Patent Litigation

Disrupting the Balance: The Conflict Between Hatch-Waxman and Inter Partes Review

Disrupting the Balance: The Conflict Between Hatch-Waxman and Inter Partes Review
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By Joanna Shepherd*

 

Introduction

Inter partes review (IPR), a new pathway for challenging patents, is threatening the nature of competition in the pharmaceutical industry, drug innovation, and consumers’ access to life-improving drugs. Since its creation under the America Invents Act (AIA) in 2012,[1] this new administrative proceeding has produced noticeably anti-patent results. Whereas patents challenged in district court are invalidated in less than 40% of cases,[2] and patents challenged in the administrative predecessors of IPR were invalidated in less than one-third of cases, IPRs have resulted in patent invalidations in a shocking 70% of cases.[3] Moreover, the IPR process has been exploited by entities that would never be granted standing in traditional patent litigation—hedge funds betting against a company, then filing an IPR challenge in hopes of crashing the stock and profiting from the bet.[4]

Unfortunately, in recent decisions, courts have recognized the anti-patentee bias of IPR, yet punted to Congress the job of amending the provisions. In Cuozzo Speed Technologies v. Lee (Cuozzo) in June 2016, the U.S. Supreme Court found that an anti-patentee claim construction standard in IPR “increases the possibility that the examiner will find the claim too broad (and deny it),”[5] yet concluded that only Congress could mandate a specific standard.[6] Similarly, in Merck & Cie v. Gnosis in April 2016, the U.S. Court of Appeals for the Federal Circuit determined that an anti-patentee standard of review for IPR decisions “is seemingly inconsistent with the purpose and content of the AIA,”[7] yet decided that “the question is one for Congress.”[8] On the standing issue, the Patent Trial and Appeal Board (PTAB) concluded in 2015 that, under the AIA language created by Congress, hedge funds cannot be excluded from IPR proceedings.[9]

Congress generally intended IPR to improve patent quality by providing a more efficient pathway to challenge patents of dubious quality. Because IPR is available for patents in any industry, for pharmaceutical patents, IPR offers an alternative to the litigation pathway that Congress specifically created over three decades ago in the Hatch-Waxman Act. With Hatch-Waxman, Congress sought to achieve a delicate balance between stimulating innovation from brand companies who hold patents and facilitating market entry from generic companies who challenge the patents. By all accounts, Hatch-Waxman has successfully achieved these goals. Generic drugs now account for 89% of drugs dispensed,[10] yet brand companies still invest significantly in R&D, which accounts for over 90% of the spending on the clinical trials necessary to bring new drugs to market.[11]

Unfortunately, IPR proceedings that culminate in a PTAB trial differ significantly from Hatch-Waxman litigation that occurs in federal district court. The PTAB applies a lower standard of proof for invalidity than do district courts in Hatch-Waxman litigation. It is also easier to meet the standard of proof in a PTAB trial because there is a more lenient claim construction standard and a substantially limited ability to amend patent claims. Moreover, on appeal, PTAB decisions in IPR proceedings are given more deference than lower district court decisions. Finally, while patent challengers in district court must establish sufficient Article III standing, IPR proceedings do not have a standing requirement, allowing any member of the public other than the patent owner to initiate an IPR challenge. These inconsistencies have led to the significantly different patent invalidation rates in PTAB trials compared to rates in district court litigation.

It is imperative that Congress reduce the disparities between IPR proceedings and Hatch-Waxman litigation. The high patent invalidation rate in IPR proceedings creates significant uncertainty in pharmaceutical intellectual property rights. Uncertain patent rights will, in turn, lead to less innovation in the pharmaceutical industry. Drug companies will not spend the billions of dollars it typically costs to bring a new drug to market when they cannot be certain if the patents for that drug can withstand IPR proceedings that are clearly stacked against them. And if IPR causes drug innovation to decline, a significant body of research predicts that consumers’ health outcomes will suffer as a result.

This Article proceeds as follows. Section II begins with a general discussion of the pharmaceutical market, explaining the nature of competition between brand and generic drugs and the importance of brand drug innovation. Section III explains the regulatory frameworks that Congress established to balance the interests of brand patent holders with generic patent challengers, focusing on the Hatch-Waxman Act and the Biologics Price Competition and Innovation Act. Section IV describes administrative pathways available for patent challenges; it discusses both IPR’s predecessors and the changes introduced with IPR under the AIA. Section V explains the critical differences between district court litigation in Hatch-Waxman litigation and IPR proceedings that give rise to the pro-challenger bias in IPR. Section VI proposes several reforms that Congress could institute to align IPR with Hatch-Waxman and restore the delicate balance between stimulating innovation and encouraging generic entry. Section VII concludes the Article.

I. Understanding the Pharmaceutical Market

A. The Nature of Competition Between Brand and Generic Drugs

Over the past several decades, the nature of competition in the pharmaceutical industry and the relative market shares of brand and generic companies have changed dramatically. The generic industry exploded after the 1984 Hatch-Waxman Act—discussed in greater detail in Section III—created various regulatory shortcuts and litigation incentives to spur the introduction of generic alternatives to brand name drugs. The generic industry was further assisted by drug substitution laws in every state that allowed, or sometimes required, pharmacists to automatically substitute a generic equivalent drug when a patient presents a prescription for a brand drug. These regulatory changes have allowed generics to capture significant market share from brand companies. As shown in Figure 1, generics’ market share has steadily increased from only 19% of drugs dispensed in 1984 to nearly 89% in 2015.

Shepherd Figure 1
Figure 1: Growth in Generics’ Share of Pharmaceutical Market[12]
 

The success of generic drugs can be attributed entirely to their lower prices. When a brand drug’s patent expires, generics initially enter the market at a price that is, on average, 50% less than their branded counterpart.[13] As months pass and more generics enter the market, the generic price eventually drops to 80% of the pre-expiry brand drug’s price. Generic companies are able to charge these lower prices while earning substantial profits because they face significantly lower costs than brand drug companies. In contrast to brand companies that spend an average of $2.6 billion on R&D and the FDA approval process, bringing a new generic drug to market costs only $1 to $2 million.[14] In addition, whereas brand companies spend millions of dollars marketing their drugs to physicians and patients,[15] generic companies typically spend very little on marketing. Because generics are automatically substituted for brand prescriptions at the pharmacy, generics can free-ride on the marketing efforts of brand companies and rely on automatic substitution laws for a large chunk of their sales. With these significantly lower costs, generic companies can afford to charge a lower price for their drugs and still earn impressive profits.

A significant number of existing brand drug customers switch to the lower-priced generics as they enter the market, swiftly eroding brand drugs’ market share. As shown in Figure 2, upon market entry, generics now routinely capture over 70% of the brand drug’s market share within only three months of generic entry. In contrast, as recently as 1999, generics captured less than 40% of the market within three months. Within twelve months, generics now capture over 80% of the brand drug’s market share, whereas in 1999, they only captured slightly over 50%.

Shepherd Figure 2
Figure 2: Generic Erosion of Brand Drug Market Share[16]
 

The expansion of the generic industry has produced significant savings for consumers; in the last decade alone, generic drugs have saved the healthcare system nearly $1.7 trillion dollars.[17] However, it has also raised concerns about brand companies’ ability to develop innovative new drugs. Brand drugs experience a significant drop in sales after generics enter the market and erode brand market share. For instance, in 1984 new brand drugs experienced a 12% decrease in net sales as a result of generic entry (a decrease which took place during the first decade after the enactment of the Hatch-Waxman Act).[18] And the expansion of generic drugs since then has further reduced brand sales. Brand drugs’ average lifetime sales are now lower than they were in the early 1990s.[19] In fact, just two in ten brand drugs now earn profits sufficient to cover the average R&D costs required to bring new drugs to market.[20] Moreover, between 2012 and 2018, it is estimated that brand drug companies will lose almost $150 billion in sales because of patent expirations and generic entry.[21]

B. The Importance of Brand Drug Innovation

Unfortunately, reductions in brand drugs’ profitability limits companies’ ability and incentive to engage in the expensive R&D necessary to develop innovative new products. Drug companies will not spend millions (or potentially billions) of dollars to develop new drugs if they cannot recoup (and earn an acceptable return on) the costs of said development. Moreover, since only 20% of marketed brand drugs will ever earn enough sales to cover their development costs, the sales of these successful drugs must not just recoup their own costs; they must also cover the costs of the other 80% of approved drugs that generate losses for drug makers.[22]

Less R&D spending by brand companies will result in less innovation throughout the pharmaceutical industry. Brand drug companies are largely responsible for pharmaceutical innovation.[23] Since 2000, brand companies have spent over half a trillion dollars on R&D,[24] and they currently account for over 90% of the spending on the clinical trials necessary to bring new drugs to market.[25] Because of this spending, over 550 new drugs have been approved by the FDA since 2000,[26] and another 7,000 are currently in development globally.[27] Yet brand companies’ R&D efforts and innovation are directly tied to their profitability. Numerous studies have found that policies that increase pharmaceutical profitability lead to increases in new clinical trials, new molecular entities, and new drug offerings.[28] Other studies have found that policies that reduce expected profitability lead to decreases in R&D spending.[29] Thus, reductions in brand drug profitability over the long term could very well lead to less R&D and less innovation in the pharmaceutical market.

A reduction in innovation will jeopardize the significant health advances that innovation achieves. Empirical estimates of the benefits of pharmaceutical innovation indicate that each new drug brought to market saves 11,200 life-years each year.[30] Another study finds that the health improvements from each new drug can eliminate $19 billion in lost wages by preventing lost work due to illness.[31] Moreover, because new, effective drugs reduce medical spending on doctor visits, hospitalizations, and other medical procedures, data shows that for every additional dollar spent on new drugs, total medical spending decreases by more than seven dollars.[32] Brand companies, and the profit incentives that motivate them, are largely responsible for pharmaceutical innovation. Thus, actions that reduce brand profitability could have long-term negative effects on consumer health and health care spending.

II. Regulatory Frameworks Balancing Drug Innovation with Generic Availability

Understanding the importance of stimulating innovation while encouraging generic entry, Congress created two regulatory frameworks that balanced the interests of brand patent holders with generic patent challengers. The Hatch-Waxman Act applies to traditional drugs, while the Biologics Price Competition and Innovation Act covers the new pathway for follow-on biologic drugs. This section discusses both regulations in turn.

A. The Hatch-Waxman Act

The Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act, was designed to balance the benefits of pharmaceutical innovation with consumers’ needs for affordable drugs.[33] With Hatch-Waxman, Congress recognized that drug companies will only have the incentive to innovate if they can earn sufficient profits during the patent period to recover the exorbitant costs of researching and developing the drug, obtaining FDA approval, and marketing the drug to physicians and patients. However, while preserving incentives for “brand-name” innovations, Hatch-Waxman also encourages companies to create bioequivalent drugs—generics—that copy these branded drugs and enter the market at a lower price as soon as the patents expire on the innovator drugs.[34]

Hatch-Waxman includes various provisions designed to incentivize innovation by brand drug companies. First, to help companies recover the costs of bringing a drug to market, Hatch-Waxman allows for an extension of the patent term lost because of delays attributable to the FDA approval process. It establishes a period of patent restoration, which extends a covered drug’s patent length by up to five years (to a maximum of fourteen years) for half of the brand drug’s clinical testing period and all time spent securing FDA approval.[35] In addition to patent term restoration, Hatch-Waxman confers on brand drugs five years of data exclusivity. Data exclusivity prohibits the FDA from receiving a generic application that relies on the brand drug’s safety and efficacy data. Protection from early generic filings helps to ensure that brand drug manufacturers have an adequate opportunity to recoup research, development and marketing costs.[36]

But in exchange for these new protections for brand drug manufacturers, Hatch-Waxman created various incentives for other companies to produce and market cheaper, generic drugs. First, to spur the introduction of low-cost generics, Hatch-Waxman created the Abbreviated New Drug Application (“ANDA”) process that allows a generic that demonstrates bioequivalence to rely on previously submitted brand drug safety and efficacy data.[37] Prior to Hatch-Waxman, generics were required to submit their own original safety and efficacy data, often duplicating the brand drugs’ tests. The new, greatly truncated process enables generics to quickly enter the market after brand patent expiration and to bring new drugs to market at a cost of only $1 to $2 million, compared to an average of $2.6 billion for brand drugs.[38] Moreover, Hatch-Waxman also immunizes generic companies from patent infringement liability for uses of the brand drug prior to expiration that are reasonably related to the filing of an FDA application.[39]

Second, Hatch-Waxman actively incentivizes generic companies to challenge the validity of brand patents before they expire by creating a pathway for such challenges and by offering a lucrative incentive to the first generic manufacturer to do so. Under a “Paragraph IV” challenge, a generic manufacturer submits an ANDA certifying that either the brand drug patent is invalid or unenforceable, or the generic drug will not infringe on the listed brand patent. As an incentive for filing Paragraph IV challenges, for the first generic that files a challenge and wins, Hatch-Waxman grants a 180-day exclusivity period during which the FDA will not approve any other generic versions of the drug. During this period, the first generic is the only generic on the market, and it can earn substantial profits by shadow pricing, or pricing slightly under the innovator’s price.[40] As a result of this lucrative incentive, Paragraph IV challenges have exploded in recent years: although only 9% of drugs facing generic entry in 1995 were challenged, 81% of drugs facing generic entry in 2012 were challenged.[41] Moreover, Paragraph IV challenges are occurring earlier in the lives of brand drugs. Brand drugs that experienced their first generic entry in 1995 faced their first Paragraph IV challenge 18.7 years after original launch. By comparison, drugs facing the first generic entry in 2012 saw only 6.9 years between market launch and the first Paragraph IV challenge.[42]

Thus, Congress designed the Hatch-Waxman Act to strike a delicate balance between promoting brand innovation and facilitating generic entry. By granting brand drugs a period of patent restoration and data exclusivity, the Act recognized that brand innovators must earn a sufficient return on their R&D costs for innovation to occur. Yet, by streamlining the generic approval process, incentivizing generic challenge of brand patents and providing a litigation pathway for such challenges as discussed below, the Act also sought to increase generic availability and lower drug prices. By all accounts, Hatch-Waxman has successfully achieved these twin goals; generics now account for 89% of drugs dispensed,[43] yet brand companies still invest significantly in R&D, accounting for over 90% of the spending on clinical trials.[44]

B. The Biologics Price Competition and Innovation Act

Congress reconfirmed its intentions to balance brand innovation with the entry of cheaper, follow-on alternatives in 2009 with the Biologics Price Competition and Innovation Act (BPCIA).[45] The BPCIA deals with biologic drugs that distinguish themselves from traditional drugs by their origins: biologics derive from living organisms, typically proteins; though occasionally include toxins, blood, viruses or allergens.[46] These medications are far more complex than traditional medicines; whereas a traditional drug might contain between a few dozen to a hundred atoms per molecule, a biologic’s complicated proteins can include several thousand atoms per molecule.[47] Because of this complexity, biologics are significantly more expensive to manufacture than traditional drugs. The average cost of a biologic drug is twenty-two times greater than a traditional drug, making them prohibitively expensive for many consumers.[48]

Fortunately, Congress recognized the need for cheaper, follow-on substitutes for biologic drugs—or biosimilars (the generic counterpart of biologic drugs). With the BPCIA, it achieved a compromise between biologics and biosimilars patterned after Hatch-Waxman’s regulatory scheme for traditional drugs. First, the BPCIA created an expedited biosimilar approval pathway—analogous to Hatch-Waxman’s approval pathway for generic drugs—under which a proposed biologic substitute does not have to demonstrate bioequivalence, but merely biosimilarity, to a reference product.[49] A product approved as biosimilar may further be deemed “interchangeable” with another biologic if its manufacturer can demonstrate that switching between the reference biologic and the proposed substitute presents no additional risk in safety or efficacy for consumers.[50] Similar to Hatch-Waxman’s 180-day generic exclusivity window, the first biosimilar deemed interchangeable receives an exclusivity window as well.[51]

However, the BPCIA also recognizes the importance of protecting the original biologic’s patent period to encourage biologic innovation. Innovative biologics—the biologic equivalent of brand drugs—receive twelve years of marketing exclusivity during which the FDA cannot approve a biosimilar substitute. [52] The BPCIA also confers four years of data exclusivity on innovative biologics during which a biosimilar is not permitted to use a reference drug’s safety information to file an abbreviated application for FDA approval.[53]

Thus, like Hatch-Waxman’s balance between protecting brand innovation and encouraging generic entry, the BPCIA protects biologics’ patent terms while incentivizing biosimilar entry in the market.

C. Legal Challenges to Patents Under Hatch-Waxman and BPCIA

Both Hatch-Waxman and the BPCIA establish frameworks for patent challenges that further balance the competing interests of brand and generic drug manufacturers. As noted above, when an ANDA applicant makes a Paragraph IV certification that the brand patent is either invalid, unenforceable or would not be infringed by the generic drug, Hatch-Waxman provides a structure for resolving the dispute.[54] First, the ANDA filer must give notice to the brand patent holder of the Paragraph IV certification. Hatch-Waxman makes the filing of an ANDA with a Paragraph IV certification an act of patent infringement even though no direct infringement has occurred. Thus, in contrast to many other industries in which the patent holder cannot sue for infringement until an infringing product has been produced and sold, the brand patent holder can bring suit against a generic rival before the infringing product is brought to market.[55] Moreover, the ANDA filer can resolve the patent dispute in court before exposing itself to patent infringement damages for bringing the challenged product to market. If the brand company does not sue for patent infringement within forty-five days of receiving notice of the Paragraph IV certification, the FDA may approve the ANDA and the ANDA filer can file for declaratory judgment of patent invalidity or noninfringement. If the brand company does sue for patent infringement within the forty-five days, the FDA is stayed from approving the generic ANDA until the generic company prevails in court or reaches a settlement, the brand patent expires, or a thirty-month stay expires. If the generic company wins at trial or reaches a favorable settlement, it receives a 180-day exclusivity period during which the FDA will not approve any other generic versions of the drug.

Similarly, the BPCIA creates a framework for patent challenges of biologic drugs that balances the interests of original biologics and biosimilars.[56] First, the biosimilar applicant must give notice to the biologic manufacturer that it plans to market a competing product, and it must provide access to the biosimilar application and relevant manufacturing details. Similar to a Paragraph IV filing under Hatch-Waxman, the BPCIA creates an artificial act of infringement that enables the original biologic manufacturer to bring a claim for patent infringement against a biosimilar manufacturer. If it chooses to bring an infringement claim, the original biologic manufacturer may provide to the biosimilar applicant a list of all patents it believes are infringed. The parties may then decide to exchange statements describing why each patent will or will not be infringed and negotiate as to which patents will be subject to the patent infringement action in the first round of litigation.[57] Unlike Hatch-Waxman, the BPCIA does not provide a stay of FDA approval during the course of patent litigation. However, by requiring the biosimilar applicant to give 180 days’ notice before going to market, the BPCIA does provide an opportunity for biologic manufacturers to seek a preliminary injunction against an “at-risk” launch (i.e., a launch while patent litigation is ongoing and there is a risk of incurring patent infringement damages) of the biosimilar. Furthermore, to encourage biosimilar development and patent challenges, the BPCIA grants an exclusivity period to the first interchangeable biosimilar that wins a patent dispute or is not sued for infringement.[58]

Thus, Hatch-Waxman and the BPCIA encourage generic and biosimilar manufacturers to challenge patents with a regulatory “bounty” system that provides a lucrative incentive for follow-on drug development and patent challenges. At the same time, they protect brand and biologic patent holders from generic/biosimilar competition in the marketplace until after a patent dispute has been resolved. Moreover, brand patent holders are afforded additional protections because federal district court is the venue for Hatch-Waxman and BPCIA patent challenges. The court presumes patents are valid unless a patent challenger can show invalidity by clear and convincing evidence. In addition, the court interprets patent claims using the “ordinary and customary meaning” standard, making invalidation less likely than under the more lenient standard used in administrative proceedings.[59]

III. Administrative Proceedings for Patent Challenges

A. Pre-IPR Proceedings

In addition to the litigation frameworks created under Hatch-Waxman and the BPCIA, patents can also be challenged in administrative proceedings. Congress has long recognized that imperfections exist in the U.S. Patent and Trademark Office (PTO) examination and issuance process and that some issued patents may require reexamination.[60] In creating an administrative pathway for patent reexamination, Congress intended to reduce both the number of doubtful patents and the cost of patent litigation.[61] This “second look” allows the PTO to withdraw improperly granted patents, thereby correcting its previous errors at a much lower cost than litigation. Indeed, Congress predicted that the administrative reexamination of doubtful patents would:

permit efficient resolution of questions about the validity of issued patents without recourse to expensive and lengthy infringement litigation. This, in turn, will promote industrial innovation by assuring the kind of certainty about patent validity which is a necessary ingredient of sound investment decisions. . . . A new patent reexamination procedure is needed to permit the owner of a patent to have the validity of his patent tested in the Patent Office where the most expert opinions exist and at a much reduced cost. Patent office reexamination will greatly reduce, if not end, the threat of legal costs being used to ‘blackmail’ such holders into allowing patent infringements or being forced to license their patents for nominal fees.[62]

Prior to the AIA in 2012, these administrative reexamination proceedings took place exclusively before the PTO. Ex parte reexamination, created by the 1980 Bayh-Dole Act, allows anyone, including the patent owner, to request reexamination of a patent. [63] The request can be made at any time during the life of a patent, but the reexamination is limited to issues of obviousness and novelty on the basis of prior art consisting of patents or printed publications.[64] The party requesting the reexamination submits prior art to the PTO that it believes calls into question the obviousness or novelty of the patent. The PTO will grant the petition and order an ex parte reexamination if the petition raises a “substantial new question of patentability.”[65]

If the ex parte reexamination is granted, it involves only the patent owner and the PTO; any third-party petitioners are excluded from the process.[66] The reexamination advances much like the original examination of the patent application: none of the patent claims are presumed valid and the PTO uses the broadest reasonable construction to interpret the claims.[67] Because this broad construction standard is more likely to interpret claims as invalid, patent owners are allowed to amend their claims to narrow their scope and avoid invalidation of the patent.[68]

Ex parte reexamination has never gained popularity because, as critics claim, it does not allow any third-party participation beyond the initial reexamination request.[69] In response to concerns of its underutilization, Congress enacted an alternative reexamination procedure in 1999: inter partes reexamination.[70] Although similar to ex parte reexamination in almost every way, inter partes reexamination could not be initiated by the patent owner,[71] and it allowed substantial involvement of third parties in the reexamination process.[72] The two procedures existed side-by-side until inter partes reexamination was replaced by the new administrative procedure established by the AIA in 2012.

B. Inter Partes Review

The AIA, perhaps the most significant reform to the patent system in sixty years,[73] created several new procedures for reexamining the validity of patents.[74] A primary goal of the AIA was to provide a swifter resolution to patent reexaminations than the pre-AIA procedures.[75] Congress had grown increasingly concerned that reexaminations were “too lengthy and unwieldy to actually serve as an alternative to litigation when users are confronted with patents of dubious validity.”[76] The average length of an ex parte reexamination proceeding in 2012 was about 27.9 months,[77] and the average length of an inter partes reexamination was thirty-six months.[78] In contrast, the average length of patent litigation in the courts prior to the AIA was 27.36 months.[79] Thus, the existing reexamination procedures were unable to offer a quicker resolution to patent disputes than litigation. To remedy this, Congress intended the AIA “to establish a more efficient and streamlined patent system.” [80]

Congress also sought, with the AIA, to “improve patent quality and limit unnecessary and counterproductive litigation costs.”[81] On the one hand, Congress recognized the importance of challenging weak patents because “patents of dubious probity only invite legal challenges that divert money and other resources from more productive purposes, purposes such as raising venture capital, commercializing inventions and creating jobs.”[82] Yet it also accepted that provisions under the pre-AIA reexamination procedures had threatened strong patents by making the reexaminations “too easy to initiate and used to harass legitimate patent owners.”[83] Indeed, combating patent-assertion entities, pejoratively known as “patent trolls,” was cited as a primary goal of the AIA.[84] Thus, to balance the role of patent owners and challengers, Congress transformed post-issuance proceedings “from an examinational to an adjudicative proceeding.”[85] The new “mini-trials,” it was believed, would more fairly balance the role of patent holders and patent challengers in a manner similar to litigation.[86]

Two of the new administrative procedures created by the AIA—covered business method review and post-grant review—are not the focus of this Article. Covered business method review applies only to business method patents within financial services, making it largely irrelevant to the pharmaceutical industry. Post-grant review, which allows an invalidity challenge on any grounds during the first nine months of a patent,[87] applies only to patents issued under the AIA’s new first-inventor-to-file regime, and thus is still in its infancy.

The AIA proceeding currently garnering the most attention from the pharmaceutical industry is inter partes review (“IPR”). The AIA created IPR to replace inter partes reexamination—therefore, IPR resembles the earlier reexamination procedure in many respects.[88] Like inter partes reexamination, IPR challenges are available to anyone other than the patent owner,[89] and the validity of the patent can only be challenged for either obviousness or lack of novelty.[90] An IPR can be requested at any point during a patent’s lifetime, beginning nine months after the patent’s issuance.[91] However, an IPR may not be sought if the petitioner has previously filed a civil action challenging the validity of the same claim,[92] or has been sued for infringing the patent in question more than a year prior.[93]

However, IPR differs from the earlier inter partes reexamination in two important respects. First, unlike the paper administrative proceeding of inter partes reexamination, IPR is an adjudicative proceeding before the newly-created Patent Trial and Appeal Board (PTAB). The PTO will grant an IPR request (i.e. make an “institution” decision) and order a full trial before the PTAB if there is a “reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.”[94] A PTAB trial resembles a traditional trial, but with more limited discovery, depositions, and cross-examination.[95]

Second, IPR offers users a significantly speedier resolution than did inter partes reexamination. An inter partes reexamination often took years to reach a decision. In contrast, the PTAB must, by statute, make a final decision on an IPR claim within twelve to eighteen months.[96]

IPR is much more popular than the previous reexamination procedures. Between 2000 and its abolition in 2012, there were a total of 1,919 inter partes reexamination requests filed, or on average, 148 per year.[97] Between 2000 and 2014, there were a total of 7,709 ex parte reexamination requests filed, or on average, 514 per year.[98] Additionally, in the first nine months of fiscal 2016, 1,126 IPR petitions have already been filed.[99] By contrast, fiscal years 2014 and 2015 saw the filing of 1,310 and 1,737 IPR petitions, respectively.[100]

Moreover, IPR is significantly more friendly to patent challengers than the previous reexamination procedures. Of the completed trials that have reached a final written decision, the PTAB has invalidated at least some of the patent claims in a patent in 85% of cases and all of the patent claims in a patent in 70% of cases.[101] By contrast, from 1999 to its abolition in 2012, only 31% of inter partes reexaminations resulted in the cancellation of all claims of the challenged patents.[102] Similarly, from its advent in 1981 through 2014, only 12% of ex parte reexaminations have ended with the cancellation of all of the challenged patents’ claims.[103]

IV. IPR’s Pro-Challenger Bias

Congress designed the new IPR proceeding to improve patent quality by providing a more efficient pathway to challenge patents of dubious quality. The popularity of IPR compared to the pre-AIA reexamination procedures suggests that many challengers perceive significant advantages in the new proceedings. For many types of patents, an increase in post-issuance proceedings should produce clear social benefits: the more efficient resolution of patent disputes will allow more resources to be allocated to productive purposes. However, for pharmaceutical patents, IPR proceedings may instead create significant social costs. Unlike other industries, specific qualities of both the pharmaceutical industry and pharmaceutical patent litigation combine to create very different effects for the new IPR proceeding.

With the Hatch-Waxman Act and the BPCIA, Congress provided a litigation pathway for challenging pharmaceutical patents that balances the interests of brand patent holders with generic patent challengers. By all accounts, Hatch-Waxman has successfully achieved its goals of promoting brand innovation while facilitating generic entry. Generic drugs now account for 89% of drugs dispensed,[104] yet brand companies still invest significantly in R&D, accounting for over 90% of the spending on the clinical trials necessary to bring new drugs to market.[105] Although the BPCIA is still in its infancy, it was also explicitly designed to protect biologics’ patent terms while incentivizing biosimilar entry in the market.

Yet with IPR, Congress created an entirely new pathway for challenging pharmaceutical patents. As this section discusses, critical differences between district court litigation and IPR proceedings jeopardize the delicate balance Hatch-Waxman and the BPCIA sought to achieve between patent holders and patent challengers. As IPR has grown in popularity, it has become evident that these proceedings favor patent challengers. This change threatens to disrupt the nature of competition in the pharmaceutical industry, brand companies’ incentives to innovate, and consumers’ access to life-improving and life-saving drugs.

First, in IPR proceedings, the PTAB applies a lower standard of proof for invalidity than do district courts in either Hatch-Waxman or BPCIA proceedings. In district court, patents are presumed valid and challengers must prove each patent claim invalid by “clear and convincing evidence.”[106] In contrast, no such presumption of validity applies in IPR proceedings, and challengers must only prove patent claims invalid by the “preponderance of the evidence.”[107] This significantly reduced burden of proof gives patent challengers in PTAB cases an important advantage over district court litigation.

In addition to the lower burden, it is also easier to meet the standard of proof in the PTAB trial. One of the most contested parts of patent litigation is claim construction. Claim construction is the translation of the technical patent claims that define the scope of the patentee’s legal rights into understandable language.[108] District courts construe claims according to their “ordinary and customary meaning” to a person of ordinary skill in the art.[109] By contrast, the PTAB uses the more lenient “broadest reasonable interpretation” standard in IPR proceedings.[110] In many cases, these two standards will yield the same construction and conclusions on invalidity. In some cases the PTAB will interpret patent claims as “claiming too much” (using their broader standard), resulting in the invalidation of more patents.[111] Indeed, the Supreme Court recently recognized in Cuozzo that these different standards “may produce inconsistent results and cause added confusion”[112] and that “use of the broadest reasonable construction standard increases the possibility that the examiner will find the claim too broad (and deny it).”[113] Yet the Court concluded that, because the AIA did not specify which standard applies in PTAB trials, the decision of claim construction standard was left to the PTO.[114]

The use of the broadest reasonable construction is not new in the patent office. The PTO uses this standard during its initial examination of patent applications and during ex parte reexaminations.[115] In these proceedings, the justification for broadly interpreting claims is that patent owners will have an opportunity to amend their patents, so claims can be scrutinized using the broadest lens without necessarily resulting in patent invalidation.[116] However, patent owners are rarely allowed to amend claims in IPR proceedings even though the PTAB uses the broadest reasonable interpretation. Of the 118 completed trials in which the PTAB decided a motion to amend (which were requests to substitute patent claims) the board allowed the patent owner to amend claims in only six trials, or 5% of the total.[117] Thus, the PTAB’s use of the broadest reasonable construction standard in IPR proceedings will necessarily result in more patent invalidations than in either district court litigation or in ex parte reexaminations.

PTAB decisions in IPR proceedings are also given more deference than district court decisions. A district court decision upholding the validity of a patent does not prevent a later PTAB challenge by the same patent challenger within a year, essentially giving patent challengers “two bites at the apple.”[118] As long as an IPR petitioner meets the requirements—it has not been sued for infringing the patent in question more than a year prior,[119] and has not previously filed a civil action challenging the validity of the same claim[120]—a patent challenger that was unsuccessful in invalidating a patent in district court may pursue a subsequent IPR proceeding challenging the same patent.[121] And the PTAB’s subsequent decision to invalidate a patent can often “undo” a prior district court decision. In fact, a patent challenger who prevails in a subsequent IPR proceeding can avoid a prior district court judgment finding infringement and imposing damages or issuing an injunction.[122] Thus, pharmaceutical patent holders face persistent uncertainty about the validity of their patents.[123] Even if a patent is found valid in district court, and the validity is affirmed on appeal, the patent could later be found invalid in an IPR proceeding because the PTAB applies lower standards of proof and broader claim construction standards. The Federal Circuit could then affirm the PTAB’s decision, because with the different standards, the PTAB’s finding of invalidity is not necessarily in conflict with the district court’s finding of validity.

Similarly, although both district court judgments and PTAB decisions are appealable to the Federal Circuit,[124] the court applies a more deferential standard of review to PTAB decisions. Whereas a district court’s factual findings in a bench trial are reviewed for “clear error,”[125] the PTAB’s factual findings are reviewed using the more deferential “substantial evidence” standard.[126] The closer judicial review of district court factual findings means that these decisions are more likely to be overturned on appeal than are PTAB decisions. The more deferential review granted to the PTAB’s factual findings is especially troublesome given the more limited fact-finding in IPR proceedings. In contrast to the expansive discovery and witness testimony that is common in district court litigation, discovery is significantly restricted and live testimony is rarely allowed in IPR proceedings.[127] Thus, the Federal Circuit applies a more deferential review of factual findings that are based on less evidence. This approach is not only nonsensical, it will inevitably lead to more errors.

Another critical difference between district court litigation and IPR proceedings lies in the standing requirement. To challenge a patent in district court, a petitioner must have sufficient Article III standing, which the courts have generally interpreted to require that the petitioner has engaged in infringing activity and faces the threat of suit.[128] In contrast, IPR proceedings do not have a standing requirement, allowing any member of the public other than the patent owner to initiate an IPR challenge.[129] As a result, approximately 30% of IPR challengers have not been defendants in district court litigation, and thus would likely not have had Article III standing.[130]

Legal commentators, including advocates of administrative proceedings, have recognized that the lack of a standing requirement in IPR proceedings could lead to harassment suits brought by competitors intending only to impose costs on the other party.[131] Indeed, the lack of a standing requirement has given rise to “reverse patent trolling,” in which entities that are not litigation targets, or even participants in the same industry, offensively use IPR or the threat of IPR to profit. Under this opportunistic practice, reverse trolls threaten to file an IPR petition challenging the validity of a patent unless the patent holder agrees to specific pre-filing settlement demands. These demands are arguably extortion,[132] but with the high rate of decisions to institute IPRs and the high rate of patent invalidations in IPR proceedings, companies take a big risk if they do not agree to such demands.[133]

Moreover, pharmaceutical patents face the threat of another, distinct form of abuse under IPR—the novel hedge fund practice of short selling a brand drug company’s stock, then filing an IPR challenge in hopes of crashing the stock and profiting from the short sale.[134] Pharmaceutical patents are especially vulnerable to this abuse because the stock value of a small or mid-size pharmaceutical company typically depends critically on the success of an individual drug, which in turn typically depends on an individual patent. Thus, while hypothetically invalidating a patent owned by Apple or Samsung may do little to affect the companies’ stock price because of the variety of product offerings and multitude of patents underlying their technology, invalidating a pharmaceutical patent could cause a pharmaceutical company’s stock to plummet. Indeed, the data on IPR petitioners suggest that pharmaceutical patents are especially vulnerable to this sort of abuse; whereas in most industries, over 70% of IPR challengers were defendants in district court litigation (granting them Article III standing), for the drug industry, this figure is less than 50%.[135] And while critics have argued that the hedge fund strategy amounts to illegal market manipulation,[136] the PTAB has thus far allowed the practice, concluding that “profit is at the heart of nearly every patent and nearly every inter partes review,”[137] and “Congress did not limit inter partes reviews to parties having a specific competitive interest in the technology covered by the patents.”[138]

The differences between district court litigation and IPR proceedings are creating a significant deviation in patent invalidation rates under the each pathway. From 1996 to 2015, patents were invalidated in 34% to 39% of district court cases.[139] Additionally, of the 1,046 PTAB trials in IPR proceedings that were completed by June, 2016, a shocking 70% resulted in the invalidation of all claims of the challenged patents.[140] This higher invalidation rate in IPR proceedings is especially meaningful because, while a challenged patent can only be invalidated in an IPR for lack of novelty or for obviousness, a challenged patent in district court can also be invalidated on other grounds.[141]

To date, IPR petitions filed on pharmaceutical patents have made up only a small percentage of the total petitions. Of the 4,253 IPR petitions filed as of March 2016, only 228, or 5.36% were filed on patented pharmaceuticals.[142] Yet the number of IPR challenges to pharmaceutical patents continues to increase; twice as many IPR petitions were filed on pharmaceutical patents in 2015 compared to 2014, and the number is on pace to increase again in 2016.[143]

Although only a handful of these pharmaceutical IPR petitions have reached a written decision in a PTAB trial, it appears that, similar to other industries, brand patent holders are faring worse in IPR proceedings. The PTAB has invalidated approximately 50% of the total claims considered in written decisions.[144] However, of the 220 Hatch-Waxman cases litigated to trial or summary judgment from 2000 to 2012, only 21% resulted in invalidation of the patents.[145]

V. Correcting the Imbalance

The growing popularity of IPR threatens to dislodge the delicate balance that Hatch-Waxman and the BPCIA sought to strike between brand patent holders and generic patent challengers. To achieve this balance, Hatch-Waxman’s litigation pathway includes several protections for patent holders. In contrast, IPR proceedings clearly tilt the balance in the patent challenger’s favor. Although IPR challenges to pharmaceutical patents do not yet occur in large numbers, their popularity is increasing swiftly. Moreover, even the risk of facing a pro-challenger IPR is enough to create significant uncertainty for brand drug companies. IPR makes intellectual property rights less certain: patents are more likely to be invalidated than they are in district court and even a favorable district court ruling doesn’t guarantee that a patent won’t be invalidated by a subsequent IPR.

Uncertain patent rights will, in turn, lead to less innovation in the pharmaceutical industry. Brand drug companies are largely responsible for pharmaceutical innovation; since 2000, they have spent over half a trillion dollars on R&D, and they currently account for over 90% of the spending on the clinical trials necessary to bring new drugs to market.[146] But if brand companies can’t rely on their patents, they will have less incentive to engage in costly R&D. Companies will not spend the billions of dollars it typically costs to bring a new drug to market when they can’t be certain if the patents for that drug can withstand IPR proceedings that are clearly stacked against them.[147] Indeed, a substantial body of literature shows that strong, predictable patent rights are critical for innovation.[148] If IPR increases the uncertainty of pharmaceutical patent rights, innovation will suffer, harming consumers’ health outcomes.[149]

Although proponents of IPR claim that Hatch-Waxman “has been so thoroughly gamed” that it no longer promotes generic entry in the market,[150] the evidence does not support this assertion. Generic drugs now account for 89% of drugs dispensed,[151] and within twelve months of generic entry, these drugs regularly capture over 80% of brand drugs’ market share.[152] Moreover, generic utilization continues to grow; these drugs will soon account for over 90% of drugs dispensed in this country. While strategies adopted by certain pharmaceutical companies have been an attempt to avoid generics’ continued erosion of brand market share, the courts have typically addressed any practices found to be anticompetitive.[153] Certainly closing any occasional perceived loophole is smarter than providing an end run around Hatch-Waxman and creating an entirely new to pathway to challenge patents.

Instead, Congress should align certain provisions in IPR to mirror those in Hatch-Waxman. First, Congress should ensure that IPR patent claims are interpreted using the same claim construction standard as courts use in Hatch-Waxman litigation. Currently, district courts construe claims according to their “ordinary and customary meaning” to a person of ordinary skill in the art,[154] but the PTAB uses the more lenient “broadest reasonable interpretation” standard in IPR proceedings.[155] Changing the IPR claim construction standard to match that of the courts will ensure that the PTAB is not invalidating too many patents, particularly when patent owners cannot easily amend their claims. Alternatively, if the claim construction standards in IPR and Hatch-Waxman litigation are not aligned, the right to amend in IPR proceedings should be expanded. Then, the justification for using the “broadest reasonable interpretation” in IPR would correspond to the justification for using this standard in initial patent examinations and ex parte reexaminations: because patent owners will have an opportunity to amend their patents, claims can be scrutinized using the broadest lens without necessarily resulting in patent invalidation.

Indeed, the Supreme Court recently recognized in Cuozzo that these different standards “may produce inconsistent results and cause added confusion,”[156] and that “use of the broadest reasonable construction standard increases the possibility that the examiner will find the claim too broad (and deny it).”[157] However, the court concluded that only Congress was in a position to mandate a different statute:

We interpret Congress’ grant of rulemaking authority in light of our decision in Chevron . . . [w]here a statute is clear, the agency must follow the statute . . . But where a statute leaves a “gap” or is “ambigu[ous],” we typically interpret it as granting the agency leeway to enact rules that are reasonable in light of the text, nature, and purpose of the statute . . . The statute contains such a gap: No statutory provision unambiguously directs the agency to use one standard or the other.[158]

Second, Congress should provide that standards of review in the Federal Circuit are the same for PTAB decisions and district court decisions. Currently a district court’s factual findings are reviewed for “clear error,”[159] but the PTAB’s factual findings are reviewed using the more deferential “substantial evidence” standard.[160] The inconsistency is especially troublesome given that PTAB factual findings are based on less evidence than are court factual findings. Aligning the standards of review will ensure that, at least at the appellate level, court decisions and PTAB decisions will be reviewed with equal deference.

Indeed, courts have recognized the problems with the inconsistent standards. In April, 2016, the Federal Circuit denied an en banc review on whether the clear error standard should be applied in appeals from IPR proceedings.[161] The Court concluded that the “application of the substantial evidence standard of review is seemingly inconsistent with the purpose and content of the AIA,”[162] yet the Court was not the correct venue to change the standard: “Because Congress failed to expressly change the standard of review employed by this court in reviewing Board decisions when it created IPR proceedings via the AIA, we are not free to do so now.”[163] Instead, the Court called on Congress to align the standards of review: “a substantial evidence standard of review makes little sense in the context of an appeal from an IPR proceeding. But the question is one for Congress.”[164]

Third, Congress could eliminate certain abuses of IPR by adding a standing requirement that mirrors Article III standing. Currently, any member of the public other than the patent owner can initiate an IPR challenge.[165] The lack of a standing requirement has allowed reverse patent trolls and hedge funds to exploit IPR proceedings for profit. And although the pharmaceutical industry is fighting the abuses of reverse trolls,[166] and IPR challenges by hedge funds may ultimately prove to be an ineffective strategy,[167] even the risk of such predatory challenges create uncertainty for patent owners.

Congress currently has bills pending before it that would limit standing to exclude parties wielding the IPR for either extortionary purposes or for non-patent related consequences, such as affecting a company’s stock value. [168] Adding such a standing requirement would prevent abuse of the IPR proceedings by parties that do not have a direct interest in the validity of a patent.

Alternatively, Congress could conclude that amending the AIA to align all IPR proceedings with Hatch-Waxman litigation is overkill because the current inconsistencies are only relevant and meaningful to pharmaceutical patents. In this case, Congress could instead exempt biopharmaceutical patents from the AIA, excusing patents already subject to Hatch-Waxman or the BPCIA from the IPR process entirely.[169] There is certainly a precedent for such reform—Congress has treated pharmaceutical patents differently from other types of patents since at least 1984. A carve-out would preserve the efficiency benefits of IPR for all non-pharmaceutical patents while restoring the balance that was established by Hatch-Waxman over three decades ago and is critical to pharmaceutical innovation.

Conclusion

For patents in most industries, IPR offers a new, efficient alternative to challenge patents of dubious quality. However, for pharmaceutical patents, IPR is a means to avoid the litigation pathway created under Hatch-Waxman over thirty years ago. Critical differences between district court litigation in Hatch-Waxman proceedings and IPR jeopardize the delicate balance Hatch-Waxman sought to achieve between patent holders and patent challengers. As IPR has grown in popularity, it has become evident that these proceedings favor patent challengers; compared to district court challenges, patents are found invalid in almost twice as many IPR challenges.

In recent decisions, courts have recognized the anti-patentee bias of IPR, yet punted to Congress the job of changing the provisions. It is critical that Congress reduce the disparities between IPR proceedings and Hatch-Waxman litigation. The high patent invalidation rate in IPR proceedings creates significant uncertainty in intellectual property rights. Uncertain patent rights will, in turn, disrupt the nature of competition in the pharmaceutical industry, drug innovation, and consumers’ access to life-improving drugs.



* Professor of Law, Emory University School of Law.

[1] Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284 (2011).

[2] Cf. PricewaterhouseCoopers,​ 2016 Patent Litigation Study: Are We at An Inflection Point? 9 fig.11 (2016), https://www.pwc.com/us/en/forensic-services/publications/assets/2016-pwc-patent-litigation-study.pdf.

[3] U.S. Pat. & Trademark Off., Patent Trial and Appeal Board Update 10 (2016), https://www.uspto.gov/sites/default/files/documents/2016-6-30%20PTAB.pdf.

[4] See discussion infra Part V.

[5] See Cuozzo Speed Tech. LLC v. Lee (Cuozzo), 136 S. Ct. 2131, 2145 (2016).

[6] Id. at 2144.

[7] See Merck & Cie v. Gnosis S.P.A., 820 F.3d 432 (Fed. Cir. 2016).

[8] Id. at 2 (majority opinion).

[9] See Coal. for Affordable Drugs VI LLC v. Celgene Corp. (Celgene), Nos. IPR2015-01092, IPR2015-01096, IPR2015-01102, IPR2015-01103 and IPR2015-01169, at 3 (P.T.A.B. Sept. 25, 2015). Though they may be excluded from appellate review under Article III.

[10] See IMS Institute for Healthcare Informatics, Medicine Use and Spending in the U.S., A Review of 2015 and Outlook to 2020, 46 (2016), http://www.imshealth.com/en/thought-leadership/medicines-use-and-spending-in-the-us-a-review-of-2015-and-outlook-to-2020#form.

[11] See PhRMA, 2016 Profile Biopharmaceutical Research Industry 1, 35 (2016), http://phrma.org/sites/default/files/pdf/biopharmaceutical-industry-profile.pdf.

[12] See U.S. Gov’t Accountability Off. GAO-12-371R, Drug Pricing: Research on Savings from Generic Drug Use 2 (2012), http://www.gao.gov/assets/590/588064.pdf; see also IMS Institute for Healthcare Informatics, supra note 10, at 46; PhRMA, Chartpack: Biopharmaceuticals in Perspective 56 (2015), http://www.phrma.org/sites/default/files/pdf/chartpack-2015.pdf.

[13] See IMS Institute for Healthcare Information, Price Declines After Branded Medicines Lose Exclusivity in the U.S. 3 (2016), http://www.imshealth.com/files/web/IMSH%20Institute/Healthcare%20Briefs/Price_Declines_after_Branded_Medicines_Lose_Exclusivity.pdf.

[14] See Office of the Assistant Sec’y for Planning & Evaluation, U.S. Dep’t of Health & Human Servs., Expanding the Use of Generic Drugs (Dec. 1, 2010), http://aspe.hhs.gov/basic-report/expanding-use-generic-drugs#11; see also Henry Grabowski, Patents and New Product Development in the Pharmaceutical and Biotechnology Industries, 8 Geo. Pub. Pol’y Rev. 7, 13 (2003) (“Generic firms can file an Abbreviated New Drug Application (ANDA), a process that takes only a few years and typically costs a few million dollars.”).

[15] Brand companies spent between $103 million and $249 million on the top-ten most heavily advertised drugs in 2014 alone. See Beth Snyder Bulik, The Top-10 Most Advertised Prescription Drug Brands, FiercePharma, http://www.fiercepharmamarketing.com/special-reports/top-10-most-advertised-prescription-drug-brands (last visited Nov. 1, 2016).

[16] See Henry Grabowski, Genia Long & Richard Mortimer, Recent Trends in BrandName and Generic Drug Competition, 17 J. Med Econ. 207, 211-12 (2014).

[17] See U.S. Gov’t Accountability Off., supra note 12, at 2; see also Generic Pharmaceutical Association, Generic Drug Savings in the U.S. (2015), http://www.gphaonline.org/media/wysiwyg/PDF/GPhA_Savings_Report_2015.pdf.

[18] See U.S. Cong. Budget Off., How Increased Competition from Generic Drugs Has Affected Prices and Returns in the Pharmaceutical Industry 38 (1998), https://www.cbo.gov/sites/default/files/105th-congress-1997-1998/reports/pharm.pdf.

[19] See PhRMA, supra note 12, at 44.

[20] Id. at 43.

[21] See PricewaterhouseCoopers, From Vision to Decision Pharma 2020, at 6 (2012), http://www.pwc.com/gx/en/pharma-life-sciences/pharma2020/assets/pwc-pharma-success-strategies.pdf.

[22] See John A. Vernon, Joseph Golec & Joseph A. DiMasi, Drug Development Costs When Financial Risk is Measured Using the FamaFrench ThreeFactor Model, 19 Health Econ. 1002, 1004 (2010).

[23] See, e.g., Kenneth Kaitin, Natalie Bryant & Louis Lasagna, The Role of the Research-Based Pharmaceutical Industry in Medical Progress in the United States, 33 J. of Clinical Pharmacology 412, 414 (1993) (92% of new drugs are discovered by private branded companies).

[24] See PhRMA, supra note 12, at 46-47.

[25] Id. at 35.

[26] Id. at 20.

[27] Id. at 47.

[28] See Mark Duggan & Scott Morton, The Distortionary Effects of Government Procurement: Evidence from Medicaid Prescription Drug Purchasing, 121 Q. J. Econ. 1, 5 (2006); see also Amy Finkelstein, Static and Dynamic Effects of Health Policy: Evidence from the Vaccine Industry, 119 Q. J. Econ. 527, 540 (2004); Daron Acemoglu & Joshua Linn, Market Size in Innovation: Theory and Evidence from the Pharmaceutical Industry, 119 Q. J. Econ. 1049, 1053 (2004).

[29] See Joseph Golec, Shantaram Hegde & John A. Vernon, Pharmaceutical R&D Spending and Threats of Price Regulation, 45 J. of Financial & Quantitative Analysis 239, 240-41 (2010); see also Frank R. Lichtenberg, Public Policy and Innovation in the U.S. Pharmaceutical Industry, in Public Pol’y and the Econ. of Entrepreneurship (Douglas Holtz-Eakin & Harvey S. Rosen eds., 2004).

[30] See Frank R. Lichtenberg, Pharmaceutical Innovation, Mortality Reduction, and Economic Growth 1 (Columbia U. & Nat’l Bureau of Econ. Res., Conf. Presentation on The Econ. Value of Med. Res., Working Paper No. 6569, 1998), http://www.nber.org/papers/w6569.

[31] See Craig Garthwaite, The Economic Benefits of Pharmaceutical Innovations: The Case of Cox-2 Inhibitors, 4 Applied Econ. 116, 118 (2012).

[32] See Frank R. Lichtenberg, Benefits and Costs of Newer Drugs: An Update, 28 Managerial & Decision Econ. 485, 485 (2007).

[33] Hatch-Waxman Act, Pub. L. No. 98-417, 98 Stat. 1585. (1984).

[34] See Margo Bagley, Patent Term Restoration and Non-Patent Exclusivity in the U.S., in Pharmaceutical Innovation, Competition, and Pat. L. 111, 114-15 (Josef Drexel & Nari Lee eds., 2013).

[35] 21 U.S.C. § 355(c)(3)(E)(ii) (2012).

[36] Id.

[37] 21 U.S.C. § 355(j) (2012).

[38] See Office of the Assistant Sec’y for Planning & Evaluation, supra note 14; see also Henry Grabowski, supra note 14.

[39] 35 U.S.C. § 271(e).

[40] See, e.g., U.S. Dep’t Health & Hum. Servs., Guidance for Industry: 180-Day Generic Drug Exclusivity Under the Hatch-Waxman Amendments to the Federal Food, Drug, and Cosmetic Act (1998), http://www.fda.gov/downloads/Drugs/…/Guidances/ucm079342.pdf.

[41] See Grabowski, Long & Mortimer, supra note 16, at 207.

[42] Id.

[43] See IMS Institute for Healthcare Informatics, supra note 10, at 46.

[44] See PhRMA, supra note 11, at 35.

[45] 42 U.S.C. § 262(i)(2)(B) (2012).

[46] See Jason Kanter & Robin Feldman, Understanding & Incentivizing Biosimilars, 58 Hastings L.J. 57, 59 (2012) (citing 42 U.S.C. § 262(i)(I) (2006)).

[47] See, e.g., Joan Kerber-Walker, Small Molecules, Large Biologics, and the Biosimilar Debate, Ariz. Bioindustry Assoc. (Feb. 18, 2013), http://www.azbio.org/small-molecules-large-biologics-and-the-biosimilar-debate.

[48] See Anthony D. So & Samuel L. Katz, Biologics Boondoggle, N.Y. Times (Mar. 7, 2010), http://www.nytimes.com/2010/03/08/opinion/08so.html?_r=0.

[49] See 42 U.S.C. § 262(i)(2)(B) (2012); see also Zachary Brennan, FDA Likely to Require Substantial Clinical Data for Interchangeable Biosimilars, Lawyers Say (Jan. 12, 2016), http://www.raps.org/Regulatory-Focus/News/2016/01/12/23887/FDA-Likely-to-Require-Substantial-Clinical-Data-for-Interchangeable-Biosimilars-Lawyers-Say/ (noting that the FDA is still determining what pre-clinical and clinical data will be required for approval).

[50] 42 U.S.C. § 262(i)(3) (2012).

[51] Kanter & Feldman, supra note 46, at 69-72 (citing 42 U.S.C. § 262(i)(I) (2006)).

[52] 42 U.S.C. § 262(k)(7)(A); see, e.g., Elizabeth Richardson et al., Biosimilars, Health Aff. (Oct. 10, 2013), http://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=100.

[53] 42 U.S.C. § 262(k)(7)(B) (2012).

[54] See, e.g., Bagley, supra note 34.

[55] See Lang v. Pacific Marine & Supply Co., 895 F.2d 761 (Fed. Cir. 1990) (noting that in other industries, it is possible to seek a declaratory judgment prior to the good entering the market); see also 35 U.S.C. § 271(a) (noting that it is also an infringement to merely offer to sell the invention even if the sale is not completed). Compare 35 U.S.C. § 271(e)(2) (“It shall be an act of infringement to submit—(A) an application under section 505(j) of the Federal Food, Drug, and Cosmetic Act . . . for a drug claimed in a patent or the use of which is claimed in a patent . . . .”), with 35 U.S.C. § 271(a) (“[W]hoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States . . . during the term of the patent therefor, infringes the patent.”).

[57] Amgen Inc. v. Sandoz Inc., 794 F.3d 1347, 1360 (Fed. Cir. 2015) (holding that notice of commercial marketing is only effective after FDA approval of the biosimilar application and that the information exchange process is optional).

[58] See 42 U.S.C. § 262(k)(6) (2012) (noting that exclusivity extends until the earliest of: (i) one year after the first commercial marketing of the first-approved interchangeable biosimilar; (ii) eighteen months after a final court decision or the dismissal of a suit against the first interchangeable biosimilar; (iii) forty-two months after the approval of the first interchangeable biologic if patent litigation is still ongoing; or (iv) eighteen months after the approval of the first interchangeable biosimilar if the applicant has not been sued).

[59] See, e.g., Phillips v. AWH Corp., 415 F.3d 1303, 1312-18 (Fed. Cir. 2005) (en banc).

[60] See, e.g., Wayne B. Paugh, The Betrayal of Patent Reexamination: An Alternative to Litigation, Not a Supplement, 19 Fed. Cir. B.J. 177, 181-88 (2009).

[61] See Patlex Corp. v. Mossinghoff, 758 F.2d 594, 602 (Fed. Cir.), aff’d in part, rev’d on other grounds, 771 F.2d 480 (1985); H.R. Rep. No. 107-120, at 3 (2001) (“The 1980 reexamination statute was enacted with the intent of achieving three principal benefits. It is noted that the reexamination of patents by the PTO would: (i) settle validity disputes more quickly and less expensively than litigation; (ii) allow courts to refer patent validity questions to an agency with expertise in both the patent law and technology; and (iii) reinforce investor confidence in the certainty of patent rights by affording an opportunity to review patents of doubtful validity.”).

[62] H.R. Rep. No. 96-1307, pt. 1, at 3-4 (1980), as reprinted in 1980 U.S.C.C.A.N. 6460, 6463.

[63] See, e.g., Bayh-Dole Act, Pub. L. No. 96-517, ch. 30, § 302, 94 Stat. 3015, 3015 (1980) (codified at 35 U.S.C. § 302 (2012)) (“Any person at any time may file a re-quest for reexamination by the Office of any claim of a patent on the basis of any prior art cited . . . .”).

[64] 37 C.F.R. § 1.552 (2014); U.S. Pat. & Trademark Off., MPEP § 2258 (9th ed. Rev. Mar. 2014) [hereinafter MPEP].

[65] 35 U.S.C. § 303(a) (2012).

[66] 37 C.F.R. § 1.550(g) (2014) (“The active participation of the ex parte reexamination re-quester ends with the [grant of the petition for reexamination], and no further submissions on behalf of the reexamination requester will be acknowledged or considered.”).

[67] MPEP § 2111 (“During patent examination, the pending claims must be ‘given their broadest reasonable interpretation consistent with the specification.’”).

[68] Douglas Duff, Comment, The Reexamination Power of Patent Infringers and the Forgotten Inventor, 41 Cap. U. L. Rev. 693, 710 (2013) (“[R]eexamination affords the patent owner a chance to narrow the scope of the claims to avoid being invalidated based on subsequently discovered prior art.”).

[69] Shannon M. Casey, The Patent Reexamination Reform Act of 1994: A New Era of Third Party Participation, 2 J. Intell. Prop. L. 559 (1995); Marvin Motsenbocker, Proposal to Change the Patent Reexamination Statute to Eliminate Unnecessary Litigation, 27 J. Marshall L. Rev. 887, 898 (1994); Gregor N. Neff, Patent Reexamination—Valuable, But Flawed: Recommendations for Change, 68 J. Pat. & Trademark Off. Soc’y 575 (1986).

[70] American Inventors Protection Act of 1999, Pub. L. No. 106-113, 113 Stat. 1501 (codified in relevant part in 35 U.S.C. §§ 311-318 (2006)) (repealed 2012).

[71] Patent owners cannot request inter partes reexaminations of their patents because there would be no third party to participate. See 35 U.S.C. § 311(a) (2012).

[72] 35 U.S.C. §§ 311-318 (2012).

[73] Andrei Iancu & Ben Haber, Post-Issuance Proceedings in the America Invents Act, 93 J. Pat. & Trademark Off. Soc’y 476, 476 (2011).

[74] Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. at 299-305 (2011)(setting forth procedures for IPR).

[75] See generally Joe Matal, A Guide to the Legislative History of the America Invents Act: Part II of II, 21 Fed. Cir. Bar J. 539, 599-604 (2012) (summarizing legislative history); H.R. Rep. No. 112-98, at 45 (2011).

[76] Sen. Patrick Leahy, Senate Begins Debate on Leahy-Smith America Invents Act, Press Release (Sept. 6, 2011), http://www.leahy.senate.gov/press/senate-begins-debate-on-leahy-smith-america-invents-act.

[77] U.S. Pat. & Trademark Off., Ex Parte Reexamination Filing Data, at 1 (Sept. 30, 2012), http://www.uspto.gov/sites/default/files/documents/ex_parte_historical_stats_roll_up_EOY2014.pdf.

[78] See PricewaterhouseCoopers, 2011 Patent Litigation Study: Patent Litigation Trends as the ‘America Invents Act’ Becomes Law 28 (2011) https://www.pwc.com/us/en/forensic-services/publications/assets/2011-patent-litigation-study.pdf.

[79] Id. at 28 (reporting the average time to trial as 2.28 years, or 27.36 months).

[80] H.R. Rep. No. 112-98, at 40 (2011).

[81] Id.

[82] Patent Quality Improvement: Post-Grant Opposition: Hearing Before the Subcomm. on Courts, The Internet & Intellectual Prop. of the H. Comm. on the Judiciary, 108th Cong. 1 (2004) (statement of Rep. Lamar Smith, Chairman, Subcomm. on Courts, the Internet & Intellectual Prop.).

[83] Sen. Patrick Leahy, supra note 74; see also 57 Cong. Rec. S5428 (daily ed. Sept. 8, 2011) (statement of Sen. Patrick Leahy) (asserting that the AIA post-issuance review proceedings provide more protections to patent holders against frivolous requests and harassment).

[84] See, e.g., 157 Cong. Rec. H4485-86 (daily ed. June 23, 2011) (statement of Rep. Lamar Smith) (explaining Congress’s thoughts regarding the predatory behavior of patent trolls).

[85] H.R. Rep. No. 112-98, at 46 (2011).

[86] Mark Consilvio & Jonathan Stroud, Unravelling the USPTO’s Tangled Web: An Empirical Analysis of the Complex World of Post-Issuance Patent Proceedings, 21 J. of Intell. Prop. L. 1, 12 (2014).

[87] 35 U.S.C. § 321 (2012).

[88] Id. §§ 311-319.

[89] Id. § 311(a).

[90] Id. § 311(b).

[91] Id. § 311(c)(1). An IPR request cannot be filed until the post-grant review window has expired. Id. § 311(c)(2).

[92] 35 U.S.C. § 315(a)(1) (2012).

[93] Id. § 315(b).

[94] Id. § 314(a).

[95] Id. § 326(a)(5); 37 C.F.R. § 42.51-42.53 (2012).

[96] 35 U.S.C. § 316(a)(11) (2012).

[97] U.S. Pat. & Trademark Off., supra note 77, at 2.

[98] Id. at 1.

[99] U.S. Pat. & Trademark Off., supra note 3, at 3.

[100] Id.

[101] Id. at 10. Specifically, out of the 1046 completed trials (as of June 30, 2016, 896 (85.66%) have invalidated at least one claim, and 736 (70.36%) have resulted in all claims being invalidated. Id.

[102] U.S. Pat. & Trademark Off., supra note 77, at 1.

[103] Id. at 2.

[104] IMS Institute for Healthcare Informatics, supra note 10, at 46.

[105] PhRMA, supra note 11, at 35.

[106] Microsoft Corp. v. i4i Ltd., 131 S. Ct. 2238, 2242 (2011) (holding that a clear and convincing showing of invalidity is required to invalidate patents).

[107] 35 U.S.C. § 316(e) (2012) (establishing a “preponderance of the evidence” standard in IPR proceedings).

[108] See generally Dennis Crouch, Claim Construction: A Structured Framework, PatentlyO (Sept. 29, 2009), http://patentlyo.com/patent/2009/09/claim-construction-a-structured-framework-1.html.

[109] See, e.g., Phillips, 415 F.3d at 1312-13.

[110] 37 C.F.R. § 42.100(b) (2012).

[111] See, e.g., PPC Broadband, Inc. v. Corning Optical Communications RF, LLC, 815 F.3d 734 (2016) (“This case hinges on the claim construction standard applied—a scenario likely to arise with frequency. And in this case, the claim construction standard is outcome determinative.”).

[112] Cuozzo, 136 S. Ct. 2131, at 2146.

[113] Id. at 2145.

[114] Id. at 2136.

[115] See, e.g., Phillips, 415 F.3d at 1316 (“The Patent and Trademark Office (“PTO”) determines the scope of claims in patent applications not solely on the basis of the claim language, but upon giving claims their broadest reasonable construction. . . .”); In re Yamamoto, 740 F.2d 1569, 1571 (Fed. Cir. 1984) (stating that claims subject to reexamination will “be given their broadest reasonable interpretation consistent with the specification, and limitations appearing in the specification”).

[116] MPEP § 2111 (“Because applicant has the opportunity to amend the claims during prosecution, giving a claim its broadest reasonable interpretation will reduce the possibility that the claim, once issued, will be interpreted more broadly than is justified.”).

[117] U.S. Pat. & Trademark Off., Patent Trial and Appeal Board Motion to Amend Study: 4/30/2016, at 4 (2016), http://www.uspto.gov/sites/default/files/documents/2016-04-30%20PTAB%20MTA%20study.pdf. But see the Federal Circuit order in In re: Aqua Products, Inc., No. 2015-1177 (Aug. 12, 2016), in which the full court granted en banc review of the petitioner’s argument that the PTAB has “unduly restricted” the ability to amend patent claims.

[118] The PTAB justifies this second bite by maintaining that the petitioner is not a party to district court proceedings and that the two venues possess different burdens of proof. See, e.g., Amkor Tech., Inc. v. Tessera, Inc., IPR2013-00242, Paper 37 at 12 (P.T.A.B. Oct. 11, 2013).

[119] 335 U.S.C. § 315(b) (2012).

[120] 35 U.S.C. § 315(a)(1) (2012). Importantly, a counterclaim challenging the validity of a patent claim in an infringement action is not considered a civil action. 35 U.S.C. § 315(a)(1), (3) (2012).

[121] 35 U.S.C. §§ 315, 325 (2012).

[122] See generally Jay Chiu et. al, Pharmaceuticals at the Patent Trial and Appeal Board, 30-32 (2015), http://www.goodwinlaw.com/news/2015/07/07_29_15-goodwin-procter-publishes-guidebook-on-litigating-pharmaceutical-cases?device=print; EPlus, Inc. v. Lawson Software, 789 F.3d 1349 (Fed. Cir. 2015) (vacating the injunction issued by the district court after a subsequent PTAB decision invalidated the patent); Fresenius USA, Inc. v. Baxter Int’l, Inc., 721 F.3d 1330, 1335, 1336 (Fed. Cir. 2013) (absolving the patent challenger of the damage award imposed by the district court after the USPTO subsequently cancelled the patent on reexamination).

[123] Some IPRs and district court litigation will naturally happen in tandem because IPRs will only consider invalidity determinations, while ANDA litigation also deals with infringement determinations. Generic companies may prefer to pursue a non-infringement determination in district court because, in contrast to a finding of invalidity, a finding of non-infringement keeps the patent in place so that competing generics will also have to show that they don’t infringe or that the patent is invalid or unenforceable. Moreover, non-infringement determinations will often be cheaper to litigate. In a non-infringement determination, the generic company has all of the information about its product, so the costs of evaluating non-infringement should be lower. In contrast, an invalidity determination requires a prior art search and analysis as to whether the claimed invention is novel, non-obvious and useful.

[124] 35 U.S.C. § 141 (2012).

[125] ​Fed. R. Civ. P. 52(a)(6); United States v. Cazares, 121 F.3d 1241, 1245 (9th Cir. 1997). Findings in a jury trial in district court are reviewed using the “substantial evidence” standard. However, review of claim construction will always be different between appeals from district court proceedings and PTAB trials because claim construction at the district court is always decided by the judge, and thus, reviewed for clear error.

[126] 5 U.S.C. § 706(e) (2012); Merck, 820 F.3d at 433.

[127] See 37 C.F.R. §§ 42.51-42.53 (2015).

[128] See, e.g., MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) (quoting Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941)).

[129] See 35 U.S.C. § 311(a) (2012). Yet, a challenger who loses at the PTAB may have to meet Article III standing requirements in order to appeal. Cf. Consumer Watchdog v. Wis. Alumni Research Found., 753 F.3d 1258, 1261 (Fed. Cir. 2014).

[130] See Saurabh Vishnubhakat, Arti K. Rai, & Jay P. Kesan, ​Strategic Decision Making in Dual PTAB and District Court Proceedings, 31 ​Berkeley Tech. L.J. ​45, 76 (2016).

[131] Jonathan Masur, Patent Inflation, 121 Yale L.J. 470, 522 (2011) (“[IPR] could potentially be abused by parties interested only in delaying and harassing competitors.”).

[132] See, e.g., Joseph Herndon, IPRs Threatened/Filed as Money-Making Strategy, Patent Docs (Aug. 16, 2016), http://www.patentdocs.org/2016/08/iprs-threatenedfiled-as-money-making-strategy.html; First Amended Complaint at 4, Chinook Licensing DE, LLC, v. RozMed LLC, C.A., No. 14-598-LPS (D. Del. June 13, 2014), ECF No. 9; Allergan Inc. v. Ferrum Ferro Capital LLC, No. ​SACV 15-00992 JAK (PLAx​) (C.D. Cal. Jan. 20, 2016).

[133] See Joseph Gulfo, Hedge Funds,Reverse Trolls’ Crushing Biopharma Innovation, CNBC (July 22, 2015), http://www.cnbc.com/2015/07/22/biopharma-hammered-by-hedge-funds-reverse-trolls-commentary.html.

[134] See Joseph Walker and Rob Copeland, ​New Hedge Fund Strategy: Dispute the Patent, Short the Stock, ​Wall Street Journal ​(Apr. 7, 2015), http://www.wsj.com/articles/hedge-fund-manager-kyle-bass-challenges-jazz-pharmaceuticals-patent-1428417408.

[135] Vishnubhakat, Rai & Kesan, ​supra note 130, at 85-86.

[136] Kevin Penton, ​Biogen Wants Kyle Bass to Give up Financial Docs at PTAB, ​Law360 ​(July 9, 2015), http://www.law360.com/articles/677449/biogen-wants-kyle-bass-to-give-up-financial-docs-at-ptab; see also 162 Cong. Rec. H4361 (daily ed. July 6, 2016) (statement of Rep. Duffy) (expressing concern about a “potential[ly]” “deceptive and manipulative practice by some hedge funds to challenge the legitimacy of a drug patent while simultaneously shorting the drug manufacturer’s stock. These particular hedge funds game the system” by “publiciz[ing] numerous patent challenges,” “provok[ing] fear in the marketplace” and “driv[ing] down [the stock] prices” of these smaller companies.).

[137] Celgene, Nos. IPR2015-01092, IPR2015-01096, IPR2015-01102, IPR2015-01103 and IPR2015-01169, at 3.

[138] Id. at 4.

[139] PricewaterhouseCoopers,​ supra note 2, at 9 fig.11. Earlier studies found invalidation rates in district courts were around 46%. See John R. Allison & Mark A. Lemley, Empirical Evidence on the Validity of Litigated Patents, 26 AIPLA Q. J. 185, 205-06 (1998); Donald R. Dunner, Introduction, 13 AIPLA Q. J. 185, 186-87 (1985); Mark A. Lemley, ​An Empirical Study of the Twenty-Year Patent Term, 22 AIPLA Q. J. 369, 420 (1994) (finding that 56% of litigated patents to be valid between 1989 and 1994).

[140] U.S. Pat. & Trademark Off., ​supra note 10, at 10.

[141] It is possible that the patent invalidation rate in IPR may eventually decrease assuming that, shortly after the creation of IPR, there was an abundance of “low-hanging fruit” (i.e. easily invalidated patents which were previously difficult to challenge: (i) because of the Article III standing requirement; and (ii) because IPR enabled more patent challenges than are possible in district court).

[142] Kevin E. Noonan, PTAB Statistics from Spring BIO IPCC Meeting, Patent Docs (Apr. 17, 2016), http://www.patentdocs.org/2016/04/ptab-statistics-from-spring-bio-ipcc-meeting.html.

[143] U.S. Pat. & Trademark Off., ​supra note 3, at 5 (indicating that there were ninety-two IPR petitions on pharmaceutical patents in 2014, 167 in 2015 and 159 as of June 30, 2016).

[144] Id. at 15.

[145] Jacob S. Sherkow, Litigating Patented Medicines: Courts and the PTO, at 5 (Stanford Law Working Paper, 2015), http://law.stanford.edu/wp-content/uploads/sites/default/files/event/862753/media/slspublic/Litigating%20Patented%20Medicines20-%20Courts%20and%20the%20PTO.pdf.

[146] PhRMA, 2015 Profile Biopharmaceutical Research Industry 1, 26, 35-36 (2015), http://www.phrma.org/sites/default/files/pdf/2015_phrma_profile.pdf. See generally Kaitin, Bryant & Lasagna, ​supra note 23, at 414 (showing that 92% of new drugs are discovered by private branded companies).

[147] See Joseph A. DiMasi, Dir. of Econ. Analysis, Tufts Ctr. for the Study of Drug Dev., Briefing: Cost of Developing a New Drug (Nov. 18, 2014), http://csdd.tufts.edu/files/uploads/Tufts_CSDD_briefing_on_RD_cost_study_-_Nov_18,_2014..pdf.

[148] See, e.g., In re Bilski, 545 F.3d 943, 977 (Fed. Cir. 2008), cert. granted sub nom. Bilski v. Doll, 129 S. Ct. 2735 (2009) (Newman, J., dissenting) (“Uncertainty is the enemy of innovation. These new uncertainties . . . diminish the incentives available to new enterprise . . . .”); Jason Scott Johnston, ​Uncertainty, Chaos, and the Torts Process: An Economic Analysis of Legal Form, 76 Cornell L. Rev. 341, 344 (1991) (“[U]ncertainty has been shown to have potentially serious economic consequences in discouraging certain socially desirable, but risky, activities.”). See generally Craig Allen Nard, Certainty, Fence Building, and the Useful Arts, 74 Ind. L.J. 759, 759 (1999).

[149] Frank R. Lichtenberg, Columbia University & National Bureau of Economic Research, Conference Presentation on The Economic Value of Medical Research, Pharmaceutical Innovation, Mortality Reduction, and Economic Growth (Dec. 2-3, 1999), http://m.laskerfoundation.org/media/pdf/pharmaceuticalimrec.pdf. (noting empirical estimates of the benefits of pharmaceutical innovation indicate that each new drug brought to market saves 11,200 life-years each year).

[150] Gene Quinn, ​Senators Mistaken, IPRs Do Not Frustrate Hatch-Waxman, ​IP Watchdog (June 4, 2015), http://www.ipwatchdog.com/2015/06/04/senators-mistaken-iprs-do-not-frustrate-hatch-waxman/id=58397/.

[151] IMS Institute for Healthcare Informatics​, ​supra note 10, at 46​.

[152] Grabowski, Long & Mortimer, ​supra note 16, at 207.

[153] These strategies include reverse payment settlements in cash, certain product hopping situations (in which the manufacturers fabricate safety concerns or falsely disparage the original drug to drive consumers to the new substitute), and abuse of the REMS program. See e.g., Joanna Shepherd, The Prescription for Rising Drug Prices: Competition or Price Controls?, Health Matrix (forthcoming 2017), available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2743242.

[154] See e.g., Phillips, 415 F.3d at 1312-13.

[155] 37 C.F.R. § 42.100(b).

[156] Cuozzo, 136 S. Ct. at 2146 (majority opinion).

[157] Id. at 2145 (majority opinion).

[158] Id. at 2142 (majority opinion).

[159] Fed. R. Civ. P. 52(a)(6); Cazares, 121 F.3d at 1245.

[160] 5 U.S.C. § 706(e) (2012); Merck, 820 F.3d at 433.

[161] Merck, 820 F.3d at 433.

[162] Id.

[163] Id.

[164] Id.

[165] 35 U.S.C. § 311(a) (2012).

[166] See Herndon, supra note 132.

[167] See J. Gregory Sidak & Jeremy O. Skogs, ​Attack of the Shorting Bass: Does the Inter Partes Review Process Enable Petitioners to Earn Abnormal Returns, 63 ​UCLA L. Rev. Disc. 120, 125-26 (2015).

[168] See Support Technology and Research for Our Nation’s Growth (STRONG) Patents Act, S. 632 (2015); Innovation Act, H.R. 9, 114th Cong. (2015).

[169] See Claire Laporte, One Patent Law, ​Two Economic Sectors: Is the One-Size-Fits-All Patent Law Still Workable?, ​Health Aff​. (Mar. 17, 2016), http://healthaffairs.org/blog/2016/03/17/one-patent-law-two-economic-sectors-is-the-one-size-fits-all-patent-law-still-workable/.

Interview: Trial by Jury of Patent Cases Symposium

Interview: Trial by Jury of Patent Cases Symposium
Anne Hassett & Julian Pymento
Download a PDF version of this article here.
Anne Hassett joined NYU School of Law’s Engelberg Center on Innovation Law and Policy following a distinguished 30-year career as a trial lawyer in complex business litigation, and in particular, intellectual property litigation. Anne most recently was a senior partner in the patent litigation practice at Goodwin Procter LLP and previously a partner in the intellectual property practice at Kirkland & Ellis LLP. Anne received her BS summa cum laude in chemistry from SUNY Albany, AM in chemistry from Harvard University, and JD cum laude from U.C. Hastings College of the Law. Anne was editor-in-chief of the Hastings Law Review and named to the Order of the Coif and the Thurston Society. She is currently President-Elect and serves on the board of the New York Intellectual Property Law Association (NYIPLA), is Board Liaison to the NYIPLA’s Legislative Action Committee, and is a member of the Honorable William C. Conner Inn of Court. Anne is Of Counsel to Amster, Rothstein, & Ebenstein, LLP. Anne is also a research scholar at NYU School of Law, with a particular interest in how diversity enhances innovation.
Julian Pymento is a student at NYU School of Law graduating in May 2017 and the Senior Notes Editor for the NYU Journal of Intellectual Property and Entertainment Law. Julian has focused his studies on patent law and was co-chair for the Patent Committee of the Intellectual Property and Entertainment Law Society. Julian received both his BS and MS in Electrical Engineering from New York University Polytechnic School of Engineering and a minor in Business Studies from New York University Stern School of Business.

* * *

JP: Thank you for taking the time to speak with us. Before we get your views on the symposium topics, what was the inspiration behind Trial by Jury of Patent Cases, the choice of panels, and the order in which they were presented?
AH: So it was multivariate as you might expect. The question of what is the best way to handle deciding patent issues in litigation is something that is of interest to several of us at the Center – for me, because I‘ve spent many years working in the area, and in particular, Rochelle Dreyfuss, and Jeanne Fromer are also involved in looking at some of these issues, and other people as well. This issue has been of interest to us for a while, and then the Civil Jury Project approached us about doing a program on why civil jury trials are decreasing and what can be done about it. So it seemed like a good opportunity for the two of us to put our resources together. Just to give you a sense of how long it takes to get these things, we probably started talking to the Civil Jury Project, maybe February or March 2016 for a program that was at the end of September.
As for the choice of panels – when the Engelberg Center co-directors talked about the proposal to do this program, the co-directors had a number of ideas about what were important components of the question. And so a lot of the framing of the panel questions came out of that brainstorming discussion that we had. And then we proposed to Steve Susman of the Civil Jury Project our ideas for the framework. He and I also met to talk about what kinds of questions we thought would be of value, and then we put all this together and came out with a plan to fundamentally look at the issue of the 7th Amendment and whether there is, in fact, a constitutional right to jury trial in patent cases – and what parts of a jury trial might be protected by that right and which parts might not be.
And so we concluded that question should probably be the starting point of the conference, so everybody would have the same point of reference and be on the same page as we moved forward with the discussion for the day. So then we went to the judges’ perspective, because judges are the practical funnel for everything in patent litigation. Getting their perspective on things was, I think, the next most important thing. And then after that we had the scholars look at their issues, and then the practitioners. Why the practitioners last? Because they’re the ones who have to deal with all the attitudes of everybody else, including their clients. So it seemed reasonable for them to have a very broad sense of the overall discussion to frame what they were going to talk about and to be responding, in part, to issues that earlier panels were questioning. So the program would follow an iterative thought process.
JP: A theme throughout the symposium was an increased onus on advocates and judges to make jury trials more efficient, for example, by appointing an impartial technical advisor to the judge and allowing technological demonstrations in the courtroom. Do you agree with this assessment or do you find any potential problems with these approaches?
AH: I’m going to quibble with the question a bit here. I’m not sure that I agree that the two things you cite in the question, impartial technical advisers to the judge and technological demonstrations in the courtroom, necessarily make trials more efficient. I agree that there certainly is an interest in making trials more efficient. That is, using your time wisely and making sure that, as an advocate, you’re pushing the arguments that really matter and not just every argument that’s in the briefs. You want to make sure that those points are in the record to be dealt with but you may not want to present every single one of those at trial because that likely won’t make things more efficient. Efficiency is about how much time you use and how well you use it, whereas avoiding confusion and making it possible for the trier of fact to understand what is important may take more time.
For example, I think technological demonstrations in the courtroom can be very useful for the trier of fact, and depending on what the advocates propose to do, I would say most cases, you get permission to present them. I’m not aware of there being a time when we wanted to use, in my own trial practice, either through demonstration or a video, a way to explain and show how the technology worked, where it was not allowed.
Now the question of an impartial technical adviser to the judge – that is fraught with a lot of issues, so let’s talk a little bit about that. It may or may not make the case more efficient. Under the Federal Rules of Evidence, an impartial technical advisor can be appointed, and some judges, in fact, routinely have someone appointed who is available to them to use as a technical advisor. But most of the judges that I know and that I’ve spoken to at the program are very careful to say that they only want to use a technical advisor as someone to whom they could go and say, “Is this how that wiring diagram should be understood?” Or if I’m writing my opinion, and I’m putting in a picture of something from the patent that I am using to help explain my decision, “Technically, is this correct? Are the electrical ions are flowing in the right direction?” I think most judges are very reluctant and wary of using technical advisors in a fashion that says, “Tell me what the answer is” to how the law applies to the technological facts. Having technical advisors can make the judge’s decision making process more efficient. But it mostly means that there is a greater opportunity for the judge to be able to really evaluate what he or she is hearing from the experts on either side because these are advocates. Advocates can sometime emphasize certain things over others because that is better for their case. But advocacy can sometimes give a view of things that needs to be balanced, and judges’ access to their own technical advisors can be a way for these impartial technical advisors to be very useful.
So I agree that there are a number of techniques that advocates can use to make the process more helpful, but whether they make it more efficient is another question.
JP: Certain courts such as the Eastern District of Texas and the District of Delaware already have the lion’s share of patent jury trials. Might those advances in courtroom procedure lend further to the problem of forum shopping in the jurisdictions which do adopt such measures? And if so, is this downside outweighed by the benefits?
AH: Well, there are some assumptions implicit in the question, so let’s just talk about those first. One is a concern about having a lot of cases go to only a few courts – is that a bad thing? That’s actually an interesting question. One might say, and I’m not taking a position – just pointing out the assumptions built in there – that courts that handle a lot of these cases may have a better system to manage them. They can have a faster learning curve for any particular case, and they may be bolder, sitting down with the advocates and saying, “You know, let me tell you X, Y, and Z.” They may be able to give more direction to the parties than other judges who don’t have as many of these cases and may feel more intimidated by the process. So you have to think about this, whether in chambers with the parties before the case gets to trial, whether more experienced judges in patent-savvy courts are better able to signal to the parties news they may not want to hear, but news that they need to know so they can reconsider their assessments of whether they should go to trial, and what they should present at trial. So what I’m trying to focus on is that judges who handle patent cases infrequently, and I think this was suggested by some of the judges on the panel, can be somewhat intimidated by the process, just as jurors are going to be intimidated by the process because jurors only do this once. And the more you do it, the more comfortable you feel, and therefore, perhaps the more frank you may be in communicating things to the parties that they should know and should take into account. So that’s some food for thought on the assumption in the question.
Why are people forum shopping? They are looking for a perceived advantage – whether it’s true or not, whether they really have that advantage is another question. We don’t have a lot of empirical data to back up these perceived advantages that people bank on when they are making these forum selections.
I think to the extent that any district court can develop more effective ways to get the cases ready for trial and to help the parties appreciate what arguments are better for them to move forward with than others, and to the extent that the court respects the technology and allows the parties to have an opportunity to present it, that’s a very positive development. To my mind, such a court would make an excellent venue for a patent trial.
Of course, if the advocates want to do an animation or demonstration to explain the technology, it’s on the parties to make it technically correct. Judges should be evaluating whether it should be permitted in terms of how helpful it may be for the jury, not on whether it might prolong the trial.
Just as an aside, there’s a whole issue about demonstrations and animations, which can become very problematic in jury trials. You want your demonstration to be in evidence in the jury room, and not just something that the jury sees in the court room and then doesn’t have a chance to look at again. So you have to be very careful when you make these things to be sure that every piece of it is correct. And then, you want to be able to freeze a frame and say, “Okay, that’s the document I want to introduce – that picture of that frozen frame – as an independent piece of evidence to go into record.” The jury needs a way to have it during their deliberations, and that’s a can of worms on how you to accomplish that.
Bottom line is you’re never going to stop people from doing venue shopping. So really the issue is how we can make our courts the best at handling patent trials. And if people are picking a court because it’s the best, I don’t think that’s bad.
JP: Shifting gears a little bit, in her opening address, the Honorable Judge O’Malley described herself as an unabashed believer in juries: a jury’s competence, their good faith efforts, and their importance in patent trials. Taking all the speakers in sum, do you think that there was a majority dynamic in one direction or the other?
AH: I would say that the overwhelming dynamic, certainly from the judges, was that juries can do it. They can decide the issues they are presented with, and they can do it well. I would say this group was more pro-jury on the whole than you might have found twenty years ago, or even ten years ago, or that you may find among certain other judges who are not very pro-jury. One of the questions that Scott Hemphill asked the judge’s panel was, “When you’re sitting in a jury trial, do you agree with the juries and the results that they come to in the patent cases?” And what was interesting is that, at one level, the judges all said “Yes,” but then they all kind of said, “You know, we don’t listen the same way so it’s not the same as if we were making the decision.” So you have to recognize that there’s a little bit of a tension there. They’re saying, on one hand, that the juries get it right, but then that they didn’t really listen with the same degree of scrutiny that they would have if they were at a bench trial.
Then I think there’s another piece of this. They didn’t come out explicitly and say this, but I think it’s definitely a component that undergirds why judges these days are much more open to juries in patent cases: There is this a fear of the law becoming too elite. So if you have decisions about important things – and everybody I think agrees that what affects innovation is important to society – if you have those decisions being made by a smaller and smaller group of people who are the cognoscenti, the ones who “know,” the law becomes very elite and removed from everybody else. I think that even though some people might say, “I‘m not sure the juries always get it quite right,” those same people might say they would rather have the process involve the public than have it become the domain of just the experts. That’s an attitude that I think is very strongly held these days.
The last thing I’ll say is that one problem in evaluating what juries do is that it’s kind of a black box. Judges, in their opinions at bench trials, have to explain their reasoning piece by piece by piece. But it is rare that jury verdicts break down how the jury has evaluated each piece of the case and so we don’t necessarily have as good a read on their analysis.
JP: There were a number of statistics presented by the symposium participants, particularly from Professor Lemley, one of which showed that the number of jury trials in patent cases have risen since the 1970s. Among reasons given for this phenomenon are the trend shift of litigation conducted by IP boutiques to general practice firms and the 1982 formation of the Federal Circuit. Which way do you think these developments cut and to what extent do these explanations suffice?
AH: Certainly the number of patent cases tried to juries has changed tremendously. Kimberly Moore wrote a very interesting article, which is dated now, but contains a very good analysis for a certain period of time. One of things she points out is that in the late sixties and early seventies, the number of patent cases going to juries was two to five percent – something like that. Twenty years later, it was like fifty-two percent going to juries. That’s a huge change. So the evidence, as you can see from the statistics we presented at the conference, shows that jury trials are more common than bench trials in patent cases. I don’t think anyone has demonstrated empirically the “why.”
I kind of lived through some of this change. When I came out of law school in 1985, I was interested in being a trial lawyer. Yes, I had a technical background, and a lot of people said I should do patent litigation. But I wasn’t interested in it then because those cases rarely went to trial, certainly not jury trials, and jury trial were what I wanted to do. So I did other kinds of complex business litigation for almost fifteen years and got lots of jury trial experience. Then I had to try a criminal defense case for which we had to do present technical evidence – scientific evidence in a court. Long story short, that was my first opportunity, as a trial lawyer, to present scientific evidence to a jury and I decided, “Wow, that’s really a lot of fun!” So I started looking around for how I could do that more. I knew it wouldn’t come up come up more than once every fifteen years in the federal white collar criminal defense practice I was in at the time. I saw there are two places you could go to: product liability and patent litigation. That’s how I decided switch to patent litigation. I went to a boutique patent practice firm and kind of knocked on the door and said, “Would you take me in and teach me patent law?” There was already this phenomenon of general practice firms having identified how lucrative an IP practice could be and blending their IP teams with people having a lot of trial experience. The boutiques were also looking for people with trial experience because they could see this is what clients were now looking for.
By the time I was making this practice switch, the move to more patent jury trials was well underway. General practice firms had identified how much opportunity there was and started moving into this area and bringing in the focus of litigators, which was a very different perspective from what the predominantly prosecution-oriented lawyers who handled the boutique practice had. So my personal speculation is that the increase in jury trials in patent cases came because general practice firms identified IP practice as a kind of ore that could be mined, and brought the perspective that they had to treat these like regular trials. And quite honestly, from my talking to judges, it seems a lot of the judges thought, “Thank you!” When these cases were going to trial before that, many judges felt that the cases were just impossible to understand because it was very rare for people from the patent prosecution boutiques to be trying to make the technology and the law something that the average person could understand. They treated explanations to the judge like their explanations to the patent examiners at the USPTO. Many practitioners coming from the patent prosecution world didn’t want juries because they figured, “It was hard enough to get the judge to understand. How do I get twelve jurors?” I don’t know what to call that phenomenon. But honestly I think that’s what happened. So I agree the trend shift does have a big impact. But why did that trend shift take place? I think it’s because general practice firms were looking for places to expand, and not because we concluded that our system should have more jury trials in patent cases. It was more like general practice firms thought, “Here’s an area of practice we can take up,’ and then when litigation partners look at the cases, they applied their skills and that’s what led to those changes. In my view, the formation of the Federal Circuit was not important to this trend shift.
JP: Jury trials may tend towards certain biases, for example, tilts toward the patentee and possibly pro-American companies versus foreign corporations. Is jury bias something that should be worried about?
AH: I think certain biases that really exist. The statistics seem to bear it out that if you compare judge bench trial resolutions versus jury trial resolutions in patent cases you find that, overall, patent holders tend to win more often before juries when they are the ones who bring the lawsuits. And why is that? There are a couple of factors. I think juries often feel like litigation is a tough process and so you’re not going to bring that case unless you’re really sure you are right. And they give credibility to the party who brings the lawsuit, so there’s that component. And actually what’s interesting, if you look at the statistics that Kimberly Moore talks about in her article, when the alleged infringer brings the action through a declaratory judgment action, they tend to win more often before juries than judges, which credits the notion that jurors are biased in favor of the party that sues, inferring that if you take the time to go to court, you must really believe in the strength of your case.
There’s a second component to juror bias: There is an evidentiary advantage to the patent holder in assessing patent validity. I think a lot of jurors believe the Patent Office does a good job and so they give the patentee credit for that. The presumption of validity and the high standard of clear and convincing evidence to overcome patent validity – that’s a tough standard to meet! I think juries are impressed by those standards. And you can compare that with bench trials – the patentee-plaintiffs’ win rate on bench trials tends to be higher than the alleged infringers’ win rate – might be 53% to 47%, or something like that, whereas for jury trials, it’s even higher: About 65% in favor of the patentee-plaintiffs. But the patentee win rate is lower in bench trials than in jury trials, and it’s lower in a way that you cannot explain by anything other than bias differences. And so one thing I would infer is that this difference occurs in part because judges judge cases all the time. That’s their business. I think that, with experience, judges are less intimidated by patent cases and become bolder in their willingness to conclude that the U.S Patent Office was wrong and the standard for invalidating a patent has been met, and because they have the opportunity to judge these types of cases over and over again, they get better at applying a standard of evidence. I think experienced judges are less overwhelmed by the standards of evidence they have to apply to technical facts. But jurors are only doing deciding a patent case once. And I think their lack of experience handling such cases makes it harder for them to say, “Sorry, the U.S. Patent Office was wrong when it granted this patent.”
JP: Moving to the idea of specialization – by mere virtue of the existence of voir dire, isn’t that a de facto “special” jury that may not be representative of their community? And if so, does that mean that the creation of “special” juries comprised of individuals deemed ordinarily skilled in the art is not too far flung?
AH: Well, there’s a huge leap! It‘s a provocative question, but I don’t think you literally mean a “special jury.” There’s a huge leap between a special jury of technical experts and the actual voir dire process. The actual voir dire process is “Okay, we’re going to call in everybody from the venire and then figure out who among those people are the ones who we think cannot be impartial.” You’re not specializing in anything except in the ability to be impartial: to not have any obvious prejudice in favor of one party or the other. Of course, a lot of prejudices we know we are not really getting at very well in the voir dire process. But voir dire is very different from selecting persons of ordinary skill in the art. That’s like saying we’re only going to have engineers, chemists, or coders, and nobody else, as jurors for any particular case. And it assumes that those “specialized” jurors lack biases about the technical field. They won’t. There are attitudes and assumptions and biases about scientific matters, too, just as in other things. You can’t expect that a “special jury” of microbiologists will be impartial on points in microbiology – you’re going to find scientific biases apart from the evidentiary biases we discussed before. Some people will say, “Oh no, CRISPR method is the right way.” Some people will say, “No, this other method is better.” And so you‘re not necessarily getting a better set of decision makers. So that’s a problem: The notion that, “Oh, just get these experts and they’ll all be able to agree.” You might find you have more disagreement among them because they have their own biases about science.
That being said, it certainly was common to have people experienced in a commercial field assist judges in 18th-century England. Let’s say you came to the court in that era with an admiralty case. What was the judge going to do? He’d likely say, “I don’t understand this stuff. Here’s a bunch of folks who are admiralty experts. Go sort it out with them and come back and let me know what they figured out about these five things.” So there’s some logic to think that, at least in commercial cases, there may be value in letting the commercial community sort it out. But this is subject to the same concern, of course, that we spoke about earlier, which is letting elites make decisions and excluding the public from participating in those decisions when the public may be affected – I really don’t want to do that.
So I’ll say one more thing. This is a personal view. Since the America Invents Act was implemented, we have IPRs. You don’t have to be involved in a district court litigation to file an IPR, but if you are involved in a court litigation and file an IPR in time, you may well find that the judge will grant a stay on the district court action, hoping the Patent Office [PTAB] will resolve the issue of patent validity. So that is de facto giving us something that I think people wouldn’t swallow if we just proposed it flat out: Having the Patent Office resolve the validity issues, leaving infringement for the district courts. You could say, “Gee, that sounds like what those judges were doing in the admiralty situation, telling the experts to deal with these questions and come back with the answers.” My personal view is that we ought to be looking more carefully at whether that division of issues is a good pro-innovation way for our system to function, perhaps to always have validity issues go back to a special court like the PTAB, and let the general public decide infringement issues – perhaps that’s the question that the society in general should be involved in. Whether that solves the concerns about elitism, I don’t know. But I think it’s something that’s worth considering.
JP: So, as you mentioned, a highlight of PTAB proceedings is adjudication by specialized administrative law judges. Why may specialized judges be okay while specialized juries are not in district courts?
AH: Well, so if we just deal historically with how IPRs came to be part of the AIA, there was something called inter partes reexamination that the Patent Office had previously set up hoping to provide a forum for the people who fashioned and implemented the patent system to help make the decisions in reviewing validity. And that process wasn’t being used very often. I think they analyzed a few reasons why it might have been infrequently used, and they really wanted to change that. That was a big reason why the AIA implemented the PTAB with IPRs and PGRs. There was a strong interest on the part of the people who were pushing that reform to make our system more like the European patent courts where none of these issues are jury issues. The PTAB brought in specialized judges to focus on questions of validity, which was what the Patent Office wa really all about. And so, the goal was to bring in people to be judges and not examiners – you know their basic job function is very different – we could develop a system that would be more harmonious with the rest of the world. Whether it’s the best solution, I can’t say yet, but I think it offers a lot of advantages because it enable having technological experts judge patent validity and it allows the public to decide the questions of infringement and what innovation can go forward.
And I think one of the advantages of the way the PTAB is set up is that you have three judges, not just one, so there’s an opportunity similar to the kind that happens in a jury, which is that people with different points of view can challenge each other. And I think that PTAB judges generally feel comfortable challenging each other, so that’s a good thing. And in my view, it’s better than a bench trial in district court where the poor judge – it’s all on him or her. That can be very difficult. I think it’s very difficult for a single person operating alone to get these decisions right. Willfulness – or questions of inequitable conduct – those might be jury issues along with infringement. So yes, I think it’s something we should explore much more.
JP: On one side the 7th Amendment favors instituting jury trials for civil cases. However, on another side are practitioners, who prefer greater consistency in court outcomes, which is less feasible with jury trials. Is there a sense of whether one policy should weigh more heavily than the other?
AH: I’m going to interpret what you’re saying to mean that, because bench trials produce opinions supported by fact and legal principles, we can better discern principles of law from them and apply them whereas jury verdicts – well, all we know is that’s what the jury did. And what that jury verdict means for other cases, might be very hard to discern. So jury results provide less consistency in our understanding of the law and make it harder to advise your clients. Our conference did not explore the process that advocates go through to advise their clients before they decide to go forward with a jury trial – the legal and technical evaluations, the asymmetries of information, the estimations made for clients.
My personal view is that, because I care about the law, I’d like to encourage things that make the law more consistent and more apparent. The advantage of having judicial opinions is that it puts reasoning out there that can be studied and applied or criticized for failing to take into proper account facts or law, and it makes the law more apparent. Whether you are citizens – potential jurors – or judges, lawyers, or law students, everybody can look at that and try to understand it, which is not true with jury verdicts. In the case of juries, all you know is their decision; exactly what they relied on is very hard to appreciate. Even if you interview jurors afterwards, you’re not necessarily getting anything that’s very useful for the next case.
I suppose the benefit that, in the case of jury trials, post-trial motions may generate a post-trial opinion by the judge granting or denying the JMOL and therefore providing an analysis of why there is or is not enough to support a jury verdict, which would help explicate the principles that the judge views as important and relevant in that case. It’s tough. I believe firmly in the notion that we don’t want this to be a law of the elite. And yet, you want law that you can understand and apply, and that has consistency. So I guess I’m waffling but probably a little bit more in favor of having judicial decisions ratherthan black box jury verdicts.
JP: To close, during the symposium, an overarching theme was the dichotomy of patent exceptionalism and American exceptionalism. Patent exceptionalists argue that jury trials are inappropriate for patent cases because the issues are too complex and American exceptionalism stresses the importance of juries even in complex cases. With the passage of the AIA, PTAB proceedings, and other shifts in patent law, do you see the direction of our nation’s patent law structure shifting towards one view or the other?
AH: Well, certainly if I look at the proposed patent reforms that are on the radar screen today, I don’t see anything that is anti-jury. So I think they are all jury-neutral. And actually in some ways, they are geared towards making patent cases fit the same standards that a lotof other litigations must meet, like the standards of Iqbal and Twombly: “Throw out that Form 18! You should be like everybody else, patent people!” And the judges, when they decided eBay, said to the patent bar, “Why should prevailing patentees always get injunctions? You should go make your injunction case like everybody prevailing party.” So to a certain extent, there’s actually a move against patent exceptionalism, and I think that’s a good thing. Part of this is because I don’t agree with the attitude that ordinary people cannot decide patent issues. They can, if you, as the advocate, present them the facts and the law in the right way. You have a big responsibility as advocates to understand, for decision makers, which components of law matter, which facts matter, and how you can present the facts so that the jurors get it visually and orally. Always, advocates need to present information so every juror has the opportunity to understand. I know it can be done because I’ve seen it happen. I believe that jurors can make these decisions so long as we advocates teach them the right way.