26 March 2017

Enforcing Patents on Processes for Producing Biologics – Easier Said Than Done?

Seeking answersA biological medicine, or biologic, is a medicine that contains one or more active substances made by a biological process or derived from a biological source.  Compared to conventional pharmaceuticals, which are made by chemical synthesis using different organic and/or inorganic compounds, biologics are generally much larger molecules that are derived from the living cells of micro-organisms or animals by utilizing the metabolic processes of the organisms themselves.  In many cases, cells are genetically engineered, using recombinant DNA technology, to co-opt their expression capabilities and turn them into tiny ‘factories’ for producing the desired biologic molecules.  The first such substance to be approved for therapeutic use was synthetic ‘human’ insulin, developed by Genentech and first marketed by Ely Lilly in 1982.  Since then, biologics have become increasingly important, and hundreds of biologic medicines are now in use, including therapeutic proteins, DNA vaccines, monoclonal antibodies, and fusion proteins.

The chemical structures of traditional ‘small molecule’ pharmaceuticals are usually well-defined.  Biologics, on the other hand, are often difficult, and sometimes impossible, to characterise structurally due to their size and complexity.  In many cases, some components of a finished biologic may be unknown.  Protecting biologics with patents can therefore be challenging, given the potential difficulty in claiming the active biologic molecule in terms that are sufficiently precise to meet legal requirements for the invention to be clearly defined, while also being broad enough to encompass variations that may have the same therapeutic properties, and satisfying the tests for novelty, inventive step and subject-matter eligibility.

The complexity of biologics also means that they are more difficult to produce than small molecule pharmaceuticals.  Minor differences in the production process, raw materials, temperature, pH, or cell line can result in a significant alteration in a medicine’s quality, efficacy, or safety.  While this creates challenges in manufacturing and quality control, it also creates opportunities for the protection of intellectual property, by securing patents on methods of producing biologic medicines either in place of, or in addition to, trying to claim the active molecules themselves in some form.

Process claims are all very well if the patentee can established that a suspected infringer is using the patented method of production.  But what happens when the suspect company keeps its manufacturing processes secret, as indeed is most commonly the case?  Well, then the patentee may need to convince a judge to issue an order for preliminary discovery, compelling the accused infringer to disclose relevant information about its processes.

This is exactly what Pfizer recently sought to do in preparation for possible patent litigation against Samsung Bioepis AU (‘SBA’) in relation to Pfizer’s product ENBREL (active ingredient etanercept), which is a biological medicine used in the treatment of autoimmune diseases such as rheumatoid arthritis, juvenile rheumatoid arthritis and psoriatic arthritis.  Unfortunately for Pfizer, Justice Stephen Burley has denied its application for discovery, ruling its evidence insufficient to establish a ‘reasonable belief’, as opposed to a ‘mere suspicion’, that SBA is infringing its patents relating to a process for producing etanercept: Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd [2017] FCA 285.

19 March 2017

Revisiting Official ‘Advice’ on Engaging Patent Attorneys

FeedbackLast month I presented an analysis of the fate of Australian patent applications filed by self-represented applicants.  It was not pretty.  I found that for Australian patent applications made by small self-filers, at least 90% of all provisional applications, 77% of all standard patent applications and 95% of all innovation patent applications ultimately result in absolutely no enforceable rights whatsoever. 

I laid some of the blame for this squarely at the feet of IP Australia which, despite its vision of having ‘a world leading IP system that builds prosperity for Australia’, appears to make only the most cursory effort on its web site to encourage prospective applicants to seek advice from a patent attorney.  I also presented examples of corresponding content from the web sites of the US Patent and Trademarks Office, the UK Intellectual Property Office, the European Patent Office and the Canadian Intellectual Property Office, all of which highlight the risks of failing to obtain professional assistance, and encourage applicants to engage a patent attorney.

This elicited some responses from IP Australia via Twitter.  The Chief Economist, Ben Mitra-Kahn, speculated that the fate of self-filed applications might not be a significant issue, on the assumption that the the relative number of self-filers is small.

Sadly, this is not the case.  Based on the Intellectual Property Government Open Data (IPGOD) 2016 data set, in calendar-year 2014, for example, the total number of standard patent applications filed naming one or more Australian resident private or small-business applicants was 1499, of which 220 (14.7%) were self-filed.  Clearly this is not so far short of the 20% of resident self-filers in the UK.  And if history is anything to go by, fewer than 50 of those 220 self-filed applications will ultimately result in granted claims.

IP Australia also pointed out to me that there is a downloadable PDF document, A guide to applying for your patent, that contains stronger suggestions regarding the benefits of professional advice.

Appeals Court Annuls $1.5 Million ‘Unjustified Threats’ Damages Award

Unjustified ThreatUnder section 128 of the Australian Patents Act 1990, a person or company that has been unjustifiably threatened with patent infringement proceedings may seek an injunction to prevent the threats from continuing, and the recovery of any damages sustained as a result of the threats.  These provisions may be invoked pre-emptively by an accused infringer, for example against a patent holder that may be trying to inhibit competition by making vague or dubious claims.  However, they may also be invoked defensively, in response to the actual commencement of infringement proceedings by a patent holder that has initially made threats by way of a cease-and-desist letter.  As the law has developed in Australia, an application for relief from unjustified threats will be successful in any case in which it ultimately turns out that a patent is invalid or not infringed, regardless of how objectively reasonable the patentee’s original belief may have been.

I have written on a number of previous occasions of my concerns about the operation of the unjustified threats provisions in the Patents Act.  Most recently, in August 2016, I discussed the difficulties faced by a patentee in raising and seeking to resolve a dispute prior to commencing proceedings – as required under the Civil Dispute Resolution Act 2011without incidentally opening itself up to a subsequent unjustified threats claim.  At around the same time, a single judge of the Federal Court of Australia (Barker J) issued an 870 paragraph judgment (Australian Mud Company Pty Ltd v Coretell Pty Ltd (No 7) [2016] FCA 991) awarding damages of A$1,506,859 against the Australian Mud Company Pty Ltd (‘AMC’) for making unjustified threats against Coretell Pty Ltd, following a number of years of patent infringement proceedings in which AMC was ultimately unsuccessful.  (For earlier articles on this dispute see Innovation Patent Claims Once Again Construed Narrowly, Australian Appeals Court Further Clarifies ‘Purposive Construction’ and Australian Federal Court Considers Patent Attorney Privilege.)

If you think (as I do) that $1.5 million seems like an excessive amount of damage to have resulted from the sending of a fairly typical letter of demand, then I am pleased to report that you would be correct.  A Full Bench of the Federal Court of Australia has now wholly overturned the ruling of the original judge and ordered that, instead, Coretell’s claim for damages should be dismissed with costs: Australian Mud Company Pty Ltd v Coretell Pty Ltd [2017] FCAFC 44.  In doing so, the Full Court has highlighted the importance of establishing causation, i.e. that damage is sustained as a result of the threats.  In particular, the judgment cautions against failing to distinguish properly between damage sustained as a result of the threat of infringement proceedings and damage sustained as a result of infringement proceedings themselves.

This is, to my mind at least, a welcome development in the law.  While it does nothing to prevent the unjustified threats provisions being invoked by an accused infringer in response to proceedings commenced on the basis of a reasonably-held belief that a patent is being infringed, it significantly limits the practical impact of the provisions in such circumstances.  I imagine that it would be rare for substantial damage to be sustained merely as a result of an initial threat of proceedings in any case where infringement proceedings are actually commenced within a reasonable period of time, allowing for some efforts to resolve the dispute prior to litigation.

12 March 2017

Australia’s Biotechnology ‘Hotspots’ – An Interactive Map

Heatmap-thumbAccording to IP Australia data covering patent applications filed during a 16-year period commencing on 1 January 2000, Melbourne is the biotechnology capital of Australia.  Sydney comes in second, followed by Brisbane.  There is significant biotechnology activity in Adelaide and, to a lesser extent, Perth.  Canberra looks to be an active area, but is something of a special case.  There is, however, very little activity in this sector in Australian regional areas. 

A ‘heat map’ highlighting the locations of organisations filing Australian patent applications relating to developments in biotechnology shows how innovation in the biological sciences thrives principally where there is an ecosystem of academic, medical and corporate organisations located in close proximity.  Melbourne’s leading position is driven primarily by the critical mass of public and private medical and bioscientific research institutes located in the ‘Parkville precinct’ and its immediate surrounds.  Similarly, the primary origins of patent applications relating to biotechnology in the other capital cities coincide with the locations of major research universities, hospitals and associated companies and institutes.

The single largest filer of patent applications over the period analysed is – as in many other fields of technology – the Commonwealth Scientific & Industrial Research Organisation (CSIRO).  In fact, CSIRO is almost single-handedly responsible for putting Canberra on the map in biotech, as a result of the fact that it uses its national capital address on all patent applications.  However, much of the actual research covered by those applications is conducted at CSIRO’s many other sites around Australia, including locations in and around Melbourne in Parkville, Clayton, Werribee and Geelong.  In all likelihood, therefore, Melbourne’s leading position in Australian biotechnology research and development is even more pronounced than the map suggests.

The top Australian patent attorney firm handling all of these applications is Davies Collison Cave – and it is so by a considerable margin.  Second-placed FB Rice has been responsible for filing only about half as many applications relating to biotechnology over the same period.

05 March 2017

Users and Abusers of the Australian Innovation Patent System

Up and Down In an eight year period – one full innovation patent lifecycle – between 2007 and 2015, Australian residents were overwhelmingly the biggest users of the second-tier innovation patent system, filing over 10,000 innovation patent applications.  The next most frequent filers were the Chinese, with just 1500 applications, followed by US applicants with less than 1000.  Over 90% of the Australian applicants were individuals or small-to-medium enterprises (SMEs – businesses with fewer than 200 employees), i.e. the exact people the innovation patent system was intended to benefit when it was established by the Howard Government in 2001.  Over the same period, Australian residents filed just over 23,000 standard patent applications, a very distant second to US residents who were responsible for 115,000 applications.

Yet despite the system’s success by these measures, it is an open secret that IP Australia would like to see the end of the innovation patent, and has been diligently working behind-the-scenes for some years to achieve this objective.  After first proposing – and failing to win substantive support for – raising the ‘innovative step’ threshold to the same level of inventiveness required for standard patents, IP Australia economists undertook a study of the ‘economic impact’ of the innovation patent system which was used – prior to any publication or consultation on the methodology or results – to convince the now-defunct Advisory Council on Intellectual Property (ACIP) to issue, as its final act, a recommendation that the Government consider abolishing the system.  A belated consultation on this recommendation elicited submissions from a range of stakeholders who once again overwhelmingly supported retaining the innovation patent as a second-tier right in Australia, although many favoured modifying the system to address problems that had become apparent since its introduction in 2001.  IP Australia passed the submissions received in response to its consultation paper on to the Productivity Commission, which was by then in the midst of a 12-month review of Australia’s entire IP system.  To nobody’s great surprise, the Commission recommended abolition of the innovation patent system, in both its draft report and, despite further submissions from stakeholders, in its final report

More recently, Innovation and Science Australia released its Performance Review of the Australian Innovation, Science and Research System, in which it followed the Productivity Commission in declaring that Australia grants patent protection too easily and this has allowed a proliferation of low-quality patents, and innovation patents in particular.  IP Australia was quick to highlight this particular ‘weakness’ of the IP system in a post on its blog.

Now, I do not doubt that IP Australia would dispute that it is gunning for the innovation patent.  Rather, I am sure that its position is that it is seeking to provide evidence-based input to government to enable it to make informed decisions in meeting legitimate policy objectives.  The difficulty I have with this is that, despite a veritable cacophony of dissenting views from stakeholders, with proposals to improve rather than abolish the innovation patent system, it seems that the current position of IP Australia, the Productivity Commission, and Innovation and Science Australia – all of which have the Government’s ear – is informed almost entirely by the IP Australia Economic Impact study.  It is perhaps worth noting that this study cannot be independently replicated, verified and/or its assumptions tested, because key data on which it is based – Australian Tax Office records of R&D tax concession claims by businesses, industry sector information, and business/tax registration records – are not publicly available.

There is, however, much in the Economic Impacts study itself, and in the publicly-available IPGOD data set, supporting a view that the innovation patent system has not failed so badly as to justify its abolition.  Although its fate may already be sealed, given the forces rallying against it, it is worth taking a fresh look at who is using the innovation patent system and, equally importantly, who is abusing it.

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