Supreme Court pitches patent fight over Shire's Lialda after Teva ruling

The ripple effects from last week's Teva v. Sandoz ruling have begun. The U.S. Supreme Court sent three patent fights back to a lower court in light of that ruling, which ordered the Federal Circuit Court to defer to district-level findings on patent claims unless a "clear error" had been made.

One of the suits sent down from the Supreme Court is a fight over Shire's ($SHPG) Lialda, a treatment for ulcerative colitis. In 2013, a district court backed Shire's patent protections on the drug against a challenge by Watson Pharmaceuticals, now Actavis ($ACT).

The appeals court tossed out that decision, saying Watson's competing drug did not step on Shire's patent, which expires in 2021. Now, the U.S. Court of Appeals for the Federal Circuit will reconsider the case. The other suits SCOTUS sent back for reconsideration are outside the pharma industry.

When the Supreme Court handed down its decision in the Teva ($TEVA) case, legal experts predicted that the ruling might affect a variety of present and future patent lawsuits. The majority opinion instructs the Federal Circuit to defer to the trial court's fact-finding in determining patent claims, unless a clear error occurred. The appeals court would be forced to accept a trial judge's estimation of expert witnesses, for example, as in the Teva case.

So, as the National Law Review points out, companies might use more expert witnesses in their patent fights. Or district judges might write their opinions to rely more heavily on factual matters, to avoid being overturned on appeal.

In its appeal to the Supreme Court, Shire contended that the Federal Circuit should have deferred to the trial judge's fact-finding unless the "clear error" standard applied. Actavis argued that the Teva argument shouldn't apply at all because Shire didn't identify any factual findings that were owed deference on appeal. Now, the appeals court will have to apply the Teva ruling's standards to the Shire case.

For Teva, the SCOTUS ruling was a big deal because it further forestalls Copaxone generics and gives the company more time to switch patients to its new, longer-lasting formula. Copaxone is the company's top seller, with more than $4 billion in 2013 sales.

Lialda isn't quite as important to Shire, but it is the company's second-best selling product, with $176 million in third-quarter sales; its haul for the first 9 months of 2014 came to almost a half-billion dollars. Shire's top seller, the ADHD med Vyvanse, delivered $1.06 billion over the same time period.

- read the Reuters news
- get more from the National Law Review
- see the Supreme Court ruling

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