Kyle Bass Does Not Seek to Uphold PTAB Decisions on Appeal
By: Tucker N. Terhufen and Tasha Francis
Over the past few years, Kyle Bass has sought to invalidate pharma patents that he believes should have never been granted, and that he claims artificially inflate the costs of certain drugs, through the inter partes review (“IPR”) process. Although Bass and his hedge fund may have made money by shorting the stocks of affected companies, he has claimed altruistic motivations. In a July 2015 interview with Joff Wild of Intellectual Asset Management, Bass said, “[w]e are seeking a merit-based review of patents that we think should never have been issued. We will not settle short of decision by the PTAB.” And for the most part, Bass has made good on this promise. Of 21 IPR petitions that were instituted by the PTAB, Bass has pursued 18 of them to final written decisions, with two others resulting in cancelled claims for other reasons, and one final decision expected in June. Apparently, Bass meant exactly what he said—he would not settle short of PTAB decisions—and he said nothing about Federal Circuit appeals. And as it turns out, Bass is not too concerned about upholding the PTAB’s invalidity decisions on Anacor Pharmaceuticals and NPS Pharmaceuticals patents recently appealed to the Federal Circuit.
In March of this year, Anacor Pharmaceuticals had three patents covering its toenail fungus treatment Kerydin® cancelled in IPR decisions from the PTAB. In April, Anacor appealed those decisions to the Federal Circuit for review, and Bass has not showed up. On May 17, 2017, the Federal Circuit issued an overdue notice to Bass’ Coalition for Affordable Drugs X (“CFAD X”) that there had been no Entry of Appearance, Certificate of Interest, or Docketing Statement filed. A week later, a second overdue notice was issued. Then, on May 31, an Order was filed removing the CFAD X from the caption and notifying the Director of the USPTO, Michelle Lee, that she had 30 days to notify the court whether she wished to intervene in the appeal. Basically, Kyle Bass has bowed out of this fight.
Bass similarly bowed out of the appeal of another case where he successfully invalidated claims of two NPS Pharmaceuticals patents covering Gattex®. NPS appealed to the Federal Circuit in December of 2017, and Bass never appeared for that appeal either. Interestingly, Director Lee declined to intervene in that case and NPS was able to file its brief with no opposition in March.
The good news for pharma companies losing to Bass at the PTAB is that they likely will be unopposed at the Federal Circuit. Apparently, Bass will pursue decisions through final written decision, just as he suggested he would, but will not go any further than that. That Kyle Bass is out of the fight does not mean that he did not make good on his promise regarding clearing the thicket of pharma patents, it remains to be seen whether the PTAB decisions will be upheld on appeal. However, it does show that he was only willing to invest so much time and money into the process of invalidating these types of patents. Because Director Lee elected not to intervene in the NPS appeal, it seems unlikely that the USPTO will intervene in the Anacor appeal. If it does not intervene, Anacor will be allowed to file its brief with no opposition briefing, and the Federal Circuit will make a decision based on the views of one party, just as it will do in the NPS appeal. This does not necessarily mean the PTAB will be overturned in either case, but it likely increases the chances that it will, meaning Bass’ claims to altruistic motivations may not hold up after all.
Bass filed his last IPR in March of 2016, and is waiting for a final written decision in one last IPR, expected in June. We will provide an update once that decision is issued, as well as updates on these appeals as they become available.