By MARK McCARTY
Medical Device Daily Washington Editor
BOSTON The last day of AdvaMed 2012 included a discussion of the case of Prometheus v. Mayo that left observers with little reason for optimism unless the observer was employed by a large commercial entity with a good budget for legal consultation. Otherwise, holders and would-be holders of intellectual property might find the outcome of Prometheus leaves them ill equipped to manage patents and patent portfolios in a way that steers around some of the issues that arose in the case, which is expected to not only reshape the contours of the patent landscape going forward, but could eviscerate a number of existing patents as well.
Omar Amirana, MD, of Allied Minds (Boston) started the discussion with the observation that the outcome in Prometheus is yet another reason for investors to eye med-tech start-ups warily. "The IP landscape today is arguably cloudier than it was" prior to Prometheus, he said, adding, "murkiness in the IP arena is scary. It's another reason to step back and take pause" before investing in life sciences.
Michael Schiffer, VP and general patent counsel at Beckman Coulter (BC; Brea, California), said the effect of Prometheus would not be limited to the latest in vitro diagnostic, claiming the firm's big-box diagnostic equipment could be affected as well. "With each analyzer, we may be running a hundred or more assays," he said, many of which are the subjects of patents. Prometheus "is good and bad for us," Schiffer acknowledged. He explained that BC would have to up its legal due diligence "to get good patent coverage," but he also remarked that some of the firm's existing IP of lesser market value may prove fairly profitable as products for licensing.
"In some sense, the biggest losers may be the universities because they get these early stage patents," Schiffer said, which may be adversely affected because many such patents are difficult to write with full anticipation of the market utility of the article. Absent such information, a patent filing may lack the specificity that sidesteps the issues of breadth that helped torpedo the Prometheus patent, but the cost of consultation to assess market value not to mention the fine crafting of a patent application that covers such values exhaustively without prompting a challenge can quickly drain a modest legal consultation budget.
Schiffer said "if you want to get protection for your claim, you need a lot more disclosure and a lot more experiments. So it has raised the bar on costs" because more basic research will often be needed. "The effect goes way beyond the legal side" to the technical side, Schiffer said.
"There was a preview to Prometheus in LabCorp," Schiffer continued, reminding those in attendance that Justice Steven Breyer's dissenting opinion in LabCorp v. Metabolite foreshadowed his writ in the unanimous decision in Prometheus. Schiffer said Breyer saw the Prometheus patent as "overly broad, and he wanted to look at it under section 101," of patent law, which deals with the issue of patentable subject matter.
"Try to work with your potential partners sooner rather than later, because you may need their expertise on what that innovation will be applied to in the real world," Schiffer recommended.
Amy Mendel of Ziopharm Oncology (Charlestown, Massachusetts) indicated she was not entirely awed by the Supreme Court's demonstrated familiarity with patent law. "It takes a long time and a lot of practice" to master patent law, she remarked, adding, "the justices are jumping into complex issues where they don't have the background," to come up with rulings that resonate with precedent and avoid creating new problems. She remarked that the working knowledge held by the justices of the Court of Appeals for the Federal Circuit allows that court to render decisions that are "much more applicable to what we do on a daily basis."
Mendel said some in the molecular diagnostics business believe Prometheus "isn't applicable to me . . . but I'd say it is."
"Where the courts gave us a lot of trouble in Prometheus is where they interpreted what constitutes a law of nature," Mendel explained, adding that at least some patent reviewers at the U.S. Patent and Trademark Office are not entirely certain how to deal with the implications of the decision. She said a PTO guidance document for patent reviews applies the court's views in Prometheus, but that the guidance seems also to say "add some fluff to your claims and we'll make it patentable." Mendel stated, "we're putting Band Aids on big gaping wounds" with the PTO guidance.
Amirana indicated the outcome has fostered some deep skepticism regarding the IP inventory held by some early-stage companies. "I'm probably more interested in basically ascribing zero value to the IP until [a patent is] actually issued," he acknowledged, adding that his skepticism might sustain until that patent has survived a challenge.
The outcome might have ramifications outside the area of patent applications as well, Amirana said. He remarked that firms with disclosure requirements under securities law may find that disclosure of any IP risk "may be what keeps you out of a shareholder lawsuit."
He said further, "in some respects, this has put IP into the same bucket as regulatory or reimbursement" considerations because of the potential for a failed patent application.
"It's not all dire," Amirana continued, but he asserted that the IP landscape has changed dramatically as a result of the court's decision, "and it reinforces the fact that you need to surround yourself with people who understand" the implications of the decision.
"IP has become an even more important part of the investment thesis," Amirana advised, explaining that any indication of a less than airtight patent portfolio may cause investors to hesitate.
ACLU appeals Myriad
The American Civil Liberties Union (New York) has filed an appeal with the U.S. Supreme Court to hear the Myriad patent case, asking the court to review the remaining claims held by Myriad Genetics (Salt Lake City).
ACLU's Sept. 25 statement requests that the court "invalidate patents for two genes associated with hereditary breast and ovarian cancer that allow a Utah company to control access to crucial genetic tests that could lead to life-saving treatment."
Mark McCarty, 703-268-5690
Published October 5, 2012