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  • The Effect of Patents and Drug Price Regulation on New Drug Diffusion Globally

    By Kevin E. Noonan —

    American Economic ReviewOne of the great benefits of scientific inquiry is the capacity for presumptions and prejudices from experience to be challenged and explained in ways that are counter-intuitive.  This is true even for disciplines like economics, where the complexity of the variables involved (and the inability for most studies to be experimentally manipulated for pragmatic or ethical reasons) increase the necessity to avoid "just so" explanations for the observed data.  Recently a paper by Cockburn, Lanjouw, and Schankerman, "Patent and the Global Diffusion of New Drugs," American Economic Review 106: 136-64 (2016), challenges the conventional wisdom that patents impede and price regulations promote access to new drugs around the world and particularly in developing countries.

    The study evaluated the time to launch of 642 new drugs in 76 countries between 1983-2002.  The data in broad strokes showed that both patent protection and price regulations "strongly affect" how quickly new drugs become commercially available.  But contrary to expectations, the data showed that launch is delayed by price regulation, whereas "[l]onger and more extensive patent rights" accelerate new drug launch.  In addition to these results, the authors noted that other factors (health policies, demographics, economic factors) that make drug markets more profitable also speed up introduction of new drugs, using data controlled for policy regimes country-by-country and otherwise.

    The authors recognize the competing interests and factors:  on the one hand, providing adequate incentives for new drug development in the first place, and on the other hand having those drugs priced to be "affordable" for a sufficient percentage of the citizens who need or could benefit from the drug to avoid political consequences.  The authors also recognize that governments encourage the first with patents and the second with price controls.

    Much of the literature on these competing interests has been focused on the GATT/TRIPS agreement and its semi-compulsory harmonization of patent protection globally, particularly in developing countries.  There, the "tradeoff" seems particularly inequitable, because in addition to the "deadweight loss" of higher prices due to patents (these are economists, after all) there is the prospect of significant portions of such populations being unable to afford access to the drugs.  Some have also argued that the benefits of patenting in these countries is far less, and thus the risks to innovation of price regulation are sufficiently low as to minimize the need for patenting.

    These authors looked at another metric:  the effects of patents and price controls on the rate of diffusion (i.e., new drug introduction) in countries outside the U.S.  This is because, according to the authors, "[t]he public health benefits of new drugs depend, first, on how quickly (if at all) drugs are launched in different countries and, second, on how widely they are adopted within a country, once launched."  The calculus they used ignores the R&D costs of the drugs, which by definition are "sunk costs" by the time the drug begins to "diffuse" into countries other than where it was developed.  Even so, drug makers are sensitive to the balance between anticipated profits and costs of launching in each country.  Such costs include those incurred to obtain regulatory approval (such as clinical trials) as well as setting up distribution networks, "detailing," and reimbursement mechanisms.  These are country-by-country costs, and thus the authors could meaningfully investigate how different patent and price control regimes affected drug launch in each country.

    Traditional economic theory assumes these costs are negligible and thus introduction in each country depends on idiosyncratic variables in the demand for each drug in each country.  These authors posit that the costs are not negligible, and that the policies in each country and their effect on expected profits matter in determining whether and how quickly new drugs are introduced into each country.

    The countries chosen for study "span all levels of economic development and exhibit a wide variety of patent regimes."  The study also differentiates between process patents (protecting methods for manufacturing drugs, which the authors characterize as "weak" and use India as an example of a country that permitted only process patents as a way to promote domestic competitive entry, i.e., generics) and product patents, which they say "confer stronger rights . . . and allow[] for more effective appropriation of rents."

    They discuss four principal empirical findings:

    • There is limited scope and slow pace of global diffusion of new drugs (with there being long (> 10 years) lags in many countries and many drugs never being launched outside a small number of developed countries).

    • Patent policies adopted by different governments "strongly affect" the rate of diffusion, with "[l]onger, and stronger, patent protection" increasing the rate of adoption (reducing the lag by 55% when comparing countries with no product patents with those with "long" product patent terms).  Interestingly, which process patents also have an effect they report to have a much lower impact, and product patents having "short" terms have no effect at decreasing the lag in drug introduction rates.

    • Price controls have the opposite effect, with countries having "strong" controls having "significantly longer launch lags" (i.e., increasing by about 25% on average and, in some circumstances, by as much as 80%).

    • New drugs are launched more quickly in countries having institutions that promote drug availability and distribution (citing adoption of the WHO's Essential Drug List as one factor).

    There was also an effect of market size, consistent with earlier studies showing, inter alia, that "market size is associated with greater pharmaceutical innovation and nongeneric entry."

    The econometric analysis presented in the paper is beyond the scope of this discussion here; to illustrate, the authors assert that:

    The probability that the drug is launched in country j at time t, given it has not been launched before (the hazard rate of launch), is

    h(t|Zijt)        = Pr(ωijt > ω*ijt| ωij1 < ωij1, . . . , ωijt-1 < ω*ijt-1)

                       = Pr(ωijt > ω*ijt| ωij, t-1 < ω*ijt-1)

    where Zijt ≡ (xij,Tj,t,σij,ηi,μj) is assumed known to the firm, and the second equality follows from the AR(1) assumption on ω. This implies that the hazard rate is a decreasing function of factors that raise the threshold ω*.

    'Nuff said.

    The dataset used was based on the entry date of the drugs in each country, branded or generic, as compiled by IMS Health Inc., to avoid the vagaries in public health and regulatory records in each country.  For India (which was not monitored by IMS during the relevant time period), data from an Indian market research company (ORG/MARG) was used.  The 642 drugs chosen were based, in part, on the authors' ability to (relatively) unambiguously identify the drugs in each country based on generic/non-proprietary naming conventions that they recognize could vary.  Also, all forms of the drugs (salts, ester, etc. of a given "active moiety") were treated as equivalents.

    The patent regime in each country was characterized by four qualities:  "duration of patent term, coverage of pharmaceutical products, coverage of chemical manufacturing processes, and an index of the strength of patent protection that reflects the degree to which patent law provisions favor patent holders versus potential infringers," forming a "propatent index" that ranged from zero to 1.  Term was further split into "short" = 0-12 years, "medium" = 13-17 years, and "long" =  > 18 years; assuming delay between patent protect and market approval is on average 10 years, the "short" category was equivalent to no patent protection in a country.  For product patents, the distribution of these different terms in he countries studied were 6.4, 16.5, and 58.2 percent, and for process patents they were 10.8, 22,3, and 60 percent.  Similarly, although the authors acknowledge the variety and complexity of different price control schemes in the countries studied, they separated the countries into ones with "no," "some," and "extensive" price controls, where an extensive price control schema was one where "most or all drugs are regulated."  Arranged this way, 22% of the countries had no price controls, 31% had some, and 47% had extensive price controls.

    Finally, the "other" variables considered include 1) "whether a country had adopted a national formulary" (65% of all countries studied); 2) "whether a country had adopted the Essential Drug List (EDL) promulgated by the World Health Organization" (41%); and 3) "whether a country has a formal 'national drug policy,' i.e., an effort to coordinate industrial policy and domestic regulation to promote access to safe and effective pharmaceuticals" (63%).

    Overall, these researchers found drug distribution to be slow:

    In the entire sample of new drugs, 39 percent were launched in ten or fewer countries during the sample period, and only 41 percent were launched in more than 25 countries.  The mean number of countries experiencing launch is 22.4 (median of 18) out of a possible 76.  Even among the wealthier countries with the most developed health care systems, not all drugs became available during the sample period: e.g., only about 60 percent were launched in the United States, Germany, or the United Kingdom.

    And they acknowledged that there were a variety of factors other than patent and drug price policies that can affect these results.  But they found that "higher quality" drugs (ones subject to FDA approval) showed the widest extent of diffusion, with more than half being launched in more than 25 countries.

    These authors report three "main" findings from their data:

    • "First, pooling over all drugs and countries, even after ten years only 41 percent of drug-country opportunities for a launch were taken up.  Even after 20 years or more, less than 50 percent of possible launches had taken place, and as a practical matter, many of these drugs may never be launched in large numbers of countries."

    • "Second, the pace and extent of diffusion is strongly associated with a country's patent and price regulation regimes."

    • Third, "launch delays are strongly related to market size."

    The remainder of the paper provides and explanation of how the data were analyzed and validated, which is also outside the scope of this discussion.

    The authors conclude by noting that, while their data show that strong patent protection and no to little price controls increase the rate of new drug diffusion:

    [T]he same policies that promote faster launch—stronger patent rights and the absence of price regulation—are also those that raise prices.  This highlights the basic trade-off countries face between making new drug therapies available and making them affordable.  Finding ways to mitigate the adverse effects of this trade-off remains a major challenge.  One possible approach would be to introduce multi-lateral recognition of drug trials and regulatory approval, lowering launch costs and speeding up global drug diffusion.  Finally, our findings highlight the broader point, not limited to pharmaceuticals, that patent rights can have an important impact on the diffusion of new innovations as well as on the rate at which new innovations are created.

    These conclusions underscore the significance of the message that can be drawn from the data:  things aren't always as they seem.  Such findings are important if policymakers are to address disparities in access to medicines for the poor in countries developed and developing, while not causing the contrary effect of having those policies impede rather than promote these lofty policy goals by being based on assumptions that are contrary to the reality that these results illuminate.

  • PTAB Life Sciences Report

    By John Cravero and Richard Martin —

    USPTO SealAbout the PTAB Life Sciences Report:  Each week we will report on recent developments at the PTAB involving life sciences patents.

    Koios Pharmaceuticals LLC v. Medac Geselleschaft Fuer Klinische Spezial Praparate MBH

    PTAB Petition:  IPR2016-01370; filed July 20, 2016

    Patent at Issue:  U.S. Patent No. 8,664,231 ("Concentrated methotrexate solutions," issued March 4, 2014) claims a method for the treatment of inflammatory autoimmune diseases comprising subcutaneously administering a methotrexate in a pharmaceutically acceptable solvent at a concentration of more than 30 mg/ml.

    Petitioner Koios Pharmaceuticals LLC is challenging the '231 patent on six grounds as being anticipated under 35 U.S.C. § 102(b) (grounds 1 and 4) or obviousness under 35 U.S.C. § 103(a) (grounds 2, 3, 5, and 6).  View the petition here.

    Related Matters:  According to the petition, the '231 patent was involved in litigation in the District of New Jersey, captioned Medac Pharma Inc. v. Antares Pharma, Inc., 1:14-cv-1498; and in IPR2014-01091 (Antares Pharma, Inc. v. Medac Pharma Inc.; Petitioners Antares Pharm, Inc., Leo Pharma A/S, and Leo Pharma Inc.; filed on 07/01/2014; instituted on 01/06/2015; and terminated 04/30/2015 through settlement). The petition also indicates that the '231 patent is involved in IPR2016-00649 (Petitioner Frontier Therapeutics, LLC; filed on 02/22/2016; pending).


    Par Pharmaceutical, Inc. v. Novartis AG

    PTAB Petition:  IPR2016-01479; filed July 22, 2016

    Patent at Issue:  U.S. Patent No. 9,006,224 ("Neuroendocrine tumor treatment," issued April 14, 2015) claims a device for collecting and assaying a sample of biological fluid.

    Petitioner Par Pharmaceutical, Inc. is challenging the '224 patent on four grounds as being obviousness under 35 U.S.C. § 103(a) (grounds 1-4).  View the petition here.

    Related Matters:  According to the petition, related matters include litigations in the District of Delaware, captioned Novartis Pharm. Corp. et al. v. Par Pharm., Inc., 1:14-cv-1289-RGA; Novartis Pharm. Corp. et al. v. Par Pharm., Inc., 1:14-cv-1494-RGA; Novartis Pharm. Corp. et al. v. Par Pharm., Inc., 1:15-cv-78-RGA; Novartis Pharm. Corp. et al. v. Par Pharm., Inc., 1:15-cv-475-RGA; and Novartis Pharm. Corp. et al. v. Par Pharm., Inc., 1:15-cv-1050-RGA; and in IPR2016-1461 (Roxane Labs., Inc. v. Novartis AG).  The petition also indicates that related matters include IPR2016-00084, -01023, -01059, -01102, and -01103 (inter partes review of U.S. Patent No. 5,665,772).


    Alere Inc. v. Rembrandt Diagnostics, LP

    PTAB Petition:  IPR2016-01498; filed July 27, 2016

    Patent at Issue:  U.S. Patent No. 8,623,291 ("Multiple analyte assay device," issued January 7, 2014) claims a device for assaying a fluid for the presence or absence of different analytes and a method for detecting a multiplicity of analytes using such a device.

    Petitioner Alere Inc. is challenging the '291 patent on nine grounds as being obviousness under 35 U.S.C. § 103(a) (grounds 1-9).  View the petition here.

    Related Matters:  According to the petition, the '291 patent is involved in litigation in the Southern District of California, captioned Rembrandt Diagnostics, LP v. Alere Inc., et al., No. 3:16-cv-698-CAB-NLS.


    Alere Inc. v. Rembrandt Diagnostics, LP

    PTAB Petition:  IPR2016-01502; filed July 27, 2016

    Patent at Issue:  U.S. Patent No. 6,548,019 ("Device and methods for single step collection and assaying of biological fluids," issued April 15, 2003) claims a device for collecting and assaying a sample of biological fluid.

    Petitioner Alere Inc. is challenging the '019 patent on thirteen grounds as being anticipated under 35 U.S.C. § 102(b) (grounds 1 and 5) or obviousness under 35 U.S.C. § 103(a) (grounds 2-4 and 6-13).  View the petition here.

    Related Matters:  According to the petition, the '019 patent is involved in litigation in the Southern District of California, captioned Rembrandt Diagnostics, LP v. Alere, Inc., et al., No. 3:16-cv-698-CAB-NLS.

  • Of Technical Tools and Problems: Going Beyond the Two-Prong Alice Test

    By Michael Borella —

    Introduction

    Supreme Court Building #2It is abundantly clear that the Supreme Court's 2014 Alice Corp. v. CLS Bank decision has significantly changed the patent-eligibility landscape for business methods and some types of software inventions.  For instance, in 2015, approximately 70% of all patents challenged under Alice in district courts were invalidated, while the monthly 35 U.S.C. § 101 rejection rates for USPTO Technical Centers 3620, 3680, and 3690 were over 85% for most of the year.[1]

    These sobering statistics are due to the new subject matter eligibility test set forth in Alice.  Particularly, one must first determine whether the claim at hand is directed to a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then one must further determine whether any element, or combination of elements, in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exception.  But, generic computer implementation of an otherwise abstract process does not qualify as "significantly more."  Notably, the abstract idea exclusion has been heavily employed against the aforementioned business method and software inventions.

    Since Alice was handed down, organizations, their attorneys, the USPTO, and lower courts have struggled to apply this test.  After all, the Supreme Court refrained from explicitly defining the scope of abstract ideas, and provided only limited examples of what might be "significantly more" than a judicial exclusion.  This has led to much hand-wringing, because ultimately one must be able to determine whether a claim falls into the bucket of patent-eligible inventions.  This calculus takes place during claim drafting, when evaluating the eligibility of a pending claim, and when evaluating the validity of an issued claim.

    But what if we are approaching post-Alice eligibility the wrong way?

    Herein, I propose that our emphasis on deciphering the two-prong test might not be the best way of evaluating claims.  Instead, we should be focusing on two alternate tests that have emerged from lines of cases in the Federal Circuit.  There is evidence that these tests are being used, in at least some circumstances, by the district courts and USPTO.  Further, I submit that thinking about patent-eligibility in terms of these two tests may be more helpful than just focusing on the language of Alice.

    The first is the "technological tool test."  The question to ask is whether the claimed invention is directed to a new technological tool, or is it merely making use of one or more existing technological tools.  The second is the "technical problem test."  Here, the question is whether the claimed invention is a technical solution to a technical problem (yes this is very similar to the approach used by other jurisdictions, Europe, and the European Patent Office in particular).

    The Technological Tool Test

    Use of the technological tool test first appeared explicitly in Enfish, LLC v. Microsoft Corp.  Therein, the Federal Circuit characterized the first prong of Alice as an inquiry into "whether the focus of the claims is on the specific asserted improvement in computer capabilities . . . or, instead, on a process that qualifies as an abstract idea for which computers are invoked merely as a tool."  The court further noted that "in Bilski and Alice and virtually all of the computer-related § 101 cases we have issued in light of those Supreme Court decisions, it was clear that the claims were of the latter type."

    Thus, the Federal Circuit is taking the position that the technological tool test can be used to distinguish between eligible and non-eligible inventions.  Notably, the court stated that the claims in Enfish were "directed to a specific improvement to the way computers operate" and therefore "not directed to an abstract idea within the meaning of Alice."  In some cases, if claims clearly pass this test, then there is no need to fully evaluate the claims under the two-prong test of Alice — essentially, short-circuiting that determination.  But the technological tool test can also be applied at prong two, as we will see below.

    This test was picked up by the USPTO in its May 19th memo entitled Recent Subject Matter Eligibility Decisions (Enfish, LLC v. Microsoft Corp. and TLI Communications LLC v. AV Automotive, LLC).  In it, the USPTO asserted that "the Enfish claims were not ones in which general-purpose computer components are added after the fact to a fundamental economic practice or mathematical equation, but were directed to a specific implementation of a solution to a problem in the software arts."

    In contrast to Enfish, the Federal Circuit rendered a decision in TLI Communications LLC v. AV Automotive, L.L.C. shortly thereafter.  In TLI, the court wrote that while the claims involve "concrete, tangible components such as 'a telephone unit' and a 'server,' the specification makes clear that the recited physical components merely provide a generic environment in which to carry out the abstract idea of classifying and storing digital images in an organized manner."  The court also found that the process recited by the method claims was abstract (though arguably the ordered combination of method steps was new).  Since the claims involved merely using the recited components for their intended purpose, no new technological tool was invented.  Thus, the claims were found invalid under § 101.

    Not long after Enfish and TLI were decided, the Federal Circuit found another set of claims to meet the requirements of § 101.  In Bascom Global Internet Servs. v. AT&T Mobility LLC, the challenged claims involve an Internet content filtering system in which "individuals are able to customize how requests for Internet content from their own computers are filtered instead of having a universal set of filtering rules applied to everyone's requests."  Throughout the opinion, the court referred to the claimed filtering mechanisms as a "tool."  But the observation that swung the analysis in favor of the patentee was that the claim involved "the installation of a filtering tool at a specific location, remote from the end-users, with customizable filtering features specific to each end user."  Thus, "the inventive concept harnesses this technical feature of network technology in a filtering system by associating individual accounts with their own filtering scheme and elements while locating the filtering system on an ISP server."  As a consequence, the court found that the claims were "a technology-based solution (not an abstract-idea-based solution implemented with generic technical components in a conventional way) to filter content on the Internet that overcomes existing problems with other Internet filtering systems."  In other words, a new technological tool.

    Recently, language related to Enfish's take on technological tools has found its way into district court decisions (see, e.g., Open Parking, LLC v. Parkme, Inc., as well as about a dozen others) and the USPTO's Patent Trial and Appeal Board as well (see, e.g., Netsirv v. Boxbee, and several other Board decisions).  Even though it is less than six months old, Enfish's tool paradigm already has a long reach.

    The Technical Problem Test

    Use of the technical problem test can differentiate between technical solutions to technical problems and technical solutions to non-technical (e.g., business) problems.  The former usually are patent-eligible, while the latter usually are not.  In order to apply this test one must consider whether the problem being solved is technical in nature.  Of course, one must also consider whether the solution is technical, but in almost all claims that is the case.

    While use of a similar test has been employed in Europe for years, it has only recently reached U.S. shores.  Language supporting this test was introduced by the USPTO in its rules regarding the Covered Business Method (CBM) review program.  Particularly, 37 C.F.R. § 42.301 states "[i]n determining whether a patent is for a technological invention solely for purposes of the Transitional Program for Covered Business . . . the following will be considered on a case-by-case basis: whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution."

    While this position is not binding on courts, and even the USPTO couches it by limiting the definition to the CBM program, the Federal Circuit has adopted its use in at least some cases.  Notably, in that court's final take on Ultramercial Inc. v. Hulu LLC, Judge Mayer wrote in concurrence that Alice "for all intents and purposes, set out a technological arts test for patent eligibility."  In support of this premise, Judge Mayer suggested that the Supreme Court's dim view of claims that do not "improve the functioning of the computer itself or effect an improvement in any other technology or technical field" effectively leads to a technological requirement.  Judge Mayer contrasted claims that encompassed such an improvement with those directed to business or entrepreneurial goals.  It is worth noting, however, that nothing in the patent statute or the Alice decision dictates such an approach.

    While this test has not been widely applied outside of CBM proceedings (though it is gaining popularity in the Federal Circuit and district courts), it is a helpful instrument for evaluating the patent-eligibility of claims.  For instance, the ineligible, financially-focused claims of Alice and Bilski v. Kappos were technical solutions to business problems.  Similarly, in Ultramercial, claims directed to carrying out an abstract business transaction over the Internet were deemed ineligible.  On the other hand, the claims directed to new features of a web server in DDR Holdings, LLC v. Hotels.com L.P. were found to be eligible.  Those claims were a technical solution to a technical problem despite their being motivated by commercial goals.

    Indeed, the recent spate of Federal Circuit § 101 decisions can be viewed through this lens.  Enfish was directed to a new form of database that has certain advantages over other types — thus it was a technical solution to a technical problem.  Similarly, Bascom's per-user Internet filtering technically solved a technical problem that was present in the state-of-the-art filtering mechanisms.

    In contrast, TLI's claims to the transmission and storage of digital images were directed to "use of conventional or generic technology in a nascent but well-known environment, without any claim that the invention reflects an inventive solution to any problem presented by combining the two."  Particularly, the specification of TLI's patent indicated that the problem being solved was one of administration of digital images, rather than an improvement to a specific technology.  As a consequence, the court concluded that "the claims are not directed to a solution to a technological problem."

    Surely, the line between what is a technical versus a non-technical problem can be thin.  After all, most inventions are ultimately aimed at addressing business issues (e.g., by making something work faster, better, cheaper, with new features, and so on).  But those that merely make use of generic technology to solve what is presented as a business goal are unlikely to survive a § 101 challenge.

    Conclusion

    While there may be counterexamples (although I am not aware of any), it appears that the outcomes of most Supreme Court and Federal Circuit § 101 cases can be determined by applying either the technological tool test or the technical problem test.  Thus, these tests may be helpful for patentees, alleged infringers, and their respective representatives to keep in mind.

    For instance, when evaluating the eligibility of a new invention, a patentee or its attorney should consider whether the invention can be reasonably said to pass these two tests.  If not, then further consideration should be taken as to how the invention can be positioned and claimed to be more technical.

    Of course, the claims themselves remain critically important — claims that are too broad or vague are likely to fail under the current § 101 jurisprudence.  But when drafted to a technological tool or technical solution to a technical problem, these claims are in a better position to issue and survive challenges.  Further, the specification has become similarly important, as it provides the applicant with an opportunity to state the (technical) motivation of the invention.

    I am not advocating that we ignore the two-prong test of Alice.  Clearly, we still need to be able to apply those prongs in court and during prosecution.  Attorneys, however, must have a deep bench of arguments and ways of thinking about § 101.  The two tests presented herein may be helpful in that regard — at the very least they are more concrete than making decisions about poorly-defined notions of what is "abstract" and "significantly more."


    [1]     Statistics derived in part from http://www.bilskiblog.com/.

  • Conference & CLE Calendar

    CalendarAugust 25, 2016 – "The Next Wave of Data Privacy: What the GDPR, Privacy Shield and Brexit Mean for U.S. Intellectual Property Litigation" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CT)

    September 1, 2016 – "Drafting and Prosecuting Patent Applications to Withstand PTAB Scrutiny — Building Reasonable Claim Construction to Avoid Unpatentability and Using Declarations to Survive Post-Grant Proceedings" (Strafford) – 1:00 to 2:30 pm (EDT)

    September 7, 2016 – "USPTO's Subject Matter Eligibility: A 2016 Update" (The Knowledge Group) – 12:00 to 2:00 pm (EST)

    September 7, 2016 – "What is Patent Eligible: The Ever-evolving Section 101 Standard" (Dilworth IP) – 1:00 to 2:00 pm (EDT)

    September 8, 2016 – "After-Final Practice: Navigating Expanding PTO Options to Compact Patent Prosecution — Utilizing Post-Prosecution Pilot Program (P3), After-Final Consideration Pilot 2.0, Pre-Appeal Conference and More" (Strafford) – 1:00 to 2:30 pm (EDT)

    September 8, 2016 – "Europe's Unified Patent Court and Patents with Unitary Effect: Status, Perspectives and Impact of Brexit" (Practising Law Institute) – 1:00 to 2:00 pm (Eastern)

    September 11-13, 2016 - 44th Annual Meeting (Intellectual Property Owners Association) – New York, NY

    September 14-15, 2016 - Advanced Patent Prosecution Workshop 2016: Claim Drafting & Amendment Writing (Practising Law Institute) – Chicago, IL

    September 15, 2016 – "On Sale and Public Use Bars to Patentability: Leveraging Recent Developments — Minimizing Risk of Patent Ineligibility or Invalidation" (Strafford) – 1:00 to 2:30 pm (EDT)

    September 20, 2016 – "The Shifting Landscape of Bio/Pharma Litigation: The Influence of PTAB Proceedings" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CT)

    September 29, 2016 - IP & Diagnostics Symposium (Biotechnology Innovation Organization) – Alexandria, VA

    September 29-30, 2016 – Advanced Patent Law Seminar (Chisum Patent Academy) – Washington, DC

    October 3-4, 2016 – Advanced Patent Law Seminar (Chisum Patent Academy) – Washington, DC

    ***Patent Docs is a media partner of this conference or CLE

  • BIO IP & Diagnostics Symposium

    Biotechnology Innovation OrganizationThe Biotechnology Innovation Organization (BIO) will be holding its fourth annual IP & Diagnostics Symposium from 8:15 am to 2:30 pm on September 29, 2016 at the Hilton Alexandria Old Town Hotel in Alexandria, VA.  The Symposium will review and evaluate the state of patent law for advanced molecular diagnostics and personalized medicine as well as explore the implications of developments in these fields for patenting in the broader biopharma sector.  The Symposium will offer the following presentations and sessions:

    • Session 1 — Diagnostic Tests – Is There Anything Left to Patent? — Warren Woessner of Schwegman, Lundberg & Woessner, P.A. will moderate a panel consisting of Leslie Fischer, Novartis; and Hans Sauer, Biotechnology Innovation Organization.

    • Session 2 — Patenting Diagnostics and Personalized Medicine in Europe and Beyond — Berthold Rutz of the European Patent Office will moderate a panel consisting of Jennifer Enmon of Vossius & Partner; and Arti Rai, Elvin R. Latty Professor of Law and co-Director, Duke Law Center for Innovation Policy, Duke University.

    • Session 3 — How Diagnostics can be Developed in a Post-Mayo World — Patent Docs author Donald Zuhn of McDonnell Boehnen Hulbert & Berghoff LLP will moderate a panel consisting of Michael Flavin of Flavin Ventures; and Patent Docs author Kevin Noonan of McDonnell Boehnen Hulbert & Berghoff LLP (session sponsored by McDonnell Boehnen Hulbert & Berghoff LLP).

    • Session 4 (Working Luncheon) — Regulation of Diagnostics: Trends and Developments — Scott Danzis of Covington & Burling LLP will moderate a panel consisting of Wade Ackerman of Covington & Burling LLP.

    An agenda for the Symposium, including a list of speakers, moderators, and panelists can be obtained here.

    The registration fee for the Symposium is $70-90 (service provider rates), $40-50 (in-house counsel at R&D company rates), or $0 (academic, government & non-profit association rates). Those interested in registering for the Symposium, can do so here.

  • Chisum Patent Academy Patent Law Seminar

    The Chisum Patent Academy will be offering two sessions of its Advanced Patent Law Seminar on September 29-30 and October 3-4, 2016 in Washington, DC.  The seminar is co-taught by Donald Chisum, author of the treatise Chisum on Patents (LexisNexis), and Janice Mueller, who was a tenured full Professor at the University of Pittsburgh School of Law from 2004-2011.  The registration fee for each seminar is $1,500; a maximum of ten registrations will be accepted for each seminar.  Those interested in registering for either seminar can do so here.  Additional information regarding the seminar can be obtained here or by e-mailing info@chisum.com.

    Chisum Patent Academy

  • Webinar on Patent Eligibility

    Dilworth IPDilworth IP will be offering a live webinar entitled "What is Patent Eligible: The Ever-evolving Section 101 Standard" on September 7, 2016 from 1:00 to 2:00 pm (EDT).  In this presentation, Dr. Anthony Sabatelli will discuss:

    • Current interpretations of Section 101;
    • Best practice tips for avoiding or overcoming a Section 101 rejection;
    • The Supreme Court's denial of certiorari in the Ariosa v. Sequenom case;
    • The important guidance provided by the Federal Circuit in two recent cases: Rapid Litigation v. CellzDirect and Enfish v. Microsoft.

    Those wishing to register for the webinar can do so here.

  • Apotex Inc. v. Wyeth LLC (Fed. Cir. 2016)

    By Kevin E. Noonan —

    WyethPerhaps the most significant Supreme Court decision in the past quarter century for the working patent practitioner is Dickinson v. Zurko, which strictly speaking is less a patent case than an administrative law decision.  But every day the question of whether a party can successfully challenge a U.S. Patent and Trademark Office decision is decided on the basis of the Court's interpretation of the Administrative Procedure Act to require the Federal Circuit to give deference to the Office's factual determinations and only overturn them if there is not substantial evidence supporting them.  In re Gartside, 203 F.3d 1305, 1316 (Fed. Cir. 2000).  In a nonprecedential decision this week, Apotex v. Wyeth, the Federal Circuit once again applied the Court's instruction in upholding the Office's determination, in a Final Written Opinion from an inter partes review proceeding, that the claims at issue were not obvious.

    The IPR involved U.S. Patent No. 7,879,828, which claims a stabilized formulation of tigecycline:

    Structurea tetracycline-class drug that is important as a treatment against drug resistant bacteria to be used when other antibiotics have failed.  Tigecycline has a narrow stability profile, however, suffering oxidation at high pH and epimerization to an inactive form at acidic pH.  The claimed formulation addresses these concerns by formulating the drug with an acid (in practice, hydrochloric acid) in the presence of a carbohydrate (lactose) that inhibits epimerization.  Claim 1 is representative:

    A composition comprising tigecycline, lactose, and an acid selected from hydrochloric acid and gentisic acid, wherein the molar ratio of tigecycline to lactose is between about 1:0.2 and about 1:5 and the pH of the composition in a solution is between about 3.0 and about 7.0.

    The Board instituted IPR based on three references: a published Chinese patent application ("CN '550") that disclosed formulations of another tetracycline-type antibiotic, minocycline, as a powder of its hydrochloride salt in the presence of a "powder supporting agent" that could be a carbohydrate and in particular lactose.  CN '550 was combined with a reference by Pawelczyk on the kinetics of minocycline oxidative degradation at pH greater than 5, and a reference by Naggar on the effects of stabilizers such as polysorbate 20, urea, and thiourea on tetracycline epimerization.

    Apotex #1At trial, however, the Board found that Apotex had not established by a preponderance of the evidence that the claims of the '828 patent were obvious.  The decision reasoned that Apotex had not shown why the skilled worker would have substituted tigecycline for minocycline in the composition disclosed in CN '550 nor why the skilled person would have prepared a lyophilized preparation of tigecycline according to the reference.  The Board also found that Apotex had not shown why the skilled worker would combine the teachings of CN '550 with the Pawelczyk or Naggar references to arrive at the claimed formulation.

    The Federal Circuit affirmed, in an opinion by Judge Lourie, joined by Judges Wallach and Hughes.  The importance of the Zurko decision is evident in the portion of the opinion setting forth the standards of review the panel used in arriving at its opinion:

    We review the Board's legal determinations de novo, In re Elsner, 381 F.3d 1125, 1127 (Fed. Cir. 2004), and the Board's factual findings underlying those determinations for substantial evidence, In re Gartside, 203 F.3d 1305, 1316 (Fed. Cir. 2000).  Obviousness is a question of law based on underlying factual findings, In re Baxter Int'l, Inc. 678 F.3d 1357, 1361 (Fed. Cir. 2012), such as what a reference teaches, In re Beattie, 974 F.2d 1309, 1311 (Fed. Cir. 1992), and whether a skilled artisan would have had a reason to combine references, see In re Hyon, 679 F.3d 1363, 1365–66 (Fed. Cir. 2012).

    Apotex argued that the Board had imported an "epimeric stabilization" limitation into the claim in finding non-obviousness, which challenge the panel rejected based on the absence of such a limitation in the claim.  The Board had expressly stated that, because the claims did not recite this limitation "'obviousness of the claims [could] be demonstrated without a showing of epimeric stability in the prior art'" (emphasis in the Federal Circuit opinion).  Accordingly, the Federal Circuit found no basis for Apotex's argument that the Board had improperly relied upon such a limitation in its non-obviousness finding.  And the panel stated that, to the extent the Board considered epimeric stabilization at all, it was in the context of determining the motivation to combine references (a factual determination under In re Hyon).

    Apotex's second argument was that the Board failed to consider any motivation to combine "beyond the problem the patentee was trying to solve," contrary to the Supreme Court's decision in KSR International Co. v. Teleflex Inc., 550 U.S. 398 (2007).  Regarding this argument (again, a question of fact), the panel noted that the Board had considered the motivation to combine but had found Apotex's evidence thereof "wanting."  In this regard, particularly as the question related to the motivation to substitute minocycline for tigecycline, the Board rejected the evidence proffered by Apotex's expert and credited Wyeth's expert that the oxidation and epimerization rates of minocycline and tigecycline were known to differ.  According to the opinion:

    Thus, there can be no question that the Board considered the structural similarities between tigecycline and minocycline as a potential motivating factor for a skilled artisan to substitute tigecycline for minocycline in the CN '550 composition.  The Board simply found that the record did not support that finding, and we decline to disturb its decision on appeal.

    The Court also expressly rejected Apotex's reliance on Senju Pharm. Co. v. Lupin Ltd., 780 F.3d 1337, 1346 (Fed. Cir. 2015), for the proposition that the skilled worker would be motivated to "make a simple substitution of generational drugs."  The panel stated that its decision in Senju was dependent on "very factual findings" in that case, which "are notably absent here."

    The Board also found, and the panel did not disturb these findings, that the skilled worker would not have been motivated to combine the cited references because none of the references disclosed tigecycline; the Naggar and Pawelczyk references did not disclose lactose as a stabilizing agents; the CN '550 reference did not teach the use of lactose for epimerization stabilization; and Apotex did not make a showing why the skilled worker would use lactose based on the teachings of the Naggar reference, which taught polysorbate 20 instead of lactose.

    It should also be noted that this decision represents something of a unicorn, involving an IPR against a pharmaceutical (and brought by a generic company challenger) instituted over asserted prior art and resulting in a finding of non-obviousness based on that same art.  The decision suggests that factual distinctions persuasive to the Board may be useful by patentees as kryptonite against invalidation in IPR proceedings, particularly due to the difficulty in persuading a not always patent supportive Federal Circuit to reverse the Board in view of the substantial evidence standard of review.  While clearly not always available as a strategy, patentees in IPR would be remiss if they did not use expert testimony and other factual evidence to rebut prima facie obviousness assertions used as the basis for the Board's institution of an IPR against them.

    Apotex Inc. v. Wyeth LLC (Fed. Cir. 2016)
    Nonprecedential disposition
    Panel: Circuit Judges Lourie, Wallach, and Hughes
    Opinion by Circuit Judge Lourie

  • Netsirv v. Boxbee, Inc. (PTAB 2016)

    By Michael Borella —

    USPTO SealA post grant review (PGR) is an administrative reconsideration of a recent-granted U.S. patent.  The proceeding is held in the USPTO, before that body's Patent Trial and Appeal Board.  A petition for PGR is timely if it is filed within nine months of the challenged patent's issuance.

    To date, there have been 32 PGR petitions filed, only three of which have proceeded to a final written decision.  All of these decisions have involved claims being ruled invalid under 35 U.S.C. § 101.  This case is the third and most recent.

    Petitioners Netsirv and Location Motion MN petitioned for PGR of all claims of Boxbee's U.S. Patent No. 8,756,166 on grounds of invalidity under 35 U.S.C. §§ 101, 102, and 103.  The Board instituted the PGR on the § 101 grounds only.

    The '166 patent is directed to "storage container tracking and delivery in the physical storage field."  This is unlike pre-existing storage systems, in which a user "rents a single large container (e.g., using the PODS® storage system) and stores various personal property items therein."  The drawbacks to such a system are that the "user may not always need that much storage space, may not remember all that was in that storage space, [and that] large storage containers require specialized equipment to move, such as lifts and trucks."  The '166 patent addresses these issues by tracking "individual items stored in one or more relatively small storage containers," as well as a computerized method of doing so.

    Claim 1, the sole independent claim of the '166 patent, recites:

    A method for stored item distribution to a user, the user associated with a user identifier, the method comprising:
        by a computing system:
            (a) receiving a delivery request associated with the user identifier comprising a requested time, a requested location, and a requested number of containers;
            (b) facilitating delivery of a set of containers to the requested location at the requested time, the set of containers comprising at least the requested number of containers, each container of the set associated with a unique storage identifier;
            (c) receiving a set of storage identifiers from a delivery device remote from the computing system, each storage identifier of the set of storage identifiers associated with one of the set of containers;
            (d) associating the set of storage identifiers comprising a first storage identifier with the user identifier in response to receipt of the set of storage identifiers from the delivery device;
            (e) receiving a media description in association with the first storage identifier from a user device associated with the user identifier, the user device remote from the computing system;
            (f) storing the media description as a storage description for the first storage identifier;
            (g) setting a fill status of the first storage identifier to packed;
            (h) receiving a removal request comprising storage identifiers associated with empty fill statuses from a pickup device remote from the computing system;
            (i) removing the storage identifiers having an empty fill status from the set of storage identifiers associated with the user identifier;
            (j) receiving a summary request associated with the user identifier;
            (k) in response to receipt of the summary request, sending the storage description of the first storage identifier;
            (l) receiving a retrieval request associated with the user identifier comprising a selection associated with the storage description, a retrieval location, and a retrieval time; and
            (m) facilitating delivery of a first container identified by the first storage identifier to the retrieval location at the retrieval time.

    The steps of claim 1 were enumerated by the Board for purpose of reference.

    After a brief discussion of claim construction, which involved defining the broadest reasonable interpretation of several terms, the Board moved on to the substantive § 101 issues.

    Patent-eligibility under § 101 is determined by whether claims at issue meet the eligibility requirements set forth by the Supreme Court's two prong test in Alice Corp. v. CLS Bank Int'l.  First, one must determine whether a claim is directed to a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then one must further determine whether any element, or combination of elements, in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exception.  Notably, generic computer implementation of an otherwise abstract process does not qualify as "significantly more."

    Applying prong one, the Board stated that the '166 patent was related to an abstract bailment scheme using storage containers (a "bailment" involves delivering goods for a particular purpose but without transfer of ownership).  Netsirv argued that claim 1 is "preemptive of the entire containerized storage business that has been around for decades," and that "none of the dependent claims add limitations that save the claims from ineligibility."  Boxbee responded by arguing that the claims are not directed to a "business practice known from the pre-Internet world," and instead recite a previously unknown process as evidenced by the lack of relevant prior art.

    The Board reiterated that the invention was in fact directed to a well-known bailment scheme, but cited to support in Diamond v. Diehr for the principle that the § 101 inquiry was separate and distinct from those of §§ 102 and 103.  It went on the state that the "added notion of storage in a particular container does not render the idea any less abstract—it is a particular operating environment."

    The Board cited to the recent Enfish v. Microsoft case to support its position that the claims are abstract, noting that "[a] claim for which computers are invoked merely as a tool . . . requires that the analysis proceed to the second step of the Alice inquiry."  It found that "the steps of the '166 patent use computers as a tool to facilitate the receipt, storage, and transmission of information ancillary to operating a bailment scheme—an economic task, or method of conducting business."  Furthermore, "[t]he computer acts as a device to move and hold data, but the computer is used merely in its ordinary capacity."

    Moving to prong two of Alice, Netsirv asserted that "the claims generally recite bookkeeping items that do not add meaningful limitations beyond the abstract idea because they are simply those conventional, routine things a bailment business would track to run the business properly," and that these steps "naturally flow from a containerized storage business."  Supposedly-irrelevant prior art came into play, with Netsirv citing (and the Board emphasizing) a patent and a published patent application as allegedly disclosing the claim limitations.  (Oddly, the Board did not institute review under §§ 102 or 103 based on this art, so it remains unclear why the references help Netsirv's case under § 101.)

    Nonetheless, the Board pointed to three claimed concepts that go beyond just a bailment scheme.  The first was that the steps of the invention are to be performed by a computing system and involve communication between the computing system and a remote device.  But the Board found that these aspects were merely routine computerization of bookkeeping functions.  Thus, according to the Board, the claims only "provide a solution implemented with generic technical components in a conventional way."

    The second involved looking to "the nature of the data passed between the above computers to determine if the data provide an inventive concept."  But this data consisted of just "pickup and delivery instructions (time, location, count) and internal bookkeeping (associations between containers and customers)" as well as media descriptors, digital photographs, and lists of contents.  The Board found all of this data to be conventional, and that it does not "recite any particular use or technological innovation tied to their storage."

    The third was the concept of delivering more boxes than requested, as recited in a dependent claim.  But the Board determined that this is just an idea unto itself and "it is not an uncommon business practice to provide more than asked."  Further, this feature was not tied to a technological advance.

    As a consequence, the Board concluded that these additional elements did not transform the recited abstract idea into patent-eligible subject matter.  The Board justified this decision by pointing out similarities between the claimed invention and that of Ultramercial v. Hulu — "[e]ven though some of the steps were not previously employed in this art, that fact was not enough to confer patent eligibility because the steps themselves were conventional steps, specified at a high level of generality, data-gathering steps, or otherwise added nothing of practical significance to the underlying abstract idea."

    Boxbee made a last ditch attempt to rescue the claims, arguing that "a human cannot perform the dynamic associations and disassociations with sufficient speed and accuracy to enable method performance," the claims were to "a particular useful application rooted in computer technology," and "the totality of the steps improve the allegedly technical field of storage management."  The Board responded by stating that the claimed steps could be performed with pen and paper, the claims are directed to bookkeeping rather than a technological process, and that storage management is not a technical field.

    Thus, the Board ruled that Netsirv had established a preponderance of evidence that the claims were unpatentable under § 101.

    This case illustrates an odd nuance of the Alice decision — let's call it the "Alice conundrum."  In that case, the Supreme Court paid lip service to the clear language of Diehr that prohibits combining the analysis of §§ 101, 102, and 103.  Nonetheless, by requiring that we look for "well-understood, routine, conventional activity" in the claims, prior art analysis has become a typical part of the § 101 inquiry.  In Ultramercial, the Federal Circuit made it clear that one can have claims that were novel and non-obvious, but still too well-understood, routine, and conventional to be eligible subject matter.  But when Ultramercial (the patent holder in that case) attempted to rebut the notion that its claims were well-understood, routine, and conventional, the Federal Circuit shot them down on the grounds that just because some of the steps were arguably novel, that doesn't mean they are not abstract.  A similar line of reasoning was set forth by the Board in this case.

    As a consequence, the courts have laid out an intellectually unappealing set of rules: (i) prior art is not relevant in the § 101 analysis, (ii) but if claims are deemed abstract and involve only well-understood, routine, and conventional activities, these claims are ineligible.  Still, there is a way to make sense of this (to the extent that sense is involved in any recent § 101 jurisprudence).  While the terms "well-understood, routine, and conventional activities" seem to invoke prior art undertakings (and many tribunals have used them in this fashion), it is more accurate to think of them as referring to "using technology as a tool."  And even if this use is new and innovative, the courts seem to have taken the position that such innovation does not advance the technological arts.

    Or, another way of looking at the Alice conundrum as illustrated herein is to consider the lengths to which the Board went to establish analogies between the claimed invention and a non-computerized bailment scheme.  Any differences were deemed just a conventional use of computing technology.  Thus, use of technology as a tool would be obvious to the skilled artisan.

    When viewed in the light, the Board has actually performed a fairly detailed § 103 analysis under the guise of § 101.  If this is how judicial bodies are going to view patent-eligibility, they should stop telling us that Diehr is still good law.

    Before Administrative Patent Judges William V. Saindon, Justin T. Arbes, and Christopher L. Crumbley
    Final Written Decision by Administrative Patent Judge Saindon

  • IPRs Threatened/Filed as Money-Making Strategy

    By Joseph Herndon —

    Silver Star CapitalOn March 10, 2016, Silver Star Capital, LLC filed a petition for Inter Partes Review of U.S. Patent No. 6,212,079 (IPR2016-00736).  The patent owner is Power Integrations, Inc.  On its face, this seems like another IPR filed using the post grant review process of the AIA as intended.  However, the patent owner's preliminary response indicates otherwise, as the Principal of Silver Star Capital, LLC is Kevin Barnes.

    The '079 patent relates generally to switched mode power supplies and, more specifically, to a method and apparatus for improving efficiency in a switching regulator at light loads.  The IPR petition alleges that the '079 patent is anticipated by or obvious over a number of prior art references.

    Power IntegrationsIn the patent owner's preliminary response, the patent owner indicated that Silver Star is not in the semiconductor business, nor in the switching regulator integrated circuit ("IC") business which is the specific semiconductor product at issue in this IPR, but that Silver Star filed its Petition simply for the purpose of extorting a settlement from Patent Owner in return for not filing its Petition, and after its filing, for withdrawing the Petition.

    This extortion is being perpetrated by Kevin Barnes, Principal of Silver Star, who is certainly not new to this type of extortion.  See e.g., Ferrum Ferro Capital, LLC v. Allergan Sales, LLC, IPR2015-00858.

    Attached to the patent owner's preliminary response were many exhibits, including four letters that highlight the story here.

    First, an important fact in the story is that the '079 patent is the subject of two patent infringement litigation cases pending in the Northern District of California, Civil Actions Nos. 09-cv-5235-MMC and 15-cv-4854-MMC (e.g., Power Integrations, Inc. v. Fairchild Semiconductor International, Inc. et al., 3:09-cv-05235 (CAND); Power Integrations, Inc. v. Fairchild Semiconductor International, Inc. et al., 3:15-cv-04854 (CAND)).

    The first letter, from Mr. Barnes at Silver Star Capital to the President and CEO of Power Integrations, indicates that Silver Star has prepared an Inter Partes Review petition demonstrating the invalidity of specific claims of the '079 Patent, and that Silver Star is aware that institution of an IPR petition can potentially be denied if the real-party in interest is otherwise time-barred under the 12-month litigation threshold.  Silver Star indicated that it is in no way affiliated or in privity with Fairchild Semiconductor Corp/, System General Corp., or any other previously accused infringers of the '079 Patent.  Nevertheless, upon Silver Star filing the '079 IPR with the USPTO, formerly time-barred entities, including Fairchild Semiconductor, will have the opportunity to join Silver Star's IPR proceedings challenging the '079 Patent once the claims are instituted and aid in the prosecution to invalidity.  The first letter ends with an invitation to Power Integrations to have a discussion to determine if Silver Star should consider alternatives to its contemplated '079 IPR Petition strategy.

    The second letter, written as a response to Mr. Barnes from counsel for Power Integrations, declined the invitation and called the event a "shakedown effort".

    The third letter, written by counsel for Power Integrations as a response to a telephone call from Mr. Barnes, declined a so-called proposed "settlement".  Apparently, the settlement to forego the IPR with respect to Power Integrations' '079 patent included one of:

    • Pay Mr. Barnes $600,000 up front + 10% gross of any damages PI collects for infringement of the '079 patent going forward; or

    • Pay Mr. Barnes $1,800,000 up front + 3% gross of any damages PI collects.

    In the fourth letter, written by Mr. Barnes at Silver Start Capital to counsel for Power Integrations, Mr. Barnes put forth allegations of invalidity of the '079 patent, and noted that in a recent PTAB ruling dated September 25, 2015 (IPR2015-01169, Paper No. 21) (Coalition for Affordable Drugs VI, LLC v. Celgene Corp), in a decision denying sanctions, the judge stated:

    Profit is at the heart of nearly every patent and nearly every inter partes review.  As such, an economic motive for challenging a patent claim does not itself raise abuse of process issues.  We take no position on the merits of short-selling as an investment strategy other than it is legal, and regulated.

    Thus, Silver Star appeared on sound ground with its strategy for attempting to extract money from Power Integrations.

    As we see, instead of only targeting biopharma companies as he has in the past, Mr. Barnes is now targeting hi-tech companies.

    Previously, Mr. Barnes, the sole principal of Ferrum Ferro Capital LLC, tried a similar attempt to "shakedown" Allergan (see links below), and he has also brought more drug IPRs under different names (e.g., Gray Square Pharmaceuticals LLC), and once as an "IPR partner" of a St. Louis-based virtual generic company (Generico LLC (which collaborated on its IPR with an entity called "Flat Line Capital," whose principal is Kevin Barnes)).

    The entity called "Silver Star Capital LLC" seems to have been formed for going after valuable high tech patents that have been successfully asserted in litigation by their owners.  The strategy is simple — provide Mr. Barnes a large payment and share of the infringement damages award or Mr. Barnes will file an IPR.  And if you do not pay off Mr. Barnes, you may be in for a long batter because once the IPR is filed, formerly time-barred entities (such as the defendants being sued by the patent owner) will have the opportunity to join Silver Star's IPR proceedings challenging the '079 Patent to aid in the prosecution to invalidity.  What this means is that the defendant, who has undoubtedly spent more time, money, and effort, and who has a substantial interest to invalidate the patent, can join teams with Mr. Barnes in the IPR.

    The IPR between Silver Star and Power Integrations is on-going now, as are the two pending litigations in California.  It will be interesting to see who wins this battle, but at this stage, it would appear that Power Integrations is not backing down.

    For additional information regarding this topic, please see:

    • "Ferrum Ferro Capital Files Motion to Strike Allergan's Complaint Alleging Misuse of IPR Process," August 12, 2016
    • "Allergan Fights Back, Files Complaint Against Venture Fund That Filed IPR Petition," July 13, 2016