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Patents and IP

Freedom to Operate

A discussion with a colleague the other day brought up a point about drug patents. When you’re thinking about the chemical matter you have for your project, one of the things you have to worry about is the patent situation. Are your molecules patentable? For that to be the case, you need novelty and utility. Utility is pretty much a given in this business – you wouldn’t be interested in the compounds if they didn’t do something – so novelty (prior art) is what we spend time wondering about.
There’s usually a way through on that, though. I mean, sure, there are all these generic claims out there in other patent applications that take everything out to the asteroid belt, but you should only get worried about the stuff that the claims are teaching toward and the compounds that have been enabled (that is, actually made). Prior art is crucial, but it’s also crucial to only pay attention to what deserves attention. (We last talked about this problem here).
Then there’s “freedom to operate”. In that case, you’re asking not “can I get a patent on this”, but “can I do anything with it without infringing someone else’s patents”. For FTO considerations, you have to look at what IP rights other people have (or are likely to have by the time you’ll be ready to go). That can get rather involved, since patents are limited in several dimensions: time (they expire eventually), space (coverage varies country by country), and in “IP space” (what territory the claims stake out). Depending on what comes up, you might decide that you’re in the clear. Or you might try to invent yourself out of a tight spot, if you can do that. Or you could pay someone for rights to their IP, or trade them some of yours, if you have something to trade.
But here’s where we got to talking: in the drug business, where we’re patenting particular chemical matter (and the use of it for particular medical needs), it seems like freedom to operate isn’t as big a deal as it is in some other areas. That’s partly because it’s hard to get sweeping medical claims issued, and it’s hard to make them stand up if they do. There have been attempts to stake out whole modes of action (“We claim the method of treating a patient in need of lowering their XYZ levels with any inhibitor of XYZase”), but fortunately, that hasn’t taken hold.
So when you’re talking chemical matter, does anyone know of drugs (or programs) that have been derailed in development just because of freedom-to-operate concerns? Drug patents get challenged all the time, often by generic companies, but those are patentability issues, trying to overturn the whole filing. But what about FTO? Any examples?

27 comments on “Freedom to Operate”

  1. BFS says:

    “For that to be the case, you need novelty and utility.”
    You omitted the most important legal requirement: non-obviousness.

  2. johnnyboy says:

    Sorry, not a chemist so can’t answer your question on chemical matter. However in cancer biology, the case of the oncomouse is well known, and is a clear and severe restriction on research. Dupont holds the patent on the oncomouse, defined as any transgenic mouse that is modified to overexpress an oncogene. I believe this patent is valid until 2016. Therefore any research using a mouse modified to overexpress a particular cancer target is considered a potential patent infringement, and opens the possibility of getting sued for royalties. Needless to say, big pharmas like the one where I used to work would not come near any use of this model, however useful it would have been to test any possible cancer target. So cancer research is stuck with nude mice bearing xenografts of human cancer cell lines, which express multitudes of variable and often poorly characterized oncogene targets – muddy water indeed.

  3. SP says:

    Wasn’t HCV very hard to operate in because Chiron had a patent on using or even producing the protease for anything?

  4. SP says:

    I should say, given Derek’s current address, that he is probably very familiar with the HCV situation.

  5. Anonymous says:

    Telomerase for immortalizing cells is under patent by Geron or someone. The patent fee is ridiculous too, like 300K+. So any immortalized lines with artificial telomerase overexpression are verboten at many big pharmas.

  6. PatentSchmatent says:

    Derek, most definitely have seen it happen. Especially in areas where the molecular space is fairly tight. If somebody gets a fairly broad structure claim then anything you wish to get falling with that structural space will be dominated by them. Assuming they are a competitor as they are likely to be, the possibility of a sublicense can be decreased. Even more likely, somebody’s application publishes and it has extraordinarily broad structural claims and/or description of the broad structural genus in their specification. They may not get those claims issued but you have to deal with them nevertheless because they could get issued. Normally you will carefully follow such a patent application to see what eventually issues but this process can take many years. Your team, in the meantime, has to proceed with this dark cloud over its head and has to be able to justify the risk to management. This is where patent attorneys earn their pay because they need to do an in depth analysis of the patent application, the prior art and the prosecution history to that point to determine whether an embodiment that covers your own company’s compound(s)of interest is likely to issue and if it does, whether it is likely to be valid. This is typically referred to as an opinion of counsel.

  7. milkshake says:

    given how easy is to bust patents (adding or disconnecting a ring, moving a heteroatom around, adding a slightly exotic group that was left out of somebody’s list, etc) I think it is perfectly reasonable to optimize the series without initial freedom to operate.
    Sepracor took pure enantiomers and active metabolites of old approved drugs and re-patented them for themselves, then in many cases sold the patents to the companies that developed the old drug…

  8. HelicalZz says:

    If you think 5 years of data exclusivity is enough to build a market, recover investment, and drive a profit, then maybe freedom to operate is good enough.
    But it probably isn’t so no it isn’t good enough. It is the freedom for the generic companies to come a knocking just that much earlier. I don’t doubt this derails a good number of projects.

  9. patpending says:

    Derek, the people who could best answer your question would be in-house patent counsel. However, because of attorney-client privilege and the desire by in-house counsel to be afforded that privilege by the courts, in-house counsel cannot waive the privilege without the permission of the Board of Directors/Senior Management. A greater problem is when management, without the advice of a patent attorney, tries to do FTO on its own and either botches it by determining that the project will not enter into a particular chemical space or decides that there is no problem and pushes ahead into a situation where they eventually get a license at a much higher price or get sued for patent infringement.

  10. SP says:

    7- You forgot changing an H to a D.

  11. PatentSchmatent says:

    Milkshake, with regard to Sepracor, their ability to patent an enantiomer does not mean they have freedom to operate with the enantiomer. If the first company’s patent is still in force meaning that they have a composition claim to the compound itself, that would also cover the single enantiomer. In that situation, neither company could make, use or sale (or import) the enantiomer without a license from the other. Just because you can get a patent doesn’t mean you can use the thing you patented absent a license (two different inquiries).
    With regard to counsel/client privilege, I don’t see a problem with in house counsel providing opinion to in house chemists about their discovery work. The damages of infringement would come upon marketing the product and no company will go forward to market without clearing up such a basic issue. The early inquiry relates primarily to whether one wants to pursue this direction or that in view of whatever else is out there and in house counsel should be fully involved in that kind of advise. Or at least thats what I’ve been advised :). I agree about team leadership or management screwing these things up. I’ve generally seen it going the other way where management has shut whole areas of molecular space out due to omnibus generic claims in prior patent applications that would cover any and every compound ever known or knowable to man – competent counsel is needed to avoid those types of mistakes.

  12. Will says:

    My patent practice involves a lot of FTO in the chemical/drug sector. Usually it’s a VC/bank/HF looking to invest in a startup with a couple of leads, and they want to make sure there are no dominating patents out there. There are plenty of issued patents with incredibly large genus claims. The genus claims may not stand up in court, but having to either license a patent or get involved with a costly litigation is something investors consider when assessing the risk/reward of a particular company.
    I can think of at least three license deals between two big pharma companies where one company had a genus claim that dominated the other’s api.

  13. Cialisize Me says:

    On Derek’s question: Pfizer sued Icos/Lilly for infringing on their patent that claimed a method of treating erectile dysfunction by using an orally dosed phosphodiesterase-type-5 inhibitor. It took years of effort and resources to fight this suit, but eventually Pfizer’s patent claims were ruled invalid, and Cialis was free and clear (and ready for bathtub time).

  14. You're Pfizered says:

    Derek must have been skimming The Chemist’s Companion Guide to Patent Law on the train this AM…
    I’ve been in the business for a while, and this book has really clarified a lot of things regarding pharmaceutical patents for me. I’m glad he recommended it a while back, even if it’s a hard book to get a hold of at this point…

  15. pharmadude says:

    Off topic of the initial question, but when aliens come and learn of our patent system they’re going to think us fools.

  16. Ohion says:

    A lot of potential for derailment depends on how aggressive or passive your legal depts are. I once spent 6 months debating with my legal dept over a Cytopia JAK3 claim, where they claimed “anything that fits into a particular hydrophobic pocket in the JAK3 enzyme”. it was an absurd claim, but it almost was enough for my wussy patent attorneys to terminate my project

  17. milkshake says:

    The trouble is, managers and VCs want to be assured of a project success from the very beginning – and they do not like the attitude “we can figure out the patentability later”. It is easy to shoot down a project proposal and when they do they are hardly proven wrong.
    In my experience the default position of a company patent attorneys is to cover their ass and make their life easy. When they tell you that there is no absolutely no IP space available, as a medicinal chemist you need to learn to take their negative verdict in stride. Given how trivial patent busting is it is more productive to start with a good project unconstrained and once you know the SAR constraints at some later point start looking into how to protect it – even if within a narrow patent space.

  18. Ed says:

    Totally agree Milkshake – both on the VCs and the simplicity of patent busting.
    I have experienced first hand VC bone-head stupidity in this regard. One of said VCs actually told me *adopt tone of significant gravitas* that you can’t under any circumstances patent something that falls within the scope of another patents broadest genus.

  19. chris says:

    Given all the other hurdles that have to be surmounted I’d actually put patentability low on the “difficulty to overcome scale”. The ingenuity of medicinal chemists in finding patent free space seems endless.

  20. Dec says:

    “Or you could pay someone for rights to their IP, or trade them some of yours, if you have something to trade.”
    FTO works both ways. If you fall within the broad claim of someone else’s patent, then you can’t use your patentable invention without their say-so.
    However, they can’t use your invention without YOUR approval! In other words, if your idea is commercial, then you’ll always have something to trade. The question is – do you want to enable a competitor to launch a competing product?
    This isn’t common in pharmaceuticals, but it does tend to happen in other areas of technology, such as mobile phones.

  21. petros says:

    Look at all the cross licnesing, and patent infringement suits relating to antibody technology and marketed antibodies.

  22. Cellbio says:

    Have seen it stop development of certain small molecules, a few times, but often with biologics. Different now, since antibody claims would expire before an effort launched today could get to market.

  23. Virgil says:

    The elephant in the room for FTO in bio research was Roche’s claim on PCR, which could have killed the whole enterprise if they’d got it wrong and been too greedy. Thankfully they figured out a pricing structure so we could all use it and pay a few cents licensing fee when we bought the reagents. I didn’t see the price of PCR kits drop much after the patent expired in 1995, but hey that’s just business.

  24. David Formerly Known as a Chemist says:

    Once we had to work around the patents covering Hartwig-Buchwald coupling for a compound that was progressing into clinical trials. Early medchem samples were prepared using this methodology, but once it came to scaling up and moving API forward into development, the patents covering this reaction blocked our way. Fortunately, we quickly found alternative conditions outside the patented claims. Patented transformations can stand in your way, too, not just composition of matter claims.

  25. Chemist turned banker says:

    11- “If the first company’s patent is still in force meaning that they have a composition claim to the compound itself, that would also cover the single enantiomer”
    That’s not quite right- a claim to a racemic molecule does not automatically cover the enatiomers (unless of course they are explicitly claimed). If you can find some unexpected property of an enantiomer, you can get a claim for that molecule. This was done to death in the Plavix litigation, but the key caselaw goes back much further.

  26. PatentSchmatent says:

    To ChemistTurned Banker – “covered” – If you have a claim to a broad genus, then you “cover” all the compounds within that genus meaning that you can exclude others from making, using or selling compounds within that genus. When you claim a structure with no explicit stereochemistry, you are “covering” the structure itself and that includes the various enantiomers, stereoisomers, etc. This means that if somebody later comes along and gets a patent to one of the enantiomers, they still cannot make, use or sale that single enantiomer because you own the claim to the compounds in all its forms. What will happen in the case where somebody has a claim to the compound itself (which will include its different permutations unless specified otherwise) and a different party has a claim to a subgenus of that compound (e.g. enantiomer) is that the first party cannot practice the enantiomer without a license from the second party and the second party cannot practice without a license from the first. Also, when somebody gets a patent to an enantiomer issued, they are not claiming the property but rather using a showing of that unexpected property to overcome an obviousness rejection – they are still claiming the compound, not its property.

  27. Foo says:

    Merely because someone claims a large genus, and your compound falls within that genus, does not preclude you from obtaining a patent, i.e. a genus does not always anticipate a species. See in re Petering.

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