Patent Trolling Is Taking Its Toll On Biotech

Includes: BIIB
by: Derek Lowe

This is the sort of thing we don't need: Nature News reports on a court case that I missed, Classen Immunotherapies, Inc. v. Biogen IDEC (NASDAQ:BIIB) et al., yet another run at the "can you patent natural phenomena?" argument, which seems to be an ever-upwelling spring for patent litigation:

The court upheld a lawsuit filed by Classen Immunotherapies of Baltimore, Maryland, against four biotechnology companies and a medical group, for infringing on a patent that covered the idea of trying to link infant vaccination with later immune disorders. A district court had thrown out the lawsuit, finding that the concept at the heart of the case amounted to an abstract idea that could not be patented. The appeals court found otherwise.

Beyond its complex particulars, the case sets "a troubling precedent", says James Bessen, a lawyer at the Boston University School of Law, Massachusetts, "because you're patenting something that's very broad". (The patents include the act of reading the published scientific literature and using it to create vaccination schedules that minimize immune disorders.)

Oh, I particularly like that last part. I have to congratulate whoever thought of putting it it into a patent application, in sort of the same spirit that one has to congratulate the Mongol hordes on their horsemanship. The facts of the case are a bit more complicated, though, as it always the case in the law. Originally, a district court had indeed ruled (by summary judgment) that the Classen claims were unpatentable, and the CAFC had gone along with that. But the Supreme Court vacated the decision, in light of a 2010 case (Bilski v. Kappos, if you're into this stuff), and remanded it back down to the CAFC. The guidance seems to have been to not make any broad statements about patentability, if possible, and to consider each case narrowly as. On reconsideration, they now find that two of the three claims under dispute are "patent eligible," but they're leaving the door wide open for them to be contested on other grounds:

We conclude that the claimed subject matter of two of the three Classen patents is eligible under §101 to be considered for patenting, although we recognize that the claims may not meet the substantive criteria of patentability as set forth in §102, §103, and §112 of Title 35. However, questions of patent validity are not before us on this appeal.

(If you want more, there's a detailed look at the decision over at Patent Baristas.)

But the broader problem is still with us. Bessen has just recently published a study of "patent trolls," the organizations that buy up as many (preferably broadly worded) patents as they can, and then go looking for people to sue. That business model -- which seems to be more and more popular -- has always brought to mind of one of the characters in the old "Pogo" comic strip: When approached with a sure-fire way for him to make money in the advertising business, he responded with a panicked, "No, no! I can always rob graves!"

Nature News is incorrect, though, when it implies that the biotech industry has been free of these things up until now. There may have been fewer of the real "non-producing entities," the firms that have nothing but a pile of bought-up patents and some hungry lawyers, but we have had our share of people trying to get rich by enforcing crazily over-broad patents.

In the earlier days of this blog, I spent a good amount of time chronicling Ariad's attempt to sue everyone in sight over claims to the Nf-kappa-B pathway that basically covered everything out to the asteroid belt. That one only took about eight full years of lawyering -- and who knows how much money and effort -- to be disposed of. And back in the 1990s, I recall that there was some guy with a patent claiming huge swaths of space around the concept of cell-based assays, who was shaking down everyone he could find.

Some other high-tech areas are infested with this sort of thing. I find that I cannot, for example, listen to any presentation by Nathan Myhrvold, who is otherwise an intelligent and interesting person, without thinking about how he runs Intellectual Ventures, a patent-trolling firm in its purest form. As it happens, the Nature News piece mentions that Myhrvold's minions own hundreds of biotech patents. They claim that they have no plans to litigate in the field, but why on earth would they buy these things up, otherwise? And as a comment to the news article points out, that denial may be disingenuous, because IV's usual procedure is to set up some other entity to do the suing, after first having sold it the rights to the patents at issue. As that extremely interesting NPR story goes on to detail, those other entities tend to be in Marshall, Texas:

The office was in a corridor where all the other doors looked exactly the same —locked, nameplates over the door, no light coming out. It was a corridor of silent, empty offices with names like "Software Rights Archive," and "Bulletproof Technology of Texas."

It turns out a lot of those companies in that corridor, maybe every single one of them, is doing exactly what Oasis Research is doing. They appear to have no employees. They are not coming up with new inventions. The companies are in Marshall, Texas because they are filing lawsuits for patent infringement.

So this is how people make money these days: not by inventing anything themselves, but by buying up other people's work -- dubious or valid, it doesn't much matter -- and suing people. From empty offices over in ArkLaTex country. And we biopharma people could well find ourselves spending more and more of our own time and money fighting this stuff off.