17 April 2017

University of California Unsurprisingly Appeals Decision to Terminate CRISPR Patent Interference

Gavel FigureIn February, I reported the decision of the US Patent and Trademarks Office (USPTO) Patent Trial and Appeal Board (PTAB) in the patent interference proceedings initiated by the University of California (‘UC’) against the Broad Institute of MIT and Harvard (‘Broad’) in relation to CRISPR/Cas9 gene editing technology.  That decision was that there is ‘no interference in fact’, meaning that Broad’s development of the CRISPR/Cas9 system for use in eukaryotic cells (i.e. complex cells with, among other characteristics, distinct nuclei) was a non-obvious advance over UC’s development of the system for use in simpler prokaryotic cells (specifically, bacteria), and that there is thus scope for both parties to hold distinct patents.  At the time, I noted that the PTAB decision was subject to a possible appeal to a US Federal Court – most likely the specialised Court of Appeals for the Federal Circuit (CAFC) – and predicted that UC would file an appeal, in view of the substantial commercial interests at stake.

I am therefore not at all surprised to now be reporting that UC has indeed appealed to the CAFC.  In a press release announcing the appeal, UC has confirmed that it ‘seeks to have the PTAB reinstate the interference’, and quotes Edward Penhoet, a ‘special adviser on CRISPR to the UC president and UC Berkeley chancellor’ as saying that:

Ultimately, we expect to establish definitively that the team led by Jennifer Doudna and Emmanuelle Charpentier was the first to engineer CRISPR-Cas9 for use in all types of environments, including in non-cellular settings and within plant, animal and even human cells

Broad has responded with its own media statement saying, in relation to the appeal, that:

Given that the facts have not changed, we expect the outcome will once again be the same.
We are confident the Federal Circuit will affirm the PTAB decision and recognize the contribution of the Broad, MIT and Harvard in developing this transformative technology.

Possible Outcomes from the Appeal

Should the PTAB decision stand, Broad will be entitled to maintain its CRISPR patent portfolio, while UC's patent application – which includes claims encompassing CRISPR without regard to cellular environment – should issue as a patent.  As illustrated in my earlier article reporting the PTAB decision, using the simple Venn diagram reproduced below, this would mean that anybody wishing to commercialise applications of CRISPR/Cas9 in eukaryotic cells (including human beings) will require licences to do so from both UC and Broad, along with licences to any of the other ever-increasing number of patents held by various parties that may be pertinent in a specific case.  In effect, UC would hold the patent to ‘CRISPR/Cas9 in any environment’ as a result of its ground-breaking first demonstration of ‘CRISPR/Cas9 in prokaryotic cells’, while Broad would hold patents specific to ‘CRISPR/Cas9 in eukaryotic cells’.
On the other hand, if UC is successful in its appeal, the case will be returned to the PTAB for further proceedings in relation to the alleged interference, which could lead either to the same outcome, or to a decision resulting in Broad being deprived of its overlapping claims to ‘CRISPR in eukaryotic cells’. 

Either way, any further PTAB ruling will itself be subject to a separate appeal, which itself presents a potential problem for UC.  The CAFC will be well-aware that should it overturn the current PTAB decision, it will be setting itself up to deal with a far more complex case at some point down the line.  While this, in itself, is no reason to reject an appeal on its particular merits, any appeal from a PTAB ruling faces an uphill battle from the outset.  As Broad’s media statement rightly points out, ‘to overturn the PTAB decision, the Court would need to decide that the PTAB committed an error of law or lacked substantial evidence to reach its decision.’  In a (non-partisan) opinion on the respected Patent Docs blog, US patent attorney Kevin Noonan concurs, explaining that ‘the Federal Circuit's review ... would be to give the PTAB's factual determinations deference under the substantial evidence standard, and to review de novo the ultimate legal question of obviousness.’

Even so, based on my own enquiries, and comments from biotechnology specialists that I have received via this blog and elsewhere, it seems as though expert opinion on this issue is divided, and the evidence presented to the PTAB is fairly finely balanced, so UC must have some prospects of success on appeal.

Conclusion – Still Too Big to Settle?

While some commentators continue to argue that the parties should reach a settlement before all of this can play out – including Kevin Noonan, who has been quoted by The Atlantic as saying that ‘the smart thing to do would be to settle’ – I remain unconvinced that this now the more probable outcome.  As I have written previously, we are not really looking at a case of two research institutes engaged in a spat over priority, but a range of commercial interests with over a billion dollars in invested funds and market cap at stake, making this a case that might just be too big to settle.

And speaking of market cap, I will conclude with a chart of the latest share performance of the Broad-affiliated Editas Medicine Inc (NASDAQ:EDIT), whose stock jumped 28.8% in response to the PTAB ruling in February.  Since then, after some further fluctuation it has fallen back to the slight upward trend that it was following prior to the decision.  It appears, at least so far, to have been unaffected by the announcement of the UC appeal, which suggests that the market appreciates that this was an entirely predictable event that really changes nothing... or not yet, anyway!
20170417 NASDAQ-EDIT


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