Wednesday, November 2, 2011

How Far Upstream May a Patent Be Granted?

Human Genome Sciences Inc v Eli Lilly & Co [2011] UKSC 51 rev’g [2010] EWCA Civ 33, aff’g [2008] EWHC 1903 (Pat)

Today the UKSC released an important decision on industrial applicability which raises in pure form the difficult question of how far upstream in the innovation process a patent should be granted.

The facts are quite simple. The patent disclosed and claimed the DNA sequence for Neutrokine-α, which was described, correctly, as being a member of the TNF family of cytokines. It was common general knowledge that all known members of the TNF family had in common certain biological activity related to immune and inflammation responses, so a skilled person would expect Neutrokine-α to have the same activity. Little else was disclosed or known about Neutrokine-α at the time of the application. The question is therefore whether the known activity of the TNF family was sufficient to satisfy the requirement of industrial applicability. 

In infringement proceedings in the English courts Kitchin J, at trial, held that it did not, so the claims were invalid. Subsequently, the Technical Board of Appeal of the EPO in T 0018/09 considered the same arguments in respect of the same patent in an opposition proceeding between the same parties, and concluded on the contrary, that the claimed invention did have industrial applicability. On appeal of Kitchen J’s decision, the EWCA, with Jacob LJ writing the lead opinion, affirmed, disagreeing with the TBA. The UKSC, relying heavily on EPO case law, agreed with the TBA, disagreed with the Jacob LJ and Kitchin J, and held unanimously that the invention did have industrial applicability. (Lord Neuberger wrote the lead opinion and Lord Hope wrote a fully consistent and supporting concurrence.)

The central question was whether such a patent was too far upstream. Of course it is well-accepted everywhere that an applicant need not have obtained regulatory approval, or even gone through clinical trials, in order to justify a patent. But the known activity of the TNF family, such as a role in T cell proliferation and T cell mediated immune responses, was much further upstream than that. While there was a wide range of diseases which might eventually be diagnosed and treated with Neutrokine-α and related mAbs by virtue of its immune and inflammatory response role, at the time of filing the patentee did not have evidence that Neutrokine-α has therapeutic promise in respect of any specific disease. For the TBA and the UKSC is was enough that it was plausibly shown that Neutrokine-α had some therapeutic use. For Kitchin J and the EWCA, it was necessary to identify some specific disease or condition which it could be used to diagnose or treat. [161]

It is tempting assess this case by addressing the central question head-on, and asking where the line should be drawn in order to best promote innovation. The standard argument against granting a patent too far upstream is that “it might prevent further research in that area, and/or give the patentee unjustified control over others who are actively investigating in that area and who might eventually find actual ways to exploit it” T 0898/05. Or, as the USSC said in Brenner v Manson, in a passage quoted by Kitchin J, “[u]nless and until a process is refined and developed to this point – where specific benefit exists in currently available form – there is insufficient justification for permitting an applicant to engross what may prove to be a broad field.”

This is persuasive. The difficulty is that this only tells us that some point in the innovation process is too far upstream; it does not tell us where that point is. Nor is the argument as simple as it seems. It is not evident that an upstream patent should have a strong chilling effect, as it is in the interest of the patentee who gets an upstream patent to actively exploit it or to licence others to do so. Indeed, as Edmund Kitch famously argued, patents should be granted as a hunting licence, or, in his analogy, a prospecting claim, in order to coordinate research and thereby mitigate the patent race problem. And on the other hand, if upstream patenting is not permitted, this may itself have a chilling effect, as the inventor will keep the research secret for longer in order to be able to develop it to the point of patentability. Others will not be able to build on an innovation that is not disclosed. Consequently, as I understand it, there is no clear theoretical answer as to how soon is too soon to patent. The answer depends on the empirical question of the relative transaction costs and associated problems in an early v late to file system. How readily will upstream patentees licence? How much delay would be caused by increased secrecy? How bad is the patent race problem? These are all empirical questions, and I am not aware of any research that provides answers that are sufficiently specific to be helpful in framing the legal test. Put another way, from the perspective of promoting innovation, I know of no theoretical or empirical reason to prefer the line drawn by the EWCA over that drawn by the UKSC.

This point was made explicitly by Lord Neuberger:

130. Just as it would be undesirable to let someone have a monopoly over a particular biological molecule too early, because it risks closing down competition, so it would be wrong to set the hurdle for patentability too high. . . Quite where the line should be drawn in the light of commercial reality and the public interest can no doubt be a matter of different opinions and debate. However, in this case, apart from the fairly general submissions of the parties and of the BIA [the BioIndustry Association], we have not had any submissions on such wider policy considerations.

Rather than pretend to know where the line should be drawn in order to optimally promote innovation, Lord Neuberger appealed instead to the more pedestrian, but nonetheless very important values of certainty, predictability and harmonization. His decision was based primarily on a desire to harmonize English law with European law, and secondarily on the need for clarity and certainty. No doubt it would be good to have a rule that drew the line in exactly the right place in order to draw the right balance between encouraging upstream work and allowing others to build on that work; but clear, stable and consistent rules of patentability are also important in promoting innovation. Given that the courts had no evidence before them as to where the line should ideally be drawn, it would be wrong to abandon the more mundane virtues in pursuit of a shadowy perfection.

I am very pleased to see a high court that recognizes the limitations of its own knowledge and acts accordingly. Modesty is also is an important but mundane virtue that is too often overlooked at the highest levels of the judiciary.

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