Intellectual Property Rights and Regulations in a Global Economy

Lila FeiseeManaging Director for Intellectual Property

BIOJanuary 6, 2010

Washington Campus

About BIO

• Trade association with more than 1,200 biotechnology companies, academic institutions, state biotechnology centers, and related organizations in all 50 states.

• Vast majority are small, emerging companies with little revenue and no marketed products– Health care, – Agricultural,– Industrial, and environmental biotechnology

products

“The very first official thing I did in my administration—and it was on the very first day of it too—was to start a patent office; for I knew that a country without a good patent office and good patent laws was just a crab, And couldn’t travel any way but sideways or backwards.”--Mark Twain, “A Connecticut Yankee in King Arthur’s Court” 1889

Today’s Topics

1. Role of biotechnology in the global economy2. Role of Patents in Biotechnology3. Challenges and opportunities in IP for Biotech

1. Patent reform and the PTO2. Gene patents and management of IP arising from

federally funded research3. Healthcare reform4. Compulsory licensing/access to technologies

Role of biotech in the Economy• Jobs for more than 7.5 million people in the United States

• Commercialized more than 300 biotechnology drugs and diagnostics

• Health products used by more than 325 million people worldwide;

• Another 400 or so biotechnology products are in the pipeline.

• In the agricultural field

– simultaneously increasing food supplies, reducing pesticide use, conserving natural resources of land water and nutrients, and increasing farm income.

– leading the way in creating alternative fuels from renewable sources without compromising the environment.

The role of Biotech in the economy• Market capitalization as of April 2008 was $360 billion • U.S. health care biotech revenues from publicly traded companies rose

from $8 billion in 1992 to $58.8 billion in 2006.• U.S. publicly traded biotech companies spent $27.1 billion on research

and development in 2006.• The top five biotech companies invested an average of $170,000 per

employee in R&D in 2007. • Biotechnology attracted more than $24.8 billion in financing in 2007 and

raised more than $100 billion in the five-year span of 2003-2007.• The average annual wage of U.S. bioscience workers was $71,000 in

2006, more than $29,000 greater than the average private-sector annual wage.

• See Battelle report.. http://bio.org/local/battelle2008/State_Bioscience_Initiatives_2008.pdf

Patents and Biotech

• Ideas/research with potential are patented– DNA, proteins, cells, transgenic plants and animals,

methods of treating and detecting• Long lead time and hundreds of millions of dollars of

investment– University research and government funding– Investor financing and collaborations

• Ancillary benefits of patents: Jobs– High-skilled workforces have a higher standard of

living

Diligence Categories for Investors• Management• Intellectual Property • Legal • Technology

– Preclinical work– Clinical Data

• Regulatory Diligence• Manufacturing• Financials

Pillars of Biotechnology’s Growth

• Strong public/private partnerships and innovative research

• Strong intellectual property protection– Broad patent eligibility– Predictability in term length– Predictability in enforcement

• Stable regulatory environment– Safety of approved product– Timeliness of approval

Basic Basic ResearchResearch

Invention Invention & Patent & Patent

FilingFiling

00 1212 2020

Marketing Marketing ApprovalApproval

Applied Applied ResearchResearch(including (including

clinical work to clinical work to obtain obtain

approval)approval)

Market Market ExclusiviExclusivity Periodty Period

Patent Patent ExpirationExpiration

- 6- 6

Fed $Fed $$$$$

Timeline for biotech therapeutic Development

Industry Use of Patents

• To generate capital – 90% have no products on the market

• To exclude competitors for a period of time– 10% with products must protect investment

• As product for licensing– Universities, mid-size companies

• 700K patent applications• 1 million in the next few years • Increase in total number of licenses over the

past decade

Global Innovation

46,576 total licenses/options executed from 1996 – 2006**based on AUTM data

Challenges and Opportunities

Patent and PTO reform

Challenges and Opportunitieson the IP front

• Patent Reform– Congress

• Legislation pending– Expand opportunities to challenge patents (House and

Senate)– Decrease the value of patents through recalculation of

damages (House)– Lacks true front-end quality reforms (House and Senate)

• PTO– New Administration, looking at ways to streamline patent

process

Challenges and opportunities: In the Courts

• Business method patents: The Federal Circuit, in In Re Bilski, basically eliminated much-maligned patents on disembodied business methods

• Willful infringement: Under the Federal Circuit’s In re Seagate decision, willfulness is now a much more circumscribed doctrine that is harder to establish in litigation.

• Obviousness: In KSR v. Teleflex, the Supreme Court made it easier for the PTO to reject applications on combination inventions, and for defendants to prevail on an obviousness defense against asserted patents.

Is Reform Necessary?

• Stream-line patent office processes• Collaborations with other patent offices• Bring the PTO into the 21st century with the

right tools and training

Challenges and Opportunities

Healthcare Reform

Biosimilars Legislation

• In healthcare legislation• Create a pathway for approval of biosimilars• In both the House and Senate passed bills

– Both bills have biosimilars provision though the House bill’s patent provisions are a bit better for our members

• Congressional leaders (Dems) are meeting to try and reach a deal that will hold in both chambers.

• January-early February timeframe

FOBs Provisions

• 12 years DE (both House and Senate)– Senate bill does not allow for additional exclusivity– House bill allows for 6 months for pediatric exclusivity

• Allows interchangeability based on FDA assessment (Both House and Senate)

• FDA can set guidances but they’re not required to do so (Both House and Senate)

• FDA can require analytical data and animal studies or can waive this requirement (Both House and Senate)

• Distinct naming provision (Generic naming)– House has unique naming provision, Senate bill does not

• Patent provisions in Senate bill, more restrictive and burdensome on innovator, unlikely to allow for resolution of all disputes prior to approval of biosimilar and also has the potential to create additional litigation

• BIO is able to support both the House and Senate versions of the FOBs provisions.

Patent Provisions• BLA triggers obligation to provide to innovator access to

application (Both House and Senate)• Identification of relevant patents is the obligation of the

innovator (Both House and Senate)• Process patents and method of use patents can also be used

in infringement (Both House and Senate)• The earliest date litigation can ensue is 4 years after licensure

of the innovator product (Both House and Senate)• Both bills would open a time window for litigation long before

approval of biosimilar.(Both House and Senate)• No stay of approval (both House and Senate)

• Senate bill more restrictive in who can access confidential info to biosimilars– No access to Scientists and individuals who are involved in

prosecution of the relevant patents– No access to Patent owners who have not exclusively

licensed to the reference product sponsor

• The House bill is more flexible and relies on a contract-based confidentiality within the FDA.

• Identification of relevant patents- The Senate bill follows a four step process while the House follows a 2 step process– Both allow for a back and forth on the referenced patents– But Senate allows for a negotiation of which patents

should be litigated if no agreement reached there would be a “list exchange” of patents the two parties view as relevant and the innovator has 30 days to file suit on all common listed patents.

• Under either bill the biosimilar applicant can certify that it will not begin marketing until patent expiration and parties may license instead of litigate.

• Senate bill provides for essentially two waves of litigation– Early wave over the list exchange patents– Late wave on patents identified but not common to both

lists• Senate bill does not allow for third party

participation in the preapproval litigation process

• Linkage- Senate requires appellate decision prior to approval of biosimilar– House requires district court decision

• Senate provides for DJ action only after biosimilar’s intent to launch– House has no DJ provisions

• Senate bill has cause of action when biosimilar certifies that a patent is invalid or unenforceable– House has no such cause of action provision

• Senate bill has forfeiture and and penalty for those patents that could have been included in early wave but not timely litigated.

• House bill does not have such a provision

Gene Patents and Federally funded Inventions

• Patents are eroneously equated with high prices– Stricter control over federally funded research– Senator Wyden tried to include “reasonable

pricing clause” in licensing agreements between federally funded labs and companies (last healthcare debate)

– Exercise march-in rights to compulsory license certain types of technologies

– Several hearings on how to manage federally funded inventions

• ACLU sued Myriad Genetics for its breast cancer test--BRCA gene patented

– Questions quality– The ability to get a second opinion– Whether or not genes should even be patented

• SACGHS report on licensing of gene patents for diagnostics

• Possible legislation to limit licensing of gene patents– Wasserman Schultz

• Understand the role of IP in developing new medicines for intractable diseases

• Increase funding of university labs and research

• Increase funding of university technology transfer offices

• Use IP incentives to bring companies into the fold during the “valley of death” stage

Challenges and Opportunities

Global IP

International IP

• Biodiversity treaties

– Access and benefit sharing of genetic and biological materials

• Mandatory Patent Disclosure requirements for genetic and biological resources

• World Health Organization

– Access to Medicines

• Compulsory licensing, mandatory licensing, patent pools

• UN Framework Convention for Climate Change

– Funding of and access to climate change technologies

Patents are the Solution not the Problem

• Hidden driver of economic recovery• Catalyst for innovation• The impetus for addressing global challenges• A solution to poverty

– The Property Rights Alliance study showed that countries that protect the physical and intellectual property of their people enjoy nearly nine times higher GDP per capita than countries ranking lowest in property rights protections.

– The study, the 2009 International Property Rights Index (IPRI), compared the protections of physical and intellectual property to economic stability in 115 countries representing 96 per cent of the world’s GDP.

– http://www.propertyrightsalliance.org

bio.org/ip

Thank You