Tuesday, July 20, 2010

Scylla and Charybdis: alternative patent and false advertising claims survive

Deston Therapeutics LLC v. Trigen Laboratories Inc., 2010 WL 2773317 (D. Del.)

Deston sued Trigen over either its use or failure to use a chemical called u-polycosanol 410 in their purportedly generic version of Deston’s ear drops. Polycosanol is a general term for a type of alcohol extracted from waxes, but Deston alleged that u-polycosanol 410 is a unique patented composition. Trigen’s package insert indicates it contains “u-polycosanol 410 (synthetic),” which is allegedly a way of ensuring that the product would be used by wholesalers, distributors, and pharmacies as a generic equivalent for Deston’s Auralgan. Generic equivalence requires both pharmaceutical and bioequivalence; otherwise, pharmacists won’t substitute the generic for the brand-name drug. Trigen, by labeling its product Treagan to include u-polycosanol 410, got drug information databases relied on by market participants to link its product to Auralgan as a generic equivalent. “Similar ear drops that list polycosanol as an ingredient but not u-polycosanol 410 have not been linked to Auralgan, because of the unique composition of u-polycosanol 410.” This behavior allegedly caused sales of Auralgan to erode due to substitution.

Deston argued that, if Treagan contains u-polycosanal 410, it’s infringing plaintiffs’ patent, and that if it doesn’t, then Trigen is falsely advertising in violation of the Lanham Act and state law. The court refused to dismiss the complaint, first finding that the challenges to the patent claims couldn’t be resolved on a motion to dismiss. Then, since Deston was pleading in the alternative, the court refused to dismiss the false advertising claims.

Trigen argued that Deston inadequately alleged falsity, misleadingness, and commercial advertising or promotion. Because of the patent infringement claim, it was sufficient to allege in the alternative that, if Trigen’s u-polycosanol 410 isn’t the same as Deston’s, then Trigen made a false statement by listing that ingredient on Treagan and presenting Treagan as a true equivalent to Auralgan.

Trigen’s argument was that, under the patents at issue, it could make and use u-polycosanal 410 so long as the chemical was not derived from the plant listed in the patents. If that’s true, it may also be true that the labeling is true because their u-polycosanal 410 is chemically identical without either infringing on the patents or making any false representations of equivalence. But, the court having declined to adopt Trigen’s construction of the patent claims for purposes of the motion to dismiss, the present allegations were sufficient.

Deston also sufficiently alleged actual confusion and misleadingness because of the listing in drug information databases and resulting behavior by wholesalers, distributors, pharmacies and pharmacists.

Finally, Deston sufficiently alleged commercial advertising or promotion. Trigen argued that Deston was required to allege that the label and insert proposed a commercial transaction and was disseminated widely in the industry. The court pointed out that Third Circuit cases have found a product’s name and label to be false advertising (Mylanta Night Time Strength, Breathasure). Deston alleged that consumers are purchasing Treagan “precisely because of the contents of its label,” that listed ingredients are the principal form of advertising in the generic pharmaceutical market, and that drug information databases have broadcast this information across the country. Even if widespread dissemination is required, Deston sufficiently alleged it.

The court also refused to dismiss the §43(a)(1)(A) claims of false designation of origin, on largely the same grounds. (Is a false claim about ingredients a false designation of origin? Under Dastar, how can it be? Does the test for the two prongs of §43(a) differ here? Is this a way of getting around the implicit/explicit falsity divide if the claim is only implicitly false and Deston lacks evidence of actual confusion?) The court rejected the argument that the term “synthetic” on Tregan’s label doesn’t resolve confusion, because the word doesn’t “distinguish the chemical makeup of the two substances (as opposed to the source).” (Doesn’t that implicitly concede that the problem is not one of designation of origin? How is a false ingredient claim any more a claim of origin than a false claim that “this computer has a really fast processor”? Composition isn’t the same as origin, I wouldn’t think.)

Anyway, the Delaware Deceptive Trade Practices Act claims also survived, as did the common-law unfair competition claims: Deston alleged misconduct causing interference with a business expectancy by claiming that Auralgan was a leading prescription product and that sales have eroded as a result of Trigen’s false marking of Treagan as a generic equivalent.

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