Patent Baristas

Somewhere around the world, likely around Sunday, May 8 or Monday, May 9, 2005, the one billionth cumulative acre of biotech crops was planted, as reported by the policy analysts for Truth About Trade and Technology (TATT).

Just how big is a billion acres? It’s really big. A billion square acres would cover the entire land area of the European Union’s 25 countries. (World Factbook, 2004)

For a prospective on the magnitude of the growth in biotech plants, though it has taken the past 10 years to achieve that milestone, at the present double-digit growth rate, it won’t be more than four years until the second billion acres of biotech crop plantings is reached. In 2004 alone, more than eight million farmers planted 200 million acres of biotech crops in 17 countries.

More here.
See Pioneer Hi-Bred’s Comment.

This comes on the heels of the introduction by Syngenta of genetically engineered golden rice, “Golden rice 2” that contains up to 23 times more provitamin A, the substance converted in the body into vitamin A. This vitamin is vital for preventing childhood blindness, which affects 500,000 children worldwide each year.

The breakthrough was achieved by replacing a gene originally borrowed from daffodils, and which also has a counterpart from maize. Critics of the original golden rice said that its levels of provitamin A – 1.6 micrograms per gram of rice – were too low to make the rice a practical proposition. But each gram of the new strain contains up to 37 micrograms of the provitamin. The new rice could provide at least half what a child would need and might now contain enough to supply the entire recommended daily intake.

But critics point out that it remains to be proven that the provitamin A is absorbed and converted into vitamin A when people eat the rice. However, questions about the uptake of provitamin A, also known as beta carotene, could be answered later in 2005 through experiments in people using the original golden rice.

Syngenta owns Golden Rice 2, but is donating it to the Humanitarian Rice Board.

The Washington Post reported that a three-judge panel for the U.S. Circuit Court of Appeals for the District of Columbia said the Federal Communications Commission had exceeded its authority in requiring built-in, anti-piracy technology to let broadcasters and studios prevent digital shows from being copied.

The “broadcast flag” would have been required in digital televisions and consumer devices sold after July 1. Under the rule, producers were to be required to embed a Broadcast Flag into programs transmitted via DTV signals so that, for example, users could store a program on a hard disk but would be prevented from archiving it to a DVD in order to save hard drive space. A detailed description of the regulation is available from the Electronic Frontier Foundation.

Judge Harry T. Edwards wrote:

“In this case, all relevant materials concerning the FCC’s jurisdiction — including the words of the Communications Act of 1934, its legislative history, subsequent legislation, relevant case law, and commission practices — confirm that the FCC has no authority to regulate consumer electronic devices that can be used for receipt of wire or radio communication when those devices are not engaged in the process of radio or wire transmission.”

While it is a setback for the entertainment industry’s anti-piracy agenda, it’s also going to slow down the entrance of digital media products as the industry tries to keep a tight lock on digital media.

Edwards also stated that the court could:

“find nothing in the statute, its legislative history, the applicable case law, or agency practice indicating that Congress meant to provide the sweeping authority the FCC now claims over receiver apparatus. And the agency’s strained and implausible interpretations of the definition provisions of the Communications Act of 1934 do not lend credence to its position.”

This means that proponents of the broadcast flag, like the National Association of Broadcasters, will be running to Congress to try to get their agenda pushed onto the public. This will make for some interesting times as Congress tries to rewrite the 1996 Telecommunications Act, set a “hard date” for the transition to digital TV, toughen the nation’s laws for indecent programming and (probably) revisit copyright law after the Grokster case.

See the entire opinion here.

I thought since its an absolutely beautiful Friday here in Cincinnati, I’d write about a lighter topic and focus today’s post on two of my favorite things – animals (and dogs in particular for this post) along with patents and patent reform. (Okay, so this post is about one of my favorite things.) Now, what you might ask do these two things have in common? Personally, I have two retriever rescues and I am a patent attorney, so that might be enough for some. But……..

Much has been said about patent reform lately. Last month, Stephen discussed some of the more substantative changes to U.S. patent law that are sorely needed and the efforts to reform this patch-work patent system we use on a daily basis.

In fact, just last week (April 28, 2005), The Honorable John W. Dudas made a statement before the House Subcommittee on Courts, Internet and Intellectual Property addressing “Patent Quality Improvement.” (Do you think this may be in response to the PB&J patent brouhaha?). Secretary Dudas proposed as a part of a strategic plan, a post-grant review addressing patent quality issues. What I would like to know since beauty is in the eye of the inventor, how does one address such a subjective issue?

I raise this point purely for my own interests since I stumbled across a news item about a dog-washing machine that could be part of a doggie spa. Its touted as “the latest canine grooming craze to hit pet spas across the country.” So, first I thought of my two dogs, Sadie and Sam, when I saw what appeared to be a dog smiling (or at least its human was) in the picture that accompanied the article. Then I saw the machine itself and began to ponder the obvious question to any patent attorney. Sure enough, there was an issued patent, (February 2004) so presumably this machine is safe and secure and patent-protected.

This brings me back to the quality issues Secretary Dudas spoke of as I tried to picture the Secretary attempting to subdue and then wash my 60 pound retriever with a hose and bucket, or picture him placing my spastic retriever in the dog-washer as a part of Sammy’s “spa experience.” This is pure quality to me.

Now, I did also have some kid put a flyer under my windshield the other day advertising his services to pick up dog “excrement” from my yard, priced out by the poundage of the dog, or was it poundage of excrement…. Maybe there’s another patent here just waiting to be drafted.

Now, what might you ask do these things have in common? Well, in what some reports claim to be a “surprise” announcement by Merck, the drug company announced today that Raymond V. Gilmartin was stepping down as chief executive of and that a longtime company insider, Richard T. Clark, would replace him.

Frankly I don’t see what the “surprise” is. Maybe the timing? Maybe he wanted a nice summer vacation. But, for Gilmartin to state to the board and shareholders in a December 2004 business briefing that “Merck’s response to the VIOXX withdrawal was swift and effective…and the long-term strategy we have in place is still very much the right one, given the environment in which Merck and the rest of the industry will be operating in the years ahead” is delusional.

This move was greeted with little enthusiasm by investors who had hoped for a high-profile outsider to help the embattled company rather than taking the easy way out and choosing just another old-school and ‘safe’ choice. Not too creative for a company that has not introduced a new successful drug for the last few years. In fact, Merck has been one of the slowest of the big drug companies to acquire new medicines from the outside — either through licensing deals or acquisitions. Instead, it has insisted on relying on its own internal research. Merck has failed in recent years to launch many big-selling products, with the exception of two new cholesterol drugs it is co-marketing with Schering-Plough Corp.

Now what was that about dinosaurs and extinction? I am certainly tired of seeing top executives continually being rewarded for poor performance. If the phrase “you eat what you kill” applied to Gilmartin, he’d be dead from starvation by now.
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We’re seeing more interest in patenting of micro- and nanotechnology inventions. Red Herring recently ran an interesting article describing a report by Lux Research entitled “The Nanotech Intellectual Property Landscape,” showing that, as of March, there were 3,818 nanotechnology patents issued by the USPTO with 1,777 more pending. The report describes a “crowded and entangled landscape” where startups, researchers and large companies are filing on anything that could be a patent in hopes for a windfall in the future.

This gold rush mentality of nanotech entrepreneurs has university and corporate researchers alike filing patent applications left and right, betting that their patents will generate sweet deals later. Often, without a lot of forethought.

Lux examined 1,084 U.S. patents that represented 19,485 claims on dendrimers, quantum dots, carbon nanotubes, fullerenes, and nanowires. Lux reported that the increase in filings has overwhelmed the USPTO, often with overlapping terms like “nanorod” and “nanowire,” so that patents are issuing with broad, overlapping claims, making for some difficult litigation later if commercialization ever materializes.

More on Peter Zura’s Two-Seventy-One Patent Blog, here.

A summary of the Lux report findings can be found here.

Often separating the facts from the hyperbole is quite difficult. On the NanoTech Lex blog, one of the blogs by Anthony Cerminaro, there are some great suggestions for evaluating the claims of nanotechnology companies in his post “7 Questions for Reporters to Ask Nano Companies.” In order to separate out the real nanotech companies from those only using the flash of nanotech language for financial gain, he suggests reporters ask a few basic questions to ascertain whether a company is truly nanotech worthy:

1. Where’s the nano? Show me the nano.

2. Is nanotechnology required for your technology to work? Could microtechnology be substituted instead?

3. Does your technology provide an answer to a specific industrial dilemma, or is it a solution in search of a problem?

4. Who are your competitors/competing technologies? Why is your technology a better solution?

5. Are other researchers/companies following your lead or are you a lone ranger?

6. What’s your market strategy?

7. Have you been approached by other (especially larger) companies about licensing/acquiring your technology?

Cerminaro points out that, like any emerging technology, nanotech is “an uneven amalgamation of science, finance, marketing, personalities and luck” where more than $8 billion per year is being spent on nanotechnology research and development by federal, state and local governments, Fortune 500 companies, and universities. Just be careful out there.

One of Business Week’s blogs, Deal Flow, states in a recent post that with such a fragmented market, few investors are going to be able to understand the competitive landscape. Therefore, many investors might be tempted to believe a patent means more than it does, setting some investors up for a big loss. They point out that very often small cap, nano-companies can skyrocket or plummet on the mere mention of a new patent. Let’s be careful out there.

See more here and here.

The next edition of Blawg Review is up at Law & Entrepreneurship News. Law & Entrepreneurship News is a collaborative project involving Professor Gordon Smith and students at the University of Wisconsin Law School.

Law & Entrepreneurship News provides a nice collection of information particularly of interest to small businesses and emerging growth companies. The Baristas wish they had their team of editors and their Research Advisor, Bonnie Shucha, who’s “paid to be an information detective” and likes Almond Joy ice cream.

Next week’s edition is hosted again by Professor Smith at Conglomerate , only this time he co-blogs with Christine Hurt, Assistant Professor of Law at Marquette University. The Baristas will be hosting the Blawg Review on August 15th, right after the Common Scold. Those interested in submitting a post should see the Submission Guidelines.

As a Monday morning patent litigation round-up of interesting proceedings, I put together a list of recent actions. You just can’t tell the players without a program:

Eli Lilly has filed a lawsuit to block Teva Pharmaceuticals from selling generic Symbyax after Teva filed for an Abbreviated New Drug Application (ANDA) for generic Symbyax on January 10, 2005. This is currently the only option open to the innovator company under the process outlined in the Hatch-Waxman Act, despite the fact that Lilly has just emerged successfully from a similar patent court battle over Zyprexa. On April 14, 2005, the federal court upheld Zyprexa’s patent which was under fire by Ivax, Dr Reddy’s and Teva. This precedent would suggest that Teva’s second attempt to bring a product containing olanzapine to the market will also be unsuccessful. Unfortunately for both, the FDA has recently issued a warning of fatal adverse events in patients treated with certain atypical antipsychotic drugs including Abilify (aripiparozole), Zyprexa (olanzapine), Seroquel (quetiapine), Risperdal (risperidone), Clozaril (clozapine) and Geodon (ziprasidone). Manufacturers were asked to place a “black box” warning (the FDA’s most severe labeling option) on drug labels. Opinion leader research carried out by Datamonitor had indicated a concern about the long-term use of Symbyax at the time of its approval, with only an eight week trial having been carried out. More here.

Sandoz, Inc. notified Cephalon Inc. that it will no longer challenge Cephalon’s U.S. particle-size modafinil patent. Instead, Sandoz said it intends to convert its abbreviated new drug application (ANDA) for approval of a generic equivalent of modafinil, the active ingredient contained in PROVIGIL® Tablets [C-IV], from a paragraph IV certification to a paragraph III certification. Sandoz will certify to the U.S. Food and Drug Administration (FDA) that it does not intend to market a generic form of modafinil until the applicable patent for modafinil listed in the Orange Book has expired in 2014. Therefore, it will no longer be necessary for Cephalon to continue to pursue its patent infringement litigation against Sandoz. More here.

Schering AG announced on Friday that it filed a patent infringement action in the U.S. District Court for the District of New Jersey against Barr Pharmaceuticals Inc. over its Yasmin oral contraceptive. Barr Laboratories Inc. is currently seeking approval from the Food and Drug Administration to produce and market a generic version of Yasmin. More here.

Medtronic Inc. has agreed to settle a lawsuit by paying biotechnology company Cytomedix royalties to use the company’s therapy for wound healing. Cytomedix filed a lawsuit against Medtronic in November, alleging that Medtronic was infringing on Cytomedix’s patent for a treatment that uses a patient’s own blood platelets to treat tissue damage and diabetic foot ulcers. More here.

The Motley Fool offered the “Lowdown on Patent Shakedowns” and talked about the rise of the patent terrorists in a recent article. It seems that the rhetoric has really ratcheted up a notch recently – there must be some intense lobbying going on.

The term patent terrorists (or the more polite, patent trolls) has been showing up quite a bit lately in the news. This refers to any person/entity that owns a patent or patents but never develops products based on them but threatens others with litigation with demands for payment of license fees.

What’s interesting is that the article seems to draw a distinction between the business of licensing patents – described as a legitimate enterprise – and patent terrorism, a form of licensing that does not follow an established code of conduct. I don’t know where this code is posted but if someone has a citation, please send me a link, I’d like to see it.

From the article, patent licensing apparently means licensing if done by a large company (the article mentions IBM and TI), which for some reason is OK even though it is described as generating huge revenue streams for companies, revenue that must come from someone. Yet, the Fools say there is definitely a code of conduct for the licensing of innovative ideas here in the U.S., and patent terrorists often cross this time-honored line.

I realize they’re fools and all but what the eff are they talking about? And why do the Fools even care? If one is concerned primarily with investments in companies — companies that could be on either side of the equation — don’t you just want the company that reaps the greatest profit? Couldn’t a company that decides to license a product without commercializing it be a good investment? And how did the Fools come to be the arbiters of what practices in licensing patents will be considered legitimate?

The Fools seems to think that licensing is acceptable only if there is some form of return in kind, that is, cross-license agreements. The other “acceptable” scenario is if a company pays licensing fees to a patent owner and the ideas can give the company a significant boost in either time to market, profitability, or competitive advantage. The Fools say that in this case, the inventors “often provide consulting, design services, or other forms of technical assistance.” Both of these forms of patent licensing are good because they represent collaborations between two parties.

Patent terrorism, though, is an evil presumably because it doesn’t include either cross-licensing or help for the licensee with product development. Therefore, the result is not legitimate but is instead, a shakedown. The Fools even mention the target’s “so-called ‘infringing’ products.”

I’m not sure how the Fools would classify Ampex Corp., whose share price rocketed from $1 to $40 (now $32). Founded in 1944, it had been one of Silicon Valley’s greatest innovators. Ampex then hit a long, money-losing slump until it started aggressively enforcing its patent portfolio. Ampex filed lawsuits against large consumer-electronics companies, including Sony and Eastman Kodak, for infringing a patent on a method for displaying digital images. Royalties from that patent helped Ampex generate a profit of $47.1 million in 2004 on revenues of $101.5 million

Does that make it illegitimate? It’s funny that the Fools often recommended tobacco stocks in the past because of the massive return on investment and have now come out against licensors for asserting their rights. While the Baristas aren’t sure what the Fools have been smoking, they can’t help but notice the coincidence that this article came out just as Intel’s patent attorney is on a road show campaigning against those pesky patent trolls.

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Update: I received this Ampex response to BusinessWeek from Dan McGlinchey, Senior Vice-President, Emerging Growth Equities Ltd.