As of this writing, patents protecting a number of drugs, including several blockbusters (e.g., Humira, Rituxan, Avastin, Tecfidera, Copaxone, etc.), are under scrutiny in inter partes review (IPR), putting these drugs at risk of early generic entry. In Part 1 of this series, we reviewed the type of post-grant opposition (PGO) proceedings available and their process. In Part 2, we discuss various laws associated with PGOs and how they make it easier for a petitioner to invalidate a patent claim as compared to a district court litigation.
PGO proceedings can be filed even when district court litigation between the parties is already ongoing; indeed, this is often the case (e.g., Teva’s Copaxone). Generics manufacturers or other petitioners seek to leverage all avenues of attack, though this observation suggests that IPR is perceived as having a greater likelihood of success. The reason behind this perception is the laws associated with PGO proceedings, which differ substantially from court litigation.
- The decision makers: Three technically-trained administrative patent judges (APJs) from the Patent Trial and Appeal Board (PTAB) are appointed on the panel to review PGO proceedings. APJs are most likely to have an engineering/science background, and therefore are well positioned to understand complex technical cases and invalidity arguments. In district court litigation, a judge and jury evaluate the case. Therefore, it may be wiser for a third-party to pursue PGO proceedings over court litigation in challenging a technically complex patent.
- The standard of proof: In PGO proceedings, the standard of proof needed to invalidate a claim is to demonstrate a “preponderance of evidence,” which has been described as ‘just enough’ evidence to make it more likely than not (>50% likelihood) that the facts presented are true. This standard of evidence is less stringent than the “clear and convincing evidence” standard used in district court. Moreover, unlike the district court, patent claims are not presumed to be valid in case of PGO proceedings, making it potentially easier for a petitioner to invalidate a patent claim via PGO proceedings as compared to a court litigation.
- Claim construction: PTAB uses the broadest reasonable interpretation (BRI) standard for claim construction, taking into account the description given in specifications as would be interpreted by someone of ordinary skill in the art. It is the same standard that is used during the patent examination process (prosecution) by the patent examiner before a patent is granted. When deciding whether a claim may capture a prior art as written, the examiner gives the claim its most expansive meaning consistent with the disclosure given in the patent specifications, increasing the likelihood of overlap with prior art and, thus, invalidation. In contrast, District Court litigation employs a narrower standard, “ordinary and customary meaning”, reducing the likelihood of overlap with prior art. Due to the broader interpretation used by PTAB, it becomes easier for a petitioner to invalidate a patent claim under PGO proceedings, because when a claim is interpreted broadly, its meaning will more likely overlap with prior art, reducing its novelty and/or non-obviousness.
- Provision of “discovery”: Discovery (i.e., a pre-hearing process for exchanging evidence between parties to prepare a response) is allowed in PGO proceedings (unlike in the inter partes reexamination), but it is usually limited in scope (e.g., exhibits cited in a paper or testimony in the case), unless otherwise agreed upon by both parties and PTAB. There is no such limitation in a district court litigation, which has the advantage of allowing a wide scope of discovery, but in turn making it a more time-consuming process. The rationale behind limited discovery for PGO proceedings is to have an efficient, streamlined, and cost-effective alternative to district court litigation that must be completed within the statutory time period.
- Co-pending litigations: There is a law that governs the filing of an IPR in a case in which both parties are already fighting a patent infringement litigation in district court. According to the law, the petitioner can file an IPR to challenge the same patent claims within one year from the court litigation start date. Usually what follows the PTAB’s review acceptance (sometimes even before acceptance), is a stay on the co-pending court litigation. According to multiple sources, in about 80-90% of IPR reviews there is also a pending or parallel district court litigation ongoing (e.g., Paragraph IV challenges), and in about 60-70% of them, a stay gets imposed on the court litigation. Courts are willing to grant the stay, in part because IPRs may provide useful information and insights that could aid a district court’s final judgment. Thus, it is advantageous for the petitioner to put litigation in the district court on hold and try to invalidate the patent claims via the less costly and faster venue provided by PGO. The court may also receive useful insights from the IPR after PTAB’s final written decision.
- Estoppel: Once PTAB issues a final written decision, estoppel applies to both parties. A petitioner is estopped (stopped or prevented) from using any evidence or ground that was raised or reasonably could have been raised (a subject of much debate) during the PGO proceedings to invalidate the same claims in the Federal Circuit, district court, or international trade commission proceeding (in case the petitioner loses in the PGO). It is useful to file the PGO petition with all the acceptable prior art available because if the prior art is available (i.e., retrievable by a skilled searcher), but not included in the PGO petition, then the estoppel may apply to that prior art.
The Patent Owner (PO) is also estopped from taking any action inconsistent with the final written decision. These include obtaining a patent claim (for example, in a continuation or new patent) that is not distinct from a refused or cancelled claim, or amending a specification after the amendment was denied by the PTAB in any application or patent that has the same written description. Thus, final written decision can have an immediate effect on the PO’s strategies to strengthen its patent portfolio.
- Settlement: In district court litigations, settlement among the parties leads to case dismissal. However, in PGO, both the parties involved in the review may decide to settle and terminate the review (before the issue of final written decision), though PTAB may still continue the proceeding in view of public interest, most commonly if the case has been fully briefed. Therefore, PGO proceedings may still invalidate weaker patents even if a PO pursues a settlement to maintain its patent portfolio.
- The cost: District court litigation is costlier than PGR, followed by IPR. Limited discovery and a strict timeline make PGO proceedings cost effective. It should be noted that the overall costs may become substantial if a petitioner wants to challenge multiple patents because separate petitions need to be filed for each patent.
- The time: PGO proceedings are faster and follow statutory time limits of 18-24 months from the date of petition filing. In contrast, district court litigations are longer, with an average trial length up to 2.5 years, with post-trial activities delaying the final decision for several months after the close of trial.
In summary, it is beneficial/easier to invalidate patent claims by PGOs compared with District Court litigation because of the technical knowledge of the APJs, the broader standard for claim interpretation, lower standard of proof requirement, strict timeline, and lower cost. However, limited discovery and estoppel risk may prove to be a disadvantage as compared to district court litigation. In Part 3 entitled “Post-grant oppositions (PGOs) for patents (Part 3): A look at potential strategies,” we highlight potential strategies for the petitioner and the PO that may help develop strong positioning during the review.