Food and Drug Administration regulators turned down a request from Johnson & Johnson to expand the approved uses for Risperdal, a treatment for bipolar disorder. J&J received a not approvable letter from the FDA to use Risperdal in Alzheimer's-related psychoses.

This is after last weeks announcement that the FDA rejected J&J's application to market Risperdal for patients with autism after it petitioned for an additional use of the drug.

It seems the FDA is taking a slow and cautious route on new approvals, especially after the Vioxx withdrawal, as we noted before. In April, the FDA ordered new warnings on all antipsychotic drugs, including Risperdal, to alert physicians to a higher death rate when the medicines are prescribed for the atypical use of treating dementia in elderly patients.

Things are not all bad for J&J, though. It announced that it plans to file and receive marketing approval for 10 to 13 new drug compounds by 2007. J&J said that it expects to grow even though it will likely lose patent protection on some of its top-selling drugs. Obviously, this is geared to rev up confidence in the company. J&J, like lots of big pharmas these days, is staring down the barrel of a growing number of patent expirations.

The company expects new growth would come from therapies to treat cancer; viruses such as HIV; urology treatments, including a drug for premature ejaculation; and antibacterials to treat serious infections. J&J said it could have as many as 70 product filings between 2005 and 2011, including 23 new drug compounds and 47 line extensions.

Interestingly, the company said it is rapidly expanding its research into drugs based on biotechnology, or live organisms. While this brings great potential, this will certainly not be without risks. Earlier, when two patients taking Tysabri, a new drug for multiple sclerosis, developed a rare brain disease, the $3 billion a year in potential profits suddenly vaporized. Shares of Biogen Idec fell by nearly half, and Elan, trading at $30, took a sickening swan dive to $4.

It's an exciting time but biotechnology's risks will make for some stomach-churning thrills.

The TechnoLawyer Blog, an amalgam of pithy commentary, industry news, and other helpful information compiled by Neil Squillante and Sara Skiff, is sponsoring the Eighth Annual TechnoLawyer @ Awards where TechnoLawyer members vote for their favorite products, services, and Web sites in a variety of categories.

Yes, the Patent Baristas are simply far too modest to ask for your votes but we'll understand if you feel compelled to vote for us as best practice area blog, especially for Best Coffee-Themed, Bio-Pharma Blog.

Voting began May 16, 2005 and ends on Friday, June 10, 2005 at midnight eastern time. If you're not yet a TechnoLawyer member, you have until June 10th at midnight eastern time to join and cast your votes. You can find out more about this year's awards and voting opportunities on the Official Awards Page.

Also on TechnoLawyer, don't miss one of the (many) side-projects of blogger Stephen Nipper: IP Memes, a biweekly newsletter that explores emerging technology-related intellectual property issues.

The IPKat posted a nice summary of the Tercica Inc v Avecia Ltd et al. case involving summary judgment motions on the validity of a patent having Swiss-type claims. The action concerned two applications for summary judgment in linked proceedings. In the first, Tercica, a licensee under a Genentech patent for a growth hormone, sued Avecia and Insmed for infringement; in the second, Avecia and Insmed sought revocation of that patent. The patent had a Swiss claim, its essential inventive content being a new use for a known drug.

Tercica's suit in the UK alleged that by making, using, and selling the SomatoKine(R) product in the United Kingdom for the treatment of Growth Hormone Insensitivity Syndrome (GHIS), Avecia and Insmed infringe a European (UK) patent under which Tercica holds an exclusive license from Genentech. SomatoKine(R) is a complex of insulin-like growth factor-1 (IGF-1) and insulin-like growth factor binding protein-3 (IGFBP-3). Tercica licensed world-wide rights to develop, manufacture and commercialize rhIGF-1 and IGF-1/IGFBP-3 from Genentech.

The High Court of Justice (Chancery Division Patent Court) in London dismissed both sides' applications for summary judgments. The Court also ordered Insmed and Avecia to pay Tercica's and Genentech's legal fees saying:

"What I was asked to consider (among other things) was a concept which Jacob J has called the "artificial construct of a Swiss form claim" (see Merck & Co Inc's Patents [2003] FSR 498 at para 80), and in particular what is meant by "new use" where part of that new use involves a particular method of administration, and the interface with the method of treatment point. One of the questions which might arise is: just how far can the artificiality be pushed before reality forces its way in? These are not subjects which are particularly happily determined on applications for summary judgment, even when those applications are argued as well and as fully as the one before me was."

Basically, if a chemical composition or a method of manufacture or use, is already known, then it is not patentable. The therapeutic use of that substance cannot be patented either. This is because that use is a method of treatment of a human or animal body by surgery, therapy or diagnosis which is practiced on that human or animal body and methods of treatment are regarded in Europe as not being capable of industrial application and are consequently not patentable.

However, if an invention relates to a substance or composition which is to be used in a method of treatment of a human or animal body by surgery, therapy or diagnosis practiced on that human or animal body then, even if that substance is known, that knowledge does not prevent the compound from being regarded as new, if the use of that substance or composition in any such method does not form part of the state of the art. In other words, it is possible to patent a known chemical compound as a pharmaceutical provided that it has not been previously known to have any pharmaceutical activity.

This is what is known as the Swiss Claim, adopted by the EPO and the Swiss Patent Office, which has a basic format along the lines of:

"Use of compound X in the manufacture of a medicament for the treatment of disorder Y".

In the UK, the view is that merely indicating that something is "for" or "suitable for" a new purpose will not give novelty to subject matter which is already known but allowed the Swiss form of claim to be granted in order to achieve conformity with EPO practice.

The Swiss claim is a claim to a manufacturing process and not merely to the taking of the active ingredient and converting it into a special medicament. However, the distinguishing feature of the claim is the use to which that medicament is then put. That new medical use must be entirely new and cannot just be a modification of an existing treatment or a better method for treating the disease, for which the drug is already known to have an effect.

It will be interesting to see how the case law on Swiss claims evolves in both the UK and the EPO.

In IPO arena, things finally seem to be percolating. First, Reliant Pharmaceuticals has filed to raise an IPO worth $300 million in a public offering. The New Jersey company holds rights to four marketed brands, and has three drugs in late-stage clinical trials. Two of its three late-stage compounds have recently received approval from the U.S. Food and Drug Administration. This despite the fact that the company lost $170.8 million in 2004. Reliant relies on both third-party drug testers and third-party manufacturers for its cardiovascular drug portfolio.

Phenomix Corp., a San Diego-based drug company focused on immune disease and metabolic syndrome, has raised $40 million in Series B funding. Phenomix has raised $65.5 million in total VC funding since its 2001 inception.

Genomic Solutions Inc., which makes gene-analysis software and instruments, announced plans to go public in an initial public offering worth as much as $100 million.

In addition, Oxagen, a drug discovery and development company, announced the successful completion of a $59.8 Million (£31.6 Million) Series B round to support its work on anti-inflammatories and respiratory drugs.

In some recent Midwest activity, Advanced Life Sciences Inc., a developer of antibiotics and other drugs, plans to raise up to $86.25 million in an initial public offering. Advanced Life Sciences has no products for sale and has had a cumulative net lost of $41.3 million through the end of March, according to the SEC filing. The company has drugs in earlier-stage development that it hopes could treat cancer and HIV patients and is trying to get approval for an antibiotic cethromycin owned by Abbott Laboratories. The drug is in the final stage of testing generally required for U.S. approval.

Not all is rosy as Swiss biotech company Speedel Pharma AG has pulled its planned initial public offering (IPO) on the SWX Swiss Exchange due to weak market conditions, particularly for biotech stocks. The company claims to be under no pressure to go ahead with the listing and plans to continue with clinical trials with its kidney disease drug SPP301.

This follows the recent listing of Swiss drug development company Arpida Ltd., whose shares were sold at the bottom end of the range and are currently trading lower than their issue price. Arpida is focused on the discovery and development of antibiotic drugs that seek to overcome the growing problem of bacterial resistance.

The IPO market had a weak first quarter, with only eight companies going public. But, of those eight, four companies were biopharmaceuticals and raised a total of $171.8 million. Also, five of the top 10 acquisitions during the first quarter were also biotechs, which sold for $1.75 billion total -- keeping in mind that the typical IPO raised $41 million during the first quarter.

While fewer than 40 U.S. biotech companies went public between late 2003 and the end of 2004, overall VC investment in biotech startups dropped 56 percent in the first quarter from the same quarter last year, $656.6 million compared to $1.50 billion.

Noteworthy is that there seems to be optimism in the sector with many predicting some good times ahead for the industry. At Biotech 2005, it was trumpeted that 2005 will be an even bigger year than 2004, as venture capitalists continue to plow more money into the biotech sector.

Cheers!

The U.S. House of Representatives voted today to lift limits on embryonic stem cell research, which could speed cures for diseases. The House approved the Stem Cell Research Enhancement Act by a 238-194 vote, short of the two-thirds majority (290 votes) that would be needed to override a veto by President Bush -- who has said he would veto the bill.

Admittedly, the threat comes from someone who has never vetoed a single bill as president. Bush said the legislation would violate his earlier policy in which he allowed federal funding for stem cell research but limited it to 78 stem cell lines that existed as of Aug. 9, 2001. However, only about 20 of those lines proved suitable for basic research and even these cannot be used in people because they were contaminated with mouse feeder cells.

Supporters of the measure said many of the embryos that would be studied would be discarded otherwise rather than implanted anyway. They hope that federal funds could go to research that could lead to cures for diseases like Parkinson's and Alzheimer's.

As we posted earlier, this comes after opponents introduced a parallel Stem Cell Therapeutic and Research Act bill (H.R. 2520), introduced by Reps. Chris Smith, R-N.J., and Artur Davis, D-Ala., it would provide $79 million to increase stem cell research using umbilical cord blood and establish a national database for patients looking for matches. It also would clear the way for studies on stem cells derived from adults.

Many members were voting for both measures, saying that together they represented hope for the largest number of people critically ill with diseases that scientists say could be treated or even cured through stem cell research.

But, the two bills address very different procedures. Blood saved from newborns' umbilical cords is rich in a type of stem cells that produce blood cells and could be used to help treat leukemia and other diseases, even as most are routinely discarded. The Castle-DeGette bill deals with embryonic stem cells, which are the building blocks for every tissue in the body.

However, umbilical and embryonic stem cells are not interchangeable as cord stem cells have only been made to give rise to blood cells, not other tissue types as is the case with embryonic stem cells.

The bill now goes to the Senate where backers of embryonic stem cell research say it is supported by 60 senators, enough to break a filibuster by opponents, and could even get a two-thirds majority to that would be enough to beat a presidential veto.

Last week, the U.S. Court of Appeals for the Federal Circuit ruled that a District Court judge committed a "clear error" when he concluded that Allergan's patent on Acular was valid because it wasn't an obvious variation of earlier known compounds. The Fed Circuit, saying there were necessary factors that weren't considered, ordered him to review the issue.

The ruling gives Canadian generic-drug maker Apotex Inc. a second chance to seek the invalidation of the patent. Acular (ketorolac tromethamine) is Allergan Inc.'s treatment for eye inflammations, first approved by the FDA in 1992 to treat allergies, photophobia, post-surgical pain and post-surgical inflammation. Allergan contends that the patent is valid until 2009.

Apotex, Inc., Apotex Corp. and Novex Pharma (collectively "Apotex") appealed from the final judgment of the United States District Court for the Northern District of California, which, after a bench trial, held U.S. Patent No. 5,110,493 (the "'493 patent") owned by Syntex LLC not invalid, enforceable, and infringed by Apotex's Abbreviated New Drug Application ("ANDA").

Allergan, Inc., Syntex's distributor, has exclusive rights to manufacture the commercial embodiment of the '493 patent. The Federal Circuit found that the district court committed legal error in establishing certain factual predicates to its non-obviousness determination and reversed the judgment of validity and remanded for further consideration.

The '493 patent, entitled "Ophthalmic NSAID Formulations Containing a Quaternary Ammonium Preservative and a Nonionic Surfactant," claims a formulation for sterile, preserved eye drops to treat eye inflammation such as that caused by conjunctivitis or eye surgery. The '493 patent teaches combining a nonsteroidal anti-inflammatory drug ("NSAID") such as ketoralac tromethamine ("KT") and a quaternary ammonium preservative such as benzalkonium chloride ("BAC") with a surfactant such as octoxynol 40.

The NSAID is the active ingredient for reducing eye inflammation. The quaternary ammonium preservative, in turn, kills any bacteria introduced into the eye during administration of the NSAID. However, quaternary ammonium preservatives, such as BAC, do not always mix well with NSAIDs. Neither ingredient is water soluble plus the two active ingredients may react with each other to form complexes when mixed. These complexes will eventually cause the mixture to look cloudy or lose its antibacterial properties.

On appeal, the critical issue was whether the use of the surfactant octoxynol 40 in the claimed formulations is an obvious alteration of similar formulations taught in the prior art. At trial, Apotex argued that based on the prior art, a person of ordinary skill in the art would expect to succeed in stabilizing a formulation containing an NSAID and BAC with a nonionic surfactant. Contending that the formulation claimed in the '493 patent is just such a formulation, Apotex argued that it is legally obvious.

The Federal Circuit found clear error based upon the following observations:

First, the court clearly erred in finding that "[n]o pharmaceutical formulation other than ACULAR has ever included Octoxynol 40." Second, the court clearly erred in discussing the McCutcheon reference and in finding that each of the Waterbury, Gilbert, and Han references teach away from the use of octoxynol 40 in the claimed formulations. Further, the court was under the impression that, in the absence of evidence that those references teach away from combination, there was a failure of proof that there would have been any motivation by one of ordinary skill in the art to use octoxynol 40 in the claimed formulations. In so concluding, the district court failed to examine the expert testimony of Dr. Mitra on the question of whether one of ordinary skill in the art would have deemed the invention obvious, and as a subset of the overall obviousness question, whether octoxynol 40 produced the unexpected results asserted by Syntex. In addition, we think the district court failed to appreciate that the prosecution history of the relevant patents, while not establishing inequitable conduct, casts some doubt on the final examiner's conclusion that the claimed surfactant produces unexpected results sufficient to overcome a prima facie case of obviousness. Finally, we feel the district court should reconsider the significance of the commercial success of the patented formulation in light of our recent decision in Merck & Co. v. Teva Pharmaceuticals. USA, Inc., 395 F.3d 1364 (Fed. Cir. 2005).

Allergan's eye-care business, which includes Acular and Restasis drops for chronic dry eyes, accounted for $999.5 million, or 57%, of Allergan's sales last year. The Federal Trade Commission had been investigating whether Allergan and Syntex improperly thwarted generic competition by misusing the patent rights. The agency dropped the probe based on the finding of validity by the trial judge. Since Apotex was the first to challenge the Acular patent, it will have six months of exclusive rights to sell the only generic brand on the market.

See more here.

A recent Wall Street Journal article profiled the wrangling between publishers of scientific journal and academics over so-called open-access journals. That is, many researchers would love to abandon expensive journals from publishers in favor of web-based journals and databases that offer free research articles.

The WSJ depicted this as "a raging Internet-era debate about who should control information and what it should cost." The reality is not quite just a control issue. Faculty members are now trying to compete against publishers with free or inexpensive journals of their own. Two UC scientists even organized a world-wide boycott against a unit of Reed Elsevier, protesting its fees.

For a bit of perspective now. This is a big expense -- a $5 billion global market. For just the 10-campus University of California system, this represents a $30 million a year expense on scholarly periodicals. As we wrote about in an earlier post, this issue came to a head last year when the National Institutes of Health proposed that articles resulting from NIH grants be made available free online. That prompted protests from Reed Elsevier, John Wiley & Sons Inc. and several nonprofit publishers such as the American Diabetes Association, which argued such a move would hurt their businesses. The NIH retreated and in February made the program voluntary.

I'm a big fan of Paul Kedrosky's blog, Infectious Greed, and his "musing about the money culture". Kedrosky had an interesting post recently on this debate where, from his point of view, this has less to do with a high-minded, "science can only advance when information is freely available" (an open-source mindset) than the less high-minded perspective that cash-strapped universities want to use a wedge issue "to solve a problem that they created." That is, universities insist that faculty seeking tenure have to publish in top-tier journals, which begat journals ratcheting up subscription prices, knowing that universities had created the requirement that they publish in these top-tier journals. Now, universities would like to cut back on this Frankenstein's monster.

I think that the reality is somewhere between the two. For publishers, the process of selecting and editing journals is expensive but is a necessary filter to help sort out the wheat from the vast amounts of research chafe. The nonprofit publisher of the prestigious Science magazine makes content available free after 12 months. Other publishers note that with a combination of free abstracts, free distribution to the developing world and public-library subscriptions, much of the globe already has access to what they produce.

But, let's be honest here -- Elsevier's scholarly journals bring in about $1.6 billion in annual revenue with an operating-profit margin of about 30%. OK, raise your hand if you would like to see your business maintain an operating-profit margin of 30%. Now put them down.

While one could argue that all articles should be published and the public (scientists) can figure out the genius from the quack, it is the vetting of articles through the peer-review system that provides real value. At some journals, less than 10% of submitted articles make it into a publication. This lends real authority to the work and, often, is the only way to gain tenure. But this vetting costs real money. The WSJ notes that Science gets 12,000 submissions and publishes 800 articles a year on a $10 million editorial budget. That averages more than $10,000 per published article, although typical per-article costs are between $3,000 and $4,000. So, what's the solution? Competition.

Only through innovative business models and Internet-based alternatives can pressure be applied to drive down the costs of publications. For example, Harold Varmus, a Nobel laureate and former NIH director, has co-founded Public Library of Science, offering open-access journals. PLoS charges authors a fee of $1,500 for its first peer-reviewed journal, PLoS Biology, and also distributes its contents free on the Internet. But this battle is not over as publishers are lowering their fees in an attempt to keep universities from revolting - the UC System negotiated a 25% price reduction.

Get ready to rumble!

Jeremy Richey brings us Blawg Review #7 at his Blawg heralding:

“Wisdom is the chief and leader: next follows temperance; and from the union of these two with courage springs justice. These four virtues take precedence in the class of divine goods.” –Plato

Check out the review for a nice summary of this past week's activities.

On February 2, 2005, NIH Director Elias Zerhouni announced an overhaul of agency ethics guidelines that would restrict all 18,000 NIH employees' outside consulting activities for pharmaceutical companies, hospitals, insurers and health providers "in an effort to restore luster" to NIH's "tarnished reputation.”

Under the revised guidelines, about 6,000 high-ranking NIH employees would no longer be allowed to hold stock in pharmaceutical or biotechnology companies, and current stockholders in that group must sell all shares. Other NIH employees "with no control over purse strings or policies" would be subject to a $15,000 limit on "health-related stock holdings."

The guidelines would also limit awards that scientists may receive to no more than $200, with the exception of the Nobel and Lasker prizes.

The purpose of these revisions was to "codify the reversal of a trend toward liberalized links between NIH researchers and drug and biotechnology companies that began in 1995," when then-NIH Director Harold Varmus eased consulting restrictions in an effort to speed medical advances to the market.

This shift is policy was originally supported by those on Capitol Hill. Sen. Tom Harkin (D-Iowa) said, "I welcome (NIH's) decision today," adding, "NIH's well-deserved reputation as the world's premier biomedical research agency was in danger of being tarnished." Rep. Joe Barton (R-Texas) said, "For [NIH] to do the complex work of thwarting disease and saving lives requires near-absolute public confidence in the people who conduct the research. If the notion that private gain is supplanting public service as the guiding light for health research, NIH's value to our nation will plummet".”

Less than a month later, senior National Institutes of Health scientists met with NIH director Elias Zerhouni to discuss concerns that new ethics guidelines were excessive. Zerhouni stood firm on the new rules, while sympathizing with the grievances of the scientists, according to press accounts. Among other provisions, the new rules forbid 6,000 top NIH employees from holding stock in pharmaceutical or biotech companies. This rule, of course, drives the employees crazy and they want it relaxed or eliminated altogether.

These NIH scientists are now demanding the right to invest in the same companies that are affected by their research. Does this bother you as much as it bothers me?

Continue reading "Show me the Money"

The Washington Post reported that House backers of legislation that would loosen restrictions imposed by President Bush in 2001 say they have 201 co-sponsors and enough private commitments to put them at or over the 218 votes needed to pass.

See our earlier report here.

The Stem Cell Research Enhancement Act of 2005 would permit federal money to fund research on stem cells taken from days-old embryos stored in freezers at fertility clinics and donated by couples who no longer need them. The cells show great promise in treating a variety of diseases and injuries because they are able to morph into all kinds of tissues, but they are controversial because the embryos must be destroyed to retrieve the cells.

Specifically, the Act states that human embryonic stem cells would be eligible for use in any research using federal support if the cells meet each of the following:

(1) The stem cells were derived from human embryos that have been donated from in vitro fertilization clinics, were created for the purposes of fertility treatment, and were in excess of the clinical need of the individuals seeking such treatment.

(2) Prior to the consideration of embryo donation and through consultation with the individuals seeking fertility treatment, it was determined that the embryos would never be implanted in a woman and would otherwise be discarded.

(3) The individuals seeking fertility treatment donated the embryos with written informed consent and without receiving any financial or other inducements to make the donation.

Opponents, with the support of House Majority Leader Tom DeLay (R-Tex.), are hoping to persuade undecided Republicans to vote instead for a bill sponsored by Rep. Christopher H. Smith (R-N.J.), known as the Cord Blood Stem Cell Act of 2005, that would create a national umbilical cord blood bank. Cord blood cells display some of the same traits as embryonic stem cells but are more limited in the types of tissues they can become. DeLay said that he was "adamantly opposed" to the Castle bill.

You may not have heard but a new Star Wars episode opened today in theatres. Yes, after more than 25 years, "Star Wars: Episode III -- Revenge of the Sith" is certainly whipping up a frenzy among the public. ABCNews reported that Die-Hard fans of the epic paid $500 to attend the premiere of Episode III. Those not wanting to end up as fodder for Conan O'Brian's insult dog, however, should wait to see it later.

Some fanatical fans have taken Star Wars as a religion -- some more literally than others -- with "The Force" usually linked to ideas from the Chinese religion Taoism. In Taoism, the universe is constructed of energy which one must become in harmony with. Yoda and Obi-wan Kenobi are spiritual mentors, often compared to Hindu gurus and Buddhist monks. But, at least one popular spiritual blog Web site, dickstaub.com, connects Star Wars to Christian themes. Then again, on another site, the author claims to demonstrate that Yoda, a character from the movie "Star Wars" is actually a subliminal symbol of The Devil. I can't tell if they're serious.

Like Karlyn, not everyone is so enthralled. There are plenty of detractors, including an "I Hates Lucas" rant at the Bynk Zone where he chastises Lucas for changing the earlier episodes and for making Anakin an angst-filled teen, extolling:

"Thanks to George's appalling lack of subtlety and talent, one of the great embodiments of screen evil is now the lame embodiment of an over-privileged teen trust kid who had to settle for a stock Benz on their birthday instead of the AMG model."

Personally, Star Wars lost me with the prequels. As though the Jar Jar fiasco wasn't bad enough, you find out in Episode II (the fifth movie?) that Anakin's mother has spent the last decade as a slave -- all while the Jedi sit around. So the Jedi are all-powerful in the Universe, can use the force and save planets but no one could get off their butts to go over and GET HIS MOTHER OUT OF SLAVERY? No wonder he turns to the dark side. Although, it could have something to do with what seems to be a galactic-wide shortage of Starbucks. No one could spend all that time flying from planet to planet without a cup o' java in the spaceship drink holder.

For those interested in the science of Star Wars, Forbes provides an interesting pondering of the chances for success of the science in the movies. Although Forbes gives little chance for a lightsaber, don't miss this detailed explanation on How Stuff Works outlining how a light saber works, including this Important Safety Information:

"A lightsaber is not a toy! Keep it out of reach of children at all times. Lightsaber locks are required in most states."

For my son, who's too young to see the PG-13 flick, he has to be content with the Lego "Revenge of the Block," which is pretty darn good for adults, too.

We'll see you at the movies.

The New York Times had a great overview of the new tax boondoggle that is allowing the biggest drug makers to return as much as $75 billion in profits from international havens to the United States while paying a fraction of the normal tax rate.

The break is part of the American Jobs Creation Act, signed into law by President Bush in October, which allows companies a one-year window to return foreign profits to the United States at a 5.25 percent tax rate, compared with the standard 35 percent rate. See an overview here. Although any company with profits in other countries can take advantage of the law, drug makers have been the biggest beneficiaries because they can move profits overseas relatively easily. Not everyone thinks it's a great idea.

As detailed, the money comes from years of using tax loopholes to shelter profits from United States taxes. Basically, drug companies claim that their profits come mainly from international sales, even though the prices of medicines are far higher in the United States and almost 60 percent of their sales take place in America. You do the math.

For example, Pfizer said that in 2004 it had only $4.4 billion in pretax profits in the United States, compared with $9.6 billion internationally, though most of its sales came in the United States. The company says that its profit margins on international sales were almost three times as high as on American sales. Let's see ... a three-month supply of 40-milligram tablets Lipitor costs $305 at Walgreens.com and an internet pharmacy in Canada lists it for $174. Hmmmm. Appartenly, they went to the same bookkeeping lesson as my brother.

Apparently, the I.R.S. lacks the resources to challenge the companies so drug companies collectively pay a federal tax rate of less than 15 percent on worldwide profits. Although the act is intended to create jobs, Pfizer announced it would cut its annual costs by $4 billion over the next three years (read: get rid of workers) while it repatriates at least $28 billion under the act.

And the nifty part is that after the break expires, companies will probably go back to stockpiling profits overseas as they wait for another tax holiday in a few years. Congress has already shown it's willing to kow-tow to these companies.

MSNBC reported that the tax savings could run about $39 billion from the legislation. Money that won't go to social security, roads, etc. I guess making the tax rates reasonable for everyone was out of the question.

Oh, by the way, the government proposes to pay for the tax breaks, estimated at $143 billion over 10 years, mainly by closing tax loopholes and cracking down on tax cheats. That's you, my friend.

Fortunately, SUVs still get a break. The new tax bill reduces but doesn't eliminate the tax break for SUVs. Autos generally do not qualify with one exception: Vehicles that weigh more than 6,000 pounds -- which include most trucks, vans and SUVs. Great. Burn more fossil fuels and get a tax break.

And what's with the name? How does a 650-page bill that bestows billions in corporate tax breaks get titled the American Jobs Creation Act? Nice title for something that contains little that requires or even encourages companies to hire workers. Sen. John McCain, R-Ariz., who did not vote on the bill, called it the "worst example of the influence of the special interests I have ever seen." That would have been a better title for the bill.

The Patent Baristas need to lobby harder to get included in the next tax bill that comes around.

The annual meeting of the American Society of Clinical Oncology (ASCO) took place this past week in Orlando, FLA. Much of this meeting was dominated by industry giants such as Pfizer and Genentech. Although no magic bullets were revealed, the meeting does provide a forum for the smaller biotech companies to present their promising new drugs and also gives investors and others watching the industry an idea of what companies and technologies to keep an eye on.

“AP23573” - Ariad Pharmaceuticals This Cambridge, Mass.-based biotech's new drug, AP23573, showed promising results among advanced sarcomas. AP23573 is an mTOR inhibitor, a popular class of drugs getting attention at big pharmaceutical firms such as Novartis. In a study with 51 patients from a mid-stage trial of AP23573, 37%, saw their cancers stabilize for at least six months. Three of those patients actually saw their tumors shrink. These results suggest that Ariad's drug may have big potential.

“Acadopene” - GTx
GTx, founded by urologist Mitchell S. Steiner, is targeted to be the first drug firm aimed exclusively at men's health--and, more specifically, at prostate cancer. Selective endrogen receptor modulators, or SERMs, including Eli Lilly's Evista, block estrogen in some tumors, but also simulate estrogen-like effects, and are used to prevent osteoporosis in women. SERM's have shown promise against breast and endometrial cancer as well. Steiner theorizes that estrogen may be a factor in the development of prostate cancer, and thinks that a SERM could keep the disease under control. In a phase II trial unveiled at ASCO, scientists demonstrated that GTx's SERM, called Acadopene, reduced the chances of high-risk premalignant cells turning into prostate cancer by 48%. GTx is moving ahead with a phase III clinical trial in order to prove that the drug works for men.

“CRx-026” - CombinatoRx
This small, privately held company comes with a pedigree. It was founded by several researchers who are interested in attacking disease from multiple directions, using multiple chemical pathways. Peter Elliott, who co-developed Millennium's Velcade, a treatment for multiple myeloma, is now working on new drugs at Boston-based CombinatoRx. The company showed extremely early data of its first cancer drug, CRx-026, in a handful of patients, and a few seemed to be helped by it. The data are very premature, but CombinatoRx could be one to watch.

“Dasatinib” - Bristol-Myers Squibb
Novartis' Gleevec was the first gene-targeted pill to show a marked effect in a cancer--in this case, chronic myelogenous leukemia. But Gleevec eventually fails for some of those patients, as new mutations make the cancer more complex--and resistant to the drug. This new drug from Bristol-Myers Squibb appears to help those patients. Several studies appeared to link Dasatinib to mutations in specific cancer genes.

The President's Council on Bioethics has released a report that describes potential ways around the objections that have been raised against embryonic stem cell research. Because obtaining stem cells requires the destruction of a human embryo, many researchers find performing research with these cells ethically unacceptable.

Stem cells are unspecialized cells that can renew themselves for long periods through cell division. In addition, under the right conditions, they can develop, or "differentiate" to become cells with more specialized functions. Embryonic stem cells are "pluripotent," or capable of differentiating. Under the right conditions, human embryonic stem cells will proliferate indefinitely without specializing or differentiating into specific cell types.

Earlier, President Bush limited the use of federal funds for stem cell research by Executive Order, as of Aug. 9, 2001, which put a restraint on U.S. labs so that they can receive federal funding to study only the 22 embryonic stem cell lines available and approved by the National Institutes of Health. Although millions of stem cells can come from each line, they will only contain the genetic diversity of a few individuals. [However, see CNN's recent article on why the ban may be reversed.]

Now, the President's Council report looks at four potential methods of deriving cells that would have all the therapeutic potential of embryonic stem cells, without the ethical objections. The methods include deriving stem cells from embryos that have stopped growing and are essentially dead, or finding ways to trick adult cells into behaving like embryonic cells. While none of these approaches is certain to work, the report encourages more scientific research on these alternatives.

Read the Report President's Council on Bioethics: 'Alternative Sources of Pluripotent Stem Cells'

You can also hear discussion about the report on NPR's All Things Considered, May 15, 2005. The NPR Audio link can be found here.

According to the New York Times, two of the three research scientists on the council have "vigorously rejected" the report's recommendations. Michael Gazzaniga, a professor of neurology at Dartmouth College, said the proposed alternatives are "high-risk gambles" and evade the question as to whether the United States should endorse embryonic stem cell research as it currently is done or whether the country will "remain hostage to the arbitrary views of those with certain beliefs about the nature of life and its origins".

Janet Rowley, a cell biologist at the University of Chicago, said it is "totally baffling" to let healthy embryos die instead of using them to help other patients. The "sharp division" between scientists and bioethicists on the council is "unusual," the Times reports. Council Chair Leon Kass said the council has a more balanced perspective, with more members who are "pro-life" than past councils, and that it is "more representative of the nation as whole."

The dead-embryo idea draws on the fact that in fertility treatments, when many embryos are made in a test tube by mixing eggs and sperm, typically several embryos cease to undergo further cell division and can be regarded as dead. The council considers it possible that other cells might still be viable and could be salvaged for use as stem cells. Since use of tissues from cadavers is ethically acceptable, by analogy the use of viable cells from embryos regarded as dead should also pose no problem, it believes.

The second method deemed acceptable depends on the fact, basic to the technique for cloning animals, that when the nucleus of an adult cell is inserted into an unfertilized egg, the egg somehow makes the nucleus revert to an embryonic state. Presumably, there are chemical signals in the egg that enter the nucleus and reprogram its DNA. The council recommends finding these factors and using them to convert adult cells into stem cells.

On a related matter, the ban on federal funding for research has set off the Great Stem Cell Gold Rush, as states via for developing funding at the state level to concentrate the research in their own states. States all believe that they can bring lucrative companies and jobs to their state even though, despite all the excitement, no human therapies from embryonic stem cells have yet to be developed or tested.

California has passed Proposition 71, which provides $3 billion for stem cell research throughout the state over the next ten years ($350 million a year) and creates the The California Research & Cures Coalition, which has changed its name to The Foundation for Stem Cell Research, to administer funding. New Jersey established the New Jersey Stem Cell Institute, the first state-funded human embryonic stem cell research center and plans to introduce a $500 million bond proposal to continue to fund human embryonic stem cell research over the next 10 years. Similar activities are being proposed in Connecticut, Florida, Illinois, Maryland, Massachusetts, Minnesota, New York, Texas, Wisconsin, Pennsylvania, New Jersey, and Delaware.

It will be quite interesting to see how all these tax dollars sloshing around changes the landscape of research, perhaps further concentrating the research and related commercialization to just a few epicenters across the country.

The National Inventors Hall of Fame added its latest class of inductees for 2005. The new inductees include the inventors of Streptomycin and the photocopier along with Grammy-Award winner Les Paul, inventor of the solid body electric guitar in 1946.

The 2005 honorees are:

LIVING

C. Donald Bateman: Ground Proximity Warning System (GPWS); Robert Gundlach: Modern photocopier; Alec Jeffreys: Genetic fingerprinting; Dean Kamen: AutoSyringe; Les Paul: Solid-body electric guitar; Leo Sternbach: Valium.

POSTHUMOUS RECOGNITION

Matthias Baldwin: Steam locomotive; Clarence Birdseye: Frozen foods; Leopold Godowsky, Leopold Mannes: Kodachrome color film; Garrett Morgan: Gas mask, traffic signal; Glenn Seaborg: Plutonium isolation; Jacob Rabinow: Optical character recognition; Selman Waksman: Streptomycin.

Inventors may be nominated by anyone for induction into the Hall of Fame, but they must hold a U.S. patent to be considered. The nominee's invention must have contributed to the welfare of society and have promoted the progress of science and the useful arts.

The not-for-profit National Inventors Hall of Fame, located in Akron, Ohio, was founded in 1973 by the U.S. Patent and Trademark Office and the National Council of Intellectual Property Law Association.

The Baristas received a nice mention on the IPKat blog, noted for "fishing for IP stories for YOU" by Jeremy Phillips and Ilanah Simon from the Queen Mary Intellectual Property Research Institute. They write about copyright, patent, trade mark and privacy/confidentiality issues from a UK and European perspective. We get our updates from the Kats and recommend you give them a read, if you've not already.

Blue Cross/Blue Shield and other insurers have sued GlaxoSmithKline in a dispute over the generics market of Paxil. The insurers are alleging that Glaxo has been gaming the patent system to keep cheaper generic alternatives to the antidepressant off the market. Glaxo lost its patent on Paxil in 2003. They accuse Glaxo of violating federal and state antitrust laws and fraud laws and engaging in deceptive trade practices.

The lawsuit alleges that the drug company claimed to hold patents on scientific procedures that already were in the public domain and listed invalid patents with the U.S. Food and Drug Administration that kept other pharmaceutical manufacturers from making generic equivalents.

Since sales on a blockbuster drug can plunge 80 percent or more the first year after a generic competitor hits the market, drugmakers have an incentive to fend off generics for as long as possible. In addition, brand-name drugs can cost three times their generic equivalents, according to the Generic Pharmaceutical Association, even though the FDA insists there is no therapeutic difference between generics and name brands.

Drug companies have tried to release new "improved" versions, also newly patented, as patents on their original drugs expire. For example, when Glaxo lost its patent on Paxil, they came out with a new version that patients take just once a day, rather than twice. Paxil CR, a once-a-day "controlled release" drug that had $824 million in U.S. sales last year.

Another tactic is to release an over-the-counter drug when patents expire to hold on to market share as in the case of Schering-Plough, which release an OTC of Claritin, its blockbuster antihistamine, thus killing a lot of its generics market.

This doesn't always work, of course, as in the case of Merck & Co., who tried to get approval for an over-the-counter version of Mevacor, a cholesterol-lowering drug, but the FDA turned it down.

See more here.

The Court of Appeals for the Federal Circuit (CAFC) heard arguments from Monsanto Corporation on the patentability of genetic markers, known as Expressed Sequence Tags (ESTs). (In re Fisher, Fed. Cir., No. 04-1465; May 3, 2005) Monsanto argued that its application should not have been rejected by the U.S. Patent and Trademark Office (USPTO) for not being useful. Reviewing a conclusion by the Board of Patent Appeals and Interferences that the patent applications failed to satisfy the utility requirement of 35 U.S.C. sec. 101, the court is looking at whether the application must disclose the utility of what is being marked by the markers or just the utility of the markers themselves.

A large proportion of the DNA in the mammalian genome does not appear to encode any known protein. Within the genome are genes (sections of DNA that encode proteins) that are transcribed to form mRNAs, which are in time translated to produce proteins. Within the genome are ESTs, short random fragments of DNA that are isolated from mixed mRNAs and converted back to cDNAs. Because each EST is related to an mRNA, it must represent the part of a gene which encodes a protein. Using known techniques the location of the EST on the genome can be determined. Related are SNPs, sites in the genome in which there is variation among the population of one base in the sequence, which are often in the regulatory regions (promoters) rather than in coding regions of the genome. ESTs and SNPs are important because of their potential use in understanding genetics and diseases. If a certain population with a certain condition is found to have the same SNP, that may be significant. The production of a particular protein associated with a condition may be investigated through a corresponding EST.

The PTO found that the ESTs claimed in the application failed to meet a standard for "credible, substantial, and specific" utility implemented in 2001. This case is a test of the new utility standard, which the PTO implemented because of the concerns of the National Institutes of Health and other research organizations, that patents on ESTs could entangle later genomic research and technology. This is also a test of the patentability of "research tools" or technologies that are primarily used to advance other research.

Opponents of EST patents have argued that permitting EST patents will encourage researchers to search for and patent ESTs rather than focus on characterizing full-length genes. It has also been argued that allowing the patenting of ESTs will disproportionately favor large pharmaceutical companies and that patenting ESTs will inevitably lead to costly disputes. Another argument is that too many EST patents will increase licensing complexity and costs, and lead to grave market inefficiencies. Proponents of EST patents have argued that, at one time, the electronics and computer industries faced similar objections, yet patent protection in those industries actually spurred innovation and lead to better and/or less expensive products.

Monsanto is arguing that the PTO had erred in claiming that the utility of ESTs depends on knowledge of the characteristics or function of the gene sequences that the ESTs correspond. Monsanto argued there are other uses for the tags not requiring a knowledge or interest in the corresponding gene sequence and that, for example, the mapping is desired to establish a statistical correlation between identified sequences and plant traits identified by cross breeding, arguing that the utility requirement is satisfied for every tag that is properly disclosed. The USPTO, however, argued that Monsanto's application asserted no specific, "real world" utility for the claimed ESTs. Judge Rader specifically asked if the PTO had not "set the bar too high," suggesting that valuable sequence information might go undisclosed and would be retained as trade secrets. The USPTO then asserted that DNA fragments require further research and discovery to be useful, comparing EST patent applications to "raffle tickets."

The CAFC's decision is expected later this year. We'll keep you posted.

See a nice detailed description of the issues at the Patently-O blog.

Yes, its been somewhat of a slow week on the bio/pharma patent news front. So what to write about that is still patent related?

Boeing Co. engineers have found a way to increase the size of those claustrophobia-inducing aircraft lavatories. Yes, a more spacious bathroom on airplanes. Mind you, I am a petite 5 feet 4 inches, and I felt cramped, so given the size of the general population, wasn’t this obvious? How did they get a patent on this? Where’s the patent quality police. Come to think of it, there was a long-felt yet unfulfilled need.

This past Tuesday, the U.S. Patent and Trademark Office granted Boeing Co., a patent for a bathroom that expands into passenger doorways between cabins when a plane is in flight.

This extreme makeover/airplane bathroom edition promises to provide passengers more room for changing clothes, diapers and “refreshing themselves,” the patent says, without taking up more room in the passenger cabin — a concern for many nearly bankrupt airlines which need to squeeze in every possible “seat,” so to speak.

During take-off, landing and while a plane is on the ground, the lavatories would be locked into tight compartments to give passengers and crew ample room to board and exit the aircraft.
Once in flight, the lavatories would rotate into the emergency doorways via giant turntables, their sinks connected to the aircraft’s innards via flexible plumbing lines.

The patent also addresses one likely passenger fear: that the giant lazy susan might accidentally swing shut, trapping an occupant. “(D)uring a turbulent flight, a suitable locking mechanism (e.g., latches, etc.) can be provided,” the patent states. Can’t wait to try this one…..

Somewhere around the world, likely around Sunday, May 8 or Monday, May 9, 2005, the one billionth cumulative acre of biotech crops was planted, as reported by the policy analysts for Truth About Trade and Technology (TATT).

Just how big is a billion acres? It’s really big. A billion square acres would cover the entire land area of the European Union’s 25 countries. (World Factbook, 2004)

For a prospective on the magnitude of the growth in biotech plants, though it has taken the past 10 years to achieve that milestone, at the present double-digit growth rate, it won't be more than four years until the second billion acres of biotech crop plantings is reached. In 2004 alone, more than eight million farmers planted 200 million acres of biotech crops in 17 countries.

More here.
See Pioneer Hi-Bred's Comment.

This comes on the heels of the introduction by Syngenta of genetically engineered golden rice, "Golden rice 2" that contains up to 23 times more provitamin A, the substance converted in the body into vitamin A. This vitamin is vital for preventing childhood blindness, which affects 500,000 children worldwide each year.

The breakthrough was achieved by replacing a gene originally borrowed from daffodils, and which also has a counterpart from maize. Critics of the original golden rice said that its levels of provitamin A - 1.6 micrograms per gram of rice - were too low to make the rice a practical proposition. But each gram of the new strain contains up to 37 micrograms of the provitamin. The new rice could provide at least half what a child would need and might now contain enough to supply the entire recommended daily intake.

But critics point out that it remains to be proven that the provitamin A is absorbed and converted into vitamin A when people eat the rice. However, questions about the uptake of provitamin A, also known as beta carotene, could be answered later in 2005 through experiments in people using the original golden rice.

Syngenta owns Golden Rice 2, but is donating it to the Humanitarian Rice Board.

The Washington Post reported that a three-judge panel for the U.S. Circuit Court of Appeals for the District of Columbia said the Federal Communications Commission had exceeded its authority in requiring built-in, anti-piracy technology to let broadcasters and studios prevent digital shows from being copied.

The "broadcast flag" would have been required in digital televisions and consumer devices sold after July 1. Under the rule, producers were to be required to embed a Broadcast Flag into programs transmitted via DTV signals so that, for example, users could store a program on a hard disk but would be prevented from archiving it to a DVD in order to save hard drive space. A detailed description of the regulation is available from the Electronic Frontier Foundation.

Judge Harry T. Edwards wrote:

"In this case, all relevant materials concerning the FCC's jurisdiction -- including the words of the Communications Act of 1934, its legislative history, subsequent legislation, relevant case law, and commission practices -- confirm that the FCC has no authority to regulate consumer electronic devices that can be used for receipt of wire or radio communication when those devices are not engaged in the process of radio or wire transmission."

While it is a setback for the entertainment industry's anti-piracy agenda, it's also going to slow down the entrance of digital media products as the industry tries to keep a tight lock on digital media.

Edwards also stated that the court could:

"find nothing in the statute, its legislative history, the applicable case law, or agency practice indicating that Congress meant to provide the sweeping authority the FCC now claims over receiver apparatus. And the agency's strained and implausible interpretations of the definition provisions of the Communications Act of 1934 do not lend credence to its position."

This means that proponents of the broadcast flag, like the National Association of Broadcasters, will be running to Congress to try to get their agenda pushed onto the public. This will make for some interesting times as Congress tries to rewrite the 1996 Telecommunications Act, set a "hard date" for the transition to digital TV, toughen the nation's laws for indecent programming and (probably) revisit copyright law after the Grokster case.

See the entire opinion here.

I thought since its an absolutely beautiful Friday here in Cincinnati, I’d write about a lighter topic and focus today’s post on two of my favorite things – animals (and dogs in particular for this post) along with patents and patent reform. (Okay, so this post is about one of my favorite things.) Now, what you might ask do these two things have in common? Personally, I have two retriever rescues and I am a patent attorney, so that might be enough for some. But……..

Much has been said about patent reform lately. Last month, Stephen discussed some of the more substantative changes to U.S. patent law that are sorely needed and the efforts to reform this patch-work patent system we use on a daily basis.

In fact, just last week (April 28, 2005), The Honorable John W. Dudas made a statement before the House Subcommittee on Courts, Internet and Intellectual Property addressing “Patent Quality Improvement.” (Do you think this may be in response to the PB&J patent brouhaha?). Secretary Dudas proposed as a part of a strategic plan, a post-grant review addressing patent quality issues. What I would like to know since beauty is in the eye of the inventor, how does one address such a subjective issue?

I raise this point purely for my own interests since I stumbled across a news item about a dog-washing machine that could be part of a doggie spa. Its touted as “the latest canine grooming craze to hit pet spas across the country.” So, first I thought of my two dogs, Sadie and Sam, when I saw what appeared to be a dog smiling (or at least its human was) in the picture that accompanied the article. Then I saw the machine itself and began to ponder the obvious question to any patent attorney. Sure enough, there was an issued patent, (February 2004) so presumably this machine is safe and secure and patent-protected.

This brings me back to the quality issues Secretary Dudas spoke of as I tried to picture the Secretary attempting to subdue and then wash my 60 pound retriever with a hose and bucket, or picture him placing my spastic retriever in the dog-washer as a part of Sammy’s "spa experience." This is pure quality to me.

Now, I did also have some kid put a flyer under my windshield the other day advertising his services to pick up dog “excrement” from my yard, priced out by the poundage of the dog, or was it poundage of excrement.... Maybe there’s another patent here just waiting to be drafted.

Now, what might you ask do these things have in common? Well, in what some reports claim to be a “surprise” announcement by Merck, the drug company announced today that Raymond V. Gilmartin was stepping down as chief executive of and that a longtime company insider, Richard T. Clark, would replace him.

Frankly I don’t see what the “surprise” is. Maybe the timing? Maybe he wanted a nice summer vacation. But, for Gilmartin to state to the board and shareholders in a December 2004 business briefing that “Merck's response to the VIOXX withdrawal was swift and effective…and the long-term strategy we have in place is still very much the right one, given the environment in which Merck and the rest of the industry will be operating in the years ahead" is delusional.

This move was greeted with little enthusiasm by investors who had hoped for a high-profile outsider to help the embattled company rather than taking the easy way out and choosing just another old-school and ‘safe’ choice. Not too creative for a company that has not introduced a new successful drug for the last few years. In fact, Merck has been one of the slowest of the big drug companies to acquire new medicines from the outside -- either through licensing deals or acquisitions. Instead, it has insisted on relying on its own internal research. Merck has failed in recent years to launch many big-selling products, with the exception of two new cholesterol drugs it is co-marketing with Schering-Plough Corp.

Now what was that about dinosaurs and extinction? I am certainly tired of seeing top executives continually being rewarded for poor performance. If the phrase “you eat what you kill” applied to Gilmartin, he’d be dead from starvation by now.

Continue reading "A Million Dollar Fall Guy and Dinosaur Extinction (AKA – What is happening with Merck?)"

We're seeing more interest in patenting of micro- and nanotechnology inventions. Red Herring recently ran an interesting article describing a report by Lux Research entitled "The Nanotech Intellectual Property Landscape," showing that, as of March, there were 3,818 nanotechnology patents issued by the USPTO with 1,777 more pending. The report describes a "crowded and entangled landscape" where startups, researchers and large companies are filing on anything that could be a patent in hopes for a windfall in the future.

This gold rush mentality of nanotech entrepreneurs has university and corporate researchers alike filing patent applications left and right, betting that their patents will generate sweet deals later. Often, without a lot of forethought.

Lux examined 1,084 U.S. patents that represented 19,485 claims on dendrimers, quantum dots, carbon nanotubes, fullerenes, and nanowires. Lux reported that the increase in filings has overwhelmed the USPTO, often with overlapping terms like "nanorod" and "nanowire," so that patents are issuing with broad, overlapping claims, making for some difficult litigation later if commercialization ever materializes.

More on Peter Zura's Two-Seventy-One Patent Blog, here.

A summary of the Lux report findings can be found here.

Often separating the facts from the hyperbole is quite difficult. On the NanoTech Lex blog, one of the blogs by Anthony Cerminaro, there are some great suggestions for evaluating the claims of nanotechnology companies in his post "7 Questions for Reporters to Ask Nano Companies." In order to separate out the real nanotech companies from those only using the flash of nanotech language for financial gain, he suggests reporters ask a few basic questions to ascertain whether a company is truly nanotech worthy:

1. Where's the nano? Show me the nano.

2. Is nanotechnology required for your technology to work? Could microtechnology be substituted instead?

3. Does your technology provide an answer to a specific industrial dilemma, or is it a solution in search of a problem?

4. Who are your competitors/competing technologies? Why is your technology a better solution?

5. Are other researchers/companies following your lead or are you a lone ranger?

6. What's your market strategy?

7. Have you been approached by other (especially larger) companies about licensing/acquiring your technology?

Cerminaro points out that, like any emerging technology, nanotech is "an uneven amalgamation of science, finance, marketing, personalities and luck" where more than $8 billion per year is being spent on nanotechnology research and development by federal, state and local governments, Fortune 500 companies, and universities. Just be careful out there.

One of Business Week’s blogs, Deal Flow, states in a recent post that with such a fragmented market, few investors are going to be able to understand the competitive landscape. Therefore, many investors might be tempted to believe a patent means more than it does, setting some investors up for a big loss. They point out that very often small cap, nano-companies can skyrocket or plummet on the mere mention of a new patent. Let's be careful out there.

See more here and here.

The next edition of Blawg Review is up at Law & Entrepreneurship News. Law & Entrepreneurship News is a collaborative project involving Professor Gordon Smith and students at the University of Wisconsin Law School.

Law & Entrepreneurship News provides a nice collection of information particularly of interest to small businesses and emerging growth companies. The Baristas wish they had their team of editors and their Research Advisor, Bonnie Shucha, who's "paid to be an information detective" and likes Almond Joy ice cream.

Next week's edition is hosted again by Professor Smith at Conglomerate , only this time he co-blogs with Christine Hurt, Assistant Professor of Law at Marquette University. The Baristas will be hosting the Blawg Review on August 15th, right after the Common Scold. Those interested in submitting a post should see the Submission Guidelines.

As a Monday morning patent litigation round-up of interesting proceedings, I put together a list of recent actions. You just can't tell the players without a program:

Eli Lilly has filed a lawsuit to block Teva Pharmaceuticals from selling generic Symbyax after Teva filed for an Abbreviated New Drug Application (ANDA) for generic Symbyax on January 10, 2005. This is currently the only option open to the innovator company under the process outlined in the Hatch-Waxman Act, despite the fact that Lilly has just emerged successfully from a similar patent court battle over Zyprexa. On April 14, 2005, the federal court upheld Zyprexa's patent which was under fire by Ivax, Dr Reddy's and Teva. This precedent would suggest that Teva's second attempt to bring a product containing olanzapine to the market will also be unsuccessful. Unfortunately for both, the FDA has recently issued a warning of fatal adverse events in patients treated with certain atypical antipsychotic drugs including Abilify (aripiparozole), Zyprexa (olanzapine), Seroquel (quetiapine), Risperdal (risperidone), Clozaril (clozapine) and Geodon (ziprasidone). Manufacturers were asked to place a "black box" warning (the FDA's most severe labeling option) on drug labels. Opinion leader research carried out by Datamonitor had indicated a concern about the long-term use of Symbyax at the time of its approval, with only an eight week trial having been carried out. More here.

Sandoz, Inc. notified Cephalon Inc. that it will no longer challenge Cephalon's U.S. particle-size modafinil patent. Instead, Sandoz said it intends to convert its abbreviated new drug application (ANDA) for approval of a generic equivalent of modafinil, the active ingredient contained in PROVIGIL® Tablets [C-IV], from a paragraph IV certification to a paragraph III certification. Sandoz will certify to the U.S. Food and Drug Administration (FDA) that it does not intend to market a generic form of modafinil until the applicable patent for modafinil listed in the Orange Book has expired in 2014. Therefore, it will no longer be necessary for Cephalon to continue to pursue its patent infringement litigation against Sandoz. More here.

Schering AG announced on Friday that it filed a patent infringement action in the U.S. District Court for the District of New Jersey against Barr Pharmaceuticals Inc. over its Yasmin oral contraceptive. Barr Laboratories Inc. is currently seeking approval from the Food and Drug Administration to produce and market a generic version of Yasmin. More here.

Medtronic Inc. has agreed to settle a lawsuit by paying biotechnology company Cytomedix royalties to use the company's therapy for wound healing. Cytomedix filed a lawsuit against Medtronic in November, alleging that Medtronic was infringing on Cytomedix's patent for a treatment that uses a patient's own blood platelets to treat tissue damage and diabetic foot ulcers. More here.

The Motley Fool offered the "Lowdown on Patent Shakedowns" and talked about the rise of the patent terrorists in a recent article. It seems that the rhetoric has really ratcheted up a notch recently - there must be some intense lobbying going on.

The term patent terrorists (or the more polite, patent trolls) has been showing up quite a bit lately in the news. This refers to any person/entity that owns a patent or patents but never develops products based on them but threatens others with litigation with demands for payment of license fees.

What’s interesting is that the article seems to draw a distinction between the business of licensing patents - described as a legitimate enterprise - and patent terrorism, a form of licensing that does not follow an established code of conduct. I don’t know where this code is posted but if someone has a citation, please send me a link, I’d like to see it.

From the article, patent licensing apparently means licensing if done by a large company (the article mentions IBM and TI), which for some reason is OK even though it is described as generating huge revenue streams for companies, revenue that must come from someone. Yet, the Fools say there is definitely a code of conduct for the licensing of innovative ideas here in the U.S., and patent terrorists often cross this time-honored line.

I realize they’re fools and all but what the eff are they talking about? And why do the Fools even care? If one is concerned primarily with investments in companies -- companies that could be on either side of the equation -- don’t you just want the company that reaps the greatest profit? Couldn’t a company that decides to license a product without commercializing it be a good investment? And how did the Fools come to be the arbiters of what practices in licensing patents will be considered legitimate?

The Fools seems to think that licensing is acceptable only if there is some form of return in kind, that is, cross-license agreements. The other "acceptable" scenario is if a company pays licensing fees to a patent owner and the ideas can give the company a significant boost in either time to market, profitability, or competitive advantage. The Fools say that in this case, the inventors "often provide consulting, design services, or other forms of technical assistance." Both of these forms of patent licensing are good because they represent collaborations between two parties.

Patent terrorism, though, is an evil presumably because it doesn’t include either cross-licensing or help for the licensee with product development. Therefore, the result is not legitimate but is instead, a shakedown. The Fools even mention the target's "so-called 'infringing' products."

I’m not sure how the Fools would classify Ampex Corp., whose share price rocketed from $1 to $40 (now $32). Founded in 1944, it had been one of Silicon Valley's greatest innovators. Ampex then hit a long, money-losing slump until it started aggressively enforcing its patent portfolio. Ampex filed lawsuits against large consumer-electronics companies, including Sony and Eastman Kodak, for infringing a patent on a method for displaying digital images. Royalties from that patent helped Ampex generate a profit of $47.1 million in 2004 on revenues of $101.5 million

Does that make it illegitimate? It's funny that the Fools often recommended tobacco stocks in the past because of the massive return on investment and have now come out against licensors for asserting their rights. While the Baristas aren't sure what the Fools have been smoking, they can’t help but notice the coincidence that this article came out just as Intel’s patent attorney is on a road show campaigning against those pesky patent trolls.

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Update: I received this Ampex response to BusinessWeek from Dan McGlinchey, Senior Vice-President, Emerging Growth Equities Ltd.