PTAB Denies Celgene’s Request to Sanction Hedge Fund Owner

The U.S. Patent and Trademark Office has denied Celgene’s request to sanction a hedge fund owner for seeking to profit by challenging the validity of drug patents, saying there was nothing inherently wrong with the action.

Celgene — the target of five petitions for inter partes review filed by Kyle Bass’ Coalition for Affordable Drugs — argued that Bass sought to make money by betting against the companies he challenged and wasn’t simply trying to lower drug prices for consumers.

Allowing the strategy to continue would inundate Celgene with similar petitions, the drugmaker claimed, and open other public companies to unnecessary petitions from for-profit organizations pursuing investment strategies.

The Patent Trial and Appeal Board disagreed, ruling that economic motive for challenging a patent claim is not in itself an abuse of the process since profit is at the heart of nearly every patent and inter partes review. The board declined to take a position on short-selling, noting the investment strategy is legal and regulated.

Celgene had also argued petitions filed by Bass ran contrary to the America Invents Act, since Congress intended inter partes reviews as a speedy and less expensive alternative to litigation. But the PTAB countered that the AIA was designed to encourage the filing of meritorious challenges in an effort to improve patent quality.

Read the decision here: www.fdanews.com/9-15-PTAB-decision.pdf. — Jonathon Shacat