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I’ve been following along with the circus that is Ariad vs. Eli Lilly & Co. for over a year now (see 2006 posts May 5, June 28, June 6), and, as I find it fascinating, I’m going to keep writing about it. If patent decisions bore you, read no further.

The latest news is significant: Ariad has prevailed in a bench trial held in Massachusetts federal court. The prior jury award, giving Ariad entitlement to 2.3% of revenues from sales of Xigris and Evista (valued at ~$65 million at the time of the award), stands for now. Lilly has not yet commented on the Court’s decision. At the same time Ariad was getting this bit of good news, they received word from the USPTO that the patent claims upheld by the Massachusetts Court were nullified for now. Ariad will appeal the USPTO decision, which will take one to two years to be finally decided. In the meantime, the award against Lilly will stand unless appealed.

I’m going to walk through the judge’s reasoning in this case. If you read this and think you can successfully defend the logic of Judge Zobel, which I shall try my best to impugn, please do so, and more fool me. The judge’s verbatims are indented. The Court begins with a succinct summary of the case and his ruling:

Plaintiffs Ariad Pharmaceuticals, Inc., Massachusetts Institute of Technology, the Whitehead Institute for Biomedical Research, and the President and Fellows of Harvard College (collectively “Ariad”), owners and assignees of U.S. Patent No. 6,410,516 (“the ‘516 patent”), “Nuclear Factors Associated With Transcriptional Regulation,” complain that defendant Eli Lilly & Co. (“Lilly”) infringed it. Following a fourteen-day trial in April 2006, a jury found that the four asserted claims were valid against anticipation, enablement and written description defenses, and that use of Lilly’s Evista and Xigris products infringed the patent. The jury awarded plaintiffs damages in excess of $65 million. The parties agreed that certain additional defenses were to be tried to the court. Lilly asserts that the ‘516 patent is invalid because it attempts to claim non-patentable subject matter under 35 U.S.C. § 101. Even if the patent is valid, Lilly argues (1) that it cannot be enforced because of inequitable conduct by plaintiffs during the prosecution of the patent, or in the alternative; (2) that plaintiffs are estopped from recovering for any infringement because they unreasonably delayed prosecution of the patent. Following a second trial focused on these issues, I find that: (1) the four claims asserted are patentable; (2) Lilly has not proven inequitable conduct during patent prosecution; and (3) Ariad did not unreasonably delay prosecution of the ‘516 patent. Accordingly, the jury award stands.

The Court describes the extent of the claims allowed by the ‘516 patent:

The allowed claims broadly cover a method of inhibiting the expression of a gene whose transcription is regulated by NF-κB in a eukaryotic cell.8 The only step required to practice the broadest patented method is to “reduc[e] NF-κB activity in the cell such that the expression of said gene is inhibited.”9 No particular agent or substance need be used, nor any particular step(s) performed, to reduce NF-κB activity in order to practice the invention.

Skipping to specifics of Lilly’s assertion that the ‘516 claims aren’t patentable (because they attempt to claim inventorship of a natural phenomenon):

In Lilly’s view, the ‘516 patent claims subject matter not allowed under 35 U.S.C. § 101 and is therefore invalid. Specifically, it contends that the claims encompass the NF-κB-IκB autoregulatory loop (the “Autoregulatory Loop”), a natural process in cells that operates to reduce the activity of NF-κB. Because natural phenomena are excluded from patentable subject matter, it argues that any ‘516 claims encompassing the Autoregulatory Loop are invalid and cannot be enforced. Ariad’s response is that the ‘516 patent does not claim a natural phenomenon because, inter alia, (1) the patent claims a process, subject matter specifically allowed by statute; and (2) the Autoregulatory Loop is only a theory and has not been proven to exist in human cells in vivo. (Docket # 398 ¶ 618). While not all processes are patentable, I find that Lilly has failed to show that the proposed model of the Autoregulatory Loop actually exists in nature and thus that a natural phenomenon is encompassed by the ‘516 patent’s claims.

Judge Zobel explains his reasoning for rejecting Lilly’s arguments about the naturalness of the Autoregulatory loop:

Ariad’s expert, Dr. Jeffrey Ravetch (“Ravetch”), objected to Latchman’s [Lilly’s] conclusion that the Autoregulatory Loop has been proven to exist in living cells. (Trial Tr. Day 3, 10:17-21.) He described the Autoregulatory Loop as a simplified model that poorly explains the experimental data. (Id. at 17:13-18:7.) In his opinion, there are multiple positive and negative regulatory loops operating in cells which, in the aggregate, create the results seen in experimental assays such as those conducted by Hoffman et al. Ravetch rejected the view that just one loop explains the activity of NF- κB in the cell. (Id. at 9:2-12.) The patent claims a reduction of NF-κB in cells, which Ravetch sees as encompassing the net effect of all events, both positive and negative, which occur when a stimulus influences the cell. (Trial Tr. Day 3, 16:2-21.)…Therefore, I credit Dr. Ravetch’s testimony that the Autoregulatory Loop is “an incomplete model . . . subject to a significant amount of ambiguity and inconsistency” (Trial Tr. Day 4, 50:2-6) and find that Lilly has failed to prove by clear and convincing evidence that the Autoregulatory Loop exists in living cells in a way that is encompassed by Ariad’s claims.

I’ll stop right there, as the decision so far contains enough head-scratching material to warrant some derision, er, analysis. According to the Court, Ariad has patented a theoretical process, not a natural phenomenon, which wouldn’t be patentable. Not all nonnatural processes are patentable, but this one is. The nonnatural process is inhibition of nuclear factor kappa B-regulated gene expression. This nonnatural process is not man-made, that is, it has not been manufactured by Ariad; rather, it is theoretical. As with any theoretical process, it may or may not exist in nature, but Ariad asserts that it does not exist in nature (i.e. it’s of their own conjuring), and Lilly has not proven convincingly that it exists in nature. As the burden of proof lies with Lilly, the Court has decided that this is indeed a patentable, theoretical process. Ariad’s inventorship of this gene regulation process gives it rights to earn royalties on sales of any products that influence this theoretical process.

Still with me? Let’s restate the situation. Ariad has claimed ownership of a theoretical process. They claim to have invented a process that they’ve imagined will work, and can therefore claim ownership to actual inventions that do work through this theoretical mechanism. Their theoretical process is really a simplification of a much more complicated natural process of gene regulation. In other words, their process can’t really account for observed natural phenomena; at best it’s incomplete, but it’s perhaps entirely fanciful. Restating, Ariad claims ownership of an incomplete or entirely incorrect, imaginary process that bears little resemblance to anything that might be observed in nature. Well, bully for them!! Give those gentlemen a patent by all means. Let’s see them sell their imaginary process.

Ah, but remember, according to this Court, Ariad need not sell this incomplete or entirely fanciful process they have imagined in order to make good money from it. Instead of having to pound the pavement with charts and expert opinions touting their imaginary, incomplete, perhaps entirely fanciful process, Ariad may charge others (like Lilly) a fee for using their imaginary, incomplete, possibly entirely fanciful process by, for instance, asking critically ill septic patients to buy their medicines, the mechanisms of action of which somehow (perhaps through some weird quantum entanglement between drug and gene) make use of this imaginary process. It matters not that Lilly’s drugs were invented before Ariad invented their imaginary, incomplete, possibly entirely fanciful process, Lilly still must pay Ariad; apparently Ariad’s process is so effective that, unlike all known natural processes, it acts on events that have happened earlier in time (even beyond quantum weirdness, eh?).

Okay, enough irony. I’ll gladly listen to rational arguments to the contrary, but this decision strikes me as utterly silly. I now hold out hope that the recent USPTO reexamination decision rejecting Ariad’s prior-allowed ‘516 claims stands and Lilly uses the disallowance to prevail in appellate court.

Source: Ariad Pharmaceuticals vs. Eli Lilly: When Will the Insanity End?