Biotech & pharma sector-FW-Sep10.indd - Fasken Martineau

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Magazine-Sep10-final.indd 1
20/8/10 15:51:47
WO
R L D WA T C H
BI OTECH & PHARMA SECTOR
© 2010 Financier Worldwide Limited.
Permission to use this reprint has been granted by the publisher.
REPRINTED FROM:
SEPTEMBER 2010 ISSUE
www.financierworldwide.com
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WORL DWAT CH
BI OT ECH & PHARMA S ECT OR
CONTENTS
Drug regulations in Canada – an overview of some current
changes and general trends
FASKEN MARTINEAU
Patenting genetic inventions in India
LAKSHMIKUMARAN AND SRIDHARAN
A patently commercially attractive jurisdiction – but ensure
that your claims are all valid
DM KISCH INC

Medical diagnostic claims in light of Bilski v. Kappos
MCDONNELL BOEHNEN HULBERT & BERGHOFF LLP
Bioscience has thrived, even in the midst of economic downturn
BIOTECHNOLOGY INDUSTRY ORGANIZATION (BIO)
56
58
6
0
62
64
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8
I
t is impossible to stress enough how
important it is that stakeholders involved
in a drug’s life cycle, including their business
partners, are well aware of the regulations
governing drugs. The fact that drugs are the
most regulated products in the world only
makes this reality more pressing.
This article gives an overview of recent
trends and a few changes now taking shape in
Canadian pharmaceutical regulations. Three
topics will be broached: clinical trials, drug
market authorisations and price control.
Clinical trials – towards increased trans-
parency and harmonising practices
Only since 1 September 2001 has Canada had
a true regulatory framework for clinical trials.
Before then, clinical trials were essentially
based on a partnership between the federal
government and sponsors, funding agencies
and the medical community. This regulatory
framework had two principal goals: (i) ensur-
ing the protection of clinical trial subjects; and
(ii) drawing attention to and promoting invest-
ment in research development in Canada.
The regulations establish the general frame-
work that applies to ‘clinical trials’ conducted
on Canadian territory. They specifically deal
with clinical trial applications (and authori-
sations issued by the Minister), good clinical
practices, research protocols, research ethics
boards (REBs), consent forms, labelling, re-
cords, adverse drug reaction reporting, discon-
tinuance of clinical trials and so forth.
These requirements were developed mainly
to harmonise Canadian standards with Can-
ada’s principal partners’ standards and were
therefore largely inspired by the work of the
International Conference on Harmonisation.
They enshrine a number of international stan-
dards on research ethics. This general frame-
work also encompasses a few specific require-
ments adopted by some Canadian provinces,
such as Québec, which adopted a specific nor-
mative framework governing research.
Over the last few years, Health Canada began
examining its clinical trial regulations. Clini-
cal trial transparency and the harmonisation
of practices are the core improvements Health
Canada wants to make. This article will focus
on two specific measures that should be taken
in the near future – the implementation of a
mandatory clinical trial registration procedure
as well as the harmonisation of REB standards
and assessment procedures.
Mandatory clinical trial registration
Health Canada is currently developing a policy
respecting the registration and communica-
tion of information regarding clinical trials.
Health Canada began by implementing a vol-
untary registration program inspired by the
International Clinical Trials Registry Platform
(WHO), and is now considering making this
registration program mandatory. Here are some
of the more noteworthy terms and conditions
of this mandatory registration: (i) all types of
clinical trials would be registered, with the ex-
ception of those that meet established ‘exclu-
sion’ criteria; (ii) registration would be com-
pleted when the first participant is enrolled;
(iii) all trials would have to report their results;
(iv) clear summaries of the results would have
to be provided; (v) no fee would be charged
for using the register; and (vi) Health Canada
would be responsible for registering ‘clinical
trials’ and administering the register.
Harmonisation of REB standards and assess-
ment procedures
Barring exceptions, a ‘clinical trial’ cannot be
conducted in Canada unless an REB has as-
sessed and approved the research protocol
(including the consent form). That said, no
specific REB assessment standard or certifica-
tion mechanism has been implemented. This is
why assessment standards and practices differ
so widely from one REB to the next. To pal-
liate this situation, Health Canada has begun
developing a voluntary standard to harmonise
these REB standards and assessment proce-
dures. Health Canada is examining the recom-
mendations of the Canadian General Standards
Board, which was mandated to establish this
voluntary standard.
Drug market authorisation – towards a life
cycle approach
The present drug regulation system in Canada
is focused on pre-marketing activities. Once
manufacturers obtain a Notice of Compli-
ance from Health Canada, they may put their
drug on the market. Although manufacturers
must comply with a number of requirements,
they can never be subject to further review by
Health Canada provided that the drug does not
cause serious or unexpected adverse reactions
or the manufacturers do not make any changes
to the drug. Medical and social trends, both
domestic and international, demand that this
system evolve. Regulatory authorities world-
wide are shifting from a pre-market focus to a
life cycle approach that takes into account the
body of knowledge acquired throughout the
life cycle of a drug, with pharmacovigilance
and risk management being the cornerstones
of that approach. This is the rationale for the
Progressive Licensing Project proposed by
Health Canada. This ambitious project that
Health Canada is proposing is based on four
major themes: (i) life cycle management; (ii)
evaluation of advantages and risks; (iii) good
planning; and (iv) accountability.
Under the project, manufacturers that intend
to market a new drug will first have to dem-
onstrate an ‘overall favourable benefit-risk
balance’, a requirement that will be superim-
posed on the traditional evidence of the safety,
efficacy and quality of drugs. Similarly, each
manufacturer will have to submit a life cycle
management plan to Health Canada. This
plan will contain a risk management strategy
incorporating pharmacovigilance planning,
risk mitigation, safety reporting and risk dis-
closure. The life cycle management plan will
be filed and reviewed before the drug will be
authorised for marketing. It will also be sub-
ject to updating as knowledge about the drug
grows.
Health Canada proposed a new regulatory
Drug regulations in Canada – an overview of some current changes
and general trends
BY MATHIEU GAGNÉ
CANADA
Health Canada is
currently developing
a policy respecting
the registration and
communication of
information regarding
clinical trials.
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Fasken Martineau
is a leading international
business law and litigation firm. With more
than 650 lawyers and offices in Canada, the UK,
France and South Africa, we provide strategic
advice in virtually all areas of business law to
a broad range of clients including close to half
of the Fortune 100 companies. With top-ranked
lawyers in a wide range of business sectors, cli-
ents rely on us for our expertise in: Technology
& Intellectual Property; Life Sciences; Litigation
& Dispute Resolution; Corporate/Commercial;
Securities and Mergers & Acquisitions; Taxation;
Government Relations & Ethics; Labour, Employ-
ment & Human Rights; Financial Institutions &
Services; Energy, Environmental, Climate Change
& Regulatory; and Real Estate. Best Lawyers in
Canada (2010) directory lists 96 of our lawyers as
experts in 37 areas of practice. The Canadian Le-
gal Lexpert Directory 2010 recognises 76 of our
lawyers. The Lexpert/ American Lawyer Guide to
the Leading 500 Lawyers in Canada lists 20 of
our lawyers. Chambers Global 2010 Guide to The
World’s Leading Lawyers lists 47 of our partners.
The global nature of today’s business community
demands clear counsel and representation on
complex legal issues. For more information, visit
www.fasken.com.
structure organised around the core concepts
identified by the Progressive Licensing Proj-
ect. The proposed regulations should soon be
tabled again for adoption.
Drug pricing – towards generic drug price
reductions
The Parliament of Canada ‘regulates’ the pat-
ented medicine prices in Canada through the
Patent Act. To our knowledge, Canada is the
only country to proceed in this fashion. Con-
sequently, it is the mandate of the Patented
Medicine Prices Review Board (PMPRB) to
ensure that prices charged by the manufactur-
ers of patented medicines are not excessive, in
accordance with legal parameters and the PM-
PRB guidelines.
Prices are further controlled by means of pro-
vincial and territorial drug insurance programs.
Indeed, both the provincial and territorial gov-
ernments offer drug benefit plans to eligible
groups. Having said this, the provincial drug
benefits programs are not harmonised. They
are somewhat of a ‘patchwork of private and
public drug plans’. It is up to manufacturers to
submit a price for each drug they would like
to have added to the provincial drug insurance
lists or formularies.
Once a listing is accepted by any one of the
governments, various restrictions apply, nota-
bly those affecting the manufacturers’ business
practices (rebates, professional allowances,
discounts, funding, etc.), billing, interactions
with wholesalers, banners and pharmacists.
It is also important to note that prices granted
in one province can have an impact on prices
granted in another province. This is especially
true in Québec, where a lowest-price policy is
enforced under which the selling price must
not be higher than any selling price granted
by the manufacturer for the same drug under
other provincial drug insurance programs.
In the last few years, a number of provincial
governments initiated reforms to reduce costs
and improve the flexibility and administration
of the provincial drug insurance programs. It
would seem that provincial governments are
now taking aim at generic drug prices. Last
July, Ontario made regulatory amendments
that halved generic drug prices, which are
now capped at 25 percent of brand name drug
prices. Bolstered by its lowest-price policy,
Québec announced that same month that it
would follow suit. Other provinces like Brit-
ish Columbia and Alberta have also recently
announced measures to reduce the price of
generic drugs by various means. These recent
changes are expected to result in a restructur-
ing of the Canadian generic drug industry’s
business models.
Mathieu Gagn
é
Partner
Montreal, Quebec, Canada
T: +1 (514) 397 7657
E:
mgagne@fasken.com

A doctor in law and partner at
Fasken Martineau Du-
Moulin
, Mathieu Gagn
é
specialises in drug law and
other health products (cosmetics, medical devices,
natural health products, etc.). He is also an associ-
ate professor at the Universit
é
du Qu
é
bec
à
Montr
é
al
and is the author of a 1000-page book on drug law
in Canada.
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8
T
here is a great economic value of patent
protection for biotechnological inventions.
Genetic inventions, as they are called, is a
broad term that covers DNA, RNA, genes,
promoters, proteins and recombinant DNA
technology. These inventions are relevant
to pharmaceutical, agricultural, industrial,
and environmental biotechnology based
companies. The patenting of genes, DNA
sequences and proteins has been permitted in
India since January 2005.
Based on statistics from the Indian Patent
Office (IPO), in 2008-09, around 1844 patent
applications pertaining to biotechnology were
filed, compared to 1214 in 2004-05. Further,
around 1157 patents were granted, a manifold
increase since 2004-05, during which only 71
patents were granted. This shows an enormous
interest in the field of biotechnology in India.
Genetic inventions may include one of the
following: DNA, RNA, SNPs (Single Nucleo-
tide Polymorphs), mRNA (messenger RNA),
cDNA (complementary DNA), oligonucle-
otides, siRNA (Small interfering RNA), DNA
markers, genetically modified organisms, re-
combinant vectors proteins, and polypeptides.
It is to be noted that DNA sequence informa-
tion cannot be patented, but a DNA molecule
having a defined utility is a patentable subject
matter.
Under Indian law, the three basic require-
ments for patenting an invention are novelty,
non-obviousness, and industrial application.
For a patent to be granted in India, the inven-
tion under consideration should not be covered
in the negative list in Section 3 of the India
Patents Act, 1970 (the Act) which provides an
extensive list of what are not inventions (ex-
clusions) under the Act.
An invention is considered to be ‘novel’ if it
is different from prior art and does not form a
part of the public domain prior to filing. The
requirement of novelty for patenting of a gene
in India is satisfied when the claimed invention
covers an isolated and purified gene and not a
gene that occurs in nature. That is, a patent on
genes is allowed when the applicant is not only
able to prove that the existence of a gene dis-
covered is new, but also that the inventor is the
first person to isolate it from natural sources,
characterise it, and define it chemically in ad-
dition to describing its utility. For example,
genes isolated from the body and/or purified
artificial copies of it produced by technical
processes outside the body are entitled to be
granted patents.
Considering the ‘obviousness’ part of such
an invention, an invention involving genes is
obvious if the prior art provides motivation for
the invention and enables one of skill in the art
to invent something similar with a ‘reasonable
expectation of success’. However, the exhibi-
tion of ‘unexpected properties’ or ‘surprising
results’ will render an invention non-obvious.
In terms of the ‘utility’ requirement, the ex-
amination guidelines for patent applications
relating to inventions in the field of chemicals,
pharmaceuticals and biotechnology states that
gene sequences and DNA sequences are not
patentable if functions are not disclosed.
There are several ongoing debates on the is-
sue of patentability of genes/DNA sequences.
A number of arguments have been advanced
against patentability of genes including argu-
ments that genes are naturally occurring and
therefore not patentable, that genes are basi-
cally discoveries and not inventions, and that
the processes of gene isolation and cloning are
mere improvements and do not involve any in-
ventive step.
Section 3 of the Act deals with inventions
that are not patentable subject matter. This
section poses a problem for the protection of
genetic inventions as some sub-sections ex-
clude genetic inventions from the patentability
list. One such section (S 3b) is that an inven-
tion must not be contrary to public order and
morality or not harmful to human or plant life
or to the environment. In this context, Bt toxin
genes, which may be considered harmful to the
environment, can be objected to by the Patent
Office. However, such objections can be easily
overcome if one can show that the invention is
environmentally safe.
Another important exclusion in this section
is that the discovery of a living thing or non-
living substances occurring in nature is not a
patentable subject matter. Therefore, the ques-
tion of whether a DNA molecule is a discovery
or an invention must be addressed first. The
problem has arisen because of the assump-
tion that genes are naturally occurring, and
consequently these are mere discoveries, not
inventions. The India Patent Office does not
raise the question of discovery for chemicals
isolated from plants or microorganisms such
as antibiotics from fungal sources. However,
when it comes to claims directed to genes/
DNA sequences, the IPO will invariably raise
objections that these inventions fall under the
category of discovery. Despite these issues,
several genetic inventions have been success-
fully granted patents by the IPO.
DNA sequences useful for protein produc-
tion, for example, have been granted patents.
The claims in such granted patents have cov-
ered DNA sequences, recombinant vectors,
and recombinant microorganisms in addition
to methods for production of proteins using
DNA sequences. Thus, it is possible to get
claims granted for proteins and/or polypep-
tides encoded by recombinant DNA sequences
if the recombinant DNA sequences are novel.
Genetic inventions related to promoters for
expression of genes in an organism have also
been granted a patent in India.
Further, DNA sequences useful as diagnos-
tic or screening tools are also considered as
patentable subject matter. Patents directed to
screening will cover claims for DNA primers
useful for PCR assay, methods for carrying out
the PCR assay or wild type gene or mutated
gene sequences. Such patents can also have
claims directed to SNPs that characterise the
Patenting genetic inventions in India
BY V. LAKSHMIKUMARAN,
R. PARTHASARATHY
AND
MALATHI LAKSHMIKUMARAN
INDIA
Under Indian law,
the three basic
requirements for
patenting an invention
are novelty, non-
obviousness, and
industrial application.
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The Intellectual Property Rights Group of
Laksh-
mikumaran and Sridharan
consists of over 40
professionals from various fields of science, tech-
nology, business, law and commerce. It handles
matters relating to every aspect of Intellectual
Property Rights and ensures protection to some
of the most challenging and path-breaking in-
novations of its clients. The core value of our IP
group lies in the confluence of technical and le-
gal knowledge combined with rigorous in-house
training programs. The professionals associated
with us are from some of the best research in-
stitutes, law schools and leading life sciences
and technology companies with many years of
industry experience. They hold degrees in varied
fields such as mechanical, computer science and
electronics engineering, chemistry, pharmacology,
biotechnology and biochemistry. Lakshmikumaran
and Sridharan has been a leader in securing pat-
ents for inventions related to Biotechnology and
Pharmaceuticals for major clients. Areas of ex-
pertise include: patent litigation; patent drafting,
filing and prosecution; IP management and stra-
tegic counselling; IP licensing and transactions;
antitrust; trademark practice; copyright; and plant
variety protection. Sectors and industries include:
biotechnology; pharmaceuticals and chemicals;
computer science; electronics; and mechanical
and automotive engineering. For more informa-
tion, visit www.lslaw.in.
disease causing nature of the genes. However,
new use of a known gene or DNA/RNA se-
quences will not be patentable under Section
3(d) of the Act.
Further, any method of treatment of humans/
animals to render them free of a disease is also
not a patentable subject matter in India under
Section 3(i) of the Act. Therefore, inventions
related to gene therapy (somatic gene therapy)
will not be granted a patent in India. However,
processes involving gene technology such as
a method of cloning and expressions of genes
of interest in a cell; a method of producing a
transgenic plant; and a method of modifying
DNA sequences have been granted patents.
Further, in India, microorganisms including
genetically modified microorganisms are pat-
entable since January 2005 to comply with the
Trade Related Aspects of Intellectual Property
Rights (TRIPS) requirement. However, plants,
animals and parts thereof are not considered
patentable subject matter under Section 3 (j)
of the Act.
Even though the TRIPS excludes plants and
animals from patentability, India has gone
a step forward to exclude parts of a plant or
animal from patentability. Therefore, a recom-
binant plant cell comprising a gene of inter-
est, such as an herbicide resistance gene or
a salt tolerant gene, will not be patentable in
India, even though the gene of interest and the
method of producing a transgenic plant com-
prising that gene is patentable. Similarly, es-
sentially biological processes for the produc-
tion or propagation of plants are not patentable
under Section 3 (j) of the Act. The option for
protection of transgenic plant varieties may be
availed under the Plant Varieties Protection
and Farmers’ Rights Act, 2001.
V. Lakshmikumaran
Managing Partner
New Delhi, India
T:
+91 11 2616 4768 ext 888
E:
vlakshmi@lakshmisri.com
V. Lakshmikumaran
is the founding and managing
partner of Lakshmikumaran & Sridharan (L&S). He
practices as a litigator in the area of intellectual
property and, in particular, in the area of patents. Mr
Lakshmikumaran has handled several high profile
litigations.
R. Parthasarathy
Senior Partner
New Delhi, India
T:
+91 44 2833 4700
E:
partha@Lakshmisri.com
R. Parthasarathy is a senior partner at L&S and heads
the IP Division. He is responsible for patent procure-
ment, patent opposition and patent enforcement. In
addition, Parthasarathy is actively involved in WTO
trade remedy laws and customs valuation. He has
represented a number of exporters, importers and
domestic industry in anti-dumping, anti-subsidy and
safeguard investigations.
Malathi Lakshmikumaran
Partner
New Delhi, India
T:
+91 11 4606 3300
E:
malathi@Lakshmisri.com
Dr Malathi Lakshmikumaran has more than 30 years
of experience in the field of plant molecular biology.
She has more than 100 publications to her credit in
various international and Indian journals. Ms Laksh-
mikumaran is a qualified patent agent and heads the
life science practice.
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8
S
outh Africa has been described as
the ‘Gateway to the Rest of Africa’,
representing a stepping stone into a significant
part of the developing world, and an established
prospective market waiting to be mined.
With such compelling prospects on offer, it
follows as a matter of course that South Africa
would see a flurry of activity surrounding the
protection of product-specific markets. Or
so it would appear at first blush. Despite its
potential, South Africa is not first on the map of
a majority of commercial concerns in pegging
monopolies in respect of their products.
Patent rights are first prize in securing any
lawful monopoly within a particular jurisdic-
tion. Patent filing statistics provide an indica-
tion of commercial entities’ trust to compete
within a given market. In the period 2006-
2009 the number of Patent Cooperation Treaty
(PCT) patent applications filed at the various
receiving offices have exceeded and stabilised
at just over 150,000 applications per year,
with a high point of about 164,000 in 2008,
according to the PCT International Patent Sys-
tem Yearly Review 2009. The applicant in re-
spect of a PCT application has the opportunity
thereafter to file national phase applications at
national or regional patent offices within the
following 18 or 19 months (i.e., within 30 or
31 months from the priority date of such appli-
cations) depending on the provisions of the re-
spective national laws. Applicants who wish to
avail themselves of this opportunity typically
do so shortly before the end of that period.
When one compares the various national fil-
ing statistics to the global PCT filing number
of 18 months earlier, it is clear that there is a
very large attrition rate in potential national
applications at the transition from internation-
al PCT filings to national phase filings. About
50 percent (or about 80,000) of the global PCT
applications may be expected to proceed to
regional filings in the most attractive patent
jurisdiction, the EPO. Just over a third – i.e.,
50,000 to 60,000 – may be expected to be filed
in other attractive jurisdictions like the US,
Japan and China. At a third tier of between
20,000 and 30,000 applications is Canada, Ko-
rea and Australia with around 20,000 to 30,000
applications, which is about 13-20 percent of
the potential PCT applications.
And South Africa? Unfortunately there are
no official statistics available on the exact
number of PCT national phase filings in South
Africa. However, our own analysis of South
African filings by foreign applicants indicates
that about 6000 applications based on foreign
priorities were filed between July 2009 and
June 2010. Our own experience is that the vast
majority of South African filings by foreign
applicants are national phase filings of PCT
applications. We are thus comfortable to state
that about 6000 PCT national phase applica-
tions are filed in South Africa per year. This
figure places South Africa on a tier with Sin-
gapore and Israel but at only half the level of
PCT national filing activity experienced by
Brazil, Mexico and the Russian Federation.
This figure of 6000 applications represents
only about 3.6 percent of the vast number of
PCT applications filed 18-19 months earlier
around the world.
Is this the rightful level of attention that
South Africa should attract? We think it is not.
The following demographics and the level of
South African technological sophistication
in our view indicates that South Africa is be-
ing overlooked by many applicants. As South
Africa continues to show its abilities, as it re-
cently did with its successful hosting of the
Soccer World Cup, we believe that such appli-
cants will in future come to regret the fact that
they failed to protect their inventions in this
gateway to Africa. As at 2007, South Africa’s
estimated GDP was US$467bn, according to
Intute. GDP growth rate trailed just under the
world growth rate at 5.1 percent in the same
year, a rate almost double that of Canada by
comparison. Per capita, South Africa’s GDP
comes in at slightly under the estimated world
average of US$10,000.
It is also apposite to mention that South Afri-
ca is a non-examination country, meaning that
the patentability considerations of novelty and
inventiveness are not examined before grant-
ing a South African patent, as is done in many
other jurisdictions. The cost of filing and pros-
ecution of a South African patent application at
about US$2100 in total from filing to grant is
small in comparison to other countries. There
are little or no prosecution fees for taking the
application to grant. Low cost considerations
should rank South Africa as a highly favour-
able patent jurisdiction.
Such a non-examination system is not with-
out its inherent weaknesses. South African pat-
ents (based on foreign equivalent patents) are
often filed and granted with claims that were
originally filed in preceding priority or PCT
applications. These claims are typically in its
broadest scope. Examination of subsequent
but related co-pending patent applications
in other jurisdictions may result in amended
claims, either to reduce the scope of those
claims, or to overcome examiner objections. If
these amendments are not carried through to
the South African claim set, the South African
claims may be objected to on the same grounds
as those advanced in those other jurisdictions.
If an argument of invalidity can be sustained
against one or more claims of the SA patent,
the effect is debilitating: South African case
law has confirmed the view that a South Afri-
can patent having one or more invalid claims
cannot be enforced against any third party in-
fringer, until such time as the invalid claims
have been removed.
Such partially invalid patents also stand as a
bar to patent enforceability on an urgent basis.
This affords a third party infringer sufficient
time to make inroads into an exclusive mar-
ket, erode the patentee’s market share and ulti-
mately increase the level of difficulty to meet
a successful reliance on urgency in seeking
relief.
A patently commercially attractive jurisdiction – but ensure that your
claims are all valid
BY
NICO VERMAAK AND MUHAMMED VALLY
SOUTH AFRICA
Patent rights are first
prize in securing any
lawful monopoly within
a particular jurisdiction.
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DM Kisch Inc
is a firm of patent attorneys which
has served a large number of researched based
pharmaceutical companies with success for over
135 years of its existence. Founded in 1874 as a
firm of patent and trade mark agents, and becom-
ing a firm of attorneys in 1976, DM Kisch has a
long and distinguished history in intellectual prop-
erty law. As one of the leading intellectual property
law firms in South Africa, DM Kisch has expanded
to now offer clients a full range of commercial
services, however much of our practice revolves
around the filing and prosecution of trade mark,
patent and design applications in South Africa, Af-
rica and the rest of the world. The firm prides itself
on providing innovative solutions and combines
specialised capabilities and expertise to provide a
comprehensive range of legal services for the ben-
efit of our clients.
After having gone through the procedures of
amending its patent while litigation is pending,
patentees often find themselves having to then
approach the courts by following normal time
periods. The question of enforceability may at
that time become academic and patentees may
be reluctant to pursue the matter further.
We have recently advanced argument against
the harsh effect of this rule in respect of the
unenforceability of a patent containing invalid
claims in a case that came before the commis-
sioner of patents. However, the court did not
find it necessary to decide upon the issue. Un-
til a court of higher authority pronounces upon
the issue, the status quo remains.
In a more recent case before the commis-
sioner in which we were not involved, the pat-
entee seems to have seen fit to concede that a
partially invalid patent is unenforceable. The
principle accordingly appears to be enshrined
for now. It creates a difficulty for patentees in
that the standard for enforcing partially invalid
patents has possibly been raised even further.
Unless a well prepared argument militating the
effect of this principle in South African law
comes before a court (other than a court of first
instance), patentees have to exercise greater
caution in maintaining the proper breadth of
the scope of protection defined by their patent
claims.
South Africa is a particularly alluring juris-
diction for establishing and maintaining pat-
ent rights. Prudence, however, is a requisite
for having a patent that is enforceable when
the occasion arises. Agreement with this state-
ment would hopefully see many more patent
applications being filed in South Africa in the
future, and successfully enforced when the
need arises.
Nico Vermaak
Director and Head of the Patent Department
Johannesburg, South Africa
T: +27

11 324 3018
E:
nicov@dmkisch.com
With 34 years of experience in the field of patents,
Nico Vermaak deals mainly with litigation matters,
filing and prosecution of patent applications in the
pharmaceutical fields.
Muhammed Vally
Director and member of the Patent Department
Johannesburg, South Africa
T: +27 11 324 3080
E:
muhammedv@dmkisch.com
Muhammed Vally has just under six years of experi-
ence in the field of intellectual property, particularly
patent litigation relating to pharmaceutical products,
mechanical engineering, and registered designs.
PROOF ONLY
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8
T
he US Supreme Court handed down its
long-awaited decision in
Bilski v. Kappos

(561 U.S. (2010)) on the last day of its term,
unfortunately not providing much in terms of
‘pellucid’ teachings regarding the metes and
bounds of patent-eligible subject matter. In
the wake of its decision, the Court granted
certiorari
, vacated the Federal Circuit’s
decision below, and remanded to the appellate
court two cases related to medical diagnostic
claims:
Prometheus Laboratories, Inc. v. Mayo
Collaborative Services
(581 F.3d 1336 (Fed.
Cir. 2009)) and
Classen Immunotherapies,
Inc. v. Biogen Idec
(178 Fed. Appx. 14; 2006
U.S. App. LEXIS 10809 (10 April 2006)). On
earlier appeals, the Federal Circuit decided that
the claims in
Prometheus
were patent-eligible
under the ‘machine-or-transformation’ (MOT)
test, and that the claims in Classen were not.
How the Federal Circuit decides these cases
on remand, and whether its decisions change,
will provide the first inklings of how the
CAFC will implement whatever insights the
Bilski
decision may provide.
The claims and the grounds for the Federal
Circuit’s disparate decisions are informative.
In
Prometheus
, the claims recited methods for
determining whether treatment for immune-
related gastrointestinal disorders needed ad-
justment, i.e., whether the amount of a drug
administered to treat the disorder should be
changed. The asserted claims of the patents-
in-suit specifically relate to methods for iden-
tifying the administered drug, thiopurine, or
metabolites thereof, in red blood cells of a pa-
tient. The claim includes steps of administer-
ing thiopurine to a subject, assaying the levels
of thiopurine or a metabolite, and adjusting
the amount administered if the levels detected
fall outside a prescribed range. The Federal
Circuit reversed the lower court’s finding that
the claims were not patent-eligible under 35
U.S.C. § 101. The Federal Circuit disagreed,
holding that the ‘administering’ and ‘deter-
mining’ steps were transformative and thus
satisfied the transformation prong of the
Bil-
ski
MOT test. The opinion stated that “[t]he
transformation is of the human body follow-
ing administration of a drug and the various
chemical and physical changes of the drug’s
metabolites that enable their concentrations
to be determined”. The Court found that these
steps were essentially ‘method of treatment’
steps, “which are
always transformative
when
a defined group of drugs is administered to a
body to alleviate the effects of an undesired
condition”
(
emphasis added
)
. A human body
to which drugs are administered “necessarily
undergoes a transformation”, since “the drugs
do not pass through the body untouched with-
out affecting it”, something the Court charac-
terised as “the entire purpose of administer-
ing the drugs”. The opinion rejected Mayo’s
contention that the transformations are the
result of ‘natural processes’, because “quite
literally every transformation of physical mat-
ter can be described as occurring according
to natural processes and natural law”. But the
administering step of the asserted claims were
not ‘natural processes’ according to the Court:
“[i]t is virtually self-evident that a process
for a chemical or physical transformation of
physical objects or substances
is patent-eli-
gible subject matter” (
emphasis
in the original
text). Finally, the Federal Circuit opined that
the lower court erred in deciding that Pro-
metheus’ asserted claims ‘wholly preempted’
the use of correlations between metabolites of
thiopurine drugs and their toxicity and effica-
cy. Rather, the claims utilise, not preempt, the
correlations of natural processes ‘in a series of
specific steps’ that are patent-eligible subject
matter according to the statute, with the Court
citing
Diamond v. Diehr
and its analogous use
of the Arrhenius equation for curing rubber (a
transformative step). ‘Regardless’ of this is-
sue, the Court held, satisfaction of the MOT
test renders the claims patent-eligible and thus
“do not preempt a fundamental principle”.
In Classen, on the other hand, the Federal
Circuit summarily rejected the claims based
on failure to satisfy the
Bilski
MOT test. The
claims in Classen’s US Patent No. 5,723,283
were directed to methods for determining
whether an immunization schedule affects
the incidence or severity of chronic immune-
mediated disorders in a mammal, relative to a
control mammal. Although the
Classen
claims
recited ‘immunizing’ steps (that could be con-
sidered to be analogous to the ‘administering’
steps in the
Prometheus
claims), they also
recited a step of ‘comparing’ the “incidence,
prevalence, frequency or severity” of the im-
mune-mediated disorder between the experi-
mental and control groups, making it easier to
characterise the immunization step as a mere
‘data-gathering’ step.
The use of the ‘comparing’ language was
reminiscent of the claims in
Laboratory Corp.
v. Metabolite Labs., Inc.
(‘
LabCorp
’)
, which
were criticised by Justice Breyer in his dis-
sent from the Supreme Court’s decision not
to decide the patent-eligibility of claims for
determining whether a patient had a vitamin
deficiency. In
LabCorp
, the claim at issue was
directed to a method for detecting a deficiency
of cobalamin (vitamin B12) or folate having
the steps of assaying a body fluid for an ele-
vated level of total homocysteine and correlat-
ing an elevated level of total homocysteine in
said body fluid with a deficiency of cobalamin
or folate. There are clear parallels between the
structure of the
LabCorp
claim and the
Clas-
sen
claim. Each recites a preamble directed
to identifying a biological phenomenon (a
vitamin deficiency in
LabCorp
, a chronic im-
mune-related disorder related to a acute im-
munization schedule in
Classen
), comprising
an unambiguous diagnostic/tangible step (as-
saying a bodily fluid to detect elevated homo-
cysteine levels in
LabCorp
, immunizing mam-
mals with one or more doses of one or more
immunogens, according to an immunization
schedule in
Classen
), followed by an inter-
preting step (correlating elevated homocyste-
ine with the vitamin deficiency in
LabCorp
,
comparing the incidence, prevalence, frequen-
cy or severity of chronic immune-mediated
disorders in mammals immunized according
to the immunization schedule in
Classen
).
The Supreme Court’s
Bilski
decision pro-
vides no clear instruction for resolving the
different results in the
Prometheus
and
Clas-
sen
cases; indeed, the Court appeared content
to let the Federal Circuit develop its case law
on the extent to which tests other than the
MOT test are used to determine patent-eligi-
bility. For biotechnology, it remains the case
that including active, technology-dependent
steps in method claims is prudent, and to draft
claims that minimise the likelihood that the
invention will be characterised as merely an
‘abstract idea’. In this regard,
dicta
from the
Bilski
opinion provides a certain level of com-
fort that the Court (or at least some members
of the Court) understand the proper protocol
for performing claim analysis. For example,
the opinion noted that the judiciary “does not
have
carte blanche
to impose other limitations
Medical diagnostic claims in light of Bilski v. Kappos
BY KEVIN E. NOONAN
UNITED STATES
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McDonnell Boehnen Hulbert & Berghoff LLP

is an intellectual property law firm devoted to
the needs of technology-driven companies. Our
clients range from Fortune 100 companies to en-
trepreneurial start-ups in the life sciences, chemi-
cal, pharmaceutical, electrical and mechanical
engineering, computing, and telecommunications
fields. Our attorneys have broad patent litigation
experience, both enforcing patents and defending
against infringement allegations. We are adept in
all aspects of patent procurement, including draft-
ing and prosecuting applications before the US
Patent and Trademark Office. We also work with
foreign associates to provide comprehensive pat-
ent procurement services abroad. MBHB represents
clients in interferences before the US Patent and
Trademark Office and assists in foreign patent op-
positions. We negotiate patent licences and help
our clients establish and manage patent portfolios
worldwide. MBHB is currently staffed by 81 attor-
neys and 12 technical professionals. More than half
of our professional staff has advanced technical de-
grees. Many of our attorneys have worked and pub-
lished in their respective industries. Our attorneys
contribute to MBHB’s quarterly substantive patent
law newsletter,
snippets
. MBHB partners and asso-
ciates participate in Weblogs such as Patent Docs.
Our attorneys provide practical and understandable
advice to clients throughout the world. For more
information, visit www.mbhb.com.
that are inconsistent with the text and the stat-
ute’s purpose and design”. And in a portion of
the ‘majority’ opinion joined by Justice Scalia,
Justice Kennedy reminds us that a court “needs
to consider the invention as a whole, rather
than “dissect[ing] the claims into old and new
elements and then . . . ignor[ing] the presence
of the old elements in the analysis”, citing
Diamond v. Diehr. However, this is arguably
just the analytic mistake Justice Breyer made
in his LabCorp dissent, where his argument
focused on the unpatentability of the analytic
test combined with an equally unpatentable
‘natural phenomenon’. On the other hand, the
four ‘concurring’ Justices clearly believe that
the scope of patent eligibility is (and must be)
limited by the Constitutional prescription that
a patent “Promote the Progress of ... the Use-
ful Arts”, and that Justice Breyer’s antipathy
to medical diagnostic patents retains some cur-
rency on the Court, stating that “too much pat-
ent protection can impede rather than ‘promote
the Progress of . . . useful Arts’”, citing Justice
Breyer’s Labcorp dissent (Labcorp at 127).
Thus, even as the Federal Circuit devel-
ops additional tests for patent-eligibility of
method claims, it is incumbent on patent ap-
plicants and their lawyers to recognise these
tensions in the High Court’s attitudes about
patenting and to ensure that their claims are
clearly directed to patent-eligible subject mat-
ter. This is difficult to do prospectively, and
there is little comfort that the Federal Circuit
will soon provide more concrete standards for
satisfying the rather nebulous test enunciated
by the Supreme Court (at least until the Court
decides the time has come to once again ad-
minister some corrective patent jurisprudence
to the appellate court). However, unless the
Supreme Court (by inclination or constitution
of new Justices) changes its attitude regarding
patents, applicants will continue to need to use
the few distinctions the Court has provided to
protect biotechnology inventions.
Kevin E. Noonan
Partner
Chicago, United States
T: +1 (312) 913 0001
E: Noonan@mbhb.com
Kevin E. Noonan, Ph.D., is a US patent attorney ex-
perienced in all aspects of patent practice. He rep-
resents established and start-up pharmaceutical
and biotechnology companies and universities. Dr
Noonan is also a founding author of the patent law
weblog, Patent Docs.
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The
Biotechnology Industry Organization (BIO)
is the world’s largest biotechnology organisation
and provides advocacy, business development
and communications services for more than 1100
members across the United States and in more than
30 other nations. Corporate members range from
entrepreneurial companies developing a first prod-
uct to Fortune 500 multinationals. Other members
include academic institutions, state biotechnol-
ogy centres and service providers. BIO members
are involved in the research and development of
innovative healthcare, agricultural, industrial and
environmental biotechnology products. BIO also
produces the annual BIO International Convention,
the world’s largest gathering of the biotechnology
industry, as well as industry-leading investor and
partnering meetings held around the world. The
mission of BIO is to be the champion of biotechnol-
ogy and the advocate for its member organisations
– both large and small. For additional information,
visit www.bio.org.
T
he biosciences are shaping up to be a key
engine of economic growth in the United
States. Major advancements are taking place
on a host of bioscience fronts, ranging from
high-precision personalised human biomedical
applications to widespread biomass-based
innovations in agbioscience, bioenergy, and
industrial biotechnology. Without a doubt, the
biosciences promise solutions to many global
challenges.
The
Battelle/BIO State Bioscience Initiatives
2010
report, released earlier this year at the
BIO International Convention, found that the
biotechnology industry continued to score em-
ployment gains at the beginning of the reces-
sion two years ago. The report reflects an in-
depth look at bioscience performance metrics,
state bioscience policies and program trends
across the United States (including the Dis-
trict of Columbia and Puerto Rico) from 2001
through 2008.
According to the report, biotechnology cre-
ated 19,000 jobs from 2007 to 2008, bringing
the current number of bioscience jobs to 1.42
million. The report attributes the job swell — a
1.4 percent increase compared with a 0.7 per-
cent decrease in private-sector employment
generally — to rapid growth in the biotech-
nology field in research, testing and medical
laboratories. The biotech sector accounted for
nine out of every 10 bioscience jobs created
during that year.
Additionally, bioscience jobs continue to be
among the best paid, with the average annual
salary of $77,595 – $32,000 more than the av-
erage private-sector job.
A dozen states reported that more than 5 per-
cent of all employees work in the bioscience
field. In fact, 39 states plus D.C. and Puerto
Rico report employment specialisation in one
of four bioscience subsectors: drugs and phar-
maceuticals, medical devices and equipment,
laboratories (research, testing and medical)
and agricultural feedstock and chemicals.
“States and regions are targeting the biosci-
ence sector because it is a source of high-wage,
high-skill jobs,” said Mitchell Horowitz, Vice-
President of Battelle’s Technology Partnership
Practice. “But policymakers also realise that
biosciences development is not simply about
generating economic returns. The great prom-
ise of biosciences is its ability to address global
problems, from human health to food genera-
tion and security to environmental sustainabil-
ity and clean energy. Bioscience development
pays huge social and quality of life dividends
for the US and the world.”
The study found that states are continuing to
implement policies and programs to support
bioscience development despite facing ex-
tremely challenging fiscal conditions. For ex-
ample, states are: (i) investing in major biosci-
ence development initiatives; (ii) focusing on
the agricultural biotechnology, bioenergy and
bioproducts industry subsectors; (iii) imple-
menting new programs to build R&D capac-
ity and advance commercialisation of research
discoveries; (iv) continuing to address biosci-
ence companies’ need for early-stage capital;
and (v) enacting tax policies that are support-
ive of bioscience companies.
Despite this assistance at the state level, not
every biotech company has survived the chal-
lenging financial environment. Fifty publicly
traded companies went bankrupt for lack of
access to capital. There is good news – bio-
tech stocks outperformed virtually every oth-
er index in the first quarter of this year. The
markets have come back but biotech has come
back faster and stronger.
Bioscience has thrived, even in the midst of economic downturn
BY JIM GREENWOOD
UNITED STATES
Jim Greenwood
President & CEO
Washington, DC, United States
T: +1 (202) 962 9200
E: jim.greenwood@bio.org
Jim Greenwood represented the 8th Congressional
District of Pennsylvania for six terms, after serving
in the Pennsylvania General Assembly and Senate
for six years each. He was widely viewed as a leader
on health care and the environment. He retired from
Congress in January 2005 to lead BIO.