Bass Vows to Keep Fighting U.S. Drug Patents After Setbacks

Updated on
  • Hayman Capital founder calls Patent Office `kangaroo court'
  • Hedge-fund manager still challenging Acorda, Biogen drugs

Hedge-fund manager Kyle Bass isn’t taking his early losses to the drug industry lightly.

The Hayman Capital Management founder claims the U.S. Patent and Trademark Office is purposefully denying his challenges to drug patents because it finds him “too disruptive.”

His response: File more cases targeting what he contends are patents of questionable validity that he said are protecting overpriced drugs from competition.

“It’s clear they want us to go away,” Bass said Thursday in a telephone interview. “We’re not going away.”

Bass has filed nine petitions challenging patents since Aug. 24, the day the Patent Trial and Appeal Board declined to review two Acorda Therapeutics Inc. cases. Four petitions filed Wednesday again challenge Acorda patents on the multiple sclerosis drug Ampyra.

In all, Bass’s Coalition for Affordable Drugs has filed almost three dozen petitions since February. The Acorda petitions were rejected after the Patent Trial and Appeal Board said the information he provided wasn’t publicly available. A different three-judge panel on Sept. 1 said information of a clinical trial wasn’t evidence that could be used to challenge Biogen Inc.’s MS drug Tecfidera.

‘Kangaroo Court’

“They threw Acorda out on a technicality; they threw Biogen out by ignoring the law,” Bass said. “They’re acting like a kangaroo court and we are not going to stand for it.”

Patrick Ross, a spokesman for patent office, said the Alexandria, Virginia-based agency had no comment.

The reviews were created under a 2011 law, designed to help technology companies get rid of nuisance lawsuits more cheaply by invalidating patents that never should have been issued. The drug industry has reacted to the Bass petitions by urging Congress to make it exempt from the proceedings altogether.

Trade Groups

Drug and biotechnology trade groups say Bass’s actions are “threatening to undermine the medical innovation system in this country.”
“The fact that a hedge fund or others can file endless challenges to the same patents over and over again, forcing small companies like Acorda to divert their time, attention and limited resources to fighting these improper attacks rather than focusing on bringing new cures to patients, is outrageous 
and offensive,” the Biotechnology Industry Organization said in a statement. “His abuse of this system highlights the need for reform.”

Ardsley, New York, based Acorda, in a regulatory filing, said it would oppose any effort to institute the review and will defend its patents.

Bass accused patent office Director Michelle Lee of directing the judges to find ways to not institute any reviews. “What Michelle Lee and the PTAB need to do is call balls and strikes and not try to change the rules of the game that were legislated to them by Congress,” Bass he said.

Potential Appeals

By law, the board’s administrative patent judges are independent of oversight by the director. Their decisions on whether to begin a review or not can’t be appealed.

Bass can ask the panels to reconsider their decisions, but most of those requests are denied, said Lana Gladstein, a patent attorney with the Boston firm of Nutter McClennen & Fish, who’s been involved in other cases before the board.

In both the Acorda and Biogen cases, the drugmakers argued that Bass is misusing the system to make money by undermining drug patents. Neither panel addressed that issue. A different three-judge panel has asked Bass and Shire Plc’s NPS Pharmaceuticals to provide legal arguments on whether that should be a consideration. NPS is scheduled to file its arguments next week, with Bass given another seven business days to respond.

Third Parties

The board has allowed third parties to proceed with other petitions. In those instances, it’s been a group like Unified Patents, which collects money from technology companies to challenge patents that are being asserted in specific fields.

Bass said he is motivated both by the desire to make money and an urge to “go after the worst offenders” when it comes to drug pricing and patent quality.

“If not me, then who?” Bass said. “I don’t see anyone else hiring legal teams with purely altruistic motives.”

The question is whether someone who has a profit motive fits with the goal of the patent office to take a second look at its work. On the other side of the argument is that “at the end of the day, a challenge to a possibly invalid patent is in the public’s best interest,” Gladstein said.

Drug patents are more likely than others to survive the scrutiny of the patent board, said Ronny Gal, an analystfor Sanford C. Bernstein & Co. Drug challenges make up about 7 percent of all petitions, with the majority filed by operating companies. Only seven cases have gone completely through the system, and so far there are only two instances where the patents were invalidated.

“The data accumulated so far, although early, suggests neither the attention, hyperboles, nor the legislative cure is warranted,” Gal wrote in a note to clients.

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