Basics of Life Science Patents

One of the first questions you’ll get when pitching a venture capitalist your company is: what about the patents?

Unlike in other fields, you can prevent others from copying your product (the drug) for a set period of time if you hold the right patents. Developing a drug without these patents is largely a non-starter because of the large financial and time investment needed to prove a product works and bring it to market.

The ethics and minutiae of patents are highly debated, especially in the life sciences. How long should a patent last? What about all the generic drugs, which are now devalued when the patents expire (regardless of whether they might be efficacious for another use?)? How broad or narrow should a patent be? Do they help or hurt innovation and healthcare? I’m not going to try to answer any of those prickly questions, as unfortunately regardless of their answers, patents are currently critical to a successful biotech startup.

In a tech start up, you can and do iterate the product in real time in response to feedback, converging onto a final form that is functional and has a compelling value proposition for your customer. In biotech, you decide your product’s final form, and then take it to market.

A Brief History of the US Patent System

1980 - The Bayh-Dole Act “Patent and Trademark Law Amendment Act”

Before the Bayh-Dole Act, any patentable material born from R&D funded by the US government - a huge swath of all US R&D, including the majority of academic research - was considered property of the United States government. Before this act, over 28,000 patents were held by US government, but less than 5% utilized for commercial purposes.

Crucially, the leading policy of the time was to license patents non-exclusively. In biotech, patents are crucial to own the return of investment, but are far from sufficient. A patent only gives the option to the own the ROI - the biotech company still must finance the preclinical and clinical research and development of the asset - often hundreds of millions of dollars. This process is already risky as it is; without promise of owning that ROI, companies were even less likely to take on the endeavor.

This new law allowed non-profit organizations (such as universities) & small businesses to retain ownership of inventions developed using federal funding. Key provisions include the preference for licensing the patents to small businesses, that the royalties should be used to further scientific research and education, and that a portion of the royalty should be shared with the inventor.

1984 - Hatch-Waxman Act “Drug Price Competition and Patent Term Restoration Act”

The Hatch-Waxman Act was a key law which facilitated the generic drugs industry in the United States. Generic drugs are drugs whose key patents have expired, meaning that other firms that were not inventors of the drug can manufacture and sell it. Due to increased competition, generic drugs are usually significantly cheaper than their on-patent counterparts. This is crucial for patient accessibility, but on the commercial side decreases the profit of a specific drug for the company.

Specific provisions of the Hatch-Waxman Act include:

• The establishment of the Abbreviated New Drug Application (ANDA), which is the approval process for a new generic drug. It is significantly shorter than the standard NDA, making it more attractive for a generics company to invest in developing and selling a new generic drug.

• Sponsors of a new generic drug only need to show bioequivalence - that the generic drug as manufactured by the sponsor acts the same in the human as the original drug. (this is sometimes more challenging for biologic drugs)

• Gave the FDA the ability to grant five years of exclusivity to new chemical entities just getting marketing approval, regardless of the status of their patents, holding off potential competition from generic manufacturers.

• “Research exemption” - generics manufacturing companies cannot be sued for infringing on patent rights by the holder of the rights when iterating on the manufacturing of, performing studies, and otherwise preparing the ANDA. This allows a fast turn around from a drug going off patent to a generic being available on the market.

Basics of Patents in the Life Sciences

There are three broad categories of patents: utility, plant, and design patents. Generally, biotech patents are utility patents, like the vast majority (>90%) of patents. Utility patents are enforceable for 20 years, beginning from date of earliest filing. This ticker starts when you file a provisional patent, despite the fact that the patent may not be granted for years after this filing.

A central tenant of patents is that the invention must be described in sufficient detail that an ordinarily skilled person in the relevant area can replicate the contents of the patent = “enabling disclosure” without “undue experimentation”. For example, a small molecule composition of matter patent should include a method for preparing the compounds. Any data provided or key assays should have methods for how the experiments were performed. Importantly, the methods described in the patent should be the best mode of practicing the invention. This is in part the social contract of a patent - society guarantees you full and exclusive ownership of your invention for 20 years, but in exchange you share with society exactly how your invention works and give up the exclusive rights to it after the 20 year period.

Patents must “be useful or have a utility that is specific, substantial, and credible”. In biotech, this is usually fulfilled by the use of the patented material in the context of human health and disease. While you will claim this potential human utility in your patent, you don’t need to prove it for the patent to be granted - in vitro data can be used to demonstrate proof of concept of this human utility.

Whatever you are patenting must be novel - the patentable material cannot be “known or used by others in the United States, or patented or described in a printed publication in the United States or a foreign country, before the invention thereof by the applicant for a patent”. “Prior art” anything that has been made available to the public, even if for a limited time. In biotech, prior art is often conference presentation, abstract, publications, etc.

Finally, the patentable material should also be non-obvious. This is a bit tricky to describe. The general guidance is that that someone with skill in the art should not find the subject of your patent obvious. It may be considered obvious to, for example, novelly combine prior art.

Types of patents

• Utility patents are defined as “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof”

  • Enforceable for 20 years 

• Design patents are defined as “new, original and ornamental design for an article of manufacture”

  • Most famous here would be the design patents around Apple 

  • Enforceable for 14 years

• Plant patents are defined as “distinct and new variety of plant, including cultivated sports, mutants, hybrids, and newly found seedlings, other than a tuber propagated plant or a plant found in an uncultivated state” 

  • For plant breeders

  • Enforceable for 20 years 

The key categories of patents for biotech are composition of matter, method of use/process, and formulation.

Composition of matter - “All compositions of two or more substances and all composite articles, whether they be the results of chemical union, or of mechanical mixture, or whether they be gases, fluids, powders, or solids

• Biotech example: small molecule structure, the amino acid sequence of a protein drug

Process - “An act, or a series of acts or steps”

• Biotech example: the use of a specific drug in breast cancer

Machine - “A concrete thing, consisting of parts, or of certain devices and a combination of devices”

• Biotech example: Autoinjector for epinephrine

Article of manufacture - “Production of articles for use from raw or prepared materials by giving to these materials new forms, qualities, properties, or combinations, whether by hand labor or machinery”

• Biotech example: the final drug product including excipients (powder, capsule, etc)

Types of patents and their value

Composition of matter - gives the patent holder protection of the specific drug or drug family irrespective of use! This is a critical patent for therapeutics as it gives the broadest protection of your drug. For small molecule drugs, this is often defined using markush structure - general structure with variable units (R groups) which are then separately defined.

Process - method to produce a therapeutic agent, method of using a drug to treat a specific disease. Not linked to the composition of matter patent, so for example one company could own the CoM patent and another the method to use the drug in e.g. cancer.

Composition of matter patent → utility patent (process) (must still license the CoM patent)

Cannot be patented:

• “Human organisms”

• Laws of nature 

• Natural phenomena 

• Unmodified animals

  • Genetically modified are ok

• Unchanged genes 

  • 2013 court ruled against Myriad Genetics on a patent describing BRCA1 and BRCA2

• Composition of matter for an existing molecule/structure, even if a new use or function is discovered

• Obvious changes

  • Making an object portable

  • Aesthetic changes

  • Rearranging steps in a sequence 

  • Biotech example: HTS version of a known in vitro assay 

Patent Inventors & Assignment

Inventors

The inventors on the patent are the ones who ideated or discovered the claims in the patent (not corporations). You can have one or many inventors on a single patent. It is important to ensure that the inventor list is both whole and accurate - mistakes here (leaving off an inventor or adding an unqualified person as an inventor) can make the patent unenforceable! An inventor cannot be a corporation. To be considered an inventor, the person must contribute to at least one claim. Performing the work behind an invention (e.g., synthesizing the compounds) without conceptual ownership does not qualify a person to be an inventor. Equally, managing/heading up the team that made the discovery is not enough to be an inventor on the patent. Regardless of how many claims each inventor is responsible for, each inventor has equal rights and ownership. 

Patent assignment - ownership

A person or a corporation can hold a patent assignment. The assignment of a patent can be transferred and sold. Inventors are the default assignees of the patent, although university and company employees usually sign away the right of their generated IP to their employer.

Theoretically, each inventor on a patent can assign their equal share of rights to the patent to a company; one inventor cannot prevent another from using the patent. This is why exclusivity is an important clause when negotiating the licensing of a patent, as being the exclusive licensee of a patent prevents another company from licensing the same patent from another inventor and competing with the first licensee.

USPTO method for conducting a FTO analysis: https://www.uspto.gov/learning-and-resources/support-centers/patent-and-trademark-resource-centers-ptrc/resources/seven