Comments of the Biotech Industry Organization
CRITICAL SYNERGY:
THE BIOTECHNOLOGY INDUSTRY
AND
INTELLECTUAL PROPERTY PROTECTION
PRESENTATIONS OF THE
INTELLECTUAL PROPERTY COMMITTEE OF THE
BIOTECHNOLOGY INDUSTRY ORGANIZATION
AT THE OCTOBER 17, 1994, HEARING OF
THE U.S. PATENT AND TRADEMARK OFFICE
SAN DIEGO, CALIFORNIA
Biotechnology Industry Organization
1625 K Street, N.W., Suite 1100
Washington, D.C. 20006
Preface
The U.S. Patent and Trademark Office (USPTO) held a hearing on
intellectual property issues of concern to the biotechnology industry on
October 17, 1994, in San Diego. A copy of the Notice for the hearing is
printed in Appendix A of this report. This report is a compilation of
the presentations on behalf of the Intellectual Property Committee of the
Biotechnology Industry Organization (BIO), which represents over 540
biotechnology companies, biotechnology research centers and others
involved with the biotech industry1. This report outlines the
intellectual property agenda of the biotechnology industry for the USPTO.
These presentations respond to the USPTO case law analysis and questions
regarding each patent issue raised in the Notice.
BIO is printing this compilation of the presentations so that it is
accessible to USPTO officials and examiners, BIO members, the Secretary
of Commerce, other officials of the Clinton Administration, members and
staff of the House and Senate Judiciary Committees, other Members of
Congress, voluntary health organizations, venture capitalists and
investment bankers, and others concerned about the biotechnology
industry.
There is a critical synergy between the biotechnology industry and
intellectual property protection. Implementation of the recommendations
in this report by the USPTO will enhance the competitiveness of the
biotechnology industry, which depends on protection of its intellectual
property to justify its extraordinary research expenditures.
BIO welcomes the opportunity to work with the USPTO and other
interested organizations and individuals to ensure that intellectual
property protection is afforded to the inventions of the biotechnology
industry.
Acknowledgments
BIO wishes to acknowledge and thank Bruce Lehman, Assistant Secretary
of Commerce and Commissioner of Patents and Trademarks, for scheduling
the hearing and for his concern about the competitiveness of the U.S.
biotechnology hearing. We also wish to thank the following officials and
staff of the USPTO: Michael Kirk, Deputy Assistant Secretary and Deputy
Commissioner; Jeff Kushan, Attorney Advisor for the Office of Legislation
and International Affairs; Lawrence Goffney, Assistant Commissioner for
Patents; Barry Richman, Director, Group 18000; and Charles Warren, Deputy
Director, Group 18000.
This report was prepared by members of BIO's Intellectual Property
Committee under the leadership of Chuck Ludlam, BIO's Vice President for
Government Relations, and Allen Norris, Committee Chairman, Director of
Patents at Sandoz Agro, Inc. Kenneth Kero, administrative assistant in
BIO's Government Relations Department made major contributions to the
editing and production of this report.
The Committee's presentations were drafted by fifty-four individuals
working on seven Issue Teams. These drafts were presented in oral
testimony at the hearing in San Diego by sixteen individuals.
BIO wishes to acknowledge the special contributions of the individuals
who helped to draft the enclosed position papers and those who made
presentations at the hearing in San Diego on October 17, 1994. Their
names, affiliations and addressed are listed below.
As this document represents an amalgamation of work by all of these
individuals it must be taken as an expression of the views of various
individuals, rather than the views of any specific individual or the
company or clients they represent. Each of the individuals, clients and
companies do not necessarily subscribe to each and every position
articulated herein. Given the short time available to prepare these
comments, they represent the views of the BIO Intellectual Property
Committee, not the BIO Board of Directors or all members of BIO, and the
views do not necessarily represent the views of all of the members of
this Committee.
Mr. Thomas DesRosier
VP and Chief Patent Counsel
Genetics Institute
87 Cambridge Park Drive
Cambridge, MA 02140
Ms. Stacey Channing
ImmuLogic Pharmaceutical Corporation
610 Lincoln Street
Waltham, MA 02186
Ms. Darlene VanStone
ImmuLogic Pharmaceutical Corporation
610 Lincoln Street
Waltham, MA 02186
Ms. Anne Craig
ImmuLogic Pharmaceutical Corporation
610 Lincoln Street
Waltham, MA 02186
William H. Epstein, Esq.*
Assistant Patent Counsel
Hoffmann-LaRoche Inc.
340 Kingsland Street
Nutley, NJ 07110
Mr. George Johnston*
Associate Patent Counsel
Hoffmann-La Roche Inc.
340 Kingsland Street
Building 86/602D
Nutley, NJ 07110
Dr. Estelle J. Tsevdos
Manager, Biotechnology Section
American Cyanamid Company
One Cyanamid Plaza
Wayne, NJ 07470
Norman C. Dulak, Ph.D.
Director-Patents
Schering-Plough Corporation
One Giralda Farms
P.O. Box 1000
Madison, NJ 07940-1000
Dr. Paul H. Ginsburg
Assistant General Patent Counsel,
Pfizer Inc.
235 East 42nd Street
New York, NY 10017-5755
Ms. Cheryl Agris
Novo Nordisk A/S
405 Lexington Avenue
Suite 6400
New York, NY 10174
T. Andrew Culbert, Esquire
Partner
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
Richard P. Burgoon, Jr.
Senior Director & Patent Counsel
Cephalon, Inc.
145 Brandywine Parkway
West Chester, PA 19380
Herbert Jervis, Esq.
Senior Patent Attorney
SmithKline Beecham Pharmaceuticals
709 Swedeland Road
P.O. Box 1539
King of Prussia, PA 19406
Thomas G. Wiseman, Esq.*
Counsel
Cushman, Darby & Cushman
1100 New York Ave., NW
Ninth Floor, East Tower
Washington, DC 20005
Dr. Michele Cimbala, Esq.
Partner
Sterne, Kessler, Goldstein & Fox
1100 New York Avenue, NW
Suite 600
Washington, DC 20005-3934
Evelyn McConathy, Esq.
Sterne, Kessler, Goldstein & Fox
1100 New York Avenue, NW
Suite 600
Washington, DC 20005-3934
Dr. Larry S. Millstein
Patent Agent
Foley & Lardner
3000 K Street, NW
Suite 500
Washington, DC 20007-5109
Mr. John P. Isacson, Jr.
Associate
Foley & Lardner
3000 K Street, NW
Suite 500
Washington, DC 20007-5109
Dr. Melvin Blecher
Counsel
Foley & Lardner
3000 K Street, NW
Suite 500
Washington, DC 20007-5109
Ms. Pat Granados
Foley & Lardner
3000 K Street, NW
Suite 500
Washington, DC 20007-5109
Richard C. Peet, Ph.D.*
Foley & Lardner
3000 K Street, NW
Suite 500
Washington, DC 20007-5109
Lisa Raines
Vice President of Government Relations
Genzyme Corporation
1020 19th Street, NW Suite 550
Washington, D.C. 20036
Mark A. Hofer, Esq.
Senior Vice President, General Counsel
Genzyme Corporation
One Kendall Square
Cambridge, MA 02139
Ms. Janet Hasak
Manager of Patent Prosecutions & Trademarks
Genentech, Inc.
460 Point San Bruno Boulevard
South San Francisco, CA 94080
Dr. Phillip Jones
Foley & Lardner
3000 K Street, NW
Suite 500
Washington, DC 20007-5109
Dr. Bernhard D. Saxe
Partner
Foley & Lardner
3000 K Street, NW
Suite 500
Washington, DC 20007-5109
Dr. William J. Scanlon*
Partner
Foley & Lardner
1 South Pinckney Street
P.O. Box 1497
Madison, WI 53701-1497
Mr. Stanley Schlosser
Foley & Lardner
3000 K Street, NW
Suite 500
Washington, DC 20007-5109
Dr. Kate Murashige*
Partner
Morrison & Foerster
2000 Pennsylvania Avenue, NW
Suite 5500
Washington, DC 20016-1812
Mr. Geoffrey M. Karny
Senior Intellectual Property Counsel
Genetic Therapy, Inc.
938 Clopper Road
Gaithersburg, MD 20878
Edward H. Gorman, Esq.
Associate General Counsel, Patents
Abbott Laboratories
Dept. 377, AP6D
Abbott Park, IL 60064-3500
Howard C. Stanley, Esq.
General Patent Counsel
Monsanto Company
800 N. Lindbergh Blvd., A3SA
St. Louis, MO 63167
Mr. Richard H. Shear
Associate General Patent Counsel
Monsanto Company
800 North Lindberg Boulevard
D1S
St. Louis, MO 63167
Mr. Daniel M. Chambers*
Patent Counsel
Viagene, Inc.
11055 Roselle Street
San Diego, CA 92121
Mr. Jerry Caulder, Ph.D.*
Chairman, President & CEO
Mycogen Corporation
4980 Carroll Canyon Road
San Diego, CA 92121
Mr. John Sanders*
Mycogen Corporation
4980 Carroll Canyon Road
San Diego, CA 92121
Mr. Carlton J. Eibl
Executive VP & General Counsel
Mycogen Corporation
4980 Carroll Canyon Road
San Diego, CA 92121
Mr. William Rastetter, Ph.D.*
President & CEO
IDEC Pharmaceuticals Corportation
11011 Torreyana Road
San Diego, CA 92121
Kenneth J. Woolcott, Esquire
Vice President
IDEC Pharmaceuticals Corporation
11011 Torreyana Road
San Diego, CA 92121
Mr. Karl Bozicevic
Fish & Richardson
2200 Sand Hill Road, Suite 100
Menlo Park, CA 94025
Ms. Laura Handley*
Weil, Gotshal & Manges
2882 Sandhill Road
Suite 280
Menlo Park, CA 94025-7022
Ms. Elizabeth F. Enayati*
Associate
Weil, Gotshal & Manges
2882 Sandhill Road
Suite 280
Menlo Park, CA 94025-7022
James Bradburne, Ph.D.
Patent Agent
Weil, Gotshal & Manges
1615 L Street, N.W.
Suite 700
Washington, DC 20036
Ms. Barbara Rae-Venter*
Weil, Gotshal & Manges
2882 Sandhill Road
Suite 280
Menlo Park, CA 94025-7022
Mr. Craig Opperman
Weil, Gotshal & Manges
2882 Sandhill Road
Suite 280
Menlo Park, CA 94025-7022
Edmund J. Fish, Esq.
Attorney
Weil, Gotshal & Manges
2882 Sandhill Road
Suite 280
Menlo Park, CA 94025-7022
Robert P. Blackburn, Esq.
Vice President Intellectual Property
Chiron Corporation
4560 Horton Street
Emeryville, CA 94062
Ms. Barbara Luther
Director, Intellectual Property
Incyte Pharmaceuticals
3330 Hillview Ave.
Palo Alto, CA 94304
Mr. Allen E. Norris
Director, Patents
Sandoz Agro, Inc.
975 California Avenue
Palo Alto, CA 94304
Mr. Timothy Gens*
Counsel
Fenwick and West
Two Palo Alto Square
Suite 800
Palo Alto, CA 94306
Mr. William E. Dickheiser
Patent Counsel
Zeneca Plant Sciences Inc.
1200 S. 47th Street
Richmond, CA 94804
Ms. Susan Perkins
Counsel
Campbell & Flores
4370 La Jolla Village Drive
Suite 700
San Diego, CA 92122
Steven M. Odre, Esq.
Vice President, Intellectual Property
Amgen, Inc.
1840 DeHavilland Drive
Thousand Oaks, CA 91320
Elizabeth Lassen, Esq.*
Vice President, Chief Patent Counsel
Calgene, Inc.
1920 Fifth Street
Suite F
Davis, CA 95616
Mr. Jon Case
Director Corporate Development
Targeted Genetics Corporation
1100 Olive Way
Suite 100
Seattle, WA 98101
Dr. Kenneth J. Widder*
Chairman & CEO
Molecular BioSciences
10030 Barnes Canyon Road
San Diego, CA 92121
* Made presentation at San Diego hearing on October 17, 1994.
Introduction
Mr. Carl Feldbaum
President
The Biotechnology Industry Organization
The biotechnology industry and the Biotechnology Industry Organization
(BIO) appreciates the scheduling by the U.S. Patent and Trademark Office
of a hearing on intellectual property issues affecting our industry on
October 17, 1994, in San Diego.
This hearing provides our industry with an opportunity to outline a
comprehensive presentation covering all of the principal intellectual
property issues for biotechnology inventions and to present our
recommendations for action. This agenda and these recommendations were
drafted by BIO's Intellectual Property Committee
and will be presented at the hearing by a series of witnesses and they
are compiled and published in this report.
This analysis of the issues and recommendations have been developed by
dozens of individuals at companies and law firms and their contributions
are noted throughout this report. One of the great strengths of the
biotechnology industry is the exceptional service we receive from patent
counsel.
Intellectual property protection is critical to the competitiveness of
our nation in general and the biotechnology industry in particular. Our
investors will not risk their capital to create innovative,
state-of-the-art approaches to unique problems if meaningful patent
protection cannot be secured. The USPTO, therefore, plays a critical
role in our industry's ability to fund its research into life saving and
life enhancing products.
The biotechnology industry and BIO look forward to working with the
Commissioner of Patents and Trademarks, Bruce Lehman, and his staff to
enhance the intellectual property protection afforded to the
biotechnology industry and implement these recommendations.
October, 1994
Table of Contents
Preface iii
Acknowledgments v
Introduction xi
Table of Contents xiii
Economic Value of Patent Protection
for the Biotechnology Industry 1
Statements of Biotechnology CEOs 5
Kenneth Widder, Chairman and CEO,
Molecular BioSciences 5
William Rastetter, President and CEO,
IDEC Pharmaceuticals Corporation 7
Introduction to Utility &
Operability Considerations 11
Practical Utility 25
Executive Summary 25
Case Law Review 26
Question 1 42
Question 2 46
Question 3 49
Operability/Enablement 53
Executive Summary 53
Case Law Review 54
Question 1 61
Question 2 65
Question 3 72
Nonobviousness 75
Introduction 75
Case Law Review 78
Question 1 91
Question 2 95
Question 3 97
Question 4 112
Question 5 120
Implications of Legislation 123
Pending Patent Reform Legislation 123
Biotechnology Patent Protections Act 138
Question 1 140
Question 2 143
Question 3 144
Question 4 150
Section 104 interferences 154
Experimental Use 157
Case Law Review 157
Our Concerns 159
Recommendations 161
Plant Patent Issues 163
Question 1 163
Coverage of plants under utility 171
Conclusion and BIO Invitation 173
Appendices 175
Appendix A 176
Notice of Public Hearing and Request for
Comments on Patent Protection Issues for
Biotechnology Inventions, Patent and
Trademark Office, 59 Fed. Reg. 45267(September 1, 1994)
Appendix B 181
Comments Submitted on Behalf of BIO
Concerning Patent Harmonization Issues
in response to Patent and Trademark Office
notice, October 28, 1993 BIO Position on
Changing to a First-to-File Patent System
Appendix C 185
Comments Submitted on Behalf of BIO
Concerning the Standard of Non-obviousness
for Public Hearing of Patent and Trademark
Office, July 20, 1994
Appendix D 191
1. June 27, 1994, Letter to Commissioner Lehman
from Carl Feldbaum and Charles Ludlam
Regarding Draft GATT Implementing Legislation
Attachments:
a) BIO Proposed Amendments to 35 USC 154 to Implement GATT
b) Length of Appeals For Biotechnology
Patents -- CAFC
c) Examples of Biotechnology Interferences
d) BIO Position on S. 1854, the Patent Simplification Act of 1994
e) BIO Comments on "Utility" Standard
2. August 12, 1994, Letter to Commissioner Lehman from Carl Feldbaum
and Charles Ludlam Regarding Draft GATT Implementing Legislation
3. September 27, 1994, Letter to Ambassador Mickey Kantor and
Commissioner Lehman from Carl Feldbaum and Charles Ludlam Regarding
Final GATT Implementing Legislation
Appendix E 214
Membership of Biotechnology Industry Organization
ECONOMIC VALUE OF PATENT PROTECTION
FOR THE BIOTECHNOLOGY INDUSTRY
It is appropriate that this agenda for intellectual property protection
for the biotechnology industry begin with documentation for the economic
value of patent protection for our industry.
This report is premised on the fact that there is a critical synergy
between intellectual property protection and the biotechnology industry.
This fact has now been demonstrated in a just-released, sophisticated
economic analysis of the value of patents to the biotechnology and their
importance in capital formation for the biotechnology industry.
Capital formation is a critical issue for the biotechnology industry.
In 1994 the industry lost $4.1 billion, an increase in losses of 14
percent over 1993. The biotechnology industry, in fact, has never had a
profitable year and only one percent of companies are profitable.
The biotechnology industry is one of the most research intensive
industries in the history of civilian manufacturing, based on research
and development on a per employee basis. In a 1994 survey by Business
Week, six of the top ten firms in the U.S. in terms of research
expenditures per employee were biotechnology companies -- Biogen
($208,724), Genentech ($117,594), Genetics Institute ($107,657), Immunex
($92,693), Amgen ($83,302), and Chiron ($64,263)2. On average, biotech
firms spend $59,000 per employee on research. The U.S. corporate average
was $7,476 for 1993. Ernst & Young reports that biotechnology companies
spent $7 billion on research in 1994, a 23 percent increase over 19923.
The research is expensive for one simple reason; we are advancing basic
and applied science at the same time.
The scientific research by the biotechnology industry is exceedingly
expensive. The Office of Technology Assessment finds that the average
cost per new chemical entity (NCE) is $359 million4. This survey did not
cover the cost of developing a biotechnology drug, but analyses done by
our industry find that the cost of developing a biotechnology drug may be
similar. We know that Genzyme and Amgen, two member companies of BIO,
raised $328 and $406 million, respectively, in equity before they brought
their first products to market. Genentech has spent $1.6 billion on
research and development and has four basic products on the market.
Public financing was especially difficult for biotechnology companies
in 1993. The American Stock Exchange Biotechnology Index lost 32.6
percent. Several public biotech companies were forced to do private
investment in public equity (PIPE) financing, deals where public
companies sell stock to private investors at a discount to their current
stock price. 1993 was a difficult year because in large part investors
were scared by the de facto price controls in the Administration's health
care plan. They feared that some widely discussed points of health care
reform would mean that they would not recoup their investment in a
company that was close to bringing a product to market. According to
many press accounts and three BIO surveys of our companies developing
therapies for AIDS, cancer, and other deadly and costly diseases, our
companies are cutting back on research.
The biotech industry is in a critical stage of research and
development. There are 23 biotech medicines that have been approved for
sale in the U.S. by the Food and Drug Administration (FDA). Two hundred
and seventy biotech therapeutics are in human clinical trials. According
to Ernst and Young, two thousand potential therapies are in early
development stages5. Now is the time when the biotech industry needs
increasing amounts of capital to bring these products to market so that
they can improve our quality of life.
Ernst & Young reports that biotech companies, on average, have 25 months
of capital left at their current burn rates (the rate at which capital is
being expended.) According to a recent report by Dr. Robert Goldberg of
the Gordon Public Policy Center at Brandeis University, 75 percent of
biotechnology companies have 2 or fewer years of capital left. That
means that a staggering 983 companies will need to go to the market in
the next two years or face severely restricting their activities, going
out of business, merging or selling rights to a larger firm.
With this economic environment for the biotechnology industry in mind a
discussion paper has just been released which specifically documents the
vital economic importance of intellectual property protection. Dr.
David Austin, a fellow at Resources for the Future (RFF) in Washington,
D.C. recently finished a paper entitled "Estimating Patent Value and
Rivalry Effects: An Event Study of Biotechnology Patents." The paper
analyzes the value of patents, and their effect on competing companies
and on the biotechnology industry in particular. Dr. Austin confined the
study to biotechnology firms because, "their research intensity is known
to be very high; they rely heavily on patent protection; and their patent
races tend to be extremely competitive."(Pg. 3) Dr. Austin further
states that since there are relatively few biotechnology products yet
brought to the market, "companies need an effective way to signal their
future prospects and attract investment capital. Patents serve this
function."(Pg. 4)
Dr. Austin references earlier economic estimates in this field in the
introduction to the paper. He cites a 1984 paper by Griliches, which
found that a successful patent is worth about $200.000. He also cites a
study by Pakes, 1985, which found that when a firm receives a patent it
"indicates that events have occurred that increase the firm's market
value by $810,000."(Pg. 2)
The results of Dr. Austin's study indicate that there is a significant
reaction in the stock market when certain broad types of patents issue.
When a patent is listed in the Wall Street Journal, it positively affects
the value of the stock for the company receiving the patent, and
negatively affects the stock price of competitors to that company. Dr.
Austin defines a "significant" increase in valuation as $1.7 million on a
company capitalized at an average of $400 million. The report also
indicates that there is a positive correlation between stock price, when
a patent is filed and issued, and research and development expenditures.
In addition, the report indicates that the granting of an important
patent appears to raise the net value of the entire industry.
Dr. Austin concludes the report with a discussion of the policy
implications of the findings. The report states "current patent policy
is very crude, from the standpoint of economic theory, and certainly is
not strongly linked to the value of the patent."(Pg. 32) If patent
examiners were provided with better information, Dr. Austin believes
patent examiners and judges that help determine the scope of a patent
would be able to bring greater economic rationality into their
decision-making. Finally, Dr. Austin concludes the report by suggesting
that a study of the long-term effects of rival patents is a necessary
next step in this line research.
It is easy to see the relationship between the capital formation
pressures faced by the biotechnology industry and Dr. Austin's study.
Stock prices and market value are a critical variable in the ability of a
company to raise capital. Patents give investors confidence and
influence their willingness to put their capital at risk. The shortage
of capital in the biotechnology industry means that the protection of
intellectual property has never been more critical for the ability of the
industry to survive and prosper.
BIO recommends that the United States Patent and Trademark Office
(USPTO) examines the soon to be revised Austin discussion paper as it
reviews the other recommendations in this report. We do not argue that
economic considerations are legally relevant to the implementation of the
patent law. However, with respect to the biotechnology industry, these
considerations highlight the importance of the hearings and the priority
which the USPTO should give to responding to the recommendations which
are made here.
STATEMENTS OF BIOTECHNOLOGY CEOS
Dr. Kenneth J. Widder
Chairman & CEO
Molecular BioSciences
10030 Barnes Canyon Road
San Diego, CA 92121
Good morning and welcome, we very much appreciate you coming to San
Diego to hold this hearing on biotechnology industry patent issues. I
would like to explain why the work of the Patent and Trademark office is
so critical to the biotech industry. I am Kenneth J. Widder, M.D., and
am here today to testifying on behalf of a number of organizations and
Molecular Biosystems. I am President of the San Diego Biomedical
Industry Council (BIC), a Director of the California Health Care
Institute, member of the Environmental Committee, Greater San Diego
Chamber of Congress, Chairman of the San Diego Technology Council, and
serve as a member of the Governor's Council on Biotechnology.
Since 1983 I have been Chairman and CEO of Molecular Biosystems, Inc.,
a biomedical company that manufactures and develops a range of contrast
agents for use with diagnostic ultrasound, Magnetic Resonance Imaging
(MRI) and Computed Tomography (CT). I received my medical degree from
Northwestern University and completed my residency in Pathology at Duke
University Medical Center. I came to San Diego in 1981 and served as
Associate Clinical Professor of Pathology at the University of
California San Diego until founding Molecular Biosystems in 1981.
Recently, Molecular Biosystems received FDA approval for Albunex, the
first transpulmonary ultrasound contrast agent for ultrasound. For
years, heart patients have had to visit cardiologists to receive multiple
tests in order to determine cardiac ailments. Sometimes,
catheterization is required to determine what more non-invasive tests
could not. Today, new technology and drugs have decreased the likelihood
of repeat visits. Albunex, developed by Molecular Biosystems is one of
these latest advancements.
When used with ultrasound imaging techniques, Albunex helps reflect
sound waves in the blood about a hundred times better than blood alone,
thus providing cardiologists with a brighter, clearer picture of the
heart's inner lining. We believe Albunex is another important patented
innovation that may become very useful in diagnosing heart disease.
Mark Twain called ininventors "the creators of the workd-after God."
Connecticut Yankee at King Arthur's Court, Twain remarked that the very
first thing he would do in his administration -- and it was on the very
first day of it, too - was to start a patent office; "that a country
without a patent office and good patent laws was just a crab, and
couldn't travel any way but sideways or backwards." Patents help
society move forward, they advance all innovations. Patents teach
inventions to the public, in exchange for this teaching, inventors get 17
years of monopoly on that invention. If the patent system did not exist,
the inventors would tend to keep inventions secret, and society would not
have the benefits of many new technologies and advances.
Patents can be used to put boundaries around intellectual property.
The only right a patent holder has is to prevent others from practicing
the invention. No one will invest in an Idea that is not patented
because if it is a good idea all other companies will copy it. An
invention that is patented is more valuable than one that's not because
they can be sold to someone else. Investors now view patents as tangible
assets of a company.
One way a biotechnology company can raise money is through licenses
with big Pharmaceutical companies. These license agreements permit
royalties to be collected during the term of the patent. One industry
model becoming more prevalent is the Royalty Income Trust Company (RITCO)
where biotechnology companies have found that the marketing, development,
manufacturing, and clinical development of a drug is too expensive, so
they sell the rights of the patent for a royalty stream.
Patents are imperative to our industry, our survival depends on it, we
must continue to preserve the technological innovations our industry is
creating. One of the greatest challenges we face as an industry is the
continued funding for the development of innovative products. As public
markets fluctuate as funding sources, strategic alliances become
increasingly more important. The only way a biotechnology company can
get the highest value out of a strategic alliance is for the company to
license intellectual property protected by a patent.
In order for our Industry to remain competitive on a global basis, we
need to have strong intellectual property protection. I urge you to
listen carefully to our presentations today on patent issues raised in
your notice. When the PTO rejects a patent claim it can have very
serious consequences for our industry. It would not have been possible
to develop Albunex without strong patent protection.
In addition, the Patent and Trademark Office will need to be an
increasingly efficient department. We feel that the current high
turnover rate in its office effects both industry and government. The
high turnover rate puts in place more and more inexperienced examiners,
diminishing the level of education of people examining our products.
This lack of skill and your re-education of examiners hinders the
progress of innovations being examined. We as an industry are very
committed to work with you to insure a strong and effective U.S. Patent
and Trademark Office.
Thank you for providing me the time to speak on behalf of this
industry.
William Rastetter, Ph.D.
President & CEO
IDEC Pharmaceuticals Corporation
11011 Torreyana Road
San Diego, CA 92121
Good morning and thank you for coming to San Diego for this meeting.
My name is Bill Rastetter and I am the President and CEO of IDEC
Pharmaceuticals. I also serve on the board of directors of San Diego's
Biomedical Industry Council, the board of San Diego's Biocommerce
Association or BIOCOM, the board of the California Health Care Institute,
and on the Governor's Council on Biotechnology. IDEC is a member of BIO.
IDEC is one of about 150 biotech or biomedical companies in San Diego
which collectively employ about 14,000 individuals. The biomedical
community in San Diego is a very cohesive and active one. San Diego has
embraced our industry as an important part of its economic future. In no
small part, the issues which will be discussed today, and our companies'
ability to timely secure and build intellectual property portfolios will
drive the growth of our companies. Ultimately, growth for our companies
will entail a transition from R&D organizations which consume capital to
larger companies driven by cash flow from product sales. This transition
will truly drive economic growth in the region.
It has been said recently by many that Health Care Reform is dead.
Nothing could be further from the truth! Health Care Reform is occurring
and occurring rapidly without legislation, without direct government
intervention. Private sector market forces are changing the way every
company or group of practitioners engaged in health care does business.
It would appear that the largest pharmaceutical companies are gaining
ground in the market place on the mid-sized companies. Companies like
Merck and SmithKline Beecham have moved aggressively to acquire Pharmacy
Benefit Managers as their paradigm for doing business changes. The
analogy might be that the hardware makers (read the drug developers) will
now also be in the business of software (read pharmacy benefits
management and outcomes research) to optimize how their drugs are used
and to allow them to capture further economic value.
But the pipelines of the large pharmaceutical companies are not as full
as they might be. And revenue growth is eroding with blockbuster drugs
coming off of patent, with generic substitution, and with the broad
pricing pressures that exist from private-sector-driven Health Care
Reform. Well, all of this is actually good news for the small company,
provided that we can continue to innovate -- and provided that we can
timely secure and build intellectual property portfolios.
Revenue erosion and pressure on the bottom line for large "Pharma" is
leading to cutbacks in internal R&D budgets. Large Pharma will
increasingly look to small companies like IDEC for late-stage,
development products where the risk -- both technical risk and
intellectual property risk --has been largely removed. So, small may be
beautiful, provided we can continue to discover and efficiently develop
protectable, proprietary products.
The small company in the era of Health Care Reform may well emerge as
the predominant engine of innovation in partnership with large companies;
the large companies will consolidate their power as the worldwide
marketing partners. Clearly, patent protection is paramount to the
health of such partnerships.
The uncertainty surrounding Health Care Reform has badly damaged the
capital markets for biotech. It is today impossible for small companies
to rely routinely on the public equity markets as a source of capital.
So, increasingly we look to large Pharma to fund R&D and to sustain us as
viable research and development organizations until our products are
launched and royalties and/or profit sharing arrangements begin paying
the bills. And it may take ten to twelve years after a company hires its
first scientist to reach that stage! A critical element in partnership
due diligence is always the small company's intellectual property
position. Let there be no mistake, patents are very important to
securing capital -- very important to our very viability! And issued
patents are far more valuable than patent applications.
From a small company perspective, it might be good to mention a couple
of things:
First, the trend at the USPTO toward requiring human clinical data to
demonstrate utility hurts the small company. Generally, we need to find
corporate partners to fund clinical development-- clinical development is
very expensive. Without a clear patent position it can be hard to get a
partner. Catch 22!
Second, the "first to invent" system in the U.S. helps the small
company. I am glad we have not changed this element of our patent
system. We cannot file patent applications as efficiently or as early as
the large companies. We just don't have the resources. We need to spend
as much as we can on discovery and on development of product leads. A
"first to file" system would divert dollars away from R&D, curtail
innovation, and weaken the small company. You know this as well as I do:
a "first to file" system would also burden the Patent Office with
premature applications on incompletely conceived inventions.
We had the pleasure at IDEC of hosting a group of patent examiners for
a tour of our facility and a "teach-in" on our technology. We told the
examiners about our product candidates which are antibodies for the
treatment of cancer and autoimmune disease. We told them about our
technology which includes gene splicing from cells taken from monkey and
human immune systems to create antibodies for chronic therapy of
autoimmune diseases. We told them about our manufacturing which benefits
from efficient host/vectors systems which drop the cost of goods to
one-tenth of what it would be with older technology.
At IDEC we have been very proactive about patent prosecution. This has
included whenever possible interviews at the Patent Office. In addition
to our patent counsel we believe it is essential to include the
scientist, i.e., the inventor from the Company, in such meetings. We
believe these face-to-face interviews are a very useful, additional way
of educating the examiner on the nuances of our technology. We would
encourage the Patent Office to grant interviews whenever possible
--interviews are a great communication tool, and they can benefit both
parties.
We are eager to continue "teach-ins" and other education programs with
the Patent Office -- I am sure that many of our San Diego companies would
join in that effort. A bewildering array of technologies appears at the
Patent Office: from hybridomas to transfected cell lines, from
host/vector systems to homologous recombination strategies, from
anti-sense oligonucleotides to retroviral genetherapies. Education of
the patent examiner -- to ensure timely, efficient and proper patent
prosecution -- is an obligation that we will gladly share with you!
In closing: let there be no mistake, patent protection for all of our
products and for our technology is essential for our survival as a small
company. Patents increasingly are the way we create product and
technology value. The know-how lead which small companies had in the
biological sciences in the late 70s and early 80s has nearly vanished.
Big Pharma now knows how to"do biotech." But they still need our
patented products, our patented technologies.
Thank you again for coming to San Diego. With your help we can secure
and build patent portfolios as the foundations for economic growth in the
region.
INTRODUCTION TO UTILITY AND OPERABILITY CONSIDERATIONS6
The misapplication by the United States Patent and Trademark Office
("USPTO") of the law of utility and operability is creating severe and
unnecessary economic problems for the biotechnology industry,
particularly for the inventors in universities and small companies. For
most types of inventions, the USPTO considers the invention useful enough
to qualify for a patent if the inventor merely describes in the
specification the invention's use(s); in the vast majority of cases, no
data are required to prove utility. Data are understandably required
when the invention countermands an established law of nature (for
example, a perpetual motion machine). Under the current approach to
defining practical utility and operability, the USPTO appears to have
approached the majority of biotechnology cases with the same jaundiced
eye that it casts on perpetual motion machines or cold fusion inventions.
For years, USPTO rules have treated pharmaceutical preparations by a
standard different than that applied to mechanical, electrical or even
chemical inventions. This was perhaps understandable in the 19th and
early 20th centuries when unscrupulous individuals obtained patents and
sold worthless "patent" medicines to an unsuspecting public, and the
USPTO was the only federal agency empowered to grant drug "licenses."
Eventually the Congress enacted laws to protect the public from false
advertising (enforced by the Federal Trade Commission) and from
ineffective and unsafe medicines (enforced since 1962 by the Food and
Drug Administration (FDA)). Hence, the earlier mission of the USPTO to
protect the public from patent medicines has been reassigned to other
federal agencies who have the expertise necessary to determine whether a
therapeutic modality is safe and effective.
Similarly, the USPTO for years refused to issue patents on living
things, gaming devices and "sin" products, based upon its interpretation
of 35 U.S.C. Section 101. Those prohibitions also have disappeared.
Just as the USPTO over time recognized that it did not have the right to
set policy by refusing to grant such patents, it is time for the USPTO to
cease discriminating against pharmaceutical and biotechnological
preparations and their clinical uses.
Within the last four years, the USPTO's biotechnology examining group
(Group 1800), as well as Group 120, have effectively raised the standard
of utility from "Does this countermand a law of nature?" to "I would like
to see more in vivo human data." In many instances, examiners appear no
longer to recognize the imperative that they must first build a case for
no utility before reflexively assuming that the invention is without
utility and automatically demanding that the inventor produce additional
evidence of utility. Examiners often (and inappropriately) cite a 1966
Supreme Court case (Brenner v. Manson) to support rejections grounded on
a lack of "practical utility." This is a misplaced reliance, as Brenner
was a case in which NO USE AT ALL was given in the patent application as
filed, and no use was provided later by the inventor by affidavit. This
led the Court to call the invention a mere "object of research." By
"object of research," the court obviously meant an activity with no
direction. Today, however, this case is being applied improperly to
inventions for which the inventors have described many types of utility.
The examiners are rejecting claims for proteins which can and are being
widely used by the biomedical industry as, inter alia, diagnostic
reagents, on the grounds that the proteins are "objects of research" and
have no practical utility.
As the result of this misplaced reliance on Brenner, examiners are
making bizarre utility/operability rejections. An examiner will often
first search the technical literature to discover reasons why the
invention might not work. Then, the examiner undertakes a different
technical search and finds references that allegedly make the invention
obvious. The inventor is now faced with the absurd situation in which
the examiner rejects the same claim on the grounds of both lack of
utility and obviousness, a situation that is referred to as the
"squeeze."
The biotechnology examining corps and USPTO management and Board
apparently may not understand the magnitude of the burden when they
require clinical studies to establish practical utility. There is a
misunderstanding of the "real-world" of drug development and the real
import of a USPTO demand for clinical data. There is a misunderstanding
of the high level of respect by skilled workers in the field for the
value of early-stage screening in vitro data. Most telling: the FDA, the
agency with statutory authority for regulating pharmaceuticals,
recognizes the value and importance of in vitro and in vivo animal data
in the early stages of the development of a therapeutic.
The demand for clinical data and occasionally for "significant"
clinical data by the USPTO sets an unreasonable standard and threshold
for patentability and is particularly burdensome for universities and
small companies with limited resources. In the United States, before a
single human being can receive an experimental therapy, an extensive data
package called an Investigational New Drug Application (INA) must be
filed with the FDA. The INA contains extensive toxicity data from tests
in at least one non-human animal species, performed according to Good
Laboratory Practice regulations. The costs associated with obtaining
such studies from reputable contract laboratories frequently can exceed
$1 million. In addition, preparations to perform clinical studies,
according to the Good Clinical Practice regulations, first requires the
manufacture of the product according to Good Manufacturing Practice
regulations. The cost to scale-up and manufacture enough drug to do
toxicology and initial clinical studies can easily cost another $1
million. In addition, the necessary steps to do the initial clinical
safety study typically run over $500,000 to $1 million, which includes
drafting and printing protocols, patient informed consents, case report
forms and other forms; convening Institutional Review Boards; on-site
inspection of clinical study sites; investigator fees; costs of human
testing, etc. Only after this investment of time and money in the human
safety study may the new drug enter Phase II trials to test the
effectiveness of the therapy and thus generate clinical data supporting
utility. A simple Phase II clinical trial for an acute therapy (for
example, stroke) can cost several million dollars. However, if
SIGNIFICANT clinical data are required (as for chronic conditions like
Alzheimer's disease, currently an incurable disease), patient testing
costs run tens of millions of dollars (in addition to several million
dollars for chronic animal tests and more drug supplies). Finally,
pivotal Phase III studies to establish efficacy of the drug in a large
population of the targeted patient population can run into the many
million of dollars. University and small company inventors simply do not
have the resources or wherewithal to do such testing even for the FDA,
and certainly not for the USPTO. Even large pharmaceutical companies
will not proceed to invest millions of dollars without assurance of
patent protection.
In summary, taking into account all the costs, to obtain even a minimum
of clinical data, approximately $2-5 million is invested. To obtain
FDA-level clinical data of effectiveness in Phase II costs an additional
$5-20 million. If the USPTO asks for "significant" clinical data, an
additional investment of $10-20 million may be necessary. For acute
therapy, a minimum of $30 million need to be invested, whereas for
chronic therapy, "significant" clinical data likely will cost more in
the $100 million range. In addition, a decade may elapse from a major
pharmaceutical discovery to "significant" clinical data!
One may ask how universities or small companies will ever persuade
anyone to proceed to develop their products in the face of ill-informed
attitudes of Examiners. For example, one biotech examiner recently asked
a patent attorney: "What is the practical utility of an isolated receptor
protein?" Receptors are informational macromolecules within cells or on
cell surfaces that react with, and respond to, physiological ligands or
their pharmaceutical counterparts. A well known use of receptors is as
reagents in diagnostic assays. Those skilled in the art, such as
scientists at pharmaceutical and diagnostic companies, will see the same
patent application data and consider the receptor useful enough to pay
for a license. Hardly no practical utility! If the USPTO continues to
reject such patent claims, investment, progress and cures will suffer.
A. Proof of Utility and Operability
The introduction of biopharmaceuticals into the patent field resulted
in the shift of the next generation of pharmaceutical related
applications from the examination groups which were experienced in
handling utility issues to a new examination group (Group 1800) at the
USPTO. This, combined with the massive influx of newly-hired patent
examiners at the USPTO to reduce the 1980's backlog of
biotechnology-related applications, has resulted in an increase in
utility rejections and has highlighted the need to establish a model for
handling utility issues.
1. The USPTO's Burden
The examination process at the USPTO is broadly based on a
quasi-judicial model. The process begins with the filing of an
application by the inventor(s). The application is then reviewed by an
Examiner. This review should, at least in theory, involve application of
legally-determined and substantive standards. If the application fails to
meet these standards, the Examiner issues a report to the inventor(s)
listing the deficiencies in terms of claim rejections. These
requirements for patentability include utility, novelty, nonobviousness,
and disclosure. The first of these includes a determination of usefulness
or lack thereof (is the claimed utility "incredible"?). The last of these
includes a determination of operability (is there an adequate description
of how to use the invention?).
In the biotechnology and pharmaceutical sciences, the Examiner is asked
to make these determinations at an early stage of an invention's
development. While an Examiner is not necessarily a true expert in the
field he or she examines, he or she is considered an "expert" by the
USPTO. (Under current USPTO Rules, one cannot depose an Examiner either
to establish technical credentials or to obtain insight into the
reasoning underlying their decisions). Critically, as an Examiner is
unlikely to be a real-life "expert," the Examiner must support his or her
claim rejections with evidence or sound scientific reasoning.
During the examination process, two basic, yet fundamental, guidelines
must be followed by the Examiner at the USPTO in resolving issues
relating to the adequacy of the disclosure of utility in drug cases:
(a) The same basic principles of patent law which apply in the field of
chemical arts shall be applicable to drugs.
(b) The USPTO should confine its examination of the disclosure of
utility by applying patent law principles, recognizing that other
agencies of the Government have been assigned the responsibility of
assuring conformance to the standards established by statute for safety,
efficacy, advertising, use, sale or distribution of drugs.
(c) There is some question amongst members of the patent bar as to
whether these guidelines are being uniformly followed within the USPTO.
Generally, the sworn statements made by the inventor as to the
utility of the invention should be, but are not always, assumed to be
valid and truthful both as to content of the specification and as to the
scope of the claims. This is equally true for operability and for the
sufficiency of the teachings provided within the specification as to how
to use the invention. With this as a starting point, the Examiner has
the initial burden of establishing that a person skilled in the
technology would consider (1) the inventor's statement of use
unbelievable or overly broad, (2) the invention clearly inoperable as
claimed, and/or (3) the teachings provided within the specification
clearly insufficient.
If the Examiner meets this burden, the burden is then shifted to the
inventor to reestablish the original presumptions accorded the
application. The inventor can do this by either affidavits from experts
or placing additional evidence before the Examiner, and/or presenting
arguments as to why the Examiner's initial findings are infirm, mistaken
or in error. It is incumbent upon the inventor to put any evidence into
the record before the last rejection is made final. After the final
rejection, the entry of evidence is not the inventor's right but rather
is at the discretion of the Examiner.
In the prosecution of biotechnological applications, suitable legal
precedents are slow to emerge and to develop relative to other
established technologies, which places an additional burden on the
inventors, as does the pendency reduction program at the USPTO which
typically results in premature final action. The petition remedy for a
premature final action does not stay the examination deadlines or really
help the inventor. In essence, because obtaining a patent, and not
creating legal precedent, is what drives our biotechnology innovators,
taking an Examiners misplaces or incorrect reflections to the courts is
almost always avoided, given the incredible time delay of such an
approach.
The disclosure of multiple utilities presents no unusual difficulties
for most biotechnology inventions. For example, and of benefit to
society as a whole, many inventions from the biotechnology fields are
applicable to both research and therapeutic settings. The biotechnology
Examiners are supposed to review each disclosed utility on its own
merits. Critical to this issue is that only one utility is required to
support patentability of the claimed subject matter. This is true even
when there is a human treatment utility disclosed but only a non-human
utility exemplified. Under established case law, the non-human utility
should support patentability, a fact that is frequently ignored by
biotechnology Examiners.
2. Example Illustrating Approaches in Handling Utility Issues
It is useful to provide a hypothetical example illustrating our views
on the utility issue. Immunoconjugates are hybrid molecules composed of
an antibody or a binding fragment thereof coupled via a linking molecule
(linker) to a drug. In our hypothetical, the inventor selected (1) an
antibody which selectively binds the conjugate to the desired tissue or
cell, (2) a drug which has the desired biological activity, and (3) a
linker group which attaches the drug to the antibody with minimal loss in
activity for either molecules. The functional groups and size of the
linker were selected by the inventor to avoid the loss of biological
activity of the drug and antibody molecules.
In the present hypothetical, the immunoconjugate is a immunotoxin
composed of known entities. The toxin (drug) is available commercially.
The antibody is a monoclonal antibody available commercially and known to
be selective for a specified cancer antigen. The linker used is also
available commercially from a supply house and is known to be suitable
for preparing enzyme labelled antibodies (another type of
immunoconjugate). The invention lies in the design of the immunotoxin
and the development of a protocol for its use.
The specification of the application teaches dosages, protocols and
methods for assembly and use of the immunotoxin. The application
discloses previous attempts to use analogous conjugates to treat leukemia
or alleviate symptoms. The prior art conjugates differ in the antibody
employed. Neither the prior art immunoconjugates nor those of the
inventor are in clinical trials.
The inventor's conjugates have been tested in animal models and in
vitro (tested in the laboratory) tests and have been found to be active.
The immunotoxins are effective in killing cancer cells in vitro as
measured by art recognized protocols. The immunotoxin is also active in
vivo (tested in animal or man) animal models.
The claims of the application are directed to immunotoxins, methods of
inhibiting the growth of leukemia cells using the inventive immunotoxins,
and methods of treating leukemia in mammals. No claim specifies therapy
in humans although such a use is mentioned in the specification.
Let us assume that rejection of all the claims based on Section 101
appeared in the first Office Action on the merits. The rationale
presented by the Examiner was a concern with effectiveness at the cancer
site which is based on the suspect ability of the conjugate to reach the
site. A noncurrent review article discussing immunoconjugates and
enumerating the problems generally expected with immunoconjugates is
provided with the Office Action as evidence to support the utility
rejection.
The Examiner's reasoning in the Office Action is that the utility
statement as to treating leukemia provided in the specification would not
be believed by one skilled in the art based on the concerns expressed in
the review article. In this hypothetical, the Examiner does not dispute
the sufficiency of the protocols taught or enablement of the invention
generally but merely questions operability, and hence utility, of the
immunoconjugate.
If the Examiner's case rests on the assumption that one of skill in the
art has the biases reflected in the review article and would look
skeptically upon the utility statements as a cancer therapeutic, no prima
facie case has been made, and this should be pointed out to the Examiner
forcefully. In no other art unit would an Examiner's vague concern be
considered adequate, particularly in the light of the data in the
application. Unfortunately, the threshold as to the evidence required to
shift the burden to the inventor is not high for biotechnology inventions
such as the hypothetical. A reasonable basis for the Examiner's belief
is all that is required. A review or similar journal article of any
quality or antiquity may suffice even though the progression of the art
as a whole, and those skilled in this art, may have advanced
substantially since the article forming the basis of the rejection was
written -- critically, in the biotechnology field, this advancement may
have taken place in less than a few years.
B. Proof Of Safety
Related to the general issue of "practical utility" is the specific
issue of "safety" of an invention. It has long been assumed that, in
order to be statutorily useful, an invention must be reasonably safe in
operation, as well as achieving its prescribed purpose. In most art
units, issues of safety rarely arise; it is generally recognized that
such issues are the province of OSHA, EPA, FDA or other regulatory
agencies.
The issue of safety has been raised most often in the USPTO in
connection with drugs and therapeutic inventions, and this issue has been
resolved by the federal courts which have established the following legal
principles:
1. An inventor for a patent on a drug need only show a "sufficient
probability of safety in human therapy," which need not necessarily
involve clinical evidence;
2. A drug may be "useful" for patent law purposes even though it has
not yet been proven to be safe for use under the FDA standards;
3. The task of protecting the public from the advertising and sale of
harmful drugs belongs to the FDA, Federal Trade Commission, and analogous
state agencies, not to the USPTO; and
4. "commercial usefulness" is not a prerequisite for a reduction to
practice and the subsequent patentability of any of the classes of
subject matter set forth in Section 101, much less the particular class
of compositions called "drugs."
Other legal decisions from the federal courts have made these
principles clear: the USPTO should not be determining drug safety for any
reason, and certainly not for the purpose of determining practical
utility. The Board of Patent Appeals and Interferences, the PTO
reviewing body has accepted this limitation in a 1983 decision. The
Board held that a relative lack of safety of an invention cannot
establish a lack of utility in the sense of Section 101, and that the
USPTO does not have the authority to refuse a patent because it deems the
risk to the user to be too great.
Unfortunately, as an indication of the problems faced by our nation's
entrepreneurs, the USPTO does not surrender easily. The Manual of Patent
Examining Procedure, to which Examiners strongly adhere, now states in
paragraph 608.01(p):
"Although absolute safety is not necessary to meet the utility
requirements under this Section, a drug which is not sufficiently safe
under the conditions of use for which it is said to be effective will not
satisfy the utility requirement. Proof of safety shall be required only
in those cases where adequate reasons can be advanced by the Examiner for
believing that the drug is unsafe, and shall be accepted if it
establishes a reasonable probability of safety."
From this language, it appears that the USPTO is still reserving to
itself the possibility of determining that an invention is not safe, and
the invention therefore without utility, despite legal mandates to the
contrary.
C. Practical Utility vs Proof of Operability
There should be no distinction between practical utility and proof of
operability. If the disclosure in a patent application satisfies the
requirement for practical utility, then no proof of operability is
required. In the USPTO Notice for this hearing discussing this Section7,
the CCPA decision in In re Jolles, 628 F.2d 1322, 1327, 206 USPQ 885
(CCPA 1980) is cited as holding
When utility as a drug, medicant, and the like in human therapy is
alleged, it is proper for the Examiner to ask for substantiating evidence
unless one with ordinary skill in the art would accept the allegations as
obviously correc." 206 USPQ 890
The statement was used by the CCPA in connection with the Board opinion
which they reversed. On the contrary, the CAFC in Jolles, supra, held
the character and amount of evidence needed may vary, depending upon
whether the alleged utility appears to accord with or contravene
established scientific principles and beliefs.
Nowhere does Jolles decision require the presentation of substantiating
evidence for human therapy. In fact, the CAFC in In re Jolles, supra,
specifically cited the decision of the CCPA in In re Gazave, 154 USPQ 92
(CCPA 1967) where the CCPA reversed a rejection for a requirement for
proof of therapeutic utility in humans stating
Appellant's discovery here does not appear to us to be of such a
'speculative', abstruse or esoteric nature that it must inherently be
considered unbelievable, 'incredible' or 'factually misleading'. Nor
does operativeness appear 'unlikely' or an assertion thereof appear to
run counter 'to what would be believed would happen by the ordinary
person' in the art. id. at 96
Iizuka, supra, is that a practical utility be disclosed. That is the
requirement sufficient to meet 35 USC 101 and 112. Nothing this
statement requires proof of such utility. Hence, it is only in the case
where the practical utility relied upon to satisfy 35 USC 101 and 112 is
incredible on its face that proof of operability is required. In such
cases, without proof of operability, the inventors have not disclosed a
practical utility.
For practical utility of a therapeutic compound, all that is required
under the existing law, is that the compound have pharmacological
activity. As seen from the CCPA decisions in In re Krimmel, 292 F.2d
948, 130 USPQ 215 [CCPA, 19961]; In re Bergel, 292 F.2d 955, 130 USPQ 206
and In re Dodson, 292 F.2d 943, the disclosure that a compound exhibits
some pharmacological property is sufficient to satisfy utility
requirements for this compound under this statute. There is no
requirement that one must demonstrate that a compound having
pharmaceutical utility must be operable in humans for the therapy
disclosed, much less present proof demonstrating this effectiveness. In
In re Anthony, 162 USPQ 594 [CCPA 1969] the drug Monase was removed due
to toxic side effects. The CCPA in Anthony, supra, held that even
despite the fact that Monase could not be used for the purpose set forth
in the patent application, this was not a sufficient reason for failing
to meet utility requirements of patent law. As stated by the CCPA in
Anthony, supra, in holding that whether Monase could be administered in
human therapy was irrelevant to the issue of satisfying the requirements
of the patent statute for utility:
And Congress has given the responsibility to the FDA, not to the Patent
Office, to determine in the first instance whether drugs are sufficiently
safe for use that they can be introduced into the commercial market under
the conditions prescribed, recommended or suggested in the proposed
labeling thereof. -- To put it in another way, the FDA need not
necessarily determine that a drug is commercially useful or usable before
it may be 'useful' in the patent law sense. 162 USPQ 594, 604
In its discussion concerning proof of operability for human therapeutic
inventions in the Notice, the argument relied upon appears to be
important ... yet others have identified important public policy
justification for the USPTO to review operability of inventions to be
used to treat human disorder. A patent provides the public with high
quality technical accurate disclosure of a new, useful and non-obvious
invention. However, with the imprimatur of the Federal Government, a
patent can also effect the commercial prospects of an invention in
question, and can raise and lower expectations of those effected with the
illness the invention is designed to treat.
This public policy justification for proof of operability is contrary
to U.S. law as enunciated by the highest patent court of the United
States, the Court of Appeals for the Federal Circuit (CAFC) and its
predecessor court, the Court of Customs and Patent Appeals (CCPA). To
justify this requirement, under the present law based upon the above
public policy argument, provides a waste of money and time since it
throws roadblocks in the path of patenting which roadblocks can later be
removed by costly appeals to the courts.
It is well settled that there is no requirement for proof of
operability even when human therapy is alleged unless this utility is
unbelievable on its face. Even a cancer utility has been held to be a
utility which is not unbelievable on its face requiring proof of
operation.
In Ex parte Rubin, 5 USPQ 2d 1461 (BPAI 1987) claims to a cancer
treatment method were rejected under Section 101 and Section 112 first
paragraph for lack of utility. The rejection was overturned on the basis
that since the utility asserted in the specification was credible and no
evidence had been offered that this utility was not believable. In so
holding the Board said,
"The Examiner's attention is directed to In re Langer, 503 F.2d
1380...especially at 297 (CCPA 1974). The Court there held: '...a
specification which contains a disclosure of utility which corresponds in
scope to the subject matter sought to be patented must be taken as
sufficient to satisfy the utility requirement of ¤101 unless there is
reason for one skilled in the art to question the objective truth of the
statement of utility or its cope'. No reason to doubt 'the objective
truth' of the asserted utility having been advanced by the Examiner, we
accept appellant's disclosure of utility corresponding in scope to the
claimed subject matter." at 1462.
Another example that there is no requirement for proof of utility,
unless said utility is unbelievable on its face, is the decision in In re
Isaacs and Lindenmann, 347 F.2d 887, 146 USPQ 193 [CCPA, 1965]. In this
case, a compound was disclosed as being useful as an anti-viral agent.
The application to comply with the utility requirements of the statute in
that there was no demonstration that the claimed compounds had anti-viral
properties in vivo. While in vitro data was submitted to the USPTO, the
CCPA specifically stated that it was even not necessary to present such
data. As stated by the Court in the In re Isaacs and Lindenmann case,
supra:
"Furthermore, even if there had been a call for in vitro test data, we
seriously question the Examiner's discretion to make it." 146 USPQ 193,
195.
Furthermore, in the In re Isaacs and Lindenmann case, supra, the Court
specifically spelled out the criteria for requiring data of animals
and/or human testing stating:
"It is our opinion that the instant disclosure would satisfy one of
ordinary skill in this particular art that the claimed invention
possesses the alleged utility. Even more to the point, however, it seems
manifestly clear form the record that the alleged utility is not
'incredible in the light of the knowledge of the art, or factually
misleading.' In such a case, it is clearly improper for the Examiner to
make a demand for further test data, which evidence would be essentially
redundant and would seem to serve for nothing except perhaps to unduly
burden the inventor." 146 USPQ 193, 196.
The Court of Appeals for the Second Circuit in Carter-Wallace v.
Riverton 433 F.2d 1034, 167 USPQ 656 (CA 2) aff'g 304 F. Supp. 357, 164
USPQ 73 (DC S NY), in upholding the validity of the meprobamate patent
against the arguments that its disclosure of utility did not conform with
requirements of U.S. law stated:
"We hold, therefore, that under the circumstances of this case, neither
the confidential relationship between the inventor and the Patent Office
nor the statutory requirements that the inventor disclosed the best mode
contemplated by him for use of the invention required a disclosure by him
of the results of the tests on humans.
The defendants in the Carter-Wallace v. Riverton case, supra, attacked
the validity of the meprobamate patent on the ground that the patentee
failed, during the prosecution of his application, to disclose to the
U.S. USPTO the results of human testing as well as the extensive animal
testing that he carried out with respect to the claimed compound. In
rejection this argument, the Court reiterated the doctrine of the CCPA in
the Isaacs case, supra, stating:
"Under present practice, submission of test information to the Patent
Office in support of the claims made in an application is not required,
unless the asserted utility of a compound is not believable on its face
to persons skilled in the art in view of the contemporary knowledge in
the art." 167 USPQ 656, 659.
D. Conclusion
The inventors seeking legitimate patent rights are being thwarted by
the USPTO's application of the law on utility and operability. This
practice has had severe consequences for an industry that did not exist
thirty years ago and which may not be able to continue into the next
century unless the USPTO applies the patent law in a consistent way from
one industry to another.
Practical Utility8
A. Executive Summary
While our specific concerns and points on the various patent issues
covered in the USPTO Notice are as diverse as our membership, an overall
concern has emerged: by not following established legal precedent as it
applies to proof of utility under 35 U.S.C. Section 101, the USPTO is
effectively preventing the issuance of patents to innovators and
entrepreneurs whose endeavors have created and have driven the
biotechnology industry. Without the guarantee of the legitimate right to
a patent for an invention which satisfies the statutory requirements for
patentability, the USPTO not only ignores the Constitutional mandate to
promote the arts and useful sciences, but unfortunately and unnecessarily
increases the hurdles of the biotechnology industry, an industry that
significantly impacts the economic and political landscape of our
country, and an industry which truly represents an opportunity for our
nation to compete in a 21st century global economy.
With respect to Section A of the Notice, Practical Utility for
Biotechnology Inventions, three questions have been presented by the
USPTO. As will be supported and discussed in detail below, we respond in
summary fashion to these questions as follows:
In response to Question 1, we believe that the standards governing the
requirements for "practical utility" under 35 U.S.C. Section 101
("Section 101") are sufficiently clear and appropriate for biotechnology
inventions. We believe that the issue of practical utility is one of
mis-application of the law by the USPTO and not the clarity of the law
established by legal precedent. Our position is based upon an analysis
of the relevant case law and a discussion of the types of practical
utility rejections which are routinely made by the USPTO and which do not
comport with established legal precedent. Suggested approaches to
remedying this situation include allowing the patent bar to participate
in the discussion and education of USPTO Examiners as to the nuances of
case law.
In response to Question 2, we do not believe that the USPTO is
correctly and uniformly applying the legal standards governing the
requirements for practical utility under Section 101 for biotechnology
inventions, particularly for inventions directed to combating human
diseases and disorders. This position is also supported by a review of
the applicable case law and the mis-application of this law by the USPTO.
In response to Question 3, we believe that the approach employed by
forcing patent offices to establish that the claimed subject matter be
"susceptible of industrial application" provides an advantage and a more
realistic framework than establishing "practical utility" as now done by
the USPTO. This position is supported by the recognition that identical
data which is routinely rejected by the USPTO as allegedly not
establishing "practical utility" is routinely accepted as providing proof
that an invention is "susceptible of industrial application" by foreign
patent offices.
We first present an analysis of the relevant legal decisions, from the
seminal, but mis-applied, Supreme Court decision of Brenner v. Manson, to
recent decisions of the USPTO's Board of Patent Appeals and Interferences
and the Court of Appeals for the Federal Circuit.
A. Case Law Review
The USPTO Notice for this hearing9 includes a summary of the case law
on utility as a preface to the questions which follow. We here respond
to this case law summary.
1. Introduction
Examiners in art unit groups handling biotechnological inventions
increasingly have rejected those inventions as lacking utility when the
application does not disclose human clinical data (or, at a minimum, in
vivo animal data) proving a human therapeutic use. As discussed below,
this USPTO examination practice brings severe economic hardship to the
biotechnological industry. Moreover, the rigorous USPTO utility standard
contravenes controlling case law, as the standard used by many Examiners
has been soundly rejected by the Court of Appeals for the Federal Circuit
(CAFC) and its predecessor court, the Court of Customs and Patent Appeals
(CCPA).
As the USPTO does not have the authority to deviate from controlling
case law, we urge that the USPTO educate the Examiners regarding the
utility cases discussed herein, and require that the Examiners
scrupulously apply that law.
2. The detrimental economic impact of the USPTO's overly stringent
utility standard
A patent application on a biotechnological invention today enters a
USPTO that, as a starting presumption, doubts the utility of most of the
field. Even such well-known, manifestly useful reagents as characterized
monoclonal antibodies, DNAs of defined sequence that encode proteins of
known function, membrane preparations that contain heterologous receptor
proteins of defined sequence and class, enzymes of defined activity,
enzyme inhibitors, bioassays for well-defined substances, and compounds
that have anti-viral activity, to mention just a few, are subject to this
doubt as a matter of course.
We must assume that those who wish to institute this approach to
patentability, despite the statutes and precedent, believe that doubting
the utility of any but the most dramatically effective and well proven
fruits of inventive efforts in biotechnology is the best way to carry out
the mission of the USPTO and to serve the public interest. Nothing could
be more wrong. This policy works against the benefits that the patent
system is designed to confer, impedes progress in the biotechnology
industry, and fails to further the public interest.
3. Fundamental Constitutional basis of the patent system
Our U.S. patent system is designed to reward an inventor with an
exploitable property right. This right provides a great economic
incentive to society to invest in the advancement of the useful arts.
Indeed, the purpose of the patent system as mandated by our Constitution
is to provide incentives to invest energy and resources in inventive
activity.
The patent serves as a guarantee that the fruits of invention will
accrue to those who engage in the inventive enterprise. It prevents
would-be free riders, who do not undertake the risk of failure, from
exploiting the hard won success of inventive effort. Thus, policies that
encourage inventive activity further the fundamental Constitutional
purpose of the patent system. Policies that decrease investment and
progress are directly contrary to that Constitutional mandate.
In addition, the patent system advances the useful arts by encouraging
early disclosure of hard won information, which otherwise might remain
secret. Early disclosure of information to the public, particularly to
those members of the public involved in invention activity, facilitates
further progress. Thus, the patent system fosters the dissemination of
information and hastens its exploitation to increase the public good. As
a secondary matter, therefore, policies that encourage early application
and early issuance will likewise encourage early disclosure and will
provide another fundamental benefit of the patent system.
4. The economic gauntlet which the biotechnology industry must run
Despite perceptions to the contrary, and despite the still great
promise of the industry, biotechnology since its inception has been
"losing" money at a stupendous rate. Venturesome investors in this
industry often invest on the strength of a small portfolio of patent
applications and faith in an idea and the inventors who will move it
forward. Such investments are far from a sure long-term bet. The
willingness of investors to "lend" $50 to $100 billion to the unproven
dreams of the inventors, though they may be brilliant scientists, is a
testament to the strength of investors' belief that if the claimed
invention works well enough, if it is sufficiently advantageous, and if
it achieves marketplace success, then the patent will assure a return on
investment. Thus, the patent system provides investors with an assurance
that they will be rewarded for undertaking the risk of developing an as
yet untried invention into a commodity.
The hardest times to raise capital are at the beginning of an
enterprise and later at the initiation of each stage of clinical trials
(because of the substantially greater sums required to carry out human
clinical studies). Thus, the potential for obtaining patent protection
early on is crucial to reassure investors at the earliest stage of
research and development and during the riskiest points on the investment
pathway. The USPTO's unduly stringent utility requirement for
biotechnological inventions makes it harder to obtain investment at these
critical times. It decreases investment in beginning enterprises because
it makes it difficult or impossible to obtain early patent protection, or
even a reasonable expectation of eventual patent protection, based on
preliminary results. Likewise, it decreases the incentive of investors
to foot the bill for expensive clinical trials. Both results are
counterproductive.
To the extent that early patent protection is unavailable, the risk of
investment in biotechnology will be increased, the reward necessary to
attract investment will be increased and investment in biotechnology will
decrease. This is not in keeping with the Constitutional mandate of
promoting arts and useful sciences.
5. The utility standard is clearly defined by controlling case law
35 U.S.C. Section 101 requires that a patentable invention be "useful,"
a term which was clarified by the Supreme Court in Brenner v. Manson, 148
USPQ 689 (1966). In applying this standard, the USPTO increasingly has
rejected applications with in vitro or even non-human mammalian in vivo
demonstrations of pharmacological effect. In short, the USPTO position
seems in many cases to be that nothing less than human clinical data will
suffice to establish utility when, in the opinion of the USPTO, the
ultimate intended commercial use of the claimed invention is the
treatment of humans, regardless of what is actually claimed. However, as
we establish below, the case law does not permit the USPTO to set such a
rigorous standard for biotechnological inventions.
6. The claimed invention dictates the utility inquiry
The USPTO is constrained to determine the utility of the claimed
invention, not the commercial embodiment that the USPTO believes to be
the inventor's ultimate goal. Rather, "[i]n determining utility . . .
the claims must first be interpreted to define the invention to be tested
for utility." Raytheon Co. v. Roper Corp.. 220 USPQ 592, 596 (Fed. Cir.
1983), cert. denied, 469 U.S. 835 (1984). Accordingly, The inventors are
not required to prove utility for every aspect of an invention discussed
in the application.
Biotechnology-related inventions, as reflected in many Office Actions
from Group 1800 (the designated group of Examiners at the USPTO who are
primarily responsible for biotechnology inventions), seem subject to a
very different principle of examination. A particularly striking example
in this regard is the current examination practice for applications that
relate, however distantly, to therapy of disease. Such applications
often present one or more of four broad types of claims: (a) claims that
recite products per se, such as a compound with pharmacological activity;
(b) claims that recite assays or other diagnostic or experimental tools;
(c) claims that recite compositions comprising such compounds, such as
"pharmaceutical" compositions, that may imply a use in treating disease;
and (d) claims that recite a method of treating disease.
How the utility requirement is applied depends upon the type of claim
at issue. In re Bundy, 209 USPQ 48, 51 (CCPA 1981). The CAFC has held
that claims which are not drawn to particular uses -- i.e., composition
of matter claims and method of making claims -- require a lesser showing
of utility. "[E]vidence of any utility is sufficient when the count [or
claim] does not recite any particular utility." Id. at 743. Accord
Nelson v. Bowler, 206 USPQ 881, 883 (CCPA 1980), Blicke v. Treves, 112
USPQ 472 (CCPA 1957).
Thus, what suffices for utility will vary from case to case, depending
upon how the claims and specification are drafted. Although these
different categories of claims present very different issues of utility,
current examining practice in Group 18000 often treats all claims,
regardless of format, as though any discussion of therapeutic potential
is a constructive recitation of a method of treating disease in all the
claims. Thus, claims that recite compounds, assays, and compositions
frequently are judged not to have met the utility requirement of Section
101 if the application does not demonstrate therapeutic efficacy.
Currently, if a claim recites that it is drawn to a therapeutic use in
humans (i.e., therapeutic methods or compositions having therapeutic
effect), then the USPTO position is that clinical data might be required
to prove utility. See MPEP Section 608.01(p) (citing only Ex parte
Timmis, 123 USPQ 581 (Bd.App. 1959)). However, it must be emphasized
that in vivo testing in animal models will suffice when those animal
models are accepted by those skilled in the art. In re Jolles, 206 USPQ
885, 890 (CCPA 1980). See also In re Gardner, 166 USPQ 138, 140 (CCPA
1970) (more specific disclosure regarding dosage required because claim
is drawn to the antidepressant activity of the compound rather than the
compound itself).
In contrast, methods for uses other than human treatment and
compositions of matter (and the related methods of making) should not
require proof of efficacy in humans simply because of a possibly utility
is human therapy. To reiterate, this distinction is frequently
overlooked by the biotechnology Examiners.
7. Brenner v. Manson and its progeny: "Utility" does not mean
"therapeutic use"
Brenner v. Manson, the Supreme Court's most recent pronouncement on the
utility issue, involved methods of making steroid compounds which were
similar to useful compounds for human therapy. However, the inventor in
Brenner had disclosed no utility in the patent application for the
compounds. Instead, in supporting affidavits, the inventor argued that
the compounds were presumptively useful based on article stating that a
homolog of the compounds was an effective tumor-inhibiting agent in mice.
The Court deferred USPTO opinion that such a showing was insufficient to
regardless of format, establish utility, given the article's statement
that minor structural changes "may produce profound changes" in activity.
Therefore, the steroid field at the time the application was filed was
unpredictable and utility could not be predicted. Id. at 694.
The Brenner Court rejected as a matter of law a variety of arguments
that would have excused the utter lack of utility description or tests:
that the utility standard was met by any process which "produce[d] the
intended result" or which produced a compound that was "not detrimental
to the public interest" or "the subject of serious scientific
investigation." Brenner, 148 USPQ at 694-695. Instead the Court held
that for the process to be useful, the end product had to be useful.
The Supreme Court summarized the policy rationale of the utility
requirement thus: "[A] patent is not a hunting license. It is not a
reward for the search, but compensation for its successful conclusion. A
patent system must be related to the world of commerce rather than to the
realm of philosophy." Brenner at 696. The patent is a "quid pro quo"
for the "benefit derived from the public from an invention with
substantial utility." Id. at 695. That benefit is a "specific benefit .
. . in currently available form." Id. However, these seemingly extreme
policy statements of Brenner must be understood in light of the facts of
that case -- that no utility whatsoever had been disclosed, in an art
field acknowledged to be unpredictable at the time the appellants'
application was filed.
The CAFC restatement of Brenner requires that a patentable invention
have a "substantial or practical utility . . . where such utility would
not be obvious." Cross v. Iizuka, 224 USPQ 739 (Fed. Cir. 1985).
Practical utility "is a shorthand way of attributing "real-world" value
to the claimed subject matter." Nelson v. Bowler, 206 USPQ 881, 883
(CCPA 1980).
The CCPA and CAFC cases since Brenner have progressively defined the
outer limits of the utility requirement. Immediately after Brenner, the
CCPA applied the holding to its composition of matter claims drawn to a
chemical intermediate which produces a final product for which no utility
testing had been completed, and for which no utility could be inferred.
In re Kirk, 153 USPQ 48, 56 (CCPA 1967); In re Joly, 153 USPQ 45, 47
(CCPA 1967). In both cases, the USPTO determination that the
intermediates lacked utility was upheld.
Applications which disclose some testing to support statements of
utility pose more difficult line-drawing questions. However, the CCPA
decisively drew that line far short of requiring human testing and
therapeutic effect in Nelson v. Bowler, 206 USPQ 881 (CCPA 1980). In
that case, the inventor's claims were composition of matter claims drawn
to prostaglandin derivatives. The stated utilities of smooth muscle
stimulation and blood pressure modulation were based upon an in vitro
muscle assay and an in vivo rat blood pressure assay. The results of
those tests correlated with the results of other useful prostaglandin
derivatives. The USPTO Board rejected the utility showing, stating that
the tests were "rough screens, uncorrelated with actual utility." 206
USPQ at 883.
The CCPA reversed the USPTO, holding that "the board erred in not
recognizing that tests evidencing pharmacological activity may manifest a
practical utility even though they may not establish a specific
therapeutic use." Id. at 883 (emphasis added). Further, the requisite
benefit was provided by "knowledge of the pharmacological activity." Id.
"Rigorous correlation [of the data] is not necessary where the test for
pharmacological activity is reasonably indicative of the desired
response." Id. at 883-884 (emphasis added). The Nelson court's
rejection of the USPTO focus on the ultimate therapeutic use is
consistent with earlier Supreme Court case law, which stated:
The word 'useful', therefore, is incorporated into the act in
contradistinction to mischievous or immoral . . . But if the invention
steers wide of these objections, whether it be more or less useful is a
circumstance very material to the interests of the patentee but of no
importance to the public. If it be not extensively useful, it will
silently sink into contempt and disregard.
Lowell v. Lewis, 15 F. Cas. 1018, 1019 (No. 8568) (C.C. Mass. 1817)
(Story, J.) (emphasis added). See also In re Langer, 183 USPQ 288, 298
(CCPA 1974) (full scale clinical trials in humans may be necessary to
establish commercial usefulness but are not required to establish utility
under Section 101). The Nelson court's approach is also consistent with
In re Krimmel, 130 USPQ 215 (CCPA 1961), in which the court instructed
the USPTO to leave determinations of safety and efficacy to the FDA. Id.
at 220. Thus, the FDA and the free market should determine the ultimate
commercial value of an invention -- not the USPTO.
In light of the above, it is very hard to see how the USPTO can use
Nelson v. Bowler to justify rejecting on utility grounds compounds whose
activity manifestly has been demonstrated. Yet the biotechnology
industry routinely sees such rejections issued in applications that
provide incontrovertible evidence that claimed compounds possess, e.g.,
enzymatic, ligand-binding, anti-viral, or immune-stimulating activities.
Such showings demonstrate the pharmacological activity required by Nelson
-- no more need be shown.
8. The utility requirement is a minimal threshold to patentability
In line with the rationale of Lowell v. Lewis, the CAFC has clearly
interpreted the utility requirement to be a minimal threshold. In Carl
Zeiss Siftung v. Renishaw plc, 20 USPQ2d 1094 (Fed. Cir. 1991), an
infringement litigation involving automated coordinate measuring
machines, the CAFC reversed the trial court's holding that a claim was
invalid for lack of utility, stating:
The utility requirement, although an essential requisite of
patentability, has other limits. An invention need not be the best or
the only way to accomplish a certain result, and need only be useful to
some extent and in certain applications . . .
Id. at 1100 (emphasis added). In Tol-o-Matic, Inc. v. Proma Product-and
Marketing Gesellschaft M.b.H., 20 USPQ2d 1332, 1338 (Fed. Cir. 1991), the
court reversed a jury verdict that the invention lacked utility because
the evidence at trial did not show "total incapacity." Accord E.I. du
Pont de Nemours & Co. v. Berkley & Co., 205 USPQ 1 (8th Cir. 1980) ("A
small degree of utility is sufficient.").
Likewise, the CAFC approach in a patent prosecution context underscores
the minimal nature of the utility requirement. For example, the
requirement that an inventor disclose a "stated utility," Cross, 224
USPQ at 742 n. 8, only mandates that the utility of the invention be
described with some specificity. See Cross, 224 USPQ at 745. The CAFC
explicitly states that the test is a "threshold requirement." Id.
The Cross court cited two cases as examples that failed to meet the
threshold "stated utility" requirement. In Kawai v. Metlesics, 178 USPQ
158 (CCPA 1973), the court held that a statement that the claimed
compounds "exhibited pharmacological effects on the nervous system" was
inadequate to meet the utility requirement. In In re Kirk, 153 USPQ 48
(CCPA 1967), the court rejected the inventors' bare allegations of
"biological activity" and "biological properties." Presumably then,
patent applications which provide more than such vague generalities will
meet the minimal stated utility requirement.
9. In vitro data clearly suffices to demonstrate practical utility
The CAFC requires that an invention have a "practical" utility. That
practical utility may be based upon a variety of showings. In Cross v.
Iizuka, 224 USPQ 739 (Fed. Cir. 1985), the claims at issue were
composition of matter claims drawn to imidazole derivatives which
inhibited thromboxane synthetase, an enzyme involved in platelet
aggregation. The only data supporting the inventors' utility claims were
derived from an in vitro assay. The appellant Cross lodged several
challenges to the utility finding. Specifically, Cross attempted to
shift the focus to the ultimate commercial use:
Cross' position is that the stated purpose or the sole contemplated
utility of the invention of Iizuka is to provide a novel class of
compounds which provide "practical use" as "therapeutic medicines for
diseases caused by Thromboxane A2."
id. at 743 (emphasis added). The CAFC rebuffed this position, noting
that a "fair reading" of the application disclosed utility in the in
vitro microsome test milieu. Id.
Cross also attacked the probative value of the in vitro data:
Cross has contended that . . . the inhibition of thromboxane synthetase
in human or bovine platelet microsomes is not sufficiently correlated to
a pharmacological activity to be a practical utility. In other words,
Cross may be arguing that the minimum acceptable utility disclosed in an
application claiming a compound having pharmacological activity must be
directed to an in vivo utility in order to comply with the practical
utility requirement of ¤ 101.
Id. at 744 (emphasis added). The CAFC dismissed this position
decisively, noting that in vitro testing "is the accepted practice in the
industry." Id. at 747. The court elaborated:
Moreover, in vitro results with respect to the particular
pharmacological activity are generally predictive of in vivo test
results, i.e., there is a reasonable correlation therebetween. Were this
not so, the testing procedures of the pharmaceutical industry would not
be as they are."
Id. (emphasis added).
Cross clearly endorses in vitro testing as probative of utility, when
those tests are accepted by those skilled in the art. This finding
accords with earlier CCPA cases, which indicated that the USPTO's inquiry
was to remain fixed upon what would be persuasive to one skilled in the
art. E.g., In re Jolles, 206 USPQ 885, 890 (CCPA 1980); In re Irons, 144
USPQ 351 (CCPA 1965), In re Krimmel, 130 USPQ 215, 219 (CCPA 1961). "In
the final analysis, every utility question . . . must be decided on its
own facts. Relevant evidence is judged as a whole for its persuasiveness
in linking observed properties to suggested uses." Nelson v. Bowler, 206
USPQ at 885. It appears clear, then, that any doubt that an Examiner may
express regarding the probative value of an in vitro assay should easily
be overcome by an appropriate sworn declaration of one skilled in the art
that the in vitro assay sufficed to establish the stated utility.
The position taken by appellant Cross -- and decisively rejected by the
CAFC -- is the position taken by many Examiners of biotechnological
inventions today. However, the CAFC in Cross has made clear that such
positions set too high a standard of utility. Instead, the lesser
showing of pharmaceutical activity -- by whatever experimental means
generally acceptable to those skilled in the art -- will suffice for
biotechnological inventions when that which is claimed is other than a
human treatment or a composition which has a utility other than for human
treatment, or a method of making such compositions. The Examiners'
persistence in reiterating positions rejected in Cross constitutes
reversible error, adding nothing but cost and delay to the inventors'
efforts to secure legitimate patent protection.
10. The USPTO's recent written decisions deviate from controlling case
law
Unfortunately, two recent decisions from the USPTO Board of Patent
Appeals and Interferences demonstrate the USPTO's deviation from the CAFC
consensus that utility is a minimal threshold and that only
pharmacological activity need be shown. Ex parte Maizel, 27 USPQ2d 1662
(BPAI 1993) and Ex parte Deuel, 27 USPQ2d 1360 (BPAI 1993), were decided
after the NIH engendered public debate regarding the utility requirement
by seeking patent protection for cDNA sequences identified by human
genome project researchers. In both cases, the Board spontaneously
raised the utility issue and stated that the inventors provided "no
statement of use or utility" in the specification.
Deuel involved composition of matter claims drawn to a "purified
prostate tissue-derived growth factor" having particular characteristics,
including mitogenic activity. The Board opinion noted that the inventors
disclosed data from assays demonstrating that the claimed compound
demonstrated "potent mitogenic activity against NRK cells." 27 USPQ2d at
1361. However, the Board noted that the cited references indicated that
"the role of the growth factor in controlling cell division and
interactions with other factors was not understood" at the time of filing
and further that the significance of the factors was "unclear." Id. at
1364-65. Another reference was quoted as suggesting that the mitogen has
"potential to mediate some of the activities related to prostatic growth,
development, and, perhaps hyperplasia and neoplasia." Id. (emphasis
added). These comments suggest that the USPTO is seeking information
relating to the physiological mechanism of action and/or the ultimate
therapeutic effect of the growth factor. The USPTO does not refer to
other potential uses for such proteins, including, e.g., making
antibodies for screening for the protein as evidence of prostatic growth,
or directly screening for cells which are responsive to the mitogen. If
such uses are supported in the specification, they should suffice to
establish utility.
In Maizel, the claims were drawn to recombinant DNA encoding a
recombinant human B-cell growth factor. The Board opinion notes that the
claimed growth factor "has the ability to maintain the growth of B cells
in a culture medium." Yet, the opinion questions whether the utility
requirement was met because, at the time of filing, "the actual function
of BCGF protein was unknown." 27 USPQ2d at 1668. This objection was
lodged despite the Board's simultaneous discussion of an obviousness
rejection based in part on prior art disclosing the non-recombinant
protein:
BCGF is described as a protein useful in bolstering the immune response
and the knowledge of the protein would have motivated one skilled in the
art to utilize recombinant DNA protocols to [produce recombinant
protein].
Id. (emphasis added). The Board's implicit conclusion -- that knowledge
of the properties of the nonrecombinant protein can simultaneously render
the recombinant protein obvious yet not be used by the inventors as
evidence of utility -- seems somewhat contrary, absent some showing of
significant sequence variation or of unexpected immune activity of the
recombinant protein.
Thus, Maizel and Deuel are published examples of the current USPTO
misinterpretation of the utility requirement. Unfortunately, any patent
attorney or agent working in the biotechnology area can augment these
examples with anecdotes of Examiners refusing to accept evidence of
pharmacological activity that is persuasive not only to those skilled in
the art, but to those in the venture capital community which,
commercialize such efforts.
Utility under 35 USC Section 101 is to be judged on a case-by-case
basis, with no higher standard than that applied to the field of organic
chemistry. In chemical cases pharmaceutical utility is assumed for a
number of molecules with a common core structure and an R group pendant
off the core structure (where R as a substituent can be any alkyl, aryl,
amino, etc. group), even though utility is only shown, if at all, for one
of this family of compounds. In fact, in many instances a mere statement
of utility, speculated based upon structural analogy with a known
compound which has the stated utility, is accepted as sufficient for
organic chemicals. In a similar way, given that sufficient utility is
shown (or analogized) for one protein or polypeptide, pharmaceutical
utility should be assumed for a family of proteins that share a common
biological function or structural characteristic, for example, they bind
to the same receptor or have a consensus sequence that is a receptor or
antigen binding site, but that vary somewhat in their amino acid
sequences.
Alternatively, if the utility for the family of polypeptides is stated
in the claims, the same favorable result is achieved, because if some
structural variants encompassed by the claims turn out in fact to be
inactive, they are not protected and neither the public nor the patent
applicant is harmed. The case law is clear that not all embodiments
encompassed within a claim must be operable for the claim to be valid.
See, e.g., Ex parte Mark, 12 USPQ2d 1904 (BPAI 1989).
The legal standard for utility is, and should be, the same in
biotechnology as it is in organic chemistry because these scientific
fields entail the same degree of predictability in extrapolating from one
compound or protein to another. For example, just as proteins have
secondary and tertiary conformations that may impart some particular
properties to the proteins, organic chemicals (e.g., small molecules)
have stearic requirements that may impart certain properties to those
molecules.
Instead of relying on Ex parte Deuel, 27 USPQ2d 1360 (BPAI 1993) for
the standard of utility (i.e., whether the utility shown is clear), the
Examiners are to rely on the case law relevant for utility in the organic
chemistry field. The law is settled that in the absence of any evidence
or apparent reason why the claimed compounds do not possess the disclosed
utility, the allegation of utility in the specification must be accepted
as correct. See, e.g., In re Kamak et al., 158 U.S.P.Q. 320 (CCPA 1968);
In re Riat et al., 140 U.S.P.Q. 471 (CCPA 1964); Ex parte Krenzer, 199
U.S.P.Q. 227 (POBA 1978).
The statements in the specification which can validly be challenged by
the Examiner are those which are speculative [In re Eltgroth, 164 USPQ
221 (CCPA 1970); In re Ruskin, 148 USPQ 221 (CCPA 1966)]; or abstruse,
esoteric, incredible, or factually misleading [In re Citron, 139 USPQ
516; 520 (CCPA 1963)]; which run counter to what would be believed to
happen by the ordinary person [In re Pottier, 153 USPQ 407 (CCPA 1967)]
or by those skilled in the art [In re Houghton, 167 USPQ 687 (CCPA
1970)]; which are in a field of endeavor where little of a successful
nature has developed or which has been the subject of much fraud [In re
Oberweger, 47 USPQ 455 (CCPA 1940); In re Irons, 144 USPQ 35 (CCPA
1965)]; or which are inconsistent with evidence presented by the Examiner
[In re Corneil et al., 145 USPQ 697, 702 (CCPA 1965); In re Wooddy et
al., 141 USPQ 518 (CCPA 1964)]. Thus, allegations in the specification
of utility which are or border on the incredible in light of contemporary
knowledge in the particular art must be substantiated by substantial
evidence. In re Ferens, 163 USPQ 609 (CCPA 1969). Cancers are an
example of where contemporary knowledge in the art has far advanced so
that it is not per se incredible. Ex parte Rubin, 5 USPQ2d 1461 (BPAI
1987).
The PTO has not been charged with the task of protecting the public
against possible misuse of chemical patents. The patent statutes do not
give the PTO the right or duty to require proof that claimed compounds or
other materials which are stated to be useful for pharmaceutical
applications are safe, effective, and reliable for use with humans. In
re Krimmel, 130 USPQ 215 (CCPA 1961); In re Hitchings et al., 144 USPQ
637 (CCPA 1965).
The requirement for clinical utility in biotechnology cases (including
antibody technology) should be the same as that in organic chemistry
cases, i.e., clinical utility should not be required if adequate animal
tests are set forth upon which the reasonably skilled clinician would
rely to decide if undertaking clinical trials would be fruitful. In re
Hartop et al., 135 U.S.P.Q. 419 (CCPA 1962). In Hartop the CCPA defined
"standard experimental animals" as "whatever animal is usually used by
those skilled in the art to establish the particular pharmaceutical
application in question." Id. at 426, footnote 14. Further, the species
of animal to be employed for testing depends on what animal is ordinarily
used by those skilled in the art to establish the particular utility in
question. In re Krimmel, 130 U.S.P.Q. 215 (CCPA 1961). The law merely
requires disclosure of an activity coupled with knowledge as to the use
of the compound for that activity to satisfy 35 U.S.C. Section 101. In
re Bundy, 209 U.S.P.Q. 48 (CCPA 1981).
Indeed, inhibition of growth of a transplanted cancer strain in rats by
an organic molecule has been held to be sufficient utility to meet the
requirements of 35 USC Section 101 [In re Ross et al., 134 USPQ 321 (CCPA
1962); In re Bergel et al., 130 USPQ 206 (CCPA 1961); Ex parte Westphal
et al., 139 USPQ 378 (POBA 1962)]. Furthermore, even in vitro tests can
raise a presumption of in vivo usefulness of the claimed compounds if
there is a showing of a reasonable correlation between such activities.
See, e.g., Cross et al. v. Iizuka et al., 224 U.S.P.Q. 739 (CAFC 1985);
Ex parte Hirsch, 34 P.T.C.J. 588 (BPAI 1987).
The same standards as set forth above should be applied equally for
biotechnology inventions.
Two other recent decisions by the PTO Board, Ex parte Balzarini (1991
Pat. App. LEXIS 37, March 1991) and Ex parte Brana (apparently
unpublished), demonstrate why it has proven increasingly difficult to
convince the PTO that a biotechnological invention satisfies the
usefulness criterion of the patent laws. In these cases, the Board of
Appeals affirmed the rejection of patent applications claiming inventions
useful in the treatment of AIDS and cancer, respectively, primarily
because the in vitro or in vivo data submitted to the PTO did not
establish that the claimed inventions were useful.
In Balzarini, where the applicants claimed pharmaceutical compositions
comprised of two dideoxynucleotides and their use to treat retroviral
diseases and to inhibit replication of HIV in human cells, the Board
agreed with the Examiner that the applicants had not presented any
persuasive evidence establishing that their in vitro data was predictive
of the in vivo activity of their claimed compositions as of 1987. In
fact, an article cited by the Examiner showed that one antiviral agent
active against HIV in vitro proved ineffective and harmful in clinical
trials, calling into question the value of in vitro data in selecting
prospective AIDS therapies. The Board stressed that the claims were not
rejected because the utility was incredible. In fact, the in vivo
activity of AZT left open the possibility that other antiviral agents
could be useful in the treatment of AIDS if shown to work in vivo. The
Board dismissed as irrelevant the fact that the PTO had previously
allowed patents claiming AIDS therapies on the basis of in vitro data
alone.
In Brana, the application as originally filed disclosed the in vitro
activity of the claimed chemical compounds (diones) against unspecified
human tumor cells. It also referred to a reference which describes a
computer analysis of the anti-tumor activity of structurally related
compounds in leukemia in vivo murine assays used by the National Cancer
Institute (NCI). During prosecution of their application, the inventors
in Brana submitted data to the PTO showing the in vivo activity of
certain of their compounds in a leukemia murine assay, as well as the in
vitro activity of other claimed compounds against human colon and
laryngeal cancer cells.
The Board in Brana affirmed the rejection of the Examiner on several
bases: the application did not disclose a specific tumor or disease
against which the claimed compounds were shown to be useful in vivo; the
in vivo murine screens only identified compounds potentially useful for
clinical study and did not establish that any of those compounds worked
clinically; the in vivo and in vitro data submitted by the applicants
subsequent to filing could not compensate for a failure initially to
describe a practical utility; and three prior art references called into
question the value of murine assays relied on by the applicants.
Brana is now on appeal to the Court of Appeals for the Federal Circuit,
in which the applicants claim that the in vitro data included in their
application as filed and the in vivo data for related compounds generated
in murine assays recognized by the NCI established utility. The PTO is
arguing that the evidence of record established that there was no
correlation between the murine screening test relied on by the applicants
and the real world pharmacological activity. The Federal Circuit heard
oral argument in January and should render a decision sometime this year.
Brana presents the Federal Circuit with an opportunity to stress that an
inventor need not establish the safety and efficacy required under law by
the FDA to market a drug. Further, Brana is directed to organic
chemicals, not to a biotechnology product, indicating that Group 1200 is
starting to take the stricter stance of Group 1800 as regards utility
rejections.
11. Conclusion
Both law and sound policy dictate that the USPTO re-evaluate its view
of the utility requirement and examine biotechnology patents in
accordance with controlling case law.
The underlying policies of the patent system require that USPTO
examining practice reward the inventors as soon as possible for
discovering and disclosing the pharmaceutical and pharmacological
activities of compounds, as opposed to requiring proof of ultimate
therapeutic utility which the USPTO tends to assert is the sole basis for
patentability of potential therapeutic agents. The decisions also
encourage early disclosure of such discoveries to stimulate research and
development of therapeutic agents. The USPTO's contrary requirement of
clinical efficacy to demonstrate utility forfeits these benefits and
instead favors secrecy, delayed filings, prolonged term of prosecution
and later disclosure of inventions.
We assert that the utility case law discussed above clearly establish a
low evidentiary threshold for meeting the utility requirement of Section
101. The decisions mark a clear distinction between pharmaceutical and
pharmacological activities and therapeutic uses, which the USPTO seeks to
ignore. Specifically, the USPTO should not interpret Brenner as carte
blanche authority for requiring clinical or in vivo data for every
biotechnological invention. Instead, the USPTO should determine the
stated utility of the claimed invention, and not require evidence of
ultimate therapeutic utility in humans unless the claims specifically are
drawn to such utility. To do otherwise is to repeat the arguments of
appellant Cross, which the CAFC rejected in Cross v. Iizuka.
As the USPTO must follow the case law set forth by the CAFC, the
Examiners should be directed to study Nelson and Cross and to conduct
their utility determinations accordingly.
The USPTO Notice for this hearing raises a number of specific questions
concerning utility and we respond to these questions here.
B. Question 1: Do you believe that the legal standards governing the
requirement for identification of practical or substantial utility under
35 U.S.C. ¤ 101, as developed by the Federal courts, are sufficiently
clear and appropriate for biotechnological inventions? If not please:
(a) identify aspects of the law that you believe lack clarity or are
inappropriate, citing relevant cases; and
(b) identify changes to legal standards you believe would be desirable.
As discussed in the previous Section, we believe that the legal
standards established by the Federal Courts governing the requirement for
identification of "practical utility" under 35 U.S.C. Section 101 are
sufficiently clear and appropriate for biotechnology inventions. We
submit that these legal standards are well defined and require a minimum
of proof to establish practical utility. The concern over the utility
requirement for patentability should not be directed to the clarity of
the legal standards, but rather the implementation of these standards by
the USPTO. Thus, we view the utility issue as one of mis-application of
the law rather than incorrect legal precedent.
To resolve the utility issue, we propose that the patent bar be offered
the opportunity to understand the content of the Examiners' education by
the USPTO on such legal standards and to positively contribute to the
content of this education. Accordingly, we offer a practical and
effective approach to working with the USPTO and achieving the principal
goal of our nation's patent system: promotion of science and innovation.
We commend the USPTO for its recent efforts to increase the number of
qualified Examiners in the biotechnology area. Consequently, the
Examiners have evidenced a very positive trend in the technical
understanding of inventions that less than two decades ago were beyond
dreams. The biotechnology industry is a clear bright spot for our nation
and its competitive endeavors. As we approach the next century, our
patent system must continue its role of protecting innovative solutions
to a variety of unique problems.
The single purpose of our patent system is to promote science and
innovation. Accordingly, the USPTO has expressed the laudable desire to
promote research, development and commercialization of technological
advances in biotechnology. On this point, the USPTO, and our nation's
inventors, actually share common ground. It is the choice of pathways to
reach this common ground that creates a problem which threatens to
undermine the recent positive trends of the USPTO and erode the faith
that those inventors (and their investors) have in rewarding advances in
biotechnology.
The mis-application of these legal standards governing practical
utility is exemplified by the Notice for this hearing authored by the
USPTO. The notice prominently states that the USPTO is interested in
ensuring that the practical utility requirement is governed by standards
that promote research, development and commercialization of technological
advances in biotechnology. It must be absolutely clear that this
laudable interest is of secondary importance. This desire does not grant
the USPTO the right to create policy. Of primary importance to the USPTO
is fulfilling its Constitutional obligation to promote science and the
useful arts by following and implementing the law decided by the Federal
Courts and legislature. Only when an issue is one of first impression,
and no direction is otherwise provided by the Courts, does the USPTO have
the right to extrapolate from the decisions otherwise rendered by the
Courts. By not adhering to the law as observed by the inventors and the
patent bar, the USPTO creates confusion in the process of securing a
patent which can lead to a variety of deleterious consequences: notably,
the trust and security inherent in the patent system is weakened and our
competitive opportunities as a nation are threatened.
The Notice also raises an example of practical utility in the
patentability of nucleotide sequences that are produced incident the
expression of a human gene. There is a "concern" as to whether the
sequence or the gene must be characterized as to its physical, biological
or physiological significance in order to establish practical utility.
This statement misplaces the focus of the problem. First, the USPTO must
implement the decisions of the Federal Courts and not respond to
perceived "concerns" by attempting to create policy. Second, the test of
utility promulgated by the Federal Courts is not "physical, biological or
physiological significance." Almost any utility satisfies the statutory
requirements. Third, the technical presumption in this statement that a
sequence has no characterization as to its biological significance is not
scientifically accurate. There is inherent biological activity, and
hence practical utility, in these inventions. In its own example, the
USPTO assumes that the only utility of a sequence or gene fragment may
lie in the use of the fragment for the production of a protein. This is
in error. Again, the legal threshold for practical utility is very low
such that the practical utility of a gene sequence can be met when the
inventor establishes that the discovered sequence can be used as probes
for genetic screening, markers for specific human chromosomes, targets
for regulation in the case of promoters or enhancing elements, or PCR
primers for genetic fingerprinting. Absent evidence to the contrary,
such uses should establish practical utility.
The Notice analogizes these policy-tainted concerns to the development
of the chemical arts practice before the USPTO. It is presumed that the
patentability of intermediate compounds can depend upon an unidentified,
yet commercially promising final product or compounds claiming
therapeutic utility based only on findings of in vitro biological
activity. The Federal Courts have made clear that commercial
significance is not the standard of utility. Neither is in vivo
therapeutic activity the standard of utility. There is no reason for
biotechnology, as exemplified by a DNA sequence, to have a different
standard of determining utility than traditional chemistry.
The mis-application of these legal standards is also exemplified during
the examination of the inventions themselves. By shifting the
requirements determining practical utility from the statutory minimum
threshold to a USPTO defined "real world" application (typically in the
form of a commercially viable invention), the USPTO has raised the
standards from one of utility to proving efficacy. The legal standards
for establishing practical utility are, and should be, a low threshold.
To equate practical utility with a complete understanding of commercial
utility improperly raises these standards.
In order to continue the successful momentum that the USPTO has
recently established, the common ground between the inventors and the
USPTO must be expanded. We must have some fundamental agreement as to
the choice of paths which will implement our common goal of ensuring that
patentable inventions receive the guarantees and benefits earmarked to an
issued patent. We must address not only the technical expertise of the
Examiners, but also their legal education and guidance necessary to apply
the legal standards established by the Federal Courts to their everyday
duties.
We highly recommend the attainable goal of having the USPTO focus
primarily on the implementation of the standards set forth by the Federal
Courts and we recommend at least one option to achieve this goal. We
suggest that the USPTO open the initial and continuing education program
of USPTO Examiners to the public, so that the basis of the Examiner's
legal education is known to the public. This should expand the common
ground between the USPTO and the inventors by providing a consensus
starting point for legal arguments to be applied to the facts of the
invention under examination.
By allowing the public to understand the legal education foundation
taught by the USPTO, the public, and in particular our nation's
inventors, will have a better appreciation of the USPTO's legal views.
Thus, if the inventors wish to deviate from the common ground, then they
will do so knowing the probable consequence of their action, namely, the
appeal of the Examiner's decision in order to have the Federal Courts
rule on the practitioner's interpretation of the law or an issue of first
impression.
Furthermore, there are clearly many advantages to establishing a legal
education for the Examiners which reflects a general consensus of both
the USPTO and the patent bar, as representatives of the inventors.
Should fewer appeals result as a consequence, the savings in economic and
inventive power alone justifies the effort. Accordingly, we recommend
allowing the patent bar to cooperate in the education of the USPTO corps
by providing comment on the Federal Court case law.
C. Question 2: Do you believe that the PTO is correctly and uniformly
applying the legal standards governing the requirement for identification
of practical or substantial utility under 35 U.S.C. ¤ 101 for
biotechnological inventions? If not, please:
(a) identify the basis for your belief that the PTO is not correctly or
uniformly applying the legal standards governing practical utility;
(b) identify the changes you would like to see the PTO make in its
application of this requirement during examination of patent
applications; and
(c) discuss the implications of such changes, not only with respect to
patent applicants seeking protection but also for scientific research
and development in general.
The standards for meeting the requirement for practical utility ,under
35 U.S.C. Section 101, for biological inventions directed to materials
for use in combatting human diseases and disorders are legal standards
which are interpreted by the courts. The USPTO is obligated to follow
these decisions and especially the decisions of its reviewing court, the
CAFC. The USPTO is not a legislative body but is empowered only to
administer the laws as enunciated by its reviewing court, the CAFC. In
their notice, the USPTO sets forth the following argument to support its
own review of inventions for use in human therapy.
...important public policy justifications for the USPTO to review
operability of inventions to be used to treat human disorders. A patent
provides the public with a high quality technically accurate disclosure
of a new, useful and nonobvious invention. However, with the imprimatur
of the Federal Government, a patent can also effect the commercial
prospects of the invention in question and can raise or lower
expectations of those afflicted with the illness the invention is
designed to treat.
While we recognize the importance of the USPTO's review of operability
of inventions, such review must be conducted in accordance with
established legal principles. The USPTO has neither the right nor the
authority to disregard the well-settled legal standards for reviewing
utility. Furthermore, the USPTO should heed its own advise and recognize
that the commercial prospects of an invention can be significantly
impaired by inappropriate USPTO action. Delays in prosecution caused as
a result of having to address rejections premised on mis-application of
the law can be tremendously burdensome to biotechnology companies, many
of which have their access to capital controlled by the value of their
patent portfolio.
Another basis for our belief that the USPTO is not correctly and
uniformly applying the utility standards is that many Examiners consider
that the practical utility standards of the U.S. statute are only
satisfied if the material in question can be useful in human therapy.
This is not the case. As seen from the CCPA decisions in In re Krimmel,
292 F.2d 948, 130 USPQ 215 [CCPA 1961], In re Bergel, 292 F.2d 955, 130
USPQ 206, and In re Dodson, 292 F.2d 943, the disclosure that a compound
exhibits some useful pharmacological property is sufficient to satisfy
the utility requirements for this compound under the statutes. As stated
by the CCPA In re Bergel, supra, in holding that the disclosure that a
compound inhibits transplanted tumors in rats or mice is sufficient
utility, the CCPA stated:
In our opinion that achievement is sufficient to satisfy the express
language of Section 101, and is in harmony with the basic constitutional
concept of promoting the progress of science and the useful arts. 130
USPQ 206, 209
The CAFC in Cross v. Iizuka, 224 USPQ 739 [CAFC 1985] and in Nelson v.
Bolar. 206 USPQ 881 (CCPA 1980) reiterated the doctrine that is not
necessary that a compound be therapeutically effective in man in order
for the compound to meet the utility requirements of U.S. patent law.
All that is required is that the compound be shown to exhibit biological
activity. In reiterating the doctrine in Bergel, supra, Dodson, supra,
the CAFC in the Cross case, supra, stated:
We perceive no insurmountable difficulty, under appropriate
circumstances, in finding that the first link in the screening chain, in
vitro testing, may establish a practical utility for the compound in
question. Successful in vitro testing will marshall resources and direct
the expenditure of effort to further in vivo testing of the most potent
compound, thereby providing an immediate benefit to the public analogous
to the benefit provided by the showing of an in vivo utility. (id. at
748) (Emphasis Added)
In Nelson v. Bolar, the CAFC specifically defined practical utility as
follows:
'Practical utility' is a shorthand way of attributing 'real-world'
value to the claimed subject matter. In other words, one skilled in the
art can use a claimed discovery in a manner which provides some immediate
benefit to the public.
Knowledge of the pharmacological activity of any compound is obviously
beneficial to the public. It is inherently faster and easier to combat
illnesses and alleviate symptoms when the medical profession is armed
with an arsenal of chemicals having known pharmacological activities.
Since it is crucial to provide researchers with an incentive to disclose
pharmacological activities in as many compounds as possible, we conclude
that adequate proof of any such activity constitutes a showing of
practical utility. 206 USPQ 883
This definition certainly does not require the USPTO to determine
whether the material being claimed is effective and safe for human
therapy. All that is required to satisfy the utility requirements of the
patent law is that material have a pharmacological activity. No more is
needed.
Question 2(b): Identify changes you would like to see the USPTO make in
its application of this requirement during examination of patent
applications.
We would like to see better education of the Examiners concerning the
law as regards to utility and what is required to satisfy the patent
standards.
Question 2(c): Discuss the implications of such changes, not only with
respect to patent applications seeking protection but also for
scientific research and development in general.
When the USPTO maintains standards of practical utility which differ
from that of the courts, unnecessary appeals result. This is very time
consuming and expensive process and is especially hard on companies with
little capitalization. Through an examining corporation better educated
in the principles governing practical utility, prosecution of
applications can proceed more expeditiously. Additionally, resources
that currently must be devoted to overcoming rejections based on
misapplication of the law can be used elsewhere.
In accordance with well settled court decisions, practical utility need
not be based upon the ultimate use of a compound as a therapeutic but can
be based on the finding that the compound has pharmacological activity.
The policy basis for this minimum standard for meeting the practical
utility requirements expressed in these court decisions is as follows:
1. patents promote the development of therapeutic agents. Through the
granting of patents investment is stimulated for developing patented
compounds with therapeutic activity;
2. investors are more likely to provide financing for development of
therapeutic agents which have patent protection;
3. patent protection increases dissemination of information concerning
therapeutic agents to public; and
4. patents accelerate the dissemination of information to clinicians
for clinical testing which aid in developing the patented compound as a
therapeutic agent.
D. Question 3: Do you believe legal standards and examining practices
in foreign systems to assess the patent eligibility of biotechnological
invention (e.g., those governing industrial applicability and exclusions
from patentability) provide a better framework than is available in the
United States? Please identify desirable and undesirable practices of
foreign offices, particularly in the EPO and Japan.
The utility requirement in the United States is the sole requirement
for patentability that addresses the contribution made by the patented
subject matter to the well-being and progress of the society as a whole,
i.e., the invention must have "real world" value. This standard is
addressed in Europe and Japan by requiring that the patented subject
matter be "susceptible of industrial application." In addition, the
European Patent Convention, in Article 53, excepts from patentability
"inventions the publication or exploitation of which would be contrary to
ordre publique or morality" and also excepts from patentability plant or
animal varieties or essentially biological processes for production of
plants or animals. Japanese patent law also requires that inventions be
useable in industry and excludes patentability for inventions liable to
be contrary to public order, health or morals. In neither Japan nor
Europe are methods for treating the human body considered an industrial
application. However, patents may be obtained for the use of
compositions (whether the compositions are old or new) in therapeutic
regimens.
It is generally considered that the standard of industrial
applicability is a much lower hurdle than the standard of utility.
Indeed, it is common experience that claims rejected in a case pending
before the USPTO as lacking utility (often, however, under the guise of
assertedl