Patents & IP
The Benefits and Limits of Non-Disclosure Agreements
This commentary in the Genomics Law Report’s ongoing series Bench to Market is contributed by Matthew S. Churchill, Robinson, Bradshaw Hinson, P.A.
The last few articles in the Bench to Market series discussed capital raises and licensing-out arrangements that facilitate an entrepreneur’s commercialization of a new product or process. To obtain capital or a licensing arrangement, an entrepreneur must often share a business plan and confidential information about the proposed product or process with potential investors or licensees. The entrepreneur should insist upon binding non-disclosure agreements that prohibit both the disclosure and misuse of such information, before disclosing any such valuable information.
While some inventors may hold intellectual property rights, such as patents, to protect their proprietary information, many entrepreneurs rely on trade secret protection early in the commercialization process. See our recent article, “Can You Keep a Secret?” Non-disclosure agreements are fundamental to trade secret protection, as they demonstrate that inventors have taken reasonable steps to hold their valuable proprietary information in confidence.
SACGHS Gene Patent Recommendations Still Controversial
The Secretary’s Advisory Committee on Genetics, Health and Society (SACGHS) for the Department of Health and Human Services (HHS) convened again on Friday for a snow-shortened session. One of several items on the Committee’s agenda was a report that the GLR has covered several times (see here and here): Gene Patents and Licensing Practices and Their Impact on Patient Access to Genetic Tests. With the threat of a blizzard looming, the meeting was unexpectedly short, with only a pair of public comments followed by the Committee’s vote to approve the report.
The report itself will not be available for several weeks, but the six recommendations on gene patenting and licensing approved by the Committee this past October continue to provoke a heated response. The Biotechnology Industry Organization (BIO), along with former Senator Birch Bayh (of Bayh-Dole Act fame) and others, held a Friday press conference to denounce – again – the report’s recommendations.
The SACGHS Recommendations. Most of the recommendations are uncontroversial, urging the Secretary of HHS to convene stakeholders to “explore” and “encourage” strategies to improve access to genetic testing, enhance patent licensing and ensure that the USPTO is “kept current with the latest scientific and technological developments related to genetic testing and technology.”
So what prompted Bayh’s charge that the recommendations represent “an attempt to send us back to a time when it appeared that American innovation was on its last legs and our economy was in deep distress”?
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Up Next in Gene Patents: Waiting for a Ruling (Again) and SACGHS Meets (Again)
GenomeWeb has a recap of today’s hearing in the Myriad case, including the not-at-all-surprising decision that there was no summary judgment decision issued from the bench. From all accounts the case appears to have been argued along the lines set forward by the parties in their briefs, with no obvious surprises presented by either party during oral argument. As for a decision, according to GenomeWeb, “Judge Sweet did not say today when he expects to make a decision in the case.” Interested observers, including the Genomics Law Report, can expect to wait some time – at least several weeks, if not months – before a decision is handed down. That decision, no matter which way it falls, is likely to produce an appeal to the Second Circuit.
In the meantime, those that simply cannot get enough of the gene patent debate are reminded that the Secretary’s Advisory Committee on Genetics, Health and Society (SACGHS) is convening again this week to finalize its report on biotechnology patent and licensing policy. As previously reported by the GLR, the last SACGHS meeting reviewed and approved several recommendations (pdf) from its Gene Patents and Licensing Task Force, including proposed exemptions from liability for infringing patents when (i) making, using, ordering, or selling tests for patient care purposes or (ii) “in the pursuit of research.”
While the SACGHS approved the recommendations, final review and approval of the Committee’s report on Gene Patents and Licensing Practices and Their Impact on Patient Access to Genetic Tests was tabled until the February meeting. The recommendations and the draft report generated some pushback last fall so, Friday morning, the Committee will be reviewing those additional comments and “coming to closure” (pdf) on the report. The GLR will be listening in. Interested readers can find information about the SACGHS meeting here.
Final Words from the Sidelines as Courtroom Arguments Begin in Gene Patent Litigation
Yesterday, on the eve of summary judgment arguments in the Myriad case, The Boston Globe editorialized—strongly—against patenting isolated genes. This is an issue in which the Globe has a natural interest, given the concentration of biotech companies in and around Boston. The Globe’s editorialists may or may not be right on the merits, but they are surely too glib.
First, they wrongly blame the Patent Office for what they see as bad policy: “The US patent office assumes that granting one firm the exclusive right to profit off of a gene is the best way to encourage further research.” No, the Patent Office doesn’t “assume” this—it’s in the U.S. Constitution (Art. I, sec. 8, cl. 8), which allows Congress to grant exclusive rights to inventors to promote the progress of science and the useful arts. That is, the Constitution states an economic rationale for patents: the Framers believed that the promise of monopoly returns was the best way to motivate inventors to invent and then to disclose their technology (which you have to do to get a patent). So even if you disagree with this policy, you shouldn’t say that the Patent Office dreamed it up or has any authority to change it.
GLR Update: The Fate of Follow-On Biologics Remains Uncertain
When the GLR looked last month at the ongoing debate over follow-on biologics, we noted that one of the most contentious issues in creating a regulatory approval pathway for these generic biological drugs centered on the appropriate length of the market exclusivity to be provided to developers of original biologics. Even as we asked the question (Follow-on Biologics: How Much Incentive Do We Need?), it appeared that Congress had its answer, with both the Senate and House health care reform packages containing follow-on biologics provisions that would provide original biologics developers with 12 years of market exclusivity.
A month later, with President Obama pushing for a last-minute reduction in that number (to 10 years, possibly fewer), and with the implications of Scott Brown’s Senate victory still being digested, the picture is considerably murkier. There is no guarantee that there will be follow-on biologics legislation at all, let alone where the final market exclusivity period will wind up.
The License-Out as a Business Model
This commentary in the Genomics Law Report’s ongoing series Bench to Market is contributed by Steve Newmark, Robinson, Bradshaw & Hinson, P.A.
The drive to create something new and useful is an almost universal trait of entrepreneurs. This passion, however, is not always accompanied by the same enthusiasm for managing the more mundane tasks of taking an idea from a research lab or academia and making it available in the marketplace. In addition to the fundamental need to raise capital, the commercialization process requires a number of time-consuming and less glamorous steps, such as forming a company, hiring employees, establishing accounting systems, drafting contracts, securing appropriate facilities and, if all goes well, marketing and selling products and services. The process can often be frustrating, difficult and even infuriating at times, particularly for scientists or researchers. So, what can an entrepreneur, who wants to maintain her day job as a professor, physician or other professional but doesn’t want her valuable innovation to sit idle, do?
Myriad Genetics, USPTO File Summary Judgment Motions in Gene Patent Case
Two of the defendants in Association for Molecular Pathology v. U.S. Patent and Trademark Office, the frontal attack on Myriad Genetics’ breast cancer gene patents organized by the American Civil Liberties Union, have now filed their own summary judgment motions. (Click through to read the memorandum in support of Myriad Genetics’ motion (pdf) filed on December 23 and the memorandum in support of the PTO’s motion (pdf) filed on December 24). As we explained in an earlier post, a summary judgment motion seeks to convince the trial judge that the facts are so clear-cut that there is no reason to go ahead with the trial—in legal jargon, that there is “no issue of material fact” that needs to be tried. This is the rare case in which both sides have asked for summary judgment (the plaintiffs filed their motion and supporting memorandum (pdf) back on August 26). The filings by both sides are not a surprise here, however, since the facts surrounding the challenged patents are largely undisputed and the real question is how to apply patent law to those facts.
Five Questions for Personal Genomics in 2010
Death, taxes and January prediction columns: these things are inevitable. So what? A new year offers a convenient—if arbitrary—time to review the year that was and contemplate what lies ahead. Without further ado, here are five of the questions the Genomics Law Report is asking as we kick off 2010.
1. Will the $1,000 genome live up to the hype? Affordable whole-genome sequencing is coming, possibly as early as this year depending on whom you ask. But when the day inevitably arrives, after the media frenzy has subsided, will the $1,000 genome prove anti-climactic?
Whole-genome sequencing is a means to an end and not an end in itself. The understandable excitement surrounding Complete Genomics’ November announcement that it had sequenced three genomes for an average cost of $4,400 often neglected to focus on what the price tag did not cover: the substantial costs associated with interpreting the genomic data.
For genomics researchers, the falling cost of whole-genome sequencing is a continuing cause for celebration, enabling increasingly ambitious research projects. But the success of personal genomics, which is what really matters to consumers, patients and healthcare providers, requires more than inexpensive genomic data. The real breakthrough in personal genomics will come when we can offer individuals affordable access to their whole-genome sequence as well as to the genomic tools and knowledgebase necessary for those individuals to put that data to use.
Can You Keep a Secret?
The competitive landscape can be a dangerous place for an early-stage entrepreneur, and even the best business plan can fall prey to imitators unless the entrepreneur is able to protect her business with some type of exclusive rights. Patents can provide powerful protection, and provisional patents are often a good choice for creating early-stage exclusivity. However, no business should overlook the potential value of trade secret protection.
There are two key issues to consider when evaluating trade secret protection: what type of information can an entrepreneur protect and what does she have to do to protect it? In general, any information can be a trade secret if (1) it is non-public information that has value because it is not publicly known and (2) the holder of the information is taking adequate steps to hold it in confidence. Trade secrets can include things as diverse as business plans, business contacts, financial analysis, inventions, formulas, designs and methods.
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Follow-on Biologics: How Much Incentive Do We Need?
After almost a full year of debate, a pathway for approving “follow-on biologics” or “biosimilars” continues to be a hot topic in Congress. We are all familiar with generic versions of brand-name drugs, and the federal regulatory scheme sets out well-defined shortcut procedures for approval of generics. Congress is now grappling with designing procedures for approval of generic versions of biological drugs. Although follow-on biologics are in some ways similar to generic drugs, the differences are crucial, and in fact the regulatory scheme for generic drugs does not work at all for biologics. Congress has its work cut out for it.
Biologics 101. In short, here is the problem: typical pharmaceutical drugs (“small molecule drugs”) are chemically synthesized, and once the brand-name manufacturer’s exclusive patent rights expire, generic manufacturers are free to obtain approvals under abbreviated procedures, Generic manufacturers are generally not required to submit preclinical (animal) and clinical (human) data along with these Abbreviated New Drug Applications (ANDAs), thereby avoiding the huge expenses associated with developing new pharmaceuticals. But this route is only open to the generic manufacturer if it can prove that the generic version of the drug contains an identical replica of the drug’s active ingredient. Under the Hatch-Waxman Act of 1984, the Food and Drug Administration (FDA) may approve a generic version of a drug if the generic contains the same active ingredient as the original, shows bioequivalence to the original, and is demonstrated to be manufactured according to appropriate practices. Once these are shown, the generic is allowed to piggyback on the designation of the original drug as safe and effective.
