Cutting Dietary Supplement Red Tape
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Cutting Dietary Supplement Red Tape Joseph Cwik 312.526.1622 [email protected] Diane Romza-Kutz 312.526.1569 [email protected] Inter Partes Review, The New Tool To Defeat Claims of Patent Infringement In The Dietary Supplement Industry 2 © 2014 Husch Blackwell LLP. All Rights Reserved. 3 4 © 2014 Husch Blackwell LLP. All Rights Reserved. Effective September 2012, the America Invents Act now allows anyone to challenge the validity of patent under the inter partes review process 5 6 © 2014 Husch Blackwell LLP. All Rights Reserved. What is an IPR? An IPR action permits a person, who is not the owner of a patent, to file a petition at the U.S. Patent Office to institute a review of a U.S. patent . Review is permitted only on issues raised under 35 U.S.C. § 102 or 103, and only on the basis of prior art patents or printed publications. 7 What is an IPR? But see, Blackberry Corp. v. Mobilemedia Ideas LLC, IPR2013-00036, Paper No. 65 (PTAB March 7, 2014) (proceeding terminated under § 112 for indefiniteness) 8 © 2014 Husch Blackwell LLP. All Rights Reserved. IPRs Filed Challenging the Validity of Dietary Supplement Patents Cyanotech Corp. v. Valensa Intl. et al., challenging patent relating to the use of astaxanthin to treat eye injury. Case pending. Gnosis v. Merck & Cie et al, challenging four patents relating to the use of a reduced folate to treat folate deficiencies and other conditions associated therewith. Gnosis prevailed on all 58 of 58 patent claims challenged in final written decision. Aker Biomarine v. Neptune Technologies, challenging patent relating to the use of krill oil containing omega-3 phospholipids. Case pending. Complete Nutrition Holdings v. Vireo Systems, Inc. et al., challenging patent related to the use of creatine HCl salt. Case pending. 9 Increasingly Popular USPTO statistics as of 7/2/14: Source: USPTO website 10 © 2014 Husch Blackwell LLP. All Rights Reserved. Source: USPTO website 11 Source: USPTO website 12 © 2014 Husch Blackwell LLP. All Rights Reserved. Potential Advantages To Using IPR to Challenge Validity of Patents • Evidence standard for proving invalidity: •IPR –preponderance of evidence • District Court – clear and convincing evidence 13 IPR Advantages Claim construction: PTAB interprets the claims of the patent “using the broadest reasonable construction in light of the specification of the patent.” See Office Patent Trial Practice Guide, 77 Fed. Reg. 48756, 48766 (Aug. 14, 2012); 37 CFR § 42.100(b). 14 © 2014 Husch Blackwell LLP. All Rights Reserved. IPR Advantages • Speed By statute, IPRs are to be completed within 18 months from initial filing vs. 2.5 years as the median time to a federal court patent trial Source: Pricewaterhouse Coopers 2013 patent lit. study 15 Speed puts a Lot of Pressure on the Patent Owner ̶ 21 days to file mandatory notices ̶ 3 months to file preliminary response (best chance before Board makes up its mind about the prima facie case) ̶ 2 more months until institution decision ̶ 6 more months for motion practice, discovery and filing case in chief plus desired amendments 16 © 2014 Husch Blackwell LLP. All Rights Reserved. Gnosis et al v. Merck & Cie et al. IPR2013-00116, -117, -118, -119 Petitions Final Trials Final oral on four written instituted arguments patents decisions June 2013 Mar. 2014 Jan. 2013 June 2014 17 IPR Advantages Bench qualifications: • MD and Ph.D., physiology and biophysics • Ph.D., cellular and molecular pharmacology • MS in pharmacology 18 © 2014 Husch Blackwell LLP. All Rights Reserved. IPR Advantages • Reduced costs and fees $400k to $900k for IPR vs. $970 k to $5.9 million for district court litigation Source: 2013 American Intellectual Property Law Association report on patent litigation 19 IPR Advantages • Good chance to stay District Court litigation • The Board will likely streamline prior art and invalidity theories • Limited document exchange 20 © 2014 Husch Blackwell LLP. All Rights Reserved. IPR Advantages • Only trial witnesses • No separate Markman briefing or hearing • Witnesses almost never at final oral argument • Cheaper way to attack validity 21 IPR Advantages • Increases Patent Owner incentive to settle • Board has discretion on whether to accept settlement • Termination by settlement likely accepted by Board if done before Petitioner reply brief, but not after 22 © 2014 Husch Blackwell LLP. All Rights Reserved. Potential Disadvantages to Petitioner • Litigation estoppel: Once the Board issues a “final written decision” on a patent claim, the petitioner may not assert invalidity of that same claim in district court or the ITC on any ground that the challenger raised or could have reasonably raised during the IPR. 35 U.S.C. § 315(e) 23 IPR Disadvantages Redundant grounds and estoppel. Most IPR boards have narrowed the petitioners’ prior art and invalidity theories claiming they are redundant. The Board then picks the prior art and theories it finds most supported. Estoppel as to other cited prior art and theories? 24 © 2014 Husch Blackwell LLP. All Rights Reserved. Redundancy Example Initial grounds asserted: 1. Obvious because of A in view of (B or C or D) and in further view of (E or F) 2. Obvious because of G in view of (F, H or I) and in further view of B 3. Obvious because of G in view of (J or K) and in further view of F Board institutes trial: Obvious because G in view of F only. All other references ruled redundant. 25 IPR Disadvantages Limited ability to develop your case after petition filed The briefs and the depositions are the “trial” Your initial petition is your case-in-chief 26 © 2014 Husch Blackwell LLP. All Rights Reserved. IPR Disadvantages • Initial declarations attached to petition are your only direct testimony • Initial petition is limited to 60 pages, including claim charts, 14 point font • Reply brief is limited to 15 pages • However, no limit on declarations 27 Initial Conference Provide list of possible motions to Board Be prepared to discuss calendar changes. Petitioner can add references, but not new grounds. 28 © 2014 Husch Blackwell LLP. All Rights Reserved. Motion Practice • Starts with email to Board requesting conference to discuss permission to file a motion • Email alone sometimes results in order issued 29 Motion Practice • Motion conference with Board. All three Judges present. Parties to provide court reporter if they want transcript. • Orders issued quickly 30 © 2014 Husch Blackwell LLP. All Rights Reserved. Preserving Evidence Objections • Send objections to other side within 5 days of service of declarations and exhibits. Other side has 10 days to serve evidence curing objection. • Exception: Patent Owner has 10 days after institution to object to evidence in petition • During deposition, evidentiary objections are to be a single word and cured, if possible, at the same time 31 Motion to Exclude Evidence Permitted without Board approval Only one motion allowed 15 page limit for motion Only for preserved objections Effective? 32 © 2014 Husch Blackwell LLP. All Rights Reserved. Demonstrative Exhibits • Due five days before argument • Limited to actual record • No new arguments or evidence permitted • Objections discouraged 33 Final Oral Argument • Must be requested • Usually limited to one hour per party for each patent • Related patents often combined into one argument 34 © 2014 Husch Blackwell LLP. All Rights Reserved. Final Argument • Petitioner first and reserves time for rebuttal • Patent Owner second with no sur-reply time, unless there is motion to amend filed 35 Final Argument • Board keeps strict time with green/red lights • A/V equipment provided by Board, if requested 36 © 2014 Husch Blackwell LLP. All Rights Reserved. Final Argument • Similar to appeal argument • Hot bench 37 Final Argument • Multiple counsel can argue for one party • Expect the unexpected 38 © 2014 Husch Blackwell LLP. All Rights Reserved. Which type of legal action do you think will be the most expensive to defend in 2014? POLL QUESTION Which class of dietary supplements will have the largest annual percentage increase in sales in 2014 over 2013? POLL QUESTION © 2014 Husch Blackwell LLP. All Rights Reserved. Dietary Supplements: An Overview of Types of Claims and Enforcement Activities Related to Those Claims Which agency has primary responsibility for regulating Dietary Supplement? POLL QUESTION © 2014 Husch Blackwell LLP. All Rights Reserved. Dietary Supplements, Generally . In 1994, Congress passed the Dietary Supplement Health and Education Act (DSHEA): ̶ This provided the FDA express authority to regulate dietary supplements ̶ Defined dietary supplements clearly for the first time ̶ Clearly intends that no manufacturer or distributor can market an adulterated or misbranded supplement ̶ It is the obligation of the manufacturer or distributor to ensure that the dietary supplement is safe (unlike a drug where the FDA makes that determination prior to market entry) Dietary Supplements, Generally . Dietary supplements are regulated by the FDA through its food center, the Center for Food Safety and Applied Nutrition (CFSAN) . Dietary supplements are defined as a product which is taken by mouth which contains a dietary ingredient intended to supplement the diet . Dietary supplements may contain these dietary ingredients - vitamins, minerals, herbs, botanicals, amino acids, enzymes and metabolites – or a dietary substance for use by man to supplement the diet by increasing the total dietary intake . Dietary supplements can be in the form of tablets, capsules, gel caps, liquids, powders or in some instances, “bar” form © 2014 Husch Blackwell LLP. All Rights Reserved. Market Entry for Dietary Supplements . Generally, dietary supplements do not need approval from the FDA before market entry provided that the supplement’s label does not contain a health claim and the product does not contain a new dietary ingredient . If a new dietary ingredient is involved, then a pre-market review of the safety data by the FDA is required .