The Wall Street Journal recently reported that Hayman Capital, a hedge fund, has adopted a strategy of seeking to invalidate patents through inter partes review (IPR), while betting on a drop in the target’s share price. In particular, the fund has targeted pharmaceutical patents that the head of Hayman Capital, Kyle Bass, says “have little value other than to drive a prescription drug prices.” According to the article, “his new fund bets against companies whose patents it believes are spurious, and invests in those that would profit if the patents are invalid.”
Mr. Bass has created an organization called Coalition for Affordable Drugs, and petitions for IPR have been filed on behalf of Hayman Capital, the Coalition, and Mr. Bass personally (the "Coalition"). The first petition was filed in February 2015, targeting an Acorda Therapeutics patent (8,663,685). Since then the Coalition has filed a total of 16 IPR petitions, all of them targeting pharmaceutical patents owned by companies such as Biogen, Celgene, Shire, and Jazz Pharmaceuticals. As of yet, none of the petitions have resulted in the institution of IPR proceedings. Some have criticized the fund’s tactics, and called for stricter standing requirements in IPRs.Celgene, one of the Coalition’s prime targets, recently struck back. On June 3, 2015, Celgene sent an email to the Patent Trial and Appeal Board (PTAB) requesting authorization to file a sanctions motion for dismissal of four petitions for IPR filed by the Coalition. In the email, Celgene states:
The identified real parties in interest (“RPI”) in these proceedings have stated publicly that they intend to use the IPR process for the purpose of affecting the value of public companies. This is not the purpose for which the IPR process was designed. Moreover, one or more of the identified RPI previously threatened to file IPRs against the challenge patents unless Celgene met their demands. When Celgene did not pay, the RPI -- apparently in furtherance of their efforts to abuse the IPR process for private financial gain -- filed the present petitions. Celgene respectfully requests authorization to file a sanctions motion to dismiss the petitions due to the real parties in interest’s abuse of process and misuse of the IPR proceedings.
On June 9, 2015, the PTAB issued an order authorizing Celgene’s motion for sanctions. The order states:
Based on the specific representations made [by Celgene during a] telephone conference, we [have] granted the requested authorization. Our decision was based on a determination that briefing will facilitate development of a complete record and, thereby, will promote the just resolution of the issues raised by [Celgene]. We emphasized that our grant of authorization to file a motion for sanctions is not a decision on the merits of Celgene’ allegation of abuse of process.