The U.S. Supreme Court delivered a blow to the nation’s pharmaceutical industry when it upheld the constitutionality of Inter Partes Review (IPR).
The U.S. Supreme Court delivered a blow to the nation’s pharmaceutical industry when it upheld the constitutionality of Inter Partes Review (IPR).
In its ruling the nation’s highest court said IPR is legal and does not violate Article III of the U.S. Constitution, which puts the authority to decide legal arguments in the hands of the judicial branch, or the 7th Amendment, the right to a jury trial. Supreme Court Justices ruled 7 to 2 in favor of the IPR process. The high court said Article III was not violated because Congress has “significant latitude” in assigning adjudication of public rights to “entities other than Article III courts.” The Court said IPR review fall “squarely within the public-rights doctrine.” In delivering the opinion of the court Justice Clarence Thomas said the court has recognized that the decision to grant a patent is a “matter involving public rights.”
Chief Justice John Roberts and Justice Neil Gorsuch both dissented. Writing the dissenting opinion Gorsuch said that until recently patents were viewed as a personal right or personal property, such as a home or farm that could only be contested in a court. The Supreme Court made the ruling in the Oil States Energy Services, LLC v. Greene’s Energy Group, LLC case.
The ruling is especially important to the pharmaceutical industry as companies have opposed the IPR process since it was established in 2011. Much like the dissenting Justices, the pharma industry has seen patents as private property that could only be revoked by a court’s decision. Under the review process, the U.S. Patent and Trade Board has the right to revisit whether or not patents are still eligible. Since the IPR process was established Reuters said approximately 80 patents have been partially or totally canceled as a result of the PTB’s decision. As FiercePharma noted in its coverage of the Supreme Court case and its impact on the pharma industry, the IPR was instituted in order to be “a cheaper, easier alternative to lawsuits to strike flawed patents.” Opponents of the IPR process criticized it as an unconstitutional attack on property rights outside of the court system.
After the IPR process was developed hedge fund investor Kyle Bass began to challenge pharmaceutical patents. His goal, as was reported at the time, was to open the door for more generics in order to lower the price of prescriptions. Bass was criticized for short-selling the stocks of the companies he challenged, Consumer Affairs reported. His IPR challenges proved to be unsuccessful.
Nicole Longo, a spokesperson for the pharma industry trade group PhRMA, told FiercePharma that the decision was “narrowly tailored.” In her statement, she said the court found that the IPR process was constitutional, but that did not mean it was “efficient or fair.”
Companies in the industry have gone to great lengths to avoid IPR challenges. Perhaps most notably was Allergan’s attempt to circumvent patent laws by selling some of the patents of the blockbuster drug Restasis to the Saint Regis Mohawk Tribe in New York. The company made the move in September as part of an attempt to take advantage of the Mohawk tribe having been recognized as a sovereign government. Allergan hoped the tribe’s sovereign immunity would shield the drug from IPR challenges to its patents on Restasis.
