By Doug Robinson, Elisabeth Koral, and Leanne Rakers, Harness Dickey
Since 2012, patent stakeholders in the U.S. have faced remarkable uncertainty in the evaluation of patent subject matter eligibility under 35 U.S.C. 101, particularly in the application of the Supreme Court’s Alice/Mayo1 test by the United States Patent and Trademark Office (USPTO). In an effort to provide more consistency and predictability in its application of this test, the USPTO published the “2019 Revised Patent Subject Matter Eligibility Guidance” on Jan. 7, 2019. The 2019 Revised Guidance applies to USPTO examiners and Patent Trial and Appeal Board (PTAB) judges.
Is this good news or bad news for biosimilars?
The 2019 Revised Guidance offers both an upside and a downside for biosimilar companies. On the negative side, examiners are expected to issue fewer section 101 rejections and, accordingly, issue more patents overall. For example, evergreening method of treatment patents to extend patent protection, such as where the point of novelty is based on a new clinical score as determined by a routine test, may more easily pass 101 muster. Of course, more patents mean an expanded biologics patent thicket and more potential barriers to entry for biosimilar companies.
On the other hand, the guidelines provide clear boundaries with very little opportunity for divergence within the most commonly claimed subject matter categories, promoting consistency and predictability. Added predictability is an upside for biosimilar companies.
What changes and what doesn’t change?
Some background on the section 101 test provides helpful context for the importance of these changes. Before 2012, patent eligibility was rarely raised in litigation and section 101 was generally seen by patent stakeholders as a very low hurdle to pass in the process of seeking a patent. The role of section 101 then drastically expanded following the Supreme Court’s decisions in Alice, Mayo, and Myriad. While a full analysis of these cases is beyond the scope of this article, the upshot of these decisions is that section 101 requires the two-part Alice/Mayo test for eligibility:
Step 1: Is the claim directed to a law of nature, natural phenomenon, or abstract idea? If not, it is eligible for patenting. If the answer is yes, then move to the second step.
Step 2: Does the totality of the claim embody an “inventive concept” that amounts to something “significantly more” than the law of nature, natural phenomenon, or abstract idea?
The Alice/Mayo test is not a precise test; in fact, the current Supreme Court appears to disfavor clear, bright line tests. As a result, ambiguity remains and assessment is still difficult for the USPTO, courts, patent stakeholders, and parties challenging patent validity. For example, at some level every biologic product is natural in the sense that it is made of naturally occurring elements. It took two rounds of USPTO guidance to confirm that gunpowder was indeed patent eligible subject matter and not an unpatentable product of nature.
It has also proven difficult to apply the “significantly more” component, under which both the courts and the USPTO have struggled mightily, resulting in further unpredictability. Even judges on the Federal Circuit — the court that hears all appeals in patent cases — have expressed frustration with the difficulty of applying the Supreme Court’s section 101 decisions.2 The 2019 Revised Guidance is an effort to coalesce the Federal Circuit’s efforts to analyze section 101 issues into a set of guidelines that help ease the analytical burden on examiners and PTAB judges and make the process more predictable.
Prior to the 2019 Revised Guidance, the USPTO evaluated whether a claim qualified as section 101 eligible subject matter by following a two-part test it derived from the Alice/Mayo test, as seen here:
Step 1: Is the claim directed to a process, machine, manufacture, or composition of matter? If the answer is yes, then proceed to Step 2A.
Step 2A: Is the claim directed to a judicial exception, i.e., a law of nature, a natural phenomenon (product of nature), or an abstract idea? If the answer is yes, then proceed to Step 2B.
Step 2B: Does the claim recite additional elements that amount to significantly more than the judicial exception? If the answer is yes, the claim qualifies as eligible subject matter, and if the answer is no, the claim does not qualify as eligible subject matter.
The 2019 Revised Guidance sets forth a revised procedure to determine whether a claim is “directed to” a judicial exception under Step 2A. The revised procedure breaks Step 2A into two prongs: (i) whether the claim recites a judicial exception; and (ii) whether a recited judicial exception is integrated into a practical application. Only when the claim recites a judicial exception and fails to integrate that judicial exception into a practical application, is the claim “directed to” a judicial exception requiring further analysis under Step 2B. In other words, when a claim is deemed to integrate a judicial exception into a practical application, that claim qualifies as eligible subject matter. The analysis under Step 2B remains the same as provided in the existing USPTO guidance as modified in April 2018.
Typically, the USPTO provides example walkthroughs that demonstrate the process for applying its latest guidance to sample claims. Currently, the only examples provided are for computer software claims, although examples in the biotech field may be forthcoming. In any event, the 2019 Revised Guidance provides that an additional element or combination of elements may integrate the judicial exception into a practical application when an additional element applies or uses a judicial exception to effect a particular treatment or prophylaxis for a disease or medical condition. The 2019 Revised Guidance also notes examples based on case law in which a judicial exception has not been integrated into a practical application, for example, where an additional element adds insignificant extra-solution activity to the judicial exception, such as measuring metabolites of a drug administered to a patient.
How will the new guidance affect the patent landscape biosimilars have to face?
The expected result of the 2019 Revised Guidance is the USPTO will issue more patents. Almost certainly, the result will not be fewer patents. This is particularly true in the software fields, which were the focus of the USPTO’s examples. Practitioners in biologic patent fields, however, can expect an increase, as well. Biosimilar companies can continue to expect the USPTO to issue formulation claims, method of making claims, most method of treatment claims, and non-naturally occurring antibody claims. As noted, claims covering clinical outcomes, such as a clinical score as measured by a routine test, may more easily pass the section 101 test under the new guidelines. One question is whether a more permissive examination will lead to more aggressive patent application approaches by biologics companies. There is already an existing concern about patent thickets created by biologics companies. For example, AbbVie is facing its first antitrust suit over the thicket surrounding its blockbuster biologic, HUMIRA. The increase of these types of “follow on” patents or evergreening, as seen in the example above, via relaxed 101 treatment at the USPTO may increase arguments regarding patent abuse.
Conversely, in light of this landscape, biosimilar companies must make their own decisions about how aggressively they will pursue section 101 challenges, because it is often possible to analyze a patent claim down to the point where any claim is arguably “abstract” or a “natural phenomenon.” This leads to a reduction ad absurdum, in which claims that seem clearly eligible may be subject to a serious section 101 challenge. Indeed, the Federal Circuit is aware of this problem, and it recently reminded judges to not “overly abstract” claims through analysis. Thus, a biosimilar company could make an argument that might advance its interests in a particular case (for example, arguing an antibody is ineligible), but that may lead to a precedent that harms the overall industry by putting a large swath of patents at risk.
When considering the patent landscape, it is also important to note the 2019 Revised Guidance does not bind district court or appellate court judges. It remains to be seen how much stock those judges will place in the 2019 Revised Guidance. In a recent nonprecedential decision, however, the Federal Circuit signaled that it is not bound by the USPTO’s guidance (Cleveland Clinic Foundation v. True Health Diagnostics LLC).
What Defensive And Offensive Strategies Should Biosimilars Develop?
Defensively, biosimilar companies must be aware of the patents they may face in litigation. Biosimilar companies should continue to monitor the patent applications of biologics competitors, for example, to stay aware of potential patent thicket additions. This will put the biosimilar company in the best position to predict and evaluate business risks. Even if the patent landscape is worse or more complex for a biosimilar company following implementation of these guidelines, if the business landscape is easier to evaluate (of which patents are one part), then the overall business risk will be easier to navigate.
Offensively, biosimilars should consider what mechanisms they can use to challenge additional biologic patents. In large part, this means preparing for court action. Importantly, the 2019 Revised Guidance is not binding on court judges. However, this guidance includes a detailed analysis of prior court decisions and as such may be highly persuasive to those judges. Regarding administrative challenges, inter partes review (IPR) proceedings have been popular with challengers, but section 101 is not a basis to bring an IPR proceeding. Biosimilar companies may also consider initiating a post-grant review (PGR) proceeding (which must be filed within nine months of the patent’s issuance) because section 101 challenges are allowed in those proceedings and the PTAB judges are bound by the 2019 Revised Guidance.
About The Authors:
Doug Robinson is a principal in the St. Louis office of Harness Dickey, one of the nation’s largest and most respected intellectual property (IP) firms. His practice focuses on contested matters in the areas of patents, trade secrets and trademarks. Robinson has experience in a number of technology fields, including biologics, pharmaceuticals, medical devices, chemicals, and others. His expertise spans every phase of the dispute resolution process, from pre-suit investigation through appeal. He has served as litigation counsel in numerous cases under the Hatch-Waxman Act and on behalf of various generic pharmaceutical companies.
Elisabeth Koral is a principal in the St. Louis office of Harness Dickey. She secures IP protection for her clients through all stages of patent preparation and prosecution. In particular, Koral has successfully fought for patent grants for her clients via appeals and oral hearings before the Patent Trial and Appeal Board. She counsels clients in the pharmaceutical industry on the best strategies for securing patent registrations for therapeutic methods, small molecule chemistry, and pharmaceutical formulations, as well as the best strategies for applying for patent term extensions.
Leanne Rakers is a principal in the St. Louis Office of Harness Dickey, where her practice focuses on identifying patentable technologies and drafting patent applications for innovations directed to small molecule chemistry, biologics, therapeutic methods and formulations, organometallic chemistry, and recombinant DNA technologies. As a leader in the firm’s Chemical and BioPharma practice groups, Rakers’ client portfolio includes large and small pharmaceutical, life science, chemical, and biotechnology companies. Her practice also includes IP portfolio strategy and management, client counseling, freedom-to-practice opinions, and due-diligence assessments.