Supreme Court overrules Court of Appeal on validity of Neutrokine patent (full update)

Practical Law UK Legal Update Case Report 6-511-0769 (Approx. 7 pages)

Supreme Court overrules Court of Appeal on validity of Neutrokine patent (full update)

by PLC IPIT & Communications

Background

Article 52(1) of the European Patent Convention (EPC) provides that:

"European patents shall be granted for any inventions, in all fields of technology, provided that they are new, involve an inventive step and are susceptible of industrial application. ..."

Article 57 of the EPC defines industrial application. It provides that:

"An invention shall be considered as susceptible of industrial application if it can be made or used in any kind of industry, including agriculture."

The patentability of biological material in the EU is governed by Directive 98/44/EC on the protection of biotechnological inventions (Biotech Directive), which confirms that, in principle, biotechnology inventions are patentable, and also addresses the question of industrial applicability. Recitals 23 and 24 of the Directive read:

"(23) ... a mere DNA sequence without indication of a function does not contain any technical information and is therefore not a patentable invention;

(24) ... in order to comply with the industrial application criterion it is necessary in cases where a sequence or partial sequence of a gene is used to produce a protein or part of a protein, to specify which protein or part of a protein is produced or what function it performs;"

Article 5 of the Biotech Directive provides that:

"1) The human body, at the various stages of its formation and development, and the simple discovery of one of its elements, including the sequence or partial sequence of a gene, cannot constitute patentable inventions.

2) An element isolated from the human body or otherwise produced by means of a technical process, including the sequence or partial sequence of a gene, may constitute a patentable invention, even if the structure of that element is identical to that of a natural element.

3) The industrial application of a sequence or partial sequence of a gene must be disclosed in the patent application."

Facts

Eli Lilly and Company (Lilly) brought an action to revoke European Patent (UK) 0,939,804 (the Patent) held by Human Genome Sciences Inc (HGS) on the grounds, among others, of lack of industrial applicability, insufficiency and obviousness. HGS applied to amend the Patent. The Patent disclosed the nucleotide and amino-acid sequence of a novel member, called Neutrokine-α, of a family of proteins known as "the TNF ligand superfamily" (TNF family). These are cytokines, proteins which act as inter-cellular mediators in inflammation and immune responses. HGS had discovered Neutrokine-α using bioinformatics and filed the Patent shortly afterwards, before any practical use had been identified. Instead, the Patent identified the protein as a member of the TNF family and included a long list of activities and uses based solely upon what was known about other members of the family. Kitchin J held that the entire patent was invalid for lack of industrial applicability and also for obviousness as there was no contribution to the art, while the claims to pharmaceutical and diagnostic compositions were invalid for insufficiency (see, Legal update, High Court finds biotechnology patent invalid as claimed invention not susceptible of industrial application).

Before this decision, in opposition proceedings in the European Patent Office (EPO) brought by Lilly, the opposition division had revoked the European patent on the ground that the claimed invention lacked any inventive step. Both decisions were appealed.

The Court of Appeal requested the EPO appeals board to accelerate its proceedings, and arrangements were made for the EPO appeal to be heard before the hearing in the Court of Appeal (see Legal update, Court of Appeal delays appeal hearing until EPO appeal completed). The EPO Technical Board of Appeal (TBA) allowed the appeal and held the European patent as amended in the proceedings to be valid (see Legal update, EPO appeal board finds Neutrokine patent valid).

The Court of Appeal then heard the appeal and decided to uphold Kitchin J's decision rather than following the TBA (see Legal update, Court of Appeal disagrees with EPO over validity of Neutrokine patent). HGS were given leave to appeal to the Supreme Court and Lilly cross-appealed on the insufficiency issue.

Decision

The Supreme Court unanimously decided to allow the appeal and dismiss the cross-appeal, for the reasons given in the lead judgment of Lord Neuberger MR, which are summarised below.

The case was remitted to the Court of Appeal to deal with the outstanding issues.

The issue

The central issue both in the High Court proceedings and in the opposition proceedings before the EPO was whether, in the light of the common general knowledge at the priority date, by its disclosure the Patent satisfied Articles 52 and 57 of the EPC (jointly referred to as Article 57) so as to enable HGS to claim the encoding gene for Neutrokine-α.

Interpretation of Article 57 – other than EPO jurisprudence

The Biotech Directive

Although Article 5 of the Biotech Directive had to be considered, it was common ground that it could not alter the meaning of Article 57 (both because it came into force after 1996, and because the EPC extended to countries outside the EU). While that might not prevent that directive being of some assistance in a case where Article 57 was in play in relation to a patent for biological material, it was not helpful in the present case as it begged the central question, namely how far an applicant for a patent for biological material had to go in disclosing industrial application.

UK and US case law

So far as UK case law was concerned, Kitchin J was correct in saying that there was very little authority on the topic of industrial applicability. There was rather more US case law, but, although the analyses in US cases deserved great respect, there were obvious risks in relying on US jurisprudence when considering the precise nature of the requirements of Article 57 in relation to a claim for a patent for biological material under the EPC. There were significant and fairly fundamental differences between US patent law and the EPC, including the different wording used in Articles 52 and 57 of the EPC and the equivalent US provision.

Interpretation of Article 57 − EPO jurisprudence

Both parties acknowledged that it was in the jurisprudence of the EPO that the applicable principles were to be found. If the EPO decided that a patent was valid, then it was still open to a national court to decide that the patent was invalid within its territorial jurisdiction. In all cases, however, the EPO and each national court were applying the principles contained in the EPC. It was plainly appropriate in principle, and highly desirable in practice, that all these tribunals interpreted the provisions of the EPC in the same way.

National application of EPO jurisprudence

In a number of recent decisions of the House of Lords, attention had been drawn to the importance of UK patent law aligning itself, so far as possible, with the jurisprudence of the EPO (see Legal update, House of Lords finds taxol-coated stent patent valid). However, the EPO (or another national court) and a national court might come to different conclusions because they had different evidence or arguments, or because they assessed the same competing arguments and factual or expert evidence differently, or, particularly in a borderline case, because they formed different judgments on the same view of the expert and factual evidence. Further, while national courts ought normally to follow the established jurisprudence of the EPO, that did not mean the reasoning in each decision of the TBA was binding. Sometimes a TBA decision may be considered by a national court to take the law in an inappropriate direction, misapply previous EPO jurisprudence, or fail to take a relevant argument into account. While consistency of approach was important, there had to be room for dialogue between a national court and the EPO (as well as between national courts themselves). Nonetheless, where the TBA had adopted a consistent approach to an issue in a number of decisions, it would require very unusual facts to justify a national court not following that approach.

Public policy

There was also a public policy requirement for clarity and consistency, as set out by the intervenor, the BioIndustry Association. As a great deal of research and development was needed after the discovery of a naturally occurring molecule before it could have actual therapeutic benefit, if patenting had to wait until the end of that period there would be a real risk that a competitor might file first. Further, funding was often dependent on patents having been applied for. However, this had to be balanced by the need to allow useful research to proceed without being hampered by patents giving no more than vague indications of possible use.

EPO principles for interpreting Article 57

After analysing the cases, the EPO approach to the requirements of Article 57 in relation to biological material could be summarised as follows (with case references):

The general principles:

The patent had to disclose "a practical application" and "some profitable use" for the claimed substance, so that the ensuing monopoly "can be expected [to lead to] some … commercial benefit" (para 4, T 0870/04, paras 2 and 4, T 0898/05).
A “concrete benefit”, namely the invention’s "use … in industrial practice" had to be “derivable directly from the description”, coupled with common general knowledge (para 6, T 0898/05 and para 15, T 0604/04).
A merely "speculative" use would not suffice, so "a vague and speculative indication of possible objectives that might or might not be achievable" would not do (para 21, T 0870/04 and paras 6 and 21, T 0898/05).
The patent and common general knowledge had to enable the skilled person "to reproduce" or "exploit" the claimed invention without "undue burden", or having to carry out "a research programme" (para 22, T 0604/04 and para 6, T 0898/05).
Where a patent disclosed a new protein and its encoding gene:
The patent, when taken with common general knowledge, had to demonstrate "a real as opposed to a purely theoretical possibility of exploitation" (para 15, T 0604/04, and paras 6, 22 and 31, T 0898/05).
Merely identifying the structure of a protein, without attributing to it a "clear role", or "suggest[ing]" any "practical use" for it, or suggesting "a vague and speculative indication of possible objectives that might be achieved", was not enough (paras 6-7, 11, and 21, T 0870/04 and paras 7, 10 and 31, T 0898/05).
The absence of any experimental or wet lab evidence of activity of the claimed protein was not fatal (paras 21 and 31, T 0898/05, and para 5, T 1452/06).
A "plausible" or "reasonably credible" claimed use, or an "educated guess", could suffice (paras 6 and 11, T 1329/04, para 6, T 0640/04, paras 8, 21, 27 and 31, T 0898/05, para 6, T 1452/06, and para 25, T 1165/06).
Such plausibility could be assisted by being confirmed by "later evidence", although later evidence on its own would not do (para 12, T 1329/04, para 24, T 0898/05, para 6, T 1452/06, para 25, T 1165/06).
The requirements of a plausible and specific possibility of exploitation could be at the biochemical, the cellular or the biological level (paras 29-30, T 0898/05).
Where the protein was said to be a family or superfamily member:
If all known members had a "role in the proliferation, differentiation and/or activation of immune cells" or "function in controlling physiology, development and differentiation of mammalian cells", assigning a similar role to the protein might suffice (para 13, T 1329/04, para 21, T 0898/05, paras 14 and 16, T 1165/06, and para 12, T 0870/04).
So "the problem to be solved" in such a case could be "isolating a further member of the [family]" (para 4, T 1329/04, para 22, T 0604/04, paras 14 and 16, T 1165/06).
If the disclosure was "important to the pharmaceutical industry", the disclosure of the sequences of the protein and its gene might suffice, even though its role had not "been clearly defined" (para 18, T 0604/04)
The position might be different if there was evidence, either in the patent or elsewhere, which called the claimed role or membership of the family into question (para 24, T 0898/05 and para 5, T 1452/06).
The position might also be different if the known members had different activities, although they need not always be "precisely interchangeable in terms of their biological action", and it might be acceptable if "most" of them had a common role (para 12, T 0870/04, para 16 T 0604/04, and para 27, T 0898/05).

Did the UK courts follow the EPO jurisprudence?

The question was whether Kitchin J was right, or at least entitled, to conclude that the inferences which would have been drawn from the teaching of the Patent in 1996 would not have been enough to satisfy Article 57. The determination of that issue ultimately involved focusing on his conclusion that the fact that the description in the Patent, even taken together with knowledge which should be attributed to its addressee, neither revealed how Neutrokine-α could be used to solve any particular problem nor identified any disease or condition which it could be used to diagnose or treat, and that this was fatal to the Patent’s validity.

At first it seemed that this was a conclusion to which Kitchin J, as the trial judge who had heard a great deal of evidence which he had impressively and cogently analysed, was entitled to come, and with which it would be inappropriate to interfere. It also seemed to be a conclusion which could be said to accord with good sense. However, the basis upon which he decided the issue, and which was upheld by the Court of Appeal, was not consistent with the above principles of the EPO jurisprudence. Under these principles, the disclosure of the existence and structure of Neutrokine-α and its gene sequence, and its membership of the TNF family, should have been sufficient, taking into account the common general knowledge, to satisfy the requirements of Article 57.

Other arguments

Lilly's argument that the claim to a new member of a superfamily was not good enough, because the known members of the family had different activities, was rejected because it did not apply in a case where all known members of the superfamily also manifested to a significant degree common activities.

The fact that the Patent was drafted in a prolix and general manner was not relevant because the evidence of Lilly's own expert, the judge and the TBA all showed that the notional skilled reader would not have been diverted from what they would otherwise have understood the Patent to be revealing, in the light of what was appreciated about the properties of the known members of the TNF family.

Kitchin J had also found the Patent to be invalid for insufficiency. Jacob LJ, at the end of his judgment, stated that he suspected that the insufficiency argument was closely related to Article 57. This was correct. If Claim 1 was simply to the encoding gene of Neutrokine-α, then, subject to any other points which had yet to be decided by the Court of Appeal, the reason why the trial judge and the Court of Appeal were wrong to hold that Article 57 was not satisfied was the same reason for holding the claim to be sufficient.

Lord Hope's judgment

Lord Hope, in a concurring judgment, analysed the judgments of Kitchin J and of Jacob LJ and pointed out where the principles that they had applied to this case differed from those applied by the TBA in the opposition proceedings against the Patent and other related cases.

Comment

This is a very important decision for the biotechnology industry. Lord Neuberger MR's principles, extracted from the EPO TBA decisions, give guidance as to when there is sufficient evidence of the utility of a newly isolated naturally occurring molecule to be able to file a patent application that meets the requirements of Article 57. However, the Supreme Court did stress that this determination was very fact based, so there cannot be hard and fast rules.

This decision is obviously good for small biotech businesses that rely on outside funding to carry on their research and development, as funders always look for intellectual property protection of the product they are helping to commercialise, preferably in the form of a comprehensive portfolio of patents or patent applications. There may be concern in academic research communities that wider patent protection may affect their fundamental research, but the requirement that the specified uses of the subject of the patent must be more than just speculation should give some protection.

Case

Human Genome Sciences Inc v Eli Lilly and Co [2011] UKSC 51, 2 November 2011 (Lords Hope, Walker, Neuberger MR, Clarke and Collins; Simon Thorley QC and Michael Tappin QC (instructed by Powell Gilbert LLP) for HGS, and Andrew Waugh QC and Thomas Mitcheson (instructed by Field Fisher Waterhouse LLP) for Lilly.

Supreme Court overrules Court of Appeal on validity of Neutrokine patent (full update) | Practical Law