Patent Baristas

News of patent anarchy are ringing throughout the land citing the troubles with the U.S. Patent and Trademark Office (USPTO) both for its long processing times and cries that it issues too many “unworthy” patents, which fall into the hands of the evil Patent Trolls who hold up legitimate businesses for ransom.

While the troll of lore lived under a bridge and extorted money from travellers, so-called “patent trolls” send cease-and-desist letters warning companies that their products are infringing on patents, and asking for payment. (Ironically, Peter Detkin, former assistant general counsel at Intel Corp. credited with coining this term now works for Intellectual Ventures LLC, a company that has been spending millions to buy up patents.)

It is clear that the USPTO believes that applicants should shoulder some blame for the its own troubles, which include a backlog of one million pending patents and record pendency times. While this seems a little like Disneyland hiring one person to work the front gate and then blaming the visitors for the long line to get in, the USPTO is certainly not the only one trumpeting patent woes.

BusinessWeek took up the issue recently in its article The Patent Epidemic claiming overpatenting is wasting companies’ money and slowing the development of new products. The article notes that in a recent Supreme Court case, two dozen intellectual-property law professors have filed amicus briefs claiming that massive overpatenting “creates an unnecessary drag on innovation,” forcing companies to redesign their products, pony up license fees for technology that should be free, and even deter some research altogether. Sounds good but it would seem that one person’s “massive overpatenting” is another’s “claim to rightful ownership.”

BW also points to “the evisceration of the obviousness test by the Federal Circuit Court of Appeals” as one of the primary causes of evil patenting. That, it is claimed, has led to a flood of low-quality patents being granted, and made it difficult to challenge a patent in court on the ground of obviousness.

In the case KSR International Co v Teleflex Inc. (04-1350), the Court will hear whether the Federal Circuit erred in holding that a claimed invention cannot be held “obvious”, and thus unpatentable under 35 USC § 103(a), in the absence of some proven “teaching, suggestion, or motivation that would have led a person of ordinary skill in the art to combine the relevant prior art teachings in the manner claimed.”

Defenders of the rule say use of hindsight can be prevented only by requiring documented evidence that an idea was easily available. Others note that new technology emerges all the time that isn’t found in published journal. Either way, the interest in patents stems not from ineffective patent rules but heightened financial stakes as we move into a knowledge economy. In a land where ideas are king, great battles will be fought to take the crown.

The USPTO has proposed rules to limit the number of continuing, CIP and RCE applications that can be filed by patent applicants. See here for the notice.

Why have continuations become the current whipping boy for the Patent Office? The Notices states that “current practice allows an applicant to generate an unlimited string of continued examination filings” and that “the exchange between examiners and applicants becomes less beneficial and suffers from diminishing returns as each of the second and subsequent continuing applications or requests for continued examination in a series is filed.”

The Notice continually mentions the “burdens imposed” on the USPTO but never mentions all the fees it collects. The USPTO claims that this would “ease the burden of examining multiple applications that have the same effective filing date, overlapping disclosure, a common inventor, and common assignee by requiring that all patentably indistinct claims in such applications be submitted in a single application.” Really? Wouldn’t each related application be easier to examine? What about the fact that the patentee is PAYING for the examination of these multiple applications?

The USPTO believes that Applicants should not rely on an unlimited number of continued examination filings to “correct deficiencies in the claims and disclosure that applicant or applicant’s representative have not adequately reviewed.” What about the need to “correct deficiencies” in the examination and response by the Examiner because the specification has not been adequately reviewed and understood?

Clearly, this has not been thought through very well. While the Notice claims that the current unrestricted continued examination practice “does not provide adequate incentives to assure that the exchanges between an applicant and the examiner during the examination process are efficient,” this is precisely what the earlier change in term to 20 years from filing accomplishes. The loss of patent term combined with the fees imposed with continuing practice provides more than enough incentive for expedited prosecution. This would seem to be a solution without a problem.

Proposed § 1.78(a)(3) defines a ‘‘divisional application’’ as a continuing application as defined in § 1.78(a)(1) that discloses and claims only an invention or inventions that were disclosed and claimed in the prior-filed application. This would make it impossible to bring in claims not presented as filed earlier.

Proposed § 1.78(f)(1) provides that if a nonprovisional application has a filing date that is the same as or within two months of the filing date of one or more other pending nonprovisional applications or patents, taking into account any filing date for which a benefit is sought under title 35, United States Code, names at least one inventor in common with the one or more other pending nonprovisional applications or patents, and is owned by the same person, or subject to an obligation of assignment to the same person, as the one or more other pending nonprovisional applications or patents, the applicant must identify each such other application or patent by application number (i.e., series code and serial number) and patent number (if applicable).

Note that proposed Rule § 1.78(f)(2) provides that for applications that fall under set proposed § 1.78(f)(1) above, there will be a rebuttable presumption that the nonprovisional application contains at least one claim that is not patentably distinct from at least one of the claims in the one or more other pending or patented nonprovisional applications. In that case, the applicant in the nonprovisional application must either: (1) rebut this presumption by explaining to the satisfaction of the Director how the application contains only claims that are patentably distinct from the claims in each of such other pending applications or patents; or (2) submit a terminal disclaimer in accordance with § 1.321(c). The USPTO would also have the authority to require elimination of the patentably indistinct claims from the second application under proposed Rule 1.78(f)(3).

The USPTO has also proposed rules to limit the examination of each application to 10 designated claims or less. See here for the notice.

Although this would put U.S. practice more in line with the EPO, these proposed rules do not appear to be favorable to patent applicants or even consistent with other recent USPTO fee changes.

The USPTO has already raised the fees that it charges for each independent claim in excess of three in each application to encourage applicants to file no more than three independent claims in each application (with the understanding that additional independent claims required to cover a complex or multi-faceted invention may be presented in separately filed applications). Under the new rules, applicants would risk having the number of total applications containing the additional independent claims limited by the USPTO if all of the claims are not presented in a single original application.

The patent community is invited to submit their comments directly to the USPTO by May 3, 2006. If you know the impetus behind this proposal, send me a note. I’d love to hear your opinions.

“What To Do About Bad Patents” under Briefly Noted by Profs. Lemley, Lichtman and Sampat (the Profs.) bemoans today’s patents, and then asks whether past problems provide a formula for new solutions.

In their equation, opposing values are placed on either side of the equal sign. (If not for our talent of scaling justice, and equating one side to the other, then what use are we lawyers). Balance first an Under-budgeted Examining Corps against a Patent Office that over-budgeting cannot cure. Equate then, as a negative and positive, the Statutory Presumption of Validity with a presumption that the statutory examination of 21st Century inventions results in invalid and useless patents. Counterweight next that, most patents are worthless to the economy, but that a lot of unworthy inventions can kill commerce in a new economy.

What the Profs. describe, however, does not balance the equation in favor of either set of factors, nor lead to the conclusions that they promote. It does makes sense to say that the patent system, including both applicants’ counsel and the examiners, needs to be driven in new directions. While that will not be free of costs, it is correct to say that piling money will not of itself improve the PTO (a new computers won’t make you smarter/better). Next, useless patents impose no novel or unique threat to the system or the economy, and so, keep considering them useless. If I can patent an invention comprising drinking straws in combination with nostrils, then, yawn.

Apart from that, I see things differently than the Profs. The presumption of validity is statutory, so give it some reverence. The presumption should be immutable, with its exceptions, or it just should be eliminated (to paraphrase the Profs., it’s either “gold” or “wooden”). To have a sliding scale presumption eliminates it, or, that sliding feature will work as well as the $9.95 slider-ring computer for your wristwatch. It’s moveable, but you never sure how far it goes. Next, the folks in our examining corps are smart and well supervised, so why cast them as willing/able only to churn out piece-work quality on a budget.

They deserve a lot of love too, what with having to deal with pricey cagey patent lawyers all day. Imagine that you are a young engineer, put in the cross-hairs of some huge firm of patent attorneys, arguing over whether some lame reference they cited, when combined with what you found, renders some dependent claim obvious – and do it 9 times every day with 55 minutes for lunch. Then, having granted allowance to those counsel and clients, they go off to their club with IP in the title, where they complain about the sorry state of the examining corps. But, more importantly, whether the Patent Office has been persuaded, in the past, to grant patents on the building blocks of some web browser, concerns the past and problems that may suggests no future plan. It can be too late to worry about some things in the past. Those patents were granted, are presumed valid, and now, only a court of law might “identify” those as “important” in terms of their validity and scope.

Overall, I do not find the causes or afflictions that the Profs. list, to be causative of future concerns or weighty measures of any solution. Those factors are contradistinct in the article. Money won’t solve “the problem,” problems put an “implicit tax on consumers,” but charging willing applicants more, to “gold plate” their patents, promotes “important” patents, and to do otherwise enables granting non-useless patents on “now-familiar concepts” which may render those “economically significant,” thereby “thwarting truly innovative” second-comers. [Apology for, without good grounds, disassembling the Profs. plainer points]. That being said, the Profs. embraced many timely views and reflections on the patent system, but to find a clear new direction for the patent industry may require foresight, not retrospect.

Go then to the Profs. most creditable conclusion of giving the Patent Office the “information” needed to truly examine patents. Try to reverse engineer from that a means to provide the information needed to improve the patent system. Take as a comparable, case differentiation in the courts. If an applicant does not provide three references that he avers are the closest prior art of which he and his agents are aware, then the Patent Office could cause that application to get special review. Also warranting this review are claims around ‘system building’ blocks. Timely, detailed review would provoke a more in-depth (but not a longer) examination. Files sent for special review would require the applicant to prove that this “important” invention is patentable and is claimed explicitly, and could generally require greater submissions by the applicant. Let the Patent Office ‘gold-plate’ applications, instead of getting rich applicants to pay extra for a genu-wine “gold-plated” presumption of validity (and other indulgences).

Presently, applicants only have to deny invalidity, and do not have to prove anything, e.g., ‘neither reference A nor reference B teaches the combination of straws and nostrils.’ Instead of affirmation-by-denial, special review could make applicants show affirmatively that their invention is novel, or that a diligent search found no close references. Also, applicants too may need to state in the file wrapper that the invention has been claimed no more broadly than proper. Applicants could purchase special review too, and may desire that scrutiny, in exchange for outer time limits on that review. This differentiation would work, just like in court, where the simple case gets little supervision and requires basic submissions, and those complex cases with “important” issues are scheduled for additional time and added efforts.

Today’s post comes from Guest Barista C. Lee Thomason, a registered patent attorney and IP litigator at Frost Brown Todd’s Louisville office.

Evan Schaeffer’s Legal Underground hosts Blawg Review #38 this week with a timely theme: resolutions. His list of Ten New Year’s Resolutions for Bloggers was born from his recent talk at BlawgThink 2005 in Chicago.

We most appreciated Resolution 1: Mix It Up. This is one we want to strive for in 2006. Even though Patent Baristas is narrowly focused in the bioscience/pharma IP field, we’ll try to follow a mix-it-up philosophy.

The remaining Resolutions are:

We also enjoyed learning about the Online Guide to Mediation and the seasonal post, “Jingle Bell Hack: A Hacker Takes on Santa.”

Check out the details of Evan’s Resolutions here.

In the U.S. Court of Appeals for the Federal Circuit case Perricone v. Medicis Pharm. Corp. (case 05-1022, 05-1023), decided December 20, 2005, summary judgment of invalidity and non-infringement on claims in a patent infringement case involving methods of treating sunburns and skin damage was reversed because the district court erred in its anticipation analysis with respect to certain claims noting that sunburn is not a species of the genus of skin disorders. The Federal Circuit held that skin sunburn is not analogous to skin surfaces generally and that there is a distinction between topical application to skin for the purpose of avoiding sunburn, and topical application to skin sunburn.

Earlier, Dr. Nicholas Perricone sued Medicis Pharmaceutical Corp, alleging that Medicis infringed its patents with its prescription skin depigmenters. On summary judgment, the United States District Court for the District of Connecticut determined that all of the asserted claims of Dr. Perricone’s U.S. Patent Nos. 5,409,693 (the ’693 patent) and 5,574,063 (the ’063 patent) were invalid and, as to the ’693 patent, not infringed. Perricone v. Medicis Pharm. Corp., 267 F. Supp. 2d 229 (D. Conn. 2003). The court affirmed the trial court’s decisions of anticipation based on inherency for the remaining claims of the ’693 and ’063 patents and its double-patenting analysis with respect to claims 9, 11-13, 16, 18, and 19 of the ’063 patent.

The district court noted that “sunburn is a species of the genus of skin disorders” covered by the ’063 patent and concluded that the claimed effective amount in the ’063 patent falls within the ranges of effective amounts in the ’693 patent.

Dr. Perricone’s patents claim methods of treating or preventing sunburns (the ’693 patent) and methods of treating skin damage or disorders (the ’063 patent). Both patents disclose essentially the same subject matter, that is, treatment or prevention of various forms of skin damage through the topical application of ascorbic acid (Vitamin C) in a fat soluble form. Specifically, the patents disclose the topical application of ascorbyl fatty acid ester (e.g., ascorbyl palmitate, ascorbyl laurate, ascorbyl myristate, ascorbyl stearate) with a dermatologically acceptable carrier. Because the carrier, as well as the ascorbyl fatty acid ester, is fat soluble, it can “effectively penetrate skin layers and deliver the active ascorbyl fatty acid ester to the lipid-rich layers of the skin.” Upon reaching the lipid-rich layers of skin, the ascorbyl fatty acid ester produces a number of beneficial effects ranging from the acceleration of collagen synthesis to the scavenging of oxygen-containing radicals caused by exposure to damaging ultraviolet radiation.

The district court determined that U.S. Patent No. 4,981,845 (Pereira) anticipates claims of the ’063 patent because Pereira teaches a cosmetic composition for topical application and discloses various ingredients in that composition, including skin benefit ingredients, emollients, emulsifiers, and thickeners. In addition to listing examples, Pereira discloses eight distinct example compositions with specific concentrations of ingredients. Pereira identifies the disclosed compositions only briefly, identifying them as “suitable for topical application to the skin or hair.” The district court concluded that Pereira’s disclosed use anticipates Dr. Perricone’s claims because Pereira’s disclosed compositions include all the various ingredients in the concentrations claimed by Dr. Perricone. Thus, according to the district court, the topical application of Pereira’s compositions would necessarily yield Dr. Perricone’s claimed skin benefits.

On appeal, Dr. Perricone argued that: (1) Pereira’s disclosed skin benefit ingredients include ascorbyl palmitate among many others, and so Pereira’s disclosure does not anticipate the specific claimed use of ascorbyl palmitate; (2) Pereira’s disclosed range of concentration of its skin benefit ingredient only partially overlaps with Dr. Perricone’s claimed range; and (3) Pereira does not disclose any benefit directed to skin sunburn, or any of the other specific skin disorders, as claimed by Dr. Perricone.

The court held that:

With respect to the particular claimed skin benefits, the district court reasoned that “Pereira will inherently function in [the claimed beneficial manner] when topically applied to the skin.” Perricone, 267 F. Supp. 2d at 248. Thus, the district court ultimately based its anticipation analysis on inherency. “In general, a limitation or the entire invention is inherent and in the public domain if it is the ‘natural result flowing from’ the explicit disclosure of the prior art.” Schering, 339 F.3d at 1379 (citing Eli Lilly & Co. v. Barr Labs., Inc., 251 F.3d 955, 970 (Fed. Cir. 2001); In re Kratz, 562 F.2d 1169, 1174 (CCPA 1979)). In some cases, the inherent property corresponds to a claimed new benefit or characteristic of an invention otherwise in the prior art. In those cases, the new realization alone does not render the old invention patentable. See Atlas Powder, 190 F.3d at 1347 (“[T]he discovery of a previously unappreciated property of a prior art composition, or of a scientific explanation for the prior art’s function, does not render the old composition patentably new to the discoverer.”); Bristol-Myers Squibb Co. v. Ben Venue Labs., Inc., 246 F.3d 1368, 1376 (Fed. Cir. 2001) (explaining that newly discovered results of known processes are not patentable because those results are inherent in the known processes). Thus, when considering a prior art method, the anticipation doctrine examines the natural and inherent results in that method without regard to the full recognition of those benefits or characteristics within the art field at the time of the prior art disclosure.

Like the district court, the dissent seems to ignore, or at least dismiss as “not substantial[],” the distinction between Dr. Perricone’s claimed method and Pereira’s disclosed method. Thus, the dissent characterizes both methods the same way: “Pereira describes not only the same product that is claimed in the sunburn patent, but also the same method of using it, i.e., topically applying it to the skin in an amount necessary to have beneficial effects on the skin.” Unfortunately, the dissent can make that statement only by dismissing the explicit language of Dr. Perricone’s claimed method: “applying to the skin sunburn.” ’693 patent, claim 1. Skin sunburn is not analogous to skin surfaces generally. Thus, there is an important distinction between topical application to skin for the purpose of avoiding sunburn, and the much narrower topical application to skin sunburn. That distinction highlights the flaw in the dissent’s knee brace hypothetical, which suggests that a particular prevention method necessarily anticipates a treatment method. To use a more apt analogy, the disclosure that a sunburn can be prevented by wearing a hat clearly does not anticipate a claim to the discovery that one can treat an existing sunburn by putting on a hat. The dissent attempts to bolster its analogy by comparing the mechanism underlying its knee brace analogy to Dr. Perricone’s invention. With that comparison, the dissent drifts even farther from the facts of this case. The alleged anticipating reference here is Pereira, not Dr. Perricone’s own teachings. Pereira is silent about any sunburn prevention or treatment benefits, not to mention the mechanisms underlying such uses. If Pereira did teach sunburn prevention, as well as the mechanism behind that prevention, those teachings might suggest that Dr. Perricone’s sunburn treatment claims would have been obvious. However, those unrealized possibilities do not alter the analysis in this case where Pereira does not disclose topical application to skin sunburn.

Thus, the court reversed the summary judgment of invalidity and non-infringement for the defendant.

See the opinion here.

Forbes ran an interesting article about Genentech that shows how it pursues a different path than traditional Big Pharma companies like Pfizer and Merck, which market drugs to the masses. Genentech takes a very different approach by foregoing mass-market medicines in favor of drugs specific for severe diseases even if that limits the market potential. Something must be working since Genentech racked up $6 billion in sales last year.

Chief Executive Arthur Levinson summed up the strategy for bringing a drug into trial as “98% science, 2% commercial.”

Earlier, Genentech began a new strategy to speed the development of breakthroughs by testing combinations of multiple experimental cancer drugs simultaneously in new tumor types, instead of waiting for each one to be approved separately before combining them. The hope is that modulating multiple disease genes at once with highly targeted drugs will increase the chance of long-lasting remissions or even cures. Ultimately, the hope is that new combinations of gene-targeted drugs will be available with fewer side-effects to replace more toxic chemotherapy regimens.

This combinatorial strategy may have an additional side benefit of extending the exclusivity of the drugs. Since a new combination of old drugs can be patentable in its own right, it may be possible for some combinations to gain 20 years of patent protection even as the individual components fall into the public domain. This could spur research into drugs that otherwise would not have been economically feasible to develop due to the lack of market protection. Developing new combinations is different from the practice of layering where drug companies develop a new use or different version of their old drug.

In terms of patent term extension for combination products, though, at least one of the active ingredients (including any salt or ester of that active ingredient) of the product must have not been previously approved by the FDA to be eligible for term extension, based on the approval of the combination product, and then only the patent covering the newly approved component or the combination of components may be extended.

Genentech must be doing something right. It has developed three of the most important targeted cancer drugs to date, e.g., Herceptin for breast cancer, Rituxan for lymphoma and Avastin for numerous tumor types. Sales of Avastin could hit $4.7 billion by 2009.

In some other news of kudos for out site, TopTenSources has selected Patent Baristas to be a featured Top 10 Source site.

Top 10 Sources publishes a daily “Top 10” site of the best newsfeeds on the Internet. Their editors pick a topic then find the ten best sources on the Net on that topic that offer newsfeeds- whether they’re blogs, mainstream media, or anybody else publishing great stuff online.

They archive every day’s Top 10 list so you can look back at what was in the news by searching our directory by day or by topic. If you’d like to suggest a news source that should be included under a given topic, send it to suggestions@TopTenSources.com.

Ranbaxy Laboratories Ltd. agreed to settle patent litigation of the $500 million drug Provigil (modafinil) with Cephalon Inc. Under the agreement Ranbaxy can market its generic version of Provigil from October 2011, three years before the patent protection ends, on payment of royalty.

Cephalon and Ranbaxy also agreed to a series of business arrangements related to Modafinil including:

Cephalon will grant a non-exclusive royalty-bearing right to Ranbaxy to market and sell a generic version of Provigil in the United States, which will become effective in October 2011 in the absence of a pediatric extension for Provigil, which would delay the entry date by six months to April 2012. An earlier entry by Ranbaxy may take place based upon the entry of another generic version of Provigil.

Ranbaxy has agreed to grant to Cephalon a non-exclusive license to certain of its world-wide intellectual property rights related to modafinil in exchange for milestone payments.

Cephalon also has agreed to enter into certain arrangements with Ranbaxy related to Ranbaxy’s supply of the active pharmaceutical ingredient modafinil.

The two companies will now file for ‘a dismissal with prejudice’ with the District Court of New Jersey that will conclude all pending litigation between them regarding Provigil. These lawsuits claim infringement of Cephalon’s U.S. Pat. No. RE37,516, which covers pharmaceutical compositions and methods of treatment with the form of modafinil contained in Provigil. The patent expires in October 6, 2014, and may be extended by six months to April 6, 2015, upon submission of pediatric study data that is acceptable to the FDA.

This patent relates to the acetamide derivative modafinil, which is 2-(benzhydrylsulfinyl)acetamide and is also known as 2-[(diphenylmethyl)sulfinyl]acetamide. Modafinil is used to treat excessive sleepiness caused by narcolepsy (a condition that causes excessive daytime sleepiness) or shift work sleep disorder (sleepiness during scheduled waking hours and difficulty falling asleep or staying asleep during scheduled sleeping hours in people who work at night or on rotating shifts). Modafinil is also used along with breathing devices or other treatments to prevent excessive sleepiness caused by obstructive sleep apnea/hypopnea syndrome (OSAHS; a sleep disorder in which the patient briefly stops breathing or breathes shallowly many times during sleep and therefore doesn’t get enough restful sleep).

Modafinil has been described as presenting a “neuropsychopharmacological spectrum characterized by the presence of excitation with hyperactivity and of hypermotility; and by the absence of stereotypy (except in high doses) and of potentialization of the effects of apomorphine and amphetamine” (U.S. Pat. No. 4,177,290). Modafinil is thought to modulate the central postsynaptic alpha1-adrenergic receptor, without participation of the dopaminergic system. Modafinil has been successfully tested in humans for treatment of idiopathic hypersomnia and narcolepsy.