In an unusual move to combat the perceived bias in favor of patent challengers at the U.S. Patent Office’s Patent Trial and Appeal Board (PTAB), the Irish drug company Allergan has decided to warehouse its key patents on the dry-eye drug Restasis with the Saint Regis Mohawk Tribe in upstate New York. Allergan generates over
In Covidien LP v. University of Florida Research Foundation Inc., the Patent Trial and Appeal Board (the “Board”) upheld a defense of sovereign immunity asserted by the University of Florida Research Foundation (the “Foundation”) and dismissed three Petitions for Inter Partes Review (“IPR”) filed by Covidien LP (“Covidien”) against a patent owned by the Foundation. (See IPR2016-01274, IPR2016-01275, IPR2016-01276) The Board relied on the Supreme Court’s decision in Fed. Mar. Comm’n v. South Carolina State Ports Auth., 535 U.S. 743 (2002) (“FMC”) in its determination that the sovereign immunity defense applies to IPR proceedings, and it concluded that the Foundation was eligible to assert the defense as an “arm of the State” under Manders v. Lee, 338 F.3d 1304, *1309 (11th Cir. 2003) (en banc).
The Eleventh Amendment provides that the “judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another state, or by citizens or subjects for any foreign State.” The Supreme Court has interpreted the Eleventh Amendment as a grant of immunity to the States against certain adjudicative proceedings brought against them by private parties. In FMC, the Supreme Court held that the sovereign immunity defense applied to administrative adjudications before the Federal Maritime Commission, grounding its determination in the similarities between the Commission’s proceedings and civil litigation. The Board relied on the Supreme Court’s analysis in FMC in determining whether the sovereign immunity defense could similarly be implicated in IPR proceedings.
Covidien filed IPRs against the Foundation as a counter-action to a breach of license suit brought by the Foundation against it. The Foundation argued that the IPRs should be dismissed, asserting that it was an arm of the State of Florida, and as such entitled to sovereign immunity under the Eleventh Amendment. The Board’s decision was limited to the Foundation’s sovereign immunity defense. This decision appears to be the first extension of the sovereign immunity defense to an IPR proceeding.
Covidien argued that under FMC the sovereign immunity defense should not apply to IPR proceedings, distinguishing IPRs from civil litigation. Most notably, Covidien argued that IPRs are adjudications directed against the validity of a patent itself, unlike civil litigation which resolves disputes between two parties. Thus, Covidien argued, the subject of the IPRs were the Foundation’s patents, not the Foundation itself, and therefore the IPRs were not proceedings brought against the State. Covidien also warned that implicating the sovereign immunity defense in IPR proceedings would effectively insulate invalid patents from scrutiny just because they were owned by a State, an outcome that would thwart the purpose of creating IPRs. In addition, Covidien noted that if the Foundation’s defense was upheld, a private party could never counter a State’s infringement action by petitioning for IPR proceedings, giving States a stronger position in district court actions.
Relying on FMC, the Board rejected Covidien’s distinctions between IPRs and civil litigation. The Board noted that IPRs are adversarial proceedings between two parties decided by an impartial adjudicator, the Board. The Board also likened the discovery rules and procedures of IPRs with those in civil litigation, and noted that final decisions by the Board created issue estoppel. Additionally, the Board noted that the Federal Circuit had previously held that interference proceedings can be characterized as a lawsuit when determining whether sovereign immunity can be applied in Vas-Cath, Inc. v. Curators of University of Missouri, 473 F.3d 1376 (Fed. Cir. 2007). Thus, the Board held that the similarities between civil litigation and IPR proceedings were sufficient to implicate the sovereign immunity defense in IPR actions under FMC.
In the case of Phygenix, Inc. v. ImmunoGen, Inc., the Court of Appeals for the Federal Circuit (CAFC) held that the petitioner (Phygenix) that had unsuccessfully challenged certain claims of ImmunoGen’s U.S. Patent No. 8,337,856 (“the ‘856 patent”) in an inter partes review (IPR) lacked standing to appeal a Patent Trial and Appeal Board (PTAB) decision that affirmed the validity of the challenged claims because Phigenix had “not offered sufficient proof establishing that it has suffered an injury in fact…” Although the Federal Circuit has required appellants to demonstrate standing in other proceedings, the Phygenix case is the first time this doctrine has been applied to bar an appeal of a final written decision in an IPR proceeding.
ImmunoGen owns the ‘856 patent, which is directed to an antibody-maytansinoid conjugate that is purportedly useful in combating a variety of cancers. Genentech has a worldwide exclusive license to the ‘856 patent for producing the drug Kadcyla®. Phigenix in turn owns U.S. Patent No. 8,080,534 (“the ‘534 patent”). Phigenix alleged that the ‘534 patent covers Genentech’s activities relating to Kadcyla and hence the subject matter claimed in the ‘856 patent.
The America Invents Act (AIA) provides that “a person who is not the owner of a patent may file with the Office a petition to institute an inter partes review of the patent.” 35 U.S.C. 311(a). The AIA does not impose a standing requirement for a challenger to request the institution of an inter partes review (IPR) of a patent. However, the patent appellate court recently held that an IPR petitioner must have standing in order seek the appellate review of a PTAB’s final decision.
Phigenix sought inter partes review of the claims of the ‘856 patent based on an obviousness challenge. The PTAB initiated a trial but ultimately found the challenged claims to be nonobvious. Following the final written decision, Phigenix appealed the PTAB’s decision to the CAFC. In response, ImmunoGen filed a motion to dismiss arguing that Phigenix lacked standing to appeal the PTAB’s decision. A single judge of the CAFC denied ImmunoGen’s motion but requested that the parties file briefs addressing the standing issue.
Phigenix provided declarations in support of its standing to appeal the PTAB’s decision and argued that ImmunoGen’s ‘856 patent increases competition between itself and ImmunoGen and increased competition represents a cognizable injury. In particular, Phigenix argued that “[t]he existence of ImmunoGen’s ‘856 patent has … encumber[ed] Phigenix’s licensing efforts while ImmunoGen receives millions of dollars in licensing revenue.” Phigenix did not, however, contend that it faced the risk of infringing the ‘856 patent, or that it was an actual or prospective licensee of the ‘856 patent, or that it planned to take any action that would implicate the ‘856 patent.
The CAFC emphasized that a party’s standing to sue is a doctrine that is rooted in the case or controversy requirement of Article III of the U.S. constitution. In particular, in order to have standing, an appellant “must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the [appellee], (3) that is likely to be redressed by a favorable judicial decision.” Further, the CAFC stressed that although Article III standing is not necessarily a requirement to appear before an administrative agency, “an appellant must nonetheless supply the requisite proof of an injury in fact when it seeks review of an agency’s final action in a federal court.” …
Continue Reading Federal Circuit Requires Standing To Appeal An IPR Decision
The Patent Trial and Appeals Board has released another decision interpreting 35 U.S.C. 315(b), regarding the time bar for filing a petitions for inter partes review (IPR). Specifically, the PTAB has again been asked to interpret what the phrase “served with a complaint alleging infringement of the patent” means. This rather straightforward language has resulted in two recent opinions which help define what actions begin the clock on the 1-year deadline to file an IPR.
As we discussed in January, the time limit for filing an IPR applies to counterclaims alleging patent infringement, as well as complaints alleging infringement, as defined in the statute. In a more recent case, Amkor Technology, Inc. v. Tessera, Inc., IPR2013-00242, the PTAB determined that an allegation of infringement in a Federal arbitration proceeding does not trigger the one-year time bar under Section 315(b).