Biotech Patent Fights
| Chief Justice of the Supreme Court Warren Earl Burger set the stage 20 years ago when he ruled that "everything under the sun made by man" was patentable. This pronouncement kick-started the biotech industry, and ever since companies and their lawyers have been trying to pin down just exactly what that encompasses. They've found one sure way to get some answers -- by carrying a patent-infringement lawsuit to the Court of Appeals for the Federal Circuit, the nation's highest court for such matters. The judicial rulings in these cases have helped to define and refine the circumstances and language necessary to obtain an unassailable patent on a biotech invention. But they've also narrowed the scope of the claims -- and set the direction for what's to come. |
Patent-infringement lawsuits in biotechnology are so common that the industry has gained itself quite a reputation -- not only among the lawyers, but also in the press. Take the latest high-profile case: Amgen Inc. and Transkaryotic Therapies Inc. (TKT) have locked horns over erythropoietin (EPO) patents in the U.S. District Court in Boston for the last four months. Reports that the two companies have been hurling accusations of greed and dishonesty at each other have, naturally, led the news coverage of this trial.
Greed or not, there's no question that the stakes are high. Amgen's version of EPO, Epogen, reaped nearly $1.8 billion in sales in 1999, and had generated $933 million by the end of the second quarter this year. Worldwide sales, including those by Amgen's licensee Johnson & Johnson, hit $4 billion in 1999.
In counterpoint, patent litigation proceedings are horrifically expensive, win or lose, so many infringement lawsuits that get filed never go the distance. In fact, as often as not, the suing party has no intention of going to court: The lawsuit is, instead, a starting point for negotiation. According to Joshua Lerner, who's made a study out of biotech patent litigation, 103 separate biotech intellectual property litigation cases were filed between 1980 and 1993. Of those, however, a significant number went to trial, or resulted in protracted disputes. Lerner, who is a professor of business administration at Harvard Business School, pointed out that trials bring an extra boon to the winner, above and beyond any financial considerations. The party that prevails "not only gets the benefit of winning the lawsuit, but also it builds a reputation for toughness that will facilitate bargaining going forward."
But there's more to patent lawsuits than that. Patent protection is critically important in biotechnology. It can establish a product's virtual monopoly in the marketplace, one that lasts long enough for the company to recoup the enormous amounts of cash that it poured into developing the product in the first place. Secondly, patent protection attracts investors, for it at least implies that the company will be able to generate a profit from product sales. And third, patents (issued or pending) are critical bargaining chips in deal-making with pharmaceutical houses (or even other biotech firms).
And, in the Amgen/TKT case, an even more fundamental issue is at stake -- the validity and enforceability of early biotech patents, which were broadly written. Do these early patents enable newer technologies? Do they invalidate more recent claims made by others? How succinct must a written description be?
Amgen filed its lawsuit against TKT and its pharma partner Hoechst Marion Roussel AG (now Aventis Pharma) in April 1997, claiming that the parties had infringed three of its U.S. patents that claim an EPO product and processes for making it. By September 1999, Amgen had added two more of its U.S. patents to this list. Amgen is seeking to prevent TKT/Aventis from making, importing, using or selling EPO in the U.S.
Amgen makes its EPO in cultured cells via recombinant DNA technology; TKT's technology activates the EPO genes naturally residing in the human body to start producing EPO in vivo. (In early August, Aventis submitted applications in the U.S. and Europe for marketing approval of this gene-activated drug, known as Dynepo.) TKT argues that its gene-activation technology circumvents genetic engineering and thus does not infringe Amgen's patents. In April, U.S. District Court Judge William Young disagreed, granting Amgen a summary judgment that TKT/Aventis had infringed a single claim on a pharmaceutical composition patent for EPO. The trial then moved to issues surrounding the validity and enforceability of that claim, as well as the infringement, validity and enforceability of the other four patents at issue.
TKT has argued that Amgen's patents don't enable the TKT method of producing EPO. But, since Judge Young also indicated in his summary judgement that Amgen's patents may be too broad, the question of whether those claims will still hold remains open. Some analysts predict that if Young rules in Amgen's favor, it will reaffirm the strength of early biotech patents, which are much broader than those issuing today. If so, companies developing so-called generic biotech drugs may be barred from the market for years to come. Other analysts, however, feel that the outcome of this case does not have sweeping implications and is, instead, only of significance to the parties involved. We'll see. But one thing's for sure: The issue is unlikely to be resolved, even when Judge Young emerges from his chambers in a few weeks with his ruling. The loser will most certainly appeal, kicking the case up to the U.S. Court of Appeals for the Federal Circuit.
Interestingly, it's the issues surrounding "written description" and "enablement" that lie at the core of the landmark biotech patent cases. For 20 years now, we've seen the courts continue to narrow the scope of biotech patents. For, in the end, it's been the Federal Circuit judges -- and even the Supreme Court -- who've decided just how to interpret and apply patent law. According to John Kilyk, Jr., an attorney in Leydig Voit & Mayer's Chicago office, "The cases that have come before the Federal Circuit Court of Appeals over the last several years have raised the bar for the patent office, which now has a very high burden to deny patents."
If you're one of the many who think that the history of patent litigation is as dry as unbuttered toast, or that infringement trials are just another showcase for word-twisting lawyers, then consider this: What's gone before has a very direct bearing on what's to come. This is especially true in the extremely controversial and as yet unresolved arena of EST patents. According to John Wetherell, a principal at the San Diego-based law firm Fish & Richardson PC, "Biotech is a constantly changing environment. The way we write patent applications today is different than it was even two years ago."
Signals interviewed a number of attorneys to get their own picks of the patent litigations that have been the most important in shaping biotech intellectual property today -- and going forward. What follows is a list of their choices, which naturally vary from individual to individual. Some of these will no doubt be obvious to you; others might not. And, some aren't even judgmental rulings per se, but rather stances taken by the Patent and Trademark Office (PTO) that have essentially the same effect as a court's pronouncement. For practical reasons, we have not attempted to present all the facts in any of these cases, but merely the summary judgements as they affect biotech patent law. If you want to read the whole case history, or the ruling, just click on the link.
It's widely agreed that without the decision handed down in 1980 by Chief Justice of the Supreme Court Warren Earl Burger, the biotechnology industry might have taken a very different turn. The ruling opened the doors to biotech patents, encouraging companies in the emerging field that they may be able to protect their inventions and turn them into saleable -- even profitable -- drugs. "The decision sent a clear message that allowed the establishment of the biotech industry," according to Fish & Richardson's Wetherell. "It was the first case that allowed the patenting of living things. Before that, it was possible to patent the use of an organism (such as using Streptomyces to make antibiotics) and a method of making the antibiotic (fermentation), but you couldn't patent the organism itself." In fact, he added, "this was the first instance in the entire world. And even today, in some foreign countries, you still can't patent living things."
John Wetherell |
In Diamond v. Chakrabarty, the Supreme Court declared that genetically modified microorganisms were patentable matter. Ananda Chakrabarty's patent application, filed in 1972 and assigned to the General Electric Co., consisted of 36 claims to a genetically engineered Pseudomonas bacterium that can break down multiple components of crude oil. This is the bug that was engineered to treat oil spills. The patent examiner allowed two of the claims (the method of producing the bacterium and a method for preparing an inoculum), but balked at the third -- claims to the bacterium itself, because "as living things, microbes are not patentable subject matter."
The Supreme Court disagreed (although the vote was close). Citing records accompanying the Patent Act of 1952 (when Congress recodified the original Patent Act of 1793, which was authored by Thomas Jefferson) the Court said that "… Congress intended statutory subject matter to include 'anything under the sun that is made by man'." According to the Court, "Judged in this light, [Chakrabarty's] microorganism plainly qualifies as patentable subject matter. His discovery is not nature's handiwork, but his own."
Many thought that this decision did not apply to plants, for they were already protected under the Plant Protection Act and the Plant Variety Protection Act. However, the PTO was already granting patents on new and unobvious varieties of seed-grown plants. In 1985, the PTO's Board of Patent Appeals and Interferences confirmed this position, stating in its decision In re Hibberd (which concerned a patent on maize that produced elevated levels of tryptophan) that it rejected the argument that "the plant-specific acts [Plant Protection Act and Plant Variety Protection Act] are the exclusive forms of protection for plant life." And, in 1987, the PTO announced that it considered "non-naturally occurring, non-human, multicellular living organisms, including animals, to be patentable subject matter." Thus, "anything under the sun" meant all forms of life -- except humans.
Early U.S. patents on biotech inventions often included seemingly broad, "prophetic," claims. Prophetic patents are granted for inventions that have yet to be tested, providing the patent contains a sufficient written description to enable someone skilled in the art to practice the invention (enablement) and use it for its intended purpose (utility). In Amgen Inc. v. ChugaiPharmaceutical Co. Ltd. and Genetics Institute (1991), the U.S. Court of Appeals for the Federal Circuit took its first step toward clarifying just what a "written description" entails.
In short, Amgen had sued Chugai and Genetics Institute for infringing a claim to a DNA sequence "consisting essentially of a DNA sequence encoding human erythropoietin." But the Court judged that it's not enough to know how a compound of unknown structure (in this case, the EPO gene) might be isolated in order to claim conception; instead, the inventor must actually isolate that gene. (In patent parlance, an invention is conceived when there is a complete idea for making and using it.)
According to the court, "It is not sufficient to define [a gene] solely by its principal biological property, e.g., encoding human erythropoietin … When an inventor is unable to envision the detailed construction of a gene so as to distinguish it from other materials, as well as a method for obtaining it, conception has not been achieved until reduction to practice has occurred, i.e., until after the gene has been isolated."
Robert Baechtold |
Robert Baechtold, a founding partner of New York-based law firm Fitzpatrick, Cella, Harper & Scinto, summarized the court's findings thus: "Just because you know about the protein, this doesn't constitute conception of the isolated gene." He added that the ruling "also prevented [a company from] getting very broad-based claims on all DNA sequences that code for a protein or analogs of that protein."
The Federal Circuit Court addressed this point again in 1993, in Fiers v. Revel and Tiollais v. Sugano, Muramatsu and Taniguchi (generally referred to as Fiers v. Revel).
At issue was the resolution of a three-way interference proceeding regarding the priority of invention to the DNA that codes for human fibroblast beta-interferon. All three parties had already filed patent applications in other countries, and each tried to establish U.S. filing priority based on the foreign filings. The PTO's Board of Patent Appeals and Interferences had awarded priority of invention to Sugano et al., basing its conclusions on the disclosure or failure to disclose the complete nucleotide sequence of a DNA coding for beta-interferon.
The Court of Appeals agreed, stating that "an adequate written description of a DNA requires more than a mere statement that it is part of the invention and reference to a potential method for isolating it; what is required is a description of the DNA itself." Moreover, the Court said that "Sugano's application satisfies the written description requirement since it sets forth the complete and correct nucleotide sequence of a DNA coding for beta-interferon."
According to John Barton, the George E. Osborne Professor of Law at Stanford Law School, this ruling in Fiers v. Revel demonstrated "more clearly than in any other case that you can get a patent for a protein once you get a patent for its sequence. You can't claim a protein by demonstrating how to find the sequence. You have to have the sequence."
This ruling provided for the definition of a substance other than by its utility, he continued. And, of course, this leads directly to issues surrounding the patenting of the human genome. "Is the sequence alone enough to get a patent on, even if you don't know what it does?" Barton asked.
Several other cases centered on this issue of a written description, including In re Bell (1993) and In re Dueul (Federal Circuit, 1995), but they culminated in The Regents of the University of California v. Eli Lilly and Co.(1997), which concerned insulin. The University of California (UC) claimed that Lilly had infringed its patents in its manufacturing of human insulin. UC's patents, which are considered pioneering and were filed in the early 1970s, relate to recombinant plasmids and microorganisms that produce human insulin. One of these patents, discussed here, is based on the determination of cDNA sequences from rats, but the claims were extended to cover mammalian and human insulin cDNA.
The Federal Circuit Court determined, however, that these claims were not sufficient or enabled for human insulin cDNA. "Describing a method of preparing cDNA or even describing the protein that the cDNA encodes does not necessarily describe the cDNA itself. No sequence information indicating which nucleotides constitute human cDNA appears in the [UC] patent, as appears for rat cDNA … Accordingly, the specification does not provide a written description of the invention."
The Court went on to state that, "In claims to genetic material … a generic statement such as 'vertebrate insulin cDNA' or 'mammalian insulin cDNA,' without more, is not an adequate written description of the invention because it does not distinguish the claimed genus from others, except by function … [which] is only an indication of what the gene does, rather than what it is."
In other words, "The sequence of the protein is not a written description of the cDNA that produces the protein," explained Fitzpatrick, Cella, Harper & Scinto's Baechtold. "It becomes too easy to preempt large fields of research if you can write broad claims based on limited disclosure." And, in fact, he added, "this [issue] is an ongoing concern. Companies are still trying to write broad claims."
Rochelle Seide, a partner in the New York law firm of Baker Botts LLP, believes that UC v. Lilly is "the single most important biotech patent ruling, in that the Federal Circuit had a departure [from previous rulings] on what constitutes a written description of an invention." Seide explained that "there are three sections of the patent statute that deal with description. You have to show you're in possession of the invention; you have to enable the invention; and you have to disclose the best mode of practice." In UC v. Lilly, the court decided that UC had not described human cDNA, even though it was enabled, she said.
Rochelle Seide |
This decision came at the end of a line of cases that dealt with description issues, Seide continued. "One of the reasons it's had so much impact is that 'written description' has become a hot issue at the PTO." In fact, she added, "the Court and the PTO are still grappling with this issue. Patents are moving targets."
One of the basic tenets of patent law is that a patent must enable someone skilled in the art to practice the invention, without undue experimentation. Enzo Biochem Inc. and Calgene Inc. learned this as a result of their extended patent battle over antisense technology. Enzo's patents, which it licensed exclusively from the Research Foundation of the State University of New York, claim various fundamental aspects of genetic antisense technology. According to the Court, "they teach the application of antisense technology in regulating three genes in the prokaryote E. coli." Calgene's patent, on the other hand, is directed to the use of antisense technology in regulating gene expression in plants (which are eukaryotes). Enzo sued Calgene, claiming that the latter's patented Flavr Savr tomato infringed Enzo's antisense patents.
Not so, according to the Court of Appeals. In Enzo Biochem Inc. v. Calgene Inc. (1999), the Court pointed out the fact that "despite limited disclosure, inventor Masayori Inouye [on Enzo's patents] asserted that the practices of this invention are broadly applicable with respect to any organism containing genetic material which is capable of being expressed." He cited bacteria, yeast, other cellular organisms and even viruses. However, the judges determined that Enzo's patents had not provided enough direction or examples of how to actually practice antisense in those cells. "Inouye has provided only the mere germ of the idea for exploiting antisense in eukaryotes … The breadth of enablement in the patent specifications is not commensurate in scope with the claims, as the quantity of experimentation required to practice antisense in cells other than E. coli at the filing date would have been undue."
If you're going to claim it, you'd better teach it, too.
Issues of conception and joint ownership were the focal point of Burroughs Wellcome Co. v. Barr Laboratories Inc. and Novopharma Inc. and Novopharm Ltd. (Federal Circuit, 1994). The patents in question concerned AZT, the first drug approved for treating AIDS. Burroughs Wellcome (later acquired by Glaxo plc ) owned six U.S. patents on various preparations of 3'-azidothymidine and methods for using the drug for treating HIV-infected individuals. Each of the patents named the same five inventors, all of whom were Wellcome employees at the time the inventions were supposedly conceived. But was it these individuals who actually conceived the invention, or did researchers at the NIH share in the conception? For, NIH researcher Samuel Broder and his colleagues, who were developing a cell line to screen compounds for anti-HIV activity, had asked pharmaceutical companies to provide them with samples to test. Burroughs Wellcome did, and one of the compounds was AZT. But that all happened before the company had filed its patent application.
To make a long story short, several years after the FDA had approved AZT, Barr Laboratories filed an abbreviated new drug application (ANDA) to manufacture and market a generic version of AZT. Barr claimed it was not infringing Wellcome's patents because Barr had licensed AZT from the government, whose employees (Broder and Hiroaka Mitsuya, who tested the Wellcome compound) should be considered co-inventors. (Later, Novopharma also filed an ANDA on AZT, and was thus included in this lawsuit.) The Federal Circuit judges ruled that the NIH scientists were not co-inventors; in fact, the testing done by the NIH "confirmed the operability of the inventions … and showed that the Burroughs Wellcome inventors had a definite and permanent idea of the inventions. [The testing] was part of the reduction of practice…" The court went on to say that "We do not know precisely when the inventors [Burroughs Wellcome] conceived their inventions, but the record shows that they had done so by the time they prepared the draft patent application that thoroughly and particularly set out the inventions as they would later be used … The NIH scientists were not joint inventors of these inventions."
When the NIH filed the first patent applications on expressed sequence tags (ESTs) in 1991, it sparked a furious debate on whether such partial gene sequences should be patentable. (Three years later, the NIH abandoned those original applications.) ESTs are short sequences of DNA only; they can be (and are) generated automatically by machines; and, though they're extremely useful in locating a full -length gene, and thus predicting the protein that gene makes, by their very nature ESTs cannot disclose the entire protein for which that gene codes, nor can they be used to conclude anything about its function. Are they patentable, then? Do ESTs meet the requirements for utility and enablement?
Well, the PTO has been granting patents on gene sequences: In fact, according to the Biotechnology Industry Organization (BIO), by the end of 1999 the PTO had issued 2,330 patents covering gene sequences. And, the U.S. government held the most -- 388 to be exact -- topping all companies, even second-place Incyte Genomics Inc. (which held 356 patents at the time).
More than 2,000 patents on gene sequences may seem like a lot, but it's only a drop in the bucket. The PTO has been flooded with gene patent applications, thousands upon thousands of them. To help relieve its burden, the PTO proposed new (revised) utility and written-description guidelines in December 1999. (This is the second time the PTO has published interim guidelines; the first time, in 1998, they were met with such harsh criticism by the research community that the PTO revised them.) "Many comments [on the first set of guidelines] took this opportunity to heavily criticize the patentability of ESTs, grounding their arguments in fairness and policy issues. Many comments also expressed the opinion that ESTs lacked the utility, enablement and written description necessary to satisfy … the U.S. code."
"ESTs are at the root of the written description and utility guideline issues," commented Baker Botts' Seide. "These issues may ultimately need some resolution by the court."
The revised interim guidelines will be used by PTO examiners in their review of applications for compliance with the written description requirement of patent law. Importantly, however, the PTO has stated that "…[they] are not the appropriate vehicle to fully address the patentability of ESTs." That will come, apparently, with the PTO's revision of the utility guidelines (including enablement requirements.) The PTO expects to publish the final guidelines this fall. "The set of decisions implicit in the utility guidelines represent a very important milestone in biotech patenting," commented Stanford Law's Barton.
There's a sticky point in the DNA/gene patent arena, though, and that has to do with the doctrine of equivalence. According to Leydig Voit & Mayer's Kilyk, the problem comes up when a client wishes to file a patent application, but first needs to determine whether its claims would potentially infringe on any other patents, issued or pending. "Sometimes we find a patent that describes exactly what our client wishes to do, but usually we find patents or applications that are arguably similar." But are they equivalent? For example, he continued, say that one company has a patent on a DNA sequence or protein. Another company wants to work with or market a DNA or protein that differs by one base pair or one amino acid. Are they the same or different? "This situation comes up all the time," Kilyk said. And, so far, "There haven't been a sufficient number of interpretations by the Federal Circuit in this area" to allow an unequivocal answer.
According to Stanford Law's Barton, the patent case that could have the biggest impact on biotech in the near future doesn't concern biological molecules at all: It's about algorithms.
John Barton |
In AT&T Corp. v. Excel Communications Inc. (1999), the Federal Circuit Court of Appeals reaffirmed the patentability of software. (The case concerned software governing long-distance telephone calls. The patented process aids long-distance carriers in providing differential billing for subscribers, depending on whether they call someone with the same or a different long-distance carrier. AT&T's process uses subscribers' primary interexchange carriers [PIC] as data.)
The Supreme Court had already affirmed that "even though a mathematical algorithm is not patentable in isolation, a process that applies an equation to a new and useful end is at the very least not barred at the threshold." And the Federal Circuit supported that decision in State Street Bank & Trust Co. v. Signature Financial Group Inc. (1998): "A mathematical algorithm may be an integral part of patentable subject matter such as a machine or process if the claimed invention as a whole is applied in a useful manner."
Importantly, the Court also addressed whether there need be a physical requirement for software to be patentable. "The mere fact that a claimed invention involves inputting numbers, calculating numbers, outputting numbers, and storing numbers, in and of itself, would not render it nonstatutory subject matter unless, of course, its operation does not produce a useful, concrete and tangible result."
According to Barton, this ruling means that it will be possible to get a patent on an abstract procedure or an algorithm. And it will impact biotechnology. For instance, he continued, "We will quickly see patents on computational methods for calculating protein folding." According to Barton, "This case is saying that it's a lot harder to draw the line between the discovery of a scientific principle and the development of a patentable invention."
Since current biological research (including genomics, proteomics, bioinformatics and systems biology) relies so heavily on computing, and, indeed, already occurs more frequently in silico than in vitro or in vivo, researchers may now have a way to patent these types of inventions -- and an entirely new way to profit from them as well.
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originally published 09/15/2000
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