LSIPR 50 2017: Lars Kellberg—The challenge of IPRs

According to Lars Kellberg, corporate vice president and corporate patents of Novo Nordisk, the company is always prepared to combat a patent attack. Since the introduction of the inter partes review (IPR) system in the US, the company has had to reconsider its approach to protecting its innovations because, in its opinion, the IPR is weakening the patent system.

“Although the IPR is a new mechanism, the statistics already show that the likelihood of surviving an IPR is surprisingly low,” says Kellberg.

“This is especially surprising when you take into consideration that the US Patent and Trademark Office (USPTO) has carried out a thorough examination of the patent.”

Kellberg explains that IPRs are difficult to combat because they are a cheap way of challenging patents and give a patent challenger more incentive to proceed with action.

“Patents are critical for the pharmaceutical industry. We have relatively few patents but each patent is worth a lot. So if a blockbuster patent is invalidated, it can be detrimental for the company,” he says.

Kellberg explains that there are companies making a business from asserting patents of low value and extorting money from big corporations.

“It’s very expensive for a company to defend itself in court proceedings, and for this reason there has been a building momentum of challenging US patents because it is easier,” says Kellberg.

He adds: “The current legislation gives the party who wishes to challenge a patent a big advantage because it has months or maybe even years to prepare its case. On the other hand, once a patent challenge has been submitted, the patent owner has very limited time to prepare a defence.”

Kellberg says that he is “puzzled” by the low number of patent survivals in IPRs. According to statistics released by the USPTO, by the end of September 2016, 1,565 IPR petitions were filed. Including those IPR petitions, 1,683 cases were filed under the America Invents Act (AIA). In the 2016 fiscal year, 214 of the 350 (61%) AIA petitions in the life sciences were instituted for review and nearly 37% of claims were invalidated.

“I don’t think this is fair to patent owners,” he says.

Being prepared

Patent challenges are inevitable, and Novo Nordisk is always prepared, Kellberg says. The company carries the mindset that one day it will be subject to patent challenges, and on top of that acknowledges that the odds are against the patentee.

For this reason Novo Nordisk has prepared strategies for minimising its vulnerability to IPRs and any other invalidation actions.

“We always work under the assumption that our patents will be attacked at some point, so we hire outside counsel, we hire experts, and we prepare responses to a potential future challenge that may or may not even happen,” he says.

“You could say we spend more money up front, but we do that in order not to be caught off guard by a sudden challenge.”

Kellberg refers to the current political climate as being “anti-IP”. He points out that the European Commission, for example, is in the process of conducting a study of reviewing the entire pharmaceutical incentive model from scratch.

“The commission’s ‘Study on the economic impact of supplementary protection certificates, pharmaceutical incentives and rewards in Europe’ must be seen in the context of the European Council’s conclusions on strengthening the balance in the pharmaceutical systems in the EU and its member states,” Kellberg explains.

“This study may mean that our patent or patent term extension may be at risk,” he says.

The solution to problems surrounding IPRs and the anti-IP climate, Kellberg says, is to invest more in ensuring that Novo Nordisk’s patents are bulletproof.

Trade secrets

Another approach the company is taking to secure its inventions is to rely more on trade secrets.

“If we can’t enforce a patent, we will instead keep more things in secret,” says Kellberg, although he stresses that this is clearly not the best way to approach advancing the patent system.

“Patents make information publicly available, which means that the technological processes will proceed at a faster pace compared to when you do not patent.”

Kellberg says that with the weakening of the patent system, it has become necessary for companies to rely more on trade secrets because in some cases that is a more effective form of protecting inventions.

He has two primary goals: the first is to ensure protection of Novo Nordisk’s innovations and the second is to secure the company’s freedom of operation. He is also responsible for industrial design tasks to the extent that they are required.

Novo Nordisk also safeguards its position by creating awareness of IP among the research and development (R&D) team.

“It’s always important to make sure that all relevant staff at Novo Nordisk are acutely aware of the importance and value of patenting to our business,” says Kellberg.

“Because Novo Nordisk is such a big organisation, it needs every individual to understand patent matters and the importance of them. By doing that, Novo Nordisk maximises its ability to collaborate with the R&D team to optimise its patent position.”