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By Salvatore Salamone

April 7, 2002 | What do magnetic pneumatic tubes have to do with life science patents?

Nothing today, but perhaps everything in a few months. Depending on its outcome, a U.S. Supreme Court patent case filed by a pneumatic tube manufacturer could change the way life science companies apply for patents and perhaps make all existing patents subject to easier challenges by competitors.

The case is commonly referred to as Festo, after the petitioner in the January Supreme Court hearing of Festo Corp. versus Shoketsu Kinzoku Kogyo Kabushiki Co. (also called SMC Corp.). The case began in 1988 when Festo filed suit against SMC, claiming it had infringed on Festo’s patents for magnetically coupled rodless pistons. The Court’s ruling is expected in June.

Before the Festo case, the patent filing routine was to file as broad a patent as possible and then narrow the initial claim through amendments to satisfy the patent examiner. In practice, U.S. courts tended to uphold patent protection somewhat more broadly than the terms of the final amendment, thus preventing competitors from winning patents for products that were only slightly different and, perhaps, encompassed in early versions of the patent application.

The November 2000 ruling by the U.S. Court of Appeals for the Federal Circuit threatens that practice. It narrowly interprets patent law and limits protection to the letter of amendments. This permits competitors to seek patents on similar products, including those potentially created from knowledge disclosed in a patent but not covered in its final, binding amendments. (For more explanation about the legal issues raised by Festo see sidebar: “Festo Rewrites Patent Law.”)

Life science companies, so dependent on patents, are particularly at risk. “Don’t wait for decision day,” says David Beier, patent attorney at the law firm Hogan & Hartson, speaking at the recent Bio.org CEO & Investor Conference. “Review patent portfolios now and come up with a best and worst case scenario.”

Opportunistic companies could simply search the published history of a patent for amendments, and, in theory, copy the item being patented --leaving out the amended element -- make some minor change, and apply for a new patent. Observers say this “patent stealing” process could be applied to the more than 1 million existing patents.

This will force life science companies to change the way they file patents, says Judy Hickey, director of product development at MicroPatent  in East Haven, Conn., a company that produces and distributes patent information. “Companies will need to be more careful in how they draft their claims,” she says. “Companies will not rely on revisions,” as they have in the past on most patent applications.

Companies will be forced to file a more succinct, narrowly focused patent claim. This could make it harder for small companies to get patents, since the time and cost of doing the research necessary to write a narrower patent application might be prohibitive. “It sometimes takes companies 18 months to figure out if they are the first with something new,” says Bruce Carter, CEO and president of Zymogenetics Inc., a drug discovery company focused on proteomics.

The decision could also challenge large companies with extensive patent portfolios to defend.

Even without Festo’s implications, pharmaceutical patents are challenged more often than other patents. An article published last year by the International Risk Management Institute noted that slightly more than one percent of all patents are involved in litigation during a patent’s lifetime. However, some types of pharmaceutical patents have a greater than 25 percent chance of being involved in litigation.

Interestingly, companies that supply patent information say they have been getting requests from their customers for the capability to deliver the content of their reports in delimited file formats that are more easily imported into other applications. There is growing speculation that this capability will be used to do research on patent amendments.

Sidebar: Festo Rewrites Patent Law

In 1988, Festo sued SMC under what is known as the doctrine of equivalents, which has traditionally been used to extend patent protection beyond the literal words on a claim. Basically, the doctrine of equivalents prevents someone from taking a patented item, changing a few minor things, and then claiming it’s new.

In Festo’s case, a second patent law doctrine called prosecution history estoppel came into play. This doctrine puts limits on what can be argued under the doctrine of equivalents, and it was derived from the way patents are awarded.

When a company first files for a patent, typically there is what is called the prosecution stage during which the patent office challenges the claim. The company responds by amending the claim, usually narrowing its scope to satisfy the patent office. During this process, patent claims are often amended several times before a patent is granted.

The doctrine of prosecution history estoppel says that any change made through an amendment limiting the extent of the patent is binding, and the company will not be able to argue later that the limit does not exist. In practice, though – prior to the Festo ruling - the courts have tended to uphold patent protection claims in the gray area between the final amendment and earlier submissions.

In its Festo ruling, the lower court adhered to an inflexible reading of the doctrine of prosecution history estoppel. If upheld, this ruling would make it easier to challenge amended patent claims.

 






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