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The Rise of Post-Grant Proceedings Krista E. Bianco* and Kristi McIntyre Finnegan, Henderson, Farabow, Garrett, and Dunner LLP, Washington, DC 20001-4413, United States ABSTRACT: This viewpoint provides a brief overview of the procedures for initiating post-grant proceedings before the United States Patent Trial and Appeal Board, including a discussion of why companies are now commonly electing to use those proceedings, both as part of an overall litigation strategy and outside of the litigation context.
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patenting, in addition to the novelty and obviousness grounds available for an IPR. For the PTAB to institute a PGR, the petitioner must show that it is more likely than not that at least one challenged claim will be found unpatentable, or raise a novel and unsettled legal question important to other patents or applicants.4
he America Invents Act of 2011 (AIA) created three new procedures for reevaluating the validity of patents after grant by the United States Patent and Trademark Office: inter partes review (IPR), post-grant review (PGR), and covered business method review (CBM). The availability of these postgrant proceedings, also known as Patent Trial and Appeal Board (PTAB) trials, have allowed challengers who were not previously able to bring suit in a district court to challenge patent validity. Experience to date has shown that these postgrant proceedings are increasingly popular and have been a game changer across all industries and patents. Challenging a patent at the PTAB is cheaper and faster than litigating a patent in district court, and the burdens of proof in a PTAB trial favor the challenger instead of the patent owner. As a result, it is now a common and expected litigation strategy for a potential infringer of a patent involved in district court litigation to file a IPR/CBM/PGR. Indeed, approximately 87% of the patents challenged in an IPR or CBM petition are also being litigated in the federal courts.1
II. POST-GRANT PROCEEDINGS ARE THE NEW NORMAL As discussed above, post-grant proceedings have been a game changer. As of August 31, 2016, 5502 total AIA petitions had been filed, including 4995 IPR petitions and 33 PGR petitions. As illustrated in Figure 1, while the electrical/computer and mechanical/business method technology groups have continued to make up over 75% of the AIA petitions over the years, the biotechnological/pharmaceutical and chemical technology groups have seen an increase in post-grant proceedings: From fiscal year 2014 to fiscal year 2016 (as of August 31), there was about 53% growth in AIA petitions in the biotechnological/ pharmaceutical and chemical technology groups (206 as compared to 315). Moreover, both institution statistics and final PTAB decisions issued to date demonstrate that chemical and biotechnological/pharmaceutical patents are not insulated from PTAB review and ultimate findings of unpatentability. The institution rate for biotechnological/pharmaceutical patents has been lower than other technological areas, but has been 63%. The institution rate for petitions related to chemical patents has been 73%.6 As illustrated in Figure 2 below, following institution, the data clearly show that biotechnology and pharmaceutical patents fare better than other technology areas; 44.61% of these claims have survived PTAB trials to date and are still enforceable, which is over double the overall average of 19.14%.
I. OVERVIEW OF AIA POST-GRANT PROCEEDINGS IPRs have been available since September 2012, and can be filed for any patent by any party who has not previously sought to invalidate the patent through a civil action and has not been served with a complaint alleging infringement of the patent more than one year prior. A petitioner may challenge patent claims only on grounds that the claimed invention is not new or is obvious based on published patents, patent applications, and printed publications. The PTAB has discretion whether or not to agree to decide (or “institute”) a post-grant challenge. As a threshold matter, a petitioner must show a “reasonable likelihood that [it] would prevail with respect to at least [one] of the claims challenged in the petition” for the PTAB to institute an IPR.2 PGR proceedings only apply to patents issuing from applications subject to first-inventor-to-file provisions of the AIA and must be filed by a third party within nine months of a patent being granted or reissued. For this reason, PGR practice is still in its infancy, as many post-AIA patents are just now starting to issue. Like an IPR, any person, other than the patent owner, can file a PGR petition, so long as they have not previously filed a civil action challenging the validity of a claim of the patent.3 Broader than an IPR, however, a PGR petition can raise arguments that a patent lacks utility, is indefinite or lacks enablement, or is invalid for obviousness-type double © XXXX American Chemical Society
III. WHY ARE POST-GRANT PROCEEDINGS SO POPULAR? Because of the relaxed standing requirements at the PTAB, pharmaceutical and chemical patents can be attacked by a diverse group of challengers, including industry competitors, generic drug companies, and nonindustry stakeholders. As one example, a company in the early stages of development who wants freedom to operate in developing a new drug, but who
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DOI: 10.1021/acsmedchemlett.6b00460 ACS Med. Chem. Lett. XXXX, XXX, XXX−XXX
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Figure 1. Total AIA petitions in fiscal years 2014, 2015, and 2016, broken down by technology (*data current as of 8/31/2016).5
Figure 2. IPR and CBM institued claim survival rate by technology center (data current as of 10/1/2016).7
would not yet have a basis to file suit in district court, can go to the PTAB and attempt to invalidate patents standing in its way. As another example, competitors who see companies with broad, blocking patents may benefit from PGR proceedings, where they can make indefiniteness and lack of enablement
arguments before the PTAB.8 Nonindustry stakeholders, such as hedge fund managers, have also targeted pharmaceutical patents, in an effort to shake up the financial markets by invalidating patents covering drugs. The hedge fund shorts the stock of the pharmaceutical companies and hopes to profit if B
DOI: 10.1021/acsmedchemlett.6b00460 ACS Med. Chem. Lett. XXXX, XXX, XXX−XXX
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(5) U.S. Patent & Trademark Office, Patent Trial & Appeal Board Statistics, 8/31/2016. https://www.uspto.gov/sites/default/files/ documents/2016-08-31%20PTAB.pdf. (6) Id. (7) Klowdowski, D. F.; et al. Technology Breakdown, AIA Blog. http://www.aiablog.com/technology-breakdown/ (last visited Nov 14, 2016). (8) PTAB 4 Years In: Biotech/Pharma’s Share of AIA Trials Increases. http://www.finnegan.com/ptab4yearsin_ biotechpharmasshareofaiatrialsincreases/ (last visited Nov 14, 2016). (9) Seastrunk, D. C.; et al. Federal Circuit PTAB Appeal Statistics October 2016, AIA Blog. http://www.aiablog.com/cafc-appeals/ federal-circuit-ptab-appeal-statistics-october-2016/ (last visited Nov 14, 2016). (10) 35 U.S.C. § 315(e) (2011); U.S. Patent & Trademark Office, American Invents Act Implementation, supra note 3.
and when the companies’ share prices fall in response to the petition challenging and/or invalidating some or all of the claims of the companies’ pharmaceutical patents. Companies also use post-grant proceedings as an additional weapon in litigation or to avoid litigation in the first place. Postgrant petitions may give parties leverage for settlement or can serve as a reason to stay an ongoing district court litigation. Because PTAB trials must be completed within 12 months of institution, a court often is willing to stay the litigation so that the PTAB trial will be completed before the parties spend additional costs on the litigation. PTAB proceedings are also generally less costly, in part because discovery is much more limited. After receiving the final written decision, the petitioner may appeal directly to the Court of Appeals for the Federal Circuit, which hears all patent appeals whether from the PTAB or district courts. From the Federal Circuit decisions involving PTAB trials, there seems to be a clear trend toward affirmance of PTAB decisions. As of October 1, 2016, approximately 79% of Final Written Decisions by the PTAB were affirmed by the Federal Circuit; only approximately 17% of cases resulted in a reversal, remand, or mixed result (e.g., affirmed-in-part and reversed-inpart).9 Thus, obtaining a favorable decision at the PTAB is very important, as it is unlikely to get overturned on appeal. A potential challenger, however, must consider the estoppel effects of its petition in considering whether to file a post-grant proceeding. For IPRs and PGRs, the estoppel provisions prohibit petitioners from raising any argument they “raised or reasonably could have raised” in their petition in subsequent U.S. Patent and Trademark Office, district court, and International Trade Commission proceedings.10 Based on the available data, it is clear that PTAB trials are a growing and effective avenue for patent challengers who may not have standing in district court, or those who simply are looking for a cost-effective alternative to litigation. Because of this and the fact that patent owners face difficult standards at the PTAB, patent owners must anticipate and prepare for PTAB trials even during the initial prosecution of a patent. Whether a patent challenger or owner (or both), understanding PTAB trials and their interplay with litigation is necessary for success in the post-AIA world.
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AUTHOR INFORMATION
Corresponding Author
*E-mail: krista.bianco@finnegan.com. ORCID
Krista E. Bianco: 0000-0002-2859-1290 Notes
Views expressed in this editorial are those of the authors and not necessarily the views of the ACS. The authors declare no competing financial interest.
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REFERENCES
(1) Vishnubhakat, S.; et al. Strategic Decision Making in Dual PTAB and District Court Proceedings, 31:1 Berkeley Tech. L. J. 45, 69 (2016). (2) 35 U.S.C. § 314(a) (2011). (3) U.S. Patent & Trademark Office, America Invents Act Implementation, The Board of Patent Appeals & Interferences, New Board Proceedings. https://www.uspto.gov/sites/default/files/aia_ implementation/120321-mcaa_conf.pdf. (4) Id.; see also U.S. Patent & Trademark Office, Major Dif ferences between IPR, PGR, and CBM. https://www.uspto.gov/sites/default/ files/ip/boards/bpai/aia_trial_comparison_chart.pptx. C
DOI: 10.1021/acsmedchemlett.6b00460 ACS Med. Chem. Lett. XXXX, XXX, XXX−XXX
