Ariad's 'Patent' Is Finally, Officially Dead

Includes: ARIA, LLY
by: Derek Lowe

It's been some time since I've written about Ariad (NASDAQ:ARIA) and their NF-kB patent. This has been a very long story, full of legal twists and turns, but I believe that it's finally come to an end.

Back in 2002, Ariad was issued an extremely broad patent on the uses of agents that affected the NF-kappaB pathway. And since it's basically impossible to talk about inflammation without talking about NF-kB at some point, the company believed that it had the legal means to claim that many other companies were infringing their intellectual property. Among the first to be sued was Eli Lilly (NYSE:LLY) - here was my reaction at the time. Short form: I was not pleased. I found it potentially catastrophic that one could lay claim to fundamental biochemical pathways and then assert that this naturally gave you a piece of the action for any compound that affected them. Update: it's worth noting that even as late as last month, Ariad's boilerplate at the bottom of their press releases included basically that process as part of their corporate strategy.

Well, the case finally was argued before a court in 2006, and to my surprise and disgust, a jury found for Ariad. Part of that surprise was a financial one, since (as I noted at the time) I'd gone short Ariad stock in anticipation of a more sensible verdict. (Note that I have no position in their stock or options now. They've significantly underperformed the market since 2006, which is no mean feat).

Every time I wrote about the company I would get beaten up on various message boards by its fans. I was a tool of Eli Lilly, Amgen (NASDAQ:AMGN) (another of Ariad's legal opponents), or just of the Monied Interests in general. I was a shill, a moron, you name it. The glee was especially pronounced after that court case in 2006. A separate bench trial took place afterward on whether the Ariad patent was enforceable at all, partly on the issues of its subject matter and possible inequitable conduct, but Ariad won that round as well.

The case then went to the Court of Appeals for the Federal Circuit, which is where all tough patent cases are going to end up eventually (a very small number go on from there to the Supreme Court). And last week the CAFC ruled: Ariad's key patent claims, they find, are in fact invalid. Lilly was right. The jury was wrong, and so was the verdict in the bench trial:

Ariad claims methods comprising the single step of reducing NF-κB activity. Lilly argues that the asserted claims are not supported by written description because the specification of the ’516 patent fails to adequately disclose how the claimed reduction of NF-κB activity is achieved. The parties agree that the specification of the ’516 patent hypothesizes three classes of molecules potentially capable of reducing NF-κB activity: specific inhibitors, dominantly interfering molecules, and decoy molecules. Lilly contends that this disclosure amounts to little more than a research plan, and does not satisfy the patentee’s quid pro quo as described in Rochester. Ariad responds that Lilly’s arguments fail as a matter of law because Ariad did not actually claim the molecules. According to Ariad, because there is no term in the asserted claims that corresponds to the molecules, it is entitled to claim the methods without describing the molecules. Ariad’s legal assertion, however, is flawed.

I've been waiting to hear someone say that since 2002. I have never been able to figure out how the company could lay claim to such huge swaths of cellular biology with no real enablement, no demonstration that they could actually do what they were asserting the rights to. Well, in the end, they can't:

Regardless of whether the asserted claims recite a compound, Ariad still must describe some way of performing the claimed methods, and Ariad admits that the specification suggests only the use of the three classes of molecules to achieve NF-κB reduction. Thus, to satisfy the written description requirement for the asserted claims, the specification must demonstrate that Ariad possessed the claimed methods by sufficiently disclosing molecules capable of reducing NF-κB activity. . .

. . .The ’516 patent discloses no working or even prophetic examples of methods that reduce NF-κB activity, and no completed syntheses of any of the molecules prophesized to be capable of reducing NF-κB activity. The state of the art at the time of filing was primitive and uncertain, leaving Ariad with an insufficient supply of prior art knowledge with which to fill the gaping holes in its disclosure. . .

Ariad sought and obtained the broad claims we now hold to be invalid. For its own reasons, Ariad maintained the breadth of these claims through claim construction and into trial. As Judge Rader observed, the situation presented in this case should not often occur, because “[i]n simple terms, a court would properly interpret the claim[s] as limited.” Univ. of Rochester v. G.D. Searle & Co., 375 F.3d 1303, 1312 (Fed. Cir. 2004) (dissenting from denial of petition for rehearing en banc). Nonetheless, as it stands, Ariad chose to assert claims that are broad far beyond the scope of the disclosure provided in the specification of the ’516 patent. Cf. Liebel-Flarsheim Co. v. Medrad, Inc., 481 F.3d 1371, 1380 (Fed. Cir. 2007) (“The motto, ‘beware of what one asks for,’ might be applicable here.”).

On the other hand, the CAFC did not side with Lilly in their arguments about inequitable conduct or inherent anticipation of the patent's claims, finding that there was no clear evidence of intent to deceive on Ariad's part. But since they find that the key claims of the patent are invalid anyway due to lack of written description, it hardly matters. Ariad's patent is dead. And this ruling should deter anyone from trying another idiotic IP power grab like this in the future. Good news, and it only took seven years of constant legal wrangling to emerge. . .