Jul 272013
 
Burcu Kilic and Luigi Palombi

Burcu Kilic and Luigi Palombi

[Burcu Kilic and Luigi Palombi]  Over the past few years, patent-eligible subject matter has become one of the hotly debated areas of patent law in several countries. Even in the U.S., the Supreme Court is beginning to express concerns about overly inclusive patent rules that stifle both competition and follow-on innovation.  However, significant confusion persists over the difference between patent eligible subject matter and patentability requirements. Patent eligibility tests have proven quite difficult to apply, often leading to inconsistent and unpredictable results.

An inquiry into the patent examination begins with determining whether a claim is eligible for patenting and falls into one or more categories listed under patent eligible subject matter. The term patent eligibility denotes limitations on the categories of subject matter that may be considered for patent protection. This inquiry is different from and always precedes the question of whether the subject matter meets the patentability criteria of novelty, industrial application and inventive step.

In U.S. patent law, patent eligible subject matter is governed by Section 101 (as opposed to Sections 102 and 103, which cover the patentability requirements of novelty and non-obviousness) and, as further defined by the courts, excludes abstract ideas, laws of nature and natural phenomena. However, in some jurisdictions (e.g., India), patent eligible subject matter may exclude certain trivial innovations from the broad category of ‘inventions’.

Patent eligible subject matter is governed by the definition of ‘invention’ in domestic law and refers to the requirement that the subject matter for which a patent is sought be inherently suitable for patent protection. The patentability of patent eligible subject matter, by comparison, relates to whether the subject matter claimed is novel, involves an inventive step and is industrially applicable. If the subject of the patent monopoly is not something that is patent eligible subject matter, there is no possibility of a patent being granted even if the subject matter claimed is new, involves an inventive step and is industrially applicable. An example of this is ‘isolated’ DNA, that is, naturally occurring genetic material that has been removed from its natural environment (Ass’n for Molecular Pathology v Myriad Genetics (U.S. Supreme Court, June 13, 2013). Another example is a pharmaceutical substance that has no improved efficacy over a known substance (Novartis v Union of India, Supreme Court of India, April 1, 2013). Other examples include human erythropoietin (Kirin-Amgen v Hoechst Marion Roussel, U.K. House of Lords, October 21, 2004 at para 109) and human tissue plasminogen activator (Genentech v The Wellcome Foundation, U.K. Court of Appeal, October 31, 1988).

In each of these cases the courts held that the subject matter eligibility threshold was not met for the reason that the patent claimed something that was not an ‘invention’. In three of the examples the subject matter was of human origin and consisted of biological materials that no one invented even though the materials were in forms that meant that they were not exactly the same as they would be in their natural environments. For instance, in Myriad, the human DNA had been ‘isolated’ but otherwise corresponded to the natural DNA in the human genome from which it was extracted (“To be sure, it found an important and useful gene, but separating that gene from its surrounding genetic material is not an act of invention.”). And in Kirin-Amgen and Genentech, the human proteins were synthetically produced or manufactured but even so were not distinguishable in a material way from their natural counterparts. However, in Novartis the subject matter was a new form of a known pharmaceutical substance (Imatinib Mesylate). The known substance from which the new form is derived is not naturally occurring. Indeed, it is completely artificial and a product of human ingenuity. Yet this new substance, a beta-crystalline form of Imatinib Mesylate, known more commonly by its pharmaceutical trade name GLIVEC or GLEEVEC, represented merely an incremental innovation that could not overcome a statutory presumption of patent ineligibility.

The central issue in Novartis was whether the beta-crystaline form of Imatinib Mesylate was an ‘invention’ within the meaning of the word provided by s.2(1)(j) and s.2(1)(j)(a) and as qualified by s.3(d) of the Patents Act 2005 (India). While Imatinib Mesylate was held not to be an ‘invention’ as defined in s.2(1)(j) and 2(1)(j)(a), this was because it was a known substance (in other words it was not ‘new’) with known properties. However, the beta-cyrstaline form was ‘new’ yet the Court held that it was not an ‘invention’ since, as a derivative of a known substance, s.3(d) applied (see para. 192).

Section 3(d) is structured as a subject matter eligibility threshold, not as a patentability test. According to s.3(d), a new form of a known chemical substance is not considered an invention if it “does not result in the enhancement of the known efficacy of that [known] substance.  However, a derivative of a known substance can overcome this presumption against subject matter eligibility if it demonstrates a significant difference in its properties with regard to efficacy. Therefore, in order to pass the subject matter eligibility threshold, Novartis’s claim was required to demonstrate improvement over the known efficacy of Imatinib Mesylate. Both the Patent Office and the Court found that Novartis failed to fulfill its burden of proof in this respect.

What this case and the other cases referred to demonstrate is how the ‘invention’ threshold is critically important to ensuring that patent monopolies benefit society. In the case of India, the Indian parliament has enacted legislation setting a high bar for subject matter eligibility by providing that only chemical derivatives that demonstrate significantly enhanced efficacy can meet the ‘invention’ threshold.

Importantly, the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) does not provide any definition for what may constitute an ‘invention’. Article 27.1 of TRIPS establishes minimal criteria for patentability, but leaves countries flexibility to define the threshold level for patent eligible inventions. WTO Members have full discretion to determine what should be deemed an invention and can take advantage of TRIPS-enumerated exclusions.  Even though Article 27 uses the word ‘patentability’, its heading makes clear that it is about ‘patentable subject matter’.

Evergreening Practices

Over the years, patent eligible subject matter in developed countries has expanded significantly, facilitating evergreening patents. The ‘evergreening’ of pharmaceutical patent protection, which occurs through the grant of new patents that will extend the term in which a company can earn monopoly profits, such as patents for substantially identical or derivative compounds (e.g., venlafaxine and desvenlafaxine; omeprazole and esomeprazole; citalopram and escitalopram), is not, however, confined to the chemical substance itself. Evergreening includes patent monopolies over manufacturing processes, formulations, dosages, uses and methods of treatment.

As this table, compiled from patent information available from the Australian Patent Office (IP Australia), shows that evergreening patents have extended patent protection to nearly 50 years in some cases, well beyond the 20 year period provided in TRIPS.

evergreening table

The net cost for society of evergreening patents is substantial. A recent European Commission study demonstrates that evergreening patents interfere and hinder fair competition in the pharmaceutical market, with the result that pharmaceutical companies can charge high monopoly prices for far longer than is justified.

Because of its critical implications for competition and public health, India’s s.3(d) is becoming a model criteria for patent eligible subject matter in other countries.  For instance, Brazil’s patent reform proposes—appropriately—to adopt such a provision.

The invention threshold plays a critical role in the patent system. Setting the bar too low makes it easier for the patent system to be improperly exploited by those that use extended patent monopolies to extract economic rents.  This behaviour should not be facilitated, as it unreasonably restricts society’s ability to benefit from the technology transfer trade-off at the crux of the patent system.

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  3 Responses to “The Question of Patent Eligible Subject Matter and Evergreening Practices”

  1. Interesting piece but you need to further reflect upon the precise nature on Indian Section 3 (d). You said and it is apparently the right reading that Section 3 (d) is part of patent-eligibility criteria instead of being patentability criteria. But the confusion in this regard is created by the Indian courts when High Court said in the earlier Novatis judgment that Section 3 (d) is a mere elaboration of inventive step requirement. The same position is stated elsewhere too. In this way India is trying to justify that 3 (d) is not a new requirement and it should be read along with traditional patentability requirements. There is a practical problem as well with your suggestion that 3 (d) is part of patent eligibility question and that is how would you apply 3 (d)? In order to apply 3 (d), you will deal with novelty and inventive step questions. Now when you start doing this then 3 (d) process itself becomes part of patentability criteria. You cannot first determine 3 (d) on the basis of inventive step test and then conclude that yes it is patent eligible subject matter so now apply patentability criteria of novelty and inventive step (once again!). For this practical reason, I think, experts like Professor Correa said that 3 (d) had to be seen as a part of inventive step scrutiny.

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