1 For a general discussion of the economic theory of property rights, see R. POSNER, ECONOMIC ANALYSIS OF THE LAW 28-75 (3d ed. 1986).
2 "[T]he basic policy underlying the patent system is to encourage the disclosure of inventions through issuance of patents. Another policy of the system is to stimulate the investment of risk capital in the commercialization of useful patentable inventions so that the public gets some benefit from them, which may not occur in the absence of some patent protection." Rohm and Haas Co. v. Crystal Chemical Co., 722 F.2d 1556, 1571, 220 U.S.P.Q. 289 (Fed. Cir. 1983), 469 U.S. 851 (1984). Kitch, 20 J. LAW & ECON. 265 (1977); Plant, 1 ECONOMICA 30 (1934).
3 The first pharmaceutical produced through recombinant DNA technology to be approved by the U.S. Food and Drug Administration (FDA) and to be marketed was human insulin. FDA approval came in October 1982 and commercial sales began shortly thereafter. McGraw Hill's Biotechnology Newswatch, Nov. 15, 1982, at 2; Johnson, 219 SCIENCE 632 (1983). As of 1989, a total of nine biotechnology-based pharmaceuticals have been approved for commercial use by the FDA. Gupta, Wall St. J., Nov. 13, 1989, at 34.
4 ARTHUR YOUNG HIGH TECHNOLOGY GROUP, BIOTECH 88: INTO THE MARKETPLACE (1987).
5 For general references, see K. DRLICA, UNDERSTANDING DNA AND GENE CLONING (1984); J. WATSON, J. TOOZE & D. KURTZ, RECOMBINANT DNA, A SHORT COURSE (1983) [hereinafter J. WATSON]; Gilbert and Villa-Komaroff, SCI. AM., Apr. 1980, at 74.
6 Goeddel, Kleid, Bolivar, Heyneker, Yansura, Crea, Hirose, Kraszewski, Itakura & Riggs, 76 PROC. NAT. ACAD. SCI. USA 106 (1979); Johnson, note 3.
Proteins are the basic components of biological structures and processes. Familiar structural proteins include collagen, which forms connective tissues such as cartilage and bone, and keratin, which forms skin and hair. Examples of proteins that carry out biological processes are insulin, which regulates sugar metabolism; Factor VIII, which is needed for blood clotting; and antibodies, which help protect against infection by foreign substances. Given the range of apparent medical uses of proteins, their production in pure quantities has been and continues to be one of the principal objectives of biotechnology.
7 For general references, see J. WATSON, N. HOPKINS, J. ROBERTS, J. STEITZ & A. WEINER, MOLECULAR BIOLOGY OF THE GENE (4th ed. 1987); B. LEWIN, GENES (3d ed. 1987).
8 The relative difficulty of identifying and isolating the gene for a desired protein is a consequence of the complexity of the natural environment in which the gene and protein are found. For example, the DNA in each human cell consists of a total of about 3 billion nucleotide base pairs, organized into 100,000 or more individual genes. J. WATSON note 5.
9 OFF. OF TECH. ASSESSMENT, COMMERCIAL BIOTECHNOLOGY: AN INTERNATIONAL ANALYSIS, U.S. Cong., Pub. No. OTA-BA-218 at 119-136 (1984).
10 Wood, Capon, Simonsen, Eaton, Gitschier, Keyt, Seeburg, Smith, Hollingshead, Wion, Delwart, Tuddenham, Vehar & Lawn, 312 NATURE 330 (1984) (describing the use of synthetic oligonucleotides to isolate the gene for human Factor VIII).
11 note 5.
12 S. OLSON, BIOTECHNOLOGY - AN INDUSTRY COMES OF AGE 16 (1986).
13 For example, securities analysts estimate that Genentech, Inc. expended over $200 million to bring recombinant tissue plasminogeen activator to market. Bylinsky, FORTUNE, May 9, 1988, at 52, 62.
14 One measure of importance of patents to the biotechnology industry is the number of biotechnology-related patent applications that are filed. As of September 1988, some 15,000 to 16,000 biotechnology-related patent applications were pending in the U.S. Patent and Trademark Office (PTO), "with more coming in all the time." Insight, Sept. 19, 1988, at 54-55. Another measure is the frequency of biotechnology-related patent litigation, see infra figure 2.
15 35 U.S.C. §§ 101-103 (1982).
16 35 U.S.C. § 101 (1982).
17 35 U.S.C. § 102 (1982).
18 35 U.S.C. § 103 (1982).
199 Bergstrom, 427 F.2d 1394, 1401, 166 U.S.P.Q. 256 (C.C.P.A. 1970) (where compound does not exist in nature in pure form, pure compound is patentable).
20 O'Farrell, 853 F.2d 894, 903, 7 U.S.P.Q.2d 1673 (Fed. Cir. 1988); Old, 229 U.S.P.Q. 196 (Bd. Pat. App. & Int. 1985).
211 U.S. Patent No. 4,879,226, issued Nov. 7, 1989 (human tumor necrosis factor); U.S. Patent No. 4,659,805, issued Apr. 21, 1987 (human alveolar surfactant protein); U.S. Patent No. 4,658,021, issued Apr. 14, 1987 (human growth hormone); U.S. Patent No. 4,632,981, issued Dec. 30, 1986 (human antithrombin III).
22 The first paragraph of § 112 states: The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention. 35 U.S.C. § 112 (1982).
23 note 21.
24 One method for making nucleotide changes in an isolated gene is referred to as site-directed mutagenesis. This method is used to introduce pre-determined nucleotide changes at specific sites within the isolated gene. J. WATSON note 5.
25 European Patent Application No. 0251037.
266 35 U.S.C. §§ 101-103 (1982). For purposes of the present discussion, the analogs of interest are those that improve upon the first-generation protein, and will therefore be assumed to satisfy the utility requirement of 35 U.S.C. § 101. note 19 and accompanying text.
277 The term "prior art" refers to at least the statutory prior art material named in 35 U.S.C. § 102. Yale, 347 F.2d 995, 1000, 146 U.S.P.Q. 400 (C.C.P.A. 1965). Section 102 states in pertinent part: A person shall be entitled to a patent unless --
(a) the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent, or
. . .
(e) the invention was described in a patent granted on an application for patent by another filed in the United States before the invention thereof by the applicant for patent. . . . Thus, the patent on the first-generation protein may be considered prior art under 35 U.S.C. § 102(a) (patent reference is prior art as of its date of issue), or § 102(e) (United States patent reference is prior art as of the date of filing).
28 Arkley, 455 F.2d 586, 172 U.S.P.Q. 524 (C.C.P.A. 1972); Brown, 329 F.2d 1006, 1011, 141 U.S.P.Q. 245 (C.C.P.A. 1964); LeGrice, 301 F.2d 929, 930, 133 U.S.P.Q. 365 (C.C.P.A. 1962).
299 In the following discussion, it will be assumed that the only prior art in existence at the time of the invention of the second generation protein is the patent on the first generation protein. note 27.
300 U.S. Patent No. 4,659,805, issued Apr. 21, 1987:
[M]inor modifications of [the] primary amino acid sequence [of alveolar surfactant protein ASP] may result in proteins which have substantially equivalent or enhanced activit[ies.] . . . These modifications may be deliberate, as through site-directed mutagenesis, or may be accidental, such as through mutation of hosts which are ASP producing organisms. All of these modifications are included [within the scope of the invention] as long as the ASP activity is retained.
31 .
32 Rushig, 343 F.2d 965, 145 U.S.P.Q. 274 (C.C.P.A. 1965) (prior art references that claimed a group of 259 compounds did not anticipate claims to four specific compounds of that group where the prior art did not specifically describe the later compounds).
33 455 F.2d 586.
344 at 588.
355 at 587 (emphasis in the original).
366 Kalm, 378 F.2d 959, 154 U.S.P.Q. 10 (C.C.P.A. 1967); Ruschig, 343 F.2d 965, 145 U.S.P.Q. 274 (C.C.P.A. 1965).
37 , 343 F.2d at 974.
38 Wiggins, 488 F.2d 538, 543, 179 U.S.P.Q. 421 (C.C.P.A. 1973).
399 52 U.S. 248 (1851).
40 Graham v. John Deere Co., 383 U.S. 1, 12-17 (1966).
411 at 17-19.
422 at 17.
433 at 18.
444
45 2 CHISUM, PATENTS § 5.04[6] (1989); Blodgett, 63 J. PAT. OFF. SOC. 69 (1981).
46 The non-oviousness determination under 35 U.S.C. § 103 is similar to the question of what analogs are described in the patent on a first-generation protein for novelty purposes under 35 U.S.C. § 102. That is, what analogs are taught or suggested to one of ordinary skill in the art by the disclosures of the patent on a first-generation protein? In evaluating the non-obviousness of a protein analog based on its functional properties, the relevant prior art would not necessarily be limited to the patent on the first-generation protein. To the extent that other materials and knowledge in the public domain taught or suggested the functional properties of the protein analog, those would also be considered under the analysis set forth in In the following discussion, however, it will be assumed that the only prior art in existence at the time of the invention of the second-generation protein is the patent on the first-generation protein.
47 Thus, a test of obviousness based solely on a comparison of amino acid sequences would have the same practical effect as finding the analog to be "described" for purposes of §102 by a broad generic claim in the patent on the first-generation protein.
48 315 F.2d 381, 137 U.S.P.Q. 42 (C.C.P.A 1963).
49 at 391 (emphasis in the original).
50 at 386-7.
51 Kalm, 378 F.2d 959, 154 U.S>P.Q. 10 (C.C.P.A. 1967).
522 Chupp, 816 F.2d 643, 2 U.S.P.Q.2d 1437 (Fed. Cir. 1987); Ackermann, 444 F.2d 1172, 170 U.S.P.Q. 340 (C.C.P.A. 1971); Lunsford, 357 F.2d 380, 148 U.S.P.Q. 716 (C.C.P.A. 1966).
53 For general references, see note 7.
54 B. LEWIN, note 7.
55 Holvoet, Lijnen, & Collen, 158 EUR. J. BIOCHEM. 173 (1986).
566 De Montmollin, 344 F.2d 976, 145 U.S.P.Q. 416 (C.C.P.A. 1965). Carter-Wallace, Inc. v. Davis-Edwards Pharmaceutical Corp., 341 F. Supp 1303, 173 U.S.P.Q. 65 (E.D.N.Y. 1972), 474 F.2d 529, 176 U.S.P.Q. 2 (2d Cir. 1972), 412 U.S. 929 (1973) ; Mod, 408 F.2d 1055, 161 U.S.P.Q. 281 (C.C.P.A. 1969) (an unexpected activity in an analog was not sufficient to overcome an obviousness rejection where the compound was structurally similar to prior art compounds, because the prior art compounds also possessed the activity, but this fact had not been previously known).
57 May, 574 F.2d 1082, 1093, 197 U.S.P.Q. 601 (C.C.P.A. 1978); Warner-Jenkinson Co. v. Allied Chem. Corp., 477 F. Supp 371, 388, 206 U.S.P.Q. 837 (S.D.N.Y. 1979), 633 F.2d 208 (2d Cir. 1980) ("courts have been moving to a test of `essential predictability,' balancing the significance of unexpected properties resulting from minor chemical manipulations of existing compounds against the desirable properties that would be expected from such alterations").
58 Ruschig, 343 F.2d 965, 978, 145 U.S.P.Q. 274 (C.C.P.A. 1965); note 51. As suggested by the quote from under the patent laws of the United States, a patent on a compound confers rights to every use of which the compound is susceptible. Thuau, 135 F.2d 344, 347 (C.C.P.A. 1943). Thus, the granting of a patent for an analog of a multifunctional protein would secure to the patentee rights in all the properties of the analog, including those identically shared with the first-generation protein.
59 The only injustice that might result would be if the patent on the analog were held not to infringe an existing patent on the prior art compound. Under such circumstances, the patentee of the analog could freely make, sell, and use the analog for any purpose, including any utility shared with the first-generation protein, in direct competition with the prior art compound. As discussed section IV, the injustice of such a result lies not in the granting of the patent on the analog, but rather in the failure to provide an adequate scope of patent protection on the prior art compound.
60 35 U.S.C. § 103 (1982); Graham v. John Deere Co., 383 U.S. 1, 17 (1966).
61 Van Brunt, 6 BIO TECHNOLOGY 655 (1988).
62 See J. WATSON, note 7, at 78-79.
63 Bishop, 235 SCIENCE 305 (1987).
64 Van Brunt, note 60; McGraw-Hill's Biotechnology Newswatch, Jan. 6, 1986, at 2; Blundell & Sternberg, 3 TRENDS IN BIOTECHNOLOGY. 228 (1985); Winter & Fersht, 2 TRENDS IN BIOTECHNOLOGY 115 (1984); Wilson & Klausner, 2 BIO TECHNOLOGY 511 (1984).
65 Eli Lilly & Co. v. Generix Drug Sales, Inc., 460 F.2d 1096, 1103, 174 U.S.P.Q. 65 (5th Cir. 1972).
666 Papesch, 315 F.2d 381, 386, 137 U.S.P.Q. 42 (C.C.P.A. 1963) (emphasis in original).
67 J. Kittle, Materials from the Board Meeting of the Biotechnology Institute, U.S. Patent and Trademark Office (July, 1989) (available at the High Technology Law Journal Office).
68 Crawford, 239 SCIENCE 723 (1988).
69 Merges, Genetic Engineering News, June 1988, at 3.
70 Infringement analysis is discussed section IV. Another alternative is that the parties will agree to cross-license their patents to the other.
71 Grabiak, 769 F.2d 729, 731, 226 U.S.P.Q. 870, 872 (Fed. Cir. 1985); Papesch, 315 F.2d 381, 381, 137 U.S.P.Q. 42 (C.C.P.A. 1963).
72 502 F.2d 775, 183 U.S.P.Q. 50 (C.C.P.A. 1974).
733 at 780; Lalu, 747 F.2d 703, 223 U.S.P.Q. 1257 (Fed. Cir. 1984).
74 769 F.2d at 731.
75 Goeddel, 5 U.S.P.Q.2d 1449 (Bd. Pat. App. & Int. 1985).
77 McGraw-Hill's Biotechnology Newswatch, June 1, 1987, at 1; Klausner, 4 BIO TECHNOLOGY 706 (1986).
788 35 U.S.C. § 271(a) (1982).
799 Mannesmann Demag Corp. v. Engineered Metal Products, 793 F.2d 1279, 1282, 230 U.S.P.Q. 45 (Fed. Cir. 1986); Caterpillar Tractor Co. v. Berco, S.P.A., 714 F.2d 1110,1114, 219 U.S.P.Q. 185 (Fed. Cir. 1983), Texas Instruments, Inc. v. United States Int'l Trade Comm'n., 805 F.2d 1558, 1562, 231 U.S.P.Q. 833 (Fed. Cir. 1986). Every patent application must conclude with one or more "claims" particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention. 35 U.S.C. § 112 (1982), para. 2.
80 Johnston v. IVAC Corp., 885 F.2d 1574, 12 U.S.P.Q.2d 1382 (Fed. Cir. 1989).
811 Fonar Corp. v. Johnson & Johnson, 821 F.2d 627, 631, 3 U.S.P.Q.2d 1109 (Fed. Cir. 1987), 484 U.S. 1027 (1988); Moeller v. Ionetics, Inc., 794 F.2d 653, 656, 229 U.S.P.Q. 992 (Fed. Cir. 1986).
822 821 F.2d at 632; Howes v. Medical Components, Inc., 814 F.2d 638, 644, 2 U.S.P.Q.2d 1271 (Fed. Cir. 1987).
833 United States v. Adams, 383 U.S. 39, 48-49, 148 U.S.P.Q. 479 (1966) [citation omitted].
84 Atlas Powder Co. v. E. I. DuPont de Nemours & Co., 750 F.2d 1569, 1579, 224 U.S.P.Q. 409 (Fed. Cir. 1984).
855 at 1576.
86 Hyatt, 708 F.2d 712, 714, 218 U.S.P.Q. 195 (C.C.P.A. 1983)
87 Moore, 439 F.2d 1232, 1236, 170 U.S.P.Q. 260 (C.C.P.A. 1971); 708 F.2d at 715.
888 For a general discussion of the relationship between obviousness and enablement, see D. Chisum, 15 AIPLA Q. J. 57 (1987).
899 Fisher, 427 F.2d 833, 166 U.S.P.Q. 18 (C.C.P.A. 1970).
90 at 834-35.
91 at 839.
922 Hormone Research Found. v. Genentech, Inc., 708 F. Supp. 1096, 1108, 8 U.S.P.Q.2d 1377 (N.D. Cal. 1988); Forman, 230 U.S.P.Q. 546, 548 (Bd. Pat. App. & Int. 1986).
93 Hybritech, Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1384, 231 U.S.P.Q. 81 (Fed. Cir. 1986), 480 U.S. 947 (1987); Angstadt, 537 F.2d 498, 190 U.S.P.Q. 214 (C.C.P.A. 1976).
94 Wands, 858 F.2d 731, 737, 8 U.S.P.Q.2d 1400, 1404 (Fed. Cir. 1988); 230 U.S.P.Q. at 547.
95 1989 Pat. App. LEXIS 12 (Bd. Pat. App. & Int. 1989).
96 at *9.
97 Hughes Aircraft Co. v. United States, 717 F.2d 1351, 1361, 219 U.S.P.Q. 473 (Fed. Cir. 1983).
98 Graver Tank & Mfg. Co. v. Linde Air Prods. Co., 339 U.S. 605 (1950).
99 at 607.
100 Texas Instruments, Inc. v. U.S. Int'l Trade Comm'n., 846 F.2d 1369, 1370, 6 U.S.P.Q.2d 1886 (Fed. Cir. 1988).
101 Westinghouse v. Boyden Power Brake Co., 170 U.S. 537, 562 (1898) (Pioneer inventions are "a distinct step in the progress of the art, distinguished from a mere improvement or perfection of what had gone before").
102 Corning Glass Works v. Anchor Hocking Glass Corp., 374 F.2d 473, 476, 153 U.S.P.Q. 1 (3d Cir. 1967); 389 U.S. 826 (1967).
103 4 U.S.P.Q.2d 1001, 1012 (C.D. Cal. 1987), 849 F.2d 1446, 7 U.S.P.Q.2d 1191 (Fed. Cir. 1988).
10404 Atlas Powder Co. v. E. I. DuPont de Nemours & Co., 750 F.2d 1569, 224 U.S.P.Q 409 (Fed. Cir. 1984).
105 at 1580 n.3.
106 In re Papesch, 315 F.2d 381, 391, 137 U.S.P.Q. 42 (C.C.P.A. 1963).