(FirstmentiononTwitter)

Wed07/29/201506:00AM

Celgenerespondsto2of4KyleBass'IPRs:UnderNew
Jerseylaw(whereCelgeneisheadquartered),thisconduct
amountstoextortion.
RelevantDocuments:
720PreliminaryResponse
501PreliminaryResponse
MotionForSanctions
ExtortionEmail

Celgene has filed Preliminary Responses, and Motions For

Sanctions in which the company details the evolution of the
Hayman IPR strategy against it. Specifically, Celgenes
Preliminary Responses collectively allege (i) that the
Petitioner, Coalition For Affordable Drugs (CFAD), relies
heavily on an expert declaration that is entitled to little or no
weight because the declarant is not a person of ordinary skill
in the art (POSA), and because the declaration merely
reiterates CFADs conclusory arguments, (ii) that CFAD
failed to show that its references constitute prior art, (iii) that

CFADs obviousness arguments fail on the merits because

none of the cited references disclose, teach, or suggest all
elements of the challenged claims, (iv) that CFADs petition
is an improper use of the IPR proceedings creating
unwarranted burdens for both patent owners and the
[PTAB], and (v) that the Petition should be denied because it
fails to name all real-parties-in-interest (RPI), which is a
threshold requirement for an IPR.
Celgenes Motion For Sanctions detail the evolution of CFADs
IPR strategy against it. According to Celgene, in January of
2014 notorious patent troll Erich Spangenberg sent a cryptic
email with attached draft IPRs (and supporting expert
declarations) against the two Celgene patents in the instant
IPR petitions. The email was sent to Celgenes counsel who
is known for using IPRs to invalidate weak patents, and is
also a signatory on the Motion. The email is presented
below:

Celgenes Motion then alleges in a footnote:

Under New Jersey law (where Celgene is
headquartered), this conduct amounts to

extortion. See N.J. Stat. 2C:20-5(g); State v.

Roth, 289 N.J. Super 152 (1996)(finding extortion
where defendants threat was solely calculated to
harm victim, and the only benefit to defendant
was payment to make him go away).
Celgene ignored the threat in January 2014, but
received another threat that it ignored in July 2104 from
an attorney representing the Initiative for Responsibility
in Drug Pricing (IRDP), with nearly the same
draft petitions and expert declarations as in January.
Shortly thereafter, Erich Spangenberg met and
partnered with Kyle Bass where they formed fifteen
shell companies one including CFAD for the sole
purpose of filing and publicizing [IPR] patent
challenges against pharmaceutical companies while
also betting against their shares. Soon, Kyle Bass was
pitching wealthy individuals and institutions to invest in
a dedicated fund that would bet against, or short, the
shares of [target] companies . . . and wager on rivals
that could benefit. Concurrently, Bass claimed publicly
that his IPRs are designed to support generic drug entry
and lower drug prices for consumers. Then, earlier this
year IPRs of very similar subject matter as the draft
petitions and expert declarations from the two recent
threats were filed against Celgene.
Celgenes Motion warned that [i]f the Board
permits this strategy to continue, it will be inundated
with similar petitions, and no public company that relies
on patents to protect its innovations will be safe from
threats or unnecessary petitions from for-profit
organizations misusing IPRs as investment strategies.
The Motion also asserts that [t]he post-grant
procedure [was] designed to allow parties to challenge
a granted patent through a[n] expeditious and less
costly alternative to litigation.

The American Invents Act (AIA) did not introduce IPRs to

provide hedge funds (who have no litigable patent
claim) with a vehicle to profit by affecting a public
companys stock price by taking advantage of the
stigma associated with IPRs.
Lastly, the Motion asserts that the PTAB should dismiss
the IPRs for their abuse and improper use of these
proceedings. To this end, among other arguments, the
Motion notes, [i]ndeed, if altruism meant anything to
the RPI, then they would have filed their threatened
IPRs in 2014 instead of demanding payment, and,
[t]ellingly, the RPI have only filed IPRs against patents
owned by public companies [against whom they could
short].

Celgene will file Preliminary Responses and Motion For

Sanctions for the remaining two IPRs on Thursday July 30 th.
CFAD has 10 business days to respond. The PTAB will make
a decision on the Motion For Sanctions, and whether or not
to institute the four proceedings within three months
(September or October 2015) of the optional Preliminary
Response due date (late July 2015).
Note: There are several other Bass targeted patents from
other companies early in the IPR process. Any changes to
those proceedings may impact and provide at least a
moderate harbinger to the instant IPRs.

More Relevant Documents (Proceedings):

IPR2015-01092 (Patent 6,045,501)
IPR2015-01103 (Patent 6,315,720)
Petes software can monitor these proceedings docket
updates as frequently as desired at:
https://ptabtrials.uspto.gov/prweb/PRServlet/HcI5xOSeX_yQR
YZAnTXXCg%5B%5B*/!STANDARD?