Law360
August 13, 2013
Mylan Inc. on Monday dodged a $15 million breach of contract suit from Bristol-Myers Squibb Co. after a New York federal judge found that an agreement between the companies didn’t bar Mylan’s sales of an HIV drug in Venezuela, although a patent infringement complaint is still possible.
The opinion from U.S. District Judge Paul A. Engelmayer turned on a highly technical reading of a contract that immunized Mylan from patent infringement liability when selling a generic version of Reyataz, or atazanavir, in India and sub-Saharan Africa.
While the agreement left Mylan exposed to intellectual property suits for selling the product elsewhere, that’s not the same thing as saying that Mylan would breach the contract by engaging in such sales, Judge Engelmayer wrote.
“Although the agreement provides immunity from suit for sales in [India and Africa], it nowhere purports to prohibit [Mylan] from making sales outside [those countries],” the judge wrote.
In arguing otherwise, Bristol-Myers pointed to a provision of the contract in which Mylan promised not to sell the drug to any third parties that might export it to places outside India and Africa.
Judge Engelmayer, however, said that no such activity took place. Instead, Mylan sold atazanavir to the Pan American Health Organization, which then distributed it within Venezuela.
“In other words, [the contract] provides that [Mylan] cannot claim immunity under the agreement were it, for example, to use a third-party intermediary in India to enable it to sell generic atazanavir in Pakistan,” the judge said. "[It] does not, however, prevent [Mylan] itself from selling generic atazanavir in Pakistan, or, relevant here, Venezuela.” According to the suit, Bristol-Myers assisted Mylan in producing atazanavir and allowed its sales in India and Africa as a charitable endeavor meant to help poor nations beset by HIV and AIDS. When it came to Venezuela, however, Bristol-Myers had for years negotiated sales to the government and had rebuffed Mylan’s request to include the country in its distribution network, only to see Mylan disregard its refusal and sell the PAHO a year’s supply valued at $15 million.
While the contract doesn’t create a legal claim for that move, it’s possible that Bristol-Myers can rejigger its suit in a way that has legs, Judge Engelmayer wrote.
“To be sure, [Mylan’s] sales of generic atazanavir may be actionable on other grounds [Bristol-Myers] may have a cause of action against [Mylan] for its sales in Venezuela under relevant patent [laws],” the judge said. “But [Bristol-Myers’] claim here is for breach of contract, based on the agreement. Under the plain language of the agreement, no such claim lies.”
Counsel for the parties did not immediately respond to requests for comment Monday. BMS is represented by Richard A. Spehr, Henninger S. Bullock and Lisa R. Plush of Mayer Brown LLP.
Mylan is represented by Jessica Leigh Margolis, Michael S. Sommer and Robert Allen Glunt of Wilson Sonsini Goodrich & Rosati PC.
The case is Bristol-Myers Squibb Co. v. Mylan Laboratories Ltd., case number 12-cv-05846, in the U.S. District Court for the Southern District of New York.