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Federal Trade Commission v. Abbvie Inc.

United States District Court, E.D. Pennsylvania

September 15, 2017

FEDERAL TRADE COMMISSION
v.
ABBVIE INC., et al.

          MEMORANDUM

          Bartle, J.

          The Federal Trade Commission (“FTC”) has filed this action against defendants AbbVie Inc., Abbott Laboratories, and Unimed Pharmaceuticals LLC (collectively “AbbVie”), [1] as well as against Besins Healthcare Inc. The FTC alleges that the defendants engaged in monopolistic conduct in violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. § 45(a). Section 45(a)(1) states that “[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful.”

         As part of its claim for relief, the FTC asserts that the defendants filed sham patent infringement lawsuits against two competitors, Teva Pharmaceuticals USA, Inc. and Perrigo Company, which were seeking approval from the U.S. Food and Drug Administration (“FDA”) for generic versions of AndroGel 1%, the defendants' brand-name product.[2] AndroGel 1% is a transdermal testosterone replacement therapy gel. It has been approved by the FDA for the treatment of conditions in men associated with a deficiency or absence of endogenous testosterone and is protected by U.S. Patent No. 6, 503, 894 (“the ‘894 patent”). The FTC further alleges that the defendants possessed monopoly power with respect to AndroGel 1% at the time of the filing of the underlying lawsuits.

         The court has before it the motions[3] of the defendants for summary judgment on Count One of the complaint and the motion of the plaintiff FTC for partial summary judgment on the objective baselessness element of the sham litigation prong of their illegal monopolization claim.[4]

         I.

         We first turn to the undisputed facts from the prosecution history record of the ‘894 patent, which issued on January 7, 2003 from U.S. Patent Application Serial No. 09/651, 777 (“the ‘777 application”).

         The patent application process began in August 2000 when AbbVie and Besins filed an application for a “pharmaceutical composition comprising testosterone in a gel formulation, and to methods of using the same.” Claim 1 of the ‘777 application read:

A pharmaceutical composition useful for the percutaneous delivery of an active pharmaceutical ingredient, comprising:
(a) a C1-C4 alcohol;
(b) a penetration enhancer;
(c) the active pharmaceutical ingredient; and
(d) water.

(Emphasis added). Claim 1 encompassed all penetration enhancers without limitation.[5] The ‘777 application explained that “[a] ‘penetration enhancer' is an agent known to accelerate the delivery of the drug through the skin.” The invention description in the ‘777 application stated:

Non-limiting examples of penetration enhancers include C8-C22 fatty acids such as isostearic acid, octanoic acid, and oleic acid; C8-C22 fatty alcohols such as oleyl alcohol and lauryl alcohol; lower alkyl esters of C8-C22 fatty acids such as ethyl oleate, isopropyl myristate, butyl stearate, and methyl laurate; di(lower)alkyl esters of C6-C8 diacids such as diisopropyl adipate; monoglycerides of C8-C22 fatty acids such as glyceryl monolaurate; tetrahydrofurfuryl alcohol polyethylene glycol ether; polyethylene glycol, propylene glycol; 2-(2-ethoxyethoxy)ethanol; diethylene glycol monomethyl ether; alkylaryl ethers of polyethylene oxide; polyethylene oxide monomethyl ethers; polyethylene oxide dimethyl ethers; dimethyl sulfoxide; glycerol; ethyl acetate; acetoacetic ester; N-alkylpyrrolidone; and terpenes.

(Emphasis added). Isopropyl myristate is the penetration enhancer actually used in AndroGel 1%.

         In June 2001, the patent examiner at the U.S. Patent and Trademark Office (“PTO”) rejected claims 1-9 and 35-36[6] of the ‘777 application as obvious over prior art references Mak in view of Allen, among others. Allen is an international patent application published in September 1996, which discloses the use of isopropyl myristate, isopropyl palmitate, and three other penetration enhancers in a nitroglycerin cream. Mak is an international patent application published in May 1999, which discloses a transdermal testosterone gel that uses the penetration enhancer oleic acid. In rejecting the claims of the ‘777 application, the examiner stated “[s]ince all composition components herein are known to be useful for the percutaneous delivery of pharmaceuticals, it is considered prima facie obvious to combine them into a single composition useful for the very same purpose.” In response to the June 2001 office action rejecting the claim of all penetration enhancers, AbbVie and Besins submitted their first amendment to their ‘777 application in October 2001. Claim 1 of the amended ‘777 application now read:

         A pharmaceutical composition useful for the percutaneous delivery of an active pharmaceutical ingredient, consisting essentially of:

(a) at least one penetration enhancer selected from the group consisting of isostearic acid, octanoic acid, lauryl alcohol, ethyl oleate, isopropyl myristate, butyl stearate, methyl laurate, diisopropyl adipate, glyceryl monolaurate, tetrahydrofurfuryl alcohol, polyethylene glycol ether, polyethylene glycol, propylene glycol, 2-(2-ethoxyethoxy) ethanol, diethylene glycol monomethyl ether, alkylaryl ethers of polyethylene oxide, polyethylene oxide monomethyl ethers, polyethylene oxide dimethyl ethers, dimethyl sulfoxide, glycerol, ethyl acetate, acetoacetic ester, N-alkylpyrrolidone, terpene, and combinations of any of the foregoing; and
(b) testosterone.

(Emphasis added). In this amendment, AbbVie and Besins narrowed their claim from one encompassing all penetration enhancers to a claim naming only twenty-four penetration enhancers, including isopropyl myristate. They also added several new claims. In new claim 47, AbbVie and Besins claimed “a penetration enhancer selected from the group consisting of isopropyl myristate and lauryl alcohol.” In new claims 61 and 62, they identified only isopropyl myristate as the penetration enhancer.

         In support of the October 2001 amendment, the defendants argued to the examiner that “[a]pplicants' invention is not obvious because of secondary considerations recognized by the courts as indicia of non-obviousness.” They submitted the declaration of Jean-Louis Anspach, the chief executive officer of Unimed Pharmaceuticals, Inc., stating that “Unimed launched AndroGel® in June 2000, and it has met with substantial commercial success as shown below.” The AndroGel product used only isopropyl myristate as the penetration enhancer.

         On December 6, 2001, attorneys for AbbVie and Besins met with the patent examiner to discuss the October 2001 amendment. In her interview summary, the examiner noted that claims 61 and 62, which identified only isopropyl myristate as the penetration enhancer, “are seen to be allowable over the prior art.” The interview summary also stated that “applicants argued claim 47 is novel [and] nonobvious over the prior art because the prior art does not teach the composition with particular concentration.” As previously stated, claim 47 identified isopropyl myristate and lauryl alcohol as penetration enhancers.

         Two weeks later, on December 21, 2001, AbbVie and Besins submitted a supplemental amendment to their patent application. They cancelled the October 2001 amended claim 1 in its entirety and amended claim 47 to specify only isopropyl myristate as the penetration enhancer. As a result, they reduced the number of penetration enhancers in the ‘777 application from twenty-four to one. AbbVie and Besins also modified the concentration ranges for isopropyl myristate in claim 61. In support of their amended application, AbbVie and Besins stated:

With entry of the above amendments and in view of the foregoing remarks, it is respectfully submitted that claims 47, 48, 51, 52, 54-62, 66-96 are in condition for allowance. . . . Accordingly, reconsideration and withdrawal of the outstanding rejections and allowance of the present claim is respectfully solicited.

         They further asserted that “[t]he prior art does not teach the claimed combination; therefore, it is patentable.”

         AbbVie and Besins submitted additional amendments in February 2002, July 2002, and August 2002. The February 2002 amendment narrowed the concentration range for isopropyl myristate in claims 47 and 61 and cancelled claim 62. AbbVie and Besins stated in the February 2002 that they sought “reconsideration and withdrawal of the outstanding rejections and allowance of the present claims.” The July 2002 and August 2002 amendments contained additional changes not relevant here.

         The patent examiner finally issued a Notice of Allowability in August 2002 as to claims 47-48, 51-52, 54-57, 61, 78-81, 83, 87-89, and 97-121. The examiner wrote that “[t]he claimed pharmaceutical composition consisting essentially of the particular ingredients herein in the specific amounts, is not seen to be taught or fairly suggested by the prior art as discussed below.” The examiner then distinguished the most recent version of the ‘777 application from the previous versions of the application and from the prior art references Mak and Allen, among others, that were the bases for her rejections in her June 2001 office action. The examiner approved the application because “the prior art [including Allen] does not teach or fairly suggest the instant claimed pharmaceutical composition consisting ...


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