America-Israel Patent Law

Overdoing It With “Overlap”: An Obvious Way the Israel PTO Could Learn from U.S. “Obviousness-type” Double Patenting Practice

35 U.S.C. §101 reads as follows:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

§101 has received much attention in recent years in the context of litigation over what kinds of inventions are and aren’t eligible for patent protection, last June’s Supreme Court Bilski decision and the CAFC’s Myriad Genetics case later this term being the most prominent examples.  But there’s another aspect to §101 that, fortunately, hasn’t been the object of attention for quite a while: the limitation that a person may only receive a single patent on his invention.  In U.S. parlance, the statutorily prohibited practice of getting two patents on the same invention is called “double patenting”.  The logic of the case law in this regard is that the statute says an inventor may receive “a patent”, in the singular, not “patents” in the plural.   

In some ways, though, that statement is specious.  The fact is that through the filing of continuations and divisionals, applicants routinely get more than one patent for what any reasonable person would regard as the same invention, or at least part of the same invention.  But here the case law make a neat distinction that only a lawyer (as opposed to a reasonable person) could love: “invention” in this context means “claimed invention”, as in the invention as defined by the claims of the patent.  So if two claims in an inventor’s two patent applications are close to each other but don’t claim quite the same thing, he doesn’t run afoul of §101’s prohibition on double patenting. 

To illustrate – and if you’re a U.S. practitioner, you can skip down to the discussion of Israel – suppose you’ve got a patent with two claims,

“1. A table comprising four legs and a square tabletop” and

“2. A table comprising four legs and a triangular tabletop.” 

If in addition you have a still-pending application that claims, “3. A table comprising four legs and a tabletop having a shape selected from the group consisting of square and triangular”, that last claim might be shot down for a host of reasons, but the double-patenting prohibition of §101 isn’t one of them.  Even though the scope of claim 3 is the same as the scope of the two granted claims when taken together, the scope of claim 3 when compared to either of the granted claims individually is different.  Consequently, there’s no double-patenting issue under §101.

But wait, the non-practitioner cries in shock and amazement, how can that be?!  Claim 3 is so close to the first two, how can it be allowed in the face of them?  The answer is, under U.S. law it can’t, but not because of §101’s double-patenting prohibition.  There’s a second double-patenting prohibition that has its basis in case law rather than the statute.  That prohibition is called obviousness-type double patenting, and it has its origins in a time when U.S. patents were issued for 17 years from the date of grant.  Referring back to the example above, if claim 3 issued in a patent on a later date than the patent containing the first two claims, the later expiration date of the later-issued patent would effectively give the patentee an extension of his period of exclusivity for what is an obvious variation of claims 1 and 2 in the first patent.  Put differently, inasmuch as claim 3 is an obvious variation of claims 1 and 2, there was no reason the patentee couldn’t have included claim 3 in the same patent as claims 1 and 2.  To now grant him claim 3 in a later-expiring patent wouldn’t be fair to the public. 

An additional problem with granting claim 3 in a separate patent is that the patentee could in principle sell the first patent but not the second patent, or vice versa.  This would make it difficult for potential licensees to negotiate a license, since they would now have to negotiate with two parties instead of one.  (In law school-speak that’s called raising transaction costs, and it’s considered to be a bad thing because higher transaction costs lead to sub-optimal allocations of resources.)  Even if a competitor designed a work-around to avoid infringement of either patent, he might still need to defend against infringement suits from two parties instead of one, with concomitantly higher legal expenses – what the case law calls “vexatious litigation”. 

To avoid these twin problems, over the years U.S. courts developed the doctrine of obviousness-type double patenting: an applicant can’t get claims in a later patent that are obvious in view of the claims in an earlier-granted patent of that same applicant.  However, unlike statutory double-patenting, which can only be remedied by amendment or cancellation of the offending claims, an applicant or patentee can overcome o.t.d.p. without amending or canceling his claims.  He does this by filing a notice at the USPTO that says (a) the applicant or patentee disclaims the term of the later-granted patent which extends beyond the term of the earlier-granted patent [thus obviating the patent term-extension aspect of the later-granted patent], and (b) in order for either patent to be enforceable, the two patents must be owned by the same entity [thus obviating the threat of “vexatious litigation” that concerned the courts].  This statement, called a “terminal disclaimer”, is so common that the USPTO even has a standard form that can be used for it.  (Although the U.S. moved to a 20-years-from-earliest-filing system in 1995, which has eviscerated the first reason for o.t.d.p., the case law has not caught up in this respect, perhaps because the second reason for o.t.d.p. remains.) 

Turning to my local environs, Israel too has a statutory prohibition on double-patenting: §2 of the statute says that the owner a patentable invention may apply for a patent on that invention.  As in the USA, the courts in Israel have said “a patent” means one, not two or more.  However, when it comes to obviousness-type double patenting, Israel still lags behind.  Again taking the example from above, whereas in the U.S.A. claim 3 would be rejected for obviousness-type double patenting, here in Israel the patent office would say, “Claim 3 overlaps with claims 1 and 2 of your earlier patent/application.”  At which point the applicant would scratch his head and say, “Yeah, so what?  There’s nothing in the statute against overlap.  What do you want from me?”, because indeed nowhere in the statute does it say that “overlap” between claims is verboten. 

So what does the ILPTO mean when it says there’s “overlap” between the claims of one’s later application and one’s earlier application?  There are a few possibilities.  It could be trying to say, you’re claiming the same invention in two different applications, which is prohibited by section 2 of the statute, and thus we can’t allow the claims.  The problem with that explanation is that since it’s the claims that define the invention – section 13 of the statute say so – then claims that merely overlap in their scope aren’t really prohibited under section 2.  And besides, if it was a section 2 issue, then why not just say so, instead of saying “there’s overlap”? 

Or the ILPTO could be trying to say that the later claimed invention is anticipated by, or obvious in view of, the earlier claimed invention.  But here too, if that’s the case why not just say that the later claims are anticipated or obvious?  Moreover, the ILPTO will reject the claims of a divisional application for “overlap” with the claims of the parent application; but since a divisional and its parent share the same priority and filing dates, the parent can’t be cited against the divisional as a basis for anticipation or obviousness. 

So by deduction, if “overlap” isn’t shorthand for rejections under sections 2 (statutory double patenting), 4 (novelty) or 5 (inventive step) of the statute, then what the ILPTO is trying to get at in its clumsy, communication-challenged way when it issues an “overlap” rejection are the same two factors that gave rise to the obviousness-type double patenting doctrine in the USA – the possible extension of the period of exclusivity for some of what is claimed in the first application, and the ability to split ownership of the patents, making life unnecessarily difficult for competitors.  

If “overlap” is meant to be shorthand for “obviousness-type double patenting”, then it follows that the ILPTO has adopted a terminal disclaimer practice like that in the USA, right?  Silly you.  Why be so sensible?  Under current Israel practice, the only way for an applicant to overcome an “overlap” rejection is to convince the examiner there is no overlap, or to excise the offending material from the claims of the later application.  In chemical cases in which large genera of compounds are claimed in both applications, that can involve significant analysis on the part of the applicant or its attorney – i.e. it can both be a pain and cost a lot – and it can lead to the introduction of multiple provisos, which makes ascertaining the scope the claim so amended somewhat difficult.  The introduction of such carve-outs also necessitates significant examiner time checking to make sure that all of the “overlap” has been eliminated.  (I once sat with an examiner for three hours painstakingly going over a proposed amendment to be sure he was satisfied that all "overlap" between two applications had been removed.)  Filing a terminal disclaimer would be a much simpler, less costly and more efficient route to achieve the same end.

Moreover, unlike many of the policies that the (mercifully, now ex-) Commissioner instituted over the past few years, with which he clearly overstepped his authority, the implementation of a terminal disclaimer program is something that is within his purview.  And it’s fairly in keeping with other aspects of Israel patent law: assignments and liens on patents, for example, are recorded at the ILPTO; there’s no reason a stipulation of joint ownership between two patents as a condition for their enforceability couldn’t also be recorded at the ILPTO.

Hopefully the next Commissioner (we’re still waiting for an announcement) will be someone with enough patent experience to appreciate how useful terminal disclaimers can be, and who will be willing to allow their use before the ILPTO.

Physician's Lament: Let's Give Away New Drugs For Free

In October I wrote about the paragraph IV challenge to Eli Lilly’s anti-lung cancer drug Alimta^®, royalties from which had paid in full for a new $280 million chemistry building at Princeton University, the patentee.  In November, Princeton and Lilly prevailed at the district court, and in December the Princeton Alumni magazine carried a story about the university’s victory.  This prompted a letter from an alumnus – a physician by trade – bemoaning the P-IV lawsuit instituted by Princeton and Lilly, and the resulting “additional five years” of exclusivity, beyond the original patent term expiry in 2011, from which Princeton and Lilly would now benefit.  “It is likely that the standard seven-year period of patent protection has been enough to cover the development cost of the drug”, he wrote, asserting that while the university had benefited immensely from the drug, the deferment of the entry date for generic competition until 2016 would harm low-income patients who could not afford the $2800 per dose price tag.  “It is disheartening to see the University harming low-income patients and contributing to the high cost of American health care in this way”, he concluded.

 

Now, this may sound surprising coming from a patent attorney who spends a fair amount of his time protecting new molecules, but I’m a big fan of generic drugs.  You won’t catch me buying a name-brand version of ibuprofen, my pain-killer of choice.  However, I’m also a big believer in new drug development, and that costs big bucks.  And frankly, if it’s a choice between erring on the side of giving an innovator a longer period of exclusivity than necessary for its new life-saving drug – with a concomitantly high price for the drug – versus never having that drug reach the market because sufficient exclusivity wasn’t available, I’d rather have the innovator benefit from a few extra years of exclusivity.  So between that and some factual errors in his letter, I couldn’t let Dr. Herr’s remarks go without comment.  I reprint below (with some hyperlinks inserted) the long version of a letter I sent to the Princeton alumni magazine; my understanding is that a much-edited 275-word version will appear in the print edition of the magazine a few weeks hence.

As a patent attorney who has worked on both sides of the innovator/generic drug company divide, I was disappointed to see the position espoused by a health care professional with regard to the economics of innovative drugs like Alimta^® (David Herr ‘65, letters, January 19, 2011).

The FDA, acting as the public’s guardian, requires that new drugs meet stringent safety and efficacy standards.  The overwhelming cost of new drug development lies in the hundreds of millions of dollars spent in clinical trials to demonstrate compliance with those standards.  Furthermore, for every new drug candidate that receives FDA approval, dozens more fail somewhere during clinical trials, and hundreds more never even make it out of the laboratory.  Those many failures are funded by the few successes.  Put bluntly, if you want new drugs tomorrow, you’re going to have to foot part of bill today, because without a reasonable expectation of profit, no company is going to invest the kind of money required to develop new drug candidates.  So while Alimta^®, now approaching seven years on the market, may or may not have already paid for its own development, giving it away to generic competition at this time, as Dr. Herr seems to suggest be done, would doubtless harm the development of the next cancer-curing drug. 

Indeed, that Alimta is an anti-cancer drug already makes it exceptional.  According the only peer-reviewed study published on the subject (Grabowski, Nature Reviews Drug Discovery, Vol. 7 (June 2008) pp. 479-488), a new drug needs about 13-16 years of market exclusivity following its launch in order to justify its development.  Such market exclusivity is presently pegged to patents, which since 1995 have been limited temporally to 20 years from filing, with a possible extension of up to five years for delays in launch due to the FDA approval process.  But meeting FDA requirements for drugs for the treatment of cancer and chronic diseases like Alzheimer’s takes longer than it does for other types of drugs. 

Alimta^® itself is a case in point: the first patent application on the active ingredient was filed in 1989 and eventually granted as US 5,344,932 in August 1994 (not 2004, as stated by Dr. Herr), giving rise to an August 2011 expiration date.  However, FDA approval for the drug only came nine-and-a-half years later, in February 2004 – fourteen-and-a-half years after the filing of the initial patent application.  Without the possibility of a patent term extension to compensate for slow FDA approval (which extension was ultimately granted, until 2016), it is doubtful that Alimta^® would have reached the market; without the profits generated by Alimta^® over the next five years (for example, if another generic drug company were to successfully challenge the patent during that time), other promising new drugs may die in the pipeline.

Incidentally, neither the grant of a patent nor a patent term extension is a guarantee that the innovator will have market exclusivity for that optimal 13-16 year period.  Under the current system, which ties new drug exclusivity to patents, litigation over the validity of those patents is de rigueur; generic drug companies will usually be considered remiss if they don’t challenge an innovator’s patents.  And for reasons I won’t go into here, the deck is currently stacked against the innovators when it comes to patent validity challenges.  What bears mention is that making the timing of entry of generic competition dependent on the outcome litigation creates unpredictably for both innovators and generics manufacturers.  The potential for the untimely loss of market exclusivity due to the loss of a patent thus becomes part of the pricing calculus for innovators.  For this and other reasons, it would probably better to move to a set-term-from-FDA-approval regimen for determining market exclusivity; I discussed this a few months ago in a blog post written in response to an earlier PAW article about the Alimta^® litigation.

Returning to Dr. Herr’s letter, it is heart-wrenching to see someone suffer from a terminal disease solely because they can’t afford the treatment.  But would Dr. Herr prefer that in 30 years’ time his progeny have no more choices for life-saving therapies than are currently available, because in his own lifetime he gave away today’s profit-generating drugs and thus undermined future drug development?

There is, of course, a place for generic drugs in this system: after the 13-16 year window of exclusivity that makes new drug development financially worthwhile.  Not only does the arrival of generic competition cause the price of drugs in the U.S. to plummet precipitously, making those medications affordable for nearly everyone, but without the threat of generic competition, innovator companies would have less incentive to develop new drugs.  

Finally, in the global scheme, the construction of a new chemistry building at Princeton using royalties from Alimta^® is also a good thing.  The old Frick building was well past its prime was I was there in the late 1980’s; at least a few of the many students who will be trained in the new building will over the course of their careers contribute to humanity by participating in new drug development, or by developing generic versions of older drugs.

Daniel Feigelson '90

Rehovot, Israel