Smith & Nephew, Arthrex Settled Suture Anchor Patent Dispute Before Trial

On February 14, 2017, U.S. District Judge Michael Mosman of the United States District Court, District of Oregon granted a Joint Stipulated Motion for Dismissal with Prejudice submitted by Plaintiffs Smith & Nephew, Inc. and John O. Hayhurst, M.D. (inventor) and Defendant Arthrex, Inc. subject to the terms of a Settlement and License Agreement.  Information about the settlement terms is not publicly available.

This agreement ends a 12-year long dispute between Smith & Nephew and Arthrex over Smith & Nephew’s U.S. Patent No. 5,601,557, which is directed to a method and apparatus for anchoring cartilage within a joint.

In 2004, Smith & Nephew sued Arthrex and alleged that certain products of Arthrex’s SutureTak® and PushLock® suture anchor families infringed the ‘557 patent (case number 3-04-cv-00029).  According to the United States Court of Appeals for the Federal Circuit’s opinion of March 18, 2015, the parties had gone through three jury trials and two previous appeals.  The third jury trial in 2011 produced a verdict of willful infringement and damages awards.  Arthrex moved for Judgment as a Matter of Law (JMOL) of noninfringement, which was granted by the district court without an opinion.  The Federal Circuit reversed and remanded the JMOL and reinstated the verdict in its S&N II opinion in 2013.

We previously reported the district court’s entering of judgment in favor of Smith & Nephew on remand, awarding a total of $88 million in damages and granting a permanent injunction against Arthrex.  The judgment was affirmed by the Federal Circuit in its March 18, 2015 opinion.  In June 2015, Smith & Nephew reported receiving a $99 million patent infringement payment from Arthrex.

In 2008, Smith & Nephew also sued Arthrex and alleged that different products from the same SutureTak® and PushLock® families infringed the ‘557 patent (case number 3:08-cv-00714).  Judge Mosman granted in-part Smith & Nephew’s motion for summary judgment of infringement and denied Arthrex’s motions for summary judgment as of non-infringement.  He also granted Smith & Nephew’s motion for summary judgment as to reasonable royalty damages.

According to the court’s public record, a jury trial was set for February 13, 2017 for the remaining issues in the lawsuit filed in 2008.  On February 10, 2017, Judge Mosman vacated the jury trial, followed by the parties’ Joint Stipulated Motion for Dismissal with Prejudice.

Smith & Nephew and Arthrex filed a similar Joint Stipulated Motion for Dismissal with Prejudice in the 3-04-cv-00029 case, and in another lawsuit in the Eastern District of Texas relating to Arthrex’s patents (case number 2:15-CV-1047).  The motion was granted by the Eastern District of Texas court, but denied as moot in the 3-04-cv-00029 case, which was closed when the September 2013 judgment was entered.

Biogen to Pay Forward $1.25 Billion in Settlement

Forward Pharma A/S (“Forward”) recently announced that a necessary super majority of its shareholders have approved a settlement of various patent disputes with two wholly-owned subsidiaries of Biogen Inc. (“Biogen”) in which Forward will receive USD $1.25 billion cash from Biogen.  77% of the voting shareholders voted in favor of accepting the settlement agreement.

Founded in 2005, Forward, a Danish biopharmaceutical company, develops pharmaceutical treatments for patients with neurological conditions such as multiple sclerosis.  The company reports that it is currently conducting Phase 1 clinical trials for its formulation of dimethyl fumarate (DMF).

Boston, Massachusetts-based Biogen, founded in 1978, is also a biopharmaceutical company specializing in treatments for multiple sclerosis and other neurological conditions and rare genetic disorders.  Biogen developed and now markets an oral multiple sclerosis medication (a DMF therapy) under the trade name TECFIDERA™ for which FDA approval was obtained in early 2013.

Forward and Biogen have been engaged in patent disputes before tribunals in the US and Europe since at least 2014.  As exemplified by its suit for patent infringement brought in Germany, Forward alleges that Biogen infringes certain of Forward’s patents  relating to oral DMF therapies for the treatment of multiple sclerosis.  Forward has also brought an interference proceeding (seeking priority over Biogen’s patent to DMF therapy) in the U.S. Patent and Trademark Office (“USPTO”), and multiple opposition proceedings in the European Patent Office (“EPO”).  Under the terms of the settlement agreement, one of the EPO oppositions and the patent infringement suit will be terminated, but the USPTO interference proceeding and the other EPO opposition will be allowed to continue to a final determination of patentability (appeals included).

In addition to the up-front cash payment it agreed to pay Forward, Biogen will pay royalties (10–20%) on U.S. and non-U.S. sales of its orally administered DMF products, but only if Forward successfully obtains patent rights covering those treatment methods as a result of the USPTO and EPO proceedings referenced above.

New Video Resources on Inter Partes Review (IPRs)

Since 2012, Inter Partes Review (“IPR”) has emerged as one of the most significant new procedures in patent law. An IPR is a proceeding in the Patent Office, and allows a party to challenge an issued patent on certain prior art grounds.  If successful, the challenging party can invalidate some or all of the patent claims. IPRs can be an alternative to challenging a patent in court, although oftentimes IPRs are filed while a patent lawsuit is also ongoing.

Here at Knobbe Medical, we continue to track and identify Medical Device IPRs that have been filed.

Below is a summary of the 315 Medical Device IPRs Knobbe Medical has identified between December 22, 2012 – November 30, 2016:

Cases Filed – 315

  • Decision Regarding Institution Made – 222
  • Pending Institution Decision – 63
    • Instituted and Subsequently Settled/Patent Owner Terminated – 51
    • Instituted and Pending Final Decision – 45
    • Not Instituted – 73
    • Final Decision Reached – 53
  •  Settlement/Patent Owner Termination Prior to Institution Decision – 30

summary-1 summary-2Average Time to Decision –

  • Average Time for Decision of Institution to be Reached = 181 days
  • Average Time for Final Decision to be Reached = 529 days

summary-3

As the number of IPR filings in the medical device industry continues to increase, this procedure is proving to be a powerful tool for companies and patent owners to challenge issued patents.

Please note that determining what is considered a “Medical Device IPR” was subjective and the data above is only intended to provide a general overview of medical device IPRs filed in the last couple of years, is based on public databases, and may not be accurate or complete.

Even if you are already familiar with IPRs, the following videos illustrate how actual IPR practitioners might approach some common issues.

Introduction to IPRs

Learn or refresh yourself on the basics of IPRs. Topics include:

  • An overview of the patenting process and ways in which patent disputes can arise
  • A description of how the Patent Trial and Appeal Board (PTAB) is structured and how IPRs function
  • High-level strategic considerations for both patent holders and petitioners to help position themselves for success throughout the IPR process

Strategic Insights for IPRs

Hear insights into the process of successfully managing IPRs. Topics include:

  • A clear description of the timeline associated with an IPR proceeding
  • A walk-through of an IPR proceeding, including a trial
  • What skills a successful IPR practitioner must possess to ensure the best representation at the PTAB

Potential Repeal of Medical Device Tax

With the upcoming Republican-dominated Presidency and Congress in 2017, the Affordable Care Act, or at least parts of it, look to be on the chopping block.  One of the changes that may be forthcoming is a repeal of the 2.3% medical device excise tax.  While currently being suspended through 2017, under the present law the medical device tax would be reinstated in 2018.

Some producers of medical devices hope that the tax is never reinstated. Mark Throdahl, president and CEO of OrthoPediatrics Corp., a northern Indiana based orthopedic company, has said that the suspension of the tax allowed the company to hire new workers and hopes for a full repeal after the Republican transition.  According to Throdahl, the tax led to a hiring freeze, and suspension of the tax allowed  for them to resume “an aggressive pace of hiring and investment.”  Complaints from companies like OrthoPediatrics, as well as medical device associations like AvaMed, were what led to the initial temporary suspension of the tax.

Immediately after Donald Trump‘s election victory, AvaMed President Scott Whitaker wrote in a letter to Vice President-elect Mike Pence:

The medical device tax has been a significant drag on medical innovation, and resulted in the loss or deferred creation of jobs, reduced research, spending and slowed capital expansion.

According to some lawmakers, lobbyists, and industry executives, Trump and U.S. lawmakers will likely repeal the tax which could help some of the larger medical device manufacturers such as Medtronic, Boston Scientific, St. Jude Medical, and Johnson & Johnson.  Senate Republican Leader Mitch McConnell has stated that repealing the Affordable Care Act will be one of the first order of business starting in January.   Senator John Barrasso (R-Wyoming) has also stated that the medical device tax would likely be repealed.

There are still a number of decisions on how to approach the repeal of the medical device tax, whether in one single bill to repeal the Affordable Care Act or a number of smaller bills removing different parts of the Act.  We should be receiving more clarity once President-elect Donald Trump officially takes office.

Repeal of the tax may remove approximately $2.5 billion of annual federal funding.

Myriad Genetics Announces an Assay that Identifies Patients for Olaparib Treatment

Salt Lake City-based Myriad Genetics, Inc. announced that its BRACAnalysis CDx® test accurately identifies patients with ovarian cancer for a second-line treatment with olaparib. The announcement came as a result of a clinical study finding that the Myriad diagnostic device accurately identifies patients for olaparib treatment.

Commenting on the results of the clinical study, Johnathan Lancaster, M.D. Ph.D., Gynecologic Oncologist and Chief Medical Officer of Myriad Genetic Laboratories, stated that:

These outstanding findings represent another meaningful advancement for ovarian cancer patients. Importantly, the results demonstrated that BRCA status as determined by BRACAnalysis CDx can identify patients likely to benefit from PARP inhibition therapy.

 

bracanalysis-cdxAccording to the press release, the BRACAnalysis CDx® test is an FDA approved diagnostic device that detects and classifies mutations in the BRCA1 and BRCA2 genes, using genomic DNA obtained from whole blood samples from a patient. Mutations in BRCA1 and BRCA2 are known to be associated with Hereditary Breast and Ovarian Cancer (HBOC) Syndrome. These mutations can be detected and quantified using the BRACAnalysis CDx® detection platform. In its Press Release, Myriad announced that BRACAnalysis CDx® may be used to aid in the identifying ovarian cancer patients who would be eligible for treatment with olaparib.

According to its website, Olaparib (Lynparza) is an FDA-approved targeted therapy for cancer, developed by AstraZeneca. Olaparib is a poly ADP ribose polymerase (PARP) inhibitor. Olaparib prevents PARP DNA repair, resulting in a buildup of damaged DNA, and resulting in cell death. Olaparib acts against hereditary BRCA1 or BRCA2 mutations.

Sean Bohen, Executive Vice President, Global Medicines Development and Chief Medical Office of AstraZeneca stated that:

We are pleased with the robust improvement in progression-free survival demonstrated by Lynparza in the SOLO-2 trial. We will work with regulatory authorities to make Lynparza tablets available as quickly as possible to patients with ovarian cancer. We remain committed to investigating the full potential of Lynparza, both as monotherapy and in combinations, and to identifying all patients who may benefit from this important medicine.

According to its website, Myriad Genetics is a molecular diagnostic company that develops diagnostic assays for the detection of genetic diseases. Specifically, these assays are said to determine the risk of developing disease, accurately diagnose disease, assess the risk of disease progression, measure disease activity, and guide treatment decisions. Myriad states that it discovered and sequenced the breast cancer gene, BRCA1 in 1994, and has developed numerous diagnostic products related to the diagnosis of hereditary cancers.

Isto Holdings Acquires Arteriocyte To Form Isto Biologics

Isto Holdings, the parent company of Isto Technologies, has acquired Massachusetts based Arteriocyte Medical Systems Inc. and the two companies will be combined under the name Isto Biologics under the current CEO of Isto Technologies, George Dunbar.

According to its website, Isto Technologies is a medical device company involved with bone and cartilage repair and regeneration. Public records indicate that there are several pending patent applications listing Isto as the applicant.  According to its website, Arteriocyte focuses on improving surgical outcomes and there are several patents and applications listing Isto as the applicant covering a number of technologies, such as centrifuge systems and autologous fibrin sealants, to name a few.Isto_Biologics_Logo

Accordingly, Isto Biologics’s expanded product portfolio will now include Arteriocyte’s MAGELLLAN autologous platelet separator with Isto’s bone-growth and cell therapy products including InQu bone graft extender and substitute, Influx natural bone-grant material, and CellPoint concentrated bone marrow aspirate system.

Thompson Street Capital Partners, which acquired the commercial operations of Isto in June of this year, provided capital for the transaction.  According to Anthony Chambers, Director at Thompson:

We’re excited to bring together two great organizations under the Isto umbrella and build upon their leading biologics platforms.

At this time, the terms of the acquisition deal have not been disclosed. While the combined company will be headquartered in St. Louis under CEO George Dunbar, Isto’s base of operations, they will maintain operations in Massachusetts.

2016 Security of Things® Forum

The third annual Security of Things® Forum (SECOT) in Cambridge, Massachusetts fostered discussion on a variety of cyber-security related topics ranging from a standards-based approach to security connected devices to connected healthcare platforms.  Even the Department of Homeland Security weighed in on its own efforts to influence the next generation of connected networked devices by developing strategic principles for developers to consider when addressing the Internet of Things.

Keynote speaker Dr. Kevin Fu of the University of Michigan spoke specifically about both the benefits and security problems in networked medical devices.  Dr. Fu noted that pacemakers, for example, require direct contact from a sterile needle to adjust or maintain them, which creates an infection risk; and thus a wirelessly controlled pacemaker therefore can offer both the benefits of easier  access and control, but also the security risk of being accessible—and therefore hackable—via a network.  Moreover, a password protected pacemaker cannot simply lock out the user or attending physician because they fumbled the password at a critical moment.

While cyber-security for medical devices is a complex problem, especially in view of the aging infrastructure of most healthcare systems, Dr. Fu concludes that overall “patients prescribed an implant are far safer with those devices than without” despite even “major security problems.”  In fact, he believes that most security flaws can be addressed by practicing basic security hygiene, addressing the “low lying fruit” and designing critical systems to “fail gracefully” by localizing breaches.

A second session of the SECOT Forum occurred on October 27, 2016 in Washington, DC.  Speakers included: Suzanne Schwartz, FDA Director of Emergency Preparedness/Operations and Medical Countermeasures; Beau Woods, Deputy Director of the Cyber Statecraft Initiative in the Brent Scowcroft Center on International Security; and keynote speaker Ralph Langer, Managing Principal of Langer Communications.

FDA Announces International Draft Guidance for Clinical Evaluation of Software as a Medical Device

The U.S. Food and Drug Administration announced the availability of a draft guidance for the clinical evaluation of software as a medical device (SaMD).  The draft guidance was prepared by the SaMD Working Group of the International Medical Device Regulators Forum (IMDRF), an international group of medical device regulatory authorities including the FDA.  When finalized by the IMDRF, the draft guidance will represent the FDA’s “current thinking” on SaMD clinical evaluation and will not be binding.

SaMD is defined in the guidance as software that functions as a medical device and can run on a general purpose computing platform, “without being part of a hardware medical device.”  Unlike other medical device-related software, SaMD primarily has risks associated with incorrect output affecting clinical management of a patient, rather than risks resulting from direct patient contact.  Thus, the guidance is intended to address the “uniqueness of indirect contact between patients and SaMD” and provide globally harmonized principles for establishing scientific validity, clinical performance, and analytical validity for a SaMD.

The FDA is seeking public comment on the draft guidance generally, and related to eight specific issues:

  1. Does the document address the intention captured in the introduction/scope or vice versa?

  2. Does the document appropriately translate and apply current clinical vocabulary for SaMD?

  3. Are there other types of SaMD beyond those intended for non-diagnostic, diagnostic and therapeutic purposes that should be highlighted/considered in the document?

  4. Does the document adequately address the relevant clinical evaluation methods and processes for SaMD to generate clinical evidence?

  5. Are there other appropriate methods for generating clinical evaluation evidence that are relevant for SaMD beyond those described in the document?

  6. Are the recommendations related to the “importance of clinical evidence and expectations” appropriate as outlined for the different SaMD categories?

  7. Are the recommendations related to the “importance of independent review” appropriate as outlined for the different SaMD categories?

  8. Given the uniqueness of SaMD and the proposed framework—is there any impact on currently regulated devices or any possible adverse consequences?

The draft guidance is available for comment until December 13, 2016.

Sanofi & Verily Launch a Diabetes Joint Venture

Sanofi, a French multinational pharmaceutical company, and Verily Life Sciences LLC (formerly Google Life Sciences), Alphabet’s U.S.-based company devoted to the study of life sciences, recently announced the launch of Onduo, a joint venture created through collaboration between the two companies in diabetes treatment. Bloomberg and Reuters reported that Sanofi is inventing $248 million in the joint venture, and Verily the equivalent amount.

According to the announcement by Sanofi and Verily, Onduo will “leverage Verily’s experience in miniaturized electrics, analytics, and consumer software development, and Sanofi’s clinical expertise and experience in brining innovative treatments to people living with diabetes.” The announcement also mentioned that Onduo will initially focus on the type 2 diabetes community, specifically on “developing solutions that could help people make better decisions about their day to day health, ranging from improved medication management to improved habits and goals.”

Stefan Oelrich, head of diabetes at Sanofi, said to the Wall Street Journal that the collaboration between Verily and Sanofi could yield a new product much faster than traditional drug development.  He expected Onduo to launch its first product within 2 to 3 years, compared to the roughly 10 years it takes to develop a new medicine.

The joint venture came out about a year after Sanofi and Verily agreed to collaborate to improve care and outcomes for people with type 1 and type 2 diabetes.  Onduo is one of many joint ventures that Verily have created in collaboration with other major pharmaceutical and medical device companies, including Galvani Bioelectronics, a joint venture with GlaxoSmithKline (GSK), and Verb Surgical, a joint venture with Johnson & Johnson’s Ethicon.

Sanofi and Verily appointed Joshua Riff, formerly a senior vice president of prevention and well-being at UnitedHealth Group’s Optum, as the chief executive officer of Onduo.  The joint venture is based in Kendall Square, Cambridge, MA.

ICU Medical Buys Hospira Infusion Systems From Pfizer

ICU Medical and Pfizer have reached an agreement to transfer ownership of Hospira Infusion Systems to ICU Medical, according to a joint press release on October 6.

    Image result for hospira     microclave - ICU Medical

According to the press release, in exchange for the Hospira division, which Pfizer acquired in September 2015, Pfizer will receive $600 million in cash and $400 million in ICU Medical stock. After the acquisition, Pfizer will own approximately 16.6% of ICU. Furthermore, Pfizer will have the right to nominate one director to ICU’s board as long as it holds 10% or more of ICU’s stock.

According to the Hospira Infusion Systems website, its products include IV pumps, solutions, and devices. Vivek Jain, ICU Medical’s CEO, explained that:

“By acquiring the Hospira Infusion Systems business, currently our largest single customer, we create a pure-play infusion business with the focus and scale to compete globally, eliminate our single customer concentration issue, and have a significant value creation opportunity as a much larger company.”

Jain further noted that Hospira has been using ICU’s licensed technology for more than 20 years.

Reuters reported that ICU Medical’s shares jumped 14 percent after the news.

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