Patent protection, regulatory exclusivity and product life cycle management should be at the core of any company's life science development strategy. A well-integrated strategy will be critical to securing investments, forming strategic partnerships and achieving sales success.
In putting together this strategy, it is important to consider the four essentials of any good intellectual property strategy - as well as relevant case law. With proper consideration of what might come up during an IP audit or third-party due diligence, a company can avoid unexpected delays or even derailment of its otherwise well-laid plans.
The four essentials of a good IP strategy include:
- Patent prosecution and strategy;
- Rights and ownership;
- Interplay between regulatory exclusivity and patents; and
- Freedom to operate and assessment of competitors.
Patent Prosecution and Strategy
As a company begins to grow, it would be prudent to conduct an internal IP audit to objectively assess strategy and measure progress toward its end game. Since IP audits will become commonplace during later financing negotiations with others, this initial exercise will help familiarize staff and the management team with the IP due diligence process while also identifying potential concerns. If issues are identified, they will be protected by attorney-client privilege and can be addressed thoughtfully and strategically - without impacting external perceptions of the company.
It is important to start by identifying the company's core intellectual property filings and assets, as well as fully vetting their strengths and weaknesses. Ancillary patent families, such as those covering alternative indications, formulations, and methods of manufacture, should also be analyzed to make sure they cover what competitors would reasonably develop.
Rights and Ownership
The company should be able to articulate ownership or other rights it may have in its patent portfolio. For example, it should ensure that all employees have executed employment agreements, which contain the clause "I hereby assign all right, title and interest in all inventions while employed by company" and that inventors have executed appropriate assignments, any assignments have been recorded with the appropriate bodies in a timely manner and that the chain of title is clean.
For licensed assets, the company should know what rights it has been given and whether those rights are exclusive to the company. Fully understanding the impact of any field-of-use restrictions within a license is also critical, as certain products can fall outside of a company's field of use, and therefore outside of its ability to enforce the licensed patents and restrict competition.
Interplay Between Regulatory Exclusivity and Patents
Patent and regulatory exclusivity should be considered together as they are two areas that can provide the most value and protection to a life science product. Simply identifying when a key patent expires is not sufficient, because regulatory exclusivity could possibly extend the company's ability to keep competitors off the market or, in certain situations, allow competitors to speed up entry.
It is important to note that different types of regulatory exclusivity may have significant limitations that enable a third party to enter the market. For drug products, the timing of marketing and data exclusivity can be critical. In fact, many products have had strong commercial success wholly independent of their patent position.
Understanding the approval pathway of the company's products can illuminate the types of workarounds that generics or biosimilars might use to bypass one's patents. Understanding when a potential competitor could enter the market and the effect of such an entry on the sales of a company's product is vital to third-party investors or collaborators. Scoping out barriers to entry for a generic or biosimilar often can illuminate strategies on how to erect such barriers to entry.
Freedom to Operate and Assessment of Competitors
As a company nears completion of its clinical development, it is imperative for the company to confirm that it does, in fact, have the right to commercialize the product without infringing the rights of others. Such a freedom to operate analysis will identify whether any third party has a patent right that could dominate or cover the use, manufacture or sale of the company's product or components thereof. The company's IP counsel should be consulted regarding any relevant patents to determine whether an opinion (e.g., of non-infringement or invalidity) is required. When asked during due diligence whether there are any freedom-to-operate considerations, the company also should consider identifying patents it licenses (if applicable to the product in question) because, absent the license, the licensor would presumably be able to interfere with product development.
Case Law and Changing Regulations to Consider
Keeping current with recent court rulings can help determine whether it would be prudent to shift prosecution strategy or assert certain rights. In the 2019 case, Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., the U.S. Supreme Court held that secret sales - such as a sale or offer for sale to a third party that is obligated to keep the invention confidential - do qualify as prior art. Recently, in Larry Junker v. Medical Components, Inc. (Fed. Cir. 2022), the Federal Circuit found that a letter including pricing information from an infringer to a third party was an offer for sale even though the letter was from an infringer of the patent and was in violation of a non-disclosure agreement. This case serves as another reminder that a non-disclosure agreement does not protect against the on-sale bar to patentability.
In 2015, an amendment was made to the USPTO's rules governing Request for Continued Examination (RCE) practice such that an RCE is not allowed in national stage applications where all statutory requirements are not fulfilled. The amendment indicates that national stage applications do not comply with all statutory requirements for international applications entering the U.S. National Stage until inventor declarations are filed - even though the USPTO specifically allows for later filing of inventor declarations. Despite this amendment occurring in 2015, the USPTO has only recently decided to implement the change in procedure by sending out Notices of Abandonment in U.S. national stage applications where an RCE was filed before inventor declarations. Companies facing this issue should consider filing a petition to revive the unintentionally abandoned application, along with the appropriate fee and the inventor declarations, even if the patent has already issued.
Other current hot topics in U.S. patent case law involve patent eligibility as well as enablement and written description. Patent subject matter eligibility in the life sciences has been in a state of change since Mayo Collaborative Servs. v. Prometheus Labs., Inc (2012). While the case law continues to evolve, companies, especially those whose products are diagnostics or improvements to existing treatment regimens, should consider whether their patents' claims are directed to patent ineligible subject matter and/or if the claims require multiple infringers, which would require a divided infringement analysis.
Pharmaceutical and biotech inventions have also faced heightened scrutiny under enablement and written description requirements in recent federal circuit cases, especially for claims with broad functional language when predictability and guidance fall short. Enablement requires that the specification teach those in the art to make and use the invention without undue experimentation. When a claim recites functional limitations, it is important to consider the amount of experimentation required to make and use not only the limited number of embodiments that the patent discloses, but also the full scope of the claim.1 When substantial time and effort, even if routine, are needed to practice a claimed invention with broad functional limitations and yet narrow working examples, the consideration will likely weigh against enablement.
A written description for a compound genus should enable one of skill in the art to visualize or recognize the members of the genus. The scope and diversity of a claimed genus and the unpredictability in the field of invention are both relevant to the written description inquiry.2 If, as of the filing date, only a narrow subset of examples are known for a claimed broad genus of diverse members with unpredictable characteristics, written description will likely be deemed insufficient.
While the scrutiny for using functional limitations remains high, a recent federal circuit case does provide some welcome guidance for patent owners. As noted in Novartis Pharmaceuticals Corporation v. Accord Healthcare, Inc., Appeal No. 2021-1070 (Fed. Cir. 2022), "a patentee can choose to claim any particular embodiments identified in the specification and exclude others, without explanation, as long as the claim does not indicate to persons of skill that it covers embodiments inconsistent with, and therefore unsupported by, the disclosure." Accordingly, a company should revisit its patent claims and applications to understand where such concerns could be raised by a third party and prepare answers to such concerns.
A Global Outlook
Lastly, knowledge of foreign patent and regulatory laws is important to enable a company to identify potential problems in its intellectual property assets and further strengthen the protection around its product.
Be Prepared
While an internal audit can help a company prepare for third-party due diligence and make course corrections, patent holders may not be able to adequately address everything before a deal. Still, understanding the nature of the problem will ensure that the company is not blindsided. Advanced warning also gives a company the chance to proactively prepare answers to questions.
While not addressed in this article, a company should also audit its design patent (e.g., medical device designs), trade secret (e.g., processes), copyright (e.g., software for health care apps), trademark, and domain name portfolios, as applicable, to form an overarching strategy that is aligned with product development and anticipated offerings.
Footnotes
1 Amgen Inc. v. Sanofi, Aventisub LLC, 987 F. 3d 1080, 1086 (Fed. Cir. 2021)
2 Juno Therapeutics Inc. v. Kite Pharma, Inc., 10 F. 4th 1330,1341 (Fed. Cir. 2021)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
