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New United States patent rules – the battle has commenced
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New United States patent rules – the battle has commenced

In brief: Partner Dr Trevor Davies (view CV) provides an overview of the proposed changes to the patent rules governing the prosecution of patent applications in the United States, and of the recent legal challenge to the implementation of the rule changes.

US patent prosecution process
Proposed rule changes
Federal Court challenge to the proposed rule changes
USPTO announcement
Conclusions

The US Patent & Trademark Office (the USPTO) and many other patent offices around the world have been faced with increasing numbers of patent applications being filed, resulting in serious delays in the examination and granting of patents. While many patent offices, including the USPTO, have responded by hiring new patent examiners, the backlogs have continued to grow, placing increasing pressure on resources, management and examiners.

The USPTO particularly has come under pressure over the increasing delays in the grant of patents and perceived problems with the quality of examination and of patents being issued. In response, the USPTO has recently proposed changing how it examines and processes patent applications. To implement these changes, the USPTO has sought to impose a number of restrictions on several already well-established US patent claiming and prosecution practices.

On 3 January 2006, the USPTO proposed changes to existing patent rules which, in its view, would respond to these issues. The USPTO justified the proposed changes on the basis that the growing number of continuing applications, and increasing number and complexity of claims in applications, had reduced the USPTO's ability to examine newly filed applications. A formal public commentary period of four months was undertaken, during which the USPTO received more than 500 written comments, many of which expressed disapproval of the proposed rules. On 21 August 2007, the USPTO published the final rules entitled Changes to practice for continued examination of filings – Patent Applications containing patentability, indistinct claims, and examination of claims in patent applications (72Fed.Reg.46716-46843 (August 21, 2007). The final rules were set to take effect on 1 November 2007.

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US patent prosecution process

In accordance with the established patent rules, following the filing of a patent application in the US, the application undergoes substantive examination by a technically qualified examiner working in the art group within which the technology of the invention resides. Substantive examination includes determining whether the claimed invention is novel and not obvious over the prior art located by the examiner, and determining whether the description of the invention and the claims meet a number of formal requirements set out by US patent law.

If an examiner finds that the claimed invention is not patentable, then an Office Action will be issued setting a period within which the applicant can respond. A respondent can seek to amend the claims, file submissions in support of the invention, and/or provide evidence from the inventor/expert to support the patentability of the invention. The examiner may respond by either allowing or rejecting the claims. This process may occur a number of times with several Office Actions issuing and corresponding responses being filed by the applicant.

Upon receiving a final rejection or Office Action, an applicant has four options with which to pursue patent protection for its invention:

file a request for continued examination (RCE) of the application,
file a continuation or continuation-in-part (CIP) application based on the original (parent) application,
file an after-final amendment, or
appeal to the Board of Patent Appeals and Interferences and, from there, the case leads to the US Federal Court.

A continuation application uses the same specification as the parent application and is entitled to the benefit of the parent application's filing date. A CIP application is based on the parent application but includes further data or information on the invention that was originally disclosed in the parent application. If during the prosecution of the parent application the examiner finds that more than one invention has been claimed, then a restriction requirement issues, which requires the applicant to choose which invention to pursue in the parent application and remove the claims for the other inventions. Prior to the grant of a patent on the parent application, an applicant may file one or more divisional applications directed to the inventions that were restricted out of the parent application.

The US patent system, which allows a potentially unlimited number of continuation and CIP applications, is utilised extensively, particularly for the large innovators in the information technology, pharmaceutical and biotechnology industries. The continuation system is particularly useful for the pharmaceutical industry, as it allows an innovator to have an application pending even though a patent may have been granted on the parent application. If over a period of time from the filing of the parent application one or more drugs are found to be particularly suitable for a given indication, then having a pending continuation application allows claims to be drafted to that specific drug (provided there is adequate support for any such claims in the specification) that may not have been identified at the early stages of the patenting process.

Furthermore, the continuation system in the US provides innovators the flexibility of drafting and prosecuting claims that may capture potential infringers, therefore strengthening their patent position in the US. Accordingly, any change to the US system that may lessen or reduce the potential rights of innovators in the US is likely to be (and in the case of the final rules, has been) received unfavourably by innovators.

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Proposed rule changes

The stated purpose of the final rules is to reduce the number of continuing applications (continuation, CIP, and divisional) and RCE filings. Importantly, due to the retroactive nature of the final rules, changes would affect current pending applications, thus potentially limiting existing patent rights.

Although the final rules propose a number changes, some of the more significant changes are summarised below.
An applicant will be limited to two continuing applications and one RCE per application family as a matter of right. Any additional applications filed must be supported with a petition showing why the amendment, argument or evidence presented in the new application could not have been previously submitted.

An application, or family of applications, should contain no more than five independent claims or a total of twenty-five claims (the 5/25 claim limit). If an applicant does not comply with the 5/25 claim limit, it is possible to file an examination support document including:

a statement that a search was conducted;
an information disclosure document listing the most relevant references;
a comparison between all claims and the cited references;
a detailed explanation of how the independent claims are patentable over the cited references; and
showing where the limitations of the claims are supported in the specification.

An examination support document moves the burden of searching and examination onto the applicant. Many US patent practitioners consider the filing of an examination support document may leave a patent vulnerable to the risk of facing a validity challenge during subsequent litigation.

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Federal Court challenge to the proposed rule changes

On 9 October 2007, Smithkline Beecham Corporation and Glaxo Group Limited (GSK) filed a complaint against the USPTO in the US District Court for the Eastern District of Virginia, seeking a preliminary injunction staying the implementation of the final rules until a resolution of the lawsuit, a permanent injunction against the implementation of the final rules, a declaratory judgement that the final rules are contrary to law, and a request that the final rules be vacated.

GSK was supported by others, including the American Intellectual Property Law Association (AIPLA), HEXAS, The Roskamp Institute, Tikvah and Elan Pharmaceuticals.

GSK argued that the final rules are contrary to law and that the USPTO lacks the authority to promulgate substantive rules under the US Patent Act. In addition, as the final rules are retroactive, they limit the protection available to applicants that was available for applications filed prior to the final rules. There was also the issue that GSK is likely to suffer irreparable harm if the preliminary injunction is not granted. The USPTO vigorously defended the action and moved to strike all motions.

GSK was successful and the court granted a preliminary injunction on 31 October 2007. Accordingly, the final rules were not implemented as planned and the matter will continue in the District Court.

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USPTO announcement

Following the injunction, a notice from the USPTO, dated 5 November 2007, was posted on its website outlining these events and stating:

'...the changes to the rules of practice in the Claims and Continuations Final Rule, including the October 10 clarifications, did not go into effect on November 1, 2007.

USPTO employees are to continue processing and examining patent applications under the rules and procedures in effect on October 31, 2007, until further notice.'

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Conclusions

Following the unpopular announcement by the USPTO of the final rules on 21 August 2007, the US patent profession was forced to review clients' pending patent applications in an attempt to devise strategies to ensure patent rights would not be lost due to the final rules. The preliminary injunction has now raised serious doubts as to whether the USPTO will be able to implement the final rules. We await the final outcome of this challenge to the implementation of the final rules.

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Company news

In brief: Regular news from the biotech industry.

Arana Therapeutics to be new name for merged Peptech and Evogenix entity
Johnson & Johnson announce restructure
Merck enters vaccine collaboration with Dynavax
Merck settles Vioxx claims
Neuren CEO steps down
Roche's anaemia drug approved by FDA
Schering Plough receives antitrust clearance from FTC

Arana Therapeutics to be new name for merged Peptech and Evogenix entity

8 November - The company formed by the merger of Peptech and EvoGenix in August 2007 will be named Arana Therapeutics Limited after Peptech announced that shareholders had voted in favour of the official name change. The company's ASX code changed to 'AAH' in the week commencing Monday, 12 November and its code on the London Stock Exchange has been changed to 'AAHx'. A new strategic plan has been developed and approved by the Board, which commits Arana Therapeutics to expanding and accelerating the development of its internal clinical pipeline, leveraging the company's technology platforms to in-license new drug candidates and seeking commercial partners at the optimum stage of drug development. Within three years, Arana Therapeutics expects to have 2-3 Phase II/III assets, 2-3 Phase I or Investigational New Drug stage assets, 3-4 preclinical programs and a number of new technology deals generating recurring revenues. The new entity has a market capitalisation of around $250 million and currently receives recurring revenues from licensing and commercialisation agreements with international companies including GSK, CSL, Centocor (J&J) and Abbott Pharmaceuticals.