Obviousness and Biotechnology

Author: Teodor Danielyan

Introduction

Due to the substantial upfront investment needed for development of therapeutics (transition from “bench to bedside” often costs > $500 million), the biotechnology industry as a whole is highly dependent on the effective working of the patent system. In this paper we will describe a very important case in front of the Supreme Court that can potentially alter the criteria of patentability, thereby making a significant impact on our industry.

The majority of investments into biotechnology revolve around the concept of protecting intellectual property (IP) associated with the scientific work that is funded. In numerous cases the biotechnology industry supports a research concept on the notion that the IP surrounding it grows to attain a certain value, after which it is handed-off to another entity or a series of entities which eventually develop it into a marketed product. In contrast to other industries where a marketed product can be produced by the same entity that invents the product, in biotechnology this is very rarely the case. For example, University X discovers that drug Y inhibits viral replication in a cell line. A small biotechnology company licenses the patent for drug Y and demonstrates in animal models efficacy. Based on this efficacy, the small biotechnology company raises funds from investors to perform a Phase I human trial. Upon successful completion, the small biotechnology company sells the patent to a medium size Pharma company which completes the Phase II and III clinical trials. The medium size Pharma company then partners with a large Pharma company that already has distribution networks in place so that once the drug is approved rapid market penetration may occur. Throughout this whole process, there is one fundamental thing that ensures a return on investment in the research before entry of the product to the market. This fundamental thing is the patent that is excluding others, besides the inventor from using the specific drug. If it were not for patents, then only large Pharma companies with enormous resources would have the ability to develop drugs since small entities and universities do not have it within their scope to actually manufacture and sell the drug to the market.

In the example above the notion of a patented drug is easily understood. Someone discovered a new chemical entity that possesses specific properties of inhibiting viral replication. This example is the most clear-cut type of patent. However as one looks at the biotechnology sector, one actually sees a continuum of cases, in which the granting of patents and the notion of discovery becomes more and more difficult to clearly understand. On the other side of the continuum are patents on mechanistic pathways. We will look at the example of David Baltimore’s patent on the NF-kB pathway, in which one of the claims cover a drug that inhibits this pathway for treatment of an inflammatory disorder. While David Baltimore identified the pathway and the importance of modulating that specific pathway, is his patent given the ability to cover drugs that are undiscovered at the time of filing that inhibit that pathway? Furthermore, how does one determine without a shadow of a doubt that the drug only works through the NF-kB pathway and not other pathways? This was the question at issue in the Ariad v Lilly case in which Ariad received damages based on Lilly’s drug Xigris inhibiting the NF-kB pathway.

Based on the above discussion, it seems critical for anyone involved in biotechnology to understand the mechanisms by which patents are granted, and understand the questions of law regarding validity. In the area of stem cells, the question of patentability becomes even more pressing since there are only a limited number of stem cells that exist in the body. Typing in the PTO database the word “stem cells” gives rise to 19,000 patent applications and approximately 9,000 issued patents. A careful sorting through these reveals that only 40 or so patents and applications that cover composition of matter for stem cells (and of these there is some redundancy and overlap: for example separate patents covering the same cells except claiming different markers). Therefore, the majority of stem cell patent applications cover novel uses. Patents that cover use are most susceptible to attack on the question of obviousness. This paper will describe the history of the obviousness objection, and try to understand the implications of the current obviousness case before the Supreme Court.

Question of Obviousness in Granting of Patents

Patents are granted upon the criteria of utility, novelty, and non-obviousness. Utility is a relatively self-explanatory, and the majority of innovation in biotechnology usually has some aspect of use or otherwise they would not be pursued. Novelty is also a relatively easy concept to understand. The putative invention must not anticipate another patent or prior art either “literally” or “substantially”. By anticipation what is meant is that one skilled in the art can refer to one single prior-art reference and “anticipate” the invention. In other words the single prior art reference specifically teaches the invention that the patentee is seeking protection for. The more difficult concept in determining patentability is the notion of obviousness.

Obviousness has several problems that make it difficult to understand. The first is that of “hindsight bias”. Philosophically speaking, the purpose of the patent is a bargain between the inventor and the State in which the inventor fully discloses their contribution to the public, in exchange for a limited period of exclusivity. When disclosing an invention properly, the inventor desires to explain as clearly as possible not only the means of practicing the invention, but also the thought processes that led to the “Eureka Moment”. The problem with obviousness is, as King Solomon is often quoted as saying “nothing is new under the sun”. Since nothing is new, the goal of the inventor is to assemble known components together for an effect that was previously unknown. Now the question is, if the patentee describes their thought processes in a very clear line of logic, then someone reading the specification will, in hindsight, more than often say that the invention was “obvious”. The danger of this “hindsight bias” is that with exception to new composition of matter patents, all use patents may be considered “obvious”.

Since obviously (no pun intended) not all utility patents are considered “obvious”, we examine on how the courts make judgment of non-obviousness. Essentially this depends on understanding what exactly is the “person of ordinary skill in the art”. This depends not only on the art that is in question, but also the time of the filing of the patent since some arts progress with greater expediency than others. The person of ordinary skill in the art is considered essentially, “a pair of hands”, a “technician”, who does not display a grain of innovation. Canadian Jurisprudence provides a colorful example of one skilled in the art, which at least philosophically may provide a good context for discussion. Specifically, Justice Hugesson in the case Beloit Canada v Valmet Oy defined the “skilled technician” as follows:

“The classical touchstone for obviousness is the technician skilled in the art but having no scintilla of inventiveness or imagination; a paragon of deduction and dexterity, wholly devoid of intuition; a triumph of the left hemisphere over the right. The question to be asked is whether this mythical creature (the man in the Clapham omnibus of patent law) would, in the light of the state of the art and of common general knowledge as at the claimed date of invention, have come directly and without difficulty to the solution taught by the patent.”

This definition however causes some problems, especially in the art of biomedical sciences where the skilled artisan may require a doctorate to practice the art. The essence of obtaining one’s doctorate is “to enable one to create knowledge and seek solutions to the world’s problems through innovation, creativity, and ability to draw upon a variety of resources”. Therefore, would the criteria for patentability be higher in biomedical arts as opposed to mechanical arts where the skilled artisan may possess, for example, a Bachelor’s degree in mechanical engineering? This issue of balancing the need for patenting non-obvious improvements, versus understanding that everything may be obvious in hindsight is exemplified in the Bonito Boats, Inc v. Thunder Craft Boats, Inc, 489 U.S. 141, 146 (1989) in which it is stated that there is a need to achieve “a careful balance between the need to promote innovation and the recognition that imitation and refinement through imitation are both necessary to invention itself and the very lifeblood of a competitive economy”.

Traditionally, the Supreme Court seems to have followed the precedent set forth in Hotchkiss, embodied by the Patent Act of 1952, upheld in Graham v John Deere, and last used in Sakraida. This being essentially a 4 part test in which: a) Examination of the claims of the patent and the prior art is made; b) Establishment of who the person of ordinary skill in the art is; c) Determination of whether the combination of prior art references cover the claims of the invention; and d) Asking if one of ordinary skill in the art would readily combine the references. On the other hand, the Federal Court seems to have noted there was a problem with the above test in that there is still susceptibility to “hindsight bias”. Accordingly, the “teaching, suggestion, motivation” (TSM) test evolved in which the question specifically asked is if there is, basically any reason, for the person skilled in the art to combine the references in order to arrive at a solution. The case of KSR v Teleflax, that will be discussed in more detail below, which was granted certiorari on June 26, 2006, is asking the question of law, whether

“A claimed invention can be “obvious” and therefore unpatentable under 35 U.S.C. 103(a), without proof of some “teaching, suggestion, or motivation” to modify or combine the prior art in the manner claimed”. Below we will analyze both some of the major Supreme Court and Federal court insights into these issues through overviewing a series of cases.

Supreme Court Obviousness Decisions

The case of Hotchkiss v Greenwood, 52 U.S. 248 (1852) dealt with doorknobs made of porcelain (putative invention) versus wood (prior art). The Supreme Court made the decision that for an invention to be patentable, it not only has to be useful and new, but it also has to consist of a substantial improvement over the prior art, not only a slight modification that the “skilled artisan” could make. This concept was codified into the US Patent Act of 1952 as Section 103. Specifically, in 103(a) were it states:

“A patent may not be obtained through the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made.”

The first interpretation of the new 103(a) was made by the Supreme Court in Graham v. John Deere Co., where the issue surrounded a clamp that attached a plough shank to the frame of the plough. Although attachment of shanks to ploughs was known at the time, the Graham patent claimed a reversal of the side onto which the shank was mounted on the plough frame. This patent, although originally issued to Graham, was invalidated since it provided “no operative mechanical distinctions” over the existing technology.

In Calmar, Inc. v. Cook Chemical Co. (383 U.S. at 26), Cook Chemical invented and patented a cap to cover insecticide spray cans that had a rib seal. Although rib seals were used for caps to cover other types of cans, this was the first time a rib seal was used in the context of an insecticide spray can. Cook argued that they were solving the problem of efficient mechanical closure, however, in light of prior references that have already solved this problem for other cans, the Supreme Court invalidated this patent since it presented “no patentable difference over the prior art”.

In United States v Adams, 383 U.S. 39 (1966), Adams invented a new type of battery made of old components that were already known in the art. The patent of Adams were upheld as non-obvious since the end product had advantages over other batteries, and that prior art actually thought away from combining the elements that he combined.

In Anderson’s-Black Rock, Inc. v. Pavement Salvage Co., 396 U.S. 57 (1969), an apparatus for paving a road was patented, said apparatus consisted of four elements known in the prior art put together on one chassis. The patent was held invalid since no “new or different functions, nor synergistic results” were obtained by the combination of the elements.

In Dann v. Johnson, 424 U.S. 219, 222 (1976), a patent application on an automated system which provides customers which details of their transactions for a specified time period. The application was initially rejected by the PTO, in part due to obviousness, subsequently the precursor of the Federal Circuit, the Court of Customs and Patent Appeals stated the patent was non-obvious, finally the Supreme Court held it obvious and therefore invalid. The Supreme Court cited an invention by Dirk (find what patent or reference it was !!) that covered essentially the same system but not modified specifically for banking transactions. The Supreme Court concluded that “the gap between the prior art and the respondent’s system is simply not so great as to render the system nonobvious to one reasonably skilled in the art.”

The last case of obviousness that the Supreme Court had to decide on was Sakraida v. Ag Pro, Inc., 425 U.S. 273, 274, (1976). This involved a patent which claimed a system that allowed for the removal of cow manure from a dairy barn through a specialized way of flushing water on the floor. Since the Court found no “syngergism” between the components, the patent was invalidated.

In these six cases that were tried between the codification of the non-obviousness requirement and the present time, it appears that several elements were chosen for invalidation. These included the usual test of as described in Graham, which involves factual determination of: 1. What is the scope and state of the prior art; 2. How is the prior art different from the claims of the invention at issue; and 3. What knowledge does the person of ordinary skill in the art have at the time of the invention. Additional secondary considerations are evaluated such as commercial success or long-felt need for the invention. After these factual inquires, a judgment as a matter of law is made. Interestingly, some of the cases involved seeking a “synergistic result” by combining the existing parts of the prior art. In biotechnology, there is always the concept of anticipated synergism. For example, it is well known in the art that stimulation of stem cells, or cells in general, which certain signals, “primes” the cells for hyper-responsiveness to other stimuli. Accordingly, this is one area where the logic of the Supreme Court may fail. Additionally, what if an interaction is not “synergistic” but “additive” but the additive effect was not anticipated? Lets say for example mixing two chemotherapies to have an additive effect on cancer regression, but no additive effect on toxicity. To answer this question, one may look toward pre-1952 Supreme Court rulings in which “synergy” per se is not needed but only a “new or different function or operation than that theretofore performed or produced by them” (Lincoln Engineering Co. v. Steward-Warner Corp., 303 U.S. 545, 549 (1938)).

Possible failures of the Supreme Court Test based on Graham, including the possibility of hindsight bias, strongly prompted the Federal Court to “move with the times” and develop another test of patentability called the “teaching, suggestion, motivation” test (TSM).

PLEASE COMMENT BELOW…is the TSM test better or worse than the Graham test in terms of the principles of patentability in the US???