Phigenix Seeks to Undo Ruling in Genentech Patent Suit

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By Dana A. Elfin

Phigenix Inc. wants another chance to prove it could be entitled to damages based on Genentech Inc.'s sales of the breast cancer treatment Kadcyla ( Phigenix, Inc. v. Genentech, Inc., Fed. Cir., No. 17-02617, 9/27/17, appeal docketed 9/27/17 ).

Phigenix is appealing an August district court decision finding Genentech’s Kadcyla sales didn’t infringe Phigenix’s patent to the U.S. Court of Appeals for the Federal Circuit. If Phigenix wins on appeal, Genentech, a division of Roche, could be on the hook to pay Phigenix substantial damages because Kadcyla is a top 10 pharmaceutical product for Roche and the franchise is expected to grow in 2017, Roche said.

Kadcyla U.S. sales in 2016 were $326 million; total global sales were about $858 million.

Atlanta-based Phigenix is a nonpracticing entity (NPE), which means it buys up patents and makes money from selling licenses for them. NPEs are becoming increasingly controversial.

“These types of patents tend to raise greater concerns about whether they truly embody an innovation or merely represent a repurposing or obvious tweak on existing knowledge,” Robin Feldman, director of the Institute for Innovation Law at the University of California Hastings and professor of law at the University of California Hastings School of Law, told Bloomberg BNA Sept. 28.

“Those concerns are heightened when the patent is being wielded by a party who does not make any products but just accumulates patents to license and litigate them,” she said.

Series of Lawsuits

Phigenix’s appeal is part of a series of legal actions between Phigenix and Genentech over Kadcyla.

The long-running series of lawsuits between Genentech, ImmunoGen Inc., which exclusively licenses a Kadcyla patent to Genentech, and Phigenix is a “watershed moment in patent law,” Feldman said. Feldman is the author of Drug Wars: How Big Pharma Raises Prices and Keeps Generics Off the Market.

“This series of legal actions tests the boundaries of patent law and the business model of NPEs—also known as patent trolls,” Feldman said. “The saga also lies at the critical intersection of patent trolling and pharmaceutical patents.”

Phigenix and Genentech previously battled at the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board over the validity of a patent covering Kadcyla, but the patent board upheld the patent in 2015, rejecting Phigenix’s arguments that the patent was invalid for obviousness.

In that litigation, the Federal Circuit found Phigenix didn’t have standing to appeal an adverse PTAB decision because it couldn’t have been sued for infringement and hadn’t shown it suffered a concrete factual injury.

No Standing Issue

But the standing issue that thwarted Phigenix before won’t apply here because, unlike in that case where Phigenix challenged a Kadycla patent licensed to Genentech, Phigenix owns the patent at issue in this case. As the patent owner, there is no question it has standing to appeal the decision finding Kadcyla sales didn’t infringe its own patent.

So far in the legal actions, Phigenix has lost consistently, Feldman said, adding she doesn’t expect them to fare much better on this appeal. “Much lies ahead,” Feldman said, adding some aspects of the battle—including the induced infringement issue and whether NPEs have standing to appeal adverse decisions at the PTAB—may wind up reaching the Supreme Court.

2014 Infringement Suit

Phigenix’s infringement suit dates to 2014, when the company sued Genentech in federal court in Atlanta. Phigenix claimed Genentech’s sales of Kadcyla induced doctors to infringe its patent, U.S. Patent No. 8,080,534B2. The patent covers a method of preventing or treating breast cancer.

Kadcyla (ado-trastuzumab emtansine) is approved to treat HER2-positive (human epidermal growth factor receptor 2) breast cancer that has spread to other parts of the body (metastatic breast cancer) after prior treatment with Genentech’s Herceptin (trastuzumab) and a taxane. HER2-positive breast cancers tend to grow more quickly and are more likely to spread and recur compared to HER2-negative breast cancers.

The suit was transferred to the Northern District of California in 2015.

Although Genentech beat back Phigenix’s induced infringement claims, the judge said Genentech failed to show Phigenix’s patent was invalid.

Chances on Appeal

Michael Risch, a law professor at Villanova University School of Law in Philadephia, told Bloomberg BNA Phigenix is unlikely to prevail on its appeal of the induced infringement issue, especially if the Federal Circuit views the evidence the same way the district court did. Risch focuses his teaching and scholarship on intellectual property and internet law.

Risch said this appeal will be based on a factual inquiry of “What did Genentech do, if anything, to encourage off-label uses of its drug, knowing and intending that such use would infringe the patent?”

Because the district court found no evidence supporting Phigenix’s induced infringement claim, the Federal Circuit will have to view the same evidence differently to find for Phigenix.

Induced Infringement

“Induced infringement can be tricky when you’re relying on the drug label,” Brian W. Nolan, a life sciences lawyer with Mayer Brown LLP in New York, told Bloomberg BNA Sept. 28.

Inducement occurs when a party causes, urges, encourages, or aids direct infringement by another party.

The patentee must demonstrate that the drug’s label instructs users to perform the patented method and there is a specific intent to encourage another to infringe.

Pharmaceutical ‘Trolls’ Uncommon

NPEs remain rather uncommon in the pharmaceutical arena.

“It is interesting to see NPE activity in this space. It is very unusual,” Michael J. Meurer, professor of law at the Boston University School of Law, told Bloomberg BNA Sept. 28.

“Previous NPE litigation has focused overwhelmingly on software, communications, computing, and electronics technologies,” Meurer said. Meurer teaches patents and intellectual property law.

Genentech is based in South San Francisco, Calif. Its parent company Roche is based in Basel, Switzerland. Phigenix is based in Atlanta.

Fish & Richardson PC filed the appeal on behalf of Phigenix.

To contact the reporter on this story: Dana A. Elfin in Washington at delfin@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

For More Information

The appeal is at http://src.bna.com/sUM.

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