In an email dated June 3, 2015, Celgene requested authorization from the PTAB to file a sanctions motion for dismissal against Kyle Bass for the four IPR petitions he filed against the company over the past two months.   The email states “[t]he identified real parties in interest (‘RPI’) in these proceedings have stated publically that they intend to use the IPR process for the purpose of affecting the value of public companies.  This is not the purpose for which the IPR process was designed.”  The email continues to state that “one or more of the identified RPI previously threatened to file IPRs against the challenged patents unless Celgene met their demands.  When Celgene did not pay, the RPI—apparently in furtherance of their efforts to abuse the IPR process for private financial gain—filed the present petitions.”

On June 8, 2015 the Board conducted a telephone conference pertaining to Celgene’s request.  Celgene confirmed that it wishes to move for sanctions against Bass, but not Petitioner’s counsel, for abuse of the IPR process under 37 C.F.R. § 42.12 (a)(6).  The Board granted the requested authorization based on a determination that briefing would facilitate development of a complete record, and thereby promote just resolution of the issues raised by Celgene.

While the Board is empowered to impose sanctions against parties for misconduct, the Board has generally been reluctant to officially sanction parties given the relative newness of the IRP proceedings.  Instances where sanctions have been imposed have involved unusual circumstances with a high level of abuse.  See e.g., SAP America v. Lakshmi Arunachalam (IPR2014-00413, 00414) (Board sanctioning patent owner for filing papers containing sensitive information and unsubstantiated allegations about one of the Board judges).

In what appears to be a case of first impression, the parties are ordered to submit briefing on (1) the elements required to establish abuse of process, (2) evidence of intent that supports or undercuts the allegations of abuse, and (3) the standard of proof required when deciding a sanctions motion.  Thus, the Board appears to be interested in setting up a framework to address any alleged abuse of the IPR process by IPR petitioners like Bass.

In its order, the Board also directed the parties to meet and confer to resolve any dispute regarding the alleged waiver of confidential documents relevant to the allegation of abuse of process.  In what may be a sign that the Board is particularly interested in documents related to any threats made by the RPI going public, the board stated “[t]here is a strong public policy that favors making information filed in an inter partes review open to the public, especially because the proceeding determines the patentability of claims in an issued patent and, therefore, affects the rights of the public.”

It will be interesting to see if other companies targeted by Bass, for example Pozen or Biogen, file similar motions for sanctions or wait for a decision from the Board.