January 25, 2011

Medtech Patenting in 2010: Significant Developments and Future Directions

In David Kappos' first full year as Director of the United States Patent and Trademark Office (USPTO), the office issued a record number – more than 240,000 – of utility and design patents.  While some may argue this necessarily signals a decrease in the "quality" of the patents being issued, there is no doubt that innovators consider patents to be integral to a successful business strategy.  The following is an overview of some significant legal and administrative developments relating to patenting medical technologies that occurred in 2010, as well as a preview of issues that medical technology companies will want to monitor in 2011.

USPTO Broadly Interprets "First Permitted Commercial Marketing" Under Hatch-Waxman Extension Provisions

One of the more interesting patent developments for the medical technology industry in 2010 appears to have gone largely unnoticed.  On May 5, 2010, the USPTO issued a final determination extending the term of U.S. Patent 5,451,233 by 777 days beyond its statutory termination date, in response to a petition by the patent owner under the Hatch-Waxman Act.

Enacted in 1984, the Hatch-Waxman Act allows for a patent term extension of up to five years if the patent owner was unable to enjoy the full term of its patent due to delays in obtaining government marketing approval for either a drug or a medical device.  Notably, Hatch-Waxman allows term extension only if the regulatory approval is for a product representing "the first permitted commercial marketing or use of the product." 

What makes the USPTO's determination particularly interesting is its apparently expansive interpretation of the "first permitted commercial marketing or use" under the statute.  The ‘233 patent is directed to a rapid-exchange delivery catheter for interventional cardiology procedures. As the patent owner acknowledged to the USPTO, such catheters have been on the market for years.  Nevertheless, the patent owner sought the Hatch-Waxman extension based on the U.S. Food and Drug Administration (FDA) review period for a delivery catheter in combination with a drug-coated stent.

In granting the extension of more than two years, the USPTO necessarily determined that this combination constituted the "first permitted commercial marketing" under Hatch-Waxman, even though the patent owner had obtained approval for products covered by the ‘233 patent several years earlier.  Thus, the USPTO ostensibly interpreted this requirement of Hatch-Waxman very broadly, perhaps providing opportunities for medical technology companies to extend patent protection on strategic products under Hatch-Waxman, based on FDA review of later combination products.

Federal Circuit Reaffirms Patent Eligibility of Medical Treatment Methods After Bilski

In December, U.S. Court of Appeals for the Federal Circuit issued its second decision in Prometheus Laboratories, Inc. v. Mayo Collaborative Services, re-affirming its earlier conclusion that Prometheus's patent claims to methods for calibrating the proper dosage of thiopurine drugs, which are used for treating autoimmune diseases, satisfied the patent eligibility requirement of section 101 of the Patent Act.  Prometheus had been remanded to the Federal Circuit in view of the Supreme Court's Bilski decision, in which the Court rejected the Federal Circuit's determination that the so-called "machine-or-transformation" test is the exclusive test for assessing patent-eligibility of method claims under § 101.  Bilski thus perhaps called into question the patent-eligibility of so-called medical treatment methods, which include steps utilizing natural correlations and transformations within living subjects.  The Bilski Court, however, still endorsed the machine-or-transformation test as a "useful and important clue" in assessing patent eligibility, and so it was not surprising that the Federal Circuit upheld Prometheus's claims on remand. 

In short, under Prometheus, a method of medical treatment can be eligible for patent protection if it utilizes natural correlations "in a series of specific steps" and does not "preempt all uses" of the natural correlations.  In addition, medical treatment methods that "transform an article into a different state or thing," where this transformation is "central to the purpose of the claimed process," are eligible for patent protection under § 101.

Importantly, the Federal Circuit independently found diagnostic claims lacking the treatment step to be patent-eligible, holding the determining step of these claims to be transformative and central to the claimed methods, citing expert testimony:  "at the end of the process, the human blood sample is no longer human blood;  human tissue is no longer human tissue." 

Presumably, the contours of patentability of medical treatment method claims will be even better defined once the Federal Circuit decides Classen Immunotherapies, Inc. v. Biogen Idec, in which the Federal Circuit previously held that patent claims to "a method of determining whether an immunization schedule affects the incidence or severity of a chronic immune-mediated disorder in a treatment group of mammals" was not patent-eligible under § 101 solely on the basis that the claims did not satisfy the machine-or-transformation test. As this is no longer the sole test for patent eligibility under § 101, the Federal Circuit must now determine whether Classen's claims are an attempt to patent "laws of nature, physical phenomena, or abstract ideas" in view of Bilski

Patentability of Isolated Genes (Myriad Genetics)

The Federal Circuit will soon consider a case that may have a profound impact not only on certain segments of the biotechnology industry but on any industry that uses "isolated" materials such as biological or chemical molecules.  Last March, in Association for Molecular Pathology v. USPTO, the federal court in the Southern District of New York found composition of matter claims directed to isolated BRCA1 and BRCA2 human genes and mutations, as well as methods of using such genes and mutations for the diagnosis of breast and ovarian cancer, to be invalid and not eligible for patenting. The court framed the central issue of the case as whether "isolated human genes and the comparison of their sequences" are patentable," and concluded that "purification of a product of nature, without more, cannot transform it into patentable subject matter" under section 101 of the Patent Act.

This case has been heavily debated, and multiple briefs have now been filed with the Federal Circuit.  Notably, in a brief for the United States filed by the Department of Justice and in which the USPTO did not take part, the government agreed that isolated and purified DNA molecules are not patent-eligible, but that copies of the isolated DNA (cDNA) are eligible for patenting, as are methods of using isolated DNA. The United States acknowledged in its brief that this position is contrary to the long-standing position and practice of several government agencies, including the USPTO.

While the USPTO did not file its own brief and did not participate in the DOJ's brief, the position of David Kappos was made clear in a recently published symposium address at George Washington University.  Director Kappos noted the USPTO has issued more than 20,000 patents claiming DNA molecules, with almost 4,000 directly claiming isolated human DNAs encoding a protein, and has also issued tens of thousands of patents on other types of isolated and purified chemicals, "all of which could be put at risk by the district court's decision." According to Kappos, the USPTO's view has been that "the purified version of a naturally occurring compound – where the purified version does not exist in nature – is eligible for patent protection."

The outcome of this case may have a profound impact on certain segments of the biotechnology industry, including, for example, companies that generate methods of isolating DNA molecules. A decision from the Federal Circuit is expected sometime in late 2011.

Medtech Case Clarifies Written Description and Enablement Requirements of Patent Statute

In March 2010, the Federal Circuit issued an en banc decision in Ariad Pharmaceuticals v. Eli Lilly & Co., confirming that the patent statute has a written description requirement separate from the requirement that the patent specification enable one to make and use the patented invention.  Ariad had argued that under 35 U.S.C. § 112, the test for legal sufficiency of the patent's written description is whether it enables one of ordinary skill in the art to make and use the invention.  Defendant Lilly, on the other hand, argued that 200 years of precedent supported its contention that the statute has a written description requirement distinct from the enablement requirement.  The Federal Circuit sided with Lilly, and upheld the lower court's finding that Ariad's claims were invalid for failing to satisfy the written description requirement of § 112.  This decision confirms that a patent applicant's ability to "mine" a pending patent application in an effort to obtain broad, blocking claims does have meaningful limits.  In particular, to satisfy section 112, a patent holder must show that the inventors were "in possession" of the claimed invention at the time of filing.

Medtech Case to have Far-Reaching Effects on Inequitable Conduct Defense

While a U.S. patent is presumed valid, it can be held unenforceable if a defendant can establish that the patentee obtained the patent as a result of inequitable conduct – i.e., misrepresentations of material facts or withholding of information that is material to the patentability of the patentee's claims, coupled with the intent to deceive the USPTO.  Currently, establishing inequitable conduct requires both a showing of the materiality of the misrepresented or withheld information and a showing of intent to deceive the USPTO.  However, current standards call for balancing the showing of materiality against the showing of intent.  That is, the more material the misrepresented or withheld information, the lower the showing of intent necessary to establish an inequitable conduct defense. 

Therasense, Inc. v. Becton, Dickinson and Company, et al. involves a patent covering blood glucose strips, which was held to be unenforceable by the trial court.  The trial court found that the patentee had committed inequitable conduct because it took positions on certain prior art before the USPTO that were inconsistent with positions it took on the same prior art in related European proceedings, and failed to notify the USPTO of these positions in Europe.  This decision was affirmed by a panel of the Federal Circuit on January 25, 2010. 

Subsequently, the Federal Circuit decided to revisit this earlier decision en banc, and in doing so asked for briefing on issues that could significantly impact the inequitable conduct defense down the road.  It is possible, for example, that the Federal Circuit will use Therasense as an opportunity to clarify (or eliminate) the current balancing inquiry by expressly requiring evidence of intent in every inequitable conduct defense.   Such a decision could benefit medical technology companies by reducing the strength of inequitable conduct defense and by reducing the administrative burden (and thus the cost) associated with building a patent portfolio.

Other Cases with Potential Impact on Medical Technology Patents

Although they do not directly involve medical technology patents, several cases decided in 2010 may significantly impact how medical technology companies use patent protection in support of their business strategy. 

Most significantly, earlier this year in Microsoft Corp. v. I4i LP, the Federal Circuit affirmed a $290 million patent infringement jury verdict against Microsoft.  Microsoft appealed to the Supreme Court, which has agreed to review whether the current "clear and convincing" evidence standard should apply when an accused infringer attempts to invalidate a patent based on prior art that was not considered by the USPTO during examination of the patent application.  Microsoft is arguing that in such cases a lower preponderance of the evidence standard should apply.  If the Supreme Court adopts this position, it may undermine the strength and thus the value of key patents relied upon by medical technology companies for attracting equity investments and protecting market share.   

Another notable Federal Circuit decision from 2010 that will be reviewed by the Supreme Court in 2011 is Global-Tech Appliances Inc. v. SEB SA, in which the Federal Circuit found that the accused infringer had actively induced infringement because it deliberately ignored the possibility that another company had a patent covering its product, and thus acted with "deliberate indifference of a known risk."  On appeal, the Supreme Court will consider (oral arguments are scheduled for February 23, 2011) whether a patent holder must establish that an accused infringer had actual knowledge that another entity was infringing the asserted patent.  This decision will impact the patent strategies of medical technology companies that hold patents directed, for example, to methods of medical treatment, where the direct infringement is based on the actions of a physician.

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