ByRachelle H.B. Fishman

BioWorld International Correspondent

TEL AVIV, Israel - Teva Pharmaceutical Industries Ltd. said it will probably appeal the Tel Aviv District Court decision made in favor of Eli Lilly and Co., of Indianapolis, regarding Teva's alleged patent infringement of fluoxetine (the active ingredient in Prozac). The appeal must be filed within 45 days of the court ruling.

The court's decision relates to Teva's initiation of small-scale production in the early 1990s, which it performed in order to obtain a compulsory patent license in Israel. Upon the filing for this license, Lilly initiated the suit.

"The stance of the Israeli pharmaceutical industry allowing out-licensing at the time of the alleged infringement favored [Teva's] action," said Teva's CFO, Dan Suesskind.

"In fact," he said, "in 1993, the Israeli registrar of patents decided to award Teva the requested compulsory patent license. The current court decision refused to grant Eli Lilly's main request for a three-year manufacturing injunction against Teva, but ruled for an accounting of damages as claimed by Eli Lilly against Teva."

Teva did put a generic version of fluoxetine on the Israeli market - Prixma - but not until 1996, after other generic manufacturers were also selling their equivalents.

The company released a statement last week upon publication of the court decision. It said that, "based on the initial review of [its] legal counsel, it appears likely that Teva will appeal the court decision, but does not expect that this decision will have a significant impact on the company's financial results," because the court decision does not have any impact on Teva's activities in the U.S.

Case Being Tried Under 'Old Law'

In February of this year, the Israeli patent law was amended to allow the pharmaceutical industry to perform the activities which were performed by Teva in the early 1990's.

Teva's spokesperson said Israeli patent law "allows companies to perform research and development, including preparations for marketing and sales, before patent expiration, thereby allowing Israeli companies to compete in the world marketplace."

Mark Friedman, the founding partner of Tel Aviv-based Mark Friedman Ltd., Israel's leading firm of patent attorneys, told BioWorld International the case "is being tried under the old law prohibiting any early exploitation of a patent. The amendment to the patent law passed earlier this year, thanks largely to lobbying efforts of Teva, following its loss to the Wellcome Foundation in a patent infringement suit, permits the manufacture of small amounts of a drug for the purpose of securing licensing."

The issue discussed was whether an individual company can manufacture a patented drug prior to the patent expiration, and thereby save those years of research and development. In the U.S., such an action is permissible if the quantities are small and are merely for the purpose of securing a license from a government authority, such as the FDA. Currently, Israel's law is the same as America's: Companies are allowed to do research and development before the patent expires but the original company has the right to extend its patent rights.

"Under the present law, activities such as Teva's may not have been found to constitute an infringement," said Friedman, whose firm, since its inception five years ago, has commandeered more than 50 percent of the hundreds of technological ideas that seek to be patented annually in Israel. "The ruling will greatly depend on the quantities actually found to have been produced and whether it can be proven that the manufacture was for the purpose of securing a license," Friedman added.

Teva is Israel's largest pharmaceutical company, with three-quarters of its sales outside Israel, the largest market being the United States. The company develops, manufactures and markets branded and generic human pharmaceuticals, active pharmaceutical ingredients, medical disposables and veterinary products. n

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