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Paul Zimmerman
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A Different Route: Challenging Orange Book Patents Via Inter Partes Review

Since the passage of the America Invents Act (AIA) in 2012, and the corresponding implementation of the inter partes review (IPR) process, patent challengers have been utilizing the Patent Trial and Appeal Board (PTAB) as an alternative venue for patent adjudication. The IPR process permits anyone other than the patent owner to challenge a patent's validity for alleged obviousness or lack of novelty based on patents or printed publications. This has become an increasingly popular avenue for challenging “orange book” pharmaceutical patents, many of which are simultaneously at issue in Hatch-Waxman / Abbreviated New Drug Application (ANDA) litigation in the federal courts.

In a recent Supreme Court decision, Cuozzo Speed Technologies, LLC v. Lee, 579 U.S. ___, No. 15-446, 2016 WL 3369425 (U.S. June 20, 2016), the Court rejected a challenge to the IPR process, upholding the ability of the PTAB to apply the broadest reasonable interpretation (BRI) of patent claims during an IPR proceeding. The Supreme Court’s decision in Cuozzo strengthens the foundation of the PTAB’s authority in the U.S. patent landscape.

Generally, the IPR process is very favorable to petitioners.  According to USPTO statistics through the end of April 2016, of all trials instituted and completed, 72% have resulted in all instituted claims being invalidated. These types of statistical trends will clearly make the PTAB and the IPR process an attractive alternative to traditional patent litigation. However, in the ANDA patent litigation space, there are some additional strategic considerations that a petitioner/patent challenger must consider before deciding to file a request for an IPR.

Different standards at the PTAB vs district court

As noted above, the PTAB applies the broadest reasonable interpretation to patent claims. See 37 C.F.R. § 42.100(b). District courts interpret claims using the “ordinary and customary meaning” standard (see Phillips v. AWH Corp., 415 F.3d 1303, 1312–18 ((Fed. Cir. 2005) (en banc)). This difference may result in the PTAB considering a broader range of prior art than the district court. Additionally, the standard for proving invalidity in an IPR is a preponderance of the evidence.  See, e.g., Bio-Rad Laboratories, Inc. v. California Institute of Technology, et. al., IPR2015-00010, Paper 29. The standard for proving invalidity in a district court is clear and convincing evidence. See Microsoft Corp. v. I4I Ltd. P'ship, 564 U.S. 91, 95 (2011). Similarly, the PTAB does not presume the subject patent is valid, whereas the district court must. See 35 U.S.C. § 282(a).

Extra bite at the apple

The timeline of an IPR from institution to decision is 12-18 months (See 35 U.S.C. §§ 316 (a)(11)). Whereas the average timeline of a district court ANDA litigation from institution to trial is 2.4 years. Therefore, by filing an IPR, the challenger is likely going to receive a decision from the PTAB before the conclusion of the district court litigation.

If the PTAB decision invalidates the patent, this will end the district court litigation, which will save time and cost compared to traditional district court litigation. On the other hand, if the PTAB does not invalidate the patent, the challenger retains the right to make certain arguments in the district court. The IPR process is limited to reviewing challenges to patent validity based on prior art. Thus, the challenger could still present the district court with arguments based on non-infringement or non-prior art invalidity. Further, although the IPR statute includes an estoppel provision—that provision is limited.

The section of the AIA related to IPRs includes an estoppel provision that prohibits an IPR petitioner from later raising before the PTO, any district court, or the U.S. ITC, any basis for invalidity that the petitioner “raised or reasonably could have raised” during the IPR. 35 U.S.C. § 315(e). Estoppel from an IPR attaches when the PTAB issues a final written decision. 

However, estoppel attaches only to those claims that are addressed in a final written decision. Further, there is no estoppel if the PTAB denies institution of the IPR.  Synopsys, Inc. v. Mentor Graphics Corp., 814 F.3d 1309, 1316 (Fed. Cir. 2016) (“The validity of claims for which the Board did not institute inter partes review can still be litigated in district court. We see no inconsistency in this.”). Therefore, arguments based on claims that were not addressed by the PTAB in its final decision are not estopped from being made before a district court.

180 Day Exclusivity

One benefit of the ANDA process is that the first filer of an ANDA is granted exclusivity wherein the FDA will not grant final approval of other ANDAs with Paragraph IV certifications for 180 days. See 21 U.S.C. § 355(j)(5)(B). The 180 day exclusivity period begins either from the date the filer begins commercial marketing of the drug or from the date of a court decision finding the patent invalid, unenforceable or not infringed, whichever is first. See id. It is unsettled whether an IPR decision would qualify as a “court decision” under the statute to trigger the 180 day period. 

Further, even if the first filer qualifies for the 180 day exclusivity period, it is unclear if an IPR decision would trigger the “failure to market” forfeiture provision. Under the failure to market provision, if the first filer fails to market its generic drug within the timeline proscribed by the statute, the filer will lose the 180 exclusivity period. Id. One of the triggering events under that timeline is the later of 75 days after the court enters “a final decision, from which no appeal has been or can be taken, that the patent is invalid or not infringed”. Id. Again, it is unclear if an IPR ruling would qualify as such a decision.

Complex Strategic Considerations

With multiple forums available to patent challengers, both in IPR proceedings and district court ANDA litigation, parties may now be selective in their invalidity strategies. For example, challengers may elect to make use of the PTAB’s expertise, as well as the lower burden of proof in IPR proceedings to present their most technical arguments in an IPR setting. The challenger could then focus their efforts during any concurrent district court litigation on other grounds of invalidity, such as arguments regarding patentable subject matter under 35 U.S.C. § 101, written description or enablement under 35 U.S.C. § 112, or prior art under 35 U.S.C. §§ 102 and 103 that is unavailable for use in an IPR. Before charting a strategic course, patent challengers should consult with experienced patent counsel to ensure that they are adopting the most prudent, efficient and technically savvy approach possible.

This blog post is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.