Viewing post categorized under: Patent



December 27 / All Articles, Patent

Association for Molecular Pathology v. Myriad Genetics

Association for Molecular Pathology v. Myriad Genetics

Erika Manderscheid, Vishal Parikh

Summary

On June 13, 2013, the Supreme Court ruled that naturally occurring DNA segments were not patentable but artificially created complementary DNA (cDNA) segments were patentable.  Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2117-19 (2013).  In Ass’n. for Molecular Pathology (AMP) v. Myriad Genetics, the Supreme Court held that the patents Myriad had on the BRCA1 and BRCA2 genes are invalid because the BRCA1 and BRCA2 genes are naturally occurring and thus are not patent eligible subject matter under 35 U.S.C. §101. Id. at 2117.  However, the creation of cDNA in the laboratory is patent eligible subject matter.  Id.

The case concerned nine composition claims from three patents Myriad had obtained based on its discovery of the location and sequence of the BRCA1 and BRCA2 genes.  Id. at 2112-13.  Myriad used information about these two genes, mutations on which are associated with a substantially higher risk of breast and ovarian cancer in women, to develop tests that assessed a patient’s risk of cancer.  Id. at 2112-13.  While the Court’s decision turned on patent validity issues, it is important to note that the decision had far reaching implications in the field of genetic testing and public policy.  See id. at 2114.  If the patent claims were found valid, for example, Myriad would have been granted the exclusive right to isolate the BRCA1 and BRCA2 genes and to create them synthetically.  Myriad, 133 S. Ct. at 2114.  Because isolation is necessary for genetic testing, no one else could have manufactured cancer screening tests without Myriad’s permission, which would have greatly hindered the public’s access to lifesaving technology.  See id.  Had the Court found the patent claims invalid, the Court’s decision would have been damaging to the innovators because Myriad had invested substantially in isolating these genes and in developing the appropriate tests.  Kevin E. Noonan, Why Does Myriad Think It Can Win BRCA Gene Lawsuits?, Patent Docs: Biotech & Pharma Patent & News Blog (July 30, 2013),http://www.patentdocs.org/2013/07/why-does-myriad-think-it-can-win-brca-gene-lawsuits.html.

Technical Background

Deoxyribonucleic acid (DNA) is the essential material that encodes the genetic information in all living organisms.  Bruce Alberts et al., Molecular Biology of the Cell 329 (5th ed. Garland Pub 2008). DNA is double-stranded helix, made up of simpler elements known as nucleotides. These nucleotides are guanine (G), thymine (T), cytosine (C) and adenine (A).  Id. at 332.  Where, G pairs with only C, and A pairs with only T.  Id.  These nucleotides along with the phosphate backbone make up the DNA structure.  Id.

The role of DNA is to produce proteins through processes called transcription and translation.  Id. at 331.  DNA includes segments of nucleotides that code for proteins.  Id. at 332.  These segments are called exons and the segments that do not code for proteins are called introns.  Alberts, at 347.  For these processes to occur, the DNA must be separated from its double-stranded form into a single-stranded form.  Id. at 333.  Once this is accomplished, the single-stranded DNA is then used to create a strand of Ribonucleic Acid (RNA) via transcription.  Id.  During transcription, specific enzymes use the single-stranded DNA as a template and add RNA nucleotides to the single-stranded DNA nucleotides, matching up with all the base pairs and then breaking off from the single-stranded DNA to create a single-stranded RNA.  Id. at 333.  The one exception to the nucleotides of RNA is that instead of thymine, the RNA is composed of uracil (U).  Id. at 332.  The end process results in a single strand of RNA which then undergoes RNA splicing, where the introns are removed to produce messenger RNA (mRNA).  Id. at 347.  The mRNA continues on to translation to produce proteins.  Alberts, at 347.

The mRNA, now composed only of exons, undergoes translation, where the exon segments are coded into specific amino acids.  Id.  These amino acids are then grouped together to form the final product, a protein.  Id. at 367.

cDNA is created from the mRNA that is created before translation, after the RNA has undergone RNA splicing to remove the introns.  Id. at 544.  The cDNA is made by using the mRNA as a template to match up nucleotides, creating a strand of cDNA made of only the exons.  Id.  cDNA is not naturally found in the body, since no DNA exists in the body that does not have introns.  Id.

Procedural History and Case Summary

The case originated in the Southern District Court of New York where the court granted summary judgment to AMP, stating that the claims in Myriad’s patent are invalid because DNA, even if isolated, and cDNA are considered products of nature and are not patent-eligible subject matter.  Myriad, 133 S. Ct. at 2114.  The case then bounced between the Federal Circuit court and the Supreme Court[1], before finally being appealed to the Supreme Court for the second time.  See Id. at 2114-15

The Supreme Court addressed two questions: (1) whether a naturally occurring segment of DNA is patent eligible under 35 U.S.C §101 by virtue of its isolation from the rest of the human genome, and (2) whether synthetically created cDNA is patent eligible.  See id. at 2111.  The Court, in a unanimous decision authored by Justice Thomas, held that “[a] naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated, but cDNA is patent eligible because it is not naturally occurring.”  Id. at 2111.

The Court’s decision to reject Myriad’s patent claims rested on its determination of whether Myriad’s patents claim any “new and useful … composition of matter” under 35 U.S.C. §101 or whether they claim naturally occurring phenomenon which fall under the long-recognized law of nature exception, stating that items of nature that are naturally occurring are not eligible for patent protection.  Id. at 2116; Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980).  Regarding the isolated DNA segments, the Court ruled that neither discovery nor isolation alone were enough to make them patent eligible.  Myriad, 133 S. Ct. at 2117.  With respect to cDNA, on the other hand, the Court found that the BRCA1 and BRCA2 cDNA was patent eligible because it is not naturally occurring.  Id. at 2119.  However, the Court did not extend patent eligibility to cDNA that is identical to the DNA from which it was created, a situation that would happen if the original DNA was a short enough sequence to only contain exons.  Id.

Implications

The Myriad case is a landmark decision in patent law, and it remains to be seen how far-reaching the implications of this decision will be.  The Court’s choice to not address the patentability of an altered DNA sequence has been noticed by both scientists and legal scholars.  John Conley, Myriad, Finally: Supreme Court Surprises by not Surprising, Genomics Law Report (June 18, 2009), http://www.genomicslawreport.com/index.php/2013/06/18/myriad-finally-supreme-court-surprises-by-not-surprising/.  There is a variety of genetic material that cannot be categorized as either isolated DNA or as cDNA, such as purified DNA or DNA that has been altered in some other way, which is of questionable eligibility for a patent.  Id.  The Myriad decision did little to clarify the degree to which genetic material has to be altered in order to become patent eligible.  Id.

In addition, it is unclear to what extent the lower courts and the US Patent and Trade Office will apply the reasoning in the Myriad decision to other “isolated bodily substances such as proteins (where there are patents based solely on isolation) and cell lines, which begin with the isolation of the cell from the body.”  Id.

Finally, although this case is over, it appears that Myriad’s fight is not.  Myriad has already filed new claims against competing testing companies, which assert that other companies cannot test for the BRCA1 and BRCA2 genes without violating Myriad’s cDNA patent.  David S. Olson, Patent Protection for Genetic Innovation: Monsanto and Myriad, 12, Cato Sup. Ct. Rev. 283, 299-300 (2013).



[1] The Federal Circuit reversed the decision of the district court, only for AMP to appeal its decision to the Supreme Court. 133 S. Ct. at 2114-15. The Supreme Court granted certiorari and remanded the case to the Federal Circuit. Id. The Federal Court on remand found that both isolated DNA sequences and cDNA sequences are patent eligible. Id. The main point of contention in the second Federal Circuit ruling was whether the act of isolating DNA is an inventive act that entitles an individual to patent protection. Id. at 2114. Judges Lourie and Moore stated that isolating DNA molecules creates a new set of molecules that are not naturally occurring. Judge Moore relied on the USPTO practices of granting similar patents.  Id. Lastly, Judge Bryson concluded that isolated DNA is not patent eligible. Id. at 2115. However all three Judges agreed that patent claims related to cDNA were eligible for patent protection. Id. The case was once again appealed to the Supreme Court, and the Court decided to hear the appeal. Id.

The Court also specifically indicated what was not considered in Myriad: (1) method claims; (2) patentability of new applications of knowledge about genes; and (3) patentability of a DNA sequence “in which the order of naturally occurring nucleotides has been altered.”  Id. at 2119-20.

 

November 10 / All Articles, Other Intellectual Property, Patent

The Patent Bar: What it is and What it Means For You

The Patent Bar: What it is and What it Means For You

by Holly Chamberlain and Ethan Rubin

The Patent Bar (officially the United States Patent and Trademark Office Registration Examination) allows one to engage in patent prosecution, the process of procuring patent rights for new inventions.  Patent prosecution is appealing to those who want to use their knowledge of science or engineering in a legal capacity.

What does it mean for your career?

The patent bar exam exists for reasons very practical to the practice of patent law.  It is in the best interests of both inventors and the United States Patent and Trademark Office (USPTO) that patent applications are written by a competent lawyer or patent agent.  The eligibility requirements for the patent bar help ensure that patent agents and attorneys possess enough technical knowledge to understand and explain their client’s invention effectively to the examiner. This in turn helps to improve efficiency of patent examinations.  The patent bar also tests lawyers for the requisite knowledge of patent law, and thus protects clients. Finally, the patent bar helps to prevent the USPTO from examining trivial patent applications, like inventions that supposedly defy the laws of physics or thermodynamics.

The patent bar exam also frames a general understanding of how intellectual property law firms are setup.  Boiled down, in the realm of patent law there are patent prosecutors and there are patent litigators.  A larger intellectual property law firm will have both kinds of patent lawyers.  Patent prosecutors must pass the patent bar in order to prosecute patents before the USPTO, whereas patent litigators need not pass the patent bar exam at all.  In fact, patent litigators need not have a technical degree or technical experience, although such knowledge may be useful over the course of their practice.  The relation patent prosecutors and patent litigators have with each other can be simplified to this: patent prosecutors generally represent an inventor up to and including the granting of a patent, while patent litigators represent their clients after a patent has already been granted.  Generally, patent prosecutors facilitate interactions between a private party (their client) and a public party (the USPTO), and patent litigators mostly resolve disputes between two private parties (two companies or inventors), often times representing a client entangled in a patent infringement lawsuit.[1][2]

Although eligibility for the patent bar is only necessary for those interested in becoming a patent prosecutor, those without the necessary requirements to take the exam are not precluded from working with patents. In other words, the arenas of patent litigation, copyright law, trademark law, and trade secrets are still available for those seeking to practice intellectual property law.

Who can take the exam?

To sit for the exam, a candidate must qualify under one of the three categories laid out by the USPTO in the General Requirements Bulletin for Admission to the Patent Bar. The first category requires a Bachelor’s degree in a qualifying subject, a list of which can be found online. The second category requires a Bachelor’s degree in any subject and also requires a significant amount of course-work in the sciences or engineering. The third category allows a candidate to take the exam with a Bachelor’s degree in any field as long as the candidate demonstrates proficiency and experience in the field of engineering shown by passing the Fundamentals of Engineering Examination (FE).[3] The applicant must present their qualifications to the USPTO in a preliminary application. The USPTO can take anywhere between a week to a few months to approve applicants and allow them to register for a test date. Note that neither a law degree nor legal knowledge beyond the scope of the materials is required to sit for the exam.

When should you take it?

Once you have been approved, you must take the exam within 90 days.[4] Because the exam takes a significant amount of preparation, find a one to three month period in which you can dedicate 150-250 hours to studying for the exam. Make sure that you have at least two days available to take full practice exams (a 6.5-7 hour stretch all in a row) because that is the easiest way to build confidence and test-taking stamina.

What does the exam cover and what does it look like?

The exam covers patent laws, USPTO rules of practice, the relevant procedures contained in the Manual of Patenting Examining Procedure (MPEP), ethical and professional standards expected of patent attorneys, as well as any other relevant, published USPTO policies. The majority of the exam is taken from the MPEP procedures and the patent laws. Note that changes in patent law due to the Leahy-Smith America Invents Act’s (AIA) enactment on September 16, 2011, will be tested.

The exam is electronic, six-hours long, and comprises 100 multiple-choice questions split into a three-hour, 50-question session in the morning and another in the afternoon. The exam does not test scientific principles or knowledge, though familiarity with technical language is helpful in working through the test quickly and efficiently.  An exam-taker must answer 70% of the questions correct to pass and there is no penalty for guessing on the exam. Ten of the 100 questions are experimental and do not count toward the score however, the exam taker does not know which questions are experimental. The exam is open book in that the laws, the MPEP, and any relevant USPTO rules and policies are accessible during the test; however, significant knowledge of the testable subject matter is required in order to move through the test quickly enough to pass the exam.

How do you study for the exam?

Some candidates choose to self-study for the exam as all of the material tested is publicly available in the MPEP or in related documents available on the USPTO website. Online databases and forums, like www.mypatentbar.com offer practice questions and answers for free. This study method is very economical, especially when compared to prep classes which cost thousands of dollars. However, the MPEP is several thousand pages long, and thus impractical to read and outline. Additionally, some of the chapters of the MPEP have not been revised to reflect changes to the law. Therefore, simply studying the MPEP and working through online practice questions can cause you to get questions wrong because the online answers rely on the unrevised MPEP while the actual exam will expect answers in accord with current patent prosecution practice (though not listed in the MPEP).[5] Because of having to outline and determine the most important parts of the tested materials and figure out which questions in online databases have wrong answers due to test updates on your own, this study method tends to only have a first-attempt pass rate of approximately 15%.[6]

Another study strategy is to enroll in an exam prep class. Classes can be online or in person and vary in cost. The most commonly taken prep course is the Practising Law Institute’s (PLI) Patent Bar Review; approximately 50% of all test takers take this class.[7] The class comprises approximately 50 hours of in-person or online lectures, check-point exams as you learn each piece of the law and MPEP, and access to an online testing platform called Patware which contains thousands of practice questions guaranteed to be updated to reflect the exam that you will take. The biggest advantages of using PLI’s Patent Bar Review course is that you are given a study guide that outlines all of the tested materials and have access to their bank of practice questions, which provides the user with statistics on their strong and weak points, allowing for more targeted study. PLI’s Patent Bar Review Course’s students pass the exam on their first attempt 88% of the time. However, this course is very expensive, costing almost $2800 for non-students and almost $1900 for students.  There are less expensive courses available, like PatBar’s Patent Bar Review course at $700, but pass rates of their students were not available online.[8]

Results and Next Steps

After finishing the exam, you will immediately see your preliminary results showing whether you passed or failed the exam. If you pass, you simply see that you have passed and do not get a numerical score. If you fail, you will see your score, letting you know how close you were to passing. After you finish your exam, the USPTO will send a letter with your official results and information as to how to complete your registration if you’ve passed or how to reapply to take the exam again if you’ve failed. If you have passed, make sure to celebrate!

For retakers or those hoping to sit for the exam soon, it is important to note that the patent bar exam will change again in January 2014, adding in three more document’s worth of material from the AIA.[9] The more patent law changes, the more the patent bar exam changes, and the less utility old exams will have in students preparation for the patent bar exam as less questions will be repeated from the released exams.

 

 

 


[1] http://www.luc.edu/career/practice_areas/patent.html

[2] http://www.isenberg-hewitt.com/Practice-Areas/Business-Litigation/Patent-Prosecution-and-Patent-Litigation.shtml

[3] http://www.uspto.gov/ip/boards/oed/exam/registration.jsp

[5] http://www.ipwatchdog.com/2013/07/27/beware-patent-bar-exam-study-advice/id=43136/

[6] http://www.ipwatchdog.com/patent-bar-exam/patent-bar-review-courses/

[7] http://www.ipwatchdog.com/patent-bar-exam/patent-bar-review-courses/

[8] http://patbar.com/patent-bar-exam-pass-rates.shtml

[9] http://www.uspto.gov/ip/boards/oed/exam/

November 5 / All Articles, Patent

Bowman v Monsanto Replicates Problems for the Future

Bowman v Monsanto Replicates Problems for the Future

By Hannah Marie Farhan and Jonathan Hu

On May 13, 2013, the Supreme Court decided Bowman v Monsanto 9-0 in favor of Monsanto. Monsanto had sued an Indiana Farmer, Vernon Bowman, for infringing its patents on “Roundup Ready” soybean seeds. Bowman argued patent exhaustion in defense. Justice Kagan, writing for the Court, held that patent exhaustion does not allow an authorized purchaser to replicate patented seeds without permission from the patent holder.

Abstract Idea:

The legal doctrine of patent exhaustion provides that patentees lose their patent protection after the initial authorized sale of their patented product. Quanta Computer, Inc. v. LG Electronics, Inc., 553 U. S. 617, 625. The subsequent owner can thus use or sell the item as he or she pleases without the threat of patent infringement for him/her or secondary purchasers. The Court had previously held, however, that patent exhaustion does not enable an authorized purchaser to reconstruct the patented product. Otherwise, patent holders would only profit from the first few sales of their products. The issue in Bowman v. Monsanto was whether the “natural use” of the seed protected the grower under the doctrine of patent exhaustion.

Case Argument:

Bowman acknowledged that the exhaustion doctrine does not grant the right to “make a new product.” He attempted to differentiate genetically modified seeds within this principal by arguing that seeds control their own natural replication and that this natural process should be recognized within patent exhaustion. The Supreme Court rejected this argument first by pointing out that the seeds Bowman bought were specifically licensed for consumption and not reproduction. The Court also highlighted Bowman’s actions of planting and watering the seeds, thus enabling reproduction. Therefore, the Court concluded that Bowman was in control of the reproduction, finding the “‘blame-the-bean’ defense tough to credit.”

Potential Takeaways and Impacts:

The Supreme Court’s ruling explicitly limited its decision to this specific situation. It recognized possible future cases with potentially unexpected technology and, therefore, distinct needs. Nevertheless, for farmers, the immediate result is a continued spike in prices for both farmers and consumers. Soybeans, cotton, and corn seed prices have shot up between 259 and 516 percent over the past fifteen years. Eamon Murphy, Bowman v. Monsanto: The Price We All Pay for Roundup Ready Seeds, Daily Finance (May 21, 2013, 11:30 AM) http://www.dailyfinance.com/on/monsanto-gmo-roundup-ready-seeds-patents-food-prices/. Genetically modified soybeans are currently three times the price of normal soybeans.  Nina Totenberg, For Supreme Court, Monsanto’s Win Was More About Patents Than Seeds, NPR’s All Things Considered, (May 13, 2013, 6:16 PM) http://www.npr.org/blogs/thesalt/2013/05/14/ 183729491/Supreme-Court-Sides-With-Monsanto-In-Seed-Patent-Case. Additionally, the long term issue has been an increase in the use of Roundup and a resulting prevalence of super-weeds.

This highlights an interesting point: Monsanto creates both the increasingly used, and basically necessary, herbicide (Roundup) and the herbicide resistant seed in question from this case. Accordingly, even if Monsanto could not directly profit at all off its genetically modified seed, it could still profit from the seed’s creation because of the cycle of increased dependency upon Monsanto’s herbicide that the seed is used with. Therefore, the Court could have agreed with Bowman without eliminating Monsanto’s incentive for innovation.

Ultimately, the takeaway question is when, not if, the Supreme Court will balance its protection of innovators with its protection of consumers over replicating technology? With recognized limits like patent exhaustion, the Supreme Court will eventually draw the line on protecting the patents and profits of naturally reproducing products.

April 23 / All Articles, Copyright, Featured, Patent, Trade Secret

Intellectual Property Indemnity Clauses

The practices associated with intellectual property indemnity can be traced in part to Article 2 of the Uniform Commercial Code. At the dawn of the computer age, practitioners searched for legal models that they could use for transactions in intangible rights and products such as computer software. Although computer software did not fit easily into the “sale of goods” paradigm, analogies to the familiar rules governing sales of goods were inevitable.

Lurking in the lower reaches of Article 2 of the UCC, one finds an implied warranty of non-infringement in Section 2-312(2):

Unless otherwise agreed, a seller that is a merchant regularly dealing in goods of the kind warrants that the goods shall be delivered free of the rightful claim of any third person by way of infringement or the like but a buyer that furnishes specifications to the seller must hold the seller harmless against any such claim that arises out of compliance with the specifications.

In the context of a sale of goods at the time Article 2 was drafted, a non-infringement warranty made good economic sense. The only form of intellectual property likely to be of concern to the purchaser of goods was patent protection. In the mid-twentieth century, when Article 2 of the UCC was adopted, patents were the disfavored stepchildren of the federal courts. A high percentage of patents were held to be invalid, and the damages accorded to those found to be valid were often limited to a modest royalty. Furthermore, patent rights are—as a rule—exhausted upon the first sale of a product and far fewer patents were being issued. Additionally, products were less complex, typically falling into only a single engineering domain, with correspondingly fewer points of intersection with issued patents. For all these reasons, the risk that the ultimate purchaser of a product would be sued for patent infringement was very remote, and even if the purchaser were sued, the damages would be only a tiny fraction of the purchase price—the average and median for all products was between five and seven percent.

In this context, a product manufacturer could provide an implied warranty of non-infringement with very little risk beyond whatever modest risk of infringement the manufacturer had already incurred by manufacturing the product itself. Product purchasers did not typically insist on an indemnity beyond the implied warranty , perhaps because the risk was perceived as too remote to be worth worrying about. The exhaustion doctrine would—in many cases—cause the claim to be made against the manufacturer rather than the user. Therefore, they would assume—probably quite rightly—that the manufacturer would “stand behind its product” and obtain the required license if an infringement claim were actually made.

With this background, and without giving the matter too much additional thought, it did not seem unreasonable for the lawyers representing software and other technology providers to provide a warranty of non-infringement governing their clients’ products as well. Such a warranty was certainly consistent with established practice as embodied in UCC Article 2. It therefore would have met the expectations of the marketplace. Furthermore, the risk of infringement liability seemed manageable. At that time, virtually no one believed that computer software would be patentable, and absolutely no one imagined that business methods would be patentable. The risks of trade secret or copyright infringement liability are more uniquely within the control of the software provider since each of them requires an element of intent or a near equivalent. By adopting appropriate internal controls and standards, sometimes even including a “clean room,” a software provider ought to be able to minimize its infringement risk.

As licensors, software providers had an additional consideration of the desire to control litigation concerning rights in the product. At that time, protection for computer software was in a state of flux. Copyright in computer software expanded in the years following the Copyright Act of 1976, but doubt persisted as to the extent of its protection. For instance, in following decades, the courts were faced difficult questions regarding whether copyright protected operating systems that communicate only with machines and whether it protected the “look and feel” of the user interface generated by the software. These were considered weighty issues going to the heart of the value represented by computer software. Accordingly, the software providers did not want to risk having them decided in litigation against their licensees, whose interest in broad protection would likely be less than the interest of the software providers.

In response to this concern, software providers migrated the infringement issue from the warranty clauses of software license agreements to indemnity provisions. As quid pro quo for indemnity, the licensor obtained prompt notice of the claim and full authority to defend or settle the case on behalf of the licensee. To mitigate their risk, most software licensors further provided that their obligation—and the licensee’s sole remedy—was to (a) obtain for the licensee the right to use the licensed product; (b) modify the product to make it non-infringing; or—failing (a) or (b)—(c) to terminate the license and refund a pro-rated portion of the purchase price depending on how much of the license term had been exhausted at the date of termination.

Clauses along these lines became a de facto standard in the software industry and persisted for many years. They were hardly perfect from the standpoint of licensees. Option (c) could be very detrimental in the case of software that was critical to a business, Even if comparable non-infringing software were available, the end user would be in the position of having to find, implement, and migrate all data or customizations to the new system. This could be expensive, risky and time-consuming. If no comparable non-infringing software were available and the patentee refused to offer a license on commercially reasonably terms, a business that relied on the software could be crippled. Even option (b) could be problematic if the required modifications degraded functionality or compatibility. As a result, licensees with sufficient bargaining power would nibble at the edges of such indemnity clauses, sometimes allowing full refunds and often providing that (b) could only be exercised if functionality were not compromised. Nonetheless, the basic pattern—limited indemnity in exchange for control over litigation—became well-fixed in many practitioners’ minds.

As so often happens in the law, the basic practices that emerged in one field—the software industry—migrated to other industries as well. Intellectual property indemnification clauses were inserted into virtually any agreement in which the parties foresaw a risk of intellectual property infringement.

October 24 / All Articles, Featured, Patent

Do Business Method Patents Encourage Innovation?

Although the United States Patent and Trademark Office (“PTO”) had issued business method patents (“BMPs”) prior to 1999, the decisions of the United States Court of Appeals for the Federal Circuit (“Federal Circuit”) in State Street Bank & Trust Co. v. Signature Financial Group, Inc. in 1998 and AT&T Corp. v. Excel Communications, Inc. in 1999 led to a significant increase in the number of BMP applications filed with and granted by the PTO. Although grants of such patents have considerably stabilized in recent years, many policy issues raised by financial, electronic commerce and software companies in response to the State Street Bank and AT&T Corp. decisions regarding the patentability of business methods remain unanswered. Several legal and economic scholars, as well as the press, have examined this issue and have raised concerns about the quantity, quality and patentability of BMPs. There is some consensus in their point of views.

Many of these scholarly works provide fairly detailed and systematic studies of individual cases and their implications. Comparatively, there is little literature on the effect of BMPs on innovation, which is grounded in a more comprehensive theoretical perspective and empirical approach. This paper endeavors to fill this gap by reviewing the extant literature on patents in general and attempting to draw inferences about the implications of this literature for BMPs. The paper primarily focuses on the role of patents in driving innovation and the effect of poor patent quality on innovation.

The remainder of the paper is divided into seven sections. Section I briefly outlines the history and economic rationale of the patent system. Section II discusses the history of BMPs in the United States. Section III sheds light on the provisions of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement regarding BMPs. Section IV briefly illustrates how different Member States of the World Trade Organization (“WTO”) have used the TRIPS agreement’s flexibility regarding BMPs in their national laws. Section V presents theoretical and empirical evidence about the general relationship between patent system and innovations, with analysis to understand the probable impact of BMPs on innovation. Section VI briefly presents the issues concerning BMPs and their consequences. Section VII presents a summary of the policy recommendations made by various scholars who have followed BMP’s evolution to becoming acceptable subject matter. The paper concludes with a brief discussion about some key policy recommendations for improving BMPs.

Rajnish Kumar Rai & Srinath Jagannathan

June 11 / All Articles, Patent

Dosage Patenting in Personalized Medicine

Inventions for dosage regimens often arise after the pharmaceutical product has been dosed in patients and more information is known about the in vivo and pharmacokinetic properties of the medical agent. However, securing patent protection for this type of invention has been difficult because dosage inventions are considered to be simple medical methods whose protection is believed to limit doctors’ choices in clinical practice. Moreover, novel dosage inventions are also considered to involve a process that does not enjoy the same scope of patent protection as new chemical entities despite their superior therapeutic potential. This article examines the nature of dosage inventions under an increasingly personalized clinical setting and argues that traditional patent jurisprudence might not apply to such inventions in personalized medicine. Therefore, more liberal approaches are needed to foster inventions in this field of technology.

 

*Jerry I-H Hsiao, PhD & Wei-Lin Wang, JSD

September 22 / All Articles, Patent

Patent Litigation: What About Qualification Standards for Court Appointed Experts?

Abstract–“The descriptions in patents are not addressed to the public generally, to lawyers or to judges, but, as [35 U.S.C.] section 112 states, to those skilled in the art to which the invention pertains ***.” [1] This leads to a tenet of patent law, that the meaning of patents and claim terms must be construed by a person of ordinary skill in the relevant art (“POSA”). However, federal district court docket statistics show that for tasks such as claim construction, the “experts” hired by courts to aid the courts themselves may, in fact, not meet the POSA standard In contrast, to perform the very same tasks, the testifying experts hired by the party litigants are now required to be POSAs. This article argues that logic dictates that there should be consistency in the requirement of skills for both court-appointed experts and party-employed experts when they perform the same tasks.

 

I. Introduction

 

Do you understand an invention regarding DC to AC power converter circuits used to drive cold cathode fluorescent lamps? [2] Would you understand the patent claims, the long run-on sentences defining the invention? [3] Well, sometimes courts may not either. However, when complex patents surface in litigation, there are many types of experts to help a court construe the words and decide whether patent claims are valid and whether they have been infringed. There are both experts hired by the parties (“party experts”) and experts hired by the courts themselves (“court experts”) whose roles are finely delineated. [4] For example, among party experts, there are trial-preparation experts, consulting technical experts, and Fed. R. Ev (“FRE”) 702 experts whose goals are to champion the particular party that hired them. [5] Among court experts, there are (special) masters, (technical) advisors, and FRE 706 court-appointed experts whose goals are to aid the judge who hired them. A problem is that, with regards to court appointed experts, practitioners continue to be concerned about the confidential nature of their influence on the ultimate decision of the court can obscure a possible lack of neutrality or relevant expertise of the purported expert. [6] The problem is exacerbated in patent cases because an invention may be complex and obscure so that there is often little choice but to use experts to elucidate the technology. [7] Accordingly, it is highly unlikely that courts will stop appointing experts; even the U.S. Supreme Court has occasionally utilized this practice that is allowed by statute and common law. [8] Thus, restraining the frequency of using experts is not a viable solution. But, setting threshold standards on the appointment requirements of the court experts is a reasonable compromise solution towards improving the quality of the influence that the experts do have. Presently, however, there is a lack of standards in the qualification of court experts in patent law. Therefore, this article proposes that courts implement a defined set of standards for court experts, specifically requiring them to be POSAs for matters that require a POSA point of view. This proposed solution is consistent with the traditional tenets of patent law, and it is now within practical reach due to recent case law. Setting qualification standards helps ensure that parties do not needlessly pay for court experts whose influence may be based on an inaccurate knowledge of the technology and which may lead to inaccurate analyses and decisions. Beyond patent law, the same concepts may be extended to other areas of law that also rely heavily on experts, such as products liability or criminal law. [9]

 

Setting qualification standards is compelling because of the frequent use of experts. Experts are so prevalent in patent litigation that even appellate judges in the U.S. Court of Appeals for the Federal Circuit (“CAFC”) lamented: “Evidentiary conflicts with respect to technology and science arise in a variety of cases; and the conflicting testimony of expert witnesses is ubiquitous.” [10] Given the likelihood of conflicting testimony and of complex inventions, court experts are necessary. But, it is important that their use be consistent with the traditional tenets of patent law, which includes a person-of-ordinary-skill-in-the-art standard (“POSA”) for patent claim construction, invalidity, and infringement determination. This POSA standard should also set restrictions on the qualification of all experts, whether they are party or court experts.

 

The CAFC recently set standards for someone to qualify as a FRE 702 party expert. In Sundance v. DeMonte, the CAFC held that a patent attorney who did not practice or have formal training in the technology was improperly permitted to testify as a FRE 702 party expert regarding invalidity and infringement. [11] The expert testimony was rejected because the attorney was not deemed a POSA. [12] Thus, Sundance seemingly heightened the standard to be a POSA. The CAFC also decided that party experts must be POSAs if they provide opinions on claim construction and other matters which traditionally have required a POSA point of view. [13] Given Sundance, rationally, it would be incongruous if court experts are not also as least as qualified as party experts. Presently, however, party experts must qualify at least as POSAs, but court experts need not do so, [14] which seems contrary if they are opining about the same issues. The incongruity is all the more a concern considering that court experts may have to distinguish between opposing technical viewpoints and play a decisive role in the outcome of a case. [15]

 

With this context, this article addresses the qualification standards of court experts. Section II provides an overview of court experts and relevant case law. In Section II-C, court docket statistics illuminate the present practice regarding the experts. Section III discusses the criteria to be a POSA. Section IV describes how Sundance and SEB v. Montgomery Ward [16] require higher standards for FRE 702 experts and also seemingly change the traditional POSA criteria. Section V considers the implications for court experts….

 

 

Dolly Wu*

September 22 / All Articles, Patent

Proveris v. Innovasystems: Redefining a Patented Invention under § 271(E)(1): An Examination of the Federal Circuit’s Narrowing of the § 271(e)(1) “Safe Harbor” Exemption

The Food and Drug Administration’s (“FDA”) regulation of drugs and medical devices impacts the everyday lives of Americans in both noticeable and inconspicuous ways. [1] For example, a recall of contaminated food or adulterated pharmaceuticals illustrates how the FDA noticeably affects impacts our everyday lives. [2] Additionally, unobservable consequences springing from the overlap between FDA regulations and patent law also affects the lives of Americans by stimulating market competition and providing incentives for medical research and development. [3]

 

Attempting to promote continued innovation in medical science, while at the same time provide the public with “more low cost generic drugs,” the U.S. Government amended both FDA regulations and patent laws through the Price-Competition and Patent Term Restoration Act (“the Act”). [4] The Act, commonly known as the Hatch-Waxman Act, consists of two sections, Title I and Title II, which function in tandem “affect[ing the] introduction procedures and patent requirements for certain kinds of generic new drugs.” [5] Title I of the Act provides for a new route of FDA regulatory approval for generic drugs (also known as “generics”), the Abbreviated New Drug Application (“ANDA”). [6] Congress’s intent behind the ANDA process was to allow generic drug manufacturers to get generics on the market sooner and at lower costs. [7] Title II of the Act made several amendments to the U.S. patent laws regarding how they apply to federally regulated products. [8]

 

The “safe harbor” provision of 35 U.S.C. § 271(e)(1) is a patent law amendment created by Title II of the Act. [9] Utilized in conjunction with the ANDA provision in Title I, Congress believed § 271(e)(1) would aid generics in obtaining market approval “between 18 months and 2 years earlier.” [10] Under § 271(e)(1), the otherwise infringing use of a “patented invention” is immunized from liability if the infringing use is “reasonably related” to the development of data for FDA approval. [11] Although § 271(e)(1) appears to lend itself to a fairly straightforward interpretation, its scope has been the source of much judicial and commentator debate over the last two decades. [12]       Since the enactment of § 27(e)(1), the Supreme Court has weighed in on its scope only twice. [13] In both cases the Court held the plain language and legislative intent behind the Act indicated that § 271(e)(1) was supposed to immunize a broad scope of inventions and actions, related to FDA approval, from patent infringement. [14] Despite the Court’s broad holdings in both cases, the United States Court of Appeals for the Federal Circuit (the “Federal Circuit”) recently narrowed the scope of § 271(e)(1) with its holding in Proveris Scientific Corp. v. Innovasystems, Incorporated. [15] The Federal Circuit employed a narrow test, termed the “perfect product fit” analysis, for determining what constitutes a “patented invention” under § 271(e)(1). [16] Under Proveris’ perfect product fit analysis, in order for infringement of a patented invention to be immunized by § 271(e)(1), the “patented invention” must be eligible for a 35 U.S.C. § 156(e)(1) patent term extension. [17]

 

While Proveris may appear to comport with sound patent policy, the reasoning of the Federal Circuit fails to properly consider Congress’s overall purpose for the Act. Additionally, Proveris’ new interpretation of “patented invention” flatly contradicts the meaning previously assigned to the statutory phrase by the Supreme Court in Eli Lilly & Company v. Medtronic, Incorporated. [18] Further, the Federal Circuit misinterprets Lilly’s discussion of statutory symmetry (between § 271(e)(1) and § 156), through which the Court intended to broaden the § 271(e)(1) term “drugs,” not narrow the phrase “patented invention.” [19]

 

By reducing the scope of “patented inventions” within § 271(e)(1) to only inventions comporting with the “perfect product fit” analysis, Proveris has drastically altered the function of § 271(e)(1) and potentially impairs the ability of generic manufactures to fully utilize the ANDA process created in Title I of the Act. [20] Adherence to Proveris’ “perfect product fit” rule risks establishing loopholes that potentially allows patent holders of pioneer drugs and medical devices to delay generic manufacturers from bringing less expensive generics to the market. [21]

 

This Note critiques the Federal Circuit’s recent narrowing of § 271(e)(1) in Proveris. Part I provides a historical overview of FDA regulations on drugs and medical devices, the promulgation of the Act, and judicial interpretations of § 271(e)(1). Part II furnishes an in-depth review of the Federal Circuit’s holding in Proveris, and discusses the reasons cited as supporting the court’s narrowing of § 271(e)(1). Part III analyzes the Federal Circuit’s “perfect product fit” test, found to control the scope of § 271(e)(1), and discusses how the “perfect product fit” test contradicts the judicial precedent cited by the court as supporting its holding. Part IV illustrates how Proveris operates contrary to Congress’s intention for the Act, and suggests a “sliding scale” analysis for Federal courts when faced with a § 271(e)(1) defense….

 

Duane C. Marks*

July 19 / All Articles, Patent

The Biologics Price Competition and Innovation Act: Innovation Must Come Before Price Competition

Unlike traditional pharmaceutical drugs, which are small molecule compounds synthesized by chemists, biologics are typically large molecules that are produced in living things. [1] [2] Breakthroughs in the life sciences over the last two decades have led to new biologically derived treatments for debilitating diseases including autoimmune diseases, metabolic disorders, degenerative diseases, blood disorders, and cancer. [3] Several new biological treatments for diseases presently untreatable by other means are currently under development. [4] Despite these advances, new biologics come at a substantial cost for developers, consumers, and health care payers and providers. For developers, internal research, development, and production costs often exceeds a billion dollars per product brought to market. [5] For consumers, the purchase price of any given biologic treatment can be up to several thousand dollars per year. [6] For example, the cost per year per patient for Avastin®, a biologic used to treat colon cancer, is $100,000, and the cost for Cerezyme®, which is used to treat the metabolic disorder Gaucher Disease, is over $300,000. [7] On average, across treatments, the cost of medicinal biologics per patient is over $16,000 per year. [8]

 

For health care payers, the cost of biotech products is rising dramatically. According to IMS Health Inc., a provider of business intelligence for biotech and pharmaceutical companies, expenditures on biologics in the United States was over $40.3 billion dollars in 2006, which marks an increase of 20% from 2005. [9] Public and private insurance companies have declared that a continued increase is not sustainable without cuts to health care coverage. [10] Biologic medicines are of little benefit if they are too expensive for patients to afford.

 

Although Congress has made efforts to make biologics more affordable for the consumer market, such legislation must be carefully balanced to maintain incentives for innovators as they develop new therapeutic regimens. [11] [12] Without adequate incentives for biotechnology companies to discover new market-viable biologic medicine, there would be a dearth of breakthrough products available to patients. The majority of new biologics are discovered by small to medium-sized innovative biotechnology companies. [13] Research and development of biologics is an extraordinarily high risk endeavor requiring a great deal of up-front capital investment, [14] and returns are often not realized for several years due to the length of time required for the product to be developed and go through the stringent regulatory approval process of the Food and Drug Administration (“FDA”). [15]

 

In an effort to reduce the costs of medicine for patients, Congress must be especially careful not to impair the ability of the biotechnology industry to thrive by substantially diminishing profitability. Currently, the biotechnology industry is “still relatively nascent” and is largely fueled by venture capital investment. [16] Of the approximately 1400 biotechnology companies operating in the United States today, only twenty are profitable. [17] Many of these companies are small, with revenues of under a million dollars per year, and do not even have a product on the market yet. [18] Leaders in the biotechnology industry have expressed concern over the ability to secure investments in the wake of new biologics legislation:

 

Biotechnology researchers must have some certainty that they can protect their investment in the development of new breakthrough therapies for a sufficient period of time in order to secure necessary financial resources. If … legislation were to fail to provide adequate protections, it could jeopardize the ability of biotechnology researchers to continue to innovate. [19]

In June 2007, a bipartisan bill sponsored by Edward Kennedy (D- Mass.), and co-sponsored by Hillary Clinton (D- N.Y.), Orrin Hatch (R- Utah), Mike Enzi (R-Wyo.), and Charles Schumer (D- N.Y.), titled the Biologics Price Competition and Innovation Act of 2007 (“BPCIA”), was introduced to and unanimously passed by the Senate Committee on Health, Education, Labor, and Pensions. [20] The BPCIA seeks to balance patients’ needs for affordable biologic medicine with the needs for innovation in the biotechnology industry to continue to develop new therapeutics. [21]

 

This Note will discuss key provisions of the BPCIA and will analyze the likely impact of its passage on innovation in the biotechnology industry and patient access to lower cost biologic medicine. Part I will provide a brief background on biologics and the complexity of their manufacture. Part II will describe the regulation of small molecule drugs under the Food Drug and Cosmetic Act (“FDCA”) [22] and the regulation of biologics under the Public Health Services Act (“PHSA”). In addition, the Hatch-Waxman amendments to the FDCA that allow for abbreviated new drug applications (e.g., generics) will be discussed. [23] Part III will explain why legislative action is necessary for a viable path forward to abbreviated FDA approval of biologics. Part IV will describe key provisions of the BPCIA that lay the framework for regulation of follow-on biologics. Finally, in Part V, this Note will analyze the impact that enactment of the BPCIA might have on innovation in the biotechnology industry and patient access to lower cost biologic medicine….

 

Robert N. Sahr*

July 5 / All Articles, Patent

Rounding Up Plant Patents & Other Growing Patent Concerns a Comment on Monsanto v. Schmeiser

On the heels of their ubiquitous and controversial decision in Harvard College v. Canada (Commissioner of Patents) (the so-called ‘Harvard Mouse’ case), [1] the Canadian Courts were soon asked to re-consider the issues surrounding the patentability of biotechnological inventions in Monsanto v. Schmeiser. [2] Unlike Harvard Mouse, this matter was an infringement action. At the Trial Division, the crux of the action lay with Schmeiser’s alleged failure to obtain a license Monsanto’s patented [3] “Roundup Ready Canola” (a canola seed tolerant of glyphosate herbicides including Monsanto’s own “Roundup”). [4]

 

“The infringement alleged is by the defendants using, reproducing and creating genes, cells and canola seeds and plants containing genes and cells claimed in the plaintiffs’ patent, and by selling the canola seed they harvested, all without the consent or licence of the plaintiffs.” [5]…

 

 

Emir A. C. Mohammed