patent law for new medical uses of known compounds and Pfizer Viagar patent

283

Volume 46 — Number 2 PATENT LAW FOR NEW MEDICAL USES OF KNOWN COMPOUNDS AND PFIZER’S VIAGRA PATENT

RICHARD A.CASTELLANO

I. I NTRODUCTION

“[I]nternational outcry” arose concerning China’s commitment to the World Trade Organization (WTO) when the State Intellectual Property Office (SIPO) invalidated Pfizer Inc.’s VIAGRA patent in early July of 2004.1 Amidst mounting criticism and in light of China’s historically lacking IP enforcement, 2the VIAGRA decision could be mistaken as demonstrative of why not to con-sider foreign direct investment in China. 3 While circumstantial evidence may tend to support State protectionist motives to selectively enforce IP laws, the Juris Doctor & Master of Intellectual Property, 2006, Franklin Pierce Law Center, Concord,

NH; Bachelor of Science in Chemistry, concentration in Biochemistry, 2003, Frostburg State University, Frostburg, MD.

1 Roger Pilon, China’s Viagra Test , Apple Daily (Hong Kong)

2 (Aug. 11, 2004) (available at

6fd52e34b90d6c85ec3ac6cf/cgi-bin/scripts/printech.cgi/dailys/08-13-04) (stating “As this appeal is adjudicated, it is absolutely essential -- for China, and the world that deals with it -- that the proceedings be transparent, for all the world to see, if that huge nation is to become a full and trusted participant in the global economic community. The precondition for participation in that community is respect for property rights and contracts. Intellectual property is no less important than the real property the farmer tills. In fact, in the modern world, it is doubtless more important. The world will be watching.”).

2 U.S. companies, when asked about the perceived progress China had made in implementa-

tion of WTO commitment areas, intellectual property rights and judicial enforcement of law being among the most important areas to these companies, observed some, but little extent in progress as of 2004 in those areas. United States General Accounting Office, World Trade Organization:U.S. Companies’ Views on China’s Implementation of Its Commitments , GAO 04-508 (Mar. 2004). See also Edwin Mansfield, 19 Discussion Paper: Intellectual Property Protection, Foreign Direct Investment, and Technology Transfer (The World Bank 1994). 3 Pilon, supra . n.1 at 2; Duan Hongqing, Zhu Xiaochao & Fu Li’ao, China Revokes Viagra

Patent , Caijing English Newsletter 2 (Nov. 25, 2004) (stating “Joseph M. Damond, associate vice president for Japan and Asia Pacific at the Pharmaceutical Research and Manufacturers Association, says the revocation sends a worrying message about China’s commitment to protecting intellectual property rights.”).

284IDEA—The Intellectual Property Law Review

46 IDEA 283 (2006) TRIPS signatory was far from alone in its decision to invalidate Pfizer’s patent. Moreover, unlike actions in other developing countries, China’s basis for invali-dation was well-founded in patent law, albeit on a controversial principle. China did not expressly ignore their obligation to maintain minimum intellectual prop-erty standards as a Member of the WTO; they followed the jurisprudential lead of the United States with a harsh application of the written description doctrine on a second use patent, a technology that receives questionable protection else-where, including the U.S.4

Pfizer recycled their patented compound sildenafil citrate to yield $1.7 billion annually from a second patented medical use for the treatment of male erectile dysfunction (MED) under the VIAGRA mark. Despite sildenafil cit-rate’s benefits to health 5 and considerable commercial success, many companies may be hesitant to pursue similar drug development tactics for fear that the fruits of their investment will be inadequately protected from sharp-eyed com-petitors.

Research-based pharmaceutical companies must invest, on average, eight hundred million dollars and 15 years to bring a new drug to market;6 in-cluding four years of pre-clinical development, six years of clinical develop-ment, and several more years of regulatory review. During the lengthy pre-clinical phase, large pharmaceutical companies employ various search methods to identify possible drug candidates.7 From serendipitous discovery to high through-put combinatorial library screening and rational drug design, unpredict-able and expensive search methods significantly inflate pharmaceutical research and development costs.8 The value of pharmaceutical companies’ efforts exists not in the end product, which is amenable to reverse engineering, but in research and development. Thus, pharmaceutical companies rely substantially on patents to recoup research and development outlay.

4 Pfizer, Inc., 2004 Financial Report, 11 (available at

6fd52e34b90d6c85ec3ac6cf/pfizer/annualreport/2004/financial/ financial2004.pdf).

5 Up to 50 percent of men over 40 suffer from MED, a condition now recognized to have a

physical cause. Richard Teyman, Viagra , The Wellcome Trust 1 (Sept. 22, 2004) (available at wellcome. 6fd52e34b90d6c85ec3ac6cf/en/genome/tacklingdisease/hg12f007).

6 Pilon, supra n.1 at 1.

7 See generally 6fd52e34b90d6c85ec3ac6cf (accessed May 15, 2005).

8 Combinatorial library screening involves reacting small numbers of starting compounds with

large numbers of reagents to generate a library of organic compounds that react with a spe-cific biological receptor. Rational drug design, an alternative method, enables researchers to design a compound for a specific target using structural information about a protein or its natural ligands, thereby yielding drugs with optimal binding affinity and minimal negative side effects without expensive large-scale screening. Id.;see generally Hardman and Lim-bird,The Pharmacological Basis of Therapeutics (10th ed., Goodman & Gilman 2001).

Patent Law for New Medical Uses of Known Compounds 285 Volume 46 — Number 2 Second therapeutic indication 9 research is steadily rising 10 and it is prob-able that many k nown compounds could serve as potential drug candidates. Development of k nown compounds reduces search costs and affords greater success rates in clinical trials because the risk of unexpected side effects is lower, particularly for compounds that were already marketed as pharmaceuti-cals.11 Compounds not previously marketed are also attractive candidates—only a small percentage of patented therapeutic compounds are fully developed.12Research and development costs are high and pharmaceutical companies are likely to avoid products that would receive weak patent protection or uncertain enforcement, which in turn would stifle development of new uses for patented compounds and foreclose a potentially vast well of pharmaceutics. About forty percent of the compounds in Pfizer’s drug development pipeline have a prior-known use.13

The following discussion will explore second therapeutic use patent protection in the United States and the People’s Republic of China while assess-ing recent and ongoing litigation over Pfizer’s second medical use patent for VIAGRA. The discussion will illustrate that second use patent protection is available but enforcement is uncertain. It is the nature of the technology Pfizer seeks to protect that has led to the demise of market exclusivity in countries like the U.K., P.R.C., and Korea. Unlike Pfizer’s untenable losses in Argentina and Egypt, invalidation of the VIAGRA patent by SIPO serves as a positive example of the role of law in twenty-first century China.

II. F ROM L AB B ENCH TO J UDGE ’S B ENCH

A. The VIAGRA Story

In mid-December of 1992, Science featured an article that touted the newly discovered and unexpectedly diverse roles occupied by the reactive 9

The terms second therapeutic indication, medical use, and therapeutic use denote the use of a

compound for a different medical treatment or medical use than that of a prior art use; the terms are used interchangeably throughout.

10 Bengt Domeij, Pharmaceutical Patents in Europe 195 (Kluwer Law International 2000). 11 See id . at 195 (citing J.A. DiMasi & L. Lasagna, Development of Supplemental Indications

for Already-Approved Drugs by the United States Pharmaceutical Industry , 5 J. Clinical Re-search and Pharmacoepidemiology 19 (1991)).

12 Id . at 196.

13 Kevin Kelleher, The Wired 40: They are Masters of Innovation, Technology, and Strategic

Vision – 40 Companies Driving the Global Economy , Wired 4 (June 2004) (available at 6fd52e34b90d6c85ec3ac6cf/ wired/archive/12.06/wired40?pg=4).

286IDEA—The Intellectual Property Law Review

46 IDEA 283 (2006) molecule nitric oxide (NO), the “smallest, lightest molecule—and the first gas—known to act as a biological messenger in mammals.”14 Functions with which nitric oxide was claimed to be associated include neurotransmission, muscle relaxation in peristalsis, and male tumescence.15 The article was based in part on published research that, although significant to science, failed to support any-thing more than brief speculation about NO’s relation to MED.

In January of 1992, a team of researchers, including Dr. Jacob Rajfer and Nobel laureate Professor Louis Ignarro, were credited for elucidating the non-adrenergic, non-cholinergic (NANC) pathway,16 a NO dependent biochemi-cal mechanism that affects smooth muscle relaxation.17 In smooth muscle cells, NO 18 activates guanylyl cyclase, which facilitates conversion of intracellular guanosine triphosphate to cyclic guanosine monophosphate (cGMP). cGMP acts as an effector for enzymes that promote smooth muscle relaxation and vasodilation. Conversely, phosphodiesterases (PDEs) facilitate hydrolysis of cGMP to 5?GMP, thereby precluding muscle relaxation.

Muscle relaxation can be induced through increased production of NO or inhibition of the PDEs that catalyze cGMP cleavage. As of June 1993, five PDEs were known to regulate levels of cGMP and cyclic adenosine monophos-phate (cAMP).19 Using an L-arginine analog and the weak-acting ZAPRINAST, a selective cGMP PDE inhibitor, Rajfer and his colleagues tested both ends of the NANC pathway and concluded their report with the following conjecture:

[The NANC pathway] may be involved physiologically in mediating penile

erection….Smooth muscle relaxation is the mechanism by which papaverine and prostaglandin E sub1, [prior art medicaments], when injected intracaver-

14 Elizabeth Culotta and Daniel J. Koshland Jr., NO News Is Good News , 258 Science 1862

(Dec. 18, 1992).

15 Id . at 1863. In male erectile dysfunction too little nitric oxide is produced; not enough cyclic

guanosine monophoshate is made.

16 The pathway is now referred to as the L-arginine-NO-cGMP pathway; the pathway was

originally “named for what [they are not] . . . nobody knew what they were so they were called nonadrenergic and noncholinergic nerves,” i.e. NANC. Pfizer Ltd’s Patent , 2001 F.S.R. 16, 232 (Pat. Ct. 2000) (citing Day 3 Transcript p. 352).

17 J. Rajfer et al., Nitric Oxide as a Mediator of Relaxation of the Corpus Cavernosum in Re-

spect to Nonadrenergic, Noncholginergic Neurotransmission , 362 New Eng. J. Med. 90 (Jan. 9, 1992).

18 NO is produced when the complex enzyme nitric oxide synthase removes five electrons from

the amino acid L-arginine. NO is a short-lived gas that is produced physiologically from at least two sources. One source is the endothelial cells that line smooth muscle, which release what were once known as Endothelium Derived Relaxing Factors, now know to be NO. The second source is the non-adrenergic non-cholinergic nerves that service smooth muscle. 19 Pfizer Ltd’s Patent , 2001 F.S.R. at 212.

Patent Law for New Medical Uses of Known Compounds 287 Volume 46 — Number 2 nosally,20 cause tumescence in impotent men. . . . Interference with the L-

arginine-nitric oxide pathway could be one cause of impotence that is treat-

able by the administration of direct -acting vasodilators.21

Notwithstanding Rajfer’s speculation in 1992 over the import of the NANC pathway, Pfizer had already scheduled a vasodilator, sildenafil citrate, for evaluation in a model of erectile function by August of 1991.22 Sildenafil citrate, one in a class of potent and selective cGMP PDE V inhibitors called pyra-zolopyrimidinones, was originally developed by Pfizer to treat circulatory prob-lems and was accordingly patented as an antianginal agent.23

In 1992, shortly after Rajfer’s article was published, Pfizer researchers injected anaesthetized monk eys with sildenafil citrate in an experimental model 24 that tested for direct inducers of erections. A week earlier, a Pfizer re-searcher distributed the Rajfer paper with an attached note reading: “[s]hould we not try out [sildenafil citrate] in impotence? Have we seen any beneficial ef-fects?”25 Unlike alpha blockers and prostaglandins, however, sildenafil citrate unexpectedly failed initial testing. According to VIAGRA inventor Dr. Peter Ellis, “we were disappointed…and did not have the conviction to continue ex-ploring the utility of sildenafil citrate in MED in the absence of other supportive data. Indeed, I do not recall seeing any formal report of [the] study.”26 The anaesthetized monk eys used in the experimental model lack ed adequate NO supply, such as that released during sexual arousal, and sildenafil citrate had no substantial amount of cGMP to potentiate. Pfizer later discovered that sildenafil citrate requires an adequate level of NO to be effective because the production 20 The corpus cavernosum is smooth muscle tissue in the penis; the same tissue was used for

experimentation by Dr. Rajfer. See generally Rajfer supra n. 17. Sildenafil citrate is a PDE V inhibitor; PDE V is the dominant isoenzyme present in the corpus cavernosum .

21 Pfizer Ltd’s Patent , 2001 F.S.R. at 229 (emphasis added).

22 Id. at 234.

23 See e.g.Pyrazolopyrimidinone Antianginal Agents , U.S. Patent 5,250,534 (Oct. 5, 1993)

(claiming compounds inclusive of the active compound in VIAGRA, sildenafil citrate). 24 Pfizer Ltd’s Patent, 2001 F.S.R. at 235 (“[T]he Urogenitals group were working on impo-

tence and were investigating novel alpha blockers, injected intracavernosally, for the treat-ment of MED . . . . Gorm Wagner was a sex therapist who had developed a model in the monkey to assess compounds as potential treatments for MED. The model involved the use of an anaesthetized monkey. A ligature was placed around the penis and the compound un-der test injected intracavernosally. After a few minutes to allow adsorption of the compound the ligature was released and any erection were recorded”).

25 Id. at 230.

26 Id. at 235.

288IDEA—The Intellectual Property Law Review

46 IDEA 283 (2006) of cGMP is not increased by application of the compound, instead breakdown of cGMP is countered—sildenafil citrate is not a direct inducer.27

By early 1993 oral forms of treatment for MED were in high demand over previous alpha blockers and direct inducers, none of which were oral me-dicaments.28 Pfizer filed a patent application for an oral treatment of MED enti-tled “Pyrazolopyrimidinones for the Treatment of Impotence” in the United Kingdom on June 9, 1993.29 Pfizer filed an international patent application on May 13, 1994 under the Patent Cooperation Treaty, claiming priority from the U.K. application, and patents were later granted in the U.S. and the P.R.C. among other countries. The patent includes claims to a method of using PDE inhibiting compounds for the purpose of treating MED,30 and incorporates by reference compounds claimed in Pfizer’s antianginal drug patent (Bell).31 Pfizer mark eted the invention under the VIAGRA mark and reaped enviable profits while introducing an unlikely drug to pop culture history.32

B. Patent Problems

China’s decision to invalidate Pfizer’s VIAGRA patent in July 2004, if anything, steeps the WTO Member in solidarity. Many countries have denied Pfizer exclusive rights to VIAGRA and their reasons vary. Under the guise of inadequate healthcare access 33 and through manipulation of TRIPS time exten-sions, VIAGRA exclusivity was denied by U.S. priority watch-list veterans like 27

Id. at 235-36.

28 Id. at 239.

29 App. No. 9311920.4 (available at v3.espacenet.coom/ textdoc?DB=EPODOC&IDX =RU2130776&F=0).

30 Pyrazolopyrimidinones for the Treatment of Impotence , U.S. 6,469,012 (Oct. 22, 2002). 31 See U.S. 5,250,534 (Oct. 5, 1993). This patent is a continuation of Serial No. 717,227, June

18, 1991 and claims sildenafil citrate among a class of pyrazolopyrimidinones.

32 See Make Love, Not War , 366 The Economist 8314, 60 (Mar. 6, 2003).

33 Paragraph 5 of the Declaration on the TRIPS Agreement and public health, adopted at Doha,

Qatar on November 14, 2001, provides that TRIPS should be read in light of the objectives of the TRIPS Agreement. Accordingly, Members should not be restricted from taking measures to promote public health in the face of diseases like HIV/AIDS, tuberculosis, and malaria. Members may grant compulsory licenses, determine through independent means as to what constitutes a national emergency, and determine its own regime relating to exhaustion of pat-ent rights. Adrian Zahl, International Pharmaceutical Law and Practice xvi-xvii (Matthew Bender 2005).

Patent Law for New Medical Uses of Known Compounds 289 Volume 46 — Number 2 Egypt and Argentina in attempts to accommodate their domestic pharmaceutical industries through static competition, which promotes copying and imitation. 34

Pfizer gained market approval for VIAGRA in Egypt during a period of maturation for intellectual property rights only to be thwarted by a campaign organized by local pharmaceutical companies to pressure Egypt’s Ministry of Health. Pfizer-Egypt’s 2002 market entry was soon followed by the Ministry of Health’s decision to “grant market authorization for all Egyptian companies that applied to produce VIAGRA . . . in the interests of the poor people.”35 The president of the Ministry of Health, Dr. Mostafa Ibrahim, supported the decision with reference to the extended 2005 deadline granted to developing country Members to meet TRIPS standards.36 Pfizer’s director of health policy and ex-ternal relations in the middle east, El Hak im, expressed concern over Egypt’s protectionist policies, which initially led a hesitant Pfizer to “slam the brakes” on a state-of-the art production facility in Egypt in 2002.37 According to Hakim, Egypt may be harming its own economy:

A business environment that encourages new investments needs transparency

in the regulatory system and strong intellectual property protection. There are

many other countries in the region who are competing for these new high-tech

investments. We should not lose out on the opportunity to attract them to

Egypt . . . . [Allowing generic VIAGRA] will send a chill down foreign in-

vestor’s spines.38

Similar concerns about insufficient intellectual property protection and foreign investment arose in Latin America during the 1990’s. Argentina had cost the U.S. pharmaceutical industry an estimated $600 million annually—10% of global pharmaceutical losses—and was targeted by Pharmaceutical Research and Manufacturers of America.39

34

The extensions were granted to developing and least-developed countries to provide time to

develop supporting infrastructure and laws that would advance TRIPS compliance.

35 Abeer Allam, Seeking Investment, Egypt Tries Patent Laws , The New York Times W1 (Oct.

4, 2002) (available at 2002 WLNR 4072698) (quoting Dr. Mostafa Ibrahim).

36 A Tou gh Pill to Swallow , Bus. Today (Egypt) 2 (Aug. 1, 2002) (available at 2002 WLNR

3395080).

37 Id. at 3.

38 Id. at 4.

39 Hernan L. Bentolilal, Lessons from the United States Trade Policies to Convert a Pirate: The

Case of Pharmaceutical Patents in Argentina , 5 Yale J. L. & Tech. 3, n. 2 (citing Margalit Edelman,The Argentine Trade Tango: Out of Step on Intellectual Property Protection , AdTI

Issue Brief No. 172 (July 1999) (available at 6fd52e34b90d6c85ec3ac6cf/html_files/ip/Argentine_Trade_Tango)).

290IDEA—The Intellectual Property Law Review

Under Argentine law, pharmaceutical patents were not granted until January 1, 2005—the expiration date of the initial TRIPS phase-in period.40 TRIPS requires Members, pursuant to Article 70.9, to implement a “mailbox” system and corresponding exclusive marketing rights (EMRs) to allow pharma-ceuticals to gain marketing approval prior to patent grants. Argentina granted only two such EMRs.41 Although Article 5 of Argentine Law No. 24.766 pro-vides for the protection of valuable information from dishonest commercial use during the mark eting approval process, applicants could still gain mark et ap-proval for similarly structured compounds. Thus, during the phase-in period, pharmaceutical companies, upon submitting relevant data while seeking market approval, could effectively give up their inventions without due compensation while local pharmaceutical companies developed and legally mark eted similar compounds.

Indeed, after Pfizer gained market approval for VIAGRA, local Argen-tine companies filed market authorization requests for similarly structured com-pounds and prepared to produce generics. This prompted aggressive unilateral trade tactics from the United States. Special 301 of the Trade Act of 1974, Gen-eralized System of Preferences (providing preferential tariff treatment), and the Dispute Settlement Understanding Mechanism of the WTO were used to pres-sure Argentina into compliance with U.S. standards on pharmaceutical intellec-tual property protection by October 24, 2000, well before the January 1, 2005 deadline. Pfizer’s experience in Egypt and Argentina clearly demonstrates to foreign investors the pitfalls of bringing technologies that can be easily reverse engineered to investment environments that have little regard for the ownership of information as valuable property. Moreover, their propensity to take advan-tage of necessary regulatory disclosure requirements and the lack of protection for such disclosures emphasizes the importance of adequate patent protection laws and enforcement as a means of recouping R&D costs; whether a firm is bringing a drug to market or planning to invest in manufacturing or R&D facili-ties.

Investors may be hard pressed, however, to find solace in second use patent protection. Pharmaceutical industry giants Eli Lilly, Glaxo-SmithKline (GSK), and Bayer have waged substantially successful legal battles against Pfizer’s VIAGRA. Eli Lilly and GSK/Bayer developed their own PDE inhibit-ing MED drugs, CIALIS and LEVITRA respectively. Already, Australia, Can-ada, Japan, and South Africa, among many others, have invalidated claims in 40Art. 100, Argentine Law 24.481.

41 Bentolilal,supra n. 29, at 4.

46 IDEA 283 (2006)

Patent Law for New Medical Uses of Known Compounds 291

Volume 46 — Number 2 Pfizer’s second use patent.42 In January of 2002, the UK invalidated the VIAGRA patent in a case brought by Eli Lilly, which prompted invalidation by the European Union. Similarly, Bayer in April 2003 sought to invalidate the VIAGRA patent 43 in South Africa,44 citing obviousness and lack of novelty.

Administrative actions in the Pacific Rim have also yielded negative re-sults for Pfizer. A final rejection from the Korean Intellectual Property Office, and unfavorable decision in a subsequent appeal to the Korean High Patent Court, were based on insufficient disclosure.45 Less than a year later, in early July of 2004, the State Intellectual Property Office (SIPO) of the People’s Re-public of China (PRC) made international headlines when the combined efforts of domestic pharmaceutical companies resulted in a decision by SIPO to invali-date Pfizer’s VIAGRA patent on similar grounds. Pending a final judgment on Pfizer’s appeal of the Patent Reexamination Board’s decision, speculation over China’ ability to deliver an investment environment backed by TRIPS compli-ance continues. Meanwhile a dispute over the validity of the VIAGRA patent in the U.S. is stayed, pending Director ordered reexamination by the U.S. Patent and Trademark Office (USPTO).46

III. P ATENT P ROTECTION FOR S ECOND M EDICAL U SES OF K NOWN

C OMPOUNDS IN THE U.S. AN

D TH

E P.R.C.

Pharmaceutical companies that are preparing to venture into foreign markets, already cognizant of their peculiar reliance on patent protection, should explore the target country’s relevant law and respective regulations to determine whether their technology can be protected. They then should assess interpreta-tions of the law by the judiciary, relevant government agencies, or local patent agents to determine how the law will be interpreted and enforced. While patent law principles have a common thread throughout various WTO Member coun-42 E.g. Eli Lilly & Co. v. Pfizer Overseas Pharmaceu ticals [2005] FCA 67 (Feb. 10, 2005)

(invalidating claim 10 of AU Pat. No. 676,571 for obviousness over the prior art and lack of support in the specification and stating that Eli Lilly’s Cialis would have infringed said claim to the use of cGMP PDE V inhibitors for the treatment of impotence).

43 ZA App. No. 94/4018.

44 Case No. 94/4018, Bayer Ltd. v. Pfizer , Court of Comm. of Patents For the Republic of South

Africa (2003) (finding claims 1, 5, 6, 7 and 10 anticipated by and obvious in light of the prior art).

45 Commissioner of the Korean Intellectual Property Office Rebuttal Brief Case: 2001 Heo

2771-Final Rejection (Patent) (2003).

46 Theresa Agovino, Viagra Maker Goes to Co u

rt ,6fd52e34b90d6c85ec3ac6cf/stories/2002/10/23/health (accessed Oct. 23, 2002).

292IDEA—The Intellectual Property Law Review

46 IDEA 283 (2006) tries, TRIPS sets forth minimum standards for intellectual property protection; as such, there exists among Members variant interpretation and application of patent law principles although still within the bounds of the TRIPS agreement. This section will discuss patent protection for new uses of old compounds and highlight some areas of potential concern.

Unlike medical devices, methods of medical treatment have not always been patentable. Such methods include surgical techniques, medicament ad-ministration, and methods of treating disease. Pursuant to an incentive theory, patent law should not recognize medical methods lik e surgery or methods of diagnosis, which are substantially rival and excludable goods due to their reli-ance on the skill of a third party user. Pharmaceutical methods, however, are substantially non-excludable and non-rival—pharmaceuticals are easily reverse engineered—and without a legal rule to invok e against third-party users, such methods offer more uncertainty for researchers and investors who must realize benefits sufficient to justify their labors.47 These desirable public goods will be under-produced absent adequate patent protection.48 Legislatures in countries like the U.S. and the P.R.C. have recognized the need to carve out an exception for second uses of known compounds.

A. United States

1.The Business of Healing

Dr. Samuel Pallin sued Dr. Jack Singer in 1993 for infringing his pat-ented method of making frown-shaped self-sealing incisions in the episcelral of the eye during corneal eye surgery.49 Singer had videotaped the procedure and published it in the Audiovisual Journal of Cataract and Implant Surgery .50 The United States District Court for the District of Vermont invalidated Pallin’s pat-ent and ordered that he “tak e no [further] action to enforce any feature of the patent against the parties, any physician, health care provider, hospital, clinic

[or] teaching institution”.51

47 See generally Roger E. Schechte & John R. Thomas, Principles of Patent Law § 1.3 (West

2004).

48 Id.

49 Pallin v. Singer , 1995 WL 608365 at *1 (D.Vt. May 1, 1995) (citing U.S. Pat. No. 5,080,111

(method disclosed utility of lower likelihood of post-suture astigamitism)).

50 Id . at *4.

51 Pallin v. Singer , 1996 WL 274407 at *1 (D. Vt. March 28, 1996).

Patent Law for New Medical Uses of Known Compounds 293

Pallin inspired the American Medical Association (AMA) to launch an attack against the U.S. patent system for what it believed to be “dangers inherent in medical procedure patents.”52 The AMA argued that patented medical proce-dures compromised patient care by forcing physicians to perform inferior pro-cedures for fear of infringement, increasing financial burdens through licensing fees and litigation costs, and threatening patient confidentiality.53 According to the AMA, the medical profession had no need for the market intervention pro-vided for by the patent regime; through their own incentive system, medical innovators could receive recognition for their advancements through publication in periodicals like The New England Journal of Medicine.54

In response, members of Congress proposed a bill to prevent the patent-ing of any technique, method, or process for performing a medical procedure or diagnosis except where a machine, manufacture, or composition of matter was a necessary component.55 The proposed legislation would have denied patent pro-tection to therapeutic methods, assays and vaccines; thereby threatening innova-tion of new pharmaceutical applications of k nown compounds, an expensive technology that is acutely subject to mark et failure.56 The bill culminated in a new subsection (c) for 35 U.S.C. § 287 pursuant to The Omnibus Consolidated Appropriations Act.57

Currently, § 287 (c)(2) excludes from the definition of barred medical activity “the use of a patented machine, manufacture, or composition of matter or the practice of a patented use of a composition of matter or practice of a bio-technological process.”58 Accordingly, where novel therapeutic uses of k nown compounds or biotechnological processes are discovered, the inventor may re-ceive exclusive rights to an invention derived from that discovery by claiming a method of use.

52 Eric M. Lee, 35 U.S.C. § 287(c)--The Physician Immunity Statute, 79 J. Pat. & Trademark

Off. Socy 701, 703 (Oct. 1997).

53 Id.

54 Id. at 703-04.

55H.R. 1127, 104th Cong., § 2 (March 3, 1995).

56 Lee, supra n. 52,at 705.

57Pub. L. No. 104-208, § 101, 110 Stat. 3009 (1996).

5835 U.S.C. § 287 (2000) (providing in subsection (c)(2)(F) that “the term ‘patented use of a composition of matter’ does not include a claim for a method of performing a medical or sur-gical procedure on a body that recites the use of a composition of matter where the use of that composition of matter does not directly contribute to achievement of the objective of the claimed method”).

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294IDEA—The Intellectual Property Law Review

2.Claiming New Medical Uses for Old Compounds

Pharmaceutical patents may include claims to methods of using compo-sitions of matter.59 For new compounds, pharmaceutical claims may be drafted to teach both pharmaceutical composition and method of use in the Skuballa format: “A method of treating a human to alleviate X, wherein said method comprises administering to said human compound Y”; provided that such claims are supported by their respective disclosure.60 New uses for known com-pounds are also patentable; the compound itself, however, belongs to the prior art.61 The new use must have utility, must be novel as to the use directed, unob-vious in light of the prior art, and sufficiently disclosed so as to both enable and indicate possession of the invention at the time of filing.

Utility

A therapeutic use claim must set forth a coherent mode of operation that comports with known laws of physics and chemistry.62 Utility must be specific, substantial, and credible enough for the sk illed artisan to accept that the dis-closed invention is in available form or could be expected to function in accor-dance with current scientific understanding.63 For example, inventions alleged to have therapeutic utility against newly discovered or substantially untreatable diseases have been called into question in the absence of adequate clinical test-ing results.64

5935 U.S.C. § 101; 35 U.S.C. § 100(b) (defining process claims); see e.g. U.S. Pat. 6,469,012 Oct. 22, 2002) (entitled “Pyrazolopyrimidinones for the Treatment of Impotence”).

60Ex parte Skuballa, 1989 WL 274384 at *1 (Bd. Pat. App. & Interf. June 2, 1989)

61In re Thuau, 135 F.2d 344, 346 (C.C.P.A. 1943).

62 See 35 U.S.C. § 101; Jerome Rosenstock, The Law of Chemical and Pharmaceutical Inven-

tion: Patent and Nonpatent Protection § 3-2-3 p. 3-6 (1st ed., Little, Brown and Co. 1993). 63Brenner v. Manson, 383 U.S. 519, 535-36 (1996); Jasmine C. Chambers, Update on USPTO Practice for Biotech and Pharma Practitioners, in Biotechnology & Pharmaceu tical Law: Patents & Business Strategies 85 (S. Peter Ludwig ed., Practising Law Institute 2004) (pro-viding by example that a claim to a receptor where neither receptor nor ligand has utility and receptor function cannot be predicted from DNA or protein sequence homology will cause utility issue).

64Ex Parte Kranz, 1990 WL 357080 at *3-4 (PTOBA & I 1991). It has been suggested that a requirement for specific levels of clinical testing may serve to stifle research and develop-ment, especially considering the efficacy of modern in vitro models. Rosenstock § 3.2.3, p.

7-8 (2005) (citing Ex parte Balzarini, 21 U.S.P.Q.2d 1892, 1895 (PTOBA & I 1991)). From In re Krimmel, which stated that efficacy in animals is sufficient utility, to Cross v. Iizuka, which stated that mere in vitro inhibition of an enzyme by a compound was sufficient to es-tablish patentable utility, it is evident that the Court has shown acute awareness of the need to 46 IDEA 283 (2006)

Patent Law for New Medical Uses of Known Compounds 295 Novelty

Method claims for known compounds should employ the prior art com-pound only as a work-piece—no utility need be disclosed for a reference to an-ticipate a claim to an old compound.65 In setting forth this principle, the Court of Appeals for the Federal Circuit (CAFC) relied in part on In re Spada, which provided that “discovery of an unobvious property and use does not overcome the statutory restraint of section 102 when the claimed composition is known.”66 Thus, where a novel property of a known compound or microorganism is dis-covered a posteriori, a monopoly for the k nown compound or microorganism cannot be granted again; the discovered property, however, may properly be claimed as a method of use.67

Although anticipation requires all of the claimed elements of a product or process to be present in a prior art reference, the discovery of an unknown but inherent property of a prior art invention may lead to anticipation pursuant to the doctrine of inherency.68 Claims to a method of using a known compound, which are often based on newly acquired k nowledge of biochemical pathways, must account for the possibility that the underlying mechanism for the new therapy is the same mechanism that allows for a prior art treatment using the same com-pound.

Amidst strong dissent, the CAFC recently addressed inherent anticipa-tion in deciding Eli Lilly & Co. v. Barr Laboratories, Inc.,Schering Corp. v.

interpret 35 U.S.C. in light of developments in science leading to a parallel progression of utility case law and biotechnology—in this vein, it has even been suggested that the in vivo activity requirement for homologous or analogous compounds be abandoned and “mere re-ceptor ligands [be deemed] patentably useful”. Philippe Ducor, New Drug Discovery Tech-nologies and Patents, 22 Rutgers Computer & Tech. L.J. 369, 433 (1996).

65In re Shoenwald, 964 F.2d 1122, 1124 (Fed. Cir. 1992).

66911 F.2d 705, 708-09 (Fed. Cir. 1990) (holding that “discovery of a new property or use of a previously k nown composition, even when that property and use are unobvious from the prior art, can not impart patentability to claims to the known composition.”); see also In re Thau, 135 F.2d at 346 (holding that patents for old compositions of matter based upon new uses or properties are “contrary to the letter of the patent laws.”).

67Iver P. Cooper, Biotechnology and the Law, § 4:2 (West 2005).

68Atlas Powder Co. v. IRECO Inc., 190 F.3d 1342, 1346-49 (Fed. Cir. 1999) (holding that anticipation may be found where the prior art necessarily functions in accordance with, or in-cludes, the claimed limitations it anticipates regardless of prior knowledge thereof) (citing Ti-tanium Metals Corp. v. Banner, 778 F.2d 775, 780 (Fed. Cir. 1985) (using doctrine of inher-ent anticipation to enforce the principle that the “public remains free to mak e, use, or sell prior art compositions or processes, regardless of whether or not they understand their com-plete makeup or the underlying scientific principles which allow them to operate”).

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Geneva Pharmaceuticals Inc., and Jansen v. Rexall Sundown, Inc. The Eli Lilly Court found a claimed method of inhibiting serotonin uptak e by applying fluoxetine hydrochloride to be an inherent result that naturally flowed from the application of fluoxetine hydrochloride for any purpose, including the prior art treatment of anxiety.69 Judge Newman dissented: “To negate the patentability of a discovery of biological activity because it is the ‘natural result’ of the chemi-cal compound can have powerful consequences for the patentability of biologi-cal inventions.”70 Shortly thereafter, in Schering Corp., the Court found claims to using descarbethoxyloratidine, an isolated metabolite of loratidine discovered in vivo, to be anticipated by a patent that disclosed the same metabolite while silent on its utility.71 Judge Lourie, dissenting, suggested that the nonenabling nature of the prior art disclosure, with respect to the metabolite, should preclude a finding of inherency and further stated that the Court’s holding “mandate[s] that the mere issuance of the patent on the product—or any other publication of that product—inherently anticipates claims to the metabolite merely by disclos-ing that the product can be administered to a patient, in the theory that such ad-ministration would inevitably cause the human body to ‘make’ the metabolite”.72 Jansen v. Rexall Sundown Inc. provides a safe harbor from the broadly construed anticipation doctrine for pharmaceutical and biotechnological inven-tions.73 Judge Lourie, writing for the Jansen Court, held that “[t]he preamble is . . . a statement of the intentional purpose for which the method must be per-formed.”74 Relying on Kropa v. Robie, the Court found a claimed method of treating or preventing macrocytic-megaloblastic anemia by administering a combination of folic acid and vitamin B12 to a human in need thereof to have a preamble that set forth an objective and breathed life and meaning into the 69Eli Lilly & Co. v. Barr Laboratories, Inc., 251 F.3d 955, 971-72 (Fed. Cir. 2001).

70 Id. at 976 (Newman, J. dissenting).

71348 F.3d 992, 993 (2003) (petition for rehearing en banc denied; Judge Lourie and Judge Newman dissenting in separate opinions).

72 Id. at 996 (citing U.S. Pat. No. 4,282,233, col. 4, II. 42-66; but see Continental Can Co. USA

v. Monsanto Co.,F.2d 1246, 1268 (Fed. Cir. 1991) (holding that where reference is silent about inherent characteristic, extrinsic evidence may be used where such evidence mak es clear that such characteristic would be recognized by one of ordinary skill in the art).

73342 F.3d 1329, 1333 (Fed. Cir. 2003) (considering the effect of the preamble in a claim di-rected to a method of treating or preventing pernicious anemia in humans by administering a certain vitamin preparation to "a human in need thereof," the court held that “the claims' reci-tation of a patient or a human ‘in need’ gives life and meaning to the preambles’ statement of purpose).

74 Id.

46 IDEA 283 (2006)

Patent Law for New Medical Uses of Known Compounds 297 claims.75 Under Jansen, the preamble is “not merely a statement of effect that may or may not be desired . . . but a statement of [] intentional purpose for which the method must be performed.”76

Non-obviousness

Pharmaceutical methods of use must be non-obvious; several factual in-quiries are relevant, and the balancing of these factors to determine whether an invention is obvious in light of the prior art is a matter of law.77 Independent and Skuballa-type claims to compounds are subject to the Hass-Henze doctrine if prior art compounds are structurally similar.78 Motivation to develop a com-

75 Id. at 1333-34.

76 Id. at 1333.

77Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966) (setting forth factors to be considered: scope and content of prior art, differences between prior art and the claims at issue, the level of ordinary skill in the pertinent art, and secondary indicia).

78 The Hass-Henze doctrine provides the first factor in determining obviousness of chemical

compounds, which is to determine whether the claimed chemical is structurally similar to prior art compounds.In re Hass provided that a prior art homolog of the claimed compounds could be considered in an obviousness determination where the applicant asserted a non-obvious property. 141 F.2d 122 (C.C.P.A. 1944). In re Henze held that a presumption of obviousness arises in such occasions and to rebut this presumption the applicant had to show that the claimed compound possessed non-obvious or unexpected properties not possessed by the prior art. 181 F.2d 196, 200-01 (C.C.P.A. 1944). However, the unexpected properties portion of the test went largely neglected and applications were often rejected based solely on similar prior art compounds. Note, Standards of Obviou sness and the Patentability of Chemical Compounds, 87 Harv. L. Rev. 607, 610-11 (1974). In finding that proof of non-obviousness or unexpectedly advantageous properties in the claimed compound not shared by the prior art compounds defeated a prima facie obviousness assertion, the Papesch court took advantage of an opportunity to reject the Patent Office Board of Appeals refusal to con-sider chemical properties in an obviousness rebuttal. In re Papesch, 315 F.2d 381, 391

(C.C.P.A. 1963). In Papesch, the Court reinforced the complete Hass-Henze doctrine; Judge

Rich stating that the “compound and all of its properties are inseparable,” noting that nomen-clature is merely symbolic and “the patentability of [a] thing does not depend on the similar-ity of [the] formula to that of another compound but of the similarity of the former compound to the latter”. Id. (emphasis added); see also Commissioner of Patents v. Deutsche Gold-und-Silber-Scheideanstalt Vormals Roessler, 397 F.2d 656, 662-63 (D.C. Cir. 1968) (following Papesch and observing that unique elemental configurations is increasingly rare in light of the body of k nown organic compounds in assessing obviousness of ring isomers). The CAFC has since followed this interpretation of Hass-Henze in stating that “generalization should be avoided insofar as specific chemical structures are alleged to be prima facie obvi-ous from the other.” In re Grabiak, 769 F.2d 729, 731 (Fed. Cir. 1985). The USPTO has established an array of prima facie obvious structures that must be overcome by showing non-obvious or unexpected properties, including adjacent homologues, tautomers, remote

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pound or method of use, also probative of obviousness, may be found in the nature of the problem posed, the teachings of the prior art, and the knowledge of persons of ordinary skill in the art.79 Other factors include the level of skill in the art, secondary indicia lik e an existing nexus between commercial success and the merits of the claimed invention, and unexpected properties.80

A consistent criterion is whether the prior art would have suggested to one of ordinary skill that a process should be carried out and would have a rea-sonable expectation of success, where both the suggestion and the expectation of success are founded on the teachings of the prior art, not the applicant’s dis-closure.81 The reasonable expectation of success principle was recently empha-sized to clarify the distinction between non-obvious and obvious-to-try inven-tions.82

In re O’Farrell holds that obvious-to-try inventions are obvious and un-patentable if the inventor had a reasonable expectation of success in his en-deavor.83 O’Farrell claimed a method of using a fused gene to produce foreign protein in bacteria where a foreign gene was inserted following a portion of the native gene without a stop codon, thus allowing for translation of a chimeric protein.84 The prior art taught fusion of a beta-galactosidase gene to a ribosomal RNA gene and subsequent transcription to yield an analog of the beta-galactosidase enzyme with a higher molecular weight.85 Despite argument by O’Farrell that there existed no basis for predicting successful expression of ribo-somal RNA, the Court found a reasonable expectation of success.86 homologues, compounds subject to ring enlargement or contraction, positional isomers, opti-cal isomers, analogs, esters and their free acids, alcohols, oxygen/sulfur substitutions, ether link ages versus lack thereof, and compositional ranges where said ranges overlap even slightly. See Rosenstock § 8.02[A] 12-22 (2005) (listing structure utility comparisons and relevant cases).

79In re Dillon, 919 F.2d 688, 692-93 (Fed. Cir. 1990) (en banc); In re O’Farell, 853 F.2d 894, 902 (Fed. Cir. 1988).

80In re Papesch, 315 F.2d at 391.

81In re Dow Chemical Co., 837 F.2d 469, 473 (Fed. Cir. 1988); In re Longi, 759 F.2d 887, 896 (Fed. Cir. 1985).

82In re O’Farrell, 853 F.2d at 903-04.

83Id.

84 Id. at 896. A chimeric protein results from readthrough transcription of chimeric DNA,

which is produced by recombinant DNA technology consisting of a combination of unique genetic material, and subsequent translation of the resulting mRNA. Dictionary of Scientific and Technical Terms 339 4ed. (McGraw-Hill 1998).

85Id.

86Id.

46 IDEA 283 (2006)

Patent Law for New Medical Uses of Known Compounds 299 Volume 46 — Number 2 Conversely, in an initial determination by the International Trade Commission, an administrative law judge (ALJ) found Amgen’s patent on re-combinant DNA capable of expressing erythropoietin to be non-obvious.87 The ALJ reasoned that erythropoietin was a poorly expressed protein and that obsta-cles overcome, including construction of a genomic DNA library containing introns,88 indicated no reasonable expectation of success in light of the prior art.89 The expectation of success criterion will be increasingly important as new uses of compounds continue to find their basis in novel understandings of a seamless web of biochemical pathways.

The Written Description

The patent specification must describe the invention, enable one skilled in the art 90 to make and use the claimed invention without undue experimenta-tion, and set forth a best mode.91 Specifications for pioneering inventions that derive from unpredictable technology must disclose more than a mere starting point for further research.92 Recent case law suggests includes possession, tradi-tionally used to prevent unsupported new matter during prosecution, as a gen-eral disclosure requirement.93

The specification must clearly convey to those skilled in the art that the applicant was in possession of the claimed invention at the time of filing; a re-87

In re Certain Recombinant Erythropietin , 337-TA-281 (Initial determination, Harris, A.L.J.,

Jan. 10, 1989).

88 Introns are nonencoding regions of a gene that are normally excised out during transcription. 89 Recombinant Erythropoietin , 337-TA-281.

90 The fictitious person of ordinary skill in the art is not held to the higher standard used in an

obviousness determination. Donald S. Chisum, Chisum on Patents vol. 3 § 7.03(2) (c), 7-26 (Lexis 2002). Fulfillment of the utility condition does not render the disclosure per se ena-bling. In re Cortright , 165 F.3d 1353, 1356 (Fed. Cir. 1999) (claim to a using a compound for hair growth restoration was adequately supported by examples that disclosed the amount and length of time to apply the compound).

9135 U.S.C. § 112 ? 1; Amgen Inc. v. Hoechst Marion Roussel, Inc., 314 F.3d 1313, 1334 (Fed.

Cir. 2003).

92 Genentech Inc. v. Novo Nordisk A/S , 108 F.3d 1361, 1366-68 (Fed. Cir. 1997).

93 See generally Eli A. Loots, The 2001 USPTO Written Gu idelines and Gene Claims , 17

Berkeley Tech. L.J. 117, 134 (2002) (noting that conflicts between prosecution and litigation are inevitable but Eli Lilly decision symbolizes a “widening gulf between the norms of the scientific community and those of the legal system”); 119 F.3d 1559 (Fed. Cir. 1997); Evans v. Eaton , 20 U.S. 356 (1822); Vas-Cath, Inc. v. Mahurkar , 935 F.2d 1555, 1563-64 (Fed. Cir. 1991).

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46 IDEA 283 (2006) quirement separate and distinct from enablement.94 Moreover, possession is “ancillary to the statutory mandate” and that mandate may remain unmet despite a showing of possession if the specification does not teach the invention by de-scribing it.95 In Regents of the University of California v. Eli Lilly & Co.,96 the Court found the University’s disclosure inadequate to support claims to com-plementary DNA (cDNA) that would encode vertebrae, mammalian, and human insulin. At the time of filing, the University had cloned rat insulin genes, but had not yet isolated or even determined the respective human sequence.97 None-theless, the specification purported to support claims to human insulin cDNA by referencing a method used to obtain rat cDNA and describing the human insulin protein. The Court held that “a cDNA is not defined or described by the mere name “cDNA”, even if accompanied by the name of the protein that it en-codes.”98 Recitation of nucleotide sequences or structural features common to members of a claimed genus may constitute an adequate description.99

The written description requirement applies not only to DNA, but also to antibodies and pharmaceutical method of use inventions.100 Pharmaceutical method of use claims should be drafted with consideration of the foregoing case law, which collectively posits that a disclosure may describe without enabling, or conversely, enable without adequate description.101 A claim to a method for treating disease ‘Y’ by administering a compound that is a receptor ‘X’ agonist may be adequately supported by disclosing physical and chemical characteris-tics of the administered compound and how to mak e and use the compound, unless within the skill of the ordinary artisan, so as to place the public in posses-sion of the compounds by which the claimed treatment may be effectuated. In University of Rochester v. G.D. Searle & Co., Inc., for example, the Court in-94 Mah u

rkar , 935 F.2d at 1563 (written description requirement is separate and distinct from

the enablement requirement).

95 Enzo Biochem, Inc. v. Gen-Probe, Inc ., 323 F.3d 956, 969 (Fed. Cir. 2002).

96 119 F.3d 1559, 1569 (Fed. Cir. 1997).

97 Id .

98 Id . at 1568.

99 Id . at 1568-1569.

100 See Noelle v. Lederman , 355 F.3d 1343, 1349 (Fed. Cir. 2004) (finding that parent applica-

tion for murine antibodies failed to provide structural elements of human antibody or antigen to support subsequent application’s human and genus antibody claims); U. of Rochester v. G.D. Searle & Co., Inc. 358 F.3d 916, 927 (Fed. Cir. 2004) (stating “the statute applies to all types of inventions,” including methods of using a compound).

101 Mark S. Cohen, Compliance with the Written Description Requirement in Biotechnology and

Pharmaceu tical Patents , in Biotechnology & Pharmaceu tical Law: Patents & Bu siness Strategies , 11, 14 (S. Peter Ludwig, Practising Law Institute 2004).

Patent Law for New Medical Uses of Known Compounds 301 Volume 46 — Number 2 validated generic claims to methods for using non-steroidal compounds to selec-tively inhibit the activity of the prostaglandin H synthase-2 gene thereby reduc-ing inflammation without the undesirable effects of inhibiting beneficial pros-

taglandins.102 The patent included claims to a method of achieving a biological

effect but did no disclose compounds that could accomplish the claimed ef-fect.103 Claims to compositions of matter or methods of using a compound must be supported by a description of the compound that allows for determination of the bounds of exclusivity, which must not overreach the inventor’s contribution to the art.

Post-Lilly decisions and efforts by the U.S. Patent and Trademark Of-fice to clarify the written description requirement indicate general acceptance of the doctrine.104 With regard to possible global ramifications one commentator stated the following about U.S. influence on foreign intellectual property re-gimes:

The Paris Convention has no room for a uniquely American doctrine of a

“written description” as a possession requirement. . . . [T]hose patent regimes

in countries that reluctantly strengthened the minimum protection for patents

based upon pressures exerted under the Trade Related Aspects of Intellectual

Property (TRIPS) will surely seize on any negative doctrine of this type as a

way to dilute the patent rights of Americans in their country.105

The threat of TRIPS Member protectionist motives drawn toward ma-nipulation of negative U.S. patent doctrine is not idle; Member nations have already enjoyed gross manipulation of TRIPS doctrine in efforts to sustain do-mestic business in a formidable global market.106

102 U. of Rochester , 358 F.3d 916, 926 (Fed. Cir. 2004) (finding invalid generic claims to COX-

2 selective inhibitors that were supported merely by a description of an assay for screening and identifying compounds exhibiting the claimed effect).

103 Id .

104 EPO-JPO-USPTO, Trilateral Project B3b, Mutual Understanding in Search and Examina-

tion: Report on Comparative St u dy in Biotechnology Patent Practices ,6fd52e34b90d6c85ec3ac6cf/web/tws/B3b_ reachthrough.pdf (accessed Oct. 20, 2005); see gener-ally Dept. of Commerce, Patent and Trademark Office, Requ est for Comments on Interim Gu idelines for Patent Applications Under the 35 U.S.C. 112-1 “Written Description” Re-quirement , 63 Fed. Reg. 32639 (June 15, 1998)..

105 Stephen B. Maebius, Sean A. Passino, Harold C. Wegner, “Possession” Beyond Enable-

ment: A New Written Description Requ irement For All Technologies , in Biotechnology & Pharmaceutical Law: Patents & Business Strategies 33, 63 (S. Peter Ludwig ed., Practising Law Institute 2004).

106 See s u pra Patent Problems.

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B. The People’s Republic of China

1. 1.2 Billion Consumers and More 107

Accession to the WTO followed by phenomenal economic growth has made the country with the world’s largest population an attractive mark et in-deed. The People’s Republic of China (P.R.C.) established a State Food and Drug Administration (SFDA) in 1998 to accommodate drug approval and im-portation.108 In response to pressure from WTO Members, the P.R.C. adopted in 2001 new intellectual property and pharmaceutical legislation designed to cen-tralize government oversight on the drug industry, encourage competition, and battle piracy and counterfeiting.109 The P.R.C. acceded to the WTO on Decem-ber 11, 2001110 and now has one of the world’s largest pharmaceutical industries with over 5,000 companies.111

China’s burgeoning pharmaceutical industry is due in part to recent ef-forts to strengthen the patent regime to provide investors with incentive to ven-ture into riskier technologies in a market notorious for reverse engineered and counterfeit goods. The P.R.C. National People’s Congress Standing Committee adopted the Patent Laws of the People’s Republic of China on March 12, 1984 (PLPRC 1984)112, which included provisions barring patent protection for food, beverages, flavorings, pharmaceuticals, and other substances obtained from 107While “‘1.2 billion consumers’ was to become the commercial poetry of the 1990s . . . multi-national business needed something more. It needed a further rationalization for a grand ad-venture and a reason why the market was going to be different this time.” Joe Studwell, The China Dream, The Quest for the Last Untapped Market on Earth, p. 125 (Atlantic Monthly Press, N.Y.) (describing the investment atmosphere in China in late 20th Century).

108 Zahl,International Pharmaceutical Law and Practice, at §5, 2.

109Like most countries, China has a civil law system; judgments are supported by statutes and regulations, not judicial precedent.

110The PRC is also a member of WIPO, Paris Convention and the Patent Cooperation Treaty (PCT), among others.

111 Zahl, International Pharmaceutical Law and Practice at §5, 2. The Agreement establishing the World Trade Organization (WTO) concluded at Marrakesh on April 15, 1994, and en-tered into force on January 1, 1995. The Agreement culminated from the eight-year Uruguay Round negotiations under the auspices of the General Agreement on Tariffs and Trade. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) constitutes Annex 1C of the Marrakesh Agreement and binds all Members of the WTO pursuant to Arti-cle 11(2). The TRIPS Agreement requires Members to establish in their national law a minimum standard level of intellectual property protection.

112PLPRC 1984 allowed for a world record 3,455 applications to the Chinese Patent Office on its effective date, April 1, 1985. See Peter Feng, Intellectu al Property Law in China, 142 (Sweet & Maxwell Asia 1997).

46 IDEA 283 (2006)

Patent Law for New Medical Uses of Known Compounds 303 chemical processing.113 Under PLPRC 1984, pharmaceutical patents were barred due to a then substantially imitation-based pharmaceutical industry.

Conflict between intellectual property administrative bodies, scholarly criticism concerning the undue complexity of PLPRC 1984, and the prospect of GATT membership prompted further change. The Sino-US Memorandum of Understanding of January 17, 1992 memorialized China’s commitment to up-grade patent and copyright protection to meet international standards.114Ac-cordingly, amendments to the Patent Law were adopted on September 4, 1992 and enacted January 1, 1993 in the Resolution on the Amendment of the PRC Patent Law (PLPRC 1992), which redacted the aforementioned exclusions. Thus, pharmaceuticals previously excluded under PLPRC 1984 were patentable under PLPRC 1992 and remain so under current PLPRC 2000.115

While China’s patent law is strong in letter, enforcement is a chief con-cern among foreigners.116 Foreign direct investors with concerns about misap-propriation of valuable know-how can rely primarily on contract law and seek to resolve disputes through negotiation, mediation, or arbitration; but litigation is a more effective forum for enforcing patents on foreign complex technology and is of particular importance to companies selling products in the Chinese market even if they are not producing products in China. Lack of procedural rules for discovery and evidence, low damage awards, and lack of judicial independence are noted challenges facing foreign IP holders.117 In light of recent discrimina-tory tax policies on semi-conductors and mandatory encryption standards for wireless networks, some worry that China may seek to pursue an industrial pol-icy of limiting competition from imports while taking advantage of open compe-113Thomas Traian Moga, Patent Practice & Policy In The Pacific Rim, vol. 1, CHI 4.10 (Oceana Publications, Inc. 1999); Feng, supra n. 112, at 142 (following a policy of reform and open up, the State Science and Technology Commission was entrusted with the task of drafting a patent law; 24 drafts in all were produced).

114 Feng,supra n. 112,at 145.

115 Id. The Patent Laws were further amended to ensure TRIPS compliance. Additionally, the patent term was extended from 15 to 20 years for utility inventions and criminal sanctions for counterfeiting were added.

116Keith E. Mask us, Intellectu al Property Rights in the WTO Accession Package: Assessing China’s Reforms, in China and the WTO: Accession, Policy, Reform, and Poverty Reduction Strategies, 49, 59 (2004); Stanley P. Kowalski, Agricultural Biotechnology in China: An Un-reachable Goal? 6 Journal World Intellectual Property 655, 657-658 (July 2003) (discussing inadequacies of IP regime in China and potential consequences of weak IPR enforcement on agri-biotech development).

117 Catherine Sun, IP Regime of the PRC in Arthur Wineburg, Intellectual Property Protection in Asia, 2d §§ 3.01, 3-8-3-10 (2004).

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