To what extent do protein patents cover posttranslationally modified proteins?

People often treat proteins as simply a string of amino acids as specified by a gene, and in particular this is often how they are represented in patents, i.e., essentially as a string of letters. For example, many patents claim proteins as defined by an amino acid sequence referenced by SEQ ID NO. However, while this simplistic view of proteins holds true for most bacterial proteins, and some very small proteins such as human growth hormone, most eukaryotic proteins (and in particular naturally occurring human proteins) are posttranslationaly modified. That is, the process of protein translation in a cell results in a string of amino acids as specified by the corresponding gene, but this polypeptide backbone is subsequently chemically modified to result in a final protein product having a markedly different structure than the originally translated polypeptide backbone. These posttranslational modifications involve the chemical addition of sugars and other molecules to certain amino acids in the polypeptide backbone. Common examples of posttranslational modifications include phosphorylation, sialation, glycosylation, and acetylation. Posttranslational modifications can dramatically affect the structure and function of the protein. Some modifications, particularly glycosylations, dramatically increase the size of the posttranslational modified protein relative to the protein as initially translated. Furthermore, these modifications entail the removal of one or more atoms from the modified amino acid, e.g., most of these modifications cause the removal of a hydrogen atom from the original amino acid and replacement by the modifying chemical group.

As a side note, posttranslational modification is one of the primary rationales offered by the biotechnology industry as to why an abbreviated approval process for generic biologics would raise safety and efficacy issues not presented by traditional small molecule generic drugs. Posttranslational modifications can be quite complex, and purified protein preparations are typically heterogeneous mixtures of a variety of different posttranslationally modified forms of the protein. The specific nature of posttranslational modifications for any given protein preparation can vary based on the particular cell line in which the gene is expressed, and the production conditions under which the cells are grown, the protein is expressed, and the protein is harvested and purified. The potential for substantial alteration in safety and/or efficacy based on minor changes to the production process, or use of a different cell line, is cited as necessitating a full scale assessment of safety and efficacy for any follow-on biologic, even if it has the same amino acid backbone sequence as a currently approved originator biologic.

Back to my main point, which is, to what extent do patent claims directed to proteins encompass posttranslationally modified proteins? The issue has been presented to the Federal Circuit in a brief filed by Roche on May 13, 2008 appealing the decision by the lower court in Amgen v. Roche (2008 WL 2231038). The allegedly infringing Roche product is MIRCERA, a pegylated version of erythropoietin (EPO) that has been on the market in Europe since 2007, and has been approved in the US by FDA. Pegylation is a form of non-natural posttranslational modification, which is accomplished outside of the cell in a chemical process that results in a covalent attachment of polyethylene glycol (PEG) to one or more amino acids on a protein. Pegylation can dramatically affect the biological and pharmacologic function of the protein, particularly by altering binding characteristics and increasing the half-life of the protein in the human body. Increased half-life translates into less frequent administration of the drug to the patient, with obvious clinical benefits.

Roche's challenge is directed particularly at claim 3 of U.S. Patent No. 5547933, which claims a “non-naturally occurring glycoprotein product of the expression in a mammalian host cell of an exogenous DNA sequence comprising a DNA sequence encoding human erythropoietin said product possessing the in vivo biological property of causing bone marrow cells to increase production of reticulocytes and red blood cells.” Roche argues that MIRCERA is not and cannot be produced by a mammalian host cell, as required by the claim, but can only produced by means of the cell free pegylation reaction. Roche also stresses the very different chemical and functional characteristics of MIRCERA in comparison to EPO produced in a cell. In particular, Roche argues that MIRCERA has twice the molecular weight, a lower molecular charge, different hydrodynamic size, different chromatographic profiles, different binding, distinct carbohydrate structures, and a much longer half-life. Roche also emphasizes the functional distinctions between MIRCERA and Amgen’s EPO products, arguing that MIRCERA provides substantially superior outcome for at least some subset of patients, and thus fulfills a medical need that is not currently being satisfied in the US.

It will be interesting to see how the Federal Circuit responds to Roche’s argument. In a previous decision involving a related Amgen EPO patent, Amgen v. HMR (314 F.3d 1313) the Federal Circuit strictly limited another claim directed towards the EPO protein to the amino acid sequence referenced in the claim. In that case, the claim defined EPO by reference to an amino acid sequence listing containing 166 amino acids. This amino acid sequence was derived from the DNA sequence of the corresponding EPO gene. However, subsequent to the filing date of the patent it was learned that the initially translated 166 amino acid EPO was posttranslational processed in the cell, resulting in the removal of a terminal amino acid, such that the final EPO product actually only contains 165 amino acids. The Federal Circuit held that this unanticipated posttranslational modification resulted in the claim not covering mature human EPO literally or under the doctrine of equivalents.

Looking beyond Amgen v. Roche, what are the ramifications of this issue for other protein patents? Many patents claim proteins solely in terms of amino acid sequence, with no explicit mention of posttranslational modifications. Commercially relevant products, such as biologic drugs, are often posttranslationally modified, and one might argue that many proteins claims are not literally infringed by posttranslationally modified versions of the claimed sequences. To find literal infringement, at the very least a court would have to find that the amino acids recited in the claim include derivatives of an amino acid lacking a hydrogen atom, and that the claim encompasses any of a host of chemical additions not defined in the specification. And if the court interprets the claim this broadly, potential 112 issues are raised. The Federal Circuit has repeatedly stated that biomolecules (like proteins and DNA) are chemical compounds, and that patent law should be applied to biomolecules in the same manner as it is to other chemicals. But in other contexts, an inventor is not permitted to claim a genus of chemical compounds sharing a common structural backbone and encompassing any chemical additions to that backbone. If the court were presented with this argument, and chose to actually treat a protein claim like any other chemical claim (as it did in Amgen v. HMR), then perhaps it would find that an interpretation of the claim that would encompass any posttranslationally modified version of the recited amino acid sequence violates the disclosure requirements of section 112.

BIO 2008

I spent last week in San Diego at the annual Biotechnology Industry Organization (BIO) international meeting, and wanted to share a few of my impressions.

Biotech Profitability

At a well-attended panel presentation by Ernst & Young summarizing and commenting upon the results of their 2008 Global Biotechnology Report, day reported that publicly traded US biotechnology companies came very close in 2007 to realizing a net profit (a net loss of $0.3b, compared to a $5.6b net loss in 2006). If the trend toward profitability continues, 2008 might be the first year in which US biotechnology is able to report a profit, which I think would be a huge psychological breakthrough if nothing else.

Major Themes

For those who have not attended a BIO conference, it is a huge event with many parallel presentation tracks, so it is very difficult to take in and make sense of more than a small fraction of the information presented. However, from my perspective some of the important topics which received a great deal of attention included biomarkers, genomics, personalized medicine, and the integration of diagnostics and drug products; reimbursement issues; globalization, particularly the rising importance of Asia as a producer and consumer of biotechnology products; the use of biotechnology to address environmental and energy concerns; and of course, recent developments in patent law, particularly in US courts and Congress. There was also a great deal of emphasis on finding and implementing incentives and market-based approaches for the development of products to address orphan diseases, diseases primarily affecting the developing world, and other under-addressed conditions.

For example, BIO has spun out BIO Ventures for Global Health (BVGH), a small nonprofit charged with the mission of harnessing the biopharmaceutical skills and resources that have transformed medicine in the industrialized world to accelerate the development of innovative vaccines, drugs and diagnostics targeting the most pernicious diseases of the developing world. BVGH is funded by BIO, the Rockefeller Foundation, the Bill and Melinda Gates Foundation, and members of industry. These diseases have received relatively little attention due to a lack of a market able to pay for any resulting product, and BVGH is attempting to facilitate and encourage market-based solutions to encourage greater industry investment, and public-and private partnerships, to create a pipeline of innovative solutions for the developing world.

In a similar fashion, groups like FasterCures seek to develop mechanisms to encourage biotechnology investment in developing drugs for orphan diseases and other conditions which have so far failed to garner sufficient industry interest. In one session, representatives of FasterCures held a discussion forum seeking input on ways to encourage the sort of innovation. Some of the ideas discussed involved better funding for FDA, a reduction of regulatory hurdles to reduce the cost of developing drugs and speeding their entry to market, and the use of prizes to incentivize innovation. In particular, there was discussion of expanding the use of market exclusivity rewards, such as those currently available for the developers of certain orphan drugs, or for companies performing pediatric studies. Another sort of prize discussed is a transferable "priority review the voucher.” The Food and Drug Administration Amendments Act (HR 3580), signed into law Sept 27, 2007, authorizes FDO to award a priority review voucher to the sponsor of a newly approved drug or biologic the targets and neglected tropical disease. The voucher, which is transferable and can be sold, entitles the bearer to a priority review for another product. It is estimated that such a voucher could shave months off approval times, resulting in valuations potentially in the tens of millions of dollars.

Intellectual Property Hot Topics

Hot topics in intellectual property at Bio 2008 included obviousness, especially the impact of KSR on the patentability of pharmaceutical and biotechnological inventions in the United States; patent reform legislation; USPTO rule changes; and the potential impact of World Health Organization (WHO) proposals to modify intellectual property practices and policies on member states. Many speakers expressed the view that proposed patent reforms being considered by Congress would substantially weaken patent laws and have an inordinately deleterious impact on biotechnology, characterizing the debate as pitting biotechnology and pharma versus the computer and information sectors. While I support strong patent rights, and agree they are of critical importance to biotechnology, sometimes I think the rhetoric goes a little overboard. While some speakers made it sound like many of the proposed patent reforms would severely harm biotechnology, a number of the reforms that have been called for in recent years have essentially been put in place in the courts, particularly in recent Supreme Court decisions. Other aspects of patent reform, like the availability of opposition proceedings, are available in other parts of the world like Europe, and do not seem to have impeded the progress of biotechnology. I think that there is a danger that if representatives of biotechnology keep promoting the idea that patent reforms will substantially undermine the future of biotechnology, and these reforms ultimately to come to pass, investors will heed the warnings and interpret the changes as more detrimental to biotechnology than is actually the case. If this occurs, it might be that investor perception of harm ends up hurting biotechnology more than the changes to patent law themselves. Whether it is KSR, Quanta, or eBay, or proposed reforms aimed at damages, venue and post-grant opposition, I predict that biotechnology will be able to cope with the changes and the industry will continue moving forward and accomplish great things.

All in all, I left the conference feeling very optimistic about the future of biotechnology. The motto of the conference was “Feed. Fuel. Heal the World,” a lofty mission, but one that I think will ultimately be successful, thanks in no small part to the important incentives provided by a robust patent system.

For more commentary on BIO 2008, you might want to check out the Biolaw blog for postings by my colleague at the University of Kansas School of Law, Andrew Torrance.

Quanta and Agricultural Biotechnology

In previous posts, I have discussed why it is important for agricultural biotechnology companies to be able to prevent farmers from saving genetically modified seeds for replanting, and the potential for Quanta to limit the ability of companies to enforce such post sale restrictions under the patent laws. To the extent Quanta prohibits enforcement of these restrictions by means of patent infringement actions, the value of many agricultural biotechnology patents could be severely eroded, which could in turn negatively impact an industry that has historically relied heavily on patents. I think most people, even those who argued in favor of the Supreme Court overruling the Federal Circuit approach to patent exhaustion, as exemplified by the Mallinckrodt and Braun decisions, would agree that enforceable post sale restrictions are important in the context of agricultural biotechnology. Concerns with the impact of the Court's decision on ag biotech is evidenced by some of the questions asked by Justice Kennedy during oral arguments, as well as a footnote in the Solicitor General's amicus brief stating that the Court has never ruled on the question of whether patent exhaustion applies to copies of a self replicating patented product, and that this question was not implicated by Quanta. In the amicus brief it filed recommending denial of cert in McFarling v. Monsanto, the Solicitor General expressed the view that patent exhaustion should not apply with respect to the progeny of patented seeds.

It appears to me that the ability of agricultural biotechnology companies to enforce these important restrictions under the patent laws has not been severely impacted by Quanta. At least, I hope this is the case. For one thing, I think that a court faced with the question would side with the Solicitor General, and find that patent exhaustion does not apply to copies made from a self replicating patented invention, particularly when the invention is a genetically modified seed. I don't think anything in Quanta would preclude such a determination, and for public policy reasons the courts would side with the innovator in a case raising the issue. I also think drawing such a line between a purchased patented product and a copy of the product would be entirely consistent with Microsoft v. AT&T, the 2007 Supreme Court decision which made an analogous distinction between software and copies of software. In Microsoft, the Court held that while software made in the US can constitute a component of a patented invention originating from the US for purposes of 271(f), copies of the software made outside the US do not originate from the US and hence cannot form the basis for infringement under 271(f).

Another element of Quanta that will facilitate the enforcement of post sale restrictions in agricultural biotechnology is the Court's endorsement of the rule announced in its General Talking Pictures decisions. As I noted in my last post, General Talking Pictures, when read in combination with other Supreme Court patent exhaustion precedent such as Univis and Quanta, creates what the solicitor General has described as an anomalous outcome which “allow[s] a patentee to achieve indirectly - through an enforceable condition on the licensee - a limitation on use or resale that the patentee could not itself impose on a direct purchaser.” Under General Talking Pictures, I think that agricultural biotechnology companies will be able to impose post sale restrictions through licensee seed companies, and enforce violations of those restrictions under the patent laws.

The facts of General Talking Pictures appear to be right on point in this regard. Recall that in that case the patent owner licensed a manufacturer to sell the product only to private users, not to commercial users. Because sales to commercial users were not authorized by the patent owner, patent exhaustion did not apply and the patent owner was permitted to sue commercial users for patent infringement, even though the seeds were purchased from licensee. If we tweak the facts only slightly, substituting seed saving farmers for commercial users, it seems clear that if a patent holding biotechnology company licenses seed companies to sell seed only for use in the production of food and a farmer saves and replants seeds, under General Talking Pictures the patent owner will not be barred from bringing suit under the patent laws. As I understand it, a company like Monsanto generally does not sell seed directly to farmers, but rather licenses seed companies to produce and sell seeds incorporating the patented technology. In a case where the patent owner is selling seeds directly to farmers, Quanta might prompt a patent owner to structure its business such that sales are made through a licensee so as to avoid patent exhaustion.

Moreover, the Federal Circuit's LGE decision (the subject of appeal in Quanta), along with earlier decisions like Mallinckrodt and Braun, suggest that the Federal Circuit generally disfavors a strong patent exhaustion doctrine that cannot be overridden by an agreement between the patent owner and purchaser to limit post-sale uses. For example, prior to Quanta, the Federal Circuit was confronted with Supreme Court precedent that on its face seemed to mandate patent exhaustion in all cases where a patented product was the subject of an authorized sale. Nevertheless, the Federal Circuit circumvented this precedent by holding that the doctrine only applies to product claims, not method claims, and even then only when the post sale restriction independently violates some other law or policy, such as patent misuse or an antitrust violation. When faced with a new fact patterns implicating patent exhaustion, the Federal Circuit might well read Quanta in a similarly narrow fashion, thereby limiting its impact, particularly with respect to self replicating products. This sort of circumvention will be facilitated by Quanta’s failure to directly address Mallinckrodt, or any other Federal Circuit decisions relating to patent exhaustion other than LGE.

Quanta and Its Impact on Biotechnology

Quanta’s Impact on Mallinckrodt

Many people viewed Quanta as an important opportunity for the Supreme Court to address the viability of Mallinckrodt (976 F.2d 700), a 1992 Federal Circuit decision which held that the doctrine of patent exhaustion applies only to unconditional sales, and that a patent owner is thus permitted to impose post-sale restrictions on purchasers of a patented product by providing purchasers with notice to that effect, and enforce those restrictions under the patent laws. Many, including the Solicitor General, argue that Mallinckrodt should be overruled, and that the decision conflicts with Supreme Court precedent, particularly the 1942 Univis decision, which they interpret as mandating a doctrine of patent exhaustion that bars the enforcement of such restrictions by means of a patent enforcement action.

Unfortunately for those seeking Supreme Court clarification on this point, the patent holder in Quanta (LGE) chose not to defend the Mallinckrodt rule. Instead, LGE sought to circumvent the issue by arguing that, regardless of the validity of Mallinckrodt, its patents were not exhausted because the Intel products at issue were not covered by the patents. This strategy, in turn, permitted the Supreme Court to avoid addressing the issue head on, and its decision makes absolutely no direct mention of Mallinckrodt (or any Federal Circuit decisions for that matter, other than the one on appeal). Nevertheless, it appears to me that Quanta implicitly overrules Mallinckrodt, an unfortunate result, as I have explained in previous posts.

In Mallinckrodt, the Federal Circuit distinguished Univis and other related Supreme Court cases which found patent exhaustion by interpreting those decisions as only applying to post-sale restrictions that violate “some other law or policy (in the patent field, notably the misuse or antitrust law).” However, in Quanta the Supreme Court cites Univis as controlling authority and finds that it applies to the post-sale restrictions imposed by LGE – importantly, there is no suggestion that the restrictions imposed by LGE violated antitrust law or any other non-patent “law or policy.” Thus, Quanta appears to cut the doctrinal footing out from under the Federal Circuit with respect to Mallinckrodt; there appear to be no legitimate basis for confining Univis to restrictions that violate some other law or policy. To drive this point home, the Court summarizes its decision in Quanta as establishing that “[t]he authorized sale of an article exhausts the patent holder’s rights and prevents the patentholder from invoking patent law to control postsale use of the article.” It is hard to see how Mallinckrodt could survive this clear statement, although perhaps the Federal Circuit will find a way, given ita apparent aversion to the doctrine of patent exhaustion.

Exhaustion of Method Claims

In Quanta the Court reversed the Federal Circuit on the issue of whether patent exhaustion applies to method claims – the Federal Circuit had held that patent exhaustion only applies with respect to product claims. This aspect of Quanta is surely correct, albeit trivial – it makes no sense allow patent exhaustion with respect to a patent claiming a product, but to impose a per se rule barring its application to method claims, particularly in cases where the only substantial uses of the purchased product would infringe the method claim. In the decision below the Federal Circuit cited this supposed rule distinguishing between product and process claims, but provided absolutely no rationale in support of the rule, instead citing to two earlier Federal Circuit decisions as supporting the proposition. The earlier of these decisions (Bandag) did hold that that under the facts of that case the sale of an article did not exhaust the asserted method claims, but in that case the court found that there existed substantial uses of the product that would not infringe the method claims. The decision did not announce a per se rule that would apply in cases where the only substantial uses of the product would infringe a method claim. It is also entirely consistent with the holding in Quanta – sale of an article should only exhaust method claims in cases where there are no substantial noninfringing use (or, in the words of Quanta, when the article “embodies” the method patent). The second Federal Circuit decision cited in the decision below did not provide any rationale for distinguishing between product and process claims, but merely cited to Bandag for the proposition.

In short, the Federal Circuit’s position lacked any rationale support and was correctly rejected by the Supreme Court.

Exhaustion of Claims not Covering the Article Sold

LGE’s patents did not cover the products sold by Intel, but only covered products made by combining the Intel product with other components. LGE argued that patent exhaustion did not apply because the Intel products were not covered by the patent. However, the Supreme Court rejected LGE’s argument and held that it is not necessary for the patent to cover the product sold, so long as the product “substantially embodies” the patent. The Court found that the “Intel Products constitute a material part of the patented invention and all but completely practice the patent.” In making its determination of “substantial embodiment,” the Court noted that Quanta was not required to make any “creative or inventive decisions” when combining the Intel products with other components to arrive at the patented invention, and that the only difference between the patented invention and the Intel products was the “addition of standard parts.”

In my view, the court erred in adopting a “substantially embodied” standard to define the scope of the patent exhaustion doctrine. The “substantially embodied” language presumably owes its origin to Univis, but the court could (and should) have achieved essentially the same desired outcome by creating a different standard, such as “not suitable for substantial noninfringing use.” This standard would have the virtue of consistency with other doctrines of patent law, particularly contributory infringement under 271(c), and would be much more amenable to application by a court.

I foresee difficulty as courts attempt to apply the “substantially embodied” standard. For example, the Court suggests that in applying the doctrine to a patent claiming a “combination invention,” the purchased product would have to incorporate all claim limitations to “substantially embody” the patent (citing Aro). But for other patents, wherein the inventive element resides in only certain claim limitations (such as the LGE patents), the court will need to identify the “inventive” claim limitations and determine whether a product comprising those limitations “embodies” the patent. The court might also need to address the question of whether the purchaser’s use of the product required “creative or inventive decisions,” or whether any additional parts added to the product to arrive at the patented invention are “standard.” The “substantially embodied” standard seems to me to unnecessarily weaken the internal consistency of patent law and impair predictability for patent owners in structuring their licensing and sales arrangement.


Anomolous Treatment of Direct Sales and Sales by a Licensee

Curiously, Quanta appears to permit a patent holder to impose post-sale restrictions on purchasers if those sales are made by a licensee, even though the patent holder would not be able to impose the same restrictions on a direct purchaser. Thus, for example, Quanta would seem to bar a patent holder from selling a product under the condition that purchasers are only permitted to use the product for personal, non-commercial uses, and then suing purchasers who violate this condition for patent infringement. However, in Talking Pictures (1938) the Supreme Court held that a patent holder can accomplish essentially the same result when the product is sold by a licensee. In Talking Pictures, the patent owner authorized a licensed manufacturer to sell a patented product solely for private use; the licensee was barred from selling the product to commercial users. Nevertheless, some purchasers used the product commercially, and the Supreme Court held that because the sales were not authorized under the license patent exhaustion did not apply; the patent owner was permitted sue the commercial purchasers for patent infringement. In Quanta, the Supreme Court cited Talking Pictures with approval, apparently clearing the way for a patent owner to restrict the use of a product by sales through a licensee in a manner that would not be permitted if the patent owner sold the product directly.

This is clearly an anomalous outcome, and seems to make little economic sense. If this sort of restriction is permissible when accomplished through a licensee, why not let the patent owner achieve the same result directly? In fact, the Solicitor General pointed out this inconsistency in its brief supporting grant of cert in Quanta, stating that “[a]lthough there is a seeming anomaly in allowing a patentee to achieve indirectly - through an enforceable condition on the licensee - a limitation on use or resale that the patentee could not itself impose on a direct purchaser, the distinction is a necessary and explicable result of the Court's decision in General Talking Pictures.”

Interestingly, in the SG’s subsequent brief supporting petitioner, filed after cert was granted, the SG removed the above-quoted sentence and replaced it with the following: “The distinction between the rights of licensees and of authorized purchasers is thus a necessary and explicable result of the differences in their respective positions.” Apparently the SG rethought the wisdom of pointing out the illogic of the rule it was arguing in favor of, and chose to advocate rather than to clearly explain the clear implications of the ruling sought. Nonetheless, the anomaly clearly exists. If the case had been better briefed, and LGE had actually advocated on behalf of the continued validity of Mallinckrodt, perhaps the Supreme Court would have recognized the lack of economic rationale for such an inconsistent doctrine, and rethought the wisdom of its patent exhaustion precedent in the same manner it has recently rethought other patent and antitrust doctrines, as reflected in recent cases such as Leegin and Independent Ink.

Effect on Biotechnology

In earlier posts I discussed the importance to the biotechnology industry of the Mallinckrodt rule, as reflected in amicus briefs filed by BIO and the seed industry in support of those decisions. In particular, post-sale restrictions enforceable under the patent laws are important in allowing biotechnology companies to price discriminate between basic research users and commercial users of patented technologies, and to restrict the use and sale of the progeny of self-replicating biotechnology inventions, especially genetically modified seeds. How will Quanta impact the ability of biotechnology companies to enforce these sorts of important post-sale restrictions?

Consider a biotechnology product with substantial uses in either basic, non-commercial research, or in commercial drug discovery or diagnostic testing. In the past, biotechnology companies have achieved price discrimination by selling such a product with notice to purchasers that they are only authorized under the patents to use the product for non-commercial research, and that if the purchaser intends to use the product for more lucrative commercial purposes it must seek an additional license. This approach seems to be precluded by Quanta, at least when the patent owner seeks to impose these restrictions directly. But under Talking Pictures, the patent owner should be able to achieve essentially the same outcome by licensing a third party to sell the product only to basic researchers. The patent owner could then reserve commercial sales for itself, and sue under the patent laws anyone who purchases the product from the licensee but uses the product commercially. The same outcome, but it requires a more cumbersome legal and business framework. This hardly seems the most sensible approach, but apparently flows directly from Quanta and earlier Supreme Court decisions in this area.

Regarding the impact on agricultural biotechnology and its ability to use patent law to prevent farmers from saving progeny seed for re-planting or sale, I don’t think Quanta will be a substantial impediment, primarily because courts will find that patent exhaustion does not apply to progeny seed. The SG has expressed this view in a footnote in its amicus brief supporting Quanta, which states: “This Court has never suggested that the patent-exhaustion doctrine applies to the products of a patented item that is capable of reproducing itself in the hands of the purchaser - e.g., newly-grown seeds that are identical to, and grown from, a patented genetically-modified seed that was purchased from the patentee or an authorized licensee. See U.S. Amicus Br. at 14 & n.8, McFarling v. Monsanto Co., 545 U.S. 1139 (2005) (No. 04-31). This case presents no opportunity to address that question.” I think the SG is correct, and that courts will carve out an exception to the patent exhaustion doctrine for the progeny of self-replicating biotechnology products such as generically-modified seeds. This distinction between a product embodied by a patent vs. a copy of the product would also be consistent with the distinction the Supreme Court recently drew between a component of a patent invention under 271(f) and a copy of that component made outside the US (Microsoft v. AT&T).

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.”