Broward Daily Business Review
August 13, 2013
Bristol-Myers Squibb Company has lost an unusual breach of contract case against Matrix Laboratories Ltd., a generic drug company that distributes a low-cost generic version of BMS's HIV/AIDS drug Reyataz in 49 poor and developing countries.
In a 20-page decision issued Monday, U.S. District Judge Paul Engelmayer in New York dismissed BMS's claim that Matrix, a subsidiary of Mylan Laboratories Ltd, violated a litigation amnesty agreement between the companies by selling Reyataz to the Pan American Health Organization, which in turn distributed the medicine to AIDS patients in Venezuela. Engelmayer ruled that BMS's proper recourse is to sue Matrix for patent infringement, not breach of contract.
Under the terms of a 2011 "immunity-from-suit agreement" with BMS, Matrix can sell its generic version of Reyataz in India and 48 countries in sub-Saharan Africa without facing patent infringement claims. The agreement was part of BMS's "Global Access Program," a charitable endeavor that ensures access to the company's HIV drugs in poor countries. According to Bristol-Myers, Matrix also sought its permission to sell its generic in Venezuela, despite the country not being covered by the program.
BMS's lawyers at Mayer Brown sued Matrix in August 2012, alleging that Matrix sold a one-year supply of the drug to PAHO, knowing full well that PAHO would distribute the medicine in Venezuela. BMS, which has applied for patents relating to Reyataz in Venezuela, pegged damages at $15 million.
Mylan's lawyers at Wilson Sonsini Goodrich & Rosati moved to dismiss in May. They argued that BMS failed to plead a viable claim for breach of contract, since the agreement never explicitly prohibits Matrix from distributing generic Reyataz in Venezuela.
The agreement simply states that such sales could make Matrix liable for patent infringement, they argued.
Engelmayer adopted that argument in Monday's ruling. "BMS's interpretation is contrary to the Agreement's plain language. It would transform the immunity from suit agreement ... to a farther-reaching prohibition on sales by Matrix outside the affected Territories," he wrote. "[A]ny remedy by BMS for such sales must derive from sources other than the Agreement, e.g. applicable patent laws, if any."
Wilson Sonsini's Michael Sommer, who represented Matrix, was not immediately available for comment. Bristol-Myers Squibb counsel Richard Spehr of Mayer Brown also was unavailable for comment. In an emailed statement, BMS said it was "disappointed" with the decision and evaluating its options.
Bristol-Myers Squibb Company has lost an unusual breach of contract case against Matrix Laboratories Ltd., a generic drug company that distributes a low-cost generic version of BMS's HIV/AIDS drug Reyataz in 49 poor and developing countries.
In a 20-page decision issued Monday, U.S. District Judge Paul Engelmayer in New York dismissed BMS's claim that Matrix, a subsidiary of Mylan Laboratories Ltd, violated a litigation amnesty agreement between the companies by selling Reyataz to the Pan American Health Organization, which in turn distributed the medicine to AIDS patients in Venezuela. Engelmayer ruled that BMS's proper recourse is to sue Matrix for patent infringement, not breach of contract.
Under the terms of a 2011 "immunity-from-suit agreement" with BMS, Matrix can sell its generic version of Reyataz in India and 48 countries in sub-Saharan Africa without facing patent infringement claims. The agreement was part of BMS's "Global Access Program," a charitable endeavor that ensures access to the company's HIV drugs in poor countries. According to Bristol-Myers, Matrix also sought its permission to sell its generic in Venezuela, despite the country not being covered by the program.
BMS's lawyers at Mayer Brown sued Matrix in August 2012, alleging that Matrix sold a one-year supply of the drug to PAHO, knowing full well that PAHO would distribute the medicine in Venezuela. BMS, which has applied for patents relating to Reyataz in Venezuela, pegged damages at $15 million.
Mylan's lawyers at Wilson Sonsini Goodrich & Rosati moved to dismiss in May. They argued that BMS failed to plead a viable claim for breach of contract, since the agreement never explicitly prohibits Matrix from distributing generic Reyataz in Venezuela.
The agreement simply states that such sales could make Matrix liable for patent infringement, they argued.
Engelmayer adopted that argument in Monday's ruling. "BMS's interpretation is contrary to the Agreement's plain language. It would transform the immunity from suit agreement ... to a farther-reaching prohibition on sales by Matrix outside the affected Territories," he wrote. "[A]ny remedy by BMS for such sales must derive from sources other than the Agreement, e.g. applicable patent laws, if any."
Wilson Sonsini's Michael Sommer, who represented Matrix, was not immediately available for comment. Bristol-Myers Squibb counsel Richard Spehr of Mayer Brown also was unavailable for comment. In an emailed statement, BMS said it was "disappointed" with the decision and evaluating its options.