A Big Year Is Expected in Life Sciences Patent Litigation: The Supreme Court recently accepted its first biosimilar patent case

Tuesday, March 7, 2017 - 20:33

Chad Shear has been a busy man. A principal at Fish & Richardson, Shear tried five cases in 18 months­ – four of them outside the country. But he’s not complaining. The last one ended with the kind of victory most lawyers only dream about. We talked to him about non-practicing entities, the Biologics Price Competition and Innovation Act and inter partes reviews. The interview has been edited for length and style.

MCC: Your practice is focused on patent litigation for life sciences and pharmaceutical companies. How did you get involved in that field?

Shear: My background is in chemistry, and I’ve always been interested generally in the life sciences field. But I began to realize, when I was clerking at the U.S. Court of Appeals for the Federal Circuit in the early 2000s, that my real passion lies in life sciences patent litigation. While I had the chance to work on appeals across all technology spectrums, I was drawn to cases involving life sciences. What really intrigued me was the interplay between patent law on the one hand and the applicable regulatory law on the other. That interplay adds a dimension of complexity that I hadn’t seen before in other areas of law, and it was fascinating to watch the court grapple with it. It was a challenging area then, and it still is today. In fact, a majority of my time is now spent counseling clients on this interplay.    

MCC: Can you tell us about some of your biggest successes, and what you are working on now?

Shear: The last few years have been a whirlwind, with trials literally all over the globe. One of the biggest successes has been the outcome that we achieved in Gilead Sciences v. Merck. Merck alleged that it had invented Sofosbuvir, the active ingredient in Gilead’s groundbreaking cure for Hepatitis C, and was seeking billions of dollars in damages. After a two-week jury trial where Merck was awarded $200 million, a fraction of what it had asked for, the court held that Merck had breached a confidentiality agreement, improperly used confidential information in procuring its patents and committed litigation misconduct. The centerpiece of the court’s ruling was that a Merck witness, its patent prosecuting attorney, had committed perjury both at trial and during his deposition. As a result, Merck was barred under the doctrine of unclean hands from any recovery. 

That case topped off five trials in 18 months, only one of which was in the U.S. Currently, among other things, I am representing Coherus Biosciences in its bid to bring to market a biosimilar of AbbVie’s product Humira. Humira is one of the top-selling biologics in the world, with sales in excess of $10 billion annually.    

MCC: What issues and trends are currently affecting Hatch-Waxman litigation?

Shear: One of the most interesting is the tension between potential changes to the law spurred by those hoping to curtail non-practicing entities (NPEs) and the downstream implications on stakeholders, like pharma companies, who need the patent system to protect assets that in many instances cost hundreds of millions, if not billions, to develop. 

A perfect example is the tension between the scope of the venue statute that is presently before the U.S. Supreme Court in the TC Heartland case. Those who often find themselves the subject of suit by NPEs would like to limit venue to a narrower set of potential forums, hopefully to avoid jurisdictions that some may deem to be plaintiff-friendly, while those who use the patent system to affirmatively protect assets, like life sciences companies, would like a broader interpretation to allow more flexibility in bringing suit. The scope of the venue provisions of the patent act are squarely at issue in TC Heartland, and the impact of any decision could have unintended consequences.   

MCC: You have particular expertise in developing and implementing global patent litigation strategies for life sciences companies. What does this entail, and why is it so important?

Shear: Life sciences companies today operate on a global scale: There are patients in need everywhere. This desire to operate globally, though, presents interesting challenges in trying to protect investments and assets in a world where, despite recent efforts, laws and regulations vary greatly from country to country. Obviously, you need consistent arguments that play across jurisdictions. But in my experience, the real opportunity lies in taking advantage of the differences between various countries’ legal and regulatory regimes.

Despite recent efforts at harmonization, every country is different, and those differences, rather than being seen as a nuisance, should be seen as an opportunity. Companies need a global strategy that takes into account these differences and maximizes them for a strategic purpose. There is much more to it than simply finding an argument that works well in one place while not detracting from another. To handle this, the most important thing to me is assembling the right team of people who are collaborative enough to be willing to work together, regardless of firm affiliation or nationality, to put the client’s needs first. Striking the right balance, in terms of both team and strategy, can be a challenge—particularly when you’re doing it across multiple languages and time zones. It requires patience and an open mind, but amazing results can happen when you get it right.      

MCC: Patent litigation involving biosimilar and biologic drugs is a new frontier. Can you share some of your perspective on the most significant cases so far, and what they mean for the industry? 

Shear: A new frontier is an apt description. In many ways we are at the beginning of what will be years of litigation fleshing out the true meaning of various provisions of the Biologics Price Competition and Innovation Act of 2009 (BPCIA). With the BPCIA, we are currently where we were 20 or 30 years ago with the Hatch-Waxman Act. But unlike the Hatch-Waxman Act, there is very little legislative history to help us understand what various provisions were intended to mean. For example, the BPCIA fundamentally envisions two avenues that a biosimilar applicant may take to put an originator on notice that they have filed an application for approval to market a biosimilar: (1) the so-called patent dance (also known as the patent exchange); and (2) the 180-day notice of commercial marketing. Case law to date has held that while the patent dance is optional, the 180-day notice of commercial marketing is mandatory and can only be given after final FDA approval of the biosimilar’s application. This last part is significant because the practical effect, unintended as it may have been, is to give the biologic originator a 180-day exclusivity period extending from the date of the biosimilar’s approval. This may not be what was intended, but it is the current state of the law. Both issues are presently before the U.S. Supreme Court. (In the interest of full disclosure: I filed an amicus brief on behalf of Coherus Biosciences on this issue.)      

MCC: On Jan. 13, the Supreme Court agreed to hear its first biosimilar patent case. What’s at stake in this case, and what issues do you hope will be clarified moving forward?

Shear: There are two fundamental issues that every client operating in this space wants to know: Is the patent dance mandatory, and when will the 180-day notice of commercial marketing be effective? Strategically, these two questions impact a series of business considerations that in-house counsel have to advise their companies on, including when we might know that there is potential competition, and how soon competitive products could potentially be on the market. On the flip side, biosimilar clients often want to know whether they have to show their hand in the dance and how soon can they get to market. 

The Supreme Court case, Sandoz v. Amgen, potentially will answer both questions. At this point, most people are fairly comfortable thinking through the dance and whether to engage in it. But when to give notice of marketing, and whether it will be effective, are open issues. And for smaller companies without multiple revenue streams, time to market is a big issue, either because they are concerned with competition entering (in the case of an originator) or because (in the case of a biosimilar) they are in need of generating revenue. 

MCC: The number of inter partes reviews (IPRs) filed by pharmaceutical companies has been steadily increasing. How are you using post-grant proceedings to complement your patent litigation strategies?

Shear: I represent clients on both sides of the fence, some challenging patents, others defending against challenges that have been or will be brought. Post-grant can be a valuable tool to narrow the issues in litigation, but it has to be invoked carefully. To me, one of the most important considerations whether to use a post-grant proceeding is to assess which is the best forum for the argument that you intend to make. Is it something more technical in nature that might be better suited for the technically minded Patent Trial and Appeal Board, or is it something more appropriate for a judge or jury? That isn’t always an easy call to make.   

MCC: How will the change in the administration in Washington, D.C., affect patent litigation for pharmaceutical and life sciences companies?

Shear: That is truly anyone’s guess. Many commentators have noted that the judiciary is in a state of crisis because of the incredibly large number of vacant judgeships that need to be filled. Hopefully, this can be addressed.

Chad Shear is a principal at Fish & Richardson, where he focuses his practice on high-stakes patent litigation for life sciences and pharmaceutical companies around the world. He has deep experience handling complex competitor-to-competitor, Hatch-Waxman and biosimilar litigation.

He is based in Fish’s Southern California office and can be reached at shear@fr.com.