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IPR Petitioner “Lost” Standing to Appeal to Federal Circuit By Abandoning Development of Proposed Biosimilar Before Appeal Was Completed

On February 7, 2019, the Federal Circuit dismissed an appeal because the IPR petitioner, Momenta Pharmaceuticals, essentially “lost” its constitutional standing when – prior to completing its appeal to the Federal Circuit – it abandoned development of its proposed biosimilar after failed Phase 1 clinical trials. Momenta Pharm., Inc. v. Bristol-Myers Squibb Co., No. 2017-1694, 2019 WL 470177 (Fed. Cir. Feb. 7, 2019). The Federal Circuit determined that Momenta’s change in circumstances removed any concrete interest in the result to support standing.

This decision raises a lot of questions about in what other factual scenarios a party could “lose” its standing to appeal an unfavorable decision.  For example, what if an accused infringer charged with patent infringement voluntarily takes its product off of the market during the pendency of the litigation, and in the interim, files an IPR petition?  Does standing cease to exist because the accused infringer essentially agreed to a temporary injunction?  What steps does a biosimilar developer need to take to maintain standing when litigation and product development continue in parallel?

Background

Bristol-Myers Squibb Company (“BMS”) owns U.S. Patent No. 8,476,239 (“the ’239 patent”) claiming an immunosuppressive agent used in treatment of immune system disorders such as rheumatoid arthritis called abatacept. BMS markets abatacept under the brand name Orencia®. Momenta Pharmaceuticals, Inc. (“Momenta”) was developing a biosimilar counterpart to Orencia® and challenged the ’239 patent by filing an IPR in July 2015. The Patent Trial and Appeal Board sustained patentablility of the ’239 patent and Momenta appealed the decision.

The Appeal to the Federal Circuit

Momenta challenged the merits of the IPR decision, but found itself defending its ability to bring the appeal instead. BMS moved to dismiss the appeal, stating Momenta lacked constitutional standing after Momenta’s proposed biosimilar failed its Phase 1 clinical trials and was withdrawn after the IPR decision. This raised issues of whether Momenta had a concrete interest in the appeal.

Momenta argued its continued interest in developing a biosimilar to Orencia® should be adequate to support standing. Momenta had been developing several biosimilar products as part of a joint development agreement with Mylan, including M834 (the biosimilar to Orencia®). Press releases submitted to the court indicated Momenta had exited its participation in the joint development of M834 to focus on other biosimilar products. After the court issued an Order to Show Cause as to why the appeal should not be dismissed as moot, Momenta stated it still had standing because it was jointly responsible for sharing the substantial costs of the joint development and the business decision to pursue a biosimilar to Orencia® hinged on the pending appeal of the IPR. Because Momenta was no longer developing M834 itself, Momenta claimed an economic interest in potential royalties of any Mylan-developed biosimilar to Orencia®. On December 10, 2018, BMS notified the court that Momenta’s SEC filing indicated Momenta had terminated its collaboration agreement with Mylan with respect to M834.

To support its continued standing to appeal, Momenta argued a relaxed standard for standing when the right to appeal is created by statute. The right to appeal an IPR decision is statutorily created by 35 U.S.C. § 319, stating “[a] party dissatisfied with the final written decision of the Patent Trial and Appeal Board . . . may appeal the decision,” without mentioning any of the traditional constitutional standing requirements. Citing Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992), the court recognized Congress’s power to create rights that alter standing requirements, but distinguished between altering redressability and immediacy—which a statute may change—and the requirement to have a concrete and particularized interest in the outcome—which a statute cannot eliminate. Momenta, at 6.

Even under a relaxed standing requirement, Momenta must still show a concrete and particularized interest in the appeal. Momenta’s investment of millions of dollars in its development of M834 does not show an “actual or imminent” harm now that development has ceased; there is no potentially infringing activity. Id. at 7. The court found Momenta’s arguments of possible future royalties from Mylan to be too speculative. Id. at 8–9. Therefore, Momenta no longer had a legally protected interest in the validity of the ’239 patent.

Momenta also argued it had standing when the IPR proceedings began and its standing should continue through the review of those proceedings. The court rejected this argument on mootness grounds. The Court found that while Momenta’s infringing actions when developing its biosimilar may have been sufficient for standing in an Article III court, events during the proceedings can cause claims to become moot. Id. 10–11. The lack of any potential infringement now means “Momenta no longer has the potential for injury, thereby mooting the inquiry.” Id. at 11.

For a similar reason, the court also rejected Momenta’s claims that IPR estoppel under 35 U.S.C. § 315(e) would create an injury-in-fact. Momenta would be prevented from later challenging invalidity based on any grounds it raised or could have raised in the IPR, but the court stated any estoppel that may apply to Momenta is irrelevant after ceasing any potentially infringing activity. Id. at 8.

With no potentially infringing activity in the present and no concrete plans that may infringe in the future, Momenta’s challenge to the ’239 patent became moot. The Federal Circuit dismissed the appeal.