The recently established inter partes review (IPR) and post-grant review (PGR) of the America Invents Act have been in the spotlight lately, especially now that the life sciences industry has begun to utilize these proceedings to challenge the validity of issued patents covering lucrative/blockbuster therapeutics. The spotlight is even brighter now that seemingly uninterested parties have filed IPRs against a number of branded pharmaceutical products. These IPRs have the alleged goal of “lower[ing] drug prices for everyone,”1 but, in some instances, have resulted in falling stock prices for the branded drug company, potential gains for those “shorting” the stock, splashy headlines for the media, and anxiety within the entire industry. Is this all “much ado about nothing?”
We have reviewed more than 100 IPRs2 that have been filed to date within the life sciences industries,3 and, not surprisingly, the devil is in the detail. Although hedge fund–like petitioners are grabbing the headlines, the real story is playing out in the IPRs filed by both generic companies and branded companies. Here are some of the more interesting facts and strategies that have come to light:
- Of the 100 or so IPRs filed in the life sciences industries, (i) nine have been filed by hedge fund–like petitioners against seven products; (ii) about 35 have been filed by generic/biosimilar therapeutic companies against 19 products; and (iii) about 58 have been filed by historically branded therapeutic companies against about 25 products or technologies.
- There has been a recent flurry of filings by hedge fund–like petitioners, likely due to a concern that there will be a legislative end to their ability to file IPRs.
- Hedge fund petitioners appear to be all about headlines and potential monetary gain, despite their claims of advancing the greater good. The Coalition for Affordable Drugs LLC (led by activist investor Kyle Bass) appears to have filed IPR challenges while shorting the stock in one example. Even if successful, this would shorten the patent coverage on the branded drug product by only five months, which does not seem like a big windfall for patients.
- When faced with an IPR filed by a hedge fund, patent owners may utilize the requirement that the “real party in interest” be identified to prevail in an IPR or even prevent an IPR from being initiated. Patent owners are also at an advantage because the hedge fund–like petitioners do not have the ability to appeal an adverse decision by the Patent Trial and Appeal Board because there is no “case or controversy” between the parties to establish subject matter jurisdiction for the Court of Appeals for the Federal Circuit, which is the court designated to handle any such appeals.
- When generics utilize IPR proceedings, they often appear to challenge only those Orange Book patents that have a substantially longer term or that cover core features of the product that cannot be easily designed around. Accordingly, Orange Book–listed patents directly to particular crystalline salts or polymorphs are often not challenged.
- When historically branded companies utilize IPR proceedings, they often challenge patents of relatively broad scope that are likely to create the freedom to operate for new or competitive products or they challenge key patents to undermine exclusivity around a competitive product.
- Patent owners should not use their standard patent litigation counsel or their standard patent prosecution counsel as IPR counsel because there are limited opportunities to amend the claims during the IPR process. Additionally, IPR counsel is required to be registered with the U.S. Patent and Trademark Office (PTO), and litigation counsel is often not a registered patent attorney.
- To mitigate the risk of an IPR, a patent owner should consider various strategies, such as the following: (i) including a large number of claims and multiple claims strategies to make challenging the patent more difficult; (ii) keeping a continuation application pending to enable citation of any new art arising out of an IPR with the PTO; (iii) filing a supplemental examination of core patents; and (iv) “hiding” core patents by obfuscating the lead compound/product.
- Additionally, patent owners can strengthen their portfolios by (i) filing new applications on discoveries related to products; (ii) combining an existing product with another product that has a strong exclusivity position (e.g., a new chemical entity or new biologic with regulatory exclusivity); and/or (iii) mining clinical data to reposition indications that have stronger patent protection.