Limitations on the scope of DNA patent claims in Europe: Monsanto struggles in its attempt to block importation of soy meal containing patented DNA

A while back Hal Wegner of Foley and Lardner forwarded me an English translation (courtesy of Dutch IP lawyer Charles Gielen) of a recent decision by a Dutch [corrected May 6] court in the case of Monsanto Technology v. Cefetra. I think the decision should be of great interest to the biotech community, so I’ve attached it here, and provide some of my own commentary below.

Monsanto holds a European patent (EP 0 546 090) essentially claiming a gene that encodes a glyphosate-tolerant form of the enzyme EPSPS, derived from bacteria. Expression of this gene in a recombinant plant, such as soy, renders the plant resistant to glyphosate (Round-Up®), and is the basis for Monsanto's highly successful line of Roundup-Ready® crops. However, Monsanto was unable to secure patent protection for the invention in Argentina, a major agricultural country, so farmers in that country are essentially free to use the technology without paying royalties to Monsanto.

In the currently pending case of Monsanto v. Cefetra, a Dutch court is struggling with the question of whether importation into Europe of Argentinian soy meal constitutes infringement of Monsanto’s European patent. Monsanto argues that because the processed soy meal comprises the patented DNA, the importation of the product is infringing. However, Cefetra argues that the mere presence of patented DNA in the processed soy meal does not amount to infringement of any of the claims, and so far has met with some success.

The Dutch court hearing the case held that "there can be no question” that Monsanto's claims directed to "isolated" DNA sequences were not infringed because DNA incorporated in soy meal is not present as "isolated matter.” Monsanto argued that the term isolated encompasses any DNA sequence taken out of its natural environment - in this case, the bacterial chromosome. But the court found that “the average person skilled in the art would understand the term isolated DNA as DNA that has been retrieved from the cell (core) of an organism for further treatment in a manner as is usual in the relevant profession.”

Likewise, the court held that claims directed to a method of producing a genetically modified plant harboring the glyphosate resistant gene were not infringed by the soy meal. While the court accepted that the soy plant and soybean have been directly obtained by the method, the court found that the subsequent crushing, separation, and treatment stages were "too drastic to still assume a direct relationship between the methods and the soy meal."

The remaining unresolved question for the court is whether claims directed to the DNA sequence per se, without any limitation to "isolated DNA," are infringed by the soy meal. The court found that even if the “DNA sequence is only present in the soy meal in minimal quantity, this does not deter from the fact that there is a breach of the Monsanto patent, if and to the extent that the scope of protection extends to the product, the DNA, as such.” In other words, the court rejected a de minimis argument, holding that even traces of DNA as a contaminant amount to literal infringement of a claim broadly directed to the DNA. The court did note that mere coincidental contamination, for example, resulting from residue from previous cargo in the ship, might not constitute infringement, but the court did not have to decide this issue because it was clear that the defendant's soy meal was the source of the patented DNA.

However, the defendants argue that Article 9 of the EU Biotech Directive bars patent protection for DNA present in an inert material such as soy meal. The Biotech Directive was issued by the European Parliament in 1998, essentially to clarify that biotechnological inventions are patentable in Europe, and provides direction with respect to the scope of that protection. Article 9 states that the “protection conferred by a patent on a product containing or consisting of genetic information shall extend to all material . . . in which the product is incorporated and in which the genetic information is contained and performs its function.” The defendants argue that since soy meal is dead material, the DNA present in the soy meal is incapable of performing its function of coding for a protein, and hence is not eligible for patent protection under Article 9. Monsanto counters that soy meal is not a biological material and thus does not fall under Article 9. Monsanto further argues that the Directive is intended to extend the scope of protection for biotechnological inventions, not to restrict it, and that in any event, it is “sufficient that the [claimed] DNA has exercised its function (namely the provision of resistance to glyphosate in the soy plant) or that the DNA, should it be isolated from the soy meal, can be incorporated in a cell in a soy plant and can then (once again) exercised its function."

The Dutch court found this Article 9 argument important and novel, and has referred the question to the European Court of Justice. In particular, the ECJ has been asked to address whether Article 9 should be understood such that patent protection is extended in situations where “the DNA is present in a material and does not express its function at the time of the stated breach but has indeed expressed its function or possibly, following the isolation from the material and its incorporation in the cell in organism, could once again express its function.” The ECJ has also been asked whether Article 9 "stand[s] in the way for the national patent legislation to (additionally) allow absolute protection for the product (the DNA) as such, whether or not the DNA expresses its function and must the protection provided by article 9 therefore be considered exhaustive?”
Monsanto has already lost similar infringement lawsuits in 2007 in Spain and England. Monsanto’s Jan. 1, 2008 10-Q filing with the SEC reports that the English court found that patent valid, and that the patented sequence is present in the imported soy meal, but that the claims as interpreted by the court were not infringed. In Spain, the judge ruled that the soy meal does not fall under the protection of the patent as the [patented] DNA in the meal no longer expresses its function (apparently the same argument that the Dutch court is referring to the ECJ) I.
The 10-Q filing also reports that the “Argentine government has opposed our use of patent infringement actions as a means of securing payment for the use of our technology in Argentina and has been admitted as a co-defendant to the proceedings in the Netherlands and as an observer to the proceedings in Denmark. In addition, the national competition commission in Argentina (CNDC) has initiated a formal investigation regarding our patent infringement actions in the European Union.”
These cases raises a number of fascinating but perhaps troubling issues for the biotechnology industry. Claims directed to isolated DNA sequences are extremely common, particularly in the United States, where the patent office normally will not allow a claim directed to a DNA molecule per se, but will require the applicant to include a limitation like "isolated" to distinguish from naturally occurring forms of the molecule, e.g., naturally occurring genes. I'm not sure how common it is even in Europe to get claims to DNA molecules per se as a Monsanto was able to do in this case. But if a US court were to construe the term “isolated” as narrowly as this Dutch court did then patent owners might find themselves in possession of a very limited scope. In the US it is often assumed that a claim to isolated DNA covers the DNA essentially in any context different from us naturally occurring environment - people often refer to claims reciting isolated polynucleotide' as gene claims and assume that they broadly cover any use of the gene. However, depending on how a court interprets the term isolated, the scope of such claims might be much narrower, as exemplified by this Dutch court’s interpretation.

Also, consider the impact of new genetic use restriction technologies (GURTs) which essentially result in removal of recombinant genes from the seeds produced by recombinant plant. This technology has a number of advantages. For example, it would obviate much of the arguments by opponents of genetically modified crops, because the seeds and food produced by the plants would not contain any foreign DNA. It would also make it harder for farmers to save and replant genetically modified seeds, because the second-generation seeds would not retain the trait. But if farmers in a country such as Argentina, where an effective patent protection for a genetic modification is lacking, were able to get access to the first-generation seeds they would seem to be free to export the recombinant DNA-free crops to other countries without having to worry about infringing any patent directed to the DNA sequence encoding the trait.

Most importantly, it is a good example of the challenges biotechnological patent owners face in enforcing their patents. Although many critics of gene patents argue that gene patents are particularly restrictive of follow-on technology because it is difficult if not impossible to design around a gene, in practice the actual scope of protection is often dramatically limited in the courts, in many cases allowing accused infringers to escape liability.

PTO Issues Revised Written Description Guidelines, Further Muddying the Waters

On March 25, 2008, the PTO issued revised written description training materials to supersede and replace the interim written description guidelines training materials published in 1999. The 1999 guidelines were published in response to Regents of the University of California v. Eli Lilly, a controversial 1997 Federal Circuit decision which has been widely interpreted as establishing a new form of the written description requirement applicable to originally filed claims, and particularly targeting biotechnology inventions. As of 1999 Lilly was the only Federal Circuit decision applying this novel form of the written description doctrine. However, since that time the Federal Circuit has decided a number of cases involving what I refer to as the “Lilly written description requirement,” or LWD (to distinguish it from the traditional written description requirement, a doctrine which serves to police against patent applicants amending or adding new claims encompassing subject matter not adequately described in the specification as filed), including Enzo, Rochester, Noelle, and Wallach.

Both versions of the guidelines attempt to explain the application of LWD by means of a series of examples, nearly all arising out of biotechnology, including hypothetical claims directed to genes and other polynucleotides, antibodies and other proteins, and bioinformatic inventions. The 2008 guidelines include a number of new examples specifically directed towards the holdings in Wallach, Noelle and Rochester (Examples 5, 14 and 17, respectively), and also retain many of the original examples from the 1999 guidelines. Most notably, there are a several instances where the 2008 guidelines substantially diverge from the earlier version.

For instance, Example 6 from the 1999 guidelines concludes that a claim reciting an “isolated gene comprising SEQ ID NO:1,” wherein SEQ ID NO:1 represents the sequence of a novel “cDNA fragment,” is invalid for failing to comply with LWD. The 2008 guidelines do not include an example reciting an "isolated gene," but do include Example 4, which includes claims reciting an "isolated DNA comprising SEQ ID NO:16” and an "isolated nucleic acid comprising SEQ ID NO:1,” wherein the SEQ ID NO:’s represent EST sequences (essentially another word for cDNA fragments). In essence, the only difference between the claims is the substitution of the word DNA or nucleic acid for gene. Interestingly, the 2008 guidelines find that the claims reciting a DNA or nucleic acid are valid under LWD.

Why the opposite results with such very similar claim language? The 1999 guidelines explain that mere disclosure of the cDNA fragment is inadequate to describe the claimed genus of genes, because the regulatory elements and untranslated regions generally associated with genes, e.g., introns and promoter regions, are not described. In contrast, the 2008 guidelines conclude that because the presence of the recited cDNA fragments “defines the scope of the claim genus," and because "it is within the level of skill and knowledge to add any desired DNA sequence to either end of [a cDNA fragment] with no more than routine extermination," one skilled in the art would recognize that the applicant was in possession of the structural features shared by members of the claimed genus.

The 2008 guidelines specifically recognize that the nucleic acid and DNA genuses of Example 4 would include the full length open reading frame, fusion constructs and vectors comprising the cDNA fragment, and might even include the full-length genomic gene in cases where the cDNA fragment is derived from a single exon. Thus, under the new guidelines a short EST sequence representing only a fragment of a single exon is sufficient to claim the full length genomic sequence, in spite of the fact that the regulatory elements and untranslated regions required by the 1999 guidelines are not disclosed, to say nothing of the other non-disclosed exons.

Thus, with respect to claims to nucleic acids comprising an EST sequence, the 2008 guidelines provide for a substantial lowering of the bar to satisfying LWD. This interpretation of LWD is consistent with Ex parte Fisher, the BPAI decision that was the subject of the Federal Circuit’s in In re Fisher decision, which essentially found EST sequences invalid under the utility requirement. In Fisher, the examiner had rejected claims to EST sequences for failure to comply with LWD, noting that additions to the disclosed partial cDNA sequences would confer function not possessed by the originally disclosed fragments. The board reversed, however, finding that a claim encompassing any polynucleotide comprising a partial cDNA sequence did not raise written description issues. The board failed to explain its rationale for this determination. On appeal, the Federal Circuit limited its inquiry to the utility issue, and did not address the board’s questionable interpretation of LWD, which is now apparently embodied in the guidelines.

An even more direct conflict exists between Example 9 of the 1999 guidelines and Example 6 of the 2008 guidelines. Both involve claims directed towards an isolated nucleic acid that specifically hybridizes under highly stringent conditions to the complement of a disclosed sequence, wherein the nucleic acid encodes a protein having the functional activity of the protein encoded by the disclosed nucleic acid sequence. The 1999 guidelines find that this claim satisfies the written description requirement, while the 2008 guidelines finds essentially the same claim invalid. The 1999 guidelines found that a person of skill in the art would not expect substantial variation among species encompassed within the scope of the claims because the highly stringent hybridization conditions would be expected to yield structurally similar DNAs. In contrast, the 2008 guidelines conclude that those of ordinary skill in the art would not be able to identify without further testing which of the nucleic acids that satisfy the hybridization requirement would also encode a polypeptide having the recited functional attributes, based on the unpredictable relationship between protein structure and function.

Similarly, Example 14 of the 1999 guidelines found that a claim directed to protein variants sharing at least 95% sequence identity to a disclosed protein sequence and retaining the functional activity of the disclosed protein complied with LWD, while Example 10 of the 2008 guidelines finds the same claim to be invalid. Again, the 2008 guidelines focus on the unpredictability of the protein structure-function relationship, pointing out that one of skill in the art would be unable to identify which variants satisfying the 95% identity criteria would also retain the recited function.
Interestingly, the same Example 14 finds a broader claim, directed to any variant sharing 95% identity with the disclosed protein sequence, (i.e., not limited to functional variants, as was the case with the invalid claim) to comply with LWD. In other words, the guidelines would find that a subgenus claim is invalid for failing to comply with LWD, while a broader genus claim that encompasses the entire unpatentable subgenus does satisfy LWD. Thus, the guidelines teach that a patent applicant can overcome an LWD rejection to a percent identity claim limited to functional variants by simply broadening the scope of the claim to include non-functional variants.

In 2007 I published an article reviewing all the federal court and Board of Patent Appeals and Interferences decisions I could find which applied LWD. In the article, I noted that relatively few patent claims had actually been invalidated under the doctrine, that the courts and the board have routinely found very broad claims relating to genetic and biotechnology inventions to comply with LWD, and that in most (arguably all) of the cases where LWD has been used to invalidate a claim it has been applied in a manner that was explicitly or implicitly redundant with invalidation by means of the enablement requirement. My conclusion was that LWD was not playing any positive doctrinal role that could not be accomplished by means of the enablement requirement, particularly as it has been applied in cases such as Amgen v. Chugai.

However, since I conducted my study, the PTO appears to be heading in the opposite direction, seeking to reinvigorate LWD by carving out a role for the doctrine distinct from the enablement and utility requirements. I think this is a mistake, and this is reflected in the confused logic that runs throughout both versions of the guidelines. Although the guidelines speak in terms of a "possession” test for compliance with LWD, they fail to articulate a standard of possession that can be meaningfully distinguished from enablement. In explaining the outcomes arrived at in its examples, the 2008 guidelines repeatedly assert that one of skill in the art would (or would not) have concluded that the applicant was in possession of invention, without providing any guidance with respect to the nature of the general test for “possession.”

It seems clear that some of the examples in the 2008 guidelines found to comply with LWD would be held unpatentable on other grounds, such as lack of utility and/or enablement. For example, I suspect that the claim directed to 95% identical protein sequences without a functional limitation might be considered invalid for lack of enablement, which could resolve the anomaly that under the guidelines the claim satisfies LWD, while a subgenus claim limited to functional variants is invalid under LWD. What might really be useful would be a more holistic guidance document explaining how LWD should be applied in conjunction with the other 112 requirements, such as utility and enablement.

Two Remaining Challenged WARF Embryonic Stem Cell Patents Upheld in Ex Parte Reexamination

In a March 13 post I reported that the Wisconsin Alumni Research Foundation (WARF) had prevailed in an inter partes reexamination of its patent that claims cultured pluripotent human embryonic stem (ES) cells (7,029,913). That decision will likely be appealed by the third-party challenger Public Patent Foundation (PPF).

On March 5, the two other WARF embryonic stem cell patents (5,843,780 and 6,200,806) that were challenged by PPF were also found valid in final PTO actions (Notice of Intent to Issue Ex Parte Reexamination Certificate). These two reexamination were both ex parte (as opposed to the inter partes examination of the ‘913 patent), and thus PPF will not have an opportunity to appeal these decisions. Both decisions were based on essentially the same logic as the Action Closing Prosecution in the inter partes reexamination: the fact that multiple parties had tried for years without success to derive cultured, immortal ES cells for non-rodent mammals animals, that the prior art reported success only for certain rodents (most notably mice), and thus prior art teaching directed to the derivation of mouse ES cells was not enabling for primate ES cells, nor was there a reasonable expectation that the techniques could be successfully applied to primates.

The ‘806 patent claims are directed stable cultures of human ES cells – the claims are very similar to those in the ‘913 patent, the primary difference being that the ‘913 patent includes the limitation that the cells will proliferate in an undifferentiated state in the absence of leukemia inhibitory fact (LIF). The reexamination resulted in the amendment of the claims to specifically recite that the claimed human ES cells are “derived from a pre-implantation embryo,” and that the cell culture will proliferate in culture “in an undifferentiated state.” These limitations, which were also incorporated into the claims of the ‘913 patent, were probably inherently present in the original claims, but the explicit recitation of the limitations is one positive outcome of the reexamination. For example, the Action Closing Prosecution notes that prior art disclosing human embryonic germ (EG) cells derived from post-implantation embryos are different from ES cells, and thus the prior art EG cells did not anticipate or render obvious Thomson’s human ES cells.

The ‘780 patent claims are directed to stable cultures of primate ES cells – the claims are very similar to those in the ‘806 patent, the primary difference being that the ‘806 patent is limited to human ES cells. This reexamination also resulted in the amendment of the claims to specifically recite that the primate ES cells are “derived from a pre-implantation embryo,” and that the cell culture will proliferate in culture “in an undifferentiated state.”

WARF Human Embryonic Stem Cell Patent Upheld in Inter Partes Reexamination

On February 25, 2008, the PTO issued an action closing prosecution in the inter partes re-examination of patent number 7,029,913. The patent, which claims cultured pluripotent human embryonic stem (ES) cells capable of proliferating for over one year in an undifferentiated state without the application of exogenous leukemia inhibitory factor (LIF), is based on the pioneering work of the University of Wisconsin’s James Thomson. Thomson is credited as the first to successfully derive stable cultured human/primate ES cell. The patent is assigned to the Wisconsin Alumni Research Foundation (WARF), and has been the source of much controversy based on what many consider to be restrictive licensing practices on the part of WARF. Pluripotent human stem are capable of differentiating into any fetal or adult cell type, and are widely viewed as critical reagents in a variety of research and (potentially) therapeutic contexts. The patent is one of several WARF patents relating to human ES cells that have been challenged by the third-party requester Public Patent Foundation (PPF).

Prior to Thomson's success in deriving primate embryonic stem cells, the technology for deriving embryonic stem cells in mice, and possibly other rodents, had been well established, but attempts in primates and other mammals had proven unsuccessful. However, PPF argues that the claimed human ES cells were derived using essentially the same methodology that had been used for years to derive mouse ES cells, and pointed to a number of prior art references which it argues render the ‘913 patent anticipated and/or obvious. Two of the references from the scientific literature, "Robertson 1983" and "Robertson 1987," describe the process for deriving pluripotent mouse ES cells, which PPF asserts is the same process used to derive human ES cells. Another non-patent reference, Piedrahita, describes the isolation of mouse, pig, and sheep ES cells. Importantly however, Piedrahita does not report success in creating stable, pluripotent ES cell cultures from pig and sheep. A patent reference is also cited (5,166,065) which prophetically discloses pluripotent ES cells derived from humans and other mammals, but only provides working examples of mouse ES cells. The other cited patent reference (5,690,926) describes human embryonic germ (EG) cells derived from post-implantation embryos (the human ES cells claimed in the ‘913 patent are derived from pre-implantation embryos).

PPF was unable to persuade the examiner with any of its arguments. The examiner found that while the ‘065 patent provided prophetic disclosure of the claimed human embryonic stem cells, subsequent publications by the inventor of the ‘065 patent acknowledged that he had been unable to use the methodology to derive sustainable cultures of human or other mammalian ES cells. The examiner pointed to numerous other examples where researchers attempted but failed to derive stable culture to pluripotent embryonic stem cells from animals other than mice (or perhaps other rodents). Based on this, the examiner found that the ‘065 patent did not anticipate under 102(b) for failure to enable primate ES cells, and failed to provide the basis for a finding of obviousness because there was no reasonable expectation that the disclosed technology could be used successfully to derive non-rodent ES cells.
Likewise, while the non-patent references reported success in deriving mouse ES cells, none reported success in deriving human or other non-mouse ES cells. In view of the general lack of success by others in using the methods to derive non-rodent cells, the examiner determined there was no reasonable expectation that the teaching of these references could be successfully modified to arrive at the claimed human ES cells.

Finally, the examiner found that the human EG cells disclosed in the ‘926 patent were different from the human ES cells claimed by Thomson, and thus did not anticipate or render obvious the claimed human ES cells. In particular, the human EG cells contain the cell surface marker SSEA-1 (a protein), which is absent from human ES cells.

PPF will have an opportunity to appeal the decision to the Board of Patent Appeals and Interferences, and eventually perhaps to the Federal Circuit.

I think this case raises an interesting enablement issue. The examiner found that the prior art patent prophetically disclosing human ES cells was not enabled as of the date of Thomson's invention because one of skill in the art could not have implemented the disclosed methodology (for deriving mouse ES cells) to derive human ES cells without engaging in undue experimentation. But PPF argues, and the examiner seems to agree, that the method for deriving human ES cells disclosed in the Thomson patent is essentially the same as the prior art methods used to derive mouse cells. So if the prior art patent was not enabling for human ES cells as of the date of Thomson's invention, then logic seems to suggest that Thomson's patent is likewise not enabled. In other words, how can one patent be enabling, while a second disclosing essentially the same methodology is not? Of course, the distinction is the Thomson reported success, but is that relevant to the enablement of one of ordinary skill in the art?

As described in a declaration by Jeanne Loring, an expert in this area technology, Thomson’s success was not due to any tangible scientific breakthrough disclosed in his patent. Perhaps Thomson succeeded because he and his laboratory had a higher level of skill than one of ordinary skill in the art, or engaged experimentation exceeding “due experimentation,” or had some other advantage that allowed him to produce human embryonic stem cells by use of methodology that was not enabling for those of ordinary skill in the art. Or perhaps his success reflected the improved quality of reagents or a general increase in the level of skill of those working in this field, and Thomson just happen to be the first to succeed. Of course, enablement cannot be challenged directly in re-examination proceedings, but this could be an issue if the validity of the patent were ever challenged in infringement litigation.

The Federal Circuit Considers Equivalence of Nucleic Acids and Peptide Nucleic Acids (PNAs)

Nucleic acids, such as DNA and RNA, are polymers of purine and pyrimidine bases linked together by a sugar-phosphate backbone. Peptide nucleic acids (PNAs), on the other hand, are synthetic polymers of purine and pyrimidine bases linked together by peptide bonds, the same bonds present in polypeptides, i.e. proteins. Like nucleic acids, PNAs are capable of hybridizing to a complementary nucleic acid strand, and thus can be used as functional analogs for nucleic acids in a host of research and diagnostic applications that employ nucleic acids as hybridization probes, as well as in antisense therapies.

However, there are important functional differences between nucleic acids and PNAs. Because the backbone of a PNA contains no charged phosphate groups, the binding between PNA/DNA strands is stronger than between DNA/DNA strands (due to a lack of electrostatic repulsion). PNAs also show greater specificity in binding to complementary DNAs, with a PNA/DNA base mismatch being more destabilizing than a similar mismatch in a DNA/DNA duplex. This binding strength and specificity also applies to PNA/RNA duplexes. PNAs are not easily recognized by either nucleases or proteases, making them resistant to enzyme degradation. PNAs are also stable over a wide pH range.

In Regents of the University of California v. Dakocytomation (Doc. No. 2006-1334), decided by the Federal Circuit on February 28, 2008, defendant Dako argues that its diagnostic test kits do not infringe the University of California's patent because the claims recite "blocking nucleic acids” (which the parties stipulate to be limited to RNA and DNA), and the accused kits employ PNAs. The kits are used to identify the presence of excess HER2 genes in cancerous cells, in order to decide if treatment with Herceptin is appropriate.

Although the stipulation precludes a finding of literal infringement, UC argues that the use of PNAs infringes under the doctrine of equivalents. The district court ruled on motion for summary judgment that UC was precluded under Festo from establishing infringement under the doctrine of equivalents by prosecution history estoppel, since the "blocking nucleic acid" limitation was added by narrowing amendment to overcome prior art. However, on appeal the Federal Circuit reversed, finding that the motivation for UC’s narrowing amendment "centered on the method of blocking-not on the particular type of nucleic acid that can be used for blocking.” The case was remanded to the trial court to determine the question of infringement under the doctrine of equivalents.

In dissent, Judge Prost argued that the majority had misapplied Festo, finding that prosecution history estoppel should apply to the nucleic acid itself, not just the blocking method.

Applying the traditional function-way-result test, Dako might be able to successfully argue non-equivalence. Dako submitted expert testimony to the trial court that “PNA probes accomplish blocking in a substantially different way from DNA probes and are not ‘interchangeable’ with DNA. For example, PNA probes can bind to DNA that is not been denatured. PNA is also less susceptible to changes in hybridization conditions, such as temperature.” UC presumably submitted testimony that would minimize the significance of these functional distinctions. It should be interesting to see how the trial court, and perhaps eventually the Federal Circuit, decides on the issue of equivalents.

Comiskey and Its Implications for Biotechnology Patents

In In re Comiskey, 499 F.3d 1365 (2007), the Federal Circuit held that claims reciting a “method for mandatory arbitration resolution regarding one or more unilateral documents,” which encompassed modes of practicing the method independently of a computer, were invalid under Section 101 for claiming unpatentable “mental processes.” However, the court held that other claims in the application that were limited to computer-implemented modes of performing the process could be patentable, stating that “[w]hen an unpatentable mental process is combined with a machine, the combination may produce patentable subject matter.”

Why do I bring up Comiskey on a blog dedicated to biotech IP? The decision includes a fascinating discussion of the interplay between patentable subject matter under 101 and nonobviousness under 103. The court opines that “[claims limited to computer-implemented modes of performing the method] at most merely add a modern general purpose computer to an otherwise unpatentable mental process []. The routine addition of modern electronics to an otherwise unpatentable invention typically creates a prima facie case of obviousness. Moreover, there is no pertinent evidence of secondary considerations because the only evidence offered is of long-felt need for the unpatentable mental process itself, not long-felt need for the combination of the mental process and a modern communication device or computer.” (footnotes omitted)

In other words, this panel of the Federal Circuit seems to be seriously suggesting that software that carries out a process that could be performed mentally is prima facie obvious, even if the underlying process is itself nonobvious. This would call into question the validity of a large number of software and business method patent claims.

But what most interests me is the implications for biotechnology and the patenting of genetic and biology-based inventions. “Laws of nature” and “natural phenomena” are clearly unpatentable under Supreme Court precedent, and thus it is well established that genes as they exist in nature (e.g., in the human body) are not patentable. It is only by isolating or chemically synthesizing a gene, or engineering it into a recombinant construct, that the genetic sequence is rendered “made by man” and hence patentable. Likewise, the discovery of a biological correlation cannot be patented per se.

But if the suggestion in Comiskey is correct, then could one not extrapolate and argue that an unpatentable phenomenon of nature (e.g., a naturally occurring genetic sequence, signaling pathway, or biological correlation), when combined with an obvious practical application of the phenomenon (e.g., an isolated polynucleotide or genetic construct embodying the genetic sequence, a process for inhibiting the signaling pathway, or a process of detecting and recognizing the correlation) is likewise prima facie obvious? Under the rationale proposed in Comiskey, this would apparently be the case even if the underlying phenomenon was itself nonobvious. What would be the ramifications for the validity of many gene patents, or patents broadly claiming the detection of genetic mutations or polymorphisms (think Myriad’s BRCA patents), or methods of correlating levels of metabolites in the human body (think LabCorp v. Metabolite), or methods of inhibiting a biological signaling pathway (think Ariad’s NF-kB patent and its litigation with Lilly and Amgen)? I think the ramifications could potentially be quite significant, particularly when considered in conjunction with KSR and In re Kubin (depending upon how the Federal Circuit decides that important case for biotechnology).

New Report Identifies $378 Billion in Savings From Generic Biologics

In a new report, Robert Shapiro identifies $378 billion in savings which he argues could eventually be realized if the US creates an accelerated pathway for the approval of follow-on biologics. Dr. Shapiro is a prominent economist who served as Under Secretary of Commerce for Economic Affairs during the Clinton Administration and currently heads up a private consulting firm. The report was sponsored by Insmed, a company that recently settled a patent infringment suit brought by Genentech and Tercica alleging that Insmed's follow-on product IPLEX infringed Genetech/Tercica patents covering the the innovator biologic prodcut Increlex (as discussed in another article, The Impact of Human Gene Patents on Innovation and Access: A Survey of Human Gene Patent Litigation). the settlement came while the case was on appeal to the Federal Circuit and after the district court found Insmed liable for patent infringement.

The report finds that biologics will play an increasingly important, albeit costly, role in US health care, and that by facilitating accelerated and less costly approval of follow-ons the US could save $378 billion over 20 years. Moreover, the report states that this estimate "almost certainly understates the savings." It suggests that the US emulate the EU's new regulatory pathway for follow-on biologics.

The report notes that earlier studies have found much lower saving (e.g., up to $14 billion over 10 years), but finds that the estimates of these studies are too low because they assume "such high costs to enter the market that few biogeneric competitors would emerge, which would keep by a generic prices relatively high and produce limited savings."

In a conference call I participated in with Dr. Shapiro this morning, he noted that these earlier studies fail to adequately account for the capability of foreign countries like India and China to produce biologics at a lower price than US production facilities, and also substantial excess capacity in US biologic production facilities. When I questioned him regarding potential safety concerns with offshoring biologic production to countries like India and China, particularly in view of the heightened importance of process in the production of biologics relative to conventional small molecule drugs, Dr. Shapiro agreed that this was an important and critical issue that needs to be addressed, and that safety is of paramount importance in any plan to bring less expensive biologic products into the US market.

Clearly, concerns regarding the ability of FDA to effectively monitor production processes outside the US are substantial, as noted in a Washinton Post article last year, FDA Scrutiny Scant In India, China as Drugs Pour Into U.S. These concerns have led FDA to seek to establish offices in China and India. Just last week it was reported that:

"Chagzhou Scientific Protein Laboratories, which own the factory that supplies Baxter's blood thinner, heparin, was never checked by drug regulators in China. The plant has no certification. Heparin has led to four recent deaths in the USA, as well as hundreds of allergic reactions throughout the country."

Highlighting how difficult it is to monitor production processes for safety, USDA (which is generally considered to impose much stricter monitoring of food safety than FDA) recently issued the largest beef recall in history, covering beef produced over the last two years at a California facility, and acknowledging that most of the meat has probably already been eaten.