Reaping the Benefits of Genomic and Proteomic Research Intellectual Property Rights, Innovation, and Public Health (2006) / Chapter Skim
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3 The U.S. Patent System, Biotechnology, and the Courts
3 The U.S. Patent System, Biotechnology, and the Courts
Pages 70-99
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From page 70... ...
This chapter addresses intellectual property issues in the context of genomics and proteomics, focusing on patent law and interpretation -- specifically, fields of activity, applicable law, and limitations on licensing and enforcement. FIELDS OF ACTIVITY The practice of patenting genes is at least as old as the biotechnology industry, providing a quarter century's worth of legal precedents on the application of patent law to genetics and genomics.
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From page 71... ...
. These early patents typically claimed an "isolated and purified" DNA sequence corresponding to the amino acid sequence for the protein, along with recombinant materials incorporating that DNA sequence for use in making the protein in cultured cells.1 As a legal matter, the courts and the United States Patent and Trademark Office (USPTO)
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From page 72... ...
They also were useful as research tools in the development of therapeutic products, but the relationship between gene and therapeutic product typically was less straightforward than it had been for the first generation of biotechnology products. Patents on these discoveries, although similar in form to patents on genes encoding therapeutic proteins, played a different and less familiar role in the biomedical community, setting the stage for conflict between people and institutions that had barely taken note of the first generation of gene patents.
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From page 73... ...
With this shift, patenting genes began to look less like patenting end products and more like patenting research tools. Scientists argued that the progress of biomedical research would be better served by making the human genome freely available than by permitting its balkanization through patent claims and restrictive licensing agreements.8 This opposition became more vehement as EST sequencing moved from NIH to the private sector and as terms of access to privately held EST databases were set beyond the reach of many academic institutions (Eisenberg, 1996)
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From page 74... ...
Owners of platform technologies often seek reach-through royalties when the user is a pharmaceutical firm or other institution engaged in product development.11 Grant-backs are more typical when the user itself is a nonprofit institution, such as a university, that does not develop products but nonetheless generates further intellectual property.12 Both are primarily contract strategies, in which the role of patent law is largely limited to determining background rights. A more powerful strategy for allowing developers of research tools to capture the value that their tools contribute to future product development is called "reachthrough claiming."13 This strategy focuses on the patent itself rather than on license terms, using claim language that is broad enough to cover future products directly.
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From page 75... ...
The invention must be new, useful, and nonobvious in light of the prior art. The patent application must satisfy certain disclosure requirements, including a written description of the invention, an enabling disclosure that would allow a person of ordinary skill in the field to make and use the invention without undue experimentation, and disclosure of the best mode contemplated by the inventor of carrying out the invention.
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From page 76... ...
. 20Congress created the Court of Appeals for the Federal Circuit in 1982, consolidating intermediate appellate jurisdiction over patent law matters in a single court that would hear appeals from decisions of USPTO and decisions of the Federal District Courts in patent cases.
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From page 77... ...
Recent decisions concerning the patentability of computer-implemented inventions may provide more guidance than prior decisions about the patentability of discoveries in the life sciences and in predicting the patentability of informational inventions in genomics and proteomics. The overall trend of decisions in the Federal Circuit is toward the expansive interpretation of the scope of patent-eligible subject matter -- even for categories of inventions that prior decisions seemed to exclude from the protection of the patent statute -- in order to make the patent system "responsive to the needs of the modern world."26 The most conspicuous recent example of this trend was the 1998 decision in State Street Bank & Trust v.
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From page 78... ...
1994) , in which the Federal Circuit upheld the patentability of a data structure for storing, using, and managing data in a computer memory.
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From page 79... ...
The analysis of USPTO emphasized that the subject matter of each of these hypothetical claims was "nonfunctional descriptive material" and therefore "an abstract idea." Although the views of USPTO and its foreign counterparts are of enormous practical importance in determining what gets patented, neither the USPTO guidelines nor the 2002 trilateral report has the status of binding legal authority. If a disappointed patent applicant appeals the rejection of claims covering atomic coordinates for proteins to the Federal Circuit, that court could reverse the rejection.
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From page 80... ...
The solicitor general's brief had argued for denial of certiorari on the grounds that the history of the case and the facts of the dispute were not suitable to address the broader question of patent eligibility. The Court's acceptance of the case, however, has set the stage for what could be a significant revision of patentability.
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From page 81... ...
Patent applicants appealed, and the Federal Circuit eventually reversed USPTO in the case of In re Brana,43 holding that "[u] sefulness in patent law, and in particular in the context of pharmaceutical inventions, necessarily includes the expectation of further research and development." The court admonished USPTO that an applicant's assertion of utility is presumptively correct unless based on implausible scientific principles, and the burden is initially on USPTO to provide evidence showing that someone of ordinary skill in the art would reasonably doubt the asserted utility before it enters a rejection for lack of utility.
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From page 82... ...
The scientific community urged USPTO to use the utility requirement to limit the patenting of gene fragments of unknown function.46 After providing extensive opportunity for public input, and acknowledging that the utility standard should apply equally to all inventions regardless of technology, USPTO fortified its articulation of the utility standard for biotechnology examiners in new Utility Examination Guidelines. These guidelines directed examiners to apply Supreme Court precedent and to require that the application assert "a specific and substantial utility that is credible."47 Using a genomics example, USPTO elaborated that "a claim to a polynucleotide whose use is disclosed simply as a `gene probe' or `chromosome marker' would not be considered to be specific in the absence of a disclosure of a specific DNA target."48 On the other hand, in its responses to comments, USPTO noted that "the utility of a claimed DNA does not necessarily depend on the function of the encoded gene product," but might, for example, be established by a credible assertion that "it hybridizes near a disease-associated gene or it has a gene regulating activity."49 USPTO explicitly declined to adopt a per se rule against assertions of utility based upon homology to prior art sequences, citing In re Brana and noting the absence of "scientific evidence that homology-based assertions of utility are inherently unbelievable or involve implausible scientific principles."50 44U.S.
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From page 83... ...
Novelty and Nonobviousness Perhaps the most basic limitation on access to the patent system is that one may patent only something that is new. What is "new" or "novel" for patent purposes is a function of how patent law defines the content of the "prior art" in § 102 of the Patent Act.
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From page 84... ...
The reason for this is a pair of decisions from the U.S. Court of Appeals for the Federal Circuit that reversed rejections of patent claims to genes that were cloned using information about the amino acid sequences of the proteins they encoded.52 How 52In re Deuel, 51 F.3d 1552 (Fed.
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From page 85... ...
In the early days of gene patenting, the process of cloning the gene for a known protein was fraught with uncertainty and required considerable creativity and skill, but as the field progressed, it soon became an increasingly routine matter, albeit one requiring significant technological expertise and financial investment in the initial development phase. Patent examiners accordingly began to reject patent applications claiming genes encoding proteins for which a partial amino acid sequence had previously been disclosed, reasoning that "when the sequence of a protein is placed into the public domain, the gene is also placed into the public domain because of the routine nature of cloning techniques."53 This analytical approach appeared to be broadly consistent with prior decisions of the Federal Circuit that had stressed the unpredictability of research strategies used to make previous biotechnology products in holding that those product inventions were nonobvious, rather than focusing more narrowly on the predictable character of the products themselves.54 But when this analytical approach began calling for rejections of claims to genes that were cloned through the use of what had become predictably successful strategies, the Federal Circuit changed course and repeatedly reversed these rejections on appeal.
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From page 86... ...
As more DNA sequence information becomes available in databases, even the restrictive approach of the Federal Circuit is likely to lead to obviousness rejections, because most newly sequenced genes are likely to be structurally similar to previously disclosed sequences, given conservation of coding regions in genomes. In chemical patent practice, if a patent application claims a molecule that is structurally similar to another useful molecule that is disclosed in the prior art, the claimed invention may be deemed prima facie obvious, and shifting the burden to the applicant to show that the claimed molecule has surprising or superior properties not possessed by the structurally similar prior art.56 As more DNA sequence information accumulates as prior art in databases, one would expect to see more prima facie obviousness rejections for claimed DNA sequences that are structurally similar to previously disclosed DNA sequences.
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From page 87... ...
of the Japanese patent law mandates that a claimed invention will lack an inventive step when that step easily could be made by a person with ordinary skill on the basis of inventions publicly known or worked prior to the filing of the patent application. Participants in this committee's Trilateral Workshop in Bellagio, Italy, which included representatives of the biotechnology sections of the Japanese and European Patent Offices, generally agreed that differences between the United States on the one hand and Europe and Japan on the other in interpretations of these very similar statutory formulations represented the most important difference in policy and practice in the area of genomic- and protein-related patents in the aftermath of the Deuel and Bell decisions in the United States.
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From page 88... ...
The Federal Circuit has stressed the distinctness of the "written description" requirement from the "enabling disclosure" requirement, holding that it is not enough to provide an enabling disclosure of how to make a product that is not described in the specification.65 In a series of cases involving claims to DNA sequences, the Federal Circuit has said the "written description" standard, which serves to ensure that the inventor was "in possession" of the invention as of the patent application filing date, requires disclosure of information about the structure of products covered by the claim, not just a description of their function.66 6235 U.S.C.
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From page 89... ...
USPTO has published guidelines and examiner training materials for the written description requirement that explain in some detail its application to genomic inventions,67 and written description is emerging as a significant constraint on proteomics claiming strategies as well.68 Although at least one member of the Federal Circuit has called for the court to reconsider decisions expanding the reach of the written description requirement,69 it appears to retain the support of a majority of the court. The recent opinions70 responding to the request for en banc reconsideration of the Federal Circuit panel decision in the case of University of Rochester v.
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From page 90... ...
Arguably the disclosure of crystal coordinates and binding sites provides enough structural information about the size and shape of the claimed compounds, linked to the function of binding the target, to permit visualization of the molecules falling within the scope of the claim.73 But USPTO has indicated that such a claim would fail the written description standard "because one skilled in the art would conclude that the inventors were not in possession of the claimed invention."74 For now, it appears that proteomics inventors are likely to be limited to claiming the actual proteins and peptides that they have disclosed and characterized in their patent applications, without being able to reach through to claim as yet unidentified compounds that ultimately might be found to interact with those proteins and peptides. Limitations on Licensing and Enforcement License terms for patented inventions pertaining to genomics and proteomics have sometimes been as controversial as the underlying patents themselves.
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From page 91... ...
Housey Pharmaceuticals, Inc.,77 a pharmaceutical firm argued that the owner of patents on screening methods to identify potential pharmaceutical products was misusing its patents by licensing them on terms that required the payment of reach-through royalties on future products that were not themselves covered by the patent claims but that were identified through use of the patented screening methods. The district court concluded that, although it would be patent misuse for a patentee to "condition" a license upon the payment of royalties on unpatented products and activities,78 reach-through royalty terms are nonetheless permissible for the mutual convenience of the parties, when the evidence indicates that the patent holder was willing to consider other payment options.
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From page 92... ...
The European Commission's proposed Council Regulation on the Community Patent excludes from the effects of a community patent "acts done privately and for non-commercial purposes" and "acts done for experimental purposes relating to the subject-matter of the patented invention."80 The national patent laws of many European Union member states contain similar provisions, as does Japanese law.81 In a line of cases going back to the 1813 opinion of Justice Story in Whittemore v. Cutter,82 the U.S.
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From page 93... ...
Bolar,86 the Federal Circuit rejected the argument of a generic drug manufacturer that the defense applied to its use of a patented drug to conduct clinical trials during the patent term. The court characterized the defense as "truly narrow" and refused to extend it to a use that was "no dilettante affair such as Justice Story envisioned" but rather had "definite, cognizable, and not insubstantial commercial purposes." Shortly thereafter, Congress amended the patent statute as part of the Hatch-Waxman Act87 to provide a defense from infringement liability for the use of a patented invention "solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs.
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From page 94... ...
The Supreme Court granted review to consider the scope of the statutory exemption and reversed the Federal Circuit by a unanimous vote.92 Noting that "the statutory text makes clear that it provides a wide berth for the use of patented drugs in activities related to the federal regulatory process," the court rejected the argument that the statutory exemption covers only clinical trials and not preclinical research.93 On the other hand, the court recognized some limits to the scope of the exemption, noting that "[b] asic scientific research on a particular compound, performed without the intent to develop a particular drug or a reasonable belief that the compound will cause the sort of physiological effect the research 90331 F.3d 860 (Fed.
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From page 95... ...
asic scientific research on a particular compound, performed without the intent to develop a particular drug or a reasonable belief that the compound will cause the sort of physiological effect the researcher intends to induce, is surely not `reasonably related to the development and submission of information' to the FDA."97 It provides no guidance, however, on how to implement the line drawing envisioned. Second, because the court refers to patented compounds, and not to patented inventions, it raises questions about whether patented processes or other patented inventions that are used in the course of drug development but are not the intended subject of an FDA submission should be treated in the same way.
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From page 96... ...
For example, in the United Kingdom, the state is permitted to compel licensing if a patented invention is not commercialized "to the fullest extent that is reasonably practical" for three years.100 German patent law provides for a compulsory license if the patentee is not willing to grant a license to someone who offers "reasonable compensation."101 Although there has been little litigation under this provision in recent years, German practitioners claim it has a significant in terrorem effect on patentees. Other examples include the Competition Act, § 32 (Canada)
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From page 97... ...
The potential role of patent pools in the biotechnology industry has received considerable attention in the literature. Some analysts have argued that in view of possible royalty stacking, anti-commons, and other situations in which existing patent rights could become impediments to further research and development, patent pools have significant benefits and therefore should be encouraged.
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From page 98... ...
Even though the utility of patent pools for the biotechnology industry is arguable, it generally is accepted that patent pools may benefit both patent owners and consumers, provided the pool is limited to complementary and/or blocking patents. Under these conditions, patent pools may facilitate the integration of complementary technologies, reduce transaction costs, facilitate the clearing of blocking patent positions, and avoid infringement litigation (Bratic et al., 2005; OECD, 2005)
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From page 99... ...
Important issues concerning the patentability of ESTs -- a technology from the early 1990s -- are only now being addressed by the Federal Circuit. Meanwhile, USPTO and the scientific community have had notable success in working together to determine how best to apply the standards of patent law to new types of discoveries in genomics, providing a model for addressing emerging patent law questions in proteomics and structural genomics in a more timely fashion.
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