Patent Baristas

Antitrust Review has Blawg Review #149 up and steaming, including “what is undoubtedly the greatest four paragraphs to ever appear in a newspaper.”  This review is chock full of great posts — more than can be absorbed in one sitting.

We enjoyed  the Drug and Device Law Blog’s (lengthy) review the FDA’s “new draft guidelines that slightly relaxed some aspects of the Agency’s prohibitions concerning promotion of off-label uses by manufacturers of FDA-regulated products.”

Don’t miss David Giacalone’s review of Leap Day at f/k/a or the question of penalties for unlawful cancellation of health insurance policies.

The Most Commented Post Award goes to Above The Law’s what could happen to a highly-paid NY lawyer if Congress eliminates the social security tax cap, a guest post by Ted Frank, a resident fellow at the conservative think tank American Enterprise Institute.  (Note: the post ties the question to whether Barack Obama is elected even though there wasn’t any evidence that Obama is even in favor of eliminating the cap so it’s really just a “what if” that applies to any candidate or party.)

At the beginning of the last century, the majority of drug products available were ineffective for their stated purpose at best and worsened the conditions they were purported to cure at worse.  For many of these so-called Patent Medicines, the main active ingredient was a form of alcohol (in the case of the Toneco Bitters bottle above, 30% according the lower label).

Note:  Few if any of the elixers were actually patented — these were medicines with trademarks, not patented medicines.  The phrase patent medicine comes from the late 17th century marketing of medical elixirs, when some were issued letters patent authorizing use of a royal endorsement in advertising.

A series of articles in Collier’s magazine, published in 1905-06, began with these words:

Gullible America will spend this year some seventy-five millions of dollars in the purchase of patent medicines.  In consideration of this sum it will swallow huge quantities of alcohol, an appalling amount of opiates and narcotics, a wide assortment of varied drugs ranging from powerful and dangerous heart depressants to insidious liver stimulants; and, far in excess of all other ingredients, undiluted fraud.

Samuel Hopkins Adams, The Great American Fraud 36 COLLIER’S 14 (Oct. 7, 1905).

This series of articles contributed to the pressures to enact laws regulating the food and drug industries, ultimately resulting in the Federal Food, Drug, and Cosmetics Act (FD&C Act).

Since 1962, before a new drug can be marketed in the US, the Food and Drug Administration (FDA) must approve it, after it is shown to be safe and effective. This has not been without side-effects since the FDA requirement that a new drug is safe and effective, which ordinarily means that a company must complete clinical trials, which increased the cost of developing new drugs and delays their introduction.

According to conventional wisdom, the cost and delay involved in this process lessens incentives to invest in the development of new drugs.  Accordingly, several reforms aimed at restoring such incentives have been implemented and many others have been advocated.

One way that drug companies are compensated for the regulatory burden is the extension of patent terms. In the US, the Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman Act) makes it possible for drug patentees to have the term of their patent extended for as much as five years if they meet certain criteria.  In the EU, there is the Supplementary Protection Certificate (SPC).

Ariel Katz, Assistant Professor at the University of Toronto, has now published a paper looking at some of the effects of regulation in the drug industry entitled “Pharmaceutical Lemons: Innovation And Regulation In The Drug Industry.”

This paper looks at the argument that drug regulation and drug innovation are at odds with each other and shows that the regulatory framework is not solely a burden imposed on the industry; it also provides a valuable service to the industry, that is, drug regulation provides certification of drug quality.  This certification contributes to the value of new drugs and may actually encourage innovation.

Prof. Katz now challenges the argument that new drug regulation negatively affects the incentives for new drug innovation. It’s good food for thought on the ripple effects of drug regulations.

This paper, published in 14 Michigan Telecommunications and Technology Law Review, can be downloaded without charge at the Social Science Research Network Electronic Paper Collection.

[Side note:  Some consumer products were once marketed as patent medicines but have been reformulated and are no longer sold for medicinal purposes. Their original ingredients may have been changed to remove drugs, such is the case with Coca-Cola®.  Others, like Vicks VapoRub® still exist.]

The U.S. Patent and Trademark Office (USPTO) came down on the side of Wisconsin Alumni Research Foundation (WARF) in upholding one of its patents on human embryonic stem cells. 

WARF’s licensee, Geron Corp., holds an exclusive license to these patents to develop and commercialize therapies based on three types of cells derived from human embryonic stem cells: neural cells, cardiomyocytes and pancreatic islet cells.

Earlier, the USPTO announced it would re-examine patents covering embryonic stem cell discoveries made by University of Wisconsin researchers. The patents, US Pat. Nos. 5,843,780, 6,200,806, and 7,029,913, cover all embryonic stem cell research in the U.S.  The USPTO granted each of the requests in September 2006 and rejected all claims of each of the patents on March 30, 2007.

In the Office Actions rejecting the claims, the examiners said the Wisconsin cells appeared to be either the same or obvious variations of cells described in previous patents issued to others or in scientific papers.

In the latest action on the reexamination of ‘913 Patent (95/000,154), the Patent Office has confirmed that the amended claims 1-3 are allowable and has closed prosecution on the merits.  The original patent covered all embryonic stem cells no matter how they are derived.  However, in the course of the re-exam, the applicants have now narrowed the claim only to stems cells derived from pre-implantation embryos.

The amended claim 1 is to:

1. (amended) A replicating in vitro cell culture of pluripotent human embryonic stem cells derived from a pre-implantation embryo, wherein the stem cells [comprising cells which] (i) [are capable of proliferation] will proliferate in an in vitro culture for over one year in an undifferentiated state without the application of exogenous leukemia inhibitory factor, (ii) maintain a karyotype in which the chromosomes are euploid through prolonged culture, (iii) maintain the potential to differentiate to derivatives of endoderm, mesoderm, and ectoderm tissues throughout the culture, and (iv) are inhibited from differentiation when cultured on a fibroblast feeder layer

The reexamination requesters, the Foundation Taxpayer and Consumer Rights (FTCR) and the Public Patent Foundation (PUBPAT), , tried to get the claims rejected as unpatentable under 35 U.S.C. §103(a) as being obvious in view of the Declaration by Dr. Jeanne F. Loring. They indicated that the Loring Declaration was submitted in order to explain “what the prior art disclosed to, and what motivations or suggestions it provided to those of ordinary skill in the art.”

However, the USPTO came back and indicated that only patents or printed publications can be used in the reexamination proceeding to raise a substantial new question of patentability. The USPTO said that the Loring declaration cannot by itself provide the necessary motivation to combine references even though the declaration had been given full consideration as evidence supporting obviousness in each rejection under 35 USC §103(a) in the non-Office action. Accordingly, the proposed rejections were not adopted.

The question now is whether or not a newer stem cell technology, Induced Pluripotent Stem Cells (IPS cells) , which are derived without destroying embryos, would be covered by the more narrowly-defined patent scope.

Still, a lot of money is at stake. WARF has made free licenses and cells available to more than 300 academic research groups but charges companies $75,000 to $400,000, depending on their size and the terms of the license. WARF also claims royalties from products produced using the patents.  WARF has said the patents apply to all human embryonic stem cells, no matter how derived, but had not slowed research.

If the action is made final, look for the nonprofit groups to appeal the patent claims to the patent office’s Board of Patent Appeals and Interferences. They also could appeal any board decision to federal district court. The parallel reexamination proceedings involving U.S. Patent Numbers 5,843,780 and 6,200,806 which claim preparations of, respectively, primate and human embryonic stem cells and methods for their isolation, are still pending.

Copies of the challenges filed by FTCR and PUBPAT.

If you are interested in more details of the ongoing dispute between California and Wisconsin, check out the coverage on the California Stem Cell Report.

Also see:

WARF Stem Cell Patents Knocked Down in Round One 

WARF Backhanded by PUBPAT

Jon Dudas, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (USPTO), testified in an oversight hearing held by the House Judiciary Committee’s Subcommittee on Courts, the Internet and Intellectual Property.

Among the topics addressed in the testimony were patent and trademark quality and timeliness; hiring, retention and work-life offerings such as the USPTO’s telework program; global policy and enforcement initiatives; and the pending patent modernization legislation. The testimony was to address developments and successes since the last USPTO House oversight hearing in 2005.

Dudas’ testimony was meant to highlight the USPTO’s “record-breaking performance” for the last two years. Oh, really?

Granted, this is a large corporate entity given it has 8,500 employees and almost $2.1 billion in fee revenues.  Dudas said the USPTO hired 1,215 patent examiners in FY 2007 and intends to hire an additional 1,200 patent examiners each year through 2013 and expand the telework program (we’re all for these efforts).

On the downside, Dudas (proudly?) highlighted the fact that the allowance rate for patents is currently 44%.  This is in contrast to allowance rates in excess of 70% just eight years ago. Bear in mind that patent examiners reviewed over 362,000 patent applications in 2007, the largest number ever.

So, does this mean that quality is up or that frivolous rejections are soaring?  Did patent applications really get that much worse in just a few years?

Also, the percentage of Board of Patent Appeals decisions in which the examiner is affirmed or affirmed in part has increased from 51% to 69%. Finally, since the pre-appeal brief program was established in midyear 2005, the percentage of applications reviewed under the program in which the examiners action is deemed correct has increased from 45% to 56%.

Dudas mentions that the Office of Patent Quality Assurance (OPQA) has “implemented targeted reviews of examination processes or functions that are perceived to potentially be problematic trends” whatever that means — the areas of final rejection practice, Request for Continued Examination (RCE) practice, search quality and restriction practice were identified for review during FY 07.

Not surprising, Dudas is tickled pink that the current version of the patent reform bill include provisions pertaining to applicant quality submissions (AQS) basically shifting the burden of the USPTO’s job onto the applicants themselves.

The USPTO is touting its many initiatives to lessen their workload, which include:

1. Accelerated Examination

The USPTO has established procedures setting forth requirements for patent applicants who want, within 12 months, a final decision by the examiner on whether their application for a patent will be granted or denied. To be eligible for “accelerated examination,” applicants who file under this procedure are required to provide specific information so that invalidity of any ultimately issued patent can be completed rapidly and accurately by any attacking competitor crying inequitable conduct.

2. Peer Review Pilot

The USPTO is still trying to push its Peer Review Pilot project that gives so-called technical experts in computer technology the opportunity to submit annoying and irrelevant technical references before an examiner reviews it.

3. Markush Claims

Earlier, USPTO proposed new rules in the Federal Register that will allow an examiner to split one Markush claim into lots and lots of individual claims as distinct inventions so that one application can be turned into dozens, thereby lending credence to the claim that the USPTO gets too many applications.

4. Information Disclosure Statements

We’ve already discussed the stupid USPTO proposed rule changes to information disclosure statement (IDS) requirements and other related matters to improve the quality and efficiency of the examination process. The proposed changes will enable the examiner to require that the applicant make damning statements against themselves so that any ultimately issued patent can be completed rapidly and accurately by any attacking competitor crying inequitable conduct (also see No. 1 above).

5. Open Source as Prior Art

The USPTO is consulting with the Open Source community regarding the potential development of a tagging process and interface to enable examiners access to open source software repositories as a source of prior art.

6. Electronic Filing and Processing

The USPTO continues to promote electronic filing and processing of patent applications as a means of reducing paper-based inefficiencies. Now, if someone could just explain to me why a $2.1 billion dollar entity trying to move to a web-based system still gives me an error message so often.

7. Central Reexamination Unit (CRU)

Reexamination cases are now assigned to a Central Reexamination Unit (CRU). The goal of the CRU is to close prosecution on all ex-parte reexaminations within two years of filing.

8. Pre-Appeal Conferences

The USPTO announced that patent applicants can request a pre-appeal brief conference and learn its results before nothing happens and the applicant has to go ahead with incurring the costs of drafting and filing an appeal brief. This change is expected to cause more work for applicants.

9. Pre-First Office Action Interview and First Action Interview

The pre-first Office action interview with the applicant or his/her designated legal representative is designed to discuss potential prior art rejections and possibly resolve many or all issues with respect to patentability. Under a pilot program, the first action interview, upon request, prior to the first Office action on the merits where the examiner will conduct a prior art search and provide applicant with a condensed pre-interview Office action. If done fairly, this has a lot of potential to streamline prosecution, a system whereby applicants would otherwise be forced into a final office action.

Not surprising, Dudas is tickled pink that the current version of the patent reform bill include provisions pertaining to applicant quality submissions (AQS), basically shifting the burden of the USPTO’s job onto the applicants themselves.

Anticipate This! wonders what ever happened to an inventors right to a patent.

See all the fun here.

IP Newsflash, an IP meta-information portal that browses your information channels for you and presents only relevant, recent and customizable IP information on a single page, just got better.  IP Newsflash is touted as being for “patent professionals who want to stay up to date but dislike the tedious task of browsing through countless sources of information.”  See other reviews at the Invent Blog, IP Menu, Patently-O and Securing Innovation. We really like the new look.  We love the free price.

Filed under Your Tax Dollars at Work, the Congressional Budget Office has released its cost estimate on the patent reform bill. Note that this includes an estimated $1 billion in compensation for DataTreasury’s check processing patents (5,910,988 and 6,032,137). Why Congress is wanting to give free immunity to one industry from infringement of a private company’s patent can probably be spelled c-a-m-p-a-i-g-n-d-o-n-a-t-i-o-n-s. More at the Patent Prospector.

Listed as the “first worldwide Web 2.0 pharmaceutical news portal,” World Pharma News.com now has World Pharma News.net —  a web application that allows you to submit pharmaceutical news articles or other related web resources that will be reviewed by our registered users and will be promoted, based on popularity, to the main page. When a registered user submits a news article it will be placed in the “unpublished” area until it gains sufficient votes to be promoted to the main page.

A Denver judge showed trial attorneys how to lose $51 million  for “cavalier and abusive” misconduct and for having a “what can I get away with?” attitude during a patent infringement trial.  Meanwhile, New Mexico has been finding new uses for lasers.

Also, Legal Andrew has an update on lawyer advertising.

Robert Shapiro, chairman of Sonecon, LLC, and former advisor to U.S. President Bill Clinton and British Prime Minister Tony Blair, has published a study on the potential savings when generic biologic treatments (biogenerics) find a pathway in the U.S.   I say when and not if since the government is the largest consumer of medical care via medicare and medicaid and given the fact that sales of biotech drugs were $40.3 billion last year.

With such enormous amounts of money involved, Congress is seriously interested in creating a new regulatory pathway for the approval and marketing of generic or follow-on versions of biological treatments that no longer have patent protection. This is purely an economic (and political) issue, not one of health and safety.  Today, more than 150 biopharmaceuticals are available in the United States, including therapeutic serums, antitoxins, vaccines and biological therapeutics that induce immunity in infectious diseases, and the number of new biologics is growing at twice the rate of new small molecule pharmaceuticals.

Under the Hatch-Waxman Act, a pharmaceutical producer can secure FDA approval to market a generic version of an original drug no longer under patent protection without having to conduct lengthy and expensive safety and effectiveness studies and clinical trials, by demonstrating that the generic is the bioequivalent of the original drug. The process involves the approval of an Abbreviated New Drug Application (ANDA), which rests on a certification that the original patent has expired or is invalid, and that the dosage and active ingredients of a generic are identical to those in the original treatment.

However, the law covers only traditional, small-molecule pharmaceuticals. There is no mechanism for generic-drug makers to gain approval for generic biotech drugs or so-called follow-on biologics, sometimes called biosimilars or biogenerics.  The FDA evaluates and approves biologics mainly under the Public Health Safety Act, although a small number have been approved under the Food, Drugs and Cosmetic Act. The Center for Biologics Evaluation and Research (CBER) regulates biological products for safety. For the FDA to approve follow-on biologics, many difficult issues have to first be addressed such as safety, effectiveness and intellectual property rights have to be resolved.

The reason for the lack of a regulatory pathway for approval of biogenerics lies in the complexity of the biological products themselves. Biologics are large, complex, heterogeneous molecules for which the manufacturing process can be a determinant of the end product. Demonstrating that a generic version of the product is as safe and effective as the brand name product would be a difficult at best since, for example, establishing that immunogenicity had not been altered and that any undetected differences in the product would not impact safety and efficacy would be problematic without conducting extensive clinical trials.

Currently, the cost of conducting clinical studies from scratch keeps competitors out of the market. Biogeneric companies need an abbreviated approval pathway to avoid undertaking the same large scale clinical development process as the originator companies, and thus allow them to market their product at a discount to the brand while maintaining a profit margin.

It is likely that any follow-on biologic applicant would be required to demonstrate that there are no clinically meaningful differences in safety, purity and potency between its product and the brand product. An applicant would need to provide evidence that its product has profound similarity — it is impractical to show identical biological products — and that these will produce the same clinical result as the brand product in any given patient and that it presents no additional safety risks or diminished efficacy if a patient alternates or is switched between products.

During a conference call this morning, Shapiro noted that the conventional wisdom held that the high cost of building the manufacturing infrastructure would be so high as to result in very little savings even if biogenerics are allowed. He argues that this is not the case given that there are plenty of other options in the marketplace. Shapiro pointed out the facilities currently available in Europe and Asia and the potential for partnerships.

According to the present study, the potential savings likely to follow from the introduction of these follow-on biologics over the next 10 and 20 years would be quite large. The study found that generic versions of the top 12 categories of biologic treatments with patent protections that have expired or are due to expire in the near future could save Americans, in net present value, $67 billion to $108 billion over the first 10 years and $236 billion to $378 billion over 20 years. Moreover, these estimates almost certainly understate the savings, because they could not take full account of a number of factors likely to reduce the price of biogenerics and further expand their use in the United States.

Currently, biogenerics are used in the European Union and the major countries of Asia. The study concludes that the United States has led the world in developing biologics, and when the U.S. Congress approves a regulatory pathway for biogenerics, the United States very likely will quickly become the world’s largest market for follow-on biologics.

See the entire report here.

See also:  Why are biogenerics so hard to regulate?

More from the Orange Book Blog and the BioJobBlog.

Securing Innovation has a piece on the Eco-Patent Commons, an initiative to create a collection of patents on technology that directly or indirectly protects the environment. The patents will be pledged by companies and other intellectual property rights holders and made available to anyone free of charge. Eco-Patent info in pdf here.

Biotechnology Industry Organization (BIO) posted a new study, entitled “The Economic Implications of Patent Reform,” on the potential economic impact of the pending patent reform legislation.  The study, available here, concludes that the following provisions would greatly increase costs:

• Changing the rules for apportioning damages would increase the cost of patent litigation.
• A new post-grant opposition system would increase the cost of adjudicating patents.
• Changes to the inequitable conduct doctrine would increase litigation and patent transaction costs.

Consumers, generic drug manufacturers, insurers and others sent letters to the U.S. Senate leaders on the issue of on the importance of maintaining the inequitable conduct defense in patent disputes. Senate Letters.

Although, it now looks like the Senate vote on the Patent Reform Act is going to be delayed, probably until April.

Insmed has just launched a campaign to increase awareness of the need for Congress to pass the follow-on biologics (FOB) approval pathway. In trendy fashion, Insmed has posted a video on YouTube called Follow-On Biologics – Tell your Story.

e-IP announced new features that simplify the process of posting your IP, as well as more pricing options. These enhancements have been developed in response to requests from research institutions with large portfolios of IP (i.e. over 100), and are now available to anyone.

Drug developers often search for new leads in the biodiversity often found in developing countries. Often, a new theraputic or genetically engineered product is developed and patented.

Depending upon your view, this is either the free market at play in creating new and better products (so-called bioprospecting) or exploitation of developing nations (so-called biopiracy).

However, a lot of tension has arisen from such patents, such as the Enola patent derived from Mexican traditional crop mayocoba bean and the patent on Ayahuasca, a sacred plant. These disputes show that some genetic engineering exploitation and patents based on certain species may be offensive to certain indigenous people’s spiritual, religious, or cultural traditions.

Our Associates at Dannemann Siemsen, a law firm with offices in Rio de Janeiro, São Paulo and Brasília, have alerted us to a new proposed legislative bill that has recently published by the Brazilian Government. Currently, access to genetic resources and associated traditional knowledge, as well as benefit sharing in Brazil are regulated by Provisional Measure 2.186-16 of August 23, 2001.

The new bill, which is open to public consultation until February 28, 2008, is available in Portuguese at the website here. Although the proposed bill is somewhat long, some of its highlights are set forth below:

Genetic Resources And By-Products

The proposed bill makes it clear that access and benefit sharing rules will also cover activities involving the by-products of genetic resources and not only involving information of genetic origin, as provided for in the current Provisional Measure.

Records and Databases

The proposed bill provides for a number of databases and most of the activities involving access to genetic resources and traditional knowledge must be recorded.

No Need of Access Authorizations in Some Cases, in Special Research Without Commercial Purpose

Access to genetic resource for scientific and/or technological research without commercial purposes in some cases will not need previous authorization.

Benefit Sharing Agreement

According to article 86 of the proposed bill, a benefit sharing agreement may be executed after the access, provided that certain conditions are met.

Federal Sales/Royalty Tax

The proposed bill creates a sales/royalty tax (CIDE) directed to governmental funds aimed at financing R&D, supporting traditional communities, conserving biodiversity and benefit sharing.

Agricultural Biodiversity

A new category of biodiversity is created and the corresponding access and benefit sharing are regulated under more flexible rules.

Prison and Administrative Penalties

A number of penalties, such as fines and product seizure, are provided for in case of irregular access to genetic resources and traditional knowledge. Prison terms are defined, e.g., in case of the illegal remittance abroad of biological material.

Patent Disclosure

The corresponding access license must be attached to patent applications covering subject-matter obtained via access to genetic resources and to its by-products and associated traditional knowledge.

Please feel free to contact Dannemann Siemsen should you require further details on the current rules and on the provisional bill concerning biodiversity access and benefit sharing.

See also:

India Fights Back Against Biopiracy

Bioprospecting Discussed at the UN

Article on the Convention on Biological Diversity (“CBD”), the first international agreement aiming at the protection of biodiversity, sustainable use of biological resources and the sharing of benefits of its exploitation.