Orange Book Blog

I wrote previously about the difficulty challengers to pharmaceutical patents face in proving standing at the Federal Circuit to appeal unfavorable decisions under the Federal Circuit’s view of what constitutes “concrete plans.” Thus, pharma companies may justifiably be hesitant to file petitions for PTAB review too early, lest they have no chance for appeal.

However, the discretionary denial practice under Acting Director Coke Morgan Stewart has focused heavily on “settled expectations” and made it difficult for petitioners to raise challenges more than a few years after issuance, especially if the party waits until litigation has begun. And new Director John Squires has delegated discretionary denial authority to Ms. Stewart, thus I expect this practice to continue. Thus, potential challengers may have an incentive to file early challenges if they want to be able to take advantage of the PTAB.

As others have written, “the PTAB’s role in adjudicating OB patents has been modest, both as an absolute matter and relative to its role for non-OB patents.” Rai, A.K. et al., Post-Grant Adjudication of Drug Patents: Agency and/or Court?, 37:139 BERKELEY TECH. L. J. 139, 166 (2022), available here. As the authors note, this likely is at least in part because the invalidation of a patent in the PTAB does not lift the automatic stay, therefore “the PTAB route is unlikely to be faster than the district court route, and may even be slower.” Id. at 167.

However, this doesn’t account for the benefits ANDA filers could obtain by knocking out patents in advance of filing and the ensuring Hatch-Waxman litigation. The authors noted that biosimilar patents were much more often challenged prior to any litigation (53% v. <10%). Id.

While the potential inability to appeal adverse decisions may dissuade some challengers, the Federal Circuit’s standing doctrine could create an interesting loophole strongly incentivizing early challenges. If a challenger is precluded from appealing the PTAB decision, there is a strong argument collateral estoppel does not apply due to traditional collateral estoppel rules. While Federal Circuit dicta suggests that it would not, the court has not fully answered the question. See AVX Corp. v. Presidio Components, Inc., 923 F.3d 1357, 1363 (Fed. Cir. 2019) (“this court has not decided…whether § 315(e) would have estoppel effect even where the IPR petitioner lacked Article III standing to appeal the Board’s decision to this court. For this court to so hold … we would also have to consider whether § 315(e) should be read to incorporate a traditional preclusion principle—that neither claim nor issue preclusion applies when appellate review of the decision with a potentially preclusive effect is unavailable.”).

Early challengers may be able to have their cake and eat it too – challenge the patents in the PTAB while reserving the ability to raise those challenges again later in district court.

Of course, as I’ve written about previously, challengers likewise cannot benefit from collateral estoppel, thus potentially mitigating the benefits of PTAB challenges in the first place, especially for large patent portfolios.

It will be interesting to see if there are any Congressional efforts to increase the use of PTAB for resolving validity of OB patents, perhaps by giving collateral estoppel effects to related patents, allowing PTAB decision to lift the automatic stay, or creating other incentives for early challenges.