In Cuozzo Speed Technologies, LLC v. Lee, the Supreme Court recognized that a “district court may find a patent claim to be valid, and the agency may later cancel that claim in its own review.” The Court also recognized that because of the different evidentiary burdens in court versus before the agency—the Patent Office—“the possibility of inconsistent results is inherent to Congress’[s] regulatory design.” Is that inconsistency sensible? As good a case as any to consider that question involves a global pharmaceutical company, one of its top-selling drug products, and a patent it owns that covers the administration of that drug product.
Eli Lilly and Company (“Lilly”) markets and sells ALIMTA®, a drug used to treat certain types of lung cancer and mesothelioma. Lilly earns billions of dollars in revenue annually from the sales of ALIMTA® in part because it also owns U.S. Patent No. 7,772,209. That patent covers a method of administering ALIMTA®, requiring that physicians co-administer that drug with folic acid to reduce incidences of patient toxicity caused by the drug.
In 2010, a number of companies each filed an abbreviated new drug application (ANDA) seeking the FDA’s approval to make and sell generic versions of ALIMTA®. Shortly thereafter, Lilly sued these companies for infringement of certain claims of the ’209 patent. The court tried the patent’s validity in the summer of 2013, and issued a decision—favorable to Lilly—in the spring of 2014. Eli Lilly & Co. v. Teva Parenteral Medicines, Inc., et al., 1:10-cv-01376-TWP-DKL (S.D. Ind. Mar. 31, 2014). During the litigation, inter partes review (IPR) was not available to these defendants (the “Teva defendants). IPRs became available in September 2012, which was already more than one year after the Teva defendants had been served with Lilly’s infringement complaint. Any IPR petition from the Teva defendants thus would have been untimely under 35 U.S.C. § 315(b). The Teva defendants, however, could have requested the Patent Office reexamine the patent, but they did not do so. Ultimately, the Teva defendants did not succeed in proving invalidity under the clear-and-convincing evidentiary standard—a standard more demanding than the preponderance-of-evidence standard used by the Patent Office. An appeal in that case is pending at the Federal Circuit.
Following the district court’s 2014 decision, a company not among the Teva defendants, Sandoz, notified Lilly that it too had filed an ANDA seeking the FDA’s approval to make and sell a generic version of ALIMTA®. In response, Lilly sued Sandoz for infringement of the ’209 patent, and that lawsuit was consolidated with others and is pending before the same district court. Eli Lilly & Co. v. Nang Kuang Pharm. Co., Ltd., et al., Case No. 1:14-cv-1674-TWP-DKL (S.D. Ind.). In the consolidated court action, the “Sandoz defendants” are entitled to challenge the patent’s validity—even on exactly the same evidence and arguments the Teva defendants unsuccessfully presented. See Blonder-Tongue Labs., Inc. v. University of Ill. Found., 402 U.S. 313, 329 (1971). In response to the lawsuit, Sandoz timely filed a petition for inter partes review of all claims of the ’209 patent. In its petition, Sandoz asserted the claims were obvious over the same prior art publications that were the subject of the 2014 court decision against the Teva defendants.
Over Lilly’s objections, the Patent Trial and Appeal Board at the Patent Office recently granted the Sandoz petition, instituting IPR. Sandoz Inc. v. Eli Lilly & Co., Case IPR2016-00318 (PTAB June 16, 2016). In its decision, the Board concluded that the Sandoz petition presented information showing a reasonable likelihood that Sandoz would succeed in showing by a preponderance of evidence that at least one of the patent claims is unpatentable. Lilly had unsuccessfully argued that the Board should deny the petition because the district court had already considered and rejected similar arguments in concluding many of the patent claims were not invalid. The Board noted that not all of the petitioned claims were the subject of the district court’s earlier review. Further, the district court’s earlier decision was based on expert testimony—including Lilly’s expert’s testimony—that the parties have not (yet) presented to the Board, and Sandoz’s expert testimony was not (and has not been) considered by the district court. On the limited record, therefore, the Board instituted inter partes review. And since the Board’s institution one of the Teva defendants has sought to join the Sandoz IPR.
Shortly before Sandoz filed its IPR petition, another entity, Neptune Generics, LLC—not an ANDA-filer itself—filed two IPR petitions challenging the same Lilly patent. The Board recently granted both petitions, instituting review over Lilly’s objections. Neptune Generics LLC v. Eli Lilly & Co., Cases IPR2016-00237 and -00240 (PTAB June 3, 2016) (Institution Decisions). And since those Board decisions, a prospective ANDA-filer, a recent ANDA-filer, and even early ANDA-filers comprising the Teva defendants have filed their own inter partes review petitions and moved the Board join those petitions to the Neptune IPRs. The Board’s decisions on the joinder motions and accompanying IPR petitions are pending.
In its optional responses to the Neptune petitions, Lilly stated: “When Neptune first raised its allegations regarding the ’209 patent with Lilly, it indicated a willingness to forget all about them and not challenge the ’209 patent if Lilly provided Neptune with some sort of consideration in return. Lilly refused to submit to such a shakedown, and so here we are.” Having spent years litigating the patent’s validity in district court, and with an appeal pending, the patent owner now faces multiple IPRs, some petitioned by the same defendants who earlier lost at the district court yet are able to seek joinder of their otherwise time-barred petitions based on a joinder provision in the AIA. The patent owner thus faces the potential that the Board may cancel patent claims that have, thus far, survived validity challenges in court.
This quagmire may seem tenable because ANDA-filers other than one of the Teva defendants ought to be able to challenge the patent even if the courts concluded that the Teva defendants did not succeed in their validity attack. To those ANDA-filers, the patent remains an impediment to their ability to market and sell a generic product. The Patent Office may minimize its administrative burdens by empaneling the same patent judges to administer all of these proceedings. And whatever burdens it faces may be offset by its receipt of petition-filing fees of about $250,000—a majority of which it would have to refund if it denied the petitions—a potential windfall if it grants the joinder motions.
The right to exclude competition may be fairly burdened with the expense of enforcing the patent right through litigation, serially, if necessary, relative to each new defendant. And, for Orange Book-listed patents, the Hatch Waxman Act already offers a familiar framework for adjudicating patent validity in court before a judge (and not a jury). Accordingly, administration of even one IPR where a court has already addressed the same question (based on the same arguments and similar evidence) may make little sense. The only purpose of the administrative proceeding would be to exploit the different evidentiary burdens in court versus before the agency to elicit a different validity result. Perhaps it makes more sense here to require validity to be contested in court, and to deny the Teva defendants any opportunity to join the IPRs.
In the AIA, Congress did not require the Patent Office to institute inter partes review if the petition satisfies the threshold showing in 35 U.S.C. § 314; instead, it simply said the Office may not institute such review unless the threshold had been met. Congress apparently recognized the potential abuse of repeated challenges to a patent through administrative review. Accordingly, the statute prohibits institution of an IPR if a petitioner first files a district court action challenging validity of the patent (35 U.S.C. § 315(a)), or if the petitioner does not file a petition within one year of being served with a complaint for patent infringement (§ 315(b)). The statute further estops the petitioner, after obtaining a final written decision in an IPR, from raising an issue in another Patent Office proceeding or civil action that the petitioner raised or reasonably could have raised in the IPR petition. 35 U.S.C. § 315(e). Although the statute does not expressly provide that the Patent Office has discretion to deny an IPR petition on the basis that the patent had already been the subject of the same attack in a concluded district court action, the permissive language of Section 314 suggests that the Patent Office is not required to institute an IPR under such circumstances.
It is unclear how carefully Congress considered the sensibility of inconsistent results that AIA trials may present relative to district court actions concerning the same patent. The inherent possibility of inconsistent results the Supreme Court recently recognized in Congress’s AIA design is not academic, and so here we are.