We previously addressed the differences between landscape studies, patentability studies, and freedom to operate analyses so you should have a good understanding of what type of information will be gained from each. While there are some overlaps between the three types of studies, each study is meant to provide different information that can be used at different times to guide a company.
There are no one-size-fits-all rules for these studies as they can be utilized at various points to provide valuable information. In this post, we will examine how each type of analysis fits within a company’s overall business strategy in helping guide research, development, and ultimately, commercialization.
Landscape studies form the foundation of a company’s business strategy. These studies are essentially a market analysis to help companies understand the existing technology and trends in a given technological area. Landscape studies will also identify the companies and inventors working in this technical area.
Understanding the “state of the art” ultimately helps companies develop a plan for their technology. This plan can involve deciding to patent a particular invention, modify an existing one, or identify white space for further technological development. In addition, landscape studies can help identify possible collaborations that may require in- or out-licensing IP.
Overall, a landscape study provides valuable information about the current market and its trends and allows companies to evaluate opportunities for developing new products, abandoning existing products, and exploring possible collaborations within the same space.
Once an interesting idea is discovered, the next question is whether it can be patented. These ideas may be generated from landscape studies but often times they are simply generated in the course of research. Regardless of how they come up, patentability studies are designed to uncover prior art that could present hurdles to obtaining a patent. For instance, a patentability study, when done correctly, should identify both patent and non-patent literature which may interfere with an invention satisfying the standards of patentability, novelty (Section 102) and non-obviousness (Section 103).
Understanding the prior that exists can help a company formulate a strategy for pursuing patent protection. This strategy may involve having to strengthening the support for the idea if there is complex prior art, modifying the idea if there is similar prior art, or simply presenting the idea as-is if no burdensome prior art is found. Often times a patentability study will reveal prior art that is in the same space. In these cases, knowledge of that prior art can help in drafting the patent application to include enough support to later overcome USPTO rejections related to that prior art.
With the help of patentability studies, companies can better plan ways for satisfying the requirements of obtaining patent protection.
Freedom to Operate Analysis
Once the appropriate landscape studies and patentability studies have been conducted, and an idea is determined to be worthy of commercialization, the next question is whether there are any blocking patents that would prevent it from entering the market. This is done by a freedom to operate, or FTO, analysis. This type of analysis determines whether a product infringes another issued patent or may be encompassed by a pending patent application. It is done by identifying patents and patent applications that, if later issued as patents, may be infringed when commercializing your product.
If a product or service is found not to infringe any third-party patents, then the product or service can generally be considered safe for commercialization. If, on the other hand, the product or service is found to infringe a third-party patent, then the company will have to explore possible ways of getting around that third-party IP. This can include designing around the third-party IP, licensing that IP, or challenging the validity of that third-party patent.
Unlike landscape studies or patentability studies, FTOs should only be conducted when a product is already complete and ready for market. This allows its features to be analyzed against the claims of the third-party patent. Nevertheless, waiting too long to conduct an FTO may also be problematic as it could uncover block IP after significant time and expense has already been invested. Therefore, FTO’s should be conducted soon after a final version of the product is developed so that there is still time if changes need to be made or licensing discussions need to be explored.
Conducting and understanding FTOs is an important step in helping a company identify possible hurdles to commercializing its product and to proactively develop a strategy for entering the market.
Utilizing these three types of studies during the regular course of a business provides valuable information about the types of products and ideas already developed. Based on this information, companies can evaluate opportunities for developing, patenting, and commercializing new products.
On March 30, 2020, the Honorable Miranda M. Du from the United States District Court for the District of Nevada ruled against Amarin and invalidated the company’s patents covering Vascepta® as being obvious. In doing so, Judge Du opened the door for Hikma and Dr. Reddy’s to launch generic versions of Vascepta®. In her ruling, however, Judge Du misconstrued the law of obviousness, in particular how secondary considerations are evaluated, and created an opportunity for Amarin to prevail on appeal. Here we will examine the law of secondary considerations and how it was misapplied.
In analyzing whether Amarin’s patents were obviousness, Judge Du held that the generics established a prima facie case of obviousness. In doing so, Judge Du held that a combination of prior art, namely Lovaza and Mori, rendered the claims obvious. A finding of obviousness, however, can still be overcome by focusing on the context for the inventive product rather than on the technical features of the invention. These arguments, which include i) unexpected benefits; (ii) satisfaction of long-felt need; (iii) skepticism; (iv) praise; and (v) commercial success are often referred to as “secondary considerations.” Generally speaking, showing any one of these could negate a finding of obviousness.
In her review, Judge Du analyzed each of the secondary considerations and found that while long-felt need and commercial success weighed in favor of Amarin, the other factors weighed against it. At that point, Judge Du conducted a “weighing of the secondary considerations” and ultimately found that despite two factors (long-felt need and commercial success) supporting a finding on nonobviousness, those factors were outweighed by the secondary considerations which favored the generics.
This is an unusual application of the law of secondary considerations and therefore a potential weakness in the Court’s holding that Amarin can exploit on appeal. The Court essentially weighed the secondary considerations against each other but the law of secondary considerations suggests they should be reviewed differently.
An analysis of Section 103 obviousness stems from the Supreme Court case of Graham v. John Deere, 383 U.S. 1 (1966). Under Graham, Courts look at several factors when determining obviousness, including (1) the scope and content of the prior art, (2) the level of ordinary skill in the art, (3) the differences between the claimed invention and the prior art, and (4) objective evidence of nonobviousness. Of the four Graham factors, the issue of secondary considerations often creates confusion as many practitioners wonder how significant a role they play in an obviousness analysis. According to the Federal Circuit, however, secondary considerations are intended to play a role equal to or greater than the other Graham factors in an obviousness analysis:
“It is jurisprudentially inappropriate to disregard any relevant evidence on any issue in any case, patent cases included. Thus evidence rising out of the so-called ‘secondary considerations’ must always when present be considered en route to a determination of obviousness…Indeed, evidence of secondary considerations may often be the most probative and cogent evidence in the record. It may often establish that an invention appearing to have been obvious in light of the prior art was not. It is to be considered as part of all the evidence, not just when the decisionmaker remains in doubt after reviewing the art (emphasis added).” In re Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litigation, 676 F.3d 1063, 1076 (Fed. Cir. 2012).
Based on this line of reasoning, secondary considerations should be weighed against the other three Graham factors, not against each other. Moreover, when weighed against the other three Graham factors, the secondary considerations should be given more weight.
In fact, there are many instances where a secondary consideration, such as long-felt need, can overcome an obviousness challenge. In Eli Lilly & Co. v. Zenith Goldline Pharm., 471 F.3d 1369 (Fed. Cir. 2006), for example, the Federal Circuit affirmed the lower courts holding that a strong showing of secondary considerations, including information illustrating the long felt need to develop a safer and more effective antipsychotic medication olanzapine (Zyprexa®), was sufficient to overcome an obviousness challenge over a structurally similar compound, clozapine. In that case, testimony established that beginning at least 15 years prior to the discovery of olanzapine, a significant number of investigators were working to develop a safer and more effective antipsychotic drug because “[t]he medical need for better antipsychotic drugs in terms of increased efficacy and fewer unwanted effects is great.” In particular, it was established during trial that there was a need to find a replacement for clozapine due to the significant side effects experienced by patients, including movement disorders, bone marrow suppression and seizures.
Moreover, even from the perspective of a patent prosecutor, most times we rely on only one or two secondary considerations when trying to overcome an obviousness rejection and thus we cannot and do not provide evidence of the others. This is due, in part, to the fact that the invention may not have yet generated information on certain secondary considerations. Commercial success and praise by others, for instance, may not apply to inventions that have not yet been commercialized. For these types of inventions, only long-felt need, failure of others, unexpected results, and skepticism of experts may be available.
Moreover, there is not a certain number of secondary considerations that must be presented. It is up to the patent applicant or patentholder to provide the USPTO or court, respectively, with the secondary considerations that he feels are applicable and they should be reviewed on a case-by-case basis. In the Amarin case, Judge Du found that two secondary considerations weighed against invalidating the patents, and that by itself should have been sufficient to defeat the generics’ invalidity challenge.
Now, this is not to say that any showing of secondary considerations should automatically overcome an obviousness challenge. If the prima facie case of obviousness is very strong, then a showing of secondary considerations may not be enough. In Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1372, 82 USPQ2d 1321, 1339 (Fed. Cir. 2007), for instance, Court found that a strong case of obviousness could not be overcome by a showing that amlodipine besylate had allegedly unexpectedly superior results when compared to amlodipine maleate.
While a strong showing of obviousness may outweigh a showing of secondary considerations, requiring the patentholder to present and defend every possible secondary consideration and then weighing them against one another is incorrect.
As Amarin prepares its case for appeal, Amarin should gather caselaw holding that the Judge’s manner of weighing the secondary considerations against each other was inappropriate. Moreover, Amarin will likely show that the District Court’s application of the law was not a harmless application of the law, especially since weighing the secondary considerations against each other appears to have directly impacted the outcome of this case. If the Federal Circuit agrees that the application of the law of secondary considerations was erroneous, it is likely that the case will be remanded back to the District Court to correct its analysis and the dispute over Vascepta® may continue for another couple of year.
The ongoing coronavirus pandemic highlights a potential conflict between patenting innovations by allowing companies to profit from their inventions and protecting public health by allowing people access to those treatments. This tension forms the basis of my first book, Intellectual Property and Health Technologies, and is also the overarching theme to my law school course.
As a result of the current outbreak, we are seeing many companies and universities devote significant resources to COVID-19 research in hopes of developing a vaccine or cure for the disease. The big question on many peoples’ minds: is what happens when someone develops a vaccine or cure? Will it be available to everyone? And at what cost will it be available?
Last week I wrote about compulsory licensing and how countries can circumvent patents using that mechanism. We have already seen this with Israel announcing that AbbVie’s HIV treatment Kaletra® has been approved for importation despite the fact that patent protection for Kaletra® doesn’t expire until 2024 in Israel.
In the U.S. there is also something called march-in right which allows the government to circumvent a patent and practice the invention itself or have a third party practice the invention. Below is a brief over of march-in rights in the U.S. and what they mean for the current pandemic.
Overview of Bayh-Dole Act
The Bayh-Dole Act, also called the University and Small Business Patent Procedures Act, is U.S. legislation that addresses intellectual property arising from federally-funded research. Enacted on December 12, 1980, the Bayh-Dole Act gives U.S. universities, small businesses and non-profit organizations the ability “to retain title to any invention developed under such support”. In other words, the Bayh-Dole Act allows U.S. universities, small businesses and non-profit organization to own the intellectual property that results from it rather than automatically vesting ownership rights in the government.
Prior to the Bayh-Dole Act, inventions that arose out of federally funded research were owned by the government. The government, however, was not adept at commercializing the technology, and as a result, university technologies were not efficiently commercialized. Of the approximately 30,000 patents awarded to the government, for instance, only about five percent were licensed for use. According to Senator Bayh, “[d]iscoveries were lying there, gathering dust.”
To stimulate innovation and promote the use and development of federally funded inventions, Senator Birch Bayh of Indiana and Senator Dole of Kansas sponsored the Bayh-Dole Act, which gave ownership of such technologies to the university. The thought behind granting ownership of the patented technology to the university rather than the government was that the university would be more efficient and successful at developing and commercializing the technology. The university would do this by entering into a license agreement with a company to grant access to the technology.
In return for ownership of the technology, the university had to satisfy several requirements of Bayh-Dole, including: providing the government with a non-exclusive royalty-free license to the invention; patenting and commercializing the inventions; sharing a portion of any revenue received from licensing the invention with the inventor; providing licensing preferences for small businesses to facilitate the growth of small businesses; and requiring that the product be substantially manufactured in the U.S.
Government’s March-in Rights
A critical feature of the Bayh-Dole Act relates to the federal government’s right to maintain control over the technology that it funded. In what is known as the government’s right to “march-in,” the Bayh-Dole Act explicitly allows the government to step in and acquire technology under certain circumstances. Under this provision, the government, as the funding agency, has a right to “require the contractor [university], an assignee or exclusive licensee of a subject invention to grant a non-exclusive, partially exclusive, or exclusive license―in any field of use―to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and if the contractor, assignee, or exclusive licensee refuses such a request, to grant such a license itself.” In order words, the Bayh-Dole Act allows the government to ignore the exclusivity of a patent and practice the invention itself, or have a third party practice the invention on its behalf.
The government’s rights, however, are not without limitation. To enforce its march-in rights, at least one of four criteria must be satisfied by the government, which include:
(1) action is necessary because the contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use;
(2) action is necessary to alleviate health or safety needs which are not reasonably satisfied by the contractor, assignee, or their licensees;
(3) action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the contractor, assignee, or licensees; or
(4) action is necessary because the agreement required by section 204 has not been obtained or waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of its agreement obtained pursuant to section 204.
March-In Rights Case Studies
The government has yet to exercise its march-in rights, making it difficult to determine exactly under what circumstances government intervention is likely. In the few petitions that were filed, however, it is clear that the most common scenario used to justify marching-in was the second criteria - to satisfy the "health and safety needs" of the public. Under this provision the petitioner claimed that the original licensor of the technology is inadequately addressing the public’s health and the government should therefore intervene allowing a third party to practice the technology.
One scenario in which a petition for marching-in may be warranted is during an infectious disease outbreak, such as the current coronavirus pandemic. In 2001, for instance, the government contemplated invoking the march-in doctrine during the anthrax attacks following the terrorist attacks of September 11, 2001. At the time of the attacks, Bayer had patent rights to the drug Cipro®”, which was the most effective anthrax treatment at the time. It was unclear whether Bayer would be able to supply the required amount of drug needed to treat a potentially large population. As the anthrax scare continued and fear of a full-blown epidemic increased, the Department of Health and Human Services threatened to use the march-in rights to acquire Bayer’s patent rights to Cipro® and allow other companies to manufacture it. By allowing other companies to manufacture Cipro®, the government would ensure that enough drug supply would be available to the population. Ultimately, however, the government did not proceed with its petition.
High Drug Pricing
Apart from this one limited instance, march-in rights have surfaced mainly in connection with drug pricing. In the case involving Norvir® and Xalatan®, for instance, the National Institutes of Health (NIH) received a request to exercise march-in rights for patents covering Abbott Laboratories’ HIV/AIDS drug, Norvir®, and Pfizer's glaucoma drug, Xalatan®, arguing that both drugs were priced too high. While Abbott increased the price of Norvir® 400% for U.S. consumers but not for other countries and Xalatan® was sold in the U.S. at up to five times the cost compared to other high-income countries, the NIH denied both petitions. In doing so, the NIH cited the availability of the drugs and also the lack of evidence suggesting that the health and safety needs of the public were not being adequately met by the companies. Moreover, the NIH considered the topic of drug pricing to be outside its jurisdiction and one that should be addressed by Congress.
In 2010, the NIH was petitioned to exercise its rights in response to a drug shortage. The petition asked the NIH to review Genzyme's inability to manufacture enough Fabrazyme® to treat Fabry patients as a result of manufacturing problems and FDA sanctions. To alleviate the drug shortage, petitioners asked the NIH to allow other manufactures to begin supplying the proper drug. The NIH again denied the march-in petition, but unlike in the previous situations, the government believed that marching-in in this situation would be futile given the length of time required to bring a generic version, or biosimilar, of Fabrazyme® to market. Because of the uncertain FDA approval process, the NIH contended that the drug shortage would not be solved any faster even if other companies were given the opportunity to manufacture the drug.
Implications for Current Pandemic
While the U.S. government has yet to exercise its march-in rights, the current pandemic could provide its first opportunity to do so. Companies that are working to develop COVID-19 treatments, including Moderna and Gilead Sciences, have each benefited from government funding. Remdesivir®, Gilead Sciences’ antiviral that has shown promise in treating COVID-19, was developed at the University of Alabama at Birmingham and has received approximately $38 million from the National Institutes of Health (NIH). The NIH itself has spent around $700 million to develop a vaccine to coronavirus.
The implications of this are potentially huge because it sets up the U.S government to circumvent any patents that could stand in the way of getting treatment to the public. Even though the U.S. government has yet to exercise its march-in rights, companies developing products with the aid of government funding are subject to Bayh-Dole and the march-in rights.
This, however, does not mean that the government will necessarily have to exercise its power. For instance, there could potential logistical problems with doing so. Some drugs, particularly biologic ones, are often challenging to manufacture. They require very specific materials and processes to be used to yield the correct product so asking a different company to manufacture a biologic drug could result in a significantly different end product. At best, this end product would not be effective at treating the disease, and at worst, it could cause harm.
Moreover, there is no evidence to say that drug companies will not make their drug available and accessible to all. We have already seen AbbVie give up its patent rights to Kaletra® in an effort to fight the pandemic. Other companies will likely follow suit considering the public relations nightmare they may otherwise face.
As I have mentioned before, protecting innovation and protecting the public’s health do not have to be mutually exclusive concepts. Allowing a company to make a profit from their drug and fund future innovation does not mean that people should be denied access to the drug, especially in the case of a pandemic. These two concepts can work together to bring newer and better treatments to the market and at the same time make people healthier.
As I have mentioned before, patent rights are not absolute, but neither is the right to circumvent those rights. In a time when restoring global public health is at an all-time high, patent rights and public health rights must work together to not only develop new treatments, but also to rid the public of COVID-19.
When deciding what product to pursue and patent, companies generally have two options: start from scratch and develop a truly novel product or find one that has already been around and repurpose it for another use. Repurposing technologies can offer viable opportunities for companies looking to expand their product portfolios since working with pre-existing technologies eliminates many of the hurdles associated with developing de novo products. This is especially true of therapeutics since the discovery of effective, safe therapeutics remains costly, time-consuming, and risky.
We are seeing this dynamic unfold in the current COVID-19 pandemic. Companies and universities are working to see if existing pharmaceuticals, vaccines, treatments, and diagnostics can be used to fight against the novel virus. Several U.S. companies have already announced that their research into COVID-19 has resulted in the filling of patent applications covering coronavirus treatment. For instance, Texas-based Moleculin Biotech took their existing inhibitor compound WP1122 and tested it to see if it could limit coronavirus replication by depriving the host cells of energy.
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 technology 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. Accordingly, composition claims including pre-existing drugs need to include new elements not anticipated by the earlier disclosure.
Below are ways to overcome Section 102 hurdles to obtain claims directed to previously-known technologies.
Reciting new uses
One way to obtain claims directed to previously-known technologies that overcome a Section 102 challenge is to draft claims reciting a novel use for that technology, such as a new indication in the case of a drug. If the original claims were directed to a cancer indication, for instance, a novel use would be to claim a cardiovascular indication. We are seeing this play out with existing drugs, such as AbbVie’s HIV drug, Kaletra®, being tested on COVID-19 patients. Such method claims are often difficult for competitors to design around, and they are also available in many foreign jurisdictions, although they may be drafted in slightly different formats. Other uses could include new dosage amounts, different formulations, better safety, better tolerability, new way of administration, and so forth.
Recite new dosage forms
For drugs, specifically, another way to claim a previously-known drug is to claim novel pharmaceutical dosage forms. Pharmaceutical dosage forms can be, for example, 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.
Develop new combinations
A final 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. As a side note, combining more than one product into one overall product can have the added benefit of extending the patent term. Caduet®, for instance, expired in 2018 which is about seven years after the last expiration of one of their products.
To overcome novelty objections with combination products, applicants should be prepared to focus on new uses of their products and to draft their patent applications with sufficient disclosure to address these new uses. Such combination claims should include additional features, such as specific drug amounts or ratios between the drugs to increase their likelihood of being found patentable over what was previously known in the prior art. Nevertheless, combinations of one or more products can be patentable.
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.” 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.
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.
Discussing complex hurdles
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.
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.
If the experiments to generate the above argument are not planned before the application is drafted and filed, they could still be conducted while the application is being prosecuted. Some countries, including the U.S., allow post-filing data to be submitted during prosecution. Post-filing data is that which is generated after the application is filed and thus not part of the originally-submitted application. Generating post-filing data is often worthwhile, especially when you cannot predict the kind of experiments or data that will be necessary to overcome a rejection.
Overall, overcoming novelty and obviousness rejections for repurposed technologies 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 to 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.
The ongoing coronavirus pandemic highlights a potential conflict between patenting innovations and protecting public health. In my first book, Intellectual Property and Health Technologies, I reviewed this tension in the context of drug development. On the one side, there is a struggle for companies to patent their innovations so that they can benefit from the market exclusivity allotted to them. On the other side, there is a struggle for countries that cannot afford to pay for patented products to get treatments to their people.
We are already seeing this dynamic unfold in the current pandemic. Several U.S. companies have already announced that their research into COVID-19 has resulted in the filling of patent applications covering methods of treating patients infected with the coronavirus. For instance, Texas-based Moleculin Biotech filed a patent application covering the use of inhibitor compound WP1122 to limit coronavirus replication in patients by depriving the host cells of energy.
Similarly, PA-based Premier Biomedical filed a patent application directed to a method of treating COVID-19 infection by using antibodies to target the replication pathways of COVID-19 and cause the disease antigens to bind together, thereby allowing the coronavirus to be removed from the blood.
While many companies will file patent applications to their coronavirus research, many countries will be looking for ways to circumvent patent rights in order to bring treatment options the public. We have already seen this with announcing that AbbVie’s HIV treatment Kaletra® has been approved for importation despite the fact that patent protection for Kaletra® doesn’t expire until 2024 in Israel. This is the first time that Israel has exercised its law to permit approval of a generic version of a patent-protected drug. As a side note, AbbVie has already confirmed its intention to suspend its patent rights to Kaletra® in response to the COVID-19 health crisis.
So what exactly is this law that allows a country to circumvent patent rights and allow an otherwise patented product to be imported for public health purposes? It is known as “compulsory licensing” and it stems from the TRIPS Agreement which is signed by each country that wants to me a member of the World Trade Organization, or WTO. Below is a brief over of compulsory licensing, how it has been used before, and what we can expect moving forward.
Brief History of Compulsory Licensing
One of the agreements that countries must ratify upon joining the WTO is the Agreement on Trade Related Aspects of Intellectual Property Rights, or TRIPS. The TRIPS Agreement was negotiated in 1994 to harmonize intellectual property laws across different countries and establish minimum standards for protecting and enforcing intellectual property rights for all WTO member countries. This is because, prior to the TRIPS Agreement, patent laws varied across countries. In most developed countries, for instance, patents were valid for 15-17 years from date of filing, compared to only 5-7 years in some developing countries. This shortened life span significantly reduced the ability of intellectual property owners to benefit from reduced generic competition.
While the TRIPS Agreement harmonized patent laws in all member states, the TRIPS Agreement also recognized the countervailing need for countries to protect public health. In Article 8 Section 1, the TRIPS Agreement states that “Members may …. adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement.” There are several provisions under TRIPS that allow governments to provide for limitations to intellectual property rights.
One such limitation is compulsory licensing. In Article 31, for instance, TRIPS allows governments to order domestic manufacturers to make a patented product without permission from the patent holder. This practice is known as compulsory licensing. Article 31 permits countries to engage in compulsory licensing if there is a “case of a national emergency or other circumstances of extreme urgency,” or in cases of “public non-commercial use.” Under these circumstances, the country is not required to negotiate with, or seek approval from, the patent holder of the drug, but is instead just permitted to manufacture patented products, such as essential medicines, for its domestic market.
In addition, the “scope and duration” of a compulsory license under Article 31 has to be “limited to the purpose for which it was authorized.” This means that a country that issues a compulsory license to treat COVID-19, for instance, will not be able to use the medicines to treat other conditions or for longer than is required. If we look at Israel, for example, a compulsory license to Kaletra® will only allow Israel to use that license to treat COVID-19 patients during the time of the pandemic, not HIV patients for an unlimited period of time. A compulsory license, therefore, is limited in scope and duration and not a way for countries to receive blanket approval to use the drug for any and all uses it desires.
A major limitation of Article 31 is that it requires that production of the patented product to be “predominantly for supply of domestic market.” This means that if a country wants to benefit from compulsory licensing, then it must also be able to manufacture the product. The problem here is two-fold. Many countries, including both developed and developing ones, do not have the ability to manufacture complex medicines. In reality, depending on the nature of the drug, very few places could just be able to pick up and start manufacturing a drug. In addition, time is a problem. Even if a country is equipped to manufacture a drug, it is unlikely it could do so quickly. Manufacturing even the simplest of compounds without previous experience and know how would likely involve some trial and error which would delay the drug in reaching the public.
To address the problem of being required to manufacture a drug in-house, an amendment was made to the TRIPS Agreement to allow countries with insufficient or no manufacturing capacities to take advantage of the compulsory licensing provision under Article 31. The amendment, known as Article 31bis, allows countries to issue compulsory licenses to its domestic generic pharmaceutical manufacturers, permitting the domestic manufacturers to export medications to other countries. This amendment expands access to generic drugs by eliminating the restriction in Article 31 that requires use of compulsory licenses on pharmaceutical patents for "predominantly for the supply of the domestic market."
Compulsory Licensing Case Studies
Compulsory licensing has been used in varying ways over the years but it started predominantly as a negotiating technique to lower drug costs. In 2001, the Brazilian government threatened to use compulsory licenses to negotiate lower prices of HIV drugs in an effort to curb the growing rate of HIV infections in Brazil. As a result, Brazil was able to reduce the prices for several HIV/AIDS drugs in 2001, including Stocrin® (efavirenz), Crixivan® (indinavir), and Viracept® (nelfinavir) by upwards of 65 percent. After using compulsory licensing as a negotiation technique, Brazil eventually went forward with manufacturing its own HIV drugs.
Following in Brazil’s footsteps, Thailand was also successful in issuing a compulsory license for the HIV drug, Kaletra® (lopinavir/ritonavir), despite already getting favorable drug pricing. Thailand also issued a compulsory license for Sanofi-Aventis’ heart disease drug, Plavix® (clopidogrel), which proved to be controversial because it represented the first time that a compulsory license was issued for a chronic disease, as opposed to an infectious disease. The Thai government justified the license under Article 31(b)’s “public non-commercial use” provision instead of the “national emergency” provision. Since the “public non-commercial use” provision is not defined in the TRIPS Agreement, Thailand’s action illustrates how broadly the “pubic non-commercial” provision can be read to include health conditions that are not infectious diseases.
After Thailand began issuing compulsory licenses for chronic diseases, India granted its first-ever compulsory license in March 2012 when it allowed Natco Pharma to manufacture a generic version of Bayer's drug Nexavar® (sorafenib), a drug used to treat kidney and liver cancer. The compulsory license resulted in a 97% reduction in the price of the drug. Following Nexavar®, India continued to issue compulsory licenses for other drugs used to treat chronic diseases, including compulsory licenses on three cancer drugs, including Roche's Herceptin® (trastuzumab), Bristol-Myers Squibb's Sprycel® (dasatinib) and Ixempra® (ixabepilone).
This is the first time that we are experiencing a global pandemic in recent years and the first time that are seeing how companies and countries react to compulsory licenses on a global scale. I fully expect more countries to follow in Israel’s footsteps and issue compulsory licenses. I also fully expect companies that conduct research into COVID-19 to file patent applications to those ideas.
These concepts do not have to be mutually exclusive and doing one does not have to be at the detriment of the other. Patent rights are not absolute. There are many restrictions to them, a 20-year term being one of them. Likewise, compulsory licenses are not absolute. They can only be issued in certain circumstances and can only be used for a specific purpose. In a time when restoring global public health is at an all-time high, patent rights and public health rights must work together to not only develop new treatments, but also to use new and existing treatments to eliminate COVID-19.
We are now in a time of uncertainty due to the current COVID-19 pandemic and we do not know how long this period will last. While most people are now working from home and it is easy to fall into a routine of just watching TV all day, now is the perfect time for a company to take this relative “down time” to review, build, and expand upon its IP assets.
Certainly not an exhaustive list, but below are three ways a company can use this time strategically to plan for the next phases of its development.
First, mine your notebooks for new IP ideas. I credit one of my clients with this idea. Review all the data and research generated over the past year or two that you previously did not have time to review. You never know what interesting information you missed the first time around because you were simply looking at the main findings. These jewels of information could provide valuable support for upcoming patent applications or could provide ideas for new patent applications and inventions all together. Take this period to really review your data and information and find new ideas or new uses for that information.
Second, review your landscape studies and strategically map your ideas. Landscape studies can be an important source of information for companies. These studies not only provide a glimpse of the “state of the art” of a particular technology space, but they also show you what opportunities exist for further development. As with the previous point, you may not have had time to thoroughly review your landscape studies initially, or you may not have even conducted one, but now is the ideal time to review those studies and get ideas of what you can work on next. Moreover, reviewing your landscape studies can provide additional insights into the new ideas you found from mining your notebooks. Either the landscape studies will reveal players who are already working on those ideas, or it will reveal open space for you to explore. Either way, reviewing your landscape studies can provide new ideas for further development.
Finally, explore potential partnerships. Based on the new information you found from either mining your notebooks or reviewing your landscape studies, you may have ideas for exploring potential collaborations with others in the industry. Another benefit from landscape studies is that they reveal who the main players are in a space, including companies and inventors. You could use this time to reach out to players in the space and explore ideas for development. For instance, if your company specializes in antibody discovery, but lacks expertise in developing vaccines, you may explore collaborations with a company that has that vaccine expertise. With many companies pausing clinical trials and halting projects, now is a good time to reach out to those companies and explore new ideas.
While it is easy to get distracted by the turmoil around us, I encourage companies, including startups and aspiring entrepreneurs, to take this time to review and reflect upon all the information that they have generated and brainstorm ideas that can either be used to support their existing IP, or ones that can turn into new IP.
Force majeure clauses are typically overlooked in agreements as merely “boilerplate” language, however, subtle differences in the language can have significant effects on the parties. With the potential business disruptions caused by the current COVID-19 outbreak, many impacted service providers and vendors are rightfully concerned about their exposure. What their rights and obligations will be will depend on the “force majeure” clauses that can be found in the back of their agreements.
In general, a “force majeure” event is an act beyond a party’s reasonable control. “Force majeure” means “superior force” in Latin. A force majeure clause, therefore, is a contractual provision that excuses a party’s obligation to perform under an agreement if the circumstances giving rise to the failure are beyond the party’s control. Below are several examples of a force majeure clauses and how they may be construed in an emergency situation such as this.
In the event either Party is delayed from performing any act required under this Agreement due to (i) flood, fire, earthquake or explosion; (ii) war, invasion, hostilities, terrorist threats or acts, riot or other civil unrest; (iii) government order or law; (iv) actions, embargoes or blockades in effect on or after the date of this Agreement; or (v) shortage of adequate power or transportation facilities, then performance of such act shall be extended for the reasonable period of such delay, and either Party shall be granted a reasonable period of time to perform after the cessation of the reason for the delay.
Under this this first example, only an occurrence that is specifically stated in the clause would constitute a force majeure event. Thus, the event in question would have to be one of (i) through (v) to trigger this clause. Since a “pandemic” or “epidemic” is not specifically stated, a failure or delay caused by the COVID-19 pandemic probably would not be covered in this situation.
In the event either Party is delayed from performing any act required under this Agreement due to, (i) acts of God; (ii) flood, fire, earthquake or explosion; (iii) war, invasion, hostilities, terrorist threats or acts, riot or other civil unrest; (iv) government order or law; (v) actions, embargoes or blockades in effect on or after the date of this Agreement; (vi) national or regional emergency; or (vii) shortage of adequate power or transportation facilities, then performance of such act shall be extended for the reasonable period of such delay, and either Party shall be granted a reasonable period of time to perform after the cessation of the reason for the delay.
Clause 2 is better than Clause 1 because, while it does not specifically mention “pandemics” or “epidemics,” it does mention “acts of God” and “national or regional emergency.” These two categories could give you some leeway when it comes to a health emergency such as COVID-19. Of course, it would be better to specifically name “pandemics” or “epidemics” or even “health emergencies” to eliminate confusion but having some additional categories which could encompass a pandemic could be helpful.
But what if you don’t list every possible situation that could lead to a force majeure? Clause 3 can help with that.
In the event either Party is delayed from performing any act required under this Agreement due to (i) acts of God; (ii) flood, fire, earthquake or explosion; (iii) war, invasion, hostilities, terrorist threats or acts, riot or other civil unrest; (iv) government order or law; (v) actions, embargoes or blockades in effect on or after the date of this Agreement; (vi) national or regional emergency; (vii) shortage of adequate power or transportation facilities, except to the extent such failure was caused by the party invoking this Section, or (viii) due to any cause beyond the reasonable control of a Party (collectively, a “Force Majeure Event”), then performance of such act shall be extended for the reasonable period of such delay, and either Party shall be granted a reasonable period of time to perform after the cessation of the reason for the delay. Regardless for the excuse of the Force Majeure Event, if such Party is not able to perform within ninety (90) days after such event, the other Party may terminate the Agreement.
Clause 3 contains the catch-all provision which allows the force majeure clause to be triggered for any cause “beyond the reasonable control of a Party.” Under such a definition, there is no need to name every single possible cause as the catch-all would cover causes that are “beyond the reasonable control of a Party.” Since pandemics and epidemics are “beyond the reasonable control of a Party,” disruptions caused by COVID-19 would likely be covered.
Clause 3 further adds two additional points worth noting. First, this clause requires that the force majeure event cannot have been caused by the party invoking this Section. This makes sense because it would not be fair for the non-performing party to benefit from its negligence or poor planning that resulted in the force majeure event. While this is unlikely in the context of COVID-19, it is good practice to include such limitations in force majeure provisions.
Second, Clause 3 allows the other party to terminate the agreement after ninety (90) days. This provides the other party the option to walk away from this Agreement and not be tied to a vendor who cannot provide services or supplies for an extended period of time. While a force majeure clause provides some flexibility to the non-performing party, it should also not force the other party to be stuck in a situation where it is not receiving the benefits of its contract.
As seen from the above examples, force majeure clauses should not be treated as merely “boilerplate” provisions as small differences can have significant repercussions on the rights and obligations of each party. Force majeure provisions should therefore be reviewed carefully, with particular attention given to the potential causes that could trigger them.
We previously addressed both freedom-to-operate and patentability analyses and what the benefits of each are. In this post, we will examine landscape analyses and the five pieces of information that can be learned from conducting one. At BPLG, we love landscape studies because of the valuable information they provide. We can use this information to not only guide our IP strategy, but also to help expand our product pipeline.
Provides a look at the market today
At its heart, a landscape analysis is essentially a look at the market to understand the existing technology and trends in a given technological area. Such an analysis involves looking at the past, present, and future trends in technology and learning important details about a given technology. Based on this information, companies, entrepreneurs, researchers, and scientists gain an understanding of the “state of the art” which ultimately helps them plan a research strategy to build, expand, improve, or modify that art.
Early insight into what the patenting activity of competitors
A landscape analysis can further provide early insight into what competitors have in the development pipeline and what products competitors are innovating. Examining patent filing trends together with market research is useful in determining the commercial phase (e.g., infancy, mature, or declining) of the technology and understanding the general trend of certain technology areas. Understanding this information can help companies better plan the development of their own products and allow them to identify which products should be developed and which should be abandoned.
Identify gaps for innovation
Similar to a patentability study, a landscape analysis can also help uncover further opportunities for development and ultimately patenting. If a landscape study reveals patent filings for an antibody in the field of inflammation, but not in the field of cardiovascular disease, for instance, this gap could encourage the development of products in the field of cardiovascular disease. The landscape study may further reveal other modifications that could be made to the product (e.g., changes in formulation, dosage amount, etc.) that could be pursued. Overall, understanding the patent filing trends is important in guiding a company to areas that worth pursuing commercially and those that should be avoided.
Explore opportunities for collaboration
Furthermore, a landscape study can help identify potential partners for collaborations. Since a patentability study identifies patents and patent applications directed to similar content, the assignees of those patents and applications can be found on those documents. This will allow a company to reach out to the assignees to discuss possible collaborations or identify opportunities for in- or out-licensing.
Identifies inventors to hire or collaborate with
Similar to the previous point, a landscape study can identify inventors who are developing new and exciting technology. Knowing what patent applications are being filed can help companies explore potential opportunities to either hire those inventors or collaborate with them on future projects.
When done correctly, a landscape study provides valuable information about the current market and its trends. Based on this information, a company can evaluate opportunities for developing new products, abandoning existing products, and exploring possible collaborations within the same space.
Imagine you conducted an FTO analysis and it turned out your invention was found to infringe a third-party patent. What can you do? This post will discuss three possible solutions that will help you practice your invention after it was found to infringe a third-party patent.
The purpose of an FTO analysis is to determine whether a product infringes another issued patent. This analysis is done by identifying patents and patent applications that, if later issued as patents, may be infringed when commercializing your product. This analysis is done by examining the claims of the issued third party patents and asking whether your product or service contains each and every element of that third-party patent claim. We discussed FTOs in detail here.
The first option when encountering a blocking third-party patent is to design around that third-party patent. This requires identifying an alternative way to develop the desired product without infringing the patent.
An example of designing around may be seen with a drug-eluting stent. A drug-eluting stent is a peripheral or coronary stent or scaffold, placed into peripheral or coronary arteries to release the drugs slowly into a patient's body. Assume that a company has developed a new drug and wants to use a stent to deliver the drug into the patients’ bodies. By developing a new drug, the company will likely satisfy the requirements of patentability; however, the issue resides with the stent. If a third-party owns the stent patent, the company will have to find an alternative design to the stent if it wants to continue using it.
If the original stent patent is broad enough, however, the company may not be able to design around the stent in a way that accomplishes its goals. If designing around becomes unfeasible, the next option may be a solution.
In situations where no design alternative is acceptable or possible, such as with the stent example above, a company may have no other option but to enter into a license agreement with the owner of the third-party patent.
A license is a contractual agreement in which the patent owner promises not to sue the licensee for patent infringement as long as the licensee abides by the terms of the agreement, which usually involves the payment of certain fees. Such an agreement allows the owner of a patent to retain ownership of the patented products or services while permitting the company (e.g., the licensee) to make, use, offer for sale, or sell the patented product or service. Once a license agreement is in place, the company can market the new product without infringing the third-party patent.
Challenge the Third-Party Patent
If the company cannot design around a third-party patent and cannot, or does not want to license the third party patent, then another option is to challenge the third party patent. If the company successfully challenges a patent and invalidates it, it clears the path to commercialization by removing that third-party patent as a hurdle.
Even if the patent challenge does not result in the invalidation of the third-party patent, it could allow the company to enter into a settlement agreement with the third-party patent holder, thereby allowing the company to commercialize its product. While the company may have to pay a licensing fee as part of the settlement, it would allow the company to practice its invention without having to worry about being sued for infringement by the third-party patent holder.
Inter partes review (IPR) proceedings have become a popular method by which someone can challenge an issued patent based on prior art (either Section 102 or Section 103) grounds. IPRs allow for a relatively quick and cost-effective means by which third party patents can be challenged. Moreover, they have yielded favorable results for the challenger, in part due to the lower burden of proof that a petitioner must satisfy. We previously discussed IPRs here and here.
Third-party patents can also be challenged in a traditional district court litigation. While longer and generally more costly than an IPR, district court litigation allows patents to be challenged on grounds in addition to those involving prior art. Challenges directed to inappropriate subject matter or written description, among others, can thus be raised in district court but not in an IPR.
If your product or service is found to infringe a third-party patent, not all hope is lost. There are still several options for practicing your invention.
We previously addressed what a freedom to operate analysis is and what information it provides. In this post, we will examine patentability analyses and the five pieces of information that can be gained from conducting one.
Uncovering hurdles to patentability
The first piece of information gained from a patentability study is simply uncovering prior art that may present hurdles to obtaining a patent. This is, after all, the purpose of a patentability analysis.
A patentability study is done by identifying prior art, both patent and non-patent, which may interfere with an invention satisfying the standards of patentability, novelty (Section 102) and non-obviousness (Section 103). To this end, a patentability study will uncover any printed publications—such as journal articles, scientific papers, textbooks, abstracts, conference presentations, and any other papers—that have been published and that may impact patentability. A good patentability study should not be limited only to patents and publications published only in the U.S. but should be global in scope. Both prior art hurdles, Section 102, and Section 103 are based on publications worldwide and in any language.
In the Section 102 case of In re Hall, an invalidating piece of prior art reference, a doctoral dissertation, was found in the basement of a library in Germany. The reference was neither available online nor written in English, but it was indexed according to the author's name and title in the library’s indexing system. As such, the court decided the reference could have been accessible by anyone visiting the library to look through the indexing system as early as 1977.
While such references may be difficult to find, a good patentability study should uncover these and other potentially problematic references. Once uncovered, those references can help a company better formulate a strategy for differentiating a product to satisfy patentability requirements.
Draft better patent applications
Knowing what prior references you may be faced with during patent prosecution can also help you better draft patent applications with adequate support to later overcome any such prior art rejections. If you know what possible rejections the USPTO can come up with based on the prior art, you can begin crafting your responses and making sure support for those responses is in the patent application when it is filed.
Identify possible blocking IP
A patentability study can also help uncover potential blocking third-party IP, the type that would come up in an FTO. Not only will a patentability study show you which patents have already been issued, but it will show which applications and claims are still pending. Knowing which applications are pending is important because pending applications could quickly turn into potentially problematic blocking patents if they are not monitored and carefully examined. Having this information can help you proactively mitigate a potential problem with blocking IP.
Identify opportunities for expanding development pipeline
A patentability study can also help uncover further opportunities for development and patenting. When dealing with a lot of prior, the patentability analysis is important in helping guide a company to patentable areas or to help avoid pursuing a product with too much prior art.
For instance, if a drug were previously patented for cancer indications, you will not likely be able to patent the drug composition (without modification of the composition) nor will you be able to patent the use of the drug for cancer treatment. You may, however, be able to patent the drug for other indications, such as treating cardiovascular disease or neuroinflammation. You may also be able to patent a different dosage form of the drug. Instead of having an immediate-release formulation, you may be able to patent a sustained or extended-release formulation.
In general, a patentability study will reveal options for patenting products as well as existing hurdles.
Explore opportunities for collaboration
Finally, a patentability study can help you identify potential partners for collaborations. Since a patentability study identifies patents and patent applications directed to similar content, the inventors and assignees of those patents and applications can be found on the documents. This will allow a company to reach out to the assignees to discuss possible collaborations and even to try to hire personnel with certain know-how and skill sets.
When complete, a patentability study provides valuable information about what is already in the public domain with respect to your product. Based on this information, a company can evaluate opportunities for patenting a new product, developing a pipeline of products, or exploring possible collaborations with other parties within the same space.
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.