Pharmaceutical and medical device litigation increasing at the US International Trade Commission

August 2017  |  EXPERT BRIEFING  |  LITIGATION & DISPUTE RESOLUTION

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In recent years, due to the increasing difficulty of obtaining injunctions in district court and the rise of inter partes review (IPR) proceedings which often stay district court litigation, the US International Trade Commission (ITC), an independent government agency which has the ability to bar US sales of products which infringe intellectual property rights, has become one of the most popular forums for patent litigation in the US.

This popularity is only expected to increase in coming years, as the US Supreme Court’s May 2017 decision in TC Heartland LLC v. Kraft Food Groups made it difficult to sue multiple unrelated patent infringers in a single district court case, while the ITC’s ability to address infringement by unrelated parties was not impacted. Though the ITC’s popularity has risen, it is often thought of as primarily a place to bring high-tech cases or cases relating to knockoffs of consumer products. However, in recent years the number of ITC investigations involving medical devices, pharmaceuticals, nutritional supplements and biologics has risen dramatically. There is reason to believe that this trend will continue.

In 2010, only two cases involving medical devices or pharmaceuticals were filed in the ITC and, in 2011 and 2012, only five were filed each year. In 2016, however, 16 cases were filed in these areas, along with an additional three cases on chemical compositions. The investigations have involved diverse technologies such as cardiac catheters, coenzyme Q-10, recombinant factor VII products, antivenoms, balloon dissection devices and masks for treating sleep apnea.

This increase in ITC filings is not surprising given the advantages of the venue to patentees generally – such as speedy decisions by knowledgeable judges, the ability to stop all infringing imported goods at the US border, regardless of their source or whether their manufacturers are related, and the fact that ITC proceedings, unlike district court proceedings, are not stayed by IPR filings. In addition to these general advantages, the ITC has features which may be particularly useful when litigating patents on medical devices and pharmaceuticals.

First, and often crucial with medical and pharmaceutical cases, is the issue of regulatory approval and timing as it relates to importation of goods. Pharmaceuticals and medical devices generally need FDA approval before being sold and marketed in the US. As such, the earliest importations of products generally relate to clinical trials and other activities connected with obtaining FDA approval. These are not importations of products for sales to consumers. A specific provision of US federal law limits the ability of patentees to bring an infringement suit directed towards these FDA-approval activities. This provision, known as the ‘safe harbor’ or § 271(e)(1) of the Hatch-Waxman Act, provides that the testing of pharmaceuticals or medical devices cannot be the grounds for an infringement suit in district court if the testing was for purposes of obtaining regulatory approval from the FDA.

While there is continued debate over just how broadly the protections of the Hatch-Waxman safe harbor can be extended, in most cases patentees are forced to wait until after clinical trials and FDA approval are completed, and an approved product is sold (or about to be sold) before suing and obtaining damages. However, the safe harbor of § 271(e)(1) does not apply to the ITC. A single importation of an infringing device, regardless of the purpose for which it is imported, may be enough to give the ITC jurisdiction to hear the case. If one couples this with the fact that ITC investigations conclude within 16 months (far quicker than most if not all district court litigations), with an initial determination issuing within a year, it means that in many cases a patentee at the ITC may be able to obtain a ruling blocking the infringing devices or compounds from sale in the US before they have a chance to establish substantial market share, and possibly even before they are approved by the FDA for sale.

Second, the ITC offers owners of pharmaceutical patents a greater scope of patents to assert. Asserting pharmaceutical process patents can be an effective method in extending the market for a branded drug product. Section 271(g) of the US patent laws allows the owners of process patents to sue anyone who imports products made outside of the US using a patented process. However, § 271(g) contains an exclusion saying that patentees may not sue parties importing goods made by the patented process if the imported product was “materially changed by a subsequent process” or has become a “trivial and nonessential component of another product”. This exclusion allows parties to sidestep pharmaceutical process patents covering an intermediate or precursor by manufacturing the precursor overseas using the patented process, and then applying additional processing steps to import the finished product into the US. Fortunately for the holders of these kinds of pharmaceutical process patents, § 271(g) defences do not apply to ITC actions.

For owners of patents covering biologic products (typically large-molecule drugs, such as monoclonal antibodies or other proteins that are manufactured in living systems), the ITC offers additional, unique advantages. The Biologics Price Competition and Innovation Act (BPCIA), which went into effect in 2010, created a pathway for FDA approval of biological products that are “biosimilar” to previously approved biologic products. Under the BPCIA, companies that hold a licence to these biologics, also known as “reference product sponsors”, may sue those seeking to introduce biosimilar versions of their products for patent infringement in district court. However, the BPCIA can limit the timing and ability of reference product sponsors to assert their patents against potential biosimilar entrants. Because many of these biologic patents are process or manufacture patents, the same advantages discussed above regarding the ITC apply. In addition, under the BPCIA there are numerous limitations on when the reference product sponsor may file a complaint in the district court against a biosimilar company. These limitations do not exist, by contrast, at the ITC.

The owners of patents on pharmaceuticals, medical devices and biologics are increasingly realising, and taking advantage of, the advantages the ITC offers to patentees generally and to the holders of patents impacted by the Hatch-Waxman Act or the BPCIA specifically. We expect this trend to continue, or even possibly accelerate, in the post-TC Heartland world.

 

Aarti Shah and Thomas Wintner are members of Mintz, Levin, Cohn, Ferris, Glovsky, and Popeo PC. Ms Shah can be contacted on +1 (202) 434 7408 or by email: ashah@mintz.com. Mr Wintner can be contacted on +1 (617) 348 1625 or by email: twintner@mintz.com.

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Aarti Shah and Thomas Wintner

Mintz, Levin, Cohn, Ferris, Glovsky, and Popeo PC


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