Opinion ID: 804422
Heading Depth: 2
Heading Rank: 3

Heading: The Schering-ESI Litigation and

Text: Settlement In December 1995, ESI Lederle 4 (“ESI”) filed an ANDA seeking FDA approval to make and sell a generic 4 ESI is the generic division of American Home Products, Inc., which changed its name to Wyeth in 2002. Melody Peterson, American Home Is Changing Name to Wyeth, New York Times, Mar. 11, 2002. Wyeth was subsequently 12 version of K-Dur along with a paragraph IV certification stating that its proposed generic did not infringe the ‘743 patent. Within the forty-five-day period provided by the Hatch-Waxman Act, Schering sued ESI for patent infringement in the Eastern District of Pennsylvania. ESI defended on the ground that, unlike K-Dur, its generic equivalent did not employ a “coating material with two different ingredients” as specified by the ‘743 patent, but rather was made by a “different technology which produces a multi-layered coating with each layer comprised of a separate material having only a single ingredient.” App. at 1696-97. In the fall of 1996, Schering and ESI agreed to participate in court-supervised mediation before a magistrate judge. The settlement agreement the parties eventually reached (“the Schering-ESI agreement”) called for Schering to grant ESI a royalty-free license under the ‘743 patent beginning on January 1, 2004. In exchange, Schering would pay ESI $5 million up front and a varying sum depending on when ESI’s ANDA was approved by the FDA. Specifically, Schering agreed to pay ESI an amount ranging from a maximum of $10 million if ESI’s ANDA was approved before July 1999 down to a minimum of $625,000 if the ANDA was not approved until 2002. As part of the settlement, ESI also represented that it was not developing and had no plans to develop any other potassium chloride product. The FDA approved ESI’s generic K-Dur product in May 1999, and Schering paid ESI the additional $10 million as required under the settlement agreement.