Big Pharma Fires Defensive Missile: Complaint Filed for Attempted Extortion

Authored by Michelle Carniaux

Big pharma continues to be on the defensive against IPR attacks by financiers, this time, by filing a civil law suit against a financier/IPR petitioner. Last Friday, Allergan filed a complaint in the Central District of California for attempted extortion, unfair competition and malicious prosecution, against Ferrum Ferro Capital. According to the complaint, Ferrum Ferro filed an “objectively baseless IPR petition for the express purpose of monetizing the petition, including by attempting to extort compensation from Allergan.” Allergan, Inc. et al. v. Ferrum Ferro Capital, LLC et al., 8:15-cv-00992, No. 1 at 2 (C.D.Cal., June 19, 2015).

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Breaking: Federal Circuit Affirms, Reverses, and Vacates in Part PTAB Decision in Microsoft v. Proxyconn

Authored by Michelle Carniaux and Michael E.Sander

This morning, the Federal Circuit issued its second substantive decision on an appeal of a final IPR decision, and its first remanding back to the Board, in Microsoft Corp. v. Proxyconn, Inc. See Microsoft Corp. v. Proxyconn, Inc. 2015-1542, 2015-1543 (Fed. Cir. June 16, 2015); see also IPR2012-00026, IPR2013-00109. In its decision, the Federal Circuit re-affirmed that the broadest reasonable interpretation claim construction standard applies in IPR proceedings. 2015-1542 at 6 (citing In re Cuozzo Speed Techs., LLC, 778 F.3d 1271 (Fed. Cir. 2015)). The Federal Circuit also made clear that it reviews the Board’s conclusions of law de novo and its finding of fact for substantial evidence. Id. at 2 (citation omitted). Accordingly, consistent with Teva Pharmaceuticals U.S.A., Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015), in reviewing the Board’s claim construction determinations, the Court reviews the Board’s claim constructions de novo and its underlying factual determinations involving extrinsic evidence for substantial evidence. Id. at 5-6.

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Sanctioning the “Spider”: Big Pharma Fights Back Against Kyle Bass’ IPR Campaigns

Authored by Michelle Carniaux and Michael E. Sander

Kyle Bass and his hedge fund Hayman Capital have become infamous for challenging the validity of patents owned by large biopharmaceutical companies, but now, “big pharma” is fighting back. On June 9, 2015, Celgene Corp. moved a step closer to ending Bass’ IPR reign of terror. In a set of IPRs challenging two patents owned by Celgene Corp. (IPR2015-01092,01096,1102,1103), the PTAB authorized briefing on a Motion for Sanctions over whether Bass and his related companies were, as alleged, “abus[ing] the IPR process for private financial gain.” IPR2015-01102, No. 7 at 6 (P.T.A.B. Jun. 9, 2015). Celgene argued that Bass intends to use the IPR process for the purpose of affecting the stock price of publicly traded companies, which is “not the purpose for which the IPR process was designed.” Id. Celgene also alleged that “one or more of the identified RPI previously threatened to file IPRs against the challenged patents unless Celgene met their demands.” Id. Celgene requested the Board to dismiss the petitions as a sanction for abuse of process and misuse of the IPR proceedings. Id.

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PTAB Issues Second Ruling on Scope of Estoppel After Final Decision

Authored by Brian S. Mudge

In its second ruling on the scope of estoppel,1 the Board has rejected a patent owner’s attempt to terminate an AIA trial based on a final written decision involving the same patent. The case, Westlake Services, LLC v. Credit Acceptance Corp., CBM2014-00176 (PTAB May 14, 2015) (paper 28), involved a covered business method (CBM) proceeding brought in connection with U.S. patent no. 6,950,807. Although the ’807 patent was the subject of a final decision in a prior CBM case, the PTAB ruled that estoppel did not bar the second CBM proceeding because the specific claims of the ’807 patent at issue were not addressed in the prior final decision.

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Financier’s Short-and-Petition Strategy Targets More Drugs: Nine and Counting

Authored by Maria Luisa Palmese and Eric Paul Greenwald

We recently referenced Coalition for Affordable Drugs LLC’s (“CFAD”) unconventional practice of filing inter partes review petitions seeking to invalidate patents covering approved drug products after obtaining a “short” position on the stock of companies marketing those drugs. CFAD leader Kyle Bass explains that the strategy is designed to increase returns for his investors while lowering drug prices. He does not address the long-term effect of this type of speculation on the pharmaceutical industry and pharmaceutical innovation. In February, we wrote about CFAD’s first IPR filing, which targets patent protection on Acorda Therapeutics’ multiple sclerosis drug Ampyra and reported that Acorda’s shares fell five percent in the two days following the filing . See IPR2015-00720. Last week’s filings bring the total IPR petitions to twelve and drugs targeted to nine, including Celgene Corp.’s multiple myeloma drugs Pomalyst, Thalomid and Revlimid and NPS Pharmaceuticals’ (now part of Shire PLC) short bowel syndrome drug Gattex. See IPR 2015-01096; IPR2015-01102; IPR2015-01103, and IPR2015-01093. The filings and share prices the day before, day of, and day after filing are summarized in the chart below. The chart also indicates whether CFAD challenged all Orange Book patents listed for the target drug. As can be seen, so far Shire PLC’s Lialda is the only drug for which CFAD has challenged all Orange Book patents listed.

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