Current state of U.S. patentable subject matter as it relates to pharmaceuticals and biotechnology. The Trans-Pacific Partnership and its potential impact on pharmaceutical and biotech IP.

1. June 21, 20181
Issues in U.S. Biotech and Pharma Patenting:
Patentable Subject Matter; and the Trans-Pacific Partnership
Jay Erstling
January 4, 2016
Current State of U.S. Patentable Subject Matter as it Relates to
Pharmaceuticals and Biotechnology
The Trans-Pacific Partnership and its Potential Impact on
Pharmaceutical and Biotech IP

2. SM
© 2015 Patterson Thuente Pedersen, P.A., some rights reserved - www.ptslaw.com
DISCLAIMER: This presentation and any information contained herein is intended for informational purposes only and should not be construed as legal
advice. Seek competent legal counsel for advice on any legal matter.
Issues in U.S. Biotech and Pharma Patenting:
Patentable Subject Matter; and
the Trans-Pacific Partnership
Jay Erstling
8th Global IP Convention
January 2016
New Delhi, India
TM

3. Roadmap
Part 1
Current State of U.S. Patentable Subject Matter as it Relates to
Pharmaceuticals and Biotechnology
Part 2
The Trans-Pacific Partnership and its Potential Impact on Pharmaceutical
and Biotech IP
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4. Part 1:
Patentable Subject Matter
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5. The Dilemma
How to determine patent eligible subject matter in the light of two important
U.S. Supreme Court decisions with respect to Biotech innovations:
Mayo Collaborative Serv. v. Prometheus Labs., Inc., 132 S. Ct. 1289
(2012)
• Diagnostic testing
Association for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct.
2107 (2013)
• Isolated DNA sequences (genes)
The U.S. Court of Appeals for the Federal Circuit reluctantly addressed the
issue and expressed concerns in:
Ariosa Diagnostics, Inc. v. Sequenom, Inc., Fed. Cir., No. 14-1139,
12/2/2015 (denial of a petition for en banc review)
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6. Definition of a Patentable Invention under US Law
35 USC § 101 (Inventions Patentable) – Section 1 of the US Patent Act
Whoever invents or discovers any new and useful process, machine,
manufacture, or composition of matter, or any new and useful
improvement thereof, may obtain a patent therefor, subject to the
conditions and requirements of this title.
• The Act contains no provisions on what is not an invention
• Exceptions to patentable subject matter are the result of case law
Contrast with…
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7. Definition of a Patentable Invention under EP Law
Article 52 of the European Patent Convention
(1) European patents shall be granted for any inventions, in all fields of
technology, provided that they are new, involve an inventive step and are
susceptible of industrial application
(2) The following in particular shall not be regarded as inventions within
the meaning of paragraph 1:
• (a) discoveries, scientific theories and mathematical methods;
• (b) aesthetic creations;
• (c) schemes, rules and methods for performing mental acts, playing
games or doing business, and programs for computers
• (d) presentations of information.
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8. Definition under the Indian Patents Act
Article 2(1)(j)
"invention" means a new product or process involving an inventive step
and capable of industrial application
Article 3. What are not inventions.
(a) an invention which is frivolous…;
(b) an invention the primary or intended use or commercial exploitation of which could be
contrary public order or morality…;
(c) the mere discovery of a scientific principle…;
(d) the mere discovery of a new form of a known substance which does not result in the
enhancement of the known efficacy of that substance or the mere discovery of any new
property or new use for a known substance or of the mere use of a known process, machine or
apparatus unless such known process results in a new product or employs at least one new
reactant…;
(e) a substance obtained by a mere admixture resulting only in the aggregation of the properties
of the components thereof…;
(f) the mere arrangement or re-arrangement or duplication of known devices each functioning
independently of one another in a known way;
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9. Definition under the Indian Patent Act (2)
Article 3. What are not inventions (cont’d)
(h) a method of agriculture or horticulture;
(i) any process for the medicinal, surgical, curative, prophylactic, diagnostic, therapeutic or
other treatment of human beings…;
(j) plants and animals in whole or any part thereof other than micro organisms but including
seeds, varieties and species…;
(k) a mathematical or business method or a computer programme per se or algorithms;
(l) a literary, dramatic, musical or artistic work or any other aesthetic creation whatsoever…;
(m) a mere scheme or rule or method of performing mental act or method of playing game;
(n) a presentation of information;
(o) topography of integrated circuits;
(p) an invention which in effect, is traditional knowledge or which is an aggregation or
duplication of known properties of traditionally known component or components.
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10. And Even the TRIPS Agreement
Article 27. Patentable Subject Matter
2. Members may exclude from patentability inventions, the prevention
within their territory of the commercial exploitation of which is necessary to
protect ordre public or morality, including to protect human, animal or
plant life or health or to avoid serious prejudice to the environment….
3. Members may also exclude from patentability:
• (a) diagnostic, therapeutic and surgical methods for the
treatment of humans or animals;
• (b) plants and animals other than micro-organisms, and
essentially biological processes for the production of plants or
animals other than non-biological and microbiological processes….
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11. Does US Law Offer Any Guidance?
Three judicially created exceptions to patent eligible subject matter under
§101:
Laws of nature;
Natural phenomena; and
Abstract ideas
• Are not patentable
– Because “they are the basic tools of scientific and technological
work”
– And granting a patent “might tend to impede innovation more
than it would tend to promote it.”
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12. Mayo Collaborative Serv. v. Prometheus Labs., Inc.
A unanimous Court
The Invention
A method of assisting doctors who prescribe thiopurine drugs to
determine whether a given dosage level is too low or too high, based on
the concentration of a thiopurine metabolite in the blood and the likelihood
that the drug dosage won’t be effective or that it will produce harmful side
effects.
• The relationship is a natural result of the way in which thiopurine
compounds are metabolized.
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13. Mayo Collaborative Serv. v. Prometheus Labs., Inc. (2)
The Case
Prometheus’ patents claimed: an “administering” step (when the drugs
are given to patients); a “determining” step (when patients’ metabolite
levels are established); and a “wherein” step (indicating the
concentrations above which there is a likelihood of harmful side effects
and below which the dosage is likely to be ineffective, and allowing the
doctor to adjust the dosage levels accordingly).
Based on its patents, Prometheus developed and sold a metabolite blood
test.
Mayo used the test, but then it developed its own. When Mayo said it was
going to market its test, Prometheus sued for infringement.
The Issue
Whether the claims are patent eligible or constitute a patent ineligible law
of nature
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14. Mayo Collaborative Serv. v. Prometheus Labs., Inc. (3)
The Supreme Court decision: The claims are not patent eligible
The “patents set forth laws of nature—namely, relationships between
concentrations of certain metabolites in the blood and the likelihood that a
dosage of a thiopurine drug will prove ineffective or cause harm.”
• “The question before us is whether the claims do significantly more
than simply describe these natural relations.”
• “If a law of nature is not patentable, then neither is a process
reciting a law of nature, unless that process has additional features
that provide practical assurance that the process is more than a
drafting effort designed to monopolize the law of nature itself.”
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15. Mayo Collaborative Serv. v. Prometheus Labs., Inc. (4)
The Supreme Court decision (2)
“The Court has repeatedly emphasized… that patent law not inhibit further
discovery by improperly tying up the future use of laws of nature.”
• “The laws of nature at issue here are narrow laws that may have
limited applications, but the patent claims that embody them
nonetheless implicate this concern. They tell a treating doctor to
measure metabolite levels and to consider the resulting
measurements in light of the statistical relationships they describe.
In doing so, they tie up the doctor’s subsequent treatment decision
whether that treatment does, or does not, change in light of the
inference he has drawn using the correlations. And they threaten to
inhibit the development of more refined treatment
recommendations….”
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16. Mayo Collaborative Serv. v. Prometheus Labs., Inc. (5)
The Supreme Court decision (3): BUT
“The Court has recognized, however, that too broad an interpretation of
this exclusionary principle could eviscerate patent law.
“A process is not unpatentable simply because it contains a law of nature
or a mathematical algorithm…. An application of a law of nature or
mathematical formula to a known structure or process may well be
deserving of patent protection.”
• “A novel and useful structure created with the aid of knowledge of
scientific truth may be [patentable].”
• “Still, as the Court has also made clear, to transform an
unpatentable law of nature into a patent-eligible application of such
a law, one must do more than simply state the law of nature while
adding the words ‘apply it.’”
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17. Mayo Collaborative Serv. v. Prometheus Labs., Inc. (6)
The Supreme Court Test:
“We must determine whether the claimed processes have transformed
these unpatentable natural laws into patent eligible applications of those
laws.”
The Court’s precedents “warn us against interpreting patent statutes in
ways that make patent eligibility ‘depend simply on the draftsman’s art’
without reference to the ‘principles underlying the prohibition against
patents for natural laws.’ They warn us against upholding patents that
claim processes that too broadly preempt the use of a natural law. And
they insist that a process that focuses upon the use of a natural law also
contain other elements or a combination of elements, sometimes referred
to as an ‘inventive concept,’ sufficient to ensure that the patent in practice
amounts to significantly more than a patent upon the natural law itself.”
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18. Assoc. for Molecular Pathology v. Myriad Genetics
Another unanimous Court
The Invention
Myriad discovered the location and sequence of two genes (BRCA1 and 2
– both associated with breast and ovarian cancer) and obtained several
patents.
• The patents gave Myriad the exclusive right to isolate an individual’s
BRCA1 and BRCA2 genes by breaking the covalent bonds that
connect the DNA to the rest of the individual’s genome. The patents
also gave Myriad the exclusive right to synthetically create BRCA
cDNA.
– Myriad claimed that its patents gave it the right to exclude others
from isolating the genes (making its patented composition of
matter) and engaging in genetic testing
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19. Assoc. for Molecular Pathology v. Myriad Genetics (2)
The Case
Myriad acted to prevent other entities from providing BRCA testing, and
became the only testing entity
Several years later the petitioners filed a lawsuit seeking a declaration that
Myriad’s patents covered products of nature and therefore were invalid
under 35 U.S.C. §101 .
The Issue
Citing Mayo: “Patent protection strikes a delicate balance between
creating ‘incentives that lead to creation, invention, and discovery’ and
‘impeding the flow of information that might permit, indeed spur,
invention.’ We must apply this well-established standard to determine
whether Myriad’s patents claim any ‘new and useful . . . composition of
matter,” or instead claim naturally occurring phenomena.”
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20. Assoc. for Molecular Pathology v. Myriad Genetics (3)
The Issue (cont’d)
“It is undisputed that Myriad did not create or alter any of the genetic
information encoded in the BRCA1 and BRCA2 genes. The location and
order of the nucleotides existed in nature before Myriad found them. Nor
did Myriad create or alter the genetic structure of DNA. Instead, Myriad’s
principal contribution was uncovering the precise location and genetic
sequence of the BRCA1 and BRCA2 genes. The question is whether this
renders the genes patentable.”
The Supreme Court decision: Merely isolating genes that are found in nature
does not make them patentable.
A naturally occurring DNA segment is a product of nature and not patent
eligible merely because it has been isolated, but cDNA is patent eligible
because it is not naturally occurring.
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21. Assoc. for Molecular Pathology v. Myriad Genetics (4)
The Supreme Court decision (cont’d)
“Myriad did not create anything. To be sure, it found an important and
useful gene, but separating that gene from its surrounding genetic
material is not an act of invention.”
• “Groundbreaking, innovative, or even brilliant discovery does not by
itself satisfy the §101 inquiry.”
But
“cDNA does not present the same obstacles to patentability as naturally
occurring, isolated DNA segments.” “Creation of a cDNA sequence from
mRNA results in a… molecule that is not naturally occurring.”
• “The labtechnician unquestionably creates something new when
cDNA is made. cDNA retains the naturally occurring exons of DNA,
but it is distinct from the DNA from which it was derived. As a result,
cDNA is not a “product of nature” and is patent eligible under §101.”
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22. Assoc. for Molecular Pathology v. Myriad Genetics (5)
The limits of the Supreme Court decision
“It is important to note what is not implicated by this decision.”
• “First, there are no method claims before this Court. Had Myriad
created an innovative method of manipulating genes while
searching for the BRCA1 and BRCA2 genes, it could possibly have
sought a method patent. But the processes used by Myriad to
isolate DNA were well understood by geneticists at the time of
Myriad’s patents…”
• “Similarly, this case does not involve patents on new applications of
knowledge about the BRCA1 and BRCA2 genes.”
• “Nor do we consider the patentability of DNA in which the order of
the naturally occurring nucleotides has been altered. Scientific
alteration of the genetic code presents a different inquiry, and we
express no opinion about the application of §101 to such
endeavors.”
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23. Assoc. for Molecular Pathology v. Myriad Genetics (6)
The limits of the Supreme Court decision (cont’d)
“We merely hold that genes and the information they encode are not
patent eligible under §101 simply because they have been isolated from
the surrounding genetic material.”
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25. Ariosa Diagnostics, Inc. v. Sequenom, Inc.
Rehearing by the Federal Circuit denied December, 02, 2015 with two
concurrences and one dissent.
The original Appeal Decided on June 12, 2015.
Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371 (Fed. Cir.
2015)
The Invention:
1) Discovery of cell-free fetal DNA (cffDNA) in the bloodstream of the
mother
2) Use well known lab techniques to analyze the characteristics of the
cffDNA.
Claimed invention enables one to diagnose birth defects and other fetal
characteristics without the risk of taking a sample from the fetus or
placenta
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26. Ariosa Diagnostics, Inc. v. Sequenom, Inc. (June 12,
2015 Decision)
The original Appeal decision of June 12, 2015:
The court affirmed the District Court grant of invalidity
Claim at issue: “A method for detecting a paternally inherited nucleic acid
of fetal origin performed on a maternal serum or plasma sample from a
pregnant female, which method comprises amplifying a paternally
inherited nucleic acid from the serum or plasma sample and detecting the
presence of a paternally inherited nucleic acid of fetal origin in the
sample.”
Issue:
• Is a method of analyzing a newly discovered, naturally occurring
phenomenon using conventional techniques patent eligible subject
matter?
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27. Ariosa Diagnostics, Inc. v. Sequenom, Inc. (June 12,
2015 Decision)
The original Appeal decision of June 12, 2015 (continued):
CAFC applied the Supreme Court’s framework set forth in Mayo:
• 1) Directed to patent ineligible naturally occurring phenomenon?
– “It is undisputed that the existence of cffDNA in Maternal Blood
is a naturally occurring phenomenon”
• 2) Is there an inventive step that transforms the naturally occurring
phenomenon into a patent-eligible application?
– CAFC holds that there is not
» “The method at issue here amounts to a general instruction
to doctors to apply routine, conventional techniques when
seeking to detect cffDNA.”
Judge Linn Concurrence: concurs only because of the unnecessary
breadth of the Mayo test binds the outcome
• “This case represents the consequence…of that broad language in
excluding meritorious inventions from [] patent protection”
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28. Ariosa Diagnostics, Inc. v. Sequenom, Inc. (Rehearing
Denial)
Petition for Rehearing En Banc Denied
Judge Lourie Concurrence: concurs because he finds no “basis to distinguish
this case from Mayo, by which we are bound.”
However, Lourie goes on to express concern that the Mayo test is too far
reaching especially concerning medical innovation
• “[i]t is unsound to have a rule that takes inventions of this nature out
of the realm of patent-eligibility on grounds that they only claim
natural phenomenon plus conventional steps”
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29. Ariosa Diagnostics, Inc. v. Sequenom, Inc. (Rehearing
Denial)
Judge Dyk Concurrence: Concurs on the same grounds as Lourie and
expresses similar concerns with Mayo; goes on to suggest an approach to
alleviate this §101 issue
“I worry that method claims that apply newly discovered natural laws and
phenomena in somewhat conventional ways are screened out by the
Mayo test.”
“There is a problem with Mayo insofar as it concludes that inventive
concept cannot come from discovering something new in nature” even
when there is creativity and novelty in the discovery of natural laws
Dyk further recites his suggested approach: “if the breadth of the claim is
sufficiently limited to a specific application of the new law of nature
discovered by the patent applicant and reduced to practice, I think that the
novelty of the discovery should be enough to supply the necessary
inventive concept.”
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30. Part 2:
Trans-Pacific Partnership
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31. Trans-Pacific Partnership (TPP)
The largest regional trade agreement ever negotiated, potentially binding 12
nations and almost 800 million people, and effecting 40% of the world’s GDP
Parties:
• Australia
• Brunei Darussalam
• Canada
• Chile
• Japan
• Malaysia
• Mexico
• New Zealand
• Peru
• Singapore
• United States of
America
• Vietnam
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32. TPP
Concluded on October 4, 2015
Adoption in the US will be on the basis of “fast-track” authority
Chapter 18: Intellectual Property
Significant impact on pharmaceutical and biotech patenting
• Patentability criteria
• Patent term extensions
• Data exclusivity
– Biologics
• Pharmaceutical marketing approval measures
Chapter 11: Investment
Provides for investor-state dispute settlement (ISDS)
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33. TPP and Pharma and Biotech Patenting
Patentability Criteria
Article 18.37 (Patentable Subject Matter)
• The parties confirm that patents are available for
– New uses of a known product
– New methods of using a known product
– New processes of using a known product
• While parties can exclude plants (other than microorganisms) from
patentability, they confirm that patents “are available at least for
inventions that are derived from plants”
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34. TPP and Pharma and Biotech Patenting (2)
Extension of the Patent Term
Articles 18.46, 18.48 and 18.49 (Patent Term Adjustment)
• Parties “shall” provide a means for patent term adjustment to
account for “unreasonable delays” in processing patent applications
– Unreasonable delay is defined as more than 5 years from the
date of filing or 3 years from a request for examination
(whichever is later)
• For pharmaceutical products:
– Parties “shall” provide and adjustment “to compensate the patent
owner for unreasonable curtailment of the effective patent term
as a result of the marketing approval process”
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35. TPP and Pharma and Biotech Patenting (3)
Data Exclusivity
Article 18.50 (Protection of Undisclosed Test or Other Data)
• Parties “shall” require a minimum of five years of protection for
undisclosed test data submitted to a regulatory agency for
marketing approval of a pharmaceutical
• New indications, new formulations, or new methods of
administration must be entitled to at least three years of data
exclusivity
Article 18.52 (Biologics)
• Parties must provide at least eight years of data exclusivity from the
date of first marketing approval
– A biologic is a pharmaceutical generally derived from humans, animals
or microorganisms (in contrast to chemically synthesized conventional
drugs.
» Highly dependent on precise process variables that make
biosimilarity hard to attain
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36. TPP and Pharma and Biotech Patenting (4)
Pharmaceutical Marketing Approval Measures
Article 18.51 (Measures Relating to the Marketing of Certain
Pharmaceutical Products)
• Parties “shall” provide a mechanism for notifying patent holders
when a generic market approval application is submitted for the
same pharmaceutical
– Patent holders must be granted “adequate time and opportunity”
to seek remedies for potential patent infringement before the
application for market approval can be allowed
• Or Parties can provide that no generic approval can be granted
without the consent of the patent holder
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37. TPP and Investor-State Dispute Settlement (ISDS)
Chapter 9: Investment
Includes intellectual property rights within the definition of “investment”
Section B (Article 9.17 et seq.) provides for ISDS in the event of an
investment dispute between a private party and a TPP member country
• Private party may bring an arbitration action
Ch. 9 is somewhat vague as applied to IP: Is IP excluded from ISDS?
Article 9.7(5) provides that ISDS “shall not apply to… the revocation,
limitation or creation of intellectual property rights.
• But the exclusion applies only “to the extent that the revocation,
limitation or creation is consistent with Chapter 18 (Intellectual
Property) and the TRIPS Agreement.”
• Also, the exclusion does not exclude ISDS claims that a Party
discriminated against a foreign investor (Article 9.4, National
Treatment) or failed to provide a “minimum standard of treatment”
(Article 9.5)
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38. TPP: The US Trade Representative’s Perspective
When the USTR announced the conclusion of the TPP, it said the following:
“The IP chapter will make it easier for businesses to search, register, and
protect IP rights in new markets, which is particularly important for small
businesses.”
“The chapter establishes standards for patents, based on the WTO’s
TRIPS Agreement and international best practices.”
“[T]he chapter contains pharmaceutical-related provisions that facilitate
both the development of innovative, life-saving medicines and the
availability of generic medicines, taking into account the time that various
Parties may need to meet these standards. The chapter includes
commitments relating to the protection of undisclosed test and other data
submitted to obtain marketing approval of a new pharmaceutical or
agricultural chemicals product.”
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39. Questions?
Jay Erstling | +612-349-5771 | erstling@ptslaw.com
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