Commercial Litigation
Economic
Expertise
Clinical
Expertise
Clinical Expertise
Patent Validity
Clinicians can provide an expert opinion on the novelty and the obviousness of a patented drug or medical device.
Antitrust
Clinicians can provide an expert opinion on the drugs, medical devices and treatments that are considered therapeutic alternatives or therapeutic substitutes.
Dr. Jonathan S. Olshaker, M.D., FAAEM, FACEP
meet our clinical experts
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Dr. Feldman has over 40 years of experience in emergency medical care as a practicing physician and academic. He is a Fellow of the American College of Emergency Physicians and has received certifications from the National Board of Medical Examiners, American Board of Internal Medicine, and American Board of Emergency Medicine.
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For nearly two decades, Dr. Olshaker was Chairman of the Department of Emergency Medicine at Boston Medical Center (BMC), the largest Level One trauma center in New England, while serving as Professor and Chair of the Department of Emergency Medicine at the Boston University School of Medicine (BUSM).
James A. Feldman, M.D., M.P.A., FACEP
Economic Expertise
Commercial Success
Evidence of secondary considerations, or objective indicia of non-obviousness, can be a critical factor when assessing whether an invention was obvious per 35 U.S.C. § 103. Commercial success, long-felt but unmet need, and failure of others to create the invention can be relevant tools in assessing patent validity. Evidence of commercial success of the product-at-issue weighs against a finding of obviousness. If the invention were truly obvious, economic incentives would have driven others to develop the product-at-issue (or a similar product) therefor limiting the opportunity for the product’s commercial success. However, if the product-at-issue was found to be a commercial success and there was a nexus between that success and the patented features of the product-at-issue then there is a presumption that the inventions were not obvious.
Why is nexus important? Why isn’t the product’s commercial success sufficient? If, for example, a product’s commercial success can be entirely attributed to marketing efforts or price discounts and in no way due to the patented features then commercial success is less informative as a secondary consideration. An additional example is when a barrier that prevented others from developing the inventions. For example, in Acorda Therapeutics Inc. v. Roxane Laboratories Inc. the District of Delaware found that the secondary considerations did not sufficiently weigh in favor of non-obviousness of the Acorda patents because an earlier patent “provide[d] an independent, alternative reason why [another person of ordinary skill in the art] would not have attempted to develop the invention claimed in the Acorda Patents.” [2017 U.S. Dist. LEXIS 48479, at 105 (D. Del. Mar. 31, 2017)] Although the Federal Circuit affirmed the District Court’s decision, it also stressed that the Federal Circuit’s decision did not impose a per se rule and identified a number of factors that are relevant to secondary considerations analysis. [2018 U.S. App. LEXIS 25536, at 67 (Fed. Cir. Sept. 10, 2018)].
Commercial Success analysis is often seen in pharmaceutical cases such as ANDA litigation (i.e., Hatch-Waxman litigation) which may take place in District Court (commonly Delaware), Inter Partes Review at the PTAB or International Trade Court section 337 investigations.
Patent Infringement
There is a legal framework for correctly assessing damages in patent infringement cases. As a matter of law, the patents-at-issue are assumed to be valid, enforceable and infringed. The damages analysis must also consider that the plaintiff is entitled to “damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer.” [35 U.S.C. § 284] Consequently damages can take two forms: (1) lost profits or (2) reasonable royalty. Lost profits are appropriate when the patent owner would have made additional profits but-for the infringement. Consequently, a reasonable royalty is appropriate when the patent owner is not entitled to lost profits.
As a matter of law, one can determine if lost profits are appropriate damages using the four “Panduit Factors.” [Panduit, 575 F.2d at 1156]
- Was there sufficient demand for the patented product?
- Were there acceptable non-infringing alternatives (NIAs) to the patented product?
- Could the patent owner have met demand for the patented product?
- What profit would the patent owner have made but-for infringement?
Accordingly, a patent owner is only entitled to lost profits when all four Panduit Factors can be affirmatively addressed. For example, let us assume that but-for the infringement there was demand for the patent owner’s patented product and that no NIAs were available. Let us further assume that the patent owner was incapable of meeting the entirety of demand due to insurmountable constraints on manufacturing capacity. In this stylized example, the patent owner would be entitled to lost profits for lost sales up to the amount of manufacturing capacity and entitled to a reasonable royalty for any infringing sales in excess of manufacturing capacity.
The Federal Circuit has approved multiple methodologies for calculating a reasonable royalty. However, the most common approach is based on Georgia-Pacific Corp. v. United States Plywood Corp. [318 F. Supp. 1116 (S.D.N.Y. 1970)] As a legal matter, a negotiation between the parties is hypothesized to take place prior to the act of first infringement. The parties are assumed to be “willing” participants in the negotiation with the mutual assumption that the patents-at-issue are valid and infringed but-for a license. Consequently, the hypothetical negotiation is assumed to yield a hypothetical license that can theoretically reflect a real-world licensing negotiation occurring prior to first infringement. The District Court also identified 15 factors (i.e., the Georgia-Pacific Factors) that were considered in other leading cases. Depending on the case, consideration of these factors may either raise, lower or have no impact on the reasonable royalty.
Irreparable Harm
Evidence of irreparable harm can be a critical factor in a preliminary injunction, writ or temporary restraining order. A determination that harm is irreparable must fundamentally show that the harmed party cannot be adequately compensated for said harm if the defendant is permitted to continue with the alleged action. A proper analysis of irreparable harm requires a holistic assessment of the harm as well as the parties. Can the harm be reasonably assessed? Is there an assessment that the court will not consider unreasonably speculative? Will both the defendant and plaintiff survive through trial so that adequate compensation, if warranted, can be made?
Valuation
There are commonly three approaches to assess the value of an asset: (1) the Cost Approach; (2) the Market Approach; and (3) the Income Approach.1 The Cost Approach is based on the economic principal that an informed buyer will not pay more for an item than what it would cost to produce or replace the item, otherwise known as the item’s replacement cost. Since the Cost Approach does not rely on comparables, it is commonly used in valuing special-use assets. The Market Approach is based on the selling price of a similar or comparable item in the marketplace. This approach relies on recent sales of comparable items, adjusting for any differences between the item being valued and the comparable items. This approach is based on the same economic principal that an informed buyer will not pay more for an item than what it would cost to replace the item. The Income Approach, also known as the Income Capitalization Approach, relies on the income the item will expectedly generate. This approach is commonly referred to as the discounted cash flow (DCF) approach and is often used in business valuation. The DCF approach uses both income statements and balance sheets in the analysis, thus taking revenue and expenses into account.
Breach of Contract
There are several common remedies for a breach of contract. The most befitting remedy can depend on the terms of the contract, nature of the breach and the circumstances. Compensatory damages compensate the non-breaching party for any losses incurred as a result of the breach. Damages may include loss directly and necessarily incurred by the breach (“general damages” or “expectation damages”) as well as loss due to special circumstances or conditions that are not ordinarily predictable (“special damages”).
Trade Secret Misappropriation
Injunctive relief is often the primary remedy in a trade secrets case. However, monetary relief can be assessed for the misappropriation that occurred before the injunctive relief was entered. In addition, monetary relief can be assessed in cases where injunctive relief is either not sought or granted. The courts have recognized four methods of calculating monetary relief.
Loss to the Plaintiff (“actual loss”) may consist of (a) lost profits resulting from the plaintiff’s lost sales, (b) lost profits on sales of the plaintiff’s derivative or convoyed products, (c) as well as lost royalties the plaintiff would have received but-for misappropriation. However, lost profits are only recoverable if the misappropriation is the proximate cause of the loss. Alternatively, the plaintiff may seek lost business value, rather than lost profits, when the plaintiff is operating at a loss or lost profits are incalculable.
Unjust Enrichment consists of defendant’s financial gain that is attributable to the misappropriation but not accounted for in the actual loss. The financial gain may entail the defendant’s profits or other forms of ill-gotten gains such as market value appreciation.
Reasonable Royalty is the price the parties would have willingly agreed to in a hypothetical negotiation for the defendant’s use of the trade secret.
Standard of Comparison consists of the defendant’s cost-savings attributable to the misappropriation. The cost-savings are calculated by comparing the defendant’s actual cost to the cost of achieving the same result without misappropriation. The latter may entail the development costs of the trade secret or the cost of alternative methods that would achieve the same result of using the trade secret but available to the defendant at the time of the misappropriation.
Lanham Act
The Lanham Act prohibits unfair competition directly related to a number of activities including trade dress, trademark infringement and false advertising among other areas. [15 U.S.C. ch. 22] An accurate assessment of damages stemming from Lanham Act violations requires a thorough understanding of the impact caused by the alleged wrongful act. Commonly, this understanding is reached by analyzing documents, testimony, surveys, the marketplace and sales data. If, for example, there were shifts in the marketplace (e.g., competition, shortages, etc.) that were independent of the alleged wrongful act then it is necessary to pinpoint the distinct impact of the alleged wrongful act.
Damages, subject to the principles of equity, are commonly determined based on lost profits to the plaintiff or disgorgement from unjust enrichment. [15 U.S.C. § 1117] Lost profits analysis is the incremental profits that the plaintiff would have made but-for the defendant’s alleged wrongful act. Consequently, determining the impact, if any, that the alleged wrongful act had on the plaintiff’s sales is commonly a fundamental step in the process. The same can be said for disgorgement analysis. If, for example, it cannot be shown that the defendant benefited (e.g., garnered profits) from the alleged wrongful act then there is no unjust enrichment to disgorge.
Antitrust Claims
Allegations of anticompetitive conduct such as bundling, tying, foreclosure and monopolization often require expert assessment on economic matters regarding liability (e.g., market definition, market power, and anticompetitive effects) as well as damages. For example, bundling and tying claims commonly allege that sellers leverage power in one market to gain power in another market. Consequently, it is critical to accurately assess market power in the tying product(s). [547 U.S. 28 (2006)] In some cases it may also be useful to examine whether the alleged conduct had an anticompetitive effect in the tied product market.
Defining the relevant antitrust market requires an accurate assessment of potential consumer substitution based on the price and non-price factors affecting demand. Once a relevant antitrust market is properly defined, then measures of market share and market concentration are commonly used to assess market power and competitive effects. However, it is worth noting that not all of the tools used to assess competitive effects rely on market definition.
In the case of prescription pharmaceuticals, an assessment of the relevant antitrust market must reflect the distinctive nature of those markets. A commonly used tool to assess relevant market definition in many industries is the SSNIP (Small but Significant and Non-transitory Increase in Price) test.2 However, the unique structure of prescription pharmaceutical markets will often make use of the SSNIP test unfeasible. Typically, it is impossible to observe a single, ‘true’ price for each prescription pharmaceutical that is in the candidate antitrust market due to the use of chargebacks, rebates and other discounts. Moreover, the complex structure of the distribution and payment chain involves many stakeholders that can have wide ranging impact on which prescription products are first considered and then ultimately prescribed. How does the physician choose the prescribed product? What input does the patient have on the prescription? What is the influence of third-party payors or managed care organizations? All of these questions, and many more, complicate an assessment of relevant market in prescription pharmaceuticals.