April 8, 2015

Pharmaceutical Filings on the Upswing as Power of IPR Becomes More Well-Known

By Matthew L. Cutler, Principal

The Wall Street Journal has taken note of recent IPR filings by hedge fund manager Kyle Bass against certain pharmaceutical patent portfolios. Our Matt Cutler was quoted in one of the articles. The other can be found HERE.

Mr. Bass seems to be an early pioneer in realizing the power of inter partes review, and has opened the eyes of investors in the pharma industry. While Mr. Bass suggests that his actions are intended to open up the pharma industry to more competition by eliminating bad patents, today’s WSJ article quotes sources that believe his motives are more dubious – creating negative news for certain pharma companies that help with short sale bets against those companies.

Whether his bets are long or short, however, Mr. Bass has hit on a strategy that recognizes the strong, negative impact IPR has had to date on pharmaceutical patents. Our data shows that 87% of pharma patent claims that are subject to an IPR trial are ultimately deemed unpatentable. This is among the highest claim kill rates for any technology area.

As a result, we expect pharma-related IPR filings to continue to grow, and not just from hedge fund managers looking to make a quick buck.