Biotechnology company Acorda has filed its preliminary response to an inter partes review (IPR) petition challenging its Patent Number 8,663,685 at the Patent Trial and Appeal Board (PTAB). The petition was brought by the Coalition for Affordable Drugs, backed by hedge fund manager Kyle Bass and nXn Partners owner Erich Spangenberg.
This petition, filed on February 10, was the first filed by the Coalition for Affordable Drugs. As of May 21 seven pharmaceutical and biotechnology companies had been targeted through 15 IPR petitions. All of the petitions list the Coalition for Affordable Drugs, Bass, Spangenberg, Hayman Capital Management, various Hayman funds, IP Nav and nXn as the petitioners.
“Use of the inter partes review process as a tool to manipulate markets is not what Congress intended. Moreover, such filings are a costly drain on the Office’s resources,” said the preliminary response, filed by Paul Hastings partner Gerald Flattmann. “In order to preserve the Office’s resources for proper petitions and stem the sort of filings involved here, the Board should exercise its discretion under 35 USC § 314(a) to deny institution of this inter partes review petition. The Board should also deny institution because of petitioner’s failure to name its investors and identify them as real parties-in-interest.”
In addition to objecting to using IPR process as a tool to manipulate markets and not failing to name its investors, the response added that even if the Office considers the petition in its discretion, it “should still be denied because it is fatally flawed”. Acorda said the petitioner has not satisfied the burden of establishing that it is relying on statutory prior art. It said each of the petitioner’s three grounds for rejecting the ‘685 patent relies on at least one reference that the petitioner failed to show is a “printed publication”, as required under Section 311(b).
The response went on to say the petition contains nothing new, with its grounds of rejection all based on information that was previously presented to the office during prosecution.
It added that the obviousness arguments in the petition’s three proposed grounds of rejection are “facially deficient”. The response said the grounds are ambiguous and inconsistent with respect to the combinations of references relied upon and fail to specify how or why he cited references should be combined.
Lastly, the response says the petition sheds no light on any distinctions among the proposed grounds of rejection. The Board should decline to consider the Petition’s redundant grounds.
Acorda said the invention claimed in the ’685 patent and the underlying work by inventors Ron Cohen and Andrew Blight on the use of 4- aminopyridine (4-AP)2 represented a “milestone” in the treatment of MS. The company added its Ampyra product was developed after years of research into 4-AP
Bass’s IPR petitions have been presumed to be a short selling strategy. Acorda’s share price fell nearly 10% the day the first IPR petition was filed.
The response noted that other investment funds had filed similar petitions since.
“There can be no dispute that allowing hedge funds to use the IPR process to manipulate financial markets is inconsistent with Congressional intent and the directives given to the Office discussed above. Instituting inter partes review here will only encourage more such filings, which will burden additional patent owners, their industries, and the Office. At least two other investment funds, Ferrum Ferro Capital LLC (IPR2015-00858) and The Mangrove Partners Master Fund, Ltd. (IPR2015-01046 and IPR2015-01047), have already followed Mr Bass’ lead.”
The petition identifies Hayman Capital Management as a real party-in-interest. But the response said: “The undisclosed investors that provided substantial funding for the petition are the parties that stand to gain or lose, and, therefore, are RPIs.”
Acorda noted that the PTAB in RPX v VirnetX found the petitioner to be “at most, a ‘nominal plaintiff’ with ‘no substantial interest’ in these IPR challenges apart from those of its client”. In that case the Board dismissed RPX’s petitions for IPR of four patents owned by VirnetX because it held that Apple was a real party-in-interest and was time-barred.
The PTAB must decide whether to institute an IPR or not within six months of a petition being filed. Observers are unsure whether the Board can deny the petition on the grounds of “improper use of the proceeding”.
For an in-depth analysis of The Coalition for Affordable Drugs’ IPR petitions, their chance of success and an interview with Bass, read our “The fine line between abuse and fair use at the PTAB” feature here (subscribers and triallists only).
