McDermott has contributed to the Italian chapter of the 2014 edition of “Pharmaceutical Antitrust” published by Getting the Deal Through, a valuable work tool for legal practitioners dealing with antitrust rules in the pharmaceutical sector. The chapter addresses the most significant regulatory and antitrust issues affecting the marketing, authorization and pricing of pharmaceutical products in Italy.
Oregon has now become the second state to take aim at non-practicing entities (NPEs), more colorfully called “patent trolls,” with laws addressing patent enforcement. On February 25, 2014, the state attorney general announced that the legislature had passed a measure making it a violation of the Oregon Unlawful Trade Practices Act to send a demand letter that fails to identify the patent and the violation, or that insists the recipient make a licensing payment in an “unreasonably short” amount of time.
The Oregon law is only the latest, however, in a flurry of activity. Vermont passed a similar measure last year and Nebraska is considering doing so now. Also last year, the U.S. House of Representatives passed a bill designed to raise the stakes for NPEs that threaten or engage in patent litigation. The House bill would force plaintiffs to include in complaints the identity of their parent companies and greater detail regarding the alleged infringement. The bill further imposes restraints on discovery to prevent plaintiffs from using discovery costs to pressure defendants for a settlement early in the litigation. In some circumstances, costs could be imposed on losing plaintiffs. The U.S. Senate has not yet acted on the legislation. However, U.S. Senator McCaskill introduced a bill on February 27, 2014 called the Transparency in Assertion of Patents Act that, like the state laws, particularly focuses on making it harder for patent assertion entities to issue demand letters to small companies.
Finally, President Obama is implementing new measures to reduce the prevalence of NPE patent litigation in the future by raising the overall quality of patents. These measures include additional training for patent examiners and crowdsourcing “prior art” from the public.
Lawmakers and commentators disagree over whether NPEs stifle innovation or perform a useful role by creating a broader market for patents. But the movement toward greater regulation of the enforcement and litigation tactics that some NPEs favor is unlikely to lose steam.
On May 10, the Federal Trade Commission announced that Sanofi-Aventis U.S. LLC and two generic drug makers had violated federal law by failing to notify antitrust authorities about agreements involving Sanofi’s insomnia drug Ambien CR. The FTC found no harm to consumers or competition in this instance and recommended no enforcement action, but the agency seized upon the opportunity to provide public guidance to the industry about the scope the filing requirement under the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA).
The MMA requires filing of certain types of agreements between a brand name drug company and a generic drug applicant that has submitted an Abbreviated New Drug Application that contains a certification that a patent asserted to cover the branded drug is invalid or not infringed (“Paragraph IV certification”). Failure to file within ten business days exposes the parties to penalties of up to $11,000 for each day the party is in violation of the notification requirement.
The Advisory Letters issued by the FTC analyze the Sanofi agreements and seek to clarify how the FTC interprets the Act. The FTC has signaled that it will recommend enforcement actions for future violations of the MMA. This announcement emphasizes the continuing concern that the FTC has shown for the anti-competitive impact of deals between brand name drug manufacturers and generic competitors. The FTC has in recent years repeatedly attacked so-called “pay-for-delay” deals.
For more information on the Sanofi settlement and to view the FTC Press Release with links to Advisory Letters, please visit: https://ftc.gov/opa/2011/05/sanofi.shtm.
Yesterday, the U.S. Department of Justice announced that CPTN Holdings, LLC, a joint venture owned equally by Microsoft Corp., Apple, Inc. , Oracle Corp., and EMC Corp, has agreed to modify its agreement to acquire certain patents from Novell, Inc. in order to allay antitrust concerns raised by the transaction. The Department had expressed concerns that the original deal would threaten the ability of open source software to innovate and compete in critical software markets. The modifications to the deal will allow it to go forward, but the Department emphasized that it will continue to monitor distribution of the patents to ensure continued competition. The transaction also received antitrust clearance from Germany’s Federal Cartel Office. The German and American authorities cooperated closely on the matter, aided by waivers from the parties that allowed information sharing between the two agencies. Regulators are increasingly attuned to the effects of intellectual property transactions on competition.
For more information on the CPTN Holdings, LLC transaction, you may find the following links useful:
Department of Justice Press Release