Bass Goes Two for Two Against Shire
Oct. 25, 2015 (Mimesis Law) — Shire must be wondering why it can’t get any love from the PTAB, especially since its pharma brethren have a perfect record to date in defending Bass & Co. IPR’s against patents protecting various blockbuster drugs. Unlike the rest of the industry, Shire is in the unenviable position of having to deal with Bass IPR’s that have been instituted, first with respect to its Lialda drug, and now with respect to patents protecting Gattex — a blockbuster short-bowel syndrome treatment.
Shire paid a hefty sum for the company that developed Gattex, to the tune of $5.2bn, earlier this year. So while Bass is batting .000 against the rest of Big Pharma, Bass is batting 1.000 against Shire — to the chagrin of the company. For now, investors in Shire don’t seem to care, though that can change if these IPR’s actually to earlier generic competition that erases the value of Shire’s substantial investment in Gattex.
As per PTAB rules, the ultimate decision as to whether Shire’s patents will be cancelled will depend on a year-long “trial” process, culminating in a final written decision. For Bass, the institution of these IPR’s is further validation of his overarching claim — that high-cost prescription drugs are often protected by weak patents, and that forcing the USPTO to take a second look at such patents is a worthy underpinning to a broader “activist short” strategy against targets in the pharmaceutical industry.
With respect to the institution decision itself, the PTAB stuck to discussion of the merits throughout most of the detailed opinion, and rejected Shire’s attempt to differentiate the invention from the prior art presented. Likewise, the PTAB rejected Shire’s attempt to argue that secondary considerations favored a finding of non-obviousness.
Also failing was Shire’s attempt to have the petition bounced for failure to name all the real-parties-in-interest (“RPI”). In particular, Shire argued that investors in Bass’ funds should have been named in the petition, but the PTAB responded that such “passive investors” did not render themselves RPI’s, because they were not shown to control the petition, or to have paid to “initiate any particular” IPR. On this issue, the PTAB indicated that its core focus is on those entities that could “control” the petition or the subsequent proceeding, and felt that Shire failed to come forward with evidence to show that Bass’ petition missed naming any such party as an RPI.
Finally, Shire had argued, and the PTAB once again considered, whether or not Bass’ strategic motivation for filing the IPR constituted an abuse of process. In keeping with the prior trend on Bass IPR decisions finding no abuse, yet again the PTAB declined Shire’s invitation to label Bass’ petition abusive. As a result, Shire now needs to gird for a multi-front battle in the PTAB, in an effort to protect two lucrative drug prices.
Disclosures and Disclaimers:
Nothing in this material is intended to constitute legal or investment advice of any kind, nor is any of this material based on any non-public information of any kind. In addition to my work at Markman Advisors, I am also a name partner at a NYC-based intellectual property litigation boutique firm, Kroub Silbersher & Kolmykov PLLC (www.kskiplaw.com). Markman Advisors is affiliated with a Houston-based investment management firm, Perdix Capital Management, which may have existing or potential positions relating to situations discussed in this material. Markman Advisors also provides consulting services to buy-side investors, including hedge funds and family offices, that may also have or enter into positions relating to situations discussed in this material. Questions or comments can be directed to me at firstname.lastname@example.org. All suggestions are welcome.