Inter Partes Review Patent Challenges Bedevil Biopharmas

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By John T. Aquino

Nov. 15 — The PTO's inter partes review process to invalidate existing patents continues to rattle biopharma patent owners, conference panelists said Nov. 15.

The number of IPR petitions is growing, and method and composition claims are the most likely to be found unpatentable by the Patent and Trademark Office’s Patent Trial and Appeal Board, said Robert F. Shaffer, an attorney with Finnegan, Henderson, Farabow, Garrett & Dunner LLP in Washington, based on the law firm’s analysis of PTO data.

But James Harrington, senior vice president and chief intellectual property counsel for Dublin-based Shire Pharmaceuticals, said the problem isn't with the IPR process but with the PTO’s initial review of the patents.

He cited Finnegan’s research, saying, “63 percent of the IPR petitions for which trials are instituted are for biopharma claims. It should be 5 or 6 percent. The PTO needs to be getting it right. We need to have certainty in our patents. When they come out, they should be right.”

The session, titled “Five Years of Living with the AIA: The Impact of IPR on Pharmaceutical Patents,” was part of the BIO IP Counsels Committee Conference in Savannah, Ga.

Faster, Maybe Not Cheaper, Maybe Misused

The IPR process was created by the America Invents Act to allow third-party challenges to the validity of issued patents on the grounds that the claims were anticipated or rendered obvious by prior patents or publications. It was designed to be a faster and less expensive method of challenging patents than federal district court litigation.

Nicole A. Conlon, a Finnegan associate attorney, said the firm’s analysis shows the process is achieving the PTAB’s goals for speed. But she noted that 83 percent of IPRs have parallel proceedings ongoing in federal district court. Harrington said this “only points out that the IPR process isn’t cheap after all.”

The Biotechnology Innovation Organization in Washington, which sponsored the conference, has said the IPR process is being misused by hedge fund companies whose motive isn't to develop their own products but to make money by selling company stocks short.

The Coalition for Affordable Drugs (CAD), which was created by hedge fund manager Kyle Bass, has filed three dozen IPR petitions against biopharma patents.

Bass’ IPR Biopharma Challenges

The CAD has challenged the validity of several Shire patents through the IPR process. On Oct. 21, 2015, the PTAB found most of the claims of Shire’s patent on Gattex (teduglutide), a treatment for short bowel syndrome, invalid. But on Oct. 5, 2016, the PTAB upheld the validity of Shire’s only patent on its colitis drug Lialda (mesalamine) against a CAD IPR challenge.

“If the IPR institution rate for biopharmas were lower, Kyle Bass wouldn’t be in this game,” Shire’s Harrington said. “Fix the patent office, this goes away. Bass brilliantly figured out that once it’s filed there’s a good chance the petition will be instituted and then the patent may fall.”

Harrington said Shire’s stock price dropped 30 percent when the CAD’s petitions were instituted. “You may notice that Bass hasn’t filed any petitions recently. He has indicated there are less time-consuming ways to make money,” Harrington said.

Criticism of IPR, Advice

Harrington offered more criticism of the IPR process.

When Conlon said the PTAB has issued only eight precedential opinions, which are the only decisions binding on future IPR cases, Harrington said: “This makes it easier for them to do anything they want.”

He disagreed with the PTAB’s statements that the patents it has invalidated have been weak ones. “I would argue that they are the strongest patents, the ones we have worked on the most, the ones that are being commercially challenged.”

He gave some advice to those whose products are the subject of an IPR petition: “Get experts on board fast. It’s impossible to win these things without an expert.”

Harrington said an IPR proceeding is more like an appellate argument than it is a litigation. “You’ve got to pick the right counsel for that, and it might not be the same person as your litigation counsel. And get your in-house patent counsel involved from the beginning.”

Harrington concluded, “The IPR process is what it is. We’ve used it against other companies. If a petition against our patent is not instituted, we view it as a win just like they do if it’s instituted. If it’s filed and not instituted, analysts think the patent becomes stronger.”

To contact the reporter on this story: John T. Aquino in Washington at jaquino@bna.com

To contact the editor responsible for this story: Randy Kubetin at RKubetin@bna.com

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