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Note 16 - Legal Proceedings
3 Months Ended
Mar. 31, 2013
Legal Matters and Contingencies [Text Block]
16. Legal Proceedings

Fortical, the Company’s nasal calcitonin product for the treatment of postmenopausal osteoporosis is covered by U.S. Patent No. 6,440,392, which was reissued on June 30, 2009 as U.S. Patent No. RE 40,812 (the “Fortical Patent”). In June 2006, the Company received a Paragraph IV certification letter from Apotex Inc., a Canadian generic pharmaceutical manufacturer, alleging that this patent is invalid and therefore not infringed by Apotex’s nasal calcitonin product, which is the subject of an Apotex pending ANDA. On July 24, 2006, the Company and USL jointly filed a lawsuit against Apotex Inc. and Apotex Corp., its U.S. subsidiary (together, “Apotex”), in the U.S. District Court for the Southern District of New York for infringement of the Fortical Patent. Due to the filing of the above-mentioned lawsuit, the Hatch-Waxman Act provided for an automatic stay of FDA approval for Apotex’s ANDA of up to 30 months. In December 2008 this stay ended and the parties agreed to a preliminary injunction entered by the Court which enjoined Apotex from engaging in the commercial manufacture, use, marketing, distribution, selling, transportation or importation of any Fortical generic equivalent product in the United States. The preliminary injunction was to remain in effect until the court rendered a final decision on the validity and infringement of Unigene’s U.S. Patent. In obtaining the preliminary injunction, Unigene and USL were required to post a bond. In August 2009, the U.S. District Court, Southern District of New York, confirmed the validity of Unigene’s patent and issued an order permanently enjoining Apotex from engaging in any activity that infringes the patent.  Apotex appealed this decision. In October 2009, the District Court vacated its order subject to reinstatement and asked the parties to identify any claims that remain in the case. As a result, Apotex’s appeal was deactivated. In July 2010, the District Court ruled that no claims remain at issue and it reinstated its opinion and order of August 2009 in its entirety.  Apotex appealed this decision to the United States Court of Appeals for the Federal Circuit and a hearing was held on March 7, 2011. On August 25, 2011, the United States Court of Appeals for the Federal Circuit issued a decision affirming the District Court’s ruling confirming the validity of Unigene's Fortical Patent. Apotex filed a petition for certiorari for review of the Appeals Court decision by the U.S. Supreme Court on January 13, 2012, which was assigned Supreme Court Docket Number 11-879.  Unigene filed an opposition brief on February 17, 2012, and on February 28, 2012, Apotex filed a reply brief. On March 19, 2012, the U.S. Supreme Court denied Apotex’s petition for certiorari, meaning that all of Apotex’s appeals in this case were exhausted, and the ruling in the civil litigation in favor of Unigene is “final”. The bond required for the preliminary injunction was released, and in January 2013, the U.S. District Court, Southern District of New York, allowed the notice of taxation of costs to proceed and in February, 2013 approved the taxation of costs resulting in the receipt of $54,000 by the Company.

On September 8, 2011, after the Federal Circuit affirmance, the United States Patent and Trademark Office (“USPTO”) granted a request for inter partes reexamination of the Fortical Patent filed by Apotex, Inc. 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 claim 19 of the Fortical Patent had been upheld as valid by the Court of Appeals for the Federal Circuit, 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. 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 product. The  inter parties  reexamination remains open for claims 13, 14, 16, 17 and 24-29 of the Fortical Patent. On January 16, 2013, the USPTO issued an Action Closing Prosecution (“ACP”) indicating that claims 13, 14, 16, 17 and 24-29 remain rejected, and on April 3, 2013, the USPTO issued a Right of Appeal Notice (“RAN”).  To appeal the claim rejections, Unigene must file a Notice of Appeal with the USPTO by May 3, 2013.  Unigene will then have two months to prepare and file an Appeal Brief with the USPTO. There is the usual USPTO prosecution risk that the Company will not be successful in the reexamination and potentially subsequent USPTO or litigation proceedings.

On December 20, 2012, Apotex filed a request for an ex parte reexamination of claims 13, 14, 16, 17, 19 and 24-29 of the Fortical Patent. On March 4, 2013, the USPTO issued an Office Communication indicating that claims 13-14, 16-17 and 24-29, will not be reexamined in the ex parte reexamination proceeding; only claim 19 will be subject to ex parte reexamination. Unigene has the option to file a Patent Owner Statement by May 4, 2013.  Then Unigene will wait to hear from the USPTO.  Only Unigene can participate in the ex parte reexamination proceedings, Apotex will not be allowed to participate in the ex parte reexamination proceedings.  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 the Company will not be successful in the reexamination and potentially subsequent USPTO or litigation proceedings. In the event that the Company does not prevail, then Apotex could be in a position to market its nasal calcitonin product if and when its pending ANDA receives FDA approval and if the U.S. District Court, Southern District of New York, relieves Apotex of the injunction. This could have a material adverse impact on the Company’s results of operations and financial position.    On August 14, 2012, the USPTO issued RE43,580 patent to Unigene entitled “Nasal Calcitonin Formulations” that covers the Fortical product.