How 2015's Patent Law Trends Will Affect Life Sciences Companies
By Greg DeLassus, patent attorney, Harness Dickey
Although 2015 did not produce any explosive new developments in patent law from the Supreme Court (like the Myriad gene patenting case in 2013) or from Congress (like the America Invents Act in 2012, also known as the AIA), the past year did witness the emergence of two important trends in life sciences patent law. These trends concern: (1) increasingly difficult standards for life sciences inventions to be considered eligible subject matter for patenting; and (2) low cost, expedited procedures to contest patent validity after grant.
SUBJECT MATTER ELIGIBILITY AND THE MAYO REVOLUTION
To understand the significance of the changes that emerged in 2015, a little background knowledge is needed. U.S. courts and the Patent Office have long considered that you cannot patent a diagnostic or therapeutic method that takes place entirely in a physician’s head (e.g., “look at the patient’s dilated pupils and decide that the patient has a concussion”). However, so long as the method involved some physical steps (e.g., “measure blood lead concentration and diagnose lead poisoning”) it was eligible for a patent.
This changed in 2012 when the Supreme Court announced a new rule for analyzing the subject matter eligibility of a medical treatment process at issue in Mayo Clinic v. Prometheus Labs. The Mayo rule holds that if the method’s physical steps involve routine or conventional techniques, they do not count in assessing patent eligibility. In other words, if your invention involves, for example, measuring expression of a certain gene and then prescribing a particular medicine, the “measuring” part does not count toward assessing eligibility because gene expression can be measured by conventional techniques like PCR (polymerase chain reaction).
The Mayo rule was such a startling break with past practice that the court of appeals for the Federal Circuit (i.e., the court that hears almost all appeals involving patents, also known as the CAFC) was initially hesitant to apply this new rule too vigorously. However, the Supreme Court reiterated Mayo in 2013 (ACLU v. Myriad Genetics) and again in 2014 (Alice Corp. v. CLS Bank). The CAFC “got the message,” so to speak, in 2015 and began applying Mayo more aggressively. The CAFC’s more recent approach is to start an analysis of patent eligibility by asking “does this invention involve a natural product, law of nature, or abstract idea?” If so, then you mentally bracket that element and look at the rest of the patent claim, ignoring any parts that concern routine or conventional technologies (e.g., PCR, affinity purification) to decide whether the claim as a whole still adds up to something that fits into a category of a patentable invention. Because most life sciences inventions involve either a natural product or a law of nature at some point, this new approach to analyzing patent eligibility invalidates many life sciences patent claims.
THE ARIOSA EXPANSION
In Ariosa v. Sequenom, the CAFC applied a very aggressive version of the Mayo rule to invalidate a patent covering an invention that can diagnose fetal abnormalities without amniocentesis by detecting fetal DNA in the mother’s blood. All of the judges who heard the case agreed that the invention was innovative and brilliant, but because the invention involved fetal DNA (which is a natural product) and PCR (which is a conventional technique), the CAFC held that the invention claimed was not patent eligible.
Companies whose technologies involve isolated natural biomolecules or correlations between biomarkers and a disease should have an attorney review any patents that were issued before 2015 to make sure they include the sort of narrow claims that have been suggested to still be eligible in view of Ariosa. If such narrow claims are not already in the patent, it may still be possible to seek a reissue examination to add such claims.
The Ariosa case was so controversial — because the technology involved was so clearly useful and innovative — that the CAFC was asked to take a second look at the case (so called “en banc” rehearing). Although the judges ended up reaffirming their original decision, they did suggest other ways that the patent could have been written that might have changed the outcome. In particular, the order denying en banc reversal indicated that if the patents had been limited to just the aspects of the invention that had been tested and proven workable (i.e., if the patents did not also cover methods that were very likely to work in view of the data, but which had not yet been tested), they might still have been valid.
POST-PATENT GRANT OPPOSITION PROCEEDINGS
The 2012 AIA created a low-cost alternative to litigation to deal with situations where one party thinks that another party’s patent claims are invalid. Instead of suing in court to invalidate the patent, the challenger can file a brief explanation of the challenged patent’s perceived defect with the Patent & Trademark Office (PTO). If the PTO agrees, an administrative trial is instituted and directed only to patent validity, not infringement. The trial is supposed to run for no more than 18 months — sometimes no more than one year. This creates a very efficient — and much less expensive — way for a company to clear away a blocking patent that it believes to be invalid.
Because these proceedings only came into effect late in 2012, it was not until 2014 that we started to get an appreciable number of decisions from the PTO about what sort of patents are liable to be invalidated. Only in 2015 did we start to get decisions from the CAFC indicating how the courts will review PTO decisions on appeal. Two trends can be broadly discerned from the decisions we have so far: (1) the PTO has been generally less willing to invalidate biotech and pharmaceutical patents than patents directed to software and business methods; and (2) the CAFC is very unlikely to reverse the PTO’s decision.
In view of the new AIA proceedings, every life sciences company should have a patent attorney review the company’s patent portfolio (including pending applications) to make sure that the requisite narrow claims are present. Frequently, early patents will have been issued years ago, before all of the details of the market product were entirely settled. If you have a better picture now of the market product than you had back when the patent(s) were issued, consider requesting a reissue examination to add new claims to the patent that more narrowly cover the market product. Such narrow claims could make all the difference in a validity contest.
THE EFFECT ON PHARMA AND BIOTECH
The relatively low cost of these proceedings (compared to litigation in court) has made them very attractive to two sorts of entities with particular relevance to the biotech and pharmaceutical sectors. The first of these is generic and biosimilar drug manufacturers. Because a generic or biosimilar drug cannot enter the U.S. market until all patents covering the FDA approved product are expired, generics can often accelerate their entry into the U.S. market by months or even years by attacking the latest expiring patents in the PTO.
A second group of life sciences-related entities have also emerged as a result of these PTO proceedings: hedge funds that call themselves patients’ rights groups. Although Kyle Bass’ “Coalition for Affordable Drugs” is probably the most famous of these, it is not the only hedge fund whose business model is built around attacking late-expiring patents covering brand-name drugs and trading stocks of players in the relevant markets.
Both of these groups — the generic manufacturers and the hedge funds — have the same interest: shortening the term of protection on life sciences’ inventions. Most patents covering life sciences technologies have more than one claim, where some of the claims are broader, and others are narrower. The PTO has shown itself more willing to invalidate the broad claims than the narrow claims. However, the FDA will not usually give a generic manufacturer approval to enter the market so long as there is even one claim still covering the product on the market. Therefore, it is very important to have at least one claim — no matter how narrow — that can survive a validity challenge.
THE BIG PICTURE
Both of the trends discussed above (tighter standards for patent eligibility and easier review of potentially invalid patents) are good for companies that need freedom to operate in the face of patent claims belonging to competitors. Both trends are bad for companies that need to secure and enforce patent claims for their own intellectual property. In other words, 2015 brought good news and bad news for life sciences innovators.
Life sciences companies need to pursue future patents with these two trends in mind. They also need to review existing patents to determine whether claims that once might have been sufficient are possibly less secure in view of these trends of 2015. If the 2015 trends have introduced weaknesses into your patent portfolio, it is probably not too late to fix these problems, but only if you take a proactive view to protecting your company’s intellectual property.