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Education Series - Number One: Patent Freedom to Operate - Some Practical Considerations

Date: 27 July 2010
Author: Patrick McManamny
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Planning for the development, production and/or launch of a product or process is as much a matter of minimising risks as it is of forecasting future market developments.  One risk is that your product may infringe existing patent rights, unless authorisation of the patentee is obtained.  Defending yourself in an action for patent infringement or having to pay damages for infringement can be an expensive process.  For example, in 2009, Abbott Laboratories’ blockbuster antibody drug Humira was found to have infringed a patent owned by Centocor (and New York University), and Abbott was ordered to pay US$1.67 billion plus interest.
 
It is also worthwhile conducting some preliminary patent landscape searches if you are planning to license your technology.  This is because numerous or unresolvable freedom to operate issues may make your technology unattractive to commercial partners or significantly reduce its value.  Conducting some preliminary patent landscape reviews can reduce the risk of you investing significant resources in a commercial project that will be difficult or impossible to commercialize.
 
When considering your freedom to operate, you will need to consider obvious things like if there are any patents that cover the final commercial product.  In busy areas there may even be a number of patents that cover a single finished product.  As previously discussed, Humira was found to infringe Centocor’s patent, and was sold under a license to Arana Therapeutics patents. Bayer has also commenced litigation alleging that Humira infringes their patents.  Thus, Humira may be captured by patents to three different companies, leading to what is commonly known as “the royalty stack”.
 
You may also need to consider overarching technologies that you use, including manufacturing technologies, reagents used to produce the product and how the product will be used.  Depending on how serious you are about considering your freedom to operate, you may also need to consider every step and reagent you use (even those you think are minor).  Looking again at Humira, Abbott recently paid US$9.5 million to settle a case in which they were sued by the University of Iowa for using the cytomegalovirus immediate early promoter to produce their product.
 
While it may be important to consider all aspects leading to your commercial product, this should be done in a sensible manner.  For example, rather than considering everything at once, think about which aspects are fixed and which are changeable.  In the case of an antibody, the antigen to which it binds may be fixed, but the technology that you use to make the antibody may be changeable.  Consider the fixed aspects first and as the project progresses consider the variable aspects when they become important.
 
If you are planning to do some preliminary searching yourself, some points to consider are:
  • Think about alternative terminology, e.g., what is an antibody to one company is a member of a specific binding pair to another;
  • Think about whether you are looking at a patent or an application, the claims of an application may significantly change before a patent is granted;
  • Search in the jurisdictions in which you will be active, e.g., if you will manufacture in Australia and sell in USA, it may not be worth searching in India;
  • Look at the claims, not what the inventors actually did; and
  • Do not discount a patent because you think the science is poor, patentability requirements are different from those of peer reviewed journals.
It is also worthwhile considering that because Australia is a relatively small market, many patents are not filed here.  Accordingly, it may be possible to conduct your research in Australia while patents in your target countries run out.  If you are producing a therapeutic, several countries offer so-called “safe harbour” provisions that protect clinical trials (and some pre-clinical research in some countries).
 
Finally, while it may be useful and cost-effective to conduct preliminary patent landscape searches yourself, you should seek advice of a qualified professional with knowledge of your technology area before embarking on any commercially focussed projects. 
 

Feel free to discuss these matters with Patrick McManamny or your contact at FB Rice & Co who can conduct searches or advise on strategies.

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