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Patent eligibility test stalls US pharma innovation

Counsel at Novartis and other pharma firms explain how the ever-changing standard for patent eligibility in the US has frustrated innovation by narrowing the scope of patentable subject matter

Evolving patent eligibility criteria has driven uncertainty and stalled innovation in the life sciences sector by increasingly limiting the scope of patentable subject matter, according to pharmaceutical companies.

In-house counsel from Novartis and other pharma firms explain that the US Supreme Court’s patent eligibility decisions in Mayo, Myriad and Alice between 2012 and 2014, plus the USPTO’s guidance on the first two cases in 2013, have established an inhibiting standard on claims relating to laws of nature, natural phenomena and abstract ideas.
They say that the lower courts have further exacerbated the impact of that standard by incorrectly applying the high court’s eligibility framework so that only inventions that fundamentally re-invent a core technology are patent-eligible. That aspect of the problem comes from a misapplication of the so-called ‘claim as a whole’ test. 
Lower courts, including the Federal Circuit, are analysing patent eligibility by excising any element from the patent claim that implicates an abstract idea, law of nature or natural phenomenon, and only looking in isolation at those elements that remain to determine whether they alone amount to an invention. 
According to counsel, the correct approach is to look at the whole patent claim to see whether its elements collectively represent an application of one of those excluded categories.
The eligibility test has led to a spate of patent application rejections and successful invalidation actions based on United States Code Section 101 objections, and created a snowball effect that has steadily knocked out whole technology categories from patent eligibility in the life sciences sector over the past six years.
“The test is like the event-horizon of a black hole that keeps getting bigger and bigger, because almost everything in the life sciences space is based on a natural phenomenon or is a product of nature,” says the deputy general counsel at a pharmaceutical business. He adds that his filing of patent applications is becoming more of a pain because eligibility law is increasingly difficult to reconcile with reality and examiners are having a hard time applying the case law to new claims.
Sources say that one of the main problems with this approach is that it has rendered all sorts of inventions as ineligible where the core innovation is the application of an existing technology to something new, or in a new way.
Corey Salsberg, vice president and global head of IP affairs at Novartis, points out that the current case law has led to the illogical situation where what is considered to be an ineligible law of nature or natural phenomena – which should be scientific and universal constants – now changes and expands with every technological advance.
As an example, he points to polymerase chain reaction (PCR), which is a widely-used method of copying DNA segments. There is no doubt, Salsberg says, that PCR is a human-made technological invention and not a law of nature. He points out that the technology was actually patented in the 1980s.
“But today, the courts are essentially holding that if you take that same human-made technological invention and apply it to a newly discovered type of DNA, the whole method is now considered an ineligible law of nature,” he says.
The associate patent counsel at a life sciences business adds: “My biggest gripe is understanding the law about what is really patentable subject matter. The matter seems so amorphous that it is hard to go to either the established case law or statute itself or how the office has treated both to say ‘this is the test’.”
He adds that Section 101, which sets out patent eligibility law in the US, was never previously seen as an impediment to patentability.
“Businesses knew that they could not get protection on subject matter such as a computer algorithms or something that clearly occurred in nature, but other than that something could be patented so long as it was inventive, new and not obvious.

“That is not the case anymore, or at least it certainly does not seem to be the case in life sciences,” he says.


The eligibility effect

In the long term, life sciences firms are concerned that the uncertainty surrounding patent eligibility for therapeutic products in the US will inhibit the development of new and revolutionary technologies.
Salsberg, at Novartis, points out that the future of medicine and health technologies will rely heavily on biologics (biology-based drugs), personalised treatments, cell and gene therapies plus AI and software-assisted applications – but these matters are all getting closer to the kinds of things that are being held as ineligible. He adds that if the Section 101 debacle is not resolved, the US and perhaps the world will not see these technologies realised.
“Hopefully we will clean the situation up this year. Folks in congress are starting to understand it and it may be possible for them to get together and somehow modify the provision.”
The pharma firm deputy general counsel agrees and adds: “At at a time when we are experiencing a revolution in cancer and healthcare, where precision medicine is a good way to make sure we’re treating the right cancer with the right drug, it seems counterintuitive to disincentivise innovation in that space.” 
In the immediate term, the sting of this ever-evolving eligibility test has been particularly piercing for businesses involved in diagnostics development, which are the tests used to detect the presence of certain genes, or other biomarkers, and are the key to personalised medicines. Salsberg says Novartis is one of the few companies that has been vocal about this problem, but does not have a diagnostics division.
“Diagnostics is getting killed off,” he says. “Many companies in that space are losing their ability to get patents at all and my understanding is that many of them are moving towards trade secrets.” He adds that some diagnostics businesses have started analysing DNA using machine algorithms because they are relatively easy to keep secret.
The deputy general counsel says that diagnostic companies are indeed on the front lines when it comes to patent eligibility, but that firms such as his have continued to file methods of treatment patents nonetheless. “Some of those cases have gone in our favour and others have not. We are continuing to watch the developments in that space closely,” he says.
He adds that eligibility is as much a problem for small companies and academic organisations as it is for big pharmaceutical firms because most of the discoveries made around mechanisms of action or biomarkers are done by those organisations.
One industry source points out, however, that this situation cuts both ways for large pharmaceutical companies that either have to take licences for important discoveries made by smaller institutions, or seek to invalidate their patents in court.
Life sciences firms will likely become more affected by the Section 101 developments in the US as they start to rely on software-related technologies, including artificial intelligence, not only to perform tasks but also for drug discovery. The software industry has been hammered by Section 101-based objections since Alice because many innovations in the space could be considered to be abstract ideas.

Salsberg points out that this problem is likely to extend to most industries over the next few years as more traditionally non-tech businesses invest in connected technologies to improve their products and processes.


Strategy 101

The growing number of Section 101-based rejections and invalidations suffered by life sciences businesses, particularly by those in diagnostic medicines, have compelled many firms to more diligently monitor case law developments.
Salsberg says that the patent team at Novartis reads every new opinion and tries to adapt its practices so as to deal with the impact of those decisions. The team will also try to draft claims to avoid the potential pitfalls introduced by any new eligibility decision.
“The office created a Frankenstein type of test that merged the language of these two distinct cases. There was a huge outcry over the matter from the patent owner community that felt strongly that these two cases were being interpreted more broadly than they should have been.”
“We are still able to patent a lot, which is encouraging, but there are areas where we continue to see rejections that make no sense. For example, we had a digital microscope that was held as ineligible.” He adds that the business has also seen rejections on patents for peptides and antibodies.
Many life sciences businesses, including Novartis and BMS, have had a hand in lobbying the US government to step in and rectify the situation.

“Hopefully we will clean the situation up this year,” says the life sciences associate general counsel. “Folks in congress are starting to understand it and it may be possible for them to get together and somehow modify the provision.”


Where it all started

The problem began after the Supreme Court’s 2012 decision in Mayo Collaborative Services v Prometheus Laboratories that method claims for treating autoimmune diseases based on metabolite levels of drugs administered to the patient are patent-ineligible for merely reciting a natural law.
The following year, the court ruled in Association for Molecular Pathology v Myriad Genetics that while claims directed specifically to cDNA for the BRCA1 and BRCA2 genes were patent-eligible, claims to an isolated nucleic acid encoding a BRCA1/2 gene were not eligible because they related to  a natural product.
Sources say that these two decisions were not a problem by themselves when interpreted narrowly, and only became a problem once the USPTO issued guidance on these Section 101 matters in an attempt to find common ground between the two.
“The office created a Frankenstein type of test that merged the language of these two distinct cases,” says Salsberg at Novartis. “There was a huge outcry over the matter from the patent owner community that felt strongly that these two cases were being interpreted more broadly than they should have been.”
The Supreme Court made a third Section 101 ruling a year later in Alice Corp v CLS Bank International, where it validated the USPTO’s eligibility test to abstract ideas and solidified the idea that this approach would be taken to all laws of patent eligibility.
The current eligibility situation in the US is not good for medical innovation. Companies say that diagnostics are being hit hard and future innovative medicines stand to be stalled if the Section 101 debacle is not resolved. Congress needs to step in and make serious legislative change if the country hopes to stay innovative – and in the meantime pharma businesses must knuckle down and do their best to keep up with the constantly changing case law.

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