Amicus Curiae Brief — United States, Petitioner v. Arthrex, Inc., et al.

Nos. 19-1434, 19-1452, and 19-1458

IN THE

Supreme Court of the United States

_________

UNITED STATES OF AMERICA,

Petitioner,

v.

ARTHREX, INC., ET AL.,

Respondent.

________

On Writs of Certiorari

to the United States Court of Appeals

for the Federal Circuit

________

BRIEF OF THE ASSOCIATION FOR ACCESSIBLE

MEDICINES AS AMICUS CURIAE IN SUPPORT

OF PETITIONERS IN NOS. 19-1434 AND 19-1452

________

Jeffrey K. Francer

Karin Hessler

ASSOCIATION FOR ACCESSIBLE

MEDICINES

601 New Jersey Ave., NW

Suite 850

Washington, DC 20001

(202) 249-7100

Matthew S. Hellman

Counsel of Record

Sarah J. Clark

JENNER & BLOCK LLP

1099 New York Ave., NW

Suite 900

Washington, DC 20001

(202) 637-6327

mhellman@jenner.com

(For Continuation of Caption, See Inside Cover)

IN THE

Supreme Court of the United States

_________

19-1452

SMITH & NEPHEW, INC. AND ARTHROCARE CORP.,

Petitioner,

v.

ARTHREX, INC. AND UNITED STATES OF AMERICA,

Respondent.

_________

19-1458

ARTHREX, INC.,

Petitioner,

v.

SMITH & NEPHEW, INC.; ARTHROCARE CORP.; AND

UNITED STATES OF AMERICA,

Respondent.

i

TABLE OF CONTENTS

TABLE OF AUTHORITIES ......................................... iii

INTERESTS OF AMICUS CURIAE ............................ 1

INTRODUCTION

AND

SUMMARY

OF

ARGUMENT ................................................................. 2

ARGUMENT ....................................................................... 4

I. Inter Partes Review Is Essential to

Eliminating Invalid Patents, Which In Turn

Enables Patient Access to More Affordable

Generic and Biosimilar Medicines ......................... 4

A. Inter Partes Review Is Essential to

Eliminating Invalid Patents ............................ 4

1. The PTO Often Issues Invalid Patents .... 5

2. Congress Established Inter Partes

Review to Weed Out Invalid Patents

Quickly and Efficiently ............................... 6

B. Eliminating Invalid Patents Is Necessary

to Permit Patient Access to More

Affordable Generic and Biosimilar

Medicines ............................................................ 7

1. The Availability Of Generic and

Biosimilar Medicines Saves Money and

Provides Greater Patient Access to

Critical Medicines ........................................ 8

2. Invalid Patents Can Block More

Affordable Generic and Biosimilar

Medicines .................................................... 10

ii

II. Administrative Patent Judges Are Not

Principal Officers, But to The Extent The

Court Concludes Otherwise, It Should Reject

Arthrex’s Request to Eliminate IPR

Indefinitely ............................................................. 14

CONCLUSION ................................................................. 17

iii

TABLE OF AUTHORITIES

Page(s)

Cases

Ass’n for Molecular Pathology v. Myriad

Genetics, Inc.,

569 U.S. 576 (2013).................................................... 10

In re Barr Laboratories, Inc.,

930 F.2d 72 (D.C. Cir. 1991), cert. denied,

502 U.S. 906 (1991)...................................................... 8

BTG International Ltd. v. Amneal

Pharmaceuticals LLC,

923 F.3d 1063 (Fed. Cir. 2019) ............................ 3, 13

Caraco Pharmaceuticals Laboratories, Ltd. v.

Novo Nordisk A/S,

566 U.S. 399 (2012).................................................... 11

Eli Lilly & Co. v. Medtronic, Inc.,

496 U.S. 661 (1990)...................................................... 8

Lear, Inc. v. Adkins,

395 U.S. 653 (1969)...................................................... 5

Novartis AG v. Noven Pharmaceuticals Inc.,

853 F.3d 1289 (Fed. Cir. 2017) ............................... 2-3

Precision Instrument Manufacturing Co. v.

Automotive Maintenance Machinery Co.,

324 U.S. 806 (1945)................................................... 4-5

iv

Sandoz Inc. v. Amgen Inc.,

137 S. Ct. 1664 (2017) ........................................... 8, 12

Statutes and Rules

21 U.S.C. § 355(b)(1) ....................................................... 11

21 U.S.C. § 355(j) ............................................................ 11

21 U.S.C. § 355(j)(2)(A) .............................................. 8, 11

21 U.S.C. § 355(j)(5)(B) .................................................. 11

35 U.S.C. § 271(e)(2)(A) ................................................. 11

35 U.S.C. § 271(e)(4)(C) ................................................. 12

42 U.S.C. § 262(i)(2)(B) .................................................... 9

42 U.S.C. § 262(k) ........................................................... 12

42 U.S.C. § 262(k)(7) ....................................................... 12

Sup. Ct. R. 37.3(a) ............................................................. 1

Sup. Ct. R. 37.6.................................................................. 1

Other Authorities

John R. Allison et al., Understanding the

Realities of Modern Patent Litigation, 92

Tex. L. Rev. 1769 (2014) ............................................ 6

Order, Amgen Inc. v. Iancu,

No. 2019-2171 (Fed. Cir. Mar. 24, 2020),

ECF No. 48 ................................................................ 15

v

Association for Accessible Medicines, Generic

Drug Access & Savings in the U.S. (2017) .............. 9

Association for Accessible Medicines, 2020

Generic Drug & Biosimilars Access &

Savings in the U.S. Report (2020) ............................ 9

Biologics Price Competition and Innovation

Act of 2009, Pub. L. No. 111-148, tit. VII,

subtit. A, 124 Stat. 804 ............................................... 8

Biosimilars Council, Failure to Launch:

Patent Abuse Blocks Access to

Biosimilars for America’s Patients (June

2019)............................................................................ 13

21 C.F.R. § 314.107(b)(3)(viii) ....................................... 11

Michael A. Carrier, Post-Grant Opposition: A

Proposal and a Comparison to the

America Invents Act, 45 U.C. Davis L.

Rev. 103 (2011) ............................................................ 5

157 Cong. Rec. 2844 (2011) (statement of Sen.

Klobuchar) ................................................................... 7

157 Cong. Rec. 3375 (2011) (statement of Sen.

Sessions)....................................................................... 7

157 Cong. Rec. 12992 (2011) (statement of

Sen. Leahy).................................................................. 7

Drug Price Competition and Patent Term

Restoration Act of 1984, Pub. L. No. 98417, 98 Stat. 1585 ........................................................ 8

vi

Michael D. Frakes & Melissa F. Wasserman,

Does the U.S. Patent and Trademark

Office Grant Too Many Bad Patents?:

Evidence from a Quasi-Experiment, 67

Stan. L. Rev. 613 (2015) ............................................. 6

H.R. Rep. No. 107-120 (2001) .......................................... 6

H.R. Rep. No. 112-98, pt. 1 (2011), as

reprinted in 2011 U.S.C.C.A.N. 67........................... 7

Aaron S. Kesselheim et al., Extensions of

Intellectual Property Rights and Delayed

Adoption of Generic Drugs: Effects on

Medicaid Spending, 25 Health Affairs

1637 (2006) ................................................................. 12

Cynthia Koons, Guarding Big Pharma’s

Crown Jewel, Bloomberg Businessweek

(Sept. 11, 2017) .......................................................... 13

U.S. Food & Drug Administration, Generic

Competition and Drug Prices

(Dec. 13, 2019), https://www.fda.gov/aboutfda/center-drug-evaluation-and-researchcder/generic-competition-and-drug-prices ........... 10

U.S. Patent and Trademark Office,

Performance and Accountability Report,

Fiscal Year 2020 (2020) ............................................. 5

INTERESTS OF AMICUS CURIAE1

The Association for Accessible Medicines (AAM) is a

nonprofit,

voluntary

association

representing

manufacturers and distributors of generic and biosimilar

medicines and bulk active pharmaceutical chemicals, as

well as suppliers of other goods and services to the

generic pharmaceutical industry. AAM’s members

provide patients with access to safe and effective generic

and biosimilar medicines at affordable prices. AAM’s

core mission is to improve the lives of patients by

providing timely access to safe, effective, and affordable

prescription medicines. Generic drugs constitute 90% of

all prescriptions dispensed in the United States, yet

generics account for only 20% of total drug spending.

AAM regularly participates in litigation as amicus

curiae.

AAM and its members have a significant interest in

the questions presented, and in the existence and

smooth functioning of the inter partes review process.

AAM’s members depend on fair and prompt adjudication

of patent claims that seek to block their efforts to bring

lower-cost drug options to patients. The inter partes

review process is thus essential to the work of AAM’s

1

Pursuant to Supreme Court Rule 37.3(a), counsel for all parties

consented to the filing of this brief. Pursuant to Supreme Court

Rule 37.6, no party authored this brief in whole or in part, no fee has

been paid or will be paid for preparing this brief, and no person or

entity other than amicus curiae and its counsel made any monetary

contribution to the preparation or submission of this brief.

2

members and to the patients who depend on generic and

biosimilar medicines.

INTRODUCTION AND SUMMARY OF

ARGUMENT

Inter partes review (IPR) is a critical tool for quickly

and efficiently eliminating invalid patents. When it

adopted the current IPR system in 2011, Congress

recognized that patent examiners—laboring under an

intense workload—frequently issue patents that are

invalid. IPR allows the Patent and Trademark Office

(PTO) to fix those mistakes without forcing competitors

to undertake lengthy, expensive litigation to defeat

patents that never should have been granted in the first

place.

Perhaps no segment of the public benefits more from

IPR than the patients who depend upon generic and

biosimilar medications. Branded drug manufacturers

often seek to extend their monopolies unlawfully by

filing multiple patents intended to keep more affordable

generic and biosimilar medicines off the market. AAM’s

members rely on IPR to efficiently root out those invalid

drug patents. The ultimate winners from those IPR

proceedings are the patients (and taxpayers) who are

able to obtain less expensive, safe generic and biosimilar

medicines without undue delay. It is because of

successful IPR proceedings that cheaper generic and

biosimilar alternatives to fight diseases like Alzheimer’s,

Parkinson’s, and prostate cancer, have reached the

market far more quickly than they otherwise would

have. See, e.g., Novartis AG v. Noven Pharms. Inc., 853

3

F.3d 1289 (Fed. Cir. 2017); see also BTG Int’l Ltd. v.

Amneal Pharms. LLC, 923 F.3d 1063 (Fed. Cir. 2019).

In the decision below, the Federal Circuit held that

the administrative judges who preside over IPR

proceedings are principal officers who hold their position

in violation of the Appointments Clause. AAM urges the

Court to reverse that ruling for the reasons the

government and Smith & Nephew have set out, and

writes separately to emphasize that the Federal

Circuit’s merits ruling has already caused delay by

mandating rehearing of potentially hundreds of IPR

decisions. Branded drug patent-holders have jumped at

the opportunity to re-litigate the validity of patents

already found invalid through the IPR process. And

members of the public must now wait even longer to

benefit from generic and biosimilar alternatives that do

not infringe any lawful patent. Reversing the Federal

Circuit’s incorrect merits determination would correct

this problem.

If the Court nonetheless concludes that the IPR

judges are principal officers, it should reject Arthrex’s

contention that a more sweeping remedy is needed.

Arthrex asks this Court to invalidate the entire IPR

system subject to Congress’s decision to reauthorize the

system if Congress so chooses. Arthrex leaves no doubt

that it would be happy to see the IPR system never

return from its trip to the Capitol, but eliminating IPR,

even temporarily, would have deleterious consequences

for the patients who seek cost-effective medications and

the generic and biosimilar manufacturers who must

4

make investment decisions about what products to bring

to market.

There is no legal justification for treating any

Appointments Clause violation as a basis for dismantling

the entire IPR system, and doing so would re-impose the

very hurdles to addressing invalid patents that

Congress sought to eliminate. Those patents would

continue to serve as an illegitimate barrier to cheaper

generic and biosimilar alternatives. This Court should

allow the IPR system to continue to serve the goals that

Congress intended and to work on behalf of all

Americans, including the millions who benefit from costeffective generic and biosimilar medicines.

ARGUMENT

I.

Inter Partes Review Is Essential to Eliminating

Invalid Patents, Which In Turn Enables Patient

Access to More Affordable Generic and Biosimilar

Medicines.

A. Inter Partes Review Is

Eliminating Invalid Patents.

Essential

to

IPR allows competitors to quickly and cheaply

eliminate improvidently granted patents that are

blocking valuable technology from reaching the market.

This Court has recognized that “possession and

assertion of patent rights are ‘issues of great moment to

the public,’” and that “[t]he far-reaching social and

economic consequences of a patent . . . give the public a

paramount interest in seeing that patent monopolies . . .

are kept within their legitimate scope.” Precision

5

Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S.

806, 815-16 (1945) (quoting Hazel-Atlas Glass Co. v.

Hartford-Empire Co., 322 U.S. 238, 246 (1944)). The

PTO frequently issues invalid patents, and Congress

established the inter partes review process to remedy

those mistakes. Inter partes review simplifies and

accelerates the process of weeding out invalid patents,

while retaining significant protections for valid patents.

1. The PTO Often Issues Invalid Patents.

A patent “represents a legal conclusion reached by

the Patent Office,” “predicated on factors as to which

reasonable men can differ widely” and reached “in an ex

parte proceeding, without the aid of the arguments

which could be advanced by parties interested in

proving patent invalidity.” Lear, Inc. v. Adkins, 395 U.S.

653, 670 (1969).

Unfortunately, the examiners

conducting those ex parte proceedings have heavy

caseloads: In the 2020 fiscal year, fewer than 8,500

patent examiners were tasked with reviewing more than

650,000 patent applications. U.S. Patent and Trademark

Office, Performance and Accountability Report, Fiscal

Year 2020, at 189, 231 (2020) (PTO Report). On average,

patent examiners have only about 20 hours to evaluate a

patent application, which requires reading the

application, searching for prior art, communicating with

the applicant, evaluating patentability, and writing up

their conclusions. Michael A. Carrier, Post-Grant

Opposition: A Proposal and a Comparison to the

America Invents Act, 45 U.C. Davis L. Rev. 103, 107

(2011).

6

It is no surprise, therefore, that the PTO frequently

issues patents later found to be invalid. See Michael D.

Frakes & Melissa F. Wasserman, Does the U.S. Patent

and Trademark Office Grant Too Many Bad Patents?:

Evidence from a Quasi-Experiment, 67 Stan. L. Rev.

613, 615, 676 (2015) (describing consensus that the PTO

“is issuing too many invalid patents” and concluding that

“the Agency is in fact biased toward granting patents”).

Indeed, one recent study found that federal courts hold

challenged patents to be invalid 43% of the time. John R.

Allison et al., Understanding the Realities of Modern

Patent Litigation, 92 Tex. L. Rev. 1769, 1801 (2014).

2. Congress Established Inter Partes

Review to Weed Out Invalid Patents

Quickly and Efficiently.

Because the PTO will inevitably issue some patents

that it should not, a speedy and inexpensive process for

challenging patents of dubious validity is critical to the

health of the entire patent regime. Congress has long

recognized the need for an administrative mechanism to

review improvidently granted patents. See H.R. Rep.

No. 107-120, at 3 (2001) (noting that the 1980 creation of

a reexamination process was intended to “(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”).

7

By 2011, when the America Invents Act was passed,

Congress had concluded that the existing ex parte and

inter partes reexamination procedures were “too

lengthy and unwieldy to actually serve as an alternative

to litigation when users are confronted with patents of

dubious validity.” 157 Cong. Rec. 12992 (2011)

(statement of Sen. Leahy). And it noted “a growing

sense that questionable patents are too easily obtained

and are too difficult to challenge.” H.R. Rep. No. 112-98,

pt. 1, at 39 (2011), as reprinted in 2011 U.S.C.C.A.N. 67,

69. As then-Senator Sessions explained, the goal of the

America Invents Act was to “allow invalid patents that

were mistakenly issued by the PTO to be fixed early in

their life, before they disrupt an entire industry or result

in expensive litigation.” 157 Cong. Rec. at 3375

(statement of Sen. Sessions); accord id. at 2844

(statement of Sen. Klobuchar) (“The legislation also

provides a modernized, streamlined mechanism for third

parties who want to challenge recently issued, lowquality patents that should never have been issued in the

first place.”).

B. Eliminating Invalid Patents Is Necessary

to Permit Patient Access to More

Affordable

Generic

and

Biosimilar

Medicines.

Pharmaceutical patents provide a compelling

illustration of the need for an efficient mechanism for the

PTO to retract improvidently issued patents. Inter

partes review is essential to ensure patient access to

low-cost generic and biosimilar medicines that would

otherwise be blocked by invalid patents.

8

1. The Availability Of Generic and

Biosimilar Medicines Saves Money and

Provides Greater Patient Access to

Critical Medicines.

Congress has recognized the benefits offered by

generic medicines, and it sought to encourage their

introduction by enacting the Drug Price Competition

and Patent Term Restoration Act of 1984, Pub. L. No.

98-417, 98 Stat. 1585, commonly known as the HatchWaxman Amendments.

See Eli Lilly & Co. v.

Medtronic, Inc., 496 U.S. 661, 676 (1990) (Congress

sought “to enable new drugs to be marketed more

cheaply and quickly”); In re Barr Labs., Inc., 930 F.2d

72, 76 (D.C. Cir. 1991) (purpose of Hatch-Waxman was

“to get generic drugs into the hands of patients at

reasonable prices—fast”), cert. denied, 502 U.S. 906

(1991). More recently, Congress sought to speed up the

introduction of biosimilar medicines by enacting the

Biologics Price Competition and Innovation Act of 2009,

Pub. L. No. 111-148, tit. VII, subtit. A, 124 Stat. 804. See

generally Sandoz Inc. v. Amgen Inc., 137 S. Ct. 1664

(2017). Patient access to low-cost, high-quality generic

and biosimilar medicines remains critically important

today given the high cost of healthcare in the United

States.

To be approved by the FDA, a generic medicine must

have the same active ingredients as the brand-name

drug and must meet the same rigorous standards of

strength, quality, purity, and potency. See 21 U.S.C.

§ 355(j)(2)(A)(ii)-(iv). Likewise, a biosimilar medicine

has “no clinically meaningful differences” in “safety,

9

purity, and potency” from the brand-name biologic

product. 42 U.S.C. § 262(i)(2)(B).

The principal difference between generic or

biosimilar medicines and brand-name prescription drugs

or biologic products is cost. Association for Accessible

Medicines, Generic Drug Access & Savings in the U.S.

24 (2017). Generics account for 90% of prescriptions

dispensed in the United States, but only 20% of total

drug costs. Association for Accessible Medicines, 2020

Generic Drug & Biosimilars Access & Savings in the

U.S. Report 16 (2020). In total, generic medicines

generated $313 billion in savings for the American

healthcare system in 2019, and $2.2 trillion in savings

over the last decade. Id. at 16, 18. In 2019 alone, generic

medicines saved the Medicaid system $48.5 billion and

the Medicare system $96 billion. Id. at 17.

The benefits of more affordable generic and

biosimilar medicines extend beyond mere cost savings.

Lack of adherence to treatments is responsible for

approximately 125,000 deaths annually. Association for

Accessible Medicines, Generic Drug Access & Savings

in the U.S. 26 (2017). Generic drugs reduce the problem

of lack of adherence because new patients are three

times less likely to stop taking generic medicines than

brand-name drugs. Id.

All of these benefits flow directly from the

competition that generic and biosimilar medications

provide to brand-name drugs that would otherwise

enjoy monopoly status. The more competitors there are,

the greater the savings: The entry of a second generic

10

manufacturer into the market reduces the average

generic price to roughly half the brand-name price, and

for medicines that attract a large number of generic

manufacturers, the average generic price falls to less

than 10% of the brand-name price. U.S. Food & Drug

Admin., Generic Competition and Drug Prices (Dec. 13,

2019),

https://www.fda.gov/about-fda/center-drugevaluation-and-research-cder/generic-competition-anddrug-prices.

2. Invalid Patents Can Block More

Affordable Generic and Biosimilar

Medicines.

Patent law “strikes a delicate balance between

creating ‘incentives that lead to creation, invention, and

discovery’ and ‘imped[ing] the flow of information that

might permit, indeed spur, invention.’” Ass’n for

Molecular Pathology v. Myriad Genetics, Inc., 569 U.S.

576, 590 (2013) (quoting Mayo Collaborative Servs. v.

Prometheus Labs., Inc., 566 U.S. 66, 92 (2012) (alteration

in original)). Especially in the pharmaceutical context,

that balance is frequently upset by the assertion of

invalid patents, which inevitably leads to lengthy and

expensive litigation. Delay in removing improperly

awarded patents can lead to substantially higher drug

costs for patients, insurers, and taxpayers.

a. When a brand-name drug manufacturer submits

an application to the FDA for approval of a new drug, it

must include a list of every patent related to that drug

that the patentee could reasonably assert would be

infringed by the manufacture, use, or sale of a generic

11

version of the drug. 21 U.S.C. § 355(b)(1). Those patents

are then listed in the FDA’s “Orange Book,” See Caraco

Pharm. Labs., Ltd. v. Novo Nordisk A/S, 566 U.S. 399,

405-06 (2012).

A generic competitor hoping to enter the market

must file an Abbreviated New Drug Application

(ANDA). See 21 U.S.C. § 355(j). As part of that

application, the generic manufacturer must identify any

patents claiming the brand-name drug in the Orange

Book and either wait for their expiration or show that

they are not a barrier—for example, by certifying that

they are “invalid or will not be infringed by the

manufacture, use, or sale” of the proposed generic. Id.

§ 355(j)(2)(A)(vii).

Such a certification naturally “provoke[es]

litigation,” see Caraco, 566 U.S. at 407, and the brandname manufacturer may file suit immediately, 35 U.S.C.

§ 271(e)(2)(A). When the brand-name manufacturer

does sue, the FDA is automatically precluded from

approving the proposed generic for 30 months, unless

the case is dismissed or the court declares that the

patent is invalid or not infringed before that time. 21

U.S.C. § 355(j)(5)(B)(iii); 21 C.F.R. § 314.107(b)(3)(viii).

In other words, whether or not the patent is

eventually ruled invalid, litigation is “likely to keep the

generic drug off the market for a lengthy period.”

Caraco, 566 U.S. at 408. Even after the 30-month stay

has elapsed, a generic manufacturer that enters the

market before the litigation is fully resolved risks being

held liable for substantial damages if the court later

12

rules against it. 35 U.S.C. § 271(e)(4)(C). And when it

comes to generic drugs, even modest delays have high

costs. One study, for example, concluded that delays

ranging from 21 to 33 months in the introduction of

generic substitutes cost the Medicaid program alone

more than $1.5 billion. Aaron S. Kesselheim et al.,

Extensions of Intellectual Property Rights and Delayed

Adoption of Generic Drugs: Effects on Medicaid

Spending, 25 Health Affairs 1637, 1643 (2006).

Because the automatic 30-month stay does not

depend on the strength of the brand-name

manufacturer’s patents or infringement claims, even

invalid patents may block generic substitutes for

lengthy periods of time. A speedy and efficient

mechanism to challenge improvidently granted patents

is therefore essential to the timely provision of generic

medicines.

Much the same is true of biosimilar medicines. By

statute, the FDA may approve such products as

“interchangeable” with a brand-name biologic product.

42 U.S.C. § 262(k). Such approval is permitted only after

a 12-year period of exclusivity for the brand-name

product. Id. § 262(k)(7); see Sandoz, 137 S. Ct. at 1670.

But by using multiple patents, even patents of doubtful

validity, brand-name biologic manufacturers can delay

the introduction of biosimilar products until well after

the expiration of that 12-year period.

b. Recent experience with efforts to introduce

generic medicines shows that the costs of invalid patents

are not merely theoretical. For example, when generic

13

manufacturers sought to introduce their versions of

Zytiga, a brand-name prostate cancer drug, the brandname manufacturer filed suit in district court. The

generic manufacturers then sought inter partes review,

where they defeated the patent claims on obviousness

grounds. See BTG Int’l Ltd., 923 F.3d at 1066-67. The

Federal Circuit affirmed the Patent Trial and Appeal

Board’s decisions. Id. at 1066. While the generic

manufacturers were successful in the end, the time spent

litigating the patent claims was time in which the

affordable, life-saving generics were not available to

prostate cancer patients.

Brand-name drug companies can also use dubious

patents to delay the entry of more affordable biologic

medicines. See, e.g., Cynthia Koons, Guarding Big

Pharma’s Crown Jewel, Bloomberg Businessweek 17

(Sept. 11, 2017) (noting that AbbVie Inc. has secured

more than 75 ancillary patents on its best-selling

rheumatoid arthritis drug, Humira, most within several

years of the expiration of the original patent); accord

Biosimilars Council, Failure to Launch: Patent Abuse

Blocks Access to Biosimilars for America’s Patients 8

(June 2019) (highlighting that, absent settlements, latestage patents would have extended AbbVie’s patent

protection for Humira until 2034, over thirty years after

its approval).

By allowing speedier resolution of patent validity—

and prompt correction by the PTO of its own mistakes—

inter partes review avoids unnecessary delays and

furthers the congressional goal of ensuring that the

patent monopoly on brand-name medicines be of limited

14

duration, thus bringing more affordable treatment

options to patients sooner.

II.

Administrative Patent Judges Are Not Principal

Officers, But to The Extent The Court Concludes

Otherwise, It Should Reject Arthrex’s Request to

Eliminate IPR Indefinitely.

In the case below, the Federal Circuit held that

Administrative Patent Judges (APJs) of the Patent Trial

and Appeal Board are principal officers who held their

position in violation of the Appointments Clause. AAM

urges the Court to reverse that merits determination for

the reasons stated by the government and by Smith &

Nephew in their opening briefs. AAM will not repeat

those legal arguments here but emphasizes that the

Federal Circuit’s merits determination has required a

large number of IPR decisions currently pending on

appeal to be sent back to the IPR for re-adjudication by

a new panel. See Pet. App. 223a-228a, No. 19-1434

(Patent Trial and Appeal Board, General Order in Cases

Remanded Under Arthrex, Inc. v. Smith & Nephew,

Inc., 941 F.3d 1320 (Fed. Cir. 2019) (May 1, 2020)) (noting

that the Federal Circuit had already vacated more than

a hundred decisions by the Board in light of Arthrex,

with more expected in the future). As the government

has explained, there are now at least 139 cases in which

an IPR determination has been vacated—not including

cases currently pending in the Federal Circuit or cases

to which the government is not a party. See Petition for

a Writ of Certiorari 24-25, 25 n.2, United States v. Image

Processing Techs. LLC, No. 20-74.

15

One casualty of that ruling is the recent IPR

decisions invalidating unlawful branded drug patents.

Armed with the Federal Circuit’s principal officer

determination, brand-name manufacturers have jumped

at the opportunity to relitigate—and delay—IPR

(re)determinations on the validity of their patents. See,

e.g., Order 1-2, Amgen Inc. v. Iancu, No. 2019-2171 (Fed.

Cir. Mar. 24, 2020), ECF No. 48 (remanding to the Board

in light of the Federal Circuit’s decision below). The

result is that patients and taxpayers must wait even

longer to gain access to affordable generic and biosimilar

alternatives that have already been adjudicated through

the IPR process not to infringe on any valid patent.

Indeed, so many Board decisions have been vacated in

light of Arthrex that the Board has placed the cases in

abeyance until the APJs’ status is settled by the

Supreme Court, further exacerbating the delay. Pet.

App. 223a-228a, No. 19-1434 (Patent Trial and Appeal

Board, General Order in Cases Remanded Under

Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320

(Fed. Cir. 2019) (May 1, 2020)).

But if this Court concludes that the APJs are in fact

principal officers, AAM urges the Court to reject

Arthrex’s invitation to undermine the IPR process

further by going beyond the Federal Circuit’s remedial

decision and disbanding the IPR system indefinitely

unless and until Congress acts to reauthorize it. As

Arthrex has set out both in its Federal Circuit briefing

and its petition to this Court, Arthrex contends that the

proper remedy for an Appointments Clause violation is

to invalidate the entire IPR system, and permit

16

Congress to reauthorize it if Congress so chooses. Brief

for Petitioner at 33-34, Arthrex, Inc. v. Smith & Nephew,

Inc., No. 19-1458 (June 30, 2020).

It would be legally groundless as well as harmful to

the American public and the cost-effective generic and

biosimilar medications the public relies upon to eliminate

IPR, even temporarily. As Smith & Nephew has

explained, the Federal Circuit’s remedy lifting certain

tenure protections is well in keeping with this Court’s

prior Appointments Clause jurisprudence. See Brief for

Respondents Smith & Nephew, Inc. and ArthroCare

Corp. at 10-18, Nos. 19-1434 and 19-1458 (July 23, 2020).

And as explained above, the IPR system is crucial to

ensuring that necessary and affordable generic and

biosimilar medicines can quickly and efficiently be

brought to market free of restraints from invalid

patents. See supra Section I.

If IPR were unavailable, even just temporarily, it

would deprive patients and drug manufacturers of all

the efficiencies and benefits of IPR going forward. Atrisk launches—where a generic company launches its

product prior to resolution of patent issues at the risk of

incurring damages should infringement liability

ultimately be found—are already a perilous, timesensitive proposition. Eliminating IPR would create

further uncertainty and risk for generic and biosimilar

drug manufacturers in determining what cost-effective

alternatives they could bring to market. With an

uncertain future for IPR and the concomitant risk of

expensive litigation over patent scope, the companies

that consider investing in and developing generic and

17

biosimilar alternatives may be forced to pull back from,

or even abandon, plans to develop those medications.

Patients and taxpayers would suffer from those

unwarranted delays, and in some cases they would be

deprived of generic and biosimilar alternatives

altogether.

Rather than upend the IPR system, to the extent

this Court finds an Appointments Clause violation at all

(and it should not), it should affirm the Federal Circuit’s

targeted remedy for the violation, and refuse to

eliminate the IPR mechanism that Congress intended as

an important check on invalid patents.

CONCLUSION

For the foregoing reasons, the Court should reverse

the Federal Circuit’s determination that the APJs of the

Patent Trial and Appeal Board are principal officers.

And if the Court finds an Appointments Clause violation,

it should affirm the Federal Circuit’s remedy.

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Respectfully submitted,

Jeffrey K. Francer

Karin Hessler

ASSOCIATION FOR

ACCESSIBLE MEDICINES

601 New Jersey Ave., NW

Suite 850

Washington, DC 20001

(202) 249-7100

December 2, 2020

Matthew S. Hellman

Counsel of Record

Sarah J. Clark

JENNER & BLOCK LLP

1099 New York Ave., NW

Suite 900

Washington, DC 20001

(202) 637-6327

mhellman@jenner.com