Pay for delay: EU Comission sends objections to J&J and Novartis

As announced today (here) “The European Commission has informed the pharmaceutical companies Johnson & Johnson (J&J, of the USA) and Novartis (of Switzerland) of its objections regarding an agreement concluded between their respective Dutch subsidiaries on fentanyl, a strong pain-killer. The Commission takes the preliminary view that the agreement delayed the market entry of a cheaper generic medicine in the Netherlands, in breach of EU antitrust rules”.

Described facts are:

"Janssen-Cilag, the J&J subsidiary supplying the pain-killer fentanyl in the Netherlands, concluded a so-called "co-promotion agreement" with its close generic competitor Sandoz, a Novartis subsidiary, in July 2005. At the time there were no regulatory barriers to develop and market generic versions of the fentanyl patches and therefore for Sandoz to enter the Dutch market. The agreement foresaw monthly payments from Janssen-Cilag to Sandoz for as long as no generic product was launched in the Dutch market. Consequently, Sandoz abstained from entering the market with generic fentanyl patches for the duration of the agreement from July 2005 until December 2006. This may have delayed the entry of a cheaper generic medicine for seventeen months and kept prices for fentanyl in the Netherlands artificially high."

According to the Press Release, Commission Vice President in charge of competition policy Joaquin Almunia said:

"The Commission is determined to fight undue delays in the market entry of generic medicines so that European citizens have access to affordable healthcare. It is also important to make sure that pharmaceutical companies do not free ride our welfare state and health insurance systems, especially in this period of constraints on public spending"

Time will tell if this commitment is effective or just a political speech. I’m afraid these words will mostly go with the wind.

Spanish Supreme Court confirms Bexal and Uso Racional victory over Pfizer (Amlodipine)

On January 3, 2013 the Spanish Supreme Court has dismissed the Cassation appeal filed by Pfizer in its action against Bexal Farmeceutica and Uso Racional.

Court action was filed by Pfizer on 28 October 2005 against Kern Pharma, Bexal Farmaceutica and Uso Racional.

On 26 May 2006 Commercial Court no. 2 of Barcelona approved the agreement reached by Pfizer and Kern Pharma.

On 31 July 2008 Commercial Court of Barcelona recognised patent (product and procedure) infringement and condemned Bexal Farmaceutica and Uso Racional to pay a total amount of Euro 4,681,520.74.

On 24 February 2010 Appeal Court of Barcelona granted the appeal filed by Bexal Farmaceutica and Uso Racional and rejected Pfizer’s action.

The Appeal Court pointed out that:

.- Pfizer’s Product Patent expired on 19 March 2004 while Bexal Farmeceutica and Uso Racional started producing their (Amlodipine) products not before 1 March 2005.

.- Bexal Farmeceutica and Uso Racional proved that the Amlodopine salt was produced by Adamed

.- Procedure used by Adamed was panteted by means of European Patent no. EP 993,447.

.- Pfizer filed an opposition to EP 993,447, based in its procedure patent (EP 244,944) that was rejected by the EPO.

.- An expert who travelled to Adamed premises in Poland confirmed that procedure used by Adamed was the one described in EP 993,447.

Appeal Court concludes that procedure of EP 993,447 is not equivalent to Pfizer’s.

Pfizer called in its Cassation appeal Art. 69 of European Patent Convention and its modification on 29 November 2000, that entered into force on 13 December 2007.

The Spanish Supreme Court rejects now the Cassation appeal filed by Pfizer since Pfizer didn’t use that argument during the first instance or the appeal.

Furthermore, Pfizer’s Spanish Patent over the procedure expired on 31 March 2007 and Appeal Court couldn’t therefore apply the modification, even if the argument was used during the Court procedure (that it wasn’t).

Some questions came to my mind while reading the rulings. The first may be answered by our readers: Has Pfizer started an action against Adamed as producer of the Salt? If so, when and which was the result? 

Other questions are connected with pay for delay agreements, use or abuse of patent system and enforcement…

Those interested in a copy of Appeal Court and Spanish Supreme Court decisions (in Spanish) just have to ask.

Pointers to the Dead End Street

One thing that makes our life difficult is that innovations tend to make things better – but not in every respect. Cost-saving improvements might be less robust and “cool” designs might be less prestigious, not to speak of the advantages and drawbacks of atomic energy or genetic engineering.

This ambivalent nature of innovations might be one of the reasons why the requirement that the invention is a “technical progress” has been banned from the list of requirements to be fulfilled by patentable inventions in Germany as of 1978.

Ever since, courts and offices struggle with the assessment of inventiveness for alleged inventions making things – at least in important aspects - worse than before. While the case law of the Technical Boards of Appeal still provides a special treatment for so-called “disadvantageous modifications” (see e.g. T119/89) in that they are basically non-inventive right away as long as the disadvantages are foreseeable and not outbalanced by surprising advantages, the BGH in Germany has banned any such judgmental considerations from the assessment of inventive step.

Rather, the “incentive” (Anregung) for the skilled person to modify the prior art has been implemented in the last years as a very strict requirement for the assessment of obviousness (see e.g. here and here).

In the decision “Kniehebelklemmvorrichtung”, the BGH applies this approach to a modification which ultimately turned out to have major drawbacks, the drawbacks being – according to the patentee - an incentive for the skilled person to return to the prior art or to make further modifications rather than adhering to the solution according to the patent.

The patentee’s argument that adhering to the disadvantageous solution of the patent would therefore be non-obvious was rejected. The BGH emphasizes that the decisive question is whether or not there was an incentive or pointer to make the modification.

To put it differently: As long as there is a pointer at the beginning of the street, it is obvious to follow it – even if it ultimately turns out to be a dead-end street.

Dropping an infringement claim: what are the consequences?

J. Sai Deepak's Indian blog The Demanding Mistress carries an interesting post, "Can a Plaintiff/Patentee Withdraw a Suit for Patent Infringement At Will?" (here). The post considers some of the issues that exercise the minds of litigators where a plaintiff in patent infringement proceedings decides to go no further: what happens to defences and counterclaims when the action is dropped, particularly if they raise issues that lie outside the scope of the alleged infringement? And what of costs in the proceedings, and possible compensation for loss inflicted on the alleged infringer by virtue of the proceedings being brought?

This post considers suit withdrawal issues through the prism of a Calcutta High Court decision in Dilip Kumar Dey v Vishwamitra Ram Kumar, a 1994 ruling which is quite unrelated to patent law but which is however relevant to suit withdrawal issues and the Indian Civil Code of Procedure.

This blogger wonders what the consequences of dropping a patent infringement action are within the currently less-than-harmonised civil procedure rules of the European Union's Member States, and indeed beyond.  Might the answers to these questions influence forum-shopping decisions?

USPTO Refloats "Small Claims" Patent Court Concept

In nearly all U.S. state court systems, a “small claims” court has jurisdiction over petty civil disputes. Small claim courts exercise jurisdiction limited by subject matter or amount in controversy, or both.  For example, in New York, the small claims court handles commercial and consumer disputes involving $5,000 or less. In California state small claims courts, individuals can bring claims for up to $10,000, although claims by businesses are capped at $5,000. Generally, small claims procedures are marked by rapid timetables, lack of discovery, absence of juries, limited rights to appeal, and unavailability of injunctions and other equitable remedies. Most small court systems stress mediation as a way to resolve as many disputes as possible prior to trial. Parties frequently represent themselves without counsel.

Although the U.S. federal court system lacks any small claims procedure, the U.S. Patent and Trademark Office is floating the possibility of instituting a “small claims” court for certain patent disputes. Although the concept has been a topic of on-and-off discussion for several years, the USPTO currently is accepting public comments through March 18, 2013. The USPTO’s Request For Comments announcement is available HERE.

Although most companies experienced in traditional patent litigation might view a quick, efficient, and inexpensive forum to resolve patent disputes as a godsend, many practical problems must be addressed in establishing such a tribunal. Streamlined litigation may be appropriate for peripheral patent issues, such as actions to challenge inventorship under 35 U.S.C. § 256, especially since the America Invents Act removed the requirement that a correctable mistake in designating inventorship lack deceptive intent. In many cases involving infringement contentions, however, the issues arising from claim interpretation and the joinder of claims involving multiple patents (including patent infringement counterclaims ) would seem to guaranty a panoply of issues too large for any “small” scale proceedings. Furthermore, any savings in time and expense likely are offset by decreased due process and, potentially, credibility.

The USPTO’s request for comment catalogs some of the hurdles facing the patent small claims court concept:

(a) what the possible venues for a small claims proceeding should be, including whether patent small claims should be heard by Federal District Court judges or magistrates, whether patent small claims should be handled by an Article I court, such as the U.S. Court of Federal Claims, or whether patent small claims should be heard in another venue not specifically listed here; 

(b) what the preferred subject matter jurisdiction of the patent small claims proceeding should be, including which if any claims, counterclaims, and defenses should be permitted in a patent small claims proceeding;

(c) whether parties should agree to waive their right to a jury trial as a condition of participating in a small claims proceeding;

(d) whether there should be certain required pleadings or evidence to initiate a small claims proceeding;

(e) whether a filing fee should be required to initiate a small claims proceeding and what the nature of that fee should be;

(f) whether multiple parties should be able to file claims in a small claims proceeding and whether multiple defendants may be sued together;

(g) what role attorneys should have in a small claims proceeding including whether corporations should be able to represent themselves;

(h) what the preferred case management characteristics that would help to control the length and expense of a small claims proceeding should be;

(i) what the preferred remedies in a small claims proceeding should be including whether or not an injunction should be an available remedy and any minimum threshold or maximum cap on damages that should be imposed;

(j) whether a small claims proceeding should include attorney’s fees or some form of a “loser pays” system;

(k) whether a small claims proceeding should include mediation and whether mediation should be mandatory or permissive;

(l) what type of record should be created during a small claims proceeding including whether hearings should be transcribed and whether a written decision should be issued;

(m) what weight should be given to a decision rendered in a small claims proceeding in terms of precedent, res judicata, and estoppel;

(n) how should a decision in a small claims proceeding be enforced;

(o) what the nature of appellate review should be including whether there should be a direct appeal to the U.S Court of Appeals for the Federal Circuit or whether there should be intermediate review by a U.S. district court or some other venue;

(p) what, if any, constitutional issues would be raised by the creation of Federal small claims proceedings including separation of powers, the right to a jury trial, and/or due process[.]

Kudos to the USPTO for seeding a discussion of the patent small claims court proposal, but clearly the obstacles to a meaningful alternative venue for even routine patent disputes seems a long way off.

Lifting the cap: costs orders and abuse of process

Xena Systems Ltd v Cantideck & Another [2013] EWPCC 1 (18 January 2013) is a fairly long (121 paragraph) ruling in the Patents County Court from Judge Colin Birss QC on an inquiry into damages for patent infringement.

The claim related to the infringement of Xena's European patent for a “rolling” platform for use on construction projects (pictured here): The defendants submitted to judgment on liability in August 2011. Following the damages inquiry, which was heard in November 2012 Xena was awarded substantial damages.  The decision noted here relates to, among other things, the costs of the inquiry. The Patents County Court was established to allow greater access to the courts for SMEs with intellectual property issues and, since its recent reform, that court can now cap the level of legal costs which can be recovered from another party. In a damages inquiry such as this, the total costs which can normally be recovered are £25,000 (and in practice usually less). However, where the Court considers that a party has behaved in a manner which amounts to an “abuse of the Court’s process”, the scale costs for claims in the Patents County Court can be disapplied.

Judge Birss QC was careful not to define what may amount to an “abuse of the Court’s process”. However, he was satisfied that there had been an abuse of the Court’s process by the defendants in this claim, given the defendants’ failure to provide disclosure in relation to the recall and modification of infringing platforms, after the defendants had been ordered to disclose such documents at the Case Management Conference. The court also found that a letter sent by the defendants before the inquiry was an abuse of process as it claimed that the total number of infringing platforms dealt with by the defendants was 17 when it had in fact been 38.

 After hearing submissions on costs, Judge Birss lifted the cap on costs and awarded Xena its costs of the inquiry, which were summarily assessed (at the parties’ election) on an indemnity basis. The burden of showing that there had been an abuse of the court’s process was higher than that required to award costs on the indemnity basis, so the award of costs on an indemnity basis followed naturally from the finding of abuse. While the Patents County Court continues to offer significant protection on costs for litigants, this case is a clear example of the Court’s willingness to remove that protection in order to deal with the conduct of a party, where appropriate.

Thanks go to DMH Stallard, solicitors, for drawing the attention of PatLit to this decision.  DMH Stallard acted for the successful claimant in these proceedings.

The unified patent package: a word from Italy

A good deal has been written about the prospects of the new European patent package -- but we have not heard very much from Italy -- a country that has been regarded as something between peripheral and irrelevant on account of its reluctance to join the new scheme and its challenge, together with Spain, of the legal basis for the version of "enhanced cooperation" that the EU has adopted in pressing ahead with a "27 minus 2 regime.

Given Italy's size and sophistication, the country cannot be ignored -- however much one may wish to do so for the sake of administrative convenience or political spite. So this blogger was pleased today to receive this bulletin from Italian IP practice Modiano & Partners, which contains the following message:

" ... with the Italian political elections coming up in the 1st quarter of 2013, the Italian approach to the entire package might change. Indeed, it is possible that Italy will decide to participate in the jurisdictional part of the system, by signing the agreement establishing the Unified Patent Court together with the other 25 member states already adhering to the package at present [the idea of a post-election opt-in makes it sound like a party political decision -- but is it? One imagines that arguments for and against joining in would cross traditional party political allegiances. Perhaps the decision will be made on economic ground or in return for support from other EU states on other issues. Let's see what happens].

In such case, both European patents designating Italy and future unitary patents for which there is also a parallel designation of Italy might fall within the competence of the Unified Patent Court with respect to the Italian portion as well, although Italy would presumably continue to require a separate designation, the filing of an Italian translation at the Italian PTO upon grant of the patent by the European Patent Office, and the payment of national annuities to the Italian PTO after grant.

On the other hand, for as long as Italy does not join either the new jurisdictional system nor the unitary patent system, it will remain necessary, for those wishing to defend their patent rights or challenge third party patent rights in Italy, to file their actions at the sections of the Italian civil courts specializing in intellectual property. Such specialized sections were instituted several years ago and, while the number of cases handled by each section varies, they have all gained significant experience and expertise in the matter of patent litigation, thereby providing a reliable and efficient system of patent right protection in Italy [this places Italy in the same position as the UK, in having worked hard to improve the performance of a domestic IP dispute resolution system which many are unwilling to sacrifice for the uncertainty of that of the new European patent package] ..."

PatLit looks forward from hearing from Spain -- Italy's fellow cynic over the new package but a country with a very different legal and commercial ethos.