We review contracts daily at BioPharma Law Group. These range from simple CDAs to more complex licensing discussions. Below are some practices that I have encountered over the years that frustrate lawyers and their clients and can result in prolonged negotiations and can sometimes even jeopardize deals.
Make late-stage edits
At the beginning of negotiations, it is common for one party to mark up the other party’s contract template and send it back. These mark-ups are typically done through redlining. The other party then reviews the redline and returns it either having accepted the edits or proposed alternative ones. Eventually, the parties agree on language that is acceptable to both. A problem that can introduce a wrinkle in this process is when a party introduces new terms or last-minute changes in the third or fourth round of negotiations. Introducing last minute edits will not only slow down the negotiating process but will also frustrate the opposing party, thereby making it more difficult to reach a deal. If some terms need additional input or cannot be commented on in a first round, those should be highlighted with a comment saying that this language is “pending.”
Reintroduce previously-rejected terms
While it is frustrating when the opposing party introduces new edits late in the negotiating stage, it is even more frustrating when they try to sneak in terms that you had previously rejected. I have had situations where the other party reintroduced terms in a final version that I had previously rejected. They did so not in redline form hoping I would not catch the addition. Luckily, I did a comparison between the final version and the initial draft and caught the change. Not only does this tactic annoy the opposing party, but it shows a lack of good faith in completing the transaction.
Provide no reasoning for your changes
Communication is the most important aspect of any negotiation. When addressing the opposing party’s edits, it is not uncommon to find some of the opposing party’s requests unacceptable. When deleting or modifying the unacceptable language, it is extremely important to provide reasoning for your changes. This process not only helps the other party understand your position, but it also makes the negotiation process more amicable and streamlined. Simply deleting large portions of text provides little to no context for understanding your position and can lead to more contentious discussions.
Waste valuable live or in-person contact
Sometimes it is more effective to have a telephone conversation with the other party to discuss remaining issues in an agreement rather than exchanging documents with edits. Prior to this conversation, however, both parties should exchange a list of topics to discuss. It is important that during the meeting, the parties stick to the issues they agreed upon and not introduce entirely new ones. I once prepared for a discussion thinking that the main concern was IP ownership resulting from the collaboration but was surprised that the other party only wanted to discuss owning my client’s personal IP. Needless to say, it was an unproductive call. Phone calls should be reserved toward the end of negotiations to resolve the few remaining issues. Bringing up new issues during a phone call wastes precious time and makes the negotiation process unproductive.
Be fixed to your terms
When negotiating an agreement, a party should be willing to modify its terms. Certainly, a party could have points that they are not willing to concede, but there is usually some acceptable language that could be found. Simply saying that edits are "ridiculous" and refusing to even consider alternative language is a recipe for disaster. If there are terms that are non-negotiable, for whatever reason, a party should point those out at the onset of negotiations and provide reasoning. This allows the opposing party to know which terms cannot be changed, so they can decide whether they want to proceed with the negotiation. To reach an agreement, a party should be open to modifying language instead of simply refusing to negotiate.
Rely on “industry standard” terms
One of my biggest pet peeves in contract negotiation is when a party insists on terms saying they are “industry standard” and providing no other reason. While there are some terms that are generally considered “industry standard,” many others depend on the specifics of the negotiation – who are the parties to the agreement, what is being exchanged between the parties, and so forth. In a clinical trial, for instance, it may be proper to say that the sponsor indemnifies the site for problems associated with their drug, but in a consulting agreement, it may not be proper to demand that the individual consultant indemnifies the company. Merely saying that your terms are “industry standard” without anything else will not move the deal forward.
Not provide consideration for last-minute demands.
It is generally bad practice to make large asks in the final stage of negotiation. Substantial changes to a term can often jeopardize a deal but making substantial changes without providing additional consideration will almost certainly kill the deal. I once had the opposing party demand rights to all my client’s personal IP without additional compensation and without providing any reasoning beyond saying its “industry standard.” If something does require a late-stage demand, it should, at a minimum, be accompanied by additional consideration to show the opposing party that you are serious about completing the transaction. Simply asking or demanding for substantial changes with no additional payment displays a lack of good faith in completing the transaction.
Calling the opposing counsel names or unprofessional conduct
This should go without saying but under no circumstances should a party call the opposing counsel names or engage in unprofessional conduct. Calling the opposing counsel, and even the opposing counsel’s client, incompetent because she or he does not agree to your terms is not a good way to get that counsel to agree to your terms. In fact, this is a good way of killing a deal. Clients and attorneys are often under a lot of pressure to close deals but they should always remain professional in their interactions.
Intellectual property (“IP”) assignment agreements are thorny subjects for employees at both mature and early stage companies. Many employees are skeptical about entering into these agreements because they want to retain ownership of the ideas they create while they are away from work. These days, the line between work and one’s personal life are increasingly more difficult to distinguish. For those who have been working from home for the last year, the two paradigms might seem to have merged into one entirely. Accordingly, employees who have entered into IP assignment agreements should evaluate the wording of their agreements carefully.
Broad IP assignment agreements might be unenforceable depending on the state the IP holder works in. For instance, suppose an inventor signs an employment contract with an IP assignment clause that reads:
In consideration for the compensation the Company pays to me, Company shall own all of the rights to the inventions and work product that I create or conceive during the term of my employment.
Under this language, any and all inventions that an inventor worked on while employeed would presumably be owned by the company, regardless of …. This broad language, however, would likely fail to meet California’s requirements for IP assignment agreements. Under California Labor Code § 2870, an intellectual property agreement should be more tailored to capture work within the time, place, scope, and function of an employee’s employment. Several other states, including Delaware, Minnesota, and others, have similar requirements.
Other states, however, take a more employer-friendly approach. In Nevada, for instance, employers have a right to patentable inventions as a default under Nevada Stat. § 600.500. In New York, where there is no statute directly on point, the law is even less clear. A recent case in the Southern District of New York demonstrates how broad IP assignment agreements can reach in New York. In Novasparks SA v. Enyxfpga, Novasparks designed and marketed financial data processing systems, and it had several employees who worked on these systems’ code. Some of Novasparks employees then left to form Enyxfpga and shortly thereafter Novasparks sued Enyxfpga—alleging that the departing employees breached their employment agreements by using the IP the employees developed while at Novasparks. The employment agreement in question provided that:
[A]ll intellectual property rights and know-how in and to any creation or invention developed by [employee] in relation to [their] internship and in particular to the Project in any form whatsoever (including in particular, technical inventions, software, computer programs, integrated circuits, designs, plans or any other technical, commercial or other documents).
The court stated that this employment agreement was worded broadly enough to capture inventions conceived while the Enyxfpga employees worked for Novasparks, and thus found the employees breached the agreement.
But even if New York accepts broader language, the time, place, scope, and function requirements remain critical components when evaluating an IP assignment agreement. These four factors help form the basis for what courts refer to as an employee’s “scope of employment.” At bottom, one’s scope of employment captures what they were hired to perform. If you were hired by a biotech company to research and develop new gene therapies, then any gene therapies you develop would probably fall under the scope of your employment. However, if you develop a language learning program, that program would likely fall outside the scope of your employment.
As such, there are steps inventors can take to escape the grip of broadly worded IP assignment agreements. To minimize the likelihood that your employer can claim rights to your invention, the following four tips can help demonstrate that your IP was developed outside the scope of your employment.
Start recording everything. Maintaining meticulous records helps reduce questions surrounding ownership over the new IP and can help prove your ownership. Write down your project dates, including the start date, in a diary and keep track of its development stages, including any discussions with third parties that you have had. You can also maintain an electronic record by sending an email to your personal address that documents your contributions.
Use your time wisely. Make sure you work on your project outside of your work hours. This means focusing on your project only in the evenings and weekends if your work hours are from nine to five. If you work on your project during work hours, you can risk the employer claiming rights to it.
Use separate devices. Similar to the point above, make sure you work on your project using your own devices. Do not use your employer’s computers, tools, copiers, scanners, or other devices for your personal work. Use only your own personal computer or laptop. This means that any inspiration you get while working should be written on paper and pen, and not on your office device. Likewise, use only your personal email when communicating about your invention.
Use your own money.Finally, make sure you fund your project using your own resources. This means using your own money to pay for expenses like electricity, paper, permits, and raw materials. Do not claim money from your company for any IP-related expenses. If you use your employer’s money to pay for any parts of your invention, you risk jeopardizing ownership of it.
Ultimately, whether an employer can claim ownership over your intellectual property will depend on (1) the language in your employment agreement, (2) the nature of the intellectual property and its relationship to your employment, and (3) your state’s laws. However, following the four steps listed can ultimately decrease the likelihood that an employer could successfully claim ownership of your intellectual property.
On August 26, 2021, the Federal Circuit revisited the written description requirement in determining patent validity in Juno Therapeutics v. Kite Pharma. In this case, the Federal Circuit’s decision addressed Juno’s patent written description between Juno Therapeutics and Kite Pharma over Kite’s CAR-T anticancer therapy, Yescarta®. Yescarta® is a $373,000 per treatment regimen. Juno does not market a competing product.
In general, CAR-T anticancer therapy works by modifying a patent’s T cells to stimulate a patient’s immune response against tumor cells. CAR-T cells involve a Car-T receptor comprised of a zeta chain portion with (a) intracellular domain of CD3 ζ chain (a signaling domain that activates to trigger an initial immune response when T Cells bind to antigens) (b) a co-stimulatory signaling region, (The stimulation of this region causes T cells to multiply), and (c) specific binding element that binding to an expressed antigen by a target cell (e.g. tumor). A nucleic acid encoding CAR is introduced into a patients’ T cells after isolation from the patients. Then, these T Cells are reintroduced and bind to patients’ tumor cells. This process allowing for the cascade of these tumor-specific T cells and causing tumor cell deaths.
The ‘190 patent claims three specific elements of the CAR-T therapy: scFv, CD28, and CD3ζ. Claim 1 of the ‘190 patent is below:
A nucleic acid polymer encoding a chimeric T cell receptor said chimeric T cell receptor comprising:
(a) a zeta chain portion comprising the intracellular domain of human CD3 ζ chain,
(b) a costimulatory signaling region, and
(c) a binding element that specifically interacts with a selected target, wherein the costimulatory signaling region comprises the amino acid sequence encoded by SEQ ID NO:6.
Juno initially sued Kite for infringing claims 3, 5, 9, and 11 of its 7,446,190 (the ‘190) Patent. Kite countered arguing that Juno’s ‘190 patent is invalid for failure to satisfy the written description requirement of 35 U.S.C. Section 112. In the District Court, the jury determined that Kite did not show clear and convincing evidence that the asserted claims of the '190 Patent were invalid for failure to meet the written description requirement under 35 U.S.C. § 112(a). In doing so, the District Court awarded Juno a $1.2B judgment which included over $778 million on the jury verdict to account for Kite's infringing sales of Yescarta® not accounted for by the time of trial, enhanced damages of over $389 million for Kite's willful infringement, and an ongoing royalty of 27.6% on Yescarta® revenues through patent expiration. However, the Federal Circuit reversed the lower court’s decision and vacated a $1.2B judgment to Juno Therapeutics.
The main issue, in this case, was a single-chain antibody variable fragment or scFv. This binding element is forged by linking antigen-binding portions of the heavy and light chain of an antibody’s variable region to form the binding element. The Federal Circuit used this fact to reverse the lower court's decision as each variable region contains a unique amino acid sequence that dictates how scFVs will bind to the target.
The ‘190 Patent disclosed only two scFvs, one ScFv that binds to CD19 protein and the other that binds to PSMA. However, the patent failed to describe and disclose the amino acid sequence of either of these scFvs. The Federal Circuit cited Ariad Pharms. V. Eli Lilly (Eli Lilly) to determine that the ‘190 patent failed to meet the written description requirement. A written description of a biological or chemical invention would require “a precise definition, such as by structure, formula, [or] chemical name," to distinguish itself from other materials.
The Federal Circuit further sided with Kite’s argument that the ‘190 patent did not disclose the representative species or common structural features of the scFv genus to identify which scFvs would function as claimed in the patent. There was no specification of which scFvs bind to given specific targets, so that the written description does not meet the written description for functional binding limitation and that scFvs’ binding ability depends on several factors.
The Court also assessed the failure to satisfy the written description requirement for dependent claims 3 and 9. The Court interpreted claims 3 and 9 to mean “any scFvs for binding any target.” The Court gave an opinion that ‘190 patent “fail[ed] to provide a representative sample of species within, or defining characteristics for, that expansive genus” Thereby, claims 3 and 9 failed the written description requirement of Eli Lilly.
The Federal Circuit also rejected Juno’s expert testimony to counter Kite’s invalidity contentions by stating that Juno’s written description requirement did not “lead a person of ordinary skill in the art to understand that the inventors possessed the entire scope of the claimed invention.” Furthermore, the Court formed an opinion that for Juno to claim that general knowledge of scFvs was sufficient, they needed to convey they possessed “the claimed invention, encompassing all scFvs, known and unknown, as part of the claimed CAR that binds to a selected target.” This would be an impossible standard for Juno to have met.
The Federal Circuit also looked at the alternative Eli Lilly test to satisfy the written description requirement. There too, the Federal Circuit found the ‘190 specification lacking. The Court acknowledged that scFvs have structural commonalities and that the differences in amino acid sequences determine the binding specificities to a variety of antigens. However, the ‘190 patent failed to disclose a way to distinguish binding-capable scFvs from binding-incapable scFvs of specified targets.
The opinion also looked at asserted claims 5 and 11, regarding the limitations of scFvs binding to CD19. The Court agreed with Kite stating that this limitation does not satisfy the written description requirement because there are only a few scFvs that bind to CD19 known in the prior art. This factor is important because there could potentially be millions or billions of possible sequences of scFvs.
The major lesson from this decision is that the Court narrowed the scope of antibody patent claims. Now, claims regarding antibodies will have to resemble closely with a company’s antibody products. With antibody claims, companies will need to disclose some of the structures of the antibody product rather than submitting broad claims using languages such as “binding elements,” “costimulatory regions,” etc. Inventors will only get patent protection for the disclosed items. This case will allow others to make derivative products to make more competing species of antibodies. One positive side of this case is that there will be an increase in the number of potential antibody-related inventions. However, with the lack of protection, the inventors might not even innovate to make antibody-related products at all.
However, there is a way to build a patent portfolio that can withstand some of the recent written description decisions, including Sanofi. Companies will need to build a patent portfolio with many layers to create a “patent thicket.” The most important features of a successful patent thicket are 1) the number of patents; 2) the diversity of the portfolio; 3) the timing of its patent application. There is a trade-off: this strategy is very expensive. However, if a patent is worth protecting, the patent portfolio method is highly recommended.
For antibody patents, each patent should claim the subject matter using different formats yielding differences in scope so that some of the patents can survive the potential post-grant challenge. This can be done by including a set of narrower claims that include parts of antibody sequence or other features of the antibody. Furthermore, functional elements could be coupled with structural elements in the same claim, creating hybrid claims. It would also greatly help if the company could staggeringly file these patents to include a range of different patent claims that act to extend the patent term.
Joint inventorship presents one of the most challenging situations within patent law. It allows the ownership of a patent to reside with more than one person; and, as a result, it can create uncertainties over the patent’s chain of title when the inventors’ interests diverge. To avoid such problems, it is preferable to address joint inventorship issues upfront—before any discussions with investors or collaborators takes place. The fact pattern below highlights situations that commonly arise with joint inventors and it then proposes some solutions.
Alice and Dwayne are friends in upstate New York. They are both interested in magnetic resonance imaging (“MRI”) machines and they are trying to come up with a process that speeds up the time it takes to effectively use an MRI machine. They believe that their research—if successful—presents a tremendous opportunity to improve rural medicine due to the scarcity of MRI machines in these areas. Additionally, because the average MRI scan takes between 15 to 90 minutes, queues often plague the speed of administration that rural community hospitals are capable of.
Alice and Dwayne successfully develop a software that decreases the time of an MRI scan by a factor of ten. Realizing the unique and transformative nature of the software, the two file a patent with the United States Patent and Trademark Office (“USPTO”) and list themselves as the inventors of the patent. They do not form a company, nor do they have any intellectual property (“IP”) agreements in place to determine how any IP developed by them would be handled. For all intents and purposes, Alice and Dwayne own the intellectual property jointly.
Shortly after filing, Alice mentions the software to her Aunt—a top executive at a leading medical device company. Alice’s Aunt tells her that the company would likely buy the rights to the patent for $10 million. Alice rushes to tell Dwayne who expresses discontent with the offer. Dwayne prefers to provide the software for free through an open-source license to improve rural communities’ healthcare systems.
This hypothetical illustrates a particularly nascent problem within the intellectual property space. Absent any agreements to the contrary, patent ownership resides with the inventor or inventors of the patent. Inventorship, in turn, is determined by whether the person contributed to the “conception” of the idea, or “the formation in the mind of the inventor of a definite and permanent idea of the complete and operative invention as it is thereafter to be applied in practice.” Assuming that both Alice and Dwayne contributed to the conception of the new software, then both Alice and Dwayne are inventors on the patent and therefore jointly own the patent.
Ownership of a patent comes with benefits, one of which is the right to sell or license out the patent. When there are multiple owners of a patent, each one of those owners may sell or license out the patent without the permission of the other owners. In our fact pattern above, Alice’s desire to sell the patent to her Aunt may be hindered by Dwayne’s desire not to do so. In fact, if Dwayne starts providing the software for free, Alice’s Aunt’s company may no longer be interested in buying the patent when they learn that it is being provided at no cost.
Nevertheless, mechanisms exist that can mitigate such joint inventor problems. One rather simple solution is for the inventors to agree upfront on a contract that would govern rights and responsibilities to jointly held inventions. This would provide some guidance for the inventors for when to sell the joint work, when to bring suit, and so on.
Another more robust solution is for the inventors to form a separate corporate entity to which the inventors will assign their intellectual property. For instance, Alice and Dwayne could have formed a c-corporation and assigned all intellectual property related to fast MRI scans to the corporation. This process provides better protection for inventors because it removes the concerns about joint inventorship by placing ownership of the invention into a company, which would have the sole power to sell or license the patents to a third party.
To bolster the protection offered by using a company to hold title for the intellectual property, the founders can carve out what IP the inventor retains based on specific uses. For instance, the parties can agree to divide the interest to arising intellectual property into distinct fields of use, and each party would retain rights within its pre-defined field of use. In our fact pattern, for example, Alice could retain rights over MRI uses for epilepsy while Dwayne could retain rights for stroke. This allows each party to maintain some exclusivity to the arising inventions, preventing one party from potentially sabotaging the other party’s interests.
Using either of these devices helps contemplate the problem that joint ownership can present. By negotiating each inventor’s rights ahead of time, inventors avoid—or at least mitigate—disputes that may arise as interests diverge.
For many early stage inventors, the prospect of securing a patent represents a daunting next step. Cost concerns, complexity, insufficient data, or lack of foresight dissuade inventors from securing patent protection. However, delaying the filing of a patent can cost inventors tremendously.
The United States has a first-to-file patent system, which means that the first person to file a patent application receives priority to that application. It logically follows that if you wait to file then you can lose all rights to your invention; however, this is not the only concern. Failing to timely file a patent hamstrings an inventor in several other ways. This post details three key risks that follow from delaying a patent filing.
Losing Priority to your Invention. As previously stated, the first-to-file system provides an incentive to proactive inventors. By filing early, an inventor locks in their right to maintain a limited monopoly over the claimed invention. Thus, a first-to-file system differs from a system that bestows patent ownership to the person who first conceives the idea, in that the person who had the idea first nonetheless lacks any claim of right over the invention.
Suppose you invent a novel drug that can treat hair loss, but you do not wish to patent the invention until your data reflects 90% efficacy. Several years pass and the data you wish to include in the patent application reflects 100% efficacy. You go to your attorney on March 3rd, 2021 to help you with the patent application, and they let you know that they will begin a prior art search immediately. Unfortunately for you, the attorney’s prior art search uncovers the exact same drug formulation on a patent filed on March 2nd, 2021. Even if the data on this patent reflected a less effective formula your patent would still be excluded under the United States’ first-to-file system.
The above hypothetical reflects a near-catastrophic example of losing priority to your invention. Not only did delaying your patent put you second in line, but the inventor that filed first now maintains a twenty-year monopoly over the hair loss drug that you spent years of your life—and potentially a significant portion of you or your company’s finances—developing.
Inadvertent Disclosure. Another risk that inventors face when delaying a patent’s filing is the inadvertent disclosure of their invention. Suppose the drug developer mentioned above attended a conference for people working in the hair-loss treatment space, and that the inventor presented their preliminary findings for their drug formulation. After the conference, the inventor collects data for thirteen months before finally meeting with their attorney to start the drug’s patent application. During the prior art search, the attorney uncovers the inventor’s presentation at the conference. Here, the attorney would have to inform the inventor that their prior disclosure precludes the patent filing because the information already exists in the art—the inventor effectively became their own prior art.
Here, the risk is less dramatic than above, but it still impairs the inventor’s ability to market their drug unimpeded. Now the inventor will have to enter a market without the exclusivity protection that a patent offers. In short, the inventor exposes themselves to a potential flood of unfettered competition.
Under 35 U.S.C. § 102(b)(1), an inventor has one year from the time of an inadvertent or intentional disclosure to file a patent. The clock begins to toll immediately from the point of disclosure. In many instances, the risk would be another inventor beating you to the patent filing. However, if the patent application for this invention is particularly laborious, then one year might not be enough time to complete and file the application. At any rate, if you find yourself at a point where you are willing to disclose details of your invention, you should begin the patent-filing process to avoid these risks.
Impairing your ability to freely share information. For many inventors, the invention is but a subset over their overarching goal. The invention might be the foundation on which they plan to build their company around. To build a successful enterprise, an inventor will need to talk with potential employees, customers, and investors. Inventors that wish to delay their patent filing might take comfort in the use of non-disclosure agreements (“NDA”)—particularly with their employees. Here, the inventor might maintain that the invention is their company’s trade secret, and that a signed NDA prevents other companies from replicating the invention because the information is held confidentially. The problem here is that once a person discloses a trade secret, it is no longer a trade secret. The disclosure could thus prevent you from obtaining a patent either because the information became prior art, or a different company used the information to file its own patent.
Accordingly, the lack of patent protection could preclude you from disclosing all of your invention’s details with the parties that might enable your company to succeed. This may present a barrier that is too great for some to overcome, and they might avoid doing business with you or decline your employment offer. Additionally, the lack of patent protection might be a nonstarter for some investors who are worried that established companies could replicate your invention and force you out of the market.
In today’s first-to-file patent system, it has become increasing important to file timely patent applications. Failing to do so not only jeopardizes an inventor’s rights to that technology, but also hamstrings the inventor’s ability to promote that technology.
Companies generally have two options when deciding what product to pursue and patent: develop a novel product from scratch or find an existing one and repurpose it. Repurposing existing technologies can offer viable opportunities for companies looking to expand their product portfolios since it eliminates many of the costs, time, and risk associated with developing de novo products.
There are two main hurdles when it comes to IP issues involving a pre-existing technology: novelty under 35 U.S.C. Section 102 (“Section 102”) and obviousness under 35 U.S.C. Section 103 (“Section 103”). We will address these in turn.
Section 102: Novelty
One of the main hurdles to overcome when patenting a pre-existing technology is novelty, or Section 102. As applied to a pre-existing drug, Section 102 requires that it not be previously patented, described in a printed publication, in public use, on sale, or otherwise available to the public before the patent application is filed. In other words, a claim to the pre-existing drug must recite something not previously known to the public. For drug patents, most composition of matter claims reciting only the pre-existing drug will run afoul of Section 102 because the drug was previously known to the public, and thus, would be considered prior art to any subsequent patent application.
New indications: To overcome the novelty hurdle, composition claims including pre-existing drugs need to include new elements not anticipated by the earlier disclosure. Such new elements could be, for instance, reciting new uses, such as a new indication. If the original claims were directed to a cancer indication, for instance, a novel use would be to claim a cardiovascular one. Such method claims are often difficult for competitors to design around, and they are also available in many foreign jurisdictions, although in slightly different formats. Other uses could include new dosage amounts, different formulations, better safety, better tolerability, new way of administration, and so forth.
New dosage forms: Another way to claim a previously-known drug is to claim novel pharmaceutical dosage forms. Pharmaceutical dosage forms can be, for instance, gels, solids, liquids, or sustained or extended-release forms. Other examples of dosage forms can be for a specific type of administration including oral, parenteral, intramuscular, and the like. Many variations of pharmaceutical dosage forms are available and lend themselves to drafting novel claims that overcome Section 102 rejections.
New combinations: Yet another approach for overcoming a Section 102 hurdle is to combine two pre-existing technologies into one product. In the case of drugs, one can incorporate the pre-existing drug into a composition including one or more other compounds to form a novel combination. For instance, Pfizer’s drug, Caduet®, is the combination of the calcium channel blocker, Norvasc®, and the cholesterol-lowering agent, Lipitor®, which expired in 2007 and 2011, respectively. The combination product expired in 2018, about seven years after the expiration of one of its products.
While the repurposed technology can be any new use, new form, or even new combination that is novel for the purpose of overcoming Section 102, such modifications to the pre-existing technology may nevertheless encounter Section 103 obviousness hurdles as the modification may be obvious to one skilled in the art. Below we explore Section 103 and provide suggestions for overcoming rejections to pre-existing technologies.
Section 103: Obviousness
Obviousness rejections under Section 103 for pre-existing technologies can be based on a combination of several prior art references, each of them teaching one or more aspects of the rejected claims. Overcoming an obviousness rejection can, therefore, be complex. Overcoming obviousness rejections often turns on arguments that focus on the context for the inventive process rather than on the technical features of an invention. These arguments, which include the invention’s commercial success, satisfying a long felt but unsolved needs, failure of others where the invention succeeds, and the appearance of unexpected results are often referred to as “secondary considerations.”
Commercial success: Showing commercial success of an invention is one way of overcoming an obviousness rejection. In theory, if a product that is commercially successful was obvious to invent, then competitors likely would have already developed it. Therefore, if a product is commercially successful, one argument in overcoming obviousness is that others also recognized the product’s potential for commercial success but failed in their commercial attempts to develop a solution to the same problem. Including information showing a connection between the novel aspects of the patent claim(s) and the commercial success is often required in demonstrating non-obviousness based on commercial success.
Prior problems: Another possible argument against obviousness is disclosing a prior, unappreciated problem or complex hurdle the inventors overcame in a non-obvious manner. In this situation, the inventors could point to wide-spread skepticism that a hurdle could not be overcome using known methodologies. Showing that the methodology for overcoming the hurdle or problem was unique can be a successful strategy when overcoming an obviousness challenge.
Failure of others: Yet another possible argument in overcoming an obviousness rejection is to show that previous studies either failed at developing the claimed invention or indicated the claimed invention would not work. In this situation, it is necessary to have a clear understanding of research in the space and point to any shortcomings. Including such shortcomings in a patent application can greatly help overcome obviousness rejections down the road.
Unexpected results: Another strong argument in overcoming an obviousness rejection is by showing unexpected results. This can include data showing that the pre-existing drug has a surprising effect—that it works at the higher/lower dose used, that a combination of drugs demonstrates synergy when used together, or that it has a different mechanism of action for a new use—that would not have been expected based on what was known at the time. Such examples of unexpected results can greatly help to overcome obviousness rejections, and as such, designing experiments to help generate this data is important.
The most effective way of overcoming obviousness rejections employing these secondary considerations requires early planning and foresight. Before the patent application directed to the new use of the pre-existing technology is drafted and filed, one should think about possible obviousness rejections the application might face and, when possible, design and conduct experiments to generate data that will help overcome these rejections.
Overall, overcoming novelty and obviousness rejections for repurposed products is not only possible, it can also offer a faster and more efficient way of bringing potentially valuable products to the market. To successfully obtain patent protection for the new product, be prepared to provide a lot of information. The more information you have about how the repurposed product was generated and how it differs from the previously-known versions, the better the chances are of overcoming possible rejections.
Drafting a provisional application is often the first step in the road to obtaining a patent. However, due to time or budget constraints, provisional applications are often not afforded the attention that they deserve, resulting in applications that lack the necessary disclosure to support the later-filed non provisional or utility application. When this happens, potentially invalidating prior art that otherwise would have been precluded from the prosecution process by the provisional applications’s filing date could all of a sudden be used to impede patentability. This is becoming increasing true in today’s climate where courts and patent examiners are honing in on the Section 112 written description requirement against addition of new matter and demanding more support from patent applications.
While it is always best to draft thorough and complete provisional applications with all the necessary disclosure, sometimes that is not possible. When experiments are not fully completed, time is short, and budgets are tight, it is still possible to put together a provisional application that can be relied on. Below are several “must haves” when it comes to putting together a provisional application.
1. Start with the claims. While claims are not required for a provisional patent application, they nevertheless form the basis of the patent application and are ultimately what describe the invention. When drafting the claims, think about the various ideas that are part of the invention. If you have a composition, you may also have a method of making the composition or a method of using that composition, as well as kit claims, and even system claims. The claims do not have to be perfect, but they should at least cover the features of the invention. Drafting a set of claims will help put the invention into perspective and help focus the rest of the invention. There is no limit placed on the number of pages or the number of claims in a provisional application. Thus, if possible and if time permits, add more claims than may be necessary just to be sure each element and combination is captured somewhere.
2. Use the claims to outline the specification. Once the claims are drafted, use them as an outline to draft the specification. If they are complete, the claims should form a good basis for what needs to be included in the specification. Each different claim type can be the basis of a different section of the detailed description.
3. Whenever possible, include experimental data. Experiments provide support that shows that the invention does what it claims it does, i.e. that it is enabled. You cannot assert that a composition can be used to treat cancer without at least providing some experimental data to that effect. If no experiments have yet been conducted, hypothetical examples describing the future experiments could be included, but care must be taken to clearly reflect the fact these theoretical examples are prophetic and were not actually conducted.
4. Provide supporting figures, graphs, charts, data tables, schematics, and/or sequence listings whenever possible. Any supporting information should be included and described. This information should be easy to gather and provides further support for the invention. Even a power point slide presentation or figures from a recent draft of a scientific publication can form a good basis upon which to draft the remainder of the application and should be submitted with the application if no formal drawings are available.
5. To the extent that time and budget permits, fully describe the components of the claims. The purpose of a patent application is to fully describe every possible feature of an invention. Often times the patent application not only describes the features of the preferred embodiment but also numerous variations of each feature and potential work-arounds that competition could use to skirt around any issues patent. In a CAR T cell therapy application, for instance, not only is the preferred binder described, but other possible binders are described as well. This type of drafting protects not only the invention, but also modifications to it. If time is limited, however, focus should be given to adequately describing the preferred embodiments and essential or most critical features.
6. Provide proper definitions. A definition section should be included to define the various terms, especially those recited in the claims. The definition section should not be overlooked because it can provide important basis for claim interpretation and scope. Often times, certain terms, such as terms of art, in the definition section can be copied over from a similar application so including these should not be too time consuming.
7. Include a background section. The background section can be used to put the invention in perspective and in some cases even steer the application to a preferred art unit within the USPTO. It does not need to be long (it can be as short as two sentences), but it should describe the current state of the art and most importantly the problem that the invention intends to solve. By providing a background, the invention and its contribution can be better understood and appreciated.
8. Draft an abstract. Abstracts are limited to 150 words. Often times drafting an abstract before or after the claims can help crystallize the drafting process. If you can summarize the major gist or themes of the invention story into an abstract of 150 words or less, it shows you have a good grasp of the key parts of the invention upon which the claims should be based.
In today’s climate with courts and examiners requiring more and more proof of support of conception and reduction to practice, i.e. possession of the claimed invention, provisional applications need to include enough information to satisfy the Section 112 written description requirement and to avoid running afoul of new matter issues when using them as the basis of a non-provisional utility application. By focusing on the above seven points, inventors can improve the likelihood that their provisional applications will overcome the written description hurdle.
Provisional patent applications can be a valuable tool for inventors. Such an application serves as a “place holder” for a later-filed nonprovisional (or utility) application. While inventors often debate the need to file a provisional application, filing a provisional application rather than going straight to a nonprovisional has several benefits.
1. Provisional applications establish a priority date. While it is not examined by the USPTO, a provisional application allows the researcher to establish a priority date for an invention that predates subsequent prior art from impeding patentability. One year after filing the provisional application, the researcher must file a nonprovisional application, which claims the benefit of the provisional filing, to maintain patent rights. If the one-year deadline is missed, patent rights that may have been afforded to inventions described in the provisional application as of the filing or priority date are lost and new prior art can be introduced.
To benefit from the filing date of a provisional, however, that provisional must adequately support and enable the subject matter claimed in the nonprovisional application. Simply put, the nonprovisional application can only claim the benefit of the provisional application’s filing date and disclosure if it supports the invention. This forms the basis of the 35 U.S.C. Section 112 written description requirement. How much support is required is a subject of constant debate but recent case law suggests that courts are becoming more strict on interpreting written description. Inventors are thus better off including more description in their provisional applications to maximize their chances of having their priority dates upheld. Failing to do so increases the risk that prior art disclosed after the priority date can impede patentability.
2. Provisional applications help buy you time. Provisional applications require only a minimal fee to be filed ($280 for large entity, $140 for small entity, and $70 for micro entity) and they provide a twelve-month window before the more costly utility and PCT applications need to be filed. During this window, inventors can find financing and generate more experiments to support the utility and PCT filings.
3. Provisional applications are not public. This means that a provisional patent application can be abandoned before the one-year mark and the information in that provisional will not become public. This is helpful, for instance, if an inventor has an idea but cannot generate enough data within that one year to support that idea. In those situations, the inventor could abandon the provisional and refile it when the necessary information is gathered.
4. Provisional applications can be updated with new information. From the time the first provisional application is filed to the one-year deadline of filing the nonprovisional application, the inventor can file multiple follow-on provisional applications to add data or information to that application. If the first provisional was filed only with hypothetical examples, follow-on applications can be filed with actual results of those examples. When filing follow-on applications, however, inventors should be mindful of having adequate support as discussed in the first point.
Provisional patent applications provide value benefits to inventors, such as establishing early priority dates and allowing the inventor time to either update the invention with follow-on applications or abandon it entirely without making it public. Careful attention, however, must be paid to making sure that the provisional application has sufficient disclosure in it so that a later-filed nonprovisional can benefit from its filing date.
On May 29, 2020 the World Health Organization (WHO) officially launched the COVID-19 Technology Access Pool (C-TAP), an initiative which is intended to improve access to existing and new medical technologies, such as therapeutics and vaccines, which are developed in response to the global COVID-19 pandemic.
According to the WHO, the technology pool is meant to ensure better access to existing and new COVID-19 health products through five elements:
1.public disclosure of gene sequences and data;
2.transparent clinical trial publications;
3.funding agreement clauses on availability and trial data publication;
4.promoting the licensing of related technologies to the UN’s Medicines Patent Pool (MPP); and
5.promoting open innovation models and technology transfer.
But what exactly are patent pools? And how to they work to improve access to patented treatments? In this post, we will examine patent pools and the advantages and disadvantages that they provide.
Another potential mechanism to improve the patent system is to address the hurdle to drug development created by overly broad patents. Overly broad patents are those, for example, which are directed to a drug that targets multiple indications, yet only one of those indications is actually being pursued by the patent holder. By referencing multiple indications in the patent application, the patent holder is blocking others from being able to pursue those indications. Faced with either paying the high costs of licensing or being sued for infringement, many potentially lifesaving technologies may never be developed.
The problem presented by overly broad patents can be solved by creating patent pools. A patent pool is an agreement between two or more parties to combine their patents into a single package, or pool. When members of the pool combine their relevant patents together, they can divide the patent rights amongst themselves so that each party takes exclusive or non-exclusive rights to a particular invention covered by the combined patents. Members divide their patent rights along with a promise not to sue one another and without the exchange of licensing fees. This allows each party to the agreement to practice its invention without worrying about the threat of infringement or licensing fees.
If the pool includes all relevant patents, the pool can serve as a platform for freedom to operate within that patent landscape. The pool further stimulates innovation by giving its members the opportunity to use technology generated by the industry to bring new products to market and to carry out further reach and development.
History of Patent Pools
Patent pools have been around for more than a century. One of the original patent pools was created in 1856 for the sewing machine industry. Prior to the creation of the patent pool, sewing machine manufacturers Grover, Baker, Singer, Wheeler, and Wilson were accusing each other of patent infringement. To settle their lawsuits, they all met in Albany, New York. At the meeting, Orlando B. Potter, a lawyer and president of the Grover and Baker Company, proposed that each company pool their patents together instead of spending their money on the infringement suits.
Another example of a patent pool was in the early 1990s, when the US government mandated a patent pool for aircraft manufacturing. The need for increased aircraft production arose during the onset of World War I, however, manufacturers of aircraft were faced with threats of infringement and high royalty charges from the relevant patent holders in the area, namely the Wright Brothers and Glenn Curtiss. The government realized that more planes were needed to assist in the war effort and required the creation of a patent pool. This pool ultimate resulted in the formation of the Manufacturers Aircraft Association.
While patent pools have long been established in other technological areas, patent pools within the pharmaceutical industry are relatively new. In 2008, the World Health Organization (WHO) recognized the important role that patent pools may play in increasing access to drugs. As a result, attempts to establish a patent pool for severe acute respiratory syndrome (SARS) and for neglected tropical diseases have been made. In July 2010, the Medicines Patent Pool was established to foster the development of HIV/AIDS drugs. The Medicines Patent Pool solicits voluntary licenses from patent owners of antiretroviral medicines to create a pooled resource. This pooled resource can then be accessed by drug manufacturers to develop new and adapted formulations of drug products, such as heat-stable products, lower-dose formulations, pediatric medicines and fixed-dose combinations, that will be sold in developing countries.
Advantages of a Patent Pool
A patent pool may be beneficial for all the parties involved, including the drug manufacturers, the patent holders, and the people receiving the treatment. For drug manufacturers, for instance, a patent pool eliminates the uncertainty and expense of negotiating licenses where several different patent holders may hold rights to a single drug or treatment. It also encourages further research by lowering the cost associated with licensing technology to create new medicines.
For patent holders, on the other hand, the patent pool offers the opportunity to enjoy royalty streams from different sources and provides a collaborative platform for enhancing access in developing countries. Since the drugs that are developed as a result of the pool are limited to developing countries, the pool would not affect the patent holders’ rights in higher-income markets. Accordingly, patent holders would be able to continue selling the rights to their drugs and treatment at higher prices in developed markets.
For people living with HIV/AIDS, most importantly, the patent pool would make medicine more affordable. It is estimated that the Medicines Patent Pool could impact an estimated 33.3 million people living with HIV/AIDS.
Patent pools offer several other advantages for members of the pool. First, they can help overcome blocking patents. If all the relevant patents are combined in the pool, then there are no outstanding patents that can act to block the use of those patents.
Second, patent pools can reduce the overall transaction costs associated with the patents by lowering licensing fees and reducing patent infringement suits. They do so by allowing licensees to negotiate with only one party, eliminating the need for potential licensees to conduct their own patent landscape analysis, and eliminating problems associated with royalty stacking. Since patent pools allow members of the pool to use the technology without being sued for patent infringement, patent pools can reduce and even eliminate patent litigation settlements.
Third, patent pools allow intellectual property other than patents to be included in the pool. This is especially important because it allows the inclusion of trade secrets that may be important to the research and development behind the products.
Finally, patent pools further allow members of the pools to share in the risk of developing the technology. By spreading the risk across all members of the pool, no one company is solely responsible for putting in all the time, effort and money in developing a product.
Disadvantages of a Patent Pool
While there are definite advantages to patent pools, there are also several disadvantages to them. One of these disadvantages is the uncertain return on investment that can be generated. Pharmaceutical products are costly to develop, and when companies invest a significant amount of time and money into developing technology that ultimately becomes part of the patent pool, they expect a return on their investment. However, that return will have to be shared amongst the other members of the pool. Determining exactly how the member companies divide the return will be complicated and may depend on a variety of factors, such as a company’s contribution to the initial technology and to the final product, will need to be considered.
Second, patent pools may actually shield invalid patents from being invalidated in court. By protecting invalid patents, patent pools may require that royalties are paid on a technology that would be part of the public domain if the patents were actually litigated in court. This concern could be alleviated if all candidate patents to the pool are reviewed and examined by an impartial expert to determine their validity.
Finally, patent pools may create some antitrust issues by eliminating competition through collusion and price fixing. Companies that are not members of the pool may be at a competitive disadvantage since they will not be able to obtain the necessary licenses to develop a product. Since companies will not have access to the necessary technology, these companies may struggle to prosper.
Patent pools strive to solve the problem of balancing innovation of new drugs and access for all. Companies that are members of the pool would, in theory, benefit because they could develop new therapies.
Chimeric antigen receptor, or CAR, T cell therapies use the body’s own T cells to fight off cancers. The development of such cellular immunotherapies is becoming increasingly popular technology for treating cancer. Novartis’ Kymriah and Kite’s Yescarta are currently the only two FDA approved therapies on the market but many other companies are looking to launch products in this highly lucrative and therapeutically promising field.
Despite the promising nature of cellular therapeutics, however, CAR T cell therapeutics present some unique IP challenges that should be resolved early on in the development process in order to minimize hurdles when it comes to commercialization. Here we discuss some of these unique challenges specifically when it comes to seeking a freedom to operate, of FTO.
1. Highly crowded landscape. The patent landscape for cellular immunotherapies is highly crowded with many actors already established in the space. CARs involve several different components. The current generation of CARs involve a binding domain, a transmembrane domain, a signaling domain, and at least one co-stimulatory domain. Companies already have their own proprietary CARs with modifications to any of these domains. The two FDA approved products are both directed to CD19, for instance, and many other groups are working on CD19 as well.
2. Multiple components. Since CAR T cell therapies involve multiple components, each of which will require its own separate FTO. As mentioned above, CARs involve a binding domain, a transmembrane domain, a signaling domain, and one or more co-stimulatory domains. To effectively launch a product without infringing a third party’s patent, each element of the CAR must have a clear FTO. Even one third party patent with claims covering any one of the CAR elements could subject the company to infringement litigation.
3. Method patents. Methods of manufacturing CAR T cell therapies should not be overlooked. While composition claims are often the most favored, there is significant value to patenting methods related to engineering the CAR T cells, or culturing and expanding them. Companies that develop CAR T cells may run afoul of the method claims even though the composition of the CAR T cell itself is different. Therefore, it is not only important to analyze patents directed to each of the components, but also to any methods that can be used to manufacture the cells.
4. Global nature. CAR T cell therapies, by their very nature, may require certain steps of the process to be carried out in different countries. For instance, the current generation of CAR T cells use autologous cells, meaning that the cells that are used and modified are those taken directly from the patient. Once they are taken from the patient, they can be transported to a lab in a different location, even a different country, for modification. The extraction, modification, and subsequent re-administration can thus happen in different jurisdictions. An FTO, therefore, should not only be limited to the country in which the therapy is going to be commercialized, but also in the countries in which individual steps of the process will be carried out.
Due to their complex nature, CAR T cell therapies present unique obstacles to commercialization. Companies developing products in this space need to be aware of these challenges early on in the development process so that they can take the proper actions (e.g., seek licenses, design around existing patents, challenge existing patents, etc.) to minimize their risk of commercialization.
BioPharma Law Blog posts updates and analyses on IP topics, FDA regulatory issues, emerging legal developments, and other news in the constantly evolving world of biotech, pharma, and medical devices.