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Patent Ruling May Mean Trouble for Big Pharma

Not surprisingly, another big challenger of patents, Teva Pharmaceutical Industries (TEVA - Get Report), also welcomed the Supreme Court's ruling.

"Certainly on the surface, it does look like it is favorable to us," said George Barrett, president of Teva's U.S. division, during a May 2 conference call with analysts. "But we really need to digest this, and then we'll have a better read whether it has a direct impact on any of our cases."

Participants and observers in the arcane world of patent law say it will take a while before they can gauge how the U.S. Patent and Trademark Office and lower courts will interpret the ruling, which has already taken effect.

At first glance, they say it appears companies will have a tougher time defending patents, especially those related to incremental improvements on existing drugs, a practice known as patent life-cycle management.

The Supreme Court ruling "will have a significant impact on the issue of patent life-cycle management," said Steven Ludwig, a partner in Venable LLP, a law firm whose clients include the Pharmaceutical Research and Manufacturers of America, the trade association for big drug companies. "The standard has been lowered. It may be easier for generic companies to invalidate patents."

Cloudy Forecast

Although attorneys say each case is different, the ruling could influence patents on a drug's administration, for example a once-a-day pill vs. a twice-a-day pill or on different ways a drug is absorbed in the bloodstream. Chemical cousins, in which different drugs have similar molecules, also could be affected.

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