Hedge Fund Challenges Drug Patent With IPR Petition

Last week, an unconventional new player launched its first drug patent attack. The hedge fund Hayman Credes Master Fund, L.P., under the name Coalition For Affordable Drugs (ADROCA) LLC, filed an IPR petition against U.S. Pat. No. 8,663,685. (IPR2015-00720.) The patent, which covers the drug AMPYRA (dalfampridine), is owned by Acorda Therapeutics, Inc.

This is a first time a hedge fund has challenged a drug patent. Under the IPR procedure set up by the America Invents Act, any third party may challenge any issued patent. But ANDA litigation has remained largely the domain of branded and generic manufacturers, with few third parties interested in challenging drug patents. The Hayman hedge fund’s IPR, however, may signal a change this status quo.

Third party challenges to drug patents could have meaningful consequences for generics. For one, they may impact other cases involving the same patent. For example, Acorda is currently asserting its AMPYRA patent in ongoing lawsuits against Mylan, Actavis, Apotex, Aurobindo, Roxane, Teva, and others.   Acorda now must defend the AMPYRA patent not only in those cases, but also against the Hayman hedge fund’s IPR. And the hedge fund has an advantage over the generics: as a non-practicing entity, it can make its invalidity arguments in the IPR unconstrained by possible estoppel effects in a district court. If the Hayman hedge fund invalidates the AMPYRA patent, it could moot (at least in part) the ongoing lawsuits against generic manufacturers.

It remains to be seen if third party actors will challenge drug patents in significant numbers. Nevertheless, it is a trend that could be disruptive and bears watching.