Patent Strategy for Biotech Founders

Intellectual property will be among the most valuable assets your company creates, so it’s critical to prevent others from copying your innovations.

Value of a Patent

Patents are usually the best way to protect an invention. Investors will have more confidence in your company if your IP is protected by a patent. Patent rights are inherently valuable, and obtaining a patent establishes that your IP has been vetted by the patent office.

A patent gives you the right to prevent others from practicing your invention. It does not, however, give you the right to practice the invention yourself. For that, you’ll need freedom to operate, which means that your product does not infringe a patent belonging to somebody else.

Protect Your Intellectual Property

A patent is an exclusive right granted by the government in exchange for public disclosure of an invention. The claims of a patent provide a legal definition of what the patent owner can prevent others from making, using or selling. Patents have a 20-year term starting on the filing date. This term can be extended if there are excessive delays by the patent office in examining the patent or delays by the FDA in approving a drug claimed by the patent.

Patent prosecution is the process of preparing a patent and responding to rejections from the patent office. Prosecution is expensive and time-consuming, and it exposes your ideas to competitors. The fees from your attorney and the patent office will total tens of thousands of dollars, and it usually takes 3-5 years from the filing date before a patent is granted. Before starting on this adventure, you should be confident that your invention is valuable and patentable. You should also consider whether the invention might be better protected as a trade secret.

A trade secret is confidential information that provides a business advantage. Trade secrets never expire so long as they’re maintained in confidence. However, you can’t rely on trade secrets if you plan to publicize the nuts and bolts of your invention. Trade secret protection will also be ineffective if your product can be reverse engineered.

You should also consider whether your patent or trade secret will be enforceable.

For a patent, you must prove that the accused infringer practices every element of the patent claim. A competitor who designs around your claims will not be liable for infringement. For trade secrets, you need to prove that a competitor had illegitimate access to your secrets and could not have recreated your IP from publicly available information.

Litigation is an order of magnitude more expensive than patent prosecution. This can be a huge burden for a small business, especially when they accuse a competitor with deep pockets who can use delaying tactics to wear you down. The patent owner must prove infringement of every element of a patent claim in court and defend the validity of the claims for a second time against a more aggressive challenge. If you win, the judge may issue an injunction that prevents future infringement. Injunctions are usually granted in patent litigation over an FDA regulated drug. For other patents, the remedy for infringement might be limited to what the infringer would have paid as a royalty. This may seem inadequate compared to damage caused by infringement and the cost of litigation.

Prior Art vs. Freedom to Operate

During patent prosecution, the examiner will determine whether your claims are novel and non-obvious compared to the prior art. Prior art is a reference that was available before the priority date of your claims. The reference can be a patent application, a publication such as a journal article, or a public use or sale.

The priority date is the filing date of the first patent application that describes your invention, which is usually a provisional application. If the examiner’s reference is a patent application, its prior art date is the date when the application was filed, even though patent applications aren’t published until 18 months after filing. Thus, there might be prior art that’s impossible to find while you’re preparing your patent application.

As an expert on your own invention, you should have a working understanding of the state of the prior art. Before deciding to file a patent application, it would be worth your time search for additional prior art on PubMed and Google patents using queries to keywords, authors, and competing companies.

Founders often confuse prior art with freedom to operate. When analyzing a patent application as prior art, the examiner will evaluate everything disclosed in the entire patent, including its specification, drawings, and claims. For freedom to operate, the claims are the only part of the patent that matters. You can’t be found liable for patent infringement merely because part of your product is described in the specification of another patent.

As a founder, you can begin evaluating freedom to operate by searching Google Patents for patents covering all aspects of your business plan. If you discover something relevant, you should consult a patent attorney for advice on whether the patent has claims that are valid and enforceable. Your attorney can also interpret claim terms from a legal perspective to assess infringement. If you infringe a valid claim, you should consider licensing the patent. If you don’t infringe or the claims are invalid, may want to request a formal opinion of counsel. This can protect you against treble damages in litigation if a judge or jury disagrees with your opinion.

Requirements for Patentability

The Patent Act sets forth the requirements for obtaining a patent. The claimed invention must be eligible for patenting, novel, non-obvious, enabled, and described. Each of these requirements is evaluated from the perspective of a hypothetical person who knows everything described in the prior art but lacks the creative genius of an inventor.

The traditional rule for patent eligibility is that you can patent anything under the sun that was made by man. However, courts have created exceptions. You cannot patent laws of nature, natural phenomena or abstract ideas. These patent eligibility exceptions are an impediment to patenting diagnostic inventions. The Supreme Court has invalidated claims directed to a mutant DNA associated with breast cancer and the correlation between a biomarker and a disease.

For novelty, the examiner will search for a single prior art reference that discloses every element of the patent claim. If the examiner finds pertinent prior art, you will need to amend your claims until they’re novel.

For obviousness, the examiner will combine the teachings of two or more prior art references. An obviousness rejection can be overcome by showing that the references don’t disclose every element of the claim, or that a skilled person would not be motivated to combine the references or would not have a reasonable expectation of success. Alternatively, the applicant can demonstrate unexpected results that would not have been predicted from the prior art.

For enablement, the examiner asks whether the patent application fully explains how to make and use the claimed invention. The legal test is whether a skilled person can practice the full scope of the claim without undue experimentation. To make this determination, the examiner will analyze everything described in the patent application and compare it to the breadth of the claims, the nature of the invention, the state of the prior art, and the predictability of the field.

The written description requirement requires the claimed invention to be disclosed in the original application. A concept that’s not described in the original application is considered new matter. New matter can’t be claimed, even if it’s obvious based on what the application does disclose. Making the effort to prepare a complete patent application describing multiple variations of the invention will help avoid written description rejections.

For antibodies, the application must disclose the amino acid sequence of the claimed antibody. Under the written description requirement, you cannot claim an antibody by specifying the target that it binds to. This is a problem, because once a high value target is identified, it is routine to generate an antibody, and an independently generated antibody that binds to the target will have a different sequence.

Patent Claims

Claims are the most important part of a patent. They define the invention and put others on notice not to infringe. Patent claims can be directed to a composition, a method, a system, a formulation, or a machine. Patents usually have multiple claims of different scope.

Here’s an example of two composition claims from a Merck patent.

1.An isolated antibody or antibody fragment which binds to human PD-1 comprising:

a. three light chain CDRs of SEQ ID NOs: 15, 16 and 17; and/or

b. three heavy chain CDRs of SEQ ID NOs: 18, 19 and 20.

2. The antibody of claim 1, further comprising a human heavy chain constant region and a human light chain constant region, wherein the human heavy chain constant region comprises a γ4 or γ1 human heavy chain constant region or a variant thereof, wherein the constant region variant comprises up to 5 conservatively modified amino acid substitutions.

In claim 1, I highlighted three parts, a preamble, a transition, and a body. The preamble describes the invention and its purpose. The transition “comprising” is an open-ended term indicating that the claimed invention can have additional features. The body sets forth the metes and bounds of what is protected.

The body of claim 1 specifies the amino acid sequences that form the binding domain of the monoclonal antibody known as Keytruda, an immune checkpoint inhibitor for treating cancer. This is a relatively narrow claim that will not be infringed by an otherwise identical PD-1 antibody that has different CDR sequences. Even so, the claim is valuable because Keytruda is regulated by the FDA. Under FDA regulations, a biosimilar to Keytruda must have the same CDR sequences.

Claim 2 is a dependent claim that starts with a reference to claim 1. A dependent claim is narrower in scope than an independent claim. It requires all the limitations of the independent claim, plus the additional limitations of the dependent claim. Claim 1 is recognizable as an independent claim because its preamble does not refer to another claim.

Given the precise specificity of claim 1, you might wonder whether a competitor could avoid infringement by making a minor change such as a conservative amino acid substitution at the end of a CDR. This mutation would avoid direct infringement, but the competitor could still be held liable for infringing under a legal theory called the doctrine of equivalents. The doctrine of equivalents can be invoked if the claimed and accused products have the same function, work the same way, and achieve the same result.

The independent claim of the Cabilly patent shown here is much broader in scope than the Keytruda claim.

1. A method comprising

(a) preparing a DNA sequence encoding a chimeric immunoglobulin heavy or light chain having specificity for a particular known antigen wherein a constant region is homologous to the corresponding constant region of an antibody of a first mammalian species and a variable region thereof is homologous to the variable region of an antibody derived from a second, different mammalian species;

(b) inserting the sequence into a replicable expression vector operably linked to a suitable promoter compatible with a host cell;

(c) transforming the host cell with the vector of (b);

(d) culturing the host cell; and

(e) recovering the chimeric heavy or light chain from the host cell culture.

Cabilly claimed a method for expressing an antibody in a recombinant host cell. This is fundamental technology used by the entire therapeutic antibody industry. Genentech licensed the Cabilly patent to other pharmaceutical companies and earned billions of dollars in licensing revenue before the patent expired. The legal tactics Genentech used to maintain the Cabilly patent, which has limited experimental data, were impressive.

As a founder working on your first patent, you will have to provide the information your attorney will use to prepare a diverse set of claims. You should explain all the different ways your invention is distinguishable from the prior art, how competitors might try to invent around your patent, and what data you can provide to support claims with varying degrees of specificity and breadth. Claims of varying scope allow flexibility as you continue developing your lead. The broad claims will deter competitors from inventing around more specific claims. Diverse claim sets are also an asset in litigation where the validity of each claim is considered independently. If your broadest independent claim is invalidated, a dependent claim may survive.

Patent Prosecution

In this next section, I’ll introduce some of the steps in patent prosecution.

The first application is usually a provisional application. Provisional applications don’t get examined and they never mature into a patent. The function of a provisional application is to establish a priority date by demonstrating possession of the invention. This priority date only applies to subject matter disclosed in the provisional application. Thus, a provisional application should describe every aspect of your invention, and it should have a full set of claims.

Provisional applications are only valid for one year. You must file a PCT or a regular US application before the provisional expires. This will be your last opportunity to add data and additional ideas.

A PCT is an international patent application, but its primary function is to extend the time before you have to decide where to file national phase applications for a total of 30 or 31 months. Patent prosecution costs explode when you file applications in multiple countries. The 30-month delay provides time to learn more about the value of the claimed invention before incurring these costs.

A regular US patent application is called a non-provisional or utility application. A non-provisional application can be filed directly, or it can claim priority from a provisional application or PCT. US applications are examined by the US patent and trademark off ice and can mature into a US patent which only protects against making, using or selling the claimed invention in the US.

The first office action is usually called a restriction requirement. Restriction requirements reduce the examiner’s workload by dividing the claims into groups. The applicant must select one group for continued prosecution and withdraw the other claims. The withdrawn claims can be filed again in a divisional application.

The next office action will be a non-final rejection. This is the first office action on the merits of the claims. The examiner will explain all the grounds for rejecting every claim. The applicant will be given three months to respond to every rejection in writing. The response will include claim amendments where the examiner makes a solid rejection and arguments when the examiner is wrong. The applicant also has the option to request an interview with the examiner. Interviews help advance prosecution by facilitating a dialog to clarify the issues and resolves misunderstandings.

The third office action will be called a final rejection. Don’t be alarmed by this term. You can continue prosecution by paying an additional fee with your response.

The examiner will issue a notice of allowance when she’s persuaded that your claims are patentable. Before proceeding to grant by paying the issue fee, you should decide whether to file a continuation or divisional application. These applications have the same specification as their parent, but different claims.

Startups are often motivated to obtain an allowance quickly, so they narrow the scope of their claims even when they disagree with a rejection. Filing a continuation offers the possibility of pursuing broader claims with less time pressure. You may also want to keep a patent family open to preserve your ability to file claims covering a product a competitor might sell in the future.

Timing

It usually takes about 5 years after the provisional filing date before a patent is granted. A US non-provisional application is filed 2 and a half years after the provisional, and each round of office actions and responses takes at least six months. Slow prosecution can have the advantage of deferring costs until after your next round of fundraising.

If you want to obtain a patent quickly, prosecution can be compressed to less than one year by immediately filing a US non-provisional application, paying for expedited processing, filing narrow claims that won’t provoke the examiner to issue a restriction requirement or multiple rejections, and responding to office actions in a timely manner.

Foreign Patents

You should file foreign patent applications if you plan to sell internationally or if you have a foreign competitor. Important patent applications are typically nationalized in the IP5 jurisdictions: the US, Europe, China, Japan, and Korea. These countries have large economies with well-functioning patent offices. Some of my clients have also nationalized their PCT applications in additional countries.

European applications are examined by the European Patent Office. When a European patent is allowed, it must be validated in the individual European countries where you want a to protect your invention. A Unitary patent is a relatively recent alternative to individual validations which covers 17 European countries.

Patent prosecution in foreign counties is generally similar to prosecution in the US, but each country has its own process and applies specific laws, necessitating the engagement of a foreign patent attorney.

When to File a Patent

Competing factors often come into play when deciding when to file a patent.

First, the invention must be ready for patenting. Don’t file a patent on a research plan. You need a complete and operative invention.

On the other hand, business necessities can create urgent deadlines. To protect your rights, you should file a provisional patent application before disclosing your invention to potential partners or investors, filing an IND,

publishing a paper that can be cited as prior art, or selling a product or service. Relying on a confidentiality agreement is problematic because NDAs are difficult to enforce.

You should file early if your invention is in a competitive field. When similar inventions are described in two patent applications from competing companies, the first application filed gets priority and becomes prior art to the second.

The problem with filing early is that you may not have finished collecting the data you plan to include in your application. If you know what the invention is, you can describe and claim it in a provisional and add supporting data to the PCT. The 1-year expiration date of the provisional sets a hard deadline for adding data to the application, but post-filing data can be used to establish the plausibility of an invention described in the application. You can also include prophetic data in the application describing the protocol and expected results of planned experiments.

On the other hand, there are benefits from finishing development of an invention before filing a patent. The application itself will be better organized if it’s based on data rather than shifting expectations. You will also have a better grasp of what should be claimed as the final product and what variations to include in broader claims to block your competitors. A modest amount of data on alternative embodiments can increase the likelihood of getting your broadest claims allowed.

If there’s no competition, you should consider waiting before filing a patent application. For example, competition might be thwarted by an earlier patent that covers a critical component of your next invention. Delayed filing will defer costs and extend the expiration date of your patent. Extending the expiration date is particularly valuable for therapeutic inventions because profits are highest immediately before a drug goes off patent.

Plan Ahead for Your Next Patent

Before finalizing your first patent application, you should start planning for the next one. For example, you can patent an improved version of your invention with unexpected benefits, use a drug to treat a different disease, or create a new formulation that solves a problem with the original.

It’s tempting to add a preliminary discussion of your next invention to the current patent application as you think about how to broaden the claims. This would be a mistake. You might create an absurd situation where you can’t patent your planned invention in the first application because it lacks data essential to support the claims and can’t patent it in a later application because the first is cited as prior art.

A partial solution to this dilemma is to file the second application before publication of the first. Europe has the strictest rule for prior art. In Europe, a published application is prior art for both novelty and obviousness, while an unpublished patent application is only prior art for novelty. Accordingly, a second application filed before publication of the first can include claims that are obvious variations of what was disclosed in the first application.

Closing remarks

The first patent is an important milestone for a biotech startup that can provide a critical foundation for future success.

I hope you’ve learned something useful from this presentation and are excited to start creating and protecting your IP. Please contact me with your questions.

Disclaimer

I’m a patent attorney, but I don’t want you to rely on this informational presentation for legal advice. The right patent strategy for you depends on the specifics of your invention, your business plans, and the competitive landscape.

Five reasons to file a patent today