United States v. Glaxo Group Ltd.

PETITIONER: United States
RESPONDENT: Glaxo Group Ltd.
LOCATION: Wisconsin Eastern U.S. District Courthouse

DOCKET NO.: 71-666
DECIDED BY: Burger Court (1972-1975)
LOWER COURT:

CITATION: 410 US 52 (1973)
ARGUED: Nov 09, 1972
DECIDED: Jan 22, 1973

ADVOCATES:
Daniel M. Friedman - for appellant
Henry P. Sailer - for appellee Glaxo Group, Limited
Sigmund Timberg - for appellee Imperial Chemical Industries, Limited

Facts of the case

Question

Media for United States v. Glaxo Group Ltd.

Audio Transcription for Oral Argument - November 09, 1972 in United States v. Glaxo Group Ltd.

Warren E. Burger:

We will hear arguments next in 71-666, United States against Glaxo Group.

Mr. Friedman.

Daniel M. Friedman:

Mr. Chief Justice and may it please the Court.

Well, this is a Government civil antitrust case, here on direct appeal to the United States District Court for the District of Columbia, which presents two basically unrelated issues.

The first issue is whether in a civil antitrust case, the Government may challenge validity of patents which although not relied upon by the defendants as a defense to the antitrust charge and nevertheless involved in the antitrust violations case.

And the second issue is whether the relief given by the District Court in this case was inadequate.

The appellees, the Glaxo Group Ltd. and Imperial Chemical Industries Inc, which I should refer to as ICI, are two British drug firms.

The drug involved in this case is an antibiotic called Griseofulvin.

Griseofulvin itself is an old product and is unpatented and for many years was used as fungicide in the treatment of fungus infection of plants.

In the 1950s, ICI discovered that if Griseofulvin was taken internally, it would be able to cure various fungus infections such as ringworms on the skin of people and animals.

And as a result of these discoveries, in 1959, ICI obtained a patent upon this new use of the drug.

The patent contained two basic claims.

The first was a so-called method claim which consisted of a method of curing external fungus infections of animals and people by the administration of what they describe as an effective amount of Griseofulvin.

The second claim was a so-called product claim.

It was described as pill, a capsule or a container containing an effective amount of Griseofulvin which would accomplish this objective.

And this is the basic patent, these two claims which the government is here challenging.

In 1967, the other appellee Glaxo obtained a United States patent on an improved form of Griseofulvin, the so-called micro size form of the drug, which is very much ground up in very small particles which is proven to be much more effective than the original form, which is the one now of principal commercial significance.

Between 1957 and 1960, the two appellees had extensive discussions, looking to a pooling of their patents and cross-licensing, and in 1960, they reach such an agreement under which the patents on Griseofulvin of the two companies were pooled and they cross-licensed each other.

And in addition to that, in this agreement, ICI agreed that it would use its best endeavors to make sure that its licensees did not sell Griseofulvin in bulk to third persons without the consent of Glaxo.

In 1962, ICI appointed the American Home Products Corporation, an American firm as its exclusive distributor of Griseofulvin.

It previously had appointed this firm as its exclusive distributor for other drugs.

And in its license to American Home Products, it required an agreement that American Home Products in turn would not sell this drug in bulk to any third persons without the written permission of ICI.

Shortly before this, Glaxo had granted similar, made a similar agreement with two other American firms, Schering Corporation and Johnson & Johnson, appointing them as distributors for the drug Griseofulvin in the United States and the agreements of Glaxo with these two licensees similarly provide that the licensees could not sell in bulk without the written approval of the licensor.

Each of these agreements gave the people cross-licenses under the patents.

That is Glaxo license under its own and ICI’s patents, ICI license under its and the Glaxo patent, and each of these was in form, the form of a patent licensing agreement.

That is they -- in addition to the bulk sales restriction, the basic agreement was they licensed them to manufacture and sell under the patents and each of the licensees was required to pay a royalty to the licensor based upon the total amount of the Griseofulvin which they purchased from the English firms and sold.

Now, although the license has permitted the American firms to manufacture, the fact is that throughout this entire period, all three of the American licensees purchased all of their Griseofulvin from the English firms.

During this entire period, neither Glaxo nor ICI made any bulk sales to anyone, other than the three licensees and the three licensees themselves made no bulk sales at all to anyone in the United States.

Shortly before this suit was filed when the appellees were informed that the Justice Department was investigating the legality of these bulk sales restrictions, they canceled them.

Since that time, American Home Products Corporation has made a few sales of the Griseofulvin, not in bulk, but in the capsule form.