Intellectual Property Litigation - - BioPharm International


Intellectual Property Litigation

BioPharm International
Volume 1, Issue 8

A patent is infringed by making, using, offering to sell, selling, or importing, without authorization from the patent owner, an apparatus or method that meets each and every limitation of a corresponding patent claim. Liability may also be triggered by actively inducing someone else to infringe, or by selling, offering to sell, or importing a material component of an invention for which there is no substantial non-infringing use.7 Allegations of infringement are routinely answered with assertions that the patent is invalid (because it claims something that is not new or that was obvious at the time) and unenforceable (due to some unfair behavior by the plaintiff or deceptive conduct by the patent applicants during prosecution). Alleged infringers frequently also counterclaim for infringement of patents from their own portfolios.

Remedies for patent infringement generally include an injunction against further infringement and damages, which may be measured by the larger of the plaintiff's lost profits or the royalty that the infringer would hypothetically have paid for a license before beginning the infringing activities. When infringement is found to be willful, the judge can increase damages up to treble and award attorneys' fees.

Claim Construction

"[T]he name of the game is the claim," wrote one famous patent judge.8 Indeed, because the scope of the right to exclude is measured by the patent claims, the meaning of the claims typically is disputed by the parties.9 Consequently, the claims must be interpreted before they can be compared to an accused product or device. The Supreme Court has ruled that claim interpretation is an issue for courts, rather than juries, to decide. Judges therefore often hold claim construction or Markman hearings (named after a historic case) to resolve disputes between the litigants and to make highly technical claims easier for a lay jury to understand. Judges are required to interpret the claims as a person with average skill in the industry would understand them, based primarily on the patent itself and on the record of correspondence between the patent applicant and the United States Patent and Trademark Office during examination (known as the prosecution history).

Studies show that claim construction decisions have been found erroneous on appeal 30 to 40 percent of the time.10 Because such decisions are not immediately appealable, erroneous claim construction rulings often infect final judgments regarding infringement or validity and ultimately cause such decisions to be overturned.

Special Issues Concerning Generic Drugs

The Hatch-Waxman Act (1984) governing the generic drug approval process for human drugs creates special rules under which patent lawsuits frequently can be brought before a generic drug is approved, and under which approval can be delayed for up to 30 months. Although many biological products such as insulin and human growth hormone may be characterized as, and have traditionally been regulated as, drugs under the Food, Drug, and Cosmetics (FD&C) Act,11 the Hatch-Waxman rules have yet to be extended to biologics. Moreover, since there currently is no analogous law permitting the approval of an abbreviated Biological Licensing Application, generic inroads into biopharmaceuticals have been minimal, and most patent infringement litigation in the industry has involved independently developed products.12 A dramatic increase in biopharmaceutical patent litigation, like the explosion of lawsuits over classical pharmaceuticals in the wake of the Hatch-Waxman Act, may be in the offing. Reportedly, companies have already begun developing generic versions of top-selling biopharmaceuticals,13 and the government has expressed interest in facilitating FDA approval of follow-on biologics.11 Moreover, it is estimated that by 2007, patents covering $10 billion of branded biologics will expire, exposing the corresponding products to potential competition from generics.14

Litigation Costs

IP litigation is an expensive undertaking. The table above shows the American Intellectual Property Law Association's median estimates of the total out-of-pocket costs of IP litigation based on the amount of money at risk.15 While litigation is not cheap, legal costs often pale in comparison to the value of the assets being protected. In 2002, sales figures for the ten top-selling biopharmaceutical products ranged from over $600 million to nearly $4 billion.13

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