The United States Patent and Trademark Office (USPTO) is the federal administrative agency that issues patents for the use and development of inventions. Patents are available for items such as new medications and equipment. They also cover processes, machines, articles of manufacture, and compositions of matter. To be patentable, an invention must be useful, novel, and not obvious to a person with ordinary skills in the relevant discipline.⁴

The process of obtaining a patent begins when an inventor files a patent application in the USPTO. It is important to file a patent application as soon as practicable because the first person to file gains priority over all others who claim rights to the same invention. The application describes the invention, gives examples of how it can be used, and usually includes illustrations like schematic drawings or graphs. Filing swiftly is important, but so is thoroughness. The inventor cannot add new information once he or she has already filed a patent application.⁵

Without patent protection, the typical biotech company is unlikely to invest the capital needed to develop innovative medications.⁸ Diminished patent protection will reduce innovative desire to develop new and potentially better drugs and treatments, which in turn could result in the use of more expensive treatments.⁹

In 1984, President Ronald Reagan recognized the importance of market exclusivity for new drugs by signing the Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman Act).¹⁴ The Hatch-Waxman Act expanded the Federal Food, Drug, and Cosmetic Act to include the universe of drugs for which the Food and Drug Administration (FDA) accepts Abbreviated New Drug Applications (ANDAs). The Hatch-Waxman Act also provided for new drug product exclusivity. The legislature's intent behind these reforms was to encourage research and development, while at the same time, expedite the entry of generic drugs into the market.¹⁵

The Hatch-Waxman Act also sought to maximize incentives for innovator companies so they would continue investing in research and development for new drugs. To balance the benefits provided to generic companies, the Act established a 5-year exclusivity period for new molecular entities. Even more significantly, the Act provided patent term extensions for brand-name innovator companies in specified circumstances.¹⁶ This allowed pioneer companies to gain an extended patent term for patents claiming a drug product, or its method of use or manufacture. This statutory patent term restoration made up for some of the time lost by pioneer companies during the FDA regulatory review process.

The most recent major legal development has resolved a struggle between companies holding patents to inventions, and those who wish to use the inventions to conduct further research. The courts have sided with innovation, making it easier to conduct experiments using another company's patented inventions. Such use does not constitute infringement so long as there is a reasonable basis to believe that the research will produce the types of information relevant to obtaining FDA approval for a new drug or treatment.¹⁸ Although this development is welcome news to researchers, it means that patent-holding companies lose out on licensing fees and business leveraging power for other companies' use of their inventions in research.

Another challenge that courts have faced is deciding whether an invention is patentable at all. “[I]t remains axiomatic that principles, laws of nature, mental processes, intellectual concepts, ideas, natural phenomena, and mathematical formulae are not patentable, although the line between patentable inventions and principles of nature has become more difficult to draw.”¹⁹ Distinguishing between which inventions fall under the umbrella of patent protection proves increasingly difficult as technology blurs the distinction between natural fact and scientific discovery.²⁰ Courts have also addressed whether naturally occurring but recently discovered chemical compounds, such as DNA, are patentable inventions or unpatentable natural phenomena.²¹

For instance, courts have had to decide whether and how patents protect metabolites formed within a patient's body after ingesting a patented drug. A drug often converts into another chemical compound, or metabolite, when a patient ingests it.²² The courts have long recognized that a metabolite has the potential to receive a patent. However, the manner in which a drug company frames its patent claims, and the way that the court defines the claimed terms, can determine whether the metabolite receives protection from infringement.

An “optimal strategy” is for an inventor to “patent both the pre-ingested form of the drug and its new physical forms or metabolites, as formed in the body (′in vivo').”²³ This presupposes that the inventor has invested the resources to discover the drug's action in the body before filing its patent application. It is important to “include claims to pharmaceutical compositions, preparations, doses or dosage forms and not simply rely on simple ‘compound’ claims.”²³

Novartis experienced a devastating outcome based on the court's interpretation of its patent claim language. The company's failure to carefully draft its patent claim cost Novartis market exclusivity of its formulation for administering cyclosporin.

Novartis dissolved cyclosporin, which is not very soluble in water, in a solvent and added large amounts of water. Novartis described this as a “hydrosol” in its claim for patent protection. A competing company, Eon, manufactured capsules containing cyclosporin dissolved in a small amount of ethanol, absent any water. Novartis sued for indirect patent infringement, arguing that Eon's capsules formed the patented “hydrosol” when patients ingested the capsules and the drug mixed with water in their stomachs. The Federal Circuit found that Eon's capsules did not infringe Novartis' patent. The court construed “hydrosol” to mean a dispersion formed outside of the body, and not inside a patient's stomach.²⁵

Polymorphism has also presented a scientifically challenging issue for biotech companies, and a legally challenging one for the courts. Polymorphism is the concept of a molecule assuming multiple crystal structures.²⁶ Polymorphism can have a “profound effect on the shelf life, solubility, formulation properties, and processing properties of a drug.”²⁷ One polymorph of a drug can be more effective than another, easier or more difficult to manufacture, or even dangerous.²⁷

Polymorphs raise patenting considerations because a company may choose to patent either the molecule's structure, one of its specific crystallized states, or both. Some companies have used polymorphism to their advantage. By patenting a polymorph after the original drug has been patented, a company can extend its period of market exclusivity.²⁹ However, polymorphism can also present a patenting pitfall. Consider if a competitor discovers an unpatented polymorph that is easy to manufacture and is as effective as the original drug. Because it is a polymorph, its production will not infringe on the inventor's patent. Early research to discover a drug's polymorphs and their properties is therefore crucial.

An additional issue has recently emerged involving enantiomeric drugs derived from racemate pharmaceuticals for which a company already holds a patent.³⁰ Many drugs are compounds made up of different mixtures of stereoisomers, and such mixtures can consist of either enantiomers or isomers. A “racemate” or “racemic mixture” is a compound consisting of an equal mixture of pairs of enantiomers.³⁰

Many companies holding a patent nearing expiration for a racemic drug choose to remarket the drug as a single enantiomer under a different patent. This process of “racemic switching,” allows drug companies to apply for FDA approval of the enantiomer, before the expiration of the racemic patent, while maintaining market exclusivity for the drug as a whole. Due to the fact that enantiomer pharmaceutical sales reached $160 billion in 2002, racemic switching has become another valuable topic of discussion in the biotech patent arena.³²

An important aspect of patent litigation is avoiding it in the first place. Selecting a competent patent lawyer who has a hard science background in the relevant field is crucial. There are two basic choices when selecting a firm to handle your IP issues: a large multifaceted firm that has an IP component to its practice, or a smaller “boutique” firm that only handles IP cases.

When selecting a firm some considerations include: the number of lawyers that compose the IP practice, whether the lawyers have hard science degrees and technical backgrounds, and whether they have obtained special licensing by the patent bar. The importance of your lawyer's technical and hard science experience should not be underestimated.³³ An excellent corporate or litigation attorney cannot be effective in a patent case if he or she does not fully understand the technical issues. Your lawyer should also be mindful of practical considerations and understand the balance between protecting patent rights and keeping legal fees reasonable.

Patent litigation requires the careful analysis and preparation of complex technical and legal issues.³⁴ A company contemplating a suit must balance the costs and risks of litigation against the business advantage they seek to obtain. A patent infringement lawsuit initiated by the biotech company/patent owner seeks to secure what the patent owner believes to be a protected position.³⁵ Any party whose interests face jeopardy of patent infringement can also bring suit for the purpose of seeking a declaration concerning the patent's validity and scope.³⁶ Figure 2 shows a patent infringement flow chart.

The stakes are extremely high for attempting to obtain, retain, or invalidate a patent. Unlike the typical tort claimant, the patent owner who initiates litigation potentially endangers the very patent upon which the basis for the legal claim rests. Studies indicate that complaining patent owners have lost in a significant number of the cases based upon judicial determinations that the patent is invalid.³⁷ The expenses and risks involved require a company to weigh the possible advantages gained from compromising an infringement controversy with the disadvantages of filing suit.

A company might seek an alternative course to litigation, such as agreeing to issue a license under the patent.³⁸ The company can thus derive some royalties from limited competition, rather than chance a legal decision that could result in complete invalidation of the patent and unlimited competition.

It is important for biotech companies as patent owners to precisely define the goals sought by litigation and the potential ramifications. Before initiating suit, a company must thoroughly review and analyze the strength of the patent and its enforcement capabilities to gain a clear understanding of their available options. Both legal and business considerations determine the practical advantages of filing a patent infringement action.

For example, there is no way to predict the outcome of a suit once it goes to court. At a bench trial, a judge makes the legal rulings and findings of fact, and issues the verdict. The trial judge that hears the case may or may not have any expertise in patent law and is unlikely to have a background in the relevant technical or scientific discipline. In a jury trial, the judge makes legal rulings and the jury makes findings of fact before reaching a verdict. It is a virtual certainty that the jurors will not have any experience in patent law, and it is unlikely that they will have any relevant scientific or technical background.³⁹ Considering that patent cases involve complex legal and technical issues, and fall under the scrutiny of individuals with potentially no expertise in either area, the appellate process is crucial to obtaining consistent and correct results. Appellate courts have the final say.

The Court of Appeals for the Federal Circuit is an appellate court that specializes in patenting issues. The court has “nationwide jurisdiction to hear appeals in specialized cases such as those involving patent laws.”⁴⁰ The President nominates judges who must then receive confirmation by the Senate to gain appointment to a term for life or good behavior. There are no specific qualifications for becoming a federal judge, but Congress and the President select highly skilled lawyers from diverse backgrounds including expertise in patent law. For instance, the twelve judges presently composing the Federal Circuit include two chemists, a law school patent professor, and two former USPTO patent examiners.⁴¹ The Federal Circuit court does not exclusively hear patent cases. It also addresses claims in diverse areas including government contract disputes and veterans' appeals. Even this group of highly skilled jurists has not reached consistent opinions dealing with the sticky issues that biotechnology patents have recently raised.⁴²

For instance, there are presently two separate lines of cases promoting different methods for patent claim construction. The first line of case law indicates that evidence intrinsic to the patent itself, particularly inventor's written description of the invention, is the primary source for determining the claim meaning. Under this approach, evidence extrinsic to the patent is useful only insofar as it “can shed useful light on the relevant art—and thus better allow a court to place itself in the shoes of a person of ordinary skill in the art” reading the claims alongside the rest of the specification.⁴³

The Federal Circuit has suggested a second approach in some of its recent opinions. Under this other view, extrinsic sources such as dictionary definitions take precedence over the intrinsic record. That is, “the intrinsic record, except for the claims, are consulted only after the ordinary and customary meaning of claim terms to persons skilled in the pertinent art is determined.”⁴⁴ The court might define terms contained in the patent in a way contrary to the intention or foresight of the patent applicant.

The question, then, is “whether the intrinsic evidence takes priority in our construction of the claim term, or if instead the ordinary meaning of the term, as determined from sources such as treatises and dictionaries, controls our construction in the absence of intrinsic evidence of clear lexicography or disavowal.”⁴⁵

The Federal Circuit seeks to finally resolve this issue in an eagerly anticipated opinion.⁴⁶ A clear and decisive opinion resolving the law of claim construction would receive a warm welcome from the legal community. However, the likelihood of one cohesive opinion is uncertain, especially considering the long history of divergent case law.

One example of the divergent case law is Metabolite Labs., Inc. v. Lab. Corp. of Am. Holdings.⁴⁷ This recent suit illustrates how trial judges, juries, and various appellate courts interact and make litigation complex and unpredictable.

Metabolite sued LabCorp for using Metabolite's patent while testing for vitamin B deficiencies. In this jury trial, the trial judge handled legal issues, and the jury had to determine whether LabCorp had willfully infringed Metabolite's patent. The jury, finding willful patent infringement, assessed $3.6 million in damages against LabCorp for breach of contract and another $1 million for patent infringement.

The Federal Circuit appellate court determined that the trial court had correctly defined the patent's terms. The court also approved the jury's finding that LabCorp had willfully infringed the patent.⁴⁸ Although the Federal Circuit agreed with the trial court's findings, this did not end the story. Litigation is ongoing. The case is presently on appeal in the United States Supreme Court.

The Supreme Court is focusing on a separate issue from the Federal Circuit. Instead of asking whether LabCorp violated Metabolite's patent, it will be entertaining argument as to whether Metabolite's patent held any validity before the outset of the case. The Court is concerned that the method of measuring vitamin B deficiency is, in actuality, only a natural phenomenon, and therefore, ineligible for patent protection.⁴⁹

It is possible that Congress may decide to grant potential litigants some relief from the often overbearing and, many times, discouraging or prohibitive expense of litigation. The National Academy of Sciences (NAS) recently suggested a less costly and time-consuming alternative to traditional claim re-examination and litigation.⁵⁰