Source: https://newsletter.bpla.org/proposed-local-patent-rule-will-speed-up-pat-5bjzk
Timestamp: 2019-04-25 10:44:04+00:00

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The notice function of a patent, a notion that the public should receive clear warning of a patent’s boundary before they are found infringing it, is an essential element in patent law that ensures fairness and promotes innovation. This paper aims to examine the public notice function of biologic drug patents, in comparison with small molecule drug patents.
The notice function is generally well served in pharmaceutical and biotech industries.1 Both pharmaceutical and biotech patents have well-defined terminologies that help reduce the imprecision caused by language,2 experts in both fields are confident in predicting subsequently added patent claims,3 and neither field is plagued by large quantities of weak patents. However, there are nuanced differences between biologic drug patents and small molecule drug patents due to the dramatic differences in terms of synthesis, structure, complexity, and cost of the two types of drugs.
1 See Kevin Emerson Collins, Patent Law's Functionality Malfunction and The Problem of Overbroad, Functional Software Patents, 90 WASH. U. L. REV. 1399, 1443 (2013) (suggesting that pharmaceutical patents are less problematic, because, unlike software, the physical structure of a drug has significance); Mark A. Lemley, Software Patents and the Return of Functional Claiming, 2013 WIS. L. REV. 905, 908-09 (2013) (“Commentators have observed for years that patents do less good and cause more harm in the software industry than in other industries such as pharmaceuticals.”).
4 See Moba, B.V. v. Diamond Automation, Inc., 325 F.3d 1306, 1324-26 (Fed. Cir. 2003) (Rader, J., concurring) (“This new disclosure doctrine, applied so far only to biotechnology cases, requires a nucleotide-by-nucleotide recitation of the structure of a biotechnological invention”), cert. denied, 540 U.S. 982 (2003).
The second issue that leads to poor notice in biotechnology patents is the fragmentation of property right. Like other complex technologies, the innovations of biotechnology come from various discrete research centers, including universities, government agencies, biotech startups, and pioneer drug companies. In addition, the fast-growing nature of this industry means that many indispensable research tools are still under patent protection.
5 See Shraddha A. Upadhaya, The Postmodern Written Description Requirement: An Analysis of the Application of the Heightened Written Description Requirement to Original Claims, 4 MINN. INTELL. PROP. REV. 65, 89-90 (2002) (listing the relevant cases).
6 University of California v. Eli Lilly & Co, 119 F.3d 1559 (Fed. Cir. 1997).
7 See, e.g., Falko-Gunter Falkner v. Inglis, 448 F.3d 1357, 1367-68 (Fed. Cir. 2006) (“Eli Lilly does not set forth a per se rule that whenever a claim limitation is directed to a macromolecular sequence, the specification must always recite the gene or sequence, regardless of whether it is known in the prior art.”).
8 See Guang Ming Whitley, A Patent Doctrine Without Bounds: The "Extended" Written Description Requirement, 71 U. CHI. L. REV. 617, 626-27 (2004) (discussing the cases that reflect lower courts “confusion as to the meaning and boundaries of the [written description] doctrine”).
9 Ariad Pharmaceuticals, Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1350 (Fed. Cir. 2010) (reviewing the written description requirement for claiming a genus).
10 See Moba, B.V. v. Diamond Automation, Inc., 325 F.3d 1306, 1323 (Fed. Cir. 2003) (Rader, J., concurring) (criticizing the written description requirement in biotechnology as confusing and increasing trial errors).
11 See EUROPEAN PATENT OFFICE, JAPAN PATENT OFFICE & U.S. PATENT AND TRADEMARK OFFICE, REPORT ON COMPARATIVE STUDY ON BIOTECHNOLOGY PATENT PRACTICES: COMPARATIVE STUDY ON “REACH-THROUGH CLAIMS” 16-19 (2001) (comparing the validity of reach-through claims in different countries).
Upstream patent holders often try to exert control over others’ downstream discoveries, either by reach-through claiming11 or reach- through licensing.12 Under the heightened written description requirement in Eli Lilly, reach-through claiming should no longer be a serious problem. On the other hand, reach-through licensing are still frequently being used by upstream platform inventors; they might be in the form of exclusive or non-exclusive license on the use of future inventions or sales royalty of future products developed by using the platform technology.13 Reach-through licensing allows platform patent holders to reap larger benefit on the success of the technology’s application,14 but it clouds the property right of downstream patents by granting upstream patent holders continued bargaining power. When the property right is fragmented, it is more challenging for a downstream user to identify the large number of entities whose permissions are required to enter the market. As a result, fragmented property right leads to poor notice and increases search cost of biotechnology patents. Third, unlike the Orange Book, there is no patent listing in the Purple Book. Due to the fragmented property right, if patent listing is required only for biotechnology patents owned by the pioneer drug company, then pre-approval litigation does not clear the way for FOB entry; instead, if patent listing is required for patents owned by all entities, the pre-approval litigation process might be disproportionately extensive, vulnerable to abuse, and thus unduly delay FOB entry.15 Therefore, a patent listing requirement was eventually not adopted for biologic drugs in the Purple Book, and competitors in biotechnology cannot receive notice through a patent listing. Having discussed the adverse effect on notice caused by the three issues, however, they might not be as detrimental as if they occurred in other industries. Both pioneer biologic companies and FOB companies are large corporations with tremendous resources and experiences in identifying patent rights. Additionally, poor notice hurts competitors more than patent holders, and it may even provide extra incentives for pioneer drug companies to bring new drugs to the market. In summary, despite the unique challenges of providing clear notice of biologic drug patents, whether the notice issues are detrimental or beneficial may depend on one’s point of view of the current patent law and policy.
12 Michael A. Heller & Rebecca S. Eisenberg, Can Patents Deter Innovation? The Anticommons in Biomedical Research, 280 SCI. 699 (1998) (describing reaching-through license); see, e.g., Bayer AG v. Housey Pharmaceuticals, Inc., 228 F. Supp. 2d 467 (D. Del. 2002) (discussing patent misuse related with reach-through license).
13 Heller & Eisenberg, supra note 12, at 699-700.
14 Id. at 699 (analyzing the pros and cons of reach-through license).
15 See Health Care Issues: Follow-On Biologic Drug Competition: Hearing Before the Subcomm. on Health of the Comm. on Energy and Commerce House of Representatives, 111th Cong. 91, 111-14 (June 11, 2009) (analyzing the pros and cons of a patent listing system for biologics).

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