Patent Baristas

In a nonprecidential opionion, the U.S. Court of Appeals for the Federal Circuit dismissed an appeal by Biopolymer Engineering (Biothera) as moot after it appealed a District Court order granting summary judgment of noninfringement by Immunocorp and Biotec Pharmacon ASA (Biotec).  Biopolymer Engineering and MIT v. Immunocorp and Biotec Pharmacon ASA (2010-1096).

Biothera sued Biotec alleging that Biotec for infringement of 14 of Biothera’s patents. Both parties filed summary judgment motions concerning one of the patents in suit, United States Patent No. 5,702,719, a patent related to the use of purified beta (1,3) yeast extract glucan particles, in particular finely ground, as nutritional supplements and as dermatological agents.  The district court granted Biotec’s motion for summary judgment that the ‘719 patent was not infringed.

While the case was pending in the district court, the parties entered into a settlement agreement. Pursuant to the terms of the settlement agreement, the district court entered judgment of noninfringement, and Biothera appealed.

Biotec showed a letter indicating that, pursuant to the settlement agreement, it had agreed not to participate in this appeal. The court then directed Biothera to show cause why this case should not be dismissed as moot due to lack of a case or controversy.

Biothera said that this appeal is not moot because:

“[a] very real and current controversy exists as to whether defendants’ products infringe the ‘719 patent.” Biothera states that this appeal “will directly decide the legal rights between Biothera and the defendants. If Biothera fails to prevail in its appeal, the judgment of non-infringement of all of Defendant’s accused products will become final. However, if Biothera prevails in its appeal, the judgment of non-infringement will be reversed or vacated.”

A settlement agreement does not necessarily result in mootness of an appeal. However, if by reason of settlement or other circumstance a court can no longer grant effectual relief, a case becomes moot and must be dismissed:

Based on Biothera’s response and the court’s review of the settlement agreement, that this court cannot grant any effectual relief to Biothera. Biothera has not shown that any claim for monetary or other relief is contingent on this court’s determination. Under these circumstances, this case does not present a “definite and concrete [case or controversy], touching the legal relations of parties having adverse legal interests.” Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240-41 (1937). In this case, because the court cannot grant Biothera any effectual relief, there is no case or controversy and the appeal must be dismissed.

In addition, when a case becomes moot due to settlement, vacatur is not justified in the absence of exceptional circumstances. In this case, Biothera did not show that exceptional circumstances warrant vacatur.

Request denied.

Caraco Pharmaceutical Labs and Sun Pharmaceutical Ind. tried to get a rehearing en banc regarding the counterclaim provision of the Hatch-Waxman Act (HWA).  Novo Nordisk A/S v. Caraco Pharmaceutical Labs and Sun Pharmaceutical Ind., US Court of Appeals for the Federal Circuit (2010-1001).

The petition for panel rehearing and for rehearing en banc was denied.

As part of the NDA process, the manufacturer must also identify all patents that claim the drug or a method of use. If the patent claims one or more methods of using the NDA drug, FDA forms require a description of each of those processes. This description is commonly known as the “use code narrative.” The FDA assigns a unique number, known as a “use code,” to each description. The FDA publishes a list of drugs, along with the applicable patents and their associated use codes, in the Orange Book.

A manufacturer that seeks to market a generic copy of these listed drugs may submit an abbreviated new drug application (ANDA) in which a generic manufacturer must make a certification that it would not infringe any patent identified in the Orange Book pertaining to its drug. Specifically, the generic manufacturer must select one of four alternatives permitting use of the patented product or process:  (I) no such patent information has been submitted to the FDA; (II) the patent has expired; (III) the patent is set to expire on a certain date; or (IV) the patent is invalid or will not be infringed by the manufacture, use, or sale of the generic drug. 21 U.S.C. § 355(j)(2)(A)(vii).

Often pharmaceutical formulations have multiple uses and applications. After expiration of the patent on the composition itself, only some of those uses may get continued protection as patented methods. If a generic manufacturer wants FDA approval for a use not covered by a method-of-use patent for a listed drug, the generic manufacturer must submit a proposed label to the FDA that does not contain the patented method of using the listed drug. When considering approval of these requests for a use not covered by a patent, the FDA relies on the applicable patent’s use code narrative to determine the scope of the patented method. The FDA approves the statement only where there is no overlap between the proposed carve-out label submitted by the generic manufacturer and the use code narrative submitted by the pioneering manufacturer.

The Hatch-Waxman Act enables a generic manufacturer in a Paragraph IV suit to assert a counterclaim challenging the accuracy of the “patent information” submitted to the FDA:

[The ANDA] applicant may assert a counterclaim seeking an order requiring the holder to correct or delete the patent information submitted by the holder under subsection (b) or (c) of this section on the ground that the patent does not claim either– (aa) the drug for which the application was approved; or (bb) an approved method of using the drug. 21 U.S.C. § 355(j)(5)(C)(ii

Congress enacted the counterclaim provision in order to prevent patent holders from making unwarranted or inaccurate claims of patent coverage in the Orange Book. Patent holders previously made such claims in order to delay the onset of competition from generic drug manufacturers, by preventing or delaying FDA approval of a generic manufacturer’s Abbreviated New Drug Application (ANDA).

Novo sells repaglinide under the brand name Prandin, approved for three uses: (1) repaglinide by itself (i.e., monotherapy); (2) repaglinide in combination with metformin; and (3) repaglinide in combination with thiazolidinediones (TZDs).

The Orange Book lists two patents for Prandin: U.S. Patent No. RE 37,035 (the “’035 patent”) for the chemical composition of repaglinide, which expired on March 14, 2009, and U.S. Patent No. 6,677,358 for repaglinide in combination with metformin, which expires on June 12, 2018.

The FDA initially assigned the ’358 patent the use code “U-546–Use of repaglinide in combination with metformin to lower blood glucose.”

Caraco filed an ANDA for the drug repaglinide with a Paragraph III certification for the ’035 patent and a Paragraph IV certification for the ’358 patent. Caraco stipulated that its ANDA would infringe the ’358 patent if it included a label that discussed the combination of repaglinide and metformin. Caraco submitted an amended ANDA declaring that Caraco was not seeking approval for the repaglinide-metformin combination therapy (a carve-out label). Novo got mad and said that the carve-out would render the drug less safe and effective.

Novo then updated its use code narrative for the ’358 patent where the FDA removed the use code U-546 from the Orange Book for Prandin and substituted the new use code “U-968–A method for improving glycemic control in adults with type 2 diabetes mellitus.” The FDA then disallowed Caraco’s section viii statement, because its proposed carve-out label overlapped with the use code U-968 for the ’358 patent. As a result, Caraco’s current label now includes the repaglinide-metformin combination therapy, which is stipulated to infringe claim 4 of the ’358 patent.

Caraco made a counterclaim requesting to change the use code for the ’358 patent in reference to Prandin from U-968 to U-546. Caraco claimed that the use code U-968 was overbroad because it incorrectly suggested that the ’358 patent covered all three approved methods of using repaglinide even though it claimed only one approved method. Caraco also added a patent misuse defense, asserting that Novo misrepresented the scope of the ’358 patent in its use code narrative.

The district court found that Novo had improperly filed an overbroad use code narrative for the ’358 patent and directed Novo Nordisk to correct the description of the ’358 patent by reinstating its former U-546 listing for Prandin and describes claim 4 of the ’358 patent in section 4.2b as covering the “use of repaglinide in combination with metformin to lower blood glucose.”

The ’358 patent claims only one of the three approved methods of using PRANDIN (i.e., repaglinide in combination with metformin). Novo argued that the counterclaim is available only if the ’358 patent does not claim any approved methods. Caraco countered that it is entitled to the counterclaim because the ’358 patent does not claim two of the approved methods of PRANDIN use. In other words, Novo reads “an approved method” in the counterclaim statute as “any approved method” while Caraco reads it as “all approved methods.”

The Federal Circuit shot down Caraco’s chances for a rehearing by extending the rights of the original patent holder:

This court detects no ambiguity in the statutory language. When an indefinite article is preceded and qualified by a negative, standard grammar generally provides that “a” means “any.”

The rest of the counterclaim provision also does not support Caraco’s interpretation. In the context of this case, the statutory language “an approved method of using the drug” refers to the approved methods of using the listed drug, PRANDIN. This language cannot refer to the methods of using Caraco’s generic drug, because the FDA has not yet approved Caraco’s ANDA. Therefore, the Hatch-Waxman Act authorizes a counterclaim only if the listed patent does not claim any approved methods of using the listed drug.

[Legislative] language selected for this Amendment supports this court’s interpretation that “an approved method” means “any approved method.” A patent listing that covers one amongst several approved methods of using a formulation protects that patented method and thus bears a direct relation to the purpose of Orange Book listings. This court does not detect a situation such as the one occurred in Mylan.

As Judge Clevenger points out, Caraco’s real complaint should lie with the FDA, not with Novo. Had it not been for the FDA’s regulatory action, Caraco could have asserted in a Paragraph IV lawsuit that its proposed labeling did not infringe the ’358 patent. It was the FDA, not Novo, that tipped the careful balance in the favor of pioneering manufacturers.

Denied.

Circuit Judges Gajarsa and Dyk dissented:

As the dissent explains, the majority’s opinion adopts an overly narrow construction of “patent information” and an overly broad construction of “an approved method of using the drug.” See id. at 1370-72, 1376-78. Both constructions are irreconcilable with pre-existing FDA regulations, the text of the HWA, and Congressional intent. See id. at 1370-78. I believe rehearing the case en banc is necessary to rectify these improper constructions.

Not only is the majority’s construction of the counterclaim provision erroneous, it also eliminates the careful balance Congress has struck between encouraging pharmaceutical discoveries and ensuring that the American people have access to low cost generic drugs. Specifically, the majority’s opinion seriously undermines Section viii, a critical provision of the HWA that facilitates the approval and marketing of lower-cost generic drugs for uses no longer protected by a patent.

To defeat this Section viii carve-out statement, Novo changed the Orange Book use code associated with the ’358 patent from “use of repaglinide in combination with metformin to lower blood glucose” to “a method for improving glycemic control in adults with type 2 diabetes mellitus.” See id. at 1362-63. The latter use code unmistakably covering both patented and unpatented uses. … This effectively allows a patent holder to extend its monopoly to unpatented uses.

The majority opinion thus eviscerates Section viii. A generic, like Caraco, cannot use Section viii if the pioneering manufacturer’s use code is erroneously broad. With the majority’s blessing, pioneering drug manufacturers now have every incentive to follow Novo’s lead and draft exceedingly broad use codes thereby insulating themselves from generic competition and rendering Section viii a dead letter.

See the original decision here: Novo Nordisk A/S v. Caraco Pharm. Labs., Ltd., 601 F.3d 1359, 1370-78 (Fed. Cir. 2010) (Dyk, J., dissenting).

“The backlog is indeed our biggest problem.” ~ USPTO Director David Kappos

CBS News ran a story on Sunday on the growing backlog at the U.S. Patent & Trademark Office. Since the federal patent agency was created in 1790, the U.S Patent and Trademark Office has issued 7,752,677 patents.

Now, with an average wait time of 36 months and a backlog of 700,000 applications, Patent Office Director David Kappos says speeding up the process will help the economy. “The backlog is indeed our biggest problem. It represents innovations trapped in this agency that otherwise could be creating jobs.”

Kappos wants to cut the waiting time from 36 to 20 months and the backlog in half but he needs more money to hire an additional 1200 patent examiners and update computers. “It’s no taxpayer dollars at all– all the fees we collect come from patent applicants.”

Congress sets the fees charged by the patent office. The legislative branch also does not permit the patent office keep all $2 billion in its annual revenue, by diverting $200 million dollars a year for other federal budget items.  Legislation that would end fee diversion and empower USPTO to adjust its own fees is pending.

Many say they would pay higher application fees if it meant a more functional patent office.

To see the full story, see here.

Where once we were isolated legal students, practitioners, and academics who could share our thoughts only with those in proximity, blogging and social media have turned us all into a kind of “other memory” for one another. ~Colin Samuels, Blawg Review Sherpa Emeritus

Blawg Review #276 is out at the Securing Innovation business blog, published by IP.com.  This is from a blog site that encourages and participates in discussions and topics regarding anything IP.  Securing Innovation provides some wonderful guest posts including “Patent an Idea?” by Vincent LoTempio.

In this week’s version, the focus of Blawg Review is not Intellectual Property but Indigenous Peoples in honor of International Day of the World’s Indigenous People.

“The theme of this year’s Day of the World’s Indigenous Peoples is indigenous filmmakers, who give us windows into their communities, cultures and history. Their work connects us to belief systems and philosophies; it captures both the daily life and the spirit of indigenous communities. As we celebrate these contributions, I call on Governments and civil society to fulfill their commitment to advancing the status of indigenous peoples everywhere.”  ~Secretary-General Ban Ki-moon

The stated objectives of the United Nations with respect to Indigenous Peoples include developing strong monitoring mechanisms and enhancing accountability at the international, regional and particularly the national level, regarding the implementation of legal, policy and operational frameworks for the protection of indigenous peoples and the improvement of their lives.

Obviously, the top item is the Wall Street Journal Law Blog report this week, “The battle between oil giant Chevron and Ecuador’s government continues to rage. The parties were back in court on Thursday to discuss the latest item in their long-running dispute over environmental damages in the country’s Amazon region.”

For background and references to the movie “Crude” about this case, see this YouTube video of a Voice of America news report. In a blog post on Opinio Juris, Roger Alford reports that the “ongoing saga regarding Chevron’s legal travails in Ecuador took an interesting twist this week. As I reported earlier, Chevron has secured key outtakes of the movie Crude that appeared to show alarming collusion between the plaintiff lawyers and the Court-appointed expert.”

In another post on Opinio Juris, Roger Alford says one of the key arguments that the Ecuador plaintiffs are making in response to Chevron’s Motion is that the damaging quotes are being taken out of context. Without question, writes Alford, one of the most damning excerpts is when lead plaintiffs’ lawyer Steve Donziger is quoted as saying that “Because at the end of the day, this is all for the Court just a bunch of smoke and mirrors and bullshit. It really is.”

Additional must-see items in this week’s Blawg Review includes a report by Kevin Noonan at Patent Docs that describes how intent generally is not required for patent infringement, a strict liability tort.  Now, pharma and software companies have filed a joint Amicus Brief in the Therasense case arguing that it is only in “extraordinary situations” that intent becomes an issue for infringers when the allegation is for inducing infringement, and for patentees when the allegation is inequitable conduct. The brief argues that specific intent, defined as “[t]he intent to accomplish the precise act with which one has been charged” (reflecting the origins of the concept in criminal law) is the standard that a court should apply when establishing inequitable conduct.

Also, don’t miss Gene Quinn at IP Watchdog where he has posted an Interview Exclusive with USPTO Director David Kappos.

Eli Lilly lost an appeal from a final judgment of the U.S. District Court for the Eastern District of Michigan, finding claims 2, 6, and 7 of U.S. Patent No. 5,464,826 invalid for obviousness-type double patenting over its earlier U.S. Patent No. 4,808,614.  See, Sun Pharmaceutical Industries v. Eli Lilly and Co., United States Court of Appeals for the Federal Circuit (2010-1105).

Lilly markets the drug Gemzar® (gemcitabine) for the treatment of various forms of cancer. Both the ’614 patent and the ’826 patent cover gemcitabine and are therefore listed in the Food and Drug Administration’s (FDA’s) Approved Drug Products with Therapeutic Equivalence Evaluations (the Orange Book) with respect to Gemzar®. The ’614 patent claims gemcitabine, as well as a method of using gemcitabine for treating viral infections. The ’826 patent, however, claims a method of using gemcitabine for treating cancer.

Specifically, the specification of the ’614 patent explains:

In addition to the antiviral utility of the present compounds, certain of the compounds of the present invention have also demonstrated excellent oncolytic activity in standard cancer screens. A particularly preferred compound with this utility is [gemcitabine].

The ’614 patent does not claim a method of using any of the claimed nucleosides for treating cancer.

On December 4, 1984, the same day that Lilly filed the continuation-in-part that resulted in the ’614 patent, Lilly filed another patent application that ultimately issued as the ’826 patent. Lilly did not file a terminal disclaimer with respect to the ’826 patent.

Each claim of the ’826 patent is directed to a method of treating cancer with an effective amount of a class of nucleosides, which includes gemcitabine. Specifically, claim 1 of the ’826 patent recites:

“[a] method of treating susceptible neoplasms[, i.e., cancer,] in mammals comprising administering to a mammal in need of such treatment a therapeutically effective amount” of the class of nucleosides.

Claim 2 of the ’826 patent is specifically directed to a method of using gemcitabine.

After Sun Pharma filed an Abbreviated New Drug Application (ANDA) with the FDA for approval to market a generic version of Gemzar® and certified that both the ’614 patent and the ’826 patent were invalid or not infringed, Sun filed a declaratory judgment action against Lilly, seeking judgment that the ’826 patent is invalid and not infringed.

The district court granted Sun’s motion for partial summary judgment that the claims, namely claims are invalid for obviousness-type double patenting over the earlier ’614 patent after it concluded that, given the ’614 patent’s disclosure of gemcitabine’s anticancer use, claim 12 of the earlier ’614 patent, which claims gemcitabine, and claims 2, 6, and 7 of the later ’826 patent, which claim a method of using gemcitabine for cancer treatment, are not patentably distinct as a matter of law.

The doctrine of double patenting is intended to prevent a patentee from obtaining an extension of a patent for the same invention or an obvious modification. The proscription against double patenting takes two forms: (1) statutory double patenting, which stems from 35 U.S.C. § 101 and prohibits a later patent from covering the same invention, i.e., identical subject matter, as an earlier patent, and (2) obviousness-type double patenting, which is a judicially created doctrine that prevents a later patent from covering a slight variation of an earlier patented invention.

Obviousness-type double patenting prohibits “claims in a later patent that are not patentably distinct from claims in a commonly owned earlier patent. An obviousness-type double patenting analysis consists of two steps.  First, the court “construes the claim[s] in the earlier patent and the claim[s] in the later patent and determines the differences.” Second, the court “determines whether those differences render the claims patentably distinct.”

Lilly argued that the double-patenting analysis of earlier cases did not apply to the later ’826 patent claims because, though the specification of the earlier ’614 patent disclosed gemcitabine’s use in treating both viral infections and cancer, the antiviral use provided the essential utility necessary to the patentability of the ’614 patent’s claim to gemcitabine. Lilly objected to what it said was the district court’s extension of the obviousness-type double patenting analysis to any utility disclosed in the specification of an earlier patent.

The Federal Circuit summarily rejected Lilly’s argument.

Moreover, the analysis in the Pfizer decision shows that obviousness-type double patenting encompasses any use for a compound that is disclosed in the specification of an earlier patent claiming the compound and is later claimed as a method of using that compound. Pfizer never implies that its reasoning depends in any way on the number of uses disclosed in the specification of the earlier patent.

Thus, the holding of Geneva and Pfizer, that a “claim to a method of using a composition is not patentably distinct from an earlier claim to the identical composition in a patent disclosing the identical use,” extends to any and all such uses disclosed in the specification of the earlier patent. Pfizer, 518 F.3d at 1363; Geneva, 349 F.3d at 1385-86. Indeed, as both cases recognized,  [i]t would shock one’s sense of justice if an inventor could receive a patent upon a composition of matter, setting out at length in the specification the useful purposes of such composition, . . . and then prevent the public from making any beneficial use of such product by securing patents upon each of the uses to which it may be adapted.

Affirmed

BioOhio Annual Conference “Innovation Road Show”

This year BioOhio has decided to take its annual conference networking and learning experience around the state.  At each 1-day event, the focus will be on innovation… defining it, discussing it, debating it, and understanding how essential  it is from R&D through commercialization to market.

For 2010, one event becomes three across the state:

NE Ohio on Sept. 28 (Embassy Suites Cleveland-Rockside)

Central Ohio on Oct. 28 (OCLC Conference Center in Dublin)

SW Ohio on Nov. 17 (The Manor House in Mason)

Full agenda details are still being cooked, but some of the major speakers they’ve set up include:

In Cleveland/Independence in September: Frank Douglas, President & CEO, Austen BioInnovation Institute in Akron and Jay Mazelsky, Senior Vice President, Philips Healthcare

In Dublin in October: Christine Poon, Dean of Ohio State University’s Fisher College of Business, and former Worldwide Chairman of Medicines & Nutritionals of J&J

In Mason in November: Thomas Fogarty, MD, Vascular Surgery Pioneer, Inventor, Professor, and Cincinnati native

According to BioOhio spokesman Matt Schutte:

We think this regional-one-year, central-the-next approach will allow us to extend the value of the annual conference and allow more “first timers” to experience the event and learn more about Ohio’s growing bioscience industry.

For registration, click here.

Early bird rates: $55 for members, $90 for non-members, $45 for students

Each event will kick off around 10, include a great lunch, wrap-up around 4:30, and then capped off with a networking reception.  In 2011, they’ll come back to one central event… and if they like how this year goes, they’ll return to the “road show” in 2012.

Hot on the heels of the Bilski decision in the US, the Australian Patent Office has now refined the Australian test for the patentability of business methods.

The patent application in question relates to a “Method for Commercialising Inventions”.  The main independent claim read as follows:

1. An invention specific commercialization system to facilitate success of inventions, the system including the steps of:

a) applying for patent protection for the invention in a country which is party to the Paris Convention,

b) conducting a review of specific commercialization process required by the invention,

c) preparing a research and development plan, testing the business dynamics of the invention,

d) conducting prototype testing, developing a prototype cost/benefit analysis,

e) determining product positioning and packaging,

f) conducting a manufacturing checklist,

g) entry of the information collected in steps a) to f) into an electronically fillable checklist having a prescribed time limit for each step to form a commercial entry strategy (CES) with a number of sub-steps, the CES prepared on the basis that each of the sub-steps in the CES are to be completed by a corresponding deadline, all deadlines falling within 30 months from the earliest priority date of the patent application, the checklist being computer-implemented and stored in computer or human readable format in data storage means and associated with processing means to allow updating of the checklist; and

h) policing compliance with the deadlines for the completion of the sub-steps through the production of reminders based on the prescribed time limits in the checklist to ensure that all sub-steps are completed within the deadlines. (underlining added)

Prior to the subject decision, the governing precedent was Grant v Commissioner of Patents [2006] FCAFC 120 (“Grant”).  Grant stood for the proposition that a method must produce “a physical effect in the sense of a concrete effect or phenomenon or manifestation or transformation”.  Grant went on to say that a change in the state or memory of a computer may be a “physical effect”.

In the subject case, the applicant argued that the entry of information into the electronically fillable checklist, and the storage and updating of same, satisfied the “physical effect” requirement of Grant.  The Australian Patent Office rejected this argument.  At paragraphs 36-38, the Australian Patent Office stated:

36. In Grant the Court clearly was stating a view that without a physical effect in the sense of a “concrete effect or phenomenon or manifestation or transformation” a claimed method could not be considered to be within the realms of patentability but, as I have indicated, I do not take it to suggest that patentability is merely determined on the presence of a physical effect. Rather it clearly must be an effect of such substance or quality that the method considered as a whole is “proper subject of letters patent according to the principles which have been developed for the application of s. 6 of the Statute of Monopolies”.

37. The decisions in Grant and Catuity both referenced US law and in Bilski I note the Supreme Court confirmed that in the US the “the prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of the formula to a particular technological environment” or adding “insignificant post-solution activity” (Diehr at 191-192). It was said in that decision:

“To hold otherwise would allow a competent draftsman to evade the recognized limitations on the type of subject matter eligible for patent protection. On the other hand, when a claim containing a mathematical formula implements or applies that formula in a structure or process which, when considered as a whole, is performing a function which the patent laws were designed to protect (e. g., transforming or reducing an article to a different state or thing), then the claim satisfies the requirements of 101.”

38. Insignificant post-solution activity has been taken to include steps such as the inputting, storage or displaying of data. I take from this aspect of US law however only confirmation of the unremarkable conclusion that one must consider whether the subject matter of a claim considered as a whole falls within the scope of patentable subject matter and that this cannot be achieved merely by pointing to some physical effect or transformation that, while present in the claimed method, does not alter its fundamental character. In applying the decision in Grant I therefore consider that the “concrete effect or phenomenon or manifestation or transformation” referred to must be one that is significant both in that it is concrete but also that it is central to the purpose or operation of the claimed process or otherwise arises from the combination of steps of the method in a substantial way. Consequently while the step of building a house involves a concrete physical effect it is peripheral to the method of acquiring a house and indeed could hardly be said to characterize the subject matter of the method such that it is considered an artificially created state of affairs. I consider the same to apply to a business scheme implemented in some part by computer and do not believe the patentability of such a method can arise solely from the fact that, in a general sense, it is implemented in or with the assistance of a computer or utilizes some part a computer or other physical device in a incidental way. (underlining added)

In summary, the subject case has qualified the “physical effect” requirement by now making it clear that the physical effect must be “central to the purpose or operation of the claimed process or otherwise arises…in a substantial way”.

In addition to qualifying the patentability of business methods, the subject case also had meaningful comments about the ability of the Commissioner to inform herself regarding factual matters.  In particular, the Commissioner rejected arguments and evidence submitted by the applicant in relation to the state of the common general knowledge in the art (see paragraph 55).  Further, the Commissioner rejected arguments submitted by the applicant on the question of whether prior art references would have been considered by the skilled person (see paragraph 67).  We expect that this aspect of the decision will embolden Australian examiners to maintain rejections more often in the future.

The full decision can be viewed here: http://www.austlii.edu.au/au/cases/cth/APO/2010/10.html

Today’s post is by Guest Barista Bill Bennett of Pizzeys.

O Canada

Lilly sued Novopharm for infringement under Canadian Patent No. 2,041,113, a selection patent for the compound olanzapine (sold under the brand name Zyprexa), owned by Lilly. Olanzapine is used to treat schizophrenia.

Novopharm argued that the ‘113 Patent is invalid.  A Federal Court judge (the trial judge) agreed with Novopharm and dismissed Lilly’s action.  The Federal Court of Appeal reversed.

On appeal, the question raised by the parties was:

Do the conditions for a valid selection patent constitute an independent basis upon which to attack the validity of a patent?

Lilly already obtained Canadian Patent No. 1,075,687, a genus patent described by the court as covering “approximately 15 trillion compounds predicted to be useful in the treatment of mild anxiety and certain kinds of psychotic conditions, such as schizophrenia and acute mania. The ‘687 Patent expired 15 years ago.

The ‘687 Patent encompassed, but did not disclose, olanzapine. The trial judge concluded that olanzapine fell within the “most preferred” compounds. The ‘687 Patent specifically disclosed flumezapine, ethyl flumezapine and ethyl olanzapine.

Further research was conducted on some of the ‘687 Patent’s compounds, one of which was olanzapine. In 1989, clinical trials began with patients. Lilly decided to file the ‘113 Patent, which characterizes olanzapine as a selection from the class of the ‘687 Patent. The patent for olanzapine was filed in Canada on April 24, 1991 and the ‘113 Patent issued July 14, 1998.

In the reasons for judgment, the trial judge identified the ‘113 Patent’s stated advantages over both the ‘687 Patent and other antipsychotic drugs, including lower incidence of liver enzyme elevations compared to flumezapine; lower CPK levels than flumezapine; lower ESP liability than flumezapine; and no increase in cholesterol compared to ethyl olanzapine.

The trial judge reasoned that if these advantages amounted to a substantial advantage secured by the drug (or a substantial disadvantage avoided in comparison with the genus patent), if they were known or predicted at the time of filing, and if they were adequately disclosed, the ‘113 Patent would be a valid selection patent.

The trial judge concluded that there was insufficient evidence of the advantages identified by the ‘113 Patent. Specifically, the trial judge determined: the stated advantages were not substantial and peculiar; a person skilled in the art (POSITA) would not be able to appreciate any inventive difference between the ‘687 Patent and the ‘113 Patent; the test for sound prediction was not met; Lilly had very little idea about what olanzapine’s effect was likely to be; and the ‘113 Patent did not meet the requirements for adequate disclosure.

Although not restricted to chemical patents, selection patents more commonly arise in that context. Simply stated, the originating (or genus) patent typically refers, in general terms, to a group of products or processes from all of which a particular result (or results) may be obtained or predicted. If a property, quality or use in relation to one or more members of the genus is subsequently discovered, that discovery may be an invention giving rise to a valid selection patent. As explained in Pfizer and Sanofi, selection patents exist to encourage researchers to further use their inventive skills so as to discover new advantages for compounds within the known class. A selection patent can be claimed for a selection from a class of thousands or for a selection of one out of two.

In Sanofi, the characteristics of a valid selection patent are described as follows:

1. There must be a substantial advantage to be secured or disadvantage to be avoided by the use of the selected members;
2. The whole of the selected members (subject to “a few exceptions here and there”) possess the advantage in question;
3. The selection must be in respect of a quality of a special character peculiar to the selected group. If further research revealed a small number of unselected compounds possessing the same advantage, that would not invalidate the selection patent. However, if research showed that a larger number of unselected compounds possessed the same advantage, the quality of the compound claimed in the selection patent would not be of a special character.

Lilly argued that the trial judge erred by creating an “illegitimate amalgam by merging the doctrine of sound prediction of utility with obviousness and sufficiency and in the process required Lilly to provide proof of the inventive step (i.e. the advantages) in the disclosure.” In Lilly’s view, the “selection” issue goes to the question of obviousness and is properly addressed as part of that inquiry.

The Federal Court of Appeal felt likewise:

In my view, a challenge directed to a determination that the conditions for a selection patent have not been met does not constitute an independent basis upon which to attack the validity of a patent. Rather, the conditions for a valid selection patent serve to characterize the patent and accordingly inform the analysis for the grounds of validity set out in the Act – novelty, obviousness, sufficiency and utility. In short, a selection patent is vulnerable to attack on any of the grounds set out in the Act.

Notably, the Act contains no reference to invalid selection.

On consideration, I think it would be unwise to endeavour to state in definite language all the conditions on which a selection patent must depend; for after all a selection patent does not in its nature differ from any other patent and is open to attack on the usual grounds of want of subject-matter, want of utility, want of novelty and so forth.

Application to this Case:

I have concluded earlier that a determination that the conditions for a selection patent have not been met does not constitute an independent basis upon which to attack a patent’s validity. A selection patent is the same as any other patent. Its validity is vulnerable to attack on any of the grounds set out in the Act. It necessarily follows that the trial judge erred in determining the validity of the ‘113 Patent on the basis that he did. That is not to say, however, that his analysis is not relevant to the issue of utility, or other grounds of validity.

Eli Lilly Canada v. Novopharm Ltd