Biologics Makers Have a Patent Protector in US Discovery Statute

The rapid growth of biologic therapeutics—a class of medicines that are produced in living cells then purified—has led to growth in multi-jurisdictional patent disputes.

With billions of dollars in sales at stake, innovators and biosimilar manufacturers have developed diverse global patent portfolios to protect their products. These patents run the gamut of subject matter, from structure and formulation to methods of use and manufacture.

The complexity of biologics’ global manufacturing and supply chains often makes it difficult for patentees to determine if, when, and where competitors may be infringing their patents. Production methods are particularly difficult to assess because these processes are closely held secrets—and often occur outside the US.

Even if samples of the competing product are available, manufacturing details can be impossible to deduce or reverse-engineer. This often leaves litigation discovery as the only way to learn the manufacturing methods for the potentially accused product and processes for its production.

Multinational disputes such as these are complex because of significant differences in substantive law, procedure, and privacy across borders.

Biologics manufacturers often produce and test their products in one country for distribution worldwide. Since many countries have limited or no mechanisms for discovery in patent cases, companies can sometimes conceal critical information from patentees and gain an advantage in patent battles.

Unique Discovery Statute

The US has a unique and broad discovery statute, 28 U.S.C. §1782, to help litigants discover information from their adversaries to use in foreign proceedings. This can include pending and anticipated litigation and other disputes, such as patent office proceedings, arbitrations, and potential government investigations.

Use of §1782 has risen in disputes involving biologics. A §1782 application for documents, things, and/or depositions is typically filed ex parte and must meet three threshold statutory factors:

• Target must reside or be found in the judicial district where the application is made
• Evidence must be for use in a foreign proceeding
• Request must be made “by a foreign or international tribunal” or by “any interested person”

If the court determines those factors are met, it weighs four discretionary factors in deciding whether to grant the application. Applications typically are accompanied by a declaration establishing need for discovery, satisfaction of the factors, and proposed subpoenas for documents and testimony.

If the court authorizes service of subpoenas, the target may lodge objections or move to quash. In certain cases, a district court might grant a request by the initial target for reciprocal discovery.

Section 1782 also can be used to obtain discovery for an anticipated foreign proceeding, if it’s “within reasonable contemplation.” It’s the target, not the documents, which must reside or be found in the pertinent jurisdiction.

The statute covers discovery for use before “foreign or international tribunals,” which includes foreign courts such as the foreign patent offices, the Unified Patent Court, various arbitral bodies, and antitrust authorities such as the European Commission. The US Supreme Court has ruled private adjudicatory bodies don’t count as “foreign or international tribunals” for §1782 purposes.

If a foreign tribunal indicated it would reject evidence obtained by §1782, or that the §1782 application amounts to a fishing expedition, the application may not be granted. Protective orders present a multitude of traps for the unwary. Counsel familiar with cross-border issues concerning ex-US protective orders, such as UK confidentiality clubs, should carefully craft and negotiate them.

Early Deployment

Outside counsel should bring an experience-driven approach to litigating two more unique issues associated with §1782 discovery.

First, applications are closed once granted, meaning individual orders resulting from motion practice over the scope of discovery will each be directly appealable to a circuit court.

Second, such motion practice may be referred to as a magistrate judge in some jurisdictions, making Federal Rule of Civil Procedure 72 (essentially an additional round of appeal to a district court judge) a crucial element as to the rulings’ dispositive nature. There is a split in the courts on whether a magistrate’s ruling is viewed as dispositive and whether a clear error standard of review should apply. Due to these complexities, experienced litigation counsel should deploy §1782 early in a dispute.

Some biologics companies embroiled in global litigation may not know where to start. What if discovery is initially obtained in US litigation and later becomes relevant to a global dispute?

Generally, the US action will prohibit use of discovery outside the litigation and the biosimilar statute, which requires that early exchange of the biosimilar’s regulatory application prohibits ex-US use. As a result, it’s often necessary to file a separate §1782 action specifying the discovery, including sections of the biologics license application, to be used outside the US.

Due to its power, we predict use of §1782 in global biologics disputes will continue to increase in coming years. It should be in the toolbox of every multinational company.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Jonathan D.J. Loeb is partner with Dechert, focusing on life sciences litigation and strategic patent counseling.

Katherine A. “Kassie” Helm is partner with Dechert and first-chair counsel representing pharmaceutical and biotechnology companies.

Sharon K. Gagliardiis counsel with Dechert representing clients in IP and complex commercial matters.

The authors have significant experience in 1782 proceedings for use in biologics litigations.

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