Takeaway: Where a shareholder does not control or direct the conduct of a petition, or pay to have a named real party-in-interest initiate any particular proceeding, the shareholder may be considered a passive investor and not a real party-in-interest.

In its Decision, the Board granted institution of inter partes review (IPR) of claims 1-27, 31-40, and 44-45 of the ’886 patent. The ’886 patent discloses L-histidine stabilized drug formulations of glucagon-like peptide-2 (“GLP-2”) and GLP-2 analogs. Petitioner challenged claims 1-45 of the ’886 patent on the following grounds: (1) claims 1-27, 33-35, 38, and 45 as obvious over Drucker ’379, Kornfelt, Osterberg; (2) claims 31-32 and 44 as obvious over Drucker ’379, Kornfelt, Osterberg, and Munroe; (3) claims 28-30 and 39-43 as obvious over Drucker ’379, Kornfelt, Osterberg, and Holthuis; and (4) claims 36-37 as obvious over Drucker ’547, Kornfelt, Osterberg, Holthuis, and Munroe. The Board did not construe any specific terms of the claims.

The Board addressed Petitioner’s first, second, and fourth challenges to the ’886 patent together. Petitioner alleged that an ordinary artisan would have combined Drucker ’379, Munroe, and Drucker ’547, which disclosed buffered GLP-2 analog formulations, with Osterberg and Kornfelt, because Osterberg and Kornfelt disclose the use of L-histidine in combination with an excipient such as mannitol or sucrose in protein formulations for the purposes of protein stabilization. Petitioner argued that the claimed GLP-2 formulation is a combination of known ingredients with a predictable result of stability as confirmed by routine testing. Patent Owner asserted that the prior art peptides differed from the claimed GLP-2 peptide and that peptide stabilization is not routine or predictable. The Board disagreed with Patent Owner, stating that Petitioner had established sufficient similarities between the peptides to institute trial.

Next, Patent Owner alleged various secondary considerations including a long-felt need and commercial success. The Board determined that Patent Owner did not provide sufficient evidence to indicate that the claimed invention satisfied a long felt need. Further, the Board stated that it could not determine if the asserted commercial success was due to the sale of a buffered formulation comprising GLP-2 generally, as compared to a buffered GLP-2 formulation comprising L-histidine and mannitol or sucrose, as recited in the challenged claims. Thus, the Board did not find in Patent Owner’s favor regarding the alleged secondary considerations.

Patent Owner also argued that the ’886 patent claims priority to a foreign application filed December 30, 1999, and that this priority date would disqualify Osterberg as prior art under § 102(b). The Board noted that Osterberg was published prior to the December 30, 1999 priority date, and is therefore available as prior art under § 102(a). Thus, the Board concluded that Petitioner had established a reasonable likelihood of prevailing on its assertion that claims 1-27, 33-35, 38, and 45 are unpatentable.

The Board next addressed Petitioner’s third asserted grounds to challenge the ’886 patent, relying on, inter alia, Osterberg and Holthuis. The Board determined that the formulations and “conditions of lyophilization” disclosed in Holthuis are not substantially identical to the formulations and conditions disclosed in the ’886 patent and recited in the challenged claims. Petitioner also relied upon the declaration of Dr. Palmieri. The Board was not persuaded by this testimony because it did not provide sufficient underlying data to support the opinion. Thus, the Board concluded that the combination of asserted art did not establish that claims 28-30 and 41-43 would have been obvious. The Board reached a similar conclusion regarding claims 39 and 40.

Patent Owner argued that the Petition should be denied because it fails to identify all real parties-in-interest (RPI). Patent Owner asserted that the shareholders of Petitioner should have been designated as RPI. According to Patent Owner, Petitioner’s business strategy renders Petitioner “a nominal petitioner for high net worth investors who profit by bringing IPRs and manipulating stocks.”

The Board stated that the shareholders identified by Patent Owner are passive investors who contributed funds to be invested at the behest of, for example, Mr. Bass, a named RPI. The evidence does not suggest that Mr. Bass was paid by any entity to initiate any particular IPR. The Board determined that the evidence does not support sufficiently a finding that an unnamed party (1) controlled the investment decisions prompting the filing of the present Petition; (2) co-authored the present Petition or exerted control over its content; and (3) had any agreement affecting control of the instant proceeding despite Patent Owner being granted additional discovery on this issue. Thus, the Board concluded that Patent Owner has not provided sufficient rebuttal evidence to show that the present Petition fails to satisfy the requirement to identify all of the RPI.

Patent Owner asserted that the Petition was filed for an improper purpose and should be denied. Patent Owner argued that Petitioner is not using IPR as an alternative to court proceedings, as Congress intended because Petitioner could never commence a district court case involving the ’886 patent due to Petitioner’s lack of standing. The Board stated that the purpose of the America Invents Act (AIA) includes (1) providing a less costly alternative to court proceedings, and (2) encouraging the filing of legitimate patentability challenges in an effort to further improve patent quality. The Board asserted that providing a forum for legitimate patentability challenges serves a strong public interest in facilitating the removal of poor quality patents from the public arena. Thus, the Board dismissed Patent Owner’s argument regarding abuse of process.

Finally, Patent Owner argued that the Petition relies on substantially the same art and arguments that were previously considered during prosecution of the ’886 patent. Patent Owner stated that the Examiner considered Kornfelt during prosecution and that, although Drucker ’379 was not considered by the Examiner, the technology disclosed by Drucker ’379 was considered by the Examiner because it is merely cumulative of Knudsen. Petitioner acknowledged that the Examiner considered Knudsen and Kornfelt during prosecution. However, Petitioner alleged that the Examiner did not consider the combination set forth in the Petition. The Board noted that Osterberg was not considered by the Examiner and it is relevant art. Thus, the Petition is not repetitive to arguments and prior art presented during prosecution.

COALITION FOR AFFORDABLE DRUGS II LLC v. NPS PHARMACEUTICALS, INC.,IPR2015-01093

Paper 26: Decision Institution of Inter Partes Review

Dated: October 23, 2015

Patents: 7,056,886

Before: Lora M. Green, Jacqueline Wright Bonilla, and Sheridan K. Snedden

Written by: Snedden

Related proceeding: IPR2015-00990