I seem to have set off all kinds of interest with that Ariad patent item from the other day (thanks to the folks from the Dow Jones news wire for citing me as a source, by the way). I'm not sure when the reexamination actually showed up on the USPTO site, but I was alerted to it this week by an email from a regular reader.
And that when-did-people-know question is an interesting one. Some of the fans of Ariad's stock have been claiming that this is all old stuff, that the company has already disclosed this information, no news here, already priced in, etc. Ariad's management seems to be taking roughly the same tack, according to Peter Loftus at Dow Jones:
"An Ariad spokeswoman referred inquiries to comments made by company executives on a conference call in August. "This action is a routine and expected step in the re-examination procedure and does not represent the final ruling," Ariad Chief Executive Harvey Berger said on the call, according to a transcript. "The PTO action invites a response from the patentees which will be filed in due course." He also said the patent remains valid and enforceable during the re-examination process."
Berger is right that this isn't the final ruling, of course. I believe that Ariad has one shot at an appeal through the Patent Office, though, before this becomes final. Since early June, they've also tried to stop the whole thing through legal action (a request to enjoin the PTO from continuing the reexamination, and a request for summary judgment on their complaint) in the U.S. District Court (Eastern Virginia). A hearing was set for September 1, and a dollar or so spent this evening on the PACER document retrieval system tells me that the motion was argued on that day, but no court order has been recorded yet.
So, are Ariad's fans correct that all this is old news? If you go back to Ariad's most recent 10-Q form, you find the whole painful topic glossed over a bit on page 23:
As a result of the PTO orders described above, Lilly's ex parte request has been merged into a single action with the ex parte request filed on December 2, 2005 (the "Merged Requests"). The Merged Requests question the patentability of certain claims of the '516 Patent by newly cited references which (i) either inherently or expressly disclose the use of a variety of prior art compounds as reducing NF-?B activity and resulting gene expression, or (ii) are directed to the use of oligonucleotides having an NF-?B binding site for reduction of NF-?B activity. The PTO issued a first office action affirming the Merged Requests on August 2, 2006.
And that's that. You have to go to the PTO to find out that "affirming the merged requests" means "agreeing with them wholeheartedly, to the tune of throwing out most of the patent's claims, including all the ones that were used as the basis for the lawsuit". (See the next post for the details). Despite this oblique acknowledgement of the PTO's decision, the rest of the 10-Q form carries on as if nothing had happened. Referring to the uncertainty surrounding the patent, the quarterly report cites:
. . .The timing and ultimate outcome of Plaintiff's motion for summary judgment enjoining the PTO from proceeding with the reexamination of the Merged Requests, and the consequent reexamination of the Merged Requests by the PTO if the motion is denied . . ."
And says that:
Although we have prevailed at trial in the Lilly litigation, the damages we have been awarded by the jury may be eliminated or limited by an adverse finding upon appeal or in the event that the claims of the '516 Patent are invalidated by the PTO.
Emphasis added in both cases. Now, I'm sure that legally Ariad is within its rights to talk this way, because the reexamination process isn't finished until they've had a right to reply and the PTO has issued its final action. But you wouldn't know from reading this that large sections of their patent had already been ripped out by the seams, and that the task before Ariad now was to make this go away rather than to keep it from happening in the first place.