Teva and AstraZeneca's Drama Concludes

The drug patent world is a complicated one. Teva Pharmaceuticals (Nasdaq: TEVA  ) and AstraZeneca (NYSE: AZN  ) aren't making it any easier for investors to figure it all out.

Last week, Teva launched a generic version of AstraZeneca's asthma treatment Pulmicort Respules. The launch was considered "at risk" because AstraZeneca still had a pending lawsuit claiming its patents on the drug were enforceable. A day later, the court issued a temporary injunction, pending a hearing this week.

Instead of leaving their fates to the whim of the court, the two companies decided to settle the lawsuit. Teva will get to launch the drug in December of next year -- well before the 2019 date that AstraZeneca thinks it's entitled to -- but Teva will have to pay AstraZeneca a royalty. Teva also has to cough up for the short time it had a generic version on the market. Unfortunately for investors, the companies didn't give any amounts for the settlement, so we really don't know who won the standoff.

A lot could depend on how much drug Teva shipped before a court ordered it to stop, since what's out there is being allowed to work its way through channels and be sold. When Teva launched an at-risk version of Wyeth's (NYSE: WYE  ) Protonix last year, it reportedly flooded the market with the drug, and Teva certainly could have done the same in this instance.

The real loser -- besides the in-the-dark investors -- seems to be Par Pharmaceutical (NYSE: PRX  ) , which was going to sell AstraZeneca's authorized generic to compete with Teva but has now been cut out of the loop.

Patent law is a complicated subject, and the best that most investors can hope for is that the companies they invest in have good lawyers to defend or attack the patents, depending on which side they're on. Patent lawsuits will remain a black box; sometimes you just have to trust management, especially when you invest in drugmakers.