On The Cutting Edge Of Biotech Law

Wednesday, June 2, 2010 - 01:00
Jennifer A. Camacho

Editor: Please remind our readers of your background as both in-house counsel for a scientific firm as well as outside counsel.

Camacho: I spent many years at a large law firm as outside counsel to a number of venture-backed companies. At one point I decided it would be a good experience to go in-house and get a better view of what my clients were actually doing and how our work at the firm actually fit into the overall picture. I went in-house at a very early stage company called Codon Devices, a synthetic biology company. I was one of their early hires, being the tenth person onboard. I was there for two-and-a-half years. I came to understand what an operating company did day-to-day and where IP fit into the business plan. As the company's IP needs became more routine, as they often do with a startup, I transitioned back to the law firm and continued to work with that company as outside counsel.

Editor: Which areas of intellectual property do you focus on?

Camacho: While my practice encompasses everything from litigation to IP-driven transactions to patent procurement, I focus primarily on counseling in connection with the business aspects of IP - for example, IP due diligence, competitive patent analyses, patent portfolio development and valuation, etc. The non-contentious side of the IP practice can be incredibly diverse, so one day I may be working with a client on a product clearance study and alternative product designs, and the next day I may be analyzing inventorship in a dispute over IP generated under a collaboration agreement.

Editor: Could you describe your client base and any outstanding issues clients have sought your help on recently?

Camacho: A big portion of my clients are venture-backed companies. I often work with the venture firms themselves on the start-up phase of their companies, when they have a platform technology or scientific team in mind but need to have a better understanding of what their IP position would or could be. I often think of it as developing the company's IP story - a story that must be compelling to investors as well as potential partners and competitors. I also work with some of the larger and more established pharma firms and with some of the mid-sized companies that are getting more aggressive these days in building their IP base.

Recently, I have been working with a couple of clients who are implementing more proactive strategies in addressing third party IP. Moving beyond simply monitoring third-party patents or patent applications of interest, these clients are getting involved in the application examination and issuance processes at the U.S. and European patent offices. Along the same lines, I have seen more clients take a proactive approach to freedom-to-operate and product clearance studies. Rather than settling for a static freedom-to-operate study, these clients are viewing it as a dynamic analysis that must keep pace with and guide the research and development of the technology or product.

Editor: One of the areas in which you have specialized knowledge is synthetic biology. Please describe the subject matter of this area and its industrial use.

Camacho: Synthetic biology takes engineered biological processes and metabolic pathways and applies them in new directions that are not inherent in what microbial organisms tend to do. It is in effect writing new genes, developing new proteins or DNA sequences, that will optimize the proteins in enzymes and put them to a purpose that is not naturally occurring in the organism. For example, synthetic production of certain chemical or chemical intermediates that are produced from petroleum products can be biosynthetically produced using engineered microbes using renewable starting products like glucose.

Editor: Please describe some of the new fields of biological and medical research into which your practice takes you.

Camacho: My practice has taken me deep into the industrial biotechnology field - renewable fuels and conversion from the petroleum feedstock towards the greener feedstock, such as switch grass or sugarcane - biomass materials. I've also seen a lot going on in the personal medicine area, such as the use of biomarkers and customized companion diagnostics and therapeutics that are personalized to an individual's disorder.

Editor: The Bilski case has been argued before The Supreme Court. What are some of the arguments being put forward by both sides? Do you consider the earlier decisions to be a step backward in reducing the value of process engineering?

Camacho: We are expecting the Court's decision in Bilski any day now. That case relates to a method of hedging financial risk. The Federal Circuit found that the Bilski patent was invalid because the method covered by the patent was not patentable subject matter. The court applied what was called a "machine or transformation test," which requires that a process must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing in order for the process to be patentable. What Bilski has asked the Supreme Court to decide is whether or not that process is patentable subject matter, arguing that the intent of the patent statute is to be very broad and inclusive. The appellants are asking the Supreme Court not to apply the machine or transformation rule but to apply the so-called practical application rule, i.e., a process that is a practical application of otherwise unpatentable subject matter such as an abstract idea, law or nature, or natural phenomenon, is patentable.

Arguing on the other side, the patent office has framed the issue more narrowly. They have asked the Court to decide whether the method of hedging financial risk that the Federal Circuit held neither concerns the use of a particular machine or apparatus nor results in the transformation of a particular article is eligible subject matter under the patent statute. They asserted that the patent statute protects industrial and technological processes and excludes methods directed toward organizing human activity, and that the Bilski patent covers a process that is nothing but a method for organizing human activity.

The Bilski decision could have implications far beyond the financial services industry. Many diagnostic patents are directed to methods of determining the presence or absence of a biomarker, for example, and making a diagnosis based on that determination. Those methods may not be tied to a particular machine or device, and may not result in a transformation of any particular article. It will be important for companies in the biotech industry to review their current portfolio and patent strategy once the Bilski decision comes out..

Editor: Have there been any recent cases that have modified the court's decision in KSR as to "obviousness"?

Camacho: Rather than "modify," there have been some cases where its application has been clarified. For example, the Federal Circuit has clarified that the KSR does not require that the prior art references provide an explicit motivation to combine them (i.e., some teaching in one of the references that it ought to be combined with the other reference). Rather, in finding obviousness, a court should provide an explicit statement regarding the motivation to combine the references.

Editor: Have there been any more recent cases relating to biotech that you feel our readers should be informed about ?

Camacho: One of the recent cases of interest is Association of Molecular Pathology and ACLU v. U.S. Patent and Trademark Office and Myriad ( "Myriad" ) in the Southern District of New York, giving it limited applicability to other jurisdictions. The case involved a claim for a patent on isolated DNA that included a mutant gene sequence that was indicative of a pre-disposition for breast cancer, and the court held that it was a "purification of a thing of nature" and thus not eligible for patenting.

Another case is Ariad Pharmaceuticals et al. v. Eli Lilly and Company ("Ariad"), in which the Federal Circuit affirmed that the patent statutes include separate requirements for sufficient written description and enablement of the claimed invention. In Ariad, the patent recited methods for regulating cellular responses to external stimuli by reducing a certain protein. The Federal Circuit found that that patent did not provide a sufficient description of the invention but rather described it broadly by way of functional characteristics or desired results. This is an important holding for the pharmaceutical industry, which often seeks patent coverage early in the drug discovery phase by defining the methods of treatment by way of functional limitations.

Editor: Do you see any of your larger clients selling off some of their patent portfolios?

Camacho: I see very few of my clients selling off patent assets except in connection with the sale of a portion of the business, which will typically include the portion of the patent portfolio to which it pertained. More often, my clients are finding strategic partnerships in which they can monetize their patent portfolio by licensing the technology in markets that are ancillary or orthogonal to the client's primary market - i.e., they don't want to license the technology to a competitor. However, when a client has a large number of overlapping patents on a particular product and the value of pushing through incremental advances on that particular product is marginal at best, I do see clients choosing to spend less of their IP budget on getting additional patent coverage.

Editor: How is this marketed? Are there brokers who know of someone who has a patent that they would like to dispose of, or is the world so small that everybody knows what everyone else has?

Camacho: There are IP brokers out there, and a company can put up patents for auction, but I don't see with my client base many high-value transactions in that marketplace. In these nascent industries in which the start-ups operate, they know what everybody is doing and occasionally you will see one of the start-ups who has some technology that may be more applicable to another firm sell to that firm, even in a different industry.

Editor: Have any of the Obama administration initiatives found their way into advancing the field of biotech?

Camacho: The Obama administration has been supportive of biotech research and development and overall on innovation. They have a number of initiatives that are directed towards innovation; even in unrelated initiatives, such as the increased exports initiative, biotech is enjoying the benefit of increased funding. The Obama administration has been particularly supportive of biotechnology research and development in the field of fuels from renewable feedstock. This administration has done some interesting things such as the i6 Challenge, a multi-agency innovation competition led by the U.S. Department of Commerce.

Editor: Has the U.S. Patent Office advanced its timetable for keeping in step with the latest of biotech advances under the present administration?

Camacho: There has been a lot of focus on this lately, and we are starting to see some changes at the Patent Office. David Kappos came in as the new director, for example; and the Obama administration has taken a position on some of the provisions under discussion in the current version of the Patent Reform Act of 2010, which may improve the current processes of the Patent Office to increase efficiency and to provide higher-quality patents.

Please email the interviewee at jcamacho@proskauer.com with questions about this interview.