In a remarkable ruling, the U.S. Patent and Trademark Office (PTO) has narrowed the eligibility standards governing patent term extensions (PTEs) on the grounds that the Federal Circuit 1990 precedent, Glaxo v. Quigg, is no longer good law.

The PTO based its decision on a 2004 Federal Circuit case, Pfizer v. Dr. Reddy’s, which curiously doesn’t even mention the Glaxo case it supposedly overruled.

Section 156 of the Patent Laws allows medical device, veterinary, pharmaceutical, biotech and other companies to receive a PTE of up to five years to compensate them for the effective shortening of their patent terms due to the lengthy regulatory process needed to get their products approved.

Because a PTE attaches to the end of the original patent term when the product is mature and enjoying its maximum earning potential, a PTE is perhaps the most valuable patent right

However, because the PTO has re-interpreted the governing law, fewer PTEs will now be available and the legal viability of some PTEs already issued has been thrown into doubt.

What is a ‘Product’?

A company can receive a PTE only if its shows that its “product” has just received government approval, the approval marks the first time the “product” was approved, and that it lost time on its patent waiting for approval.

A patent that is extended only covers the “product” that was the subject of the PTE and not other molecules that might also be within the scope of the patent. Thus, the interpretation of the statutory definition of the term “product” is central to determining both the eligibility and enforceability of PTEs.

The term “product,” in the case of therapeutic products, means “the active ingredient” of drugs and biologics, “including any salt or ester of the active ingredient.”

Prior to 1989, the PTO interpreted the term “product” to mean the “active moiety” of the drug or biologic and not the entire active ingredient. The active ingredient of a drug in salt or ester form (which is the form of the vast majority of drugs), thus would only be the active part of the drug and not the salt or ester forming part of the drug (atorvastatin, not atorvastatin calcium).

Under this broad definition, drugs that were an improvement on an older, previously approved drug would not be eligible for a PTE even though they could represent a substantial medical improvement.

For example, in the 1980s, Glaxo developed a new oral dosage form of a previously approved antibiotic that required an injection.

Glaxo sought a PTE, but the PTO denied the request on the grounds that the “product” (i.e., active moiety) was previously approved. Glaxo challenged the ruling.

The Federal Circuit found that the words of the statute were plain and should be interpreted literally, and rejected the PTO’s policy arguments. It ruled that “active ingredient” meant the entire active ingredient, salt and all, and did not mean active moiety.

The Elephant in the Courtroom

In 2004, Dr. Reddy’s Laboratories modified the salt part of Norvasc® (amlodipine besylate) and made a similar drug known chemically as amlodipine maleate. Amlodipine maleate and amlodipine besylate are different salts of the same moiety, amlodipine.

Pfizer sued Reddy claiming that because Reddy’s product had the same moiety as Pfizer’s, Reddy’s product fell within the scope of Pfizer’s PTE. The district court agreed with Reddy, and, citing Glaxo, ruled that the product covered by Pfizer’s PTE was amlodipine besylate, not the broader amlodipine moiety.

The Federal Circuit reversed, and, reverting back to the PTO’s pre-Glaxo policy-based position, held that “product” meant “active moiety” not the entire salt or ester form of the product.

Although this holding was directly contrary to Glaxo, it’s important to note that the court did not even mention the Glaxo case.

This omission was particularly striking because Glaxo was binding precedent, Glaxo was explicitly relied upon by the district court, Glaxo was discussed extensively in the briefing, and Glaxo was discussed at oral argument.

The Glaxo case was also the centerpiece of Reddy’s motion for reconsideration en banc, which was denied. Despite all of this, the Pfizer court simply ignored the prior, perhaps “inconvenient,” Glaxo precedent.

The PTO’s Conundrum

In 2005, the PTO was faced with the question of whether it should issue a PTE for a new injectable form of the billion-dollar drug Nexium® (esomeprazole sodium), even though a different salt form of Nexium® (esomeprazole magnesium) previously was approved. If the PTO followed Glaxo it would issue the PTE.

If it followed Pfizer, it would deny the PTE. The PTO determined that Pfizer had in fact overruled the prior binding precedent in Glaxo and denied the PTE.

The PTO stated: “Eligibility for patent term extension must be consistent with the rights derived from a patent term extension. Accordingly, if the rights derived from the extension of a patent based upon the regulatory approval of a salt encompass other compounds within the same active moiety, then extension based upon subsequent approvals of other compounds within the same active moiety must be barred. As Pfizer suggests this result, Glaxo must be treated as overruled.”

The result of the PTO determination is confusion and uncertainty.

One can be sure that the PTO’s “new” position will be appealed and the Federal Circuit will have to decide if its 1990 or 2004 precedent controls. Thus, the patent bar and interested industry will not know for years to come what the appropriate standard is.

Brian T. Moriarty is a principal with Hamilton, Brook, Smith & Reynolds, P.C. in Concord, Mass. (www.hbsr.com). Brian is an intellectual property litigator with expertise in the areas of biotechnology and pharmaceuticals. He is one of a few registered patent attorneys in the U.S. who also has served as an assistant U.S. Attorney. Brian can be reached at [email protected] or (978) 341-0036.