Canada: Life Sciences Newsletter, April 2009 – Part One

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INTELLECTUAL PROPERTY

Industrial Application

By Tracy Ko

The English Patents Court case of Eli Lilly & Co v Human Genome Sciences Inc [2008] EWHC 1903 (Pat) gives guidance on the requirement that an invention must have industrial application in order to be patentable.

The case concerned a Human Genome Sciences Inc ("HGS") European patent for the nucleotide and amino acid sequence of Neutrokine-a (the "Patent"), which was a novel member of the Tumour Necrosis Factor cytokines ("TNF") superfamily (a grouping of proteins that act to cause inflammation in the human body).

The sequence was found through bioinformatics, whereby computers identify new DNA sequences for proteins by making comparisons to similar known sequences, rather than by traditional laboratory methods. HGS filed a patent application soon after the sequence was determined, without carrying out any further research to explore its function, activity or potential use.

Eli Lilly & Co ("Lilly") applied to revoke the patent. Lilly's arguments included that the Patent did not disclose an invention capable of industrial application and on the grounds of insufficiency. 

The judge, Kitchin J, reviewed the limited amount of UK, EU and US law on industrial application and the European Directive on the legal protection of biotechnological inventions (Directive 98/44/EC). He set down the following principles:

• 'Industrial' must be construed broadly and does not need to be conducted for profit.
• The capability of industrial exploitation must be derivable by the skilled person reading the patent description with the benefit of common general knowledge.
• The description must disclose a practical way of exploiting the invention in at least one field of industrial activity or a sound and concrete basis for recognising that the contribution could lead to a practical application in industry.
• The purpose of the invention and how it can be used to solve a certain technical problem must be disclosed in definite technical terms.  If the purpose and use is not obvious from the nature of the invention or the background art, then there must be a real prospect of exploitation directly derivable from the specification.

• Industrial application will be shown by: (a) a description of a research result that might yield an unidentified industrial application; (b) a speculative indication of possible objectives that might or might not be achievable by carrying out research; or (c) a description that leaves it to the skilled person to find out how to exploit the invention.
• The purpose of granting a patent is not to allow the patentee to reserve an unexplored field of research or to give the patentee unjustified control over others investigating the same area.
• The industrial application requirement will be satisfied if it is a substance which has a function essential for human health and it is identified as having such a function.  However, simply identifying the substance, even where the disclosure is considered a scientific achievement of great merit, would not meet the requirement if its function is unknown or not fully understood, no disease has been identified to be linked to its excess or deficiency, or no other practical use is suggested for it.

• The mere use of the claimed invention to find out more about its activities does not of itself satisfy the requirement.
• Whilst it is relevant to how a skilled person would understand the disclosure, the fact that an invention has been found by homology studies using bioinformatics techniques does not prevent it from being capable of being patented.

Taking into account the above principles, Kitchin J concluded that HGS patent was invalid for lack of industrial application, based on the following findings:

• The only contribution made by HGS' patent was to identify Neutrokine-a, but its application was not obvious or identified.
• The patent specifications contained nothing more than mere speculation as to possible conditions, actions and broad categories of disease for which Neurokine-a may be useful and general statements on its potential activity and expression but no evidence to substantiate those claims.  In Kitchin J's view, a skilled person reading the patent would not have been able to derive any industrial application from the patent.
• Simply making Neutrokine-a available as research tool is not sufficient to establish that the patent had industrial application.

Kitchin J also agreed with Lilly that the patent specification was wholly insufficient to allow the invention to be performed by a skilled person, such that the patent was also invalid on the grounds of insufficiency, as the skilled person would be "faced with a substantial research programme with an uncertain outcome" before Neutrokine-a could be put to any therapeutic or diagnostic use.

Comment: In addition to giving guidance as to how the requirement of industrial application will be interpreted by the courts, the case illustrates the difficulties that companies face when attempting to balance the desirability of seeking early protection of the results of their research and the risk of having the patent being held invalid; or waiting until further research has been undertaken to ensure the validity of the patent, at the risk of being pre-empted by competitors.

Supplementary Protection Certificates

By Fran Boateng-Muhammad

The case of Daiichi Pharmaceuticals v Generics (UK) Limited looks at some of the issues that can arise in relation to supplementary protection certificates (SPCs), specifically the validity of the underlying patents and the appropriate commencement date for an SPC.

Daiichi owned European patent (UK) No. 0206283 for levofloxacin (an enantiomer of a racemic compound called ofloxacin which is a member of the quinolone class of anti-microbial agents. The (-) enantiomer of ofloxacin was called levofloxacin) and a process for its preparation (the "Patent"). Daiichi also held an SPC granted in July 1998 on the marketed product based on the Patent. The Patent expired on June 2006 but the SPC is not due to expire until June 2011.

Generics challenged the validity of the SPC under article 15 of Council Regulation (EEC) 1768/92 (on SPCs) because grounds existed which would have justified the revocation of the Patent, or its limitation to the extent that levofloxacin would no longer have been protected by the claims on the grounds, inter alia, of lack of novelty and obviousness. Generics also challenged the SPC on the basis that the SPC's term should be based upon earlier marketing authorisations for ofloxacin as the first marketing authorisation, rather than that of levofloxacin. Both challenges were dismissed by the court.

As to the validity of the Patent, on the evidence presented, none of the attacks were entitled to succeed and in those circumstances, the challenge to the SPC failed. Even though the skilled person would appreciate that ofloxacin was a racemate, and that one enantiomer might have better activity than the other or the racemate, the judge acknowledged the potential in relation to quinolones and that there was uncertainty as to whether the enantiomers of quinolones would produce a better compound than the racemate. The Court decided that the skilled person would consider it obvious to try to resolve ofloxacin into enantiomers only if it were relatively easy to do so. Generics' own evidence indicated the difficulties in resolving the ofloxacin into its enantiomers.

The Court also rejected the second challenge to the term of the SPC. The judge determined that ofloxacin and levofloxacin were different products commenting "that an authorisation to place ofloxacin on the market as a medicinal product cannot be considered an authorisation to place levofloxacin on the market as a medicinal product".

Comment: This case represented a rare victory for research-based companies as to the validity and term of an SPC. The court appeared to be influenced by the greater expertise of Daiichi's' experts in the field of quinolones and the claimant's failure to demonstrate that the resolution of ofloxacin was relatively easy...

Zyprexa Patents

By Tracy Ko

The October 2008 case in the Patents Court (Dr Reddy's Laboratories (UK) Limited v Eli Lilly and Company Limited [2008] EWHC 2345 (Pat)) raises two issues of interest - firstly whether an earlier patent claim for a wide class of compounds would destroy the novelty of a later claim for an individual compound in that class, and secondly, a discussion on selection patents.

Dr Reddy's Laboratories (Dr Reddy) applied for a revocation of Eli Lilly & Co's ("Lilly's") European patent for Zyprexa (olanzapine) for the treatment of schizophrenia (the "Patent"). Dr Reddy argued that the Patent was invalid as it lacked novelty and would be obvious to the skilled addressee based on the prior art of a prior provisional patent application filed by Lilly that claimed a "Markush" formula (a general chemical class formula wide enough to cover millions of compounds (including olanzapine, although it was not specifically mentioned in the provisional patent) and other published papers relating to compounds almost identical to olanzapine (but again olanzapine was not specifically named). Dr Reddy also argued that given the prior art, Lilly's patent could only be considered valid if it satisfied the requirements applicable to selection patents, which Dr Reddy argued was not the case and therefore the patent should be revoked on the grounds of insufficiency.

Dr Reddy's attack on the Patent ultimately failed as Floyd J held in favour of Lilly on each of the grounds raised by Dr Reddy.

In arriving at his decision, Floyd J undertook an analysis of the prior art and concluded that none of it was sufficient to deprive Lilly's patent of its novelty, holding that the disclosure of a general formula for a chemical class does not necessarily deprive a later patent application for a specific compound of that class of its novelty. Approving Synthon's Patent [2006] RPC 10, Floyd J stated that "there are two requirements for a claim to be anticipated by a prior document: disclosure and enablement".  In the case of the disclosure of a general formula, his view was that making such a disclosure was a powerful way of covering a large number of compounds, and therefore that the focus would be on compounds actually described in that disclosure in an "individualised form". Applying this to the prior art relied upon by Dr Reddy, Floyd J found that none of the prior art contained "a clear description of, or clear instructions to do or make, something that would infringe the patentee's claim if carried out after the grant of the patentee's patent" and therefore was not a sufficient disclosure of olanzapine to take away the novelty of Lilly's patent. Further, whilst Floyd J acknowledged that in theory, Dr Reddy was correct when it argued that Lilly's prior provisional patent for the Markush claim allowed a skilled person to write down all possible permutations of the compounds in the class (which would therefore include olanzapine), he dismissed it as being "wholly artificial to supposed that anyone would."

Having found that none of the prior art deprived Lilly's patent of its novelty, Floyd J did not need to make a decision on the issue of whether Lilly's patent was a valid selection patent. However, Floyd J's judgment nonetheless contains a useful review of the case law concluding that: 1) a selection patent must be based on some substantial advantage to be secured by the use of selected members, 2) all of the selected members must possess that advantage, and 3) the selection must be in respect of a special character which can fairly be said to be peculiar to the selected group.

Comment: It remains to be seen whether the higher courts will agree with Floyd J's view on selection patents, but this decision may foreshadow a change in the way that patentees approach such patents in the future.

Sufficiency of Damages for a Wrongly Injuncted Generic

By Ralph Cox

The High Court suggested that purely compensatory damages may not always be sufficient compensation for the marketer of a wrongly injuncted generic. The judge considered there may even be situations in which a generic pharmaceutical company held off the market by a wrongful injunction should receive an account of profits from the patent-asserting, innovative pharma company.

The action concerned perindopril, an ACE inhibitor used to treat hypertension, for which Les Laboratoires Servier ("Servier") held patent rights. Its first generation patent for the drug expired in 2006 but Servier had obtained a further, second generation patent that extended its monopoly rights beyond that date. Nonetheless, following expiry of the first patent, Apotex Incorporated and its associated companies ("Apotex") launched a generic version of perindopril. Servier sued for infringement of the second patent and, on 3 August 2006, obtained an injunction pending trial.

As is standard, to obtain the injunction Servier gave a cross-undertaking to compensate Apotex for any losses caused to it by the injunction if subsequently found to have been incorrectly granted. This is exactly what came to pass as in a judgment dated 6 July 2007 the High Court held the patent invalid. The injunction was discharged as the High Court refused to extend it pending Servier's appeal. In a very short judgment, the Court of Appeal agreed that the patent was invalid stating that it was "the sort of patent which can give the patent system a bad name" and that it was "the court's job to see that try-ons such as the present patent get nowhere".

As a result, Apotex's perindopril had been wrongly held off the market for 11 months and it was entitled to compensation under the cross-undertaking. The judgment deciding the amount of that compensation was handed down on 9 October 2008 and contains various points of general interest.

First, are the questions the judge raised as to the applicability and adequacy of standard, compensatory damages. As the award under a cross-undertaking is strictly equitable compensation and not damages, it is arguable that it ought not be fettered by rigid adherence to the common law rules. But, even if these rules are followed, there is scope for aggravated or exemplary damages for "a blatant or cynical interference with a defendant's right to enter a pharmaceutical market with a generic drug by means of a second generation patent that is a "try on" Alternatively, "where a wrongful extension of patent protection results in a benefit to the patent holder which exceeds and outstrips the loss which is occasioned to the generic company... then... "restitutionary damages" might be called for". This would effectively mean the generic company getting an account of the pharma company's profits (in Servier's case £74 million).

The second interesting aspect is the judge's review of the market dynamics following entry of a generic drug and the strategies used by pharma companies to try to mitigate those effects. In Servier's case this included agreements with "authorised generics" and true generic companies, which included payments of approximately £10 million to several such companies to stay off the market.

Though fully aware of such conduct by Servier, and the Court of Appeal's views of the patent, the judge decided that this was not a case in which greater than compensatory damages were called for. He therefore assessed the profits that Apotex would have made over the 11 months reaching a figure of £17.5 million, which he compared against the payments made to the authorised generics and the profits made by Servier to check that this would not constitute over-compensation.

Finally, just before this damages judgment was handed down Servier made a late application to raise the issue that the Canadian court had just (on 2 July 2008) upheld the validity of a Canadian patent for perindopril (see below) for related report. This patent was not one of Servier's but they submitted that Apotex would have infringed this patent if they had been allowed on the market during the injunction period as Apotex manufactured their perindopril in Canada. Servier claimed that Apotex should not be awarded damages when they would have acted unlawfully in another jurisdiction. The judge held that this submission was raised too late but the point is interesting and may be one to consider in another case.

EMPLOYEE INVENTIONS

First Ever Court Award of Compensation to Employee Inventors (UK Patents Act 1977)

By Jeremy Morton

On 11^th February 2009, Mr Justice Floyd in the English Patents Court gave the first ever court award of compensation to employee inventors under the UK Patents Act 1977. Moreover, the amounts awarded were substantial.

Drs Kelly and Chiu were part of a research team at Amersham International Plc (now GE Healthcare Limited) that first synthesised the compound that went on to form the basis of a highly successful, patented radioactive imaging agent, Myoview, launched in 1994. In part due to Myoview's success, Amersham entered into a joint venture with Sumitomo and acquired Nihon Medi + Physics ('NMP'), establishing it as a global player in the radiopharmaceuticals market. Three years later, Amersham acquired Nycomed on the basis of profit projections that relied on Myoview's success. Total sales for the product exceeded £1.3bn.

Dr Chiu earned between £12,000 and £15,000 per annum over the 2 years he spent with the company. Dr Kelly, during his career with Amersham/GE, earned between £23,000 and £71,500 per annum.

For patents filed prior to 01 January 2005 a court may award an employee compensation to be paid by the employer where (in summary):

• the employee has made an invention belonging to the employer for which a patent has been granted anywhere in the world
• the patent is of outstanding benefit to the employer
• as a result it is just that the employee should be compensated.

Guidance is provided as what constitutes a fair share for the employee of the benefit derived.

The Court drew the following principles:

• Compensation is for inventors who contribute to the formulation of the inventive concept, rather than for those who merely contribute to the process.
• 'Outstanding' is not defined in the legislation but means 'something special' or 'out of the ordinary', more than one would normally expect from the employee's paid duties. The court must estimate the situation as if there had been no patent and make a comparison. The disparity in benefit between employer and employee should be 'extreme'.
• If the Court decides the patent was of some benefit, it must then consider whether that benefit is outstanding. Valuation of the benefit is done in the light of all the evidence as to what has been and may be achieved as a result of the patent (or invention).

The judge noted that here the benefits for Amersham of preventing generic competition went far beyond what could normally be expected from the employees' assigned work. He also took account of the significance of the patent in helping Amersham achieve the corporate mergers and acquisitions that were of enormous benefit to them.

Assuming sales of £1 billion, the Court concluded that revenues would have been reduced by generic competition by at least £50 million, in the absence of the patents. The Court decided that a 3% share of the employer's benefit was a just and fair award to the employees, and apportioned this 2% to Kelly (£1 million) and 1% to Chiu (£500,000).

Comment: Employers can expect potential claimants to be encouraged by this development, and should bear in mind that UK employees may be entitled to compensation in respect of patent rights worldwide under the UK legislation - employees can make claims at any time before patent expiry. It should be noted that the law was changed in 2005 whereby the court could take into account the benefit from the invention overall, not just the benefit arising from the patent.

Biotechnology Patenting before the U.S. Federal Circuit

By Serge Lapointe

On January 9^th 2009, the U.S. Federal Circuit heard oral arguments in re Kubin, a case which concerns a patent application for isolated cDNA that encodes Natural Killer Cell Activation Inducing Ligand. 

This case is significant for biotechnology patenting because the question at issue is whether the existence in the prior art of a purified protein combined with "routine" cloning methods renders obvious a claim to a nucleic acid encoding the protein¹.

The Court now must determine whether the U.S. Board of Patent Appeals and Interferences erred as a matter of law in finding Kubin's claims obvious. The Court also has to review substantial evidence used by the Board in its finding that the Appellants did not possess the full scope of their claimed invention under 35 U.S.C. § 112 (written description requirement). Interestingly, the Court will be asked to opine also on how the U.S. Patent and Trademark Office interpreted the frequently-conflicting written description jurisprudence. In fact, during presentation of the oral argument, the Court questioned whether the recently updated training materials (used by examiners to examine patent applications) themselves correctly apply the written description requirement of 35 U.S.C. § 112, first paragraph².

We will provide a complete analysis of the decision when it becomes available.

Footnotes

^{1 The Court is confining its analysis to a single claim: "73. An isolated nucleic acid molecule comprising a polynucleotide encoding a polypeptide at least 80% identical to amino acids 22-221 of SEQ ID NO:2, wherein the polypeptide binds CD48. »}

^{2 A PDF copy of the revised training materials which issued in March 2008 can be found on the U.S.P.T.O. web site at http://www.uspto.gov/web/menu/written.pdf}

Validity of Selection Patents in Canada

By Philip Swain

Late last year, the Supreme Court of Canada (SCC) in Apotex Inc. v. Sanofi-Synthelabo Canada Inc., 2008 SCC 61 upheld the validity of selection patents in Canada. In this case, Apotex failed in their attempts to both invalidate Sanofi's selection patent, which covers the anti-coagulating drug PLAVIX, and have the SCC render selection patents invalid in Canada altogether.

Sanofi held a patent in which the genus claim covered more than 250,000 compounds useful for inhibiting platelet aggregation. One such compound was a racemic mixture of two enantiomers. Sanofi discovered that one of the enantiomers, the dextro-rotatory enantiomer, had an unexpectedly high therapeutic effect and low toxicity when compared to the levo-rotatory enantiomer and the racemic mixture claimed in the genus patent. Sanofi subsequently filed for, and was granted, a patent based on the superior properties of the dextro-rotatory enantiomer. Sanofi argued that its patent was a "selection" patent. Apotex alleged the patent was invalid for anticipation, obviousness and double patenting.

The SCC affirmed a two-step approach to establish a claim of anticipation. The approach requires separate consideration of "prior disclosure" and "enablement", both of which if proven, establishes that the prior art anticipates the invention. If a person skilled in the art, when reading a genus claim in a prior patent, does not discover the special advantages of the selection, then there is no anticipation by way of "prior disclosure". No trial and error is allowed. Similarly, if that person has to perform the invention with undue burden, then there is no anticipation by way of "enablement". A skilled reader of the patent should arrive at the invention the first time they try it and each time after, with limited trial and error. In this case, there was no anticipation because Sanofi's former patent did not reveal which enantiomer was more active even if it was known that one enantiomer is often more active than another. Also, even if the methods of separation of enantiomers were known, the fact is that extensive investigation over a period of months was requested.

In addressing obviousness, the SCC examined the circumstances under which it might be appropriate to use the "obvious to try" criterion. The SCC concluded that for an invention to be obvious instead of it being merely "obvious to try" it must also be "more or less self-evident to try to obtain the invention. Mere possibility that something might turn up is not enough." In this case, the SCC found that Apotex failed to establish that the selected isomer was "obvious to try" from the 250,000 other possibilities in the earlier genus patent because it was not self-evident from the prior art and common general knowledge. In particular, there was no evidence that a person skilled in the art would have known which of the established separation techniques would work to separate the racemic mixture.

Finally, Apotex argued that selection patents extend the lifetime of the original genus patent by allowing so-called "evergreening" or double-patenting. The SCC rejected this and pointed out that third parties can obtain selection patents, and that they encourage innovation by identifying hitherto unknown and useful properties in the original genus. In a double-patenting challenge, the focus is on the claims of the two patents rather than on the disclosure and because the claims of the genus patent are broader than those of the selection patent, there cannot be double patenting.

Comment: The lower courts heard two selection patent cases last year and concluded that "sufficient representative testing" is required to establish a valid selection patent. It remains to be seen what exactly is meant by this term, but clearly, the more comparative data the patentee includes in an application for a selection patent, and the more the patentee articulates the selection's advantages over the previous genus, the stronger the argument will be for a proper patentable selection. Now with the SCC weighing in, the Sanofi decision may pave the way for more selection patents in Canada. In the meantime, with the affirmation of the two-part test for anticipation; the apparent softening of the historically strict test for obviousness; and the requirement for"sufficient representative testing", we can expect that selection patents and applications for selection patents will be scrutinized for compliance with this decision.

Early Working Exemption

By Ralph Cox

In Laboratoires Servier v. Apotex, the Canadian Federal Court ruled on numerous issues relating to Servier's drug, perindopril, which is sold in Canada under the trademark COVERSYL^TM, and which is used primarily to treat hypertension and cardiac insufficiency.

Importantly, Apotex successfully convinced the Court that it should not be liable for any infringement relating to some specific amounts of perindopril that were produced during commercialization because these amounts fell under the experimental and regulatory use exemption of section 55.2(1) of the Canadian Patent Act. The provision states that:

Section 55.2 is the so-called "early working" exemption which permits early working of a patented invention by others, such as generic drug companies, during the drug's approval process by Health Canada. In the past, this exemption had been used solely for purposes of developing submissions for regulatory approval of the drug before commencement of its commercialization. In the present case, the Court was satisfied that some of the amounts of perindopril that were generated during commercialization for submission, analytical testing and the like, as may be required by the regulatory authorities in Canada, the United States and other jurisdiction, constituted uses of perindopril which qualified under the statutory exemptions of the Patent Act.

Proposed Fee Reductions for Electronically Filed Sequence Listings

By Kevin Holbeche

The Canadian Intellectual Property Office (CIPO) is currently seeking feedback on a number of proposed amendments to the Patent Rules.

From 5 to February 28, 2009, CIPO sought comments on proposed changes to the Patent Rules.

Proposed changes in this package included amendments to the Patent Rules pertaining to authorised correspondents, requests for examination, and reinstatement periods. CIPO has stated that these amendments "seek to safeguard applicants' rights in situations where their rights would have been expunged due to a failure to meet certain procedural requirements. The package also reduces some operational requirements by providing more flexibility as to who can pay a fee and reinstate an abandoned application. Finally, the package also [...] reduces the prescribed delay to request examination."

According to CIPO's website, these amendments waive "some of the fees related to sequence listings filed electronically". Under the proposed changes, electronically filed sequence listings would be effectively discounted from the excess page fees which are presently payable at grant of a patent. Notably, therefore, such fees would be eliminated in respect of sequence listings filed electronically.

This package of proposed changes is the third in a series of five consultations planned for 2009, under which interested parties may comment on the various proposed changes. Two consultation periods were previously concluded in early 2009 concerning: (1) "generally housekeeping" changes to the Patent Rules; and (2) proposed changes to practice related to the title of the invention.

Comment: Later this year, in what promises to be another busy season, CIPO plans to conduct two further consultations (over periods yet to be determined at the time of print) concerning other contemplated changes to the Patent Rules. These upcoming consultations will concern: (i) amendments to Patent Appeal Board and final action procedures; and (ii) disclaimers, Section 29 of the Patent Rules, and claiming practice.

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