Two weeks ago, I was a featured speaker during the one-hour webinar, “The BPCIA Patent Dance: Recent Trends, Developments and Court Decisions,” hosted by the Knowledge Group. During the webinar, I discussed some of the ways that Inter Partes Reviews (IPRs) may be used by biosimilar manufactures as part of their strategy of navigating the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”) and the Patent Dance following the Supreme Court’s June 12, 2017 decision in Sandoz Inc. v. Amgen Inc.
As a quick reminder, the US Supreme Court reversed the Federal Circuit in Sandoz Inc. v. Amgen Inc., interpreting two key provisions of the BPCIA, and held that: (i) biosimilar manufacturers can begin marketing their biosimilar product prior to U.S. Food and Drug Administration (“FDA”) approval, and (ii) reference product sponsors cannot compel a biosimilar applicant to disclose its application and manufacturing information. On the second holding, the Court found that the only federal remedy for failing to provide a copy of the biosimilar application and manufacturing information is to bring a declaratory judgment action for patent infringement and proceed outside of the BPCIA. One way of challenging a patent outside the BPCIA is through the use of inter partes review.
We have already seen biologic products being invalidated through the use of IPRs. A few weeks ago, for instance, the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB) struck down U.S. Patent No. 8,889,135 (“the ‘135 patent”) covering Abbvie’s blockbuster rheumatoid arthritis drug, Humira® (adalimumab) two times in two months finding it obvious over prior art. Other patents covering Humira are also subject to inter partes review challenges, including U.S. Patent Numbers 9,017,680; 9,073,987; 9,085,619; 8,802,100; and 9,512, 216.
Abbvie is certainly not the only company facing IPR challenges. Other biologics facing IPR challenges include Avastin®, Enbrel®, Lantus®, Neulasta®, Rituxan®, and Herceptin®.
Whether or not to challenge patents through an IPR or through a more traditional means such as district court litigation comes down to several key considerations. While not an exhaustive list, the factors below highlight some of the important considerations that biosimilar manufacturers should consider when constructing their strategy.
1. Timing. The first cases involving the BPCIA, e.g., Sandoz v. Amgen, Janssen v. Celltrion, involve drug products whose patent term is either expired or close to being expired. In these cases, the biosimilar can enter the market as soon as it receives FDA approval and satisfies the requirements of the BPCIA, i.e., provides a 180 notice of commercial marketing. But what about the situations where the reference product still has ten or more years of patent term left? In those situations, the biosimilar applicant may choose to invalidate some patents through the use of IPRs earlier on in the process rather than waiting to litigate the patents as part of the BPCIA.
2. Certainty. By choosing to challenge patents through the use of IPRs earlier on, the biosimilar applicant may benefit from the certainty provided by an IPR decision. An IPR proceeding is generally faster and more cost effective than litigation. Therefore, an IPR allows the petitioner to have a final decision, whether positive or negative, much sooner.
3. High probability of success. An IPR challenge further offers petitioners a high probability of success in overturning patents. When a petitioner challenges a patent, their odds of invalidating the challenged claim(s) are high. A look at recent IPR data shows that, when a case reaches a final written decision, the odds of invalidating all challenged patent claims are around 67%. For patent holders, the numbers are less optimistic, with patent claims being upheld less than 20% of the time. A recent article published even more remarkable numbers. A look at the Final Written Decisions issued by the PTAB in June found that the Board cancelled 555 (80.32%) of the instituted claims while declining to cancel 114 (16.50%) of the instituted claims.
The biosimilar applicant also could benefit from the lower burden of proof standard that applies to IPRs but not to litigations. IPR proceedings are subject to the “preponderance of the evidence” standard whereas litigation is subject to “clear and convincing evidence”, a much higher hurdle to overcome. Challenging patents through an IPR, therefore, often favors the petitioner.
4. Number of patents. Certainly, another important factor to consider in the biologic market is the number of patents that protect each product. Unlike with small molecule drugs that may have a handful of patents protecting their compositions, a biologic product may have dozens and potentially hundreds of patents protecting its composition, including but not limited to, method of manufacture, method of treatment, formulation, etc. With so many patents out there, a biosimilar applicant may choose to challenge some patents through an IPR and leave others to litigation. By challenging some patents, and presumably being successful, the biosimilar applicant may not only obtain some certainly but can also improve its own leverage when negotiating a license with the reference product sponsor. On the other hand, with so many patents blocking its path to market, the biosimilar applicant may struggle to identify the most critical patents that would render an IPR less effective. Moreover, depending on how some of the other factors listed here turn out, a petitioner may choose to forgo IPRs and instead challenge the patents during litigation.
5. Limited discovery and estoppel. One reason that a biosimilar applicant may choose to forgo challenging a patent using the IPR process is the limited discovery and estoppel that IPRs offer. While an IPR allows the petitioner to challenge a patent multiple times, the petitioner nevertheless needs to be thoughtful when citing prior art to challenge patents. Since discovery is limited, if a petitioner cannot put together an effective argument that the petitioner otherwise would be able to if a more in-depth discovery was permitted, then the petitioner should consider pursuing those arguments in a litigation. If the petitioner proceeds with less than optimal arguments and fails, estoppel will prevent the petitioner from raising those arguments in a later district court litigation. Thus, before proceeding with an IPR, the petitioner should make sure that his arguments are sufficient.
Companies developing biosimilar products should consider these factors when preparing to launch their product. As more biosimilars are developed, we will likely see the different ways that IPRs are used in paving the road to market.
A few weeks ago, I wrote about the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board’s (PTAB) invalidation of a key patent on Abbvie’s blockbuster rheumatoid arthritis drug, Humira® (adalimumab). This was the second time in as many months that the PTAB struck down U.S. Patent No. 8,889,135 (the ‘135 patent), finding it obvious over the prior art. Other patents covering Humira are also subject to inter partes review (IPR) challenges, including U.S. Patent Numbers 9,017,680; 9,073,987; 9,085,619; 8,802,100; and 9,512, 216.
Abbvie is certainly not the only company facing IPR challenges. In fact, IPR challenges have become a popular means by which third parties can challenge issued patents. Inter partes review, which was enacted on September 16, 2012 as part of the America Invents Act, allows a third party to challenge the patentability of an issued patent based on prior art under 35 U.S.C. §§ 102 and 103. When a company challenges a patent by requesting an IPR, their odds of invalidating the challenged claim(s) are high. A look at recent IPR data shows that, when a instituted IPR challenge reaches a final written decision, the odds of invalidating all challenged patent claims are around 67%. For patent holders, the numbers are less optimistic, with patent claims being upheld less than 20% of the time. A recent article published even more staggering numbers. A look at the Final Written Decisions issued by the PTAB in June found that the Board cancelled 555 (80.32%) of the instituted claims while declining to cancel 114 (16.50%) of the instituted claims.
While the IPR process has become popular, it is not without controversy. Patent holders, in particular, argue that the IPR process is unconstitutional because it extinguishes important property rights, i.e., patent rights, without the use of a jury. On June 12, 2017, the United States Supreme Court granted certiorari in Oil States vs. Greene’s Energy Group, et al. (No. 16-172 S.Ct., Supreme Court 2017) to address whether inter partes review violates the U.S. Constitution by extinguishing private property rights through a non-Article III forum without a jury.
At the center of the argument that inter partes review is unconstitutional is the 1898 Supreme Court decision in McCormick Harvesting Mach. Co. V. Aultman & Co., 169 U.S. 606 (1898). In that case the Supreme Court held that once a patent is granted it “is not subject to be revoked or canceled by the president, or any other officer of the Government” because “[i]t has become the property of the patentee, and as such is entitled to the same legal protection as other property.”
Thus, the case before the Supreme Court now will likely come down to how the Court views the nature of the rights granted by a patent. Are the rights granted by a patent purely private property rights, in which case their taking must be adjudicated by a jury, or are they public rights that may be altered or extinguished by an administrative agency such as the PTAB?
Regardless of the outcome of the case, the decision will have important ramifications for both patent holders and third-party petitioners alike. If the Court rules that IPRs are unconstitutional, striking down laws implementing the IPR practice, then there will be many questions about the status of the patent claims that have already been challenged, whether they were cancelled or amended, through an IPR. If the Court upholds IPRs as being constitutional, on the other hand, patent holders may face even more challenges to their patents as third parties will continue to view the IPR process as an effective means of challenging patents without going down the more time and cost consuming litigation route. Moreover, upholding the constitutionality of IPRs will undoubtedly question the value of patents issued by the USPTO.
We will continue to monitor this lawsuit. Oral arguments will likely be heard during the Court’s November or December argument sessions, with a decision likely being issued next summer.
I’ve previously written about how U.S. Patent No. 8,889,135 (the ‘135 patent) covering Abbvie’s blockbuster rheumatoid arthritis drug, Humira® (adalimumab), was invalidated by the U.S. Patent Trial and Appeal Board’s (the “PTAB”) in three separate Inter Partes Review (“IPR”) proceedings, two of which were filed by Boehringer Ingelheim (IPR2016-00408 and IPR2016-00409). While Boehringer Ingelheim filed two challenges to the same ‘135 patent, Coherus filed six challenges to a different Humira patent, U.S. Patent 9,085,619 (“the ‘619 patent”). Such aggressive use of PTAB proceedings is not uncommon, and today I want to look at the strategy behind filing multiple PTAB challenges to the same patent and the reasoning behind such sequential or parallel challenges.
The ‘619 Humira patent at issue in this case is directed to the drug’s formulation. Only claims 16–19 and 24–30 are challenged, with independent claim 16 reciting:
16. An aqueous pharmaceutical formulation comprising:
(a) an anti-tumor necrosis factor alpha antibody comprising a light chain variable region (LCVR) having a CDR3 domain comprising the amino acid sequence of SEQ ID NO:3, a CDR2 domain comprising the amino acid sequence of SEQ ID NO:5, and a CDR1 domain comprising the amino acid sequence of SEQ ID NO: 7, and a heavy chain variable region (HCVR) having a CDR3 domain comprising the amino acid sequence of SEQ ID NO:4, a CDR2 domain comprising the amino acid sequence of SEQ ID NO: 6, and a CDR1 domain comprising the amino acid sequence of SEQ ID NO:8, wherein the concentration of the antibody is 50 to 200 mg/ml; and (b) water;
wherein the formulation does not comprise a buffering system.
Formulation patents are important for any company seeking to manufacture a biosimilar of Humira.
Four of the Coherus IPR petitions were filed on January 31, 2017, as follows:
Several weeks later, on March 2, 2017, Coherus filed two additional IPR petitions:
5. IPR2017-01008 asserted obviousness in view of the 2003 Humira® Label, Fransson, and Gorkan ‘011, and obviousness over Gorkarn ‘011 in view of the 2003 Humira® Label.
6. IPR2017-01009 asserted obviousness in view of the 2003 Humira® Label, Fransson, and the 2005 Gamimune ® Label.
On April 11, 2017, the PTAB granted Coherus’s unopposed motions to dismiss IPR2017-00826 and IPR2017-00827 (IPRs 3 and 4, above) without prejudice. Coherus essentially replaced IPR2017-00826 and IPR2017-00827 with IPR2017-01008 and IPR2017-01009 (IPRs 5 and 6, above). Thus, Coherus has four IPR petitions pending and is awaiting institution decisions against the ‘619 patent.
There are several reasons for companies to file sequential IPR proceedings such as Coherus did against the ‘619 patent.
First, there are technical advantages to be gained by filing multiple IPRs against a single patent. Each IPR petition is limited to a specific word count. In the case of filing any petition before the PTAB, the limit is 14,000 words. If the petitioner is looking to challenge multiple claims and using multiple prior art references, or if the patent contains numerous claims, then this word limit could be problematic. To avoid exceeding the word limit, the petitioner could separate out his arguments over more than one IPR.
Second, and more importantly, filing more than one IPRs against a single patent gives the petitioner multiple “bites at the apple.” Each IPR is a pretty good lottery ticket in the post-grant patent invalidation game in the US. A look at recent IPR data shows that, when a case reaches a final written decision, the odds of invalidating all challenged patent claims is around 67%. In fact, the patent holder is only successful less than 20% of the time. https://www.wsgr.com/publications/PDFSearch/PTAB-Year-in-Review-2016.pdf) Thus, while filing one IPR is favorable, filing more than one can increase the odds of success. Big companies launching critical product lines find these odds appealing and often “double down” on the IPR process in an attempt to reduce the risk of failure.
Third, filing multiple IPRs allows you to challenge a patent using different prior art or different combinations of prior art. This, of course, requires the petitioner to carefully evaluate the arrows in their quiver and to strategically decide which prior art arrows to launch in an IPR attack and which, if any, to reserve for potential future battles, such as another IPR proceeding or even in a litigation. Such decisions are important in light of a company’s overall IP strategy. If a company challenges a patent in an IPR proceeding using prior art reference X, and the IPR is unsuccessful, then the company can try to challenge the patent in a subsequent IPR proceeding using reference Y. If the company is successful with only reference X, then there is no need to disclose reference Y and the company can hold on to reference Y until a litigation, if any, is initiated. If the company, however, tries to challenge a patent using all of its references immediately, and is unsuccessful, then the company may not have any further means of challenging the patent. The failure of the IPR in this scenario leaves the patent in an extremely strong and enforceable position, and the challenger with no defenses. In this case, the company may not be able to enter the market until the patent expires or unless the patent holder is amenable to granting a license.
Fourth, timing must also be strategically considered since challenging a patent multiple times can help a challenger learn from their mistakes in earlier proceedings. This is what happened when Kyle Bass and the Coalition for Affordable Drugs filed two separate petitions against the Ampyra® patents, namely U.S. Patent Nos. 8,663,685, 8,007,826, 8,440,703, and 8,354,437, which constitute four of the five Ampyra® Orange-book listed patents. Kyle Bass’s first IPR petition against the Ampyra® patents was denied because he did not establish that the cited posters displayed at conferences qualified as prior art “printed publications” as required by 35 U.S.C. § 311(b). In the second challenge, however, there was a question regarding the “printed publication” status of Acorda’s S-1 Statement, but the PTAB found a “sufficient showing that the S-1 was publicly accessible to the public interested in the art.”
Fifth, filing multiple IPRs could be used as a means of intimidation. Faced with multiple instituted IPR challenges, a patent holder may simply fold and give up if the patents are not critical to their business. Alternatively, multiple IPR challenges can motivate a patent holder to license the technology if previously they were unwilling to license. In this way, filing multiple IPR challenges creates a bargaining chip that is sort-of a “win-win” for the challenger if they are successful. However, it should be noted that settlements between the parties do not necessarily mean the IPR will be terminated (though in practice they usually are terminated) as it is ultimately up to the PTAB to decide whether termination is merited.
Finally, a biosimilar company such as Coherus may take an aggressive approach to PTAB proceedings to challenge patents as a way to eliminate at least some patent disputes without participating in the patent dance, which is part of the Biologics Price Competition and Innovation Act (BPCIA). By eliminating patents in front of the PTAB, a biosimilar applicant can avoid the cost and uncertainty of litigating patents in court.
Multiple IPR filings against a single patent offer several benefits to the challenges and show that even patent owners who successfully avoid one IPR challenge may still face a subsequent IPR challenges by the same party.
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