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Four Years of IPRs: Lessons from Proceedings for the Cabilly II Patent

It has been four years since the first inter partes review proceedings were filed in the United States.  The first IPR petition, filed on September 16, 2012 (the first day IPRs became available), made it all the way to the Supreme Court, and the number of IPR filings has greatly exceeded expectations, making the Patent Trial and Appeal Board one of the most important and busiest forums for patent validity litigation in the US.  IPRs were intended to help high-tech innovators besieged with suits from patent trolls to efficiently and cheaply invalidate dubious patents and focus on innovation.  The proceedings have transformed patent litigation in the US. But their impact goes far beyond electrical and computer fields as they have had a major impact on biotech and pharmaceutical patents as well.  The PTAB proceedings for U.S. Patent No. 6,331,415 (better known as the “Cabilly II patent”) – one of the most litigated biotech patents in the US – offer key insights into IPRs and why they are widely used across technologies.

The Cabilly II patent, co-owned by Genentech and the City of Hope, covers foundational technology for making antibodies.  It is based on work carried out in the early 80s and claims priority to a patent application filed in 1983.  It is one of the most litigated patents of all time both in court and before the PTO.  It, just like the first IPR proceeding, has been the subject of substantial controversy and made it all the way to the Supreme Court in a case that expanded declaratory judgment jurisdiction for patent challenges.  The first of the Cabilly patents (Cabilly I), of which the Cabilly II patent is a continuation, issued in 1989 and expired in 2006 at the conclusion of its 17-year term.  The Cabilly II patent, which issued in 2001 after a lengthy interference proceeding with a Celltech patent, does not expire until 2018, providing its owners with another 12 years of licensing income for a total of 29 years of patent exclusivity.  The Cabilly II patent is licensed to more than 70 biotech/pharma companies and has brought in well over a billion dollars in licensing income just in the period from 2006-2011, when it was the only Cabilly patent in effect.  A third Cabilly patent (Cabilly III) issued in 2011 and also expires in 2018 due to a terminal disclaimer over the Cabilly II patent.

The Cabilly II patent was challenged in litigation and lengthy PTO proceedings.  In 2005, two third parties brought reexamination proceedings which were merged by the PTO.  After two final actions rejecting all of the claims as unpatentable over several references, the PTO ultimately confirmed the patentability of all the claims in 2009.   After the PTO proceedings, the patent continued to be challenged in a number of lawsuits involving many of the world’s best-selling antibody products.

With the advent of IPRs, five petitions challenging the Cabilly II patent have now been filed: one by Sanofi and Regeneron, two by Genzyme, one by Mylan and one by Merck.  Sanofi/Regeneron (in connection with their cholesterol-lowering Praluent antibody) filed the first challenge to the Cabilly II patent before the PTAB.  In July 2015, Sanofi/Regeneron filed a petition for IPR of claims 1-4, 9, 11-12, 14-20, and 33 of the Cabilly II patent on multiple grounds.  In its patent owner preliminary response, Genentech argued that the specific grounds advanced by Sanofi/Regeneron were unfounded and that the PTO had already “thoroughly considered and ultimately rejected the precise theories of unpatentability now being advocated.”  Genentech  stated that the petition should be rejected because Sanofi/Regeneron failed to demonstrate that the PTO’s earlier determinations were incorrect.  Genentech asked the PTAB to exercise its discretion under 35 U.S.C. § 325(d) to deny IPR.  Genentech also relied on objective indicia of nonobviousness.  In particular, it pointed to the 70 licenses to its patent and the substantial royalties it has received for years.

In February 2016, the PTAB instituted IPR of the Cabilly II patent.  Although it rejected an anticipation ground, it held that Sanofi/Regeneron made a sufficient showing of obviousness for purposes of instituting IPR of claims 1-4, 11-12, 14, 18-20 and 33. The PTAB rejected Genentech’s request “to deny institution because the Petition presents the same arguments that were raised and fully addressed in prior Office proceedings involving the Cabilly ‘415 patent.”  The PTAB stated that the teachings before them were more specific than those previously considered by the PTO.  The PTAB made no mention of objective indicia of nonobviousness in its decision.

In December 2015, Genzyme filed a petition for IPR of claims 1-4, 9, 11-12, 14-20 and 33 on different grounds than in the Sanofi/Regeneron petition.  Genentech argued that the petition should be denied because Sanofi is the real party-in-interest and that this petition would provide “a second bite at the apple.”  It also asked the PTAB to exercise its discretion and deny the petition under § 325(d) because “the same or substantially the same prior art or arguments previously were presented to the Office.”  On June 2016, the PTAB stated that it would not deny institution on discretionary grounds.  But it denied the petition on the merits, rejecting each of Genzyme’s grounds.

In January 2016, Genzyme also filed a second IPR petition on the same grounds as in the Sanofi/Regeneron petition.  After the PTAB instituted IPR, Genzyme filed a request to join Sanofi/Regeneron’s IPR and Genentech did not oppose.  In June 2016, the PTAB granted Genzyme’s motion for joinder to “promote the efficient resolution of the proceedings.”

Mylan also sought to join the Sanofi/Regeneron IPR.  In March 2016, it filed its own petition for IPR on the instituted grounds accompanied by a motion for joinder with the Sanofi/Regeneron IPR.  Sanofi/Regeneron opposed stating that it would prejudice “their ability to prosecute or settle the Sanofi IPR as they see fit without interference from Mylan or having to seek Mylan’s cooperation on so-called ‘consolidated filings and discovery.’”  In August 2016, while Mylan’s motion for joinder was still pending, Sanofi/Regeneron, Genzyme, Genentech, and City of Hope filed a joint motion to terminate the IPR, having settled their disputes in connection with the Cabilly II (and Cabilly III) patent.  On September 2, the PTAB terminated the IPR.   However, just days later on September 8, the PTAB granted Mylan’s petition to institute IPR of claims 1-4, 11-12, 14, 18-20 and 33 of the Cabilly II patent on the same grounds as the Sanofi/Regeneron IPR.

In July 2016, Merck also filed its own IPR petition.  Merck relies on five different obviousness grounds to challenge claims 1-4, 11-12, 14-20, and 33 of the Cabilly II patent.  The petition is supported by three expert declarations of pioneering scientists, including a Nobel Laureate in protein chemistry.

The Cabilly IPRs offer a number of key insights as to why IPRs are widely used across technologies.  First, the PTAB is willing to review patents and institute IPR even after the patent at issue has undergone substantial review by the PTO.  The Cabilly II patent was before the PTO in reexamination proceedings for years.  In other bio/pharma IPRs, the PTAB has instituted IPR of patents whose validity has been upheld by courts, including the Federal Circuit.  IPRs therefore provide “a second bite at the apple.”

The PTAB also typically gives little attention to objective indicia of nonobviousness although consideration of such indicia is a requisite part of an obviousness analysis.

Bio/pharma IPRs are expensive, with petitioners and patent owners engaging multiple experts as they would in patent infringement litigation in district court.  Merck, for example, relied on expert declarations of three leaders in the field in support of its IPR petition.

Multiple challenges to the same patent are common by the same and different petitioners, with challengers frequently presenting different grounds of unpatentability.

Parallel proceedings in district court are also typical, expanding litigation to multiple fronts.  With the exception of Mylan (a biosimilar maker), the other petitioners have antibody products that are approved and/or far along in development and they simultaneously brought declaratory judgment actions for invalidity of the related Cabilly III patent.  The PTO found Cabilly III to be obvious for nonstatutory double patenting over the Cabilly II patent and it is terminally disclaimed over the Cabilly II patent for that reason.  As is typical of substantially the same litigation on different fronts, the same trial counsel is handling both sets of proceedings.

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