In the battle against disease, not all treatments are utilized equally. Depending on the malady, some drugs may be given as part of “first-line” treatment. In the cancer context, for example, first-line treatments are recognized as those that are the “first treatments given for a disease … accepted as the best treatment.” When those approaches fail to work, or “stop working,” second-line therapies come to the fore. What is true for cancer treatments is true for patent defense litigation. There are first-line defense tactics and second-line ones, subject of course to the ever-shifting sands of patent law as articulated by courts nationwide.
While the development of patent law through judicial decisions may at times seem slow and at other times fast, there is no doubt that when Congress gets involved major shifts happen seemingly overnight. Just as the discovery of a cancer-fighting molecule can give rise to a new first-line treatment, so too did the passage of the America Invents Act give rise to a new first-line defense for patent defendants. Otherwise known as the IPR, the proceeding that Justice Neil Gorsuch colorfully described recently as one that “permits a politically guided agency to revoke an inventor’s property right in an issued patent” resulting in the handing of “core judicial powers to agency officials and leaving the disposition of private rights and liberties to bureaucratic mercy.” No matter how one feels about IPRs, there is no doubt that they have fundamentally transformed patent litigation — with the popular conception that they have done so at the expense of patent owners.
Despite their efficacy for patent defendants, however, deployment of IPRs as a first-line defense are not without risk for patent defendants. A failed IPR, for example, can have significant consequences in later or parallel infringement litigation. Indeed, the IPR statute itself contemplates that a defendant will be estopped from relying on the invalidity defense subject to a final written decision in that IPR in later litigation — thereby making the difficult task of proving invalidity in a district court case even harder. Remember, of course, that patents carry with them a presumption of validity, leading to an evidentiary standard for invalidation (clear and convincing evidence) much higher than that at play in an IPR. As a result, the estoppel penalty for losing an IPR serves to make the difficult nigh impossible for patent defendants in a district court case.
Consider a recent example from an extremely high-profile ongoing case — the dispute between the United States government and Gilead over the government’s HIV treatment patents. For its part, Gilead has been a market leader when it comes to filing prophylactic IPRs, targeting patents that it has been approached with for licensing before an infringement case is filed against it. With respect to the HIV treatment patents, Gilead announced in August 2019 that it had filed IPRs in the hopes of eliminating the distraction allegedly caused by the US government’s attempt to license those patents. Instead, the situation escalated, with a district court case alleging infringement filed a few months later. Worse for Gilead, all of its IPR petitions failed to garner institution by the PTAB. While a failure at the institution stage does not ordinarily result in estoppel, there is no doubt that an IPR failure is at least the equivalent of a first-line treatment failing to work. Unsurprisingly, therefore, Gilead has looked for additional defenses against the government’s assertions, including by filing a breach-of-contract case tied to the patents this past Friday.
Unfortunately for Gilead, its failed IPRs against the HIV treatment patents are not even the highest-profile (or costliest, at least for now) IPR failures it has had to endure recently. For that, we need to look at the latest developments in Gilead subsidiary Kite Pharma’s long-running patent dispute with Memorial Sloan-Kettering and Bristol Myers Squibb’s Juno. I wrote about the massive jury verdict in that case on these pages back in December, while noting that Kite’s failed prophylactic IPR may have made the patent owners “emboldened to seek maximum redress when and if the patent survives.”
Consistent with that observation, the plaintiffs moved post-trial for enhancement of the already-large jury verdict based on Kite’s alleged willful infringement. And on April 2, 2020, they got their wish, with a 50% enhancement of the damages granted by the trial judge. Had Kite’s cancer treatment not been so critical, the damage could have been worse for new owner Gilead. Even though the potential enhancement for willfulness could have been up to a treble damages award, the addition of hundreds of millions of dollars to one of the biggest patent verdicts of all time only serves to increase the importance of getting things overturned on appeal for Gilead. It should not be ignored, of course, that the failed IPR was a factor in the court’s willfulness determination, accentuating the risk when a defendant acknowledges the value of a patent asserted against it by expending the considerable resources required to file and maintain an IPR against that patent.
Ultimately, both the HIV treatment case and the Kite Pharma one have made Gilead a bit of a poster child for the risks of filing IPRs and losing. Or as I put it in December: “when the IPR kill-shot misses, the repercussions (and the future exposure) are often more serious than if the alleged infringer didn’t take such an aggressive approach.” To be clear, Gilead has plenty of opportunities left to get things right and escape liability in both of the cases. As well as the resources and access to top counsel to put up the best fight possible toward that goal. But no matter the ultimate result, Gilead’s struggles should remind us that IPRs are not without risk to filers. Because even first-line treatments sometimes fail.
Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.
Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.
Kathryn Rubino is a Senior Editor at Above the Law, and host of 
