Senator Warren Proposes ‘Swear Jar’ For Pharmaceutical Companies

According to Senator Elizabeth Warren of Massachusetts, pharmaceutical companies paid more than $13 billion in fines and/or settlements for violations of federal law.  The Senator would like to use some of that money to boost the budget of the National Institutes of Health.

The Medical Innovation Act (not yet introduced) would require large pharmaceutical companies that enter into settlement agreements with the government to contribute money to the National Institutes of Health budget.  It would be one percent of the annual profits for each ‘blockbuster drug’ that can be connected to federal research support.  The contributions to the so-called ‘swear jar’ would take place for five years – often the term of the settlement agreement entered into by the company.

There is no legislative language available just yet, so analysis based on a speech has its limitations.  The terms of the proposed legislation feed into Senator Warren’s role as a populist champion – someone targeting big companies for behavior she (and others) consider contrary to the interests of the non-rich.  That it would boost medical research is a bonus, but not really the major political motivation for the Senator.

While the additional money would be nice, it is dependent on what would be an irregular funding stream.  It would be hard to plan well for the use of the ‘swear jar’ proceeds without some kind of mechanism to provide some funding stability.  Senator Warren estimates that her legislation would have provided the NIH an additional six billion dollars per year over the last five years.  But its unrealistic to expect that the same amount of money would be available each year over the next five.

The biomedical research community is arguably still recovering from the end of the dramatic NIH budget increases around the turn of the century.  While the community would certainly welcome more money, I’m concerned that a stretch of good behavior by pharmaceutical companies would lead to halted grants and/or construction projects because this income dried up.

I like the idea – it’s an acknowledgement of how some profits from scientific and technical companies can be traced back to federal support of the underlying research.  But without a meaningful plan to properly manage this income stream, it could cause more problems than it solves.


USPTO Tweaks Guidance On Patents Derived ‘From Nature’

The United States Patent and Trademark Office (USPTO) has released another guidance memo for patents derived ‘from nature’ (H/T ScienceInsider).  The USPTO released its first memo in March, and between negative public comments and additional court action, releasing new guidance makes sense to me.

It also means that with additional court action likely in the near future, this new memo is unlikely to be the last one.  If you need an additional reason, the planned January meeting hosted by USPTO should suffice.  Comments are being accepted on the new guidance until March 16, and the public forum scheduled for January 21 will provide additional opportunity for comments.

The new guidance uses a two-step process for determining patent eligibility.  Is the claim directed to a law of nature, a natural phenomenon, or an abstract idea?  If so, then it is not eligible, unless there are additional elements cited in the claim that amount to significantly more than the law, phenomenon or idea.  To help provide additional detail, the USPTO is developing examples.

Irregular Update Corner – Australia Still Differs From US Re Genetic Patents

This Nature editorial reminded me that Australia’s judicial system has approached the Myriad Genetics case about its patents for BRCA1 and BRCA2 differently than the United States.  The most recent decision in Australia affirms the 2013 decision by its Federal Court that the Myriad Genetics patents were valid. There remains an additional level of appeal, so this case ma not be fully resolved just yet.

As it happens, the patents have not been enforced in Australia by either Myriad or the company that licensed the patents in Australia.  Should that change, it is possible that another suit may arise to challenge this ruling, or the Australian Parliament may opt to revisit the underlying law.

When It Makes Sense To Not Enforce Your Patents

Elon Musk, CEO of Tesla Motors (and also SpaceX), announced earlier today that the company will not pursue enforcement of its existing patents.  This means that other parties (whether they are car companies or not) can use Tesla electric vehicle technology to develop their own cars.

This is not a surrender.  It’s an acknowledgement that if electric cars are going to become a significant share of global automobiles, more than one company will have to produce the cars with the range and at the price that most people will want to use them.  Musk says as much in the announcement.

In a very real sense, electric cars would benefit from network effects the same way the Internet and related technologies can benefit.  There is more value (from a utility standpoint) in the individual electric car the more of them are available.  Once a critical mass of cars is on the road, there stands a better chance of support structures (charging stations, repair facilities) spreading across the country.

And with more cars on the road, prices stand an excellent chance of going down.  And that’s a good thing.

Would Musk do the same thing with SpaceX patents?  I don’t know.  Continue reading

Court Takes The Procedural Way Out Of Ruling On Stem Cell Patent

Consumer Watchdog will apparently need to get into stem cell research in order to get Courts to act on the validity of stem cell patents.  The U.S. Court of Appeals for the Federal Circuit has dismissed Consumer Watchdog’s challenge to a stem cell patent granted in 2007 to the Wisconsin Alumni Research Foundation (WARF).  The court did not rule on the merits of the challenge, but dismissed it based on Consumer Watchdog not being involved in the work on human embryonic stem cells.  As they weren’t directly involved or affected by stem cell research, the court decided that Consumer Watchdog lacked standing to challenge the patent.  The U.S. Patent and Trademark Office (USPTO) made that argument in filings earlier this year.

Consumer Watchdog filed the case because it felt that aggressive defense of the patent by WARF could effectively pre-empt research on stem cells in the State of California.  Perhaps the challenge would have met the court’s requirements for standing if a California research university, or the California Institute for Regenerative Medicine (which supports stem cell research in the state) had filed it.  At least for now, the patent stands.  As it expires in 2015, the window of opportunity to successfully challenge it, and change related patent law, is small.  The decision also suggests, as one of the legal experts quoted by ScienceInsider implies, that challenges by consumer groups like California Watchdog (or the ACLU) may not get much further than the USPTO.

Back When We Last Checked In On The Myriad

The Supreme Court ruled on the Myriad Genetics case last summer.  Since the case was decided, the company has been engaged in litigation with companies that started offering testing for the subject genes after the ruling.  Robert Cook-Deegan has summarized the post-decision for those of us, like me, who thought the Supreme Court ruling ended things.  He’s also outlined some possible reasons for why Myriad Genetics launched a patent offensive in the wake of a decision that would seem – at least to a layman like me – to have foreclosed the company’s control over two genes.

Six companies have been sued by Myriad, with one settlement so far.  The cases have been consolidated and are currently working through a Federal District court in Utah.  Hearings were held in September and October.  On March 10, the judge in the case denied a motion for a preliminary injunction filed by Myriad.  This means that the company wanted the judge to stop competition on the medical tests of the BRCA1 and BRCA2 genes while the lawsuit went through the judicial process.  Usually these injunctions are granted because the side requesting relief could be reasonably seen to prevail on the merits of its case.  That doesn’t automatically mean that Myriad would lose, but it suggests that the company’s case is far from obvious. It’s worth noting that these cases, as Cook-Deegan describes them, could be more complicated than the underlying case that opened up this competition over genetic testing.  Among the possible wrinkles include government involvement, because underlying research relied on research funds from the National Institutes of Health.

Of course, the path of litigation is tough to predict.  As one company has already settled, it’s possible none of this comes to trial.  Or not. While we’re on the subject of the BRCA genes, it’s interesting to note this development reported earlier today.  BRCA1, besides controlling the development of proteins that can help prevent DNA damage, could control brain development.  As the research is only at the mice level, it will be a while before Myriad Genetics or other companies may be able to take advantage of their breast cancer work on BRCA in a new context.

Stem Cell Patents Getting Additional Scrutiny Post-Myriad

While recent Supreme Court activity (like the Myriad case) focused on the validity of gene patents, other biotechnology patents have been the object of scrutiny.

Consumer Watchdog asked the U.S. Patent and Trademark Office (USPTO) to review the patent it granted the University of Wisconsin-Madison in 2006 related to in vitro cultures of human embryonic stem cell lines.  The USPTO agreed to review the patent, but ultimately upheld the patent after several reviews and appeals.  In July 2013 Consumer Watchdog filed a brief with the U.S. Circuit Court of Appeals to have the patent invalidated.  (February 9 – Edited To Add – I had posted about the matter back in 2010 as it worked its way through appeal(s))

As with many patent cases, there are a number of different arguments that can be made for deciding the case.  But one of the arguments in the brief draws comparisons with the Supreme Courts arguments in the Myriad and related cases.  Specifically Consumer Watchdog is arguing that like the isolated gene sequences, the stem cell cultures are isolated products of nature and should not be eligible for patent protection.

Now, the Court of Appeals may opt to let the USPTO’s decision stand.  It will hear the case (it requested all parties submit briefs by January 16), and decide to validate or invalidate the patent based on any other claims put forth in the argument.  There are any number of procedural questions (in the courts or at the USPTO) that could stop the case cold.  And should the case make it through the Court of Appeals, a visit to the Supremes could certainly happen.