After Winning Decade-Long Battle To Fix One-Day Late Filing Error, Pharma Company Sues Former IP Counsel For Patent Malpractice

Michael E. McCabe, Jr.Malpractice, Patent Malpractice2 Comments

Feb 14 calendar imageWhat a difference a day made

Twenty-four little hours

Brought the sun and the flowers

Where there used to be rain – Dinah Washington

In the world of pharmaceutical patents, every day of exclusive rights can translate into millions of dollars in additional revenue. Global biopharmaceutical company The Medicines Company (MDCO) knows this all too well. Indeed, it fought for a decade to correct a critical filing error by its former patent counsel. In the end, it finally succeeded—but not until after allegedly suffering substantial damages. Now the company that states its purpose is to “alleviate suffering” wants to administer a high dosage of payback medicine. See The Medicines Co. v. Fish & Neave, et al., No. MRS L-2516-14 (N.J. Super. Ct. Oct. 10, 2014).

This IP malpractice action arises from a missed deadline on a critical patent filing known as a Patent Term Extension (or PTE) application for Angiomax, an anticoagulant used to inhibit a key contributor to the formation of blood clots. Since 1997, MDCO has held an exclusive license to develop, market, and sell Angoimax worldwide. According to its Annual Report, MDCO’s 2013 U.S. sales of the drug exceeded $550 million. The complaint alleges that Angiomax is MDCO’s “flagship” product.

The lawsuit alleges that in 1997, MDCO retained Fish & Neave to maintain the Angiomax patent portfolio, including U.S. Patent number 5,196,404, the “principal patent covering Angiomax in the United States.” On December 23, 1997, MDCO filed a new drug application for Angiomax with the FDA. A new drug cannot be commercially marketed or used until it receives FDA approval, a process which can be time-consuming and expensive. During the FDA review time period, the applicant receives no commercial benefit from any patents on the drug.

FDA logoPursuant to 35 U.S.C. § 156 (the Hatch-Waxman Act), the holder of a drug patent may apply for a patent term extension to compensate for the delay in obtaining FDA approval. To request an extension of the patent term, the patent holder or its agent must submit an application to the USPTO “within the sixty-day period beginning on the date the product received permission . . . for commercial marketing or use.” 35 U.S.C. § 156(d)(1).

In this matter, the FDA’s approval of the new drug application for Angiomax was set forth in a letter faxed to MDCO at 6:17 p.m. on Friday, December 15, 2000. Assuming the 60-day clock meant calendar days, and further assuming day 1 was Friday December 15, 2000, then the PTE application for Angiomax was due by Tuesday, February 13, 2001. If day 1 started the next calendar day after FDA approval (i.e., Saturday, December 16, 2000), then the PTE application was due February 14, 2001. MDCO filed its patent term extension application on February 14, 2001. If approved, the extension application would have changed the expiration date of the ’404 patent from March 23, 2010 until December 2014. According to the lawsuit, this additional patent term translated into approximately $2.0 billion in sales.

The USPTO denied MDCO’s application for patent-term extension, stating that it was untimely because it should have been filed on February 13, 2001, and thus it was filed one day late. The lawsuit alleges that the untimely filing was the fault of Fish & Neave, which had all necessary information to calculate the 60-day filing deadline and was solely responsible for the filing. MDCO further alleges Fish & Neave failed to enter the approval date into an automatic docketing system or calculate the deadline manually before it lapsed. Instead, Fish & Neave allegedly assigned responsibility for the filing to an unsupervised part-time law student. “In short, Fish & Neave was asleep at the switch,” the complaint alleges.

malpractice imageThe lawsuit alleges that MDCO fought for a decade to reverse the legal effects of the missed deadline. In March 2010, MDCO sought review of the USPTO’s denial of the patent term extension application in the U.S. District Court for the Eastern District of Virginia. District Judge Claude Hilton held the USPTO abused its discretion and was too inflexible. As the district court observed, when the FDA itself gets applications after the close of business, it dates them the next business day. The court found no reason why the same standard should not apply when calculating deadlines for filing Hatch-Waxman extension when the approval is not issued until after the close of business, and thus the clock should start from the next business day, and not calendar day.  MDCO’s application was filed within this time period as determined by Judge Hilton.  Consequently, the court granted summary judgment in favor of MDCO. The Medicines Co. v. Kappos, et al., 731 F. Supp. 2d 470 (E.D. Va. 2010).

While it ultimately “won” and received the additional four-plus years of patent term extension, the cost of victory was allegedly significant.  The malpractice complaint does not specify the amount of damages sought but alleges that MDCO suffered “seismic” and “irreparable” damages as a result of millions spent on its legal and legislative battles to obtain the patent term extension. The complaint further alleges MDCO’s losses include reduced stock value, missed business opportunities, and impeded growth potential due to the “dark cloud” placed over the company.

This case illustrates both the importance of proper IP docketing practices and the duty of law firms to supervise subordinates.  According to the lawsuit, Fish & Neave failed to supervise a law school clerk who was, allegedly, solely responsible for calculating the deadline for filing a critical document.  It is unclear from the complaint what, if any, institutional practices or controls were in place at the IP firm to prevent the docketing error or to oversee the law clerk.  Considering the importance of proper docketing in IP practice, an error of even one day can make a billion dollar difference.

2 Comments on “After Winning Decade-Long Battle To Fix One-Day Late Filing Error, Pharma Company Sues Former IP Counsel For Patent Malpractice”

  1. You left out a few parts of the story. First, MCO admitted at various points that it missed the deadline to request a PTE. Second, the point is that despite that admission, MCO’s counsel was able to keep the case pending (because of a dumb response by the PTO, of all things) before the judge until it successfully purchased legislation (part of mis-named America Invents Act) that changed the law retroactively and saved MCO’s skin. Other than attorneys’ fees, it’s not clear to me what damage, if any, MCO suffered here. At the end of the day, the patent was extended, keeping competitors out of the market. The alleged effect on share price is purely speculative.

    1. Thanks for your comments. It will be interesting to hear the defense side of the story. I also wonder if limitations is an issue or if the law firm entered into a tolling agreement.

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