VirnetX Inc. v. The Mangrove Partners (Fed. Cir. 2018)

Biotechnology and pharmaceutical businesses and entrepreneurs place significant reliance interests in the validity and enforceability of their patents to develop innovative products that address unmet medical needs, increase crop yields, and provide real-world tools in the fight against disease, hunger, and pollution. The development of a new biopharmaceutical medicine, for example, requires about a decade of R&D, at an out of pocket cost exceeding $1.39 billion. DiMasi JA, Grabowski HG, Hansen RA. Innovation in the Pharmaceutical Industry: New Estimates of R&D Costs. J. Health Econ. 47 (2016), 20-33. New molecules entering human testing experience an approximately 90% failure rate on the path to regulatory approval. David W. Thomas, Justin Burns, John Audette, Adam Carroll, Corey Dow-Hygelund, Michael Hay, Clinical Development Success Rates 2006-2015, BIO Industry Analysis 2016.1 The assumption of such cost and business risk cannot be commercially justified absent patent protection. Without the promise of effective and predictable patent rights, such investments would be far more difficult—if not impossible—to undertake. Unlike typical products in, for example, the e-commerce, enterprise software, or mobile communications industries, a given biotechnology or pharmaceutical product tends to be protected by a relatively small number of patents. Thus, while the manufacturer of a smartphone may take comfort knowing it is impossible to tear down the thousands of patents that protect its flagship product, amici’s members can face the loss of their entire business if a few, or even potentially just one, of their key patents are invalidated. Amici’s members, therefore, have a strong interest in preventing unfairness or imbalance in post-grant proceedings at the Patent and Trademark Office (“PTO”), including instances where such proceedings are improperly instituted or multiple parties improperly joined to the detriment of the patent owner.