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  • Genetic Lesion Segregation Found in Chemically Induced Tumors in Mice

    By Kevin E. Noonan —

    Genetic instability has long been recognized as a hallmark of oncogenesis and tumor progression.  The phenomenon was first identified cytogenetically, most famously by the Philadelphia chromosome in chronic myelogenous leukemia (see Wapner, The Philadelphia Chromosome: A Genetic Mystery, a Lethal Cancer, and the Improbable Invention of a Lifesaving Treatment), later appreciated as the result of a translocation between a human protooncogene (c-abl) with a heterologous sequence that resulted in development of the disease.  But it was later recognized by histological analysts that cancer cells could be characterized by a host of aneuploidies, including chromosome loss and duplication as well as changes in fine structure features of the genome.

    The advent of rapid and (relatively) inexpensive whole genome sequencing (WGS) methodologies has resulted in even more sensitive assessments of changes in human genomic DNA associated with cancer progression.  This week, the scientific journal Nature published a paper* entitled "Pervasive lesion segregation shapes cancer genome evolution" that showed for the first time a heritable pattern of DNA strand-specific changes caused by contact with chemical mutagenic agents and the consequences for cancer development.  The experiments were performed by treating inbred male C3H/HeOuJ mice (as well as "divergent" CAST/EiJ mice) with one dose of dimethynitrosamine (DEN), a known cancer-causing agent.  Treatment with this mutagenic agent was found result in predominantly (76%) mutations in A:T basepairs (T→N or A→N, where N is any of the other bases), which the paper note is "consistent with the long-lived thymine adduct O4-ethyl-deoxythymidine being the principal mutagenic lesion."  Whole genome sequencing (WGS) was performed on a total of 371 independently-arising tumors from 104 C3H mice and these researchers reported finding about 60,000 point mutations in each tumor (about 13 changes per megabasepair, Mb).  Perhaps unsurprisingly (in view of what is known about how this chemical produces mutations), insertion and deletion mutations were rarely detected.

    Upon analysis of these mutations, the authors found "multimegabase genomic segments with pronounced Watson-versus-Crick-strand asymmetry of mutations, frequently encompassing entire chromosomes" (i.e., "an excess of T→N over A→N mutations when called on the forward strand of the reference genome, and Crick-strand bias as the converse of this"), with a median span of these lesions being 55Mb long.  The researchers state that in this outcome "DEN-induced lesions remaining unrepaired before genome replication."  The mechanistic consequence is shown in Figure 2i:

    Figure 2i
    where "(1) A mutagen generates lesions (red triangles) on both DNA strands.  (2) If not removed, lesions will segregate into sister chromatids: one carrying only Watson-strand lesions (blue) and the second carrying only Crick-strand lesions (gold).  Postmitotic daughter cells will have independent lesions and resulting replication errors (3), resolved into full mutations in later replication (4).  (5) Only lineages containing driver changes (* in (1)) will expand into substantial populations."

    As the authors explain, "[a]symmetric regions show a 23-fold excess (median) of their preferred mutation over its reverse complement, thus more than 95% of lesions that generate a mutation segregate for at least one mitotic division," a phenomenon they term "lesion segregation."  The authors explain instances where  these asymmetries change in a chromosome as being the result of sister chromatid exchanges resulting from homologous recombination-mediated DNA repair events.  While these asymmetries are reported to be equally distributed on the Watson and Crick strands in the genome, this is not observed at loci encoding genes associated with tumorigenesis (what the researchers term "driver genes": Braf, Hras, and Egfr).  These sites show "oncogenic selection," defined as a bias for retaining mutations associated with their role in oncogenesis.  The researchers also found transcription-coupled nucleotide-excision repair of such lesions preferentially in portions of the chromosome encoding the template (mRNA) strand of genes in the chromosomes, wherein "mutations in highly expressed genes were reduced by 79.8 ± 1.0% (mean ± s.d.) if the tumour had template-strand lesions."

    Discovery of lesion segregation provides a mechanism for the genetic heterogeneity found in many tumors.  As the authors explain, "[a] segregating lesion may act as template for multiple rounds of replication in successive cell cycles (as shown in the Figure).  Each replication could incorporate different incorrectly or correctly paired nucleotides opposite a persistent lesion, resulting in multiple alleles at the same position.  Consistent with this notion, multiallelic mutations have been reported in human cancers . . . ."  Here, 8% of mutated sites showed multiallelic variants (amounting to 1.8 million sites in C3H tumors induced by DEN), whereas only 0098% of sites between tumors showed nucleotide changes.  The consequence:  "[t]he generation of multiallelic variation produces combinatorial generic diversity that would not be expected under purely clonal expansion."  The researchers explain the consequence of these results:

    Tumours with high rates of genetic diversity have consistently high rates of multiallelism throughout their genome[].  They are likely to have expanded from a first-generation daughter of the original DEN-mutagenized cell, in which all DNA is a duplex of a lesion-containing and non-lesion-containing strand.  Therefore, replication using lesion-containing strands as the template in subsequent generations produces multiallelic variation uniformly across the genome.  Tumours with lower total levels of genetic diversity exhibit discrete genomic segments of high and low multiallelism[].  These tumours probably developed from a cell some generations after DEN treatment.  Each mitosis following DEN exposure is expected to dilute the number of lesion-containing strands in each daughter cell by approximately 50%.  Only lesion-retaining fractions of the genome generate multiallelic and combinatorial genetic diversity in the daughter lineages; consistent with this, the multiallelic segments mirror the mutational asymmetry segmentation pattern.

    The consequences of DEN mutagenesis reported are striking:  "[i]n 67% of C3H tumours and 21% of CAST tumours, the initial burst of mutations was instantly transformative."

    Lesion segregation can also be observed, as reported in this paper (if you know to look for it) in chemically mutagenized human induced pluripotent stem cells (iPSCs), as well as in tumors induced by sunlight (UV irradiation), tobacco smoke (benzo[a]pyrene diol-epoxide) and certain chemotherapeutic agents.  The authors note, however, that unlike experimentally induced tumors most naturally occurring tumors are the result of a series of longitudinal genetic insults rather than a single injury.  Accordingly, they expect that lesion segregation may be masked as a consequence of these multiple insults.  Nevertheless, they also report finding lesion segregation in renal, biliary, and hepatic tumors from a human cancer genome compendium (n=18,850 tumors from 22 primary tumor sites).

    The paper summarizes the significance of their findings thusly:

    Once identified, lesion segregation is a deeply intuitive concept.  Its practical applications provide new vistas for the exploration of genome maintenance and fundamental molecular biology.  The discovery of pervasive lesion segregation profoundly revises our understanding of how the architecture of DNA repair and clonal proliferation can conspire to shape the cancer genome.

    * Sarah J. Aitken, Craig J. Anderson, Frances Connor, Oriol Pich, Vasavi Sundaram, Christine Feig, Tim F. Rayner, Margus Lukk, Stuart Aitken, Juliet Luft, Elissavet Kentepozidou, Claudia Arnedo-Pac, Sjoerd V. Beentjes, Susan E. Davies, Ruben M. Drews, Ailith Ewing, Vera B. Kaiser, Ava Khamseh, Erika López-Arribillaga, Aisling M. Redmond, Javier Santoyo-Lopez, Inés Sentís, Lana Talmane, Andrew D. Yates, Liver Cancer Evolution Consortium, Colin A. Semple, Núria López-Bigas, Paul Flicek, Duncan T. Odom & Martin S. Taylor.

    Cancer Research UK Cambridge Institute, Department of Pathology, University of Cambridge, UK; Department of Histopathology, Cambridge University Hospitals NHS Foundation Trust, UK; MRC Human Genetics Unit, MRC Institute of Genetics and Molecular Medicine, School of Mathematics and Maxwell Institute, Higgs Centre for Theoretical Physics, University of Edinburgh, UK;  Institute for Research in Biomedicine (IRB Barcelona), The Barcelona Institute of Science and Technology, Barcelona, Spain; European Molecular Biology Laboratory, European Bioinformatics Institute, Hinxton, UK;  Edinburgh Genomics (Clinical), The University of Edinburgh, Edinburgh, UK; Universitat Pompeu Fabra (UPF), Barcelona, Spain; Institució Catalana de Recerca i Estudis Avançats (ICREA), Barcelona, Spain; German Cancer Research Center (DKFZ), Division of Regulatory Genomics and Cancer Evolution, Heidelberg, Germany.

  • Supreme Court Takes Pass on Considering IPR Constitutionality

    By Kevin E. Noonan —

    Supreme Court Building #2There is little rhyme nor reason in the cases the Supreme Court decides to review.  But the Court has patterns in its case selection that do (to some degree) probe what the Justices think are important questions.  One pattern that has been evident in the past few years is that the Court believed it important to set the contours of the post-grant review provisions of the Leahy-Smith America Invents Act, particularly with regard to inter partes review proceedings.  Thus, the Court held in Cuozzo Speed Technologies LLC v. Lee (2016) that the USPTO properly applied the "broadest reasonable interpretation" standard for claim construction for IPRs and that the statute mandated that the decision to institute an IPR was not subject to judicial review.  Two years later, the Court handed down two IPR-related decisions.  In SAS Institute Inc. v. Iancu (2018), the Court challenged the PTAB's practice of partial IPR institution and held that the U.S. Patent and Trademark Office was compelled to render a Final Written Decision (FWD) on all claims challenged by a petitioner in its IPR petition.  And in Oil States Energy Services, LLC. v. Greene's Energy Group, LLC (2018), the Court held that IPRs do not violate Article III or the Seventh Amendment of the Constitution.  Last year, in Return Mail, Inc. v. United States Postal Service (2019), the Court's decision precluded federal government agencies from availing  themselves of post-grant proceedings under the AIA, and earlier this year in Thryv, Inc. v. Click-to-Call Technologies, LP (2020), the Court mandated that the provisions of 35 U.S.C. § 315(b), which preclude a petitioner from filing an IPR petition more than one year after being served with a complaint alleging infringement, are barred from judicial review under 35 U.S.C. § 314(d).

    The Court's decisions have ranged from the (relative) minutiae of statutory construction and administrative implementation thereof to questions of constitutionality.  But the Oil States decision was perhaps the Court's most explicit reservation of judgment on whether Congress (or the PTO) had (or might) overstep its Constitutional moorings under certain circumstances.  The Court noted that it was not determining whether IPR proceedings raise due process concerns, and stressed that the holding should not be misconstrued to suggest that other constitutional challenges could not be made, for example challenges related to the Due Process Clause or the Takings Clause.  The Court seemed content to await these issues (should they arise) to come before it in future cases.

    This week, the Court announced that that future is not now, in denying petitions for certiorari in two cases, Celgene Corp v Peter and Enzo Life Sciences, Inc. v. Becton, Dickinson & Co.  Both cases involved Constitutional challenges against retroactive application of IPR challenges on patents that were filed before enactment of the AIA.  These challenges were addressed expressly by the Federal Circuit, and in both cases the Court denied those challenges.

    In Celgene, in an opinion by Chief Judge Prost, joined by Judges Bryson and Reyna, the Court based its decision that IPRs are not unconstitutional on the history, beginning in 1980, of Patent Office review of previously granted patents, which at least put patentees on notice that the Office could reconsider the validity of the patent grant.  This history made that grant contingent on there not being a successful post-grant challenge, and thus an IPR is nothing more than the latest iteration of such proceedings.  Characterizing IPRs in this way removed much of the force of the retroactivity argument, without which the constitutional challenge fell.  It is also consistent with the Court's decisions in Patlex Corp. v. Mossinghoff, 758 F.2d 594 (Fed. Cir. 1985), and Joy Technologies, Inc. v. Manbeck, 959 F.2d 226 (Fed. Cir. 1992), where the Court rejected similar challenges to ex parte reexamination.  According to the opinion, "Celgene's pre-AIA patents were therefore granted subject to existing judicial and administrative avenues for reconsidering their validity" and "[f]or several decades [prior to Celgene applying for its patents], the Patent Office also possessed the authority to reexamine—and perhaps cancel—a patent claim that it had previously allowed."

    The Office also persuasively argued that invalidation of a patent is not an unconstitutional taking because "the patent owner 'never had a valid property right because the patent was erroneously issued in the first instance.'"  And the panel noted that "[t]he validity of patents has always been subject to challenge in district court," although there is (or should be) a distinction between the agency reversing itself within its own sphere of expertise and a court deciding that the agency had erred.

    In view of the similarities between IPRs and these earlier types of post-grant review proceedings, the panel stated that:

    [I]t suffices for us to decide that IPRs do not differ sufficiently from the PTO reconsideration avenues available when the patents here were issued to constitute a Fifth Amendment taking.  Celgene identifies a number of differences between reexaminations and IPRs, including that IPRs are adjudicative and have discovery, briefing, and an oral hearing, . . . but as explained below [where the panel recites the many similarities between IPRs and earlier post-grant review proceedings], these differences are not sufficiently substantive or significant to constitute a taking.

    The Court's reticence to grant certiorari is perhaps more understandable in Enzo.  There, in an opinion by Judge Lourie joined by Judges O'Malley and Chen, the Federal Circuit dealt summarily with Enzo's argument that subjecting patents granted prior to enactment of the AIA to the IPR provisions of the AIA was unconstitutional:

    We recently addressed this issue in Celgene Corp. v. Peter, No. 18-1167, 2019 WL 3418549, at *12–16 (Fed. Cir. July 30, 2019), which is now precedent that governs this case.  Celgene held that "retroactive application of IPR proceedings to pre-AIA patents is not an unconstitutional taking under the Fifth Amendment."  Accordingly, we hold that the retroactive application of IPR proceedings to the '197 patent, which issued before the enactment of the AIA, is not an unconstitutional taking under the Fifth Amendment.

    It is unlikely that the Court has much stomach for considering arguments against the constitutionality of the post-grant proceedings set forth in the AIA.  Perhaps this is simply that a majority of the members of the Court believe (against likelihood or at least recent experience) that the Federal Circuit is correct and the patent bar's acquiescence, and settled case law, to earlier post-grant review regimes (the ex parte reexamination statute in 1980 and the inter partes reexamination statute in 1999) creates sufficient precedent that Congress's latest foray in providing a remedy to Patent Office misadventure in improvidently granting "bad patents."  This history suggests that a successful constitutional challenge in these grounds might be presented will take the type of inordinate exercise in cleverness by patent practitioners that the Court has warned against.  Until then (or until the patent winds in Congress change), the AIA's post-grant review regime appears to be here to stay.

  • An Analysis of a Failed Biosimilar Antitrust Class Action

    By Kevin E. Noonan —

    AbbvieOn June 10th, Judge Manish S. Shah, U.S. District Court Judge for the Northern District of Illinois, dismissed (without prejudice) a class action lawsuit against AbbVie and AbbVie Biotechnology Ltd. by consumer groups, drug wholesalers, and unions (including the City of Baltimore, Miami Police Department insurance trust fund, and a Minnesota-based employee welfare benefits plan for workers in the pipe trade industries), alleging antitrust violations under Sections 1 and 2 of the Sherman Antitrust Act, as well as corresponding state law causes of action for Alaska, California, District of Columbia, Georgia, Illinois, Nevada, New Hampshire, North Carolina, Utah, and West Virginia, over AbbVie's blockbuster biologic drug, Humira.

    Humira (adalimumab) is the world's most valuable biologic drug, having sales of $56 billion from 2012-2018.  Originally approved for rheumatoid arthritis, AbbVie has since obtained FDA approval for treatment of a variety of human autoimmune disorders (including Crohn's disease and plaque psoriasis according to the Opinion and Order).  Facing expiration of the patent on the adalimumab molecule (U.S. Patent No. 6,090,382) on December 31, 2016, AbbVie embarked on a successful campaign (247 patent applications, resulting in 132 patents, which the opinion characterizes as a .534 "batting average") to obtain additional patents on ancillary aspects of the technology, including formulation and manufacturing methods.  Plaintiffs alleged that because some (almost half) of these applications (continuations of earlier-filed applications) were filed two years after Humira was first marketed they should be invalid as being anticipated by earlier Humira-related patents.  (Plaintiffs noted that 5 AbbVie patents were challenged by inter partes review, with 3 being invalidated and AbbVie abandoning the other two before judgment.  AbbVie noted that IPRs against 13 other of its patents were unsuccessful.)  Plaintiffs also alleged inequitable conduct in AbbVie's acquisition of some of these patents, based on prior use of claimed manufacturing methods and failure to disclose these uses to the U.S. Patent and Trademark Office.

    Nevertheless, this "patent thicket" was very effective, and in 2019 several biosimilar applicants, including Amgen (Amjevita), Samsung Bioepsis (Hadlima), and Sandoz (Hyrimoz), (as well as Mylan (Hulio), Fresenius (Idacio), Momenta (subsequently abandoned development), Pfizer (Abrilada), Coherus (CHS-1420), and Boehringer (Cyltezo), non-defendants in this action), entered into an agreement wherein AbbVie licensed them to enter the market with their Humira biosimilars in Europe in October 2018, and in the U.S. in January 2023.  While these dates were earlier than any likely date for biosimilar entry even assuming all of AbbVie's patents that could be asserted were  either found invalid, unenforceable, or not infringed, nevertheless the class attempted through antitrust law to get a judgment that would provide Humira biosimilar market access even more quickly.

    In dismissing the complaint under Ashcroft v. Iqbal and Bell Atl. Corp. v. Twombly, Judge Shah set forth Plaintiffs' allegations in a manner consistent with the requirement that "a court must accept all factual allegations in the complaint as true and draw all reasonable inferences in plaintiffs' favor."  These include:

    • that AbbVie "cornered the market" on Humira (and other, unnamed biosimilar drugs) by "anticompetitive conduct";

    • that AbbVie obtained and asserted patents "to gain the power it needed to elbow its competitors" out of the Humira market;

    • that AbbVie then entered into agreements with those competitors "to keep their competing drugs off the market" (and then, paradoxically, "gave those competitors permission to market their drugs in Europe"; unremarked is that AbbVie gave those same competitors permission to enter the U.S. market a few years thereafter, without having to face those dastardly and profuse patents).

    While setting forth Plaintiffs' allegations bluntly, Judge Shah's decision was balanced in this regard; while noting in the first line of the opinion that "Defendant AbbVie Inc. makes a lot of money selling the prescription drug Humira," he also notes that "AbbVie's Humira-related patents (more than a hundred) make it difficult (if not impossible) to sell competing drugs" and that "the Food and Drug Administration's lengthy approval process imposes additional costs on competitors hoping to reach the market."  And that "a third reason might be the expensive, complicated, and contentious patent infringement litigation that often follows on the heels of FDA approval."

    The Court also noted AbbVie's actions in Europe to avoid adverse judicial verdicts and take advantage of "a more fractured patent system (and a type of European patent application similar to the continuation application, known as a "divisional application") to retain patent rights to assert against biosimilar applicants.  While not relevant to the antitrust issues before the Court, Plaintiff made these allegations to characterize AbbVie as a "bad actor."

    Judge Shah rebuts these arguments (with additional details as set forth below) efficiently:

    Plaintiffs say that AbbVie's plan to extend its power over Humira amounts to a scheme to violate federal and state antitrust laws.  But what plaintiffs describe is not an antitrust violation.  AbbVie has exploited advantages conferred on it through lawful practices and to the extent this has kept prices high for Humira, existing antitrust doctrine does not prohibit it.  Much of AbbVie's petitioning was protected by the Noerr–Pennington doctrine, and plaintiffs' theory of antitrust injury is too speculative.

    The Judge set forth the following reasoning in support of his legal conclusions.  The complaint sounded in antitrust law under the Sherman Antitrust Act, §§ 1 and 2, as well as state antitrust law claims.  The Sherman Act Section 1 Count was asserted under a "pay-for-delay" theory against AbbVie, AbbVie Biotechnology, and the three biosimilar applicants (Amgen, Samsung Bioepsis, and Sandoz).  Count 3 was also alleged against all Defendants, based on a market allocation agreement theory under § 1.  Count V asserted Section 2 violations against AbbVie alone.  Counts II, IV, and VI alleged state law claims on grounds analogous to the Federal Sherman Act Counts, and Count VII against AbbVie alleged state law unfair competition laws.

    With regard to the Sherman Act § 2 allegations against AbbVie, the Court agreed with AbbVie that "there is nothing illegal about amassing a broad portfolio of legitimate patents."  To the extent that some of these patents turn out to be improvidently granted, "the Noerr–Pennington doctrine immunizes them from liability."  Regarding the Section 1 allegations, the Court similarly agreed with Defendants that these settlement agreements don't violate the Sherman Act because "they[] allow AbbVie's competitors to enter the market before the expiration of AbbVie's patents, do not involve any reverse payments from AbbVie (the patentee) to Amgen, Samsung Bioepis, and Sandoz (the alleged infringers), and only divvy up the market in ways consistent with AbbVie's patent rights."  Finally, the Court agreed that even if a single one of AbbVie's patents are not invalid and infringed that would have been sufficient to keep the biosimilar applicants from marketing Humira biosimilars until that patent expired (a date that would have been very much later than January 2023).  For Plaintiffs' antitrust allegations to create liability against Defendants, Plaintiffs would need to show that AbbVie had obtained each and every one of its patents "unlawfully," which the Court found was unlikely, as a "but-for" cause of Plaintiffs' alleged injury.

    One basis for the Court's decision to dismiss was that Plaintiffs' complaint comprised "a new kind of antitrust claim."  The Court's basis for this characterization is that the Sherman § 2 allegations, which while analogous to the grounds of antitrust liability found in Walker Process Equip., Inc. v. Food Mach. & Chem. Corp. and to Prof'l Real Estate Inv'rs, Inc. v. Columbia Pictures Indus., Inc. regarding the exemption from Noerr–Pennington immunity raised by an objectively baseless assertion of an invalid patent, Plaintiffs had disclaimed those grounds of legal remedy.  Moreover, the Sherman § 1 allegations were grounded in F.T.C. v. Actavis, Inc., despite the fact that there had been no reverse payment from AbbVie to any of the biosimilar applicants.  In the Court's view, "[t]he complaint brings together a disparate set of aggressive but mostly protected actions to allege a scheme to harm competition and maintain high prices.  The allegations—even when considered broadly and together for their potential to restrain trade—fall short of alleging the kind of competitive harm remedied by antitrust law."

    Turning to the specific deficiencies of each of Plaintiffs' allegations of Sherman Act violations, the Court first plumbed the bases of liability under Section 2 as pled by Plaintiffs.  The opinion sets forth the elements of such a violation:  "a plaintiff must allege '(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident'" citing United States v. Grinnell Corp.  The opinion summarizes Plaintiffs' argument in support of this allegation to be that "AbbVie abused its monopoly over the U.S. market for adalimumab . . . when it gummed up progress toward lower prices by obtaining and asserting "swaths of invalid, unenforceable, or noninfringed patents without regard to the patents' merits" (the "patent thicket" argument).  These allegations did not include that AbbVie had obtained its patents by "knowing and willful fraud" nor that asserting these patents in biosimilar litigation was objectively baseless.

    The opinion recognizes the equitable basis for Plaintiffs' argument as being "when a patentee acquires and asserts whole tracts of questionable patents as part of a bad-faith, intentional effort to prop up the market for an existing, expiring patented product," then "petitioning the government (during patent prosecutions, the FDA approval process, and in the courts) can violate the antitrust laws if, in reality, that petitioning is nothing more than a sham meant to inhibit competition," citing California Motor Transport Co. v. Trucking Unlimited for the premise that the Noerr–Pennington doctrine does not immunize activities that are "means or the pretext for achieving substantive evils which the legislature has the power to control."  But the Court also recognized that "because immunized conduct cannot be aggregated with nonimmunized conduct without nullifying the immunity, it is necessary to identify protected and unprotected conduct," citing Mercatus Grp., LLC v. Lake Forest Hosp., and that, ultimately, informs the Court's decision that Plaintiffs should not be permitted to pursue their cause of action under the theories pled in their complaint.

    Specifically, a recently decided case — U.S. Futures Exch., L.L.C. v. Bd. of Trade of the City of Chicago, Inc. — held that the objectively baseless prong of the test for vitiating Noerr–Pennington immunity is not satisfied "merely by showing that its competitor's purposes were to delay the plaintiff's entry into the market," which was the basis for Plaintiffs' allegations here.  The opinion states that "AbbVie's conduct is protected by Noerr–Pennington (and not subject to antitrust scrutiny) unless its petitions—its patent applications, patent dance exchanges, and the lawsuits that followed—were objectively baseless," and assertions of "numerous flaws" in AbbVie's patents is not enough to amount to their assertion being objectively baseless.  Moreover, the Court is not convinced in view of the 53.4% allowance rate, which the Court believes "compels the conclusion, as a matter of law, that more than half of AbbVie's patent applications were not objectively baseless" under U.S. Futures Exch.  This conclusion is supported by case law from other Circuits where similar success rates led to the conclusion that assertion thereof was not objectively baseless.  This conclusion was bolstered by AbbVie's success before the PTAB in IPRs, where 13 of 18 challenged patents were upheld.  And although the Court did ascertain that some of the patent assertions made by AbbVie during the biosimilar "patent dance" and subsequent litigation may have been objectively baseless, "a settlement that provides substantial value to an antitrust defendant accused of initiating that lawsuit as a sham [which was the case here] is objectively reasonable," citing New W., L.P. v. City of Joliet (the Court citing the benefits of the settlements for Plaintiffs and that the settlements "required concessions from both sides').

    Taking these considerations into account, the Court concluded that:

    [T]he vast majority of the alleged scheme is immunized from antitrust scrutiny, and what's left are a few sharp elbows thrown at sophisticated competitors participating in regulated patent and biologic-drug regimes.  Some of AbbVie's conduct was not immunized by the Noerr–Pennington doctrine—including what plaintiffs allege to be the heart of their monopolization claim—but much of what preceded and followed that conduct was immunized, which makes the entirety of alleged monopolization scheme immune, because plaintiffs' theory depends on all the components of AbbVie's conduct as the means to suppress competition.

    The Court also distinguished Plaintiffs' novel antitrust liability theory here with cases where a court has found "a series of allegedly sham petitions" because in this case the patent system was involved.  Although the Court is cognizant that patenting does not provide blanket antitrust immunity and the patent system is not perfect, the opinion rejects using antitrust law to "launch a collateral attack" on AbbVie's patents and related adjudicative proceedings before the Patent Office and the district courts.

    Finally, the Court failed to recognize any antitrust injury based on Plaintiffs' Section 2 allegations because "it is not plausible that AbbVie's nonimmunized conduct intimidated the other defendants into delaying the launch of their biosimilars (or otherwise caused any antitrust injury)."

    Turning to the allegations based on Section 1 of the Sherman Act, the opinion sets out what is required for a well-pleaded complaint:  "[i]n order to state a claim under § 1, plaintiffs must plead '(1) a contract, combination, or conspiracy; (2) a resultant unreasonable restraint of trade in [a] relevant market; and (3) an accompanying injury,'" citing Deppe v. Nat'l Collegiate Athletic Ass'n, which are assessed under one of three categories of analysis: "per se, quick-look, and rule of reason," citing Agnew v. Nat'l Collegiate Athletic Ass'n.  The opinion quickly rejects a per se analysis because the agreements are not "facially anticompetitive" (not involving price-setting or the quantity of Humira each defendant could sell), and the Court notes that even frank "pay-for-delay" agreements are not per se anticompetitive under FTC v. Actavis.

    Regarding Plaintiffs' market allocation argument (wherein Europe and the U.S. comprise the allocated markets), the Court once again considers the influence of patents, which permit the patentee to selectively license in different territories, citing Dunlop Co. v. Kelsey-Haynes Co.  And the Court notes that per se analysis is disfavored when a Court considers novel antitrust liability theories as pled by Plaintiffs.

    The Court also rejects the "quick look" analysis, based on whether "an observer with a rudimentary understanding of economics would []conclude that the agreements have an anticompetitive effect," citing California Dental Ass'n v. F.T.C.  "Even if the rudimentary economist is informed that most of the patents are likely invalid and uninfringed and being asserted without regard to their validity, there are still legitimate, procompetitive justifications for the agreements that require full rule of reason analysis (for instance, the agreements provide certainty to both parties and avoid further litigation costs)" according to the opinion.

    Thus the Court concludes that the "rule of reason" approach is the best analytical tool, consistent with FTC v. Actavis for pay-for-delay or reverse payment settlements.  However, using this analysis the Court found that the settlements here fit into the "important exception" to antitrust liability in settlement agreements: "[p]arties remain free to settle on other terms—for example, 'by allowing the generic manufacturer to enter the patentee's market prior to the patent's expiration, without the patentee paying the challenger to stay out prior to that point.'"  And the Court notes an important distinction with FTC v. Actavis: there, under the 180-day exclusivity provisions of the Hatch-Waxman Act the patent holder and the first-to-file generic drug maker shared market exclusivity.  Here, in contrast, not just Amgen but all the other settling defendants were able to enter the market competitively.  Accordingly, "the package of global patent settlements were not an Actavis-like unlawful reverse-payment" and the differential market entry dates between Europe and the U.S. are permissible under Actavis.  On this motion to dismiss, the Court asked "whether the complaint alleges a patent settlement that has Actavis-like anticompetitive features and that warrants further scrutiny under the rule of reason," deciding that it did not.

    Finally the Court considered whether the complaint asserts facts amounting to antitrust injury, concluding that it does not.  There is "no hard-and-fast rule" against deciding the antitrust injury question on the pleadings, according to the opinion, but "[d]ismissal is appropriate if the claim 'rests at bottom on some abstract conception or speculative measure of harm,'" citing Associated Gen. Contractors of California, Inc. v. California State Council of Carpenters.  The antitrust injury here is "monopoly pricing" under two allegations: first, that "if the biosimilar manufacturers had pursued the underlying infringement suits, they could have prevailed and, by invalidating the patents that were preventing them from entering the market, entered the market even sooner than they are now able to under their settlement agreements, driving prices down."  Second, if AbbVie had limited assertion of its patents to those not invalid and infringed, the biosimilar applicants would have been able to negotiate more favorable settlement terms.  The Court found these allegations of "what might have happened in the underlying infringement litigation [to be] too speculative and would require legal and factual determinations that go beyond judicially manageable limits," citing Associated Gen. Contractors of California.  These allegations describe "a world where [this] might have happened" but what is conceivable "falls short of plausible" which is required for establishing antitrust injury at the pleadings stage.  "[I]t only takes one valid, infringed patent to render all the rest—whether invalid, infringed, or not—irrelevant for purposes of cause-in-fact analysis," according to the opinion. And further, "[i]f the reason the biosimilar manufacturers could not make it to market was that AbbVie had a patent that prevented them from doing so, it was the patent—and not AbbVie's other conduct—that was the but-for cause of the monopoly prices."

    The Court finds Plaintiffs' allegations of patent invalidity to be inadequate because AbbVie needed to be able to assert but one not invalid, infringed patent to avoid antitrust liability.  The Court also considered the temporal aspects affecting competition, because "litigation takes time" and for "complex patent portfolios, it can take a lot of time."  And the timing of litigation between AbbVie and the different biosimilar applicants was not consistent with (and is frankly speculative about) earlier market entry than January 2023 under the settlement agreements that Plaintiffs' allege are anticompetitive.

    The Court concludes this section of its opinion by stating:

    Antitrust injury is a prerequisite for all of plaintiffs' federal antitrust claims against not only AbbVie but also defendants Amgen, Samsung Bioepis, and Sandoz.  Because plaintiffs have failed to plausibly allege that the but-for cause of Humira's monopoly prices was the biosimilar manufacturers' failure to pursue infringement litigation to its conclusion, AbbVie's unlawful assertion of its patent thicket, or the biosimilar manufacturers' failure to use the leverage that they apparently didn't know they had to reach an agreement to enter the market sooner than they did, all of the federal antitrust claims in the complaint fail.

    The  Court then applied the same reasoning to the state law-based Counts and found them similarly lacking, based on the parties' acquiescence that if the Federal law claims are dismissed the state law claims should be as well.  And finally, the Court dismissed Count VII as to "unconscionable and unfair" conduct for failure to give adequate notice of the claim absent the antitrust allegations that the Court considered inadequate.

    The interplay between patent law and antitrust law is complex (see, e.g., Antitrust Issues in Intellectual Property Law).  There has been a great deal of angst and upset regarding the Court's decision to dismiss, based on a concern that dismissal puts the Court's imprimatur on AbbVie's strategic behavior (no matter what one may think about it), and that this will chill biosimilar entry.  These sentiments, while perhaps understandable, ignore the outcome:  more than half a dozen biosimilar applicants will bring their biosimilar Humira to market many years earlier than would have happened had the parties engaged in multiple litigations over multiple rounds of the patent dance as provided by the statute.  What Judge Shah's decision means is that antitrust law has established standards in the pharmaceutical context for what constitutes antitrust behavior that can be applied without resource, as here, to novel theories of antitrust liability.  By dismissing without prejudice the Court has given the Plaintiffs an opportunity to bring their case according to these standards.  Whether doing so will promote the cause and goals of bringing biosimilar drugs to market more quickly is less certain.

  • Biogen Int’l GmBH v. Mylan Pharmaceuticals Inc. (N.D.W. Va. 2020)

    By Kevin E. Noonan —

    N.D.W. VaThe written description requirement has had a twenty-five year renaissance, particularly in the chemical and biotechnology arts as a way of restricting claim scope to what an inventor has actually invented (see Regents of the University of California v. Eli Lilly & Co. and "Ariad Pharmaceuticals Inc. v. Eli Lilly & Co.").  In view of the unpredictability of these arts (compared with the mechanical arts; but see Tronzo v. Bionet and Gentry Gallery, Inc. v. Berkline Corp.), the same evidence that supports non-obviousness (due to the skilled worker not having the requisite reasonable expectation of success) can also restrict the scope of what has been described (because there can be much less reliance and supplementation of what the person of ordinary skill would know for disclosures that fail to satisfy the possession test of written description due to that unpredictability).  These conflicting rubrics were part of the District Court's decision last week that Biogen failed to provide adequate written description in ANDA litigation styled Biogen Int'l GmBH v. Mylan Pharmaceuticals Inc.

    The case arose over Mylan's attempt to get regulatory approval and come to market with a generic equivalent of Biogen's Tecfidera® (dimethyl/monomethyl fumarate) multiple sclerosis drug.  Biogen asserted Orange Book-listed U.S. Patent Nos. 6,509,376; 7,320,999; 7,619,001; 7,803,840; 8,399,514; and 8,759,393, but the parties dismissed their causes of action on all patents except the '514 patent, where Biogen asserted claims 1-4, 6, 8-13, and 15-16; claim 1 is representative:

    1.  A method of treating a subject in need of treatment for multiple sclerosis comprising orally administering to the subject in need thereof a pharmaceutical composition consisting essentially of (a) a therapeutically effective amount of dimethyl fumarate, monomethyl fumarate, or a combination thereof, and (b) one or more pharmaceutically acceptable excipients, wherein the therapeutically effective amount of dimethyl fumarate, monomethyl fumarate, or a combination thereof is about 480 mg per day.

    While this litigation was proceeding, Mylan successfully petitioned the Patent Trial and Appeal Board to institute an inter partes review proceeding, on the grounds that the asserted claims of the '514 patent were obvious.  The Board issued a Final Written Decision that Mylan had not shown obviousness by a preponderance of the evidence, and the District Court held that Mylan was collaterally estopped from asserting obviousness as a basis for invalidating the '514 patent in this litigation.  Accordingly, the only ground Mylan pursued before this Court was that the specification of the '514 patent did not satisfy the written description requirement of 35 U.S.C. § 112(a).

    Mylan's arguments on its written description defense were grounded on certain characteristics of the '514 specification and its prosecution history.  The '514 patent reflected Biogen's more general research goal of finding treatments for neurological disorders, including but not limited to multiple sclerosis (MS).  Mylan noted that the original named inventor was not a clinician but rather a research scientist investigating the mechanism of action of the claimed compound.  Specifically, the research underlying the '514 patent disclosure showed that DMF could activate a particular metabolic pathway (the Nrf2 pathway).  One important consequence of this inventor's testimony is that he "denied that his research could be extrapolated to a clinical dose of DMF; it 'was never the focus of [his] work to inform the clinical dosing of [DMF].'"  This inventor, Dr. Lukashev, was the only named inventor on the earliest priority applications from which the '514 patent claimed priority.

    As originally filed, the claims of the application that matured into the '514 patent did not recite methods of treatment but rather were drawn to methods for identifying compounds that affected the Nrf2 pathway.  However, in April 2011, Biogen received the results of a Phase III clinical study showing that a 480mg/day dose of DMF was effective in treating MS (specifically).  Apparently in response, Biogen replaced the then-pending claims with claims that eventually issued, changed the title of the application, and added as an inventor the scientist who posited that this dosage would be particularly effective as an MS treatment; significantly to the written description calculus Biogen did not supplement its specification which permitted it to rely on a February 8, 2007 earliest priority date.  In addition, Biogen filed a stand-alone provisional application expressly directed to MS treatment with 480mg/day of DMF.  Biogen subsequently abandoned this application when the '514 patent was allowed.

    Mylan's argument was simple:  the invention described in the specification filed in 2007 "bears no resemblance to the invention claimed in 2011."  Mylan supported this assertion with two arguments.  First,  Mylan argued that "a POSA [person of skill in the art] would not have expected the claimed invention—a 480mg/day dose of DMF (BID)—to effectively treat MS" and "that nothing in the specification of the '514 Patent teaches otherwise."  Second, Mylan argued that "when viewed as an integrated whole, the combination of selectively-plucked disclosures in the specification of the '514 Patent fails to sufficiently describe the claimed invention—a method of treating MS with a therapeutically effective amount of DMF, i.e., 480mg/day of DMF (BID)."  According to Mylan, the reason for this situation is that "Biogen grafted the '514 claims onto a specification written to cover an entirely different set of inventions, conceived of by an entirely different inventor, and filed more than four years before Biogen's 2011 Phase III trial results demonstrated the effectiveness of the 480[mg/day] dose."

    Biogen, for its part, asserted that Mylan was relying on arguments it had asserted for obviousness, and that the '514 specification contained express disclosure — in Method 4 provided in an Example — that linked each of these three recited elements of the claims ("(1) a method of treating MS with (2) DMF and/or MMF (3) at a dose of 480 mg per day") in a way sufficient to satisfy the written description requirement.[1]

    The District Court held that the '514 specification did not show that the inventors possessed the invention on its earliest claimed priority date.  The Court noted that, although the '514 specification "[s]pan[s] 30 columns," with the first column focusing on MS, the specification is then directed to disclosure of "how 'the Nrf2 pathway may be activated in neurodegenerative and neuroinflammatory diseases as an endogenous protective mechanism,' and how '[e]merging evidence suggests that [plant-derived] compounds may exert their neuroprotective effects by activating cellular stress-response pathways, including the Nrf2 pathway, resulting in the upregulation of neuroprotective genes."  As set forth in the Court's opinion, the '514 specification discloses five methods:

    1) methods of screening for at least one new candidate compound for treating a neurological disease;
    2) methods of evaluating neuroprotective properties of at least one drug candidate for treating a neurological disease;
    3) methods of comparing (e.g., for bioequivalence) at least two pharmaceutical compositions which comprise fumaric acid derivatives;
    4) methods of treating a neurological disease by administering to the subject in need thereof at least one compound that is partially structurally similar to DMF or MMF; and
    5) methods of treating a neurological disease by a combination therapy that comprises administration of at least one first compound that upregulates the Nrf2 pathway and at least one second compound that does not upregulate the Nrf2pathway.

    Even Biogen conceded that Methods 1-3 were directed to screening drug methods and not therapeutic methods, and Method 5 was limited to combination therapies using DMF and other drugs having different activities.  The only disclosure relating to the claimed methods was Method 4, which Biogen contended provided the linkage between the elements of the asserted claims.  The opinion is blunt:  it says plainly "[t]his simply is not so."  The Court understands this method to "broadly describe[] treating neurological diseases with a therapeutically effective amount of DMF; MS is merely one such disease 'among a slew of competing possibilities,'" citing Novozymes A/S v. DuPont Nutrition Biosciences APS by analogy in support of the inadequacy of the '514 patent disclosure.  As further indicia of the lack of necessary specificity of the '514 patent disclosure, the Court cites "an exhaustive list of 'diseases suitable for the [five] methods described' in the '514 Patent."  In view of this listing of a "plethora of neurological diseases," the Court held that there were no blaze marks that would teach the skilled worker to treat MS with DMF at this dosage.  The Court particularly rejected Biogen's contention that the specification would teach the POSA that the '480 mg/day dosage was the preferred dosage, crediting Mylan's expert Dr. Greenberg's testimony in this regard.  The Court particularly focused on the fact that the specification mentions the 480mg/day dosage only once, as part of a preferred range ("from about 480 to about 720mg/day").  The Court found "neither credible no persuasive" Biogen's argument that a POSA would understand that using the lowest effective dose of the narrowest range was preferred.  The Court found it more consistent with what was known at the time the application was filed that dosages of 720 mg/day were effective in treating MS, and 120 and 360 mg/day were ineffective.  In this context, the Court found that a POSA would understand from the '514 patent specification that 720mg/day was effective, to the extent that this was the upper range of every effective dosage range disclosed in the '514 patent.

    In the "battle of the experts" the Court was unpersuaded by Biogen's expert (whose credibility Mylan impeached on cross-examination, according to the Court) and clearly persuaded by Mylan's expert.*

    The Court also was convinced that the reason for this failure to describe the invention claimed in the '514 patent was that the specification contained predominantly the work and inventions of one inventor (Dr. Lukashev) directed to methods for identifying drugs for treating neurological disorders, while the claims were directed to the other inventor's (Dr. O'Neill) work on developing an effective therapeutic agent for treating MS:

    From the evidence presented at trial, Dr. Lukashev's research regarding the activation of the Nrf2 pathway and screening drug compounds had nothing to do with the clinical development of Tecfidera®.  That task fell to Dr. O'Neill and later Dr. Dawson.  Notably, Dr. O'Neill's hypothesis, that a 480mg/day dose of DMF (BID) would be efficacious in treating MS, evolved from his review of Fumapharm's confidential studies of Fumaderm®  [an early Biogen acquisition target], not Dr. Lukashev's unrelated research regarding the mechanism of action [citations to the record omitted].

    From the evidence presented at trial, the District Court identified the following deficiencies in Biogen's failure to satisfy the written description requirement:  "[i]n sum, Biogen has attempted to satisfy the written description requirement of § 112 by selectively plucking specific words from the specification that correspond to each element of the claimed invention."  Citing Nuvo Pharm. (Ir.) Designated Activity Co. v. Dr. Reddy's Labs. Inc., Enzo Biochem, Inc. v. Gen–Probe Inc., and Novozymes A/S v. DuPont Nutrition Biosciences APS, the Court states that "the Federal Circuit has clearly rejected" the approach Biogen has taken.  Precluded from prevailing on these arguments, the Court found that Biogen must rely on inventor O'Neill's testimony that he invented the claimed invention, which the Court found insufficient under Nuvo Pharm. ("inventor testimony cannot establish written description support where none exists in the four corners of the specification").

    The Court also considered "extrinsic" evidence (including the disclosure of the abandoned Biogen application filed immediately after Biogen received the Phase III clinical trial results).  The comparison, wherein this application "provided and discussed in detail a wealth of data generated during Biogen's Phase III study" showed in stark relief the inadequacies of the '514 patent specification.

    Finally, the Court took note of the fact that:

    At every stage of this case and the related IPR proceeding, Biogen defended against Mylan's obviousness challenge by insisting that a POSA would not have expected a 480mg/day dose of DMF to be efficacious in treating MS. . . .  This statement only underscores the failure of the specification to teach a POSA, who would expect otherwise, that a 480mg/day dose of DMF (BID) is efficacious in treating MS.

    The District Court found the facts and circumstances of this case most analogous to the Nuvo Pharm. case, wherein the patent at issue was invalidated on written description grounds.  The Court summarized its findings as follows:

    Mylan has established by clear and convincing evidence that the asserted claims of the '514 Patent are invalid for lack of written description.  First, the text of the specification does not reasonably convey to a POSA that Dr. Lukashev and Dr. O'Neill "actually invented" a method of treating MS with a therapeutically effective amount of DMF, i.e., 480mg/day BID, as of February 8, 2007.  This reading of the text is confirmed by the testimony of Dr. Greenberg, Dr. Lukashev, Dr. O'Neill, and Dr. Wynn.  Second, the context of the '514 Patent's prosecution history and the significant omissions from the specification further underscore the failure to adequately describe the claimed invention.  Biogen's attempt to avoid this conclusion by combining a few selectively plucked disclosures from the specification of the '514 Patent has been squarely rejected by the Federal Circuit.

    Satisfaction of the written description requirement is a question of fact reviewed for clear error from a bench trial.  In addition, the District Court cited trial testimony from inventors and experts, and the Federal Circuit give substantial deference to the fact-finder for decisions based on the trial court's ability to assess witness credibility and demeanor. Finally, the Federal Circuit has recently increased the stringency with which is assesses satisfaction of the written description requirement (see "Amgen Inc. v. Sanofi").  These factors suggest that Biogen will face quite a challenge in getting the Federal Circuit to reverse the District Court's judgment on appeal.

    * In a footnote, the Court illustrated how an expert witness can inform a fact finder regarding complex scientific concepts using commonplace relationships to illustrate the underlying principles:

    As described by Mylan's expert witness, Benjamin M. Greenberg, M.D., autoimmune diseases such as MS are much like a confused house cat that mistakes a curtain, or other house-hold objects, for an invading mouse.  Instead of attacking the mouse, the confused cat attacks a portion of the house it is meant to protect.  The cat's breed, and the type of friendly object it attacks, will help identify which autoimmune disease is causing the confusion.  For example, a Siamese cat (i.e., multiple sclerosis) may be confused and attack one part of the house (i.e., the central nervous system), and a Tabby cat (i.e., psoriasis) may be confused and attack another part of the house (i.e., the skin).

    [1] Biogen also asserted that Mylan was under a heightened burden of proof because the Patent Office had addressed the written description requirement during prosecution and issued the '514 patent when Biogen successfully overcame this ground of rejection.  This argument was particularly unavailing:  the District Court rejected it out of hand.

  • Conference & CLE Calendar

    CalendarJune 23, 2020 – "Practical Guide to Diversity in the Legal Profession in a Post-George Floyd Era" (Intellectual Property Owners Association Diversity & Inclusion Committee) – 1:00 pm to 2:00 pm (ET)

    June 23, 2020 – "A Discussion With the Federal Circuit's Clerk's Office" (Federal Circuit Bar Association) – 1:00 pm until 2:00 pm (EST)

    June 23, 2020 – "Competitive Differentiation Through Big Data Analytics" (Clarivate Derwent and IPWatchdog) – 12:00 pm (ET).

    June 25, 2020 – "Where do we stand in fighting pandemics caused by bacteria? — A closer look into the patent landscape of antibiotics" (LexisNexis PatentSight and IPWatchdog) – 12:00 pm (ET)

  • Webinar on Fighting Bacterial Pandemics

    LexisNexisLexisNexis PatentSight and IPWatchdog will be offering a webinar entitled "Where do we stand in fighting pandemics caused by bacteria? — A closer look into the patent landscape of antibiotics" on June 25, 2020 at 12:00 pm (ET).  Gene Quinn of IPWatchdog.com and Dirk Caspary of PatentSight will look at the patent landscape of antibiotics to identify global leaders developing the latest innovation in this technology.  The webinar will provide:

    • An overview analysis of the antibiotics patent landscape in general
    • An overview analysis of the antibiotics patent landscape for the World Health Organisation (WHO) list of antibiotic-resistant priority pathogens
    • A look at companies that recently gained market authorization for new antibiotics

    There is no registration fee for this webinar.  However, those interested in registering for the webinar, should do so here.

  • IPO Webinar on Diversity in the Legal Profession

    IPO #2The Intellectual Property Owners Association (IPO) Diversity & Inclusion Committee will offer a one-hour webinar entitled "Practical Guide to Diversity in the Legal Profession in a Post-George Floyd Era" on June 23, 2020 from 1:00 pm to 2:00 pm (ET).  Shruti Costales of HP Inc.; Eldora Ellison of Sterne, Kessler, Goldstein & Fox, PLLC; Serena Farquharson-Torres of Bristol-Meyers Squibb Company; and Joel Stern of the National Association of Minority and Women Owned Law Firms, Inc. will discuss the Practical Guide to D&I in the legal profession and reflect on how to improve diversity and inclusion. The panel will also highlight current issues affecting Black IP professionals and the negative impact on diversity in general by the economic slowdown, and offer concrete suggestions about what we can each do to promote these values in our profession for the good of all.

    There is no registration fee for IPO members for this webcast (the fee for non-members is $150).  Additional information regarding the webcast can be found here.

  • FCBA Program on Federal Circuit’s Clerk’s Office

    Federal Circuit Bar Association_2The Federal Circuit Bar Association (FCBA) will be offering a remote program entitled "A Discussion With the Federal Circuit's Clerk's Office" on June 23, 2020 from 1:00 pm until 2:00 pm (EST).  Andrew Trask of Williams & Connolly LLP will moderate a panel consisting of Peter Marksteiner, Circuit Executive and Clerk of Court, U.S. Court of Appeals for the Federal Circuit; and Jarrett Perlow, Chief Deputy Clerk, U.S. Court of Appeals for the Federal Circuit.  The panel will offer information and perspective about a significant set of proposed amendments to the Federal Circuit's Rules of Practice, which were announced on April 24, 2020.

    The webinar is complimentary for FCBA members and students, $50 for government/academic/retired attendees, or $175 for private practitioners.  Those interested in registering for the program, can do so here.

  • Webinar on Competitive Differentiation

    Clarivate DerwentClarivate Derwent and IPWatchdog will be offering a webinar entitled "Competitive Differentiation Through Big Data Analytics" on June 23, 2020 at 12:00 pm (ET).  Gene Quinn of IPWatchdog.com; DJ (Dipanjan) Nag of Ventech Solutions, Raymond Hegarty, author of the e-books "Intellectual Property for Executives" (2018) and "Billion Dollar IP Strategy" (2019); and Vashe Kanesarajah of Derwent, Clarivate Analytics will focus on how competitive and market intelligence has become critical to organization-wide strategic planning, offering the best source of early insights on competitors and the business environment for R&D-focused organizations.  The panel will cover:

    • How patent information enables proactive commercial strategy.
    • Alignment of IP intelligence with business intelligence.
    • Actualizing better strategic decision-making using IP intelligence.
    • Effective communication between IP leaders and the C-suite.
    • How using big data can improve the quality of decision-making in the C-suite.

    There is no registration fee for this webinar.  However, those interested in registering for the webinar, should do so here.

  • USPTO Director Updates Congress Regarding Impact of COVID-19 Pandemic on USPTO Operations

    By Donald Zuhn —

    USPTO SealLast week, U.S. Patent and Trademark Office Director Andrei Iancu sent a letter to the Chairmen and Ranking Members of the Senate and House Committees on the Judiciary, Senate Subcommittee on Intellectual Property, and House Subcommittee on Courts, Intellectual Property, and the Internet, responding to an April 14, 2020 request to provide information regarding the Office's transition to full time telework, status of patent and trademark filings and fee collections, and cost saving measures taken by the Office in response to the COVID-19 pandemic-related economic downturn.  In particular, the letter was sent to Sen. Lindsey Graham (R-SC) and Dianne Feinstein (D-CA), Chairman and Ranking Member, respectively, of the Senate Committee on the Judiciary; Sen. Thom Tillis (R-NC) and Sen. Christopher Coons (D-DE), Chairman and Ranking Member, respectively, of the Senate Subcommittee on Intellectual Property; Rep. Jerrold Nadler (D-NY) and Rep. Jim Jordan (R-OH), Chairman and Ranking Member, resoectively, of the House Committee on the Judiciary; and Rep. Henry C. "Hank" Johnson, Jr. (D-GA) and Rep. Martha Roby (R-AL), Chairman and Ranking Member, respectively, of the House Subcommittee on Courts, Intellectual Property and the Internet.

    With respect to the Office's transition to mandatory telework, Director Iancu noted that prior to the COVID-19 pandemic, about 88% of the USPTO's workforce had been working from home at least one day per week, and of the approximately 11,185 employees working from home at least one day per week, about 7,200 had been working from home full-time.  On March 23, 2020, in response to guidance from federal, state, and local authorities, the USPTO announced that it would be operating under mandatory telework.  Since transitioning to mandatory telework, Director Iancu noted that more than 14,000 USPTO employees and contractors use the Office's network, which was upgraded in January 2020, to connect to the campus daily from a remote location to perform their jobs.  And using secure videoconferencing tools to conduct meetings, patent and trademark applicant interviews, and hearings before both the Patent and Trademark Trial and Appeal Boards, the USPTO has had more than 1,200 virtual meetings with more than 6,600 participants per day since moving to mandatory telework.

    Acknowledging that the transition to mandatory telework "involved a tremendous amount of change for our employees," who "were facing challenges at home and new challenges at work," the Office provided "reasonable relief to production requirements for patent and trademark examiners during the first weeks of the transition when additional leave for federal employees had not yet been enacted into law."  And for the "very limited number" of employees who still needed to report to USPTO headquarters, the Office established strict safety protocols, limited access and the number of employees at various critical IT centers, and provided those employees with personal protective equipment such as masks and gloves.

    Turning to the status of trademark filings and fee collections, Director Iancu informed the Chairmen and Ranking Members that USPTO trademark activity traditionally correlates with the overall state of the economy, and given the domestic and global economic conditions resulting from the COVID-19 pandemic, trademark revenues had not surprisingly been lower than planned for FY 2020.  The lower revenues were the result of a 4.4% drop in Q2 trademark application filings for FY 2020 as compared with FY 2019.  The potentially good news was that preliminary data for May 1-14, 2020 showed a 2.9% increase in trademark application filings as compared to the same period in May 2019.

    As for trademark revenue, year-to-date fee collections (including preliminary data through May 2020) were down 9.2% from projected revenue of $369 million to collected revenue of approximately $335 million.  Although Director Iancu noted that May fee collections were stronger than those for April (when collected revenue was 9.4% lower than the Office's projection), he indicated that "it is too soon to say that this is a sign of continued recovery."  The Director also suggested that the Office anticipates revenue for FY 2021 to be lower than previously estimated.  As a result of the drop in trademark revenue, the USPTO has been using its trademark operating reserve to satisfy trademark obligations and expenditures, with the current $95 million trademark reserve capable of funding the Office's trademark operations for 13 weeks in the absence of additional fee collections.

    With respect to patent filings and fee collections, Director Iancu noted that while patent activity is also correlated with the overall state of the economy, "the impacts of economic shocks on patent application filings and fee collections usually take longer to manifest than with trademarks."  While Q1 patent application filings for FY 2020 were 4.7% higher as compared with FY 2019, Q2 filings were down 2.9% in FY 2020 as compared with FY 2019.  In April 2020, filings were 3.7% lower as compared with April 2019, and preliminary data for May 1-14, 2020, indicated that filings were 3.8% lower than the same period in 2019.

    As for patent fee collections, the Office averaged $11.8 million in collections per day during the first half of May 2020, which was 7% lower than projected daily collections of $12.7 million.  And through May 2020, the patent operating reserve was $356 million, which the Director indicated could fund patent operations for approximately six weeks in the absence of additional fee collections.  He also noted, however, that "a prolonged economic downturn could force us to draw down the reserve below our published minimum of $300 million to unsustainable levels, which is less than four weeks of operations funding."  The Director stated that "[t]hese trends are troubling and the current economic uncertainty could lead us to revise FY 2020 and FY 2021 revenue estimates further downward."

    The Director also noted that while the USPTO promptly provided relief to intellectual property owners under The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) "to help mitigate U.S. intellectual property loss and abandonment during these uncertain times," because Congress did not allocate additional funds to the USPTO, "any fee relief provided by the USPTO to applicants is funded by our reserves."  The Director informed the Chairmen and Ranking Members that "[t]he current relief has begun to impact patent revenues."  And according to the Director, it may take some time to fully understand the ultimate impact of such relief, when the Office will have a better grasp as to "how much this reduced revenue is attributable to a general reduction in patent application and patent maintenance activity due to the economic downturn (in which case it will never be paid) and how much is attributable to individuals simply deferring fee payments to a later date (in which case it will ultimately be paid)."

    The Director closed his letter to the Chairmen and Ranking Members by pointing out that "additional funds may be needed to supplement the USPTO's internal reserves and support operations," and suggesting that Congress could make available to the Office user fees and surcharges previously collected by the Office between 1990 and 2011, which the USPTO does not currently have the authority to spend.