The U.S. Supreme Court agreed to take up a multibillion-dollar fight between the drug industry and federal antitrust enforcers, a case that may determine how quickly low-price generic medicines reach the market.
The justices said Dec. 7 they will use a case involving Abbott Laboratories (ABT:US) to scrutinize the “pay for delay” agreements that the Federal Trade Commission says cost drug buyers $3.5 billion each year. Under those accords, brand-name drugmakers pay other companies to hold off selling generic versions. The pharmaceutical industry says the agreements are legitimate settlements of patent disputes.
Companies have struck more than 100 such deals since 2005. Medicines made by Bayer AG (BAYN), Merck & Co. (MRK:US), Bristol-Myers Squibb Co. (BMY:US), Watson Pharmaceuticals Inc. (WPI:US) and Teva Pharmaceutical Industries Ltd. (TEVA) have all been the focus of court cases as the FTC under Chairman Jon Leibowitz seeks to crack down on the practice.
Three of the four federal appeals courts to rule on the issue have said the settlements, also known as reverse payments, are generally permissible. Drug companies and antitrust enforcers alike urged the Supreme Court to set a nationwide standard. The court will rule by June.
The FTC, backed by the Justice Department, is appealing a ruling that rejected its suit against Solvay Pharmaceuticals Inc., now owned by Abbott Labs, and three generic-drug makers over Androgel, a treatment for low testosterone in men.
The FTC and its allies, including 31 states, say those infringement claims are often baseless, making the settlements similarly dubious. The agency says generic-drug makers, at least in the 1990s and early 2000s, won about 75 percent of the patent suits that have been litigated to final judgment.
The FTC says it has less concern about settlements that set a date for generic entry without involving a payment, accords that the agency says may simply reflect the prospects of success in the infringement case. A reverse payment, by contrast, “is most naturally understood as consideration for the generic manufacturer’s agreement to delay market entry,” the FTC said.
Prices for generics typically are 20 percent to 30 percent less than the name-brand counterparts, and in some cases are as much as 90 percent cheaper, according to the FTC.
Drug companies say the settlements enhance competition and encourage innovation. The Pharmaceutical Research and Manufacturers of America, which represents brand-name drugmakers, told the justices that companies spend an average of $1.3 billion to create a new drug, counting the cost of failed products.
The case is Federal Trade Commission v. Watson Pharmaceuticals, 12-416.
Casio, Motorola Can Seek Sanctions on Patent Owner, Court Rules
Technology companies were given a new weapon to go after patent owners who file frivolous lawsuits after an appeals court ordered sanctions against a firm that sued Casio Computer Co. (6952) and Motorola Solutions Inc. (MSI:US)’s Symbol Technologies.
Raylon LLC made unreasonable claims of what its patent for a ticket-writing machine covered, the U.S. Court of Appeals for the Federal Circuit said Dec. 7, ordering a judge to consider what sanctions to impose. It was clear that “no objectively reasonable litigant” would make Raylon’s arguments of how to define the patent, the court said.
The ruling by an appeals court that specializes in patent law provides a tool for companies that claim they’re bombarded with lawsuits by patent owners seeking cash even when they know their patent doesn’t cover the product.
Companies such as Google Inc. and Cisco Systems Inc. have pressed U.S. courts and Congress to tighten rules on patent owners who don’t make products. Critics of such limitations, including phone-chip maker Qualcomm Inc. (QCOM:US), say rules attacking the serial suers could lower the ability of inventors to obtain compensation for their research and ideas.
In the Raylon case, the trial judge in Tyler, Texas, said the ability to obtain sanctions was limited to those types of nuisance-value suits. In its Dec. 7 decision, the Federal Circuit said questionable litigation tactics aren’t the only grounds for a court to sanction patent owners and their lawyers.
“Reasonable minds can differ as to claim construction positions and losing constructions can nevertheless be nonfrivolous,” the Federal Circuit wrote. “But, there is a threshold below which a claim construction is so unreasonable that no reasonable litigant could believe it would succeed.” Raylon’s argument, it said, “falls below this threshold.”
The U.S. Federal Trade Commission and U.S. Justice Department have scheduled a daylong conference Dec. 10 in Washington to consider whether the economy is hurt by so-called patent assertion entities -- which use their patents to obtain royalties rather than to protect products from copies.
The case is Raylon LLC v. Complus Data Innovations Inc., 2011-1355, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Raylon LLC v. Complus Data Innovations Co., 09cv355, U.S. District Court for the Eastern District of Texas (Tyler).
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German Court Permits Two Different Breweries to Use ‘Duff’ Mark
Two German companies both have the right to use a trademark associated with cartoon character for their beer, Germany’s Federal Court of Justice ruled, and Der Spiegel reported.
The dispute was over the trademark for Duff beer, a favorite of Homer Simpson, according to Der Spiegel.
Although Duff Beer UG, which has been in operation since 2007, had tried to block a second German brewery from using the name, the court said both breweries could keep the mark, according to the newspaper.
Duff Beer UG has also had legal disputes with Twentieth Century Fox, which has tried to prevent anyone from making an alcoholic beverage with that name for fear children would be encouraged to drink it, Der Spiegel reported.
Nike Sued Over ‘Sinister Hare’ Line by ‘Psycho Bunny’ Makers
Nike Inc. (NKE:US), the Beaverton, Oregon-based athletic-gear company, was sued for trademark infringement by a New York clothing company.
The lawsuit, filed Dec. 7 in federal court in Manhattan, accuses Nike of infringing “Psycho Bunny” trademarks owned by God Gold & Moore LLC, which said the name was developed in 2005 and initially used for a collection of handmade neckties.
God Gold & Moore registered the “Psycho Bunny” trademarks in 2010 and uses them for a line of clothing and accessories, according to court papers. “Psycho Bunny” products are worn by such celebrities as actor Jim Carrey, singer Joe Jonas and the New York Yankees’ Alex Rodriguez, the company said.
Nike’s “Sinister Hare” products are accused of infringing the “Psycho Bunny” trademarks. Gold Gold & Moore said in its pleadings that in addition to using a similar name, the Nike products feature an image that is “confusingly similar” to the “Psycho Bunny” image. Both feature a stylized rabbit head above two stylized crossed bones.
The public is confused by the similar names and logos, God Gold & Moore said, and is likely to assume falsely that a connection exists between the companies. Nike is accused of rejecting the God Gold & Moore demands after being sent cease- and-desist letters since June.
Nike didn’t respond immediately to an e-mailed request for comment on the lawsuit.
Gold Gold & Moore asked the court to bar further infringement of its trademarks and for an order for the seizure and destruction of all allegedly infringing “Sinister Hare” merchandise and promotional material.
Additionally, the company asked for awards of money damages, attorney fees, litigation costs and profits Nike derived from the alleged infringement.
The case is God Gold & Moore LLC v. Nike Inc., 1:12- cv-080907, U.S. District Court, Southern District of New York (Manhattan).
Tesco to Pay Aldi to Settle Irish Trademark Infringement Suit
Tesco Plc (TSCO)’s Tesco Ireland unit must pay 150,000 Euros ($194,000) to the German discount supermarket chain Aldi Einkauf GmbH to settle a trademark suit, Ireland’s Independent newspaper reported.
The suit was related to Tesco’s price-advertising campaign Aldi said mislead customers and made use of the German chain’s trademarks, according to the Independent.
In the suit Aldi filed in May, the German company said that the “final straw” in its dispute was the use of its logo in banners displayed in Tesco stores, according to the newspaper.
Aldi initially sought the aid of Ireland’s National Consumer Agency and Advertising Standards Authority before it took the step of filing the infringement suit, the Independent reported.
UTEP Tells Community College Its ‘Harvester’ Logo Infringes
The University of Texas at El Paso has told a community college it must change its logo over trademark concerns, the Eastfield College News reported.
The “Harvesters” logo for Eastfield College looks too much like the “Miners” logo, the student newspaper reported.
One logo features a man wearing a hat and holding a pickaxe aloft, while the other features a hat-wearing man in a similar position holding a scythe, according to the newspaper.
Mesquite, Texas-based Eastfield College has been given until May 1 to phase out all uses of the logo, and has already stopped making T-shirts and other promotional material on which it was featured, the newspaper reported.
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Trade Secrets/Industrial Espionage
Best Buy Must Pay Additional $5 Million in Trade Secrets Case
Best Buy Co. (BBY:US), the consumer electronics retail chain, has been ordered to pay $27 million in damages in a trade secrets case.
On November 16 a jury in federal court in Los Angeles awarded TechForward Inc. $22 million for Best Buy’s misappropriation of trade secrets related to an electronics buy- back program.
According to court filings, U.S. District Judge Otis D. Wright II added $5 million in exemplary damages Dec. 3, saying he considered the jury’s finding of willful and malicious misappropriation, and the guidance of the California Uniform Trade Secrets Act.
TechForward, which sold its assets to San Francisco’s SquareTrade Inc. earlier this year, filed suit in February 2011, claiming its “Guaranteed Buyback Plan” was used without its consent by Best Buy of Richfield, Minnesota. The electronics retailer announced the allegedly infringing program with a Super Bowl commercial featuring Justin Bieber and Ozzy Osbourne.
The case is TechForward Inc. v. Best Buy, 2:11-cv-01313- ODW-JEM, U.S. District Court, Central District of California (Los Angeles).
Foley & Lardner Hires Two IP Litigators from Jones Day
Foley & Lardner LLP added two litigators to its IP practice group, the Milwaukee-based firm said in a statement Friday.
The new hires are Jose L. Patiño and Nicola A. Pisano, both of whom are joining from Washington’s Jones Day.
Patiño has represented clients in federal courts, before the U.S. International Trade Commission and as a special IP counsel in bankruptcy court.
He has an undergraduate degree from the University of California at Davis and a law degree from Harvard University.
Pisano has litigated patent and trade secrets cases in federal courts and has represented clients in proceedings before the U.S. Patent and Trademark Office.
He has an undergraduate degree and a law degree from the University of Notre Dame.
To contact the reporter on this story: Victoria Slind-Flor in Oakland, California, at firstname.lastname@example.org.
To contact the editor responsible for this story: Michael Hytha at email@example.com.