Preparing Pharma for Generics’ IPR Attacks

Abstract

For thirty years, patent disputes between pharmaceutical innovators and their generic competitors in the United States have been resolved in district court litigations under the balanced Hatch-Waxman Act framework. Generics have now started using the new adversarial inter partes review (IPR) proceeding in the U.S. Patent and Trademark Office to challenge pharma's patents, and have done so even before being sued in district court. This article describes the IPR threats pharma has already seen, together with specific recommendations to prepare for IPR defense. These preparations start with refocused prosecution strategies. They further include earlier and deeper due diligence to prepare, in advance, a forceful validity defense for these fast-paced proceedings.

I. How Generic Manufacturers are Using IPRs

Generic manufacturers are actively petitioning the U.S. Patent and Trademark Office (PTO) for inter partes review (IPR) of patents protecting pharmaceutical and biological products. This should not be surprising, as IPRs provide advantageous standards for invalidating a challenged patent, such as the "broadest reasonable claim construction" and "preponderance of the evidence" burden of proof. The use of IPRs by generics is also not surprising, given how effective the proceedings have been in invalidating challenged claims. Indeed, once instituted, challenged claims have been cancelled more than 70% of the time. Likewise, IPRs enable patent challenges with limited discovery burdens and at a fraction of the cost of a district court litigation.

What is unique, however, is how generics and biological competitors are using IPRs as tools in their strategies to navigate the regulatory approval landscape. For instance, while the majority of IPR petitions filed involve concurrent district court litigation,¹ generics have proceeded with IPR challenges independent of being sued. In one case, Ranbaxy, who had not been sued for infringement, petitioned for an IPR of Vertex's patent for Lexiva (fosamprenavir calcium) HIV antiviral. Ranbaxy Lab., Ltd. v. Vertex Pharm., Inc., IPR2013-00024. This forced Vertex, which was already litigating the patent against Mylan in a district court Hatch-Waxman litigation, to defend its patent on two fronts. Vertex, instead, settled the IPR with Ranbaxy, leaving only the district court litigation against Mylan. This case may be emblematic of a generic strategy to use IPRs to obtain leverage for settlement, betting that an innovator would want to mitigate the risk of having its patents challenged in both Hatch-Waxman litigation and before the PTO. Indeed, given the fast pace of IPRs, which typically conclude within twelve months of institution, the patent owner who is not prepared for an IPR challenge may be more inclined to settle.

Generics also appear to be using IPRs proactively to avoid or preempt Hatch-Waxman or Biosimilars Act litigation. Unlike a traditional Paragraph IV lawsuit or litigation under the Biosimilars Act, a challenger can petition for IPR without filing an ANDA or a biosimilars application. For instance, Hospira filed an IPR petition for Janssen's patent covering Eprex (epoetin alfa), a biologic used to treat anemia. Hospira, Inc. v. Janssen Pharm., Inc., IPR2013-00365. Janssen subsequently disclaimed all of the challenged claims, and the IPR was terminated. This effectively dedicated to the public—including Hospira—the subject matter of the challenged claims.

Another generic strategy that may be inferred is an attempt to interfere with the exclusitivity of the first generic ANDA filer. For example, Apotex filed IPR petitions against three Alcon patents covering Travatan Z (travoprost), an opthalmic solution for eye pressure. Apotex Corp. v. Alcon Research, Ltd., IPR2013-00428, -00429, -00430. In another case, Apotex filed IPR petitions against Alcon patents covering Vigamox (moxifloxacin), a solution for eye infection. Apotex Corp. v. Alcon Research, Ltd., IPR2013-00012, -00015. While Apotex was a defendant in concurrent district court litigations related to these patents, it appears Apotex was not the first ANDA filer in either case. The "first filer" distinction is generally very significant in the ANDA context, since only a first filer get the prized 180 day exclusivity. However, invalidating the patent may permit a second filer to enter the market sooner than otherwise would have been possible.

Given the motivations for generic manufacturers to petition for IPRs of pharmaceutical patents and their ability to do so on a schedule of their choosing, the owners of those patents—and the marketers of those products—need to be ready.

II. Three Steps To Prepare For Generic IPR Challenges

A. Better Prosecution

Preparations for possible IPRs should start with the original prosecution. Ideally, prosecution counsel should have experience in asserting and defending pharmaceutical patents in adversarial settings. At the very least, prosecution counsel should actively consult with litigation and IPR counsel to understand potential generic challenges to validity and infringement.

To optimally prepare for a potential IPR, it may be preferable to conduct an extensive prior art search prior to drafting the application. With knowledge of the prior art, claims can be better drafted to cover pharma's product and avoid the prior art. Knowledge of the prior art also ensures that the closest prior art can be submitted to the PTO during patent prosecution, which may make the generic's IPR challenge more difficult.

Another potentially beneficial prosecution strategy is to build the story of the invention into the specification. Doing so has the potential to preempt unfounded obviousness arguments, and can be particularly important in IPR proceedings given the limited time and limited discovery.

It could also be beneficial to maintain pendency of the application family by filing continuation applications where there is additional subject matter to be claimed. Continued prosecution further provides flexibility for responding to newly discovered art, commercial developments, and challenges through litigation and IPR. This leads naturally to the next point, "more prosecution."

B. More Prosecution

Another strategy to increase the chances of surviving an IPR is to seek both more patents and more claims within those patents, assuming that there are multiple patentably distinct inventions to be claimed. A larger portfolio can still be attacked, but this requires either one challenger to take on a greater burden or requires the coordinated efforts of multiple challengers—all of whom would be subject to the estoppel provisions of 35 USC § 315 in any later district court litigation. A larger portfolio also increases the chance of at least one claim surviving to assert in the district court, where a thirtymonth stay of ANDA approval attaches.

More specifically, when faced with multiple patents, generics will need to file multiple IPR petitions. These petitions may include multiple and varying invalidity theories and multiple and varying expert declarations. Between PTO, attorney, and expert fees, the burden and costs multiply to deter baseless IPR filings. Notably, even if faced with only one patent, if that patent has a multitude of distinct claims, a generic manufacturer may be forced to limit its challenge or consider multiple IPR filings, given that IPR petitions are restricted to sixty pages. Further, as in Garmin International, Inc. v. Cuozzo Speed Technologies LLC, IPR2012-00001, IPR2013-00373, even with multiple petitions to challenge all of the patent claims, the PTO may not institute against all the challenged claims—guaranteeing that there will be some claims to assert in the district court.

In essence, and as is true in other contexts,² a large portfolio of related patents generally provides an aggregate value greater than each individual patent.

C. Earlier and Deeper Due Diligence

A pharmaceutical company's due diligence strategy should begin early. Under the traditional Hatch-Waxman framework, the patent owner can often anticipate the timing of generic challenges. For example, an innovator company with "NCE Exclusivity" would have at least four years before a generic could even file its ANDA, a necessary prerequisite for Hatch-Waxman litigation. But an IPR can be filed as soon as nine months after patent grant, potentially accelerating the timetable for patent challenge. An early due diligence can be used to avoid and correct errors; determine and obtain optimal claim coverage; and assess, evaluate, and address potential vulnerabilities.

Each due diligence should be individually tailored, but for an IPR one should consider a thorough search to identify prior art that could form the basis of an IPR petition. As with all aspects of the investigation, the art should be evaluated from the perspective, and with the input, of litigation and IPR counsel, to address and resolve issues that may be particularly important in those settings.

Due diligence should also involve collecting and establishing objective indicia of nonobviousness, e.g., commercial success, recognition, and praise by others in the field. This type of evidence has become exceedingly important when claims are challenged as obvious. See, e.g., Leo Pharm. Prods., Ltd. v. Rea., 726 F.3d 1346, 1358 (Fed. Cir. 2013) (considering extensive experimental evidence of unexpected results in overruling the Board's obviousness finding); St. Jude Med., Cardiology Div., Inc. v. Bd. of Regents of Univ. of Mich., IPR2013-00041 (considering commercial success and long-felt need as part of obviousness analysis).

Experts should also be lined up in advance. While an IPR petitioner can craft its invalidity theories at leisure, the patent owner has just three months if it wants the Board to have the benefit of its input when determining whether an IPR will be instituted. This can be sorely little time to identify and consult with the right expert.³ Moreover, once instituted, the patent owner has only three months to conduct discovery; prepare its own expert declarations; prepare its claim construction positions; demonstrate why the cited patents or printed publications do not qualify as prior art; and present arguments why the claims are patentable in view of the prior art. The PTO is also particularly reliant on experts, making their selection all the more important. Synopsis, Inc. v. Mentor Graphics Corp., IPR2012-00042 (in finding claims patentable, finding patent owner's expert testimony persuasive, and noting that petitioner did not cite any contrary expert testimony in support of its arguments); Intellectual Ventures Mgmt., LLC v. Xilinx, Inc., IPR2012-00020 (PTAB) (in finding claims invalid, affording little or no weight to patent owner's expert's conclusory opinions, and noting that patent owner did not cross examine petitioner's expert).

If due diligence reveals a problem with one or more patent claims, the patent owner should consider addressing the problem early. Options may include pursuing the appropriate protection in a continuation application or corrective action in an ex parte PTO proceeding such as reissue, post-grant correction, or supplemental examination. In addition to allowing the patent owner to address possible problems without the involvement of an adverse party, the patent owner likely will have more flexibility in amending claims ex parte given that amendments have been rarely allowed in IPR proceedings. By addressing potential problems in a continuation or an ex parte proceeding, pharma can potentially preempt the damage of an adversarial IPR attack.

III. Conclusion

Generics' IPR challenges are a real and growing threat to pharma. By starting its defense early—indeed during the drafting and prosecution of the application—pharma patents can be built stronger to better defend these IPR attacks. Proactively marshaling evidence, engaging experts, and working with IPR-experienced counsel to develop a defense, even before any IPR petition is filed, also may be crucial. Indeed, generics' IPR challenges can come at almost any time and, once filed, they proceed at a fast pace. Unless the PTO begins to exercise its discretion to deny IPR petitions that seek to circumvent the Hatch-Waxman framework,⁴ early preparation is clearly the best defense.

Endnotes

¹ Totten, J.C. & Jeschke, E.C., "Four Strategies to Stay Litigation in Favour of IPR," Managing Intellectual Property, April 28, 2014.

² Gideon Parchomovsky, Patent Portfolios, 154 U. PA. L. REV. 1, 5–6 (2005).

³ Although expert declarations are not permitted with the patent owner's statement, having an expert's input before institution can be critical to developing a well-informed position.

⁴ Gleaton, A., Sukduang, S., Levine, H., & Lipsey, C., "Inter Partes Review in Generic Drug Litigation—Why the USPTO Should Exercise Its Discretion to Deny IPR Petitions in Appropriate Hatch-Waxman Act Disputes," pharmaphorum (March 7, 2014).

Reproduced with permission from Pharmaceutical Law & Industry Report, August 15, 2014. Copyright © 2014 The Bureau of National Affairs, Inc. (800-372-1033) www.bna.com. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.