In Coalition for Affordable Drugs VI, LLC v. Celgene Corp., a six-judge panel denied a Patent Owner’s Motion for Sanctions against a Petitioner allegedly using IPRs to attack the Patent Owner’s primary product lines in an apparent attempt to deflate stock prices and short-sell the Patent Owner’s stock. IPR2015-01092, 01096, 01102, 01103, and 01169 (PTAB Sept. 25, 2015).
The Patent Owner moved for sanctions requesting dismissal of the Petitioner’s Petitions for abusing the IPR process, arguing that (1) the Petitioner did not have a competitive interest in the challenged patents or technology, and (2) the Petitioner was using the stigma of having an IPR filed against a patent owner to profit from short-selling the Patent Owner’s stock.
The Board declined to impose sanctions on the Petitioner, holding that the motives of a petitioner are not relevant to the true goals of the AIA and IPRs: “a more efficient and streamlined patent system that improve[s] patent quality, while at the same time limiting unnecessary and counterproductive litigation costs.” Accordingly, meritorious IPR petitions, regardless of a profit-only motive, serve the goals of the AIA.
Interestingly, the Board had invited the Patent Owner to propose a standard for abuse of process and the necessary burden of proof in the PTAB. Instead of defining abuse of process in its ruling, the board merely held that “an economic motive for challenging a patent claim does not itself raise abuse of process issues,” while noting that short-selling is legal and regulated. As for the burden of proof, the Board stated that the movant carries the burden of proof by at least a preponderance of the evidence, and the Patent Owner’s motion did not meet that standard.
While this decision does not foreclose the possibility of sanctions for abuse of process in the PTAB, it certainly limits the circumstances where sanctions will be imposed. More significantly, this decision appears to pave a path for a new form of monetization in the patent system. For Patent Owners, the best defense is perhaps to ensure that patent applications are skillfully prosecuted—especially applications for patents protecting critical product lines.