The new patent office post-grant review procedures introduced in the recently enacted Leahy-Smith America Invents Act (“AIA”) have left many in the pharmaceutical industry—particularly those who frequently participate in Hatch- Waxman litigation—wondering whether these new mechanisms will alter the litigation landscape. Existing post-grant review procedures, such as ex parte reexaminations, are not commonly utilized by generic pharmaceutical companies to challenge the validity of Orange Book-listed patents. Many feel that the existing procedures take far too long to be worthwhile; others are leery of submitting their disputes to review by another patent examiner, believing an examiner would be hesitant to overturn the decision of his or her colleague: the examiner who originally allowed the patent.
Aspects of some of the new post-grant review procedures created by the AIA, particularly the post-grant review (PGR) and the inter partes review (IPR) procedures, may address these concerns. Unlike ex parte reexaminations, which are conducted by patent examiners, PGRs and IPRs will be conducted by three-member panels of the newly formed Patent Trial and Appeal Board (PTAB).1 The new procedures may also prove to be significantly faster with the AIA requiring PGR and IPR final determinations to issue within one year (plus six months for good cause) of the date the reviews commence.2 Additionally, in contrast to existing procedures, the patent holder will not have a right to an appeal within the Patent Office; rather, final written decisions of the PTAB in a PGR or IPR will be immediately appealable to the U.S. Court of Appeals for the Federal Circuit.3
The complexities of ANDA litigation require that parties consider a constellation of factors before committing to a course before the patent office in lieu of, or in addition to, litigation. ANDA litigants may find the new procedures warrant addition to their considerations. Both generic companies and branded companies would be well-served to give careful thought as to the potential effects of these new postgrant review procedures on their business and/or litigation strategies.
One important issue a company should consider before using these new procedures is the estoppel that may apply in the event the patent at issue is litigated in court. The AIA provides that petitioners for PGR and IPR, and the “real party in interest” or “privy” to the petitioner, will be estopped from raising in subsequent litigation any argument that was raised, or reasonably could have been raised, before the patent office.4 And parties may no longer be able to delay the effect of estoppel by appealing a patent office decision to the courts, as is possible under the current inter partes examination procedure.5 The AIA provides that estoppel will attach in a PGR or IPR once the PTAB issues a final written decision6— something that will occur before an appeal.7 Thus, estoppel is likely to be a much more important consideration under the new PGR and IPR procedures.
Because of the estoppel that will attach to decisions of the PTAB, ANDA applicants expecting imminent suit will likely need to decide whether their invalidity arguments are best presented to the patent office or a district court for initial determination. Factors that should be considered include the bases for the invalidity arguments, the strength and complexity of the arguments, the availability and need for specific discovery to support the arguments, and the relative burdens of proof in each forum.
For example, district courts of course entertain all statutory and equitable invalidity and/or unenforceability arguments. The same is not necessarily true of the new post-grant reviews. While a PGR petition (which may only be filed within nine months of the date a patent issues or reissues) may raise any statutory ground for invalidity,8 petitions for IPRs will be limited to invalidity arguments under 35 U.S.C. §§ 102 or 103 that are based on prior art patents or printed publications.9 Invalidity arguments based on other types of prior art, or on defects in the patent’s specification or claims, will generally be off-limits in an IPR. Also, though the new PGR and IPR procedures permit discovery, the scope of discovery permitted before the patent office may well be narrower than what is typically allowed by district courts. In addition, the burden of proof to show invalidity in the patent office is lower than the burden that applies in district court.10 And members of the three-member panels of the PTAB may be more fluent in the technical aspects of the subject matter at issue than would be a district court judge or jury.
ANDA applicants also should consider the effects that post-grant review mechanisms, and any potentially accompanying estoppel, might have in the context of multiple defendant Hatch-Waxman litigations. For example, if competing ANDA applicants who are defendants in the same lawsuit enter into a joint defense group, and one defendant petitions for PGR or IPR, the brand company might want to argue to the district court that the resulting estoppel should not be limited to the petitioning party, but should instead extend to the entire joint defense group on the theory that the entire group is the “real party in interest.” Whether such an argument would be successful could well depend on the extent to which the defendants coordinated to submit the review petition, which may in turn raise issues concerning privileged communications and attorney work product. ANDA defendants would be wellserved to consider these potential issues when organizing joint defense groups and drafting joint defense group agreements.
ANDA applicants will also want to consider a variety of other factors before utilizing one of the new post-grant review mechanisms. For example, if a generic drug company believes that a lawsuit involving a plurality of ANDA filers is imminent, the relative strength of that company’s non-infringement positions visà- vis its co-defendants might influence its decision regarding whether to challenge a patent before the patent office. In other instances, a generic company that is the first to file its ANDA (potentially entitling it to 180 days of generic market exclusivity) may also view these procedures differently than a later-filing defendant: the expediency of the new procedures, in that decisions are immediately appealable to the Federal Circuit, may provide a later filer with an opportunity to trigger a forfeiture of the first filer’s 180-day market exclusivity. Further still, in circumstances where ANDAs contain paragraph IV certifications as to multiple Orange Book listed patents, litigants will need to determine whether all, some, or no patents, or perhaps merely the latest-expiring patent, should be the subject of a patent office post-grant review procedure. That decision will hinge at least in part on whether the subject matter of the patents can be grouped into categories, as well as on a number of other factors discussed above.
These are just a few of the considerations ANDA litigation defendants should weigh before deciding to pursue post-grant patent office review and ANDA litigation plaintiffs should evaluate in determining whether to brace themselves for such a challenge in the patent office. Of course, litigants also need to consider issues of timing, and whether money and other resources dedicated to post-grant review may impact their ability to litigate effectively. When selecting litigation counsel, a pharmaceutical company should keep all of these factors in mind, and should also consider whether its potential lawyers are qualified to handle both litigation and challenges in the patent office. Because of the estoppel issues described above, extensive coordination between post-grant review counsel and litigation counsel will be required.
In the end, decisions about the new postgrant review procedures will be made on a case-by-case basis, but in order to make the correct decision, a drug company will need to have a full appreciation of the potential benefits and consequences of its actions. It seems likely that the new post-grant review procedures created by the AIA will be used more frequently by pharmaceutical companies than have been existing procedures. Time will tell whether that is actually the case.