Bilski Impact On Biotech Seen As Minimal; Experts See Court Shift

The intellectual property community is anxiously awaiting the United States Supreme Court’s reaction next month in the closely watched Bilski v. Kappos case, a legal feud over the validity of a patent covering a method of commodities trading.

The outcome of the case could have broad implications for the patentability of business methods and software, which could potentially wallop the technology industry. It likely will have less impact in the biotechnology arena, experts said at the Biotechnology Industry Organization’s Intellectual Property Counsels Committee conference in Washington on Tuesday.

“We’re dealing with the public opinion saying Bilski is going to revolutionise the biotech industry” but ultimately it may be other cases like Ariad Pharmaceuticals v. Eli Lilly, which has to do with the technology of gene regulation, that will have a greater impact on biotech, said conference panellist Amy Mendel, associate general counsel of intellectual property for Clinical Data Inc. and a BIO Amicus Committee board member.

Brad Kurtz, intellectual property counsel for DuPont and also a BIO amicus panel member, said the Federal Circuit Court’s decision last year to reject previously acceptable tests for patentability could spur concern for the biotech industry in the future.

Because the ruling prompted patent examiners and others to focus on whether a process is tied to a particular machine and whether it transforms a particular article into a different state or thing, he asked if this eventually could be a problem for plant breeding methods.

“Do those types of claims have a true transformative status?” he pondered, referring to plant genetics. “Are these questions going to be a problem down the line?”

J. Michael Jakes, a partner at Finnegan, Henderson, Farabow, Garrett and Dunner, moderated the panel and is scheduled to argue Bilski’s case before the Supreme Court on 9 November. He pointedly noted that BIO and “most people stood on the sidelines” when his firm in January asked the Supreme Court to review the lower court’s decision, adding that “experts universally seemed to think cert wouldn’t be granted.”

BIO recently filed a friend-of-the-court brief.

Panellist and BIO Amicus Committee board member Gary Loeb said the organisation did not think Bilski was the best vehicle to clarify US patent law covering patentable subject matter. “In Bilski there are some rules that could be misapplied to biotech,” said Loeb, the vice president of intellectual property at Genentech. “Bilski doesn’t have that much to do with biotech, but the ultimate decision that comes down could have an effect if it’s a broad announcement” rather than very narrow.

He said: “It feels like the high court took the case because the Federal Circuit decision was too narrow,” although he acknowledged that the Supreme Court decision could end up being extremely focused. “It’s like reading tea leaves” trying to figure out the ultimate decision, he said.

Judge Timothy Dyk, a member of the Federal Circuit that ruled on Bilski, was the conference luncheon speaker. His court rejected the Bilski patent as invalid. Dyk said he believed the high court took the case because the court views patent law as an important area, the case was less than “crystal clear” and it is likely interested in the policy issues.

“The Supreme Court doesn’t take a case to decide just on a set of facts,” he told the packed luncheon room at the St. Regis Hotel. “It uses a case to provide guidance to lower courts on future cases.”

He also noted that it will be interesting to see whether the court treats patent statutes like other statutes and what it views Congress’s role in “Section 101” patent law cases which govern what is patentable, and what role the court should play.

There are other questions the court may consider in its decision-making process, he added. For example, to what extent should the court be concerned about its decision should it render many current patents invalid? The court’s decision could have broad repercussions because who knows “how many future 101 cases will the court take over the years,” he said.

Experts See New Court Focus on Damages

Tech firms may want to look at a new strategy in arguing patent litigation by focusing on damages, intellectual property lawyers said in a separate Tuesday panel giving Federal Circuit clerks a voice on what they see as the key legal cases and issues of the moment.

Historically, large technology firms argued heartily on the obviousness of a patent, then later defended their position by showing foreign sales, followed by a focus in later years on injunctions and then venue.

Panellists John Dragseth and Chad Shear, both principals at Fish & Richardson, discussed the noteworthiness that the three most recent verdicts against Microsoft were staggeringly large sums – $1.53 billion related to its Windows Media Player, $338 million for “an obscure feature” of Outlook and $358 million for a little-used feature in Excel.

Other courts took away all three damage awards.

Dragseth said the Federal Circuit Court is treating damage analysis in a new, very thorough way. In the case of Lucent Technologies v. Gateway before that court in mid-September, the court “took a painstaking approach.” Microsoft and Dell were also on Gateway’s side in that case and are listed as defendants. The court went through the “Georgia Pacific” factors and analysed whether Lucent’s $358 million in damages were a logical, fair claim, he said, referring to the famous 1970 decision by the US District Court for the Southern District of New York that used 15 factors to determine the type of monetary award that would compensate for infringement.

Dragseth said damages were not a “hot button” issue in the past but the Lucent case seemed to document a shift at the Federal Circuit.

He advised lawyers in the audience that the damage expert in a case better be ready to show detailed evidence how he or she arrived at the damages rate.

Later during the panel Dragseth said he believed the case of Prometheus Laboratories v. Mayo Collaborative Services would have “far greater impact” on the biotechnology industry than the Bilski case regarding business method patents that is headed to the Supreme Court next month.

In the Prometheus case, a district court had ruled that a correlation between the level of non-naturally occurring drug breakdown products in a patient and the best drug dosage is not patentable because it’s a “natural phenomenon.”

Patents and Lab Notebooks

The importance of lab notebooks can be a key element in defending patent rights, said Steve Carlson, a principal at Fish and Richardson, during a panel discussion at the BIO conference this week.

He said it has been a big focus in how his firm has been preparing cases.

“Lab notebooks are hugely important and they can back up that surprise” when a scientist or researcher is working on an invention, he said. “It’s more important than ever that companies look to lab notebooks as litigation documents.”

He recalled one instance when he had a client research notebook that read: “Wow! It worked,” which hugely helped him to defend the case.

Shear of Fish and Richardson added that the landmark KSR v. Teleflex Supreme Court decision has “forced litigators to find the story…. The aftermath of KSR drives us to find more and forces you to put the whole thing in context. It puts meat on the bones of a story you can tell at trial.” The KSR decision rejected the Federal Circuit Court’s test for obviousness in regards to intellectual property.