Inter Partes Review (IPR) is conducted at the Patent Trial and Appeal Board (PTAB) to review the patentability of claims only on the basis of anticipation and obviousness based only on patents or printed publications. So far, more than 70 percent of petitions have resulted in instituting of an IPR. The procedure for conducting IPR took effect on Sept. 16, 2012, under the America Invents Act, and applies to any patent issued before, on, or after Sept. 16, 2012. An IPR petition can be filed nine months after the grant of the patent or issuance of a reissue patent and can be instituted upon a showing that there is a “reasonable likelihood” that the petitioner would prevail with respect to at least one claim challenged.

The petitioner has the burden of proving unpatentability by a preponderance of the evidence, in contrast to in district court where a clear and convincing standard is used to invalidate patents. A final determination by the PTAB is issued within one year, which is extendable for good cause by six months. The petitioner is estopped from asserting that the claim is invalid on any ground that the petitioner “raised or reasonably could have raised” during that IPR in subsequent proceedings or civil action. The claim language in an IPR is given its “broadest reasonable interpretation.”

An IPR may not be instituted if the petitioner previously filed a civil action challenging the validity of a claim of the patent. Also, an IPR may not be instituted if the petition requesting the proceeding is filed more than one year after the date on which the petitioner is served with a complaint alleging infringement of the patent. A civil action challenging the enforceability of a patent or asserting non-infringement has no impact on the filing of an IPR. Additionally, a patent can be challenged by one party in civil court and by another party at the PTAB by instituting an IPR.

IPR is being used increasingly as an alternate to Hatch-Waxman litigation. Under the Hatch-Waxman Act, a generic company which files a paragraph IV certification faces a 30 month delay of FDA approval and also cannot file its Abbreviated New Drug Application (ANDA) for four years after a new drug has been approved by the FDA because of “NCE exclusivity.” Unlike the first to file ANDA applicant, which would be eligible for the 180-day market exclusivity, a later ANDA filer may be able to enter the market sooner by successfully invalidating the patent in an IPR because it can file for IPR nine months after the issue date of the patent.

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An example of this is the IPR filed by Ranbaxy in Ranbaxy Laboratories, Ltd v. Vertex Pharms., Inc.. Here, Ranbaxy, which was not the first to file, challenged the validity of Vertex’s U.S. Patent No. 6,436,989 which Vertex had previously asserted against Mylan in the District of Delaware. Ranbaxy and Vertex reached a settlement during the IPR which also covered any future potential litigation between Ranbaxy and Vertex under the Hatch-Waxman Act.

In Ranbaxy, the Delaware district court had denied a stay of Vertex’s litigation against Mylan pending the completion of the IPR with Ranbaxy. However, courts may be inclined to stay infringement litigation for the short time required for the resolution of invalidity issues in an IPR. The New Jersey district court granted a stay of civil action pending the IPR decision in Depomed Inc. v. Perdue Pharma, LP. Here, Depomed sued Perdue for infringement of U.S. Patent No 6,635,280 on Jan. 23, 2013. Perdue filed an IPR petition on January 24, 2014 and the IPR was instituted on July 10, 2014. Staying the civil action on July 25, 2014, the court explained its decision on a finding that the likelihood of Depomed being prejudiced by a stay was minimal; PTAB’s decisions on Purdue’s petition for IPR review would likely substantially simplify the issues before the court and would promote judicial economy and efficient resolution of the matter; and the relatively early stage of the civil proceedings.

Interestingly, even after a district court has held that a patent was not invalid, the PTAB instituted an IPR in Apotex Inc. v. Alcon Pharmaceuticals, Ltd., ruling that there was a reasonable likelihood that the challenged patents were invalid for obviousness. As a consequence, after the initial PTAB findings, the Apotex was able to get a settlement from Alcon.

In instituted IPRs, some or all of the challenged claims have been invalidated more than seventy percent of the time. Other advantages of IPRs for generics include the lower “preponderance of the evidence” burden of proof, “broadest reasonable claim construction,” and potentially being faster and more economical compared to district court litigation. For generics which do not have the 180-day market exclusivity incentive because they were not the first to file the ANDA, petitioning for an IPR may be a very attractive route to potentially invalidate patent claims.