By Randall Osborne
Like notches in a belt, patents for biotech firms seem to certify strength and credibility, as well as portend a solid future for the companies that hold them. The more the better, apparently.
Patents, as surely as the scientific papers published in prestigious journals, lend a critical flavor of worthiness to any firm and it's a cache no less coveted as the industry matures overall.
Natural selection is separating inexorably the figurative men from the boys, the biotech wheat from the chaff. Among those remaining, the companies with the most abundant patent portfolios tend to be viewed as firms more likely to survive an ever more rigorous sifting.
Well, maybe they are, and maybe they aren't.
As more and more firms are finding out, patents won for "protection" of their technology and discoveries also lead to more battles and litigation in the patent realm can be particularly long and complicated.
Worst of all, patent lawsuits are very, very expensive.
With genomics racing ahead, the patent tide is rising. Files are growing ever thicker with intricately detailed paperwork, describing the gene-based properties (and others) over which ownership is jealously sought, to be carefully guarded.
A challenge unto itself is keeping track of who has what in the patent realm, much less figuring out where conflicts might arise, and how to deal with them when they happen.
One of the more recent major patent wars to break out involves Chiron Corp. and Genentech Inc., the former suing the latter over the manufacture and sale of the much-ballyhooed and high-selling breast cancer drug Herceptin (trastuzumab), a monoclonal antibody treatment approved by the FDA in September 1998 for metastatic breast cancer that overexpresses the HER-2 (human epidermal growth factor receptor-2) protein.
Genentech raked in $279.4 million in Herceptin sales last year, the highest first-year sales of any anticancer product in the U.S.
Chiron wants a piece of that action. And the company says it deserves as much, having won U.S. Patent No. 6,054,561 in late April of this year. The patent covers monoclonal antibodies that bind selectively to human breast cancer cells, specifically to the c-erbB-2 or HER-2 antigen.
That patent is the latest in a series of patents that began issuing in 1988 to Cetus Corp., which Chiron acquired. The patents are based on an application originally filed in 1984. What's more, Chiron says its researchers developed the first anti-c-erbB-2 monoclonal antibody, opening the door for drugs such as Herceptin.
Genentech says the patent is not valid.
In the manner of litigating parties, neither side is commenting about the lawsuit. Genentech said it learned of the impending conflict with Chiron shortly after the patent was granted; Chiron said it tried to negotiate a license with Genentech, but those talks broke down.
Paul Andre, an intellectual property lawyer with Brobeck, Phleger and Harrison in Palo Alto, Calif., said the firm's client list includes Chiron, and he has represented Genentech in the past.
"It's a very tangled community," he said. "What generally happens is that biotech companies are diversified into different areas, and they seek patent protection in every area. A company may have intellectual property rights in a specific area, and not have a potential product coming out in that area. This is a big pie, and everybody wants a piece of it."
Andre said it's "amazing that companies who are in an alliance on one product with marketing partners, can be on opposing sides of a case with another product."
Still, he added, his usual advice is: When in doubt, seek a patent.
Knowing what others already are working on may be a key to avoiding skirmishes. But that's been difficult under the U.S. Patent Office's rules, said Lynn Tellefsen, vice president of marketing for corporateintelligence.com, which provides intellectual property information to subscribers by way of the Internet.
Not until the patent is granted is the full extent of it known. First-page abstracts often are "intentionally misleading" with regard to the invention, Tellefsen said. "[Companies] want to hide it as long as possible. All of their secrets are in there."
Thus, for companies hoping to keep their research and development cutting-edge by using patent data, files from the U.S. Patent Office can be too late. Examining an approved patent is like squinting at light from a faraway star, long since burned out.
"You're really looking at what was going on two years ago," Tellefsen said.
Patents that are especially promising, however, get filed in the U.S. and Europe simultaneously and the overseas office provides much more paperwork for public inspection at the time the firms apply, Tellefsen said.
"If it's something big, like the next Viagra, they're probably going to market it [overseas as well as in the U.S.]," she said. "So, many of the bigger companies, the Pfizers and Upjohns, will file in multiple countries, and it's available for your viewing pleasure on the European side."
The European patent applications tend to be larger, too which means even more help for would-be competitors inspecting them, she said.
Despite this, the U.S. database is more often searched than the international one, Tellefsen said. Apparently, only the shrewder lawyers ransack patent files worldwide for potential trouble.
"Companies like Chiron and Genentech routinely search the international database," Tellefsen said. "But who knows what slips between the cracks?"
As of next January, the patent laws will change, allowing searchers to find out more about applications that might bear on their own ideas.
That won't solve everything, of course.
The pure glut of data remains a challenge, as the number of patents granted steadily climbs. In 1995, the patent office allowed 113,834. By last year, the number had increased to 154,594. Thanks to genomics and to shifting definitions, it's impossible to say exactly how many are biotech-related, Tellefsen noted.
Maybe the patent law changes won't solve much of anything. Andre, for his part, said enough companies file their applications in the U.S. and Europe at almost the same time and enough lawyers are aware of it that the changes in U.S. rules will hardly matter.
Successful firms, Andre said, ought to expect patent lawsuits.
"I tell most companies, if you get something through the FDA, and it's a successful product, you can almost count on being sued in a patent case," he said.
Seasoned officials take litigation calmly.
"It has more of an effect on investors," Andre said. "It shouldn't have. Most of the sophisticated companies understand a patent lawsuit is just the cost of doing business."
Not only that. For more robust firms, garnering patents and arguing over them is a way to generate tidy sums of money.
"A lot of biotech companies have set up litigation departments to enforce their intellectual property," Andre said. Much time and effort is devoted to watching the competition, threatening lawsuits, and collecting either license fees or cash settlements.
"What's not factored in is the market share you obtain [by knocking others out of the ring]," he added.
"Obtaining patents is one of the most important things a biotech company can do," he said. "The company can use them as bargaining chips if it's the target [of a lawsuit], or turn around and do a cross-license deal."
Genomics findings will increase the research overlap in the near future, Andre said, and this situation will take an unknown period of time to settle out.
"[Genomics] has increased the level of activity," Andre said. "Some people think that complicates it, but I'm of the belief that eventually this will be sorted out. The case law lags behind somewhat, but once they're established, people know the boundaries."
But that won't slow the court action. Patent application demands are so rigorous that firms typically are on fairly solid ground, whether they're plaintiffs or respondents in cases.
"Rarely is there a totally frivolous lawsuit in the patent arena," he said. *