Choose your court

The America Invents Act introduced several new procedures for challenging patent validity at the US Patent and Trademark Office (USPTO). One of those procedures is the inter partes review (IPR), which became available on September 16, 2012. The IPR is a procedure for challenging patentability based on patents and printed publications.

Anyone other than the patent owner can file an IPR petition. The IPR is conducted before a tribunal of administrative judges who are members of the Patent Trial and Appeal Board (PTAB). The IPR process is called a trial, although it differs significantly from a trial in a civil action in terms of judicial standards, procedures and presumptions. IPRs are attractive to parties seeking to challenge the validity of patents because they offer reduced cost and time.

Since September 2012, more than 3,100 IPR petitions have been filed. While the majority of IPRs filed cover the mechanical and electrical arts, the number of IPRs filed related to the biopharmaceutical space has steadily increased from nine in 2012 to 84 filed to date this year. As a result, biopharma IPRs account for an estimated 7.7% of all IPRs (based on USPTO statistics).

Biopharma parties considering or engaging in IPR practice should be aware that there are a number of significant differences between district court and IPR practice. This article explores a few of them, including their implications, in the biopharma area.

Governing body

One key difference between district court litigation and IPR practice is the governing body. In the case of IPRs, trials are conducted by a panel of three administrative law judges with technical degrees. In contrast, a single judge presides over district court patent litigation. Moreover, district court judges typically do not have technical backgrounds. To the extent they do, the chance their background relates to the technology at issue is unlikely.

Aided by their technical expertise, PTAB judges tend to understand the technology in suit more easily and are able and willing to drill down into the details, including scrutinising arguments based on inherency or unexpected results. For example, in Lupin v Vertex Pharmaceuticals,Vertex contended that fosamprenavir, a prodrug of amprenavir, had improved pharmacokinetics, decreased gastrointestinal side effects, and different resistance profiles as compared to its parent drug amprenavir.

The PTAB found Vertex’s presentation of unexpected results commensurate in scope with narrow claims encompassing only the common salt forms of fosamprenavir, but not broader claims encompassing phosphate ester forms of fosamprenavir. Accordingly, the PTAB granted the petition covering the broader claims but not the narrower ones.

Given the technical nature of biopharma patents, patent owners and petitioners engaging in IPR practice need to pay attention to the technical details of the case, and be able to articulate technically sound rationales for their obviousness and anticipation arguments, to a greater extent than in district court.

Claim construction

A second difference relates to claim construction. District courts construe patent claims according to the principles that the US Court of Appeals for the Federal Circuit articulated in its en banc decision in Phillips v AWH Corp. Under Phillips, claim terms are given “the meaning that [a] term would have to a person of ordinary skill in the art in question at the time of the invention.” Claims are construed after considering the entire record before the court, taking into consideration both intrinsic evidence (the claims, specification and prosecution history) as well as extrinsic evidence (dictionary definitions and expert testimony).

In contrast to the Phillips standard, PTAB judges interpret claims using the “broadest reasonable construction in light of the specification of the patent in which [they] appear.” Under the broadest reasonable interpretation standard, claim terms are given their “ordinary and customary meaning”, as would be understood by one of ordinary skill in the art at the time of the invention. As a result, the PTAB is reluctant to read limitations into the claims unless the patent owner specifically defines a term in the specification.

In the context of biopharma, parties should expect broader constructions in IPR as compared to district court litigation. For example, claims directed towards formulations or dosing regimens for treating diseases will not necessarily be interpreted to require a particular level of efficacy unless the patent owner has defined efficacy in the specification. One consequence is that these claims are potentially easier to invalidate in an IPR versus the district court.

“In the context of biopharma, parties should expect broader constructions in IPR as compared to district court litigation.”

Objective evidence of non-obviousness

A third way in which IPR litigation differs from district court proceedings is the reliance on objective evidence of non-obviousness. Perhaps on account of their technical backgrounds, PTAB judges are often more sceptical than a district court judge with respect to objective evidence of non-obviousness, including evidence of commercial success, long-felt need, and copying. The most common reason why the PTAB rejects a patent owner’s secondary consideration arguments is for failure to establish a nexus between the claimed subject matter and the objective indicia argued by the patent owner.

For example, in BioMarin Pharmaceutical v Genzyme Therapeutic Products, the PTAB concluded that the patent owner failed to show a nexus between the claimed invention and its evidence of secondary considerations. The challenged claim was directed to biweekly dosing of acid alpha glucosidase (GAA). The patent owner argued several lines of objective evidence to demonstrate the non-obviousness of the invention, submitting evidence in support of long-felt need, scepticism, praise and commercial success.

The PTAB did not find this testimony persuasive, concluding that the patent owner had not presented secondary considerations related to the merits of the biweekly dosing of therapeutic compositions of GAA. Rather, the PTAB found the evidence submitted related to the merits of therapeutic compositions of GAA, which were previously brought to market by the patent owner and therefore known in the art.

In addition to filing patents covering new drugs, it is common for biopharma companies to file additional patents covering altered formulations or dosing regimens, the validity of which is bolstered by evidence of commercial success or long-felt need. On account of the PTAB’s enhanced scrutiny of objective evidence of non-obviousness, patent owners may find it more difficult to find the opportunity to tell their patentability story, so evidence may be attributed to the original product as opposed to the altered dosing or formulations subsequently claimed.

Standing requirement (or lack thereof)

A final key difference relates to the parties that can initiate IPR proceedings versus district court litigation. A party wishing to challenge the validity of a patent in a district court must have standing to bring suit: ie, the plaintiffs must have sustained or will sustain direct injury or harm and that harm must be redressable. No such similar requirement exists for IPRs.

According to title 35, section 311(a) of the US Code, any party other than the patent owner may file a petition to institute an IPR of the patent. The lack of a standing requirement in IPR practice has led to the advent of ‘reverse trolls’—non-practising entities (NPEs) that sue patent owners to invalidate patents, as opposed to NPEs in the software and hardware space that assert patents of questionable value against others.

In one form of ‘reverse patent trolling’, hedge fund manager Kyle Bass and his Coalition for Affordable Drugs have filed 16 IPR petitions against patents owned by seven pharmaceutical companies covering well-known brand name drugs in an alleged effort to drive down drug costs for the public.

However, some observers suspect that Bass and his investors have filed their IPR petitions purely for financial gain. Bass has reportedly bet against the targeted pharma companies by taking a short position on their stock, assuming that the filing of the IPR petition would cause stock prices to fall. To date, the PTAB has yet to institute any petitions asserted by hedge funds, which would typically lack standing to challenge the validity of patents in district court.

In June, legislation was proposed to address such alleged ‘reverse troll’ filings, including a proposal to require that a party has been sued or threatened with a suit before it can file an IPR petition.

As the popularity of IPRs in the bio-pharma space continues to grow, petitioners and patent owners have to be cognisant of the differences between IPR proceedings and district court litigation. These different forums present both challenges and opportunities, which require all parties to adopt different offensive and defensive strategies.

Tasha Francis is an associate at  Fish & Richardson. She can be contacted at: tfrancis@fr.com

Dorothy Whelan is a principal at Fish & Richardson. She can be contacted at: whelan@fr.com