What to make of Dr. Reddy’s IPR losses for Celgene’s Revlimid patent cases?
Last week, we wrote about milestones to watch for in Celgene’s ($CELG) Revlimid® patent landscape in 2019 that could potentially impact the Bristol Myers ($BMY) transaction. One data-point that investors were anticipating were institution decisions in three petitions for inter partes review (IPRs) filed by Dr. Reddy’s. This week, the PTAB denied institution of all three IPRs. How will those decisions read-through to the overall Revlimid® patent landscape?
Dr. Reddy’s filed three IPRs against three separate patents: U.S. Patent Nos. 8,404,717; 6,315,720 and 9,056,120. The patents are each method-of-use patents that are generally directed to administering lenalidomide, the active ingredient in Revlimid®, to treat MDS (myelodysplastic syndrome).
Each of Dr. Reddy’s three IPRs made the same general argument: Use of lenalidomide to treat MDS was obvious since its parent compound, thalidomide, had already been used to treat MDS. Lenalidomide could act as a TNF-alpha inhibitor, just like thalidomide. And lenalidomide was potentially more potent, and less toxic, than thalidomide. In sum, the use of lenalidomide to treat MDS was obvious.
Each IPR relied upon two “grounds” to show that the challenged patent was invalid. A “ground” in an IPR is essentially a separate basis for arguing a patent is invalid. Accordingly, each “ground” constitutes a combination of multiple prior art references that Dr. Reddy’s argued, when combined and viewed as a whole, taught each limitation of each claim of each patent.
The important point here is that for every “ground” argued by Dr. Reddy’s, across all three IPRs, each one relied upon two press releases issued by Celgene in 2001. While each ground relied upon additional prior art references in addition to these press releases, the two press releases were nevertheless vital to each ground. One press release was dated in May 2001, and the other was dated in August 2001.
Unfortunately for Dr. Reddy’s, the PTAB never reached the substance of its arguments. That is because the PTAB found that the two press releases were not proven to be prior art. To qualify as prior art, a reference must have been published a certain period of time prior to the patent application being challenged. Here, Dr. Reddy’s claimed that the press releases were published in May and August of 2001, respectively. Dr. Reddy’s pointed to dates on the press releases themselves from May and August 2001 to show their date of publication.
For an article, study or reference to constitute prior art to a given patent, it must have been sufficiently publicly accessible before the application for the patent was filed with the PTO. Indeed, that is the whole point of prior art—that someone else publicly published the same invention before the challenged patent. In an IPR, the petitioner—which in this case was Dr. Reddy’s—bears the burden of establishing that a particular prior art reference was sufficiently publicly accessible as of the date it claims to have been published.
Here, the PTAB found that Dr. Reddy’s failed to sufficiently show that each press release was sufficiently public as of the date of the press release. The PTAB stated, “[a]s noted by [Celgene], there is no persuasive objective evidence in this record of when, where, or to whom the Celgene Press Releases were available, or how they were allegedly accessible.” (See IPR2018-01509, Paper 7 at 9-10).
The press releases actually bear certain dates in May and August 2001, and Dr. Reddy’s relied upon those dates as proof of the date they were publicly accessible. Yet, the PTAB found this was insufficient, by itself, to show proof that the press releases were published on that date.
Once the PTAB determined that the press releases were not sufficiently shown by Dr. Reddy’s to be prior art, each “ground” of each IPR essentially fell apart. The PTAB will not assess a “ground” on its substance if it first finds that one of the primary prior art references is not actually prior art. Thus, denial of institution of each IPR flowed immediately from the PTAB’s finding that the press releases were not prior art.
(The big irony here is that Celgene, itself, most likely knows the publication history of the press releases. Importantly, Celgene did not argue that the press releases were not published when Dr. Reddy’s claimed they were, but only that Dr. Reddy’s did not sufficiently prove them to be published by that date. While this may smack to non-lawyers as elevating form over substance, those are the rules the PTAB.)
Given how these decisions came out, there are a few conclusions we can draw. Most importantly, although Dr. Reddy’s lost all three of its IPRs, the PTAB never reached the merits. The IPRs were denied institution on what are essentially technicalities. That means, they are theoretically fixable. Dr. Reddy’s could gather more evidence showing the date the press releases were actually published, incorporate that evidence into new IPR petitions and refile them.
That evidence could include, for instance, an affidavit from PRNewswire or someone else with knowledge regarding the publications of the press releases. Alternatively, Dr. Reddy’s could scrap the press releases altogether, and try to find different prior art for the same teachings. (As discussed below, Lotus appears to have done something like this within its IPR.)
Yet re-filing the IPRs just means more time. If Dr. Reddy’s were to re-file the IPRs, it would nevertheless have to wait another six months to receive a new institution decision. This is pretty critical for those following Celgene with an eye to the Bristol transaction. Even if Dr. Reddy’s were to refile by the end of February, the PTAB would not likely issue institution decisions until August or September. If Dr. Reddy’s waits even longer to refile, then the institution decisions will be pushed back even further—potentially after the Bristol transaction closes.
Dr. Reddy’s decision to refile the IPRs may be delayed further still if it files a rehearing request. That request would essentially arguesthat the PTAB overlooked something material within Dr. Reddy’s petition. Rehearing requests are statistically rarely granted. But more importantly, it could also take one to three months for Dr. Reddy’s to receive a decision on its rehearing request. That just means more time.
What about the Lotus IPR? Lotus filed an IPR against one of Celgene’s multiple myeloma patents. That IPR is due to receive its institution decision by March 18. That IPR also relied upon the same two Celgene press releases for one of its grounds. But for a second ground, it did not rely upon the press releases at all. Moreover, in response to the Lotus IPR, Celgene did not expressly argue that the press releases did not constitute prior art. Rather, Celgene reserved the right to challenge the prior art status of each press release in the event the PTAB institutes the IPR. Thus, given that Lotus has at least one ground that does not rely upon the press releases, and Celgene did not attack the press releases the same way it did in the Dr. Reddy’s IPRs, the Lotus IPR is unlikely to meet the same fate as the Dr. Reddy’s IPRs.
What about the big picture? In our prior post, we suggested that if the Dr. Reddy’s IPRs were denied institution, that may read-through to the district court litigations because it may suggest that the MDS patents are probably not invalid. That, however, presumed that the IPRs would be denied institution on the merits.
Here, however, the denial was on essentially technical grounds that can theoretically be fixed. Because of that, the PTAB did not really reach the merits, and we cannot say that these IPR institution-denials amount to a read-through that the patents are probably not invalid.
The bigger takeaway for watchers of the Bristol transaction is this: the Dr. Reddy’s IPRs were denied, but for technical reasons that have little read-through to the district court cases. Moreover, the IPRs can themselves be fixed and potentially re-filed. But if the IPRs are re-filed, we are looking at new institution decisions coming seven to nine months from now, at the earliest. That is likely after the Bristol transaction closes.
Meanwhile, the Lotus IPR is scheduled to receive an institution decision within the next month. There is greater likelihood that the institution decision will address the merits. It will be worth watching if the PTAB grants or denies institution on the merits, and if so, whether that decision can read through to the district court cases.