Greenblum & Bernstein, P.L.C.



Recent News in Intellectual Property


                                                                                                                 May 2011   

In This Issue

·    FTC Issues Warning To Sanofi, Watson and Synthon In Connection With Ambien CR® Settlement

·    District Court Declares Amerix® Patents Invalid And Then Grants TRO Preventing Mylan From Going To Market

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FTC Issues Warning To Sanofi, Watson and Synthon In Connection With Ambien CR® Settlement

The Federal Trade Commission’s Bureau of Competition recently issued advisory letters to Sanofi-Aventis U.S. LLC (“Sanofi”), Watson Pharmaceuticals, Inc. (“Watson”), and Synthon Holding B.V. (Synthon”), warning that the companies violated federal law by failing to submit agreements/stipulations from the Ambien CR® litigations to the FTC.  The FTC, however, did not pursue an enforcement action against the companies because, according to the FTC, the violations, inter alia, did not appear to have harmed consumers or competition, nor benefitted the companies.  The FTC has further noted that these letters were meant to provide public guidance to the pharmaceutical industry at-large to avoid such situation in the future.

By way of background, Sanofi filed infringement suits against Synthon and Watson in response to their filing of paragraph IV ANDAs seeking approval for generic versions of Ambien CR®.  The parties thereafter settled the litigations and submitted the settlement documents to the FTC in accordance with the reporting requirements of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”). The FTC, after reviewing the documents, noted that there were agreements/stipulations entered into during the litigations that the FTC believed should have been submitted for review.         

Specifically, FTC Bureau of Competition Director, Richard Feinstein, observed, in the advisory letters, that in the FTC’s view, the companies’ failure to notify and submit those agreements/stipulations violated the MMA in that the statute requires that brand name and generic drug companies file agreements with the FTC and U.S. Department of Justice within 10 business days when the agreement involves a drug for which the generic has submitted the paragraph IV certification.

Here, the agreements/stipulations at-issue were: (1) the joint stipulation and order staying the Sanofi-Synthon litigation pending resolution of the inter partes reexamination of the Ambien CR® patent; and (2) the joint stipulation dismissing the Sanofi-Watson litigation. 

In relevant part, the Sanofi-Synthon joint stipulation to stay the litigation required Synthon to provide Sanofi with 120-days notice of its intention to begin marketing a generic version of Ambien CR® during the pendency of the stay.  The FTC observed, in the advisory letter, that “the joint stipulation is an ‘agreement’ within the meaning of the MMA, regardless of whether its terms had binding effect without court action and regardless of whether there was an exchange of consideration.”  The FTC continued that “the MMA required the filing of the joint stipulation even if the prior notice obligation had no actual effect on Synthon’s ability to market its ANDA product.”

The FTC concluded that “the language of the statute makes it clear that the MMA filing requirement is triggered by an agreement ‘regarding’ the manufacture, marketing, or sale of the ANDA product [and] is not limited to agreements that actually restrict such marketing. Nor does the MMA exempt agreements that the parties believe will have no effect on the sale of the generic drug. The 120-day notice requirement implicates the marketing or sale of generic Ambien CR because of its potential to impede Synthon's ability to launch its ANDA product. This provision therefore triggers the filing requirement, regardless of its actual or anticipated effect.”

The FTC, likewise, noted that the Sanofi-Watson stipulation should have been submitted because it required Watson: (1) to convert its paragraph IV certification to a paragraph III certification, and (2) similarly to provide notice to Sanofi if Watson converted its paragraph III certification back to paragraph IV, and that Sanofi was entitled to a new 30-month stay provided that Sanofi filed a patent infringement suit within 45 days of receiving such notice.  The FTC observed that “on its face, the joint stipulation falls within the MMA's filing requirement [because]: (1) it is an agreement between a brand name drug company and a generic applicant that has submitted a Paragraph IV ANDA; and (2) the agreement concerns the marketing of the ANDA product.”  The FTC further reasoned that “the joint stipulation is an agreement ‘regarding the manufacture, marketing, or sale of the generic drug for which the ANDA was submitted’” and should have been submitted to the FTC.  The FTC continued that while, “no joint stipulation was required to secure dismissal. And even where a joint stipulation is required to secure the action the parties desire, that fact does not preclude the existence of an agreement between the litigants concerning the sale of an ANDA product (which triggers a filing obligation under the MMA).”  The FTC specifically noted that “the stipulation here goes beyond a simple agreement to seek dismissal of the case. Watson's agreement provided for notice to Sanofi and included terms regarding the application of the 30-month stay of FDA approval.”

While the failure to timely submit such agreements may result in a civil penalty of up to $11,000 for each day that a required filing has not been made, the FTC, in the instant case, issued advisory letters instead of recommending that the FTC take enforcement action because the violations, inter alia, did not appear to have harmed consumers or competition, nor to have benefitted the companies.  Nevertheless, the consensus among commentators appears to be that the prudent course of action going forward will be to err on the side of caution and submit any agreements/stipulations that appear to limit and/or relate to “the manufacture, marketing, or sale of the generic drug for which the ANDA [at-issue] was submitted.”   

District Court Declares Amerix® Patents Invalid And Then Grants TRO Preventing Mylan From Going To Market

Just eight days after declaring the Amerix® patents invalid, the U.S. District Court for the District of Delaware in In Re: Cyclobenzaprine Hyldrochloride Extended-Release Capsule Patent Litigation granted plaintiffs’ (i.e., Eurand, Inc., Cephalon, Inc. and Anesta AG) motion seeking a temporary restraining order (“TRO”) against Mylan.

By way of background, the District Court conducted a seven-day bench trial during September-October 2010, and, on May 12, held the asserted claims of U.S. Patent Nos. 7,387,793 and 7,544,372 (“the Amerix® patents”) invalid as obvious.  Mylan, as the first paragraph IV filer, then launched its generic version of Amerix® triggering its 180-day exclusivity period.  Plaintiffs, nevertheless, filed a motion for a TRO, which the District Court granted. 

Despite declaring the Amerix® patents invalid, the District Court, when addressing the “likelihood of success on the merits” element of a TRO, stated that “plaintiffs’ success on appeal is just as likely as not,” and therefore “this factor marginally supports a temporary restraining order.”  Shortly thereafter Mylan filed an Emergency Motion for Reconsideration, asserting that the District Court “committed fundamental, material errors of law…” because the Court “did not find that Plaintiffs were likely to succeed on the merits but rather that ‘plaintiffs’ success on appeal is just as likely as not.’”  Mylan then argued that: “As a matter of law, this sort of 50-50 assessment is insufficient to establish a likelihood of success and destroys the basis for the TRO.”  The District Court denied Mylan’s Emergency Motion and issued an injunction on May 24.  Mylan, obviously concerned that the 180-day exclusivity period was running, appealed the TRO to the Federal Circuit, which issued an order staying the District Court’s injunction. 

The GREENBLUM & BERNSTEIN NEWSLETTER is issued by GREENBLUM & BERNSTEIN, P.L.C., an intellectual property firm, to provide timely news in the field of intellectual property.  The NEWSLETTER provides monthly updates on recent issues of general interest in this field.  The views and/or opinions expressed herein do not necessarily reflect those of GREENBLUM & BERNSTEIN, P.LC.  Information regarding the contents of the Newsletter can be obtained by contacting P. Branko Pejic at GREENBLUM & BERNSTEIN, P.L.C., 1950 Roland Clarke Place, Reston, VA 20191.  Copyright 2011 GREENBLUM & BERNSTEIN, P.L.C. [01182515.DOC