Celgene calls for Kyle Bass sanctions

Pharmaceutical company Celgene has requested that the US Patent and Trademark Office (USPTO) sanctions hedge fund manager Kyle Bass and his company the Coalition for Affordable Drugs, arguing that the inter partes review (IPR) petitions he has filed are “abusive” and a “tool to affect the stock prices of public companies”.

Celgene filed a motion at the USPTO’s Patent Trial and Appeal Board (PTAB) on Tuesday, July 28, in which it called for Bass to face sanctions and for his two IPR cases against the company to be dismissed.

At the centre of the dispute are two patents—US numbers 6,045,501 and 6,315,720—owned by Celgene, both of which Bass has argued should be invalidated.

Bass filed an IPR against the ‘720 patent, which covers a method for helping a patient avoid the adverse side effects of drugs used to treat teratogens, in April this year.

The ‘501 patent, called “Methods for delivering a drug to a patient while preventing the exposure of a foetus or other contraindicated individual to the drug”, was challenged by Bass in May.

But Celgene’s motion said both Bass and the coalition lack any “legitimate competitive interest” in the validity of the challenged patents, unlike generic drug companies, which “may seek to invalidate patents that would otherwise block their ability to market competing products”.

Celgene accused Bass of employing a “short activity strategy”. Such a strategy involves Bass filing IPRs against patents owned by big pharma companies to “rattle investors”, according to Celgene.

After the stock price of a company subsequently drops, Bass would “bet against, or short, the shares of companies ... and wager on rivals that could benefit”, the motion said.

Celgene claimed in the motion: “IPRs were not designed for this purpose, which is nothing more than another nefarious means ... to line their [Bass and the coalition] own pockets at the expense of public pharmaceutical companies and their shareholders."

Bass’s hedge fund Hayman Capital Management, however, has defended his strategy.

In April, a spokesperson for Hayman, a supporter of the coalition, told LSIPR that the petitions “fulfil the defined purpose of the IPR process”.

“Congress created the PTAB and IPR process with the goal of streamlining challenges to illegitimate patents,” the spokesperson said.

At the time of publication Bass has filed 16 IPRs against life sciences companies, including Jazz Pharmaceuticals, Pharmacyclics and Biogen.

A spokesperson for Celgene told LSIPR: "Celgene is confident in the strength of its intellectual property and believes that these IPRs are without merit and will continue to vigorously defend its patents."

Sarah Spires, patent attorney at law firm Skiermont Puckett and representing Bass in the dispute, had not responded to a request for comment at the time of publication, but we will update the story should she get in touch.