Source: https://www.patentdocs.org/classic_biotech_opinions/
Timestamp: 2019-04-19 11:01:00+00:00

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While the United States and Canada share a border, common values and a strong commitment to international trade and security issues, many are surprised to learn that protection of intellectual property (IP) is a source of significant friction in our relationship. Indeed, in its 2014 annual "Special 301" report released last week on IP practices overseas, the Office of the United States Trade Representative (USTR) again placed Canada on its "Watch List" for inadequate IP protection and enforcement. In making this determination, USTR highlighted in particular that Canada's application of heightened patent utility requirements is "leading to uncertainty for patent holders and applicants and undermining incentives for investment in the pharmaceutical sector". In comments filed with USTR leading up to the issuance of its 301 report, a number of organizations -- including the U.S. Chamber of Commerce's Global IP Center (GIPC), Intellectual Property Owners Association (IPO), and the Canadian Patent Utility Coalition (CPUC) -- detailed the negative impact of Canada's heightened and improper patent utility standard on U.S. jobs, innovation and competitiveness. USTR's Special 301 process shines a spotlight on the degree to which the Canadian utility standard is contrary to internationally accepted norms and its own trade obligations.
It is common for patents involving innovative medicines to be litigated. Competitors often argue that a patent should not have been granted because the invention was obvious or was not really new. However, it is extremely rare for patents to be challenged for lack of usefulness or utility. This is because patents are typically challenged by those who wish to revoke the patent and market the product themselves. If an invention is not useful, it makes little business sense to bear the costs of challenging the patent. Conversely, if the product is actually in production and being used by customers, it should be difficult to demonstrate that the invention is not useful and never should have been patented.
Unfortunately, a pattern has developed in Canada whereby patents for innovative medicines are being challenged on the grounds that the inventions are not useful. Ironically, these challenges have come from companies seeking to have the patents revoked so that they can copy and market these medicines themselves. As a result, Canada has revoked valuable patents for nearly 20 useful medicines over the past nine years because the patents fail to satisfy Canada's unique patent standards. As noted by USTR, under this standard, courts are invalidating patents held by U.S. pharmaceutical companies on the basis of inutility, "even though such products have been in the market and benefiting patients for years".
Robust intellectual property protections are vital to the biopharmaceutical sector; adequate and effective patent protection, in particular, is what drives innovators to undertake enormous risks by investing in the research, development, and delivery of innovative new therapeutics to patients globally. The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and North American Free Trade Agreement (NAFTA) require patents to be granted for inventions relating to all fields of technology that are new, result from an inventive step, and are "capable of industrial application." "Capable of industrial application" is synonymous with "useful" and is often referred to as the "utility" standard. Thus, TRIPS and NAFTA require signatories to provide patent protection to useful inventions that meet the other requirements for patentability.
The utility standard is by no means intended to be a burdensome requirement. It is designed simply to ensure that patents are not granted for inoperable, fanciful, or purely aesthetic inventions. For example, in applying the patent utility test, the United States Patent and Trademark Office and U.S. courts require simply that an invention's claimed utility be specific and practical. The patent utility test applied in the U.S. is very similar to the tests applied in the European Union and Japan, among most other industrialized nations. When a patent is challenged for a lack of utility under Section 101 of the Patent Act, U.S. courts focus on actual utility and will consider evidence developed and submitted after the filing of the patent application in evaluating an invention's utility. Specific utility can be shown where a pharmaceutical or biotechnology patent discloses a specific disease against which the claimed compounds are useful.
Importantly, U.S. courts have made it abundantly clear that the human testing necessary for U.S. Food and Drug Administration (FDA) approval is not a prerequisite for finding usefulness for a therapeutic under the patent laws. The FDA's focus on human testing to demonstrate the safety and efficacy of a therapeutic before it is sold on the market is distinct from the Patent Act's patentability requirements. At the same time, USPTO and the U.S. courts accept evidence of FDA approval of human clinical trials as creating a strong presumption that the utility standard has been met. The U.S. approach is consistent with the practices of most if not all other WTO members. Canada's approach is the exception, and is inconsistent with international standards.
Canada's utility test has three elements which taken together present a riddle that is impossible to solve.
• First, the court or CIPO subjectively construes the "promise of the patent" from the patent specification, sometimes going beyond a mere statement of use and also beyond that which is specifically claimed in the patent application. There is no similar concept under U.S. law or practice. For example, "promises" have been construed as treatment of disease over the long term for conditions deemed chronic. There is no way to know in advance how the "promise" might be construed by the Court or Canada's Intellectual Property Office (CIPO).
• Second, the court or CIPO, using a heightened evidentiary standard of proof, determines whether utility is demonstrated by reference to the promise of the patent. As in the first test, there is no way a patentee can know in advance whether enough proof has been provided. For example, even completed human clinical trials have been found inadequate to demonstrate utility in Canada where the courts have questioned the size or duration of the trials. This stands in sharp contrast to U.S. practice, as noted above, where data from human clinical trials (even those trials conducted after filing of the patent application) create a presumption of usefulness.
• Third, if utility is not demonstrated, the court or CIPO determines whether, at the time of the filing, there was a "sound prediction of utility." In Canada, evidence of utility generated after the filing date is not considered and only evidence contained within the application may be used as proof of utility. This last prong creates heightened disclosure requirements inconsistent with U.S. practice, which does not require evidence of utility to be found within the specification as of the filing date.
Since the "promise" of the patent is construed by the court years after the filing date, the promise doctrine leads to great uncertainty among innovators as it is now unclear how much information is required at the time of filing to meet these new, onerous requirements. Moreover, this judicially-created utility doctrine applies a shifting standard that places applicants and patentees in an untenable "Catch-22" predicament: To be patentable, useful inventions must also be novel and inventive over all prior art available at the patent filing date. If an applicant aims to meet Canada's enhanced test for proof of utility, which may include carrying out long-term clinical trials prior to filing a patent application, the applicant would have to delay patent filings in Canada and other countries such as the United States. Such delays would increase the risk of patent refusal and patent invalidity in numerous countries on the basis of prior art published during the long-term clinical trials.
Canada's approach to utility is also inconsistent with the patent laws of similarly-situated economies and impedes ongoing efforts to achieve patent harmonization internationally. The Canadian approach is strikingly out of step with the first-to-file rule of the America Invents Act, which encourages early filing. It also compromises the ability of innovators to file patents in Canada using an international application under the Patent Cooperation Treaty (PCT), which has less onerous disclosure obligations. Moreover, the results in Canadian cases contradict those in the United States and Europe: pharmaceutical patents found to lack utility by Canadian courts have been upheld as having utility in U.S. and European proceedings, if utility is challenged at all.
Moreover, Canada's promise doctrine, in practice, has discriminated against a particular area of technology -- the biopharmaceutical sector. Since 2005, all patent revocations based on utility in Canada have involved pharmaceutical patents. Given the disproportionate impact of the promise doctrine on the biopharmaceutical sector, Canada is failing to meet its international obligation to apply patent standards in a non-discriminatory manner across different technologies. The graphic below illustrates the disproportionate impact on drug patents.
The heightened test applied by Canada is substantially different from the test required under TRIPS and NAFTA. Parties to these trade agreements cannot redefine core terms like "useful" and "capable of industrial application" without fundamentally changing the essence of the agreements. Canada's substantial redefinition of "usefulness" has severely undermined patent protection for innovators.
* The Canadian Patent Utility Coalition (CPUC) represents 19 innovative companies who are extremely concerned about Canada's heightened and improper patent utility standards which are causing significant economic harm and uncertainty to innovative companies. To learn more about CPUC and its views, please refer to the group's Special 301 Written Submission (footnote 1 of the submission provides a list of the member companies).
 In only one case outside the pharmaceutical sector have any challenged claims been found to lack utility; a distinct claim under the same patent was upheld as useful, such that the patent remained valid. See Bell Helicopter Textron Canada Limitée v. Eurocopter, 2013 FCA 219.
In Canada, for subject matter to be patentable, it must be novel, inventive, and have utility. A patent will fail for lack of utility if it can be shown that "the invention will not work, either in the sense that it will not operate at all or, more broadly, that it will not do what the specification promises that it will do" (Consolboard Inc. v. MacMillan Bloedel (Saskatchewan) Ltd., (1981) 56 CPR (2d) 145 (S.C.C.)). At the time a patent is applied for, the inventor must be in a position to establish utility, "on the basis of either demonstration or sound prediction" (Apotex Inc. v. Wellcome Foundation Ltd.,  4 S.C.R. 153, 2002 SCC 2007, 2002 SCC 77).
As is often the case for both biotechnology and pharmaceutical inventions where working examples demonstrating promised utility are not available at the time of filing, the doctrine of sound prediction, as established by the Supreme Court of Canada in Apotex Inc. v. Wellcome Foundation Ltd., must be relied on to support the utility of the invention.
With respect to the first requirement, the factual basis from which utility can be soundly predicted may be provided by way of examples but there is no requirement to do so. Nor is there any requirement to establish the factual basis with human clinical trial data. In fact, in Apotex Inc. v. Wellcome Foundation Ltd., the factual basis was provided by way of in vitro examples.
A recent Canadian Federal Court of Appeal decision in Eli Lilly Canada Inc. v. Apotex Inc., 2009 FCA 97, has examined the sound prediction doctrine and sets a troubling precedent with regard to inclusion of performed clinical trial data in pharmaceutical applications in order to satisfy the third prong of the test relating to disclosure.
On March 25, 2009, the Federal Court of Appeal dismissed Eli Lilly Canada's appeal of a lower court decision pursuant to the Patented Medicines (Notice of Compliance) Regulations ("PM(NOC) Regulations") in favor of Apotex for its raloxifene hydrochloride drug (generic version of EVISTA7). The PM(NOC) Regulations are Canada's version of a Hatch-Waxman-type regime linking the approval of generic drugs under the Canadian Food and Drugs Act and Regulations with the Canadian Patent Act.
The patent at issue, Canadian Patent No. 2,101,356 ('356 patent) is directed to the use of a group of compounds (including raloxifene) in the treatment or prevention of osteoporosis and for inhibiting bone loss in a human. The patent specification disclosed four examples of in vivo rat studies and a fifth example of an anticipated study on a group of post-menopausal women where certain results were expected. In its Notice of Allegation, Apotex alleged that the rat studies disclosed in the '356 patent did not provide a factual basis for a sound prediction; specifically, that it could not be soundly predicted that the results obtained from in vivo testing in rats would demonstrate utility in humans. According to Apotex, the inventors had not demonstrated that raloxifene HCl could be used as a treatment for the prevention of osteoporosis and/or bone loss in humans and that, while the disclosure mentioned that a clinical trial in healthy post-menopausal women was underway to confirm this, the results of the study were not reported in the '356 patent.
The first instance trial judge agreed with Apotex and held that the '356 patent lacked proper disclosure as required by the sound prediction test articulated in Apotex Inc. v. Wellcome Foundation Ltd. Of relevance was an abstract published by Eli Lilly before the Canadian filing date of the '356 Patent, but after its U.S. priority date which described a study (referred to as the Hong Kong study) conducted on a group of post-menopausal women demonstrating that raloxifene showed promising skeletal anti-resorptive properties. The Court ruled that, although there was a good basis for a prediction as of the priority date of the application based on the in vivo rat studies described in the application, and a sound line of reasoning as of the Canadian filing date based on the Hong Kong study, the third prong of the test had not been met as the Hong Kong study itself was not disclosed in the '356 patent. Eli Lilly argued that the Hong Kong study abstract was available to the public at the Canadian filing date and that, as such, sufficient disclosure to satisfy the third prong of the test had been made. However, this was rejected by the trial judge who, as mentioned above, ruled that the disclosure must be in the patent, not elsewhere.
On appeal, Eli Lilly argued, inter alia, that the trial judge had committed a legal and factual error as recent case law on the issue of sound prediction had established that there was no requirement that the underlying data supporting a sound prediction be disclosed in the patent. The Federal Court of Appeal disagreed with Eli Lilly and confirmed that a heightened obligation to disclose the underlying facts and the line of reasoning for inventions that comprise the prediction was required in sound prediction cases. According to the Court, "when a patent is based on a sound prediction, the disclosure must include the prediction. As the prediction was made sound by the Hong Kong study, this study had to be disclosed."
It is unclear from the decision why both the trial level and appeal Courts found (and Eli Lilly's counsel accepted) that the particular Honk Kong study was necessary to provide a sound line of reasoning, i.e., that in vivo data in rats alone was not sufficient to provide both the factual basis and the sound line of reasoning. Eli Lilly appears to have simply argued its case on the basis that the doctrine of sound prediction did not require that the study be actually disclosed in the application. Perhaps it should have gone still further and argued that the judge had erred in finding that it was the testing in humans that made the prediction sound. In the vast majority of cases, when a patent application is filed, no such human clinical trial data is available; therefore, it is typical for applicants to support their sound predictions with in vitro or animal in vivo data only.
Therefore, this case should not be taken as establishing a requirement to provide human clinical trial studies in support of a sound prediction. As mentioned above, in the Apotex Inc. v. Wellcome Foundation Ltd. case itself, the factual basis had been established by in vitro data only. However, if an applicant does have human clinical trial studies available prior to filing its Canadian patent application (as was the case for Eli Lilly in the case at hand), then it would be advisable for the applicant to include the results of the studies in the patent application.
For more information regarding the Doctrine of Sound Prediction please contact Ariadni Athanassiadis (aathanassiadis@mbm.com), Catherine Lemay (clemay@mbm.com) or Claire Palmer (cpalmer@mbm.com).
In an opinion of great import to biotechnology patent law, the Federal Circuit affirmed the decision of the Board of Patent Appeals that denied a patent to five expressed sequence tags (ESTs) -- holding that in the absence of an identification of the function of the underlying genes, "the claimed ESTs have not been researched and understood to the point of providing an immediate, well-defined, real world benefit to the public meriting the grant of a patent." In its opinion, the CAFC endorsed the 2001 PTO Utility Examination Guidelines, holding that Brenner v. Manson applies broadly to the fields of chemistry and biology and that the PTO had not applied a heightened standard for utility of ESTs.
Monsanto, the real party in interest, had asserted that the claimed nucleic acid sequences found their use as research tools, including use in monitoring gene expression by measuring the level of mRNA through microarray technology and in identifying the presence or absence of polymorphism. The CAFC, however, dismissed this argument and affirmed that, without presenting a specific function for the underlying gene, the claimed invention lacked a specific and substantial utility and the application in question therefore also did not meet the enablement requirement of 35 U.S.C. § 112, as it incorporates the utility requirement of 35 U.S.C. § 101.
Following the directive from the Supreme Court in Brenner, the CAFC noted that any invention must have a substantial and specific utility.
Substantial Utility: "an asserted use must show that the claimed invention has a significant and presently available benefit to the public."
Specific Utility: "an application must disclose a use which is not so vague to be meaningless" and "an asserted use must  show that the claimed invention can be used to provide a well-defined and particular benefit to the public."
[W]hile a microscope can offer an immediate, real world benefit in a variety of applications, the same cannot be said for the claimed ESTs. Fisher's proposed analogy is thus inapt. Hence, we conclude that Fisher's asserted uses are insufficient to meet the standard for a "substantial" utility under § 101.
The CAFC also held that the asserted uses were not specific. Asserting that any EST from the maize genome could perform any of the recited utilities, the CAFC found that Monsanto had failed to assert any utilities setting the five claimed ESTs apart from the 32,000 plus ESTs disclosed in the application or any EST for that matter. The disclosure of such general utilities was "nebulous" and not sufficiently specific.
In dissent, Judge Rader distinguished Brenner and argued that the majority, without supporting scientific evidence, was too quick to render a value judgment that the utility of the claimed ESTs would not provide enough valuable information, that the information gained through the ESTs was too "insubstantial" to merit patent protection. Scientific research, noted Rader, is an incremental process, and ESTs, like a microscope, possess utility, albeit limited to the laboratory setting, as research tools useful in studying other compounds. ESTs, therefore, provide an identifiable benefit to society. Rader argued that the majority failed to recognize the complex nature of scientific discovery, and that "only the final step of a lengthy incremental research inquiry gets protection" under the majority holding. The decision to deny protection to inventions that contribute to the "useful arts" but not to an extent justifying the exclusive right afforded by a patent, contended Rader, is more properly founded in the nonobviousness requirement of 35 U.S.C. § 103 than in the utility requirement of 35 U.S.C. § 101.
This article was originally published on Patently-O on September 8, 2005.
On Tuesday, the Federal Circuit will hear In re Fisher, in which the Court will address the utility requirement for the first time since the Patent Office set forth revised Utility Examination Guidelines in January 2001. Specifically, in Fisher, the issue of patentable utility is being raised with respect to nucleic acid molecules. In commenting on the possible importance of this case, Harold Wegner has described Fisher as having "the potential of being either the single most important pharmaceutical patent case in recent years - or a yawn." Amicus briefs filed by such well-known biotech and pharmaceutical companies as Affymetrix, Eli Lilly, and Genentech in support of the Board's decision in Ex parte Fisher suggest that it may be the former as opposed to the latter.
The particular controversy presented in Fisher can be traced back as far as 1991, when a group of NIH investigators led by J. Craig Venter sought to protect thousands of DNA sequences corresponding to portions of expressed genes. Venter called these gene fragments expressed sequence tags, or ESTs. Venter's group sought to protect not only the ESTs themselves, but also the full-length sequences from which the ESTs were derived and the protein products encoded by the full-length sequences, without first determining the biological function of the encoded protein products. In several applications filed on its ESTs, the NIH asserted a number of utilities, including the design of oligonucleotides for use in chromosomal analysis, PCR amplification, and recovering the corresponding full-length gene. After receiving a second rejection on its initial filing, the NIH abruptly abandoned its attempts to protect the ESTs, and withdrew all of its pending EST applications from consideration.
While the withdrawal of these applications temporarily quieted the debate surrounding EST patentability, the Patent Office again stoked the fires of controversy in 1995, when it published new Utility Examination Guidelines. The new Guidelines removed some of the obstacles to EST patenting by only requiring that an applicant assert a utility that was "specific" and "credible." The new Guidelines had thus omitted the requirement that the assertion of utility also be "substantial," as set forth by the Supreme Court in 1966 in Brenner v. Manson. In 1997, the Patent Office further declared that since ESTs were acknowledged to have utility apart from the full-length sequences from which they were derived, an applicant would no longer be prevented from securing protection for an EST by the failure to specify the function of the full-length sequence from which that EST was derived.
The Patent Office reversed course again in 2001 when it publishing revised Utility Examination Guidelines, reinstating the Brenner substantial utility prong. The revised Guidelines now required that an applicant assert a specific and substantial utility for the claimed invention that would be considered credible by a person of ordinary skill in the art. The Patent Office also issued Revised Interim Utility Guidelines Training Materials, which provided Examples indicating how the revised Guidelines were to be applied to thirteen different types of biochemical subject matter, including ESTs, as well as definitions of the three utility prongs. In particular, the Training Materials defined "specific utility" as utility that is specific to the subject matter claimed, as contrasted with a general utility that would be applicable to the broad class of the invention; "substantial utility" as utility having a "real world" use; and "credible utility" as utility that is believable to a person of ordinary skill in the art based on the totality of evidence and reasoning provided.
In the appeal to be heard Tuesday, Appellants Dane Fisher and Raghunath Lalgudi (employees of Monsanto Co., the real party in interest) seek to reverse the Board's decision affirming the final rejection of a claim directed to five ESTs isolated from maize leaf tissue. The five ESTs constitute only a small portion of the 4,013 sequences that Appellants originally claimed and an even smaller portion of the 32,236 sequences that Appellants disclosed in their application. Appellants also asserted a number of utilities for the claimed ESTs in their application, including the use of the ESTs to identify polymorphisms (i.e., alternate forms, or alleles, of the claimed sequences), to design oligonucleotide probes or primers for use in isolating DNA sequences from other plants and organisms, and to measure mRNA expression levels in plant cells using microarray technology.
The Board, in Ex parte Fisher, analyzed Brenner and subsequent CCPA and CAFC decisions in In re Kirk, In re Ziegler, In re Jolles, Cross v. Iizuka, and In re Brana, and determined that "[r]ather than setting a de minimis standard, Section 101 requires a utility that is 'substantial'," or in the words of the Brenner court, "one that provides a specific benefit in currently available form." The Board then examined Appellants' asserted utilities and determined that none of the claimed ESTs provided a specific benefit in its currently available form. In particular, with regard to Appellants' assertion that the claimed ESTs could be used to measure mRNA expression levels in plant cells using microarray technology, the Board declared that "the asserted utility of the claimed nucleic acid - as one component of an assay for monitoring gene expression - does not satisfy the utility requirement of Section 101."
In briefing the issues before the Federal Circuit, Appellants argue that the Board erred in concluding that an EST is "subject to a heightened standard of utility . . . that hinges upon some undefined 'spectrum' of knowledge about the function of the gene that corresponds to the EST." Appellants also contend that the Board erred in concluding that the claimed ESTs lack patentable utility "despite the undisputed existence of eight scientifically useful applications for the claimed ESTs and a commercially successful industry built upon the sale and licensing of ESTs corresponding to genes of unknown function, just like those at issue here." In arguing against the Patent Office's application of a "heightened standard" of utility in this case, Appellants note that the Patent Office has set forth "three substantially different constructions of the utility standard over the last decade alone," and that the Board has adopted a test "so ambiguous and impracticable that even the PTO cannot articulate with any reasonable certainty when the claimed ESTs - or any other EST - might be entitled to patent protection." Appellants also contend that the Patent Office has applied the wrong test in determining whether there is an assertion of specific utility, since "the specific utility prong only requires the existence of an identifiable benefit for the claimed invention; it does not require a benefit that is unique to the claimed invention."
The Patent Office, on the other hand, denies that Appellants' ESTs have been subjected to a heightened standard, arguing instead that Appellants merely failed to assert a specific and substantial utility for the claimed ESTs that would be considered credible by a person of ordinary skill in the art. In its brief, the Patent Office often focuses on Appellants' failure to satisfy the specific utility prong, arguing, for example, that Appellants' asserted utilities "would apply not only to the over 32,000 ESTs Fisher discloses, and to the over 600,000 ESTs disclosed in Monsanto's [six] related appeals, but also to any ESTs derived from any organism." In particular, the Patent Office counters Appellants' argument that because each EST only specifically binds to its complement, the specific sequence of each EST makes its use as a probe or primer specific, by stating that "there is no specific reason for using the EST to bind its complement," and therefore, "[t]o the extent that more sequence data could be acquired by using the ESTs as probes, that result would likely be true for any scrap of DNA derived from nature." Finally, in responding to Appellants' assertion that ESTs have a real world value as part of a multi-billion dollar industry, the Patent Office contends that "batches of ESTs of unknown significance are sold for the purpose of finding targets worthy of further development, not because the individual ESTs have any specific currently available benefit."
Dr. Zuhn's article "DNA Patentability: Shutting the Door to the Utility Requirement," which was published in the summer 2001 issue of the John Marshall Law Review, contains a more thorough discussion of the history of the utility requirement, particularly with respect to DNA sequences.
This article was originally published on Patently-O on May 2, 2005.

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