On September 16, 2021, eleven congressional leaders (“the Signors”) sent a letter to Andrew Hirshfeld, the acting director of the United States Patent and Trademark Office (“USPTO”), requesting the USPTO to reevaluate the Patent Trial and Appeal Board’s (“PTAB”) view on discretionary denials of petitions for inter partes review (“IPR”). The Office uses discretionary denials to deny institution of challenges to patents when an upcoming trial in district court would address the patent’s validity on the premise that parallel review would be an inefficient use of the PTAB’s resources. The first signature of the letter is none other than Senator Patrick Leahy (D-VT), one of the two lead sponsors of the America Invents Act. The congressional letter garnered bi-partisan support, with other signors including Senator Elizabeth Warren (D-MA), Congressman Darrell Issa (R-CA), and Senator Richard Blumenthal (D-CT). However, Thom Tillis (R-NC), who has signed previous letters to the USPTO and is an active member of the Senate Judiciary IP Subcommittee, is noticeably absent from the letter.
The Signors emphasized that discretionary denials are contributing to the high price of drugs. As described in the letter, some pharmaceutical companies engage in anti-competitive patent practices that artificially extend the manufacturer’s monopoly on a drug, prevent competitors from entering the market, and drive up the cost of drugs. The letters cites as an example that pharmaceutical companies create “patent thickets” comprising “dozens of questionable, back-to-back patents,” or engage in “product hopping” by transitioning from one branded drug to another very similar drug with a longer patent life.
As noted by the Signors, the IPR process was designed by Congress to provide “a lower-cost and faster alternative to litigation” to allow competitors to challenge weak patents and bring generic or biosimilar products to market sooner. The Signors explained that the IPR system is “one of the few tools available” to serve as a “check against questionable patents” and “help address the root cause of high prescription drug prices.” By denying IPR petitions for “reasons not based on merit” but based on administrative factors “not grounded in statute,” the Signors argued that discretionary denials of IPR petitions have weakened the IPR process.
Particularly, the Signors point to Apple, Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020, designated as precedential May 5, 2020), which set forth the factors governing the PTAB’s discretion to deny institution of an inter partes review (“IPR”). Since Fintiv, the number of IPR petitions denied for reasons not based on the merit have risen dramatically – from 5% in 2016 to an estimated 19% in 2020.
Currently before the Supreme Court are two petitions for writ of certiorari related to Fintiv as further discussed here. Additionally, various members across the patent community have also weighed in on the Fintiv factors in response to the USPTO’s request for comments on discretionary institutions in 2020 as further discussed in our earlier post found here.
With the additional pressure on the USPTO from Congress, we may see changes to discretionary denials and to Fintiv in the future.