Financier’s Short-and-Petition Strategy: An Update

Authored by Maria Luisa Palmese and Eric Paul Greenwald

We write to update our April 29th post regarding the stock price of pharma companies targeted by Kyle Bass’ Coalition for Affordable Drugs LLC’s (“CFAD”) inter partes review (IPR) petitions. According to Bass, the generation of returns for his hedge fund investors through short selling the stock of his IPR targets is the primary driver of his IPR petition strategy. Now that several of his petitions have been ruled on, let’s see how his “big short” strategy has played out. As of today, half of the fourteen petitions mentioned in our first post have been granted (i.e., the PTAB has instituted an IPR), and the other half have been denied. Of the seven successful petitions, four were against Celgene Corp. and three against Shire PLC. No IPR proceedings have yet been concluded.

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PTAB Crashers: A Look at How They Are Doing in the PTAB

Authored by Michelle Carniaux

A little over six months ago, we identified certain “outsiders” who have filed IPR petitions. These outsiders include financiers, activists, and patent defense firms, none of whom were accused or at risk of being accused of patent infringement. While they account for only around 2% of the IPR petitions filed to date, one group of these outsiders seems to have raised the hackles of Big Pharma. The Coalition for Affordable Drugs entities (Kyle Bass et al.) have filed 33 IPR petitions against Big Pharma patents (allegedly) as part of a stock shorting investment strategy.

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Expanded Panel Flips Joinder Denial

Authored by Michelle Carniaux

The issue of whether the PTAB has the authority to join a subsequent petition to an ongoing inter partes review proceeding in which the petitioner is already a party appears to be settled, at least within the PTAB. We previously wrote about a Decision Denying Institution in Zhongshan Board Ocean Motor Co. et al. v Nidec Motor Corp., IPR2017-00762, in which, over a dissent, a two APJ majority found the PTAB does not have such authority. That majority decision, however, may be an example of APJs breaking ranks with the Patent Office. An expanded APJ panel recently granted Petitioner Zhongshan’s motion for rehearing, concluding that the denial decision was based on an erroneously narrow interpretation of 35 U.S.C. § 315(c). IPR2015-00762, Paper 16 (P.T.A.B. Oct. 5, 2015).

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Chance at a Second Bite: No Estoppel as to Redundant Ground

Authored by Michelle Carniaux

It has been close to three years since the PTAB first exercised its discretion to decline institution of inter partes review grounds it found to be “redundant” of grounds on which it instituted trial. See CBM2012-00003, No. 7 at 2 (P.T.A.B. Oct. 25, 2012). Since then, the PTAB has routinely been exercising its discretion in this way to take into account “efficient administration of the Office, and the ability of the Office to timely complete proceedings.” See C.F.R. § 42.1(b).

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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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