Jiri Kaderabek /
29 September 2014Big PharmaArlene Chow and Peter Noh

US bio/pharma patents under attack

ore and more pharmaceutical companies are turning to the new US Patent and Trademark Office (USPTO) proceedings available under the America Invents Act (AIA) as a way to attack the validity of bio/pharma patents.

To date,  inter partes review (IPR) proceedings, in particular, have been the focal point of post-AIA activity and, according to Patent Trial and Appeal Board (PTAB) statistics dated September 18 this year, 5.6% of IPR petitions relate to bio/pharma patents.

Those petitions are increasing. Over the past five and a half months alone, the number of IPR petitions of bio/pharma patents has almost doubled.

After PTAB’s issuance in June of its first final written decision invalidating all challenged claims in four bio/pharma patents, it can be anticipated that the upswing in bio/pharma IPRs will continue. Moreover, alternative USPTO proceedings, such as post-grant review (PGR) and covered business method (CBM) reviews are additional, attractive avenues available to patent challengers.

Why are post-grant procedures attractive?

Post-grant procedures provide clear advantages compared to district court litigation, such as faster resolution (12 to 18 months), lower costs, earlier settlement and a lower invalidity standard. To date, PTAB’s final written decisions have heavily favoured patent challengers. As of May 1 this year, in 84% of trials with final written decisions, PTAB found at least one claim unpatentable; in more than half the trials with final written decisions, PTAB found all the instituted claims unpatentable.

Because abbreviated new drug application (ANDA) disputes relating to generic drug entry dominate the bio/pharma patent litigation landscape, it is fair to assume that generic companies will comprise the bulk of patent challengers in the bio/pharma post-grant procedure landscape as well.

Indeed, later ANDA filers have a strong incentive to file IPRs against all patents for branded drugs listed in the Orange Book, which identifies drugs approved by the US Food and Drug Administration on the basis of their safety and effectiveness. A final decision invalidating those patents based on the subsequent filer’s IPRs could trigger forfeiture of the first ANDA filer’s 180-day exclusivity—forfeiture can occur 75 days after a court enters a final decision with respect to any ANDA applicant.

PTAB’s first bio/pharma ipr decisions

On June 20, 2014, PTAB issued its first final written decisions invalidating all challenged claims in four bio/pharma patents. These final written decisions resolved four IPRs on four patents generally relating to folate compositions for treating folate deficiencies. Petitioner Gnosis Pharmaceuticals filed three IPRs (IPR2013-00116, IPR2013-00118, and IPR2013-00119) against three patents (US patent numbers 5,997,915; 6,673,381; and 7,172,778) owned by South Alabama Medical Science Foundation (SAMSF); Gnosis also filed one IPR (IPR2013-00117) against US patent number 6,011,040 owned by Merck & Cie.

PTAB found all of the challenged claims in SAMSF’s three patents unpatentable as obvious over prior art combinations. Gnosis relied primarily on a combination involving a European patent application (Serfontein) and a US patent (Marazza). Gnosis asserted that Marazza teaches the claimed folate compound, and that a person of ordinary skill in the art (POSA) would use Marazza’s folate compound in Serfontein’s preparations to arrive at the challenged claims.

"the patent owner’s evidence and arguments are crucial. PTAB placed more emphasis on dismissing the patent owner’s case than the petitioner’s."

SAMSF argued that the art discouraged a POSA from considering folate forms apart from folic acid. SAMSF asserted that folic acid was the “gold standard” and that the claimed folates were considered inferior. PTAB was not persuaded, finding that a POSA would not have avoided alternatives just because a standard is suitable and works well, and that SAMSF did not credibly explain why the inferior properties would discourage a POSA from using the claimed folates.

SAMSF also cited to secondary considerations of non-obviousness based on five products. SAMSF submitted evidence of commercial success, licensing, copying, long-felt need, unrecognised problem, unexpected results, scepticism, and praise. But PTAB determined that the secondary considerations were insufficient because there was no nexus between the evidence and the claimed invention; SAMSF’s evidence was either based on formulations featuring combinations not reflected by the claims or tied to a prior art folate.

For similar reasons PTAB likewise found all of the challenged claims in Merck’s patent unpatentable as anticipated by Serfontein and obvious over Serfontein and Marazza.

As to anticipation, Gnosis argued that prior art teaching a “suitable active metabolite of folate” disclosed the claimed folate; a POSA would have envisaged each member of a limited class of eight relevant compounds that includes the claimed folate. PTAB agreed, dismissing Merck’s argument that a POSA would have envisioned “thousands” of sub-species within those eight compounds.

There are several lessons to be learned from the first final written decisions on bio/pharma patents. First, just as in other sectors, PTAB is willing to invalidate all the challenged claims. Second, PTAB is willing to invalidate all challenged claims on both anticipation and obviousness grounds. Based on these two lessons alone, the first final written decisions will incentivise additional bio/pharma challengers to pursue post-grant proceedings.

Third, the patent owner’s evidence and arguments are crucial. PTAB placed more emphasis on dismissing the patent owner’s case than the petitioner’s. Fourth, the patent holder must establish a nexus between secondary considerations of non-obviousness and the claimed invention.

As for these latter two lessons, it is clear that patent holders anticipating post-grant proceedings should prepare for them as early as possible. This is particularly the case since the patent owners have only limited time to respond preliminarily to challengers’ petitions for IPRs: just three months.

Additional post-grant procedures

Even though IPRs have been the focal point to date, they are not the only available post-grant procedures available to patent challengers. Although similar to IPRs, PGRs include some important differences. They are not limited to prior art challenges; a PGR must be filed no later than nine months after the patent has been granted; and PGRs apply only to patents with a priority date on or after March 16, 2013.

Because of this last requirement, there have been few PGRs to date. But, as bio/pharma patents issue on a rolling basis, they will be vulnerable to attack via PGR.

Even CBMs have been filed against bio/pharma patents. CBMs are restricted to “a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.” CBMs are not limited to prior art-based challenges. And CBMs need not be filed within one year of service of a complaint for patent infringement.

Over the past three months, generic drug manufacturers Amneal Pharmaceuticals, Par Pharmaceuticals and Roxane Laboratories have filed CBMs challenging six Orange Book patents covering risk evaluation and mitigation strategies (REMS) for Xyrem (sodium oxybate), case numbers CBM2014-00149, CBM2014-00150, CBM2014-00151, CBM2014-00153, CBM2014-00161, and CBM2014-00175.

PTAB has yet to accept these CBMs. A threshold determination for PTAB is whether REMS-based patents relate to a “financial product or service”. The generics’ rationale is as follows:

•  The challenged claims simply recite methods for centralised distribution of retail goods, specifically drugs, through a central pharmacy that encompasses steps such as interfacing with financial businesses such as insurance companies in order to secure payment for the prescription, rendering them incidental to a financial product or service; and

•  As the USPTO has recognised, the AlA’s legislative history establishes that “financial product or service” should be “interpreted broadly”, encompassing patents “claiming activities that are financial in nature, incidental to a financial activity or complementary to a financial activity”.

In the interim, at the minimum, for pharmaceutical companies with REMS-related patents, there is an additional risk of CBM patent challenges.

In view of the current increase in IPR filings alone, it is clear that the USPTO post-grant procedures are important considerations for any patent holder or challenger in the bio/pharma patent context. Patent challengers should view post-grant procedures as attractive alternatives to district court litigation; patent holders should consider their strategies now in anticipation of post-grant challenges taking place in the future.

Arlene Chow is a partner in Hogan Lovells’ New York office. She can be contacted at:

Peter Noh is an associate in Hogan Lovells’ New York office. He can be contacted at:

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