Since its introduction in 2012, the U.S. post-grant opposition (PGO) process, especially the inter partes review, has created a lot of buzz in the pharma sector, with more than 200 petitions filed in FY2016 against patents across therapy areas (AIA Trial Statistics, https://www.uspto.gov/sites/default/files/documents/aia_statistics_november2016.pdf, accessed February 9, 2017). Here, we begin a three-part blog series aiming to provide a layman’s description of the PGO process and its utility, advantages, and drawbacks.
In Part 1, we discuss the type of PGO proceedings available to challenge pharmaceutical (and other) patents and the procedure followed for the review process.
On September 16, 2011, President Barack Obama signed into law the Leahy–Smith America Invents Act. The Act switched the U.S. patent system from “first to invent” to “first to file” system and one year later, replaced the old inter partes reexamination system with the new PGO proceedings, namely post-grant review (PGR) and inter partes review (IPR). PGO proceedings allow third parties to challenge the validity of issued patent claims in parallel or as an alternative to district court litigation. They are designed to be more adjudicative (similar to litigation) in nature as compared to the inter partes reexamination, which was more of an examination (similar to the patent granting process). The ultimate aim is to improve the quality of issued patents by providing third parties with a less expensive and more efficient method to challenge patents of interest, which, in the pharma world, often comprise formulation, method of use, or other patents that may be most vulnerable to attack. A new administrative body, the Patent Trial and Appeal Board (PTAB), was formed to hold these proceedings.
PGR vs. IPR: PGR can only be applied for newer patents filed on or after March 16, 2013 (i.e., the patents granted under “first to file” law), within 9 months of the patent grant date. PGR allows weaker patents to be challenged and potentially overturned soon after granting, thereby preventing expensive litigation at a later stage. By contrast, IPRs are applicable on all issued patents and can be applied at any time for patents filed before March 16, 2013. For patents filed after this date, IPR can be filed only if 1) 9 months have passed since the patent grant or reissue date or 2) after an ongoing PGR proceeding has concluded.
There are more limited means for invalidating a patent by IPR as compared to PGR: IPR allows a patent to be challenged on the grounds of novelty and/or obviousness, whereas PGR allows essentially all grounds for invalidating a patent, including utility, novelty, obviousness, enablement, written description, and definiteness. The prior art evidence that is acceptable for invalidating a patent claim by IPR is limited to printed publications and patents, whereas PGR can also be sought by evidence of public use, on-sale activity, or other public disclosures.
The timeline: PGO proceedings follow a common process with a timeline of 18-24 months. Figure 1 summarizes the flow of events. The Petitioner files a petition for invalidating one or more claims of a patent, specifying the grounds for its unpatentability and relevant evidence. The patent owner (PO) may submit a patent owner preliminary response (POPR) arguing why the petition should not be accepted for review. PTAB then determines whether the grounds and evidence meet the initiation standard (e.g., for IPR, the standard is that there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged) and delivers a non-appealable institution decision (i.e., acceptance or rejection for review) within six months from petition filling date. If accepted, PTAB may proceed with some or all of the challenged claims.
The trial then begins with alternating written responses from the PO and petitioner wherein “limited discovery” (i.e., a pre-hearing process for exchanging evidence between parties to prepare a response) is allowed. An oral hearing may be requested by either party, after which PTAB delivers its final written decision regarding the patentability of the challenged claims. Unlike PTAB’s institution decision, a party may appeal the final written decision directly to the Federal Circuit Court of Appeals. However, the Federal Circuit will not hear appeals if a petitioner cannot demonstrate case or controversy (i.e., an actual ability or intention to infringe upon the patent). For example, if the IPR petitions filed by Kyle Bass and the Coalition for Affordable Drugs IV LLC are unsuccessful, appeals will not be allowed because the Coalition does not intend to launch an infringing product. It is important to note that once a final written decision is delivered by PTAB, estoppel is to both the parties; estoppel is a legal tool that (in this context) stops either party from further appeal using any defense that they raised, or reasonably could have raised, during the review.
The experience to date: PGO proceedings (mostly IPRs; there have been few patents applicable for PGRs to date) are quickly gaining popularity as a tool to invalidate issued patents. According to figures released by the USPTO (AIA Trial Statistics, https://www.uspto.gov/sites/default/files/documents/aia_statistics_november2016.pdf, accessed February 9, 2017), the number of PGO proceedings filed in the pharma sector (including biotechnology) has increased in the last few years (212 petitions in FY2016 as compared to 167 in FY2015). Around 63% of the total petitions filed were instituted by PTAB, which invalidated 39% of the total instituted claims in its final written decision. It is worth noting that 34% of the instituted claims in the pharma sector were found to be valid in the final written decision, which is the highest rate among all technology sectors; 8% of the claims were cancelled by the PO itself and 19% of the claims were settled or dismissed. Data also show that through January 1, 2017, the Federal Circuit affirmed PTAB’s written decision following an appeal approximately 75% of the time (Federal Circuit PTAB appeal statistics, http://www.aiablog.com/cafc-appeals/federal-circuit-ptab-appeal-statistics-january-1-2017/, accessed February 9, 2017). Thus, PGO proceedings provide a fast, efficient, and also balanced process to invalidate weaker patent claims (while maintaining the validity of strong patent claims), and most PTAB decisions remain final.
In Part 2 entitled “Post-grant oppositions for pharma patents (Part 2): What advantages do they hold over district court litigation?”, we will discuss various laws related to PGO proceedings and how they differ from district court litigations, highlighting the advantages of PGOs as a tool for invalidating issued patents.