Patent Baristas

OK, maybe not explode but at least some terrible, Armageddon-like fate.  According to a study by the Federal Trade Commission, pharmaceutical companies are engaging in anti-competitive tactics of paying potential generic rivals to delay the introduction of lower-cost prescription drug alternatives.  The report summarizes data on patent settlements filed with the FTC and the Department of Justice during FY 2011 under the Medicare Modernization Act of 2003.

The FTC staff report claims that drug companies entered into 28 potential pay-for-delay deals in FY 2011.  Emphasis on the word “potential“.  I think this report is idiotic and not because it has to do with complaining about patents.  It’s that this so-called study is completely flawed in its logic.  And, if there’s one thing patent attorneys hate, it’s the illogical.

Here’s the supposed data and the conclusions drawn from them, you be the judge:

The FTC looked at 156 final resolutions of patent disputes between a brand-name and a generic pharmaceutical makers. Out of the 156, they found the following:

1. 28 final settlements contain both compensation to the generic manufacturer and a restriction on the generic manufacturer’s ability to market its product;
2. 100 final settlements restrict the generic manufacturer’s ability to market its product, but contain no explicit compensation;
3. 28 final settlements have no restrictions on entry; and
4. of those 28 final settlements that contain both compensation and a marketing restriction, 18 involved generics that were so-called “first filers,” meaning that they were the first to seek FDA approval to market a generic version of the branded drug, and, at the time of the settlement, were eligible to exclusively market the generic product for 18 months.

So far, so good.  Up to this point, these are all just facts.  Now, look at the conclusion the FTC draws:

1. generic drugs help reduce costs for taxpayer-funded health programs such as Medicare and Medicaid.
2. generic drug prices are typically at least 20 to 30 percent less than the name-brand drugs;
3. patent settlements that include a payment or other compensation delay generic entry on average by 17 months longer than those that do not include a payment;
4. the 28 settlements involve 25 different branded pharmaceutical products with combined annual U.S. sales of more than $9 billion; and
5. prohibiting pay-for-delay settlements would reduce the federal deficit by $2.67 billion over 10 years.

Ipso facto, pay-for-delay settlements are at the root of the world financial crisis.  And global warming.  And maybe the war on Christmas.  Well, at least we know the government knows how to work a calculator.  What they lack (purposefully?) is an understanding that patent lawsuit settlements by there very nature are two sides coming up with terms that they can both agree on.

Both sides are for-profit entities with no interest in not making a profit.  Both sides are also being advised by presumably competent counsel.  The brand-name company believes its patent is perfectly valid but aware that anything can happen in litigation.  The generic company may well believe the patent is not valid but aware that anything can happen in litigation.  They have weighed the risks and rewards and decided on a settlement they can live with.

Yet, the FTC concludes that these settlement are wrong and are harming hard-working, God-fearing Americans.  Or, is it that the government really just needs to reduce the deficit and cutting drug costs sounds good?

“While a lot of companies don’t engage in pay-for-delay settlements, the ones that do increase prescription drug costs for consumers and the government each year,” said FTC Chairman Jon Leibowitz.  “Fortunately, Congress has the opportunity to fix this problem through the Joint Select Committee on Deficit Reduction — and save the government and American taxpayers billions of dollars.”

The FTC has challenged a number of these patent settlement agreements in court, contending that they are anti-competitive and violate U.S. antitrust laws.  The agency also has supported legislation in Congress that would prohibit pay-for-delay settlements that increase the cost of prescription drugs.

Inevitably, the FTC must make some difficult decisions about whether or not a particular patent settlement harms com­petition and should be challenged on antitrust grounds. But the broad conclusion that a settlement is anti-competitive if it includes compensation plus market restriction lacks a proper critical analysis.

At least you can like the FTC on Facebook.

A process which involves removal of a stem cell from a human embryo at the blastocyst stage, entailing the destruction of that embryo, cannot be patented.

Last week the Court of Justice of the European Union issued a judgment in the case of Brüstle v Greenpeace e.V (Case C 34/10) in which it banned the issuing of patents for stem cells on ethical grounds.  Mr. Oliver Brüstle is the holder of a patent for isolated and purified neural precursor cells produced from human embryonic stem cells used to treat neurological diseases.

The Federal Patent Court ruled that Mr. Brüstle’s patent was invalid in so far as it covers processes for obtaining precursor cells from human embryonic stem cells.  On appeal, the Court of Justice (CJEU) was asked to interpret the concept of ‘human embryo’ which is not defined in Directive 98/44/EC on the legal protection of biotechnological inventions.

The purpose of Directive 98/44 is to establish a framework for the legal protection of biotechnological inventions. Article 6(1) provides that inventions must be considered unpatentable where their commercial exploitation would be contrary to ordre public or morality. Article 6(2)(c) of the directive cites the use of human embryos for industrial or commercial purposes as an example of inventions which are considered unpatentable.

The question is whether the exclusion from patentability of the human embryo covers all stages of life from fertilization of the ovum or whether other conditions must be met, for example that a certain stage of development be reached.

The case raised very interesting legal and ethical issues, in particular how the right to human dignity related to the dispute. Although a fundamental right under German constitutional law and jurisprudence, the right to human dignity has been recognized as an unwritten principle of EU law, and undoubtedly played a significant part in the outcome of this case.

The Court was asked “What is meant by the term “human embryos” in Article 6(2)(c) of Directive 98/44 ?”  Directive 98/44 stipulates that patent law must be applied so as to respect the fundamental principles safeguarding the dignity and integrity of the person.  The question then is what form, what stage of development of the human body, must be given the legal categorization of ‘embryo’.

The development from conception begins with a few totipotent cells, which each cell has the capacity to develop into a complete human being. The Court viewed totipotent cells as representing the first stage of the human body and must therefore be legally categorized as embryos.

The Court emphasized that whether that categorization must be recognized from before or only after implantation is irrelevant.  This means that every totipotent cell, whatever the means by which it has been obtained, is an embryo and that any patentability must be excluded.  This definition covers unfertilized ova into which a cell nucleus from a mature cell has been transplanted.

The Court felt that characterizing a totipotent cell as an embryo does not resolve the issue since an embryo quickly develops into a blastocyst made up of pluripotent cells, which can develop into all kinds of cells to form all the organs of the human body. These cells cannot develop separately into a complete human being.  While the court felt that blastocysts as a whole must be categorized as an embryo, an individual pluripotent cells in isolation is not.

Most of the EU Member States take the view that pluripotent stem cells are not human embryos given that embryonic stem cells, taken in isolation, are no longer capable of developing into a complete individual.  However, the Court said it is not possible to ignore the origin of this pluripotent cell.  The pluripotent stem cell in the present case is removed from the blastocyst, which the removal will destroy. The argument is that patentability depends on the way in which it has been removed and the consequences of such removal .

In comparing the situation to prisoners killed in order to remove organs for trafficking, the Court reasoned that even though the claims under the patent did not specify that human embryos are used for the exploitation of the invention, when they actually are, the patentability of such an invention must be excluded.
While the Court agreed that inventions relating to pluripotent stem cells can be patentable if they are not obtained to the detriment of an embryo, the cells at issue are removed from the human embryo at the blastocyst stage and they necessarily entail the destruction of the human embryo.  The Court held that Article 6(2)(c) must be interpreted that a human embryo applies from the fertilization stage to the initial totipotent cells and to the entire ensuing process of the development and formation of the human body, which includes the blastocyst.

The use of human embryos for therapeutic or diagnostic purposes which are applied to the human embryo and are useful to it is patentable, but their use for purposes of scientific research is not patentable.

The Court interpreted Article 6(2)(c) of Directive 98/44/EC on the legal protection of biotechnological inventions as an invention must be excluded from patentability where the application of the technical process for which the patent is filed necessitates the prior destruction of human embryos or their use as base material, even if the description of that process does not contain any reference to the use of human embryos.

The exception to the non-patentability of uses of human embryos for industrial or commercial purposes concerns only inventions for therapeutic or diagnostic purposes that are applied to the human embryo and are useful to it.

The holding and reasons of the case means that inventions making use of deposited cell lines which had originally been obtained by destruction of an embryo within the broad meaning of an embryo are not patentable. This applies even if the origin of the cell line is not part of the claim in question.

If you read the ruling as saying that any invention based on human embryonic stem cells is unethical and therefore cannot be patented, then the ruling will have major implications for the commercialization of stem cell-based technologies in the EU, especially if it fosters the idea that stem cell research is inherently immoral.

It will take several years for the European Patent Office, national patent offices and various courts to take up the issue and interpret the decision. In one view, companies may end up relying on keeping manufacturing processes a trade secret instead of relying on patents since the European Medicines Agency keeps data submitted for regulatory approval private for eight years and blocks others from using this information for two additional years.

While the decision could spur development of therapies since it could free up ES cell research from patent infringement, it could still prove to be harmful since the far-reaching decision bans patents on any downstream products using cell lines that required the destruction of human embryos for violating respect for human dignity.

Read the judgment (in English) here.

As part of our Supporting Sponsorship of the BioOhio Annual Conference: 2020 Vision, we have one complimentary registration to share.

Just be the first person to send us your name and email address by 5:00 pm EST tomorrow, Oct. 19th, and we’ll get your registration fee taken care of on us! We think that’s pretty cool.

When

Thursday, October 27, 2011

Where

Embassy Suites Dublin, Dublin, Ohio, United States 43017

Fine Print

More info about the conference is found at the BioOhio site here.

The UK Patents Court invalidated patent claims to an enantiomer of a known racemate mixture in Generics Ltd. V. Novartis AG [2011] EWHC 2403 (Pat).

Generics (UK) Ltd. (Mylan) filed an action to try to invalidate a Supplementary Protection Certificate (“SPC”) for a drug for the treatment of Alzheimer’s disease called rivastigmine.  An SPC extends the life of a granted “basic patent” in certain circumstances beyond the date on which the patent would otherwise come to the end of its statutory term. Novartis markets rivastigmine under the trade name Exelon.

Rivastigmine is the name for the (-)-enantiomer of N-ethyl-3-[(1- dimethylamino)ethyl]-N-methylphenyl–carbamate. Earlier, scientists at the Hebrew University of Jerusalem, made and tested the unresolved racemic compound (RA7).  A racemate is an equimolar mixture of a pair of enantiomers.  RA7 was one of a number of compounds proposed for the treatment of AD, but the publications made no mention of resolving it into its individual enantiomers.

The sole question in this action is whether a relevantly skilled pharmaceutical development team would find it obvious in the light of the RA7 publications to resolve the racemic mixture of RA7 into its individual enantiomers.

Stereo-isomers or enantiomers have identical physical and chemical properties in every respect, except two. They differ in their optical properties (the direction in which they rotate the plane of polarised light) and they react at different rates with other chiral compounds. Since living systems contain chiral proteins and constitute a chiral environment, the chirality of compounds administered to humans is important in therapy.

Whether to resolve?

The Court dealt witht he question of whether or not one skilled in the art would have resolved the enantiomers from the racemic mixture.

Firstly, it was common ground that the skilled team would consider the question of resolution in relation to its lead compound or compounds taken forward for development. It could scarcely have been otherwise given the fact that, of the chiral medicinal compounds introduced in 1984 and 1985 (excluding semi-synthetic compounds where nature had produced an enantiomerically pure starting point) about 50% were racemates.

Secondly, it was common ground that the actual resolution of RA7 did not involve any problematic chemistry. RA7 is easily resolved into rivastigmine using a standard stereochemical resolving agent. Novartis did not seek to make anything out of the practical chemistry involved. They contended that the skilled team would be aware that resolution could, in some cases, represent a difficult task, and that this would make the skilled team reluctant even to attempt a simple resolution. Although I accept that questions may arise as to the extent of resources which a skilled team might be prepared to devote to difficult resolution, I am not persuaded that in 1987 the skilled team would be hesitant about seeing whether a chiral compound could be easily resolved.

Novartis argued that the skilled team would see no advantage in the present case in an improvement in potency.  However, the Court thought differently:

I am unable to accept that the skilled team would fail to see practical benefits in resolution. Firstly, there is the question of the metabolism of the compound. Whilst the very process of blocking the active site on the AChE results in a breakdown of the drug molecule, this is not the only metabolic process to which the drug might be subjected. Those drug molecules which do not interact with the target enzyme could be broken down by other enzymes, for example pseudo-cholinesterase, in a stereospecific way. Dr Newton was clear that metabolism was an area where there might (not would) be a stereochemical effect between enantiomers. Secondly, the skilled team would be aware that the process of penetration of the blood brain barrier could be stereo-selective. Thirdly, delivering a drug as a resolved enantiomer avoids the possibility of unknown, stereo-specific side effects emerging downstream.

Ultimately, the Court decided that the enantiomer was obvious in light of the racemic mixture:

I think the correct analysis is that a pharmaceutical composition for treatment of AD comprising rivastigmine was conceptually obvious in the light of Weinstock and would immediately occur to the skilled team. The team would consider that resolving RA7 would be a worthwhile step to take for good technical reasons. The team would find that the chemistry involved is trivial. Applying the principles outlined above I have no doubt that the inventive concept is obvious in the light of Weinstock.

I believe that conclusion to be consistent with the “problem and solution approach” employed by the Boards of Appeal. The objective technical effect demonstrated by the patent in comparison with the Weinstock prior art is simply that which one would expect from resolution of a chiral compound. The skilled person would know how to solve the problem of achieving those effects by an application of the common general knowledge about chiral compounds.

“The major issue in patent litigation in the People’s Republic of China is obtaining evidence to prove infringement.”  ~ Douglas Clark

As China’s economy has risen to be one of the largest in the world, disputes involving intellectual property rights will become more frequent as well as increasingly critical for business survival.

“Patent Litigation in China” by Douglas Clark (Oxford University Press 2011; 320 pp.), provides U.S. and other non-Chinese practitioners with an overview of the patent litigation system in China and enable those contemplating or involved in patent litigation in China to better comprehend the risks and challenges they face, as well as to ensure better decision-making by those responsible for bringing or defending patent actions.

The People’s Republic of China (PRC or China) has a dual administrative and judicial system for enforcing patents.  Patent enforcement actions may be brought in either administrative bodies or to the courts.  The State Intellectual Property Office (SIPO) and the Patent Review and Adjudication Board (PRAB or Patent Re-examination Board) is the key administrative body handling patent related matters.

Under the administrative system, patent enforcement actions are brought to local branches of the SIPO where the infringement is occurring although the General Administration of Customs also can take action to seize imports or exports of products that infringe a patent.  Meanwhile, the courts may handle all infringement cases directly but have no power to act on validity cases other than on appeal.

The book covers the grounds for invalidating patents, evidence gathering, litigation strategy and procedure, as well as defenses and remedies. Additional topics include design patents and preliminary and interlocutory issues.

This is an extremely useful guide for attorneys who want to proactively address the considerable challenges and risks associated with pursuing patent litigation in China. The coverage of the topic is both thorough and informative.

About the Author

Douglas Clark is an intellectual property lawyer who has practiced in China for more than 15 years. Until the end of 2010 he was a partner with the international law firm of Hogan Lovells and head of the firm’s mainland China intellectual property practice as well as co-head of its worldwide patents group. Since 2011 he has worked as a sole practitioner.

“Patent Litigation in China” by Douglas Clark (Oxford University Press 2011; 320 pp.) can be ordered from Amazon.

The United States along with Australia, Canada, the European Union and its member states, Japan, South Korea, Mexico, Morocco, New Zealand, Singapore, and Switzerland reaffirmed their commitment to the Anti-Counterfeiting Trade Agreement (ACTA) at a signing ceremony in Tokyo.

The agreement is meant to fight against the infringement of intellectual property rights (IPR), in particular the proliferation of counterfeiting and piracy on a global scale, providing a mechanism for the parties to work together in a more collaborative manner to achieve the common goal of effective IPR enforcement.

It includes provisions on civil, criminal, border and digital environment enforcement measures, robust cooperation mechanisms among the ACTA parties to assist in their enforcement efforts, and the establishment of best practices for effective IPR enforcement.

With respect to the legal framework, the ACTA establishes a strengthened standard that builds on the minimum standards of the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). It is said that this marks a considerable improvement in international trade norms for effectively combating the current global proliferation of commercial-scale counterfeiting and piracy.

Representatives of eight governments – Australia, Canada, Japan, South Korea, Morocco, New Zealand, Singapore and the US – signed the agreement. Representatives of the European Union, Mexico and Switzerland attended the ceremony and confirmed their continuing strong support for for the agreement but said they’d sign some other day.

Formal ACTA negotiations started in June 2008, with the final round of negotiations being held in Japan in October 2010. Following translation and technical work, the ACTA was opened for signature on May 1, 2011.

The U.S. Chamber of Commerce’s Global Intellectual Property Center (GIPC) applauded the conclusion of the Anti-Counterfeiting Trade Agreement in a press release:

“The signing of the ACTA is a big victory for the American business community, workers, and IP-intensive sectors across our economy,” said Mark Elliot, executive vice president of the GIPC. “This accord raises the bar on enforcement by improving cooperation among partners, harmonizing how we confront IP theft, addressing IP theft online, and setting a positive example for nations that aspire to have strong IP enforcement regimes. We urge the negotiating countries to move quickly to complete the relevant domestic processes in signing and implementing the agreement to help protect IP jobs and spur economic growth.”

Not everyone thinks the agreement is great, though.  Gigi B. Sohn, president and co-founder of Public Knowledge noted:

“Although the final version of the Agreement was an improvement from earlier versions, we continue to believe that the process by which it was reached was extremely flawed.  ACTA should have been considered a treaty, and subject to public Senate debate and ratification or, in the alternative, debated in an open and transparent international forum such as the World Intellectual Property Organization (WIPO).  Instead, public interest groups and the tech industry had to expend enormous resources to force the process open to permit public views to be presented and considered.”

But, ACTA no longer exports the worst parts of the Digital Millennium Copyright Act — the 1998 law that makes it a crime to unlock a DVD to back it up. Although it has a loosely worded ban on tools used to unlock “digital rights management” technologies, a footnote makes it clear that it is not required for  manufacturers and software developers to ship products with DRM restrictions.

Second, ACTA no longer demands that countries hold Internet providers responsible for copyright infringement committed by their subscribers.

Some aspects of ACTA, however, remain controversial since the agreement does not mention “fair use” anywhere.

Critics say the biggest problem is that the eight signatory  countries don’t include the main offenders in copyright disputes. Most agree that until you get China to sign this document, this probably won’t change much.

You can read the finalized text of ACTA here.

“Inevitably, the right to health comes into contradiction with patents on pharmaceutical products, which block the passage of a new medicine to the status of generic medicine.”

“Development and Health In Poor Countries, The Role of International Organizations and of Switzerland,” by Bastien Briand et al. (Centrale Sanitaire Suisse Romande 2010; 224 pp.), presents the mandates and activities of international organizations concerned with intellectual property and underlines the dangers of bilateral ad hoc relations negotiated among countries (or among groups of countries).

A first part explores the internal debates and contradictions in each organization without omitting the tensions which arise among them as well as the relative weight of pressure groups. The second part examines the same topics and attempts to identify the role of Switzerland and of various parties involved.

The TRIPS Agreement foresees limits to the patenting right. Excluded from patentability are (i) diagnostic, therapeutic and surgical methods for the treatment of persons or animals and as well (ii) plants and animals other than microorganisms (virus, bacteria) and essentially biological processes for plants or animals production (i.e. organisms which are not obtained by genetic engineering) other than non-biological and microbiological processes. According to the European patent Convention (EPC) and the Swiss federal patents law (in Article 2) “essentially biological processes” are not patentable either but the definition of this expression is quite vague. For example the European Patent Office (EPO) granted a patent to a firm from the United Kingdom which was applying for a selection method not involving genetic manipulations and enabling an increase in the content of anticarcinogenic glucosinolate in broccoli plants. The patent includes selection processes as well as the broccoli seeds and edible broccoli plants obtained.

This book asks the essential question of what are the possible consequences of adopting patents for for plant and animal varieties obtained through biotech processes on farmers autonomy and rights? Who is the owner of genetic resources elaborated and selected by indigenous rural communities? How to differentiate knowledge acquired in a laboratory from public knowledge (traditional, local, regional)? How to make the difference between a traditional use (for example the empirical use of certain plants with a presumed therapeutic effect) often without a scientific basis and a knowledge based on rigorous research work?

It is therefore a reasonable question as to how to guarantee a application of WTO law, in a manner consistent with WTO members’ human rights obligation in health. The major tenets of these arguments are that there is the existence of a legal right to access to medicine, although not explicitly mentioned in any agreement. Further, that the adoption of patent legislation under TRIPS leads to higher drug prices, rendering certain drugs unavailable to portions of the population. And finally, that this price effect can infringe the right of access to medicine, even though the prices are set by private individuals.

This has become a major issue as developing countries try to use of international law to gain access to life saving medicines in light of the price of AIDS medicine, as well as medicines for bird flu and for anthrax. This is certainly a topic worthy of further discussion.

“Development and Health In Poor Countries, The Role of International Organizations and of Switzerland,”can be ordered from info(at)css-romande.ch.   It is also available as a free download (PDF) at http://www.css-romande.ch

The Economic Importance of the US-India Relationship
featuring
Congressman Steve Chabot

Congressman Chabot will discuss Washington’s role in helping US companies do business in India. He is Chairman of the House Subcommittee on The Middle East And South Asia.

October 19, 2011, 6:00-9:00 PM | Frost, Brown Todd Offices
3300 Great American Tower, 301 East Fourth Street
Cincinnati, Ohio 45202

Congressman Steve Chabot has served as Congressman in Ohio’s First Congressional District for fifteen years. Prior to his election to Congress in 1994, Chabot served on Cincinnati City Council and the Hamilton County Commission for four years on each body.  He currently serves on the Judiciary, Foreign Affairs and Small Business Committees.  Congressman Chabot is one of Congress’s leading advocates for fiscal responsibility. Nonpartisan taxpayer advocacy groups such as the National Taxpayers Union consistently rate him as one of the most pro-taxpayer members of Congress.

Please join us for dinner and discussion with Congressman Chabot. Seating is limited – reserve early.  An Indian buffet (with veg options) will be served.

REGISTRATION DEADLINE:  OCTOBER 17, 2011

Registration

Registration: Cost: $35 Non-Members, $25 Members

Information/ Questions:  Please contact information@iusbn.org

The India-US Business Alliance (IUSBN ) is a Cincinnati-based non-profit organization that facilitates trade and investment transactions between the US and India.