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PROTECTING THE
RESULTS OF FUTURE RESEARCH: Pierre
Véron & Olivier Moussa Avocats
à la Cour Véron & Associés, Paris Discovering
and finalizing new drugs are processes more and more costly in time and
money. They
require heavy investments which will be made only if the return is up to the
efforts made. One of the classical means to secure this
return is to protect the end product, namely the discovered drug, by a
patent. However,
the researchers, who beforehand identified the target of the drug, also try
to make their efforts profitable by reserving for themselves a share of the
profit recorded by the end product. From a
strategic point of view, the stake for the players working at the beginning
of the research process is to use the intellectual property rights they were
granted over the tools which made the discovery possible to obtain a share of
the profit generated by this discovery. Different
mechanisms, called “reach-through” because the yield generated by the
end products can be reached through them, can be used. These
mechanisms can be classified into three categories. First it
is conceivable to extend the claimed protection at the stage of the filing of
the research tool patent. In
addition to the research method claims, a reach-through patent will hence
include one or several claims relating to the compounds which will be
discovered by using said method. If the
protection of the results of research through a patent has not been
contemplated, it is however tempting after all to gain said protection during
an action for infringement. The
holder of the patent on a research method will here attempt to have the
product discovered by using the patented method held infringing said method;
this is called “reach-through infringement”. Finally,
the access to the profit generated by the end product can be contemplated by
contract: the research method licensing agreements can provide for
reach-through royalties which would be based on the sales of the drug. The
courts begin to examine these strategies; recent decisions have laid down the
first principles on reach-through claims (1.), reach-through
infringement (2.) as well as on the contracting of licensing
agreements providing for reach-through royalties (3.). 1.
Reach-through claims
Pharmaceutical
research has known heavy changes in the last few years. Today,
technical progress enables the analysis of pathological processes at
molecular level. The trend
in pharmaceutical research is now therefore to discover the targets (receptors
or enzymes notably) on which to act by stimulation or inhibition, on the one
hand, and the molecules (designated under the generic word of “ligand”) which
could act on these targets, on the other hand. Once the
target is discovered, research of candidate compounds can begin. It starts
by screening tenths of thousands of molecules to check their ability to
perform the desired action (e.g. to link to the identified receptor). Numerous
steps will be afterwards necessary to develop the molecules identified during
the screening process and to obtain the end drug. It is
however very tempting for the discoverer of the target to try to obtain
rights over the ligands which will be discovered and will constitute the
basis of the future drug. This is
the aim of a reach-through patent. The
classic structure of the claims in a reach-through patent is the following: “1. Receptor
X useful to the treatment of disease Y 2. Method
for identifying an agonist of the receptor X comprising the following steps:
… 3. Agonist
of the receptor X identified with the method subject-matter of claim 2”. The
reach-through claim itself is claim 3 in this example. Reach-through
claims may naturally be invalidated through classical objections, e.g. lack
of novelty or lack of inventive step. Nevertheless,
they are particularly likely to be invalidated for lack of industrial
application (1.1.) and above all for insufficient
description (1.2.). 1.1.
Industrial application
Under
slightly different forms, European and In Article
52 of the E.P.C. sets inter alia forth: “European
patents shall be granted for any inventions which are susceptible of
industrial application, which are new …”. Article
57 of the E.P.C. defines industrial application in these words: “An
invention shall be considered as susceptible of industrial application if it
can be made or used in any kind of industry, including agriculture”. In the Section 101 of
the Title 35 of the U.S. Code (U.S.C.) sets forth: “Whoever
invents or discovers any new and useful process, machine, manufacture, or
composition of matter, or any new and useful improvement thereof, may obtain
a patent therefor, subject to the conditions and requirements of this title.” The
Utility Guidelines of the U.S.P.T.O. specify that an invention shall have a
specific, substantial, credible and well-established utility. The
applicant should therefore take care to disclose the industrial application
of a reach-through patent application. A claim
covering “any agonist of the receptor X identified by a screening
using the receptor X”, which is a typical case of a reach-through claim,
shall be dismissed for lack of industrial application or of utility, should
the patent application only describe the receptor and the screening stages. To meet
the requirement of industrial application, the patent application should
disclose an application of the agonist or of the receptor X, e.g. a
pharmaceutical use. Otherwise,
the person skilled in the art will not know for what purpose he can implement
the claimed invention. Therefore,
it is important to file such a patent application only after the function of
the receptor at issue has been determined. However,
the greatest risk run by reach-through claims is that of an insufficient
description. 1.2.
The description
European
and Under
European law, this requirement is set forth notably in Article 83 of the
E.P.C. which reads as follows: “The
European patent application must disclose the invention in a manner
sufficiently clear and complete for it to be carried out by a person skilled
in the art”. “The specification shall contain a
written description of the invention, and of the manner and process of making
and using it, in such full, clear, concise, and exact terms as to enable any
person skilled in the art to which it pertains, or with which it is most
nearly connected, to make and use the same, and shall set forth the best mode
contemplated by the inventor of carrying out his invention”. Two
requirements are laid down by Section 112 §1: · the requirement of a “written
description” according to which, on the one hand, the patent should set
out the claimed invention, and on the other hand, the person skilled in the
art should conclude from the reading of the patent that the inventor actually
possessed the invention at the filing of the patent, · the requirement of “enablement”
according to which the description should enable the person skilled in the
art to carry out the invention without undue experimentation. The
requirement of a written description (1.2.1.) should be examined
before that of enablement (1.2.2.). 1.2.1. The written description
requirement
One of
the main obstacles against which reach-through patents can come is that of
the requirement of a written description, notably with a claim relating to
the compounds linking to a certain target (“An agonist of the receptor X”). If it is
possible to describe the claimed target, it is a priori not possible to
describe the compounds which link to this target, as long as they have not
been obtained, otherwise than by their ability to link to this specific
target, i.e. by their function. A recent Recent
techniques are perhaps also in a position to enable the circumvention of the
obstacle the requirement of a written description represents (1.2.2.2.). 1.2.1.1. A legal solution
The
contents of the requirement of a written description was specified in three
landmark decisions handed down in 1997 and 2002 by the Court of Appeals for
the Federal Circuit (C.A.F.C.), which closely regard, even if they address this
subject-matter not directly, the validity of patents comprising reach-through
claims. The first
of these decisions, Regents of the The Court
had held that when the claimed genetic material is described only by its
function or by its result, the invention is not described appropriately. According
to this decision, a written description should contain “a precise
definition, such as by structure, formula, chemical name, or physical
properties, not a mere wish or plan for obtaining the claimed chemical
invention”. The Court
held in fact that “a description of what the genetic material does, rather
than of what it is, does not suffice”. The mere
contention that a molecule exists which might be an agonist of a specific
receptor, without any further description – which is the case of
numerous patents comprising reach-through claims – was insufficient in
view of this decision. In the
decision handed down on April 2, 2002 in the Enzo-Biochem v.
Gen-Probe case (hereinafter referred to as “Enzo II”2),
the C.A.F.C. had the opportunity to confirm again the doctrine it had
expressed in the Eli Lilly case, before it reversed it by a decision
handed down on July 15, 2002 (hereinafter referred to as “Enzo III”3). The
invention in this case related to nucleotide sequences for detecting the
bacteria liable for the gonorrhoea. These
sequences were only described by their ability to link selectively to the
D.N.A. of the bacteria at issue: the patent comprised no information on the
structure of the claimed sequences. However,
Enzo had taken care to deposit three nucleotide sequences having this ability
at the American Type Culture Collection, and to mention their accession
numbers in the patent. The
patent also mentioned the accession numbers of the bacterial strains to which
the claimed sequences had the ability to hybridise selectively, without
describing them in details. The
C.A.F.C. considered that a mere description of the function of the claimed
nucleotide sequences, to link to the bacteria in that case, did not satisfy
the written description requirement. Admittedly,
it pointed out that a description as to the function could be acceptable, but
only when a known or disclosed correlation between function and structure
exists, which it considered not to be the case here. The Court
also considered that the deposit of the nucleotide sequences alone could not
be regarded as satisfying the requirement of a written description of the
claimed sequences. The
C.A.F.C. however went back over its findings in its decision Enzo III,
to: · decide that the reference to the
public deposit of the claimed material can constitute a sufficient written
description, · confirm again that a functional
description can meet the requirement of a written description if the
functional characteristics are coupled with a known or disclosed correlation
between function and structure. The Court
found that the description of the ability to hybridise to a known or
disclosed structure corresponds to the description of a function and of a
correlation between said function and a structure, which is one of the means
for meeting the written description requirement according to the Written
Description Guidelines published by the U.S.P.T.O.4 This
reversal is important for reach-through patents, notably those of the
type: “An agonist of receptor X”, where the claimed agonist is
only described by its function, in that case by its ability to link to the
targeted receptor. Should
the validity of such claims have been very questionable under the influence
of Eli Lilly and Enzo II decisions, the Enzo III case
law seems to open new horizons for them. When the
receptor is known or disclosed (if needed by referring to a deposit at the
American Type Culture Collection, which now constitutes an appropriate
description), it is now possible to describe the compounds which link to this
receptor by identifying them only through their function (namely their
ability to link to the receptor) without risking invalidation for lack of
written description. The
contribution of Enzo III relates however only to the description
itself of the invention. It
remains necessary for the inventor to establish that he possessed the whole
invention. It is
notably what Enzo will have to prove before the court to which the case is
now referred: it will have to demonstrate that the deposits of three of the
claimed nucleotide sequences are representative of the whole scope of the
patent. The Court
reminded the precedent Eli Lilly, where it had found that the
disclosure of the rat insulin cDNA sequence was not descriptive of the
broader invention consisting of mammal and vertebrate insulin cDNA. However,
it took care to remind also that in this case the patent did not set forth
any common features possessed by members of the genus, and that the
specification did not describe a sufficient number of species for one to
conclude that the inventor possessed the whole invention and not only one or
two species. 1.2.1.2. A technical solution
A certain
type of reach-through claims aims at protecting the compounds likely to be
identified by a screening process which is moreover protected by the same
patent, although none of these compounds has been neither identified nor
described. Such
claims are drafted as follows: “Agonist of the receptor X identified by
the screening method of claim n”. These
claims risk the nullity if the description specifies no structural
characteristic of the compounds likely to be identified by the claimed
screening method. A
relatively recent technique might however enable the applicants to avoid the
charge of insufficient description in such a case. Today, it
is possible, under certain conditions, to crystallise the protein which
constitutes the studied target, and after several operations, to determine
the three-dimensional coordinates – the space structure – by X-ray
crystallography. A
three-dimensional model of the analysed target is thus obtained which can be
used to identify by their spatial conformation the compounds likely to act on
the target. One has
to determine the spatial structure of the tested compound, to create a
graphic representation thereof on a computer and to superpose it on the
representation of the structure of the target, in order to check whether the
compound links to a sufficient number of active sites of the target. According
to some authors5, the inventor of a screening method of this type
could perhaps claim the compounds identified by means of this method. One can
consider that the requirement of description is met since the crystalline
coordinates of the target provide enough information to allow identification
of the molecules covered by said claim. The
patentee would not merely claim all the molecules able to link to the target
but he would actually describe them by means of their spatial structure. However,
such a patent may be invalidated for lack of novelty,
if a compound known in the prior art was included in the scope of the claim. 1.2.2. The requirement of sufficient
description
European
and It is the
requirement of “enablement” in It
constitutes another difficulty for reach-through claims, notably for those
relating to the products discovered by a screening method which is moreover
protected by the patent, or those of the type “agonist of the receptor X”. If the
description often teaches how to identify these products, notably by the
screening method which itself can be protected by another claim of the same
patent, it generally indicates neither how to produce them, nor how to use
the whole claimed category of compounds without undue experimentation. Therefore,
such claims risk to be invalidated for lack of “enablement” under
American law. It is the
same in English law, where the requirement of “sufficiency” has been
recently specified in the American Home Products v. Novartis6
decision. Although
this decision was not handed down regarding a reach-through patent, the
principles set forth by the Court of Appeal can completely be applied
to this study. The
patent related to the use of rapamycin for producing a drug against
transplant rejections in mammals. Furthermore,
it claimed the use of rapamycin derivatives – suggesting that some of
these derivatives were more efficient than rapamycin itself – without
identifying them however. The Court
considered that the specification did not teach how to implement the
invention with the claimed derivatives. As the
patent described none of these derivatives, according to the Court it
constituted only a starting point for a research program which alone would
have enabled the person skilled in the art to ascertain the derivatives which
could be used. The
application of these principles would probably lead the English judges to
consider that, unless a significant number of compounds has been identified
and characterized, the identification of the compounds involved presents too
many uncertainties and requires too many efforts from the person skilled in
the art for a reach-through claim relating to the compounds identified by the
patented assay to be valid. 2.
Reach-through infringement
One of
the purposes of some reach-through claims is to circumvent the principle of
territoriality which governs patents. It is
notably the case of reach-through claims which cover the products identified
by means of a screening method which is moreover protected by the same
patent. Even if
the method is implemented in a country not covered by the patent, if the
product so obtained is imported into a country covered by the patent, the
reach-through claim will be infringed. The
current doubts on the validity of reach-through claims can however lead to
try to exploit other ways to reserve oneself the exclusivity of research
methods. The U.S.
District Court of Delaware had to rule on the efficiency of one of these
strategies in a decision handed down on October 17, 2001 in the Bayer v.
Housey7 case. Housey
owns It
contended that Bayer had used one of these methods outside the Housey
contended that Bayer sold a product – the drug – obtained by a patented
process and violated Section 35 U.S.C. 271(g)8. Housey
also contended that Bayer violated said Section by importing and using in the
United States the information obtained by the patented method, namely the
fact that the molecule acted on a certain target. The
District Court dismissed Housey’s claims. It
reminded that Section 271(g) relates only to the products obtained according
to a manufacturing process, and not according to a process for
obtaining information – which a screening method is in fact: said method
makes it possible to determine whether a compounds acts on a target. The Court
considered that Bayer’s acts could have infringed Housey’s patent only if the
patented method had related to a step of the manufacture of the end product. Thus the value
of a patent relating to a research method is limited: · by the substantial scope of the
patent, which the Court brought back to its real scope by the mere
application of statutory provisions, · as well as by the territorial scope
of the patent right: a Nevertheless,
the Court of Appeal for the Federal Circuit has not yet had the occasion to
give its opinion on this issue. The
English courts also have not yet had to apply to a research method the
statutory provisions relating to the infringement of a patent directed to a
“product directly obtained by means of the process”. However,
they have already defined some principles for applying the relevant statutory
provisions, notably through the Pioneer v. Warner Music9
case. Article 60(1)(c)
of the Patent Act of 1977 sets notably forth: “a
person infringes a patent for an invention if … where the invention is a
process, he disposes of, offers to dispose of, uses or imports any product
obtained directly by means of that process or keeps any such product whether
for disposal or otherwise”. Pioneer
owned patents designating the Although
the patent did not cover the production of the compact discs themselves,
Pioneer started an action against Warner for having imported into the Nevertheless,
the Court of Appeal dismissed its claims holding that the process led only to
the achievement of a master and not of discs, and
that the discs, as they did not share the essential characteristics of the
masters, could not be considered as obtained “directly” by means of
the patented process. The discs
were obtained after three further stages of production; moreover, neither the
master, nor the intermediate products could perform the same function as the
discs. The
principles brought out by this decision, applied to research methods, would
probably lead the English courts to adopt the solution found in the Bayer
v. Housey case, however on slightly different grounds. The issue
would be to determine whether the drug imported into the As the It is
less than probable that this information would be held as being a product in
the meaning of Section 60(1)(c) of the British
Patent Act. Furthermore,
should it be held that the compound is a product obtained directly by means
of the process, it would not be necessarily the same
for the drug actually marketed. If the
drug has the biological activity of the compound, the fact remains
nonetheless that the compound will have passed through many stages before
being incorporated into the drug, and that these stages will probably have
changed its essential characteristics. Like in
the The
message sent to the owners of research method patents is clear: their patent
can only cover what they have actually discovered. The
consequence is that, to increase the value of their discoveries, these
inventors should implement their methods themselves in order to find out the
new molecules and to obtain patents on the end products which are the real
sources of income. Besides,
it is what the owners of said patents begin to do, who are now engaged in a
race for the identification of active molecules which are potentially useful
and patentable. The
difficulty however only moves to another issue: the patents relating to these
molecules must provide enough information to support the claims relating to
the use of said molecules… 3.
Reach-through royalties and damages
The
access to the profit generated by the products discovered by research methods
can also be considered at the level of a licensing agreement directed to the
discovery tools. This way
corresponds to the contracting of a licensing agreement providing for reach-through
royalties (3.1.). These
royalties will probably be used as a basis for the assessment of the
reach-through damages which could be granted in case of infringement (3.2.). 3.1.
Reach-through royalties
In the
field of method patents, the royalty is usually fixed according to the use of
the method made by the licensee. However
such a criterion is inappropriate in the field of research method patents. Their
value does not lie in how much the licensee will use them but in the
molecules they will enable the licensee to identify and subsequently to
market. For this
reason, a more and more usual practice consists in basing the royalty under
the license on the sales of the end product. The
agreements providing for reach-through royalties should thus be examined not
only as to their lawfulness (3.1.1.) but also as to their
appropriateness (3.1.2.). 3.1.1. Lawfulness of reach-through
royalties
The
system of reach-through royalties is limited notably by competition law: as
the recent Bayer v. Housey decision has shown, the obligation to pay
royalties cannot exceed some limits. In
particular, an agreement which provides for the payment of royalties during
the term of patents protecting the molecules discovered by means of the
patented method, such as that offered by Housey, according to Bayer, may
constitute a “patent misuse”. Such a
clause would result in obliging the licensee to pay royalties after the
expiration of the patent subject-matter of the license. This
position is closely akin to that of the French doctrine and case law, which
have however adopted different grounds to prohibit the licensor from
requesting the payment of royalties after the expiration of the patent. The Pestre
v. Oril10 case was an opportunity to examine the case of a
licensing agreement directed to a patent and also to non patented know-how,
which provided for the payment of royalties over 50 years. The
licensee, as he refused to continue to pay the royalties after the patent had
expired, was served a writ of summons for non-performance of the licensing
agreement. The Court
of first instance held that the licensee could not be obliged to pay
royalties subsequent to the expiry of the patent, as the cause of the
agreement laid in the monopoly attached to the granted patent. The Court
of Appeal reversed and considered that: · the cause of the obligation to pay
royalties laid in the know-how license as well as in the patent license, and
the expiration of the patent did not destroy the value of the know-how, · the parties could freely agree that
the license compensation would be spread over 50 years, this spreading
being a mere payment facility. These two
decisions differentiate from each other only in the designation of the main
object of the agreement: patent license or know-how license. The Court
of Appeal only drew the consequence of its choice, without putting into
question the solution found by the Court of first instance. All these
solutions are in accordance with the majority of the doctrine, which
considers that: · a patent licensing agreement is
lapsed as soon as the patent expires and could not therefore oblige the
licensee to pay royalties subsequent to this date (unless it is merely to
spread the payment of the royalties resulting from the exploitation of the
patent during its validity period), · a know-how licensing agreement,
which is not subject to the existence of a depriving right, can validly
provide for the payment of royalties over any period agreed on by the
parties, · a combined patent and know-how
licensing agreement shall accordingly be governed by the proper rules of each
category of license in a distributive way, and if it is not possible, shall
be governed by the rules governing its main object. The
Commission block exemption Regulation on technology transfer agreements11
goes in the same direction, as it sets forth that: · regarding know-how licensing
agreements, the provisions providing for the payment of royalties until the
end of the agreement independently of whether the know-how has entered into
the public domain, are authorized, · regarding patent licenses, there
is no reason to prohibit the parties from choosing the most appropriate means
of financing the technology transfer, and therefore to prohibit the payment
of royalties for the exploitation of the licensed technology over a period going
beyond the duration of the licensed patents12. For
patent licenses, the Regulation however grants this free choice only to
facilitate payment. A clause
obliging the licensee to pay royalties for the exploitation of an expired
patent would be contrary to the rule of free competition. Provisions
setting forth reach-through royalties should therefore relate not only to the
licensed patent but also to a know-how to be still
valid after the expiration of this patent. 3.1.2. Appropriateness of reach-through
royalties
One of
the most often expressed critics against reach-through royalties is the
increase in the price of the end products to which “royalty stacking”
leads. A drug can be
subject to several licensing agreements, according to the complexity of its
finalisation which may have needed: · the contracting of a collaboration
agree-ment in order to organize a research program, · the use of a research method in
order to discover the active molecule, · and the recourse to a patented
production method. The
royalty stacking resulting from this situation can however be minimized if
each partner understands that his interest does not lie in an exaggerated
increase in the price of the end product, which is unfavourable to the sales. Rebates
on royalties are frequently provided for in such cases. Furthermore,
sometimes there is no interest in providing for a reach-through royalty;
licenses granted to universities are an example thereof: their research
generally does not lead to the marketing of a product,
a reach-through royalty would lack interest for the patentee. For this
reason, in such cases, the license is granted in consideration of the
undertaking of the licensee to grant licenses on the discoveries he will make
by means of the patented method to the patentee (“grant back licenses”). 3.2.
Reach-through damages
Case law,
either in the One can
only make reference to the general principles of the assessment of damages to
determine the approach the courts could adopt. As to
French law, it refers to the classical notions of civil liability, according
to which the infringer shall compensate the damage he has entailed (Article
1382 of the French Civil Code). The
English approach is quite similar to the French one: the measure of damages
is supposed to be that which will put the injured party in the same position
as he would have been in if he had not sustained the wrong (“had the
infringer not infringed” or “but for the infringement”). In The
difficulty to assess damages in a case of infringement of a research tool
patent is that the infringement does not result in the finalization of a
competitive method or in the production of an item which would reduce the
sales or price of the patented method. Therefore,
resorting to the loss of profit seems inappropriate in such a case. Hence,
one must turn towards the grant of a reasonable royalty. In such a
case, French courts try to determine the royalty rate which could have been
negotiated by contract by referring for this purpose to the mainstream
contractual practice for patents of the same field. Likewise,
The
difficulty lies however in the number of licensing agreements entered into in
this field, which is low in view of more traditional sectors where
well-established practices exist. Nevertheless,
it seems that the agreements provide generally for the payment of royalties
at a rate between 1 and 5% of the turnover generated by the drug issued from
the research process. Therefore,
the issue of the assessment of reach-through damages depends largely on the
development of the practices in matter of reach-through licenses. Footnotes 1. 119 F.3d 1559 (Fed. Circ. 1997) 2. 285 F.3d 1013 (Fed. Circ. 2002);
this decision is cited as “Enzo II” because another decision handed
down regarding patents is often cited as “Enzo”: Enzo-Biochem v.
Calgene, 188 F.3d 1362 (Fed. Circ. 1999) 3. No. 01-1230 (Fed. Circ. 4. 66 Fed. Reg. at 1099 5. Rebecca S. Eisenberg, “Reaching
through the genome”, article presented during “Science and cents:
exploring the economics of biotechnology”, on 6. American Home Products
Corporation and Calne v. Novartis Pharmaceuticals UK Ltd and Novartis Pharma
AG, [2000] EWCA Civ 231 ( 7. 169 F. Supp. 2d 328 8. “Whoever without authority imports
into the United States or offers to sell, sells, or uses within the United
States a product which is made by a process patented in the United States
shall be liable as an infringer, if the importation, offer to sell, sale, or
use of the product occurs during the term of such process patent. In an
action for infringement of a process patent, no remedy may be granted for
infringement on account of the non-commercial use or retail sale of a product
unless there is no adequate remedy under this title for infringement on
account of the importation or other use, offer to sell, or sale of that
product. A product which is made by a patented process will, for purposes of
this title, not be considered to be so made after (1) it is
materially changed by subsequent processes; or (2) it becomes a trivial and nonessential component of another
product.” 9. Pioneer Electronics Capital Inc.
v. Warner Music Manufacturing 10. Tribunal de Grande Instance
of 11. Regulation EC No. 240/96 of 12. Article 2, § 1, al. 7, b, and §
21 of the explanatory memorandum |