Amgen 2009 Annual Report Download - page 163

AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
the surviving entity’s creditworthiness deteriorates, which is generally defined as having either a credit rating that
is below investment grade or a materially weaker creditworthiness after the change in control. If these events
were to occur, the counterparties would have the right, but not the obligation, to close the contracts under early
termination provisions. In such circumstances, the counterparties could request immediate settlement of these
contracts for amounts that approximate the then current fair values of the contracts.
20. Contingencies and commitments
Contingencies
In the ordinary course of business, we are involved in various legal proceedings and other matters that are
complex in nature and have outcomes that are difficult to predict. We record accruals for such contingencies to
the extent that we conclude that it is probable that a liability will be incurred and the amount of the related loss
can be reasonably estimated.
Certain of our legal proceedings and other matters are discussed below:
Roche Matters
Amgen Inc. v. F. Hoffmann-La Roche Ltd., et al.
On November 8, 2005, Amgen filed a lawsuit in the Massachusetts District Court against F. Hoffmann-La
Roche Ltd., Roche Diagnostics GmbH and Hoffmann-La Roche, Inc. (collectively, “Roche Defendants”) seeking
a declaration by the court that the importation, use, sale or offer to sell pegylated erythropoietin (alternatively re-
ferred to as peg-EPO or MIRCERA®) infringes Amgen’s EPO patents. Amgen alleged infringement of six of its
U.S. Patents that claim erythropoietin products, pharmaceutical compositions and processes for making eryth-
ropoietin, specifically U.S. Patent No. 5,547,933 (“the ‘933 Patent”), U.S. Patent No. 5,621,080 (“the ‘080
Patent”), U.S. Patent No. 5,955,422 (“the ‘422 Patent”), U.S. Patent No. 5,756,349 (“the ‘349 Patent”), U.S. Pat-
ent No. 5,618,698 (“the ‘698 Patent”) and U.S. Patent No. 5,441,868 (“the ‘868 Patent”). Amgen sought a
permanent injunction preventing the Roche Defendants from making, importing, using, offering for sale or sell-
ing recombinant human erythropoietin, including pegylated EPO, in the United States. The Roche Defendants’
amended answer asserted that all six of the patents-in-suit were not infringed, were invalid and were unenforce-
able due to inequitable conduct and counterclaimed asserting violations of federal and state antitrust laws. On
June 5, 2007, the Massachusetts District Court entered an order dismissing the ‘080 Patent from the case.
The Massachusetts District Court conducted a jury trial on infringement and validity, a bench trial on other is-
sues of validity and enforceability, and heard pre- and post-trial motions. On October 17, 2008, the Massachusetts
District Court entered judgment that claim 1 of the ‘422 Patent, claims 3, 7, 8, 9, 11, 12 and 14 of the ‘933 Patent,
claims 1 and 2 of the ‘868 Patent, claims 6 through 9 of the ‘698 Patent and claim 7 of the ‘349 Patent are valid and
enforceable, and that claim 1 of the ‘422 Patent, claims 3, 7 and 8 of the ‘933 Patent, claims 1 and 2 of the ‘868
Patent, and claims 6 through 9 of the ‘698 Patent are infringed and permanently enjoined Roche from infringing the
‘422 Patent, the ‘933 Patent, the ‘868 Patent and the ‘698 Patent for the remaining life of these patents.
The Roche Defendants filed an appeal with the U.S. Court of Appeals for the Federal Circuit (the “Federal
Circuit Court”) and Amgen filed a cross-appeal. On September 15, 2009, the Federal Circuit Court affirmed the
Massachusetts District Court’s judgment with respect to infringement of the ‘933, ‘422, ‘698 and ‘868 Patents
and vacated the holding of non-infringement of the ‘349 Patent. The Federal Circuit Court also affirmed the val-
idity of Amgen’s patents except for a single issue of obviousness-type double patenting with respect to the ‘933,
‘422 and ‘349 Patents. The Federal Circuit Court remanded this validity issue and the issue of infringement of the
‘349 patent to the Massachusetts District Court for further proceedings.
Amgen and the Roche Defendants reached a settlement of the litigation in December 2009 and on De-
cember 22, 2009, the Massachusetts District Court entered final judgment and a permanent injunction against the
Roche Defendants prohibiting Roche from infringing Amgen’s patents, thus bringing the five-year patent
F-43