Tricky Obviousness: Pharmaceutical Case in 2013

Leo Pharmaceutical Products, Ltd. v. Rea, 2013 WL 4054937 

I was browsing through some previous cases where nonobviousness plays a critical role and found a compelling example written a couple days before my birthday last year by Dennis Crouch from the University of Missouri School of Law. This case highlights some very interesting qualities about nonobviousness but most of all stresses its prevalent and essential role in determining patentability.

Leo Pharmaceutical Products filed a patent claiming a "storage stable and non-aqueous" invention to treat skin conditions. Before this solution was developed, an existing and well known treatment was the combination of Vitamin-D and a corticosteroid, except no one had been able to manufacture its storage stable form due to sensitive pH requirements. Initially the Board deemed the patent invalid due to obviousness in prior art. On appeal, the Federal Circuit reversed its verdict.

The PTO decision was tricky and the case became a relatively important obviousness case in the patent world. Basically, the Board found the patent claims obvious due to three prior art references- someone skilled in this "art" in the pharmaceutical industry would have taken the existing combination of Vitamin D and corticosteroids and added a solvent to it to achieve storage stability. 

But why did the Federal Circuit reversed the Board's decision? While there is reasonable obviousness in design, the Board failed to accredit the patentee (Leo) for identifying the problem in the first place- that a stable form should be designed. The prior art did not recognize the problem and therefore never attempted to create a solution that solved the storage stability problems. 

The blog post then goes into more detail about Judge Rader's interpretation of old prior art's relation to obviousness in this case. But our key takeaway in this intriguing case is that its seems the patent was ultimately validated on the grounds of nonobviousness in functionality.

I would be interested in exploring whether discovering new functions for existing designs is a patentable area. I had brought this up previously in comments about the Myriad case whereby a genetics lab's patent claim was rejected- while they found a new way to diagnose breast cancer by isolating breast cancer genes, which had never been done before, the courts could not award them a patent. There is a fine line here, where nonobviousness is a key factor, between patenting natural phenomena (the isolated genes) and new methodology, which is what I perceive in the Leo vs Rea case. 

Want a patent? Not if it's obvious.

Just like any application, inventions must meet requirements- five, in fact- to be patentable.

Ask yourself:

1. Patentable Subject Matter: Is the invention patentable subject matter (a whole different story)?
2. Utility: Does it provide any utility? (think the not so useful Perpetual Motion Machine)
3. Novelty: Can the features of the invention be anticipated based on a previous product?
4. Can it be described with the particular language so that skilled professionals in the field can understand, create, and own the invention?

And a drumroll for...

5. Obviousness: is it obvious? 

Let's understand what this means. Even outside of the realm of the United States Code, it is difficult to objectively assess obviousness, which is critical to patentability. After reading a couple blogs online, I decided there are three ways I can phrase this, since they are often overly wordy.

1. If the differences between the invention seeking patenting and prior art are such that the invention would have been obvious at the time it was made to a person having ordinary skill in this art, the said invention is deemed obvious, which means...

2. An obvious invention is when several references knowledgeable about the field would look at your invention and consider it already known. A combination of their predictable and non-unique references and skills would create this invention. Let's look at an example...

3. Let's say you invented X+Y. Both X and Y are known in prior art. So if people skilled in X and Y looks at X+Y, they would consider the invention already known, therefore it is considered obvious.

Check out some examples in my next post.

Big Fish, Small fish: Improving Patent Reform

As my previous blog mentioned, a focus on the smallest companies may not create representative perspectives of the patent reform debate but it is worth focusing on small companies because they represent the majority of our PAE friends.

There are three ways we as a group had brainstormed and defended to reduce the harm of patent assertion in the patent market.

1) Small companies should decrease vulnerability as PAE targets by forming collective, industry association groups to set policies for the group in standard patent troll situations. By spreading information, risks and transaction costs, the return on trolling can be reduced.

2) Small companies tend to be targeted because they are USERS of technology, eg. wifi, digital scanners, innocently using widely available technology. Of course, since it appears that those innocently using technology are still targeted, Congress should adopt some limit on the liability of users under the "innocent user defense"

3) Small companies legitimize PAE patents by agreeing to royalty-based settlements.

Overall, we see a series of unique characteristics, i.e. popular PAE target, that characterize both big companies and small. I hope to learn more about examples anybody has in mind.

Big Fish, Small Fish: How Patent Demands Impact the Economy

In reading Colleen Chien's "Startups and Patent Trolls", I found some very interesting information about:

• how patent demands impact startups- the small fish in the sea
• the breakdown between large and small patent assertion entities (PAEs, or trolls), which pursue the suit against the defendant, i.e. corporation versus startup
• these patent demands' overall effect on the economy and looking ahead 

Chien studied over 200 tech startups, 40% of which received a patent demand. She found that small companies, especially startups, are more vulnerable to failure than large, well-established companies. By small, I notice that more than half of the defendants in Chien's study make under $10M a year.

Firstly, the problem lies in the fact that as a small company, it is harder to absorb a PAE demand because it causes significant operational impact, business strategy, and losses in valuation relative to the startup's size.

Secondly, because small companies are focused on growing and building the business, they lack the time and resource to monetize their intellectual property. Unfortunately, patent sales are motivated in times of distress instead, like a "firesale" with the proceeds returned to creditors and investors instead of the company itself.

In addressing the issue, reforms that focus on startups and small companies have not been most successful to reduce the harm of patent assertion. Find out how in Part II.

Take a peak at the original paper.