EMVR in phrama; court allows evidence that safety concerns drove demand instead of patents

On May 4, 2012, in Abbott GMBH & Co., v. Centocor Ortho Biotech, Inc., Case 4:09-cv-11340-FDS (D. Mass.), Judge Saylor issued an order that, among other things, ruled on a motion in limine to exclude damages evidence. The court held that evidence and testimony relating to Major Adverse Cardiac Events ("MACE"), a condition that may be connected to the use of a drug in question, was admissible for reasonable royalty purposes.

Abbott and Centocor sought FDA approval of two drugs, Abbott's ABT-874, and Centocor's Stelara. During clinical trials, both companies observed a small number of MACE events of their anti-IL-12 antibodies. When they sought FDA approval to sell their drugs, both companies were asked to provide information relevant to MACE events and their drugs. At that point, Abbott withdrew its application for FDA approval. Centocor provided additional information relevant to potential MACE events connected to its product and continued to seek FDA approval. Stelara was subsequently approved for sale in the United States.

Abbott accused Stelara of infringing two Abbott patents and is seeking lost profits and reasonable royalty damages. The lost profits claim is related to Abbott's drug Humaria, and not ABT-874. Centocor argued that the evidence of MACE events in the clinical trials was relevant to damages, among other issues. The court agreed, but only for the purpose of reasonable royalty damages.

Centocor contended that evidence of MACE events would be important to both of Abbott's damages theories, lost profits and reasonable royalty. Abbott argued, on the other hand, that the incidence rate of MACE in the clinical trials of its drug, ABT-874, and Centocor's, Stelara, should be excluded because they were not the drug, Humaria, on which Abbott sought lost profits.

The court determined that, while MACE events related to ABT-874 were not probative of lost sales of Abbott's Humaria product, they were relevant to a calculation of reasonable royalty. Specifically, Abbott demanded damages according to the entire market value rule, arguing that "the technology of the patents-in-suit drives demand for Stelara." The entire market value rule would allow Abbott to assess damages on the entire market value of the accused product (ABT-874) where the patented feature creates a "basis for customer demand or substantially create[s] the value of the component parts." Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1291, 1318 (Fed Cir. 2011) (quoting Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1336 (Fed. Cir. 2009)).

Abbot had withdrawn its FDA application for ABT-874 after the agency inquired about the MACE events. Centocor contended that this fact is evidence that the technology of the patents is not the sole basis of the market demand for Stelara. Put another way, Centocor suggested that the MACE evidence supported an inference that market demand for Stelara is based in part on a perception that it is safe. Abbott, on the other hand, argued that there was no evidence to suggest a causal connection between the MACE events that occurred during the trials and the drug itself.

The court found that that the link between MACE events and the drug related to the weight of the evidence and not its relevance. It is possible, the court said, that even a small difference between the number of MACE events between the trials of the two drugs could influence the public perception-and demand-for a given drug.

Therefore, the court allowed evidence of MACE events was admitted for reasonable royalty purposes to rebut Abbott's entire market value theory.