Congress Last Resort On IPRs After Supreme Court Backs Patent Board

Biopharmaceutical industry lobbying efforts are expected to jump into overdrive on Capitol Hill to get Congress to ban the use of the broadest reasonable interpretation by the US Patent & Trademark Office Patent Trial and Appeal Board after the Supreme Court backed the standard for conducting inter partes reviews – trial proceedings created five years ago to be a faster and more affordable alternative to challenging patents in the courts.

The biopharmaceutical industry was dealt a blow on June 20 when the US Supreme Court backed the use of the so-called broadest reasonable interpretation (BRI) by the US Patent & Trademark Office Patent Trial and Appeal Board (PTAB) for conducting inter partes reviews (IPRs) – trial proceedings created under the America Invents Act (AIA) in 2011 to be a faster and more affordable alternative to litigation for challenging patents.

In upholding an earlier ruling by the US Court of Appeals for the Federal Circuit in the case, known as Cuozzo Speed Technologies v. Michelle K Lee, the Supreme Court also said the AIA was clear the PTAB's decisions on whether to institute an IPR are final and non-appealable, although the justices appeared to have somewhat left a door open on that question by stating there might be a "constitutional" issue that could be presented, said Silicon Valley lawyer Eliot Williams, a partner at Baker Botts.

The contours of how wide that door has been opened, however, currently are not clear, he told Scrip.

Eliot Williams

The use of the IPRs to invalidate patents has skyrocketed since they were first implemented in September 2012, with about 85% of patents not surviving the process – a statistic that's had the drug industry, which has blamed the PTAB's use of the BRI standard, particularly concerned (Also see "US Capitol Capsule: Patent Challenge Landscape Shifting: Inter Partes Reviews Climb" – Scrip, 24 Aug, 2015).

Indeed, the Biotechnology Innovation Organization (BIO) has insisted that investors will turn to other sectors and partnering deals will dry up if the PTAB continues on its current course of using the BRI standard for IPRs (Also see "BIO: Deals, Investment At Risk If IPR Course Unchanged" – Scrip, 21 Apr, 2016).

BIO and the Pharmaceutical Research and Manufacturers of America (PhRMA) also contended drug makers may decide to play it safe and pursue products that are less innovative, but have more robust patent protection, rather than the best possible medicines (Also see "Will Supreme Court Lift 'IPR Pressure' Off Biopharma?" – Scrip, 18 Jan, 2016).

But those arguments didn't hold much weight with the Supreme Court "largely because the court concluded that patent rights is a real privilege and patent owners should be expected to have to defend that privilege when challenged," Williams said, noting the justices' June 20 ruling had an "anti-patent" tone to it.

BIO and PhRMA argued in briefs the PTAB should be judging patent claims on their plain and ordinary meaning – often referred to as the "Phillips" standard – which is employed by US district courts.

But "regrettably," the Supreme Court "missed an opportunity" in the Cuozzo case to "reign in" the PTAB's "invalidation of many patents under looser standards than would apply in federal court," BIO told Scrip in a statement.

The biotech lobbying group, however, said Congress has yet to speak directly on the issue of BRI and could choose to change the standard to address the policy concerns raised by BIO, PhRMA and others.

"The powerful reasons to abandon the unfair BRI standard remain even after today's decision, and the strong bipartisan votes to repeal BRI by both the House and Senate Judiciary Committees reinforce the breadth of support for that policy position," BIO argued.

It said the US PTO also could pursue another avenue.

But Baker Botts' Williams said the agency was unlikely to revisit the issue, given it fought the battle all the way to the Supreme Court.

"That leaves Congress as the last recourse, the only avenue left for drug innovators," he said.

Williams said he anticipated lobbying activity by drug makers to pick up on Capitol Hill, with efforts to get legislation that had earlier stalled off the ground again.

Williams said he didn't think the Supreme Court's ruling would lead to a significant increase in IPRs in the biopharmaceutical sector, since the process already is quite extensively used (Also see "Supreme Court Outcome Unlikely To Dent IPR Popularity" – Scrip, 26 Apr, 2016).

"This decision affirms the status quo," he said. "I think largely, it's not going to have an effect on the numbers of petitions filed."