OFFENSIVE AND DEFENSIVE STRATEGIES
FOR POST GRANT CHALLENGES IN THE
LIFE SCIENCES
Louis Beardell, Jr. – Morgan Lewis & Bockius LLP, Partner, Intellectual Property Practice
Eric Dichter – Johnson & Johnson, Assistant General Counsel - Patents
Maureen Gibbons – Bristol-Myers Squibb Co., Senior Corporate Counsel
John Gorman – Morgan Lewis & Bockius LLP, Partner, Litigation and Intellectual Property Practices
Stephen Kalinchak – Lundbeck, Vice President Global R&D Patents
http://delvacca.acc.com
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USPTO Post Grant Proceedings
• Post grant proceedings are used to challenge issued
patents before the U.S. Patent and Trademark Office
instead of District Court
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USPTO Post Grant Proceedings
• America Invents Act (AIA) introduced proceedings
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conducted by the Patent Trial and Appeal Board (formerly
the Board of Patent Appeals and Interferences)
Most rules went into effect on September 16, 2012
There is no obligation for a potential challenger of a
granted patent to request post grant review of a patent
A potential challenger is free to enter into a license
(assuming a license is available)
USPTO post grant review strategy is one component of a
global patent strategy
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USPTO Post Grant Proceedings
Post Grant Proceedings include:
• Inter partes review (IPR)
• Post grant review (PGR)
• Reexamination (Ex Parte Reexam)
• The transitional post grant review for covered business
method patents (CBM)
• Derivations
• Supplemental
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Inter Partes Review
• Participation by both 3rd party requestor and patent owner
3rd Party
Requestor
Patent Owner
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Inter Partes Review
• Applicable to any patent
• Prior art to be considered is confined to prior patents and printed
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publications
Standard: a reasonable likelihood that the petitioner would prevail
with respect to at least one of the claims
Judge will have patent, scientific/engineering backgrounds
Judge’s experience adjudicating matters will vary
Either party can appeal an adverse final decision to CAFC
DJ Plaintiffs in a court action challenging the validity patent are not
permitted to initiate request (does not apply to counterclaim in patent
infringement suit)
DJ action filed on or after the date an inter partes review petition is
filed will be stayed unless patent owner files an infringement action or
moves to lift the stay
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Inter Partes Review
• Conducted by three-judge panel of Patent Trial and Appeal Board
• Proof Standard: Preponderance of evidence
• 1 Year Duration (6 month maximum extension)
• Procedures generally favor 3rd Party Petitioner
• Fee: $23,000 per request
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Inter Partes Review
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Timing of Inter Partes Review Petition
• Within 1 year of being sued: “An inter partes review may
not be instituted if the petition requesting the proceeding
is filed more than 1 year after the date on which the
petitioner, real party in interest, or privy of the petitioner is
served with a complaint alleging infringement of the
patent.” 35 U.S.C. § 315(b)
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Inter Partes Review Filings
September 2012 – August 2013
Now 3rd Busiest “litigation”
venue after EDTX and
Delaware
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Inter Partes Review
• Who is filing?
• Generic Drug Manufacturers, Branded Pharmaceutical Companies,
Medical Device Companies, Food Companies, Pharmaceutical
Ingredient Suppliers, Diagnostic Companies
• Which Technology areas?
12%
18%
Biotech/Chem
Computers/Communication
Semiconductors
Ecommerce
Mechanical
16%
17%
37%
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Inter Partes Review Filings in the Life
Sciences
IPR Filings by Month (through Oct. 21, 2013) for USPTO Technology
Centers 1600 (Biotechnology and Organic Chemistry) and 1700
(Chemical and Materials Engineering)
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10
8
6
4
2
0
January
•
February
March
April
May
June
July
August
September
October
In the pharma industry, the new IPR/PGR procedures are appealing strongly to ANDA
second, third… filers, who generally have lower litigation budgets for a particular product
–
The firm litigating the first-filer ANDA defense may also be able to litigate IPR/PGR actions
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Inter Partes Review Filings in the Life
Sciences
IPR Filings by Month (through Oct. 21, 2013) for Technology
Centers 1600 (Biotechnology and Organic Chemistry), 1700
(Chemical and Materials Engineering), and 3700 (Primarily
Medical Devices)
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25
20
15
10
5
0
January
February
March
April
May
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June
July
August
September
October
Inter Partes Review in the Life Sciences
IPR actions, across all
Technology Centers, are
currently trending towards
challenges to more
recently granted patents
Source: IPR-PGR-Report-Vol.-3.pdf
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IPR Decisions
A majority of IPR filings in
computer, communications,
electrical, transportation,
mechanical
A significant number of IPR
proceedings have been
instituted in the Life
Sciences Technology
Centers (1600 and 1700)
Approximately 87% of IPR
actions also involve a
concurrently litigated patent
(http://www.aiablog.com/)
Source: IPR-PGR-Report-Vol.-3.pdf
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Basic Hatch Waxman Timeline
Regulatory Data
Exclusivity
expires (NCE)
5 yrs
New Drug
Application
filing to
FDA
Pharma
Patent
Granted
Patent Asserted
In
District Court
FDA
Approval
ANDA Trial
2 yrs
ANDA Appeal
1 yr
4 Years
9 Months
Post Patent
Grant
EPO
Opposition
Period Ends
Patent Listed
In
“Orange Book”
ANDA Filing + Par IV
Certification Letter of
Invalidity or Noninfringement
US PGR
Period Ends
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30 month stay
FDA Approval of
ANDA
Outcome:
Patent Holder
Prevails or
Generic Launch
Discovery Standards
• Post Grant Review:
• The parties can take discovery that is limited to evidence directly related to
factual assertions advanced by either party. 35 U.S.C. § 326(a)(5)
• Inter Partes Review: Discovery includes:
• Depositions of witnesses submitting affidavits or declarations
• What is otherwise necessary in the interests of justice. 35 U.S.C. §
316(a)(5)
• District Court Litigation:
• Parties may obtain discovery regarding any nonprivileged matter that is
relevant to any party's claim or defense. . . . .Relevant information need not
be admissible at the trial if the discovery appears reasonably calculated to
lead to the discovery of admissible evidence. Fed. R. Civ. P. 26(b)(1).
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PTAB Discovery - 37 C.F.R. § 42.51
• “Routine” Discovery
• Production of exhibits cited in a paper or testimony
• Cross examination of opposing declarant’s affidavits
• “Non-cumulative information that is inconsistent with a position
advanced during the proceeding.”
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PTAB Discovery - 37 C.F.R. § 42.51
• “Additional” Discovery
• Parties can agree to provide further discovery
• If no agreement, a party may seek discovery by filing a motion
showing its requests are:
• For “good cause” in a post grant review proceeding
• Limited to evidence directly related to factual assertions advanced by either
party.
• “In the interests of justice” for inter partes proceeding
• Requests for:
• Compelling testimony of witness
• Documents & things
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“Good cause” vs. “Interests of Justice”
• “[I]nterests-of-justice standard is a slightly higher standard than good
cause.”
• “While a good cause standard requires a party to show a specific
factual reason to justify the needed discovery, interests-of-justice
would mean that the Board would look at all relevant factors.”
• “The interests-of-justice standard covers considerably more than the
good cause standard, and in using such a standard the Board will
attempt to consider whether the additional discovery is necessary in
light of the ‘totality of the relevant circumstances.’”
• Inter Partes, Post Grant, and Covered Business Method Review Final
Rules, Fed. Reg. 48680, 48693, Aug. 14, 2012
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The “Interests of Justice”
• Five factors board considers in authorizing additional discovery
(Garmin Int’l Inc. v. Cuozzo Speed Tech. LLC, IPR2012-00001, March
5, 2013, Paper No. 26):
• The request is based on more than a possibility and mere allegation
• The request does not seek litigation positions and underlying basis
• The information must not be reasonably available through other means
• The request is easily understandable
• The request is not overly burdensome to answer
• “Interests of justice” are “limited to minor discovery and special
circumstances.” (Microsoft v. Proxyconn, IPR-00026 & IPR201300109, March 8, 2013, Paper No. 32.)
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Other Discovery Aspects
• “Mandatory” Initial Disclosures
• By agreement or by motion.
• Generally -• Name and contact information for witnesses likely to have discoverable
information that disclosing party may use to support its claims or defenses
• A copy of all documents, electronically stored information, and tangible things
that the disclosing party has in its possession that it may use to support its
claims or defenses.
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Other Discovery Aspects
• “Depositions” – Taking Testimony under 37 C.F.R. § 42.53
• More like trial depositions than discovery depositions in federal
court proceedings
• “Direct Testimony” of uncompelled witnesses is offered through affidavit
• Uncompelled witnesses subject to cross examination, redirect, and
recross at deposition
• Compelled witnesses subject to direct examination, cross examination,
and redirect
• Deposition transcripts become the evidentiary record
• Board can allow live testimony, e.g., where credibility is an issue
• All objections need to be made at the time of deposition
• All objections under Federal Rules of Evidence
• Time limits differ from federal court proceedings
• 7 hours for initial examination, then 4 hours for redirect/cross, then 2
hours for recross/redirect
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Estoppel – 37 C.F.R. § 42.73
• Petitioner estopped in the Office from requesting or maintaining a
proceeding with respect to a claim for which it has obtained a final
written decision on patentability in an IPR or PGR
• On any grounds that the petitioner raised or reasonably could have raised
during the trial
• Does not apply to a petitioner who has settled
• Patent owner is precluded from taking an action inconsistent with the
adverse judgment, including obtaining in a patent:
• A claim that is not patentably distinct from a finally refused or cancelled
claim
• An amendment of a specification or of a drawing that was denied during
the trial proceeding
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Estoppel
• Post Grant Review – 35 U.S.C. § 325(e)
• (1) PROCEEDINGS BEFORE THE OFFICE.--The petitioner in a post grant
review . . . may not request or maintain a proceeding before the Office
with respect to that claim on any ground that the petitioner raised or
reasonably could have raised during that post grant review.
• (2) CIVIL ACTIONS AND OTHER PROCEEDINGS.--The petitioner . . .
may not assert either in a [district court civil action or an ITC petition] that
the claim is invalid on any ground that the petitioner raised or
reasonably could have raised during that post grant review.
• Similar estoppel effect for Inter Partes Review – 35. U.S.C. § 315(e)
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Post Grant Proceedings - Comparison
Ex parte
reexamination
Post grant review
Inter partes review
Transitional post
grant review for
business methods
Basis
Patents/printed
publications only
Any ground
(incl. product as prior
art, prior use or sale)
except best mode
Patents/printed
publications only
Any grounds can be
argued except best
mode (use of prior art
has caveats)
Threshold
SNQ (Substantial
New Question of
patentability, i.e. new
prior art)
More likely than not that
at least one claim is
unpatentable (no
presumption of validity)
Reasonable likelihood
petitioner will prevail on
at least one claim (no
presumption of validity)
More likely than not
that at least one claim
is unpatentable (no
presumption of validity)
Anonymity
Yes
No
No
No
Interviews
Yes
No
No
No
Discovery
None
Limited
Limited
Limited
Time Limit
on USPTO
None (“special
dispatch”)
One year (extendable to
18 months)
One year (extendable to
18 months)
One year (extendable
to 18 months)
Early
termination
No
Joint request (specific to
petitioner); any
agreement must be
submitted
Joint request (specific to
petitioner); any
agreement must be
submitted
Joint request (specific
to petitioner); any
agreement must be
submitted
Estoppel
None
Any ground raised or
reasonably could have
been raised, unless
settled
Any ground raised or
reasonably could have
been raised, unless
settled
Only grounds actually
raised
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Lessons Learned and Practice Tips
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Lessons Learned
• Very new proceedings – no decisions in life science matters
• Rules and procedures before the PTAB are evolving
• Rules and procedures are generally stacked in favor of the petitioner
• For example: Motion to amend
• If Patent Owner, file preliminary response
• If Petitioner, use all of the best prior art, don't hold anything back
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Lessons Learned
• If in joint defense group, consider jointly filing or joining early
• Beware of other party settling
• Make use of conference calls with board
• If unsure, ask the Board
• Make use of expert declarations
• What one of skill in the art would consider and claim construction
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Lessons Learned
Success rates of Motions:
90%
82%
80%
69%
70%
60%
50%
40%
30%
20%
14%
10%
10%
0%
0%
Extend
Deadline
Joinder
Additional
Discovery
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Rehearing
Waive Page
Limit
Practice Tips
• Thorough review of patent/application
• Focus on sound patent prosecution
• Identify all prior art
• Keep a patent application pending so claims be adjusted
based on Post Grant Proceedings
• Patent holder should consider strengthening granted
patents through Ex Parte Reexamination, Supplemental
Examination, Reissue
• Line up expert
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Advantages/Risks of IPR
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Advantages
• BRI (broadest reasonable interpretation)
• USDC/ITC: Judge’s interpretation
• No Presumption of Patentability (Validity)
• For Motion to Amend, burden on patent owner
• Technical judges
• Preponderance of evidence (51%)
• USDC/ITC: Clear & Convincing (80%+)
• Obtain settlement leverage
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Advantages
• Lower cost
• Patent litigation $3-5 million to trial (minimum)
• IPR (100s of $K) (CBM, PGR, higher)
• Reexam (10s of $K)
• Pre-grant submissions (cheap)
• Non-practicing Entity Business Model Unsuited for
USPTO – lower cost of litigation and lack contingency fee
arrangements will weigh in favor of petitioner
• While there is a Discovery Burden, Not as Burdensome
as Discovery in District Court
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Stays of Related Litigation
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IPRs
Stays of Related Litigation
90%
• Of IPRs have related
litigation
45%
• Stays requested in related
litigations
63%
• Stays granted
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Likelihood of Success
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Final Written Decisions
1
• CBM Written Decision
0
• IPR Written Decisions
0
• PGR Written Decisions
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Ex Parte Reexamination — Statistics
(1981-2012)
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•
Owner
Requester
3rd Party
Requester
USPTO
Initiated
Overall
All claims
confirmed
21%
23%
11%
22%
All claims
cancelled
9%
12%
23%
11%
Claim changes
70%
65%
66%
67%
Average pendency 25.4 months
Median pendency 19.9 months
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Probability of Invalidating Patent
80%
70%?
70%
60%
46%
50%
40%
50%
33%
30%
20%
12%
10%
0%
Ex Parte
Reexam
District Court *
District Court
(pre and post
trial)**
Inter Partes
Reexam
Inter Partes
Review
* See Kimberly A. Moore, Judges, Juries, and Patent Cases – An Empirical Peek Inside the Black Box, 99 MICH. L. REV. 365 (2000) (between 1983 and 1999, validity was upheld in 67% of
cases — 64% of bench trials; 71% of jury trials).
** See John R. Allison & Mark A. Lemley, Empirical Evidence on the Validity of Litigated Patents, 26 AIPLA Q.J. 185, 205 (1998) (finding that “[o]f the 300 final validity decisions in the data
set [including pretrial decisions and trial verdicts], 54% (or 162) found the patent valid, and 46% (or 138) found the patent invalid.”).
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Questions?
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Contact Information
Louis W. Beardell, Jr.
• partner
• Email: [email protected]
• Philadelphia
1701 Market St.
Philadelphia, PA 19103-2921
Phone: 215.963.5067
Fax: 215.963.5001
John V. Gorman
• partner
• Email: [email protected]
• Philadelphia
1701 Market St.
Philadelphia, PA 19103-2921
Phone: 215.963.5157
Fax: 215.963.5001
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