Recent USPTO Activity May Signal Shift In Treatment Of Pharmaceutical Patents In AIA Proceedings
By Arlene Chow and Ernest Yakob, PhD, Hogan Lovells
The America Invents Act ("AIA") provides for adversarial proceedings for challenging patents in the United States Patent and Trademark Office ("USPTO") — including inter partes review (“IPR”) and post grant review (“PGR”) — which are faster, cheaper, and have a lower burden of proof than litigation in federal court. Although these proceedings were intended to curb litigation abuses by so-called "patent trolls,” a major criticism has been the perceived weakening of all patents, including patents in the traditionally "unpredictable" pharmaceutical field. In this article, we discuss certain patentee-friendly rule changes to AIA proceedings that have been proposed by the USPTO, as well as the ostensible recent trend of IPR decisions by the Patent Trial and Appeal Board ("PTAB") upholding the validity of pharmaceutical-related patents. We propose that the USPTO may have signaled a shift in its handling of pharmaceutical patents in AIA proceedings, and affirmatively acknowledged that the pharmaceutical field is in fact an "unpredictable" art with a higher threshold for invalidation than other technical fields.
The first sign that pharmaceutical patents could begin faring better in AIA proceedings was arguably the USPTO's announcement in March 2015 that it was considering a phased roll-out of general changes. The USPTO's public recognition of the need to improve AIA proceedings was a response to 37 written comments solicited by the USPTO, including a comment by the Pharmaceutical Research and Manufacturers of America (“PhRMA”) that highlighted the lopsided statistics favoring patent challengers in IPRs. The first phase of changes by the USPTO were primarily ministerial changes (such as increased page limits for certain briefs), which were quickly implemented in May 2015. However, in August 2015, the USPTO published a set of more substantive proposed rule changes and clarifications, many of which were intended to improve a patent owner's ability to defend its patent. For example, under the proposed rule changes, a patent owner would be permitted to rely on expert testimony in its preliminary response to a petition, allowing a patent owner to more effectively rebut a petitioner's arguments and evidence (which itself can include expert testimony). Additionally, because of the perception that a successful motion to amend requires a patentee to distinguish the amended claims over all prior art in existence, the USPTO clarified that the scope of relevant prior art is limited to "the prior art of record, including any art provided in light of a patent owner’s duty of candor, and any other prior art or arguments supplied by the petitioner." While not directed specifically to pharmaceutical patents, the changes suggest an affirmative effort by the USPTO to better balance the playing field. In turn, the pharmaceutical field — traditionally considered an "unpredictable" field in which the burden of proving obviousness is higher than other fields — could be expected to benefit from more balanced proceedings.
In any event, pharmaceutical patent owners already appear to be faring better than they had previously fared. In particular, since April 2015, PTAB has upheld the validity of all the challenged claims in four of five pharmaceutical-related IPR final written decisions. (For purposes of this analysis, separate final written decisions involving related patents are treated as a single decision.) Of particular interest are PTAB's final written decisions in Purdue Pharma L.P. v. Depomed, Inc. (IPR2014-00377, -378 and -379), in which PTAB upheld the validity of all of the challenged claims (directed to gastric retentive, controlled release dosage forms). Notwithstanding PTAB's finding that the several asserted prior art references collectively disclosed each limitation of the challenged claims, PTAB held that the petitioner had not met its burden of proving why or how a person of skill in the art would combine the prior art references with a reasonable expectation of success, a finding that is consistent with the premise that pharmaceutical inventions tend to lack predictability.
Additional evidence of increased deference by PTAB with respect to pharmaceutical patents is PTAB's recent treatment of IPR petitions by non-practicing entities, such as hedge funds, targeting pharmaceutical patents. Many commentators have derided such petitions — designed at least in part to manipulate the stock price of the patent owner — as an abuse of the AIA proceedings. To date, PTAB has denied institution of each of the three petitions that it has considered, albeit based on the substantive grounds asserted in the petitions; PTAB has not taken a stance on the propriety of these petitions. Still, PTAB's refusal to institute such IPRs filed by hedge funds against pharmaceutical patents — especially if this trend continues — may deter the filing of such petitions in the future.
To the extent AIA proceedings become less effective avenues for challenging pharmaceutical patents, this trend could also impact patents covering biosimilars. To date, several biosimilar manufacturers have chosen to challenge blocking patents via IPR, rather than the complicated "patent dance" of the Biologics Price Competition and Innovation Act ("BPCIA") or a declaratory judgment action in district court (initiated after submission of an application for FDA approval). However, AIA proceedings have their own disadvantages, perhaps most notably that an adverse final written decision can stop a petitioner from challenging the same claims (in later litigation or USPTO proceedings) on grounds that were raised or reasonably could have been raised in the AIA proceeding. Additionally, PGRs are limited to newer patents, and IPRs are limited to anticipation and obviousness arguments based on patents and printed publications. The extent to which biosimilar manufacturers continue to invoke AIA proceedings will therefore likely depend on whether such proceedings are perceived to offer a significantly greater chance of success compared to district court litigation. Although two IPRs have been instituted for patents covering biosimilars, no final written decisions have yet been issued, and this issue remains open. If the trend in other pharmaceutical IPRs is any indication, however, biosimilar manufacturers may not find PTAB to be a "death squad" for patents, as it was previously alleged to be.
Arlene Chow is a partner in Hogan Lovells’ New York office. She can be contacted at: arlene.chow@hoganlovells.com
Arlene Chow focuses her practice on patent litigation, post-grant proceedings, and due diligence in the pharmaceutical, biotechnological, and medical device industries.
Ernest Yakob, Ph.D. is an associate in Hogan Lovells’ New York office. He can be contacted at: ernest.yakob@hoganlovells.com
Ernest Yakob also focuses his practice on patent litigation, post-grant proceedings, and due diligence in the pharmaceutical, biotechnological, and medical device industries.