Andrew J. Kozusko, III, of Duane Morris LLP, is a registered patent attorney who specializes in the trial and appeal of complex pharmaceutical cases under the Hatch-Waxman Act. He also advises clients on pre-paragraph IV filing strategies and represents leaders in the biotechnology industry. Before joining Duane Morris, Mr. Kozusko served as in-house counsel for Mylan Inc., where he was responsible for all North American patent litigation. In addition to defending generic pharmaceutical cases, Mr. Kozusko has extensive experience negotiating license agreements, enforcing intellectual property rights and recovering damages based upon diverse, novel theories.
To register for GenericsWeb's free monthly newsletter 'INNsight', click here Escaping from Alcatraz: The Federal Circuit and Compound Patents In an ominous early scene from the classic Escape from Alcatraz, a notorious and now closed maximum security prison in San Francisco Bay, the Prison Warden informs Clint Eastwood: “No one has ever escaped from Alcatraz. And no one ever will!” In its treatment of patent claims covering chemical compounds, the Federal Circuit has been echoing this message since the enactment of the Hatch-Waxman Act in 1984. However, in recent years, the tenor and frequency of this message has increased, essentially making it impossible to prove that a chemical compound patent is invalid for obviousness.The Federal Circuit’s test for the obviousness of compound patents violates the Supreme Court’s mandate to avoid the rigid application of formulaic tests to the question of obviousness. See KSR Int’l v. Teleflex, 550 U.S. 398 (2007). This article will discuss the economic and policy implications of this error, and review briefly key U.S. Federal Circuit Court activity in this area. Hatch-Waxman Changes the Playing FieldThe Hatch-Waxman Act transformed the pharmaceutical business in the United States. Prior to its enactment, less than 20% of prescriptions were filled with generic drugs. Today, more than 70% of prescriptions are for generic medicines. Both innovative and generic drugs are critical components of the U.S. healthcare system. The Hatch-Waxman Act recognized this by creating incentives for brands to innovate (and receive protection for their inventions) and incentives for generics to challenge invalid patents and launch generic drugs prior to patent expiry.The comparative prescription percentages cited above demonstrate that the Hatch-Waxman Act has been helpful to both innovators and generics over the years. While the percentages appear skewed towards generics, the innovative drugs that lie behind the roughly 30% of U.S. prescriptions dwarf the generics in terms of revenue of many billions of dollars each year and profit margins that frequently exceed 90%. Federal Circuit’s Narrow View of “Obviousness”Notwithstanding Hatch-Waxman, there are still some invalid patents protecting brand name drugs, some of which list patents claiming basic chemical compounds in the Orange Book. Examples of such blockbuster drugs include Actonel®, Actos® and Pepcid®, among others. Collectively, these drugs have generated tens of billions of dollars in revenue since their launch. However, both before and after KSR, the Federal Circuit has applied the same rigid test to chemical obviousness. As a result, it has categorically refused to find a single chemical compound claim “obvious” since the enactment of the Hatch-Waxman Act.As demonstrated in the Benicar® case, the Federal Circuit continues to apply the same inflexible two-part test in every chemical obviousness case. See Daiichi Sankyo v. Matrix Labs., No. 2009-1511 (Sept. 9, 2010 Slip Op.). The “lead compound” test utilized in Daiichi and every other chemical obviousness case adds a further level of complexity to the “teaching, suggestion, motivation” test rejected by KSR – it requires not one, but two motivations. The challenger must prove that a person of ordinary skill in the art would have been motivated (1) to select the lead compound and (2) to modify the lead compound to arrive at the claimed invention. In spite of the existence of prior art that differed from the Benicar® (Olmesartan) compound by a single atom, the Federal Circuit rejected Matrix’s obviousness challenge.In addition to violating the letter and spirit of KSR, commentators have pointed out that the “lead compound” test violates the basic tenets of drug discovery. Seven years before KSR, the Federal Circuit utilized the lead compound test in Yamanouchi Pharma. Co. v. Danbury Pharmacal, Inc., 231 F.3d 1339, 1344-45 (Fed. Cir. 2000). Yamanouchi involved the blockbuster drug Pepcid®. As in Daiichi, the Federal Circuit held that the challenger failed to satisfy the dual motivation “lead compound” test. It found that a person of ordinary skill in the art would not have been motivated to (1) select the proffered lead compound or (2) to make the modifications necessary to arrive at the claimed invention.This history demonstrates that the Federal Circuit has flouted the Supreme Court’s mandate in KSR in cases involving the obviousness of chemical compound patents. Because of this, consumers have overpaid by billions of dollars for drugs protected by the inflexible rules established by Federal Circuit precedents. At minimum, the Federal Circuit has failed to give generics a fair chance to challenge compound patents. The problem begs for intervention by the Supreme Court. Like Clint Eastwood imprisoned at Alcatraz, we need to find a way out of here.The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Andrew J. Kozusko, IIINovember 2010AJKozusko@duanemorris.com BACK TO TOP To register for GenericsWeb's free monthly newsletter 'INNsight', click here
In an ominous early scene from the classic Escape from Alcatraz, a notorious and now closed maximum security prison in San Francisco Bay, the Prison Warden informs Clint Eastwood: “No one has ever escaped from Alcatraz. And no one ever will!” In its treatment of patent claims covering chemical compounds, the Federal Circuit has been echoing this message since the enactment of the Hatch-Waxman Act in 1984. However, in recent years, the tenor and frequency of this message has increased, essentially making it impossible to prove that a chemical compound patent is invalid for obviousness.The Federal Circuit’s test for the obviousness of compound patents violates the Supreme Court’s mandate to avoid the rigid application of formulaic tests to the question of obviousness. See KSR Int’l v. Teleflex, 550 U.S. 398 (2007). This article will discuss the economic and policy implications of this error, and review briefly key U.S. Federal Circuit Court activity in this area.
Hatch-Waxman Changes the Playing FieldThe Hatch-Waxman Act transformed the pharmaceutical business in the United States. Prior to its enactment, less than 20% of prescriptions were filled with generic drugs. Today, more than 70% of prescriptions are for generic medicines. Both innovative and generic drugs are critical components of the U.S. healthcare system. The Hatch-Waxman Act recognized this by creating incentives for brands to innovate (and receive protection for their inventions) and incentives for generics to challenge invalid patents and launch generic drugs prior to patent expiry.The comparative prescription percentages cited above demonstrate that the Hatch-Waxman Act has been helpful to both innovators and generics over the years. While the percentages appear skewed towards generics, the innovative drugs that lie behind the roughly 30% of U.S. prescriptions dwarf the generics in terms of revenue of many billions of dollars each year and profit margins that frequently exceed 90%. Federal Circuit’s Narrow View of “Obviousness”Notwithstanding Hatch-Waxman, there are still some invalid patents protecting brand name drugs, some of which list patents claiming basic chemical compounds in the Orange Book. Examples of such blockbuster drugs include Actonel®, Actos® and Pepcid®, among others. Collectively, these drugs have generated tens of billions of dollars in revenue since their launch. However, both before and after KSR, the Federal Circuit has applied the same rigid test to chemical obviousness. As a result, it has categorically refused to find a single chemical compound claim “obvious” since the enactment of the Hatch-Waxman Act.As demonstrated in the Benicar® case, the Federal Circuit continues to apply the same inflexible two-part test in every chemical obviousness case. See Daiichi Sankyo v. Matrix Labs., No. 2009-1511 (Sept. 9, 2010 Slip Op.). The “lead compound” test utilized in Daiichi and every other chemical obviousness case adds a further level of complexity to the “teaching, suggestion, motivation” test rejected by KSR – it requires not one, but two motivations. The challenger must prove that a person of ordinary skill in the art would have been motivated (1) to select the lead compound and (2) to modify the lead compound to arrive at the claimed invention. In spite of the existence of prior art that differed from the Benicar® (Olmesartan) compound by a single atom, the Federal Circuit rejected Matrix’s obviousness challenge.In addition to violating the letter and spirit of KSR, commentators have pointed out that the “lead compound” test violates the basic tenets of drug discovery. Seven years before KSR, the Federal Circuit utilized the lead compound test in Yamanouchi Pharma. Co. v. Danbury Pharmacal, Inc., 231 F.3d 1339, 1344-45 (Fed. Cir. 2000). Yamanouchi involved the blockbuster drug Pepcid®. As in Daiichi, the Federal Circuit held that the challenger failed to satisfy the dual motivation “lead compound” test. It found that a person of ordinary skill in the art would not have been motivated to (1) select the proffered lead compound or (2) to make the modifications necessary to arrive at the claimed invention.This history demonstrates that the Federal Circuit has flouted the Supreme Court’s mandate in KSR in cases involving the obviousness of chemical compound patents. Because of this, consumers have overpaid by billions of dollars for drugs protected by the inflexible rules established by Federal Circuit precedents. At minimum, the Federal Circuit has failed to give generics a fair chance to challenge compound patents. The problem begs for intervention by the Supreme Court. Like Clint Eastwood imprisoned at Alcatraz, we need to find a way out of here.The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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