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Having lobbied hard to have Inter Partes Review proceedings (IPRs) enacted, the tech industry may now be regretting what it wished for, write Traci Medford-Rosow and Peter C. Richardson.
In June the Supreme Court upheld a key standard under which Inter Partes Review proceedings (IPRs) are conducted by the US Patent and Trademark Office (USPTO). Enacted by Congress in 2011, IPRs were at first the wish, and indeed the brainchild, of the tech industry and those concerned by the rapidly growing number of patents on business methods. Seeking to create an alternate form of attacking competitor’s patents and defending against patent trolls, in lieu of the more expensive and lengthy district court lawsuits, the tech industry lobbied hard to have IPRs enacted.
Perhaps they may now be regretting what they wished for.
Research-based pharmaceutical companies certainly are, but then again, they are used to getting the short end of the stick.
Let’s see if we can count the myriad ways in which a generic company can attack an innovative drug patent.
First, there are the ANDA challenges, enacted by Congress in 1984 under Hatch-Waxman. The law, intended to be a fair compromise between research-based pharmaceutical companies that invent life-saving drugs, and generic companies that want to sell copy-cat versions thereof, the system has long broken down in practice.
Ironically, it is not just the research-based companies that are suffering under the onslaught of continuous and multiple attacks on their intellectual property, but the generic companies, as well. Hatch-Waxman was intended to encourage generic companies to challenge an innovator’s patent and provided a juicy, ripe carrot to do so. The first generic company to successfully knock out an innovative drug company’s patent was awarded a coveted golden ring-six months of exclusivity during which no other generic company could sell the product.
But this prize was soon rendered meaningless when multiple generic companies began their patent challenge on the first day possible-a mere four years after the product’s first launch. While this has proven challenging for Big Pharma companies, which often have to fight off as many as ten to twenty generic attacks simultaneously, it has also come to haunt the generic companies.
Why? No longer any first filers, there is no longer any golden ring to capture.
Settle one might think?
Not so fast.
It has proven exceeding difficult, if not impossible, to settle an ANDA patent infringement case when there are multiple first filers. How many thinner slices can one make out of a single slice of pizza?
Then again, due to the current practice of the Plaintiff’s Bar, bolstered by yet another Supreme Court case, FTC v Actavis, it has become all but impossible to settle a patent infringement case in any event, no matter how fat the initial slice of pizza is. Regardless of the deal, regardless of how much the patent owner gives up, there is no end in sight to the number of antitrust cases that are filed against both parties asserting foul play in the settlement.
Apparently this quagmire is not enough for society. Generic companies have yet another form of attack in the USPTO, through the initiation of an IPR, in which another quagmire is brewing. Many companies are even filing Hatch-Waxman ANDA challenges and IPRs simultaneously. If their request for an IPR is not granted by the USPTO, or their challenge proves unsuccessful, they are often permitted to piggy-back on the backs of other pending IPRs, filed by different generic competitors.
And if that were not enough, there are still the reexamination proceedings that can also be initiated in the USPTO. Rather than pursuing alternative, less expensive proceedings, multiple shots on goal have become the order of the day for many generics.
There is no end in sight.
We now have a system analogous to the bobbing frog game at a carnival. No sooner does the research-based company knock down one popped-up head, when another one instantly appears.
In all of this, society still expects research-based pharmaceutical companies to not become distracted by the continuous attacks on its intellectual property and to keep its nose firmly to the research grindstone. After all, we need those new drugs, especially the cancer ones that are saving millions of lives.
Isn’t it time we got off Big Pharma’s back, just a little, and let them turn their attention to the research at hand that we all so desperately want and need? Congress needs to review and rebalance the schemes it has created that provide for endless challenges to drug patents.
Peter C. Richardson is a partner in the New York City law firm, Richardson & Rosow. Traci Medford-Rosow is also a partner at Richardson & Rosow and the author of the recently-published, best seller, Inflection Point: War and Sacrifice in Corporate America.