Attorneys Tell PTO of Patent Eligibility Uncertainty

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By John T. Aquino

Sept. 14 — Obtaining a biopharma patent has become more challenging and costly, and applicants have become more likely to keep their innovations secret, attorneys told a PTO meeting Sept. 14.

“There is a need for settled law concerning patent eligibility for biomedical patent applications,” said Noel Day of Honigman, Miller, Schwartz & Cohn LLP, Detroit. “The lack of it has had detrimental impact on both patent owners and those who have challenged their patents.”

Day noted that the uncertainty is most prevalent in claims for diagnostic tests and personalized medicine.

Leslie Grab of Kilpatrick Townsend & Stockton LLP, Alexandria, Va., utilizing data the firm has developed to show the impact of recent court decisions on patent eligibility under 35 U.S.C. §101, said that there have been more PTO “office actions” since the decisions, reflecting more initial Section 101 rejections in biotechnology/chemistry areas.

Grab said that there have been surprisingly few appeals of Section 101 rejections before the PTO's Patent Trial and Appeal Board. But she attributed this to uncertainty as well.

“It's like applicants are saying, ‘Do I want to be the guinea pig or do I want someone else to be the guinea pig?' What may be happening is applicants are trying to narrow issues down in further prosecution of the patent with the examiner before they go up to appeal,” Grab said.

Day and Grab offered practitioners' perspectives on Section 101 as it is being applied to biopharma applications in sessions of the PTO's Biotechnology Chemical Pharmaceutical Customer Partnership meeting. The meeting was simultaneously held in the PTO offices in Alexandria, Va., and in Detroit and webcast between the offices.

Eligibility of Diagnostics Most Unsettled

Day said that the patent eligibility uncertainty has followed the Supreme Court decisions in Ass'n for Molecular Pathology v. Myriad Genetics, Inc., and Mayo Collaborative Servs. v. Prometheus Labs. Inc..

Day said, “Myriad, which held that isolated DNA was patent ineligible under Section 101 as a product of nature, attracted the most attention because people got revved up by the notion that someone else could patent their genes. But, in my opinion, Mayo, which held in 2012 that claims covering the administration of a treatment, specifically the correlation between the effectiveness of a thiopurine drug and the concentration of its 6-thioguanine metabolite, was just a correlation of a natural law, has had the most detrimental effect on biopharma patent eligibility. The PTO hasn't issued examples of diagnostic patent claims since 2012, and so the whole area is still unclear.”

According to Day, the PTO is holding back on diagnostic claim examples until it sees whether or not there will be further appeals of the U.S. Court of Appeals for the Federal Circuit's ruling in Ariosa Diagnostics v. Sequenom, which held that Sequenom's prenatal detection methods are patent ineligible because they begin and end with a natural phenomenon.

“The discovery by Sequenom that it could obtain testing materials from the medical waste of a mother rather than inserting a needle in her abdomen was a really important one, and Section 101 supposedly covers discovery,” Day said, referring to the protection the Constitution offers “to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

“This method of testing by Sequenom has had a huge impact on patients—both lifesaving and cost saving,” Day said. “We had hoped that things were moving back to more patent eligibility and that the Federal Circuit would provide more clarity. But, while one of the judges openly wrote that he disagreed with the decision, he said that their hands were tied by Mayo, and a three-judge panel of the court found the Sequenom claims are patent ineligible as a natural phenomenon.”

Day noted that Sequenom has petitioned for a rehearing of the full court, and there have been 12 amicus briefs filed in support of a rehearing.

“But for now, this part of the law is unsettled,” Day said.

Day added that in response to this uncertainty in patent law some companies are now considering trade secret protection rather than patent protection for their inventions, which entails keeping details about them secret. “But there's even a problem with this,” Day said, “because patent applications that have been filed have become public and therefore trade secret protection is no longer available.”

Variability, More Office Actions

Grab said that Kilpatrick Townsend attempted to track the effect of events such as Mayo, Myriad and other court decisions as well as PTO guidances on claims covered by the agency's Technology Center 1600 (biotechnology and chemistry), which is one of the PTO's nine TC centers covering patent applications.

Grab's presentation was a follow-up to an article, “Trends in Subject Matter Eligibility for Biotechnology Inventions,” that she, Kate Gaudry and Tina Williams McKeon had written for the July 12 IPWatchdog.com.

Grab acknowledged that the presentation reflected “not statistics but the eyeballing” of data. She said that the good news is the PTO is still issuing TC 1600 patents “and it looks like there has actually been an uptick now from pre-Mayo allowances. Business method patents had much lower allowances, and they had a sharp decrease after Mayo.”

Grab said, however, that there was a variability of allowances across the TC 1600 categories, which include organic compounds; organic chemistry; molecular biology, bioinformatics, nucleic acids and recombinant DNA and RNA; and immunology. “Some have decreases in allowances, and some increases.”

The Kilpatrick Townsend analysis of allowance data appeared to be similar to what the PTO shared with Bloomberg BNA in July.

And yet, Grab said, while patents may have ultimately been issued, the data also showed a 25 percent increase from pre-Mayo data in the number of office actions required for an applicant. The PTO issues an office action to state the reasons why claims are being rejected and to give applicants a chance to argue in defense of the claims, amend them or abandon them.

While there were relatively few Section 101 appeals to the PTAB, Grab said, she attributed that to the overall uncertainty concerning patent eligibility that Day had noted. She also said there was an increase in appeals based on Sections 103 (obviousness) and 112 (written description and enablement).

“What we need is more data after more court decisions and guidances are issued. And it would be good to see if the prevalence of Section 103 rejections are associated with Section 101 uncertainty since courts have been conflating the sections in their analysis in their decisions,” Grab said.

To contact the reporter on this story: John T. Aquino in Washington at jaquino@bna.com

To contact the editor responsible for this story: Nancy Simmons at nsimmons@bna.com