b'SWAINE & MOORE LLP\n\nCRAVATH\n\nWORLDWIDE PLAZA\n\nGEORGE J. GILLESPIE , m\nTHOMAS R. BROME\nROBERT D. JOFFE\nALLEN FINKELSON\nRONALD S. ROLFE\n\nFRANCIS P. BARRON\nRICHARD W. CLARY\nWILLIAM P. ROGERS . ..R.\n\nJAMES D. COOPER\n\nPAUL C. SAUNDERS\n\nDOUGLA D. BROADWATER\nALN C. STEPHENSON\nMAX R. SHULMAN\nSTUART W. GOLD\nJOHN W. WHITE\n..OHN E. BEERBOWER\n\nEVAN R. CHESLER\nPATRICIA GEOGHEGAN\nD. COLLIER KIRKHAM\nMICHAEL L SCHLER\nKRIS F. H EI NZELMAN\nB. ROBBINS KIESSLING\nROGER D. TURNER\nPHILIP A. GELSTON\nRORY O. MILLSON\n\nNEIL P. WETREICH\n\n825 EIGHTH AVENUE\nNEW YORK ,\n\nSTEPHEN L. GORDON\nDANIEL L MOSLEY\nGREGORY M. SHAW\nPETER S. WILSON\nJAMES C. VARDELL . m\nROBERT H. BARON\nKEVIN oJ. GREHAN\nW. CLAYTON ..OHNSON\nSTEPHEN S. MADSEN\nC. ALLEN PARKER\n\nNY 10019- 7475\n\nTELEPHONE: (212) 474- 1000\n\nF\'ACSIMILE: (212) 474-3700\nCITYPOINT\nONE ROPE MAKER STREET\n\nLONDON EC2Y 9HR\nTELEPHONE: 44- 207- 453- 1000\nFACSIMILE: 44- 207- 860. 1150\n\nMARC S. ROSENBERG\nWILLIAM B. BRANNAN\nLEWIS R. STEINBERG\n\nWRITER S DIRECT DIAL NUMBER\n\nSUSAN WEBSTER\nTIMOTHY G. MASSA\nDAVID MERCADO\nROWAN D. WILSON\n..OHN T. GAFFNEY\n\n(212) 474- 1564\n\nPETER T. BARBUR\nSANDRA C. GOLDSTEIN\nPAUL MICHALSKI\n\nTHOMAS G. RAF"FERT\nMICHAEL S. GOLDMAN\n\nRICHAD HALL\nELIZABETH L. GRAYER\n\n..ULIE A. NORTH\nSTEPHEN L BURNS\nKATHERINE B. FORREST\nKEITH R. HUMMEL\nDANIEL SLlFKIN\nJEFFREY A. SMITH\nROBERT I. TOWNSEND. m\nWILLIAM J. WHELAN, m\nSCOTT A. SARSHAY\nPHILIP ... aOECKMAN\nROGER G. BROOKS\nWILLIAM V. FOGG\nFAIZA... SAEED\nRICHARD J. STARK\nTHOMAS E. DUNN\n\nJULIE T. SPELLMAN\nRONALD CAMI\nMARK I. GREENE\nSARKIS .. EBE. IAN\nJAMES C. WOOLERY\nDAVID R. MARRIOTT\nMICHAEL A. PASKIN\nANDREW J. PITTS\nMICHAEL T. REYNOLDS\nANTONY L RYAN\nGEORGE E. ZOBITZ\nGEORGE A. STEPHANAKIS\n\nSPECIAL COUNSEL\nSAMUEL C. BUTLER\nTHOMAS D. BARR\nOF COUNSEL\nROBERT ROSENMAN\n\nCHRISTINE BESHAR\n\nCONFIDENTIA TREATMENT REQUESTED\n\nApril 29 , 2004\n\nCarboplatin\nDear Ms. Schenof:\n\nBristol-Myers Squibb Company ("BMS") submits ths letter and the\nenclosed materials in response to the requests for additional inormation contained\nyour letter of April 20 , 2004 , and made durng recent conversations with outside counsel\nfor BMS and/or Teva Pharmaceuticals USA , Inc. (" Teva\n\nTermation.\nYou asked us to consider modifying the term ofT eva s distrbutorship\nrights to provide that Teva s distrbutorship rights expire at the earlier of some period\nafter Teva receives Food and Drg Admstration ("FDA") approval of its ANA\n(perhaps 30 or 60 days) or June 24 2005.\n\nThe paries addressed ths request in Aricle 9 of the Distrbution and\nSupply Agreement between BMS and Teva, dated April 26 , 2004 , (the " Distrbution and\nSupply Agreement") submitted to the FTC on April 27 , 2004. BMS respectfully refers\nyou to the following specific provisions of the Distrbution and Supply Agreement:\nSections 9. 1.1\n\n5 and 9. 6.1\n\n(c).\n\nCarboplatin ANA Filers\n\nYou requested that BMS identify, by the form and dose specified in the\nAgreement, which companes have fied an ANA for carboplatin.\n\nCONFIDENTIAL\n\n\x0cEnclosed is a list of generic companes that , to BMS\' s knowledge , have\n\nfiled ANDAs for carboplatin. BMS does not generally have knowledge of ANDA filings\nprior to tentative approval unless it receives notice that a company filed an ANDA\ncontaining a paragraph IV certification. It is therefore possible that other generic\ncompanies have filed ANDAs for carboplatin about which BMS does not have\nknowledge.\nBMS\' s Annual Sales ofParaplatin\n\nYou requested that BMS identify its annual sales of carboplatin.\nEnclosed is a chart that provides annual domestic net sales for Paraplatin i!\n\nin lyophilized and solution form , by dose , for 2003. BMS also markets a 600 Mgs\nsolution product. This product launched earlier this year and accordingly no net sales\nfigures for this dosage are included.\nClaims and Potential Claims that are Resolved by the Agreements\n\nYou requested a copy of any counterclaims asserted by Teva that would be\ndismissed as part of the resolution of the litigation at issue.\nPharachemie B. V. ("Pharachemie ) filed three answers in which it\nasserted counterclaims. In its most recent answer , the Amended Answer and\nCounterclaim to Consolidated Amended Complaint , dated October 22 , 2002 , Teva\nasserted only one counterclaim for declaratory judgment of patent invalidity. A copy of\nthe Amended Answer and Counterclaim to Consolidated Amended Complaint is\n\nenclosed.\n\nREDACTED\n\nPharachemie has also argued that it could obtain approval of ANDA 76162 notwithstanding BMS\' s pending pediatric exclusivity. BMS disagreed , and continues\nto disagree , with this contention.\n\nThe language in the agreements relevant to the resolution of the claims\nand potential claims of the paries may be found in paragraphs 2 , 3 and 4 of the\nSettlement Agreement between BMS , Teva and Research Corporation Technologies\nInc. , dated April 26 , 2004 , submitted to the FTC on April 27 , 2004 , and section 2. 1.4 of\nthe Distribution and Supply Agreement.\n\nCONFIDENTIAL\n\n\x0cTeva s Corporate Strctue.\nYou requested information regarding Teva s corporate strctue\nrelationship between Teva and Pharachemie.\n\nand\n\nthe\n\nTeva and Pharachemie are both subsidiares of Teva Pharaceutical\nIndustres Ltd., an Israeli company that does not do business in the United States.\nPharachemie is a Europea company that does not directly distrbute products in the\nUnited States and relies upon Teva and others physically to sell and distrbute\nthe United States.\n\nproducts in\n\nTo aid in the FTC\' s understadig of the corporate strctue ofTeva , I am\n\nenclosing a printout from Mergent Online that provides additional information\nconcerng Teva Pharaceutical Industres Ltd.\n\nConfdential treatment of ths letter and the enclosed materials is\nrespectfully requested.\n\nThan you for your consideration and assistance. If you have any\nquestions, please do not hesitate to call me at the number above.\nRespectfully,\n\nRichard J. Stark\n\nAne Schenof, Esq.\nBureau of Competition\nFederal Trade Commission\n601 New Jersey Avenue , N.\nWashington , DC 20580\nEncls.\n\nFEDERA EXPRESS\nCopies\n\nwi\n\nencls. to:\n\nAlan Bar, Esq.\nAssistat Attorney General\n\nOffice of the Attorney General\n200 Saint Paul Place\nAntitrst Division , 19th Floor\nBaltimore , MD 21202-2202\n\nCONFIDENTIA\n\n\x0cRichard L. Schwar , Esq.\nAssistant Attorney General\nOffce of the Attorney General of New York\nAntitrst Bureau\n\n120 Broadway\nSuite 26-\n\nNew York, NY 10271\n\nWiliam Shieber, Esq.\nAssistat Attorney General\nAntitrst Section\n\nOffce of the Attorney General\n300 W. 15th Street\nAustin , TX 78701\nAlan C. Witten, Esq.\nAntitrst Section\n\nOhio Attorney General\n\n150 East Gay Street , 20th Floor\n\nColumbus , OH 43215- 3130\n\nMeredyt Smith Andrs, Esq.\nAssistant Attorney General\nOffice of the Attorney General\nAntitrst Division\n\n200 St. Paul Place\nBaltimore , MD 21202\n\nNicholas J. Weilhammer, Esq.\nAssistat Attorney General\n\nOffce of the Attorney General\nThe Capitol , PL 01\nTallahassee, FL 32399\n\nFEDERA EXPRESS\n\nCONFIDENTIA\n\n\x0cCarboplatin\nKnown\n\nCaboplatin Injection USP\n10 mglmL , Rx\n\nMayne Phara\n\nAND A\n\nANA\n\nFilers\n\n3/30/04\n\nSolution\n\nFDA\nWebsite\n\n76- 517\n\nTentatively Approved\n\nCarboplatin Injection USP\n, 150 and 450 mg, Rx\n\nFaulding\n\nANDA\n76- 473\n\n4/16/03\n\nLyophilized\n\nPharaceutical\n\nFDA\nWebsite\n\nAmerican\n\nANA\n\n5/22/02\n\nLyophilized\n\nPharaceutical\n\n76-235\n\nFDA\nWebsite\n\nANDA\n76- 227\n\n8/12/02\n\nSolution\n\nFDA\nWebsite\n\nANDA\n76- 162\n\n1/14/03\n\nLyophilzed\n\nFDA\nWebsite\n\nANDA\n76- 292\n\nN/A\n\nSolution\n\nTentatjvely Approved\n\nCarboplati Injection USP\n, 150 or 450 mg, Rx\nTentatively Approved\n\nCarboplati Injection USP\n10 mglmL , Rx\nTentatively Approved\n\nCarboplati Injection USP\n, 150 or 450 mg, Rx\n\nParers , Inc.\nGensia Sicor\n\nPharaceuticals,\nInc.\n\nPharachemie\nB.V.\n\nTentatively Approved\n\nCarboplati Injection\n10 mglmL , 5 mL , 15 mL\nand 45 mL vials\nStatu Unknown\nCarboplatin Injection USP\n10 mglmL , Rx\n\nPharachemie\nB.V.\n\nNotice of\n\nParagraph IV\n\nCertfication\nBedford\nLaboratories\n\nANDA\n76- 039\n\n6/6/03\n\nSolution\n\nFDA\nWebsite\n\nBedford\nLaboratories\n\nANDA\n76- 099\n\n9/18/02\n\nLyophilized\n\nFDA\nWebsite\n\nSpectr\n\nUnkown\n\nN/A\n\nUnkown\n\nPublic Press\nRelease\n\nTentatively Approved\n\nCarboplatin Injection USP\n, 150 & 450 mg, Rx\nTentatively Approved\n\nCarboplatin Injection\nDosage Unknown\nStatus Unknown\n\nPharaceuticals\nInc.\n\nCONFIDENTIA\n\n\x0cParaplatin\n2003 Domestic Net Sales\n\nREDACTED\n\nCONFIDENTIAL\n\n\x0c- Mergent Online\n\nPage 1 of2\n\nMERGENT ..\n\nCONTACT US I HELP\n\nMUtiE:-r\n\nHome: I Basic Search: I Search Results: I Company Details\n\nTeva Pharmaceutical Industries Ltd. (Israel) (NMS: TEVA)\nI Company Detailsl Company Financial\n\nSynopsis I Highlights\n\nDebt I Executives I\n\nEDGA\n\nCreate Report\n\nNew\n\nI History I Joint Ventures I Business\nI Propert I Subsidiaries I Long Term\n\nCapital Stock\n\nCustom Report List\n\nTeva Pharmaceutical\n\nBusiness Summary\n\nIndustries Ltd. (Israel)\n5 Basel St.\n\nTeva Pharmaceutical Industes Limited is a global\n\nto Custom Reportng List\n\nPetach Tikva, 49131 Israel\nIncorporated: 1944 ,\n\nIsrael\n\nNumber of\nEmployees: 10, 960\n(Approximate Full-Time\n\npharmaceutical company producing drugs in all major\ntreatment categories. Co. utilizes its production and\nresearch capabilites to establish a global pharmaceutical\noperation focused on supplying the growing demand for\ngeneric drugs and on the opportnities for proprietary\n\nto Company Analysis List\n\nbranded products for specifc niche categories, such as its\nas of\n\n12/31/2003)\nCountry:\n\nExpand\n\nI Company Analysls List (0)\n\nIsrael\n\nTicker: TEVA\n\nbranded drug Copaxon\nr multple sclerosis. Co. \' s actve\npharmaceutical ingredients (API) business provides both\nsignificant revenues and profis from sales to third part\nmanufacturers and strtegic benefits to Co. \' s own\npharmaceutical production through its timely delivery of\nsignifcant raw materials.\n\nPrimary SIC: 2834 Pharmaceutical preparations\nPrimary NAICS: 325412-\n\nPharmaceutical Preparation\nManufacturing\n\nNumber of\nShareholders: 1 600 (as of\n\nFinancial Highlights (In USD as of 12/1/2003)\n\nTotal Revenue 3,276,400, 000\n\nNet Income 691,\n\n01/30/2004)\n\nTotal Liabilties\n\nClosing Stock Price: As of\n\nCurrent Liabilites\n\n4/212004 $64.47\nPE Ratio N/A\n\nCompany Website:\n\nww.tevapharm. com\nMergent Dividend\n\nAchiever\nAnnual Meeting:\n\n000, 000\n915,900, 000\n716,400, 000\n2,626, 500, 000\n1, 694,900, 000\n900, 000\n289, 400, 000\n\nTotal\nAssets 5,\nCurrent Assets 3,\n\nLong Term Debt 449,\n\n\' Equit 3,\n\nStockholders\n\nKey Executives\nEli Hurvitz - Chmn.\n\nIsrael Makov - Pres. , C.EO.\n\nPrincipal Offces\n\nAuditor\n\n5 Basel St.\n\nKesselman & Kesselman\n\nPetach Tikva, 49131\n\nIsrael\nOther Search Tools\nEDGAR\n\nlegal Counsel\nTulchinsky - Stem & Co.\nWillkie Farr & Gallagher\n\nPricing Information\n\nhtt://:fsonlinel. fisonline. comfcomDdetaiLa.\'m?comn\n\nnv mp.t=\n\n\'\\Rt\\7\n\n&r.nmn nv=_\n\nLi/1\n\n/\' (\\(\\Li\n\n\x0c. Mergent Online\n\nPage 2 of2\n\nk-\n\nTicker: TEV A Exchange: NMS\nClosing Price As of 4/212004 $64.\nWeeks Ending\n04/03/2004 03/27/2004 03/20/2004 03/13/2004\n\nOpen\nPrice 64.\n\n64.\n\n64.\n\n63.\n\n62.\n\n63.\n\n65.\n\n61.\n\n62.\n\n61.\n\n61.\n\n62.\n\n64.\n\n8,421, 200\n\n12, 287, 000\n\nHigh\nPrice 64.\n\nLow\nPrice 61.\n\nLast\nPrice 62.\n\nTotal\nVolume 8, 714 800\nAverage\nVolume\nfor Past\n\n375, 200\n\n30 days 62\n\n52-\n\nWeek 55. 14Range 67.\n\nCOPYRIGHT\n\n2003 MERGENT I PRIVACY POLICY I FEEDBACK\n\nhtt://fisonlinel. fisonline. com/compdetal.asn?cornnanvmer-\n\n4\\Rf\\7\n\nnmn!\'n\'=-\n\nA/1,/,)f\\l\\A\n\n\x0cMergent Online: Teva Pharmaceutical Industries Ltd. (Israel) (NMS: TEVA)\nHistory\nIncorporated in Israel on Feb. 13, 1944. Present Co. estalished\nAssia , which were originaly established in Isrel in the 1930\'\n\nin 1976 upon the merger of thee companes, Teva ,\n\nZori and\n\nIn Mar. and Apr. 1980, Co. acquid Ikphar Ltd. , a phareutical manufactur (merged effective Mar. 31 , 1982), and Dr.\nN. Premiger Ltd. (now Promedco Ltd. ) an importer of medicines and medical equipment.\nIn Feb. 1986, Co. ,\n\nthough its U. S. joint ventue company, acqud Lemmon Company, a U. S. producer and maketer of\n\ngeneric drgs.\n\nOn Apr. 10, 1987 , Co. sold Promedico to foreign investors for US$4 000 000.\n\nOn Jan. 21, 1988 , Co. purchased from Baxter-Interntional Inc. , a U. S. company, al of the issued and outstadig shares of\nTravenol Laboratories (Israel) Ltd. The shares of the above two companes were purchased for a tota of approx.\nUS$8 200 000.\n\nOn Mar. 29 , 1988, Co. acquied the remag outstadig shares ofMigad Ltd. and Ada Ltd., Israeli companes which\nwere previously 45% owned and 50% controlled, for approx. US$I, OOO OOO.\nOn Oct. 11 ,\n\n1988, Co. acquied approx. 98% of the equity of the issued and outstadig\n\ncorporation which, diectly and indiectly,\n\nshars of Abic Ltd. , an Israeli\n\nthough subsidiares;\'manufactues and markets pharaceutical\n\nand\n\nproducts , for approx. US$26, 6000, 000.\n\nveteri\n\nIn 1989 , Travenol Laboratories and Migada Ltd , subsidiares of Co., were merged.\nCo. acquied the remaig 49. 8% interest in TAG Pharaceuticals, Inc. from W. R. Grace &Co. for\nUS$20 000, 000, plus up to US$4 000, 000 payable based on the operatig results of TAG until the year 2000.\n\nIn Jan. 1991 ,\n\nIn 1992, Co. acquied 100% of the share capita ofProchemia S.d.\n\nand is subsidiares\n\nfor a tota payment ofUS$23 200, 000.\n\nar\n\nIn 1994, Co. acquied 34% of the share capital of Pro grph\nLaboratories for consideration ofUS$7, 200,000 and 30% of\nthe share capital of Portan Pharceuticals Inc. in consideration of US$ 1 500 000.\nIn Oct. 1995 ,\n\nCo. acquied Industre Chiche\n\nItaane S.\n\nIn Nov. 1995 , Co. acquied 78% of Biogal Phaaceutical W odes.\n\nIn 1996 , Co. acquied Approved Prescription Services Ltd., a U.K. generic drg\n\ncompany,\n\nfor US$52. 2 millon.\n\nOn July 1, 1998 , Co. acquired ful ownership and control ofPharchemie N. V. for approx. US$83 millon.\nOn Sept. 21 1999, Co. acquied Copley Pharaceutical , Inc. for US$220 mion\n\n(includig acquisition\n\ncosts).\n\nIn Apr. 2000 , Co. acquired Novophar Ltd. In consideration, the vendor was issued 2. 1 millon ordiar shares of Co. and 6.3\nmillon special shares that are exchangeable into ordiar shares of Co. at his discretion on a one-to-one ratio.\nOn Dec. 31 , 2000 , Co. acquied the shares in a subsidiar of Novophar from the\na total amount of US$12 millon.\n\nmiority shareholders in ths subsidiar, for\n\nIn June 2002 , Co. acquied fu control and ownership of Honeywell Phaaceutical Fine Chemical S. d. (subsequently\nrenamed Teva Pharaceutical Fine Chemicals S. ) in Itay and Bayer Classics S.A. (subsequently renamed Teva Classics\n) in France, as well as a shareholders \' loan ofUS$34 millon grted to the acquied company by the vendor. Tota\n\n\x0cMergent Online: Teva Pharmaceutical Industries Ltd. (Israel) (NMS: TEVA)\nconsideration paid for the two acquisitions (includig the shareholder s loan mentioned above and acquisition costs) was\nUS$168 millon in cash. Co. accounted for these acquisitions by the purchase method.\nOn Jan. 22 , 2004, Co. acquied Sicor Inc. The purchase price paid by Co. amounted to approxitely $3 460, 000, 000 in a\ncombintion of cash and Co. shares.\n\nJoint Ventures\n\nSubsidiaries\n\nStF\n\nijJ.\nMexico\n\nr;,!\n\ni;:\n\n\x0c2,\n\nSTERNS & WEINOTH\nA Professional Corporation\n50 West State Street\nSuite 1400\n. Trenton , NJ 08607\nKC- 0848\nAttorneys for Defendant\nPhanachemie B.\n\nUNTED STATES DISTRICT COURT\nFOR THE DISTRICT OF NEW JERSEY\n\nBRISTOL- MYERS SQUIBB\nCOMPANY and\nRESEARCH CORPORATION\nTECHNOLOGIES , INC.\n\nPlaintiffs\n\nI CIVIL ACTION No. 01- 3751 (MLC)\nI (Civil Action No. 02- 1270 has been\n\nI consolidated herewith)\n\nPHACHEMIE B.\nDefendant.\n\nAMNDED ANSWER AN COUNTERCLAIM TO\nCONSOLIDATED AMNDED\n\nCOMPLAIT\n\n\x0cDefendant\n\nPhanachemie\n\nPharmachemie\n\nanswers\n\nthe\n\ncorrespondingly numbered paragraphs of plaintiffs \' Amended Complaint for\nPatent Inmngement as follows:\n\nPharachemie is without lrowledge or information sufficient to\nform a belief as to the trth\n\nof\n\nthe allegations of Paragraph 1 , except that it\n\nbelieves that Bristol-Myers Squibb Company ("BMS"\n\nis a Delaware\n\ncorporation with a principal place of business in New York, New York.\n\nPharachemie is without knowledge or information sufficient to\n\nform a belief as to the trth\n\nof\n\nthe allegations of Paragraph 2 , except that it\n\nbelieves that Research Corporation Technologies , Inc. ("RCT" )\n\nis a Delaware\n\ncorporation with a principal place of business in Tucson , Arzona.\n\nAdmts.\n\nAdmts.\n\nPharachemie admits that it designated\nprocess in New Jersey\nNo. 01- 3751\n\nan agent for\n\nservice of\n\noriginally filed Civil Action\n\nin connection with the\n\n(MLC) and fuher admts , for puroses of this\n\naction only, that\n\nPhanachemie is subject to personal jursdiction in this judicial distrct and that\n\nvenue is proper in this. Cour under\n\n28 D.\n\nC.\n\n1391(c) and 1400(b).\n\nPhanachemie denies the remaining allegations of Paragraph 5.\n\n\x0cPharachemie admts that United States Patent No. 4 657 927\n(hereinafter the "\' 927 patent" ) issued on April 14, 1987 , and that copies of the\n\n927 patent and Certficates\nComplaint as Exhbit A.\nsufficient to\n\nof Correction are attached to the\n\nPhanachemie is without lrowledge or\n\nform a belief as to\n\nthe trth of the remaining\n\nAmended\n\ninformation\n\nallegations of\n\nParagraph 6.\n\nPharmachemie is without knowledge or information sufficient to\nform a belief as to the trth\n\nof\n\nthe allegations of Paragraph 7.\n\nPharmachemie is without lrowledge or information sufficient to\nform a belief as to the trth\n\nof the\n\nallegations of Paragraph 8.\n\nPharachemie admits\napplication ("ANDA" )\nFDA")\n\nthat it\n\nwith the United\n\nfor approval to market\n\nfiled an abbreviated new drg\n\nStates Food and Drug Administration\n\npowder for injection\n\nproducts containing\n\ncarboplatin as their active ingredient; that its ANDA included a certfication\nunder\n\n505G)(2)(A)(vii)(IV) of the Federal Food, Drug and Cosmetic Act that\n\nthe \' 927 patent is invalid , unenforceable , or will not be infrnged; and that RCT\n\nand BMS received notice of the certfication on June 26 , 2001. Pharachemie\ndenies the remaining allegations of Paragraph 9.\n10.\n\nPharachemie admits that it filed an ANA with the FDA for\n\napproval to market injection products\n\ncontaining carboplatin as their\n\nactive\n\n\x0cingredient (together with the powder for injection products which are the subject\nof\n\n9 above referred to as "Phanachemie Carboplatin Products\n\nANA\n\n); that its\n\n505(j)(2)(A)(vii)(IV) of the Federal\n\nincluded a certfication under\n\nFood, Drug and Cosmetic Act that the \' 927 patent is invalid , unenforceable , or\n\nwill not be infunged; and that BMS received\nFebruary 25 ,\n\nnotice of the\n\ncertfication on\n\n2002. Furher answering, Pharachemie states that RCT received\n\nnotice of the certfication on Februar\n\n27 ,\n\n2002. Phanachemie denies\n\nthe\n\nremaining allegations of Paragraph 10.\n11.\n\nPhanachemie admts that if the \' 927 patent is valid , its filing of\n9 and 10 constitutes\n\nthe ANDAs referenced in\n\nan act of\n\n. least one claim of the \' 927 patent pursuant to 35 D.\n\nplaintiffs to an order\n\nC.\n\ninfrgement of\n\n271(e)(2)(A) entitling\n\nthat the effective date. of the approval of both of\n\nPhanachemie s ANDAs be a date which is not earlier than the April 14 , 2004\nexpiration date of the \'\n\n927 patent.\n\nPharachemie denies\n\nthe remaining\n\nallegations of Paragraph 11.\n\nFIST\n\nAFTI\n\nDEFENSE\n\nClaims 1 and 3 of the \' 927 patent are invalid and unenforceable against\nPhanachemie by reason of obviousness-tye\n\ndouble\n\npatenting.\n\n\x0cCOUNRCLAI\nDECLARTORY JUGMENT OF\nPATENT INALIDITY\nFor its counterclaim Pharachemie alleges the following:\n\nPharachemie is a Netherlands corporation with a -pricipal place\nof business in Haarlem, The Netherlands.\n\nOn infoffation and belief, BMS is a Delaware corporation with a\npricipal place of business in\n\nNew York , New York.\n\nOn infoffation and belief, RCT is a D\n\nware corporation with a\n\nprincipal place of business in Tucson, Arzona.\n\nSubject matter jurisdiction exists pursuant to 28 D.\n\nC. g 1331 and\n\ng 1338.\n\nPhannachemie incorporates by reference the statements in\nparagraph 5 of its Answer establishing venue over this action in this Court.\nTHE RCT/BMS PATENTS\n\nS. Patent No. 4 140 707 (the "\' 707 patent"),\nFebruar 20 , 1979 ,\nJames Hoeschele\n\nissued on\n\nidentifies the inventors of that patent as Michael Cleare\n\n, Barett Rosenberg, and Loretta VanCamp. The patent was\n\nsubject to reexamination and a Reexamination Certficate issued on December\n\n, 1989. The tenn of the \' 707 patent was extended\n\nby 916 days under 35\n\n\x0cC. 9 156 in response to an application submitted to the United States Patent\n\nand Trademark Office by RCT based on the period of time required by FDA to\n\nreview BMS\' application for approval to market its carboplatin products in the\nUnited States. Copies of the \' 707 patent , the Reexamation Certficate and the\nCertficate Extending Patent\n\nTerm are attached as Exhbit\n\nA.\n\nThe \' 707 patent expired on August 24 , 1998.\nClaims 1 ,\n\n5 6 and 7 of the \' 707 patent , after Reexamination , claim\n\ndiammineplatium(II) dicarboxylate compounds.\n\nClaim 7\n\nis limited to\n\ncarboplatin.\n\nThe \' 927 patent issued\ninventors of that patent as the\n\non April 14 , 1987 , and identifies the\n\nsame inventors identified in the \' 707 patent:\n\nMichael Cleare , James Hoeschele , Barett Rosenberg, and Loretta Van Camp.\nUnless declared invalid or unenforceable , the \' 927 patent will continue in force\nuntil April 14 , 2004 , when it is currently scheduled to expire.\n10.\n\nClaims 1 and 3 of the \' 927 patent generally claim compositions\n\ncontaining, and a method of treatment using, compounds ,\nclaimed in claims 1 , 5 , 6 and 7 of\n\nthe \' 707 patent,\n\nincluding those\n\nto be admnistered\n\nparenterally. More specifically, Claim 1 of the \' 927 patent claim a method for\n\ntreatig a specified malignant tumor which "comprises parenterally\nadmnistering to an animal\n\naffected with said malignant\n\ntumor a\n\nsolution\n\n\x0ccontaining in an amount sufficient to cause regression of. the\n\ntuor.\n\n. . (one of\n\nthe diammneplatinum(II) dicarboxylate compounds claimed in the \' 707 patent\n\nand other (platinum(II) and) platinum(IV) compounds) . . . . " Claim 3 of the\n\n927 patent claims a " composition suitable for parenteral admnistration to an\nanimal affected with a .\n\n. (specified\n\npharaceutically acceptable carer\n\nmalignant) tumor\n\nand\n\n. comprising a\n\n(one of the diammneplatium(II)\n\ndicarboxylate compounds claimed in the \' 707 patent and other (platinum(II)\nand) platinum(IV) compounds) . . . .\n\nTHE PHAACHEMIE CAROPLATIN PRODUCTS\n11.\n\nThe Pharachenre Carboplatin Products are 1)\n\ninjection products containing carboplatin\n\nas their active\n\npowder for\n\ningredient which ,\n\nif\n\napproved for marketing in the United States , will be available in strengths of\n50mg per vial 150mg per vial and 450mg per vial; and 2) injection products\n\ncontaining carboplatin\n\nas their\n\nactive ingredient which ,\n\nif approved\n\nfor\n\nmarketing in the United States , will be available in 10mg/mL, 5mL , 15mL and\n45mL vials.\n12.\n\nOn or about April 16 , 2001 , Pharachemie filed with the FDA an\n\nANA seekig approval\n\nto market the\n\npowder for . injection form of\n\nPharmachemie Carboplati Products in the United States.\nDecember 6 , 2001\n\nthe\n\nOn or about\n\nPharachemie filed with the FDA an ANDA seeking\n\n\x0capproval to market the\n\ninjection fonn of\n\nthe\n\nPharachemie Carboplati-\n\nProducts in the United States.\n13.\n\nPursuant to the Federal Food, Drug and Cosmetic Act , each ANA\n\ncontaed a certfication by Pharachemie that, in its opinion, the \' 927 patent\nwas invalid ,\n\nunenforceable or not infrnged.\n\nBy letter dated June 20 ,\n\n2001\n\nnotice of the certfication in the April 16 , 200 I ANDA submission setting fort\nthe factual and legal basis for the opinion regarding the \' 927 patent was sent to\n\nRCT and BMS. By letter dated February 20 , 2002 , notice of the certification in\nthe December 6 , 200 I ANDA submission setting fort the factual and legal\nbasis for the opinion regarding the \' 927 patent was sent to RCT and BMS.\n14.\n\nBMS and RCT have asserted and are continuing to assert that the\n\nPhanachemie Carboplatin\n\nProducts will infrnge claims\n\n1 and 3 of the \' 927\n\npatent.\n\nPharmachemie seeks a declaratory judgment that claims 1 and 3 of\n\n15.\n\nthe \' 927\n\npatent are invalid based on obviousness-\n\ntye double patenting and\n\ntherefore , the Phanachemie Carboplatin Products , when marketed in the United\nStates , will not infrge those claims.\n16.\n\nThe only difference between the subject matter of the earlier issued\n\nclaims in the \' 707 patent and the subject matter of the later issued claims 1 and 3\n\nof the \' 927\n\npatent ,\n\nwith respect to the compounds claimed in the \' 707 patent , is\n\n\x0cthe parenteral use of a solution\n\nmalignant tuor\n\ncontaining such compounds to treat a specified\n\n(claim I) and a composition\n\ntogether with a "pharaceutically\nadmnistration of such\n\nthat includes such compounds\n\nacceptable carer\n\n(claim 3).\n\ncompounds to regress the tumors specified\n\nclaims , and the manufactue or use of a composition containing such\n\nin an amount suffcient to regress such tuors , would have been\n\nThe\n\nin those\n\ncompounds\n\n, to a person of\n\nordinar skill in the relevant art and in light of the prior art\n\n, an obvious\n\nmodification of the inventions claimed in the \' 707 patent. 17.\n\nactual\n\ncontroversy\n\nexists\n\nbetween\n\nPhanachemie with respect to invalidity of claims I and 3\n\nreason of obviousness- tye\n\ndouble\n\nRCT/BMS\n\nand\n\nof the \' 927 patent by\n\npatenting.\n\nWHEREFORE , Phanachemie prays for judgment\n\nagainst BMS and RCT:\n\n(a)\n\nDismissing the Amended Complaint herein;\n\n(b)\n\nDeclarng that claims\n\nI and 3\n\nunenforceable based on obviousness-\n\nof the \' 927 patent are invalid and\n\ntye double\n\npatenting; and\n\n\x0c(c)\n\nservants ,\n\nPennanently enjoinng RCT/BMS , their offcers , agents , directors\nemployees ,\n\nauthority of or in\n\nsubsidiares and assigns , and all those\n\nprivity with them or with any\n\nof them ,\n\nacting under the\n\nfrom assertg or\n\notherwse seekig to enforce the \' 927 patent against Phanachemie.\n\nPHARMACHEMIE B.\nBy its attorneys\n\nSTERNS & WEINROTH\nA Professional Corporation\n50 West State Street\nSuite 1400 .\n\nTrenton , NJ 08607\n\nDated: October 22 , 2002\n\nOF COUNSEL:\n\nFrancis C. Lynch\nLaure S. Gill\n\nPALMER & DODGE LLP\n\nIII Huntigton\n\nAvenue\n\nBoston, MA 02199\n\n\x0cUnited States Patent (19)\n\n(11)\n\n140 707\n\nOeare et &1.\n\n(45)\n\nFeb. 20, 1979\n\n(54) MALO ATO PLATINUM ANI-TUMOR\n\nReferce aled\n\n(56)\n\nPUBUCA nONS\n\nCOt\\IPOUNDS\n\n(75) Inventors: Micbael J. Oeae; James D.\n\nWard ct aI-. CaccTre.tmnt Repom. vol. 60, No. II,\n\nHoeele; Barett Rosenberg;\n\nLorett L VBJ Cap, aD of Eat\nLaing, Mich-\n\n(73) Assignee: Reseach Corpration ,\n\nNew Yotk\n\n1675-1678 (1976).\n42-47 (1971).\nRosenbeg Pial Meta Rev. IS,\nLcb ct aI_ , J. Pha3CUt Scince, 65, No. 3 (1976),\n3IS-320.\n\nRoscnberg ct 21, Natue 222. 385- 386 (1969).\n(21) Appl. No. : 778,955\n\nPrnu\n\n(22) I:ilcd: Mar. 18 , 1977\n\n(57)\n\nRelated U.s. Applicaon Data\n(63)\n\nContinuation of Ser- No. 260.989,\n\nJun B, 1972.\n\n...____n...___n-.__._..n.....-_-\'-\n\n(52) U.s. a. _n""n-_\'-\'-----"\'-"-\'\n\n(5&) Field of Secb\n\n_n...__..n",,,,__,,"n\'_\'\n\n26/429\n\nC0\n\nR;\n424/287;\n\nABCf\n\nMaJonato platinum cOrdintion compounds and\n\nmethod of treatig JDgnt\n\nab.su!onr.\n\n(51) Int. 0.\n\nEran:iner-Helc: M. S. Snc:\n.fm:-Dcu. P. Clake\n\nArtomq. Agmt. ar\n\n15/00\n\n424n45;\n\n54/4\n\n260/429\n\np3rteral\n\nadti:l\n\na\n\ntuors comprig the\n\nto 3D afected\n\nsolution of the compot:\n\n4 a., No Ih-awi\n\nan of a .\n\n\x0c140 707\nnum (IV) forms d2 3 coordination compounds which\nhave an octahedra arrangement ir space.\n\nMALONATO PLATINUM ANTI-TtIOR\n\nThe coordination compounds of the. invention ind tra.\'!, isomers of platium 01) and\nwhicb conlz the bidentate malonato\nTbe invention described . herein was made in the S platinum\nligand which may be lubstituted or.unsubstituted. Tbe\nof work under a grant or award from the Dc.\ncou\nmaonato ligand may contan substituents sc:ected from\nparJme:nt of Healtb, Education and Welfare. .\nthe group consising oflower aJkyl. (e.g., methyl , ethyl,\nThis is a continuation, of application Ser. No.\npropyl , isopropyl, n-butyl, etc.); arl, (e.g., phenyl;\n260. 989, fied June 8, 1972, now abandon\nCOMPOl;1\'"DS\n\ndude thc cis\n\n(I\n\n10 lower alkyl., lower alkenyl-, halo-, nino-, lower aJkoxysubituted phenyl and naphthyl); aralkyl , (e.g- , pbenylmethyl (benzyl). 2-(l-n:.phthy1)methyl); alkenyl, (e_\nThe pre:sent invention rc:ate:s to novel malonato plau4-ami:IO- butene. allyl); cycloakyl. (e.g cyclopropyl,\nnum coordination compounds and to thc:r use in cancer\ncydo e:t) I, etc.); cydoalk=nyl, (e. , 2-cyclopcntcnchemotherapyIS I-yl. 2-cyc1obexcn- yl); alkoxy, (e. , mctboxy, ethoxy,\netc. ), and bydroxy. Also suitable are the . I-cydoaJkSUMMARY OF THE INVENTION\nylenedi ar\\;oxylic acids , (e.\nI-cycloThe invention provides platinum coordination compropanedicaob"ylic acid, l l-cyclobutanedicarboxylic\npounds having the fonnula:\nacid . e:c.) and the 1, I-cyc1oal1:nyldicuboxylic acids\n20 (e. , I, I-cyclopropenedicaboxylic acid , 1\n(P\\(II)A (OOI.. CRR.l Dr\ncyclobut ncdicarbo"ylic acid.. dc.\nThe cordination compounds of the invention also\nci, or ,nn,IP,(JVIA (OOCh- CRRlhLzl\ncont3i Iwo monodcnbt"e amonia or priary or heter- acyclic amie ligands, i. e., when x in the above formul\nis 2 or one bideDtatc amine ligand, i. , when. x is I.\n,2S\nx =.1 . or 2;\nSuitable monodentate ame ligands indude lower\nalk).1 amincs , (e. , methyl., ethyl-, n- propyl-, ispropylI, Z is , butyl- 3Jines , etc.), aryl amincs (e.g. . aniline), aratprovided that when y = 2, Z = 0 and when y\n1:yl amines, (e. g:, bczylaine), hydroxy lower\nRand RJ are. selected from the group consisting of H. 30 ames, (e_ g., ethaolame, propanolame; etc), bylower alkyl, aryl. aralkyl , al1:enyl, cydoalkyl, cy- dr oxybmi , lower alk ?, ames (e.g. , methxyla, etc.). aJkoxyalkyl\nes\n, lIethox3?.etbylac1o:.lkenyl. alkoxy, OH, or are combined \\lith the ca.\netc.), and h:krocycli\n(e. , pyn me and\nbon atom to fonn a cycloa1yl or c)"c1oaJkenyl group,\nandme).\nIncluded are the 3I0 acid, ie.,\nand substituted derivaives thrcof\nwhen x = I, A is HR2\nCHRr-H NRsH 3S Rr- Cm-\'Hl OOH wherein R is H, lower alkyl\nand when x = 2, A is H NR6a heterocyclic amine or an (e. g.. methyl, ISpropyl. ele.), hydroxy lower alyl (e.\namino acid, wherein Rz, R), . :a R, are the sae or hydroxymethyl, hydroxyeth).I, etc.). aralkyl (e. g., bendifferent and are selected from rhe group consisg of zyl, e Ie).\nIt 15 to be\nr.ders ood Ilt. the roordll lIo comH. CH . C H,. hydroxy and lower alkoxy provided thaI\n.& p?und of the: mve:nl1o may uaclude two Idenllca or\nR and R may also be ary) or -\' Y I. and each R is the\ndlfT rent monode:nbte: bgands\nsae or dIfferent and IS se ecku from regroup consast. L e I enta e amme: gan s\nUlta",\nIDC u e t e su taIDg 0 H, tower alkyl , arl, aralkyl, h)"woxy lower\nU\ne\ntuuo pnmary an secon\nalkyl , hydroxyl and al oxyl annes. alkoxy!akylanncs\ne th\ny I cd\n?:So. De or 0\nr on a oms 0\nwherein all of sad alyl groups are lower alkyls\n4S the: ethyleneda..rune: may contam subslltuents such as\neteroc c IC su ntuen anc u IDg S3 as a nog lo", er aJkyl (e. , methyl, ethyl), hydroxyl,\naloxy (e.g.\nmember\n, ethoxy, etc). Secondary ethylenedies\nwhen z = I, L !S a bJdenlate anlont\nwherein one or more of the ame groups conta sub.z=\n, L IS a monodentate amomc h\nstNents sueh as lisJed above for the carbon atoms of the\nThe IDventlo . also elatcs to a C\nSJlJOn and SO primar ame a.\'!d\n(e.g. , phenyl) and aralkyl Co e.g.\nod for treating mal &?ant. tUors In\nunaJs com- benzyl) may al bearlutilied.\nlDg pa entcraJly admmaste\nThe Pt (II) coordintion compounds specifed herein\na;ng to an.a?lma aff\n\\V1Ih a. ma!lgnaot tumor a solution O!mral\ng a plat\ndo not ext as geometrica ismer; however, the\nompound as defint: hereanabove 10 an OV) compou nds ext as cis and tran ismers. II is to be\ncoordllallon\namount suffCIent to caus regrason of the .\nSS\nunderstoo that the inventin is inclusie oftbe\n\nBACKGROUND OF THE INVENTON\n\n,I\n\nwherein:\ny\nI Ioror2:\nz == 0,\n2.\n\nall\n\ngreater tban 0;\n\nIIcs\n\n-A\n\nar\n\nbs\' ts\n\n\'I\n\n\'0\n\nnan=WI\n\nd\' \' d N and\n. - d,\nmethox).\nand\n\nt: th f th\n\nd.\n\nted\n\n!num\ntumor. furr\n\nTIE . ci and(Itr-iomcrs.\nINVNTON\n\nDETAILED DESCRIPTION OF\nIatlnum\n\nl!\'\n\nThe PI\ncordintioa compounds may also conra tw monoeDtate or one bidentate anioni ligand\ncompounds and methods for where only one malonato ligad is present, i. e.. where y\n\nrhe r producpon are desn\'bd by J. C.. Baiu, Jr.. The 60 = I in the above fonnula.\nChe"!ir ry of the Coordination Compounds\nSaiitable monodentate anionc ligads\n\nR:Wold\n\nPubbshang Corp-, N.Y.. 1956, Chap. 2; J. LeWI eI ai,\n\nY., 1963.\n\ninclude cbJonitrate sulfbideDtatc aionic ligands which\n\nride. brolle. iodide. oitrte.- hydroxide,\n\nCItmistry Prnciples and Method\nModer\nJlt:, etc. A:ong the\nn. Coordina\nIntersclence Pubbshers Inc., N. Y., 1960 and Kauffma may be present are oxakte, pyrophosphate, dithioxaIrrorganic Synthtsis\n\n- N.\n\n7, McGraw-Hil . Book Co., Inc.,\n\n6S late- .\n\nIt is to be understood\n\nthat the invention includes\n\nPlatinum (II) fonns dsp2 cordination compounds thos coordination compounds contanig\n\nwhich have a square planar arrangement iD space. Plati- dent3!e anonic ligads;;\n\nmixed mono.\n\n\x0c140, 707 The preferred compounds are those wherein R.\n\nRt in Ibe above formuJa are H, metbyl or ethyl\n\nwhite crys.\nand (to avoid "bumping ) on the bot plate untilquatity.-The\ntas of Ihe produci started to form in greal\n\ni_\n\nmalonatopleUnum. methylmaloDatopb.tioum ard ethyl-\n\nmiture was then cooled to room temperature and Ihe\n\nmaJon:topl:lunum cordination eompoWlds- The most product fIlered ofT.\n\n(I\n\npreferred Pt\n\nThe: filr;ole: W2 rebeated for 5-10\n\ncompounds arc Ibose mzonato- 5 miUles and coled to 0\'\n\nC. 10 col1cct a furlher crop.\n\nSg (93%).\nstage\nplatium (II) compounds of the abovc f~rmula ",hcrein The crde yield at ths\nwa recystallized .by dislving in boil,\nmaonalocThe\nproduct\nX = 1 and Rl\' RJ\' RJ and R) are each H\n5g) rethylenediamine platium (II), metbylmalonatoc- ing or nea boiling water. Thc above yield (20. diss\nylmilonatoclilers\nof\nboilng\nwaler\nCor\ncomplele\nquired about\nthylened!am!oepI31!nUm (II) and el\ntmum 01);. and .wbere!o x = 2 and 10 lution. Milonic acid IgI was dislved io the waler to\nIbylcn a.tn\nme- suppresi any hydrolysis.- The fJtered solution was\neach R6" H. e., m lonat tammmeplatinum (II).\nethyl- colcd - to. .\nto give while fluffy neees\nmeplatmUD\n01)\nthylmalol1tod\n\nan\n\n0\' C\n83%).\n\nnCllip"btc.\n\nmilonalodtamrmneplatmum (II).\n. (18.1511show. .ha. hydrlysi.\nThe prdctTcd Pt OV) compounds arc those wbcrem \'U. V JVla ,pertlo! and conduclivi.y .,udi.. havc\nbismalonato\n(or\nIS\nis\nX = 2, eacb R6 is H and y = 2, ie.,\nThe: crysub decompose between 185\' 190\' C. The\nbismelbylmalonaloorbis:tbylmalonato)di:mineplat-structure of the: product was verfied cia an ir. sp-\n\num (IV).\nThe cordination compounds of\n\nIbe: invention lUy\n\nbe tru Solubility of the prouct i, low in cold water, i.e..\nc.,\n\n20 mg/IOO mls at 20\' C. and 43 mgllOO mls al 37\'\nprepared by one ofa varidy of well-mown methods. A\nhigher in near boiling water (90\' - 100\' C)- 65g1100\ngene:ral method of preparation of the: Pt OI) cordina- 20 but\nmi.\ntion compounds is as follows: Staing compounds hav- The empirca composition was verified\ny elemental\ning the formula cis-(Pt A(Hal)zl whcrein Hil is I, Cl or\nanilysis:\namine\nBr and A is one bidentate or two monodenta:e\nMalonatodmicplatinwn(I (P(Nil(CJ\nIig:mds (prepared by the method of S. C.Dba\nCaculated for C HaNl Pt. C: 10. 88; -H: 2.43; N:\n\nIndia\n\nJ. Cbcm., V91 S, p. 193 (1970))\n\nare\n\nreact with silver 2S\n\nreacted with Ihe milonate ion to form the cordintion\n\ncompounds of the invention. Th\nseted by the foUoy..ing\n\n\' 8. 46: Pt 58. 9;\n\nlattr is then\n\nnitrte to form the diaquo eomplcx.\n\n(P\n\nFound C: 10. 67; H: 2. 35; N: 8. 54;\n\nmethod is replt-\n\n30\n\nrcacdon scheme:\n\ncilPt AOJJ + lAgNOJ + 1HzO) - a..\n\n(PI (en) (C.\n\nPI 58.\n\nEXMPLE 2\n\n(j4)) (en = H2N(CH NHJ; C.I0,\n\n- =OJ\n\n. CH(CH)) cOt -\n\n;Utrate (3. 64g)\n\nwa dislved in 20 ml ofwalcr\n\nA(H20) JJetmJh + 2,,&a Silver\n:z(CH:zCL21 (3..g) supended iD\nand adde:d to\nThe miture was ,fued\na..(P A(HzO)zjOJh +. 1t2C-iCOh .. IPI water (30 cl) in a conica () !51c.\n10 miutC$ unti all the ydhOI\nplate\nfor\n5::\nwar\non\na\n1KOJ\n+\n2H\nA(OOHii +\nJS low platinum complex Iw dilved to give a yenow\nhgand\nor\ntwo\nmouoame\nliquor plus a copious white siver. choride precpitte.\ne\nb.dentate\nwherem A!s o\nhrough a lie pore fiter and :\n.\nhgands.\nThe\nmitue was ftt.red\ndentate amIDe\nvolumes of hot\nThe followmg non-hmJtl exple: are iJustraUve the precipitate washed lwie with smallwas\nwasgs added to an\n?f the . melhods for prepag the compounds of the water. The clea fttl1tc plus\n\nmvenUon.\nEXAMPLE 1\n\nM2.onalodiacplaUnlim(II)\n(P1(NJMC\n\n04)) fillc\n\n0, + 2Hl0)\n\n(PI(NHY1(Hl 0)zClO,) + lA,a\n\n(PJh:\n\nO)z(NoPz + C,\n\n(Pt(NHJh(c)1tJ\n\nO.z-\n\n0. tI\n\n1 + 2N0, - +1H1\n\ntrte (21;558\n\nilvcr\n\nred and """ahCd with colif water\n\nand actone (Yeld\n\naqu.\n\n45 2.65g). The mothe:r liquor plus\nwashis wa\nreduce 10 about half its origi Volume (- 30 mI) to\n\nReactions:\n\n(PtJhOzJ + 1AI\n\nsolution of mcthylnonic acid (2g in 20mb)\nwhich had ben adj!l!i. to pH 5-6. The miture wa heated 10 aboul SO\' C for five miutcs and then cooled\nto 0: c. The shny white crysta whicb .formed were\n\n40 aqueou\n\nyield a second crop on coing to. O\' C. (Yield 0. 85g).\n\nTota Crude: yi.c1d\nwas recf)"Stalized from :a\n\nwith falr:tiori Ihrougb a fine\npore mtcr prior to eooling.\nYield of shiy whit leaets 2.96g (74%).\nwater (arund 250 mJs)\n\ntOIcoola-\n\nsligbtl les tha the S\n\n(88%). The complex\n\ninum volum of boiling\n\nto ct c.\n\nC:19.41 H 3.26 N:7.sS;\n\nCacuJatCd for\n\nFound C:19. U H 3. 61 N:7. 89. omelne 3;0oot m. order to aVOId silver\n) and 2/dc to\'5 A second crop (0.33g\':8%) viis obtaed by reducing\ntion) was dISlved . m watc: (SO\nk. P\' e co\n) m \' 2 mJ. comca\nthe bulk of tbe mother liquor. "\n(Pt(N\n\' J)zOzl (2OS\neo were\n\nstig\n\nwae O\\ OD\n\nmi.\n\na\n\npiawa\ne WI\nrap \'EXPLE 3\ncom.\n\nunil the siver chloride precpitatioD\n\nThe I--\n\n\'.ro IV . - J ,-m\nplcte and . the mother liqoor wa alost c:Jor1\nsilver cbloride wa fJtercd offusg a fie pore\nSilver nitr (5.45g) wa dilved in water (J mJ\nglas fiter and the precipitate wa washed seve tiesand\n(Pt(NJna.. (3g) suspcdcd in\nadded to\nwith bot water to give a tota6lrrate volume of 100200\nWiter (30 ml) cotag_ conCetrted nitrc acd (3\nloblonic acid (13g - a twofold\n\nsitcred 60 .\n\nexces) wa\n\ndilved ml), The.\n\nwaed on\n\n-8.\n\na hot plate (70\'\ncootets were\nmixture\nstired Cor.at leat ot: hour- The\nglas fiter to\nfttered through a fine pore sintere\n\nin water (30 ml.) and neutred wilh a solution of 65 C.) an\n\npota-\n\ntr\n\nre-\n\nKOH (- 13g in 30 mi.) 10 pH 5-6. The: resuJt.g\nprecpilate wa washe\n. sium maJor-ate solution wa added to the: platinum eoo- move the silver chloride:. The\ne dea fI.\nr.\nwning fttrate and the mixture was cacCully warmed t..ice v.;tb n smal volume of hot wat\n\n\x0c140 707\ntrJle plus WJsbir:gs was tested wilh a drop\n\nof 1M KCI following standard protocols for Ibis tesling as set by\n\nsclutions to detennin if excess silver chloride was pres- the National Cancer\nent. (If Ihe test is posilive. surtdent KCI is added dropRep..\n\n25(1962)).\n\nInstitute.\n\n(Cancer Chemotherapy\n\nwise to th: bul;c solution until no silver chloride is pre- For thes tests an SJ80 tumor taken from a sacrifice\ncipilaled.) The solution \\I\':S refiltered and the filtrate S mouse was disected free of superfluous tissue and cut\nreduced to 20-:!0 mls in volume and cooled to O\' C. to\n\nyield plate yellow crytals\n\nunder sterile conditions into approxitely 10 miJi-\n\n(presumably trans gram size \' pieces\n\n(PI(NH3)z(NOJ)\')). These were washed with a\n\nThese lisue pieces were then im-\n\nliule planted by Irocr in the left axlar region. subcutae-\n\nof\n\nco!d water and then acetone (Yield 1.8g). A ponion\nously, in new mice. -The mice were, on the average.\nthis)\' ield (lg)wasdisslvedinnminimumofhotweter 10 approximately fouf wecks old and weighed 18-20\nto which sodium. nitrate (0. 2g) bad bccn added. This grams. Takng day 0 as the day of implat. the anmas\nsolution was filtered iulO zn aqueous solution of malonic were sacrificed on day JO. The tumors were excisd and\nacid (0.5g\n\n- a slight excess) which had bccn adjusted to\n\n80.\n\npH 5-6 with sodium hydro"idc. Wbitc nucro-ryslals of\nthe complex quickly form on cooling. These were fi.\n\nIS\n\ntered ocr and washed with cold waler and acetone.\n\n(Yidd 0. 7g - 30-%).\nC:Iculatec! for\n\n20a Pt\n\nC:16. 63\n\nH 2. 33\n\nN:6A7;\n\nFound C:IU H 2. 64 N:6.\nGENERAL STUCTRE CONFORM TJON\nThe malonate g,roup is shown to be coordinzted\nplatinum by the o\n\nweighed and the ratio of the weights of the tumors in\nmice\nin the: treated animals to the control set of anma\nwas obtained. This ralio, multiplied by 100, is given as\nthe\n\nTIC\n\nratio in Table I,\n\nFor the flIt set of tests the coordination compound\nwas freshly dislved in stenle distiled water and in-\n\njected intraperiton ally on day I into each of the tet\n\nThe volume of the injecton wa usually I mI.\nanito mal where\nthe chemical was not soluble in\n20\n\nmice.\n\nsome cases. in order to get an active dose into the\n\nth amount\n\nrved change in the electronic \'\n\nspectra on soicg from Ih aquo to Ihe malonate speces of solvent, a fine dispersion was prepared of the dose .\nThus, structures such as- (Pt(NH)Jz(H20)zJzH2 C)O,)) Deeed for the tes Thus so e of our test rcsults w~re\n3n ruled out confirming the analyt!;al data Simiarly, 25 obtamcd oil - animal where a sluny of ,the co pound .\nzero. time conductivit). m asuremenrs support a neuual was injected. These are so noted in Table I below. In\ncompound. The i.r. specua show the presence of coor- adilition ,\n\ndi:tated carboxyl ,groups (16001650 cm\n\nfor some of the compounds,\n\nthere wa injcctl:\n\nI and 140 about I m1 of sol uti an, either in one single injection. or\n\nno COzH sroups (which would show at in 2 injecuons given a few hours apart of I m1 each.\nwith\niferent dose\n1700- 1750 cm). Finally Ihe cerboxyl group vibrations 30 These injections were initilly given in 4\nare compalible: ",ith a ehelated strulure as compared to levels for eacb Dew compound with 6 mice in each dose\n\nulate complexes of known struclures. leveL The tess covered a dose rage from a low mefThe comtJunds of the invention were tcsted for fective dose, to en upper dose level which prodlJd\nanti- tuDor a::livily using our standard screening tumor, some: death within the tie period of the experiment.\nsolid szrcorua I SO tume: in female: Swiss white: mice, 35 The results are 3d forth in Table\n\nI.\n\nTABLE I\nTOb of ADtit.",or Activity or Malo..lo aDd Substituted MaI..to\nCordinat:oa Coplex or Plarm""\n\nS..cor.. ISO ADal.\n\nFcme Swi while mice\nTw:orSi. e injectia 00 day. Doled iatupcritoc.\nDay oK\n\nCoordinalion Comptcl.\n\nI\'lCCioD\n\nLet\n\nNo. of\n\nTIC D..1h\n\n10 mEls\nJ5 rnEls\n20 ..(le\n25 rnEle\n\nM2!O:tJ.todi1.cctncpbt:\\:D1\n\n(II) (.Iurry in HID)\n\nDose\n\n.\n\n)0 rn&/\n\n1/6\n6/6\n5/6\n6/6\n\n40 ..eI!:\n50 rn\n\n(solution ia HP)\n\nD.ily ror\n\ndlY\' 1-\n\nIi4 mes\nrnsle\n\n5 lDe\n\n6 rn&\nMethylml!o..todiaminef\'atinam(ll) (Slution in H\n\n1 ..eI&\n\n30 ..eI!:\n\n40 "\'ele\n\n\'0 "\'sis\neo "\'Slg\n10 "\'els\n\n124\n\n138\n\npbtlnum (II)\n\n100\n120\n\nclhylmalon\'lo:thytencdminpla riD"\n\n(U\n\n100\n110\n120\n","10..0.\\. propylen::i.:nin..\n\nplatinum (II)\n\n3/6\n\n616\n\n50 ..&:!:\n\nmalonlOdhylcasruir.c\n\n\x0c140 707\n-continued\nDoy of\n\nCoorC:in\n\nan\n\nlnje-lion\n\nCo:rp1cs\n\nt:o.of\n\nTIC !)Ibs\n\nDox LcvcJ\n\ns:r",, I:l;clil k.c.\n\nr.:Jo:c:o-t.3\n\nrlal,nu;: (tl)\n\n30m\nC( mg/r;\n50 mglr;\nII mgr;\n70 mglr;\n90 mglg\n\ncch)-1m3!o:o:cc:h!t cDt\n\nI!:amir!:aliu:n (II)\n(sclurioa r. H\n\nJO Ins/g\n\nclh)\':""lor. w=\\r\npb.in=(11)\n(..I"lion in HPI\n\n40 mg/g\nIng/1\n70 mglg\n20 mg/jJ\n10 mglg\n\nmaJoDa:oct!ylc3ei:.a-i:C\'\npb.icuIR (II)\n\nJO mV\\1\n\n(..:uc:n i., 8;\n\n\'" mglg\n\n45 mg/g\n50 mglE\n55\n\n",elg\n\n3/6\n3/6\n\nmV\\1\n10 m;Va\n\n10 mglg\n40 mglg\n60 mV\\c\n\n1.c)\'"looulo,,-.i: 1 yb,:\nlUm::":cpb.i\' :1 (II)\n\n10\n\nmgr;\n\n100 lIg/c\n\nno mg/c\n160 "\'&11\n\n10 mBlke\n\nJ:elt:).br:ne)\n\'" (\\0\n\nl:!or..I\nF1zlin\n\n100\n110\n\n..ile\nmelc\n\n140 mg/c\n\n160 IIg/r;\n\n180 mg8\n\nday 1 injections descrbed above. in 35\ninj tions were delayed until day g\nthe tumor was usU3ly at\nIn thes\n\nIn a.dilion to th\n\na nu;nl: r oC C2\ntUIor growth.\n\ncas\n\nleast brg=r than 1 g:.\n\na.s wue\n\nas estimated by palpatioD.\n\nthOt inject\n\nTbe\n\nDo\n10\n10 lDg/g\nmtlB\n\nTVtr: W.1icr 2\'6 CacC: 0Srcoma ..\n\nand observed Cor a period\n\nwhik stilllliowing the anl\n\n40\n\nto sur-\n\n"ive for this time period. Such test results are descrbed\n\nin TABLE II below.\n\n40 milB\n\n,. IDllibitD\nDo\n10\n15\n40 100\nDo..\n20\n100\n\nMoIo..rDelb)"cncdWnin.pbtinull(U\nJ56 Carcnosacoma. ADim. . Rat\nSiDa!e injcc.ion Do)\' Iln Oi lotnperilonc:ally\n\nIIi\n\naI:: 110 Ar.!. Fame S..u. while mic:\n\nSi...ilc injeODS "0\n\nTou! Nu:nbcr\nCcordiurion Comp!cr.\n\nrr.t!c:ut\n\n,.i.c..\n\np:"ti.,=(II)\n\nDoo\n\nof Repesons\n\nOall\n\nDea\n\nall\n\nTumor: ADJIPC6,\\ . ""IDol - Mouo\nSingle injeioo Da)\' 15 in Oil. IntraperioDuUy Death\n,. Inhibition\n\nU mgllB\n\n100\n\n16 IDg/g\n\nII mglg\n\n10 IDi:B\n::.2tcutoe!hyICDC"\n\n100\n100\n\nTI:r: Walker\n\n.. b)\' MaC21O\n\nDay\' irav.cac:)\' iI H.O solU1o\n\ntOO\n\n11 lDelS\n\nTABLE II\n\nTcs of Luge SL-Co: I!O\nC1 Coplescs cC Plaw"...\n\nT=o\'.\n\nAairn. R:at\nDotll\n\nSinele injccacn In)\' 1 in Oil. Inmpen.onc.lly\n,. Inhibiuoo\n\napproxia:ely 60 days. Activity was measured by tbe\noC aniraI whos tumon had regresd to the\nnumber\n\naoi:ng PO:Dt.\n\nTABLE II\nCODfirmtory Test5 or Aftdrumor Aclivity\nMoIO""loda..mi..cpla.inum(tl)\n\ndie\n\n40 mr;l\n\nand maonato\nSamles of tbe malonato\nethylene diarno complexes of phtinum(Il) wae sub60 mal.\nmitted to the Drg Rcsn: and Development Brach\nfor mUtuoftbe Natiott Cancer Inslitute for\nTh Jesuits dcsn"b in Tabl s I and Jl indicate Imt ro mor actvity against Ihe LI110 tumor in mi The rcsalts obtaind on th tumor system arc shown in Table\nthe compouDds of the invention are very potent anlituDor agents againsl the S 180 tumor in Swi white mice\nIV. They confirm the actty of the compounds of the\n\ndi=crhliu:(l1)\n\n4\' lDg/g\n\n\'" IDaI&:\n\nscrg\n\nConfirmatory tests of anlitumor activity\n\nagait the\n\nWalker 256 Circiosacoma in rats . and the ADJIPC6A tu"1or in tnc= were conducted. The initial test\nresuI:s 2re shown in Table III and confinn the potent\nact:on of the C3mI=oc.nds of the invenlion against these\no:her tUtor s)"\n\nSlern.\n\ninVcnIiOD.\n- TABLE IV\nCoDr"".,o,y Tests of Anrilumoc Activity\nNoEioa1 Cancer Institute.\n\natlb\n\nTumor:\nLl110 Animal - Mia\nDaily injcclons D )\'s 1-. In"apcrilon..lIy\n\n\x0c707\nTABLE IV-continued\nConrirrrINY Tnti or Anti1u or Aclivit7\nbtion31 Cancer Institute.\n\nWe claim:\nIt Ihe\n" IDeu:\n\nCnonln..:a. Compteo\n\nDose\n\nM.IoNl,xD::micepb.i.um(II)\n\n50 malg\nU malg\n\n163\n\n50 mglg\n\n101\n\nD3ity\n\nCoo,\n\ninj\n\nlons Da)\' s 1- 9.\n\n13)\n\nII)\n\n12-\' m&lg\n\ntolatanOlocth)\'l:nediOl:ncpbtiwo(ll)\n\n(..;ot\nIn:1\nTumor: LlltO\n\nin Life,po"\n\nmglg\n\nx-=lor2;\n\nRand R, arc selected from the group consistig oCH.\n\n1)1\n\nlower alyl, arl, aralkyl. aIcnyl.\n\n121\n\nAniml- Mice\n\nInu3palolu~.JII,\n\nDos\n\n.,t:c. Camp!:..\n\nV. JnC1C\'\n\nin U\'::pa\n\n25 mglg\n\n196\n\nII mglg\n\n160\n141\n\n16-\'\n\nmilg\n\nand arc selecled Crom the group consisting\n\nor suspended in 20\nwaler or other pharmaceulically acceptable carrier\nliquids, . The p:ucnleral1y adminislcnble composition\n\nto about\n\nat the amount may\n\nIOmg per mL, it being undersoo\n\ncO!Dpound 2S\n\nThe platinum coordination compounds or the invenlion. are preferably adminitered parenteraly 10. an ani.\n\nm3J affected with a malignant Iwnor. The durtion\ntreatmenl and the dos\n\nlevel,\n\nor\n\nr cours, will depnd in 30\n\nupon the size of the hot anim, natue and\nsize oflhe lumor. etc. Gcneraly, however, a dose level\nor rroJ: about 20 to about 200 mg/g or boy weight\neach c\n\nper day will be suffcienL It is 10 be undersloo. however, th:!1 tbe plalinum coordination compounds eom- 3S\npounded \' wilh a suitable pharaceulical carner in the\nmay also be adminis-\n\nS3me proportions as rected a.bove\n\ntered orally al the s.e\n\ndosage leVels.\n\nI, A is HR N-CHR)NR5H\nor an amino acid\nand when x = 2, A is H2\nwherein R . R3. R. and Rs are the same or different\n\nthe inv::nlion are preferably disslved\n\nvary greatly depeding .upon the parular\nemplo)\' cd and Ihe anima to be !reatm.\n\ncycloalkyl, cy-\n\ncloakenyl , alkoxy, OH. or combine with the carbon atom 10 form a cycloalkyl or cycloalkenyl\ngroup;\nwhen x =\n\nThe malonatoplatinum cordination compounds\n\nshould preferably conlain from about O. Smg\n\n(PI(II)At(OOz-CRR\nwherein: -\n\n160\n\n12-\' mglg\n)1-\' mVkg\n\n1. Plalinum coordiD3lion compounds havig the formula:\n\nCH), CzH"\n\noC\n\nhydroxy aDd lower aJkoxy, provided\n\nIhat Rz and Rs may al be aryl or aralkyl and each\nR6 is the sae or diffcrenl and is selected from the\ngroup consting\n\noC\n\nH. lower aJyl, aryl.\n\naral.\n\nhydroxy lower alkyl , hydroxyl- and alkoxylamincs.\nand alkoxyl aJkyl amines.\n2. The: compowid oCctaim t"having Ihe Connula:\n(PI(lI)A\n\n((OOCHz))\n\nwherein\n\n:I = I, and\nR2\' R\n\nand R) arc each H-\n\n3. The compound\n\n(PI(lI)\'"\n\noC\n\nclai 1 having\n\nt(OOCK z)l\n\nwherein:\nand each\nis H.\n4. Malonalo diamine platinum\n\nx = 2,\n\n(0,\n\nthe formula:\n\n\x0c(19)\n\nREEXAATION CERTIFICATE (1173rd)\n(II) Bl 4 140 707\n\nUnited States Patent\n\nCertcate Issued De. 19, 1989\n\n(4S)\n\nOeae et\n\n(S4)\n\nl\\1ANAYo PU\'1\'UM ANTI-TUOR\n\nCOMP\'U\n\n(7S) Inventors:\n\nOc\nHcecr Ba\n\nMkhsc J.\n\n(S\n\nJames D.\n\nLo L Vm CaP, al or i:t\n\nLag. Micl\n(73) A5\n\na Reque\n\n1989\n\nCecs ror. .\n\nb.uc:\n\nPatct No.\n\nFdcd:\n\nAppl. No.\n\n4.140707\n\nI) ID\n\n(S1)\n\nFeb 20 199\n77,,55\nMa. 18,\n\no.\n\n160.919. JUD 3. 1912. abon\n\ndoned\n\nt. a." --.-_u_--..----...-..-.- C1 15/0\n\nU.s. a. -....-..-.--.....-.-.-- 556/137;\n\n8) Fldd of\n\nSc\n\n5412\n\n556/17\n\nS46n; \'\n\n--._u.--\'-\n\n6/I1,\n\n137\n\nRdcr ate\n\nPUBLICATIONS\nOn the Srcreohrn!r or Pla:o S.u (I". authored\nby A. A. Gruberg 00 Jan. 8. 1931 2.d pub cd OD\n\n455-72.\nMay 2. 193\n\nlA TUcn.\nNo. 90101.716 , Feb. 14,\n\nConrinuation of $cr.\n\n(S6)\n\n: Res CorU TlthDol\n\nt1OC\n\n. Relarrd U.s. AppUodoD Ibis\n(63)\n\nI in Hclvcrica\n\nCbi Acta xrv at pp.\n\nPrmary bDmilltr- A. McFarlane\n\n(57).\n\nABCT\n\nMaJonato platium c oOrd\n\nD co poUDds and \' 1\n\nmethod or tr tig uWgnt ncOD compriiDg th\nof 1\nparentera adtntiOD to an\nsolutin or die compoUDd.\n\nafcc an\n\n.\n\n\x0cB14. 14O 707\n\n(P.((octJl\n\nCERTICATE\nREATION\nER 35 U. C. 307\n\nwherein:\n\nISS\n\nTIrE PATE IS HEBY AMNDED\nJNICAlCD BELOW.\nMJlttu c.clos In hCA1\'\n\npatu but h.\npatet;\n\n_tt\n\nbrackets ()\n\n1nca adtions\n\n:ad R 1\n\ntcd from 1Ie group c:nsistig\n\nof It\n\nanl, alcuyl, cyc1oayl. cy.\n\ncloalkenyl, aloxy, OR, or combine with the cato form .. cycloalkyl or cyCRRt\nbon :al0m Us\ncloalftenyl grup;\nwhen x= 1. A is HRIN-CHR)-CKR-NR,H and\nwhco x=2. A is H2N\'or aD amo:ad, wherein\n\nthe 10\n\nRI. RJ. 1U and R, arc the sme or dierent and arc\n\nto the palat.\n\nselecte (ro:n the grup constig of It CH).\n\nAS A REULT OF REATION. IT HAS\nTIT:\nEEN\n\nUC sd\n\nlower ilyl. arl,\n\na.pa orIn thc\n\nb1n deleted and is DO lODger. pa\n\npritc. In ItAcs\n\n%=1 or 2;\n\n5 R\n\nC1H" hydroxy and lower aloJ;, provided tht\nRl u: R, (ImY al be) c:re als scl dfrm\npoup conr..ng \'of arl or anl an c.h 14 is the\n\nDETD\n\nsae or dicrct an is seec\n\nCW 3 JId 4 are caccUcd\n\nco03g of R,\n\nlower all, arl.\n\nfr the grup\n\nanyJ; hydrol:Y\n\nhydroxyl.\nand A\nCl 1 is detc to be patetable as amended. 20 uHvVR,anJ R,isH.rf.\nmR GnJRIlUnDrbachH.\ntcUII\ncompond af claim 1 \'\nCl 2; depdent 00 an\ncicd 10 be patentale.\nlower all,\n\no. aloxy1ao,\nwhclI JC=l\n\nprori&J rMl\n\n.noxyl alyl acinC1\n\namended c!,uCl is delAr-\n\nNew cWr S, 6, and 7 ar\n\n..ilh\n\nL Pbtium cordilico compounds hAvig the for-\n\nmuh\n\nru\n\ncarbll\n\nto\n\nC)doal1cl grp.\n\ndetcn:ed to 25\n\nbe patctale.\nadded LDd\n\n..urcu. R\n\n5. Tic\n\nrogclu,\n6.\n\n11e compond of claim\n\nrogtrhtr wirk\n\nl!re coban alom\n\nform a CJloblran\n7. 1.\n\n(ll)\n\nk1s rhey\n\n13M Ri\n\nan aru!rcd form\n\n..!rcreill R OM Rlltun\nro ..1ah\n\nrhey\n\nan Imai:hed\n\ncylotrar:t tficrba;r!clt c!i4mrint pla:illum\n\n\x0cJ:-\n\nTRDEM OFFICE\n\nUNITED STATES PATENT AND\n\nCERTIFICATE EXTENDING PATENT TERM\nC. 156\nUNDER 35 U.\n\n140 707\n\nPatent No.\nDa\n\nted\n\nFebruary 20, 1979\n\nInventor (s)\n\nMichael J. Cleare et al\n\nPatent Owner\n\nResearch corporation\n\nTechnologies, Inc.\n\nThis is to certify that there has been presented to the\n\nCOMMISSIONER OF PATENTS AND TRADEMAS\nan application under 35 U. C. 156 for an extension of the\nsince it appears that the requirements of the law\n,\nhave been met this certificate extends the term of the patent\nfor the period of\n\npatent term.\n\n916 DAYS\nwith all rights pertaining thereto as provided by 35\nUSC 156 (b).\n\n\' . J.\n\nII) ,/ .\n\n,;-\\\\,\\\' f\n\n. \'t /\n\nri\n1/\n\nI\'),\n\nu\' .\n\nI .,\n\nIj ..\n\nt"\n\ntfi\'\n\nI have caused the seal of the Patent\nand Trademark Office to be affixed\nthis 25th day of January 1990.\n\n- ,\\1\n\nI I.\n;L\n\n.,." Xx\'"\nt:.\n\n,j,tl\n\n-o\\i .\n\n. I. .\n\n,(r\n\nk.\n\n(I/\n\n. r:..\n\nJiWf\n\n"\'\\1 ,\n\nJeffrey H. Samuels\nActing commissioner of\npa tents and Trademarks\n\n\x0c'


b'UNn\'ED STATESOF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON,\nD.C.20580\n\nApril 27, 2004\nKevin B. Chilson\nChilsonFuneralHome\n200 FairlawnAvenueWest\nP.O. Box 1097\nWinsted,MN 55395\nDear Mr. Chilson:\nThank you for your recent letter to the FTC\'s Consumer ResponseCenter, which has\nbeen forwarded to me for response. You enclose a General Price List ("GPL ") that Iten Funeral\nHomes recently provided to a consumer. You ask the FTC\'s legal opinion on whether-the GPL\ncomplies with the FTC Funeral Rule.\nFirst, I cannot state definitively whether Iten Funeral Home violated the Funeral Rule\nbecause that would be an impermissible legal opinion. Whether Crist has actually has violated\nthe Funeral Rule is a factual and legal question that only the courts can determine. However, I\ncan offer an informal staff opinion on the requirements of the Funeral Rule. You should note\nthat Ithis is the opinion of FTC staff only and is not binding on the Commission or on any\nindividual Commissioner. Having given those disclaimers, here is my interpretation of the\nFunbral Rule requirements that are applicable to the GPL you sent.\nYou seemto have three primary concerns with the GPL.. First, you ask whether the\nfuneral home must list a charge for goods and services offered in connection with "Use of\nFun~ralHome Facilities;\' and with "Transportation" (and which are Jisted in the GPL as "no\ncharge."). Second, you ask whether the home should have listed or itemized the prices and goods\nor services included in the cost of a memorial seryice and in the cost of a funeral service for an\ninfant or child. Third, you ask whether the crematory charge should be listed as part of the direct\ncremation charge rather than as a cashadvanceitem.\nAs you know, the Federal Trade Commission does not regulate the prices charged by\nfun~ral providers. The purpose of the Funeral Rule is to make price information readily available\nto c~nsumersto enable them to do comparative shopping for funeral goods and services. In\naddition, disclosures required to appear on the general price list inform consumers that they have\nthe right to purchase only those goods and services that they specifically select. The Rule seeks\nto promoteinfoimed decision-making so that consumers are able to make funeral arrangements\nthat ,are within their means. To that end, the Funeral Rule requires funeral providers to give\ncon$umersan accurate price list itemizing its prices for 16 specific items of funeral goods and\nservices. The Rule does not require that the funeral home offer all 16 of these goods and\n\n\x0cservices. If a funeral home does not offer a particular good or service, it need not list that good\nor service on its GPL. In addition, the Rule does not prohibit listing other items that the home\noffers, including the prices for any packagefunerals. Among the s~ified 16 items for which\nprices must be listed are (1) use of facilities and staff for viewing; (2) use of facilities and staff\nfor funeral ceremony; (3) use of facilities and staff for memorial service; (4) use of facilities and\nstaff for graveside service; and ( 5) limousine. Iten\' s GPL does not list prices for these five\nitems.\n\nIn the FTC\'s businesspublication"Complying with the FuneralRule," the Commission\nstaff statesthat a funeralhome:\ncannot list any of the 16 items required to be separatelyitemized\non the GPL as "free" or "no charge." Because you recover the cost\nof the free item in in your other prices on the GPL, the customer\nmay not have the choice of rejecting the charge. However, you can\noffer items not required to be separatelyitemized on the General\nPrice List (such as acknowledgment cards) at "no charge," as longas your state or local laws do not prohibit this practice. (p. 27)\nThus, items on the Iten GPL that are not required to be separatelyitemized -e.g., the flower car,\npallbearer vehicle, and funeral sedan--can be listed at "no charge".if they are available at no\nchargeto all consumerswho make any type of funeral arrangement with the home. However, the\nhome must list a specific price if the charge is available at "no charge" only to some consumers\nwhile other consumers are charged separately,depending on the type of funeral service they buy.\nIn that instance, the charges become declinable fees for specific goods or services.\n\nIten\'s GPL lists "no charge"for useof the preparationroom whenthe consumerbuysthe\nstandardfuneralpackage.However,the FTC\'s "Complying with the FuneralRule" statesthat\nthe price for embalmingshouldincludeuseof the preparationroom. Therefore,Iten\' s GPL does\nnot comportwith the FuneralRule with respectto that item.\nThe FuneralRule allows a funeral providerto useseparateprice lists for specialgroups,\nsuchasfuneral arrangements\nfor childrenandinfants. The Rule allows funeral providersto list\nthe differentfeesin two ways: (1) on the GPL, CasketPrice List and OuterBurial Price List,\nalong with the regularofferings; or (2) a separateprice list for thesearrangements.If the funeral\nproviderpreparesseparateprice lists, he or sheneednot give them out to anyoneexceptthose\npersonsinquiring abouta funeral for a child or an infant. (See"Complying with the Funeral\nRule" (p. 14\xc2\xbb\nIn addition,the FuneralRule doesnot requirethe GPL to include the costof cremationin\nthe price for directcremation. In "Complying with the FuneralRule, the Commissionstaff\nstates:\nThe price of the actualcremationof the deceasedmayor may not\nbe included in yourchargefor directcremation. If you own a\ncrematory,it would be appropriateto include the cremationcharge\nin this fee. However,if youusea crematorythat someoneelse\n\n\x0c~\n\nowns, you may treatthis chargeas a cashadvanceitem. In that\ncase,you shouldmakeclearto the customerthattherewill be an\naddedchargeby the crematory.(p. 10)\nI am enclosing a copy of the Commission\'s guide "Complying with the Funeral Rule" for\nyour future reference.\n\nI hopethis informationis helpful to you.\nSincerely,\n\n~\n\nJ ~~g.~~It,~t~j~~~~."\'/\n\nCaroleI. Danielson\nSeniorInvestigatorand\nFuneralRule Coordinator\nEnclosure\n\n\x0c'


b'UNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\nDivision of Marketing Practices\nJames K o h m\nDirect Dial\n202 326 2640\n\nFax Numb er\n202 326 3395\n\nJanuary 14, 2004\nMr. Neil H. Offen, President\nDirect Selling Association\n1275 Pennsylvania Ave., NW\nSuite #800\nWashington, DC 20004-2411\n\nRe: Staff Advisory Opinion - Pyramid Scheme Ana lysis\nDear Mr. Offen:\nThank you for your inquiry requesting a staff Advisory Opinion regarding the Federal Trade\nCommission\'s analysis of pyramid schemes. You have identified two areas of concern: 1) the\nCommission\'s analysis of compensation based on personal consumption by members of a multi-level\ncompany\'s sales force ("internal consumption\xe2\x80\x9d); and 2) the legal significance of consent orders that the\nCommission has entered into with several pyramid scheme operators. I am pleased to provide you with\nthe following staff guidance.\nInternal Consumption\nMuch has been made of the personal, or internal, consumption issue in recent years. In fact, the\namount of internal consumption in any multi-level compensation business does not determine whether\nor not the FTC will consider the plan a pyramid scheme. The critical question for the FTC is whether the\nrevenues that primarily support the commissions paid to all participants are generated from purchases of\ngoods and services that are not simply incidental to the purchase of the right to participate\nin a money-making venture.\n.\nA multi-level compensation system funded primarily by such non-incidental revenues does not depend\non continual recruitment of new participants, and therefore, does not guarantee financial failure for the\nmajority of participants. In contrast, a multi-level compensation system funded primarily by payments made\nfor the right to participate in the venture is an illegal pyramid scheme.\n\n\x0cIn a pyramid scheme, participants hope to reap financial rewards well in excess of their investment\nbased primarily on the fees paid by members of their "downlines." Downline members pay these fees\nto join the scheme and meet certain prerequisites for obtaining the monetary and other rewards offered\nby the program. A participant, therefore, can only reap rewards by obtaining a portion of the fees paid by\nthose who join the scheme later. The people who join later, in turn, pay their fees in the hope of\nprofiting from payments of those who enter the scheme after they do. In this way, a pyramid scheme\nsimply transfers monies from losers to winners. For each person who substantially profits from the\nscheme, there must be many more losing all, or a portion, of their investment to fund those winnings.\nAbsent sufficient sales of goods and services, the profits in such a system hinge on nothing more than\nrecruitment of new participants (i.e., fee payers) into the system.\nThe Commission\'s recent cases, however, demonstrate that the sale of goods and service; alone does\nnot necessarily render a multi-level system legitimate. Modem pyramid schemes generally do not\nblatantly base commissions on the outright payment of fees, but instead try to disguise these payments\nto appear as if they are based on the sale of goods or services. The most common means employed to\nachieve this goal is to require a certain level of monthly purchases to qualify for commissions. While\nthe sale of goods and services nominally generates all commissions in a system primarily funded by\nsuch purchases, in fact, those commissions are funded by purchases made to obtain the right to\nparticipate in the scheme. Each individual who profits, therefore, does so primarily from the payments\nof others who are themselves making payments in order to obtain their own profit. As discussed\nabove, such a plan is little more than a transfer scheme, dooming the vast majority of participants to\nfinancial failure.\n1 A participant\xe2\x80\x99s downline usually consists of the people the participant recruits to join the\nprogram as well as the people her recruits recruit, and so on through a predetermined number of\nlevels.\n2 It is important to distinguish an illegal pyramid scheme from a legitimate buyers club. A\nbuyers club confers the right to purchase goods and services at a discount. If a buyers club is\norganized as a multi-level reward system, the purchase of goods and services by one\xe2\x80\x99s downline\ncould defray the cost of one\xe2\x80\x99s own purchases (i.e., the greater the downline purchases, the greater\nthe volume discounts that the club receives from its suppliers, the greater the discount that can be\napportioned to participants through the multi-level system). The purchase of goods and services\nwithin such a system can, therefore, be distinguished from a pyramid scheme on two grounds.\nFirst, purchases by the club\'s members can actually reduce costs for everyone (the goal of the\nclub in the first place). Second, the purchase of goods and services is not merely incidental to the\nright to participate in a money-making venture, but rather the very reason participants join the\nprogram. Therefore, the plan does not simply transfer money from winners to losers, having the\nmajority of participants with financia11osses.\nPage 2\n\n\x0cConsent Orders\nWith regard to your second question, the Federal Trade Commission often enters into consent orders\nwith individuals and companies that the Commission has determined have violated the FTC Act. To\nprotect the public from those who have demonstrated an unwillingness to follow the law, these orders\noften contain provisions that place extra constraints upon a wrongdoer that do not apply to the general\npublic. These "fencing-in" provisions only apply to the defendant signing the order and anyone with\nwhom the defendant is acting in concert. They do not represent the general state of the law.\nFor example, when the Commission brings a pyramid scheme action, the case often concludes with a\nconsent order. The scope and severity of the order will depend upon the facts of the case; however,\nmost such orders contain definitions that exclude any sale to a participant in the business from the\ncalculation of the venture\xe2\x80\x99s legitimacy. These definitions draw very clear lines for those who have\ndemonstrated a willingness to violate the law, but are not intended to represent the sta te of the law for\nthe general public.\nThank you for your inquiry.\n\nJames A. Kohm\nActing Director of Marketing Practices\n\nPage 3\n\n\x0c'


b'UNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\nDivision of Marketing Practices\n\nJanuary 6, 2004\nVIA FAX AND FIRST CLASS MAIL\nWilliam E. Raney, Esq.\nCopilevitz & Canter, LLC\n423 W. Eighth Street\nSuite 400\nKansas City, MO 64105\nDear Mr. Raney:\nThis letter responds to two separate requests for advisory opinions filed by your firm,\ndated October 29 and November 11, 2003, concerning the application of the Telemarketing Sales\nRule fee provision found at 16 C.F.R. \xc2\xa7 310.8 (\xe2\x80\x9cthe TSR Fee Rule\xe2\x80\x9d).\nEntities Required to Pay the Fee\nIn your first request, you ask which entity is required to pay the fee for access to the\nNational Do Not Call Registry in the following two circumstances:\n1)\n\nCompany A is a large insurance company with more than 10,000 independent agents.\nCompany A desires to provide a telemarketing campaign to its agents to promote and\nmarket its services. In connection with this campaign, Company A will provide scripts,\nfulfillment materials, and telephone consumer leads. Can Company A pay for access to\nthe National Do Not Call Registry and provide \xe2\x80\x9cscrubbed\xe2\x80\x9d leads to its agents for use with\nthis campaign for Company A\xe2\x80\x99s services only?\n\n2)\n\nCompany B is a large real estate company with more than 10,000 franchised agents doing\nbusiness only in the name of Company B. Can Company B purchase access to the\nregistry and provide its Subscription Account Number to its agents for marketing\ncampaigns solely in the name of Company B?\n\nThe TSR Fee Rule requires sellers to pay the fee to access the National Do Not Call\nRegistry prior to engaging in telemarketing. Specifically, the TSR Fee Rule states: \xe2\x80\x9cIt is a\nviolation of this Rule for any seller to initiate, or cause any telemarketer to initiate, an outbound\ntelephone call to any person whose telephone number is within a given area code unless such\nseller, either directly or through another person, first has paid the annual fee . . . for access to\ntelephone numbers within that area code that are included in the National Do Not Call\nRegistry . . .\xe2\x80\x9d 16 C.F.R. \xc2\xa7 310.8(a). The TSR Fee Rule also prohibits independent entities from\n\n\x0csharing the cost of accessing the registry, as follows: \xe2\x80\x9cAny person accessing the National Do Not\nCall Registry may not participate in any arrangement to share the cost of accessing the registry,\nincluding any arrangement with any telemarketer or service provider to divide the costs to access\nthe registry among various clients of that telemarketer or service provider.\xe2\x80\x9d 16 C.F.R.\n\xc2\xa7 310.8(c).\nIn the case of independent or franchised agents of a company, we believe it is appropriate,\nfor purposes of the TSR Fee Rule, to treat such agents as if they were separate corporate\naffiliates, and apply the test for corporate affiliates set forth in the Statement of Basis and\nPurpose for the TSR Fee Rule, to determine if the independent agents must separately pay for\naccess to the national registry. See 68 Fed. Reg. 45134, 45139 (July 31, 2003). Under that test,\nthe independent agents of a company will be REQUIRED to pay a separate annual fee for access\nto the national registry if they meet EACH of the following two criteria: (1) The agent is\nseparately incorporated or, for a non-corporate entity such as a partnership, is a similarly distinct\nlegal entity; AND (2) the agent markets under a different name. Thus, if the agent of Company B\nis not incorporated and markets under the name of Company B, then the agent will not be\nconsidered a separate seller. Even if the agent is a separate legal entity, it will not be considered\na separate seller if it markets only under the name of Company B. The same is true if that agent\nmarkets under the name \xe2\x80\x9cCompany B, John Smith, independent agent.\xe2\x80\x9d If, however, a\nseparately-incorporated agent markets under the name \xe2\x80\x9cJohn Smith\xe2\x80\x99s Independent Services,\xe2\x80\x9d\nwithout using the name of Company B, then the agent will be considered a separate seller and\nwill be required to pay the appropriate fee for access to the registry.\nIf the independent agents are considered separate sellers under the test described above,\nthen the parent company is prohibited from sharing in any manner information obtained from the\nnational registry with those agents, unless each agent separately registers and pays the\nappropriate annual fee. On the other hand, if the agents are not treated as separate sellers under\nthe Fee Rule, then it is entirely appropriate for the parent company to pay for access to the\nregistry and provide \xe2\x80\x9cscrubbed\xe2\x80\x9d leads to its agents. It is also appropriate in that situation for the\ncompany to purchase access to the registry and provide its Subscription Account Number to its\nagents for their use in scrubbing their own lists to be used for marketing campaigns in the name\nof the company.\nIndependent Telemarketer Access to the National Registry\nIn your second request for an advisory opinion, you ask whether a telemarketer that places\ncalls on behalf of sellers that have properly obtained and paid for access to the national registry\nmay, for \xe2\x80\x9cconvenience and programming purposes,\xe2\x80\x9d use its own Subscription Account Number\n\xe2\x80\x9cthat it has properly obtained to access the national list.\xe2\x80\x9d\nThe simple answer to your query is yes. The TSR Fee Rule Statement of Basis and\nPurpose states the answer as follows:\n\n-2-\n\n\x0c[T]he Commission agrees that allowing independent access to the national registry by\ntelemarketers or other service providers is appropriate. As a result, telemarketers or\nservice providers will be allowed to gain access to the national registry on their own\nbehalf, without being limited solely to the access allowed for their seller-clients. To\nmaintain the fairness of the fee structure, however, telemarketers and service providers\nwill be required to pay the appropriate fee for such independent access. Moreover,\ncovered sellers still will be required to pay the fee prior to engaging in, or causing a\ntelemarketer to engage in, outbound telephone calls for which access to the \xe2\x80\x9cdo-not-call\xe2\x80\x9d\nregistry is required by the Amended TSR. This \xe2\x80\x9ccovered seller pays\xe2\x80\x9d requirement\nremains in place regardless of whether the telemarketer or service provider employed by\nthe seller independently and voluntarily pays for access to the national registry. In\naddition, telemarketers and service providers paying for such independent access must\ncertify that they are accessing the national registry solely to comply with the provisions of\nthe Amended TSR, or otherwise to prevent telephone calls to telephone numbers on the\nnational registry. Finally, such telemarketers or service providers are not permitted to use\nthe information they obtain from the national registry on behalf of any entity, covered\nseller or exempt, unless that entity has paid the appropriate fee for access to the\ninformation or, for exempt sellers, has submitted the appropriate certification to gain\naccess to the national registry.\n68 Fed. Reg. at 45137 (July 31, 2003).\nPlease be advised that our opinion is based on all the information furnished in your\nrequest. This opinion applies only to the extent that actual company practices conform to the\nmaterial submitted for review. Please be advised further that the views expressed in this letter\nare those of the FTC staff. They have not been reviewed, approved, or adopted by the\nCommission, and they are not binding upon the Commission. However, they do reflect the\nopinions of the staff members charged with enforcement of the Telemarketing Sales Rule.\nSincerely,\n\nDavid M. Torok\nStaff Attorney\n\n-3-\n\n\x0c'


b'manatt\n\nMartin J. Thompson\nDirect Dial: (714) 371-2530\nE-mail: mthompson@manatt.com\n\nOctober 18, 2002\n\nClient-Matter: 24698-030\n\nmanatt I phelps I phillips\n\nVIA FEDERAL EXPRESS\nDonald Clark\nSecretary, Federal Trade Commission\n600 Pennsylvania Avenue, N.W.\nRoom H177\nWashington, D.C. 20580\nRe:\n\n- -- -- - - _j\n\nStaff Advisory Letter Request\n\nDear Mr. Clark:\nThis request for a staff advisory letter is submitted on behalf of six county medical\nsocieties located in adjacent counties in or near the San Francisco Bay area of Northern\nCalifomia. 1 These societies propose to create a messenger-model physician network, tentatively\nnamed Bay Area Preferred Providers ("BAPP"). This request is submitted pursuant to 16 CFR\n\xe0\xb8\xa2\xe0\xb8\x87 1.1 and with reference to the August, 1996 Statements of Antitrust Enforcement Policy in\nHealthcare, Statement No.8.\nBACKGROUND\nNumerous physician networks seeking to serve portions of Northern California have\nfailed during recent years. 2 These were typically delegated model IPAs accepting capitation, and\ndiscovering too late that their costs exceeded their revenues. As a result of the disappearance of\nthese IP As from the market, portions of Northern California appear to be underserved by\nphysician networks adequate to offer sufficient contracting opportunities for physicians seeking\nto participate in managed care arrangements.\nThe sponsors ofBAPP have concluded that a messenger-model network with geographic\ncoverage co-extensive with the seven counties represented by the sponsors (possibly adding\nSanta Clara as well) may create efficiencies for the payors that access the market through this\nnetwork and may create contracting opportunities for physicians who choose to participate.\n\n1\n2\n\nAlameda-Contra Costa, San Mateo, San Francisco, Sonoma, Napa and Solano.\nSee Exhibit A, attached.\n650 Town Center Drive, Suite 1250, Costa Mesa, California 92626 Telephone: 714.371.2500 Fax: 714.371.2550\nLos Angeles\n\n70009352. 1\n\nI\n\nMexico City\n\nI\n\nMonterrey\n\nI\n\nOrange County\n\n1\n\nPalo Alto\n\n1\n\nSacramento\n\n1\n\nWashington, D.C.\n\n\x0cmanatt\nmanatt 1 phelps 1 phillips\n\nDonald Clark\nOctober 18, 2002\nPage 2\nSTRUCTURE AND OPERATION\nThe sponsors propose to organize BAPP as a California nonprofit mutual benefit\ncorporation. Each sponsor will elect two directors and physician participation in BAPP will be\nentirely non-exclusive. The physician members of each sponsoring society will be invited to\nparticipate, and participating physicians will be required to provide funding for BAPP through\napplication fees and periodic assessments as necessary to cover costs. BAPP will credential its\nparticipating physicians consistent with standards established by the National Committee on\nQuality Assurance, saving payors and providers the cost and time inherent in re-credentialing.\nBAPP will function as a traditional messenger-model network. It will employ an\nindividual who will serve as an agent or "messenger". This person will not be permitted to\nattempt to negotiate or otherwise influence pricing of services. BAPP will solicit minimum\nacceptable reimbursement levels from individual physicians or fully-merged physician groups.\nBAPP will develop a fee schedule depicting numbers of physicians offering to contract at\ndifferent pricing levels. BAPP will maintain the confidentiality of this information with respect\nto the participating providers, and communicate the information to payors. BAPP will be\nauthorized to bind participating providers to contracts at or above their minimum acceptable\nrates.\nBAPP will communicate to the participating providers each payor offer. Contracts will\nbe administered by BAPP only when 50% or more of the participating providers accept offers\nfrom a given payor. With the consent of the payor in question, BAPP members will be given the\nopportunity to opt in to BAPP contracts that they initially rejected. Where less than 50% of the\nparticipating providers accept the offer of a given payor, BAPP will distribute the proposed\ncontract to all BAPP providers, allowing the payor to seek to negotiate arrangements with\nindividual providers or groups independently ofBAPP.\nInformation may be communicated by BAPP to participating providers about a given\ncontract when requested, but any such information will be limited to objective information about\nspecific contract terms. BAPP will make no recommendations encouraging or discouraging\nparticipating providers from accepting the terms of a given contract.\nANTICIPATED PARTICIPATION\nAttached as Exhibit B is a chart setting forth the number of active practicing physicians\nwithin each of the counties covered by the BAPP sponsors, the number of actively practicing\nphysicians who are members of each such sponsor, and the number of physicians currently\nexpected to participate in BAPP from each such county. The anticipated level of participation is\nderived from internal polling by each of the sponsors, and does not represent a firm commitment\n\n70009352.1\n\n\x0cmanatt\nmanatt I phelps I phillips\n\nDonald Clark\nOctober 18, 2002\nPage 3\nto participate by those responding affirmatively, nor a firm commitment not to participate by\nthose responding in the negative. It is, however, believed to be a reasonably reliable prediction\nof the level of participation. Although membership in each of the sponsoring societies is open to\nall physicians practicing within the county in question, the chart also indicates that total\nparticipation in county medical societies is generally not high, particularly in the larger counties.\nThe sponsoring societies have concluded that there are no geographic regions within their\nrespective counties and no medical specialties that have disproportionately high representation or\nare likely to achieve participation rates significantly different from the county as a whole.\nCONCLUSION\nThe sponsors ofBAPP are aware that the messenger model does not lend itselfto\nplacement within the antitmst safety zone set forth in Statement No. 8 of the Statements of\nAntitrust Enforcement Policy in Healthcare. Nevertheless, they believe that a review of the\nmarket conditions as described above (which they believe are readily verifiable) and the business\nplan for BAPP as it currently exists, leads to the conclusion that BAPP has the potential to create\na valuable addition to the healthcare market place in the greater San Francisco Bay area. The\nsponsors are also aware that their status as county medical societies may cause some level of\nconcern over the possible influence which they may have over the participating physicians. The\nsponsors submit, however, that the business plan for BAPP as described herein creates\nreasonable protection against any material anti-competitive risk.\nThe sponsors request a staff advisory letter, to confirm that staff perceives no inherent\nviolation of the Federal Trade Commission Act in the structure, sponsorship or operations of\nBAPP as described above.\nSincerely,\n\n~/~\nMartin J. Thompson\n\ncc:\n\nHealth Care Division\n\nMJT:laj\n\n70009352. 1\n\n\x0c'


b'UNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\nOffice of the Secretary\n\nKeith E. Whann, Esq.\nWhann & Associates\n6300 Frantz Road\nDublin, Ohio 43017\nDear Mr. Whann:\nThe Commission is responding to your request for the Commission\'s views whether\ncertain warranty terms violate the "tying" provisions of the Magnuson-Moss Warranty Act.\nYour inquiry arose in the context of used vehicle warranties commonly called "50/50\nwarranties." These are limited warranties under which the dealer promises to pay 50% of the\nlabor cost and 50% of the cost for parts for repairs covered by the warranty, with the remainder\npaid by consumers. 1 Your concern is whether Section 102(c) of the Magnuson-Moss Warranty\nAct2 and Section 700.10 of the Federal Trade Commission\'s Interpretations of Magnuson-Moss\nWarranty Act3 prohibit dealers who offer 50/50 warranties from requiring that warranty repairs\nbe performed at a repair facility designated by the dealer. It is the Commission\'s view that\nneither the Act nor the Interpretations prohibit such warranty terms.\nThe Magnuson-Moss Warranty Act is the federal act governing written warranties on\nconsumer products. 4 Among other things, the Act contains provisions that protect consumers\nfrom deceptive or unfair warranty practices. One of these provisions is Section 102(c), which\nprohibits warrantors from conditioning warranty coverage on the consumer\'s "using, in\nconnection with the warranted product," an article or service identified by brand, trade, or\n\n1\n\nThe discussion of 50/50 warranties in this letter applies equally to a warranty with a\ndifferent percentage allocation or with a deductible.\n2\n\n15 U.S.C. 2302(c).\n\n3\n\n16 C.F.R. Part 700.10.\n\n4\n\nThe Act defines "consumer product" as "any tangible personal property which is\ndistributed in commerce and which is normally used for personal, family, or household purposes\n(including any such property which is intended to be attached to or installed in any real property\nwithout regard to whether it is so attached or installed).\n\n\x0ccorporate name, unless the warrantor provides the article or service without charge. 5 This\nprovision prevents warrantors from imposing tying arrangements that restrict consume~s\'\npurchase options with respect to articles or services used in connection with the warranted\nproduct. In the Commission\'s view, performing the very service promised under the warranty is\nnot "using" a service "in connection with" the warranted product.\nThe legislative history for this provision, though scanty, mentions specific types of tying\narrangements that would be prohibited: "Unde~ this prohibition, for example, no automobile\nmanufacturer may condition his warranty of an automobile on the use of a named motor oil or\non the use of its own automobile parts unless he shows that any other motor oil or automobile\nparts which are available will not function properly and will not give equivalent performance\ncharacteristics in the automobile." 6 The Commission provided additional guidance in its 1977\nInterpretations of the Magnuson-Moss Warranty Act, 16 C.F .R. Part 700. 7 Section 700.1 O(b)\nclarified that, when a limited warranty covers only replacement of parts but the consumer pays\nthe labor charges, Section 102(c) would prohibit the warrantor from requiring that the consumer\nuse only specified service or labor to install those parts. Conversely, the Commission explained,\nunder a limited warranty that covers labor charges only, Section 102(c) prohibits a condition that\nthe consumer use only a brand of parts identified by the warrantor or that the parts be purchased\nfrom a particular seller.\nA tie-in prohibition that preserves consumers\' purchase options makes sense with\nrespect to non-warranted articles or services that are severable from the dealer\'s responsibilities\nunder the warranty. Accordingly, if a warranty covers only repair parts, the repair service is not\na service promised or covered under the warranty, and the consumer may choose the servicer.\nSimilarly, if the warranty covers only service, the parts are not covered under the warranty and\nthe consumer can obtain the parts from any supplier. For the same reason, as noted in the\nlegislative history, the tie-in provision would prohibit conditioning warranty service on the\nconsumer\'s use of a certain brand of motor oil or automobile parts.\nIn the case of 50/50 warranties, the warranting dealer has a direct interest in providing\nthe warranty service for which it is partly financially responsible. Unlike the above examples, in\na 50/50 warranty the warranted repair work is not, as a practical matter, severable into two parts:\none that the warrantor can perform and another part that another auto repair shop could perform.\nNor can a warranted part be separated into a fractional part provided by the warrantor and\nanother fractional part that the consumer can purchase elsewhere. Rather than conditioning the\n5\n\nThis section states in pertinent part as follows: "No warrantor of a consumer product\nmay condition his written or implied warranty of such pro9.uf1.9n the c9nsumer~s using, in\nconnection with such product, any article or service (oth~r than an article or service provided\nwithout charge under the terms of the warranty) which is identified by brand, trade, or corporate\nname ... "\n6\n\nH.R. Rep. No 93-1107, at 36-37 (1974).\n\n7\n\n42 FR 36112 (July 1_3, 1977).\n\n2\n\n\x0cwarranty on the purchase of a separate product or service not covered by the warranty, a 50/50\nwarranty shares the cost of a si11gle product or service. Dealers who pay a proportion Q[ repair\ncosts need some control over the diagnosis of the repair needed and the quality of the repair.\nBarring dealers from providing the repair under these types of warranties could impose\nhardships and costs on both consumers and dealers that do not appear warranted by the purpose\nor intent of the statute. 8\nThis opinion is consistent with staffs advice on the issue beginning over twenty-five\nyears ago, when the warranty statute was enacted. 9 In addition, the Commission\'s Buyers Guide\nfor used cars was designed to accommodate disclosure of warranties that cover less than 100%\nof the cost for warranty repairs. 10 We note, however, that a 1999 statement by the Commission\nappears to express a different view on the issue. In a Federal Register Notice ("FRN")\npublishing the results of its review of the Magnuson-Moss Warranty Act Interpretations, 11 the\nCommission stated that used car warranties that cover a percentage of parts and labor and\nprovide that the repair must be done by the dealer/warrantor "likely violate Section 102(c). " 12\nHowever, the Commission did not take a definite position at that time on the applicability of\nSection 102(c) to these types of warranties.\nTo resolve any uncertainty, the Commission is issuing this letter opinion, adopting the\nstaffs long-held opinion that Section 102(c) does not prohibit 50/50 warranties (or other\nwarranties under which the warrantor pays- a percentage of the costs for covered repairs) from\nrequiring that the warrantor perform all covered repairs. This opinion is limited to the question\nof whether section 102(c) prohibits such warranty terms. It does not constitute approval of any\n\n8\n\nThe Commission recognizes that there is some concern that dealers may inflate the costs\nof warranted repairs and in this way impose all or most of the repair cost on the purchaser. If\nsuch practices occur, they would likely constitute deceptive practices and could also constitute\nbreaches of warranty (as failing to provide the benefit promised in the warranty).\n9\n\nSee, e.g., ChristianS. White, Title L Magnuson-Moss Federal Trade Commission, in\nPractising Law Institute, THE FEDERAL TRADE COMMISSION IN 1975, at 33.\n10\n\nThe Commission\'s Used Motor Vehicle Trade Regulation Rule, 16 C.P.R. Part 455,\nrequires that used car dealers display a Buyers Guide on all used cars offered for sale. This\nBuyers Guide must disclose the basic terms of any warranty offered in connection with the sale\nof the used car, including the duration of coverage, the percentage of total repair costs to be paid\nby the dealer, and the exact systems covered by the warranty.\nFinal Action Concerning Review of Interpiet~tl~r{~-\xc2\xb7~f Magn~so-ll.-Mo-ss Warranty Act:\nRule Governing Disclosure of Written Consumer Product Warranty Terms and Conditions; Rule\nGoverning Pre-Sale Availability of Written Warranty Terms; Rule Governing Informal Dispute\nSettlement Procedures; and Guides For the Advertising of Warranties and Guarantees, 64 FR\n19700 (1999).\n--\n\n1\n\nr\n\n12\n\n!d. at 19703.\n3\n\n\x0cother terms of such warranties. Moreover, certain acts or practices, such as inadequate\ndisclosures, could constitute deceptive or unfair practices in violation of Section 5 oft~_e Federal\nTrade Commission Act, 15 U.S.C. \xc2\xa7 45, or relevant state laws. Any such determination would\nbe made on a case-by-case basis.\nIn accordance with Section 1.3(b) of the Federal Trade Commission\'s Rules ofPractice\nand Procedure (16 C.F.R. \xc2\xa7 1.3(b)) the Commission retains the right to reconsider the questions\ninvolved in this opinion and to rescind or revoke the opinion should the public interest so\nrequire. Further, in accordance with Section 1.4 of the Commission\'s Rules of Practice and\nProcedure (16 C.F.R. \xc2\xa7 1.4), your letters, the submission from the National Consumer Law\nCenter, and this response will be placed on the public record.\n\nBy direction of the Commission.\n\nDonaldS. Clark\nSecretary\n\n4\n\n\x0c'