The Uncertain Future of Inter Partes Review

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.