Note: This article is adapted from a longer guest post on Forbes.com last week. To view the Forbes article click here.

Inter partes review (IPR) is a process established by Congress to permit defendants in patent infringement suits to quickly and inexpensively challenge patents asserted against them in an administrative trial at the U.S. Patent Office – and this process has proved to a potent weapon for patent challengers. In the roughly three-years that inter partes review has been available, over 80 percent of the trials have found patent claims to be invalid. Some in Congress are now questioning whether the IPR rules are perhaps skewed too far in favor of the challengers.

At the time the new patent law was enacted in 2012, it was assumed that the IPR process would be used primarily against so-called “patent trolls” rather than the holders of life science patents. And it is safe to say that no one in Congress intended this process to be an opportunity for Wall Street to get into the pharmaceutical patent-busting business. But the law of unintended consequences seems to have come into play.

Over the past five months, Kyle Bass, the manager of the Texas-based Hayman Capital Management, has launched at least seven new hedge funds for investors to challenge patents on FDA approved drugs. The funds, named the “Coalition for Affordable Drugs” (Series I – VII), have launched at least 16 challenges to patents owned by Acorda Therapeutics, Shire, Jazz Pharmaceuticals, Pharmacyclics, Celgene, Biogen and Pozen.

The scheme seems too simple to be true: short the stock of a publicly traded pharmaceutical company, file an IPR with the Patent Trial and Appeal Board (PTAB) that sends the stock price tumbling and then cover your short position by buying the stock at a hefty discount caused by the patent challenge.


Continue Reading Bass Goes Fishing: Troubles Ahead for Pharma?

The Court of Appeals for the Federal Circuit denied Cuozzo Speed Technology LLC’s petition for en banc rehearing of a February panel decision affirming the PTAB’s use the so-called broadest reasonable interpretation (BRI) standard in claim construction.

The decision to refuse en banc rehearing was a 6-5 decision with Chief Judge Prost and Judges Newman,

The America Invents Act established inter partes review and post-grant reviews mechanisms to challenge the validity of issued United States patents. These procedures were created to improve patent quality, and were introduced in part because of perceived abusive enforcement by nonpracticing entities in the consumer electronics space. As with most legislative changes, the consequences of these post-grant challenge mechanisms may not be fully appreciated until long after the law has been enacted. What can be appreciated at this early stage, however, is that the delicate balance between innovators, generics, biosimilars and competitors established by the 25-year framework of Hatch-Waxman and the more recent Affordable Care Act has been impacted by post-grant challenges in the life science space.

IPRs have recently been in the spotlight as the life sciences industry has begun to use these proceedings to challenge the validity of issued patents covering lucrative therapeutics. Media attention intensified when hedge funds began filing IPRs against patents covering a number of branded pharmaceutical and biologic products. These IPRs allegedly aim to “lower drug prices for everyone,”[1] but in some instances, they have resulted in falling stock prices for the branded drug company, potential gains for those “shorting” the stock, splashy headlines in the media, and anxiety throughout the industry. Is this all “much ado about nothing”?
Continue Reading Post-Grant Challenges In Life Sciences: A Midyear Assessment

Petitioners seeking to invalidate patents via the new AIA inter partes review (“IPR”) proceedings at the U.S. Patent and Trademark Office (PTO) appear to be increasingly willing to file multiple petitions against the same patent. In several instances, the same petitioner has filed three, four or even five petitions against a single patent. An explanation for this tactic may lie in the Patent Trial and Appeal Board (PTAB) practice of culling the grounds that will be considered when an IPR is initiated by invoking its vertical or horizontal redundancy rules. (For our prior articles on the PTAB redundancy rules, click here and here.) However, this phenomenon may also reflect the formidable “fire-power” that can be mustered by some challengers (often multinational corporations) against patent owners.

For example, in December 2013, Subaru (together with a host of other car manufacturers) filed five IPRs against U.S. Patent No. 6,324,463 (relating to cruise control indicators). In October 2013, Apple filed four IPR petitions against U.S. Patent No. 7,010,536 (relating to multi-user networking systems). Similarly, Microsoft filed four IPR petitions in May 2013 against U.S. Patent No. 6,724,403 (relating to graphical user interfaces). By asserting different grounds in separate petitions, these challengers were apparently trying to minimize the likelihood of dismissal of any of their asserted grounds for invalidity based on redundancy.


Continue Reading If at First You Don’t Succeed: File, File And File Again

Much has occurred during the first year after the America Invents Act (AIA) established several new procedures for the public to challenge issued patents and a new administrative court to hear these cases. Here are some observations on the first year of this evolving practice.

1. Many More IPR Petitions Have Been Filed Than CBM Review Petitions.

Although Congress expected the Covered Business Method (CBM) review process would be widely used by irate businesses tired of dealing with so-called “business method” patents, only 67 CBM petitions were filed during the first year compared to nearly 500 petitions for Inter Partes Review (IPR). Many practitioners thought the more expansive grounds for challenge in CBM review (permitting challenges based on prior public uses and sales as well as prior art publications) would have piqued more interest, especially in tandem with recent Supreme Court decisions roundly criticizing non-technological patent claims. However, IPRs have been more widely invoked, probably reflecting the much larger number of non-business method patents being asserted in litigation.

2. The PTAB is Quite Willing to Initiate IPR Proceedings when a Petition is Filed

Over 86% of the IPR petitions filed in the first year have been granted –at least in part.
Continue Reading Lessons From The First Year Of Post Grant Proceedings In The U.S.

A petition for inter partes review (IPR) will not be granted “if, before the date on which the petition for such a review is filed, the petitioner or the real party in interest filed a civil action challenging the validity of a claim of the patent.”  35 U.S.C. 315(a)(1).  Recently, in Clio USA v. The Proctor and Gamble Company (IPR2013-00438), the PTAB held that a declaratory judgment action filed by Clio (petitioner) against the challenged patent prior to the request for the inter partes review, which had been subsequently dismissed without prejudice, did not bar the institution of the inter partes review.
Continue Reading A Declaratory Judgment Action that was Dismissed Without Prejudice Does not Bar the Institution of an IPR

Last week we reported on a case (Blackberry v. MobileMedia Ideas) in which a PTAB panel refused to terminate an inter partes review proceeding with respect to the patent owner despite a settlement reached by the parties.  This was not the first instance of the PTAB deciding to continue a review on its own.  Back in November 2013, another PTAB panel had reached a similar decision in a covered business method (CBM) patent review proceeding despite a similar settlement and a joint petition to terminate.  The PTAB decision on the merits of the CBM case was handed down on January 30, 2014, finding all four contested claims patent ineligible and invalid – despite a federal district court’s judgment in favor of patent owner on these same issues and the expiration of the patent in the interim.
Continue Reading PTAB Strikes Down Patent Claims — Despite Settlement and Request from Parties to Terminate Proceeding

A petition for inter-partes review (IPR) will be time barred if it is “filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.”  35 U.S.C. §315(b).  In St. Jude Medical, Cardiology Division, Inc. v. Volcano Corporation (IPR2013-00258), the Patent Trial and Appeal Board (PTAB) ruled that a counterclaim alleging infringement of a patent is a complaint within the meaning of Section 315(b) and hence starts the clock on the one year time period for filing an IPR to challenge that patent. 
Continue Reading The Time Limit for Filing an IPR After Commencement of Patent Litigation Applies to Counterclaims

Since we last discussed joinder in inter partes review (IPR) proceedings, the Patent Trial and Appeals Board (PTAB) has released two interesting orders that expand the case law on the topic.

In Fifth Third Bank v. Stambler, IPR2014-00244, Fifth Third Bank filed a petition for inter partes review, along with a motion to join IPR2013-00341. The petition was filed on December 9, 2013, more than a year after Fifth Third Bank was served with a complaint alleging infringement of the patent. On December 12, 2013 the Board granted a joint request by the parties to IPR2013-00341 to terminate.


Continue Reading Lack of Speed Kills – The Dangers of Waiting in the PTAB

The new Inter Partes Review (“IPR”) and Post-Grant Review (“PGR”)  procedures are similar to district court litigation in many respects: there are opportunities for discovery, depositions, adverse motion practice, and a trial. As such, many participants in these proceedings may wish to retain experienced litigation counsel, who may not be registered to practice before the USPTO.

The regulation authorizing counsel to appear pro hac vice is 37 C.F.R. 42.10(c) and provides:

The Board may recognize counsel pro hac vice during a proceeding upon a showing of good cause, subject to the condition that lead counsel be a registered practitioner and to any other conditions as the Board may impose. For example, where the lead counsel is a registered practitioner, a motion to appear pro hac vice by counsel who is not a registered practitioner may be granted upon showing that counsel is an experienced litigating attorney and has an established familiarity with the subject matter at issue in the proceeding.

The Patent Trial and Appeal Board (“PTAB”) recently clarified the procedures for filing a motion for admission pro hac vice, in IPR2013-00639. First, the motion shall be filed no sooner than 21 days after service of the petition, when the patent owner must file their mandatory notices. Any opposition must be filed within seven days after the motion, and no reply is allowed unless authorized by the PTAB.
Continue Reading Stranger in a Strange Land – USPTO Clarifies Rules for Pro Hac Vice Admission