The PTAB Puts Hatch-Waxman Defendants on Notice: File IPRs Early or Risk Fintiv Discretionary Denial

“Hatch-Waxman Defendants who wish to take advantage of the PTAB’s lower burden of proof that is required for invalidity should seek IPR as early as possible. This may require extra work in the early stages of litigation, but it is definitely worth it.”

https://depositphotos.com/33666627/stock-photo-too-late.htmlOn September 16, 2020, the Patent Trial and Appeal Board (PTAB) denied institution of Mylan Labs Ltd.’s petition for IPR of U.S. Patent No. 9,439,906 (“the ’906 patent”) in IPR2020-00440.  In doing so, the PTAB exercised discretion to deny institution based on the six factors set forth in its precedential order in Apple Inc. v Fintiv Inc. For Hatch-Waxman Defendants interested in challenging the validity of Orange Book-listed patents at the PTAB, IPR petitions should be filed as early as possible in order to avoid this same result.

The Board’s Analysis in Denying Institution

Mylan sought IPR of the ’906 patent about six months after Janssen filed suit in New Jersey district court, which was one of three district court actions involving the ’906 patent (Case No. 2:19-cv-16484-CCC-MF (D.N.J.)).  Applying the six factors outlined in its precedential Fintiv order, the PTAB exercised its discretion to deny institution under Section 314(a).

The PTAB analyzed whether the district court case against Mylan had been or was likely to be stayed, and the proximity of a district court trial to the PTAB’s deadline to issue a final written decision, and found that both factors weighed against institution. While Mylan had not requested to stay its district court case, the PTAB found that a stay would be unlikely given the court’s tentative trial date in June 2021 and the time remaining on Mylan’s 30-month stay of regulatory approval (IPR2020-00440, Paper 17 at 13-14).

Further, a related case against Teva was scheduled to begin trial a mere 10 days after the PTAB’s institution decision due date, during which the validity of the ’906 patent would be heard (Case No.  2:18-cv-734-CCC-MF (D.N.J.). The PTAB found it “highly unlikely” the district court would stay Teva’s case so close to trial, and “near certainty” that Janssen’s trial against Teva would be completed before a final decision in Mylan’s IPR. Because Mylan relied on the same prior art in its district court invalidity contentions and IPR petition, the PTAB found that the parties and the district court would invest significant resources determining the validity of the ’906 patent before a final written decision would issue in Mylan’s IPR.

In sum, the PTAB found that the timing of Mylan’s IPR petition as it related to all parallel district court proceedings involving the ’906 patent, and the significant overlap of the issues with those district court proceedings favored denial of institution.

The Fintiv Factors Are Stacked Against Hatch-Waxman Defendants

Arguably, in most Hatch-Waxman cases three of the six Fintiv factors weigh in favor of the PTAB exercising its discretion under Section 314(a) to deny institution of an IPR petition. For instance, it is rare that either side in a Hatch-Waxman case will seek or agree to stay the parallel district court case.  Indeed, Plaintiffs and Defendants typically seek resolution of any litigation before expiration of FDA’s 30-month stay of approval of the Defendant’s ANDA. And Defendants typically use the same, or similar, prior art in an IPR petition as was used for invalidity contentions served in the district court litigation. This makes sense, as a Defendant wants to put its best foot forward in both proceedings. And an IPR Petitioner will almost always be the same party as the Defendant in a parallel district court litigation. The PTAB’s Mylan decision is notable because the Board’s analysis not only looked at the stage of Mylan’s district court case, but also accounted for the status of other litigations involving the same patent. As for the catch-all Fintiv Factor 6, any deficiency in the merits of the petition, or any other circumstances for that matter, can sway the PTAB to weigh that factor in favor of a Section 314(a) denial.

What Can IPR Petitioners Do to Decrease the Likelihood of a Section 314(a) Denial?

Hatch-Waxman Defendants who wish to take advantage of the PTAB’s lower burden of proof that is required for invalidity should seek IPR as early as possible. This may require extra work in the early stages of litigation, but it is definitely worth it if the Defendant intends to file an IPR. Indeed, filing an IPR petition at the early stages of litigation is an easy way to tip Fintiv Factor 2 in a Petitioner’s favor. For example, a recent NCE-1 case involved two defendants that filed IPR petitions on the Orange Book-listed patents 11 months and four months, respectively, prior to district court litigation. See e.g., Inter Partes Review Nos. IPR2018-00168, -00169, -00170, and -00171. The district court litigations were subsequently stayed and a stipulated final judgment of invalidity was entered following appellate review of the PTAB’s invalidity findings. See Case No. 1:19-md-2884-RGA (D. Del.). Additionally, Defendants may consider a stay of the district court case attractive if the Patent Owner agrees not to seek to toll the 30-month stay.

The Fintiv decision and subsequent decisions, such as here in Mylan v. Janssen, make clear that the PTAB is concerned with avoiding duplicative efforts between district courts and the Patent Office. We expect Hatch-Waxman Plaintiffs to continue to rely on the Fintiv factors in attempting to dodge IPRs at the institution stage. Hatch-Waxman Defendants must plan carefully in order to avoid discretionary denial under Section 314(a).

 

The Author

Keri Schaubert, Ph.D.

Keri Schaubert, Ph.D. is a member of Cozen O’Connor’s Intellectual Property Department and is based in the firm’s New York City office. Keri concentrates her practice on complex patent cases for clients in the pharmaceutical and biotechnology industries. She is a registered patent attorney and represents companies in Hatch-Waxman and biosimilar litigation.

Keri Schaubert, Ph.D.

Aaron Lukas Ph.D. is a member of Cozen O’Connor’s Intellectual Property Department and is based in the firm’s Washington D.C. office. Aaron is a registered patent attorney who concentrates his practice on complex patent cases for clients in the pharmaceutical, biotechnology, and semiconductor industries. Aaron has handled all aspects of cases including pre-suit investigations, fact and expert discovery, dispositive motions, and trial.

Keri Schaubert, Ph.D.

W. Blake Coblentz is the co-chair of Cozen O’Connor’s Hatch-Waxman & Biologics Litigation practice and a registered patent attorney. Based in the firm’s Washington D.C. office, he focuses his practice on patent litigation and counseling for clients in the biotechnology and pharmaceutical industries. He counsels pharmaceutical companies in the areas of Paragraph IV design strategies, Hatch-Waxman litigation, and biosimilar market opportunities.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

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  1. Pro Say October 29, 2020 11:45 am

    “the PTAB is concerned with avoiding duplicative efforts between district courts and the Patent Office.”

    Great to see the Patent Office / PTAB coming into alignment with the Congressional intent in this regard.

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