evaluate the uncertainty and consult with the FDA to adequately address it.

Quality Considerations in Demonstrating Biosimilarity of a Therapeutic Protein Product to a Reference Product

This guideline relates to the biosimilarity of therapeutic protein products and describes nine factors that are relevant in developing analytical studies to show a proposed product is “highly similar” to a reference product.

1. Expression System. The application should seek to minimize differences between the proposed and referenced expression systems. The FDA expects the expression construct for a proposed product encodes the same primary amino acid sequence as its reference product. However, minor modifications (such as N- or C- terminal truncations) that are not expected to change the product performance may be justified.

2. Manufacturing Process. The application should demonstrate its manufacturing process does not result in significant differences between the proposed product and its reference product.

3. Assessment of Physiochemical Properties. Physicochemical assessments are designed to maximize the potential for detecting differences between the proposed and reference products. The sponsor should consider all relevant characteristics of the protein product and design tests to account for the heterogeneity of the proposed product and the reference product as well as the ranges of variability for each.

4. Functional Activities. Functional assays are designed to complement physicochemical analyses and evaluate the function of the protein product. Sponsors should perform appropriate assays to evaluate the range of relevant functional activities for a product.

5. Receptor Binding and Immunochemical Properties. Sponsors should analyze specific binding or immunochemical properties when they are part of the activity attributed to the protein product.

6. Impurities. Sponsors should characterize, identify, and quantify impurities in the proposed product and reference product. Sponsors should further perform a risk-based assessment regarding any differences in process-related impurities between the proposed and reference products.

7. Reference Product and Reference Standards. Sponsors should provide a broad comparison of the proposed product to the reference product that is not strictly limited to analysis of each product in isolation. For example, the biosimilarity analysis may further consider applicable reference standards and relevant publicly available information.

8. Finished Drug Product. Product characterization studies should be performed on the most downstream intermediate best suited for each analytical procedure. Thus, sponsors should analyze the finished drug product if it is best suited for a particular analysis. If the analysis is performed on an earlier intermediate, sponsors should provide additional information. Additionally, sponsors should clearly identify excipients used in the proposed product that differ from those in the reference product.

9. Stability. Sponsors should include comparative studies conducted under multiple stress conditions to establish degradation profiles of the proposed and reference product.

Conclusion

The recently issued final guidances provide insight into how the FDA will evaluate biosimilarity and directions for sponsors throughout product development. However, many additional questions surrounding the BPCIA remain. For example, the currently issued guidances do not address how the FDA will determine “interchangeability.” Interchangeable drugs are likely to be more profitable than mere biosimilars because they can be sold in place of the reference drug without a prescribing doctor’s approval.

Upcoming draft guidances plan to provide additional information regarding the required scientific requirements for establishing biosimilarity and interchangeability as well as naming and labeling requirements for approved biosimilars. In January, the FDA’s Center for Drug Evaluation and Research (CDER) announced plans to publish five draft guidances on biosimilars in 2015:

  • Biosimilars: Additional Questions and Answers Regarding Implementation of the Biologics Price Competition and Innovation Act of 2009

  • Considerations in Demonstrating Interchangeability to a Reference Product

  • Labeling for Biosimilar Biological Products

  • Nonproprietary Naming for Biological Products

  • Statistical Approaches to Evaluation of Analytical Similarity Data to Support a Demonstration of Biosimilarity

ARTICLE BY Imron T. Aly, Sailesh K. Patel, John K. Hsu and Helen H. Ji of  Schiff Hardin LLP
© 2015 Schiff Hardin LLP

FDA Finalizes Guidance Documents on Biosimilarity

On Tuesday, and over three years after the initial guidance documents were released, the US Food and Drug Administration released final versions of three guidance documents discussing how FDA will evaluate applications for regulatory approval of biosimilar products:

•Scientific Considerations in Demonstrating Biosimilarity to a Reference Product

•Quality Considerations in Demonstrating Biosimilarity of a Therapeutic Protein

•Questions and Answers Regarding Implementation of the Biologics Price Competition and Innovation Act of 2009

Draft versions of the guidance documents were originally released by FDA for public comment in February 2012. In general, the final versions released Tuesday track the draft versions fairly closely, with a few noteworthy differences.

The guidance documents reiterate that the FDA will use a totality of the evidence approach to review applications for biosimilar products, and encourages a stepwise approach to demonstrating biosimilarity which with rare exceptions will include a comparison of the proposed biosimilar product with the reference product in terms of structure, function, animal toxicity, human pharmacokinetics (PK) and pharmacodynamics (PD), clinical immunogenicity, and clinical safety and effectiveness. This stepwise approach is intended to better address residual uncertainty about biosimilarity that might remain at each step of the approval process.

The final guidance documents contain a few changes from the draft versions that are noteworthy:

•Most of the discussion of issues related to demonstrating the heightened standard for interchangeability was removed from the guidances with a note that it will be the subject of a separate guidance document that is forthcoming.

•The final guidances reiterate that, in most instances, a sponsor will need to provide information to demonstrate biosimilarity based on data directly comparing the proposed biosimilar product to FDA-approved reference product. However, they elaborate on the type of bridging data needed when a biosimilar applicant seeks to use a non-US licensed comparator product to support a demonstration of biosimilarity.

•Specific comments have been provided for biosimilar developers considering manufacturing/process changes after completing the initial analytical similarity assessment including a requirement to demonstrate comparability between the pre- and post-change proposed product.

•More detailed comments regarding animal toxicity studies were added.

•Previous Q and As relating to what constitutes the “publicly-available information” that should be included in a 351(k) application and whether an applicant can include a request for reference product exclusivity in its 351(a) application were deleted – an indication that the FDA is still considering its position on these points.

Authored by: Paul A. Calvo, Ph.D. and Timothy J. Shea, Jr., PhD. by Sterne Kessler

© 2015 Sterne Kessler

Grants Available for Specialty Crops – March 26 Deadline

Varnum LLP

In early February 2015, a spokesperson for the Michigan Department of Agricultural and Rural Development (MDARD)announced the availability of a series of grants for Michigan specialty crop growers. The grants are funded by the Crop Block Grant Program, an initiative of the United States Department of Agriculture Ag Marketing Servicesprogram.

The grants are designed to increase the competitiveness of Michigan’s specialty crops sector. Funding will go toward myriad uses, including – but not limited to – research, education, marketing, nutrition, food safety, environmental concerns, and the general promotion of the specialty crop industry.

The grants will likely range from $10,000 to $100,000. Applications are due to MDARD no later than 3 p.m. on March 26, 2015. Eligible applicants include non-profits; local, state and federal governmental entities; and for-profit organizations.

ARTICLE BY

Aaron M. Phelps
John W. Sturgis VII
OF
Varnum LLP

Life Sciences: Protecting the Crown Jewels

Sills Cummis & Gross P.C

An innovator or owner of patent rights or other technology in the life sciences arena is often unable, because of lack of financial or other resources, to develop or commercialize a pharmaceutical product covered by such intellectual property rights. In these cases, the innovator/owner (the licensor) will frequently out-license the invention to a third party (the licensee) for development and commercialization by such licensee. The resulting license agreement can be a complicated document. In this article, I will address some of the important licensing considerations that a licensor should take into account before executing a license agreement.

Consider the Exclusivity v. Non-exclusivity of the License Grant

An initial consideration in a license agreement is whether the license grant will be exclusive or non-exclusive to the licensee. If the license grant is exclusive, then the licensor typically agrees not to grant a license to any third party. If the license grant is non-exclusive, then the licensor typically is permitted to grant further licenses to third parties. Even in an exclusive license, however, the licensor may want to retain certain rights for itself. For instance, the licensor may want to preserve for itself the right to enter into certain geographical markets or fields of use. The parties should be very clear in the license agreement as to whether or not the licensor is permitted to exercise any R&D, commercialization or other rights during the term of the license agreement.

Whether a license is exclusive or nonexclusive will set the tone for the associated rights and obligations of the parties set forth in the remainder of the license agreement. For example, an exclusive licensee is usually subject to “diligence” obligations, requiring it to exploit the licensed technology in order to maintain the license grant; a non-exclusive licensee is usually subject to limited or no such obligations. Also, an exclusive licensee usually has more rights than a non-exclusive licensee with respect to the prosecution, maintenance, defense and enforcement of patent rights.

Also Consider the Scope of the “Field of Use” and “Territory”

Other important initial considerations in the license agreement are the scope of the licensed field of use and the scope of the licensed territory. A “field of use” defines the field in which the licensee may exercise the licensed rights and may take one of many forms. For example, the field of use may be all encompassing (“any and all fields and applications”), may be limited to only therapeutic or only diagnostic products, may be limited to only biologics or only small molecule products, or may be limited to a specific medical indication (e.g., cardiac indications). Especially in the case of an exclusive license (and based on the nature of the licensee), it is sometimes better for the licensor to limit the field of use. Then the licensor would be permitted to grant subsequent rights to other parties in the non-licensed fields. Alternatively, if the field of use is broad, the licensor should require that the licensee actually exercise its rights in certain specified fields in order to maintain such rights. If the licensee fails to exercise its rights in a specified field of use within a certain period of time, the licensor’s remedies could include the right to terminate the license agreement in its entirety, the right to terminate the license agreement with respect to one or more specific fields and/or the right to convert an exclusive license grant in such field to a non-exclusive grant.

Considerations regarding the “territory” are very similar to the considerations regarding the field of use. Often, in order to maintain an exclusive worldwide territory grant, the licensee is required to exploit the licensed technology in specified countries. For example, the licensee may be required to develop and commercialize a product covered by the licensed technology (licensed products) in the United States and at least one other “major market country” (e.g., Japan, France, Germany, Italy, Spain and the United Kingdom). Again, the licensor’s remedies for the licensee’s failure to satisfy this obligation could be similar to the remedies set forth above for field of use.

Maximize the Royalty Payments

Pursuant to the terms of the license agreement, the licensee will most likely be required to pay to the licensor a royalty based on sales of licensed products. Although the determination of the amount of royalty is in large part a business decision and takes into consideration, among other things, the scope and strength of the licensed patent and other intellectual property rights, the breadth of the field of use and territory, whether the licensed product is a therapeutic product (typically a higher royalty rate) or a diagnostic product, and whether the license grant is exclusive or non-exclusive, there are many important legal nuances that the licensee could and should consider. One such nuance is the calculation of “net sales.”

The amount of royalty owed by the licensee is normally calculated by multiplying the royalty rate by the amount of sales of the licensed products. The royalty rate does not need to be a flat rate and could be graduated, for example, with a rate change as sales increase. In determining the “sales” portion of the royalty calculation, it is more advantageous to the licensor that sales be based on amounts invoiced (as opposed to amounts received) by the licensee, thus keeping the risk of bad debt (i.e., a sales amount is invoiced but not actually received by the licensee) with the licensee. Also, although “net sales” (as opposed to “gross sales”) is the usual royalty base, the licensor should restrict the deductions taken into account to determine such net sales. For example, although the “net sales” calculation frequently includes deductions from gross sales for governmental taxes and charges, customer credits and rebates, and transportation, storage and insurance expenses, the licensor should avoid less typical deductions such as sales commissions owed by the licensee or a catch-all deduction for “other reasonable deductions.”

Ensure That the Inventions Are Fully Exploited

Once a licensor licenses its invention to a third party in an exclusive license arrangement, the licensor will lose much control over the day-to-day use of the technology. It is imperative that the licensor requires the licensee to actually exploit the technology in a timely manner and devote sufficient time, money and resource to such exploitation. Almost all exclusive patent or technology license agreements contain a “diligence” provision requiring the licensee to employ certain efforts with respect to the research, development and commercialization of licensed products. Generally, the diligence requirement provides that the licensee must use “commercially reasonable efforts” to advance the product through the pipeline and sale process. However, the meaning of “commercially reasonable efforts” is not precise and the two parties to the contract could interpret the phrase, and the corresponding diligence requirement, quite differently.

A prudent licensor defines the diligence requirement more exactly. Ideally, the diligence requirement would be accompanied by diligence milestones, contractually obligating the licensee to reach certain developmental, regulatory or sales milestones by certain target dates or to spend a certain dollar amount on the licensed product in a given time period. Additionally, different diligence standards could apply with respect to different jurisdictions. If the licensee fails to meet its target, the licensor would be entitled to one or more remedies such as a financial payment from the licensee or a right of termination.

Maintain Control over Patent Prosecution

In an exclusive patent license arrangement, the licensee usually pays for the costs associated with patent prosecution and maintenance. Even in a non-exclusive arrangement, the licensee could be required to pay for a portion of such amounts. Though the licensor bears some or all of the patent prosecution and maintenance expenses, the licensor should ensure that it ultimately has control. Ideally, the license agreement should provide that the licensor controls the prosecution and maintenance, perhaps with counsel reasonably acceptable to the licensee. The licensor could allow the licensee to provide input into where (which jurisdictions) the licensor will prosecute and maintain the patents. However, the licensor should have the final say as to the scope and jurisdiction of the patent filings. In order to address a licensee’s concern that it would be required to pay for expenses in jurisdictions where the licensee does not deem patent coverage to be necessary or desirable, the license agreement could provide that the licensee may notify the licensor that the licensee will not pay the patent costs in a particular jurisdiction – in which case the licensee would probably lose its license rights (or at least its exclusivity, in the case of an exclusive license grant) with respect to such jurisdiction.

Carefully Consider Termination Provisions

A license agreement includes customary termination provisions. For example, each party usually has the right to terminate the agreement in the case of an uncured material breach by the other party. Additionally, the licensee typically has the right to terminate the license agreement for convenience (without cause) following some notice period (e.g., 90 days). Following termination of the license agreement, the licensor may want to either resume R&D or commercialization efforts on its own or re-license the technology to another suitable third party. In order to avoid the need to duplicate efforts (and expenditures) of the first licensee, the licensor should give careful consideration to the termination provisions in the license agreement. Ideally, if the licensee terminates the license agreement for convenience (i.e., the licensee walks away from the technology) or the licensor terminates the license agreement because of an uncured material breach by the licensee, the licensee would be required to automatically assign to the licensor, for no additional consideration or for some agreed upon payment, all of the results, know-how and intellectual property generated by or on behalf of the licensee under the license agreement and all regulatory files, regulatory approvals and other rights related to the licensed product. Thus, the licensor or its new licensee would be able to capitalize on the past work performed by the licensee, expedite timelines and reduce expense.

All or some of the points described above could be very important to a licensor. Although the interrelation of these and various other provisions in a license agreement are complex, by understanding the unique issues and concerns that arise when analyzing and negotiating a license agreement, the licensor is better able to protect its invention and ultimately increase its profit.

ARTICLE BY

Lori M. Waldron
OF
Sills Cummis & Gross P.C.

This article appeared in the February 2015 issue of The Metropolitan Corporate Counsel.  The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect those of Sills Cummis & Gross P.C.   Copyright © 2015 Sills Cummis & Gross P.C.  All rights reserved.”

Federal Circuit’s Sandoz Decision Increases Importance of Post-Grant Proceedings to Biosimilar Developers

Sterne Kessler Goldstein Fox

On Friday, December 5, the U.S. Court of Appeals for the Federal Circuit rendered its decision in Sandoz v. Amgen, No. 2014-1693, a case with major implications for the emerging U.S. biosimilars industry. The decision addresses when and how a party seeking to launch a biosimilar product in the U.S. can initiate litigation to challenge the brand company’s potential blocking patents. This is the first instance in which the Federal Circuit has had the opportunity to address the scope and applicability of the Biologics Price Competition and Innovation Act (BPCIA), which established a formal pathway for biosimilar approval in the US.

Background

At issue in Sandoz is a litigation Sandoz, Inc. initiated against Amgen, Inc. and Hoffman-La Roche Inc. on June 24, 2013. Sandoz’s complaint seeks a declaratory judgment (DJ) that two patents owned by Roche and exclusively licensed to Amgen are invalid, unenforceable, and would not be infringed by the commercial marketing of Sandoz’s biosimilar version of Amgen’s blockbuster biologic product Enbrel® (etanercept). The patents at issue extend Amgen’s protection around etanercept an additional 15 years past the original patents. Sandoz filed its complaint against Amgen prior to filing any application with the FDA for approval to market its biosimilar etanercept product, which is currently in Phase III clinical trials. Sandoz will not file with the FDA until the Phase III trial is complete, and of course will not be able to market its version of etanercept in the US without FDA approval. At the time of suit, Amgen had not alleged Sandoz was currently doing anything that exposes it to liability for infringing Amgen’s patents rights around Enbrel®.

The District Court Decision

Amgen moved to dismiss Sandoz’s complaint, asserting that the court lacked jurisdiction to hear the case because no immediate and real controversy between the parties exists. In a brief order, the court granted Amgen’s motion to dismiss on two separate grounds. First, the court ruled that its discretion to enter a DJ in the case is subject to the provisions of the BPCIA, which sets specific limitations on the timing and conduct of any litigation arising from the filing of an application for approval to market a biosimilar. The court concluded that “neither a reference product sponsor, such as Amgen, nor [a biosimilar applicant] such as Sandoz, may file a lawsuit unless and until they have engaged in a series of statutorily–mandated exchanges of information” related to patents potentially in dispute. In this case, Sandoz had not complied with the exchanges as it had not even started the process by filing its application with the FDA.

Second, the court found that Sandoz had not established jurisdiction under traditional grounds because it had not established a real and immediate injury or threat of future injury caused by Amgen. The court noted that Amgen had never advised Sandoz that it intended to sue Sandoz, and that the mere allegation by Sandoz that it intended to file an application for FDA approval in the future was not sufficient to create a case on controversy. Sandoz appealed the district court order dismissing the action.

The Federal Circuit Decision

On appeal, Sandoz argued that the litigation provisions of the BPCIA only govern the statutory patent infringement litigation authorized by the Act after a biosimilar application is filed with the FDA, and do not apply to DJ actions in general. Sandoz further argued that nothing in the BPCIA can be construed to bar or limit in any way the ability to bring DJ actions to resolve patent disputes prior to filing a biosimilar application. Finally, Sandoz argued that the district court erred in concluding that Sandoz had not adequately demonstrated a sufficient actual case or controversy sufficient to allow the DJ action to proceed.

The Federal Circuit panel affirmed the district court’s dismissal of Sandoz’s complaint, concluding that Sandoz had not alleged an injury of sufficient immediacy and reality to create subject matter jurisdiction. The Federal Circuit noted that “a case of actual controversy” is a prerequisite to exercising declaratory judgment jurisdiction. The test for determining whether a case or controversy exists is whether “ there is a substantial controversy . . . of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” The Federal Circuit, however, declined to address the lower court’s interpretation of the BPCIA as barring a lawsuit by either the reference product sponsor or the biosimilar applicant unless and until the parties have engaged in the statutorily-mandated patent information exchanges.

In concluding that Sandoz’s complaint does not present a case or controversy, the Federal Circuit panel noted that there was no prior decision in which the Federal Circuit had found a case or controversy to exist when the only activity that would create exposure to potential infringement liability was a future activity requiring FDA approval that had not yet been sought. The court found the immediacy requirement lacking where the conclusion of Sandoz’s Phase III trial, which was a prerequisite for filing for FDA approval, was still several years away when Sandoz filed suit. The court refused to assume that the Phase III trial would be successful, and noted that the trial could in fact uncover issues with Sandoz’s product that could push the application filing date back even further. Alternatively, the clinical trial could fail resulting in Sandoz never seeking FDA approval, or Sandoz could modify its proposed product and file for approval on the modified product. The court also noted that Sandoz’s complaint lacked specificity as to how Amgen’s patents read or don’t read on Sandoz’s product; and instead relies on prior general assertions by Amgen that the patents at issue cover Enbrel, that Amgen will assert the patents against products that compete with Enbrel, and that Sandoz intends to market a competing product at some point in the future. Ultimately, the court concluded that the events allegedly exposing Sandoz to infringement liability may not occur as anticipated or may not occur at all. The court found that Sandoz also had not shown that it would suffer any “immediate and substantial adverse impact” from not being able to seek or secure a patent adjudication before filing its application for FDA approval.

Unanswered Questions

The Federal Circuit specifically stated that its decision was limited to the particular facts before it, and does not address whether Sandoz would be able to seek declaratory judgment jurisdiction once it files its FDA application, or whether the BPCIA forecloses declaratory judgment actions outside of the statutorily-mandated patent information exchange once the application is accepted by the FDA. The decision also did not clarify the additional issue disputed by the parties concerning what constitutes sufficient “notice of commercial marketing,” which the BPCIA states must be provided by the biosimilar applicant prior to launch.

Increased Important of Post-Grant Proceedings before the USPTO

Although the Sandoz court made a point to limit the scope of its decision to the facts before it, the decision casts substantial doubt on the ability of any biosimilar developer to bring a district court action challenging the reference product sponsor’s patents prior to filing a biosimilar application with the FDA and triggering the patent information exchange provisions of the BPCIA. At the same time, the decision elevates the importance to biosimilar developers of post-grant challenges before the U.S. Patent and Trademark Office, such as inter partes review (IPR) and post-grant review (PGR), as means for obtaining some degree of early patent certainty before initiating the FDA approval process. IPRs in particular have proven to be a potent weapon for generic drug manufacturers in the context of ANDA litigation. The lower standard of proof required to show invalidity, the expedited pace of the proceedings, and the decreased cost in comparison to district court litigation coupled with the extremely high rate in which patent claims are being invalidated provide generic manufacturers with tremendous leverage to obtain favorable settlements with brand companies. We expect that the Sandoz decision should only increase the speed with which post-grant proceedings are adopted in the biosimilar arena.

ARTICLE BY

Timothy J. Shea, Jr., PhD.
Paul A. Calvo
OF
Sterne, Kessler, Goldstein & Fox P.L.L.C.

Antares Pharma Bolsters the “Original Patent” Rule for Reissued Patents

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On November 17, the Federal Circuit decided Antares Pharma, Inc. v. medac Pharma Inc., holding reissued patent claims invalid for failing to comply with the “original patent” requirement of 35 U.S.C. § 251. The court’s decision casts a spotlight on the original patent rule and reinvigorates the little-used doctrine as an invalidity defense against reissued patent claims.

In Antares Pharma, the plaintiff alleged infringement of U.S. Patent RE44,846. Specifically, the plaintiff asserted four claims that had been added through reissue proceedings to broaden the original patent. The original claims were directed to various embodiments of a jet injection device, and the asserted reissue claims covered particular safety features for any injection device. The patentee sought a preliminary injunction, which the district court denied. The court found substantial questions of validity regarding whether the reissued claims impermissibly recaptured subject matter surrendered during prosecution to obtain the original claims.

On appeal, the Federal Circuit declined to address the recapture issue. The court instead decided the case by invoking the original patent rule, an issue that had been argued but not resolved below.

Section 251, which governs reissue applications, states in pertinent part that where a patentee has by error claimed more or less that it had a right to claim in a patent, the Patent Office will “reissue the patent for the invention disclosed in the original patent.” The italicized provision had previously been applied in a manner analogous to the written description requirement to require that reissue claims found adequate support in the disclosure of the original patent. In Antares Pharma, however, the Federal Circuit turned to Supreme Court precedents dating back as far as 1854 to read a more stringent standard into the “original patent” provision of § 251. In particular, the court held that whether or not the written description requirement was satisfied, “the specification must clearly and unequivocally disclose the newly claimed invention as a separate invention.”

Applying that standard to the reissue claims on appeal, the court not only affirmed the denial of a preliminary injunction, but also held the asserted reissue claims invalid as a matter of law. The court concluded that the safety features claimed during reissue were never described separately from the jet injector or disclosed in the particular claimed combinations. Because the original specification lacked “express disclosure” of the exact embodiments recited in the reissue claims, those claims failed to satisfy the original patent requirement.

The Antares Pharma decision provides guidance to potential reissue applicants and offers a significant new weapon for parties accused of infringing a reissued patent. For patentees, the decision expands the risks associated with using a reissue application to seek supplemental or complementary patent protection—the reissue applicant not only risks intervening rights and undesirable modification or loss of previously issued claims, but now faces a heightened requirement, not applicable to continuing applications, for clear and unequivocal disclosure of the newly claimed subject matter as a separate invention. To the extent practical, new applications should clearly set forth each potential invention with detailed examples. For parties accused of infringement, the exacting Antares Pharma standard will provide an additional, robust basis for validity challenges against asserted reissue claims during litigation.

ARTICLE BY

Andrew T. Dufresne
Marshall J. Schmitt
OF
Michael Best & Friedrich LLP

Timeliness – The Devil Is in the Details (a.k.a. Rules)

Mcdermott Will Emery Law Firm

GEA Process Engineering, Inc. v. Steuben Foods, Inc.

In an order issued by the Patent Trial and Appeal Board (PTAB or Board), the Board expunged exhibits from the records of five related cases on the basis of timeliness. GEA Process Engineering, Inc. v. Steuben Foods, Inc., Case Nos. IPR2014-00041, IPR2014-00043, IPR2014-00051, IPR2014-00054, IPR2014-00055 (PTAB, Sept. 29, 2014) (Elluru, APJ).

In post-grant proceedings, it is important to note that there are two different deadlines for objecting to evidence.  Prior to institution, a patent owner is required to object to evidence submitted to the PTAB with the petition within 10 business days of institution of a trial. Once the trial has begun, i.e., after institution, a party seeking to object to the introduction of evidence or an exhibit must raise its objection within five business days of service of the evidence or exhibit. The objections should be served on the offering party and not filed with the PTAB.

In GEA Process Engineering v. Steuben Foods, following the institution of trial, the petitioner filed what it characterized as exhibits entitled “Petitioner’s Objections” to the patent owner’s evidence. However, the PTAB expunged the exhibits from the records of all five cases. As the Board explained, the applicable rule, 37 C.F.R. § 42.64(b)(1), requires that “[o]nce a trial has been instituted, any objection [to evidence] must be served within five business days of service of evidence to which the objection is directed.” As such, the petitioner’s filingits objections to the patent owner’s evidence, at the Board was improper—a potentially costly mistake.

ARTICLE BY

Ryan Edmond Vachon
OF
McDermott Will & Emery

Ebola and Bribery in Liberia?

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With today’s newscasts full of stories about a second Dallas healthcare worker contracting the Ebola virus, people are focused on this woman and the 75 other Dallas healthcare workers (and their pets!) being monitored for symptoms. So what does this have to do with our usual subject of international corruption? Plenty, as it turns out.

More than 4,000 people in Africa have died from the virus. The international community has put on a full court press to contain the virus. But families in Liberia, which is at the epicenter of the epidemic,are reportedly bribing retrieval teams to let them keep their loved ones’ bodies and give them traditional burials. Traditional Liberian funerals include surviving relatives washing the body and keeping it around for a wake that sometimes lasts days, while family and friends stop by to kiss the corpse before it is buried in a shallow grave in the family grave plot nearby.

The Liberian government has ordered that bodies be collected and cremated, and sends retrieval teams out to collect the bodies. But according to news reports, grieving relatives are paying $40 to $150 for death certificates that don’t show Ebola as the cause of death. Having Ebola carries a stigma in Liberia, and it is important to some families that they don’t have to admit that Grandma had the disease. The Liberian government has said that the retrieval teams do not have the authority to issue death certificates, but for $40, they are doing so anyway.

Half of the Ebola deaths have happened in Liberia, so one can imagine the confusion of a young man who lived next door to an Ebola victim. He told the Wall Street Journal that the government tells its citizens to call the body retrieval teams and not to touch the bodies themselves, but then the teams come and don’t insist on taking the corpses. “They told us not to bury the bodies. They told us to call. But now I am not sure if they are the ones trying to eradicate this virus or to make it grow.”

So a small bribe still carries the day in some locations, even in the face of a catastrophic dilemma. Companies doing business, or contemplating doing business, in west Africa are understandably wary of doing so now, and that’s the last thing this impoverished area needs.

“The Good Wife” Defends Genetically Modified Organisms (GMOs)

Schwegman Lundberg Woessner

Last Sunday’s episode of “The Good Wife” featured a Christian mediation between a farmer (Robert Joy) sued by a Pioneer-like company, represented by the actor Richard Thomas, for saving GMO corn seed for replanting. The facts were a mash-up of J.E.M. Ag Supply v. Pioneer Hi-Bred., 534 U.S. 124 (2001), and Monsanto Canada v. Schmeiser, 1 S.C.R. 902 (2004). In the former case, JEM was selling Pioneer’s hybrid seed that had been “saved” by farmers from a previous crop of the seed, in violation of the shrink wrap-type license on the original Pioneer seed they had purchased at JEM. In Monsanto-Canada, a farmer saved and replanted glyphosate-resistant canola seed from a field he claimed was contaminated by “GMO” pollen from neighboring fields.

In J.E.M. Ag Supply, the only defense mounted by J.E.M. was that utility patents should not be issued on plants and, fortunately, the Supreme Court disagreed, in a decision that includes both plants made by conventional breeding techniques and transgenic modifications. In Monsanto Canada, the farmer was found to have infringed Pioneer’s patents.

In the “Good Wife” episode, the farmer was accused of saving seed in violation of the agribusiness’ patents. He argued that his field had been contaminated by “seed” blown from neighboring GMO fields, but Florick Agos presented an expert witness who “testified” that such blow-over would only “contaminate” about 6% of a non-GMO crop per year. The farmer and the agribusinessman were friends and after the farmer admitted he had replanted the transgenic canola, they settled the dispute with the farmer agreeing to pay some small amount of damages, as I recall.

The major issue for patent attorneys working in the ag biotech area (and for agribusiness itself) is the public perception –despite decisions upholding the patentability of plants in the U.S. or of the transgene or the transformed plant cell in Canada—that it is wrong to patent living organisms. At the end of the “Good Wife” mediation scene, one of the parties – the preacher? – exclaims that he is shocked that plants can be patented. J.E.M. was one of the last Supreme Court decisions that expanded the scope of patent rights. The Canadian Supreme Court was divided in ruling for Monsanto. As succinctly summarized by the majority:

“Inventions in the field of agriculture may give rise to concerns not raised in other fields—moral concerns about whether it is right to manipulate genes in order to obtain better weed control or higher yields. It is open to Parliament to consider these concerns and amend the Patent Action should it find them persuasive.”

© 2014 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.
ARTICLE BY

Warren Woessner
OF
Schwegman, Lundberg & Woessner, P.A.