Posts Tagged: "Celgene"

The case of Celgene Corp. v. Peter, Nos. 2018-1167 et al. (Fed. Cir. July 30, 2019) has drawn attention for its decision that inter partes review (IPR) may be applied to invalidate pre-AIA patents without running afoul of the Fifth Amendment’s prohibition of taking property without just compensation. Matthew Rizzolo and Kathryn Thornton, among others, have addressed the constitutional aspects of the decision. I will address the lesser issues decided by the Federal Circuit panel before it could reach those constitutional aspects. In particular, the Federal Circuit panel upheld the Patent Trial and Appeal Board’s (PTAB’s) conclusion that the claims in question were obvious. And, perhaps focusing upon the sparkling constitutional issue, the panel first had to address the mundane issues of obviousness; and in disposing of the obviousness issues, the panel set forth an analysis that is unclear at best and is in its present form arguably inconsistent with precedent and public policy.

This week in Other Barks & Bites: The Federal Circuit issues several precedential decisions, including one reviving the patent claims in VirnetX and another determining that America Invents Act (AIA) validity trials don’t violate the Fifth Amendment’s Takings Clause in Celgene. This week in Other Barks & Bites: The Federal Circuit issues several precedential decisions, including one reviving the patent claims in VirnetX and another determining that America Invents Act (AIA) validity trials don’t violate the Fifth Amendment’s Takings Clause in Celgene; the USPTO proposes fee increases to patent examination and AIA trials and issues a final rule on e-filing in trademark registrations; Katy Perry is ordered to pay $2.7 million for copyright infringement; free OTA TV service Locast is targeted in a copyright suit filed by Disney and other major broadcasters; Pfizer and Mylan consider creating a global giant in off-patent drugs; the University of California files patent suits against major retailers over LED light bulb technology; and patent applications listing artificial intelligence machine inventor are filed in patent offices across the world.

Celgene faces a new gang of generics moving in on its blockbuster Revlimid®.  Over the past year, a number of generics have filed ANDAs against Revlimid®, including Dr. Reddy’s, Zydus, Cipla, and Lotus Pharmaceutical.  Those ANDAs have triggered corresponding Hatch-Waxman lawsuits from Celgene.  Among the asserted patents, most of them expire by 2022, with the exception of two polymorph patents that could extend Revlimid® monopoly until 2027.  The lawsuits are in their early stages, but an upcoming Markman hearing in the case against Dr. Reddy’s is shaping up to be critical to whether Celgene can protect is Revlimid® monopoly past 2022.

The early “death squad” hysteria persisted just long enough to catch the interest of hedge funds. The hedge funds saw an opportunity to utilize the PTAB to spook financial markets to their gain. The game plan involved establishing “short” positions in publically traded stocks that have their valuation closely tied to patents, as is the case in the Bio/Pharma sector. Given the PTAB’s early infamy, the bet was that the mere filing of an IPR would spook investors enough to move a stock price to the negative (i.e., quick profit for a short seller). Yet, as hedge funds targeting Bio/Pharma patents have quickly learned, gambling on patent challenges in the unpredictable arts is not a viable, long-term business model.

The first bit of good news for Bass came with respect to his IPR petition against Celgene Corporation. Celgene Corporation filed a motion for sanctions against the Coalition for Affordable Drugs on July 28, 2015. On September 25, 2015, the PTAB, in a decision authored by Administrative Patent Judge Michael Tierney, explained that the purpose of the America Invents Act (AIA) was to “encourage the filing of meritorious patentability challenges, by any person who is not the patent owner, in an effort to improve patent quality.” Given that Bass and the Coalition for Affordable Drugs did not own the patent in question the law allows these types of challenges. The PTAB also shot down the argument that financial motivation is at all relevant, explaining on some level financial motivation is what drives all IPR challenges.

According to Celgene, the Kyle Bass strategy of shorting a stock and filing an inter partes review challenge is an abuse of the process and not what post grant procedures were designed to accomplish. In a filing seeking sanctions filed with the Patent Trial and Appeal Board (PTAB) at the United States Patent and Trademark Office (USPTO), Celgene argues that the financial motivation for the IPR filing makes the filings by Bass’ Coalition for Affordable Drugs sanctionable. Bass calls this theory “curious,” pointing out that “at the heart of nearly every patent and nearly every IPR, the motivation is profit.”