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From Antitrust Law Daily, September 18, 2017

FTC establishes objectively baseless patent litigation to support AndroGel monopoly claim

By Jeffrey May, J.D.

For purposes of an FTC monopolization claim based on sham litigation aimed at delaying generic competition for the testosterone replacement therapy AndroGel, patent lawsuits brought by AbbVie Inc. and its partner Besins Healthcare Inc. against two potential competitors, Teva Pharmaceuticals USA, Inc. and Perrigo Company, which were seeking Food and Drug Administration (FDA) approval for generic versions of AndroGel 1%, the defendants’ brand-name product, were "without question objectively baseless," according to the federal district court in Philadelphia. Therefore, the FTC was entitled to partial summary judgment on the objective baselessness element of the sham litigation prong of its monopolization claim. The court also denied summary judgment in favor of defendants AbbVie and Besins Healthcare. The defendants had moved for summary judgment based on the objective baselessness element, as well as the monopoly power prong of the illegal monopolization claim. Genuine disputes of material fact concerning the defendants’ monopoly power would require a trial, in the court's view (FTC v. AbbVie Inc., September 15, 2017, Bartle, H.).

In 2014, a divided FTC voted to file a federal district court complaint against AbbVie, Besins Healthcare, and Teva, challenging conduct allegedly intended to delay generic competition for the drug AndroGel. According to the agency, the "narrow" patent on branded AndroGel covered only a formulation of isopropyl myristate or IPM, a "penetration enhancer" that speeds the delivery of the drug’s active ingredient, testosterone, through the skin and into the bloodstream. The FTC claimed that AbbVie and Besins Healthcare filed patent litigation against Teva and Perrigo, even though the testosterone gel products that these potential rivals were developing did not contain IPM. Teva and Perrigo developed testosterone gel formulations containing penetration enhancers (isopropyl palmitate and isostearic acid) not claimed in the so-called '894 Patent. The FTC alleged that the patent litigation was sham litigation designed to preserve monopoly power in the United States with respect to AndroGel.

The FTC also alleged that AbbVie had entered into a "pay-for-delay" settlement with Teva of their underlying patent infringement litigation. The restraint-of-trade count was dismissed in 2015.

The federal district court has now decided that the FTC should be permitted to go to trial on the monopolization count. On the FTC’s motion for partial summary judgment, the court ruled that the FTC established as a matter of law that the patent litigation was a sham. The FTC successfully argued that the lawsuits against Teva and Perrigo were objectively baseless under the doctrine of prosecution history estoppel, which precludes a patentee from claiming equivalents if the patentee surrendered the equivalents for reasons of patentability during the patent prosecution process.

"[A]ny reasonable person who reads the prosecution history of the ‘894 patent can reach no other conclusion than that the defendants have purposefully and not tangentially excluded isopropyl palmitate and isostearic acid as penetration enhancers equivalent to isopropyl myristate," the court decided. Thus, the defendants’ motion for summary judgment on the exclusionary conduct element was denied.

Monopoly power. Questions of fact precluded the court from rejecting the FTC’s allegations that the defendants possessed monopoly power with respect to AndroGel 1% at the time of the filing of the underlying lawsuits. Noting that the monopoly power question required a fact-intensive inquiry, the court explained that the FTC could use direct or indirect evidence to establish this element. The court concluded, however, that the "complex issue will have to await a trial."

The case is No. 14-5151.

Attorneys: Markus Meier for the FTC. Adam R. Lawton (Munger Tolles & Olson LLP) and Paul Saint-Antoine (Drinker Biddle & Reath LLP) for Abbvie Inc., Abbott Laboratories and Unimed Pharmaceuticals, LLC. Gregory E. Neppl (Foley & Lardner LLP) for Besins Healthcare, Inc.

Companies: Abbvie Inc.; Abbott Laboratories; Unimed Pharmaceuticals, LLC; Besins Healthcare, Inc.

MainStory: TopStory Antitrust PennsylvaniaNews FederalTradeCommissionNews

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