Interview with J. Peter Fasse

INDUSTRIAL BIOTECHNOLOGY: Throughout the years that you have been a member of the Industrial Biotechnology Editorial Board, from your perspective, what have been some of the most significant changes in the industry, whether advances or setbacks?

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PETER FASSE: Based on my clients' comments, I believe that in the past five years or so, one of the biggest setbacks in the industrial and medical biotech industries has been the ailing economy, which has had a significant adverse impact on all types of businesses from start-ups to multinational companies. Not only has business been down for established companies, but the level of federal, state, and venture capital (VC) funding for start-ups was also decreased significantly for the last several years. On the bright side, it seems that VC funding picked up last year, at least for the medical biotech industry. This is a good sign, as federal and state funding in these and other areas of basic research has remained flat or continued to decline. On the other hand, some have suggested that VC investment in the biofuel and agricultural biotech industries may have peaked about 4 or 5 years ago as investors began to question the length of time it takes to reach a successful payoff, or any payoff at all, in these industries.

Company budget cuts, uncertain VC funding, and reduced state and federal funding for academic and non-profit research hospitals have also had a negative impact in many instances on our clients' ability to obtain sufficient patent protection for their new inventions. On a positive note, some patent law firms such as mine have led the way in developing fixed fee patent application and patent prosecution programs to help their clients develop more predictable budgets for developing their patent portfolios.

IB: Focusing on the past 5–10 years, what changes in patent law in the US and Intellectual Property (IP) trends have had the greatest impact on the industrial biotechnology community?

PETER FASSE: The biggest change in US patent law in many decades is clearly the America Invents Act (AIA), which President Obama signed into law in 2011. The AIA was implemented in stages, with the final stage going into effect in March of 2013. However, while there are numerous changes in the AIA, some of these changes may not have much of an impact on certain companies, while others may not come into play for certain patent applications for many years.

First, while US patent law under AIA now follows a “first-inventor-to-file” regime, which harmonizes the US practice with most of the rest of the world, this change should not require much of an adjustment for companies that were concerned about foreign patent rights prior to implementation of the AIA, because they were already filing their patent applications with an eye towards protecting foreign rights. Thus, the AIA will not likely cause these companies to alter their approach to preparing and filing patent applications. Second, the AIA permits strategies to file new US applications that have the same text as earlier applications that are still pending and that “reach back” to the old, pre-AIA patent laws. Thus, this aspect of the AIA will allow companies to rely on the pre-AIA patent laws for theoretically at least 20 years from the March 2013 implementation of the final stage of the AIA. As a result, in-house and outside patent counsel, US Patent & Trademark Office (USPTO) examiners, and company intellectual property managers, as well as judges and juries, will have to deal with the old patent laws for many years to come.

Another major change in the US patent laws is the result of the US Supreme Court's view on what subject matter is, and is not, eligible for patent protection. In the landmark decision Association for Molecular Pathology v. Myriad Genetics, Inc., (569 U.S. __, 2013) the US Supreme Court held that a deoxyribonucleic acid (DNA) molecule is not patent-eligible if its sequence is identical to a naturally occurring DNA sequence. With a stroke of the pen, the Court overturned over 30 years of USPTO practice and invalidated thousands of issued US patent claims that encompass DNAs or nucleic acids broadly defined in terms of the protein each encodes or by their nucleic acid sequence, and that attempt to distinguish over naturally occurring genomic DNA solely by requiring that the claimed DNA/nucleic acid be “isolated.” However, in a seeming “split-the-baby” approach, and to the relief of many in the biotechnology industry, the Court also concluded that most claims limited to complementary DNAs (cDNAs), which the Court viewed as not naturally occurring, are eligible for patent protection. Given this decision, patentees now need to identify which of their DNA/nucleic acid claims remain viable, and whether those claims are adequate to cover important commercial products. In addition, the decision leaves open questions as to the patent-eligibility of naturally occurring proteins, bacteria, and other types of cells often used by industrial biotechnology companies, and other materials isolated from nature. These questions will be answered in the years to come, but it will take quite some time as cases make their way through the federal district courts, the Court of Appeals for the Federal Circuit, and in some cases perhaps to the Supreme Court as well.

Prior to the Myriad decision, the US Supreme Court had also held in Mayo Collaborative Services v. Prometheus Labs., Inc., (566 U.S. __, 132 S.Ct. 1289, 2012) that diagnostic methods that merely inform a relevant audience about certain laws of nature, with additional method steps that are merely routine or conventional, are not eligible for patent protection. The Court concluded that a newly discovered medical correlation covered by the diagnostic method claims at issue in this case was a “natural law” that was itself not eligible for patent protection, and further that a method of using that natural law would also not be eligible for patent protection if the method included merely well-understood, routine, or conventional steps, such as steps of administering a known drug or gathering data.

Thus, anyone seeking patent protection in the industrial biotechnology industries that deals with isolated natural products, such as DNA, proteins, or cells, or diagnostic methods that rely on the recognition or discovery of some naturally occurring mechanism or correlation, must now look for more creative ways to patent their discoveries so that they may continue to reap some financial benefit from their efforts.

IB: How has the evolving patent landscape in the US affected technology transfer from academia to industry? Has it helped to accelerate or impeded the commercialization of promising new technologies, processes, or products?

PETER FASSE: Based on my experience, it appears that many universities and hospitals are making serious efforts to increase the licensing of their patent portfolios, not only to get their inventions out to the public, but to increase their incomes through license fees. However, I believe this general shift may have more to do with the economy than the evolving patent landscape. In addition, it seems that more universities are trying to commercialize their technology by creating, and in some cases funding, spin-out companies, but this trend clearly requires strong patent protection, which might be somewhat harder under the AIA. Some people consider that the AIA has created a “race to the patent office,” which is generally viewed as a negative for universities and other non-profit research organizations, because research sufficient to support a patent application may take longer for such institutions to generate than for established commercial organizations, and thus universities might lose the “race.” In spite of this perceived discrimination in the AIA, I still see a significant increase in licensing efforts and the support of new university and hospital start-ups.

On another front, while licensing efforts are increasing in many areas, the general “bad press” on the Supreme Court's view on patent eligibility has led some of our university and hospital clients to decrease their patent filings on inventions that relate to isolated nucleic acids and diagnostic methods. Unfortunately, this results in decreased commercialization of such inventions, because without strong patent protection, such inventions are typically not pursued by any investors or corporations. However, there are typically methods and techniques available to protect even these types of inventions, and so we do still see some call for these types of patent filings.

IB: From your perspective, what should the industrial biotechnology community anticipate in terms of IP trends, substantive changes to patent law, and emerging opportunities or challenges in the next few years?

PETER FASSE: As discussed above, there have been many recent changes in the patent laws in the US, so in my view there will be few, if any, significant changes in the near term, except perhaps in some areas of patent litigation and enforcement. However, based on the Supreme Court precedents noted above, the district courts and the Court of Appeals for the Federal Circuit will continue to develop the law on what constitutes patent-eligible subject matter. As noted above, it is still an open question as to whether, and if so, how far, the Supreme Court's view on naturally occurring DNA will be extended to other naturally occurring materials. For example, will claims to isolated proteins, cells, antibodies, small molecules, or other naturally occurring compositions be considered to be non-patentable subject matter?

Another aspect of the AIA includes various proceedings that can be conducted in the USPTO after a patent issues, and I believe that these proceedings will likely find more use in the coming years. For example, post-grant review (PGR) has some similarities to the longstanding European Patent opposition practice. Like a European opposition, the US PGR must be filed within the first nine months after a US patent issues, but for technologies other than covered business methods, PGR is available only to challenge patents with a priority date later than March 15, 2013. On the other hand, an inter partes review (IPR), which has certain similarities to past inter partes reexamination proceedings, can be initiated immediately following issuance of any patent examined under the pre-AIA patent laws. For patents examined under the AIA first-inventor-to-file (i.e., patents filed on or after March 16, 2013), an IPR can be initiated after the nine-month window of eligibility for PGR has passed. Both of these proceedings are generally cheaper alternatives to litigation and may be useful in certain circumstances, especially for economically challenged start-ups and small companies.

IB: How are you helping to champion industrial biotechnology, and what aspects of industrial biotech are you most interested in and passionate about?

PETER FASSE: I have worked as a patent attorney for over 26 years and from the beginning have worked with a wide variety of clients including universities, hospitals, and companies, from start-ups to multi-nationals. Given my educational background in biology and bio-electrical engineering at MIT, many of my clients are in the areas of biotechnology and other biological and medical fields, as well as various “green” technologies. In my role as patent counsel, I work with these clients to develop competitive worldwide patent strategies and establish solid and defensible patent portfolios. I find that my work with researchers and doctors to brainstorm about their inventions and how best to implement them is very inspiring as well as educational. I am lucky to have a career in which I continue to learn firsthand about cutting edge biotech and medical research on a daily basis and to see how some of the patents we have handled or defended in litigation can not only provide financial returns to our clients, but also advance their research, and in many instances provide enhanced patient care or better consumer products.