Biotech-Pharma Innovation Requires Specialized Patent Counsel

Sunday, May 20, 2012 - 13:21
Basil S. Krikelis

Basil S. Krikelis

The Editor interviews Basil S. Krikelis, Partner, McCarter & English, LLP.

Editor: Please tell us about your background and experience.

Krikelis: I earned a Bachelor of Science degree in molecular biology from Purdue University in 1989. After graduating, I joined DuPont and then transitioned to the DuPont Merck joint venture, where I worked primarily with transgenic mice to examine ways to inhibit the HIV protease enzyme. From there, I attended John Marshall Law School in Chicago, graduated in 1995 and returned to the East Coast to begin my law practice.

After two years in private practice, I accepted an offer from another DuPont joint venture, DuPont-ConAgra, to serve as in-house patent counsel, which I did for five years, two of those years as chief patent counsel. My responsibilities included managing a patent estate of approximately 500 U.S. and foreign patents that were directed primarily to animal feed and welfare applications and with plant and other related biotech technology.

I left the in-house position to join McCarter & English in 2005 in order to expand the breadth of my practice, and I am a partner resident in the firm’s Wilmington, Delaware office.

Editor: Should Delaware be the preferred jurisdiction for patent litigation? Why?

Krikelis: Yes, and there are many reasons why. Of particular note is the fact that, under the America Invents Act, a plaintiff no longer can capture multiple defendants under one broad claim that encompasses related patents or technologies – and thus enable filing of one complaint against all “related” defendants in a preferred jurisdiction. This change in the law forces NPEs, for example, to now potentially have to file multiple individual complaints in jurisdictions where defendants are incorporated. As a popular state in which to incorporate a business, more potential defendants will fall under Delaware jurisdiction than likely anywhere else in the country, which may preserve the ability to sue multiple defendants in a single venue.

Perhaps more important is the fact that Delaware judges handle a very large percentage of patent cases on their docket as compared to any other U.S. jurisdiction. As a result, our four judges are sophisticated and patent savvy, and they understand the nuances of claim construction, validity, and infringement arguments and applicable case law. Delaware judges exert a national influence on broad patent issues, such as patent validity, inequitable conduct and infringement, and our experienced magistrates are very effective with resolving early discovery dispute issues and encouraging reasonable settlements among parties. Judges in many other jurisdictions simply do not have the same level of exposure to these issues.

Editor: Based on your in-house experience, can you please describe the patent process for companies that focus on innovation?

Krikelis: In sophisticated organizations like universities and large pharmaceutical or chemical companies, the labs are run by PhDs who understand the patent process. As soon as they recognize a patentable achievement, they submit an invention disclosure to in-house patent attorneys or to the university tech transfer group. Review of the disclosure leads to a decision about whether to file a patent application or to request specific refinements of the invention from the lab so that a properly supported patent application can be filed. Many inventions coming out of such organizations represent improvements or continuing science in a certain area; thus, patent processes are well-defined and integral to the researcher’s work.

The process also will involve a decision on where to file. A large Fortune-50-type entity like DuPont will file internationally all over the world and then refine that decision after determining whether the cost justifies the desired protections for that invention. Universities tend to file and maintain U.S. or PCT (Patent Cooperation Treaty) patent applications while seeking partnership with a company or an investor to move the development process forward and protect internationally.

Editor: What is the optimal cooperation between academic science and biotech start-ups?

Krikelis: There is very good, patentable and sometimes pioneering science coming out of universities and garnering industry attention; however, because they are usually such early-stage projects, many industry partners or investment groups aren’t willing to commit resources.

The relationship between universities and start-ups involves professors/ inventors and tech transfer groups working with corporate industrial partners that may be interested in the success of an early-stage project. This process involves negotiations, such as for a licensing arrangement or a more substantive research and development partnership, which the university tries to make as workable as possible for potential investors. Some universities are more experienced and have better resources, but in my experience, all interests tend to be aligned at the conceptual level.

Editor: Is today’s technology more difficult to reverse engineer?

Krikelis: It depends on the technology. Mechanical-type devices, for instance, are generally easier to reverse engineer, which is why most mechanical inventions are patented as opposed to being treated as trade secrets. For more nuanced inventions, such as manufacturing processes and the formulation of drugs, reverse engineering becomes more difficult or even impossible without assistance from the original inventors, which, in turn, affects the analysis when determining whether or not to patent.

Filing a patent essentially allows the world access to the inner workings of the innovation, and patents for drug formulation or manufacturing processes must fulfill patent office requirements to fully enable and describe the invention such that one having skill in the art can replicate it. Often, others use this information to create their own patentable improvements; thus, keeping these innovations as trade secrets may be a more viable option.

Editor: What are the key issues when filing for patent protection internationally? Are there special concerns for start-ups?

Krikelis: Filing internationally is very expensive and therefore especially difficult for start-ups. Cost is the number-one issue, and even large companies with established budgets will not maintain international patents unless they can rationalize the value. Before filing internationally, start-ups should consider whether they (or a competitor) will manufacture or commercialize outside the U.S. and whether potential acquirers might view an international component favorably.

Most start-ups coming out of universities are inventing sophisticated technology with worldwide application and eventually will need to file internationally. A good interim strategy is to file with the PCT, which provides patent-pending protection for 30 months and may allow enough time to find investors or even a commercial partner that can help with the cost.

When the PCT period ends, the company should decide which countries – including the U.S. – are most important from the commercialization, manufacturing, competition and enforcement perspectives and then apply the results of this strategic analysis in the context of maximizing the available budget.

Editor: What is the impact on drug and biotechnology companies resulting from recent high-profile cases, including the Supreme Court’s decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc.?

Krikelis: Mayo and AMP v. Myriad Genetics are cases that hit closest to home for my practice and biotech background. The Mayo decision is striking for having been unanimous, which indicates it was not controversial for the Supreme Court. Essentially, the Court interpreted Section 101 of the Patent Act, which covers the scope of patent-eligible subject matter, and seems to indicate that patent claims cannot be so overbroad as to the human body’s response in general. Rather, claims must be more structured and include information about implementation of the invention as it applies to the body’s responses.

While I don’t necessarily disagree with the Mayo decision, it will certainly affect the patentability of some currently pending patent applications and even validity of issued patents. In most cases, our clients would have been more than willing to comply at the outset had such guidance from the Court been available.

The Myriad case, which is in the queue to be reviewed by the Supreme Court, involves a more structured claim and represents the next step, post- Prometheus v. Mayo, in terms of how the Court will apply Section 101 to diagnostics, and to biotech in general. We anticipate that the Myriad claims will remain valid.

Editor: What are the key barriers to innovation in today’s global environment?

Krikelis: To set the stage from the pharma perspective, innovation is inordinately expensive and time consuming, from research and development, through clinical trials that may fail or, for successful efforts, through the need to establish, patrol and enforce patent protection. For example, enforcement via patent litigation tends to be a 50-50 proposition and only gets more complicated and expensive when foreign jurisdictions are involved.

These factors create an arguable disincentive for developing new compounds and technologies, which is only magnified by competition from generic companies, among others. For large pharmaceutical companies, this environment represents business as usual; however, these demands can break smaller companies or start-ups that may not have the resources to establish adequate fall-back positions and patent protections. In short, there is no incentive to innovate if the expenses outweigh the return on investment.

Editor: Please talk about the concept of building patent “picket fences.”

Krikelis: I encourage my pharma clients to use the picket fence strategy, which involves expanding patent protections beyond the original invention in order to anticipate purely derivative innovations or freedom to operate actions by competitors. The picket fence strategy seeks to manage the lifecycle of a particular innovation, for example, a successful active drug, by patenting alternative formulations or specific treatment use in addition to just the compound.

A typical picket-fence configuration involves one or two strong, dominating patents that shore up a group of narrower, limited patents, and my in-house experience at DuPont figures prominently in my support of this approach. Competitors expect this strategy from a sophisticated company and usually respond by weeding through the estate to find the strongest, primary patent on which to focus their attention.

Editor: What are the broad issues regarding patent estate management?

Krikelis: My marching orders are to get the job done at the lowest possible cost, which involves understanding the client’s prospective customer base and manufacturing requirements and then determining the most intelligent patent protections that are sufficiently broad, respect the budget and maximize value.

As a rule, start-ups need broad patent protections and simply must commit the funds required to establish a post in the ground. One option is to file worldwide applications (e.g., PCT Applications) that secure initial protections. They must then closely monitor their value and, where necessary, abandon those that are not worth the expense. Another approach that works for both large and small companies is to manage costs and maintain control of a patent estate through an out-license or other strategic partnership.

Editor: What are your thoughts on the America Invents Act?

Krikelis: The corporate world shouldn’t get overly caught up in the negatives of the America Invents Act. While its enactment requires certain changes to established practices, I don’t view them as drastic or difficult to manage. The first-to-file provision, for instance, simply requires that corporations be aware that patent applications be filed a little more quickly than in the past. Most sophisticated companies were not necessarily relying on invention dates as a way to prove priority anyway, in part because they were originally seeking global protections in a first-to-file system.

The Act also provides for simpler methods to address patent validity through the U.S. Patent Office (PTO) and, therefore, may spare companies the expense of using the court system for this purpose. Finally, there is some legitimate concern about how the PTO will exercise its right under the Act to set fees, and some proposed fees are quite high, but this remains a work in progress.

Please email the interviewee at with questions about this interview.