- Since Feburary, Kyle Bass, founder and managing partner of Hayman Capital Management, has requested that the U.S. Patent and Trademark Office (USPTO) review 31 drug-related patents.
- Last week, the USPTO said that Bass and the Coalition for Affordable Drugs has the right to challenge drug patents—despite arguments from biotech giant Celgene and others that his tactics amount to abusing and gaming the system.
- Detractors say that Bass is attempting to invalidate patents in order to short sell or cause the stock to depreciate so that Hayman can buy it at a cheaper price, and that Bass should be sanctioned. However, a spokesperson for Hayman has suggested that challenging drug patents can help control overheated drug prices.
Because of a law that went into effect in 2012, the America Invents Act, which is supposed to make it easier to elimiate poor quality patents, Kyle Bass and others with similar interests have the right to challenge patents.
But Celgene and other biopharma companies—including Acorda Therapeutics, which was a target for Bass earlier this year—are pushing back. Unfortunately for them, the USPTO has decided against them, and in the process has also asserted that short-selling stocks is not illegal and that neither is having a profit motive when attempting to invalidate a patent through the patent review process.
It looks like Kyle Bass won this round. But biopharma won't be taking the defeat lying down.
"It is disappointing that the PTO’s Patent Trial and Appeal Board (PTAB) failed to properly assess the important issues raised by this motion," wrote the trade group BIO in a statement. "This cursory and erroneous ruling reinforces the immediate need for Congress and the PTO leadership to take clear and decisive action to prevent any further misuse and abuse of the Inter Partes Review process by hedge funds, extortionists and other questionable entities seeking to undermine it for their own financial benefit."
Celgene may decide to appeal the ruling and take this issue to federal court.