Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Three years ago Jeffrey Kindler, Pfizer Inc’s vice-chairman and GC, had a big problem � and what seemed, on first glance, a baffling solution. Pfizer was facing what Kindler calls “the most significant patent case” in the company’s century-and-a-half history � a challenge to the key patents on its blockbuster cholesterol-reducing drug, Lipitor. Estimated to account for about 30 percent of Pfizer’s profits, Lipitor took in $12.2 billion in 2005. And while it was Pfizer that had brought the case � a patent infringement suit to keep India-based Ranbaxy Laboratories Ltd. from marketing generic Lipitor � it became clear early on that Pfizer would be the one playing defense, with Ranbaxy throwing practically every patent challenge in the book at it ["Giant Slayer," January 2005]. To face that challenge, Kindler did not choose one of the big-name, mega-lawyer firms in its stable of outside counsel. Instead, he went with Wilmington-based Connolly Bove Lodge & Hutz � a relatively small IP firm that only two years earlier numbered less than 50 lawyers (today it has 95) and had just recently opened its first satellite office, in Washington, D.C. In December, Kindler’s move paid off. Delaware federal district court judge Joseph Farnan ruled in Pfizer’s favor, upholding the Lipitor patents and defeating Ranbaxy, which was represented by Knobbe, Martens, Olsen & Bear. (The case is currently being appealed.) The win likely guarantees Pfizer a key revenue stream for another five years � Lipitor’s patents expire in 2010 and 2011. But Connolly Bove sees a payoff for itself as well. While other IP boutiques have closed or merged, Connolly Bove � via an expansion plan that has been part foresight, part serendipity � is hoping to grow. The Pfizer win, says firm managing partner Jeffrey Bove, couldn’t have come at a better moment, just as the firm was getting ready to open its second satellite office in Los Angeles and start prospecting for work out West. Connolly Bove’s victory may have vindicated Kindler’s choice of counsel � but it didn’t explain it. To understand Connolly Bove’s appeal, Kindler says, one has to look at a little bit of history, and a map. First, the history � an almost 60-year relationship between client and firm. Werner Hutz � one of Connolly Bove’s founders and the father of Rudolf Hutz, who was lead counsel in the Lipitor case � prosecuted Pfizer’s patent for the landmark antibiotic tetracycline in the early 1950s. In the years since, Connolly Bove has done patent interference, litigation, and prosecution work for Pfizer. Rudolf Hutz has worked with Peter Richardson, the Pfizer senior vice president and associate general counsel in charge of the in-house IP practice, for more than 30 years. Bove (the Bove in the firm’s name is for his father, Januar, a former attorney general of Delaware) likes to talk about how he would travel to Pfizer’s New York headquarters as a young lawyer and hear tales about his dad from Pfizer lawyers who worked with him. “It is a lot more than an attorney-client relationship,” Bove says. It is also a lucrative relationship: Pfizer is the firm’s top client in terms of revenue, though Bove declines to discuss numbers. But there are other � bigger � firms with rich and long histories with Pfizer. Kaye Scholer has represented the company in patent litigation involving the high blood pressure medication Norvasc; Procardia XL, which treats hypertension; Viagra, which treats disappointing Saturday nights; and the antidepressant Zoloft. Pfizer also uses Fitzpatrick, Cella, Harper & Scinto; Jones Day; and White & Case for patent litigation and opinion work. These firms were all considered for the Lipitor case. “Given the stakes, we spent a lot of time thinking about who should represent us,” says Kindler ["This Might Hurt a Bit," December 2005]. Connolly Bove is no stranger to the courtroom. With little fanfare the firm has steadily built up a resume representing Big Pharma against generics in patent disputes, often as lead counsel, not local counsel, as Delaware-based firms are wont to do. It represented another longtime client, Germany-based Bayer AG (and its American subsidiary, Bayer Corporation), in a series of suits, beginning in 1997, in which Bayer and Pfizer (represented by Kaye Scholer) sued generic drug manufacturers for infringing patents for hypertension drugs. Those cases ultimately settled under terms that Bove declines to discuss. The firm has also chalked up some important wins for Pfizer as lead counsel. “One of the early cases on which we worked with Rudy [Hutz] was the U.S. doxycycline litigation,” says Kindler. “Then there was a series of cases in our medical devices business, which was sold some years ago. Just prior to our Lipitor case, [Connolly Bove] had played the lead in representing us in various patent infringement suits in our consumer health care business.” Perhaps the biggest asset Connolly Bove had was the same thing that seemed its biggest shortcoming: its geography. Delaware can be a tricky place to practice patent law � giving local firms an edge. Connolly Bove’s location, Kindler says, was a factor: “Their knowledge of the Delaware courts and the presiding judge was considered advantageous . . . [Wilmington] is a venue with particular rules and time limits. Rudy [Hutz] knows it quite well.” Indeed, Connolly Bove and Judge Farnan go back a long way. The firm had argued several patent suits in his courtroom; Bove personally has been before the judge half a dozen times. In 2004 the firm won a bench trial before Farnan, fending off a challenge to the patents for Aventis Pharmaceuticals, Inc.’s Riluzole, a drug used to treat Lou Gehrig’s Disease. However, Connolly Bove was local counsel in the Aventis case (lead counsel was Chicago’s McDonnell Boehnen Hulbert & Berghoff). And while Pfizer may have tagged Connolly Bove as its go-to firm in the courtroom, the company went to other firms for advice before bringing in the Wilmington team. “Given the importance of this case, we did consult with others in the early stages, including Kaye Scholer and Jones Day,” says Kindler. Pfizer, along with its lawyers at those firms, declined to comment on what exactly the early consulting was about. A spokeswoman for Kaye Scholer characterized it as “analysis work.” Whatever the work was, it was apparently kept low-key. Bove says he was unaware that Kaye Scholer played any role in the case. That Pfizer would bring in other firms for consulting isn’t surprising. “It’s not a common practice, but it does happen,” says Jonathan Singer, a patent litigator at Fish & Richardson who represents branded drug companies (but not Pfizer). “You’ll use one firm to litigate the case but bring in others earlier on for strategy and planning.” As for the Lipitor case itself, it may have been more high-stakes than high-risk. While generics manufacturers have been increasingly aggressive in taking on brand-name drug companies � now regularly filing patent suits instead of simply waiting for patents to expire � their success has been mixed. Generics fare well when they take on secondary patents, but poorly when they take on � as in the Lipitor case � primary drug patents. Indeed, Deutsche Bank analyst Barbara Ryan gave Pfizer an 80 percent chance of winning its Lipitor litigation, and Sanford C. Bernstein and Co. analyst Richard Evans gave Pfizer a 90 percent chance. Even with the odds stacked against them, generics have little to lose, and untold riches to gain. If a patent is defeated, a federal law gives six months of market exclusivity to the first drug maker to file an abbreviated new drug application with the Food and Drug Administration (which Ranbaxy had done prior to Pfizer’s suit). It’s basic math, says Kindler: “For a few million in legal fees, they can hit a jackpot of hundreds of millions of dollars.” The generics haven’t been completely unlucky, either. Apotex knocked out GlaxoSmithKline’s primary patent on the antidepressant Paxil in 2003. Bove is betting that the flood of patent challenges, combined with its Pfizer win, will get the firm more litigation assignments. But patent attacks � especially on blockbuster drugs � rattle investors, and an increasing number of companies (including Wyeth and Johnson & Johnson) have been settling with generic drugmakers. The bigger challenge for the firm, perhaps: using a case where its key advantage may have been its Wilmington location to win work outside Wilmington. Bove says the answer is simple. By keeping the firm’s administrative core � IT support, personnel, billing, and so on � in Wilmington, where payroll and rent run cheaper than they do in larger cities, Connolly Bove can offer rates that are 10 � 20 percent lower than the major national firms. According to Bove, Connolly Bove’s average partner rate is $334 an hour. Top-tier firms routinely charge between $400 and $700 an hour for high-stakes patent litigation, according to lawyers at several firms with large IP practices. Connolly Bove’s first foray outside Wilmington, a Washington, D.C., office that focuses on patent prosecution and interference work, has been a success � growing from four to 22 lawyers since opening in 2001. But that office sort of just happened. Burton Amernick, who had been a partner at the D.C. � based IP boutique Pollock, VandeSande & Amernick, approached Connolly Bove with the idea of starting up a D.C. outpost. The future of Amernick’s firm, which had worked with Connolly Bove in the past, was murky after the retirement of one partner and the death of another. To the new office Amernick brought two of his remaining partners � and IBM Corporation, for which Connolly Bove now does patent prosecution work. He also brought a below-market-value lease on the firm’s D.C. office space, which Bove says helps keeps its fees lower than comparable D.C. firms. The D.C. office emboldened the firm. “It was always in the back of our mind, wondering if we should expand beyond Wilmington,” says Bove. “We knew that we would have to grow, as our primary competitors had multiple offices.” The Los Angeles office � a five-lawyer outpost that opened in January � was a more calculated move. “We knew that Lyon & Lyon had closed down, and felt that there was a hole in the downtown marketplace that needed to be filled, especially with all the industries and client base in the Southland area,” Bove says. In fact, in getting the new office off the ground, Connolly Bove is turning to several former Lyon & Lyon partners, including John McConaghy, the former managing partner at Lyon & Lyon and more recently a partner at Fulbright & Jaworski; and Bruce Chapman, who had been at Hogan & Hartson. The office will split its focus between patent prosecution (McConaghy) and litigation (Chapman). As with the D.C. office, Connolly Bove is relying on its new partners to bring in new work. But so far, no one in Los Angeles has brought the firm an IBM. Instead, clients have been lesser-known midsize companies like Gale Banks Engineering, a manufacturer of diesel engines for RVs and trucks, and McCann’s Engineering & Mfg. Co., which makes soft drink dispenser systems. While the loss of Lyon & Lyon may have created a hole in the marketplace, it hasn’t exactly created a void: IP boutique Christie, Parker & Hale will be a rival, as will the IP departments at large firms in L.A., including Gibson, Dunn & Crutcher; Loeb & Loeb; and Sidley & Austin. The L.A. office’s first patent suit hasn’t exactly been front-page news. Connolly Bove is representing a company that makes hot tub controls. But Bove says there are other considerations. The firm’s L.A. clients are involved in areas, like laser optics and telecommunications, in which Connolly Bove has had no major focus. And it is the midsize companies, Bove says, that will be most receptive to those midsize fees. Of course, Lyon & Lyon went bust in L.A. (closing down in 2002). But with its administrative services in L.A., Lyon & Lyon’s expenses were higher than Connolly Bove’s. “Our cost structure is a big advantage,” says Bove. Not everything can be sent back to Delaware, however. Technology support, word processing, paralegals � all need to be staffed on-site, at L.A. prices that will eat into the Wilmington advantage. But if costs can be kept down, and cases like Pfizer’s help build momentum, Connolly Bove may beat back its biggest challenge yet: filling Lyon & Lyon’s shoes without following in its footsteps. This article first appeared in Corporate Counsel’s sibling publication IP Law & Business.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.