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Teva gets mixed reception in generic-drug dispute

Teva Pharmaceutical Industries Ltd. got a mixed reception at a U.S. Supreme Court hearing as the company sought to preserve a patent shielding its top-selling Copaxone multiple-sclerosis drug from generic competition.

Hearing arguments Wednesday in Washington, the justices suggested they will divide on a federal appeals court’s decision to invalidate a patent that would protect Copaxone from rivals until September 2015. Teva says the appeals court should have deferred to a trial judge’s reading of the patent.

Teva is aiming to protect a drug that brought in $4.3 billion last year, accounting for what analysts estimate to be half the company’s profit. Teva is trying to buy more time to shift patients to a longer-acting version that won’t face generic competition until 2030.

Teva is battling two sets of would-be generic competitors in court. Mylan Inc. is teaming up with Natco Pharma Ltd. while Momenta Pharmaceuticals Inc. is working with Novartis AG’s Sandoz. Synthon BV, which isn’t involved in the Supreme Court case, is also seeking approval with an undisclosed partner.

The case has broader implications for how appeals in patent lawsuits are handled. The question is whether the federal appeals court that specializes in patent law must accept the trial judge’s reading of the patent as long as that interpretation is reasonable.

In Teva’s case, the U.S. Court of Appeals for the Federal Circuit reversed a trial judge and said the invalidated patent didn’t clearly outline what the drugmaker claimed was invented. The patent contains ambiguities that make it unclear what molecular weights were used to develop the product, the appeals court ruled.

Several justices expressed support for Teva’s position, while others voiced skepticism.

Justice Stephen Breyer emerged as one of Teva’s strongest backers. He said, at least in technical cases, a trial judge will be the one who “sat there the whole time and listened to these experts talking.”

“And that, I think, is a very powerful reason for saying, in a technical case, don’t overturn the judge’s factual findings” unless they are clearly wrong, Breyer said.

Justice Samuel Alito countered that Teva’s position would “introduce a level of complication” into patent law, forcing the Federal Circuit to defer to trial judges on some matters but not on others.

“Is it worthwhile as a practical matter?” Alito asked.

Google, Intel

The Federal Circuit’s longstanding practice is to review patents without giving any weight to the trial judge’s interpretation. Google Inc. and Intel Corp. are among the companies urging the Supreme Court to back that approach and rule against Teva.

Justice Sonia Sotomayor wondered aloud why the high court should change that practice. “Why don’t we defer, as has been done now forever, to the Federal Circuit?” Sotomayor asked.

Chief Justice John Roberts said Teva’s approach would create the possibility that two judges will interpret the same patent differently, leaving its scope unclear.

“People won’t know what to do,” Roberts said. “You have two different interpretations of the patent. What happens then?”

Breyer and Justice Antonin Scalia said that scenario occurs frequently in other areas of the law. Scalia said that a deed accompanying the sale of property could also be construed differently by separate courts.

Standard Practice

Teva’s lawyer, William Jay, told the justices that under the rules that govern federal litigation, it was “standard practice” for appeals courts to defer to the factual conclusions of trial judges.

The lawyer for the generic-drug companies, Carter Phillips, pointed to a 1996 Supreme Court decision that said it was for the judge, not the jury, to decide what a patent covered. The logical conclusion, he said, is that an appeals court should be able to take a fresh look at the trial judge’s conclusions.

Interpreting a patent’s scope is “different from every other issue of litigation,” Phillips said.

The generic-drug companies are waiting for Food and Drug Administration approval to sell their versions of generic Copaxone. Because the Federal Circuit decision is currently in force, generic competition could begin as soon as the FDA provides clearance.

Once they get FDA approval, the question for the generic- drug companies will be whether they are willing to risk having to compensate Teva for lost sales if the brand-name maker ultimately wins the patent case.

In April, Roberts refused to block generic Copaxone while the high court considers the case. He said Teva can recover damages for infringement if it ultimately wins.

The case is Teva v. Sandoz, 13-854.

The court will rule by the end of its 2014-15 term in late June. One possibility is that the court could tell the Federal Circuit to reconsider the case using a different legal standard. That would potentially be a victory for Teva, extending the fight and maintaining the threat of patent damages for at least several more months.

A separate part of the Federal Circuit ruling upheld four Teva patents that have since expired.

With assistance from David Wainer in Tel Aviv.