SANTA ANA, Calif. (CN) – A patent troll is using the patent system to extort pharmaceutical giant Allergan, the company claims in Federal Court.
Allergan sued Ferrum Ferro Capital, a New York-based hedge fund, and its founder Kevin Barnes on Friday, alleging civil extortion, malicious prosecution and unfair business practices.
“This is a civil action arising out of defendants’ attempt to extort Allergan by misusing the inter partes review (‘IPS’) process established by the American Invents Act (‘AIA’),” the complaint states.
Inter partes reviews are trial proceedings before the Patent Trial and Appeal Board at which a third party challenges the validity of a patent.
Allergan claims Ferrum Ferro filed a “baseless” inter parte review “to extort Allergan under the guise of a settlement.”
Allergan says it developed the drug Combigan to slow the progression of glaucoma, an incurable eye disease that can cause loss of vision and blindness.
Several competitors filed applications to market generic versions of Combigan by claiming that Allergan’s patent 7,030,149 was invalid. But Allergan successfully sued them and Marshall, Texas Federal Court enjoined the manufacture of Combigan generics until 2022, a ruling upheld in 2013 by the U.S. Court of Appeals for the Federal Circuit, the complaint states.
Nonetheless, Ferrum Ferro sent Allergan a letter in March this year, falsely stating that it intended to seek approval for a Combigan generic, the complaint states. Allergan says that’s a “sham,” because Ferrum Ferro has no brick-and-mortar facilities or any scientists on staff to conduct the research required to develop a drug.
The letter included an inter partes challenge to patent 7,030,149, which Ferrum Ferro threatened to file unless Allergan agreed to discuss “a single opportunity to support FFC’s core social and investment interests” through a settlement, the complaint states.
But when Allergan contacted the defendants, it says, they refused to discuss a settlement unless Allergan signed a nondisclosure agreement preventing it from suing them with information learned from the proceedings, which it refused to do.
Allegan claims the defendants abused the inter partes review system by using the fake patent challenge to try to bully it into paying them to drop the challenge, which Allegan calls civil extortion.
It claims that the defendants have cost it at least $100,000 from “disruption to its business, loss of productivity, loss of business goodwill, substantial litigation expense” and other damages.
A spokesman for Ferrum Ferro told Courthouse News that the company looks forward to the “U.S. PPO’s [Patents Pending Office] IPS decision and has no further comment on the Allergan district court filing.”
Allergan seeks declaratory judgment that the defendants are committing civil extortion, an injunction preventing them from filing inter partes challenges to any Allergan patents, and restitution for civil extortion, malicious prosecution and unfair business practices.
It is represented by Michael Amon with Fish & Richardson of Los Angeles, who did not immediately return a request for comment.
Bloomberg Business News called Ferrum Ferro’s challenge a “brazen move … seeking to invalidate an Allergan Inc. patent that has already been upheld in court.”
Businesses claim that patent trolls cost them billions of dollars every year in vexatious lawsuits.
Colorado this month became the 26th state to pass laws trying to rein in the trolls .