Patent Baristas

A federal district court said that the ACLU et al. suit challenging the patentability of gene patents can go forward. The American Civil Liberties Union (ACLU), the Public Patent Foundation (PUBPAT), and a whole host of others have filed a lawsuit challenging patents on two human genes associated with breast and ovarian cancer claiming that the patents are illegal and restrict both scientific research and patients’ access to medical care, and that patents on human genes violate the First Amendment and patent law because genes are “products of nature.”

The lawsuit, Association for Molecular Pathology, et al. v. United States Patent and Trademark Office, et al., was filed in the United States District Court for the Southern District of New York against the PTO, Myriad Genetics and the University of Utah Research Foundation, which hold the patents on the BRCA genes.  The plaintiffs in the lawsuit include several patients and more than a dozen universities, genetic specialists and medical associations, such as the Association for Molecular Pathology and the American College of Medical Genetics.

The challenged patents cover diagnostic tests for mutations along the genes, known as BRCA1 and BRCA2, which are responsible for most cases of hereditary breast and ovarian cancers. The patents, held by Myriad Genetics, have been a source of contention since Myriad’s lab is the only place in the country where the diagnostic testing can be performed.

While far from over, the district court judge denied a motion filed by the US Patent and Trademark Office, Myriad Genetics, and the University of Utah Research Foundation to dismiss a lawsuit for lack standing to sue the USPTO, lack of subject matter jurisdiction, and because the action is barred by the sovereign immunity.

The judge felt that there was enough to get over the challenges saying that the plaintiffs had the necessary standing to bring their claims against the defendants and that the facts alleged in the case are plausible, specific, and form a sufficient basis for the plaintiff’s legal arguments.  The court also denied motions by the defendants to dismiss the case based on jurisdictional and other issues.

The court’s opinion stated:

“The widespread use of gene sequence information as the foundation for biomedical research means that resolution of these issues will have far-reaching implications, not only for gene-based health care and the health of millions of women facing the specter of breast cancer, but also for the future course of biomedical research… The novel circumstances presented by this action against the USPTO, the absence of any remedy provided in the Patent Act, and the important constitutional rights the Plaintiffs seek to vindicate establish subject matter jurisdiction over the Plaintiffs’ claim against the USPTO.”

The ACLU’s lawsuit is, in effect, challenging the entire practice of gene patenting so the case could have wide-reaching effects for the research and genetic diagnostics fields.  A draft report by the NIH shows that around 20 percent of human genes currently are patented, including genes associated with Alzheimer’s disease, muscular dystrophy, colon cancer, and asthma, and corresponding to 4,382 of the 23,688 genes as of 2007.  The genes found in the claims of over 4,270 patents.

While it is surprising that the suit is still in existence, I think the district court judge is allowing the plaintiff’s to at least make their best case.  Eventually, the suit will probably sputter out for lack of merit.   Even if semi-successful on some issues, a fight over the patentability of isolated genes is misplaced and is not likely to change the overall landscape of diagnostic and therapeutic costs.  Very often, patents are obtained not just on the isolated gene but also on methods of use and as part of more complex assays or kits.  Preventing just one kind of claim might provide some additional competition in the marketplace but any impact would likely be muted.

A copy of the complaint is available here: myriad-brca1-complaint (pdf)

A copy of the court’s decision is available here:  MTD_decision (pdf)

At the BIO’s IPCC Conference today, attendees were treated to a look at pending cases that concern biotech.

John Dragseth, a Partner at Fish & Richardson, gave an overview of the Mayo v. Prometheus case after filing a Petition for a Writ of Certiorari with the Supreme Court just hours earlier.  The Federal Circuit, reversing the district court, upheld Prometheus’s patent claims covering a process for correlating the level of certain chemicals in a patient’s blood with the patient’s health.

Earlier, the Supreme Court granted certiorari in Laboratory Corp. of Am. Holdings v. Metabolite Labs but — despite being hit with 20 amicus briefs — the Supreme Court turned around and opted out of ruling on the case saying that it had “improvidently” agreed to hear the case in the first place and it dismissed the appeal. At that time, thousands of patents on medical tests and genes dodged a serious bullet since the Court could have deemed such tests “natural phenomena.”

Now, the Court may have another shot to clarify the situation in Mayo and the answer may hinge on preemption of natural phenomenon.  The question presented is as follows:

Whether 35 U.S.C. § 101 is satisfied by a patent claim that covers observed correlations between patient test results and patient health, so that the claim effectively preempts all uses of these naturally occurring correlations

The Mayo case asks how a method can be patentable if anyone performing the test for other reasons can’t avoid infringing the claims if they do the test for any other reason but happen to “think” about the correlation knowing that it exists.

J. Michael Jakes, a Partner at Finnegan, gave an update on the Bilski v. Doll case as he prepares to argue the case before the U.S. Supreme Court.  The briefing is completed and argument is set for November 9.  The not so surprising note was that Bilski has garnered 65 amicus curiae briefs, which break down as 17 supporting the Federal Circuit decision, 22 against and 26 supporting neither.

Here, the questions presented are:

1. Whether the Federal Circuit erred by holding that a “process” must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing (“machine-or-transformation” test), to be eligible for patenting under 35 U.S.C. § 101, despite this Court’s precedent declining to limit the broad statutory grant of patent eligibility for “any” new and useful process beyond excluding patents for “laws of nature, physical phenomena, and abstract ideas.”
2. Whether the Federal Circuit’s “machine-or-transformation” test for patent eligibility, which effectively forecloses meaningful patent protection to many business methods, contradicts the clear Congressional intent that patents protect “method[s] of doing or conducting business.” 35 U.S.C. § 273.

Jakes pointed out that the Government-filed brief seems to want to resurrect the technological arts test by the CCPA, which was rejected by the CAFC in Bilski.  The examiner applied this test but it was overruled by the Board of Patent Appeals as not a proper test.  The technological arts test is problematic since technology is always evolving and not co-extensive with the test.

The problem of methods not tied to a specific machine or having a transformation is not solely related to business methods.  What about a method for seismic exploration?  In addition, the quality of the science is not a good measure of what is patentable.  While there are plenty of ridiculous business method patents, plenty of devices would meet the “not worthy” test, too.

See U.S. Pat. No. 5,443,036:

1. A method of inducing aerobic exercise in an unrestrained cat comprising the steps of:

(a) directing an intense coherent beam of invisible light produced by a hand-held laser apparatus to produce a bright highly-focused pattern of light at the intersection of the beam and an opaque surface, said pattern being of visual interest to a cat; and

(b) selectively redirecting said beam out of the cat’s immediate reach to induce said cat to run and chase said beam and pattern of light around an exercise area.

Is Bilski important?  Some estimates say as many as 200,000 patents could be invalidated if Bilski is held to strictly apply to all method patents.  In the end, it is doubtful that this will be the seminal case for biotech.  For that, we need a detailed court opinion on a solid diagnostic method patent.

At today’s session of BIO’s IPCC Conference, Gregory Morse of the Central Reexamination Unit of the US Patent and Trademark Office gave a presentation of the process for handling re-exams.  Comparing ex parte and inter partes, Morse showed that the time for processing to first action is inching up although inter partes proceedings have not been around enough to give a good picture.  He did say that the branch typically is made up of the best of the best examiners so quality of examination and proceedings is very high.

Chad Shear of Fish & Richardson pointed out that the time for inter partes reexamination is quite long and defendants will often try everything to slow down a parallel litigation case so that the USPTO can catch up and possible pass the litigation case since their (perceived) chances are better at the reexam level given the approximately 50% reversal rate by the federal circuit.  Shear pointed out that juries are all about damages and willfulness, not the infringement itself.

Under Reexamination, each claim of a patent is presumed valid under 35 U.S.C. 282 and may be enforced notwithstanding the presence of a pending reexamination proceeding.  Although litigation may move forward in parallel with a reexamination proceeding, at the district court’s discretion, the results of the reexamination proceeding may have an effect on the litigation. To proceed with a reexamination, a request for reexamination must establish the existence of at least one new technological teaching affecting any claim of the patent for which reexamination has been requested that was not considered by the Office in a prior Office proceeding involving the patent (substantial new question). The SNQ is established based on prior patents and/or printed publications.

Ex Parte Reexamination

A proceeding in which any person may request reexamination of a U.S. Patent based on one or more prior patents or printed publications. A requester who is not the patent owner (i.e., a “third party requester”) has only limited participation rights in the proceeding. [MPEP 2209]

Inter Partes Reexamination

A proceeding in which any person who is not the patent owner and is not otherwise estopped may request reexamination of a U.S. Patent issued from an original application filed on or after November 29, 1999 based on one or more prior patents or printed publications. Both patent owner and third party requester have participation rights throughout the proceeding, including appeal rights. [MPEP 2609]

What are the risks to reexamination?  In reexam, the patentee can throw in additional claims carefully crafted around the art you might want to use to invalidate the patent.  It is not unusual for a patent to come out of reexam upheld but with many additional claims, which are then added to the lawsuit against you.

What favors reexam for a defendant?  First, what court will you be sued in?  Is it an unfavorable venue?  Second, if the art is extremely technical, your chances are better in reexam than with a jury that will get frustrated by the technology.  Finally, do you have a good “story” to tell so that the jury can understand your actions.

What if the inventor won the Nobel Prize (or is otherwise a really favorable patentee)?  You want to be in the USPTO.

See reexamination historical statistics for requests for reexamination filed since 7/1/1981 (for ex parte) or since 11/29/1999 (for inter partes) here:

• Ex parte reexamination historical statistics [PDF]
• Inter partes reexamination historical statistics [PDF]

BIO’s Intellectual Property Counsel Committee is holding its Fall Conference and Committee Meeting got off to a great start today.  The meeting started off with an IP Counsels Committee Business Retreat – a day-long meeting where we members could discuss cutting-edge IP issues affecting the biotech industry. During this time we develop policies and positions for BIO’s Board of Directors to review. The Business meeting was chaired by Thomas Kelley, Patent Counsel with Monsanto Co.

The IP Amicus Subcommittee got a chance to meet with Chief Judge Paul Michel for advice on how to write an effective amicus curiae.  Judge Michel then offered some words to the group at the end of the day during the Meet & Greet Welcome Reception at the US Court of Appeals.

The reception, held at the Dolley Madison House (not that Dolly Madison), was sponsored by Finnegan. Interestingly, the marker on the side of the house is spelled Dolly Madison but the former First Lady married to President James Madison spelled her name Dolley.

The U.S. Senate Judiciary Committee voted to pass a compromise version of the bill by members Herb Kohl (D-WI) and Chuck Grassley (R-IA) banning pay-for-delay settlements that keep generic drugs off the market. The “Preserve Access to Affordable Generics Act (S.396 RS)” is an attempt to reduce the anti-consumer practice of brand-name drug manufacturers using pay-off agreements to keep cheaper generic equivalents off the market by making the practice illegal.

Under these pay-off agreements, brand name drug companies settle patent disputes by paying the generic drug manufacturer millions of dollars in exchange for a promise that it will keep its version of the drug off the market.

In February, the FTC filed an antitrust case challenging the latest “pay for delay” settlement. The FTC’s complaint alleges that Solvay, the brand name manufacturer of a hormone-boosting drug, entered into an agreement with two generic companies to delay the entry of their generic version of the drug for nine years. The FTC alleged that Solvay agreed in 2006 to share its profits with the generic competitors as long as they did not launch their generic versions until 2015. If these allegations are proven true, this case represents the type of agreement that would be presumed illegal by The Preserve Access to Affordable Generics Act.

Kohl introduced S. 369 in February with Senators Chuck Grassley (R-IA), Russ Feingold (D-WI), Dick Durbin (D-IL) and Amy Klobuchar (D-MN) as original cosponsors. Senators Al Franken (D-MN), Susan Collins (R-ME), and Bill Nelson (D-FL) have since signed onto the legislation.  The Act would prohibit brand-name drug manufacturers from entering into agreements with generic drug companies designed to keep cheaper generic equivalents off the market.  Sen. Grassley believes that pay-for-delay deals impede generic drug competition and keep drug costs high for Americans.

FTC Chairman Jon Leibowitz released a statement saying:

By taking this action, the Committee clearly recognizes the very real danger that these sweetheart deals pose to Americans struggling to pay their medical bills. Consumers must wait – sometimes years – for far less expensive generic drugs when branded pharmaceutical companies pay off their generic competitors to stay out of the market. We estimate that stopping these pay-for-delay settlements will save consumers about $3.5 billion per year and advance the cause of affordable health care for all Americans.

Committee members voted pretty much along party lines at 12 to 7 for the bill.

The Act would prohibit brand name drug companies from compensating generic drug companies to delay the entry of a generic drug into the market.  According to the Senate findings:

1. Prescription drugs make up 10 percent of the national health care spending but for the past decade have been one of the fastest growing segments of health care expenditures.
2. Until recently, the 1984 Act was successful in facilitating generic competition to the benefit of consumers and health care payers – although 67 percent of all prescriptions dispensed in the United States are generic drugs, they account for only 20 percent of all expenditures.
3. Generic drugs cost substantially less than brand name drugs, with discounts off the brand price sometimes exceeding 90 percent.
4. Federal dollars currently account for an estimated 30 percent of the $235,000,000,000 spent on prescription drugs in 2008, and this share is expected to rise to 40 percent by 2018.
5. In recent years, the intent of the 1984 Act has been subverted by certain settlement agreements between brand companies and their potential generic competitors that make `reverse payments’ which are payments by the brand company to the generic company. These settlement agreements have unduly delayed the marketing of low-cost generic drugs contrary to free competition, the interests of consumers, and the principles underlying antitrust law.

The Act would amend the Clayton Act (15 U.S.C. 12 et seq.) by revising section 28 of the Clayton Act to read:

SEC. 28. PRESERVING ACCESS TO AFFORDABLE GENERICS.

(a) In General-

(1) ENFORCEMENT PROCEEDING- The Federal Trade Commission may initiate a proceeding to enforce the provisions of this section against the parties to any agreement resolving or settling, on a final or interim basis, a patent infringement claim, in connection with the sale of a drug product.

(2) PRESUMPTION-

(A) IN GENERAL- Subject to subparagraph (B), in such a proceeding, an agreement shall be presumed to have anticompetitive effects and be unlawful if–

(i) an ANDA filer receives anything of value; and

(ii) the ANDA filer agrees to limit or forego research, development, manufacturing, marketing, or sales of the ANDA product for any period of time.

(B) EXCEPTION- The presumption in subparagraph (A) shall not apply if the parties to such agreement demonstrate by clear and convincing evidence that the procompetitive benefits of the agreement outweigh the anticompetitive effects of the agreement.

(b) Competitive Factors- In determining whether the settling parties have met their burden under subsection (a)(2)(B), the fact finder shall consider–

(1) the length of time remaining until the end of the life of the relevant patent, compared with the agreed upon entry date for the ANDA product;

(2) the value to consumers of the competition from the ANDA product allowed under the agreement;

(3) the form and amount of consideration received by the ANDA filer in the agreement resolving or settling the patent infringement claim;

(4) the revenue the ANDA filer would have received by winning the patent litigation;

(5) the reduction in the NDA holder’s revenues if it had lost the patent litigation;

(6) the time period between the date of the agreement conveying value to the ANDA filer and the date of the settlement of the patent infringement claim; and

(7) any other factor that the fact finder, in its discretion, deems relevant to its determination of competitive effects under this subsection.

(c) Limitations- In determining whether the settling parties have met their burden under subsection (a)(2)(B), the fact finder shall not presume–

(1) that entry would not have occurred until the expiration of the relevant patent or statutory exclusivity; or

(2) that the agreement’s provision for entry of the ANDA product prior to the expiration of the relevant patent or statutory exclusivity means that the agreement is pro-competitive, although such evidence may be relevant to the fact finder’s determination under this section.

(d) Exclusions- Nothing in this section shall prohibit a resolution or settlement of a patent infringement claim in which the consideration granted by the NDA holder to the ANDA filer as part of the resolution or settlement includes only one or more of the following:

(1) The right to market the ANDA product in the United States prior to the expiration of–

(A) any patent that is the basis for the patent infringement claim; or

(B) any patent right or other statutory exclusivity that would prevent the marketing of such drug.

(2) A payment for reasonable litigation expenses not to exceed $7,500,000.

(3) A covenant not to sue on any claim that the ANDA product infringes a United States patent.

…

(g) Penalties-

(1) FORFEITURE- Each person, partnership or corporation that violates or assists in the violation of this section shall forfeit and pay to the United States a civil penalty sufficient to deter violations of this section, but in no event greater than 3 times the value received by the party that is reasonably attributable to a violation of this section. If no such value has been received by the NDA holder, the penalty to the NDA holder shall be shall be sufficient to deter violations, but in no event greater than 3 times the value given to the ANDA filer reasonably attributable to the violation of this section.

—————–

Violators would forfeit their 180-day exclusivity period:

Section 505(j)(5)(D)(i)(V) of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 355(j)(5)(D)(i)(V)) is amended by inserting `section 28 of the Federal Trade Commission Act or’ after `that the agreement has violated’.

BIO’s Intellectual Property Counsel Committee is holding its Fall Conference and Committee Meeting on Oct. 26-28, 2009, at the St. Regis Hotel in Washington, DC.

BIO’s semi-annual IP Counsels’ Committee Conference is an excellent opportunity for BIO members to hear, listen, and learn about current and projected topics related to biotechnology IP.

I’ll be in attendance as BIO has graciously agreed to allow me to participate and blog about the conference.  Look for updates next week.  If you’d like to meet up during the conference, drop me a note and we’ll schedule some time to have coffee together.

Among topics to be discussed:

• US Patent and Trademark Office Updates: Stay abreast of recent developments, rulemakings, and initiatives in the USPTO.
• Implications of recent case law: Join us for our ever-popular case law update!  Cases to include Billski and Kubin.
• Updates on patents and IP around the world: Learn about recent developments in major foreign jurisdictions and international forums.
• IP licensing and other contractual agreements: Colleagues will share their experience on best practices and challenges.
• Product by process: US vs. Europe.
• Explore patent issues with proposed biosimilars legislation.

Key highlights include:

• IP Counsels Committee Business Retreat – This is a day-long meeting where we will discuss cutting-edge IP issues affecting the biotech industry. During this time we develop policies and positions for BIO’s Board of Directors to review. The Business meeting is open to BIO IPCC company members only.
• Meet & Greet Welcome Reception at the US Court of Appeals – Meet new colleagues and reconnect with old ones.
• Exclusive tour and dinner at DC’s famous International Spy Museum.
• Distinguished speakers and panelists will review and discuss current issues in biotechnology.

I hope to see you there.  More information is available at the IPCC Conference website here.

In recent years, India has witnessed rapid changes in its patenting landscape as a result of the growing economic activity and reforms (related to patents).  In May 2008, Evalueserve, a global research and analytics firm, investigated the patenting landscape in India , focusing on the patent applications published over 2005–07.

Some of the key findings of the patenting landscape study over the past four years (January 2005 to December 2008) are listed below:

• Reduced growth in patent filings: The number of applications filed by foreign applicants globally fell in 2008 because of the economic downturn. Since more than 80% of the applications filed with the Indian Patent Office (IPO) are from foreign applicants, the growth in IPO filings experienced over the past few years has slowed down considerably.
• Top filers: Qualcomm has emerged as the top patent filer for the two consecutive years—2007 and 2008. General Motors, General Electric, Tata Group, LG Electronics, Research in Motion, 3M and Sony Ericsson have made huge gains in their 2008 rankings. The rankings of Philips, Bayer, Microsoft and AstraZeneca have slipped marginally.
• Domestic pharma sector maintains its lead over other industries: A total of six domestic pharma companies found place in the list of top 100 filers during 2005–08. Among these six corporations, Ranbaxy Laboratories emerged as the top filer (rank 31), followed by Dr. Reddy’s Laboratories (rank 45) and Cadila Healthcare (rank 66).
• Not much change in the domestic information technology (IT) sector: In the domestic IT sector, the number of published patent applications of Infosys and TCS increased in 2008. Infosys had 25 published applications in 2008 as against 19 in 2007.

Patent Application Filings at the IPO

During the past six years, the number of patent applications filed with the IPO has increased threefold. This has been primarily due to multinational companies setting up and expanding their markets in India.  The top 25 filers list includes 11 corporations from the electronics and telecom domain, and 8 from the pharmaceuticals and chemicals domain.

There is an increase in the number of applicants approaching the courts to enforce their patents or challenging the validity of patents, or even challenging the decisions of the IPO. Reports suggest that, in 2008, a number of patent-related cases were pending in various Indian courts; more than 175 cases were pending in the Delhi High Court, including Roche vs. Cipla.

Since patent life cycle spans 20 years, it is clear that Indian corporations need to formulate their patenting strategy carefully to stay competitive. This will entail creating more innovations, protecting all innovations with the relevant form of IP, respecting others’ IP and extracting value from own IP through licensing, commercialization and enforcement.

The above is from the article, “Patent Landscape in India Evalueserve White Paper October 2009,” and is used by permission.  The article is authored by Balwant Rawat, a Group Manager with the Intellectual Property (IP) Division of Evalueserve.

Evalueserve provides knowledge services to a global client base of Fortune 5000 companies, including Investment, Commercial and Retail Banks; Insurance Companies; Private Equity Firms; Corporates; Consulting and Research Firms; Law Firms and Intellectual Property Firms. Evalueserve’s expertise covers areas such as Financial and Investment Research, Business Research, Market Research, Intellectual Property, Data Analytics and Knowledge Technology Services.  The sole owner of copyright is Evalueserve and use of the protected material is by permission only.

The Partnership for New York City and the New York City Economic Development (NYCEDC) Corporation announced that the New York City Investment Fund (NYCIF) will provide up to $1.25 million for a BioAccelerate NYC Prize in a competition that will provide funding for biomedical translational research.  The BioAccelerate NYC Prize is a citywide competition targeting commercialization of the biomedical research conducted in New York.

The goal of BioAccelerate NYC Prize is to translate laboratory discoveries into jobs and business development in the city.   Applications will be reviewed by a panel of experts from the investment, finance and life sciences industries and up to 12 finalists will be invited to make presentations during the week of January 25.

Three to five winners will be selected, with each awarded up to $250,000 in funding.  NYCIF will receive a percentage of income from the successful commercialization of products funded by the BioAccelerate NYC Prize to allow NYCIF to continue funding additional commercialization efforts in life sciences.

The competition is open to researchers affiliated with not-for-profit universities and research institutions in New York City.  To be eligible, an applicant’s research should be at a stage that is almost ready to be commercialized as a product that will improve human health.  Finalists will be mentored by one or two life sciences industry entrepreneurs and have access to patent and regulatory expertise in order to help refine their project’s commercial potential.  Winners will continue to work with the industry entrepreneurs towards commercialization and company formation.

For more information about the bioscience initiative, visit nycbiotech.org.

The application for this competition will be available starting Thursday, October 15, 2009.  Entries for the BioAccelerate NYC Prize must be submitted by November 25, 2009.