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Biologics post-grant review surge stemmed by estoppel

In-house counsel say that while PGRs offer several advantages over other PTAB post-grant proceedings, they cost more, require more organisation and severely limit further litigation

A potential surge in biologics post-grant reviews has been quashed by an expanded estoppel principle in the US district courts that makes post-grant proceedings much more risky, according to pharmaceutical manufacturers and law firms.

While PGRs have long been dwarfed in numbers by inter partes reviews (IPRs) at the Patent Trial and Appeal Board (PTAB) – for biologics and all other technology areas – it seemed they might experience a rise in popularity among biosimilar and biologics makers.

Sources at global pharmaceutical firms told Managing IP last year that they would probably choose PGRs over IPRs to help cut down biologic patent thickets, explaining that biologic registrations often have broad specifications that make them vulnerable to description attacks.

They reasoned that PGRs had yet to become popular with biosimilar makers because the proceeding could only be used against patents with a priority date later than March 15 2013, and pointed out that the next wave of biologic patents going to grant had the later priority date.

But the foreseen surge never materialised, and in-house and private practice sources say it probably never will because of the US Supreme Court’s (SCOTUS) 2018 ruling in SAS Institute v Iancu.

The ruling stipulated that a post-grant proceeding, if instituted, must address every claim the petitioner had challenged.

The new rule, enshrined in PTAB guidance soon after the SCOTUS’s judgment and then endorsed by the Federal Circuit in PGS Geophysical v Iancu, sets out that any arguments or prior art that could reasonably have been raised in a PTAB trial cannot be raised again in the district courts.

That development makes PGRs a much more risky option than IPRs because the former’s scope is much wider. PGRs can be used to launch written description attacks, for example, while IPRs can only be used to challenge prior art.

A failed PGR petition would therefore severely limit the potential for further litigation through the US court system.

“PGRs are potentially attractive to us because they allow us to bring a broader range of arguments to the table,” says the vice president of IP at a US pharmaceutical maker. “But they can also lead to a much broader instance of estoppel for the same reason.”

Ernest Yakob, partner at Hogan Lovells in New York, adds that few pharmaceutical companies are likely to want to put all their eggs in the PTAB’s basket.

“PGRs are much more open ended in terms of what you can raise, and the estoppel implications mean that even if you didn’t raise a particular argument within the scope of a PGR, you will be prevented from raising said argument at the district court.”

Preserving 112

In-house counsel tell Managing IP that an important reason they would not risk pursuing a PGR for biologics litigation is that it would prevent them raising arguments related to Section 112 of the US Code in the district courts.

Section 112, which sets out written description requirements, has proven to be a stumbling block for biologics makers in recent years because of the requirement for antibody patent specifications to sufficiently demonstrate possession, while ensuring that the invention is not easy to design around.

“If you are going to do the patent dance, there is a strong incentive to preserve 112 arguments for the district courts,” says the chief IP counsel for a biosimilar maker in the US. “If I pursue a PGR, I could get stopped from raising Section 112 on written description, which is an increasingly effective invalidity argument in the district courts.

“If I go for an IPR, I might shoot myself in the foot on my Section 102 and 103 prior art points, but I save my 112 and avoid putting all my eggs in one basket.

“There are situations where we would not let estoppel stop us from pursuing PGRs, such as matter of inherency in obviousness. But I cannot envision many scenarios where PGRs would be worthwhile, whereas IPRs still have a lot of value.”

The head of patent litigation at another biosimilar maker in the US agrees that the potential to have 112 arguments stopped is a deterrent to using PGRs. “We have been doing very well with written description arguments in the district courts as of late, so I would think carefully about using PGRs.”

He adds, however, that the estoppel risk doesn’t preclude the possibility of pursuing PGRs for biologics litigation altogether. In some cases, he says, it might prove beneficial to present 112 arguments to the PTAB, and thus warrant the risk of having those points stopped.

Time and money

But estoppel isn’t the only deterrent to filing a PGR against a biologic patent. In-house sources point out that these types of post-grant proceedings need to be filed for within nine months of the challenged patent’s grant.

The head of litigation says this restrictive timeframe is not conducive to his litigation strategy because it does not give him enough time to determine whether a patent is worth pursuing.

“We have a limited litigation budget and we want to focus our resources on challenges that will be the most beneficial to us. But at nine months, there hasn’t been enough time to see how things might play out and know whether something is worth challenging.”

He adds that working out where to focus resources for patent office oppositions in this amount of time is something his European colleagues do very well because the EPO requires opposition proceedings to be filed within nine months of grant.

“But because we have the IPR in the US, we have not caught up with them to a certain extent,” he says.

The chief IP counsel adds that because of the estoppel effect, PGRs would only take off in the US if the country adopted an EPO-style opposition procedure framework where parties were compelled to file proceedings in a certain time.

Sources note that PGRs are also more expensive than IPRs. The head of IP at one biosimilar manufacturer says that PGRs might cost her firm anything up from $1 million per patent, which is about 10 times more expensive than a standard post-grant opposition.

It is very unlikely that PGRs will be as popular as biosimilar and biologics makers predicted only a year ago. The scope of these post-grant proceedings could certainly still make them useful when it comes to cutting down patent thickets at the PTAB.

But the risk of having crucial arguments stopped in the traditional courts, the time and organisation involved in filing these petitions and the sheer cost of them compared to other PTAB proceedings means they will probably be used in very limited cases.

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