October 1, 2011 (Vol. 31, No. 17)

Gerry J. J. Elman, J.D.

Patent Decisions Have Played a Pivotal Role in the Growth of the Industry

In August 1981 the National Law Journal proclaimed that “Genetic Engineering Creates a New Breed of Lawyer.”

Fascinated by the headline, I devoured the article even though it didn’t say anything about artificial android attorneys. Rather, it reported that the previous year’s Chakrabarty decision by the U.S. Supreme Court had helped to unzip the wallets of venture capitalists, funding a field of start-up companies hoping to commercialize a cornucopia of wonders conceived in the labs of molecular biologists.

The article identified a handful of lawyers spearheading these developments, and went on to quote a publisher who had recently planted an acorn in this fertile firmament.

That publisher, of course, was Mary Ann Liebert, and the acorn was GEN, then too a start-up. Tracking her down by phone (not in the proverbial garage, but her Manhattan apartment) I introduced myself as aspiring to join the “new breed” of genetic engineering lawyers I’d just read about. Having taken a seminar in nucleic acid biochemistry while a graduate student at Stanford, then having become both a patent attorney and an antitrust lawyer with the U.S. Department of Justice, I figured I was as qualified as anybody.

Coincidentally, the nativity of biotechnology patent law was just around the corner and Mary Ann was prescient enough to engage me to report on it.

The first-ever training on the subject for patent practitioners was a seminar on “Genetically Engineered Microorganisms and Cells: The Law and Business” that Irving Kayton produced in New York City in 1981.

Gerry J. Elman, J.D.

Predicting the Future

Kayton, a fiery law professor who founded a business to train patent lawyers called Patent Resources Group, foretold that advances in molecular biology would soon give rise to technologies that would spawn a whole new sector of human activity.

Ever outspoken, Kayton prophesied medical developments that would lead to human immortality, while urging his off-Broadway audience of enthralled patent practitioners to brush up on, not your Shakespeare, but biochemistry and genetics. Because, as he accurately predicted, patent lawyers versed in that subject matter were destined to perform a pivotal role in the upcoming play.

In the aftermath of my report in GEN of Kayton’s 1981 seminar, Liebert’s acorn was popping. She suggested that we generate a legal journal to chronicle developments in this field. As the term “genetic engineering” was becoming more focused on recombinant DNA, and it seemed that the broader term of “biotechnology” was entering the discourse, we chose to identify the subject matter as “biotechnology law,” probably the first time those two words were juxtaposed in print.

At the time, we conceived a newsletter, something like the Antitrust & Trade Regulation Report I was regularly reading. We named the baby Biotechnology Law Report (BLR), which began publication at the beginning of 1982. Mary Ann instructed me to assemble an Editorial Board for BLR, and I promptly started asking colleagues to participate.

Stephen M. Sammut, who’d attended Kayton’s seminar, signed on to manage the first issues with me. One of the first lawyers on the editorial board was Geoffrey M. Karny, who had contributed the legal section of the April 1981 study published by an arm of Congress, the Office of Technology Assessment, called “Impacts of Applied Genetics: Micro-Organisms, Plants & Animals.”

Another who graced us on the editorial board with his presence from the outset was The Honorable Giles Sutherland Rich (1904–1999). Over the years, he joined us at gatherings in Washington, D.C., and stayed in touch until his passing at age 95, then the oldest living federal judge.

As a member of the Court of Customs and Patent Appeals, Judge Rich had authored, in 1978, the initial appellate decision affirming the patent-eligibility of Dr. Chakrabarty’s organism. His written opinion paved the way to the favorable decision by the Supreme Court two years later, which quoted legislative history to say that Congress had intended patentable subject matter to “include anything under the sun that is made by man.”

Before his appointment to the bench, Judge Rich had practiced patent law in New York City. As president of the New York Patent Law Association, he and chief patent examiner P.J. Federico famously drafted the major revision of U.S. patent law that was enacted by Congress in 1952. Among its innovations was a re-statement of the American test of what others have called “inventive height.”

The 1952 patent act he is credited with co-authoring provides that a person be entitled to a patent for a novel and useful invention unless: “the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made.”

Schooled in the tension between antitrust principles favoring free and open competition and laws promoting protection of intellectual property, I was aware that a purpose for that provision was to overturn the unfortunate statement by the Supreme Court in 1941 in the Cuno Engineering case that a patentable invention arises from a “flash of creative genius.”

The goal was to clarify that the patent system would protect inventions of a variety of “heights” even if enforcement of the patent would seem like a “monopoly” by preventing a second adopter of the invention from operating freely.

Junk Patents

In the years since Judge Rich’s passing, some in the technology community (particularly those working in information technology) have cried out with increasing vehemence against the flood of “junk patents” they say have been granted improvidently by the PTO for subject matter they find obvious. This outcry inspired the chiefs of the PTO during the George W. Bush administration to incite patent examiners to increase the rate of rejection of patent applications.

Moreover, the Supreme Court has recalibrated the “nonobviousness” standard in U.S. patent law and seems to have raised the bar somewhat higher than Judge Rich would have preferred.

In the 2007 case of KSR Inc. v. Teleflex, the Court said that the hypothetical “person having ordinary skill in the art” described in section 103 should be taken as having “common sense” and not be thought of as merely an “automaton” who is unable to make a mental connection between two sources of prior art without a “teaching, suggestion or motivation” to do so. But this supersedes a countervailing concept Judge Rich had expressed in the 1985 Standard Oil v. Cyanamid case.

It is noteworthy that Judge Rich and his colleagues on the Court of Customs and Patent Appeals were transferred en masse to the Court of Appeals for the Federal Circuit (CAFC) in October 1982 when Congress mandated those judges to decide appeals not only from the patent office but also patent cases that had been tried in a federal court anywhere in the U.S.

The goal was to create a unified American jurisprudence on patents, rather than a variety of views (frequently pro-competition but antipatent) as expressed by the regional federal circuits (except for the rare unifying decision by the Supreme Court).

The sense of Congress in 1981 and 1982 seemed to be that patents are a good thing and should be encouraged and made more predictable. The public regarded technology favorably, as exemplified by the IBM personal computer (remember those Charlie Chaplin ads?), and expected healthcare advances arising from biotechnology.

More recently, Congress has been singing a different song, to the tune of “patent reform.” When I wrote about this in the April 1, 2011, issue of GEN, the Senate had passed a bill that was touted as being the first “overhaul” of patent law since Judge Rich’s handiwork in 1952.

Since then, a similar bill has passed the House, now named the “Leahy-Smith America Invents Act.” Despite hype about the magnitude of the proposed changes and the need to harmonize U.S. patent principles with those of other countries, the Leahy-Smith Act wouldn’t touch a hair on the “nonobviousness” language adopted in 1952, nor would it affect what subject matter is eligible to be considered for a viable patent claim.

Rearranging the Furniture

To me, it’s not so much an overhaul of patent law as a rearrangement of the furniture. And unless the PTO is fully funded (a proposition not assured in the version adopted by the House of Representatives) that furniture might soon be looking like the deck chairs of the Titanic.

The Chakrabarty case of 1980 seems to have been the high-water mark of pro-patent-eligibility jurisprudence, when the Supreme Court affirmed the opinion Judge Rich had written for the Court of Customs and Patent Appeals. But even at that time, there were loudly dissenting public voices, notably Jeremy Rifkin, whose Foundation on Economic Trends successfully used a combination of authorship, publicity-seeking, and litigation to raise questions in the public mind as to the safety and appropriateness of biological technologies, yet all the while acknowledging their importance and potential.

Though Rifkin’s attention seems now to have turned primarily to empathic civilization and sustainability, his current successor would be Daniel B. Ravicher, whose Public Patent Foundation has been waging war against the patent-eligibility of genetic testing, and particularly, claims to isolated polynucleotides having human genetic sequences.

With a team of American Civil Liberties Union attorneys representing a coalition of medical specialists seeking to free the diagnosis of genetic abnormalities from the fetters of the patent system, he achieved success last spring in the Federal court in New York City. But on July 29, the CAFC ruled 2 to 1 that isolated polynucleotides are potentially patent-eligible. Yet the three-judge panel agreed with Ravicher’s assertion that claims reciting certain diagnostic method steps were not patent-eligible.

This probably won’t be the end of the appellate process for this case. Those following the matter may be interested in a debate scheduled for October 13, 2011, between Ravicher and Hans Sauer, intellectual property counsel of BIO, entitled “Do Gene Patents Kill? The Controversy Surrounding DNA Patenting” at the University of Missouri-Kansas City School of Law.

Further aspects of patent eligibility involving diagnostic testing arise in the Mayo Collaborative Services v. Prometheus Labs case pending before the Supreme Court.

I also take this opportunity to remember another former colleague of the BLR editorial board, Bertram I. Rowland, who prosecuted the patents on the gene-splicing technique invented by Stanford University professor Stanley N. Cohen and the University of California’s Herbert W. Boyer.

During the 1980s, Niels Reimers’ Office of Technology Licensing at Stanford University implemented a highly acclaimed licensing program for this platform technology. Rowland used the term “biologically active molecular chimera” to describe the constructs generated by the Cohen-Boyer technique of recombinant DNA.

Learning of this, I recalled a science fiction tale I’d read in early 1954 that I believe to be the first documented conception that spliced genes could be functional. Though it took me quite a while in those pre-Internet days to track it down from my memory of the story, I found that it was written by Damon Knight and originally published in the January 1954 issue of Galaxy Science Fiction as “Natural State,” just months after James D. Watson and Francis Crick had published in Nature the double-helix structure of DNA.

Recently, Liebert graciously invited me to include an advertisement for my law firm in this June’s issue of BLR. I elected to commission the accompanying illustration, which fancifully transports me into the biotechnological civilization of Knight’s “muckfeet,” where a “houseplant” is a creation from which you’d grow a house.

In 1954, science fiction writer Damon Knight wove a futuristic tale in which gene splicing would create a cornu­copia of ecologically sustainable benefits—including such wonders as plants that grow into houses. [Illustration by Tim Durning, inspired by Damon Knight’s novella Natural State.]

Gerry J. Elman, J.D. ([email protected]), is president of Elman Technology Law, P.C. (www.elman.com) and editor in chief of Biotechnology Law Report, published by Mary Ann Liebert.

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