Subject: PATNEWS: Tons of biotech patent news from Minneapolis

From: [email-masked] (Gregory Aharonian)
Date: Fri, 15 Nov 1996 03:45:55 GMT

A few weeks ago I attended a biotechnology patents conference out in
Minneapolis.  I had a fine time, met a few people who get my patent news,
and got to visit the Mall of America (three floors of every trendy store in
the country surrounding a Snoopy theme park - though I did have some good
ribs).

    The conference was sponsored by the Minnesota Intellectual Property Law
Association, the law firm of Merchant & Gould, and one other firm that
escapes me at the moment.  Some of you might wonder why biotech conferences
are being held in the MidWest (which for those of you fans of Mark Twain is
part of the drainage plain of the Mississippi River system which is that part
of the country that separates the puritans on the East Coast from the wackos
on the West Coast, though as a woman friend of mine wise beyond her beauty in
Missouri has pointed out, if the Mississippi was based on the Missouri it
would be the longest river in the world, but I digress).

    Anyways, the fortunes of the agricultural industry in the future will
rise and fall on biotechnology.  Germ lines of many food seeds are getting
as bad off as the germ lines of the Romanovs, so the seed companies either
have to combine new genes from wild plants (incuring the wrath of the third
world) or genetically transform their existing seed lines (incuring the wrath
of groups in the United States), or both (and both).  Throw in biotechnology
for altering plants to make fuel oils, transform plants to require less
chemical processing (i.e. strains of cotton that are colored, eliminating
dyeing), etc., and it is not surprising that biotechnology is of increasing
interest in the MidWest, and that law firms like Merchant & Gould (3100
Norwest Center, Minneapolis, MN, 55402) are expanding into this area.
Minneapolis is also home of 3M, which while not known as being big in biotech,
is a player (for example, their patent 5444065 "Fused cycloalkylimid
asopyridines as inducer of interferon .alpha. biosynthesis").

    The conference speakers were very informative, and the conference flowed
quite smoothly.  My only suggestion for future such conferences is to prohibit
speakers from directly reciting the contents of their handouts.  Instead, give
everyone ten minutes to read through the handout, and then allow questions and
short discussions.  Other than that, the speakers provided a lot of useful
information, even the bureaucrats.

    What follows is interesting comments and tidbits about biotech patenting
that I wrote down, with some biotech patenting news from other sources that
you can give credit to the conference organizers for inspiring me to include.

    I might have misinterpreted some parts of the talks, so don't take the
following as gospel.

                              ====================

    The first speaker was Doctor Leo Furcht, from the University of Minnesota
medical school, talking about the convergence of the biotechnology information
manipulation (using DNA) and silicon-based information manipulation (global
networks).  At one point, he reflects on comments made by Lester Thurow that
"The research and development funds that produced biotechnology 'would never
have been advanced by capitalism', Thurow writes.  They came from 30 years of
massive government investment, mainly in basic research funded by the NIH."
Dr. Furcht noted that a good way to measure these money flows is to look at
all of the labs that the NIH funded and the resulting spinoff companies
nearby.

    Dr. Furcht recommends for those interested in biotech and law a book that 
was published last year, "The Golden Helix: Inside Biotech Ventures" by
Arthur Kornberg.  Another interesting comment was that at his labs in the
University Hospital, it sometimes costs more to draw the blood than to do
genetic tests on the blood, a weird way technology has changed the economics
of medicine.

====

    The next speaker was Mark Ellinger of the law firm of Fish and Richardson,
who gave a talk titled "Is DNA a chemical - implications of applying chemical
case law concepts to biotechnology compounds".  He spoke a fair amount about
two cases, "Amgen v. Chugai Pharmaceutical", 927 F.2d 1200, 18 USPQ2d 1016,
and "Fiers v. Revel", 984 F.2d 1164, 25 USPQ2d 1601.  The problem is that
nucleic acids have two kinds of roles - performing information transfer inside
the cell for which applying chemical patent laws don't seem appropriate -
except for the fact that secondary and tertiary structural features of nucleic
acids are functional and subject to chemical patent laws (giving nucleic acids
kind of a management and employee role in the cell).

     What interested me in listening to Mark was a parallel line of argument
"Is DNA a computer", given recent developments in a few universities.  I asked
him his thoughts, in particular, how one would handle a DNA computing patent.
He basically deferred to John Doll (another speaker), who is Director of Group
1800 at the PTO, the biotechnology group, who said that this is actually a
real problem the PTO is facing, given that there are DNA computing patents
pending at the PTO.  The PTO's current solution is to have such patents
handled jointly by an examiner from Group 1800 and Group 2300, one of the
computing groups.

====

     The next speaker was John Doll, Director of Group 1800.  He talked
about 35 USC 112 First Paragraph, "Enablement Obviousness".  He passed out
two sets of materials - one being the training manual for 1800 examiners
for 35 USC 112 First Paragraph Enablement, the other being tons of statistics
on Group 1800.  One complaint that his group had been hearing was that
examining were using 101 rejections but disguising them as 112 rejections.
Doing something that Groups 2300/2400 should have done years ago, Group 1800
did a sampling of the file wrappers of issued biotech patents where there
were 112 rejections, and found that 41% should have been scope rejections
and 27% where the rejections were not clearly explained.  Thus the creation
of these training materials for First Paragraph Enablement.  Another
complaint he is hearing is that examiners are doing searches to question
enablement, not prior art.

    They also prefer that applicants use pharmaceutical language like
in vivo and in vitro, that lack of working examples is not necessarily
grounds for rejection if you have in vivo models, also that FDA approval is
not enough for enablement - you must submit the data the was submitted to the
FDA, and that it is not improper for an examiner to make a 102/103 rejection
and a 112 rejection over the same claim (but you can complain if the reasons
are unreasonable).

    He also said that they are ignoring In Re Duell (DNA in claims is ground
for rejection.  There is interesting because of a comment recently posted on
one of the net patent law lists:
        I have continued to hit resistance in the Examining corp with
        respect to adhering to the (fairly clear, I believe) holdings
        of these cases: that the disclosure of a protein in a prior art
        reference would not have made the DNA sequence obvious  --
        obviousness of a chemical (DNA) should be analyzed as to whether
        the STRUCTURE is obvious, not the method of production.

        One interesting conversation I had with an Examiner in Group 1804
        indicated that he would not follow Deuel or Bell in a general sense
        but would narrowly construe the findings to the specific facts
        (and therefore generally find factual distinctions to rely upon)
        unless the Applicant showed that there was something unusual or
        unexpected in the cloning that needed to be overcome.

    Some statistics as October 1, 1996:

    PE = Primary Examiners, JE = Junior Examiners
    UNEX = new unexamined applications,  GATT = pre-GATT applications

    Group 1801: 2 PEs,  8 JEs, 284 UNEXs,  70 GATTs   Recombinants
    Group 1802: 1 PEs,  9 JEs, 315 UNEXs, 152 GATTs   Bacterial immunology
    Group 1803: 6 PEs,  4 JEs, 559 UNEXs,  52 GATTs   Recombinant plants
    Group 1804: 3 PEs,  6 JEs, 245 UNEXs, 112 GATTs   Animals / Gene therapy
    Group 1805: 3 PEs,  9 JEs, 577 UNEXs,  32 GATTs   Gene expression
    Group 1806: 1 PEs,  9 JEs, 584 UNEXs, 135 GATTs   Antibody engineering
    Group 1807: 2 PEs, 11 JEs, 270 UNEXs,  39 GATTs   Nucleic acid assays
    Group 1808: 5 PEs, 11 JEs, 579 UNEXs, 121 GATTs   Fermentation
    Group 1809: 1 PEs,  9 JEs,  85 UNEXs,  62 GATTs   Antisense nucleic acids
    Group 1811: 3 PEs, 12 JEs, 813 UNEXs, 293 GATTs   Proteins/peptides
    Group 1812: 3 PEs, 10 JEs, 450 UNEXs, 154 GATTs   Receptors and cytokines
    Group 1813: 3 PEs, 10 JEs, 656 UNEXs, 143 GATTs   Viruses
    Group 1814: 2 PEs, 11 JEs, 742 UNEXs,  99 GATTs   Enzymes and toxins
    Group 1815: 2 PEs,  8 JEs, 224 UNEXs, 116 GATTs   Viruses
    Group 1816: 4 PEs,  5 JEs, 200 UNEXs, 100 GATTs   Cellular immunology
    Group 1817: 2 PEs,  7 JEs, 237 UNEXs, 109 GATTs   Bacterial immunology
    Group 1818: 4 PEs,  9 JEs, 396 UNEXs, 109 GATTs   Immunoneurology
    Group 1819: 3 PEs,  6 JEs, 489 UNEXs, 349 GATTs   Animals / Gene therapy

    In Fiscal Year 95, hired 35 examiners, lost 30.  In Fiscal Year 96, hired
82 examiners, lost 18.  124 examiners have PhDs, 40 examiners have Masters.
12941 patents filed for this group in 1994, 17318 in 1995.  4082 issued in
1994, 4875 issued in 1995. 22307 pending applications.

    29 animal patents ==> 23 mice, 1 rat, 1 rabbit, 1 sheep, 1 bird, 1 fish
and 1 worm, with 1 chicken SIR.  1200 animal patents on file.

    Over 5000 applications have been filed for entire human, animal or plant
genes.

    Much like Groups 2300/2400/2600, Groups 1200/1500/1800 have a combined
Matrix Management process in place.

====

    The next speaker was Christian Gugerell, Director of the EPO Biotechnology
Unit in Munich.

    While he talked about many things, he expressed confidence that in 1996
the European Parliament will finally pass directives to update the biotech
patenting laws in Europe.  For years, such attempt have been frustrated by
environmentalist groups, though apparently this time around parliamentary
maneuvers will limit their abilities to do so.  His handouts included the
full text to the proposed directive plus some commentary.

    The new directives still have the morality clauses in Article 9:

        1. Inventions shall be considered unpatentable where exploitation
        would be contrary to public policy or morality, provided that the
        exploitation is not deemed to be so contrary merely because it is
        prohibited by law or regulation.

        2. On the basis of paragraph 1, the following shall be considered
        unpatentable:

        (a) methods of human treatment involving germ line gene therapy;
        (b) processes for modifying the genetic identity of animals which
        are likely to cause them suffering or physical handicaps without
        any substantial benefit to man or animal, and animals resulting
        from such processes, insofar as the suffering or physical
        handicaps inflicted on the animals concerned are out of
        proportion to the objective pursued.

Indeed, last month at the International Bar Association meeting in Berlin,
a draft treaty Convention on the Human Genome included a ban on "germline"
gene therapy, though it left the door slightly open for such techniques so
long as "there is indisputable proof of the benefits and safety of such
therapy".  In general, I got the impression that Mr. Gugerell and his
colleagues really don't like having do deal with these morality questions,
something examiners really aren't trained to deal with (how is an examiner
supposed to determine if a patent application will lead to suffering in an
animal?), especially as there are no similar rejection ground in the United
States where such patents will issue and affect European activities anyways.
Besides, in a real, real subtle way, in the future this ban will be looked at
as a form of homosexual bashing.

41% of the biotech EPO applications are from the United States, 40% from
Europe, and 12% from Japan.  40% of the issued biotech patents go to US
companies, 36% to European companies, and 22% to Japanese companies.

====

    At this point, the conference broke for a nice lunch, and the luncheon
speaker was Judge Pauline Newman of the US Court of Appeals for the Federal
Circuit, who gave a talk "Biotechnology Patents: A View from the Bench".
Unfortunately, I really didn't take any notes because I was just enjoying
her talk.  At one point, she did express her wonder that patent law really
hasn't changed that much over the decades despite tremendous evolutions in
technology.  She also said that science has had the biggest social impact.

====

    After lunch, the first speaker was Michael Yates of Pioneer Hi-bred
International of Des Moines, Iowa, who talked about Protecting Plants
Worldwide.  Pioneer is 70 years old, $1.5 billion 1995 sales, 71 million
acres corn 1995 in United States.  Also involved with soybeans, sorghum,
sunflower, alfalfa and canola seeds.  Their competitors are DeKalb,
Novartis, Mycogen and others.  Their R&D budget is $130 million.

    He thinks utility patents for plants in Europe unlikely in near future.
Pioneer dropped one seed line because farmers were saving and selling seeds.
One of the dangers of marketing genetically engineered seeds.  Believes that
ag-biotech patent litigation could provide the forum for significant,
ground-breaking paetnt law precedents, given the number of potential
interferences (for example 200+ pending/issued patents relating to Bt genes
and their agricultural use) and stakes worth hundreds of millions of dollars.

    "Now utility patent protection should not be considered 'perfect'
either, but given the state of our knowledge of RFLP maps of our germplasm
base, we believe we can detect most misuse of patented imbred lines, and
therefore we believe the benefits of having utility patent protection in
the U.S. far outweigh the risks of both patenting and not patenting."

====

    Next speaking with Helga Kolb, a lawyer with the firm of Hoffman, Eitle
and Partner in Munich Germany, who talked about biotechnology patent
enforcement in Europe.  In short, much like the language translation problem,
each country has a different system for patent enforcement, multiplying the
amount of time and effort and cost needed to enforce a patent.  Her advice
was to choose those countries with the highest payoff to protect your patent.
As an example of the complexity, in the UK there is the Patent Court and the
Patent County Court; in Germany there are 11 patent courts; in the Netherlands
there is the District Court in the Hague; while in Italy there are 160
courts that hear patent cases, the Tribunale court in Milano preferred (as is
the Dusseldorf and Munich courts in Germany).

    In the UK, DE, FR and ES it is rather difficult to obtain a preliminary
injunction in a complex patent case.  There is a greater chance of success
in NL, IT and CH.  The Dutch courts are granting cross-border injunctions
in patent infringement matters in order to avoid contradictory decisions;
this has upset other countries who believe such actions are premature until
everyone agrees upon some cross-border system.  Chances for interlocutory
injunction: UK very difficult, DE difficult, NL fairly easy, FR difficult,
IT possible, ES difficult, SE no, and CH possible.

====

    The next speaker was Alan Kowalchyk, a lawyer with Merchant and Gould,
who spoke about options for biotechnology patent enforcement in the United
States.  He talked about the four main options: lawsuits at the US District
Court (seeking damages and injunctions), filings with the International Trade
Commission (seeking import bans), filings at the Patent Office (reexaminations
and interferences), or some combination of these three options.
    With regards to District Courts, he discussed the impact of the recent
Markman v. Westview Instruments decision specifying that the court must
interpret claim issues.
    With regards to the ITC, an ITC Commission finding of infringement and
failure to prove invalidity, even if affirmed by the Federal Circuit, has
no resjudicata or collateral estoppel effect in court proceedings involving
the same patent.
    He ended with examples of uses of more than one option, for example,
Amgen versus Genetics Institute, which involved the District Courts and
interference proceedings at the PTO.

====

    The next speaker was James Darnley, patent counsel with Pharmacia & Upjohn
in Kalamazoo, Michigan, speaking on industry's view of biotech patents.  He
had some neat observations: less than 1% of issued biotech patents protect
commercially valuable products; that despite the many thousands of new drug
patents each year only 30 new drug families are approved by the FDA each year;
that marketing is more important for positioning, for example Capoten was out
7 years before Vasotec but Vasotec had clinical studies marketed better so
that now Vasotec is #1 though both equally effective and patented; that some
drugs survive without patent protection because the risks involved mean that
few want to be involved; generic drugs drop prices 80%, though good marketing
by the original manufacturer can preserve market share; drug patents protect
narrow domain - rarely give broad protection - and only a time limited
exclusivity; health needs met in different ways - for example in 1996 there
are 25 drugs for rhuematoid arthritis but still there is an unmet need while
in 1986 27 companies were chasing TPA but only Genentech really selling
anything today.

    In his handout he mentions one point some lawyers like to deny in public.
He quotes part of an article written about the E-data mess:
	The author concluded with the following comments: "So where do
	these patents come from anyway?  For years, the US Patent Office
	granted overly-broad and vague patents on technologies, especially
	software, because it had no technically competent patent
	examiners.  That has changed in the last few years as the office
	hired technical experts in fields ranging from software to
	biotechnology.  Still the industry [software] is likely to labor
	under the onus of broad patents for years to come".
Darnley then comments:
	I believe these observations are also applicable to the
	drug/biotech industry which will also labor under the onus
	of broad patents for years to come.  The royalties charged
	for access to these technologies could become so burdensome
	that development of useful and necessary products using
	biotechnology could become stalled and prehaps wane.

    He felt that there was one fundamental problem with biotech patents:
the stacking royalty problem, that is newer biotech patents run into
earlier patents teaching "fundamental" techniques, all of which have fees
and royalties that add up to significant levels for the newer biotech
patents.  In fact, to inflame a pissing contest on one of the patent law
mailing lists, he labels some of the "fundamental" biotech patents as
"submarine" patents.

====

    The last speaker was David Hricik, of the Houston office of Baker &
Botts.  He talked about the ethical issues in the practice of intellectual
property law, in particular, communicating with clients over the Internet
and other channels (cellular telephones, cordless phones) where there is
a possibility of third party interception (though interestingly it hadn't
occurred to him to think about the problems of PTO examiners using the
Internet to do prior art searching).  The other topic he talked about was
the problems in-house counsel face when they provide legal advice to
affiliated entities.

    It was an interesting talk but I don't pay too much attention to patent
lawyers talking about ethics.  The unaddressed impotence of rule 56 for a
system where undersupported/underresourced examiners award monopoly IP rights
makes a mockery of ethics.

                              ====================

    In general it was a nice conference to attend.  If MIPLA and Merchant
and Gould hold such conferences again in the future, it is worth attending.
I think they have extra copies of the proceedings for sale.  I should be
getting some followup information from them to pass on.

Greg Aharonian
Internet Patent News Service