Article: May 2015: Life Sciences Litigation Update

Trends in Post-grant Review of Orange Book Patents. The America Invents Act’s post-grant challenges (“AIA proceedings”) continue to grow as an option for companies challenging a patent’s validity. In the first full fiscal year that AIA proceedings—inter partes review (“IPR”), covered business method review (“CBM”), and post-grant review (“PGR”)—were available (FY2013), companies filed 563 petitions. See USPTO, AIA Progress Statistics, available at http://www.uspto.gov/sites/default/files/documents /aia_statistics_03-26-2015.pdf. (“PTO Stats”) In FY2014, the number of petitions ballooned to 1494. Id. At the same time, district court patent filings dropped 18%. See DocketNavigator, 2014 Year in Review, available at http://home.docketnavigator.com/year-review/. Now, halfway through FY2015, the United States Patent & Trademark Office (“PTO”) has already received close to 950 fillings. See PTO Stats.

Pharmaceutical companies with patents listed in the U.S. Food and Drug Administration’s publication entitled, “Approved Drug Products With Therapeutic Equivalence Evaluations,” known as the “Orange Book,” have not escaped post-grant challenges. Traditionally, generic companies attempting to market a generic version of a patent-covered branded pharmaceutical drug product before patent expiration had no choice but to litigate against the innovator company in district court. Now, generic pharmaceutical companies, like many companies in other technological areas, have chosen to file AIA proceedings with the PTO while district court litigations are pending.

AIA proceedings are attractive to all patent challengers, including generic drug companies for multiple reasons. In general, AIA proceedings proceed more quickly than district court litigations, offer lower burdens of proof and broader claim constructions, and have, thus far, resulted in high success rates for petitioners. Thus, it’s understandable that patent challengers are singing the AIA’s praises, while patent owners are becoming ever more fearful.

For the PTO to institute an AIA proceeding, the petitioner must show either a reasonable likelihood of success of proving at least one challenged claim invalid (in IPRs) or that the challenged claim is invalid by a preponderance of the evidence (in CBMs and PGRs). As of March 26, 2015, the PTO reported it had issued 1829 Institution Decisions since the inception of AIA proceedings. See id. The PTO has instituted trial in 76% of those decisions. Id. And once instituted, the challenged claims fair no better. So far, less than 20% of the instituted claims have survived the PTO’s Final Written Decisions.

When looking at the trends, however, petitioner success rates are not uniform across all technologies. Patent owners with pharmaceutical patents should be breathing a little easier because the petitioner success rates are noticeably lower for such patents, and the possibility of challenging pharmaceutical patents via a CBM, which offers a broader array of invalidity grounds and less harsh estoppel provisions than an IPR, has been recently rejected.

Specifically, there have been 97 total AIA proceedings filed against Orange Book patents to date: 90 IPRs, 6 CBMs and 1 PGR. Out of the 47 Institution Decisions issued, 18 petitions (over 38%) have been denied. Further, in each of the three Orange Book IPRs decided to date, every claim has been upheld as patentable. See IPR2013-00368, -371, -372. The PTO has also rejected generic pharmaceutical companies attempts to shoehorn Orange Book patents into the CBM patent definition. The PTO has been liberal in its interpretation of what is included in a “financial product or service,” and therefore eligible for CBM review. But in the first-ever and only CBM attack in the pharmaceutical industry, Quinn Emanuel secured Decisions Not to Institute review of six patents for Jazz Pharmaceuticals. See CBM2104-00149, -150, -151, -153, -161, -175. The PTO denied the CBMs, holding that Jazz’s patents did not claim a “financial product or service.” It was only the second time the PTO had denied institution of CBM review on these grounds, and the first time that the PTO found that the patent owner affirmatively showed its claims did not encompass a “financial product or service.”

There are currently sixty-five Orange Book IPRs pending. In seven of those proceedings, Quinn Emanuel represents the patent owner. Five of the sixty-five IPRs have completed oral argument and are slated for Final Written Decisions within the next few months. We will soon know if Orange Book patent owners will continue to experience success in AIA proceedings.