In the United States, the majority of disputes involving pharmaceutical patents are resolved through one of two processes – post-grant proceedings at the United States Patent and Trademark Office ("USPTO"), or litigation under the "HatchWaxman Act" in a United States District Court. Understanding the details of these processes is key to choosing the right forum to resolve disputes over pharmaceutical patents in the United States. This article summarizes the advantages and disadvantages of these processes for Chinese pharmaceutical companies looking for the best strategy to enter the U.S. market.
The Leahy-Smith America Invents Act ("AIA"), enacted in 2012, established post-grant proceedings before the Patent Trial and Appeal Board ("PTAB") of the USPTO to be streamlined mechanisms to challenge the validity of U.S. patents. These proceedings involve mini-trials between the patent challenger ("the Petitioner") and the patent owner. The proceedings are conducted before three or more Administrative Patent Judges who are well versed in the technology, law, and procedures involved in determining the validity of a patent.
The AIA established two types of post-grant proceedings which are relevant here — Inter Partes Review and Post-Grant Review.
1. INTER PARTES REVIEWS ("IPR")
Any person other than the owner of a challenged patent can file an IPR petition to challenge the validity of a U.S. patent. However, the petitioner cannot have previously filed a civil action in a U.S. court against the same patent. Each party to the IPR must be represented by a registered U.S. patent attorney or patent agent, and lead and backup counsel must be identified for each party. Since 2012, when IPRs became available, the number of petitions filed has increased dramatically each year and IPRs have become a very popular procedure for companies wishing to invalidate U.S. patents.
An IPR petition cannot be filed until nine months after patent issuance and after the termination of any Post-Grant Review ("PGR") challenge. Furthermore, a petitioner must file its IPR petition within one year of being served with a complaint from a district court litigation on the patent at issue, if such a litigation exists. Parties can sometimes join an existing IPR.
The PTAB must complete an IPR within twelve months of institution, although it can extend that deadline for an additional six months, but only for "good cause," which is rarely found.
Patents in an IPR can be challenged only on § 102 (Novelty) and § 103 (Obviousness) grounds, using only published prior art (patents and printed publications). To institute an IPR, the petition must establish a reasonable likelihood that at least one of the challenged claims is invalid.
The petitioner bears the burden of proving unpatentability by a preponderance of the evidence, because no presumption of validity exists for a patent challenged in an IPR.
For IPRs filed before 13 November 2018, the PTAB gives claim terms their broadest reasonable interpretation unless the challenged patent expires before or during the IPR, in which case the claims are given their ordinary and customary meaning. For IPRs filed on or after 13 November 2018, the PTAB gives claim terms their ordinary and customary meaning consistent with the claim construction standard used in federal district court.
The timeline for an IPR is shown below. Note that each filing has strict limitations on length.
The first step in an IPR is filing a petition by the party challenging the patent. The petition must explain in detail how the prior art renders the claims anticipated or obvious, must construe any necessary claim terms, and should be supported by a declaration from an independent expert. Once the PTAB determines that all papers are in order, it assigns the petition a filing date from which all remaining deadlines are calculated.
Within three months after the PTAB accepts the petition, the patent owner can and should file a patent owner preliminary response ("POPR"). The POPR should point out any factual or legal gaps in the petition, present evidence in support of validity, and construe any necessary claim terms. The patent owner may file an expert or other declaration to support its argument.
Within six months after the petition is filed, the PTAB will issue a decision on whether an IPR should be instituted. To institute, the PTAB must find that the petition has raised a reasonable likelihood that at least one of the challenged claims is invalid. In that case, the PTAB will institute the IPR on all challenged claims and on all grounds raised in the petition. If the institution is denied on all challenged claims, the IPR is terminated and the patent remains valid. On the date of institution, the PTAB will issue a scheduling order specifying all future deadlines, including the times for conducting routine discovery.
Within three months after the institution decision (approximately nine months after the petition's filing date), the patent owner must file its patent owner response ("POR"). The patent owner may also submit an amendment of its claims to try to avoid the prior art. Within three months after the POR is filed, the petitioner must submit a reply that responds to the patent owner's arguments. If the patent owner filed an amendment to the claims, the petitioner must prove why the amended claims are not patentable. Within one month after the petitioner's opposition to the claim amendments, the patent owner may file a reply to the petitioner's opposition.
After the written submissions are completed, an oral hearing before a panel of three Administrative Patent Judges ("APJs") is conducted. The USPTO then issues a decision within 12 months of the institution date, or no more than 16 months after the original filing of the challenger's petition.
2. POST-GRANT REVIEW ("PGR")
Similar to IPRs, any person other than the patent owner may challenge a patent by filing a petition for PGR. However, PGRs are limited to patents that have an effective filing date of 16 March, 2013 or later. Furthermore, the PGR petition must be filed within nine months of the patent issuance. A PGR petitioner can challenge the validity of a patent claim on any grounds, including prior public use, on-sale activity or public disclosures; or lack of written description, enablement, or patent eligibility.
Once the petition is instituted, the timeline and procedural considerations for PGRs are the same as those for IPRs.
3. SIMILARITIES BETWEEN IPRS & PGRS
IPRs and PGRs combine features of patent prosecution and litigation. Similar to prosecution, no presumption of validity applies to the challenged patent, and the burden of proof is a preponderance of the evidence. For IPRs and PGRs filed before 13 November, 2018, claim terms are construed according to their broadest reasonable interpretation (except in the limited circumstances explained in Section II.A.). For IPRs and PGRs filed on or after 13 November, 2018, claim terms are construed according to their ordinary and customary meaning, consistent with the claim construction standard used in federal district court. IPRs and PGRs allow very limited discovery. All information relied on in any filing must be disclosed to the PTAB and to the other party, or it will not be considered. Confidential information can be sealed from public disclosure with the PTAB's permission. Additional discovery is allowed if the parties agree to it or if the PTAB finds it to be in the interests of justice, and as noted above is generally very limited. A disadvantage to IPRs and PGRs for the challenger is that a final written decision creates estoppel that prohibits the challenger from later raising in a district court litigation the same grounds or grounds that could have been raised in the IPR or PGR.
4. DIFFERENCES BETWEEN IPRS & PGRS
The following table summarizes some of the key differences between an IPR and a PGR.
As noted in the chart above, in IPRs, only challenges under 35 U.S.C. §102 and §103 and based on printed publications are allowed. In contrast, PGR challenges to a patent can be based on any statutory defense to infringement, including anticipation, obviousness, ineligible subject matter, indefiniteness, lack of enablement, or lack of written description. These last two defenses can be particularly meaningful in the context of pharmaceutical patents. Because the development of pharmaceuticals is unpredictable, patents in the pharmaceutical field often need to disclose more information or examples of the invention claimed than patents in more predictable fields to meet these two requirements.
Thus, the IPR and PGR procedures offer Chinese pharmaceutical companies a relatively fast and effective means for canceling patents that might otherwise serve as a barrier to entry into the U.S. market.
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