Patent Baristas

The European Patent Office (EPO) issued a report that several groups in the European Parliament have expressed about the grant of European patent EP 1257168 B1.

In motions communicated to the EPO, Members of the European Parliament (MEPs) have stated that, in their view, the grant of this patent, which is entitled “Method of cryopreserving selected sperm cells”, constitutes a violation of the Directive on the legal protection of biotechnological inventions (98/44/EC).

The patent was granted to the US Company XY Inc. of Fort Collins, Colorado, in February 2005, although there is a nine-month period during which oppositions to the patent can be filed by third parties, which will terminate on 2 November 2005. The invention relates to a method for freezing sperm selected for a particular characteristic, as well as to a frozen selected sperm sample and methods of using such a sample. The invention is useful for preserving sex-selected sperm. Claim 1 is for:

1. A method for the cryopreservation of sperm comprising : (a) obtaining a selected sperm sample ; (b) cooling said selected sperm sample ; (c) isolating sperm from said selected sperm sample to produce isolated sperm ; (d) adding final extender to said isolated sperm to produce a suspension of sperm ; and (e) freezing said suspension of sperm.

The MEPs maintain that the patent also covers non-patentable human germ cells. They have therefore announced their intention to contest the grant of this patent by initiating an opposition procedure before the EPO. Other worries expressed in the motions concern the future development of the EPO’s practice in patenting human embryonic stem cells. Every year, around 5% of the patents granted by the EPO are contested in opposition proceedings. In two thirds of these cases, the patent is changed or even revoked in its entirety.

The EPO grants patents by applying the European Patent Convention (EPC). The EPC forms the legal basis for the Office’s institutional structure and its activities and operations. The EPC expressly stipulates that the human body, at the various stages of its formation and development, and the simple discovery of one of its elements, including the sequence or partial sequence of a gene, cannot constitute patentable inventions.

However, an element isolated from the human body or otherwise produced by means of a technical process may constitute a patentable invention, even if the structure of that element is identical to a natural element. Recital 16 of the Directive and the Guidelines for examination in the EPO state that such stages in the formation or development of the human body include germ cells. In 2004, the EPO received 6,581 patent applications in biotechnology and granted over 4,000 patents.

See the memo here.

A Senate committee approved the Biodefense and Pandemic Vaccine and Drug Development Act, sponsored by Sen. Richard Burr, R-N.C. The Senate Health, Education, Labor and Pensions Committee approved the bill by a voice vote and now the bill goes before the full Senate.

Key components of the Biodefense and Pandemic Vaccine and Drug Development Act include:

Establish a single agency – the Biomedical Advanced Research and Development Agency (or BARDA) – as the lead federal agency for the development of countermeasures against bioterrorism. The new agency would report directly to the Secretary of Health and Human Services.

Provide incentives for domestic manufacturing of vaccines and countermeasures.

Give liability protections to companies that develop vaccines for biological weapons.

However, the bill is noteworthy for what is not included. Some expressed concern that the bill does not take up the threat of a pandemic sparked by the spread of avian flu. Others felt that it is the best solution at the moment because so many variables are involved.

The bill also extends some prescription drug patents. However, the extensions have been criticized by some organizations who fear that they would block more affordable generic drugs. For instance, the bill would allow Health and Human Services to sign exclusive sales contracts with particular manufacturers for a particular product. It would forbid government purchases of generic versions of such new drugs or vaccines as well as public sales of the products for use as countermeasures.

The bill is opposed by the Coalition for a Competitive Pharmaceutical Market, which believes that the market exclusivity provisions would unnecessarily drive up prescription drug costs for private and public payers without advancing our nation’s bioterrorism preparedness.

The drug monopoly extensions included in S. 1873 would broaden the definition of products eligible to be used as countermeasures in a way that could grant existing everyday medicines – rather than novel products related to the fight against bioterrorism – multiple years of additional market exclusivity.

Liability protection was also a key concern in order to protect consumers from vaccines and countermeasures that proved harmful. The measure states that a manufacturer, distibutor, or administrator of a security countermeasure, or a qualified pandemic and epidemic product or a health care provider shall be immune from suit or liability caused by or arising out of the design, development, clinical testing and investigation, manufacture, labeling, distribution, sale, purchase, donation, dispensing, prescribing, administration, or use of a security countermeasure, or a qualified pandemic and epidemic product. The liability provision was added immediately before the bill was introduced, but does have a clause dealing with producers that knowingly manufacture a bad drug.

It does not contain the earlier provision for the wild card extension (transferable intellectual property rights) for drugs with qualifying biodefense capabilities. For example, if the wildcard is 2 years, and an antibiotic is approved for BioShield II purposes, then the drug company could transfer 24 additional months of patent protection to any drug in its portfolio (e.g., blockbuster drugs like Viagra or Lipitor).

If a drug company needs a reward for the bioterrorism innovation, the more direct way to do so would be to pay a premium when purchasing the drug. The wild card system is less efficient than a contractual premium because the incentive varies with the portfolio of the company: if you are Pfizer the wild card is worth more than it would be to a smaller pharma or biotech company. The wildcard would operate as a tax on a wide population who pays for (now extended patent coverd) treatment.

See the text of the S.1873 bill here.

Earlier, the USPTO required that business method inventions must apply, involve, use or advance the “technological arts”. This requirement could be met by merely requiring that the invention be carried out on a computer.

In Ex parte Lundgren, Appeal No. 2003-2088, Application 08/093,516, (Precedential BPAI opinion September 2005), the Board rejected the examiner’s argument that Musgrave and Toma created a technological arts test. “We do not believe the court could have been any clearer in rejecting the theory the present examiner now advances in this case.” Lundgren, at 8.

The Board held that “there is currently no judicially recognized separate “technological arts” test to determine patent eligible subject matter under § 101.” Lundgren at 9. USPTO personnel should no longer rely on the technological arts test to determine whether a claimed invention is directed to statutory subject matter. There is no other recognized exceptions to eligible subject matter other than laws of nature, natural phenomena, and abstract ideas. For an excellent review, see Dennis Crouch’s summary on Patently-O.

35 U.S.C. § 101 provides: Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and requirements of this title.

In eliminating the Patent Office’s view of rejecting patents under 35 U.S.C. § 101 as outside of the “technological arts”, the BPAI concluded that:

Our determination is that there is currently no judicially recognized separate “technological arts” test to determine patent eligible subject matter under § 101. We decline to create one. Therefore, it is apparent that the examiner’s rejection can not be sustained. Judge Barrett suggests that a new ground of rejection should be entered against the claims on appeal. We decline at this stage of the proceedings to enter a new ground of rejection based on Judge Barrett’s rationale, because in our view his proposed rejection would involve development of the factual record and, thus, we take no position in regard to the proposed new ground of rejection. Accordingly, the decision of the examiner is reversed.

The USPTO has now issued guidelines to assist examiners in determining, on a case-by-case basis, whether a claimed invention falls within a judicial exception to statutory subject matter (i.e., is nothing more than an abstract idea, law of nature, or natural phenomenon), or whether it is a practical application of a judicial exception to statutory subject matter. The guidelines explain that a practical application of a 35 U.S.C. § 101 judicial exception is claimed if the claimed invention physically transforms an article or physical object to a different state or thing, or if the claimed invention otherwise produces a useful, concrete, and tangible result.

DETERMINE WHETHER THE CLAIMED INVENTION COMPLIES WITH THE SUBJECT MATTER ELIGIBILITY REQUIREMENT OF 35 U.S.C. § 101(a).

Consider the Breadth of 35 U.S.C. § 101. Under Controlling Law Section 101 of title 35, United States Code, provides: Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and requirements of this title. In 1952, when the patent laws were recodified, Congress replaced the word “art” with “process,” but otherwise left Jefferson’s language intact. The Committee Reports accompanying the 1952 Act inform us that Congress intended statutory subject matter to “include anything under the sun that is made by man.” S. Rep. No. 1979, 82d Cong., 2d Sess., 5 (1952); H.R. Rep. No. 1923, 82d Cong., 2d Sess., 6 (1952). [Footnote omitted] 35 U.S.C. § 101 defines four categories of inventions that Congress deemed to be the appropriate subject matter of a patent: processes, machines, manufactures and compositions of matter. The latter three categories define “things” or “products” while the first category defines “actions” (i.e., inventions that consist of a series of steps or acts to be performed). See 35 U.S.C. 100(b) (“The term ‘process’ means process, art, or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.”). The subject matter courts have found to be outside of, or exceptions to, the four statutory categories of invention is limited to abstract ideas, laws of nature and natural phenomena.

Determine Whether the Claimed Invention Falls Within An Enumerated Statutory Category. To properly determine whether a claimed invention complies with the statutory invention requirements of 35 U.S.C. § 101, USPTO personnel must first identify whether the claim falls within at least one of the four enumerated categories of patentable subject matter recited in section 101 (process, machine, manufacture or composition of matter). The question of whether a claim encompasses statutory subject matter should not focus on which of the four categories of subject matter a claim is directed to — process, machine, manufacture, or composition of matter — [provided the subject matter falls into at least one category of statutory subject matter] but rather on the essential characteristics of the subject matter, in particular, its practical utility.

Determine Whether the Claimed Invention Falls Within § 101 Judicial Exceptions – Laws of Nature, Natural Phenomena and Abstract Ideas While abstract ideas, natural phenomena, and laws of nature are not eligible for patenting, methods and products employing abstract ideas, natural phenomena, and laws of nature to perform a real-world function may well be. In evaluating whether a claim meets the requirements of section 101, the claim must be considered as a whole to determine whether it is for a particular application of an abstract idea, natural phenomenon, or law of nature, rather than for the abstract idea, natural phenomenon, or law of nature itself. Determine Whether the Claimed Invention Covers Either a § 101 Judicial Exception or a Practical Application of a § 101 Judicial Exception

Determine Whether the Claimed Invention is a Practical Application of an Abstract Idea, Law of Nature, or Natural Phenomenon (§ 101 Judicial Exceptions). To satisfy section 101 requirements, the claim must be for a practical application of the § 101 judicial exception, which can be identified in various ways: ..The claimed invention “transforms” an article or physical object to a different state or thing. ..The claimed invention otherwise produces a useful, concrete and tangible result, based on the factors discussed below. a. Practical Application by Physical Transformation b. Practical Application That Produces a Useful, Concrete, and Tangible Result

In determining whether a claim provides a practical application that produces a useful, tangible, and concrete result, the examiner should consider and weigh the following factors:

(1) “USEFUL RESULT” For an invention to be “useful” it must satisfy the utility requirement of section 101. The USPTO’s official interpretation of the utility requirement provides that the utility of an invention has to be (i) specific, (ii) substantial and (iii) credible.

(2) “TANGIBLE RESULT” The tangible requirement does not necessarily mean that a claim must either be tied to a particular machine or apparatus or must operate to change articles or materials to a different state or thing. However, the tangible requirement does require that the claim must recite more than a § 101 judicial exception, in that the process claim must set forth a practical application of that § 101 judicial exception to produce a real-world result. (3) “CONCRETE RESULT” Usually, this question arises when a result cannot be assured. In other words, the process must have a result that can be substantially repeatable or the process must substantially produce the same result again.

Determine Whether the Claimed Invention Preempts an Abstract Idea, Law of Nature, or Natural Phenomenon (§ 101 Judicial Exceptions). Even when a claim applies a mathematical formula, for example, as part of a seemingly patentable process, the examiner must ensure that it does not in reality “seek[] patent protection for that formula in the abstract.” Diehr, 450 U.S. at 191, 209 USPQ at 10.

The IP Department of Frost Brown Todd LLC will once again be a sponsor of BioOhio. This year’s BioOhio 2005 features national speakers, informative sessions, company exhibits, and student posters. This year’s keynote speaker is Caroline Kovac, General Manager of IBM Healthcare and Life Sciences.

I will be speaking at the conference on Monday, October 31, from 3:20pm-4:15pm in the Regent Ballroom, Hilton Columbus. The current panel line-up is:

(moderator) Michael Camp, Academic Director, Center for Entrepreneurship, Fisher College of Business, The Ohio State University; Richard J. Schwen, PhD, Senior Consultant, PAREXEL; Stephen Albainy-Jenei, Member, Frost Brown Todd LLC; Robert Schmidt, President & CEO, Cleveland Medical Devices; Sandra W. Harbrecht, President, Paul Werth Associates; Robert E. Anthony, President, REA Incorporated & Medical Milestones.

For more information on BioOhio 2005, contact Omeris Director of Corporate Communications Matt Schutte at 614/675-3686. See a full agenda or register online here.

See you in Columbus!

Science magazine ran a story that researchers at MIT found that nearly 20 percent of the human genome, or 4,382 of the known 23, 688 human genes, have been patented, with over half owned by private companies and 28 percent assigned to universities. Around 63% of the patents are assigned to private firms, with one firm, Incyte Pharmaceuticals/Incyte Genomics, having intellectual property rights covering 2,000 human genes.

The study also shows that there are specific regions of the human genome known as “hot spots” of patent activity where some genes have up to 20 patents asserting rights to how those genes can be used. There are the genes thought likely to be involved in certain diseases.

Obviously, we don’t all have to start sending in royalty checks for use of our genes or anything but it does tend to surprise laypeople that isolated DNA sequence can be patented in the same manner that a new drug. Which begs the question: Is this a good thing or a bad thing to have all these patents?

Some argue that gene patents promote the disclosure and dissemination of information by making important uses of gene sequences publicly known. They also provide the promise of financial rewards necessary to secure financial backing, e.g., venture capital, to pay for the cost of doing research.

There is the risk that research will tend more toward commercially-exploitable products than towards those that are most in need. But this is the whole of the patent bargain – giving an incentive to do the research. While one could argue that research would be better spent on treatments for AIDS instead of for Viagra®, the profits propel the scientific machinery and can provide insights that can have a broader impact.

Others feel that gene patents can block future research and discoveries into these genes. It also means that researchers and research institutions need to tread carefully in their work to avoid infringing on someone’s patent. Although, I would argue that it’s no more true than the care that must be taken with any other type of patented composition, method or other intellectual property right that might be infringed in the course of research. And, look at it this way, in 20 years, all those inventions will be public domain. Sweet.

See more details here.

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

My interest in ads that compare the efficacy of a product to the competitors’ products was peaked by the FTC ruling in In the Matter of Telebrands Corp., TV Savings, LLC, and Ajit Khubani, FTC Docket No. 9313 (Sept. 19, 2005). We all have seen those ads on cable TV that tout some easy, fitness fix for “Only 4 Easy Payments of $ …but wait, if you call now, we double your order.” The question always springs to mind – ‘how can ingesting ground-up yard waste improve my…’ well whatever part you hope to improve. In other words, how can that expressed product claim be supported by good science?

In the Telebrands case, it was conceded that the promoter had no scientific basis to advertise that the “Ab Force” belt was good for anything, except that its ab belt sent electric pulses to the muscles underneath it. Telebrands’ defense to the false advertising complaint was that the ads made no actual claims that the product provided any stated results. As close as the ads came to making a specific claim was that the belt was shown in the ads being worn by attractive models with fabulous abs, coupled with voiceovers that the “Ab Force is just as powerful and effective as those expensive ab belts sold by others.” The implied conclusion was that claims about the other ab belts were unsupported, and Telebrands had advertised that the “Ab Force” was as “effective” as those (useless) “ab belts sold by others.” Such comparisons resulted in a form of ‘guilt by association’ being adjudged against Telebrands. The Commission concluded that “the product name, visual images, and statements in respondents’ advertising create the net impression that the Ab Force electronic muscle stimulation (“EMS”) device provides health, fitness, weight loss, or exercise benefits” and liability was imposed because this “net impression” was unsubstantiated.

The facts of the case are surprising. Telebrands monitored “direct response” ads on TV, and identified ab belts as a ‘hot’ seller. It then engaged a company to replicate the product, set a lower price, and began an advertising campaign, which said that the “Ab Force” was cheaper and it emitted the same sort of electric simulation pulses as competing belts. It was just a copycat product with a copycat ad. Again, no finding was made that the “Ab Force” ads claimed that the belt did anything.

The FTC ruling notes that while “the ads did not expressly state the purpose for the Ab Force, respondents’ ads made statements about the purpose of competitors’ ab belts – in some cases, direct statements – and indicated that the Ab Force was equally effective, allowing consumers to make the obvious logical connection.” I read that to imply that viewers who believe these ads engage in “logical” decision-making about fitness products. The imposition of liability for a “net impression” where no affirmative claim or representation is made in a TV ad, extends the authority of the FTC in its policing of ads.

Many nutraceuticals and health aids are advertised to provide results, but often those are stated in the negative, e.g., ‘no product on the market is more effective’ (meaning I suppose, that all of them are useless). Consider the more typical claims: “it won’t give you X-ray vision or bionic strength. but [a Ramses’ condom] will make you a hero,” In re London Int’l Group, Inc., 125 F.T.C. 726 (1998); “Too old to take up running? Maybe you should start . . . drinking ‘Jogging in a Jug,” In re Third Option Lab., 120 F.T.C. 973 (1995); the “Brain Tuner” will ” produce 256 simultaneous frequencies all known to be beneficial for the natural stimulation of the brain’s neurotransmitters ..[and it] simply coaxes the brain to restore it’s [sic] own chemical balance,” In re Lifestyle Fascination, 118 F.T.C. 171 (1994).

These type of ads do include express claims of results, albeit in some vague or obscure expressions. The Telebrands case extends false advertising liability beyond ads that expressly claim results, without a scientific basis, to ads that present a “net impression” about the usefulness of the product (images of belt-wearers with fab abs), or about its comparative utility (as good as competing junk). The finding of a bad, or unsubstantiated, net impression was based on the opinion of an expert using split sample surveys.

So, the next time you are up late, channel-surfing on cable TV, listen closely to the product quality claims in ads for nutraceuticals and health aids – because after the Telebrands decision, the ads may be crafted more around the impression than upon expressly claimed results.

The Editor ‘n Chef of Blawg Review has come out with a double-barreled, two-fer blawg carnival this week. The double-shot features both Blawg Review #29 and Carnival of the Capitalists #107.

Besides the expected machinations on the Harriet Miers nomination, we enjoyed Bruce MacEwen’s inquiry into the economics of law firms at Adam Smith, Esq. This week, Mr. Smith polls his audience on Yea or Nay on the Billable Hour – Will the billable hour ever lose its dominance?

Quoting Jim Taronji, an antitrust partner at Howrey, he writes:

“Eventually, the “billable hour” will go the way of the Model T (just a curious novelty from the past). Why? Because that’s what corporate clients really want. They want certainty in billing because that’s what they need for internal budgeting purposes.

…

The smart law firms will get ahead of their clients and accept (dare I say, “offer”) flat fees for each project, with a “change option” for unplanned situations.

Professional service providers do this now with a detailed “Statement of Work” that is created by the service provider and the client. It lays out what will be done and when, the number and level of human resources devoted to the project (times the number of hours each person will devote to completing the project, times their hourly rates), and additional costs (travel, copying, etc.). The end result is a budget that is agreed on by both sides. Any changes to the “assumptions” will result in a change in the final cost of the project.

While I don’t see billable hours going the way of the Dodo, for some types of projects, this may be the wave of the future. It takes careful planning and a knowledgeable client to make this work, though. Otherwise you have clients falling into a “penny-wise and pound-foolish” trap.

Also this week, there’s also a great round-up of quotes in “Mixed Messages on Sexual Harassment — and a Movie Too” over at George’s Employment Blawg.

In another sign that Roche needs to act quickly to preserve their intellectual property rights, a recent report by the BBC says Taiwan has responded to rampant bird flu paranoia by starting work on its own version of the anti-viral drug, Tamiflu, without waiting for a license to the patent rights from Roche. Taiwan officials said they had applied for the right to copy the drug – but the priority was to protect the public. Several countries have asked Roche for the right to make generic copies of Tamiflu.

Taiwan says it will produce six kg of its version of Tamiflu to renew its stocks but said it will not market the drug commercially. They reported that a generic version of the drug produced by Taiwan’s National Health Institute is “99% akin to the Tamiflu produced by Roche.” 99%? So…well…what’s in that last 1%? That wasn’t mentioned but officials say they can make their version of the drug more quickly and at a lower cost than Roche.

I suppose this isn’t as bad as Brazil threatening to break the aids patents since, in that scenario, the drugs are available to purchase – Brazil just doesn’t want to pay for them. Here, supplies are not readily available and, if there were to be a start to a pandemic, stocks would not be available at any price.

I think Roche would be smart to just set out a blanket nonexclusive license for any and all takers. Like the PCR patents, the royalty and terms could be set at some bearable level and Roche could reap some revenue while avoiding all-out pandemonium. Then, no one could claim Roche has endangered public health or played favorites among countries or generic manufacturers. This could also prevent costly infringement litigation. Nearly every government is getting quite edgy about a possible flu epidemic and keeping too tight a grip on the Tamiflu patent rights could lead to the death of the golden goose. It will be interesting to see how this plays out.