Summary: In light of the discussions involving the Trans-Pacific Partnership, many major pharmaceutical and biotechnology companies have sought patent protections in the proposed legislation.
According to CorpCounsel.com, both the pharmaceutical and the biotech sectors are feeling overwhelmed in the real of intellectual property. Generic drug makers and hedge funds are challenging Big Pharma’s patents at the U.S. Patent and Trademark Office. Biotech patents are also facing challenges. Additionally, human rights groups are arguing that the Trans-Pacific Partnership, a trade deal in the works between the United States and 11 Pacific Rim countries, may favor Big Pharma and make access to cheaper, generic drugs difficult in developing countries.
However, the pharmaceutical and biotech industries are fighting back.
Both industries have asked Congress for a carve out that would provide them with special treatment. They have also lobbied for protections at the Office of the U.S. Trade Representative, which is negotiating the TPP. Law firms are also providing the industries with advice on handling the increasing number of pharma/biotech proceedings at the PTO’s Patent Trial and Appeal Board.
In fiscal year 2015, PTAB challenges to the patents had almost doubled by June 30. The fiscal year does not end until September 30. So far, 113 bio/pharma inter parties review petitions that challenge the validity of a patent have been filed. In the previous year, 66 were filed.
The number of challenges to patents in the two sectors is just 8 percent of the 1,319 challenges that have been filed in fiscal year 2015. However, most pharmaceutical companies fought these challenges in district court through patent laws that were designed specifically for that industry. Many did not have to face proceedings at the PTAB so early.
A retaliation suit has been brought against Mylan Pharmaceuticals by an ex-employee.
Now, however, law firms that specialize in patent law have begun advising their clients as to how claims at the PTAB should be addressed. Goodwin Procter recently published a guide for in-house counsel and business executives at pharmaceutical companies.
The guide contains case studies and statistics that reveal how pharma matters are being handled by the PTAB. It also provides an overview of proactive measures for companies facing such litigation.
Nick Mitrokostas, a partner at the firm and one of the guide’s co-authors, said, “Strategies for patent litigation before the PTAB are rapidly evolving.”
The guide notes the top industry companies that have filed IPR pharma petitioners, and it addresses the relationship of IPRs and Hatch-Waxman litigation. Most challenges are from companies that are already involved in litigation that centers on the challenged patent. The introduction states, “The increasing prevalence of IPR challenges during the pendency of such litigation is likely to further complicate the legal-regulatory interplay.”
Finnegan, Henderson, Farabow, Garrett & Dunner is also advising its clients, stating, “Post-grant proceedings in the U.S. Patent and Trademark Office have emerged as a battleground for pharmaceutical patent challenges in addition to the usual district court venue.” Challenges have provided mixed results so far, however.
Biotechnology and pharmaceutical companies would prefer not to fight at the PTAB. Last month, the presidents of the trade and lobbing organizations for these industries said that Congress should provide a carve out that exempts their patents from IPR challenges in any new patent reform legislation that is considered.
The Obama administration deemed Trans-Pacific Partnership negotiations as classified information.
They argue that the carve out is appropriate because PTAB challenges against pharmaceutical patents filed by hedge funds have caused major problems in these patent-dependent industries. When Congress passed the America Invents Act, which allowed IRP proceedings at the PTO, it did not expect that hedge funds may use the law to their benefit by challenging patents and profiting by shorting the stock of the companies that own these patents. “This kind of destructive behavior has a profound chilling effect on industries powered by private investment,” the presidents noted.
The nature of the chilling effect is debatable. Most IPR petitions filed by hedge fund manager Kyle Bass and Erich Spangenberg and the Coalition for Affordable Drugs have hardly impacted the stock prices of these companies. Additionally, how the PTAB will rule on the cases is uncertain.
The lobbyists did not limit the objections to hedge fund challengers, however. They argue they should be exempt from all IPR challenges, including any that manifest from generic drug producers. “IPRs threaten to undermine the unique and specialized patent challenge procedures that Congress has put in place to bring generic and biosimilars pharmaceutical products to market.” They argue that the IPRs are being used to “discourage future investments in new medicines.”
Big Pharma has worked hard to influence the TPP deal, which is considered the largest trade accord in history. These companies want negotiators to confirm that they are protected from competition from generic drug companies. The United States has pushed to protect the intellectual property of these companies for up to 12 years.
Organizations like Doctors Without Borders passionately oppose such a lengthy period of protection. They argue that it may make it harder for drug makers to compete with brand-name pharmaceuticals in other countries, and result in increased drug prices around the globe. Other countries involved in the trade discussions have also argued that a period of between five and seven years is more reasonable. According to the Los Angeles Times, a shorter period would also reduce Medicaid and Medicare costs. Other critics, according to Fortune, have argued that stronger patent measures may exceed what is necessary to promote innovation.
Many roadblocks in the discussions have prevented an agreement, but the United States’ position is causing major issues. The other countries do not like the proposed protections for pharmaceutical firms. American negotiators worry that Republicans will withdraw their support for the trade deal if the industry does not receive the protections that it wants.
Patent lawsuits will probably top 6,000 this year.
The drug companies and biotech firms have not received much sympathy from the public. One company, Myriad Genetics Inc., infuriated millions when it held a legal monopoly on a test for ovarian and breast cancer until its patent was struck in 2013. Gilead Sciences, Inc., currently holds a patent on medication that treats hepatitis C, which costs as much as $1,000 per pill. In total, a patient will spend $84,000 for the 12 weekly doses.
These companies argue that they play a major role in creating new medicines. However, their attorneys are preparing these companies for major changes. In the Finnegan article, a quote from Charles Darwin was even inserted: “It is not the strongest or the most intelligent who will survive, but those who can best manage change.”
Source: CorpCounsel.com
Photo credit: philosophicalcomment.blogspot.co, GoodwinProcter.com (Mitrokostas)