Threats – What NOT to Do

As a business owner, it is sometimes very tempting to tell everyone that your patent or design has been copied or that trade mark has been infringed. Indeed, it may be true and it is occasionally blatant. You may even have been on the receiving end of those allegations. However, firing off accusations to customers can back fire badly – and not just because people think badly of you as a consequence. There are provisions in the legislation called “threats provisions” and those sections of the relevant Acts can land you in deep water. I’m going to use the case of Pfizer v Allergan (formerly Actavis) to illustrate this.

In 2013, the patent of one of Pfizer’s well known and used drugs expired. The drug known as “Lyrica” had a number of applications, the two key ones being to treat anxiety and epilepsy. However, as is not uncommon in the pharma industry, part of the patent protection had been slightly extended time wise to cover what is known as a “secondary medical use” for neuropathic or nerve pain. It is not unknown for the life span of 20 years of a drug patent to be extended in this way.  As new uses and applications for the drug for further medical conditions may come to light some time after the original patent is filed. The patent lifespan of a drug is thereby extended as a result of a claim of second medical use. The use in this case extended the patent but only for the use of the drug in nerve pain and then only by 2 years.

Allergan, a pharmaceutical company, were waiting in the wings for the patent on Pfizer’s drug to expire so they could then launch their own generic drug, which would be much less expensive version, and sell that drug to the NHS. However, Pfizer – no doubt smarting from this – wrote to NHS professionals telling them that use of the Allergan drug for nerve pain infringed its patent rights. They also sued Allergan for patent infringement on the basis that the generic drug was being used for nerve pain as well as for the original applications.

The upshot of this story is that when Pfizer went to Court it not only lost the remaining 2 years of the patent protection it had as the Judge found the use of the drug in nerve pain “obvious”, it was also found liable for “groundless threats” it had issued to NHS staff.  As a result, Pfizer was required to pay Allergan a substantial amount of money to compensate them for their loss of business.

The reason people issue these threats is to stop or reduce the number of customers that are lost by them as a consequence of new comers.  In the case of the pharma industry, the amounts of cash at stake Worldwide are very significant. However, we are increasingly being approached by companies who are suffering because big business has issued threats. This kind of conduct is also arising in the electronics and engineering industries. Often, customers are being indirectly informed that the big companies’ patents have been infringed by the new boys on the block.  In some cases, customers are made to sign confidentiality agreements or other contracts and sworn to secrecy in order to stop the new boys from taking action under the threats provisions. Sadly, lots of our clients don’t know what to do – nor do they know what rights they have in law. This kind of scenario is where having a real expert can make all the difference to the outcome of a dispute of this kind.

You may also like...