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Unintended Consequences of the America Invents Act

Bigger, Badder “Patent Trolls”

When the America Invents Act (AIA) was being pushed through Congress in 2011, proponents of the changes in the patent system claimed it would “help stop patent trolls.” As we will show in this post, instead what it may have done is created “bigger, badder patent trolls.”

The AIA induced change that has the greatest impact on already issued patents is the inter partes review (IPR). It’s also the change that has had the most unintended consequences.

The IPR turns a long-standing principle of America’s patent system on its head.

For many years, the “rules of the game” have been that once a patent has been issued, it is assumed that the patent office did its job right, and that the patent is valid. In 1934 the Supreme Court held, in a unanimous decision, that in patent disputes “there is a presumption of validity, a presumption not to be overthrown except by clear and cogent evidence” (Radio Corp. of Am. v. Radio Engineering Laboratories).

This is a reasonable standard. Once an inventor has invested many thousands of dollars and months or years of time in securing a patent, it’s only reasonable that she should be able to assume the patent is valid: the burden of proof should be on someone seeking to invalidate the patent.

Presumption of patent validity

The IPR in essence does away with the ability of patent owners to assume their patents are valid.

While the federal court system still relies on the “clear and cogent” standard of evidence, anyone, at any time, for any reason, can challenge a patent at the Patent Trial and Appeal Board (PTAB) with an IPR. The PTAB is an administrative court that is part of the US Patent and Trademark Office (USPTO). The PTAB makes its decisions based on a “preponderance of the evidence.”

The difference between “clear and cogent” evidence and a “preponderance of evidence” may sound like a techy – nerdy thing that only a lawyer could love, but it has had enormous impact in the patent world.

In many ways there is as much “art” as “science” in granting patents. While certain facts may be clear, when a patent examiner grants a patent he or she must also use judgment. Different people may have different understandings of whether a particular invention is truly “novel” or not. It’s not always a cut and dried decision on whether a particular piece of “prior art” clearly invalidates an invention. By requiring only a preponderance of the evidence the IPR subjects every already issued patent to being subject to what amounts to a review by another examiner who may have a different opinion that is not necessarily better or more clear than the original examiner’s – it’s just different.

Broadest reasonable interpretation of patent claims

There is another “technicality” in the IPR process that weakens patents. An important part of patent litigation is what’s called “claim construction.” Claim construction is looking at the claims in a patent and clarifying exactly what they mean. The district court interprets the language in a patent’s claims according to their “ordinary and customary meaning.” IPRs instead use the “broadest reasonable interpretation.” Now one might think that the “broadest reasonable interpretation” would be a good thing for patent owners – it means the patent covers more possible products. But in fact it can be a bad thing – because it means that there is more “prior art” that can be used to invalidate a patent. This further weakens patents.

Alice

As if these features of the IPR aren’t enough to weaken patents, the Supreme Court has further muddied the waters for patent owners with recent court rulings, most importantly its ruling in Alice v. CLS Bank. The Alice ruling has cast the validity of tens (or even hundreds) of thousands of patents into doubt. The ruling affirms that “abstract ideas” are not patentable, but provides no clear guidelines that can be consistently applied by the district court. Alice has effectively wiped out billions of dollars’ worth of patents.

So far, all of this may make it seem like “big tech” has gotten exactly what they wanted: a weakening of the patent system so they can use other people’s inventions without having to pay for the privilege.

Many VERY smart people pay attention to patents. Many billions of dollars of value are locked up in patents. What the AIA and Supreme Court rulings have done is changed the rules of the game, but they haven’t done away with the game. Not surprisingly, some people have figured out how to adapt to the changes in the rules – in ways not at all anticipated when the rules were changed.

IPRs—Hmm, didn’t see that coming

Unanticipated consequences have been numerous, but two that stand out are that IPRs have been far more numerous than anticipated and have been used in a way that many corporate fans of the AIA never considered. IPRs and Alice are being used in competitor patent disputes in game changing ways.

As a result of bestowing hundreds of millions of dollars a year on both sides of the aisle branded pharma has become accustomed to getting every law they want promoting their corporate welfare initiatives. In a fit of honesty, it was incredible to hear one of the chief architects of the AIA recently state that “[pharma] was fine with how the IPR program was working until pharma patents started to be challenged in IPRs.”  Let me get this straight: as long as your ox is not getting gored, you are fine with everyone else’s ox being gored?

Wonder how HP felt—the same HP that dropped out of the Patent Fairness Coalition because it was too soft on patent reform—when four of its patents were recently held invalid under Alice. Perhaps next time significant patent legislation is being considered big companies will want Congress to hear from executives other than the usual list of Google and Cisco bobble heads intent on destroying the patent system.

Goliath v. Goliath

By making it so easy to challenge patents what the IPR has done is to make it very, very difficult to enforce a single patent. A patent owner has no idea if a single patent is enforceable. But some patents DO survive IPRs. Patents DO still have value. It’s just harder to pick which patents will survive all these new challenges.

The solution is obvious. If you want to monetize patents, don’t monetize a single patent – monetize a portfolio of related patents. If you launch a monetization campaign with ten patents, selected for strength, you will have a pretty good chance that at least some of them will survive all the challenges.

What it means is aggregation is now the name of the game. As Michael Friedman of Ocean Tomo recently said on a panel we both sat on, “David versus Goliath is dead. It’s now going to be Goliath versus Goliath.” An individual inventor with one or two good patents isn’t going to have an easy time finding anyone willing to enforce those patents on a contingency basis. He’s going to have to sell them to an aggregator, who can combine them with other patents, and launch a monetization campaign that will have a chance of success.

Smart money is very interested in the patent space right now. There is a general sense that if the patent market hasn’t hit bottom it’s “close enough.”

Many people believe the stock market’s bull run is running out of gas. Many investors are looking for “non-correlated investments,” investments that go up or down independently of trends in the overall market.

The combination of lots of money looking for a home and the patent market hitting bottom means there is a lot of money available to invest in good patents. There will be some consolidation in the industry.

Instead of getting rid of “patent trolls,” what big tech is going to discover is that when patents are enforced against them – and patents will continue to be enforced – the opposition is going to have more weapons (bigger portfolios of patents) and more ammunition (money to finance monetization campaigns).

I’m glad to see that the brakes have been put on the rush to further patent reform. Everyone is best served by going slow and letting the full impact of changes already made play out before making more changes.

 

 

 

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November 30th, 2015|Categories: Uncategorized|2 Comments

Have We Hit Bottom in the Patent Market?

Guest blog first posted on IPWatchdog:

Have We Hit the Bottom in the Patent Market?

The short answer: No. Longer answer follows.

The patent market—and I disagree with those who argue that there’s no such thing and that patents are not an asset class—had an amazing bull run from the late 1980’s through 2012. The peak was 2011 to 2012 when we saw a number of multi-billion dollar patent sales and patent-driven acquisitions.

The bull run is over – for my thoughts on the causes for the end of the good times and on how we will tell when we’ve hit bottom, please see the post on IPWatchdog.

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November 5th, 2015|Categories: Uncategorized|2 Comments

Did Celgene and Jones Day Cheat at the US Patent Office?

In our first post on this blog, we talked about how many drug companies keep generic competitors out of the market – reducing competition and keeping prices artificially high – with a process called “evergreening.” Effectively, they extend the legal monopoly granted by patent protection for years beyond anything that’s reasonable by patenting some incremental change that often has nothing to do with efficacy of the drug and is not novel.

This blog post shows how one drug company – Celgene – and its law firm, Jones Day – appear to have gone beyond simply filing patents with claims of dubious novelty to behavior that is much more problematic. [1]

Patents are protected by the US Constitution and were one of the first areas of legislation taken up by the first US Congress.[2]   A patent is a deal between the inventor and the government. The government tells the inventor “in exchange for disclosing the details of your invention – which will increase knowledge and benefit the public – we will grant you a legal monopoly on that invention for a limited period of time.”

No Ball-Hiding Allowed

The law is very clear about the requirement for disclosure. 37 C.F.R. 1.56 states:

A patent by its very nature is affected with a public interest. The public interest is best served, and the most effective patent examination occurs when, at the time an application is being examined, the Office is aware of and evaluates the teachings of all information material to patentability. Each individual associated with the filing and prosecution of a patent application has a duty of candor and good faith in dealing with the Office, which includes a duty to disclose to the Office all information known to that individual to be material to patentability as defined in this section…However, no patent will be granted on an application in connection with which fraud on the Office was practiced or attempted or the duty of disclosure was violated through bad faith or intentional misconduct.

(Emphasis added.)

There’s no “hiding the ball” with the patent office — at least there’s not supposed to be. Inventors, lawyers — anyone connected with a patent application — is required to disclose any information they have that can have a significant affect on patentability.

Some laws are a little vague, this one isn’t. People of my generation enjoyed watching the TV lawyer Perry Mason outmaneuver the bungling district attorney. In a criminal case the defense lawyer has no obligation to reveal negative information about a client. It’s the prosecutor’s job to find the dirt.

That’s not true when it comes to patents. Getting a patent isn’t an adversarial proceeding – the patent office is relying on the applicant and the lawyers not to lie or hide things… and deception can have serious consequences.

Protecting Drugs

Once a chemical compound is known it can usually be easily copied; therefore, patent protection is especially important to branded pharmaceutical companies.

The more patents a brand has, the more likely it is that the owner can delay generic competition.[3]  Celgene and its lawyers at Jones Day have taken this practice to new heights and have 27 patents disclosed in the FDA’s “Orange Book” listing for Revlimid.   The Orange Book is an FDA database  where companies list patents they claim protect their drugs from generic competition.

Telling the European Patent Office (EPO) One Thing and the US Patent and Trademark Office (USPTO) the Exact Opposite

Celgene and Jones Day prosecuted three patent applications with the US Patent Office that had been on file for six years with many exchanges of information and back and forth arguments between the patent office and Jones Day.[4]  At the same time, Jones Day and Celgene were involved in defending a patent challenge on a different patent in the European Patent Office that covered the same crystal structure.[5]

The US Patent Office sent a Notice of Allowance to Celgene on May 15, 2015 with the wonderful news that the applications were allowed and patents would be granted upon payment of the required fee.

On August 14, 2015, Jones Day paid the fee and the US patents were ready to issue.

After you pay the fee, it typically takes five or so weeks for the patent office to act and formally issue the patent.[6]  One would assume based on the payment date that the patents would issue around September 22, 2015. The patent never issued; on September 21, a day before the expected issuance date, Celgene filed a Petition to Withdraw.

So, what happened?

In June of 2015 one of our lawyers hired an expert and asked him to make the same crystal structure following the specific procedure described in certain Celgene patents.[7]

A strange thing happened. The expert tried over and over, changing temperatures, pressures, drying agents and all the things an expert would try, but could not get to the crystal structure when following the “recipe” disclosed by Celgene.

This prompted us to look more closely to see if we were doing something wrong or if there was another explanation.

We reviewed the European filings Celgene had made (Jones Day was also acting as European counsel) and found the most curious thing.  The three US applications all stated that an expert could use a specific experiment from another Celgene patent to get to the particular crystal structure described in the US applications.[8]

In March of 2015, Celgene submitted a brief to the European Patent Office (EPO Submission)[9] and expert statement (Expert Statement)[10] that unequivocally stated an expert could not use this experiment to get to the particular crystal structure.

The first time we read this we had trouble processing what our eyes were seeing in black and white on the page.  More importantly, we reviewed the file on the three US patent applications that were about to issue and realized Celgene and Jones Day never filed the EPO Submission or Expert Statement with the US Patent Office.

A Strategic Withdrawal?

On September 17, days before the patent was due to issue, I sent an email[11] to Hoon Choi and Anthony Insogna, attorneys at Jones Day who handle patents for Celgene.

I attached to the email a formal letter advising them of the potential breach of their duties owed to the US Patent Office. The email and letters pointed out that the EPO Submission and Expert Declaration both contained unequivocal statements exactly the opposite of what was said in the applications that were about to become US patents.

What happened next was really interesting.

On September 21 – a few days after I sent my email and the business day before the patent was likely to issue—Celgene filed a Petition to Withdraw with the US Patent Office.  This petition had attached to it not the EPO Submission or the Expert Declaration, but some random document from the same EPO proceeding that only vaguely referenced the content of the EPO Submission and made no reference to the Expert Declaration.

Then on September 29, Celgene filed an Information Disclosure Statement (IDS) and attached over 40 articles and patents for the examiner to consider.  The IDS did include among the 40 –buried in the middle of the 40 — the EPO Submission and Expert Declaration.   The IDS doesn’t say why any articles or patents were filed or how they were in any way relevant to the applications.   If I were the examiner, I would be curious how it was Celgene did not find these 40+ publications until the day before the patent was supposed to issue—I might even be suspicious that I was being gamed.

I can’t say for certain that Celgene filed the petition to withdraw and the IDS because of my email, but the timing certainly suggests that there may be a connection.   Perhaps there’s another explanation beyond the obvious, but I’m not sure what it would be.

Approving Generics

ANDA (Abbreviated New Drug Application) is the FDA procedure used by generic drug manufacturers to get approval for generic drugs. Celgene is currently in litigation with two companies seeking ANDA approval for generic versions of Revlimid. The information disclosed in this post will no doubt be of interest to those companies.

Two key patents in that litigation are 5,635,517 (‘517) and 7,465,800 (‘800).  The ‘517 is subject to an IPR challenge that should reach an institution decision soon.  The ‘800 is not.

The ANDA filers may want to think about whether the fact that Celgene has admitted an expert can’t make lenalidomide following the procedure in these patents might raise other validity issues that can’t be raised in an IPR — but certainly could be raised in court.

[1] The footnotes in this post are mostly for the benefit of “patent wonks” who may want to see original source material. Links in the text link to the actual Celgene documents.

[2] History of United States Patent Law, Wikipedia  

[3] Post coming soon on how Hatch Waxman does not promote efficiency and evergreening and why evergreening needs to be stopped. Also see a post by Gene Quinn on IPWatchdog.

[4] There are three relevant applications: 12/353,383 (‘383); 13/241,022 (‘022); and 13/240,976 (‘976).  At minimum these patents would have given additional exclusivity to Celgene for Revlimid through 2023.  Identical action was taken with respect to all three, but to keep the footnotes down, I am only footnoting with respect to the ‘383.

[5] Opposition in the European Patent Office regarding European Patent No. 1667682

[6] See blog post from PatentlyO “Timing of the Notice of Allowance, Issue Fee Payment, and Patent Issuance

[7] In particular Experiment 1 of US Patent Nos. 5,635,517 (‘517) and 6,281,230 (‘230).  See ‘517 at col. 7, lines 21 – 55 and ‘230 at col. 8, line 62 to col. 9, line 30.  The disclosures are identical.

[8] See the ‘383 specification at para 0070.  Disclosure directs you to Experiment 1 of the ‘517 and ‘230.

[9] Submission pursuant to Rule 116 EPC – Oral proceeding on May 7, 2015 (EPO Submission). See page 15 (Upon repeating the conditions in Example 1 of the ‘517 patent “no Lenalidomide could be detected.”) See Note 15 for copy of EPO Submission.

[10] In making the statements in the EPO Submission, Celgene relied on a Declaration of Ravi Narajan which stated that following Expirement 1 of the ‘517 and ‘213, no Lenalidomide was formed. See Note 15 for copy of Expert Statement.

[11] This is a link to the email. If you are just going to read one thing, read this one.  The attachments to the email lay out the specifics: see the letter for the ‘383 patent (the other two letters are the same), the EPO Submission and the Expert Declaration.

 

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October 15th, 2015|Categories: Pharma|Tags: , |0 Comments

Evergreening and Nucynta Pain Medication

As we announced on this blog a few days ago, we’re making draft inter partes review (IPR) documents available for anyone who wishes to use them to challenge patents for certain drugs that we find overpriced and protected by seemingly invalid patents.

An IPR is an administrative procedure at the United States Patent and Trademark Office (USPTO) to challenge the validity of a patent. The Patent Trials & Appeals Board (PTAB) is the particular administrative body at the USPTO that handles the review of IPRs. We now know from a recent ruling that anyone can file an IPR – the filer’s motives, intent, status as a competitor, lack of altruism and all the other specious arguments raised by pharma are simply irrelevant.   Now we know “anyone” actually means anyone.

The first draft IPR document we’re releasing is for Nucynta and Nucynta ER — medications used in the treatment of chronic pain that are currently marketed by DepoMed, Inc. It’s available here.

Nucynta was approved in 2008, and the “extended release” version was approved in 2011. Today, these medications cost about $7,000 per year — up from less than $3,000 when the medication was first launched.

That’s a 133% increase in seven years – at a time when inflation’s been running about 2% per year.

Depomed’s Business Strategy

Depomed’s business strategy is to buy lesser-known drugs and then massively increase the price of those drugs immediately after acquisition.

When Depomed bought the rights to Nucynta and Nucynta ER in 2015 from Johnson & Johnson, the first thing the company did was raise the price by 44%.

Pharmaceutical companies love to argue that high drug prices are critical to support research. But of the five medications currently offered by Depomed, only one was developed internally.

According to the company’s 2014 Annual Report, Depomed slashed spending on R&D from $15m in 2012 to $7m in 2014 — while revenues have gone up from $90m to $390m.

Revenues up, research down. That’s not the way pharmaceutical companies say it’s supposed to work, but from a business perspective, it makes a lot of sense: why spend time and money on tedious research to invent something new to benefit the public when you can buy up old drugs, jack up the prices, and pocket the profits?

Nucynta’s Patent Protection

The FDA’s Orange Book is a list of approved drugs. The information in the database includes which patents supposedly protect each drug and when they expire.

Nucynta is protected by three Orange Book patents. Nucynta ER (the extended release version) is protected by eight Orange Book patents.

The longest-dated patent currently claimed to cover Nucynta expires in June 2025 and is designated as US Patent No. 7,994,364 (the ‘364 patent).  The ‘364 patent is probably invalid. There is one patent with a later expiration date than the ‘364 that covers Nucynta ER, but we’ll discuss that in a future post.

As discussed in the draft IPR petition attached, inconsistent statements were made during the prosecution of the ‘364 patent in the US and in Europe with respect to the active ingredient in Nucynta and Nucynta ER. We caught this, had experiments conducted, and confirmed this deception. It will now likely come back to bite DepoMed.

Draft IPR

The draft petition is available in Word format here and a PDF version is available here. Feel free to use this free of charge for any purpose.

If you’re so inclined, make comments in the comments section below.

You can also send comments to us at info@nxn.com with “Nucynta” in the subject line.

Or you can create your own community to deal with this issue and leave us out of it.

If you’re interested in filing the IPR petition, we can make available two expert declarations and related experimental data in support of the petition.

If you’re a law firm or expert that would like to help put an end to evergreening and other bullshit practices like buying old drugs and implementing huge price increases, we are happy to connect you with interested filers.

The ideal filer would be a charitable organization, law school, or consumer-focused action group — but perhaps someone will come up with other ideas.

To be clear—I do not hold a long or short position in Depomed. I’m not asking for – nor will I accept – compensation from anyone for this petition or related declarations: it’s all now public property.

I’m hoping that additional IPR filings will help stop the US Patent Office from continuing to over-indulge the pharmaceutical industry — at the expense of patients and the American taxpayers.

If the United States Patent Office would do its job and stop bending its knee to pharma by permitting evergreening and holding pharma IPRs to higher legal standards than other technologies, drug prices would fall. As politicians look for ways to lower drug prices, let’s hope they keep this in mind and encourage the US patent office and the PTAB to do its job.

Our guess is that few Americans are familiar with the USPTO, and even fewer have heard of the PTAB—but perhaps as more become familiar with evergreening they will reach out and let politicians, the USPTO, and the PTAB know they are not fans of evergreening, and that it needs to stop.

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September 29th, 2015|Categories: Pharma|Tags: , |1 Comment

Evergreening, Altruism and Crowd Sourcing

Drug prices in America are out of control.

In one recent outrageous example, Turing Pharmaceuticals acquired the rights to Daraprim, a 62-year-old drug used to treat toxoplasmosis—a common infection that has serious consequences for people with weakened immune systems. Overnight the price was raised from $13.50 a pill to $750 a pill – an increase of 5,000%. The company was forced to back down after an article in the NYTimes led to a huge public outcry.

Beating Inflation (By Miles)

Barron’s shares a Credit Suisse report that shows branded drug prices are going up at a rate of 11-12% a year — at a time when inflation is running under 2% per year.

Some companies, such as Eli Lilly and Pfizer, have averaged one-year price increases of over 17%.

That 9-15% difference between the inflation rate and the rate of increase in drug prices translates into billions of dollars of profits for pharmaceutical companies. This price gouging also puts many drugs out of reach for people who desperately need them, and drives up overall healthcare costs for everyone. Playing by the rules, drug companies can charge whatever they like—it is when they become beneficiaries of a massive corporate welfare program and misguided policies of an obscure government agency (the US patent office) that most people have never heard of that it raises serous issues.

There are many reasons for the big increases in drug prices. They include:

  • “Niche” drugs whose market is too small to support more than one manufacturer. That one manufacturer may feel free to charge astronomical prices since no one is interested in competing with them. That was the case with Daraprim.
  • By law Medicare, the largest purchaser of drugs in the world’s largest market, can’t negotiate prices with drug companies. An article in the Wall Street Journal claims drug costs could be reduced by $16 billion per year by changing this. Medicare pays double what health care systems in other countries pay for the same drugs.
  • “Evergreening,” a process whereby drug companies extend patent protection for drugs from the statutory (and reasonable) 10 to 20 years to 30 years or more by getting new patents for “innovations” that aren’t at all innovative.

I don’t have a solution to the first two problems. Write your Congressperson. But I do have a solution for “evergreening” — one that could save consumers billions of dollars a year.

Stop Evergreening

The solution is very simple: get the US Patent and Trademark Office (USPTO) to do its job. Stop treating pharmaceutical patents as a privileged class of technology to which the usual rules don’t apply.

By law, inventions are supposed to be “novel” – new – and “not obvious to one skilled in the art” in order to qualify for a patent.

For some reason, the same “novelty” and “obviousness” standards that apply to other fields of endeavor don’t seem to apply to drug patents.

In a practice the drug companies call “life cycle management” (and everyone else calls “evergreening”), pharmaceutical companies are getting patents on highly questionable “innovations.” It is not so much that they are “incremental” (which the patent law promotes) as they are simply not patentable for various reasons.

These bogus “new” patents can extend a drug’s patent protection by a decade or more – allowing drug manufacturers to charge legally sanctioned monopoly prices far longer than deserved.

The patent office has granted patents where the only “novelty” is:

  • siliconized rubber bottle stoppers
  • micro tablets (rather than the full-size versions or granulates)
  • using computers to manage drug distribution

There are many more examples and I will write on this topic soon. Perhaps we’ll give an annual award for the most ridiculous pharma patents.

You can tell when you’re getting into evergreening territory just by looking at the patent. Evergreening patents will typically have the following attributes:

  • more than 100 references on the cover page
  • a four (or greater) year gap between the expiration date of the patent and the previous patents listed with the drug in the FDA’s “Orange Book” of approved drugs
  • a convoluted prosecution history — typically the patent was prosecuted by some mega law firm that simply wore down the patent examiner
  • multiple uses of the phrase “surprising result” or “unexpected result” in the patent specification

When these four attributes are present, it’s likely that there’s nothing really patent-worthy here. It’s just a case of evergreening — extending the patent monopoly to hold generic manufacturers at bay.

The algorithm we use to analyze the Orange Book patents is a bit more complicated, but if you don’t have time to build and test an algorithm, you’d do well just looking at these four attributes.

One interesting example is Celgene’s Revlimid, a drug used to treat anemia and multiple myeloma. This drug has gone up in price from $18,000 a year in 2005 to almost $200,000 a year in 2015. This 1,000%+ increase has resulted in Medicare Part D costs for Revlimid in 2014 of $1.35 billion – for treating approximately 25,000 patients.

Revlimid is based on thalidomide, a drug that’s been around since the 1950s. An article in SeekingAlpha points out:

…examiners of Celgene’s ‘517 patent should have found it obvious that a closely-related chemical analog like lenalidomide would reasonably exhibit similar properties and therefore should not have issued this core Revlimid® patent upon which all of the Revlimid® patents are based. There has been nothing unexpected or unanticipated about the effects or uses of the pharmaceutical compounds claimed by Celgene over the precedent scientific literature.

In May, the European Patent Office revoked one of Celgene’s patents on Revlimid. The USPTO should follow its lead.

Reducing Drug Prices—Get the USPTO to do its Job

Two simple steps by the US patent office would dramatically reduce drug prices:

Step One:

The US patent office should stop allowing evergreen patents that turn what should be 10- to 20-year monopolies into 30+ year monopolies. This will have a medium- term impact on prices, as generics become available more quickly, and the associated savings would be considerable.

Step Two:

The US patent office (technically the Patent Trial and Appeal Board or PTAB) should stop giving ridiculous deference to pharma patents in Inter Partes Review (IPR) proceedings.

Inter Partes Review

An IPR is an administrative procedure for challenging the validity of a US patent. The procedure is conducted by the PTAB.

A study from DLA Piper shows the preferential treatment the pharmaceutical industry is getting.

When filing an IPR, the first hurdle is getting the PTAB to agree to institute a proceeding. In all other technology areas, the institution rate is approximately 80%. For pharmaceutical patents it’s only 46%. In other words, non-pharmaceutical patents are nearly twice as likely to be subjected to an IPR. Is it that pharma patents are somehow of higher quality than other patents? According to a 2009 European Patent Office study, it is likely just the opposite is true and that pharma patents are generally of lower quality given European Patent Office invalidation rates in proceedings similar to US IPRs.

If the Director of the US patent office would take her thumb off the scale in favor of pharma patents — or direct whoever owns the thumb to remove it — this would have a near-term impact, accelerating generic entry and lowering drug prices.

According to the Congressional Budget Office, the cost of excluding pharma patents from IPRs (at least in part what the US patent office is now doing) will exceed $1.3 billion over the next 10 years. According to the Center for Economic and Policy Research this cost will exceed $200 billion over the next 20 years.

That windfall will be paid by patients and taxpayers to pharma companies – unless we do something about it.

Can a “Troll” be Altruistic?

As I thought about this more, it became apparent to me that I was probably the wrong person to be the face of this effort – particularly on Step Two. Drug companies constantly remind me that I am a “patent troll” and lacking altruistic motives.

But it’s because of the money I’ve made from patent monetization that I can afford to be altruistic (at times) – and to offer others the resources to fight the pharma industry. I truly believe that it is outrageous that pharmaceutical companies get away with misusing the patent system to gouge consumers, and I want to help fix this.

Here is how it will work.

I’ll make publically available substantially final draft versions of IPR petitions for pharma patents that I think are invalid. My hope is that, via crowd-sourcing or some other way, people far smarter than me will comment on the petitions and make them even better.

After the petitions are polished and suitable for hanging in The Louvre of IPR petitions, perhaps some person with altruistic motives will file them or maybe a person that is mean to puppies will file them.

I don’t care who files. It could be a law school student group, a charitable organization, a health insurance company, a consumer protection group, or a government entity sick of seeing and outrageous example of corporate welfare that results in harm to patients and taxpayers.

To help whoever takes on the task, I’ve found a number of law firms and experts that have offered fee arrangements that are a fraction of normal market pricing. If you email info@nxn.com, this information along with additional materials you will need will be provided. If there are any law firms or experts who are interested in helping out in this effort, happy to make introductions.

Unfortunately, I can’t pay the legal or expert fees or that would make me part of the IPR as a “real party in interest,” and then we’d be back to dealing with the lack of altruism rubbish from these corporate welfare-benefiting thieves that engage in the most outrageous activities.

The first draft IPR should be up on the blog early next week. Enjoy.

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September 25th, 2015|Categories: featured, Pharma|0 Comments