Small biotechs, universities and other holders of early upstream patents could find themselves caught between the proverbial rock and a hard place.

The rock is the increased pressure to file for a patent as early as possible given the U.S. switch last year to a first-to-file patent system. (See BioWorld Today, Sept. 12, 2011.)

The hard place is the uncertainty caused by the ever-tougher patent standard being set by the Court of Appeals for the Federal Circuit. That uncertainty could threaten the value of intellectual property, which in many cases is the only bankable asset a small start-up has.

The latest raising of the bar for biotech patents came last month when the Supreme Court refused to consider Janssen Biotech Inc. v. Abbott Laboratories, effectively letting the Federal Circuit set a higher standard for biotech patents, said Li Westerlund, vice president for global intellectual property for Bavarian Nordic A/S.

Bavarian Nordic had submitted an amicus brief, urging the Supreme Court to grant cert in the case, in which Janssen, formerly known as Centocor Ortho Biotech Inc., asserted that Abbott's Humira (adalimumab) infringed a patent it jointly owned with New York University.

In overturning a $1.67 billion infringement award a jury handed Centocor in 2009, the Federal Circuit said Centocor's patent claims for making recombinant antibodies that bind to the human tumor necrosis factor-alpha protein didn't meet written description requirements.

The Federal Circuit has been raising the bar on written descriptions since the 1990s, but its decision in Janssen basically requires a biotech to reduce its claims to practice, Westerlund told BioWorld Insight. That's a difficult bar to reach in upstream patents that cover basic research or discoveries that could have broad and, possibly, unforeseen applications.

Because of the nature of biotech patents, an applicant won't know if it has fully written the description until it sees what its competitors do, Westerlund said, adding that no one can assess all the future possibilities of a discovery at the time of the patent application.

Mary Webster, a patent attorney with Nixon Peabody, agreed. But despite the inability to predict where a patent will lead, the Federal Circuit's current "super enablement" standard requires patent applicants to do just that, leaving patent holders to hope they guessed right, she told BioWorld Insight.

The unpredictability of early patents also came up at a recent Patent and Trademark Office hearing on genetic diagnostic testing. Several patent experts speaking at the hearing attested to the impossibility of knowing where a biotech patent will go. (See BioWorld Today, Feb. 17, 2012.)

"You can't read a patent and predict accurately what type of product the patent will cover," Lori Pressman, a patent consultant, said at the hearing as she stressed the need for broad patent criteria.

The standard imposed by the Federal Circuit will hit small companies and universities especially hard because they don't have the resources to write the extensive – and expensive – patent applications needed to meet the standard, Webster said. And they lack the funding to develop a product just to support a patent.

Meanwhile, meeting the patent bar "seems to be harder and harder with every decision" coming out of the Federal Circuit, Westerlund said. That increased judicial uncertainty can undermine the value of a company's intellectual property, making it more difficult to attract the capital needed for R&D, she added.

To illustrate her point, Westerlund cited a financing round Bavarian Nordic, of Kvistgard, Denmark, completed last year to raise $123.5 million to help support a Phase III trial for its prostate cancer vaccine candidate, Prostvac, licensed from the National Cancer Institute. (See BioWorld Today, April 5, 2011.)

If Bavarian Nordic didn't have a clear claim to the intellectual property, it wouldn't have been able to raise the money. Then the vaccine would never be developed, Westerlund said.