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Note 18 - Legal Proceedings
9 Months Ended
Sep. 30, 2012
Legal Matters and Contingencies [Text Block]
NOTE R - LEGAL PROCEEDINGS

On September 8, 2011, the United States Patent and Trademark Office (“USPTO”) granted a request for inter partes reexamination of the Fortical Patent filed by Apotex, Inc. (“Apotex”) on July 15, 2011. In granting the Request for Reexamination, the USPTO gave Unigene a two month time period to respond to the substantial new questions of patentability raised in the Reexamination Office Action dated September 8, 2011. Unigene filed its response to the Reexamination Office Action on November 8, 2011. Apotex filed Third Party Comments on December 7, 2011 and January 9, 2012.. Because the Supreme Court denied Apotex’s petition for certiorari, on April 5, 2012, Unigene moved to Suspend Reexamination of Claim 19 by filing a Petition with the USPTO. On April 19, 2012, Apotex filed a Response to Unigene’s Petition with the USPTO, asking the USPTO to deny Unigene’s Petition. Unigene is waiting to hear from the USPTO, which may take over one year.  The Reexamination reopens the USPTO prosecution of all claims 13, 14, 16, 17, 19 and 24-29 of the Fortical Patent. Based on USPTO statistics, reexamination proceedings take an average of about 36 months to complete. Potential outcomes for reexamination include the patent emerges with the patent claims remaining unchanged, patent claims being amended, or all patent claims being canceled. There is the usual USPTO prosecution risk that we will not be successful in the reexamination and potentially subsequent USPTO or litigation proceedings. In the event that we do not prevail, then Apotex could be in a position to market its nasal calcitonin product if and when its pending ANDA receives FDA approval. This could have a material adverse impact on our results and financial position.  On August 14, 2012, the USPTO issued RE43,580 patent to Unigene entitled “Nasal Calcitonin Formulations” that covers Fortical.  On December 7, 2012 Unigene's petition to terminate the inter partes reexamination with respect to claim 19 was granted and therefore the inter partes reexamination with regard to claim 19 will not be further maintained by the USPTO. Claim 19 covers the Fortical Patent. The inter parties reexamination remains open for claims 13, 14, 16, 17 and 24-29 of the Fortical Patent.

Apotex may now file a request for an ex parte reexamination of claim 19. If Apotex files such a request, it would remain enjoined by the District Court’s injunction unless and until they were relieved of the injunction by the District Court after the USPTO finally rejects claim 19 in the ex parte reexamination and the Federal Circuit affirms.

On May 18, 2012, the Company’s former patent counsel, Ostrolenk Faber LLP, filed suit against it in the United States District Court for the Southern District of New York for unpaid legal fees and disbursements in an amount not less than $401,748 plus interest of $35,245 and legal fees.  The Company answered the lawsuit and filed counterclaims that assert amongst other things claims for legal malpractice and a breach of fiduciary duty.  The Company contends that Ostrolenk Faber LLP’s actions and/or inactions caused the loss of the Company’s intellectual property in Brazil.  On December 21, 2012, the parties agreed to settle all claims and counterclaims in the action. The terms of the settlement include an upfront payment by the Company to Ostrolenk in the amount of $40,000, which was paid on December 21, 2012, and 24 monthly installment payments of $5,500 on or before the 1st day of each month, commencing on February 1, 2013.