# Amicus Curiae Brief — Oil States Energy Servs., LLC v. Greene's Energy Grp., LLC, 138 S. Ct. 350 (2017) (No. 16-712)

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0724%3A24

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2017

## Text

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[Supreme Cour. UE
OCT 30 2017
No. 16-712 OFFICE OF THE CLERK _|

Hn the Supreme Court of the Gnited States

OIL STATES ENERGY SERVICES, LLC, PETITIONER
Vv.

GREENE’S ENERGY GROUP, LLC, ET AL.

ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT

—_«—

BRIEF FOR ~.SSOCIATION FOR ACCESSIBLE
MEDICINES AS AMICUS CURIAE
SUPPORTING RESPONDENTS

JEFFREY K. FRANCER

ASSOCIATION FOR
ACCESSIBLE MEDICINES
601 New Jersey Ave., N.W.
Washington, D.C. 20001

ERIC D. MILLER
Counsel of Record
PERKINS COIE LLP
1201 Third Ave., Suite 4900
Seattle, WA 98101

(206) 359-8000
BRIAN SAMUELSON emiller@perkinscoie.com
PERKINS COIE LLP
1120 NW Couch St.

Portland, OR 97209

TABLE OF CONTENTS

Page
Bentereent OF CamGtet GHBT UID nnn cesceccccesevscesvevsnnenisncssosnece scneresesienasennt 1
Summary of argument...................c.ccccccrsscssserssnrenseneesssessenssonsseens 3
PATIO secesseceeeevensensscosercossecemsonensanansuencsnioaectscsssncscepenecneseenenens 5
A. Inter partes review governs claims derived
from a federal regulatory SChEME..........:<..c:c-:ceeseeeees 6
B. Inter partes review is essential to the limited
regulatory objective of eliminating invalid
PALENES .........cccrererrerereeerccnrerenrsensserssnennsenrsenssaanesssusersnsscenaees 9
1. The PTO often issues invalid patents............-...0+ 10

2. Congress established inter partes review

to weed out invalid patents quickly and

eT cbeMt DY ......0ccercsnsseessncceccvessceneesconcescsosnsererees seesanensoes 11
3. Inter partes review accelerates the process

of weeding out invalid patents, while

retaining significant protections for valid

(. Eliminating invalid patents is necessary to
permit patient access to more affordable generic
and biosimilar MCCICINES .............c0sceererersceeeereeneeerees 15
1. The availability of generic and biosimilar
medicines saves money and provides greater
patient access to critical Medicines .............000 16
2. Invalid patents can block the introduction of
more affordable generic and biosimilar
IID casennecetetnesteceisionrceinninrernannaiettetintennneiasennis 18

ON i i eesiaaaminannnimiaeiiaaands

(I)

Il
TABLE OF AUTHORITIES

Cases: Page
Albertson v. FCC, 182 F.2d 397 (D.C. Cir. 1950) ...........0+. 7
Association for Molecular Pathology v. Myriad

Genetics, Inc., 133 S. Ct. 2107 (20138) ...........ceseeenereenees 18
Astra Aktiebolag v. Andrx Pharms., Inc., 222 F.

Supp. 2d 423 (S.D.N.Y. 2002)...............ccssessssserssernensennes 22
Barr Labs., Inc., In re, 980 F.2d 72 (D.C. Cir.),

cert. denied, 502 U.S. 906 (1991) ... ‘atau aa
B&B Hardware, Inc. v. Hargis fete. yee 135 Ss.

Ct. 1293 (2015) ... ae saivtttitinincienslan
Bell Atl. Corp. v. Twombly, 550 U.S. ‘544 (2007) ietieapevenearonn 13
Caraco Pharm. Labs., Ltd. vy. Novo Nordisk A/S,

I ee 18, 19, 20
Crowell v. Benson, 285 U.S. 22 (1982) ............-cscerrereneneee 5,6
Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131

St ieshinensepeustisininsnisiqenntiaemenineiengmiinanttienn 4, 8, 9, 12, 13
Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661

IE ieaecchsspsineititatpinergnivtdaialombieehlaeiecipababammmtcenenineinnenstsneann 16
FTC v. Actavis, Inc., 133 S. Ct. 2223 (2013) .............-0-e000 2
Gagnon v. United States, 193 U.S. 451 (1904) ..........ec0 7
a S.A. v. Nordberg, 492 U.S. 33

(1989).... = ceaapeehnataser
Hahn v. wien: 392 F.2d 1028 (Fed. Cir. 1989)... Lihieteesiadanams 7
Hazel-Atias Glass Co. v. Hartford-Empire Co.,

a Ba ecrrccctenseenscteimme 9
Kappos v. Hyatt, 566 U.S. 431 (2012) ...........c0ccceceeseeeereene 14
Koninklijke Philips Elecs. N.V. v. Cardiac Sci.

Operating Co., 590 F.3d 1326 (Fed. Cir. 2010).............. 7
Lear, Inc. v. Adkins, 395 U.S. 653 (1969) .........ccececesees 4, 10

Ill

Cases—continued: Page

Lujan v. Defenders of Wildlife, 504 U.S. 555

a cee ieinclios 13
Mayo Collaborative Servs. v. Prometheus Labs.,

a eee 18
Murray’s Lessee v. Hoboken Land &

Improvement Co., 59 U.S. (18 How.) 272 (1856)........... 5
Omeprazole Patent Litig., In re, 258 F. ee

221 (S.D.N.Y. 2001)... conten’ poinaianloaeel
Precision Instrument Myo. Co. v. ie ‘Maint.

Mach. Co., 324 U.S. 806 (1945) ..........c--crecrsssssrereeseseesers 9
Sandoz Inc. v. Amgen Inc., 137 S. Ct. 1664

eri cetasinsisssakindttisianiinatietpeteanscieceieimiasticouiastacnibcniiainiiniindes 2, 16, 20
Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225

Ge ic cenrnsccterennensemnninnsinncnutinienistsiimetcesiarimeminemanennsinemnet 3,6
Stern v. Marshall, 564 U.S. 462 (2011) ........--cce-eeee: 3, 5, 6,9
TC Heartland LLC v. Kraft Foods Grp. Brands

pe eg 5 Te 2
Thomas v. Union Carbide Agric. Prods. Co., 473

Sy eeiesstanatsinsieriasstiictesetennanesmmshianensininaduanienmtrcnianeens 9
United Gas Improvement Co. v. Callery Props.,

Ee 7
United States v. Denedo, 556 U.S. 904 (2009)..................... 7

Constitution, statutes, and regulations:

es es RI BG eticcieeccernintictersiniveineomneimemnnennmnibaish 6
Fs a CN, Ci irccieesciiinininsssinrnrsiccnsciiamaiianiahitn 3, 13
Biologics Price Competition and Innovation Act,

Pub. L. No. 111-148, Tit. VII, Subtit. A, 124

IV

Statutes and regulations—continued: Page

Drug Price Competition and Patent Term
Restoration Act of 1984, Pub. L. No. 98-417, 98
ee 16, 19, 22

Leahy-Smith America Invents Act, Pub. L. No.
NS) OL 2, 7, 8, 11, 12

Optional Inter Partes Reexamination Procedure
Act of 1999, Pub. L. No. 106-113, Tit. IV,
Eee 8

nN ER AE ee 18
21 U.S.C. 355()) ... a eceaae
21 U.S.C. 355())2\A)(i). i a cauesaseauianannl 17
te, ee
ee aT.
Si OE, snes 19
21 U.S.C. B55GM2A) (Vi) TIT) .ecceccnescseseeccccsssesessescecenssseseees 19
21 U.S.C. 356(j(2)(A)(VEI)TV) -sececcecone masieceinnvesie 19
21 U.S.C. 85562) BYGVID) -.-scscececcesesecessssssnevssseseseneeseeenee 19
i aictcsceecneseceniensincnssinsniiti 19

eT 7
RE ee Eh EE 19
ee aiisttirricnitnicsnininesmnintintiinnrnmminamsnnetnnesian ae

i EE aS RE cee andee a aetna or 8
RE ae OCS

V

Statutes and regulations—continued: Page
Be ts I acid eecncntinitnsenenesicetenalinilnminemnemanteniociid 15
NN arhicricnslatnetnienpstamensidentioneeniamsccchundiumnabetink 15
es CE sintiieesuciincniesenipcsinisinisioinptiniigmemnentnintennicammenenis 15
4 Se:
EET Ee STN D a RT ie rar OMe EE 14
Bs I ininicncinnsicanisiciiesepinbeeniseeadiibeuinaiinneiniapiiiiabiins 14
I csi cetiiencennsaiieteniedeensiinnimnintintaigainantiiils 14
Be Es TE icieiniseisasianndesnstopeeenndiieninngdasonsinineenpdanennineatiiiatinis 14
nso cnenensenreenrneisentsinienebinseiiadiineniineadeniantnabensiniariaic ae
I italien cuieeeeneneneenapiinaistonasiadeiginmmpadaniains 8, 15
A RTT irs cesccnsinseninaininnniinianeimabanienaiinnienetanaite 17
ak a aetaraetetellletieeieienleanldeaealt 20
TI ccs iciseriaisesrieassiesisspieninimensiiitmeesisabsdisisaiiibaiiaine 20
I oincecnsssieciniciciscidentnnennnedininnieninininabinemnaianeinins 13
er IE reteninsdercehiiontecliieseihscesseipioesonisemnenenianapeiemiiatienagia 14

Miscellaneous:

John R. Allison et al., Understanding the
Realities of Modern Patent ——e 92 Tex.

L. Rev. 1769 (2014)...... amasialia a ae
Association for cocaine Medicines, ats
Drug Access & Savings in the U.S. (2017) ........000000+ 17

Michael A. Carrier, Post-Grant Opposition: A
Proposal and a Comparison to the America
Invents Act, 45 U.C. Davis L. Rev. 103 (2011)............ 10

RUS CUI I, Gi BF aenesissecintininticcnscnmrnenicctannaninnmminnasts 11,12

VI

Miscellaneous—continued: Page

Examining Issues Related to Competition in the

Pharmaceutical Marketplace: A Review of the

FTC Report, “Generic Drug Entry Prior to

Patent Expiration”: Hearing Before the

Subcomm. on Health of the H. Comm. on

Energy and Commerce, 107th Cong. (2002)................ 21
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)......... 10
Daniel I. Gorlin, Staving Off Death: A Case Study

of the Pharmaceutical Industry’s Strategies to

Protect Blockbuster Franchises, 63 Food &

I 21, 22, 23
H.R. Rep. No. 98, Pt. 1, 112th Cong., Ist Sess.

SE iiss ierdbcninhsasibapuiapsiniideassninnpeniicnieniegntitniiimvciieideaes 2,3, 4, 12, 14

H.R. Rep. No. 120, 107th Cong., 1st Sess. (2001)............. 11
Aaron S. Kesselheim et al., Extensions of

Intellectual Property Rights and Delayed

Adoption of Generic Drugs: Effects on

Medicaid Spending, 25 Health Affairs 1637

Cynthia Koons, Guarding Big Pharma’s Crown
Jewel, Bloomberg Businessweek, Sept. 11,

SINT ceaectanicinasianiasstenailainiansnaaiicndinadighehsionssiiaisnebennientinesmnvesaenvesees 23
U.S. Food & Drug Admin., Generic Competition
and Drug Prices (May 13, 2015)..........0sssesereserereseones 18

U.S. Patent and Trademark Office, Performance
and Accountability Report, Fiscal Year 2016

Jn the Supreme Court of the United States

No. 16-712
OIL STATES ENERGY SERVICES, LLC, PETITIONER
Vv.

GREENE’S ENERGY GROUP, LLC, ET AL.

ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT

BRIEF FOR ASSOCIATION FOR ACCESSIBLE
MEDICINES AS AMICUS CURIAE
SUPPORTING RESPONDENTS

INTEREST OF AMICUS CURIAE*

The Association for Accessible Medicines (AAM),
formerly the Generic Pharmaceutical Association, is a

* No counsel for a party authored this brief in whole or in part,
and no person other than amicus or its counsel has made a mone-
tary contribution intended to fund the preparation or submission
of the brief. The parties have entered blanket consents to the
filing of amicus briefs, and copies of their letters of consent are
on file with the Clerk.

(1)

Z

nonprofit, voluntary association representing nearly
100 manufacturers and distributors of finished generic
drug products and bulk active pharmaceutical ingredi-
ents, as well as suppliers of other goods and services
to the generic pharmaceutical industry. AAM’s mem-
bers provide consumers with generic and biosimilar
medicines that are just as safe and effective as their
brand-name counterparts, but substantially more af-
fordable. Generic drugs account for roughly 89% of all
prescriptions dispensed in the United States but only
26% of total drug costs. Over the last decade, they
have generated $1.67 trillion in savings for patients
and taxpayers.

AAMW’s core mission is to improve the lives of con-
sumers by providing timely access to affordable medi-
cines. To further that mission, AAM regularly partic-
ipates in litigation as amicus curiae. See, e.g., Sandoz
Ine. v. Amgen Inc., 137 S. Ct. 1664 (2017); TC Heart-
land LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct.
1514 (2017); FTC v. Actavis, Inc., 133 S. Ct. 2223
(2013).

This case involves the inter partes review proce-
dure, an important tool established by Congress in the
Leahy-Smith America Invents Act, Pub. L. No. 112-
29, 125 Stat. 284, for efficiently weeding out invalid
patents. The America Invents Act was designed to
address “a growing sense that questionable patents
are too easily obtained and are too difficult to chal-
lenge.” H.R. Rep. No. 98, Pt. 1, 112th Cong., Ist Sess.
39 (2011) (Howse Report). In creating inter partes re-
view, Congress sought “to establish a more efficient
and streamlined patent system that will improve pa-
tent quality and limit unnecessary and counterproduc-

3

tive litigation costs.” Jd. at 40. Because manufactur-
ers of brand-name prescription drugs can and fre-
quently do use patents of dubious validity to prevent
the introduction of competing generics, inter partes
review is an important continuation of Congress’
longstanding effort “to get generic drugs into the
hands of patients at reasonable prices—fast.” Jn re
Barr Labs., Inc., 930 F.2d 72, 76 (D.C. Cir.), cert. de-
nied, 502 U.S. 906 (1991). The resolution of this case is
therefore of particular importance to AAM and its
members.

SUMMARY OF ARGUMENT

Non-Article III tribunals may adjudicate cases in
which “the claim at issue derives from a federal regu-
latory scheme, or in which resolution of the claim by
an expert Government agency is deemed essential to a
limited regulatory objective within the agency’s au-
thority.” Stern v. Marshall, 564 U.S. 462, 490 (2011).
Inter partes review involves claims that qualify under
both components of that test.

First, patent rights “exist only by virtue of stat-
ute,” and the patent system is a federal regulatory
scheme entrusted to the expert administration of the
United States Patent and Trademark Office (PTO).
Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 229
n.5 (1964). It is undisputed that Congress may assign
the issuance of patents to an administrative agency,
and it follows that Congress may also give the agency
authority to reconsider its decisions and correct its
own mistakes by revoking patents that should not
have issued. Inter partes review, which allows the
PTO to take “a second look at an earlier administra-

4

tive grant of a patent,” does exactly that. Cuozzo
Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2144 (2016).

Second, inter partes review is essential to the lim-
ited regulatory objective of eliminating invalid patents
that block valuable products like low-cost generic
medicines. Patents are issued “in an ex parte proceed-
ing, without the aid of the arguments which could be
advanced by parties interested in proving patent inva-
lidity.” Lear, Inc. v. Adkins, 395 U.S. 653, 670 (1969).
Faced with heavy caseloads and limited time and re-
sources to review patent applications, the PTO inevi-
tably issues some patents it should not. Inter partes
review was established to “provid[e] a more efficient
system for challenging patents that should not have
issued.” House Report 39-40. Compared to litigation
in federal court, the process offers the benefits of a re-
laxed standing requirement, more focused discovery,
streamlined evidentiary and hearing procedures, and
rapid deadlines for adjudication. At the same time, it
retains significant safeguards to protect the holders of
valid patents.

An efficient system for challenging invalid patents
is particularly important to the continued provision of
low-cost, high-quality generic and biosimilar medi-
cines, which are frequently denied to patients due to
invalid patents. Generic drugs are therapeutically
identical to their brand-name counterparts, and they
offer significant savings to patients and the taxpayers.
None of the benefits of generic medicines can be real-
ized, however, until after the brand-name manufactur-
er’s patent claims—even dubious ones—have been re-
solved. Delay in removing improperly awarded pa-
tents therefore leads to substantially higher drug

5

costs to our Nation. A speedy and efficient mechanism
to challenge improvidently granted patents is essen-
tial to the timely provision of generic and biosimilar
medicines.
ARGUMENT

This Court has long recognized that “there are mat-
ters, involving public rights, which may be presented
in such form that the judicial power is capable of act-
ing on them, and which are susceptible of judicial de-
termination, but which [Cjongress may or may not
bring within the cognizance of the courts of the United
States, as it may deem proper.” Murray’s Lessee v.
Hoboken Land & Improvement Co., 59 U.S. (18 How.)
272, 284 (1856). Public rights—those rights “arising
‘between the Government and persons subject to its
authority in connection with the performance of the
constitutional functions of the executive or legislative
departments’”—are created by Congress, and Con-
gress may commit their adjudication to administrative
tribunals. Stern, 564 US. at 489 (quoting Crowell v.
Benson, 285 U.S. 22, 50 (1982)); see B&B Hardware,
Inc. v. Hargis Indus., Inc., 1385 8. Ct. 1293, 1316 (2015)
(Thomas, J., dissenting) (noting that administrative
agencies may “function as courts * * * with respect
to claims involving public or quasi-private rights”).
Under this “public rights doctrine,” non—Article III
tribunals may adjudicate cases in which “the claim at
issue derives from a federal regulatory scheme, or in
which resolution of the claim by an expert Govern-
ment agency is deemed essential to a limited regulato-
ry objective within the agency’s authority.” Stern, 564
U.S. at 490. Inter partes review involves claims that
qualify under both components of that test.

6

A. Inter partes review governs claims derived from
a federal regulatory scheme

Patent rights are public rights because they are de-
rived from a federal regulatory scheme. As this Court
has observed, patent rights “exist only by virtue of
statute,” and they can be conferred only by the gov-
ernment. Sears, 376 U.S. at 229 n.5. Unlike “a parcel
of land” (Pet. Br. 29), they do not exist until estab-
lished by Congress or an agency acting on its behalf.
Congress may therefore commit their adjudication to
an agency.

In the exercise of its Article I power “[t]o promote
the Progress of Science and useful Arts, by securing
for limited Times to Authors and Inventors the exclu-
sive Right to their respective Writings and Discover-
ies,” U.S. Const. art. I, § 8, cl. 8, Congress has directed
the PTO to approve a patent application if “it appears
that the applicant is entitled to a patent” under stand-
ards prescribed by law, 35 U.S.C. 131. By empower-
ing the PTO to grant patents, Congress devised an
“expert and inexpensive method for dealing with a
class of questions of fact which are particularly suited
to examination and determination by an administra-
tive agency specially assigned to that task.” Stern,
564 U.S. at 494 (quoting Crowell, 285 U.S. at 46); see
B&B Hardware, 135 S. Ct. at 1317 (Thomas, J., dis-
senting) (“Because [trademark] registration is merely
a statutory government entitlement, no one disputes
that the [PTO] may constitutionally adjudicate a regis-
tration claim.”).

Petitioner does not dispute that Congress may
permissibly assign to the PTO the authority to issue a
patent in the first instance. It follows that Congress

7

may also allow the PTO to revoke a patent if it deter-
mines that the issuance of that patent was erroneous.
It has long been recognized that “(t]he power to re-
consider is inherent in the power to decide.” Albert-
son v. FCC, 182 F.2d 397, 399 (D.C. Cir. 1950). For
that reason, this Court has held that courts have an
inherent power to correct their own mistakes. See,
e.g., Gagnon v. United States, 193 U.S. 451, 456 (1904);
see also United States v. Denedo, 556 U.S. 904, 912-913
(2009). And “[aJn agency, like a court, can undo what
is wrongfully done by virtue of its order.” United Gas
Improvement Co. v. Callery Props., Inc., 382 U.S. 223,
229 (1965).

For decades, the PTO has exercised the authority
to reconsider its patenting decisions in appropriate
circumstances. Before the America Invents Act, when
more than one party sought to patent the same subject
matter, the PTO conducted an “interference” proceed-
ing to resolve the competing claims and determine
which one was entitled to priority. 35 U.S.C. 135(a)
(2006); see Koninklijke Philips Elecs. N.V. v. Cardiac
Sci. Operating Co., 590 F.3d 1326, 1334 (Fed. Cir.
2010). Interferences were not limited to competing
applications but could be conducted whenever an ap-
plicant sought a patent that would “interfere with any
pending application, or with any unexpired patent.”
35 U.S.C. 135 (1952) (emphasis added). And for more
than 70 years, the statute provided that if the agency
determined that the applicant had priority, the pro-
ceeding could result in the “cancellation of the claims
involved” in the already-issued patent. Ibid.; see, e.g.,
Hahn v. Wong, 892 F.2d 1028, 1030 (Fed. Cir. 1989)

8

(describing procedure for interference between an ap-
plication and a patent).

In addition, since 1980, the PTO’s ex parte reexam-
ination procedure has allowed “({aJny person at any
time” to “file a request for reexamination” of an issued
patent by the PTO. 35 U.S.C. 302. If the PTO identi-
fies “a substantial new question of patentability,” it
can reexamine the patent and revoke it if appropriate.
35 U.S.C. 303(a); see Cuozzo, 136 S. Ct. at 2137. And
in 1999, Congress established an inter partes reexami-
nation procedure under which third parties had the
right to participate in the reexamination proceedings
and challenge the validity of a patent. See Optional
Inter Partes Reexamination Procedure Act of 1999,
Pub. L. No. 106-113, Tit. IV, Subtit. F, 113 Stat.
1501A-567. That procedure is the direct antecedent of
the inter partes review process established by the
America Invents Act.

Petitioner attempts to distinguish those traditional
procedures, but its efforts are unavailing. Petitioner
points out (Br. 49-50) that interference decisions are
subject to judicial review, but so are the results of in-
ter partes review. 35 U.S.C. 319. Petitioner also ob-
serves (Br. 50) that ex parte reexamination is not “an
adversarial proceeding with all the trappings of litiga-
tion.” That may be true, but petitioner does not ex-
plain why a relatively informal procedure for recon-
sidering an agency’s decision is constitutionally per-
missible while one that offers greater procedural pro-
tections to affected parties is not.

Whether it takes place in an interference proceed-
ing, through ex parte reexamination, or through inter
partes review, the PTO’s revocation of a patent does

9

not entail constitutionally impermissible adjudication.
It does not resolve questions of whether a patent has
been infringed. Instead, it is merely an exercise of the
agency’s inherent power to correct its own mistakes
and to take “a second look at an earlier administrative
grant of a patent.” Cuozzo, 136 S. Ct. at 2144. For
that reason, the claims involved are “so closely inte-
grated into a public regulatory scheme as to be a mat-
ter appropriate for agency resolution.” Granfinanci-
era, S.A. v. Nordberg, 492 U.S. 38, 54 (1989) (quoting
Thomas v. Union Carbide Agric. Prods. Co., 473 U.S.
568, 594 (1985)).

B. Inter partes review is essential to the limited
regulatory objective of eliminating invalid
patents

The inter partes review process is also “essential to
a limited regulatory objective within the agency’s au-
thority,” Stern, 464 U.S. at 490, namely, quickly and
cheaply eliminating patents that were improvidently
granted and are blocking valuable technology from
reaching the market. This Court has recognized that
the “possession and assertion of patent rights are ‘is-
sues of great moment to the public,’” and that “[t]he
far-reaching social and economic consequences of a pa-
tent * * * give the public a paramount interest in
seeing that patent monopolies * * * are kept within
their legitimate scope.” Precision Instrument Mfg.
Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 815-816
(1945) (quoting Hazel-Atlas Glass Co. v. Hartford-
Empire Co., 322 U.S. 238, 246 (1944)). The PTO fre-
quently issues invalid patents, and Congress estab-
lished the inter partes review process to remedy those

10

mistakes. Inter partes review simplifies and acceler-
ates the process of weeding out invalid patents, while
retaining significant protections for valid patents.

1. The PTO often issues invalid patents

This Court has observed that a patent “simply rep-
resents a legal conclusion reached by the Patent Of-
fice” that is “predicated on factors as to which reason-
able 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 prov-
ing patent invalidity.” Lear, Inc. v. Adkins, 395 U.S.
653, 670 (1969). Unfortunately, the examiners con-
ducting those ex parte proceedings have heavy case-
loads: In 2016, fewer than 9,000 patent examiners
were tasked with reviewing more than 660,000 patent
applications. U.S. Patent and Trademark Office, Per-
formance and Accountability Report, Fiscal Year
2016, at 15, 179 (2016) (PTO Report). On average, pa-
tent examiners have only about 20 hours to evaluate a
patent application, which requires reading the applica-
tion, searching for prior art, communicating with the
applicant, evaluating patentability, and writing up
their conclusions. Michael A. Carrier, Post-Grant Op-
position: A Proposal and a Comparison to the Ameri-
ca Invents Act, 45 U.C. Davis L. Rev. 103, 107 (2011).
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. Pa-
tent and Trademark Office Grant Too Many Bad Pa-
tents?: 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 con-

11

cluding that “the Agency is in fact biased toward
granting patents”). Indeed, one recent study found
that federal courts hold challenged patents to be inva-
lid 43% of the time. John R. Allison et al., Under-
standing 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 mecha-
nism to review improvidently granted patents. See
H.R. Rep. No. 120, 107th Cong., 1st Sess. 3 (2001) (not-
ing 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”). By 2011, when the
America Invents Act was passed, Congress had con-
cluded that the ex parte and inter partes reexamina-
tion procedures were “too lengthy and unwieldy to ac-
tually serve as an alternative to litigation when users
are confronted with patents of dubious validity.” 157
Cong. Rec. 12,992 (2011) (statement of Sen. Leahy).
And it noted “a growing sense that questionable pa-
tents are too easily obtained and are too difficult to

12

challenge.” House Report 39. As then-Senator Ses-
sions explained, the goal of the America Invents Act
was to “allow invalid patents that were mistakenly is-
sued 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. Leahy)
(“The legislation also provides a modernized, stream-
lined mechanism for third parties who want to chal-
lenge recently issued, low-quality patents that should
never have been issued in the first place.”).

3. Inter partes review accelerates the process
of weeding out invalid patents, while
retaining significant protections for valid
patents

To accomplish its goal of “improving patent quality
and providing a more efficient system for challenging
patents that should not have issued,” Congress estab-
lished a streamlined process for challenging patents
through inter partes review. House Report 39-40; see
id. at 47; see also Cuozzo, 136 S. Ct. at 2143-2144 (de-
scribing features of inter partes review that make the
procedure “less like a judicial proceeding and more
like a specialized agency proceeding,” offering “a sec-
ond look at an earlier administrative grant of a pa-
tent”). The inter partes review process contains a
number of cost- and time-saving features designed to
allow the PTO to identify improvidently granted pa-
tents—and correct its own mistakes—quickly and effi-
ciently. Those benefits include

« A relaxed standing requirement. To chal-
lenge a patent in district court, the challenging

13

party must have Article III standing, which,
among other things, requires the party to have
suffered a concrete, particularized, and actual
or imminent “injury in fact.” Lujan v. Defend-
ers of Wildlife, 504 U.S. 555, 560 (1992). In con-
trast, inter partes review may be initiated by
any person who is not the owner of the patent
at issue. 35 U.S.C. 31l(a); see Cuozzo, 136
S. Ct. at 2143-2144 (“Parties that initiate the
proceeding need not have a concrete stake in
the outcome; indeed, they may lack constitu-
tional standing.”) That relaxed standing re-
quirement allows a prospective competitor—
such as a prospective manufacturer of a generic
drug—to resolve the validity of a blocking pa-
tent before devoting the substantial resources
necessary to develop a competing product.
That greatly increases the chance that invalid
patents will be quickly identified and eliminat-
ed.

Focused discovery. In contrast to the broad
discovery allowed in federal courts by the Fed-
eral Rules of Civil Procedure, discovery in inter
partes review proceedings is limited to the dep-
osition of witnesses submitting affidavits or
declarations and “what is otherwise necessary
in the interest of justice.” 35 U.S.C. 316(a)(5);
see 37 C.F.R. 42.51(b). The process thus avoids
“the potentially enormous expense of discov-
ery” associated with litigation. Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 559 (2007).

14

Streamlined evidentiary and hearing proce-
dures. Proceedings before the Board are most-
ly conducted through the submission of written
testimony and briefs. See 35 U.S.C. 316(a)(8).
Testimony to the Board must be presented in
the form of an affidavit. 37 C.F.R. 42.53(a).
Similarly, cross-examination must be submitted
in the form of a deposition transcript. /bid. The
parties are entitled to an oral hearing. 35
U.S.C. 316(a)(10).

Rapid deadlines for adjudication. An inter
partes review must be completed within one
year of when it is instituted. 35 U.S.C.
316(a)(11). The PTO may extend the deadline
only by six months, and only for good cause.
Ibid. According to the PTO’s annual Perfor-
mance and Accountability Report, the office has
succeeded in meeting the statutory deadlines.
PTO Report 71; compare House Report 45 (dis-
trict court litigation in patent cases is “often
costly and protracted”).

Decisions rendered by a panel of experts. I[n-
ter partes review is conducted before a three-
member panel consisting of specialized adminis-
trative patent judges appointed to the Patent
Trial and Appeal Board by virtue of their “com-
petent legal knowledge and scientific ability.”
35 U.S.C. 6(a), (c); 35 U.S.C. 316(c); see Kappos
v. Hyatt, 566 U.S. 431, 445 (2012) (noting that
“the PTO has special expertise in evaluating pa-
tent applications”). If the matter is not dis-

15

missed, the panel must issue a written decision.
35 U.S.C. 318(a).

Despite the efficiency of inter partes review, signif-
icant protections remain to protect legitimate patents.
For example, the PTO may grant a petition for inter
partes review only if the information presented in the
petition shows that “there is a reasonable likelihood
that the petitioner would prevail with respect to at
least 1 of the claims challenged”—a standard designed
to eliminate frivolous or meritless petitions. 35 U.S.C.
314(a). Similarly, a petitioner may not seek inter
partes review if it has previously filed a civil suit chal-
lenging the validity of the same claim, 35 U.S.C.
315(a)(1), or if it was served with a complaint alleging
infringement of the patent more than one year before,
35 U.S.C. 315(b). Moreover, the scope of inter partes
review is narrowly focused on the correction of erro-
neously issued patents. A petitioner in an inter partes
review may request to cancel a patent claim only
based on obviousness or lack of novelty, and only
based on prior-art patents and publications. 35 U.S.C.
311(b). Other issues, such as infringement or invalidi-
ty on other grounds, must be adjudicated in federal
court. Finally, the Board’s written decision on patent-
ability is subject to appeal to the United States Court
of Appeals for the Federal Circuit. 35 U.S.C. 319.

C. Eliminating invalid patents is necessary to
permit patient access to more affordable generic
and biosimilar medicines
Pharmaceutical patents provide a compelling illus-

tration of the need for an efficient mechanism for the

PTO to retract improvidently issued patents. Inter

16

partes review is essential to ensure patient access to
low-cost generic medicines that would otherwise be
blocked by invalid patents.

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 Hatch-
Waxman Amendments. See Eli Lilly & Co. v. Med-
tronic, 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.) (purpose of Hatch-Waxman was “to get ge-
neric 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 introduc-
tion of biosimilar medicines by enacting the Biologics
Price Competition and Innovation Act, Pub. L. No.
111-148, Tit. VII, Subtit. A, 124 Stat. 804. See gener-
ally Sandoz Inc. v. Amgen Inc., 137 S. Ct. 1664 (2017).
Patient access to low-cost, high-quality generic and
biosimilar medicines remains critically important to-
day given the high cost of healthcare in the United
States.

By definition, generic drugs are therapeutically
equivalent to their brand-name counterparts. To be
approved by the FDA, generic medicines must have
the same active ingredients and must meet the same
rigorous standards of strength, quality, purity, and

17

potency. 21 U.S.C. 355(j)(2)(A (ii), (iii), (iv). Likewise,
a biosimilar medicine has “no clinically meaningful dif-
ferences” in “safety, purity, and potency” from the
brand-name biologic product. 42 U.S.C. 262(i)(2)(B).

The principal difference between generic or bio-
similar 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) (Generic Drug Access). Generics account for
89% of prescriptions dispensed in the United States,
but only 26% of total drug costs. /d. at 16. In total,
generic medicines generated $253 billion in savings for
the American healthcare system in 2016, and $1.67
trillion in savings over the last decade. Id. at 20. Eve-
ry year, generic medicines save the Medicaid system
$37.9 billion and save the Medicare system $77 billion.
Id. at 21.

The benefits of more affordable generic and bio-
similar medicines extend beyond mere cost savings.
Lack of adherence to treatments is responsible for ap-
proximately 125,000 deaths annually. Generic Drug
Access 26. Generic drugs reduce the problem of lack
of adherence because new patients are three times
less likely to stop taking generic medications than
brand-name drugs. /bid.

All of these benefits flow directly from the competi-
tion that generic and biosimilar medications provide to
brand-name drugs that would otherwise enjoy monop-
oly status. The more competitors there are, the great-
er the savings: The entry of a second generic manu-
facturer into the market reduces the average generic
price to nearly half the brand-name price, and for med-
icines that attract a large number of generic manufac-

18

turers, the average generic price falls to less than 20%
of the branded price. U.S. Food & Drug Admin., Ge-
neric Competition and Drug Prices (May 13, 2015),
http://www .fda.gov/aboutfda/centersoffices/officeof
medicalproductsandtobacco/cder/ucm129385.htm.

2. Invalid patents can block the introduction
of more affordable generic and biosimilar
medicines

Patent law “strikes a delicate balance between cre-
ating ‘incentives that lead to creation, invention, and
discovery’ and ‘imped[ing] the flow of information that
might permit, indeed spur, invention.’” Association
for Molecular Pathology v. Myriad Genetics, Inc., 133
S. Ct. 2107, 2116 (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 up-
set by the assertion of invalid patents, which inevita-
bly 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 the
drug that the patentee could reasonably assert would
be infringed by the manufacture, use, or sale of a ge-
neric version of the drug. 21 U.S.C. 355(b)(1). Those
patents are then listed in the FDA’s “Orange Book,”
formally titled “Approved Drug Products with Thera-
peutic Equivalence Evaluations.” See Caraco Pharm.
Labs., Ltd. v. Novo Nordisk A/S, 566 U.S. 399, 405-406

19

(2012). Patents listed in the Orange Book represent
significant barriers to the entry of generic competi-
tors.

Under the Hatch-Waxman Amendments, a compet-
itor hoping to enter the market with a generic version
of an existing drug may file an Abbreviated New Drug
Application (ANDA). See 21 U.S.C. 355(j). As part of
the ANDA, the generic drug manufacturer must iden-
tify any patents claiming the brand-name drug in the
Orange Book. 21 U.S.C. 355(j2)(A)(vii). For each
listed patent that has been properly filed and has not
expired, the generic drug manufacturer must either
agree to wait for FDA approval until after the patent
expires, 21 U.S.C. 355G)(2)A)(vii(IID), or certify that
the “patent is invalid or will not be infringed by the
manufacture, use, or sale” of the proposed generic, 21
U.S.C. 355(j(2)(A)(vii (TV).

Filing that latter certification, known as a Para-
graph IV certification, “means provoking litigation.”
Caraco, 566 U.S. at 407. The ANDA filer must pro-
vide notice to the brand-name manufacturer “of the
factual and legal basis” of its patent challenge, 21
U.S.C. 355G)(2)(B)iv)(ID, and the brand-name manu-
facturer may immediately sue to enforce its patents,
35 U.S.C. 271(eX(2)(A). If the brand-name manufac-
turer files suit, the FDA is automatically precluded
from approving the proposed generic drug for 30
months, unless the court declares that the patent is
invalid or not infringed before that time. 21 U.S.C.
355(9)(5)(B)Gii). If the brand-name manufacturer pre-
vails in its suit, the generic manufacturer’s application
cannot be approved until the patent expires. 35 U.S.C.
271(e)(4).

20

The Paragraph IV litigation process is thus “likely
to keep the generic drug off the market for a lengthy
period,” whether or not the patent is eventually ruled
invalid. 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 re-
solved does so at risk of being held liable for substan-
tial damages if the court later rules in favor of the
brand-name manufacturer. 35 U.S.C. 271(e)(4)(C).
And when it comes to generic drugs, even modest de-
lays have high costs. One study, for example, exam-
ined three different drugs and 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., Ex-
tensions of Intellectual Property Rights and Delayed
Adoption of Generic Drugs: Effects on Medicaid
Spending, 25 Health Affairs 1637, 1643 (2006).

Because the 30-month stay in the Paragraph IV lit-
igation process does not depend on the strength of the
brand-name drug manufacturer’s infringement claims
or on the merits of its asserted patents, even invalid
patents may block generic substitutes for lengthy pe-
riods 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 “in-
terchangeable” with a brand-name biologic product.
42 U.S.C. 262(k). Such approval is permitted only af-
ter a 12-year period of exclusivity for the brand-name
product. 42 U.S.C. 262(k)(7); see Sandoz, 137 S. Ct. at
1670. But by using estates of multiple patents, even

21

patents of doubtful validity, brand-name biologic man-
ufacturers can delay the introduction of biosimilar
products until well after the expiration of that 12-year
period.

b. Recent experience with efforts to introduce ge-
neric drugs and biosimilar medicines shows that the
costs of invalid patents are not merely theoretical.

Prilosec is the brand-name version of omeprazole,
which is approved by the FDA to treat peptic ulcer
disease and some forms of gastroesophageal reflux
disorders. Daniel I. Gorlin, Staving Off Death: A Case
Study of the Pharmaceutical Industry’s Strategies to
Protect Blockbuster Franchises, 68 Food & Drug LJ.
823, 882-833 (2008). Omeprazole was first patented in
1979 by a predecessor to AstraZeneca PLC. In 1998,
it became the world’s largest selling pharmaceutical
product, and by 2001 it enjoyed $5.7 billion in annual
sales. Jd. at 834.

When AstraZeneca first sought FDA approval for
omeprazole, it listed only the original patent in the Or-
ange Book. Gorlin, 68 Food & Drug L.J. at 836. In an
effort to extend its monopoly even after the expiration
of that patent, it soon added additional patents cover-
ing, among other things, making the drug into a pill
that could be taken orally and using the drug to treat
certain infections. Ultimately, the Orange Book listed
ten different patents covering the drug. Jbid. In add-
ing those additional patents to the Orange Book,
AstraZeneca sought “to create a situation where ge-
neric drug manufacturers must litigate 90 claims on
six patents, making it impossible to resolve any dis-
pute within the thirty month stay.” /d. at 837 (quoting
Examining Issues Related to Competition in the

22

Pharmaceutical Marketplace: A Review of the FTC
Report, “Generic Drug Entry Prior to Patent Expira-
tion”: Hearing Before the Subcomm. on Health of the
H. Comm. on Energy and Commerce, 107th Cong. 25
(2002) (prepared statement of Business for Affordable
Medicines)).

In 1998, four generic drug companies filed ANDAs
under the Hatch-Waxman Amendments, submitting
Paragraph IV certifications and asking the FDA to
approve their versions of omeprazole. Gorlin, 63 Food
& Drug L.J. at 836. AstraZeneca sued its would-be
generic competitors for patent infringement, trigger-
ing the 30-month stay enjoining the FDA from approv-
ing their applications. [bid.

Of the six patents AstraZeneca sued to enforce,
most were ultimately found to be invalid. See In re
Omeprazole Patent Litig., 258 F. Supp. 2d 221
(S.D.N.Y. 2001). And the valid patents were deter-
mined not to be infringed by a bioequivalent version of
omeprazole. Astra Aktiebolag v. Andrx Pharms.,
Inc., 222 F. Supp. 2d 423, 547-560 (S.D.N.Y. 2002).
Nevertheless, the multitude of listed patents had their
intended effect: Although the generic competitors
filed their applications in 1998, a consolidated trial on
AstraZeneca’s patent infringement claims did not
even start until December 2001—more than three
years later. Gorlin, 63 Food & Drug L.J. at 836. By
then, both the original patent on omeprazole and the
30-month stay on generic entry under the Hatch-
Waxman Amendments had expired; the first generic
manufacturer to file an application had received final
approval from the FDA, but no generic version of

23

Prilosec had been introduced to the market. Jd. at
838.

A generic version of the drug was finally introduced
in December 2002, 14 months after the expiration of
AstraZeneca’s original patent. Gorlin, 63 Food &
Drug L.J. at 839. Those 14 months allowed Astra-
Zeneca to collect billions of dollars in extra revenue, at
a cost to the taxpayers of hundreds of millions of dol-
lars. Ibid.; see Kesselheim et al., 25 Health Affairs at
1642.

Brand-name drug companies could employ similar
techniques to delay the entry of more affordable bio-
logic medicines. See, e.g., Cynthia Koons, Guarding
Big Pharma’s Crown Jewel, Bloomberg Busi-
nessweek, Sept. 11, 2017, at 17 (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).

By allowing speedier resolution of patent validity—
and prompt correction by the PTO of its own mis-
takes—inter partes review avoids unnecessary delays
and furthers the congressional goal of ensuring that
the patent monopoly on brand-name medicines be of
limited duration, thus bringing more affordable treat-
ment options to patients sooner.

24

CONCLUSION
The judgment of the court of appeals should be af-
firmed.
Respectfully submitted.

JEFFREY K. FRANCER

ERIC D. MILLER
ASSOCIATION FOR

Counsel of Record

ACCESSIBLE MEDICINES PERKINS COIE LLP
601 New Jersey Ave., N.W. 1201 Third Ave., Suite 4900
Suite 850 Seattle, WA 98101
Washington, D.C. 20001 (206) 359-8000
(202) 249-7100 emiller@perkinscoie.com
BRIAN SAMUELSON
PERKINS COIE LLP
1120 NW Couch St.
10th Floor
Portland, OR 97209
(503) 727-2000

OCTOBER 2017

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0724%3A24. Public record. Not legal advice.