Patents

The Inaccessible Cure: the Struggle With Feline Infectious Peritonitis and Thoughts on the Underlying Law

October 10, 2023
FDA, Food and Drug Law, Intellectual Property, Patents, Pharmaceuticals

Lan Gan, MJLST Staffer

For fellow feline fanatics, you may share some of my traits. I care for my cat’s health as I care for my own. Besides giving her nutritiously balanced meals, I take notes when she’s unwell and schedule annual physicals for her, just like I would for myself. I also browse online discussions posts of cats. Some make me laugh, some give me new understanding of cat behaviors, but the ones about feline infectious peritonitis are always grim.

Feline Infectious Peritonitis, or FIP, is a severe disease that typically develops in young cats when they are infected with feline enteric coronavirus (FeCV) which later mutates into FIPV and causes inflammations.[1] The mutations happen about ten percent of the time, and, until recently, have almost always been deadly.[2]

In 2018, researchers at the School of Veterinary Medicine at UC Davis partnered with Gilead Sciences and published an article about the discovery of GS-441524, which, through their experiments with cats that were infected with FIPV in an in vitro process, “caused a rapid reversal of disease signs and return to normality with as little as two weeks of treatment in 10/10 cats and with no apparent toxicity.”[3] Another paper, published in 2019, also by researchers of the two institutions, revealed that GS-441524 was an effective treatment for cats with naturally occurring FIP.[4]

This gave cat rescuers and cat owners hope. But despite promising experiment results, Niels Pederson, who partook in the studies and was a long-time researcher devoted to FIP, warned that the development was “proof-of-concept,” showing possibility in terms of science but not immediately translating into commercially available products.[5] Subsequently, GS-441524 did not move forward to become an FDA-approved drug to treat cats.[6] Instead, it seemed to be set aside as Gilead prioritized another drug, remdesivir, which is identical to GS-441524 in part of its structural formula and has the same mechanism of inhibiting coronavirus.[7] When Gilead failed to obtain FDA approval to use remdesivir to treat Ebola, they changed course to study its effects on the then-rising Covid-19 pandemic.[8] GS-441524, with its studies on animals halted, was also part of the race and was argued by some scientists to have more efficacy in treating Covid-19 than remdesivir.[9]

The much-needed cure became inaccessible. In as early as 2019, anxious people were turning to the black market for help. GS-441524 that circulated on the black market had murky origins: potential leaks from lab orders for research, personnel that synthesized the compound themselves in overseas locations such as China.[10] The benefits of the drug, while still salient, based on surveys of cat owners who utilized them, were potentially compromised by the disparity in quality of the black market drugs, and lack of veterinary expertise involved.[11]

Pharmaceutical companies are more than incentivized to patent their research products. A search on World Intellectual Property Organization (WIPO)’s database revealed 66 patents applied for by Gilead, from as early as 2009 to as recently as July 2023.[12] The list of patents documented development in Gilead’s GS-441524 research.[13] Gilead patented GS-441524’s treatment for cats in 2018 and 2020[14], but those accounted for only 3 of the 66 patents they obtained; the rest were regarding human use.[15] Patents benefit their owners by giving them a cause of action against future infringement. They are about owning, not sharing. Patents are the culmination of a strenuous journey of scientific research. But this celebratory landmark might not go any further. Many patents do not make their way onto the market; having one is not itself an incentive for doing so.

Next comes the approval process as stipulated in federal law. 21 U.S.C. § 360b governs the approval process of new animal drugs.[16] The statute lays the burden on pharmaceutical companies – referred to as drug sponsors – of contacting the FDA after initial research of the drug, making the decision to pursue approval for the drug, and conducting tests to ensure the effectiveness and safety of the drug.[17] Additionally, the Generic Animal Drug and Patent Term Restoration Act (GADPTRA) of 1988 provides an abbreviated process for generic copies of approved new animal drugs;[18] the Minor Use and Minor Species Animal Health Act (the “Mums Act”) of 2004 paves paths for drugs affecting a small population of major species of animals (defined as horses, dogs, cats, cattle, pigs, turkeys and chickens) and minor species (those that are not major species) that have few drugs available to them.[19] In 2018, the Animal Drug and Animal Generic Drug User Fee Amendments expanded the eligibility for conditional approval of non-MUMS drugs intending to treat a serious or life-threatening disease or condition or address an unmet animal or human health need, for which a demonstration of effectiveness would require a complex or particularly difficult study or studies.[20]

How has GS-441524 escaped the statutory provisions when they have been amended to be more inclusive? There may be various reasons. It may not qualify for conditional approval under 21 U.S.C. § 360ccc(a)(1)(ii) because peer-reviewed articles have already demonstrated the drug’s effectiveness. It may be hard to quantify the FIP-affected cat population to meet the “minor use” threshold set out in the Mums Act because of the difficulty of FIP testing. Current testing cannot differentiate between FeCV and the mutated FIPV, and an FIP diagnosis is often assumed for young cats based on their higher infection rate.[21] Lastly, no matter which approval process GS-441524 is eligible to take, the process wouldn’t start unless Gilead decides to contact the FDA and set forth the drug for approval. Current statutes create paths, but no incentives to do so. The market may provide some monetary incentives, as treatment costs via the black market can be up to $10,000 for 12 weeks[22], but this is singularly held back by the decision to prioritize approval for human treatment, and the presumption that the approval process of an animal drug would negatively impact the approval process of a similar drug for humans.[23]

The black market is not a long-term solution for FIP treatment. Though the U.S. has yet to adjudicate the circulation of unlicensed FIP treatment, in July 2023, a woman in China was sentenced to 15 years in prison and fined with more than $5 million in damages for producing and selling fake, substandard products pursuant to China’s criminal law statutes.[24] Gilead also holds the exclusive patents on feline treatments. Facing unclear prospects for legitimate FIP treatment, subsequent statutory amendments need to create actual incentives to spur innovation in animal drugs, in addition to the creation of paths. The law should also create safeguards to promote transparency and fairness in the application review process in order to reduce bias against animal drugs.

Notes

[1] Feline Infectious Peritonitis, Cornell Feline Health Center, https://www.vet.cornell.edu/departments-centers-and-institutes/cornell-feline-health-center/health-information/feline-health-topics/feline-infectious-peritonitis (last visited Oct. 2, 2023).

[2] Id.

[3] B.G. Murphy et al., The Nucleoside Analog GS-441524 Strongly Inhibits Feline Infectious Peritonitis (FIP) Virus in Tissue Culture and Experimental Cat Infection Studies, 219 Veterinary Microbology 226, 226 (2018).

[4] Niels C Pedersen, Efficacy and Safety of the Nucleoside Analog GS-441524 for Treatment of cats with Naturally Occurring Feline Infectious Peritonitis, 21(4) J. of Feline Med. & Surgery 271, 271 (2019).

[5] Human Antiviral ‘GS-441524’ Shows Great Promise Against Infectious Disease in Cats, Science Daily (Feb. 13, 2019), https://www.sciencedaily.com/releases/2019/02/190213100442.htm.

[6] Sarah Zhang, A Much-Hyped COVID-19 Drug Is Almost Identical to a Black-Market Cat Cure, The Atlantic (May 8, 2020), https://www.theatlantic.com/science/archive/2020/05/remdesivir-cats/611341/.

[7] Id.

[8] Kai Kupferschmidt & Jon Cohen, WHO Launches Global Megatrial of the Four Most Promising Coronavirus Treatments, Science (Mar. 22, 2020), https://www.science.org/content/article/who-launches-global-megatrial-four-most-promising-coronavirus-treatments.

[9] E.g., Victoria C. Yan & Florian L. Muller, Advantages of the Parent Nucleoside GS-441524 over Remdesivir for Covid-19 Treatment, 11 ACS Med. Chemistry Letters 1361, 1361 (2020).

[10] See Sarah Zhang, A Much-Hyped COVID-19 Drug Is Almost Identical to a Black-Market Cat Cure, The Atlantic (May 8, 2020), https://www.theatlantic.com/science/archive/2020/05/remdesivir-cats/611341/; see also Sarah Jones et al., Unlicensed GS-441524-Like Antiviral Therapy Can Be Effective for at-Home Treatment of Feline Infectious Peritonitis, 11 Animals 2257, 2258 (2021).

[11] Sarah Jones et al., Unlicensed GS-441524-Like Antiviral Therapy Can Be Effective for at-Home Treatment of Feline Infectious Peritonitis, 11 Animals 2257, 2264–67 (2021).

[12] CHEM:(BRDWIEOJOWJCLU-LTGWCKQJSA-N), WIPO, https://patentscope.wipo.int/search/en/result.jsf?_vid=P22-LN8EIR-06824 (last visited Oct. 2, 2023).

[13] Id.

[14] See World Patent No. 169,946 (filed Mar. 13, 2018); see also U.S. Patent No. 0,296,584 (filed Mar. 13, 2018); see also U.S. Patent No. 0,376,014 (filed Apr. 17, 2020).

[15] See CHEM:(BRDWIEOJOWJCLU-LTGWCKQJSA-N), WIPO, https://patentscope.wipo.int/search/en/result.jsf?_vid=P22-LN8EIR-06824 (last visited Oct. 2, 2023).

[16] 21 U.S.C. § 360b.

[17] From an Idea to the Marketplace: The Journey of an Animal Drug through the Approval Process, FDA (Aug. 14, 2020), https://www.fda.gov/animal-veterinary/animal-health-literacy/idea-marketplace-journey-animal-drug-through-approval-process.

[18] Generic Animal Drug and Patent Term Restoration Act (GADPTRA), FDA (Apr. 24, 2023), https://www.fda.gov/animal-veterinary/guidance-regulations/generic-animal-drug-and-patent-term-restoration-act-gadptra.

[19] Conditional Approval Explained: A Resource for Veterinarians, FDA (Sept. 17, 2020), https://www.fda.gov/animal-veterinary/resources-you/conditional-approval-explained-resource-veterinarians.

[20] 21 U.S.C. § 360ccc (a)(1)(ii).

[21] Feline Infectious Peritonitis, Cornell Feline Health Center, https://www.vet.cornell.edu/departments-centers-and-institutes/cornell-feline-health-center/health-information/feline-health-topics/feline-infectious-peritonitis (last visited Oct. 2, 2023).

[22] Sarah Jones et al., Unlicensed GS-441524-Like Antiviral Therapy Can Be Effective for at-Home Treatment of Feline Infectious Peritonitis, 11 Animals 2257, 2264–67 (2021).

[23] Id.

[24] Wu Shubin (吴淑斌), Zhishou Maoyao Yishen Huoxing 15 Nian: Maoquan “Jiumingyao” de Yinmi Shengyi (制售猫药一审获刑15年:猫圈“救命药” 的隐秘生意) [Sentenced at Trial for 15 Years for Manufacturing and Selling Medicine for Cats: The Secret Business of Life-Saving Drugs in Cat-loving Communities], Sanlian Shenghuo Zhoukan (三联生活周刊) [Sanlian Lifeweek] (July 20, 2023), https://mp.weixin.qq.com/s/VKJO_AIVBy3Hm6GhWUOnWA.

Patent Venue and the Western District of Texas: Will Randomly Assigning Judges Really Change Anything?

March 31, 2023
Patents

Nina Elder, MJLST Staffer

According to the 2023 Patent Litigation Report Lex Machina released last month, Judge Alan Albright, of the Western District of Texas, heard more patent cases than any other judge in the nation. This is largely because historically Judge Albright has heard nearly all patent cases filed in his district—a district which has maintained its position as the most popular patent venue  for several years. Last July, to address concerns about Judge Albright’s monopoly over patent cases the Western District of Texas implemented a new rule requiring that judges be randomly assigned to patent cases. Some expected that patent filings in the district would “fall off a cliff” after this change, but the Lex Machine report showed that so far there hasn’t been a major decrease in the number of patent cases filed in the district. However, the question remains: will randomization have a significant effect on the distribution of patent cases in the long term?

Why Texas?

Until relatively recently, the Western District of Texas was not a particularly popular patent venue. Judge Albright’s appointment in 2018 changed that. Before becoming a judge, Albright practiced as a patent litigator for decades. He enjoys patent cases and on multiple occasions encouraged parties to file them in his court. And his efforts succeeded—the Western District of Texas had a meteoric rise in popularity after Albright was appointed, and only two years after he took the bench it went from receiving only 2.5% of patent cases filed nationwide to around 22%.

Plaintiffs have flocked to the Western District of Texas to take advantage of Judge Albright’s plaintiff friendly practices. Plaintiffs prefer his fast-moving schedules because they drive settlement negotiations and limit the time defendants have to develop their case. His patent-specific standing orders provide predictability and his years of patent experience allow for efficient resolution of issues. Albright’s procedures also make it harder for defendants to initiate inter partes review to invalidate plaintiff patents with the Patent Trial and Appeal Board, which has been called a patent death squad.

Because of the way cases are distributed in the Western District of Texas, plaintiffs can almost guarantee they will be assigned to Judge Albright if they file in the Waco division, where he is the sole judge. The district is organized into nine divisions, most with one or two judges. Federal district courts are not required to randomly assign cases and, barring unique circumstances, a case filed in a Western Texas division with only one judge will be assigned to that judge. This ability to choose provides plaintiffs with certainty as to the judge that will preside over their case – something not available in most districts. As a result, nearly all patent cases in the Western District of Texas have been handled by Judge Albright. Albright also transfers cases infrequently, meaning it is unlikely a given case will be transferred to a more defendant-friendly forum.

New Rule Requires Random Assignment

Concerns have been expressed about the monopoly Albright has on patent cases. General concerns revolve around judge shopping as it may undermine fairness and public trust in the judicial system and there is a worry that cases may be won based on procedural advantage rather than the merits. In Judge Albrights case there is unease about non-practicing entities (NPEs). NPEs, or patent trolls as they are often called, generate revenue by suing for infringement, often using abusive litigation tactics. There have been concerns that Judge Albright’s practices benefit patent trolls as after he took the bench more than 70% of new patent cases in the Western District of Texas were brought by NPEs.

In response to this issue, in November 2021 several members of the Senate Judiciary Committee’s intellectual property subcommittee wrote a letter to Chief Justice John Roberts and the Administrative Office of the U.S. Court’s Judicial Conference. While they did not name Albright, they alluded to him by noting “unseemly and inappropriate conduct in one district.” They also sent a letter to the U.S. Patent and Trademark Office expressing concern that Judge Albright repeatedly ignored binding case law and abused his direction by denying transfer motions. The Judicial Conference director, Judge Roslynn R. Mauskopf, said the office would conduct a study and noted that random case assignment safeguards judicial autonomy and prevents judge shopping.  Justice Roberts addressed the issue in his annual report and said that patent venue was one of the top issues facing the judiciary.

As a result, last July the Chief Judge of the Western District of Texas, Orlando Garcia, instituted a random assignment of patent cases filed in Waco. Under the new rule, patent cases filed in Waco are no longer automatically assigned to Judge Albright, but instead are randomly distributed to one of the 13 judges in the district.

Impacts of the New Rule

Initial reports suggested there was a decrease in patent case filings in the Western District of Texas after the new rule, but more recent Lex Machina data show that there was limited change. Though the number of patent cases on Judge Albright’s docket did decrease, it was not as great a decrease as some expected, and he still received around 50% of all patent cases filed in the district. However, this is largely because Albright is still being assigned any newly filed cases that relate to those currently on his docket. Though randomization hasn’t significantly decreased the patent cases on Albright list yet, the number of cases assigned to him over time should decrease. What remains to be seen however is whether there will be an overall decrease in patent cases filed in the Eastern District of Texas.

What Will Happen in the Future?

It is unclear how this new way of assigning cases in the Western District of Texas will impact the distribution of patent cases. Uncertainty about the behaviors of other judges in the district likely will cause a decrease in filings. There are 12 “new” judges which can preside over patent cases in the district and only five have significant intellectual property experience. Until it is clearer how the other judges in the district handle patent cases, litigants may go elsewhere. However, it is possible that the other judges will follow Albright’s lead. Two judges in the district, Kathleen Cardone and David Counts, have already adopted Albrights’ patent procedures. It is also possible litigants will simply begin targeting judges with patent experience in the district. The new rule does not require random assignment for all patent cases—only those filed in Waco. Plaintiffs can still select their desired judge, as long as it is not Albright.

Even if the Western District loses its spot at the top, Texas will likely remain a popular patent venue. Before the Western District began its rise, the Eastern District of Texas was a patent litigation epicenter. At least for the near future it seems like the Western District of Texas will remain among one of the most popular patent forums; only time will tell the larger effects of the new rule.

Who Qualifies for the Patent Bar? Proposed Changes May Mean More Applicants With Computer Science Degrees Soon Will

November 27, 2022
Intellectual Property, Legal Education, Patents

Nina Elder, MJLST Staffer

Last month, the United States Patent and Trademark Office (USPTO) put out a request for comments on a proposal to amend the admission requirements for the registration examination it administers. Passing this examination, colloquially referred to as the patent bar, is required before an aspiring practitioner can practice patent matters before the USPTO. To qualify for the test, applicants must demonstrate that they have the appropriate scientific and technical training. There are three ways to qualify, but most applicants are automatically admitted under “Category A” which simply requires a degree in an approved topic. The USPTO has historically adhered strictly to its list of approved degrees; for example, “biology” is included on the list, but in the past a degree in “biological sciences” did not qualify.

In 2021, the USPTO made its first major change to the admission requirements in years by expanding the degrees accepted under Category A to include advanced degrees and 14 new undergraduate majors. Though it did not officially announce it, the USPTO also edited its Frequently Asked Questions to reflect that it no longer requires that an applicant’s degree match a Category A degree title exactly, but instead evaluates any degree that is similar to an approved degree to determine if they are equivalent. However, even after these improvements there was still a clear lack of approved computer science-related degrees, and many attorneys felt the USPTO needed to do more. The USPTO’s new proposal at least partially addresses this issue and suggests several more changes, a key one being removing the certification requirement for computer science degrees.

Currently, computer science degrees only qualify under Category A if they are certified by either the Computing Accreditation Commission or the Accreditation Board for Engineering and Technology. This is the only degree accepted under Category A that requires extra certification. Qualifying under either of the alternative routes—Category B or C—may be nearly impossible for many students with computer science degrees. Category B requires an applicant establish they have the necessary training by showing they have a certain number of credits in particular scientific topics. However, the coursework needed for a computer science degree typically does not align with the subjects required for Category B such as physics, chemistry, and biology. Under Category C an applicant can prove they have practical training by taking the Fundamentals of Engineering test, but once again the information covered for a degree in computer science may not prepare a student for such a test. 

As of November 2022, there are only 368 schools in the US with a qualifying certified computer science program. Many highly respected schools, including Stanford, UC Berkeley, and Carnegie Mellon, do not have the required certification for their computer science programs. Considering there appear to be more than 700 four-year schools that offer computer science degrees, there are likely hundreds of computer science students graduating every year that do not qualify to take the patent bar under Category A and may have difficulty qualifying under Category B or C. Even if a school becomes accredited, any student that received a degree before that accreditation does not qualify.

The certification requirement may be excluding the “best and brightest” computer practitioners, and is contributing to the lack of practitioners with relevant experience in a heavily patented area. There is a huge disconnect between the number of patents related to software and the number of practitioners with a relevant background. As of 2010, less than 5% of patent practitioners trained in a computer science-related field. While decisions such as Alice Corp v CLS Bank International have limited what software can be patented, a growing number of patents at least include some element relating to computers and more than 60% of utility patents issued in 2019 related to software. There is clearly an increasing need for competent patent attorneys with experience in software and, if adopted, the USPTO’s current proposal would increase that pool.

It has also been suggested that altering patent bar requirements may improve diversity in patent law. Despite women making up more than 37% of attorneys in the US, only 17% of patent attorneys are women. Less than 15% of patent practitioners with a background in computer science are women. The picture is even more striking when we examine racial diversity—less than 7% of all patent attorneys and agents are minorities. Shockingly, there are more male patent practitioners named Michael than women of color. The USPTO’s broadening of the accepted degrees last year was spurred by a journal article written by a law student, Mary Hannon, suggesting that changes to patent bar admission may help address the low number of women in patent law. While she acknowledged that removing the computer science certification requirement would not close the gender gap since the majority of computer science graduates are men, she pointed out that by allowing more individuals with computer science degrees to take the patent bar the overall number of women admitted to the exam may increase. 

Many have been pushing for changes to the patent bar admission requirements for years, and while it is promising to see progress being made, there is still more that can be done. Organizations such as the American Intellectual Property Law Association have suggested Category A be broadened even further to include degrees such as data science and mathematics. The USPTO has not only shown willingness to continue updating these requirements, as evidenced by the fact it is proposing to regularly consider and add new Category A degrees, but also that it is responsive to comments. For example, environmental engineering was added to the list of accepted degrees at least partially in response to a comment. Kathi Vidal, USPTO’s current director, explained the goal is to ensure the USPTO remains dynamic by recognizing the new types of degrees being awarded as society and technology evolve. In its recent request for comments, the USPTO asked commenters to weigh in on its new proposals and to submit general suggestions on updating the scientific and technical requirements for admission to the patent bar. Comments close on January 17th, 2023—if you have thoughts about the degrees the USPTO should accept under Category A, go comment!


Only Humans Are Allowed: Federal Circuit Says No to “AI Inventors”

October 26, 2022
Artificial Intelligence, Intellectual Property, Inventions, New Technology, Patents

Vivian Lin, MJLST Staffer

On August 5, 2022, the U.S. Court of Appeals for the Federal Circuit affirmed the U.S. District for the Eastern Division of Virginia’s decision that artificial intelligence (AI) cannot be an “inventor” on a patent application,[1] joining many other jurisdictions in confirming that only a natural person can be an “inventor”.[2] Currently, South Africa remains the only jurisdiction that has granted Dr. Stephan Thaler’s patent naming DABUS, an AI, as the sole inventor of two patentable inventions.[3] With the release of the Federal Circuit’s opinion refusing to recognize AI as an inventor, Dr. Thaler’s fight to credit AI for inventions reaches a plateau. 

DABUS, formally known as Device for the Autonomous Bootstrapping of Unified Sentience, is an AI-based creativity machine created by Dr. Stephan Thaler, the founder of the software company Imagination Engine Inc. Dr. Thaler claimed that DABUS independently invented two patentable inventions: The Factual Container and the Neural Flame. For the past few years, Dr. Thaler has been in battle with patent offices around the world trying to receive patents for these two inventions. Until this date, every patent office, except one,[4] has refused to grant the patents on the grounds that the applications do not name a natural person as the inventor. 

The inventor of a patent being a natural person is a legal requirement in many jurisdictions. The recent Federal Circuit opinion ruled mainly based on statutory interpretation, arguing that the text is clear in requiring a natural person to be the inventor.[5] Though there are many jurisdictions that have left the term “inventor” undefined, it seems to be a general agreement that an inventor should be a natural person.[6]

Is DABUS the True Inventor?

There are many issues centered around AI inventorship. The first is whether AI can be the true inventor, and subsequently take credit for an invention, even though a human created the AI itself. Here it becomes necessary to inquire into whether there was human intervention during the discovery process, and if so, what type of intervention was involved. It might be the case that a natural human was the actual inventor of a product while AI only assisted in carrying out that idea. For example, when a developer designed the AI with a particular question in mind and carefully selected the training data, the AI is only assisting the invention while the developer is seen as the true inventor.[7] In analyzing the DABUS case, Dr. Rita Matulionyte, a senior lecturer at Macquarie Law School in Australia and an expert in intellectual property and information technology law, has argued that DABUS is not the true inventor because Dr. Thaler’s role in the inventions was unquestionable, assuming he formulated the problem, developed the algorithm, created the training date, etc.[8] 

However, it is a closer question when both AI and human effort are important for the invention. For example, AI might identify the compound for a new drug, but to conclude the discovery, a scientist still has to test the compound.[9] The U.S. patent law requires that the “inventor must contribute to the conception of the invention.”[10] Further defined, conception is “the formation in the mind of the inventor, of a definite and permanent idea of the complete and operative invention, as it is hereafter to be applied in practice.”[11] In the drug discovery scenario, it is difficult to determine who invented the new drug. Neither the AI developers nor the scientists fit the definition of “inventor”: The AI developers and trainers only built and trained the algorithm without any knowledge of the potential discovery while the scientists only confirmed the final discovery without contributing to the development of the algorithm or the discovery of the drug.[12] In this scenario, it is likely the AI did the majority of the work and made the important discovery itself, and should thus be the inventor of the new compound.[13]

The debate on who is the true inventor is important because mislabeling the inventor can cause serious consequences. Legally, improper inventorship attribution may cause a patent application to be denied, or it may lead to the later invalidation of a granted patent. Practically speaking, human inventors are able to take credit for their invention and that honor comes with recognition which may incentive future creative inventions. Thus, a misattribution may harm human inventiveness as true inventors could be discouraged by not being recognized for their contributions. 

Should AI-Generated Inventions be Patentable?

While concluding that AI is the sole inventor of an invention may be difficult as outlined in the previous section, what happens when AI is found to be the true, sole inventor? Society’s discussion on whether AI inventions should be patented focuses mostly on policy arguments. Dr. Thaler and Ryan Abbott, a law professor and the lead of Thaler’s legal team, have argued that allowing patent protection for AI-generated inventions will encourage developers to invest time in building more creative machines that will eventually lead to more inventions in the future.[14] They also argued that crediting AI for inventorship will protect the rights of human inventors.[15] For example, it cuts out the possibility of one person taking credit for another’s invention, which often happens when students participate in university research but are overlooked on patent applications.[16] Without patent applicability, the patent system’s required disclosure of inventions, it is very likely that owners of AI will keep inventions secret and privately benefit from the monopoly for however long it takes the rest of society to figure it out independently.[17] 

Some critics argue against Thaler and Abbott’s view. For one, they believe that AI at its current stage is not autonomous enough to be an inventor and human effort should be properly credited.[18] Even if AI can independently invent, its inventions should not be patentable because once it is, there will be too many patented inventions by AI in the same field owned by the same group of people who have access to these machines.[19] That will prevent smaller companies from entering into this field, having a negative effect on human inventiveness.[20]  Finally, there has been a concern that not granting patents to AI-invented creations will let AI owners keep the inventions as trade secrets, leading to a potential long-term monopoly. However, that might not be a big concern as inventions like the two created by DABUS are likely to be easily reverse engineered once they reach the market.[21]

Currently, Dr. Thaler plans to file appeals in each jurisdiction that has rejected his application and aims to seek copyright protection as an alternative in the U.S. It is questionable that Dr. Thaler will succeed on those appeals, but if he ever does, it will likely result in major changes to patent systems around the world. Even if most jurisdictions today forbid AI from being classified as an inventor, with the advancement of technology the need to address this issue will become more and more pressing as time goes on. 

Notes

[1] Thaler v. Vidal, 43 F.4th 1207 (Fed. Cir. 2022).

[2] Ryan Abbott, July 2022 AIP Update Around the World, The Artificial Inventor Project (July 10, 2022), https://artificialinventor.com/867-2/.

[3] Id.

[4] South Africa’s patent law does not have a requirement on inventors being a natural person. Jordana Goodman, Homography of Inventorship: DABUS And Valuing Inventors, 20 Duke L. & Tech. Rev. 1, 17 (2022).

[5] Thaler, 43 F.4th at 1209, 1213.

[6] Goodman, supra note 4, at 10.

[7] Ryan Abbott, The Artificial Inventor Project, WIPO Magazine (Dec. 2019), https://www.wipo.int/wipo_magazine/en/2019/06/article_0002.html.

[8] Rita Matulionyte, AI as an Inventor: Has the Federal Court of Australia Erred in DABUS? 12 (2021), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3974219.

[9] Susan Krumplitsch et al. Can An AI System Be Named the Inventor? In Wake Of EDVA Decision, Questions Remain, DLA Piper (Sept. 13, 2019), https://www.dlapiper.com/en/us/insights/publications/2021/09/can-an-ai-system-be-named-the-inventor/#11

[10] 2109 Inventorship, USPTO, https://www.uspto.gov/web/offices/pac/mpep/s2109.html (last visited Oct. 8, 2022).

[11] Hybritech, Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1376 (Fed. Cir. 1986).

[12] Krumplitsch et al., supra note 9.

[13] Yosuke Watanabe, I, Inventor: Patent Inventorship for Artificial Intelligence Systems, 57 Idaho L. Rev. 473, 290.

[14] Abbott, supra note 2.

[15] Id.

[16] Goodman, supra note 4, at 21.

[17] Abbott, supra note 2.

[18] Matulionyte, supra note 8, at 10–14.

[19] Id. at 19.

[20] Id.

[21] Id. at 18.



I Think, Therefore I Am: The Battle for Intellectual Property Rights With Artificial Intelligence

March 17, 2022
Artificial Intelligence, Intellectual Property, New Technology, Patents

Sara Pistilli, MJLST Staffer

Artificial intelligence (AI) is a computer or robot that is able to perform tasks that are usually done by humans because they require human judgement and intellect. Some AI can be self-learning, allowing them to learn and progress beyond their initial programming. This creates an issue of inventorship when AI creates patentable subject matter without any contribution from the original inventor of the AI system. This technological advancement has posed the larger question of whether AI qualifies as an “individual” under the United States Patent Act and whether people who create AI machines are able to claim the patent rights when the AI has created the patentable subject matter.

Artificial Intelligence “Inventors”

Patent law is continuously changing as technology expands and advances. While the law has advanced to accommodate innovative technology in the past, the introduction of AI has not been fully articulated. The United States Patent and Trademark Office (USPTO) opened up for comment on patenting AI inventions in 2019, however, it does not appear they asked for any further purpose other than to gather information from the public. The USPTO again asked for comment about patent eligibility jurisprudence as it related to specific technological areas, including AI in 2021. They gathered this information as a “study” and did not pursue any official action. The first official push to recognize AI as an inventor was by Dr. Stephen Thaler. Thaler built an AI machine called “DABUS,” and sought patent rights for the machine’s inventions. Thaler did not argue for DABUS to be the patent right holder, but rather the machine to be named the inventor with Thaler as the patent owner. Thaler’s insistence to name DABUS as the inventor complies with USPTO’s rulesregarding an inventor’s oath or declaration that accompanies a patent application.

United States’ Rulings

Thaler applied for patent rights over a food container and devices and methods for attracting enhanced attention. Both of these products were invented by his AI machine, DABUS. After applying for a U.S. patent, the USPTO rejected his application stating that U.S. law does not allow for artificial intelligence to be listed as an inventor on a patent application or patent. USPTO cited the Patent Act, stating an inventor must be a person, not a machine. USPTO stated that to allow “inventor” to include machines was too broad. Thaler requested reconsideration from the USPTO which was later denied. In 2021, Thaler appealed his rejection in the Eastern District of Virginia. Thaler failed to obtain patent rights with Judge Brinkema ruling only a human can be an inventor. Judge Brinkema relied heavily on statutory interpretation of the word “individual” which was performed by the Supreme Court in a 2012 case on the Torture Victim Protection Act. The Supreme Court had concluded that an “individual” referred to a “natural person.” Judge Brinkema further stated, that it will be up to Congress’ discretion on how they would like to alter patent law to accommodate for AI in the future. Thaler now has a pending appeal to the Court of Appeals.

International Rulings

While countries’ patent systems are independent of one another, they can be influenced based on technological and regulatory advancement happening in another country. Thaler has sought patent rights for DABUS’ two inventions discussed above in several countries including, but not limited to, the United Kingdom, Australia, and South Africa. Thaler obtained patent rights in South Africa, constituting a first in intellectual property history. Of note, however, is that South Africa’s patent system does not have a substantive patent examination system like other countries, nor do their patent laws define “inventor.” Thaler received a more persuasive ruling in Australia that may be able to effectuate change in other countries.  In 2021, Thaler’s patent application was denied in Australia. The Australian Patent Office (APO) stated that the language of the Patents Act was inconsistent with AI being treated as an inventor. Thaler appealed this decision to the Federal Court of Australia. Justice Beach ordered that this case must be remitted based on his ruling that AI can be a recognized inventor under the Australian Patents Act. Judge Beach further stated that AI cannot, however, be an applicant for a patent or an owner of a patent. It is with these reasons that Judge Beach requested reconsideration and remitted this case back to the Deputy Commissioner of the APO. The APO is now appealing this decision. Similar to the APO, the United Kingdom Intellectual Property Office (UKIPO) also pushed back against Thaler’s application for patent rights. In 2019, the UKIPO rejected Thaler’s application stating that the listing of DABUS as an inventor did not meet the requirements of the United Kingdom’s Patent Act. They stated a person must be identified as the inventor. Thaler appealed this rejection and was again denied by the UKIPO, who stated that a machine as an inventor does not allow for the innovation desired by patent rights. Thaler appealed again, to the England and Wales Patents Court, and was again denied patent rights. The judge stated that Thaler was using the Patent Act text out of context for his argument, ruling that the Patent Act cannot be construed to allow non-human inventors. In 2021, Thaler appealed this decision in the England and Wales Court of Appeals. He was again denied patent rights with all three judges agreeing that a patent is a right that can only be granted to a person and, that an inventor must be a person.

Future Prospects

Thaler currently has pending applications in several countries including Brazil, Canada, China, and Japan. The outcome of the appeal against the Federal Court of Australia’s decision on whether AI can be an inventor may prove crucial in helping to amend U.S. patent laws. Similarly, if more countries, in addition to South Africa, outright grant Thaler his patent rights, the U.S. may be forced to re-think their policies on AI-invented patentable subject matter.

Quantum Computing: Ready to Be Patented!

November 12, 2021
Intellectual Property, Patents, Uncategorized

Shuang Liu, MJLST Staffer

In June 2021, IBM presented its newest and most powerful quantum computer—Q System One. This news highlighted people’s continuing confidence and resolution in the research and development of quantum computing. As a matter of fact, several countries and leading high-tech corporations are investing from millions to billions in various aspects of quantum computing technology, and filing patent applications to protect their research achievement.

(Q System One at Fraunhofer-Gesellschaft, Germany)

This article attempts to provide a brief introduction of quantum computing technology (Part I), a potentiometric analysis of the high-tech corporations in quantum computing industry (Part II), and a discussion of potential legal challenges in obtaining patents related to quantum software (Part III).

I. The Quantum Computing Technology and Its Potential Applications

The world’s most famous cat, Schrödinger’s cat, is both alive and dead until it is observed. A quantum bit (“qubit”) behaves similarly—it is both 0 and 1 until it is measured. A classical computer transmits and processes n-bit information with n bits. In contrast, since a qubit represents 0 and 1 at the same time (that is, a superposition of 0 and 1), a quantum computer transmits and processes 2n-bit information with n qubits. Therefore, if a good algorithm is found and the superposition property is utilized properly, a quantum computer can compute exponentially faster than a classical computer.

However, algorithms for quantum computers (hereinafter “quantum algorithms”) are not easy to find and algorithms for classical computers (hereinafter “classical algorithms”) cannot be readily applied on quantum computers. After all, classical algorithms solve problems in a deterministic way (where bits are either 0 or 1), while a quantum computer by its nature processes probabilistic information (where bits are superpositions of 0 and 1). It took people decades to develop the first quantum algorithm that showed capability of solving real-life problems. To date, although quantum algorithms are still far from enough, the available ones do show a great potential of applications.

The first, surest application is cryptanalysis. Integer factorization plays a key role in cryptanalysis. The Shor’s algorithm, one of the most famous quantum algorithms, is able to factor all integers in polynomial time, which has not been made possible by classical algorithms so far.

Another promising application is predicting new chemicals and materials having certain properties. Properties of chemicals and materials usually depend on a variety of factors and can be too complicated for a classical computer to make simulations. A quantum computer, with a stronger computation power, is expected to be able to make such simulations. To be noted, researchers are hopeful to use a quantum computer to find a way to build materials that can be superconducting at room temperature.

Complex processes, such as biological processes, economic development modelling, energy allocation optimization, and big data processing, are also good candidates for which a quantum computer can use its exceptional computation power.

II. Patent Landscape of Leading Corporations

People’s confidence in the potential of quantum computing leads to a race in patents. In the last five years, nearly a thousand patent applications related to quantum computing have been filed in the US, and a little bit fewer before the WIPO.

The figures below show the number of applications filed by leading corporations related to quantum computing and the number of applications related to specific areas. Among them, IBM is the first active patent applicant, leading other corporations by big margins and showing interest in almost every aspect of quantum computing. Other leading applicants are interested in different aspects of quantum computing. For example, Microsoft is mainly working on the software side (machine learning and optimization), while Intel devotes its most energy on the hardware side (quantum circuits). It is also worth noting that Bank of America has filed many applications in the cryptology aspect of quantum computing—it is endeavoring to be the first to use quantum security keys to protect its data.

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Figure 1

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Figure 2

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Figure 3

Turning our eyes to the world, we can see that Huawei, a Chinese telecommunication company, has filed a large number of quantum computing related applications before the World Intellectual Property Office (WIPO). Its major interests reside in quantum communication and securing such communication with cryptographs. NEC, a Japanese electronics corporation is also an active global patent applicant. It mainly focuses on building a quantum computer itself.

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Figure 4

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Figure 5

III. Potential Legal Issues

In the process of obtaining a patent, the most common substantive rejections are novelty and obviousness rejections. For a quantum software application, a patent-eligibility rejection is also likely. The subsections below discuss patent-eligibility and obviousness challenges especially for quantum software applications.

A. Patent Eligibility

The case law on patent eligibility of software has been unclear and inconsistent. This subsection does not attempt to, nor can it, predict the patent eligibility of quantum software. But at least there are more arguments available for patent eligibility of quantum software than those of classical software.

Courts tend to find a software claim ineligible if it is “not tied to any particular novel machine or apparatus, only a general-purpose computer.” From a policy perspective, such claims are disfavored by courts because “[they] would risk disproportionately tying up the use of the underlying ideas and . . . pose . . . risk of pre-emption.”

To facilitate discussion and avoid confusion, the remainder of this and next subsection will discuss with claim 1 ofU.S. Pat. No. US10990677B2 (hereinafter “‘677 claim 1”):

“A method, comprising:

programming a quantum computing device to implement quantum circuits that perform a machine learning technique using one or more qubits of the quantum computing device, wherein the machine learning technique employs principal component analysis based on at least one median estimate stored as a quantum bit string . . . .”

In a nutshell, ‘677 claim 1 recites a machine learning technique implemented by a quantum computing device. It was drafted in a way that it is closely tied to the quantum computing device, in contrast to “a general-purpose computer.” Therefore, if challenged, the patentee can always argue that this method is closely tied to “a particular novel machine,” and can’t possibly preempt all use of the underlying concept in the claim.

It is worth noting that, instead of simply claiming a machine learning method implemented by a quantum computer, the claim ties the implementation with “quantum circuits” and “one or more qubits.” When drafted this way, the patentee has a strong argument that this claim is not an abstract idea under the commonly used pen and paper test,because a human cannot implement quantum circuits and/or use qubits either mentally or by a pen and a piece of paper.

Other quantum software or algorithm patents might have other arguments available. For example, the patent eligibility of an error correction algorithm patent can be supported by the fact that it greatly improved the performance of a quantum computer, which is a common theme of the current case law of patent eligibility.

B. Obviousness

As can be expected, ‘677 claim 1 has been challenged under 35 U.S.C. §103. In the Non-Final Office Action, the Examiner asserted Mork et al. in view of Kappor et al. in further view of Kerner et al. renders the claim obvious, wherein Mork discloses a classical computer implementing a similar machine learning technique, Kerner discloses a quantum computing device, and Kappor recites that “[t]he machine learning acceleration hardware . . . may comprise . . . a quantum computing device” without providing any details. Such a combination of references can be a recipe for obviousness rejections against quantum software claims.

The key for this rejection to stand is the “connecting” reference (in this example, Kappor), that is, how the classical algorithm can be connected to a quantum computing device. As discussed in Section I of this article, it’s not just that the computation powers of a classical computer and a quantum computer are different; the ways they compute are not at all the same.

Accordingly, for this specific example, the rejection is erroneous because Kappor does not provide any details of how to apply its machine learning process to a quantum computing device, let alone providing teachings of how to apply the machine learning technique disclosed by Mork to a quantum computer. In general, a reference that motivates and teaches to apply a classical algorithm on a quantum computer can be extremely difficult to find. That is because, there is few, if any, classical algorithm can be readily applied on a quantum computer!

Therefore, it is fair to say that a reference in the classical software domain is almost never effective to defeat the patentability of a quantum software.

Conclusion

Although quantum computing technology is still in its infancy, people are very confident in its potential. Corporations in the industries of communication, computing, electronics, and even finance have joined the patent race of quantum computing related technologies. The patent space of quantum computing technology is still quite sparce, and a patent on quantum computing can be obtained much more easily now than later.

Intellectual Property in Crisis: Does SARS-CoV-2 Warrant Waiving TRIPS?

February 21, 2021
Bioethics, Biotechnology, COVID-19, Food and Drug Law, Health, Healthcare, Intellectual Property, Patents, Regulatory

Daniel Walsh, MJLST Staffer

The SARS-CoV-2 virus (which causes the disease COVID-19) has been a massive challenge to public health causing untold human suffering. Multiple vaccines and biotechnologies have been developed to combat the virus at a record pace, enabled by innovations in biotechnology. These technologies, vaccines in particular, represent the clearest path towards ending the pandemic. Governments have invested heavily in vaccine development. In May 2020 the United States made commitments to purchase, at the time, untested vaccines. These commitments were intended to indemnify the manufacture of vaccines allowing manufacturing to begin before regulatory approval was received from the Food and Drug Administration. The United States was not alone. China and Germany, just to name two, contributed heavily to funding the development of biotechnology in response to the pandemic. It is clear that both private and public institutions contributed heavily to the speed with which biotechnology has been developed in the context of the SARS-CoV-2 pandemic. However, there are criticisms that the public-private partnerships underlying vaccine manufacturing and distribution have been opaque. The contracts between governments and manufacturers are highly secretive, and contain clauses that disadvantage the developing world, for example forbidding the donation of extra vaccine doses.

Advanced biotechnology necessarily implicates intellectual property (IP) protections. Patents are the clearest example of this. Patents protect what is colloquially thought of as inventions or technological innovations. However, other forms of IP also have their place. Computer code, for example, can be subject to copyright protection. A therapy’s brand name might be subject to a trademark. Trade secrets can be used to protect things like clinical trial data needed for regulatory approval. IP involved in the pandemic is not limited to technologies developed directly in response to the emergence of SARS-CoV-2. Moderna, for example, has a variety of patents filed prior to the pandemic that protect its SARS-CoV-2 vaccine. IP necessarily restricts access, however, and in the context of the pandemic this has garnered significant criticism. Critics have argued that IP protections should be suspended or relaxed to expand access to lifesaving biotechnology. The current iteration of this debate is not unique; there is a perennial debate about whether it should be possible to obtain IP which could restrict access to medical therapies. Many nations have exceptions that limit IP rights for things like medical procedures. See, e.g., 35 U.S.C. 287(c).

In response to these concerns the waiver of a variety of IP protections has been proposed at the World Trade Organization (WTO). In October 2020 India and South Africa filed a communication proposing “a waiver from the implementation, application and enforcement of Sections 1, 4, 5, and 7 of Part II of the TRIPS Agreement in relation to prevention, containment or treatment of COVID-19.” The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) sets minimum standards for IP standards, acquisition, and enforcement and creates an intergovernmental dispute resolution process for member states. Charles R. McManis, Intellectual Property and International Mergers and Acquisitions, 66 U. Cin. L. Rev. 1283, 1288 (1998). It is necessary to accede to TRIPS in order to join the WTO, but membership in the WTO has significant benefits, especially for developing nations. “Sections 1, 4, 5, and 7 . . .” relate to the protection of copyrights, industrial designs, patents, and trade secrets respectively. Waiver would permit nation states to provide intellectual property protections “in relation to prevention, containment or treatment of COVID-19” that fall below the minimum standard set by the TRIPs Agreement. At time of writing, 10 nations have cosponsored this proposal.

This proposal has been criticized as unnecessary. There is an argument that patents will not enter effect until after the current crisis is resolved, implying they will have no preclusive effect. However, as previously mentioned, it is a matter of fact that preexisting patents apply to therapies that are being used to treat SARS-CoV-2. Repurposing is common in the field of biotechnology where existing therapies are often repurposed or used as platforms, as is the case with mRNA vaccines. However, it is true that therapies directly developed in response to the pandemic are unlikely to be under patent protection in the near future given lag between filing for and receiving a patent. Others argue that if investors perceive biotech as an area where IP rights are likely to be undermined in the event of an emergency, it will reduce marginal investment in vaccine and biotech therapies. Finally, critics argue that the proposal ignores the existing mechanisms in the TRIPS Agreement that would allow compulsory licensing of therapies that nations feel are unavailable. Supporters of the status quo argue that voluntary licensing agreements can serve the needs of developing nations while preserving the investments in innovation made by larger economies.

The waiver sponsors respond that a wholesale waiver would permit greater flexibility in the face of the crisis, and be a more proportionate response to the scale of the emergency. They also assert that the preexisting compulsory licensing provisions are undermined by lobbying against compulsory licensing by opponents of the waiver, though it is unlikely that this lobbying would cease even if a waiver were passed. The sponsors also argue that the public investment implies that any research products are a public good and should therefore be free to the public.

It is unclear how the current debate on TRIPS will be resolved. The voluntary licensing agreements might end up abrogating the need for a wholesale waiver of IP protections in practice rendering the debate moot. However, the WTO should consider taking up the issue of IP protections in a crisis after the current emergency is over. The current debate is a reflection of a larger underlying disagreement about the terms of the TRIPS Agreement. Further, uncertainty about the status of IP rights in emergencies can dissuade investment in the same way as erosion of IP rights, implying that society may pay the costs of decreased investment without reaping any of the benefits.

 

When Is an Invention Disclosure or Patent Application a Trade Secret?

May 26, 2020
Intellectual Property, New Technology, Patents

Philip Alford, MJLST Staffer

Patents and trade secrets are often presented as a dichotomy of legal protections, distinguished by disclosure versus secrecy. Under the patent bargain, the government offers patent protections in exchange for the public disclosure of new and useful inventions. 35 U.S.C. §101. Various trade secret protections, on the other hand, are available when a party has suffered harm from the misappropriation of secret information. See, e.g., 18 U.S.C. §1863 and Minn. Stat. § 325C et seq. While the two areas of law are complementary, they do not perfectly align. Although trade secrets generally refer to information, this information can be embodied by a patented article, a method, or in one case, a pineapple. See Del Monte Fresh Produce Co. v. Dole Food Co., 136 F. Supp. 2d 1271 (S.D. Fla. 2001).

Trade secret protections are lost as soon as the material is disclosed to the public, including the publication of patent applications by patent offices occurring 18 months after first filing. This is the case even if the patent application never matures into a patent. Inventors should be aware that giving up secrecy in exchange for pursuing a patent is not a guaranteed exchange. To obtain a patent, inventors need to convince the Patent Office that their invention is (1) new, (2) a useful and non-obvious contribution to the art, and (3) described in sufficient detail so that others would be able to make and use the invention. 35 U.S.C. §§101, 102, 103, 112. For this reason, inventors should undertake at least a preliminary analysis to determine whether the requirements for a patent are reasonable satisfied before making any decision to give up potential trade secrets. This analysis would typically involve finding a patent attorney, who can together with the inventors to conduct a search, review for potentially relevant art, and best understand the advantages of the invention before drafting the patent application.

Trade secret protection cannot be assumed as a default. Not all secret inventions are eligible for trade secret protections—even inventions that would otherwise satisfy the requirements for a patent. A secret invention is only eligible for trade secret protection if (1) it is secret, i.e., not generally known or readily ascertainable;  (2) it confers an economic or competitive advantage; and (3) it is subject to reasonable efforts to maintain secrecy. See 18 U.S.C. §1863 and Minn. Stat. § 325C et seq. If inventors are considering whether to forgo filing a patent application, or abandon an unpublished application in favor of maintaining secrecy, the inventors must consider whether the resulting secrecy will, in fact, afford any trade secret protections at all. On one hand, a patentable but unpublished disclosure will typically satisfy the secrecy requirement if it also satisfies the novelty and non-obviousness elements of patentability. Similarly, the type of subject matter for which a patent is pursued is typically of the type that would confer an economic or competitive advantage if withheld from competitors. On the other hand, trade secret protections require reasonable efforts to maintain trade secrecy. No part of patentability imposes a similar requirement.

The reasonable effort requirement for trade secret protection is not as likely to be satisfied in the normal course of invention. What exactly is meant by “reasonable efforts” in a trade secret context? Reasonable efforts differ based on the nature of the information, the field of endeavor, and the risks to secrecy. Generally, to show reasonable efforts, parties should plan in advance to protect their secrets, for example, by using confidentiality agreements, internal employee policies, vendor policies, and electronic information policies. Such policies should be monitor compliance, remind employees that information is secret, and limit access to the secret information, e.g., via locks, passwords, and security. The extent of effort deemed reasonable will be based on the value of the information, the cost of precautions, and the likelihood that secrecy will be lost. Maintenance of absolute secrecy is not required, nor is it necessary to take steps that will be ineffective to protect the secret. See E. I. du Pont de Nemours & Co. v. Christopher, 431 F.2d 1012 (5th Cir. 1970).

Inventors may intend to forgo patent or trade secret protection in favor of the other, only to subsequently learn that they lack the protection of either. Inventors and patent practitioners should be mindful that coverage gaps can arise due to the differing requirements for patent and trade secret protections.

Orange Book, Purple Book, Complex Products, and Process Patents

December 23, 2019
Biotechnology, Intellectual Property, Patents

Philip E. Alford, Ph.D., MJLST Staffer

Complex Products and Process Claims

The most economically important pharmaceutical innovations of the past decade have centered around biologics and complex non-biologic products. Biologics are a diverse class of therapeutic products, typically produced via biotechnology or obtained from biological sources. Biologics often contain complex mixtures or large, elaborate molecules that are intricately folded into a specific desired conformation. In many respects, we do not yet have the technology to characterize all the functional elements of these products fully, and sometimes it is not possible to make the products synthetically or according to alternative processes. Even minor variations in biologic manufacturing can result in a product having different properties. Since the manufacturing process may be one of the most accurate ways to describe a biologic, patent strategies for biologics typically give extra emphasis around process patents. Indeed, biologic process claims have proven to be a powerful tool, and process patents have been at the core of the first waves of biosimilar litigation.

Non-biologic drugs can also be so complex as to defy characterization and reproduction. Such products are now referred to as complex products or non-biological complex drugs (NBCDs), as well as “nanomedicine” or “synthetic biologics.” Like biologics, many complex products have the challenge that different manufacturing processes can result in the product having divergent properties. Thus, manufacturing aspects are uniquely important to both complex products and biologics. Where the patent system is involved in the regulatory framework, process patents should play a central role in protecting complex products from generic entry. Yet for complex drug products, FDA does not integrate process patents into the generic entry process.

Despite being difficult to truly reproduce, complex products are nonetheless susceptible to market pressure under Hatch-Waxman-type generic entry 21 USC 355(b)(2) and 355(j), i.e., via Food Drug & Cosmetic Act 505(b)(2) and 505(j) applications. The Hatch-Waxman Act, discussed in more detail below, ingeniously incorporated the patent system as a secondary gatekeeper in FDA’s generic drug approval process. The so-called Orange Book is the nexus uniting two separate regulatory regimes. However, FDA has interpreted that the Orange Book and Hatch-Waxman provisions invoke only on the types of patents that were important for determining infringement of traditional, small molecule drugs, namely, drug and therapeutic use claims. The Orange Book expressly excludes process patents. 21 C.F.R. §314.53.

Although product-by-process claims can be permitted, the resulting product must be novel, and product-by-process claims are not interchangeable with process claims. (For example, see, MPEP 2113 and Judge Newman’s dissent in Abbott Labs. v. Sandoz, Inc, suggesting that process claims and product-by-process claims are held to different validity standards.)

Hatch-Waxman as a political bargain.

When Congress passed the Hatch-Waxman Act was passed in 1984, the Act represented a classic political bargain. The hope was to strike a balance between innovation and competition by strengthening the golden years of brand drugs while facilitating subsequent generic entry. Pioneers of approved new drugs were given up to 5 years of data exclusivity during which FDA would not approve a generic of the drug. Additionally, one of the pioneer’s patents could be extended up to 5 additional years to compensate for lost patent term consumed while seeking FDA approval. In turn, the Act provided a new, streamlined process for drug makers to obtain approval of generic drugs.

A key provision of the Act directs the drug pioneer to identify its patents in the Orange Book. The listed patents must (1) claim the new drug, or (2) claim a method of using the drug, in so far as a claim of infringement could reasonably be asserted if another engaged in the manufacture, use, or sale of the drug. 21 U.S.C. §355(b)(1)(G). The Orange Book thus represents an essential part of the Hatch-Waxman political bargain. Process (manufacturing) patents are expressly excluded from the Orange Book, as are patents relating to packaging, metabolites, or intermediates. 21 C.F.R. §314.53.

The Orange Book lists these patents alongside each FDA approved drug. Before obtaining approval of a generic, the generic drug maker must certify to FDA that the patents listed in the Orange Book are expired, invalid, or will not be infringed by its generic. 21 U.S.C. §355(b)(2)(A) and 21 U.S.C. 355(j)(2)(vii). Under 35 U.S.C. § 271(e)(2), such certifications of invalidity or non-infringement constitutes an act of infringement permitting the pioneer to sue the generic drug maker before the generic ever reaches the market. Prompt litigation can trigger a stay on the generic’s approval. In this manner, the Orange Book serves not only as a mechanism for transparency (informing the public of patent and regulatory exclusivities), but also as a mechanism for litigation. The Orange Book has served both causes well.

As blockbuster biologics began to approach the end of the foreseeable patent life, FDA created a compendium of BLA-approved biological products loosely mirroring the Orange Book, but for biologics instead of drugs. Reverently, FDA named this volume the Purple Book. Unlike the Orange Book, the Purple Book has had no reason to list patents because the generic drug provisions of the Hatch–Waxman Act apply only to drug approvals under 21 U.S.C. §355(b) and 21 U.S.C §355(j). The Biologics Price Competition and Innovation Act of 2009 (BPCIA) provides a framework for approving biosimilars and resolving patent disputes. Instead of referring to a book of approvals and patents, the BPCIA invokes a so-called patent dance exchange of patent information. 42 USC § 262 (l). This patent information includes not only composition and use claims, but also process of manufacture claims. Conceptually, the dance was expected to lead the parties to agree on an initial set of patents to litigate and thus control the tempo and scope of litigation. However, the parties soon recognized that dancing is optional. Sandoz Inc. v. Amgen Inc., 137 S. Ct. 1664. Dance or no dance, the parties ultimately litigate their patent disputes, which often center the methods of manufacturing the biologic product.

As new biologics and complex drug products come to market, process claims are likely to be increasingly important.

Possible Legislation to the Orange Book and Purple Book

This year, Congress considered legislation sponsored by members of the House Committee on Energy and Commerce proposing changes to the way the Purple Book and Orange Book function.

The Purple Book Continuity Act of 2019 proposes that the purple book be updated to list patents generated during the ‘patent dance’ of 42 USC § 262 (l), which would include process patents or any other patent likely to be important in an infringement claim. Any such patents listed in the Purple Book would not function as a regulatory gatekeeper for generics since no mechanism yet exists for the Purple Book to do so. Still, from a transparency point-of-view, it seems like a reasonable choice to have the Purple Book act at least as a compendium of relevant patents. The Orange Book Transparency Act of 2019 proposes a requirement to list the drug substance, drug product, and method of use patents, while also requiring removal of any patents that are improperly listed (presumably including process patents absent any change to 21 C.F.R. §314.53). Although the House Committee on Energy and Commerce sponsored both acts, each take differing approaches to process patents. It seems illogical to insert process patents into the Purple Book, while more tightly excluding process patents from the Orange Book at a time when process claims are increasingly more important to modern therapeutics.

Indeed, FDA has expressly focused on the manufacturing process when trying to understand how a generic relates to a reference complex product. For example, FDA explained that a central part of their inquiry was whether the generic is made according to the same process as the original®, a non-biologic complex product, FDA explained that a central part of their inquiry was whether the generic is made according to the same process as the original. See, also, Bell et al., which discusses FDA’s criteria for approving a generic even when there is no physicochemical or biological characterization technique to establish active ingredient sameness. If such an inquiry is part of FDA’s analysis for permitting the sale of a generic drug, then it should be more than enough to justify listing process patents in the orange book.

If Congress revisits either of these matters, it should adjust the code to include process patents in both the Orange Book and the Purple Book. Listing process patents in the Orange Book would serve a public good, namely, that of transparency, but also would notify competitors of the manufacturing space the pioneer drug company intends to protect. Delaying such litigation until after a possible generic approval is messy for all parties involved. As more medications become too complex to manufacture by alternative routes, the importance of process patents in complex biologic and nonbiologic drugs will only increase.

 

Information Sharing: Tesla and the Open Patent Framework

November 23, 2019
Intellectual Property, New Technology, Patents

Bernard Cryan, MJLST Staffer

Information Sharing: Tesla and the Open Patent Framework

By Bernard Cryan

Patents offer powerful protection of intellectual property, i.e., inventions. Patents confer the patent owner the right to exclude others from making, using, or selling the patented invention for a limited time. In return for a limited monopoly, the inventor must disclose the invention. This is the classic quid pro quo of the patent system—a limited monopoly granted by the government to an inventor in exchange for revealing helpful information to society. Tesla owns many patents on its electric vehicle technology. Under Elon Musk’s direction, Tesla has decided to allow others to use its patented technologies to “accelerate sustainable transport.”

The Patent System

The patent system often works as expected—the patent owner practices the patented invention and prevents others from doing so. Sometimes, however, the patent system can behave oddly. For example, contrary to popular belief, patents do not grant the patent owner automatic permission to practice the invention. This situation can occur in the pharmaceutical industry. For instance, a drug maker can acquire a patent on a pharmaceutical not yet approved by the Food and Drug Administration (FDA). As a result, the drug company cannot itself make, use, or sell the drug—even though it owns a patent on the drug. Therefore, a patent alone is insufficient to practice the invention. An additional inquiry is required, i.e., is the patent owner allowed to make, use, or sell the patented invention?

An opposite oddity can also occur. One can practice an invention that is patented by another. This occurs through either a formal license agreement or an open patent framework. A license, in the patent context, is simply an agreement between the patent owner and another party granting legal permission to use the patented invention. The more interesting framework, however, is the use of an open patent system. An open patent is a patent that is intentionally not enforced. In other words, the owner of the patent allows others to use the invention and actively avoids filing an infringement lawsuit—which is the main platform to enforce patent rights.

Tesla’s Pledge

Elon Musk believes the carbon crisis calls for joint efforts amongst all automakers to build electric vehicles. In 2014, Tesla pledged that it would not file patent infringement lawsuits against companies that use, in good faith, Tesla’s electric vehicle patented technology. In Tesla’s words:

“What this pledge means is that as long as someone uses our patents for electric vehicles and doesn’t do bad things, such as knocking off our products or using our patents and then suing us for intellectual property infringement, they should have no fear of Tesla asserting its patents against them.”

The Good

Another car company can use Tesla’s patented technology instead of spending resources developing similar electric vehicle technology. Tesla is the leading seller of electric vehicles and has sold more than 380,000 electric vehicles (as of April 2019). There is still opportunity for electric vehicle development as the electric vehicle market share is small (1.8% as of March 2019). As a result, Tesla’s pledge is significant because it encourages the sharing and use of powerful information in the auto industry, which should accelerate society’s move toward electric vehicles. The use of proven technology can facilitate a start-up company’s path to success or focus an established automaker’s efforts to develop electric vehicles. Further, Toyota has followed Tesla’s approach with respect to its hydrogen fuel cell technology. This open patent framework is not limited to only the auto industry. Google, for example, has pledged to open some of its patents directed at encryption technologies.

The Bad

While Tesla’s pledge may appear revolutionary, it has drawbacks. Some companies may fear the legal tools to enforce Tesla’s pledge are insufficient. As a result, automakers may be reluctant to use the patented technology out of fear that Tesla will not follow through on its promise. While a formal license agreement to use patented technology is enforceable through reliable legal tools, an informal pledge posted in blog format by a CEO on the company website may not carry the force of law. Is Tesla required to follow through with its pledge? Maybe, under the legal doctrine of estoppel. Will Tesla withdraw its pledge? It is unlikely as Elon Musk recently reminded the world of Tesla’s pledge. Nevertheless, Tesla’s pledge may have only limited impact if other automakers lack confidence to legally enforce the pledge.

The Takeaway

This open patent framework has enormous potential to facilitate innovation by concentrating companies’ efforts to build on each other’s prior work, rather than around it. Time will reveal the true impact of open patent pledges like Tesla’s. Most recently, XPeng, a Chinese automaker inspired by Tesla, has secured a $400M investment.

Perhaps the biggest impact of Tesla’s pledge is not the acceleration of the electric vehicle use, but rather teaching the world that openly sharing valuable information is priceless. This reminder may encourage other industries to adopt similar pledges, thereby accelerating all kinds of innovation.

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