on the Patents Post-Grant blog reports that Celgene has
filed its keenly-anticipated motion for sanctions against the
Coalition for Affordable Drugs – which is
backed by hedge fund manager Kyle Bass (right) and nXn Partners
owner Erich Spangenberg.
The motion filed with the Patent Trial and Appeal Board
relates to four inter partes review petitions challenging
McKeown is certain this is the beginning of the end for
Bass’s controversial IPR filing.
"As I have maintained all along, these filings will be
bounced," says McKeown. "The system is already strained under
the intense demand for PTAB trial proceedings. The limited
resources of the agency can't be wasted on stock trading
motion, filed by Dominic Cerrito of Quinn Emanuel Urquhart
& Sullivan and Anthony Insogna of Jones Day, makes
interesting reading. Celgene argues that it "should not be
required to expend extensive resources defending" its patents
"in the face of the RPI’s abuse of process".
charges that Spangenberg (right) and his company IPNav (which
is also on the Coalition for Affordable Drugs petitions) first
threatened Celgene with IPRs in January 2014.
"Then in July 2014, they assisted a third party in its
effort to obtain payment from Celgene in exchange for not
filing nearly identical IPRs against the same patents," says
the motion. The third party called itself the Initiative for
Responsibility in Drug Pricing.
The motion continues: "When Celgene did not pay, Mr
Spangenberg/IPNav no longer had any financial incentive to file
the IPRs, and did not do so at that time. Instead, they teamed
up with RPI and hedge fund manager J Kyle Bass, and together,
they concocted a new scheme to profit from affecting
companies’ stock prices by filing IPRs. The
Petition in this matter, which counsel for the RPI admitted is
just a 'rewrite’ of the earlier threatened
petitions, is part of that scheme."
The motion points to Bass terming his use of IPRs as a
"short activist strategy" and quotes an SEC filing noting that
the primary purpose of two of the IPRs was to "generate
superior risk-adjusted return through long or short positions
with regard to selected companies, primarily in the
The motion says: "IPRs were not designed for this purpose,
which is nothing more than another nefarious means for
achieving the same goal that Mr. Spangenberg and IPNav sought
to achieve through previous threats to file IPRs: to line their
own pockets at the expense of public pharmaceutical companies
and their shareholders."
the Coalition for Affordable Drugs formed 15 shell companies
(CFAD I-XV), of which seven have been used to file 16 IPRs. The
motion says the remaining eight CFAD entities "appear to be
lying in wait o similarly abuse the AIA by filing petitions
solely to execute the RPI’s investment strategy.
This is contrary to the AIA’s purpose and the
Board should not allow it."
The motion says the Board will be "inundated with similar
petitions" if it allows this strategy to continue. It says
Congress gave the USPTO broad authority to prescribe and
enforce sanctions against abusive IPRs, and this should be used
The whole filing is well worth a read.
The PTAB has until October 28 to decide the issue. In the
meantime, you can read more about how the companies targeted by
the Coalition for Affordable Drugs have hit back in my article
here, and you can read an interview I did with Bass in May
here. (Note you will need to log
in or take out a free
trial to access both of these articles).