Gene Marshall

Gene Marshall

Shin Kong Wedbsuh - Full Story On The Eli Lilly And Company V Human Genome Sciences Inc

Jacob LJ, giving his judgment for the Court of Appeal with which the other members of the court agreed, has upheld the decision of Kitchin J that the patent-in-suit was invalid for lack of industrial application. Jacob LJ suggested the case illustrates the dangers of allowing patenting "too far upstream". A patent to an isolated gene sequence without a plausible and precise disclosure of how it can be used is contrary to Art. 52 of the European Patent Convention (EPC). It will subvert the patent system by reserving an unexplored field of research for an applicant, thereby preventing research rather than encouraging it.

The court held the patent invalid despite the Technical Board of Appeal of the European Patent Office (EPO) holding the patent valid just a few months earlier. Jacob LJ emphasised that while the UK courts follow any principles of law clearly laid down by the Boards of Appeal, they "are not bound to follow, or even give deference to, the Board's findings of fact". He reviewed and applied the legal principles established by the Boards regarding industrial application but stressed that the Boards repeatedly held that each case must be decided on its own facts. Preferring the findings of fact of Kitchin J over the Board's, Jacob LJ stressed that the High Court's scrutiny of evidence is more thorough and that the Board's decision rested partly on evidence not before the UK courts. He also respectfully disagreed with specific findings of the Board.

Background

Human Genome Sciences Inc's patent identified a protein, antibodies to it and the polynucleotide sequence encoding for it together with a great number of potential applications. In 2008, in an action brought by Eli Lilly and Company, Kitchin J held at first instance that the patent was invalid. The Opposition Division of the EPO also held the patent invalid. In October 2009, the Technical Board of Appeal of the EPO held more restricted claims of the patent valid.

Industrial Application

The court applied the principle set out in legislation that a gene sequence is not patentable without a disclosure of how it can be used. Reviewing a number of key Board decisions, the court held that the disclosure (in the light of the common general knowledge) must be both plausible and sufficiently precise. These are questions of fact and degree. "Plausible" requires "some real reason for supposing that the statement is true".

Under Art. 52 of the EPC, an invention is only patentable if it is "susceptible of industrial application" ("capable" of industrial application under s. 1 of the Patents Act 1977). Art. 57 of the EPC provides that "[a]n invention shall be considered as susceptible of industrial application if it can be made or used in any kind of industry, including agriculture."

Art. 5 of the Biotech Directive (99/44EC) provides:

1. The human body, at the various stages of its formation and development, and the simple discovery of one of its elements, including the sequence or partial sequence of a gene, cannot constitute patentable inventions.
2. An element isolated from the human body or otherwise produced by means of a technical process, including the sequence or partial sequence of a gene, may constitute a patentable invention, even if the structure of that element is identical to that of a natural element.
3. The industrial application of a sequence or partial sequence of a gene must be disclosed in the patent application.

Recitals 22-24 explain:

22..... Whereas the industrial application of a sequence or partial sequence [of a gene] must be disclosed in the patent application as filed

23.Whereas a mere DNA sequence without indication of a function does not contain any technical information and is therefore not a patentable invention;

24.Whereas, in order to comply with the industrial application criterion it is necessary in cases where a sequence or partial sequence of a gene is used to produce a protein or part of a protein, to specify which protein or part of a protein is produced or what function it performs.

Jacob LJ described Art. 5.3 as a key provision, and summarised the effect of the legislation as: "However clever and inventive you may have been in discovering a gene sequence, you cannot have a patent for it or for the protein for which it encodes if you do not disclose how it can be used."

Jacob LJ reviewed six key Board decisions involving DNA sequences and proteins discovered by bioinformatics and set out ten propositions distilled by Kitchin J from these authorities and others:

1. The notion of industry must be construed broadly. It includes all manufacturing, extracting and processing activities of enterprises that are carried out continuously, independently and for commercial gain (Max-Planck).
2. However, it need not necessarily be conducted for profit (Chiron [1996] RPC 535) and a product which is shown to be useful to cure a rare or orphan disease may be considered capable of industrial application even if it is not intended for use in any trade at all (ZymoGenetics).
3. The capability of industrial exploitation must be derivable by the skilled person from the description read with the benefit of the common general knowledge (Genentech).
4. The description, so read, must disclose a practical way of exploiting the invention in at least one field of industrial activity (/Max-Planck; Salk Institute T 338/00).
5. More recently, this has been re-formulated as an enquiry as to whether there is a sound and concrete basis for recognising that the contribution could lead to practical application in industry. Nevertheless, there remains a need to disclose in definite technical terms the purpose of the invention and how it can be used to solve a given technical problem. Moreover, there must be a real prospect of exploitation which is derivable directly from the specification, if not already obvious from the nature of the invention or the background art (ZymoGenetics; Bayer T 1452/06).
6. Conversely, the requirement will not be satisfied if what is described is merely an interesting research result that might yield a yet to be identified industrial application (Salk Institute). A speculative indication of possible objectives that might or might not be achievable by carrying out research is not sufficient (Max-Planck). Similarly, it should not be left to the skilled reader to find out how to exploit the invention by carrying out a research programme (/ZymoGenetics).
7. It follows that the purpose of granting a patent is not to reserve an unexplored field of research for the applicant (Max-Planck) nor to give the patentee unjustified control over others who are actively investigating in that area and who might eventually find ways actually to exploit it (ZymoGenetics).
8. If a substance is disclosed and its function is essential for human health then the identification of the substance having that function will immediately suggest a practical application. If, on the other hand, the function of that substance is not known or is incompletely understood, and no disease has been identified which is attributable to an excess or a deficiency of it, and no other practical use is suggested for it, then the requirement of industrial applicability is not satisfied. This will be so even though the disclosure may be a scientific achievement of considerable merit (Max-Planck).
9. Using the claimed invention to find out more about its own activities is not in itself an industrial application (Max-Planck).
10. Finally, it is no bar to patentability that the invention has been found by homology studies using bioinformatics techniques (ZymoGenetics) although this may have a bearing on how the skilled person would understand the disclosure.

Although Jacob LJ did not expressly approve these propositions, the judgment does not contradict them. In his own review of the authorities, Jacob LJ drew out more general principles. The disclosure of the industrial application must be plausible and specific. What specification is sufficient depends on the facts of the case and involves a question of degree. Although not mentioned in the legislation, the term "plausible" has been repeatedly touched on by the Board. Referring to the definition in the Oxford English Dictionary, Jacob LJ concluded that "[m]ore than 'not incredible' is required - there must be some real reason for supposing that the statement is true". In addition, the statement must be sufficiently precise to be a real practical use such that "[y]ou are not left to find out what that use is".

Jacob LJ also noted that after-patent work showing that a mere speculation within the patent was in fact correct cannot be used to supplement the disclosure in the patent (John Hopkins). He suggested, conversely, that after-patent work of the inventors showing they later "had no real idea of what the invention was for" is a "powerful indication" that the disclosure was insufficient.

On the facts, the court held the patent to be invalid for failure to give plausible disclosure of industrial application. Jacob LJ noted the conclusions of Kitchin J, including that the patent "contains extravagant and sometimes contradictory claims ... from treating cancer to treating worms", that "the skilled person would come to the conclusion that the inventors had no idea as to the activity of [the protein] when drafting the Patent" and that the common general knowledge failed to indentify "any disease or condition which [the protein] could be used to diagnose or treat." Jacob LJ held that, although the protein was connected with a superfamily of proteins in the patent, "the biological effects and activities of that family were so poorly understood that any actual use should be regarded as purely speculative".

The court also rejected that, on the facts, "a kernel of more substance" within the patent amounted to a sufficient disclosure of industrial application. Kitchin J and the Board identified the same "kernel": that the members of the superfamily would be expressed on and co-stimulate proliferation of certain cells. However, the common general knowledge only identified potential uses for particular members of the superfamily. On that basis, it was "too speculative" to suggest a newly found member of the superfamily would have a practical use. Moreover, Jacob LJ noted there was no evidence from the parties "that a skilled man would approach the patent with the ability to distinguish the kernel from the rest".

The UK courts and the Boards of Appeal

Jacob LJ encouraged co-operation between national courts, the EPO and parties to identify and fast track commercially urgent and important cases within the bulk of oppositions started on a precautionary basis only. He then explored the weight UK courts should place on decisions of the Boards of Appeal, concluding that the courts should defer only on principles of law not questions of fact and degree.

Jacob LJ acknowledged that the UK courts follow any principle of law clearly laid down by the Boards unless "sure that the commodore is steering the fleet on to the rocks". However, he stressed that under the EPC system "national courts are the final judges of validity of a patent which has survived the EPO". Referring to Lord Hoffmann's judgment in Conor v Angiotech, Jacob LJ noted that national courts can differ on the facts from the Boards. Jacob LJ stressed, in particular, Hoffman's words "[s]ometimes one is dealing with questions of degree over which judges may legitimately differ", taking from this a clear indication that in this position "the national court is free to go on its own evaluation rather than give deference to a [Board's] assessment".

Moreover, Jacob LJ set out the procedural advantages of the UK courts over the Boards. Jacob LJ explained English procedure requires each side to marshal all its expert, factual evidence and arguments for trial at first instance. The evidence is thoroughly tested by cross-examination and the court may, for complex subject matter, appoint a scientific advisor. On appeal, new evidence is only admissible in very exceptional circumstances and the Court of Appeal gives considerable deference to the lower court's finding of fact and to its value judgments. He noted that similar approaches to appeals were proposed for the European Patents Court of Appeal and adopted for appeals from the Bundespatentsgericht. Jacob LJ contrasted the UK procedure with the "coarse filter" of the Boards, before which there is no cross-examination or compulsory disclosure. He noted that the Boards allow more latitude for fresh material on appeal and was concerned by anecdotal evidence suggesting inconsistencies in the latitude extended.

Concluding from the key cases that sufficient disclosure of industrial application is a question of fact and degree, Jacob LJ indeed chose to go on the UK court's own evaluation rather than defer to the Board's assessment. Jacob LJ held that the decision of Kitchin J on the evidence before him "cannot be faulted". The Board's decision was based at least in part on fresh evidence not before Kitchin J or the Court Appeal and not tested by cross-examination before the Board. Finally, Jacob LJ respectfully disagreed with a number of Board's conclusions regarding evidence before both the Board the UK court.

Comment

We have often reported conflicting views of the UK courts and the EPO, most notably regarding the patentability of computer programs. Here, the Court of Appeal has gone its own way again. The language is respectful and the judgment includes a call for greater co-operation to encourage fast tracking of commercially urgent and important cases. However, Jacob LJ expresses no reluctance or regret in not following the Board in this case.

The legal principle that the UK courts should not defer to the Board in questions of degree is forcefully set out and supported by an unfavourable comparison of the approach to evidence of the Board to that of the UK court. There is even a touch of disrespect in the respectful disagreement when Jacob LJ addresses the "last minute" affidavit admitted by the Board which was "of course ... never tested by cross-examination" and the Board's failure to address a particular paper which it "either overlooked (or did not have)". From this we can conclude that, regarding the validity of EP (UK) patents, the UK court is "for real" (as Jacob LJ put it). Jacob LJ contrasted this with "shadow boxing". Was he thinking of the EPO?

About the Author

David Brown is the Chief Investment Strategist and Director of Equities at Shin Kong Wedbush in Taipei. David is currently managing a top tier team of equities traders and analysts that are dedicated to managed high net worth and hedge fund accounts.

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To contact the financial analyst on this story: David Brown at Shin Kong Wedbush in Taiwan at : Shin Kong Wedbsuh

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