There is no standing or lack of mootness requirement to challenge issued patent claims by filing a petition for inter partes review (IPR) in the U.S. Patent Office. Anyone other than the patent owner (and not otherwise barred by the estoppel provisions) can file a petition. But thanks to recent decisions by the U.S. Court of Appeals for the Federal Circuit (CAFC), we have clarity that both requirements must be met to appeal an adverse final written decision issued during that IPR, and we also have some guidance as to how these requirements will be determined in such cases.

In particular, last month's precedential decision by the CAFC in the case of Momenta Pharmaceuticals v. Bristol-Myers Squibb (No. 2017-1694, Feb. 7, 2019) provides a clear line between the statutory right of any party other than the patent owner (and not otherwise barred by the estoppel provisions) to file a petition for IPR, and the additional Article III requirements to appeal an adverse final decision resulting from that proceeding. Relying on this distinction, the CAFC dismissed an appeal―from biotech company Momenta―of an IPR final written decision sustaining the patentability of Bristol-Myers Squibb's claims covering its Orencia® (abatacept) biologic product. Because of evidence that Momenta had abandoned its development of an Orencia® biosimilar and no longer had “concrete plans” in this regard, the CAFC found that Momenta's IPR appeal was barred by a lack of standing and for mootness.

The challenged claims in the Momenta case are drawn to formulations of an immunosuppressive protein molecule (CTLA4Ig) used in treatment of immune system disorders such as rheumatoid arthritis. In 2015, Momenta was in the process of developing a competing abatacept biosimilar product and petitioned for IPR arguing that BMS's claims were obvious. The USPTO's Patent Trial and Appeal Board (PTAB) instituted the IPR, but ultimately issued a final decision upholding the patentability of the claims. Momenta appealed to the CAFC.

Rather than ruling on the merits of Momenta's patent challenge, the CAFC dismissed Momenta's appeal out of hand “for absence of standing/jurisdiction and for mootness” after it became apparent that Momenta's proposed product had failed clinical trials and that Momenta had terminated its development of the biosimilar. In particular, the CAFC held that “Momenta does not have standing to invoke federal appellant jurisdiction, and the appeal is mooted by Momenta's discontinuance of any potentially infringing activity.”

In a similar appeal decided just a month prior to the new Momenta decision (Amerigen Pharmaceuticals v. UCB Pharma GmBH, 913 F.3d 1076 (2019)), the CAFC held that appellant Amerigen, a pharmaceutical company seeking approval of a generic version of UCB's Toviaz® product, did indeed have standing to appeal an adverse IPR decision even though it did not yet have a product on the market. At the outset of its decision in Amerigen, the CAFC acknowledged that whilst it has jurisdiction to review final PTAB decisions, an appellant must nevertheless meet the “irreducible constitutional minimum of standing” (Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992)) even if there was no such standing requirement to appear before the administrative agency. Here, the court held that Amerigen had standing because the launch of its tentatively approved drug was blocked by the patent in suit (due to listing of that patent in the FDA's Orange Book entry for Toviaz®), and thus invalidation of that patent would “advance launch” of Amerigen's drug, thereby giving Amerigen a “substantial, concrete stake” in the matter.

In the subsequent Momenta case, however, the CAFC found no such basis for standing. Momenta “initially stressed that it had spent millions of dollars in its development of an Orencia® biosimilar.” However, Momenta subsequently terminated “all potentially infringing activity”, and therefore, citing Lujan, the CAFC found that Momenta “has not shown 'an invasion of a legally protected interest' that is 'actual or imminent, not conjectural or hypothetical'.” In previous cases where the party challenging a patent did not yet have a product on the market, the CAFC found a sufficient basis for standing when the appellant had “concrete plans” for activity that created a substantial risk of future infringement. See, e.g., E.I. DuPont de Nemours v. Synvina, 904 F.3d 996 (Fed. Cir. 2018) where standing was found to exist because appellant had a “demonstration plant” capable of infringing the patent in suit―including very specific technical plans―that, taken together, “would implicate” the claimed chemical process.  On this basis, the court in DuPont held that appellant had “concrete plans” for present and future activity that created “a substantial risk of future infringement.” (DuPont at 1005, citing JTEKT v. GKN Automotive, 898 F.3d 1217 (Fed. Cir. 2018))  Following the emphasis in such cases on whether or not there were “concrete plans” currently in place, the Court in Momenta found that despite all of the company's prior activity, “Momenta has now made clear that no concrete plans are afoot” and thus, in view of its abandonment of development of a competing product, Momenta no longer has a “legally protected interest” in the validity of the patent at issue.

In an effort to show a sufficient “legally protected interest,” Momenta argued that “it might at some future time receive a royalty from Mylan, if Mylan should produce an Orencia® biosimilar.” However, the CAFC responded to this argument by citing Clapper v. Amnesty International USA, 568 U.S. 398 (2013) (a case where speculation about future “unfettered choices” of third parties was insufficient to support standing) and held that “there is no support for such an argument in precedent.”

Momenta additionally argued that it was injured by the estoppel provision (35 U.S.C. Section 315(e)), which would preclude it in any subsequent litigation from asserting certain invalidity defenses against BMS's patent. But the CAFC rejected that argument as well, noting that “estoppel of Momenta is irrelevant now that Momenta has 'exited' its development of [the competing product]” and that estoppel “cannot constitute an injury-in-fact when Momenta 'is not engaged in any activity that would give rise to a possible infringement suit'.”

The CAFC did not rely on lack of standing alone in denying Momenta's appeal; the court additionally took up the issue of mootness. The court acknowledged at the outset that “standing and mootness may not be coextensive in all cases” (a finding of mootness being predicated on the “requisite interest” continuing throughout the litigation's existence). But the court nevertheless ruled that in this case that “the cessation of potential infringement means that Momenta no longer has the potential for injury, thereby mooting the inquiry.”

In Europe, opposition proceedings at the European Patent Office, which have been available for several decades to parties wanting to challenge granted patents (regardless of specific commercial interest), were often cited favorably during efforts here in the United States to establish IPR proceedings in the U.S. Patent Office (an effort that finally came to fruition in 2011 under the America Invents Act). Although there are many differences between European oppositions and IPRs, it is interesting to note that first instance decisions in European oppositions (issued by the Opposition Division) are always appealable―as of right―to the EPO's Technical Board of Appeal―regardless whether or not the party challenging the patent claims has a demonstrable commercial interest or other such actual dispute or controversy.

By contrast, in rendering its decisions in Momenta and related cases, the CAFC burnishes a clear distinction between, on the one hand, the ability to file an IPR petition at the PTAB, and, on the other hand, the right to appeal an adverse IPR decision, where requirements as to standing and the existence of “actual cases or controversies” come into play. In other words, the right to challenge patentability at the agency level does not automatically extend to federal court jurisdiction on appeal. Thus, these decisions will potentially affect not only a pharmaceutical company such as Momenta that abandons its efforts to develop a competing product, but also so-called “nonpracticing entities” such as hedge funds and other venture groups that have from time to time filed their own IPR petitions―notably in the pharmaceutical sector.

And in the case of pharmaceutical and biotech companies, the Momenta decision leaves open the following question: Short of outright abandonment of a competing program, how much ongoing, relevant commercial interest or “concrete plans” would be necessary to avoid a finding of lack of standing or mootness on appeal? For example, would the result be different if a clinical trial for a planned biosimilar failed, but the company sponsoring the failed biosimilar could show that they were seriously considering pre-clinical development of a slightly different biosimilar product that would still be covered by the claims at issue?

James Gould, of RatnerPrestia, focuses his practice on the pharmaceutical and biotech sectors and joined the firm after 19 years with Merck & Co./Schering-Plough, most recently serving as a legal director at Merck. At the firm, he co-chairs the pharmaceutical, biopharma and life sciences Industry group and recently served as an expert on patent issues in major federal court litigation in the biopharma sector.