Patent Baristas

Law.com reported that the California Supreme Court agreed to review an appellate decision in which a $500 million judgment for City of Hope National Medical Center against Genentech, including $200 million in punitive damages.

Genentech negotiated a license agreement to develop and market human insulin and human growth hormone based on research at City of Hope. Genentech paid a royalty on the sale of products but didn’t pay for licensing revenue. The research center sued Genentech for breach of contract. The first trial ended in a deadlock favoring Genentech, but the second ended with the $500 million award. Genentech has argued that a 2003 ruling by another division of the 2nd District that said the failure to account for and pay royalties is not a tortious breach of fiduciary duty but only a breach of contract. City of Hope has emphasized Genentech’s alleged fraud.

This is being closely watch as Disney, Intel Corp. and Microsoft Corp., among others, have submitted amicus briefs in an attempt to quash any tort liability stemming from licensing.

The case is City of Hope National Medical Center v. Genentech Inc., S129463.

The Cincinnati Enquirer ran an article about a new a state-created venture fund charged with raising $100 million and steering at least half of it into Ohio startup companies. The new company, Buckeye Venture Partners, will be headed by a unit of Western & Southern Financial Group of Cincinnati.  Buckeye Venture Partners will serve as administrator of the newly created Ohio Capital Fund based in Cincinnati.  Of the money entrusted to venture capital firms, no less than 75 percent must go to Ohio-based funds. And of the money invested in companies, no less than 50 percent must go to those based in Ohio. Ohio-based funds that receive OVCA money must match it with an equal amount of their own funds.

Running adjacent to this was an article detailing the decline in venture funding in the Midwest.  The article showed reports indicated that the venture capital market nationally grew by 10.5% in 2004 but Ohio received 20% less in 2004, making Ohio’s share of U.S. venture capital 0.3 percent, down from 1.1 percent in 2002.  While some think this has more to do with the Midwest lagging in the recovery or that the Midwest is not a favorable business climate, it seems to indicate a continued bias towards investments on the coasts.  More often than not, we’re seeing venture deals that require a move out of the Midwest to a location on the coast, generally close to the VC’s home.  I guess no one wants to travel anymore.

Finally, Business 2.0 ran an article stating that they expect it to be raining cash in the coming months as much of the money raised in 2000 is in funds that will be closed to new investments after 2005, so VCs have to use that money now or return it to investors. VC’s do not like losing control over funds – they’d lose the 2 percent management fees and they’d have to go raise more money again. This could mean a good window of opportunity for all sectors and regions to obtain some venture capital. It will be interesting to see what portion, if any, makes its way to the Midwest.

See the entire article here.

Under the Consolidated Appropriations Act, 2005 (Consolidated Appropriations Act), the USPTO splits the national fee for Patent Cooperation Treaty (PCT) applications entering the national stage into a separate national fee, search fee and examination fee, during fiscal years 2005 and 2006.  The USPTO announced that it is reducing the search fee and examination fee for certain PCT applications entering the national stage, effective February 1, 2005. The changes in this interim rule apply to all international applications entering the national stage under 35 U.S.C. 371 for which the basic national fee specified in 35 U.S.C. 41 is paid on or after December 8, 2004.

(1) The Office will refund the entire search fee less $100.00 ($50.00 for small entities) if the search fee as set forth in ?? 1.445(a)(2) and (a)(3) has been paid on the international application to the United States Patent and Trademark Office as an International Searching Authority for all of the claims presented in the application entering the national stage; and

(2) the Office will refund $100.00 ($50.00 for small entities) if an international search report on the international application has been prepared and is provided to the Office no later than the time at which the search fee is paid. In addition, under the authority provided in 35 U.S.C. 376, the Office will refund the entire examination fee less $100.00 ($50.00 for small entities) if an international preliminary examination report on the international application prepared by the United States International Preliminary Examining Authority states that the criteria of novelty, inventive step (non-obviousness), and industrial applicability, as defined in PCT Article 33(1) to (4) have been satisfied for all of the claims presented in the application entering the national stage.

See the Federal Register here.

As reported in the New York Times, the National Institutes of Health (NIH) announced a new supplemental ethics regulation that addresses the concerns raised by the activities of some of its employees, particularly regarding outside consulting with the pharmaceutical and biotechnology industries. The regulation was developed by the Department of Health and Human Services (HHS), with the concurrence of the Office of Government Ethics (OGE), the federal agency that prescribes executive branch-wide ethics standards.

I am against an outright ban on consulting.  While I don’t think every activity should be allowed, I don’t think you can ever completely eliminate conflicts of interest.  It would make more sense to try to effectively manage the conflicts than to ban them completely.  With proper disclosure and oversight, commercial activities can co-exist with academic research.

I suspect, though, that the ban has more to due with trying to put a pristine shine back on research after a few high-profile cases gave consulting a black eye.  Such Dr. Bryan Brewer Jr., chief of the National Heart, Lung and Blood Institute’s molecular disease branch, who published an article on the benefits of Crestor in a medical journal "supplement" that was paid for by AstraZeneca.  In another case, Dr. P. Trey Sunderland, a senior researcher at the National Institute of Mental Health, received more than $500,000 in consulting fees from Pfizer at the same time that he was collaborating with it in his government capacity of studying patients with Alzheimer’s disease.

Noteworthy is that in Sunderland’s case, he did not disclose his consulting fees despite NIH rules require their disclosure.  This makes you wonder how effective this new ban will have on preventing conflicts.  There will always be some people who won’t follow the rules.

The new regulation focuses on outside activities, financial holdings, and awards for all NIH employees.  Under the new rules, all NIH employees are prohibited from engaging in certain outside employment with:

1) substantially affected organizations, including pharmaceutical and biotechnology companies;
2) supported research institutions, including NIH grantees;
3) health care providers and insurers; and
4) related trade, professional or similar associations.

Investments in organizations substantially affected by the NIH, such as the biotechnology and pharmaceutical industries, are also not allowed for those employees who are required to file public and confidential financial disclosure reports, and are restricted for other staff.

See:  NIH Conflict of Interest Information and Resources and the Federal Register

mMicrosoft put out its own search engine on its MSN Web site, today.  This, after  admitting that it totally missed the boat sailed by Google Inc. and others.  While one can argue the merits of putting a lot of resources into searching the web, I thought I’d at least take a look.

I did a quick search for "Merck Teva Fosomax" on MSN and on Google in a head-to-head search comparison (yes, I know, not a scientifically valid test but that’s all I had time for today).  Interestingly, MSN pulled up 11,301 web results and Google pulled up 10,600.  Given that it’s newer, I expected MSN to pull up fewer spots.  More importantly, when I looked through the sites pulled up in the listed top 10 references, the quality of the references were quite different. 

While highly subjective, I felt that the Google search provided more relavent and authoritative(?) references in siting articles by CBS Marketwatch, Reuters, Boomberg, and ABCNews.  The MSN search brought up a blog site, and various marketing feeds that merely provided a short snippet and a link to another reference.  I think MSN still needs to iron out some difficulties in their page ranking methods.

To be more thorough, I looked at AskJeeves and Yahoo.com.  AskJeeves brought up 854 references, mostly from sites wanting to sell me Fosamax!  Yahoo pulled up a mere 811 references but, interestingly, many in the top 10 overlapped with those in the top 10 of the Google search.

Use this at your own risk, your milage may vary and past performance is no indication of future returns.  For now, though, I think I’ll stick to Google.

A UK publication, Medical News Today,  has asked for input on how to deal with the growing problem with royalty stacking, the sharing of third-party royalties caused by a multiplicity of overlapping patents. The article states that many companies are forced to pay large amounts to obtain these multiple licenses and, hence, are forced to raise prices and are being discouraged to undertake technical innovation.  See the entire article here.

The article cited a vaccine plus adjuvant as an example of a product that would be a difficult option to commercialize due to the multiple, overlapping patents held by varying parties. They go on to state that growing litigation and rising production costs, along with stacking is also constraining research causing "closure of vital projects mid way through development."  They especially point to biotech companies as being a problem area.

Some suggested remedies include (i) use of clearing houses, consortia and cross-licensing; (ii) patent pools, exclusive and non-exclusive licenses; and (iii) risk-adjusted royalties or demanding up-front payments rather than royalties.

This seems to be another one of those articles about companies saying "We want to make more money so stop asking for so much of a cut!"  Look, it’s a free market and the market bears what it can or it doesn’t.  I don’t think it’s fair that I have to pay my local telephone bill and then pay the "stacked" charges for long distance by the long-distance telephone company.  But crying about it doesn’t make it the fault of the telecos.  I have often been involved in renegotiating deals when the reality at the end of the road made commercialization impractical.  No one will make any money unless the end product is a success so everyone is free to negotiate (or re-negotiate) as they wish.

If you are interested in an analysis overview providing an introduction into the Strategic Analysis of Royalty Stacking for Pharmaceutical and Biopharmaceutical Products – then send an email to Katja Feick -Corporate Communications at katja.feick@frost.com with the following information: Full name, Company Name, Title, Contact Tel Number, Email. Upon receipt of the above information, an overview will be emailed to you.

The U.S. of Appeals for the Federal Circuit invalidated U.S. Patent No. 5,994,329 (the ‘329 patent), covering the  osteoporosis drug Fosamax made by Merck & Co.  The court reversed and vacated an earlier ruling by the U.S. District Court in Delaware that had upheld the validity of the patent.

The patent is listed in the U.S. Food and Drug Administration’s Orange Book for Merck & Co.’s 35 mg and 70 mg Fosamax for which Teva Pharmaceutical Industries Ltd. has filed an Abbreviated New Drug Application to market a generic version. The district court found that Teva’s Abbreviated New Drug Application (ANDA)  constructively infringed the ‘329 patent claims 23 and 37 under 35 U.S.C. 271(e)(2)(A) of the Hatch-Waxman Act.

The ‘329 patent, entitled Method for Inhibiting Bone Resorption teaches a method of treating and preventing osteoporosis through less-than-daily administration of bisphosphonate compounds.  Bisphosphonates are a family of chemical compounds that are known to selectively inhibit the bone destruction process that contributes to osteoporosis and other bone diseases. At issue in this case are once-weekly dosages of alendronate monosodium trihydrate.

Since bisphosphonates are not readily absorbed by the gastrointestinal (‘GI’) tract, a patient must take the medicine on an empty stomach and remain upright and fasting for thirty minutes after ingestion.   The ‘329 patent provided a reduced-frequency dosing schedule to alleviate  the irritating effect of the compounds.
 
This case involves dependent claims 23 and 37 of the ‘329 patent, as below:

23.       A method for treating osteoporosis in human comprising orally administering about 70 mg of alendronate monosodium trihydrate, on an alendronic acid basis, as a unit dosage according to a continuous schedule having a dosing interval of once-weekly.

37. A method for preventing osteoporosis in human comprising orally administering about 35 mg of alendronate monosodium trihydrate, on an alendronic acid basis, as a unit dosage according to a continuous schedule having a dosing interval of once-weekly.

Relying on a construction of “about”, the district court dismissed Teva’s allegations that the claims were anticipated or obvious.

In reviewing the lower court’s holding, the Fed. Cir. stated that:

According to the district court’s opinion, the patentee uses the phrase about 35 [or 70] mg to account for variations in the molecular weight of the different derivatives of alendronic acid and to deliver exactly 35 (or 70) mg of alendronic acid.  Merck, 288 F. Supp. 2d at 613.  For example, the court noted that alendronate monosodium trihydrate, which is used in Fosamax, requires an atom of sodium for each molecule.  Id. at 613-14. 

If a heavier metal were chosen, such as potassium, the weight of the derivative compound would have to increase to deliver exactly the same number of molecules of the active alendronate compound found in 35 [or 70] mg of alendronic acid.  Id. at 614.  The district court thus construed the term “about 35 [or 70] mg” to mean the amount of the derivative compound that gives exactly 35 [or 70] mg of the active compound.

We reverse the district court’s construction of about and hold that such term should be given its ordinary meaning of approximately.

…

When a patentee acts as his own lexicographer in redefining the meaning of particular claim terms away from their ordinary meaning, he must clearly express that intent in the written description.  See, e.g., Bell Atl. Network Servs. v. Covad Communications Group, Inc., 262 F.3d 1258, 1268 (Fed. Cir. 2001).  We have repeatedly emphasized that the statement in the specification must have sufficient clarity to put one reasonably skilled in the art on notice that the inventor intended to redefine the claim term.  Id."

The trial court held a July 1996 article does not ‘expressly or inherently disclose the dosage amounts for alendronate in claims 23 and 37’ because there was no evidence that 40 mg and 80 mg of alendronate contains ‘the same number of alendronate core molecules’ as found in 35 mg and 70 mg, respectively, of alendronic acid and that the suggestion of weekly treatment was not ‘clinically useful or obvious in July 1997 because of the known dose-related gastrointestinal side effects’ associated with the daily formulation of Fosamax. Teva argued that the 40 mg and 80 mg amounts were recommended because 40 mg tablets of alendronate monosodium trihydrate were commercially available and exact multiples of the standard daily dose corresponding to the amount of Fosamax administered in a week, i.e., 35 mg or 70 mg, were not commercially available at the time of the 1996 articles.

In holding that the passage cited by the district court from the specification for Merck’s definition of ‘about’ is ambiguous, the court stated that it fails to redefine ‘about’ to mean ‘exactly’ in clear enough terms to justify such a counterintuitive definition of ‘about.’  The court also stated that:

Finally, our construction of ‘about’ eliminates the problem pointed out by Teva that the district court’s construction of the term ‘about’ renders other parts of the claim superfluous.  As Teva notes, the specification uses both the term ‘about’ and ‘on an alendronic acid basis’ at least 15 times to describe a dosage strength.  If, as Merck urges, “about 35 [or 70] mg” means exactly 35 (or 70) mg of alendronic acid, then the oft-repeated phrase “on an alendronic acid active basis’ would be unnecessary since such an understanding would be clear simply by using the term “about.”  A claim construction that gives meaning to all the terms of the claim is preferred over one that does not do so.  Elekta, 214 F.3d at 1307 (construing claim to avoid rendering the 30 degree claim limitation superfluous); Gen. Am. Transp. Corp. v. Cryo-Trans, Inc., 93 F.3d 766, 770 (Fed. Cir. 1996) (rejecting the district court’s claim construction because it rendered superfluous the claim requirement for openings adjacent to the end walls).  By construing ‘about’ to mean its accepted and ordinary meaning of “approximately,” the phrase “alendronic acid basis” is no longer excess verbiage, but is instead necessary because it is the noun that “about 35 [or 70] mg” modifies. 

In light of the corrected claim construction the court reversed the district court’s obviousness analysis holding that:

The central issue concerns the differences between the aspects of the invention claimed at claims 23 and 37, and the teachings of the Lunar News articles.  As the district court necessarily recognized, there are more similarities than differences.  These claims, and the July 1996 article, both teach administering alendronate once a week instead of once a day.  These claims read in light of the specification, and the July 1996 article, both indicate and it has been conceded as known in the art at the time that for treating or preventing osteoporosis a once-weekly dosage at seven times the daily dose would be as effective as seven daily doses.  The ‘329 patent, and both the April and July 1996 articles, explain the motivation for a once-weekly dose as increasing patient compliance, by making it easier to take the drug (and incur the inconvenience of the rigorous dosing regimen less frequently).  Although the claims teach 70 or 35 mg doses rather than the 80 or 40 mg doses disclosed in the July 1996 article, Dr. Arthur C. Santora, one of the co-inventors on the ‘329 patent admitted against Merck’s interest that a once-weekly 40 mg dose would be as effective as seven daily 5 mg doses, and a once-weekly 80 mg dose would be as effective as seven daily 10 mg doses, in preventing or treating osteoporosis.  There was no great leap required of those skilled in the art to go from 40 or 80 mg once a week, the pills available at the time to treat patients with Paget’s disease, to a 35 or 70 mg pill once a week.  The district court’s conclusion that the claims are not obvious cannot rest on any of these similarities between the claimed invention and the two Lunar News articles.
…
In short, the district court clearly erred in distinguishing the claimed invention from the two Lunar News articles offered as section 103 prior art.  Contrary to the district court’s findings, these articles support the conclusion that Merck’s claims 23 and 37 are invalid as obvious. 

The dissent, however, looked at the terms of the entire phrase “about 70 [35] mg of alendronate monosodium trihydrate, on an alendronic acid basis.”  Judge Rader warned:

1.  "Elect the Lexicographer Option at Your Own Risk"   With this court’s claim constructions wavering between the plain meaning rule … and the “specification” rule … , a patent applicant might suppose that the best option to define the scope of the claim language might be the lexicographer rule.  In this case, the patentee used the lexicographer rule to define a lengthy phrase.  …   In its definition, the patentee defined the phrase with precise values.  The patentee’s definition, however, fell five letters short of success because the phrase included the word “about.”  This court seized on that word, gave it an ordinary meaning, and cast aside the lexicographer rule without a convincing explanation.  Moreover, this court overturned the result of a lengthy district court trial for the sole reason that the trial court applied this court’s lexicographer rule.  I find it hard to explain to the district court how it erred by following this court’s rules. 

2.  "Deference to Trial Courts: Time for ‘Truth in Advertising’" Despite the district court’s superior tools and time to evaluate the complete record, to hear and inquire from expert and fact witnesses, to delve into countless related details, to probe the scientific and semantic context, and to entertain argument as long as necessary for clarity, this court with its reading three briefs before its half-hour hearing becomes enamored with its own analysis of a very close issue and reverses the district court.  Either the Federal Circuit accords deference in accordance with its public protestations or it does not in accordance with its legal standard barring any deference.  If the former, this court has a “truth in advertising” problem.  Its actual practice clashes with its professed legal duty.  If the latter, this court has a different kind of “truth in advertising” problem.

This should allow Teva’s ANDA to be eligible for Final Approval in February 2008 when U.S. Patent No. 4,621,077 expires, instead of 2018. The main patent for the daily 5 milligram and 10 milligram versions of the drug already was set to expire in February 2008.

Merck reported total sales of $3.16 billion US for Fosamax last year, more than 90 per cent of which were for the once-a-week version. This comes on top of the withdrawal of Vioxx from the market and the loss of the Zocor patents in the middle of 2006. Zocor, for high cholesterol, is Merck’s biggest drug, with $5.2 billion in sales last year.

See more here.

The USPTO has published a final rulemaking to implement the new fee structure.  See the rules description here.  There is a discussion of new section 1.52(f)(1).

Section 1.52: Section 1.52(f)(1) is added to provide that any sequence listing in an electronic medium in compliance with ?? 1.52(e) and 1.821(c) or (e), and any computer program listing filed in an electronic medium in compliance with ?? 1.52(e) and 1.96, will be excluded when determining the application size fee required by ? 1.16(s) or ? 1.492(j). See 35 U.S.C. 41(a)(1)(G) (which provides that a sequence listing or a computer program listing is excluded if filed in an electronic medium as prescribed by the Director).

This is a welcome relief for anyone who was pondering whether or not sequence listings submitted on CD-ROM in lieu of paper copy would count towards your page fee.  Since sequence listings can (and often are) thousands if not tens of thousands of pages, the cost of a provisional could have been an added $5000 per 1000 pages of sequence listing submitted.   Not exactly the $200 originally.

New fee schedule is listed here.