Vanessa Blum covers the California federal courts for The Recorder, an American Lawyer affiliate.
Gerald Dodson thinks he has found his next megamillion-dollar patent case.
Dodson, a go-to biotech lawyer for the University of California, secured settlements of $200 million each in litigation against Genentech Inc. and Monsanto Co. on behalf of the university system.
This time Dodson, a partner at Menlo Park’s Carr & Ferrell, is representing a UC-Irvine pediatrics professor who claims he came up with the fundamental theory behind Concerta, Johnson & Johnson’s groundbreaking medication for attention deficit hyperactivity disorder, or ADHD.
The case on behalf of James M. Swanson survived a critical motion to dismiss earlier this month. With Concerta bringing in roughly $1.3 billion in annual sales, Dodson said his latest attack on Big Pharma could be worth even more than the prior blockbuster awards.
"This particular drug has a larger revenue stream so there’s more revenue at stake," Dodson said.
U.S. District Judge Phyllis Hamilton in Oakland largely sided with Dodson on March 12, rejecting the defense position that Swanson lacks standing because he signed over rights to his inventions, first in his employment agreement with the University of California and subsequently in a 1993 consultancy agreement he entered with Alza Corp., a Johnson & Johnson subsidiary.
Hamilton dismissed causes of action against Alza for unjust enrichment and fraudulent concealment. However, she kept alive claims of fraud, unfair competition, and for breach of fiduciary duty related to Alza’s actions in a separate patent suit over Concerta.
Alza’s lawyers at Covington & Burling aren’t backing down in the face of the setback.
"Plaintiff’s claims are devoid of merit, contradict his contractual commitments as well as his sworn testimony and public statements concerning the development of Concerta, and are raised belatedly — literally decades after he alleges to have contributed to the conception of Alza’s invention," Covington partner Kurt Calia stated last week in a case management report. Calia, a partner in Covington’s Silicon Valley office, did not respond to a phone call or email seeking comment.
Concerta, which received federal approval in 2000, is a form of the drug methylphenidate, also known as Ritalin. It was developed by Alza, a Valley firm acquired by Johnson & Johnson in 2001 and subsequently relocated to Vacaville.
The medication is covered by three patents for the treatment of ADHD with a single pill that releases ascending levels of medicine throughout the day. The invention broke new ground because it meant children with ADHD could take one pill daily and would not be embarrassed by going to the nurse’s office for medication during school hours.
Swanson, who sued Alza in August, contends he brought that concept to a December 1993 meeting at Alza, at which he presented findings from 15 years of research. At the time, the idea of using increasing doses of methylphenidate throughout a day was counter to usual medical practice.
Alza’s three patents list as inventors several individuals who attended Swanson’s presentation, according to the suit. Dodson alleges Alza failed to name Swanson an inventor because it did not want to pay a royalty to the UC Regents.
"These were Dr. Swanson’s ideas. They were not the ideas of 11 Alza people on the patent," Dodson told Hamilton at a hearing in February on Alza’s motion to dismiss.
Swanson worked on two clinical studies for Alza in the 1990s and was advised not to discuss the work until Alza had filed patent applications. He did not discover that Alza had patented his idea until an April 2011 deposition in a separate patent suit related to Concerta, Dodson said.
At the hearing, Calia argued that Swanson had not come up with the idea for Concerta. Even if he had, it would fall under his consulting agreement with Alza, Calia said.
"Anything that he invented, that he brought to that meeting, that falls within that consulting agreement, that he would provide or did provide, belongs to Alza," Calia said.
Dodson told Hamilton that such an expansive interpretation of Swanson’s consulting agreement could not be valid.
"It’s not as if Dr. Swanson brought in a briefcase of inventions and turned them over to Alza as a result of any kind of consulting agreement," Dodson said. "In fact, that would be in direct conflict with patent policy of the University of California, which is considered state law."
In her ruling, Hamilton said she needed more evidence to determine which agreement should govern the invention and therefore ownership of the patent.
"It is not clear whether the Alza patents emerged from information or work done pursuant to the consulting agreement with Dr. Swanson, or whether Dr. Swanson had independently completed work while employed at UC," Hamilton wrote.
Swanson began working for the UC system in 1980 and signed a standard agreement assigning rights to his inventions to the Regents of the University of California. In a rare arrangement, the UC Regents are paying a portion of Swanson’s litigation costs in exchange for 20 percent of any recovery, Dodson said.
Swanson seeks a correction of inventorship and a declaration that he owns Alza’s three patents. In addition, Swanson claims Alza made fraudulent patent applications and breached its fiduciary duty by providing him with legal representation in a suit against generic drugmaker Kremers Urban Pharmaceuticals Inc.
Calia said Alza’s attorneys provided limited representation to Swanson in connection with the scheduling of his deposition. Swanson was not represented by Alza’s lawyers in the 2011 deposition.
Dodson contends that was enough to constitute a serious breach because it kept Swanson from seeking independent counsel who would have advised him of his rights in relation to Alza’s patents.
During his deposition in April 2011, Swanson "realized his own ideas from the first meeting at Alza … were important bases for the patent," the suit states.
Dodson has handled some of the UC Regents’ biggest IP cases, but suing major pharmaceutical firms hasn’t always provided a smooth career path. In the 1990s he bounced from Townsend and Townsend and Crew to Howard Rice Nemerovski Canady Falk & Rabin to Arnold White & Durkee, finally joining Morrison & Foerster in 1999 — the year he obtained the $200 million settlement against Genentech. In 2007 Dodson went from MoFo to Goodwin Procter to Squire Sanders and joined his current firm last year.
Dodson dislikes discussing his frequent lateral moves, which he attributes to client conflicts. Asked whether the case against Johnson & Johnson played a role in his joining Carr & Ferrell, Dodson said only that his new firm is "the perfect place to bring this cause of action."
Dodson describes Swanson’s case as a "formidable" piece of litigation, and one with ramifications for the relationship between university professors and companies that sponsor research.
"We think Dr. Swanson has a very strong chance of success in this case," Dodson said, adding, "There’s obviously a ways to go."