Johnson and Johnson 2012 Annual Report Download - page 68

In December 2009, the State of Israel filed a lawsuit in the District Court in Tel Aviv Jaffa against Omrix
Biopharmaceuticals, Inc. and various affiliates (Omrix). In the lawsuit, the State claims that an employee of a government-
owned hospital was the inventor on several patents related to fibrin glue technology that the employee developed while he
was a government employee. The State claims that he had no right to transfer any intellectual property to Omrix because it
belongs to the State. The State is seeking damages plus royalties on QUIXIL™and EVICEL™products, or alternatively,
transfer of the patents to the State.
In January 2011, Genentech, Inc. (Genentech) initiated an arbitration against UCB Celltech (Celltech) seeking damages for
allegedly cooperating with Centocor, Inc. (now Janssen Biotech, Inc. (JBI)) to improperly terminate a prior agreement in
which JBI was sublicensed under Genentech’s Cabilly patents to sell REMICADE®. JBI has an indemnity agreement with
Celltech, and Celltech asserted that JBI would be liable for any damages Celltech may be required to pay Genentech in that
arbitration. Following an arbitration hearing in June 2012, the arbitrators issued a decision finding no liability for Celltech,
and therefore, JBI is not liable for any potential indemnity claim. JBI has moved to recover its attorney’s fees, costs and
expenses.
In March 2012, Noramco, Inc. (Noramco) moved to intervene in three patent infringement lawsuits filed in the United
States District Court for the Southern District of New York (SDNY) by Purdue Pharma L.P. and others (Purdue) against
Noramco oxycodone customers, Impax Laboratories, Inc. (Impax), Teva Pharmaceuticals USA, Inc. (Teva) and Amneal
Pharmaceuticals, LLC (Amneal). In February 2013, Noramco appeared on behalf of Noramco customers Watson
Laboratories, Inc. – Florida and Andrx Labs, LLC (collectively, Watson/Andrx) in a similar lawsuit filed by Purdue in the
SDNY. The lawsuits are in response to the defendants’ respective ANDAs seeking approval to market generic extended
release oxycodone products before the expiration of certain Purdue patents. Three of the asserted patents relate to
oxycodone and processes for making oxycodone, and Noramco has agreed to defend the lawsuits on behalf of Impax,
Teva, Amneal and Watson/Andrx. Although Noramco did not participate, in November 2012, a trial in a lawsuit brought by
Purdue against another Noramco customer, Actavis Elizabeth, LLC (Actavis), took place. Because the active ingredient at
issue in the Actavis lawsuit is the same as the active ingredient at issue in the above lawsuits, the District Court’s decision
in the Actavis case may affect those lawsuits. A decision from the District Court in the Actavis case is pending.
In August 2012, Dr. James M. Swanson (Swanson) filed a lawsuit against ALZA Corporation (ALZA) in the Northern
District of California seeking to be added as an inventor on two ALZA-owned patents relating to
CONCERTA®. Alternatively, Dr. Swanson has alleged that the patents-in-suit are invalid and/or unenforceable as a result
of ALZA’s alleged omission of Dr. Swanson as a named inventor on the patents. Dr. Swanson is seeking damages and an
award of unjust enrichment. ALZA filed a motion to dismiss Swanson’s claims and oral argument is scheduled for February
2013.
GOVERNMENT PROCEEDINGS
Like other companies in the pharmaceutical and medical devices and diagnostics industries, Johnson & Johnson and
certain of its subsidiaries are subject to extensive regulation by national, state and local government agencies in the United
States and other countries in which they operate. As a result, interaction with government agencies is ongoing. The most
significant litigation brought by, and investigations conducted by, government agencies are listed below. It is possible that
criminal charges and substantial fines and/or civil penalties or damages could result from government investigations or
litigation.
AVERAGE WHOLESALE PRICE (AWP) LITIGATION
Johnson & Johnson and several of its pharmaceutical subsidiaries (the J&J AWP Defendants), along with numerous other
pharmaceutical companies, are defendants in a series of lawsuits in state and federal courts involving allegations that the
pricing and marketing of certain pharmaceutical products amounted to fraudulent and otherwise actionable conduct
because, among other things, the companies allegedly reported an inflated Average Wholesale Price (AWP) for the drugs
at issue. Payors alleged that they used those AWPs in calculating provider reimbursement levels. Many of these cases,
both federal actions and state actions removed to federal court, were consolidated for pre-trial purposes in a Multi-District
Litigation (MDL) in the United States District Court for the District of Massachusetts.
The plaintiffs in these cases included three classes of private persons or entities that paid for any portion of the purchase
of the drugs at issue based on AWP, and state government entities that made Medicaid payments for the drugs at issue
based on AWP. In June 2007, after a trial on the merits, the MDL Court dismissed the claims of two of the plaintiff classes
against the J&J AWP Defendants. In March 2011, the Court dismissed the claims of the third class against the J&J AWP
Defendants without prejudice.
60 •Johnson & Johnson 2012 Annual Report