United States v. Glaxo Ltd by h378WqK


									United States v. Glaxo Ltd
                      Neil Chang
                    UC Berkeley
                     IEOR 190G
                       Fall 2008
   Glaxo Group Ltd. and Imperial Chemical Industries
    (ICI) each held patents that covered various aspects
    of the antifungal drug griseofulvin
       ICI had the patent on the orally ingested form of the drug,
        Glaxo had the manufacturing patents
   Glaxo and ICI cross-licensed their patents and
    sublicensed three brand-name companies to sell the
   In 1973, the U.S. Department of Justice Antitrust
    Division sued, claiming that the two companies were
    illegally monopolizing the sale of the drug and that
    one of the patents was invalid
Parties – Glaxo
(now GlaxoSmithKline)
   Founded in 1904 in the U.K. as a baby food
   Became Glaxo Laboratories and began researching
    pharmaceutical products, acquiring several smaller
    pharmaceutical research companies
   Merged with Burroughs Wellcome in 1995 to
    become GlaxoWellcome, and merged with
    SmithKline Beecham in 2001 to become
   Currently the second largest pharmaceutical
    company in the world by revenue
Parties –
Imperial Chemical Industries
   Founded in the U.K. in 1926 as the merger of
    four smaller companies
   Produces and develops chemical products,
    such as paints, food ingredients, specialty
    polymers, electronic materials
   Currently one of largest chemical producers
    in the world
   Acquired by Dutch conglomerate Akzo Nobel
    in 2007
Parties – U.S. Dept. of Justice,
Antitrust Division
   Responsible for enforcing all federal antitrust
   Has joint jurisdiction with Federal Trade
    Commission over civil antitrust cases and
    complete jurisdiction over criminal antitrust
Mechanism of griseofulvin

                 Binds to keratin (protein
                  which make up skin, hair
                  and nail cells)
                 When fungus infects
                  these cells, griseofulvin
                  enters the fungal cells
                  and binds to their tubulin
Mechanism of griseofulvin

                   Tubulin is the building
                    block of the microtubule,
                    which is an essential part
                    of the mitotic spindle
                   With tubulin bound and
                    inhibited by griseofulvin,
                    fungal cell division is
The Patents
   U.S. Patent No. 2,900,204, owned by ICI, issued
    1959, claims a method of curing humans/animals of
    fungal diseases via administering an internal dosage
    of griseofulvin via capsule, tablet or pill
   U.S. Patent No. 3,330,727, owned by Glaxo, issued
    1967, claims a way to manufacture a finely ground
    or “microsize” form of griseofulvin, which has proven
    to be the most effective form of the drug in treating
    fungal diseases
Pooling agreement
   ICI and Glaxo agreed to pool or cross-license
    their patents
   ICI and Glaxo then sublicensed the patents to
    three brand-name companies to produce and
    sell the finished drug
   This effectively closed the market to other
    companies that wanted to sell the drug form
    of griseofulvin, because of the effective
    monpoly ICI and Glaxo had on the related
Patent Case
   USDOJ Antitrust sued, claiming that the pooling of
    the patents violated Sec.1 of the Sherman Act
   Sherman Antitrust Act: “Every contract, combination
    in the form of trust or otherwise, or conspiracy, in
    restraint of trade or commerce among the several
    States, or with foreign nations, is declared to be
   USDOJ Antitrust further claimed that the ICI patent
    was invalid because their patent was not specific
    enough: their claim on the dosage form did not
    specify an “effective amount” of the drug, and did
    not specify the diseases that could be cured
Ruling by district court
   District court of the District of Columbia ruled in
    favor of USDOJ Antitrust on the antitrust charges
    but dismissed patent invalidity claim because the
    government lacks standing to challenge patent
   Denied USDOJ Antitrust’s request for mandatory
    selling and compulsory licensing, on reasonable
    terms (a measure to reopen the griseofulvin market
    to competition)
   USDOJ Antitrust appealed to the Supreme Court
Ruling by U.S. Supreme Court
   Supreme Court ruled 6-3 that USDOJ
    Antitrust had standing to claim patent
    invalidity in antitrust cases because the
    validity of the patent can significantly affect
    which remedies are appropriate
   Ruled that mandatory selling and compulsory
    licensing should be used to remedy the
    antitrust situation

   Government now has the ability to challenge
    patent validity in antitrust litigations
   “Mandatory selling on specified terms and
    compulsory patent licensing at reasonable
    charges” are suitable forms of relief for
    antitrust situations involving patents

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