The popularity of IPR petitions in the biopharma space has steadily grown since 2012 when IPRs were first introduced as a means of challenging the validity of patents. In 2013, 34 IPRs were filed, and the number nearly tripled in 2014 with 97 IPRs filed. With 168 IPRs filed through December 2015, biopharma cases now represent over 9% of all IPR filings. Given this growing trend, it is an opportune time to evaluate the IPR activity in this space.
First, statistics published by the PTO suggest IPR petitions are instituted less often in the biopharma space compared with IPR petitions in other technological classes. For example, as of September 2015, IPRs were instituted 48.4% of the time in non-biotech fields, whereas only 40.5% of biopharma IPRs were instituted. Furthermore, once instituted final decisions are reached in the biopharma context more often, suggesting biopharma cases are less likely to settle. In particular, 65.7% of biopharma trials are completed, as compared with 57.7% of all IPR petitions. PTO statistics further reveal that biopharma claims are less likely to be invalidated by the PTAB in instances in which a final written decision is reached. Collectively, these numbers demonstrate that biopharma IPRs as a class evidence unique trends, of which practitioners in this space should be aware.
Second, review of biopharma IPR petitions reveals that not only are generic and branded companies filing, but so are nonpracticing entities—specifically hedge fund managers. In early 2015, Kyle Bass, founder of Dallas-based hedge fund Hayman Capital Management, announced plans to challenge 15 drug companies’ patents via IPR. As of November 30, 2015, Bass and his various real parties-in-interest, which include Erich Spangenberg, delivered as promised, filing 35 IPR petitions along the way. In sum, 16 companies were the subject of the various petitions, including Acorda Therapeutics, Pozen, Biogen, and Celgene. To date, a decision on institution has been reached in 15 of the 35 cases, with IPR being instituted in seven of these cases.
While Bass has publically stated his intention in filing IPRs is to invalidate weak biopharma patents to clear the way for lower-priced generic entry, many believe his motives lie in using IPR petitions as part of his investment strategy in which he attempts to profit from short-selling the stock of targeted companies. While the PTAB has refused to dismiss Bass’ petitions as abuse of process, legislative reform that would prevent hedge funds from filing IPRs is being considered. In response to allegations that their motives are not altruistic, Bass and Spangenberg recently filed two IPR petitions—this time as individuals—against Alpex Pharma and Fresenius. The petitions state that neither stands to profit financially from these filings. In a similar vein, Spangenberg recently used his blog to solicit volunteers to file IPR petitions challenging allegedly “weak” pharma patents, pledging to provide draft petitions to the volunteers and help offset the costs associated with the petitions.
It will be interesting to see how the industry reacts to these filings, and what action, if any, Congress takes in response.
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This article originally appeared in Fish’s 2015 Post-Grant Report. Read the full report here.