Patent Docs

Is Venezuela the new Thailand?

    By Kevin E. Noonan --

A great deal has been written over the past week about Venezuela's new patented drug policy.  Last Saturday, President Hugo Chavez (at right) announced that his government would "shake up" Venezuela's intellectual property laws, particularly with respect to patents on medicines.  As reported by Reuters and the Associated Press, Sr. Chavez drew a distinction between "a song [which] is intellectual property" and "an invention or scientific discovery [that] should be knowledge for the world, especially medicine."  In characteristically dramatic fashion, he went on to say "[t]hat a laboratory does not allow us to make a medicine because they have a patent, no, no, no."

The details and scope of the policy (besides a general intent to prevent foreign, predominantly Western, drug companies from enforcing patents in Venezuela) was not announced.  However, Commerce Minister Eduardo Saman (at left), formerly head of Venezuela's patent agency (SAPI), said that the revised policies "should be compatible with the international treaties that we have signed and respect and honor."  He justified the new policies by saying that "[p]atents have been a barrier to production, and we cannot allow them to be barriers to medicine, to life, to agriculture."

A contrary view was voiced by Edgar Salas, president of the Venezuelan pharmaceutical business chamber, who predicted that preventing foreign pharmaceutical companies from enforcing patents in Venezuela would result in these companies refusing to import their drugs into the country.  For a country that imports most of its pharmaceuticals this could be a huge problem.  On the other hand, Venezuela's position as an oil producer gives it significant leverage in obtaining goods from abroad.  For example, in 2002, the U.S. alone exported $4.4 billion in goods to Venezuela and yet the country ran a trade surplus, exporting $15.1 billion (mostly from the sale of oil) to the U.S.

This latest move by Sr. Chavez is keeping with his anti-capitalist, anti-Western policies and rhetoric, and thus should come as no surprise.  The "international treaties" referenced by Sr. Saman include, of course, the Trade-related Aspects of Intellectual Property Rights (TRIPS) provisions of the General Agreement on Tariffs and Trade (GATT), and Venezuela's participation in the World Trade Organization (WTO), under the 1994 Marrakesh Agreement.  Venezuela was one of the earliest nations in the Organization, becoming a member on January 1, 1995.  Sr. Chavez has threatened to leave the Organization, accusing it of neocolonialism and imposing trading practices unfair to developing nations.  And a blanket ban on permitting or enforcing pharmaceutical patents would be a violation of TRIPS.

But TRIPS in practice has not been the panacea for drug patents that its drafters might have intended (see "The Law of Unintended Consequences Arises in Applying TRIPS to Patented Drug Protection in Developing Countries"; "Worldwide Drug Pricing Regime in Chaos"; "More on the Global Drug Patenting Crisis").  This outcome is due in large part to WTO member countries taking advantage of treaty provisions that permit (or can be co-opted to permit) nationalistic interpretations like Sr. Chavez now proposes.  For example, TRIPS itself permits treaty signatory nations to include provisions for compulsory licenses in the face of extreme medical emergencies.  The WTO adopted the Doha Declaration of 2001 that has reduced the consequences for disrespecting foreign patent rights even further.  Specifically, the Declaration provides:

Article 4.  The TRIPS Agreement does not and should not prevent Members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO Members' right to protect public health and, in particular, to promote access to medicines for all.
    In this connection, we reaffirm the right of WTO Members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose.

Article 5.  Accordingly and in the light of paragraph 4 above, while maintaining our commitments in the TRIPS Agreement, we recognize that these flexibilities include:
    (a) In applying the customary rules of interpretation of public international law, each provision of the TRIPS Agreement shall be read in the light of the object and purpose of the Agreement as expressed, in particular, in its objectives and principles.
    (b) Each Member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted.
    (c) Each Member has the right to determine what constitutes a national emergency or other circumstances of extreme urgency, it being understood that public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency.
    (d) The effect of the provisions in the TRIPS Agreement that are relevant to the exhaustion of intellectual property rights is to leave each Member free to establish its own regime for such exhaustion without challenge, subject to the MFN and national treatment provisions of Articles 3 and 4.

Article 6.  We recognize that WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement. We instruct the Council for TRIPS to find an expeditious solution to this problem and to report to the General Council before the end of 2002.

Several developing countries have used the compulsory licensing provisions of TRIPS as modified by the Doha Declaration to grant compulsory licenses for anti-AIDS drugs (see "The Law of Unintended Consequences Arises in Applying TRIPS to Patented Drug Protection in Developing Countries").  Thailand has gone even further, imposing compulsory licenses for drugs such as Plavix® that do not readily fall within the definition of drugs for treating a public health crisis or national emergency (see "Thailand Continues Its Compulsory Licensing Practices").  So it is unlikely that Venezuela will be unable to fashion a justification for whatever policies it adopts that will permit Sr. Chavez to fulfill his commitment to abolish drug patents in his country while permitting Sr. Saman to maintain that those policies "respect and honor" the "international treaties that [Venezuela has] signed."

Venezuela thus becomes the latest example of a developing country able to use the provisions of GATT and the auspices of the WTO to receive the benefits of reduced tariffs on their exports while avoiding the political repercussions of enforcing drug patents owned by foreign nationals.  Even without Sr. Chavez's anachronistically Marxist rhetoric, it is hard to fathom a political leader of a country like Venezuela staking political power on protecting foreign interests.  Patent protection in any country will be enforced only when such protection benefits the society itself, suggesting that Western patent holders would be better served to support local industries that could partner with them to make the case for patent rights with their governments (see "A Modest Proposal Regarding Drug Pricing in Developing Countries").  Sadly, with few exceptions, Western pharmaceutical companies have not availed themselves of such opportunities.  As a consequence, the political calculus strongly favors leaders like Sr. Chavez, and we can expect similar actions, with luck devoid of the florid rhetoric, from other developing countries until the situation changes.

For information regarding this and other related topics, please see:

• "Recent Developments in Pharmaceutical Patenting and Compulsory Licensing of Pharmaceutical Patents in Developing Countries," July 8, 2008
• "U.S. Continues Efforts to Protect Patent Rights Abroad," April 29, 2008
• "Thailand Continues Its Compulsory Licensing Practices," March 11, 2008
• "More on the Global Drug Patenting Crisis," August 14, 2007
• "EU Trade Commissioner Sends Warning Letter to Thailand," August 13, 2007
• "Pharma Sanity Lacks Global Reach," July 13, 2007
• "Worldwide Drug Pricing Regime in Chaos," May 9, 2007
• "The Law of Unintended Consequences Arises in Applying TRIPS to Patented Drug Protection in Developing Countries," May 1, 2007
• "A Modest Proposal Regarding Drug Pricing in Developing Countries," May 2, 2007

Biotech Director at EPO Discusses European Patent Practice - Part II

    By Bradley Crawford --

In the first post in this series, background information from Mr. Enrique Molina Galan's  presentation at BIO 2009 was reported.  The focus of this post is on the second part of his talk, where Mr. Molina Galan described the European Patent Office's role in fostering innovation.

In his talk, Mr. Molina Galan noted the need for balancing the needs of innovators with those of the public, and the need to balance patent protection against disclosure.  In particular, he mentioned the incentive to innovate, the return on investment, and better market position on one hand are weighed against the sharing of knowledge, which can lead to "innovation leaps" in the other.  As he made clear, the key to ensure the right balance is for the European Patent Office to apply high standards, which is entirely consistent with the mission statement of the European Patent Office:

As the Patent Office for Europe, we support innovation, competitiveness and economic growth across Europe through a commitment to high quality and efficient services delivered under the EPC.

Quality can be fostered by the applicant via submission of an enabling disclosure, an undisputed inventive contribution, and claim scope that is commensurate with the contribution to the relevant art.  These will lead to the granting of a patent with a high presumption of validity.  Quality can be fostered by the European Patent Office via the use of highly skilled examiners, thorough and consistent procedures, comprehensive search documentation, and rigorous controls coupled with a commitment to improve.  Efficiency can be fostered by minimizing procedural delays, minimizing legal uncertainty as early as possible, and handing the ever increasing workload.

After briefly discussing the European Patent Grant Procedure, a slide entitled "fate of the biotech applications from search to grant" was shown (slide shown below).  This slide shows that for every 100 biotech EP applications that were searched, about 70 proceeded to examination.  Of the 70 that were examined, 35 were granted, 30 were abandoned or withdrawn, and 5 were refused.  Mr. Molina Galan stated that this last number was showing a slight increase.  Two of the initial hundred applications were the subject of an opposition after grant.  The end results of the opposition were as follows:  about a third of the oppositions were rejected, about a third of the patents were revoked, and in about a third of the cases, the patent was maintained in amended form.

As mentioned above, the European Patent Office's workload has been increasing.  According to Mr. Molina Galan, the gap between the number of new applications and the number of finished applications is currently growing at a rate of 37,500 applications per year; it would take 750 examiners, working at full capacity to handle this work load.  Of course, each year, an additional 750 examiners would have to be hired in order to handle this ever increasing workload.

In an effort to align patent quality standards to the needs of today's society, the European Patent Office has instituted a "Raising the Bar" campaign.  Legislative measures supporting this initiative and aimed at improving the quality of the incoming patent applications and streamlining the grant proceedings will take effect on April 1, 2010.  The key features of those amendments to the Implementing Regulations to the EPC are as follows.

Early enforcement of the EPC Rules on the admissible number of independent claims per category:

• When appropriate, the search can be restricted to one independent claim per category.
• If a meaningful search is not possible, the applicant will be invited to clarify the subject matter to be searched.
• Examination will be limited to the searched subject matter.
• A response to the search opinion issued by the EPO will become mandatory.
• Amendments and their basis in the application as filed shall be clearly identified.
• Applicants will have fewer opportunities to amend the claims on their own initiative.  Further amendments with the consent of the examining division remain possible.
• The sanction for not observing the respective time limits will, as a rule, be the deemed a withdrawal of the application.  The available remedy is further processing or, in a few cases, re-establishment of rights.

The European Patent Office is also instituting a new rule regarding the deadline for filing a divisional application.  Under the current rules, a divisional may be filed at any time before the European patent is granted.  Under the new rules, all divisional applications must be filed either within a period of two years from the first communication by the examining division in respect of the earliest application for which such a communication has been issued or within two years of receiving a lack of unity objection.

As previously mentioned, the new rules take effect on April 1, 2010.  However, the European Patent Office has yet to finalize its rules regarding the day to day implementation of the above rules.  In the next post in this series, possible results and consequences of the new rules will be discussed.

Patent Docs thanks Mr. Molina Galan for his time, the comments that he provided regarding the above post, and for granting permission to make the slides from his BIO 2009 presentation publicly available.  To view the slides, click here.

Utility under Canadian Patent Law and the Doctrine of Sound Prediction

    By Ariadni Athanassiadis, Catherine Lemay, and Claire Palmer --

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., [2002] 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.

To meet the test for "sound prediction," there must be:

(i)    a factual basis for the prediction;

(ii)    an articulable and "sound" line of reasoning from which the desired result can be inferred from the factual basis, and

(iii)    proper disclosure.

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).

Docs at BIO: Biotech Director at EPO Discusses European Patent Practice

    By Bradley Crawford --

On May 19, 2009, Mr. Enrique Molina Galan, one of nine Directors of Biotechnology at the European Patent Office, discussed biotech patent practice before the European Patent Office at BIO 2009.  In a presentation entitled "How Is the European Patent Office Supporting Innovation in Europe?" Mr. Molina Galan provided some preliminary background information and then discussed how the European Patent Office has been trying to foster efficiency and improve patent quality.

Since Mr. Molina Galan's presentation provided quite a bit of information, his discussion will be the subject of a series of posts.  Today's post focuses on the background information Mr. Molina Galan provided.  Subsequent posts will focus on some of the initiatives the European Patent Office plans on implementing to improve efficiency and increase patent quality, as well as possible interpretations and applications of new EPO rules garnered from a conversation Patent Docs had with with Mr. Molina Galan on May 20, 2009.

Mr. Molina Galan began his talk with some background information on the European Patent Organization.  For example, he noted that the European Patent Organization is a European intergovernmental institution, but not an EU institution, that is self-financing, and comprised of 35 member states that constitute a market of more than 500 M citizens.  After giving a brief history of how the European Patent Organization came to be, he noted that the European Patent Organization is comprised of two parts.  The first is the European Patent Office, which is the executive body and is responsible for examining European patent applications.  The second is the Administrative Council, which is the legislative body.  The Administrative Council is made up of delegates from the member states, it supervises the activities of the European Patent Office, and has a legislative function.  The European Patent Office has five locations and a total staff of about 6,685 people.  Around 60% (3,990) of the EPO staff are patent examiners.

Mr. Molina Galan also reported the number of PCT applications entering the European regional phase increased from 74,296 in 2006 to 78,684 in 2007, and then to 83,548 in 2008.  He also reported the number of direct European Filings as 61,133 in 2006, 62,755 in 2007, and 63,013 in 2008.  Upon analyzing the residence of the applicants for the year 2007, the top three filers were the U.S. at 25.3% of all applications, followed by Germany at 17.9%, and Japan at 16.3%.

Docs at BIO: Panel Addresses Narrowing Scope of Biotech Patents

    By Donald Zuhn --

In a Breakout Session entitled "The Narrowing Scope of Biotech Patent Claims: What Does It Mean for the Industry?" at last week's BIO International Convention, a panel consisting of Anne Dollard, the Deputy General Counsel and Chief Patent Counsel for Takeda San Francisco; Thomas Kim, Senior Director of Intellectual Property for VGX Pharmaceuticals, Inc.; Jane Gunnison of Ropes & Gray LLP; John Tessensohn of Shusaku Yamamoto Patent Law Offices; and Dr. Hans-Rainer Jaenichen of Vossius & Partner, discussed how practices in the United States, Europe, and Japan have led to a narrowing of biotech patent claim scope.  The panel was moderated by James Haley of Ropes & Gray LLP and Len Smith, Senior Intellectual Property Counsel for Novo Nordisk, Inc.

Ms. Dollard began the presentation by discussing how the statutory subject matter requirement of 35 U.S.C. § 101 has recently moved to the forefront of biotech patenting.  She reviewed the impact of Laboratory Corp. v. Metabolite Laboratories, Inc. (LabCorp), In re Bilski, Classen Immunotherapies, Inc. v. Biogen Idec, and the pending appeal in Prometheus v. Mayo on medical diagnostic claims, and then provided a review of Association for Molecular Pathology v. U.S. Patent and Trademark Office, a recently-filed case concerning gene patents assigned to Myriad Genetics.  Speaking of the ACLU case, Ms. Dollard stated that the clear intent of the plaintiffs was "to take down patents on human genes."  As for Bilski, Ms. Dollard compared the case with KSR International Co. v. Teleflex Inc., "where we thought the world was going to end," and stated that the impact of Bilski could ultimately be less significant than first thought.

Mr. Kim followed with a discussion of recent obviousness caselaw.  After reviewing KSR International Co. v. Teleflex Inc. and Takeda Chemical Industries, Ltd. v. Alphapharm Pty., Ltd., Mr. Kim addressed two recent obviousness Federal Circuit decisions:  Procter & Gamble Co. v. Teva Pharmaceuticals USA, Inc. and In re Kubin.  With respect to the future of biotech claims in a post-KSR world, he cautioned that trouble may lie ahead since biotechnology was becoming more predictable.  Mr. Kim also noted that while applicants might be able to point to secondary considerations of nonobviousness, such considerations would be unlikely to trump a strong case of obviousness.

Using antibodies as a paradigm, Ms. Gunnison next addressed the issue of written description.  She first reviewed Examples 13 and 14 of the Written Description Training Materials issued by the Patent Office just over a year ago, and then turned to a recent Board decision (Ex parte Xia), where the Board determined that a description of an epitope was not required for compliance with the written description requirement.  Ms. Gunnison then discussed Chiron Corp. v. Genentech, Inc., where the Federal Circuit determined that an antibody format that did not exist at the time of filing could not be adequately described.  She concluded her presentation by observing that changes in the written description standard have been costly for applicants.  Touching on a theme raised earlier by Mr. Kim, Ms. Gunnison responded to a question by stating that we could be reaching a point where monoclonal antibodies to known sequences would be considered obvious, but that this would depend on whether antibodies were viewed as chemical compounds (requiring application of structural nonobviousness caselaw) or whether Kubin would prevail. 

The last two panelists, Mr. Tessensohn and Dr. Jaenichen provided informative presentations regarding the state of biotech practice in Japan and Europe, respectively.  Mr. Tessensohn began his presentation by focusing on recent acquisitions by Japanese biotech companies, noting that these companies were facing the same issues (i.e., "anemic pipelines and expiring patents") that many U.S. biotech companies are currently facing.  Turning to patent practice in Japan, Mr. Tessensohn argued that the environment was not "hostile," but acknowledged that patentability standards were evolving and becoming more narrow in Japan (he noted that he was "not here to be a JPO apologist, but you have to know what you're dealing with").  With respect to written description and enablement, he stated that the Japan Patent Office (JPO) required disclosure of pharmacological test results in the application, adding that if such results were submitted after filing that was "too bad."  As for those who would suggest that the JPO was applying a heavier hand with regard to non-Japanese applicants, Mr. Tessensohn humorously contended that there was "no grand conspiracy theory" at work, and that the tough standards in Japan were affecting U.S. companies (e.g., Pfizer) and Japanese companies (e.g., Astellas) alike.  And his solution for dealing with these tough standards was simple:  "crank out as much disclosure as possible."  He added that applicants could not go wrong by following his "ABCD" rule when drafting applications, and remember to provide data that is All-inclusive, Broad, Comprehensive, and Detailed.  Mr. Tessensohn observed that it was best to avoid inferences and prophetic examples in favor of lots of data and working examples.  On the issue of obviousness, he noted that many Japanese IP High Court decisions have been decided on an "obvious to try" standard, which is alive and well in Japan, but that the "silver bullet" for dealing with obviousness rejections in Japan was to show unexpected results (which can be submitted after filing in Japan).

The session's last panelist, Dr. Jaenichen, began by discussing a few favorable differences between European and U.S. patent practice.  For example, he noted that in Europe, claims to hybridization variants are readily obtainable, provided that the claims include a functional limitation.  He stated that the same is also true for claims reciting percent identity, adding that a functional limitation is not required for claims to allelic variants.  Dr. Jaenichen also contended that the sequencing of the human genome did not mean that human genomics claims were all but dead, as there would be continue to be avenues open for genomics claiming (e.g., splice variants).  With respect to the European Patent Office's recent decision to crack down on "abuses" related to divisional filings, Dr. Jaenichen argued that only 0.35% of all applications were considered to be abuses of the system, and thus concluded that the EPO's new rules regarding divisional practice were simply a money-making device.

USPTO Begins Pilot Program with the German Patent Office

    By Christopher P. Singer --

As we previously reported by Patent Docs, the U.S. Patent and Trademark Office began a Patent Prosecution Highway (PPH) Pilot Program with the German Patent and Trademark Office (DPMA) on April 27, 2009 which will last for two years.  The USPTO issued another press release on April 20, 2009, providing links for applicants interested in reviewing the requirements for participation in the pilot program via the USPTO or DPMA.

New Administration, Same Result: U.S. Trade Representative's Section 301 Report

    By Kevin E. Noonan --

U.S. Trade Representative Ron Kirk issued a "Special 301 Report" on April 30.  This report, on the state of intellectual property rights worldwide, identifies twelve countries on a "priority watch list" and another 33 on a "watch list," all relating to deficiencies in intellectual property protection in these countries.  The Report "guides our efforts to protect American innovation and creativity around the world," according to a press release by the Representative's office, and in these times when "[o]ur creative and innovative products can hit the global marketplace . . . . with just a keystroke," the U.S. and its trading partners must be "vigilant" to protect and enforce intellectual property rights.

The Report is promulgated pursuant to Section 182 of the Trade Act of 1974, as amended by the Omnibus Trade and Competitiveness Act of 1988 and the Uruguay Round Agreements Act (enacted in 1994).  The Trade Representative is required under the Act to "identify those countries that deny adequate and effective protection for IPR or deny fair and equitable market access for persons that rely on intellectual property protection."  The Trade Representative has implemented these provisions by creating a "Priority Watch List" and "Watch List."  Placing a country on the Priority Watch List or Watch List is used to indicate that the country exhibits "particular problems . . . with respect to IPR protection, enforcement, or market access for persons relying on intellectual property."  These watch lists are reserved for countries having "the most onerous or egregious acts, policies, or practices and whose acts, policies, or practices have the greatest adverse impact (actual or potential) on the relevant U.S. products."

The Priority Watch List of the report lists China, Russia, Algeria, Argentina, Canada, Chile, India, Indonesia, Israel, Pakistan, Thailand, and Venezuela; this is an upgrade in priority for Algeria, Canada, and Indonesia, who last year were on the Watch List.  Countries on this list "do not provide an adequate level of IPR [intellectual property rights] protection or enforcement, or market access to persons relying on intellectual property protection."  This year, the Watch List names Belarus, Bolivia, Brazil, Brunei, Columbia, Costa Rica, Czech Republic, Dominican Republic, Ecuador, Egypt, Finland, Greece, Guatemala, Hungary, Italy, Jamaica, Kuwait, Lebanon, Malaysia, Mexico, Norway, Peru, Philippines, Poland, Romania, Saudi Arabia, Spain, Taiwan, Tajikistan, Turkey, Turkmenistan, Ukraine, Uzbekistan, and Vietnam; Brunei (software piracy), and Finland (lack of pharmaceutical product patent protection) are new to the Watch List this year.  Korea and Taiwan were removed from the Watch List in this report; significantly, this is the first time that Korea has not been named on either the Priority Watch List or the Watch List.

As in prior years, the majority of the report focuses on software and entertainment piracy.  Indeed, this is a major reason for Canada being named on the Priority Watch List, which includes the need for copyright reform as well as "weak border enforcement."  The Report also notes that the Canadian government "has not delivered on [its] commitments" to improving IPR protection and enforcement.  The Report emphasizes the problem of manufacturing and distributing counterfeit pharmaceuticals, singling out Brazil, China, India, Indonesia, and Russia as countries where such incidents have proliferated while noting that counterfeit pharmaceuticals are sold and distributed in several countries.  The report calls "a significant contributing factor" of this problem production of counterfeit bulk active pharmaceutical ingredients (APIs); China is singled out for a "loophole" in its law that permits counterfeit APIs to avoid regulatory oversight merely by not declaring an intention to be used to produce pharmaceutical products.  Algeria was added to the Priority Watch List for a law banning "numerous" imported pharmaceuticals and medical devices that prevents access by U.S. companies.

This year, the Report also has a section on "Intellectual Property and Health Policy," specifically relating to the 2001 Doha Declaration on the TRIPS Agreement.  The Report states that the U.S. "respects a country's right to protect public health, in particular, to promote access to medicines for all."  Accordingly, the Report states that the U.S. "respects our trading partners' rights to grant compulsory licenses" consistent with the provisions of the Doha Declaration, including provisions of the August 2003 agreement whereby countries are permitted to grant such compulsory licenses not only for producing pharmaceuticals for internal use but also for export to countries unable to produce drugs themselves.  Interestingly, the Report notes that the U.S. was the first country to formally adopt the provisions incorporating these provisions into the TRIPS agreement, and that two-thirds of WTO members must ratify them by December 31, 2009 in order for them to come into effect.

Immediately following this discussion is a section highlighting efforts by the Representative to support pharmaceutical innovation by "eliminate[ing] market barriers" and to "support . . . innovation" in the pharmaceutical industry, pointing to concerns in the Report about market access barriers in Algeria and Indonesia.  Also mentioned in the Report are "concerns" about pharmaceutical regulatory and other policies of Canada, France, Germany, Italy, Japan (specifically with regard to regulatory aspects), New Zealand, and Taiwan.  Poland's adoption in 2006 of regulations establishing maximum wholesale and retail prices for imported drugs is also mentioned, as well as urging China to add new drugs to its national formulary (which controls which drugs are available in China).

The report notes positive developments in several countries, including Korea and Taiwan (taken off the Watch List as noted above), China (relating to rebroadcast of the Olympic Games), Russia (for acceding to the WIPO Internet Treaties, and combating software piracy), Chile, Egypt, India (for passing the Drugs and Cosmetics (Amendment) Act in 2008 relating to counterfeit pharmaceuticals), Indonesia, Lebanon, Saudi Arabia, Sweden (for the PirateBay website convictions), and Vietnam.  The Report also contains a review of the status of patent and other intellectual property rights country by country for all the countries on these two Watch lists.

Section III of the Report is entitled "Notorious Markets," which sets forth a list of markets on the Internet (in China and Russia) as well as "physical" markets (in China, Russia, Mexico, India, Poland, the Philippines, the Czech Republic, Indonesia, Thailand, and the tri-border region between Paraguay, Brasil, and Argentina) where "[g]lobal piracy and counterfeiting continue to thrive."

The U.S. Trade Representative Report provides insights into both the concerns of U.S. IP rights holders and the administration's intentions to work with, cajole, coerce, or threaten other countries to increase protection for IP rights of U.S. IP rights holders.  Western governments have been frustrated, particularly with regard to pharmaceutical products, in implementation of international trade treaties designed to increase IP rights protection.  The Report is in some ways the answer to the question, "What are we going to do about it?"

For additional information regarding this and other related topics, please see:
• "Congressmen Criticize U.S. Trade Representative over Special 301 Report," July 1, 2008
• "U.S. Continues Efforts to Protect Patent Rights Abroad," April 29, 2008

More Changes Coming in Europe

    By Christopher P. Singer --

About two weeks ago, we were advised of by one of our European associates about changes to the rules relating to divisional practice in the European Patent Office (see "Changes Coming to Divisional Application Practice in Europe").  This week, our associate Forresters advised us about further rule changes that are scheduled to take effect on April 1, 2010.  These changes include:

Compulsory Applicant Responses to EP Search Reports

Under the current rules, applicants are not required to respond to any search report issued by the EPO.  The new rule changes will require that applicants respond to the objections raised in any European search report, regardless of whether it is an extended or supplementary search report.  The deadline for filing a response to a search report is triggered by the examination request; either 6 months for applications in which no request has been made, or 2 months for applications in which the request has been made.  Failure to file a response will result in withdrawal of the application, which can be revived through further processing.

Compulsory Applicant Responses to EP Written Opinions and IPERs

Similarly, applicants will be required to respond to the objections raised in written opinions generated by the EPO during the international PCT phase once they enter the European national phase.  The EPO will send a communication to applicants, setting a one-month period of time in which to file a response to the objections from the EP-based written opinion, as well as pay claims fees and file voluntary amendments.

Specifying Basis for Application Amendments

The new rules will require applicants to identify the basis in the original application text for all amendments made in an application.  If applicants fail to identify and provide the basis, the EPO will set a one-month deadline to provide such information.  After the one-month period expires, the application will be considered abandoned, but can be revived through further processing.

Multiple Independent Claims and Incomplete Searches

The rule changes will attempt to streamline the current ways in which the EPO handles multiple independent claims and examination of applications that are determined to be impossible to carry out a meaningful search of the claims.  Currently, if an application contains multiple independent claims to the same class of subject matter (e.g., product, method, use), the EPO will search the first independent claim in each class.  Under the new rule, the EPO will ask applicants which claims they would like to be searched, allowing for a more directed and timely examination of claims of interest and importance to applicants.

In situations when the EPO determines that a meaningful search of the claims cannot be performed, the EPO will notify applicants and invite them to indicate which subject matter should be searched.

Changes Coming to Divisional Application Practice in Europe

    By Christopher P. Singer --

One of our European associates, Forresters, alerted us today about change to Rule 36 EPC that was enacted on March 26, 2009 by the EPO Administrative Council.  The rule change is expected to limit the opportunities for divisional application filings in Europe, relative to the current rule, in an effort to curtail the current "abusive" practice of divisional application filing in Europe.  Forresters' website has posted an announcement with an overview of how the new rule is likely to impact divisional practice.

Briefly, the changed rule now features a two year window provision within which applicants must file any and all divisional applications based off of an original application.  Two distinct situations are envisioned that will trigger the two year window.  In one circumstance, if the EPO does not make an objection based on unity of invention the two year window starts on the date of the first communication from the examining division.  In the other circumstance, if the EPO raises an objection based on a lack of unity, the two year window starts on the date of the first communication from the EPO which asserts that the claims encompass more than one invention (except when it acts as the International Search Authority).

The effective date of the rule change is expected to be April 1, 2010, and will include a six-month grace period for filing of divisional applications that would fall outside of the two year window provision.  The EPO is also expected to provide further clarifications regarding this rule over the course of the next year.

Chile Now PCT Contracting State . . . Peru to Follow

    By Sherri Oslick --

On March 2, 2009, Chile deposited its instrument of accession to the Patent Cooperation Treaty (PCT) with the World Intellectual Property Office (WIPO), becoming the 140th PCT Contracting State.  The PCT will enter into force in Chile on June 2, 2009.  Further information will be available in the March edition of the PCT Newsletter, when available.

Elsewhere, the government of Peru has approved the ratification of the PCT; the Supreme Decree setting forth ratification was published on January 11, 2009.  At that time, the government was to shortly pass regulations implementing the date of entry into the treaty.

Will GSK Break the Doha Impasse in the Global Drug Pricing Crisis?

    By Kevin E. Noonan --

As we have noted in the past, the World Trade Organization (WTO) and Trade-related Aspects of Intellectual Property Rights (TRIPS) portion of the General Agreements on Tariffs and Trade (GATT) have not resulted in the general reverence for intellectual property protection intended by Western countries in the developing world, particularly with regard to pharmaceuticals (see "Not Getting It about Patented Drug Prices at The Wall Street Journal").  In particular, the combination of the Doha Declaration of 2001 and compulsory licensing provisions in national TRIPS implementing laws have created a crisis for Western pharmaceutical companies, who have seen the trend for compulsory licensing, or the threat of such licenses, expand from anti-AIDS drugs to other drugs less relevant to "national medical emergencies," to where the levels of protection may be lower in the post-TRIPS world than they were before the GATT treaty was signed.

Western drug companies bear part of the responsibility for this state of affairs, being (up until now) unwilling to address this real threat to their continued viability (and capacity to develop new drugs) in any coordinated way.  This paralysis may be changing, however, in view of remarks by Andrew Witty (at right), CEO of GlaxoSmithKline, to an audience at Harvard Medical School on February 13th.  In an address entitled "Big Pharma:  A Catalyst for Change," Mr. Witty squarely faced facts:  34 of the 50 poorest countries are in Africa, he said, and these countries were burdened with 24% of human disease.  He seemed to recognize what has been evident for some time:  that drug prices are the key motivator for governments in the developing world to grant compulsory licenses.  It would thus be prudent for Western drug companies to lower their own prices and thus blunt, if not forestall, the generic companies' justifications for government action.  There have been instances when this has happened (see, e.g., "Africa (Still) Depending on the Kindness of Strangers in Anti-AIDS Drug Pricing"), but there has been no coordinated effort by Western drug companies to develop a strategy around drug pricing in the developing world to address the compulsory licensing issue. 

Mr. Witty set forth four commitments directed to these concerns:

• Adopt a "more flexible" approach in "least developed countries" (as defined, inter alia, in "Trying to Find a Solution to the Global Drug Pricing Crisis").  These efforts would be particularly directed to "neglected tropical diseases" lacking research efforts and monies.  He proposed a "Least Developed Country (LDC) Patent Pool" for medicines for these diseases, where GSK would permit others access to its "relevant small molecule compounds" for developing new drugs.  He also proposed that participation in the pool would be voluntary and that "any benefits from the pool must go in full and solely to LDCs."  This latter provision would prevent transfer of new drugs for treating "neglected diseases" in Africa from being sold in the West, where GSK would be expected to want at least non-exclusive rights.

• Reduce prices for drugs under patent protection in LDCs to be no greater than 25% of the cost in the West, with the proviso that GSK would "cover" production, distribution, and other costs.  This is intended to be a maximum price, and Mr. Witty raised the possibility of "more aggressive" drug pricing under certain (undefined) circumstances.  He also indicated that while GSK would be willing to be flexible on drug pricing in "middle income" countries, such flexibility would "reflect more closely" the country's ability to pay for the drugs.

• Participate in greater collaborations against Diseases of the Developing World (DDW).  In this regard, Mr. Witty mentioned the GSK research center in Tres Cantos, Spain that is dedicated to DDW research.  He spoke of developing a "greater critical mass" and "partnership between public and private efforts to combat the existing "fragmented," "sub-optimal" efforts.  He asserted that GSK was willing to allow "partners" (including governments, foundations, or other companies) to use its facilities in the hope of creating "a truly world-class, global centre of excellence, not owned just by GSK."

• Taking responsibility for the state of global healthcare.  He advocated moving "from being a supplier of drugs to being a partner" in providing healthcare solutions to underserved populations, for example by identifying the individuals and institutions in these countries who can "ensure that the [healthcare] infrastructure" exists.  He committed 20% of GSK profits made selling drugs in LDCs would be reinvested in infrastructure projects in those countries, "benefiting the poorest people in the poorest countries directly."  This would involve acting not as a "Western" company but as a local company "committed to addressing the healthcare needs" of the countries GSKs work in.  He cited Brasil as an example, where GSK is "helping them build technical expertise so that in the long run they can produce vaccines for themselves" (presumably after GSKs patents have expired).  He said the resulting increased ties to these societies is "how it should be" for GSK, and presumably other Western pharmaceutical companies.

While forward-looking, Mr. Witty was able to cite existing GSK programs on malaria vaccines (the PATH Malaria Vaccine Initiative) that are entering Phase III clinical trials.  Should the vaccine successfully complete the trial, Mr. Witty said GSK needs "to make sure nothing gets in the way of access" to the vaccine for the children who "are among the poorest in the world."  He envisioned an international partnership to "mobilize the resources to pay for [the vaccine] and the infrastructure to deliver [it]."  

Other Western drug companies have proposed similar, more limited or focused efforts before.  GSK's commitment is reminiscent of Monsanto's proposal to use its technology to address world hunger (see "Monsanto Moves to Address World Food Shortages").  It is a bold first step; whether it is ultimately successful will likely depend on whether the remaining innovator drug companies see the benefits of such behavior and act accordingly.  Recent history indicates that such a coordinated strategy will be necessary if innovator drug companies are not to be left with none of the advantages that the TRIPS agreement was intended to have for their industry.

For additional information about this and other related topics, please see:
• "Monsanto Moves to Address World Food Shortages," June 4, 2008
• "Thailand Continues Its Compulsory Licensing Practices," March 11, 2008
• "Trying to Find a Solution to the Global Drug Pricing Crisis," July 16, 2007
• "Pharma Sanity Lacks Global Reach," July 13, 2007
• "Brasil Prevails in Dispute with Abbott over AIDS Drug Pricing," July 9, 2007
• "Africa (Still) Depending on the Kindness of Strangers in Anti-AIDS Drug Pricing," May 29, 2007
• "Not Getting It about Patented Drug Prices at The Wall Street Journal," May 6, 2007
• "A Modest Proposal Regarding Drug Pricing in Developing Countries," May 2, 2007
• "The Law of Unintended Consequences Arises in Applying TRIPS to Patented Drug Protection in Developing Countries," May 1, 2007

New EPO Fee Schedule Effective April 1, 2009

    By Christopher P. Singer --

Recently, the European Patent Office (EPO) published a notice on its website announcing a new fee schedule that will become effective on April 1, 2009.  A complete description of the revised fees can be found here.  This schedule will be applicable for all EP applications, including divisional and new applications, that are filed on or after April 1, 2009.  Several of the notable changes relate to fees for excess claims, application size, and country designation.

Claims Fee

Currently, applicants get 15 claims at no additional cost (beyond the filing and examination fees), and pay 200 Euro for each claim beyond the first 15 claims.  Under the new fee schedule, the same claims fees apply up to the 50th claim, and every claim beyond 50 will incur a new escalated charge of 500 Euro per claim.  Patent Docs first reported on the fee increase last year (see "New Excess Claim Fees for EP Applications"), and shortly thereafter, presented some strategies for dealing with the new claims fees (see "Dealing with the EPO's New Excess Claims Fees").

Application Size Fee

An additional application size fee will be introduced for applications containing more than 35 pages, at a rate of 12 Euro per page.  Application pages that are considered in the total page calculation include the description, claims, drawings and (1 page) abstract.  This fee is due within one month from the filing date of the application.  Previously, the EPO charged a similar excess page fee for applications over 35 pages in length at the time of printing the granted patent.  The EPO will no longer charge fees for excess pages at the time of printing the granted patent.

Designation Fee

The new fee schedule simplifies the prior designation fees for entering the various contracting states of the EPC by charging a flat designation fee of 500 Euro, which covers the designation of all contracting states.  Currently, the designation fee is 85 Euro per country, up to a maximum fee of 595 Euro (i.e., all designated contracting states after the seventh incur no additional cost).

In light of these changes to the fee structure, applicants may wish to file European applications prior to April 1, 2009, if they intend to designate five or fewer contracting states, or if the application contains more than 50 claims or more than 35 pages.

Amendment to Japanese IP Law Creates New After Final Deadlines for Foreign Applicants

    By Christopher P. Singer --

Last week, one of our Japanese associates, Kawaguti & Partners, published a newsletter outlining the impact on foreign applicants that amendments to the Japanese Patent Law will have on patent applications after final rejection.  Under the current law, applicants receiving a final rejection have 30 days (plus a 60-day extension) from the mailing date of the rejection to file an appeal against the final rejection.  The existing law also allows Applicants to file amendments to the claims and specification within 30 days from the filing of the appeal.  Under the amended law, applicants will have 3 months, plus a 1 month extension, from the mailing date of the final rejection in which to file an appeal.  Further, the new law will require that all amendments to the claims and specification be submitted along with the filing of the appeal.

The effective date of the new law is April 1, 2009.  Any patent application that receives a final rejection on or after that date will have to comply with the new timing and procedural requirements.

Science Progress Article Addresses Global Patent Protection

    By Donald Zuhn --

Earlier this month, Science Progress, a semi-annual journal published by the Center for American Progress, issued a series of reports on the U.S. patent system.  The series, outlined in an article entitled: "Patent Reform 101," consists of four reports:

• "Tackling the Challenge of Patent Reform: Recommendations for the Obama administration and Congress," by Rick Weiss;
• "Improving the Effectiveness of the U.S. Patent and Trademark Office: Recommendations for Reform," by Gerald Mossinghoff and Stephen Kunin;
• "Patent Trolls Erode the Foundation of the U.S. Patent System," by Daniel McCurdy; and
• "Global Patent Protection: The International Patent System and the New Administration," by Bruce Lehman.

Last week, we discussed the article by Gerald Mossinghoff and Stephen Kunin proposing Patent Office improvements (see "Science Progress Tackles Patent Reform").  Today, we address the report by Bruce Lehman (at left), which provides recommendations to the Obama Administration for dealing with the problems of the international patent system.

Mr. Lehman begins by noting that "[p]atent systems here and in other countries are experiencing a period of crisis, characterized by too many patent applications pending final approval, the declining quality of patent examinations, duplication of work by multiple patent offices, and the increasing costs of patent prosecution."  According to Mr. Lehman, the primary problem facing the international patent system is the increasing global demand for patent rights.  Evidence of this increasing demand can be found in the rapid rise in non-resident filings over the past few years (for example, global non-resident filings increased from 35.7% of all filings in 1995 to 43% of all filings in 2006).  These non-resident filings, in turn, are an indication of a rise in multinational filings directed to essentially the same invention.  As a result of such multinational filings, patent offices frequently perform duplicative work by examining applications that will be examined again by other offices (approximately 27% of applications examined by the USPTO were originally submitted to the EPO or JPO, and therefore, are likely to be examined by the EPO or JPO).

While duplicative work is a problem for the international patent system, it is even more of an issue for the USPTO.  Interestingly enough, it is the USPTO's overall pendency of 32 months (as of 2008), which is frequently criticized for being too lengthy, that makes duplicative work a more significant problem in the U.S.  According to Mr. Lehman, because the overall pendency in the EPO is 45.3 months and the overall pendency in the JPO is effectively 68 months (once deferred examination is taken into consideration), the USPTO is generally one step ahead of its counterparts in Europe and Japan.  As a result, the USPTO "must examine virtually every application from scratch," and is unable to take advantage of the results of foreign examinations to decrease the workload of its examiners.

Aside from differences in pendency, Mr. Lehman argues that with respect to its patent laws, the U.S. is also hampered by its retention of several "non-conforming idiosyncrasies."  Among these idiosyncrasies are our first-to-invent system and one-year grace period.

After outlining the problem in his article, Mr. Lehman then sets forth a number of possible solutions.  His most radical suggestion involves the creation of a multinational patent examining authority:

Ultimately . . . the most effective way of eliminating duplicative examinations from the global patent system -- and to promote uniformity and harmonization -- would be for the United States to work with its foreign partners to create a multinational patent examining authority that could be used as a substitute for the USPTO.

Mr. Lehman explains that under such a system, an applicant seeking U.S. patent protection would have the choice of filing an application with the multinational examining authority or with the USPTO directly -- akin to the choice of filing an application in the European or German patent offices.  As in Europe, where the German patent office and not the EPO would issue a German patent, the USPTO, and not the multinational examining authority, would issue a U.S. patent.  Mr. Lehman notes that such issuance "would take place only after a review that the examination complied with U.S. law," and therefore, "[i]n no way would the sovereignty of the United States be compromised."  Mr. Lehman also notes that were the World Intellectual Property Organization (WIPO) to serve as the home for a new multinational patent office, there would be no need to promulgate a new treaty to create such an office since the Patent Cooperation Treaty (PCT) already allows for its creation.

Of course, the U.S. would still have to address the non-conforming idiosyncrasies of its own patent laws, but as the patent community is well aware, Congress has begun to take steps toward further harmonizing U.S. Patent Law.  Mr. Lehman recommends that:

[T]he incoming Obama administration should give strong consideration to adopting a first-inventor-to-file position in any international negotiations involving substantive patent law harmonization.  Of course, if the Unites States agrees to change its law in this regard it should expect corresponding concessions from other negotiating parties.  As an example, this could include concessions on matters such as the grace period between public disclosure and the filing of a patent application.

As a (perhaps) more attractive alternative to a multinational examining authority, Mr. Lehman suggests that the U.S. attempt to more effectively spread the examination burden among other patent offices, such as the EPO and JPO, by modifying its patent system to take advantage of foreign examination.  As Mr. Lehman notes, however, such a strategy would require the adoption of a deferred examination system in the U.S. to offset the differences in overall pendency.  As we reported yesterday, the USPTO appears to be receptive towards considering a deferred examination system (see "USPTO Schedules Roundtable Discussion on Deferred Examination"), and therefore, Mr. Lehman's less radical proposal for curing the international patent system's ills may have the best chance of being implemented.

WTO Panel Rules for U.S. in Chinese Copyright and Trademark Infringement Complaint

    By Kevin E. Noonan --

Intellectual property rights (particularly Western intellectual property rights) were intended to receive improved protection under the Trade-related Aspects of Intellectual Property Rights (TRIPS) provisions of the General Agreement on Tariffs and Trade (GATT).  The World Trade Organization (WTO) was to provide the forum for disputes arising under TRIPS.  However, the anticipated benefits for Western IP rights holders have not materialized (see "The Law of Unintended Consequences Arises in Applying TRIPS to Patented Drug Protection in Developing Countries"; "Worldwide Drug Pricing Regime in Chaos"; "More on the Global Drug Patenting Crisis").  This outcome is due in large part to WTO member countries taking advantage of further treaty provisions intended to permit compulsory licenses in the face of extreme medical emergency being co-opted to more nationalistic demands (see "Thailand Continues Its Compulsory Licensing Practices").

So it is gratifying to learn that for other areas of IP protection (specifically copyright and trademark), the WTO is having a slightly better track record for protecting IP rights.  Today, the Office of the U.S. Trade Representative, Acting Representative Peter Allgeier, announced that the WTO ruled in favor of the U.S. on its complaint, filed in April 2007, that aspects of Chinese trademark and copyright law were not in compliance with its TRIPS obligations.  Specifically, the WTO panel found the following provisions of Chinese law to be deficient.  Chinese copyright law was not in compliance with its TRIPS obligations because it "does not protect copyrighted works that do not meet  . . . 'content review' standards."  The WTO panel found this to be a "blanket denial of [copyright] protection" and in violation of Article 9.1 of TRIPS (which incorporates Article 5(1) of the Berne Convention for the Protection of Literary and Artistic Works).  In addition, the WTO panel found these provisions of Chinese law to be inconsistent with the requirements of Article 41.1 of TRIPS (requiring enforcement procedures to be "effective" against copyright infringement).  

Second, Chinese law provides that counterfeit or otherwise infringing goods seized by the government would "normally be auctioned subject only to the condition that the infringing trademark must be removed."  As a result, the counterfeit goods are returned to the marketplace, something that the panel considered "could confuse consumers and harm the reputation of the legitimate product."  Paradoxically, in the panel's view, this would "facilitate" rather than discourage "further acts of infringement."  These provisions of Chinese law are inconsistent with Articles 46 and 59 of TRIPS, the panel opined. 

Finally, Chinese law provides criminal penalties for counterfeiting and piracy, but only when the extent of these practices exceed specific thresholds (such as 500 copies of a pirated DVD or about $7,000 of counterfeit goods).  Article 61 of TRIPS requires criminal penalties for counterfeiting and piracy to be available for "all 'commercial scale' copyright piracy and trademark counterfeiting."  The U.S. complained that the Chinese thresholds were "so high as to be divorced from market realities."  Tellingly, just prior to the U.S. filing its complaint, China had dropped its threshold for criminal sanctions from 1,000 infringing copies to 500 infringing copies.  The panel stopped short of making a determination that these provisions were in violation of Article 61, saying that it would need additional evidence.  The panel did state that determining what amounts to "commercial scale" of counterfeiting or piracy "must take into account the impact of technological developments" (such as the Internet), and that "commercial scale" of infringing activity depends on the product at issue (DVD's watched, software) "and the market in which it is sold."

Ambassador Allgeier called the decision "an important victory, because they confirm the importance of IPR [i.e., intellectual property rights] protection and enforcement, and will clarify key enforcement provisions of the TRIPS Agreement."  He also pledged to "engage vigorously with China on appropriate corrective action to ensure U.S. rightsholders obtain the benefits of this decision."

Because these decisions are subject to appeal by either the U.S. or China, it is unclear if they will lead in any reasonable timeframe to changes in Chinese law, or how the WTO will react if China does not timely respond with changes to its law.

Western Reaction to Changes in Chinese Patent Law

    By Kevin E. Noonan --

The recent changes in Chinese patent law have not received universal approval from a number of Western groups.  Two of these, the Intellectual Property Owners Association (IPO) and the Biotechnology Industry Organization, have taken different tacks to the same end:  disapproval of changes seen as harming their members' interests.

Last October, the IPO sent a letter from President Steven W. Miller to the Legal Working Committee of the National People's Congress outlining the group's concerns.  The tone is a positive one, beginning with an affirmation of IPO's interests in intellectual property and its protection, including member filings in China.  It also mentions the group's commitment to patent harmonization, and that its comments on the proposed changes to Chinese patent law are made in that spirit of international cooperation.

That said, the IPO's letter points out features of the proposed changes that the group believes are inconsistent with these principles.  Specifically, IPO's letter counsels that compulsory licensing should be avoided, or at most, to limit those situations under which compulsory licenses are granted.  Acceptable conditions for granting compulsory licenses would include patents in violation of the Chinese Anti-Monopoly law (but only after a such a violation was established by an administrative or judicial process), or in a national emergency rising to the level of "an extraordinary state of affairs resulting in extreme urgency."  Under these circumstances, "public non-commercial use" should be either by or for the government.

The IPO also believes that the provisions on genetic resources are premature in view of a lack of international consensus on the issue.  The proposed new law also contains "undefined terms" and broad language "inconsistent with similar . . . provisions adopted by other countries or international treaties."  The IPO voiced its opposition to requirements for "special disclosure requirements" and suggests contractual alternatives.  The letter further recommends implementation of provisions of the U.N. Convention on Biological Diversity including databases to "ensure availability of information about prior art."

Finally, the IPO recommends clarifying the time limits under which security/secrecy examination must be completed to permit an applicant from filing an application abroad for an invention "completed in China."  The IPO's letter also recommends that the law be changed to provide a "clear definition of when an invention . . . is . . . completed in China."

In an Addendum, the IPO also recommended that China adopt provisions relating to "indirect infringement," provisions for exploitation fees for patents involved in standards, limiting statutory damages to state-owned entities (and leaving the amount of damages from infringement between private parties to be determined between the parties), and provisions such as those in Japan and elsewhere that permit an invention to be considered novel if an application is filed within 6 months after disclosure at an international exhibition, and academic or technological conference or disclosed without the inventor or assignee's consent.  The IPO also suggests that China adopt a form of the Doctrine of Equivalents, and that invalidity determinations be confined to the Re-examination Board of SIPO instead of the courts.

BIO sent its letter to Jennifer Choe Groves, Director for Intellectual Property and Innovation and Chair, Special Section 301 Committee of the Office of the U.S. Trade Representative.  In its letter, BIO recommends that the USTR maintain China on its Priority Watch List.  The bases include increased trafficking in counterfeit pharmaceuticals and deficiencies in judicial mechanisms for enforcing intellectual property protection in China.  Included in these reasons, BIO cites provisions of the proposed changed Chinese patent law including restrictions on exploitation of genetic resources and provisions for compulsory licensing.  Finally, BIO objects to the provisions of the law analogous to the Bolar amendment that excludes from infringement liability activities related to obtaining regulatory approval for pharmaceutical products without concomitant provisions for extending patent term to compensate for regulatory approval delay.  A similar letter was sent to Kimberly Halamar of the U.S. Counsel for International Business.

Despite these sentiments, China's National People's Congress enacted the proposed changes to Chinese patent law on December 29, 2008 (see "Changes in Chinese Patent Law Adopted").

Changes in Chinese Patent Law Adopted

    By Kevin E. Noonan --

One of our foreign associates in China, Vivien Chan & Co., informs us of a number of important changes in Chinese patent law adopted by the People's Congress on December 27th.  The following new rules for patent practice will come into force in China on October 1, 2009:

•  China will now accept first foreign filings by Chinese companies or individual inventors who "complete" an invention in China.  This will permit Chinese applicants to file in the U.S., for example, as a "first filing" and thus take advantage of the patent term advantages in China of having a priority date one year earlier than the filing date for patent term determining purposes.

However, should an applicant (Chinese or not) wish to take advantage of this new option for an invention completed in China, the applicant will need to apply for "confidential examination" with the Chinese Patent Office (SIPO) prior to foreign filing.  Like with foreign filing licenses in the U.S., non-compliance with this provision can result in severe penalties for the corresponding Chinese application (rejection in China, unenforceability in the U.S.).

SIPO will need to develop rules of practice for implementing this change, including rules related to inventions that implicate national security concerns.

•  The scope of novelty-destroying activity has been expanded.  Previously, an invention needed to be publicly known or used in China (or to be disclosed in a patent or printed publication abroad or in China) to be prior art (similar in effect to 35 U.S.C. § 102(a)).  With this change, public activities in other countries can be the source of novelty-destroying prior art for Chinese applications.

•  Chinese patent law provides both utility applications (termed "patents for invention") and utility model patents.  It is common practice for applicants in China to apply for both invention and utility model patents, because the latter tend to grant more quickly.  Typically, the utility model patent is abandoned once the invention patent is granted.  The change in Chinese law merely acknowledges this practice.

•  "Genetic resources" must be identified in a patent specification if "completing" an invention requires acquisition and use of genetic resources.  Both the immediate ("direct") and original source must be identified, or an explanation provided why the genetic resource is not identified.  Patents can be rejected if either the acquisition or use of the genetic resource violates any law or regulation.  Unfortunately, the scope of this requirement is not yet apparent, since neither the term "genetic resource" or what would be considered illegal acquisition or use has been defined.

•  Compulsory licensing has been a contentious topic worldwide, with developing countries like Brasil, India, and Thailand taking aggressive steps to impose compulsory licenses particularly on Western pharmaceutical companies (see, e.g., "Thailand Continues Its Compulsory Licensing Practices").  While the opportunity exists under current law for a company in China that has the capability to "exploit" an invention to petition SIPO for a compulsory license, the current changes specify with more particularity the circumstances under which SIPO will grant compulsory licenses.  These include:  1) that the patentee has failed to exploit or "sufficiently" exploit the invention within 3 years of the patent grant or 4 years after filing, without "reasonable" grounds; or 2) exploitation of the patent by the patentee would violate Chinese antitrust laws and SIPO makes a determination that the compulsory license is "essential" to counter the patent's anticompetitive effects.

Further, Chinese law permits SIPO to grant compulsory licenses for reasons of public health, or for export to countries that are "members of international treaties to which China is also a member" (once again illustrating the unexpected consequences of TRIPS and the WTO).  The new rules also make provisions for payment of an "exploitation fee" to the patentee, again under provisions of international treaties.  Compulsory licenses are to be granted on semiconductor patents only in the public interest or to counter anticompetitive effects.  Finally, except for public health or interest licenses, the effects of these licenses are meant to be limited to the Chinese domestic market.

•  The "cap" on fines for infringement has been raised, from three times the "illegal income" made from the infringement or RMB 50,000 (US $7,311.33) -- where there was no illegal income made from the infringement -- to four times the illegal income or RMB 250,000 (US $36,556.66) for income-less infringement.  Statutory damages can be as high as RMB 500,000 (US $73,113.31) at the court's discretion, and the changes in Chinese law now provide methods for calculating damages, in the following order of preference:

•  Actual losses to the patentee;
•  Profits made by the infringer;
•  "Reasonable" multiple of royalties paid (presumably, by licensees); or
•  In the absence of these, up to RMB 1,000,000 (US $146,226.63)

Also included are damages incurred by a patentee as "reasonable costs" incurred in protecting its rights.

The new law also imposes the requirement for a bond for preliminary injunctions or other "pre-action" relief, including seizures to preserve evidence.

Finally, the new Chinese law has provisions (for the first time), similar to the Hatch-Waxman Act, that define as non-infringing conduct, acts taken to provide information to administrative agencies for obtaining approval to make, use, or import a patented medicine or medical devices.  There are no provisions extending patent term for delays in obtaining approval.

Top Stories of 2008: #13 to #10

    By Donald Zuhn --

Reflecting upon the events of the past twelve months, Patent Docs presents its second annual list of top biotech/pharma stories.  For 2008, we identified a baker's dozen of top stories covered on Patent Docs.  Today we will count down stories #13 to #10.  On Sunday, we will present stories #9 to #6, and on Monday, we will count down the top five stories.  As with last year's list, links to our coverage of these stories (as well as a few links to articles on related topics) have been provided in case you missed the articles the first time around or wish to go back and have another look.  As always, we love to hear from Patent Docs readers, so if you think we left something off the list or disagree with our rankings, please let us know.

#13 -- Pharma Patent Injunctions in View of Amgen v. F. Hoffmann-La Roche

In the fall of 2007, a jury returned verdicts in Amgen Inc. v. F. Hoffmann-La Roche Ltd., finding five of Amgen's patents not invalid and three of these patents infringed by Roche's Mircera®, a form of recombinant EPO that has been covalently linked to polyethylene glycol.  The District Court for the District of Massachusetts entered a preliminary injunction in February preventing Roche from putting Mircera® on the market.  In granting the injunction, the Court found that Amgen had satisfied all but the public interest prong of the classic four-factor test discussed in eBay Inc. v. MercExchange, L.L.C.  The District Court struggled with the public interest prong of the test, in view of Roche's argument that the public interest was served, at least in part, by the presumed reduced price that would ensue from competition between Mircera® and Amgen's Epogen® and Aranesp® products.  The Court, expressly refraining from entering any findings on the fourth prong, left open the possibility that the injunction could be modified under a handful of conditions.  Roche agreed to the Court's conditions, but Amgen did not, and the Court subsequently appointed a special master to consider the question of how dosing and pricing of Amgen's and Roche's products should be compared.  Roche responded to the Court's appointment of the special master by filing a Notice of Appeal.  On October 2nd, the Court issued a 150-page opinion in the case, handing victory to Amgen, and eight days later, the Federal Circuit affirmed the preliminary injunction without opinion.

For information regarding this and other related topics, please see:

• "Amgen v. Hoffmann-LaRoche: Remaining Issues," October 13, 2008
• "Amgen v. Hoffmann-LaRoche: Back to the District Court," October 10, 2008
• "Victory for Amgen in District Court Decision - Part III," October 9, 2008
• "Victory for Amgen in District Court Decision - Part II," October 8, 2008
• "Victory for Amgen in District Court Decision - Part I," October 6, 2008
• "BIO Submits Amicus Brief in Amgen v. Hoffman-LaRoche," July 7, 2008
• "How to Avoid a Permanent Injunction: The Lessons of Amgen v. Hoffmann-LaRoche," April 28, 2008
• "Glasses Half-full or Half-empty: Hoffman-LaRoche's Different Interpretation of Pfizer v. Teva," April 15, 2008
• "Hoffmann-LaRoche Can't Wait, Files Notice of Appeal to the Federal Circuit," April 11, 2008
• "Will the Federal Circuit's Pfizer v. Teva Decision Spell the End of Amgen's Patent Rights to Recombinant Human Erythropoietin?" March 31, 2008
• "Court Still Cannot Decide on Amgen's Permanent Injunction," March 26, 2008
• "Amgen Inc. v. International Trade Commission (Fed. Cir. 2008)," March 20, 2008
• "Roche Agrees to Court's Conditions for Modifying Preliminary Injunction," March 20, 2008
• "Roche's Mircera® Remains Off the Market (For Now)," March 2, 2008

#12 -- International Enforcement of Drug Patents

Last year, drug pricing and compulsory licensing in the developing world took the #10 spot on our list of top stories.  The fact that this story dropped two places on this year's list should not, however, be taken to mean that developing countries and the pharmaceutical industry have reached accord regarding this issue.  For example, in February, Novartis responded to Thailand's threats to issue a compulsory license by agreeing to supply its cancer drug Gleevac® (imatinib mesylate) at no cost to Thai patients -- provided that the Thai gvernment did not issue any compulsory licenses.  One month later, Thailand instead announced that it would maintain its compulsory licensing policy for Gleevac® as well as three other anti-cancer drugs (Novartis' Letrozole®, Sanofi-Aventis' Docetaxel®, and Roche's Erlotinib®).  The use by developing countries of tools provided in international agreements such as GATT, TRIPS, and the Doha Declaration (e.g., compulsory licensing and parallel importing) will no doubt continue to be a hotly debated in 2009.

For information regarding this and other related topics, please see:

• "Recent Developments in Pharmaceutical Patenting and Compulsory Licensing of Pharmaceutical Patents in Developing Countries," July 8, 2008
• "Congressmen Criticize U.S. Trade Representative over Special 301 Report," July 1, 2008
• "U.S. Continues Efforts to Protect Patent Rights Abroad," April 29, 2008
• "Thailand Continues Its Compulsory Licensing Practices," March 11, 2008
• "Indian Generic Drug Maker Seeks to Invalidate Cancer Drug Patent," February 29, 2008
• "Novartis to Supply Cancer Drug to Thai Patients," February 5, 2008


#11 -- Greater Cooperation between Patent Offices

When your backlog of unexamined applications rises from 760,924 to 771,529, as it did for the USPTO in 2008, you should be searching for all reasonable ways to reduce that backlog.  Last year, the USPTO attempted to address its application backlog by focusing on the development of a number of worksharing programs with foreign patent offices.  In particular, the USPTO expanded its Patent Prosecution Highway (PPH) program to include pilots with the Canadian Intellectual Property Office (CIPO), Korean Intellectual Property Office (KIPO), IP Australia (IPAU), European Patent Office (EP), and Danish Patent and Trademark Office (DKPTO); extended its PPH pilot program with the CIPO; entered into an agreement with IPAU, in which the IPAU will act as an International Searching Authority (ISA) and International Preliminary Examining Authority (IPEA) for certain International applications filed with the USPTO Receiving Office; added the KIPO as a participating foreign patent office in the Priority Document Exchange (PDX) system; initiated the "Triway" worksharing program between the USPTO, EPO, and JPO; initiated the "New Route" worksharing program with the JPO; announced a new worksharing initiative with the KIPO, EPO, JPO, and State Intellectual Property Office of the People's Republic of China (SIPO); and released information about a Common Application Format (CAF) that arose out of an agreement between the USPTO, EPO, and JPO at the 25th Annual Trilateral Conference.

For information regarding this topic, please see:

• "Patent Prosecution Highway Pilot with CIPO Is Extended," December 23, 2008
• "Additional Application Types Eligible for Participation in PPH Between USPTO and EPO," December 11, 2008
• "'Blueprint' Announced for Work Sharing Initiative Between Five IP Offices," November 6, 2008
• "IP Australia Now Competent ISA for PCT Applications Received by USPTO," November 3, 2008
• "Patent Prosecution Highway Pilot Program Between U.S. and Danish Patent Offices," October 29, 2008
• "KIPO Becomes Participating Foreign Office in PDX Program," October 21, 2008
• "Online Priority Document Exchange Service Between USPTO and KIPO," October 9, 2008
• "USPTO and JPO Sign Statement of Enhanced Mutual Cooperation," September 29, 2008
• "IP Australia to Provide International Search and Examination Services for Certain PCT Applications," September 29, 2008
• "Patent Prosecution Highway Expands to Europe," September 25, 2008
• "USPTO and KIPO Sign Memoradum on Cooperative Patent Examination," September 24, 2008
• "USPTO and UKIPO Extend Patent Prosecution Highway Pilot Program," September 3, 2008
• "PTO Announces 'Triway' Pilot Program," July 15, 2008
• "Docs at BIO: Representatives from JPO, EPO, SIPO, and USPTO Discuss Recent Developments in Japan, Europe, China, and the U.S.," June 22, 2008
• "USPTO and EPO to Implement Pilot Patent Prosecution Highway Program," April 29, 2008
• "Patent Office Announces Common Application Format," April 28, 2008
• "Patent Prosecution Highway Extended to IP Australia," April 2, 2008
• "Patent Prosecution Highway Network Expands to Canada & Korea," January 29, 2008
• "'New Route' Created between USPTO and JPO," January 25, 2008
• "USPTO Announces Two Additional Partners in the Patent Prosecution Highway Pilot Program," January 17, 2008


#10 -- USPTO's PTA Calculations Called into Question

On September 30th, the District Court for the District of Columbia issued a decision in Wyeth v. Dudas that could eventually impact the manner in which Patent Term Adjustment (PTA) determinations are made.  In particular, the Court granted summary judgment in favor of Wyeth, determining that the USPTO had misconstrued 35 U.S.C. § 154(b)(2)(A), and as a result, had denied Wyeth a portion of patent term to which it was entitled.  Less than a month later, USPTO Director Jon Dudas filed a Notice of Appeal in the District Court for the District of Columbia, appealing the Court's decision in Wyeth to the United States Court of Appeals for the District of Columbia Circuit, thus indicating how the Office would rule on requests for reconsideration being filed by patentees that had been similarly deprived of patent term.  Having no other recourse under 35 U.S.C. § 154(b)(4)(A), which requires patentees to file actions seeking corrected PTA determinations within 180 days of a patent's issuance, Napo Pharmaceuticals, Inc.; Ironwood Pharmaceuticals, Inc.; Solvay Pharmaceuticals GmbH; Biogen Idec Inc.; Purac Biochem B.V.; and Molecular Insight Pharmaceuticals, Inc. all followed Wyeth's lead by filing lawsuits against Director Dudas this fall.

For information regarding this topic, please see:

• "More Patentees Follow Wyeth's Lead in Seeking Additional PTA," December 3, 2008
• "USPTO to Appeal Wyeth v. Dudas," December 2, 2008
• "Two Patentees Follow Wyeth's Lead in Seeking Additional PTA," November 12, 2008
• "Wyeth v. Dudas (D.D.C. 2008)," October 16, 2008

Europe Bans Stem Cell Patenting

    By Kevin E. Noonan --

The Enlarged Board of the European Patent Office issued its decision denying a European patent on European Patent Application No. 96903521.1 (EP 0 770 125) to the Wisconsin Alumni Research Foundation (WARF), directed to human embryonic stem cells (hESCs).  This decision is another example of European antipathy to biotechnology inventions, an attitude that in the past has had an extremely negative effect on the continent's competitiveness with the U.S. and Asian countries.

The bases of the Board's decision are provisions of the European Patent Convention (EPC) prohibiting patents on inventions that would be contrary to public order ("ordre public") or morality if exploited commercially (Rule 23d(c), recodified as Rule 28c).  The EPC also proscribes patenting expressly for any use of human embryos for industrial or commercial purposes.  The Board reached this result even though the stem cell claims at issue recited neither a use of a human embryo or the method for obtaining the claimed cells.  On its face, the decision seems a fair and accurate reading of the prohibition under the EPC.

These "public morality" provisions exist in the patent law of many countries, as express provisions preventing certain types of patents.  They find their most common expression in prohibitions on methods of human treatment, resulting in "first" and "second" medical use claims.  With one exception, there are no similar provisions in U.S. patent law:  that exception, codified at 35 U.S.C. § 287(c), exempts medical practitioners (doctors, nurses, and others "licensed by a State to provide" medical activity) from the patent infringement provisions of the statute.  "Medical activity" is also expressly defined, to be the practice of a medical or surgical procedure on a [human] body"; however, the statute also excludes from protection "use of a patented medicine," "practice of a patented use," and "practice of a process in violation of a biotechnology patent."  Other proscriptions against certain types of patents on morality or other grounds are a consequence of either Patent Office procedures or judicial decisions; an example is the Office's rejection of the attempt by Jeremy Rifkin and a scientific colleague to patent a human-animal chimera (as a dramatic way to have transgenic animal claims assessed for patentability).

Generally, the European approach to biotechnology patenting has not inured to the benefits of its citizens or innovation in Europe.  As discussed in an earlier Patent Docs post, a Washington Post story reported that in the early 1980's half of the top ten pharmaceutical companies in sales were European, and European companies invented half of the world's new drugs.  Today, American pharmaceutical companies account for 60 percent of global sales.  The percentage is even greater for biotechnology companies (75 percent of biotech sales).  Indeed, U.S. companies have two and a half times as many biotech drugs in development as do their European counterparts -- a staggering 4,500, according to the Post report.

In addition to all of the other economic factors at work behind those numbers is the legal and political choice in the U.S. to support biotechnology through patents.  While true that:

[t]he grant or denial of patents on micro-organisms is not likely to put an end to genetic research or to its attendant risks.  The large amount of research that has already occurred when no researcher had sure knowledge that patent protection would be available suggests that legislative or judicial fiat as to patentability will not deter the scientific mind from probing into the unknown any more than Canute could command the tides.  Whether respondent's claims are patentable may determine whether research efforts are accelerated by the hope of reward or slowed by want of incentives, but that is all.

Diamond v. Chakrabarty, 447 U.S. 303, 317 (1980), the relative "acceleration" of biotechnology research and development as a consequence of the Chakrabarty decision provided the impetus for this sea change in the fortunes of U.S. as opposed to European pharmaceutical companies.

Even regarding stem cells, the Bush administrations proscriptions against Federal funding has been well-recognized as "slow[ing] by want of incentives" the progress of human stem cell research in this country.  The result was a "brain drain" of top scientists to Singapore and other "stem cell friendly" countries, and efforts by private groups and several States (including, famously, California) to fund the banned research.  In Europe, a few countries (notably the United Kingdom and Sweden) treat stem cells as patentable subject matter in their national patent systems.  It is likely that applicants will be willing to expend the additional costs associated with pursuing national phase patents, but such a trend is contrary to the uniformity available using the European patent system under the EPC.

These considerations are lost on those inclined to see stem cells (and gene patenting, and biotechnology generally) as being properly outside the scope of patents.  Bavarian Justice Minister Beate Merk, a member of the conservative Christian Democratic Union, called the ruling an "ethical victory," and Greenpeace praised the decision, saying (with no appreciation of its irony), "[w]ithout public interference, such patents would long be accepted."  Politicians were not alone in the anti-patent sentiment for stem cells:  Dr. Robin Lovell-Badge (at right), head of stem cell biology and developmental genetics at the U.K. National Institute for Medical Research mused that there might be "sighs of relief" from biotech companies wanting to use stem cells (inter alia, for screening purposes) or products derived from stem cells.  What is missing, of course, from this analysis is that the short-term "benefit" of license fee avoidance is purchased at the cost of investor support for new stem cell-based technologies that will lack patent protection.

Dr. Lovell-Badge posited that the Board's ruling should make it easier for stem cell companies to operate in Europe than in the U.S., where WARF's stem cell patents recently survived a re-examination challenge by a California "taxpayer" ground and the Public Patent Foundation.  Europe (or at least those European countries that do not enact national law contrary to the Board's decision) now becomes the laboratory for testing the hypothesis that stem cell research will be more fruitful without patent protection.  If history provides any insight, that result is extremely unlikely.

European Commission Releases Preliminary Report on Competition in Pharmaceutical Sector

    By Donald Zuhn --

Last Friday, the European Commission published a 426-page preliminary report regarding its competition inquiry into the European pharmaceutical sector.  The Commission commenced the sector inquiry last January to examine why fewer new medicines were being brought to market in Europe and why generic entry seemed to be delayed in some cases (the report notes that while 40 new medicines were introduced annually between 1995 and 1999, only 27 were introduced annually between 2000 and 2007).  The Commission, which announced the publication of its preliminary report at a public meeting in Brussels on Friday, has created a dedicated webpage providing additional information regarding the sector inquiry into pharmaceuticals competition.

In its press release announcing the release of the preliminary report, the Commission offered its initial finding that "there is evidence that originator companies have engaged in practices with the objective of delaying or blocking market entry of competing medicines" and that as a result, "competition in this industry does not work as well as it should."  The Commission reached this conclusion by examining a sample of 219 medicines facing a loss of exclusivity between 2000 and 2007, determining that but for delaying and blocking strategies employed by originator companies (i.e., innovator or brand companies that develop and sell new medicines), European consumers would have saved an additional € 3 billion ($3.79 billion) over this period.  The Commission concluded that the originators' strategies resulted in a delay of generic market entry of between four and seven months.

Among the blocking and delaying strategies outlined in the report are:

• The filing of "patent clusters" -- a large number of patent applications covering a single medicine -- by originator companies.  In one case, the Commission noted that 1,300 applications had been filed on a single medicine.

• The initiation of patent litigations by originators against generic companies.  The Commission noted that nearly 700 litigations had been filed against generics, with such litigations lasting an average of three years.  The Commission also noted that generics were ultimately successful in 60% of such litigations.

• Settlement agreements between originators and generics.  The Commission noted that more
than 200 such agreements had been reached in the EU, and that 10% of these agreements were "reverse payment settlements" which provide for payments from originators to generics, thereby limiting market entry for generic medicines.  The Commission also noted that such payments amounted to more than € 200 million ($252 million).

• Intervention by originators in national procedures for approving generic medicines.  The Commission concluded that such intervention led to an average delay of four months for market entry of generics.

In conducting the sector inquiry, the Commission sent out requests for information to 43 originator companies and 27 generic companies, engaged in a dialogue with industry associations at the European level, and consulted with representatives of consumer and patients associations, insurance companies, doctors, pharmacies, wholesalers, hospitals, parallel traders, patent offices, and competition authorities.  Interestingly, the report states that the two biggest stakeholders -- the originator and generic companies -- were in agreement regarding the need to create a single Community Patent and a unified and specialized patent judiciary in Europe.

Stakeholders and members of the public have until January 31, 2009 to submit comments concerning the Commission's preliminary findings, with the Commission expected to issue a final report sometime in the spring of 2009.