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Article Excerpt
I. PATENT LAWS IN THE UNITED STATES
II. PROCESS PATENTS AMENDMENT ACT--HISTORICAL PERSPECTIVE III. BIOPHARMACEUTICALS: THE SCIENCE AND THE INDUSTRY A. Biotech 101-A Basic Primer on the Relevant Science B. The Focus of Biotechnology in the "Post-Genomic" Era C. What is a "Research Tool"? D. The Marriage of the Biotech and Pharmaceutical Sectors E. Challenges Facing the Industry IV. CONFLICTING ENFORCEMENT POLICIES OF RESEARCH TOOL PATENTS A. Bayer AG v. Housey Pharmaceuticals, Inc B. Madey v. Duke University 1. Wrongful Assignment of the Burden of Proof. 2. Reinforcement of the "Experimental Use" Standard C. Integra Lifesciences I, Ltd. v. Merck KGaA V. ALTERNATIVE PROTECTION FOR RESEARCH TOOLS UNDER U.S. LAW A. Patent Protection under Section 337 of the Tariff Act of 1930 B. Process Patents and the ITC--In re Certain Abrasive Products VI. THE DIFFICULTIES OF INTERNATIONAL PATENT PROTECTION A. The History of International Patent Laws B. Application and Enforcement of Foreign Patents VII. CONCLUSION
This comment discusses the remedies available for enforcement of research tool patents used in the biotechnology and pharmaceutical industries. Part I describes the general function of U.S. patent laws and addresses a loophole allowing infringement of process patents. As discussed in Part II, recognition of this loophole prompted Congress to add section 271(g) to the Patent Act. Part III introduces the scientific principles that govern modern drug discovery, describes what is meant by the term "research tool," and presents current business and research trends in the biotech and pharmaceutical industries.
Part IV analyzes recent decisions from the Court of Appeals for the Federal Circuit (CAFC) regarding infringement exceptions. Part V describes a limited, alternative remedy available to U.S. patent holders when the Patent Act provides inadequate protection. Finally, Part VI highlights the challenges encountered by small businesses seeking adequate international protection for research tool patents. In large part, these challenges are due to impracticalities in the application for and enforcement of foreign patents. The author concludes that the decisions collectively promote willful infringement of research tool patents in international forums that will harm primarily small biotech entities and stifle innovation and suggests expanded coverage for research tool patents under the Patent Act.
I. PATENT LAWS IN THE UNITED STATES
Globalization of the world economy has created an ever-increasing need for consistent and reliable protection of intellectual property (IP) rights. (1) In the United States, the protection afforded by constitutional (2) and legislative (3) mandate provides a dependable means for securing exclusive rights to the "fruits" of an inventor's creative labor. Patents serve as the main source of domestic protection for new ideas and may issue for one of three types of claimed inventions: products, methods of manufacture, or methods of use (the last two are also called "process" inventions). (4) The scope of protection afforded to U.S. patent holders against acts of domestic infringement is definitive. (5) The exclusionary rights granted by a patent are crucial where commercial ventures rally around a central technology-based product or idea. (6) In developed nations, this security is universally assumed. (7)
While the protections granted by U.S. patents are explicit, (8) the protection has limited effect beyond the U.S. borders. (9) Inventors relying solely on United States patents for protection were once completely powerless to enforce their rights against infringers who chose to make, use, offer to sell, or sell patented subject matter in foreign countries. (10) This possibility created an obvious loophole around the protection extended to valuable process patents. Infringers could use such processes outside of the United States to manufacture unpatentable products for subsequent import and sale in the United States. (11) Exploitation of this loophole may be borne disproportionately by certain industries due to the nature of the processes claimed. The problem is particularly relevant to biotech process patent holders because "[b]iotechnology companies are often built around a new process for artificial manufacture of a substance that occurs in nature and is therefore itself unpatentable." (12) Congress recognized that foreign manufacturers could easily abuse the loophole for competitive advantage in both the biotech and pharmaceutical sectors. (13)
Addressing the loophole, Congress amended the Patent Act to strengthen existing laws. (14) Prior to amendment, the law allowed only for exclusionary orders under section 337 of the Tariff Act of 1930, which Congress simultaneously amended. (15) Such orders are granted under authority of the International Trade Commission (ITC). (16) To curtail blatant infringement, Congress sought to "expand[] the scope of [U.S.] laws to bring them into conformity with the European Patent Convention [(EPC)] and the national laws of many industrialized countries ... to protect the continued growth of American business." (17)
II. PROCESS PATENTS AMENDMENT ACT--HISTORICAL PERSPECTIVE (18)
Congress provided a new remedy for injured process patent holders by allowing collection of monetary damages via the Process Patents Amendment Act (PPAA). (19) Congress approved the Act under weighted concerns that the biotech and pharmaceutical industries would lose their competitive edge in the world market, with specific regards to then newly developed technologies. (20) The relevant portion of the Act, codified in 35 U.S.C. [section] 271(g), states that "[w]hoever without authority imports into the United States or offers to sell, sells, or uses within the United States a product that is made by a process patented in the United States shall be liable as an infringer ...." (21) Thus, the amendment effectively extends process patent protection beyond U.S. borders. Importation of goods into the United States made by the patented process triggers the government's authority to impose liability.
This provision is effective due to the economics of the pharmaceutical market. The United States accounts for nearly half of all sales of pharmaceuticals worldwide. (22) Considering the high costs of developing a drug, (23) the amendment constructively deters infringement by excluding the United States from the available market for products made abroad by a U.S. patented process, thereby limiting both the possibility of profit and the probablility of infringement. With this in mind, Congress tailored the language of the provision to encompass then-anticipated challenges facing the protection of IP rights in the biotech and pharmaceutical industries. (24) Unfortunately, the focus of the statute may have been overly near-sighted, thereby precluding current technologies in the "post-genomic" era from protection under its narrow language. (25)
III. BIOPHARMACEUTICALS: THE SCIENCE AND THE INDUSTRY
A. Biotech 101--A Basic Primer on the Relevant Science
The biotech and pharmaceutical (collectively, biopharmaceutical) industries share an intimate scientific relationship, and the recent changes in the patent laws affect them alike. To understand how, it is important to realize the underlying scientific principles involved.
Modern biotechnology builds on a pioneering theory reported by Francis Crick in 1958, which he called "The Central Dogma." (26) Crick's theory described a process whereby biological material comprised of deoxyribonucleic acid (DNA) transfers genetic information to direct protein biosynthesis. (27) Long, strand-like molecules of DNA are composed of four different types of DNA "bases" called adenine, guanine, cytosine, and thymine (commonly represented by the first letter of each base name). (28) Two strands of DNA combine to form a double-helical structure, much like the rails of a steep, circular staircase. (29) Metaphorically, each step of the staircase would represent an interacting pair of DNA bases, each tethered to its own rail. These pairs usually consist of A-T (or T-A) and G-C (or C-G). (30) Strands of DNA "encode" genetic information through a specifically ordered, linear combination of the base pairs. (31)
Discrete stretches of DNA make up genes. (32) From the beginning of each gene, every stretch of three consecutive base pairs (termed "codons") represents a specific instruction for the biological machinery that assembles proteins. (33) Returning to the metaphor, three steps up the DNA staircase would represent one piece of encoded information. Through another intermediary, (34) the information encoded in one gene ultimately acts as the blueprint for the the synthesis of a specific protein, comprised of ordered chains of amino acids. (35) Scientists have defined the informational link between 64 possible codons and the 20 individual amino acids that they represent. (36) Accordingly, researchers can determine the amino acid composition of a particular protein from a given DNA sequence through a process called "sequencing". (37)
Researchers may designate proteins into two classes, structural proteins and functional proteins (enzymes and binding proteins). Functional proteins catalyze (expedite) and regulate the chemical processes that occur in all living organisms. (38) For purposes of this discussion, it is sufficient to understand that practically all pharmaceuticals (including everything from antibiotics, to anti-inflammatories, to antidepressants) work by either chemically interacting with a functional protein, or is itself comprised of a functional protein or a segment thereof. (39) Accordingly, understanding how the genetic information encoded by DNA ultimately relates to the structure, function, and chemical mechanism of an encoded protein (human or otherwise) is central to new drug development.
B. The Focus of Biotechnology in the "Post-Genomic" Era
Sequencing of the human genome, "the whole of the genetic information of an organism," (40) has ushered in the "post-genomic" era. (41) The mass of data generated by this milestone provides the foundation for the current phase in biotech and pharmaceuticals research, understanding how this data relates to the molecular basis of disease. (42) The phase has launched or transformed entire disciplines in the fields of biotechnology and pharmacology, including: bioinformatics, proteomics, functional genomics, microarray technology, high performance computing technologies, data mining, pharmacogenetics, and others. (43) What is important to understand for purposes of this discussion is that the scientific techniques employed in each of these "new biology" disciplines focus on inter-related aspects of obtaining information about raw DNA sequence data or its encoded protein products. Commercially, researchers use this data for devising new drugs and other human health and animal related therapies. (44)
C. What is a "Research Tool"?
Despite its low cost relative to other phases of drug development, finding a potentially suitable drug or drug target is often the barrier to bringing a new drug to market. (45) Accordingly, any inventive process that employs a method or process to more efficiently or effectively acquire the information sought is invaluable to an entity in the competitive biopharmaceutical industry. Scientific and legal practitioners designate resources that facilitate such laboratory discoveries as "research tools." (46)
There is no particular legal significance in defining a method as a research tool, but doing so helps identify its nature and value, to facilitate discovery. Theorists often refer to research tools as "upstream" inventions because researchers use them to discover other creations "downstream" (for example, pharmaceuticals). (47) Critics of extending patent rights to research tool inventors argue that the monopoly granted to such upstream inventions slows progress by limiting the resources freely available to the scientific community. (48) However, experience shows that this may not be the case. (49)
Arguably, the most significant contribution to the advancement of the biopharmaceutical industry is the invention of a Nobel Prize winning research tool, the Polymerase Chain Reaction (PCR). (50) Without this tool, which allows for in vitro amplification of genetic material, the biopharmaceutical industry would not be where it is today. (51) Patent assignees, Hoffmann-La Roche have successfully asserted their IP rights in the research tool. (52) Nonetheless, researchers freely use the patented tool as licensees in biochemistry and molecular biology laboratories worldwide. PCR's widespread use demonstrates that patenting research tools does not create unduly burdensome requirements on licensees.
D. The Marriage of the Biotech and Pharmaceutical Sectors
The biological processes and associated technologies described above may sound overwhelmingly complex, and they are. They are also big business. In 2001, U.S. pharmaceutical companies spent approximately $30.3 billion on research and development (R&D), utilized 157,000 employees, and collected domestic revenues totaling approximately $130 billion. (53) In the same year, biotech (54) companies spent an additional $16.4 billion on R&D, hired approximately 66,000 scientific employees, and earned roughly $33.5 billion ($8 billion from sales to international markets). (55) In comparison to the existing number of biotech patents (23,992), the number of method and process patent claims reported pending in the fourth quarter of 2002 is astonishing (33,131). (56) While the United States Patent and Trademark Office refuses patents to a significant number of applicants, (57) the sheer number of applications underscores the explosion of new patentable subject matter in the post-genomic era. (58)
The biopharmaceutical industry has become truly borderless, both geographically and in terms of the collaborative effort between industries. With over 4,300 biotech companies distributed worldwide (600 publicly traded), the R&D potential is enormous. (59) Unfortunately, with an overall industry loss of more than $12 billion in 2002, it is unlikely that the market will be able to sustain the extensive number of entities. (60) Many biotech entities have embraced aggressive business strategies in hopes of increasing profitability and assuring their longevity in a constricting economic market. (61)
Companies in the traditional biotech sector have consolidated with either conventional pharmaceutical entities or other biotech companies through joint ventures, mergers, or acquisitions. (62) In some cases, this trend has produced truly monolithic biopharmaceutical conglomerates. (63) Vertical integration of the manufacturing chain, allowing research from "cradle to grave", provides a substantial financial benefit. (64)
Biopharmaceutical conglomerates that have the ability to perform essentially all research-related functions in-house enjoy significantly reduced R&D costs. Cost reductions result, in part, because the well-equipped companies operate independently of outside scientific licensors as part of their research plan. This assures that the conglomerates do not have to share profits from product sales with other interested licensors.
As it may suggest, a centralized location of operation, "in-house" research is perhaps a bit of a misnomer in regard to larger biopharmaceutical conglomerates. In fact, such multinational companies have offices and labs in truly diverse and remote countries. (65) Industry trends suggest that further expansion will continue. (66) At the same time, genetic research has become easier to perform and less dependant on large, delicate, and expensive equipment. This fact, coupled with the continuing progression of globalization, will ensure that big biopharmaceutical companies can conduct research anywhere in the world.
While there are scientific implications for the ability to research remotely (for instance, studying exotic plants for novel therapeutics), the legal implications are equally salient. To see why, imagine the possible scenario: BigPharmCo, Inc. learns of a newly developed research tool through a publication reporting the results of a two-year study conducted in a university laboratory. The described method would simplify the testing of their lead cancer drug candidates. Using the new technology, BigPharmCo could save six months worth of additional research in their...
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