There’s more evidence today that the IPR system needs to be fixed. PTAB ruled on Friday that under current rules, hedge fund managers are free to manipulate the system by shorting drug company stocks and then challenging their patents. Here’s what the panel said: “Profit is at the heart of nearly every patent and nearly every inter partes review. As such, an economic motive for challenging a patent claim does not itself raise abuse of process issues.” You can read the full sanctions denial here.
The panel’s point is that everyone has a profit motive for holding and challenging patents. But the difference, of course, is that biotech companies use the system to make money by developing life-saving medicines. Hedge fund managers use it to make money by creating confusion in the financial markets. This latest ruling has in essence declared “open season” on patent protection and innovation.
Not exempting FDA-approved drugs from IPR leaves patients and our whole medical innovation system at great risk. This PTAB ruling proves that the current system is too open to abuse from unscrupulous parties. That’s why patent reform legislation currently being considered by Congress should reform the IPR system. Innovators creating new cures now face double jeopardy – their patents can be challenged under both the pre-existing Hatch-Waxman system—a carefully-calibrated system that has worked well for thirty years—and the IPR system, which applies a much lower standard to patent validity. In addition, IPRs can continuously be filed on the same patents, even by the same parties, after petitions have been dismissed by PTAB. It’s essentially a never-ending assault on medical advances.
Patent reform should remove the redundancy caused by the IPR system and return to having one clear patent dispute system that has worked well for FDA-approved medications—the Hatch-Waxman system.