Objective Indicia of Non-Obviousness Must be Tied to Inventive Step

by Dennis Crouch

This post follows-up on my recent essay on Novartis v. Torrent Pharma.  If you recall, that decision by Judge Chen affirmed an IPR trial decision cancelling the claims of the Novartis patent as obvious.

Generics Successful at Invalidating Novartis Gilenya Patent

I did not previously discuss the portion of the case focusing on Novartis’ objective evidence of non-obviousness.  Novartis argued that its drug (1) met a long-felt but unsolved need, (2) received substantial industry praise, and (3) enjoyed commercial success.  The Supreme Court has accepted this type of evidence as relevant based upon the theory that an obvious invention (1) would have already been invented; (2) would not b praised by the industry as groundbreaking; and (3) would have its commercial success undermined by the similar prior art.

In recent years, however, the courts have also pushed a strong nexus doctrine — requiring a nexus or causal relationship between the objective evidence and the claimed invention. In other words, the patentee must show that it was the invention (as claimed) that led to the commercial success and not something else such as marketing. Because this evidence is used to rebut a prima facie case of obviousness, the burden shifts to the patentee to prove the nexus, although at times the court will presume a nexus.

Here, the court explains that the nexus requirement actually goes an important step further.  The secondary indicia of nonobviousness must be tied to the inventive step itself – i.e., what was claimed an not known in the art.

For objective indicia evidence to be accorded substantial weight, we require that a nexus must exist “between the evidence and the merits of the claimed invention.” Wyers v. Master Lock Co., 616 F.3d 1231 (Fed. Cir. 2010). “Where the offered secondary consideration actually results from something other than what is both claimed and novel in the claim, there is no nexus to the merits of the claimed invention.” In re Kao, 639 F.3d 1057 (Fed. Cir. 2011). . . In evaluating whether the requisite nexus exists, the identified objective indicia must be directed to what was not known in the prior art—including patents and publications—which may well be the novel combination or arrangement of known individual elements.

FDA Approval: Moving back to the facts of Novartis, the patentee argued that its commercial success was based upon “Gilenya being the first commercially-available solid oral multiple sclerosis treatment.”  Although that statement is true, the court found the commercial-availability focus misplaced for a non-obviousness argument.  Rather than first-commercial-availability, the focus should be based upon first-invention or disclosure.

The fact that Gilenya was the first to receive FDA approval for commercial marketing does not overcome the fact that solid multiple sclerosis compositions were already known.

With that framework, the court held that the “proffered evidence is not probative of the nonobviousness inquiry.”

[The Decision]

Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

148 thoughts on “Objective Indicia of Non-Obviousness Must be Tied to Inventive Step

  1. With apologies to Greg, and general readers attempting to follow along, some replies due to Greg are bunched here.

    The time listed is the time stamp of the post from Greg to which I am responding, and reflects a “going straight down the page” as opposed to an attempt at in time sequence – I attempt to minimize any “out of context” with the generous quotes of Greg’s statements. Not perfect, mind you, but the thread is becoming a little long in the tooth, and the “tripwire” of “moderation” is in effect, so…

    April 16, 2017 at 10:09 pm
    Er, o.k., but the statute giveth and the statute taketh away. IPRs are just as much a creation of statute—duly effected by bicameral assent and presentment to the lawfully elected and sworn executive—as is the presumption of validity.

    Except for the fact that timing is involved and that later legislation may run afoul of OTHER Constitutional protections – as I have point out and as you have continued to neglect.

    I gather Invention Rights simply thinks that the statute is insane (“It is insane to set the bar as low as the statute allows…”), which is fair enough. It seems passing strange, however, to defend IR’s call for the USPTO to “make a decision on patentability under 103 and stick to it,” by recourse to the statute. It is the very statute that says that the system is not supposed to run as IR would have it to run.

    A fallacy of equating any one part of the statute as having an equal validity under the law as any other part. The fallacy comes from the plain fact that a later change in the law to something that earlier has inured Constitutional protections may very well be improper.

    Incidentally, this is not really germane to anon’s remarks, but while I am thinking of the subject of the statute and the presumption of validity, I heard the craziest thing the other day. I was listening to the oral arguments in EmeraChem v. Volkswagen, and I heard Judge Chen say that Congress did away with the presumption of validity in IPRs. This appears to be a common misunderstanding, but I assure you, it is not true.

    The statement here, while appearing to be educational, only rises to be misleading, as the difference in levels of the presumption of validity are not addressed, and in fact, are made to seem immaterial. Some of the best L I E S are merely half-truths, and this appears to be one of such.

    April 17, 2017 at 12:26 pm
    I think that i4i is one of the few recent SCotUS cases that the Court got right, but I do not see how it helps your argument here. The i4i Court held that “Congress… codif[ied] the common-law presumption of patent validity and, implicitly, the heightened standard of proof attached to it,” (emphasis added) Microsoft Corp. v. i4i Ltd., 131 S. Ct. 2238, 2249 (2011). In other words, the reason invalidity must be proven by clear & convincing evidence is because that is the implicit requirement of the statute. However, where the statute elsewhere makes explicit that only a preponderance of the evidence is required, the logic and rule of i4i simply ceases to apply, so it is useless to appeal to the authority of i4i on this point.

    Once again – you ignore the fact that protections once created, cannot be merely wiped away – even by the branch of the government with proper authority to write the statutory law that is patent law. The fallacy of “both in the statute” continues…

    As you already know, I really cannot agree with you here. Nothing changes vis-à-vis the evidentiary standard for invalidity when the PTAB grants an IPR petition.

    Your agreement, or lack thereof – matters not at all – as you were informed previously. As to the “nothing changes” this is so patentably incorrect as to beggar the imagination as to why you put it forth.

    Even if we imagine that such a “stick” was ever part of a patentee’s “bundle,” it is not a “taking” to remove a single stick from the bundle. Andrus v. Allard, 444 U.S. 51, 66 (1979) (“[W]here an owner possesses a full ‘bundle’ of property rights, the destruction of one ‘strand’ of the bundle is not a taking, because the aggregate must be viewed in its entirety”). It could hardly be otherwise. After all, if your municipality zones your neighborhood as “residential,” that takes sticks from your bundle, and yet the municipality need not pay you for dispossessing you of your right to open a feed lot in your backyard. Penn Central Transp. Co. v. New York City, 438 U.S. 104, 147 (1978) (“While zoning at times reduces individual property values, the burden is shared relatively evenly and it is reasonable to conclude that on the whole an individual who is harmed by one aspect of the zoning will be benefited by another,” italics in original). IPRs are, in this respect, much like zoning. Any given patent owner’s property might be diminished by the existence of an IPR scheme, but the patent system as a whole is improved, and this aggregate benefit makes it not a taking.

    This is a bit of a twist here, where YOU make a proposition, and then turn around and demand that I give evidence otherwise (all the while you clench tight your eyes to the IPR “death rates”).

    You further merely assert that “the patent system as a whole is improved” and offer zero proof or evidence for this statement.

    April 17, 2017 at 7:40 pm
    Yes. That is what I am saying. In fact, I will go one pace further and say that the value of patents in the aggregate is enhanced by IPRs.

    Again – mere assertion and no proof (or evidence – quite in fact, ample evidence to the opposite has been posted, of which you merely do not agree and simply dismiss without more)….

    April 17, 2017 at 11:57 am
    It is in the nature of an organization to arrange itself to maximize revenues.” (remarking on a drawback of the PTAB financial-related structure)

    As I have previously point out to Ned, in the administrative law sense, the USPTO’s charter is one of the weakest as to the separation of the political (the Executive Branch) and the semi-judicial. For this reason alone, the deference provided to any of the semi-judicial edicts of the PTAB is suspect – and rightly so.

    April 18, 2017 at 11:55 am
    Mostly because of the expense. It is much less expensive and much less time consuming to litigate most questions of validity in front of an administrative tribunal like the PTAB than in front of an Art. III court. A person who has claimed a patent right that is not legally permissible (for novelty and/or obviousness reasons) has imposed costs on the relevant industries and market participants, and it is no fault of those market participants that the wrongful patentee has done so.

    Guilty until proven innocent – and the OPPOSITE of the level of presumption for a granted property right…. This is perhaps one of your most egregious overstepping of the protections afforded property under different Constitutional protections. Further, your attempts to place this on convenience of “expense” misses the mark –and badly so. This is nothing but pro-efficient infringer Kool-Aid.

    The problem, you see, is that both sides have legitimate rights here,

    There you go again, reducing the legislated LEVEL of presumption of validity of the property right that is a granted patent to vapor.

    April 17, 2017 at 12:32 pm
    As noted above, “presumption” is just an other word for “party X has the evidentiary burden.” If the PTAB requires the challenger to prove unpatentability, then that is as much as to say that the PTAB operates with a presumption of validity in place.

    And again – the fallacy of “a” presumption is the same as “any” presumption….

    If not, then it is simply incoherent to argue that the PTAB does not apply a presumption of validity.

    …and again…

    April 17, 2017 at 1:22 pm
    And I repeat: “The word ‘presumption’ properly used refers only to a device for allocating the production burden.”

    …and again…

    What you are describing is not a presumption, but rather an evidentiary standard. I do not think it a particularly worthy standard, but that is really beside the point that I am making. “Presumption” has a very particular meaning in the law, and at the point where one is talking about the “presumption” including elements of Examiner error, one is simply misusing the word.
    …half truth… – and simply wrong on the misuse, as the level of presumption is indeed critical here.

    April 18, 2017 at 9:32 am
    ”What am I missing?

    The levels, and the legal point that such simply are not interchangeable as your views require…(as should be amply clear by now)

    1. [M]ere assertion [“that the value of patents in the aggregate is enhanced by IPRs,”] and no proof…

      This is a fair point. I quite definitely did assert that IPRs improve the functioning of the system overall without providing either explanation or evidence for that assertion. Please allow me to rectify the error.

      My point is that invalid claims consume judicial resources necessary to make the patent system function well, to no good end. If a claim is not legally entitled to a patent, then all resources poured into asserting it and defending against its assertion are ultimately wasted resources. Therefore, both the patentee and the defendant have an interest in seeing that invalid claims are not asserted, because the outcome of such an assertion is pure waste. IPRs can provide* a lower cost venue in which to clear away improvidently granted claims, thus working to the advantage of both plaintiff and defendant in ensuring that even more resources are not wasted in district court.

      * I would like to emphasize the can here. It is an empirical question whether IPRs actually do save any resources. Indeed, to date the CAFC has implemented the IPR statute in a manner to maximize waste. If the promise of IPRs turns out not to be realized in practice, then I will have to change my opinion of IPRs at that time, when the data are in. Right now, I am taking an optimistic wait-&-see approach.

      [T]he USPTO’s charter is one of the weakest as to the separation of the political (the Executive Branch) and the semi-judicial. For this reason alone, the deference provided to any of the semi-judicial edicts of the PTAB is suspect – and rightly so.

      We are definitely in agreement on this point. I do not believe that the PTO or the PTAB is entitled to any deference on its interpretation or actualization of the IPR statutes.

      A person who has claimed a patent right that is not legally permissible (for novelty and/or obviousness reasons) has imposed costs on the relevant industries and market participants, and it is no fault of those market participants that the wrongful patentee has done so.

      Guilty until proven innocent – and the OPPOSITE of the level of presumption for a granted property right.

      Huh? What do you mean guilty until proven innocent? I have been loudly insisting through all of this thread that the challenger bears the burden of proving unpatentability. The patentee is presumed to be rightfully entitled to the claims that have been granted. No claims are canceled unless and until the challenger proves that the patentee is not rightfully entitled. I have not called for anything different.

      There you go again, reducing the legislated LEVEL of presumption of validity of the property right that is a granted patent to vapor.

      Er, I have not reduced any level of presumption, nor could I if I wanted. It is Congress (you know, the governmental branch empowered to decide such matters) that specified what levels of presumption attach to issued patents.

      I care emphatically that there be a presumption of validity, but I am totally indifferent at what “level” it be set, mostly because I am skeptical (as an empirical matter) that the “level” actually makes a difference in practice. I would be perfectly content if the Congress were to amend §316 to require clear-&-convincing evidence, or if the Congress were to amend §282 to require only a preponderance.

      1. You seem to miss the point that the difference is very real in the legal sense (with your fixation on “empirical.”)

        You continue to mistake “a” presumption with “any” presumption.

        This is a legal error – regardless of any “empirical” collaboration.

        Further, the notion of “guilty until proven innocent” goes directly to your lead in statement of “My point is that invalid claims consume judicial resources necessary to make the patent system function well, to no good end.

        A patent grant means something – and that something is exactly what you are turning a blind eye to (with your own presumption that claims are invalid and thus wasteful of the very effort needed to ascertain that they are invalid). You continue to assume your own conclusion and then turn around and infuse that assumption into the premise of your beliefs – in clear legal error.

        Again, and again and again and…

        1. … your own presumption that claims are invalid and thus wasteful of the very effort needed to ascertain that they are invalid…

          I do not subscribe to such a presumption. I defy you to point to anything I have said here or elsewhere that could be reasonably read to imply as much. I said that invalid claims are wasteful. I did not say that we should begin from the presumption that any given claim is invalid. We should always begin from the presumption that any proffered claim (whether pre-grant or post-grant) is valid and patentable. It could hardly be otherwise.

          1. Your statement of “invalid claims are wasteful” is in and of itself the item that I mention. How do you know that they are wasteful if you are only presupposing that they are invalid? How are you coming to the conclusion that the granted claims are in fact invalid if you are calling “wasteful” the legally necessary juridical action to make that finding?

            You assume the very conclusion that serves as your beginning point – and then to top it off, you declare “but I am totally indifferent at what “level” it be set,” when that level is at the crux of the issue (see again, i4i).

            1. How do you know that [invalid claims] are wasteful if you are only presupposing that they are invalid?

              Huh? I am not talking about any particular claims. I am not saying that I can know that (e.g.) Claim 10 of US 7,841,_ _ _ is invalid without holding a hearing on the matter. We definitely need a trial to determine validity, and that is precisely what IPRs provide.

              If a given claim is invalid, then it will be a gigantic waste of everyone’s time and money if it is asserted. Therefore, it makes good sense to provide a forum where exactly the question of its validity can be litigated quickly and inexpensively before the more expensive aspects of Art. III litigation are undertaken. That way, if the claims are shown to be invalid, no one need to waste funds debating the irrelevant propositions of infringement or damages.

              Obviously, however, right up until the challenger has brought forth evidence to demonstrate invalidity, we should all proceed on the belief that the claims are valid.

        2. (btw, I do appreciate your attention, even as I think that you are mistaken in your legal position on this issue – that may not be coming across, so I thought that I would expressly note such)

          1. I do appreciate your attention, even as I think that you are mistaken in your legal position on this issue…

            And likewise.

      2. “Therefore, both the patentee and the defendant have an interest in seeing that invalid claims are not asserted, because the outcome of such an assertion is pure waste. IPRs can provide* a lower cost venue in which to clear away improvidently granted claims, thus working to the advantage of both plaintiff and defendant in ensuring that even more resources are not wasted in district court.”

        Odd, then, is it not, that patent owners cannot bring IPRs.

        1. Two points:

          (1) Patent owners can file for ex parte re-exam and/or reissue if they think that there is some infirmity that should be cleared up prior to enforcement.

          (2) This side of the eschaton, you are never going to contrive a perfect system (for patents or anything else). How the heck could the Congress be expected to write a law saying that patent owners are permitted to dragoon a potential litigation target into the PTAB to litigate validity (on an 18 month maximum timeline) of a claim of which the would be “defendant” may never have heard? This would never survive XIV amendment challenge, for want of procedural fairness (personal jursidiction?).

        2. Greg, the patentee already had reissues to reexamine patents that were defective.

          If IPRs were so “good” for patent owners, one would think them clamoring for a fix that would allow them to haul an infringer into the PTO if they raised validity in court. But no, one does not see that happening, does one.

          The people who interests you claim to represent do no agree with you on this point, to say the very least.

          1. The people who interests you claim to represent do no agree with you on this point, to say the very least.

            You cannot possibly pretend to know this. The only general survey of patent owners on this point finds that patent owners generally like IPRs (although I regard that survey’s methos as very dubious). I am unaware of any surveys that purport to find that patent owners hate IPRs.

            Basically, we have no data on this question. To weakly paraphrase Wittgenstein, whereof one has no data, thereof one must be silent.

            1. patent owners….?

              I notice the AIPLA association (that’s directly something that Ned has already expressed as a “sell-out,” and NOT in line with actual patent owners).

                1. Greg, there are patent owners who do not need patents, and there are patent owners who need patents.

                  Major businesses that have major competitors in their space so that their respective products probably used the patents of the other routinely cross license. Apple has found out, with some difficulty, that patents cannot control who products, and that if you sue your competitor, you will be sued back in turn so that it turns into a lose-lose situation. The big boys simply build portfolios for cross licensing purposes.

                  Then there are drug companies, universities and startups, all who need patents. Ask any of these, and you will get a decidedly difference answer about IPRs.

                2. Ned, about half my clients are pharma. Of the other half that are not pharma, more than a few are universities. This is nothing like a scientifically valid survey (which is the only way that we can know what patent owners think, and which we do not have), but if we are simply trading anecdotes, I have to say that my experience is not one of clients hating IPRs.

                  The university clients are largely indifferent to IPRs, and with good reason. It is just not a point about which they spend much time thinking.

                  The pharma clients do not like being dragged into IPRs, but this does not happen very often (mostly because most pharma companies pay the money upfront to do a patent right, leaving comparatively little room for IPR challenge). We were all quite concerned when Kyle Bass launched his wide shotgun attack on branded pharma, but his laughable lack of success has left most of us feeling that IPRs are comparatively little threat.

                  Meanwhile, even branded pharma needs FTO. I have had several clients who have been very pleased to have IPRs as an arrow in their quiver for that purpose.

                  My own experiences in client feedback may or may not be representative (this is, necessarily, as true of your own personal experiences), but I have not heard a lot of teeth grinding from my clients about IPRs.

  2. MM brosef did your mainstream media inform you that lefties lost the battle of Berkeley on their home terf in a battle they started?

  3. Even if the inventor was first to invent the combination that wasn’t what was in the declaration in the patent file. It’s sort of a technicality and can be corrected in other applications in related patents.

    1. Being first to invent (or file) does not matter to the hindsight second guessers. They just say it was obvious because they would have thought of that. The only declaration that matters is the expert hired by the petitioner to say he would have thought of that.

  4. Once again, an issued patent is being picked apart from the peanut gallery. Both pieces of prior art were before the examiner during prosecution. The examiner himself found and cited the Sakai reference. The Chiba reference was cited and incorporated by the applicant in the specification. There was no hidden prior art here.

    The anticipation challenges failed, so the subject matter is novel. The applicant and the examiner did not consider it obvious to combine Sakai and Chiba. This is a judgment call. No one can go back in time to 2008 before the Novartis disclosure to see if they could have thought of it without the teachings of the inventors. The entire exercise is hindsight, subjective, second guessing.

    Yet, the PTAB assumes this omniscience. Incredibly, the USPTO overrules itself more often than not on this hindsight analysis. Why do they not defer to the examiner and respect his judgment? Every single patent ever issued is a combination of pieces of prior art. A case can always be made that it was obvious to combine 2, 3, or 4 references to arrive at the claimed invention. Yet the inventor was STILL FIRST! If he WAS FIRST and was COMMERCIALLY SUCCESSFUL, then WHY DIDN’T SOMEONE ELSE DO IT BEFORE 2008? Of course the hubris of the infringer and certain PTAB “judges” will never be overcome – “no nexus” they say, it was probably the marketing.

    The examiner is trained and qualified to render judgment of obviousness, he can not be overturned so easily on a subjective inquiry. There must be a clear error type of standard here. There must be some margin after issuance on this type of judgment call. It is not black and white, and never will be. TSM, KSR, objective indicia, nexus – all the efforts to make it an objective analysis necessarily fail because the teaching of the inventor infects every analysis.

    The USPTO must make a decision on patentability under 103 and stick to it. The USPTO 100% controls the threshold for institution, why do they let this go on?
    At the very least require a showing of an error in the examination or a substantial new question of patentability. It is insane to set the bar as low as the statute allows at reasonable likelihood. Complete schizophrenia by the USPTO, complete disregard for the work of the examining corp, complete fraud on the applicant to grant and revoke a patent on the same record. Under the current rules, every single patent ever issued is likely to be cancelled in an IPR.

    1. The USPTO must make a decision on patentability under 103 and stick to it.

      The USPTO is a collection of humans, with varying degrees of experience and all of them are capable of making mistakes.

      Under the current rules, every single patent ever issued is likely to be cancelled in an IPR.

      Wrong.

      1. The USPTO is a collection of humans, with varying degrees of experience and all of them are capable of making mistakes.

        That’s a nice truISM and has nothing to do with the STATUTORY presumption of validity nor the reason behind that statutory presumption.

        Nor does it have anything to do (really) with the point being expressed.

        In fact, “The [______] is a collection of humans, with varying degrees of experience and all of them are capable of making mistakes.” can be said of ANY and EVERY collection of humans.

        Even a collection of R0yal N1ne…

        But you already knew that, eh Malcolm?

        1. That’s a nice truISM and has nothing to do with the STATUTORY presumption of validity nor the reason behind that statutory presumption.

          Er, o.k., but the statute giveth and the statute taketh away. IPRs are just as much a creation of statute—duly effected by bicameral assent and presentment to the lawfully elected and sworn executive—as is the presumption of validity.

          I gather Invention Rights simply thinks that the statute is insane (“It is insane to set the bar as low as the statute allows…”), which is fair enough. It seems passing strange, however, to defend IR’s call for the USPTO to “make a decision on patentability under 103 and stick to it,” by recourse to the statute. It is the very statute that says that the system is not supposed to run as IR would have it to run.

          Incidentally, this is not really germane to anon’s remarks, but while I am thinking of the subject of the statute and the presumption of validity, I heard the craziest thing the other day. I was listening to the oral arguments in EmeraChem v. Volkswagen, and I heard Judge Chen say that Congress did away with the presumption of validity in IPRs. This appears to be a common misunderstanding, but I assure you, it is not true.

          35 U.S.C. §316(e) says quite clearly that “[i]n an inter partes review instituted under this chapter, the petitioner shall have the burden of proving a proposition of unpatentability by a preponderance of the evidence.” In Federal law, a presumption is merely a mechanism by which we assign an evidentiary burden. Texas Dept. of Comm. Affairs v. Burdine, 450 U.S. 248, 254 n.8 (1981) (“The word ‘presumption’ properly used refers only to a device for allocating the production burden”). Therefore, if the statute assigns the burden to the challenger (as it does), then that means that the statute creates a presumption of validity, even in the IPR proceeding. It is simply not true that the statute—or the PTAB—has done away with the presumption of validity in IPRs. The statute, to be clear, does away with the clear-&-convincing standard for invalidity in IPRs, but that is Congress considered judgment, expressed in the statute. As patents are a creation of Congress there is no legal argument to be made against that judgment (although one might question whether it is good policy).

          1. Greg,

            You haven’t been paying attention to the aspect of property and the fact that once created, that aspect inures other Constitutional protections.

            Combine that with the fact that Congress did not change the property aspect (and that the presumption of validity is one of those sticks in the bundle of property rights), and you have even Congress limited to how they may enact other laws (i.e., the AIA) that cannot transgress the other Constitutional protections.

            1. ..also see i4i for what that presumption is in a granted patent.

              Saying that the presumption remains, but that its essential nature changes at the discretion of the (political) decision of the PTAB remains a takings.

              There is just no way around the issue of what happens to a stick in the bundle of granted property rights of a granted patent at the time of the institution decision.

              1. [S]ee i4i for what that presumption is in a granted patent.

                I think that i4i is one of the few recent SCotUS cases that the Court got right, but I do not see how it helps your argument here. The i4i Court held that “Congress… codif[ied] the common-law presumption of patent validity and, implicitly, the heightened standard of proof attached to it,” (emphasis added) Microsoft Corp. v. i4i Ltd., 131 S. Ct. 2238, 2249 (2011). In other words, the reason invalidity must be proven by clear & convincing evidence is because that is the implicit requirement of the statute. However, where the statute elsewhere makes explicit that only a preponderance of the evidence is required, the logic and rule of i4i simply ceases to apply, so it is useless to appeal to the authority of i4i on this point.

                Saying that the presumption remains, but that its essential nature changes at the discretion of the (political) decision of the PTAB remains a takings.

                As you already know, I really cannot agree with you here. Nothing changes vis-à-vis the evidentiary standard for invalidity when the PTAB grants an IPR petition. If the challenged patent is involved in litigation, and if that litigation involves an invalidity defense, the defendant must still meet the clear-&-convincing standard in order to prevail in the litigation. That “stick” is never taken from the bundle. In other words, the only “stick” that the patentee ever held in the bundle was that should the patent be involved in court proceedings, clear-&-convincing evidence would be needed to invalidate it. The patentee never had a “stick” that said that clear-&-convincing evidence was needed to challenge a claim if the patent landed back in the PTO. Patentees in interference or reissue proceedings have known for well over a century know that the PTO does not need clear-&-convincing evidence to challenge one of their issued claims, so I cannot imagine that there are too many patentees walking the earth who have such an erroneous misimpression as to imagine that they ever held a clear-&-convincing evidence in PTO proceedings “stick” in their “bundles.” This argument is pure red-herring.

                There is just no way around the issue of what happens to a stick in the bundle of granted property rights of a granted patent at the time of the institution decision.

                Even if we imagine that such a “stick” was ever part of a patentee’s “bundle,” it is not a “taking” to remove a single stick from the bundle. Andrus v. Allard, 444 U.S. 51, 66 (1979) (“[W]here an owner possesses a full ‘bundle’ of property rights, the destruction of one ‘strand’ of the bundle is not a taking, because the aggregate must be viewed in its entirety”). It could hardly be otherwise. After all, if your municipality zones your neighborhood as “residential,” that takes sticks from your bundle, and yet the municipality need not pay you for dispossessing you of your right to open a feed lot in your backyard. Penn Central Transp. Co. v. New York City, 438 U.S. 104, 147 (1978) (“While zoning at times reduces individual property values, the burden is shared relatively evenly and it is reasonable to conclude that on the whole an individual who is harmed by one aspect of the zoning will be benefited by another,” italics in original). IPRs are, in this respect, much like zoning. Any given patent owner’s property might be diminished by the existence of an IPR scheme, but the patent system as a whole is improved, and this aggregate benefit makes it not a taking.

                1. It IS a taking though, when the stick removed DOES substantially affect the value.

                  Are you really trying to say that the bundle is not adversely affected with IPRs?

                  That’s a statement clearly too far.

                2. Are you really trying to say that the bundle is not adversely affected with IPRs?

                  Yes. That is what I am saying. In fact, I will go one pace further and say that the value of patents in the aggregate is enhanced by IPRs.

                3. …further, even with eminent domain (your angle individual loss), there remains Constitutional protections which are absent with the loss of sticks in the property bundle for IPRs.

                4. If you are going to advance an argument like that, it is necessary to be specific. Which protections specifically?

                5. Greg,

                  Your view is heavily in the minority, as the lack of quiet title does drive value in the opposite direction than the “ideal” that you are merely projecting as a desired result.

                6. I am sure that my views are in the minority relative to the audience at IP Watchdog. I am less certain that my views represent a minority position around here, but I would be interested to see data that might support such a contention. I really have no idea whatever (and neither do you) whether my views are a minority viewpoint relative to (1) all patent practitioners (a much larger population than the commenters around these parts) or (2) the U.S. population as a whole.

                  This is all quite beside the point, however. We are talking about Constitutional law. Constitutional law is (for better or worse) not decided by majority vote of the impacted population. It is decided by precedent and textual exegesis (in that order). What precedent or text have you to cite for the proposition it constitutes a taking if you own a property that (A) in 2010 requires a showing of clear and convincing evidence to invalidate in court, but only a showing of preponderance of evidence in an inter partes re-exam; but (B) in 2015 still requires a showing of clear and convincing evidence in court, but only requires a showing of preponderance of evidence in inter partes reviews?

                7. Greg,

                  I think that you have meandered far and wide on your frolics here – and over the course of several side threads – I am traveling now, so let me see if I could pull this together over the weekend….

          2. Greg, the statute permits the USTPO to review issued patents. It does not require it. Rather than using this power judiciously, the Director has:

            1. Delegated to the very same individuals who get their paycheck by declaring issued patents likely to be invalid, the exclusive power to declare issued patents likely invalid.

            2. Used every statutory power to destroy the work product of the examining corps, rather than defend it. If the PTAB disagrees with the examiner, on the same record, the Director always sides with the PTAB.

            3. Completely ignored the quality of the examination and the prior art considered in examination. The correctness and thoroughness of the examination is not taken into account in the decision to institute review.

            4. Implemented and argued for broadest reasonable interpretation for issued claims. Fine for examination, but why would the Director send an issued patent back through the same standards, knowing the PTAB is likely to come to a different conclusion on subjective questions such as obviousness?

            The statute gives the Director of the USPTO broad power to review issued patents. When to use it is 100% in the Director’s discretion. The Novartis patent did not have to be reviewed – it should not have been reviewed at least because the examiner did not make an error. The USPTO and its one product have lost all integrity – don’t blame patent owners and the examining corps.

            1. “The statute gives the Director of the USPTO broad power to review issued patents. When to use it is 100% in the Director’s discretion.”

              While I agree with many of your criticisms of IPRs in this thread, I would like to point out to you that the Director always had this power, even before IPRs, supposedly anyway. The implementation of IPRs were simply congress making a formal process for them to be reviewed, and laying out some ground rules. And, implicitly, their desire for the Director to start actually using that power (this is relevant to how “discretionary” the Director should be, according to congress, in the use of the power now explicitly granted to them).

              1. 6,

                I think you are stretching to an unreasonable degree in your “implicit” reading with:

                And, implicitly, their desire for the Director to start actually using that power

                If Congress wanted to do anything other than leave it to the Director’s discretion (implicitly or otherwise), they know how to say that.

                They just did not say that.

                1. ..,and as to the “more details,” even Congress being the correct branch to write the statutory law that is patent law does not guarantee that what they write correctly takes into account other Constitutional protections that have inured.

            2. The USPTO and its one product have lost all integrity – don’t blame patent owners and the examining corps.

              I am not “blaming” anyone for anything, and I cannot imagine where in my post one might purport to find an assignment of “blame.”

              Rather than using this power judiciously, the Director has… [d]elegated to the very same individuals who get their paycheck by declaring issued patents likely to be invalid, the exclusive power to declare issued patents likely invalid.

              As it happens, I think that IPRs are a good thing on balance, but I agree that there are downsides, and this one is probably the strongest possible argument against IPRs. It is in the nature of an organization to arrange itself to maximize revenues. If applicants pay fees to get patents, and IPR petitioners pay fees to cancel patents, then the logical thing (not ethical, mind you, but logical) for the PTO to maximize revenue is to be very generous on what it considers allowable during prosecution and very strict about what it considers allowable during IPR. In other words, the mere existence of IPR creates a very poor set of incentives, especially so long as the PTO is allowed to set its own fees.

              Perhaps the statute needs to be revised to require that: (1) all fees incurred during prosecution be refunded to a patentee whose patent is later canceled; and (2) the fees to petition for IPR can never be more than 50% of the basic utility filing fee for a small entity. That way, it will not be profitable to grant claims with the expectation that shoddy work can be corrected in IPR. The incentive will be to get it right the first time, or else the PTO’s books will sink into the red.

              1. Perhaps the statute needs to be revised to require that: (1) all fees incurred during prosecution be refunded to a patentee whose patent is later canceled;

                Oh, please.

              2. I have not see you blaming patent owners and examiners. Others have done so. Rather you do not recognize the magnitude of the damage to the integrity of the patent system, due to my points 1, 2, 3, and 4 above.

                I think your position is representative of many large corporations, the patent bar, and the government. That is that PTAB serves a legitimate purpose and may need some calibration. My question is, why is the Patent Act, coupled with the Declaratory Judgment Act insufficient? Please account for FRCP 54, 56, 706, and Octane Fitness in any response.

                1. My question is, why is the Patent Act, coupled with the Declaratory Judgment Act insufficient?

                  Mostly because of the expense. It is much less expensive and much less time consuming to litigate most questions of validity in front of an administrative tribunal like the PTAB than in front of an Art. III court. A person who has claimed a patent right that is not legally permissible (for novelty and/or obviousness reasons) has imposed costs on the relevant industries and market participants, and it is no fault of those market participants that the wrongful patentee has done so.

                  The interested market participant who clears the unpatentable claim off the books is doing the whole nation a favor. It is not at all strange or unfair to try to minimize the transactions costs necessary for the interested market participant to perform that public service.

                  I take your point that a rightful patentee has done no one any wrong, and it is also unfair to make rightful patentees bear the cost of vindicating their rights. The problem, you see, is that both sides have legitimate rights here, and someone is going to have to bear the costs of vindicating those rights. The creation of IPRs moves those costs somewhat more onto patentees, but not totally so.

                  The costs have to fall somewhere, and from where I am standing, they do not look like they have been apportioned in an obviously unfair manner.

          3. “It is simply not true that the statute—or the PTAB—has done away with the presumption of validity in IPRs. ”

            I think the critics are saying that effectively that is what happens in real life, regardless of what the statute explicitly did/was intended to do.

            1. If the critics are talking about substitute claims in an IPR, I think that they are correct. If they are talking about the originally challenged claims, however, then I really cannot imagine what they mean. As noted above, “presumption” is just an other word for “party X has the evidentiary burden.” If the PTAB requires the challenger to prove unpatentability, then that is as much as to say that the PTAB operates with a presumption of validity in place.

              Does anyone believe that the PTAB institutes willy-nilly, without challengers even having to submit arguments and evidence? Or that there is no quality of argument and evidence that is so poor that the PTAB will not institute in return for the fees? If not, then it is simply incoherent to argue that the PTAB does not apply a presumption of validity.

              1. Here we are talking about whether it would have been obvious for a person of ordinary skill in 2008 to combine the Sakai and Chiba prior art. No amount of evidence and argument can answer that. Instead of presuming the examiner was correct in determining it was not obvious, the panel consulted their own crystal ball to find that it was indeed obvious. Presumption at the institution stage, something the Director should apply, would require showing the examiner made some error in finding it non-obvious.

                1. Presumption at the institution stage, something the Director should apply, would require showing the examiner made some error in finding it non-obvious.

                  And I repeat: “The word ‘presumption’ properly used refers only to a device for allocating the production burden.” Texas Dept. of Comm. Affairs v. Burdine, 450 U.S. 248, 254 n.8 (1981). So long as the PTAB is requiring the challenger to cough up some amount of evidence/argument before an IPR is institute, then there is a presumption of validity being applied in IPRs.

                  What you are describing is not a presumption, but rather an evidentiary standard. I do not think it a particularly worthy standard, but that is really beside the point that I am making. “Presumption” has a very particular meaning in the law, and at the point where one is talking about the “presumption” including elements of Examiner error, one is simply misusing the word.

                2. “No amount of evidence and argument can answer that. ”

                  You should be explicit in noting that you’re saying that it is a question of lawl that must be resolved by someone, and in this case you think the examiner is that someone and should not be so easily questioned as a lot rides on that determination being made, and staying made without being unmade. And thus, some error (or similar) should need to be required to “overturn” the determination originally made on behalf of the gubmit.

                  If that is what you’re saying.

                3. 6, that is very close. I would add that whether something was obvious in 2008 does not fit neatly into the law/fact paradigm. It is essentially speculation. Admittedly, that is inherent in the statute. But the statute must be carried out with some sort of coherency. If at each new petition for review, the speculation of the new adjudicator controls, then the patent has no integrity – it is just a piece of paper with a pretty ribbon.

                4. [W]hether something was obvious in 2008… is essentially speculation… If at each new petition for review, the speculation of the new adjudicator controls, then the patent has no integrity – it is just a piece of paper with a pretty ribbon.

                  If it is speculation for the PTAB to assess obviousness at the time of invention, then it is equally so for district court judges and juries. And yet we have historically not worried that it somehow besmirches the integrity of the patent system that different district courts can reach different conclusions about the obviousness of a given patent claim in different litigations.

                  Why does this state of affairs become more problematic when it involves the PTAB instead of judges and juries?

                5. “I would add that whether something was obvious in 2008 does not fit neatly into the law/fact paradigm.”

                  I follow your argument, but you’re fundamentally mistaken on this. It is a matter of lawl, based on underlying facts. It is purely, in the end, a matter of lawl. It is that way because it was created to be specifically that by its creators in 1952 and for no other reason.

                  “It is essentially speculation.”

                  If the obviousness determination is boiling down to “speculation” in some particular case then someone fed up that resolution of that particular matter of lawl.

                6. Greg,

                  You are misconstruing the “properly used” in your attempts to have your eyes remain clenched tight.

                  You want to make an attribute disappear and then say that you cannot see why that matters.

                7. You are misconstruing the “properly used”…

                  Possibly. It helps to be specific if you are going to make that sort of argument. How should one construe “properly used”? What am I missing?

                8. Greg, we are going in circles here. It works in the Article III courts because of due process, jury of peers, presumption of validity, deference to the examiner, tenured jurists w/o conflict of interest, higher evidentiary standard, live testimony, broad discovery, etc. If, as 6 suggests, speculation is baked into the statute then someone must be vested with authority to provide that speculation, and thereafter be shown deference. If that someone is not the examiner, then patents are a scam.

            2. It is not any such “effectively,” 6.

              It is that at the initiation decision point the executive branch (read that as “political”), can take the granted patent “stick” of the level of the presumption of validity (see i4i) without Article III recourse or remuneration of any kind.

              Note that it is not that the Legislative branch is forbidden to write laws that result in takings – rather it is that any such takings must survive other Constitutional protections that have inured.

                1. Yes 6, but you really should take note of the impact of my position on what you are talking to that another person here today about.

                2. You have a rather odd view of “socially control.”

                  But then again, it is fully in your “right” to be as ig nor ant as you so choose.

                  (it’s just not a wise choice – and there is no “control” aspect to that observation)

    2. Invention Rights, “At the very least require a showing of an error in the examination or a substantial new question of patentability. It is insane to set the bar as low as the statute allows at reasonable likelihood.”

      Do you realize that the new standard was intended to raise the bar? We can all agree now that it lowered it, and lowered it by a great deal.

      Add to this that the very same people who decide to institute on this very, very low bar, also make the final decision where they are unlikely to change their minds unless the patent owner, who is not supposed to have the burden of proof, proves patentablity almost beyond a reasonable doubt.

      There was and still is a reason the Supreme Court, and Cardozo in particular, decided that the patents should have a higher standard of proof than preponderance. A patent is the property of the patent owner upon which he founds his business or invests the 100Million plus to obtain FDA approval. Patent should not be lightly invalidated.

      1. Do you realize that the new standard was intended to raise the bar? We can all agree now that it lowered it, and lowered it by a great deal.

        Something that I agree with Ned about completely.

  5. Greg, but what you want is shear fantasy.

    Er, yes. I believe I was clear on that point. I am not suggesting that my rule is the law. I am suggesting that we would achieve a more optimal outcome if we change the law to embody my proposed rule. In that sense it is definitely fantasy (as in, not presently reality).

    The earlier patent is prior art to the latter at least for obviousness purposes, if not for anticipation.

    Right now, yes. Not under my proposed rule. I am suggesting that we revise the statute to put some real teeth into the non-enabling art doctrine. A patent document (my rule would only apply to filing date art, i.e., art under the pre-AIA 102(e)) that does not enable its putative utility has no art effect. If I can read your application, and not come away knowing how to use your disclosure to treat an organism, then it is as if your application never happened.

  6. Novartis, the patentee argued that its commercial success was based upon “Gilenya being the first commercially-available solid oral multiple sclerosis treatment.”

    I am not really convinced that the claimed invention here is obvious, but if this is the level of argument that the patentee was advancing, they deserved to be sunk. First “commercially available” is just beside the point. If the reason that you were first (despite the fact that there were other treatments known to the art) is because no one else could meet the FDA’s exacting standards until your product came along, then this is indeed evidence of nonobviousness, but not because it speaks to commercial success. Rather, what that speaks to is success where others have failed, which is a much stronger indicator of non-obviousness than “commercial success.”*

    * Actually, can anyone here remember a CAFC case where commercial success arguments carried the day? I can think of many where there were (e.g.) four good arguments for non-obviousness, and commercial success was thrown in as number five. I cannot think of any, however, where the CAFC said “well, we would have considered this claim obvious if not for the commercial success evidence.” Commercial success seems to be just about the weakest possible argument one can make and still fit into a legally recognized category of evidence for patentability. If you have run so much as one commercial advertising the product (and how many products are ever successful without advertising), the fact finder is entitled to say that it was all marketing and not the invention’s attractions.

    1. Commercial success seems to be just about the weakest possible argument one can make and still fit into a legally recognized category of evidence for patentability.

      It’s definitely very weak. Logically the biggest problem with commercial success as evidence of non-obviousness is that completely obvious and even anticipated products and methods can be incredibly successful. The fact that an object or method is profitable is evidence that the object/method satisfies a need but it’s not evidence that “the art” was struggling with a solution prior to the filing date. Note also that because markets can be very small, achieving “commercial success” can be satisfied without anything remotely resembling “popularity.”

      Is it the “weakest” argument? Weaker than “my composition claim is non-obvious because seven years after I filed it someone else demonstrated that my composition has a surprising property”? I’m not sure about that.

      1. Your last paragraph seems to indicate that you have issues with inherency.

        Is that why you react (so badly) when that term is used?

    2. If you succeed where others have failed, then how you did it better is probably the invention, rather than what you did it better. Does that make sense?

  7. In recent years, however, the courts have also pushed a strong nexus doctrine — requiring a nexus or causal relationship between the objective evidence and the claimed invention… Here, the court explains that the nexus requirement actually goes an important step further. The secondary indicia of nonobviousness must be tied to the inventive step itself – i.e., what was claimed an not known in the art.

    The quoted text makes it appear that this is a new development, but I cannot figure out why. The idea that your nexus of commercial success must not be part of the prior art is old in the law. Richdel Inc. v. Sunspool Corp., 714 F.2d 1573, 1580 (Fed. Cir. 1983) (Rich, J., “Richdel failed to show that such commercial success as its marketed system enjoyed was due to anything disclosed in the patent in suit which was not readily available in the prior art”).

    1. If you want to talk about “confusion,” Greg, you might look at the part of what you quoted:

      The secondary indicia of nonobviousness must be tied to the inventive step itself – i.e., what was claimed an not known in the art.

      The use of “i.e.,” here to signify a rewording or a clarification misses the distinction as pointed out by Mark: “inventive step” parses a claim, while the phrase “what was claimed” remains – in the view of obviousness – on the claim as a whole (and NOT parsed).

      Perhaps this is a minor (or nuanced) point.
      Perhaps not.

  8. RE: The secondary indicia of nonobviousness must be tied to the inventive step itself – i.e., what was claimed an not known in the art.
    For objective indicia evidence to be accorded substantial weight, we require that a nexus must exist “between the evidence and the merits of the claimed invention.” Wyers v. Master Lock Co., 616 F.3d 1231 (Fed. Cir. 2010). “Where the offered secondary consideration actually results from something other than what is both claimed and novel in the claim, there is no nexus to the merits of the claimed invention.” In re Kao, 639 F.3d 1057 (Fed. Cir. 2011). . . In evaluating whether the requisite nexus exists, the identified objective indicia must be directed to what was not known in the prior art—including patents and publications—which may well be the novel combination or arrangement of known individual elements.
    __

    I don’t have a problem with the decision the way it is carefully worded. However, in putting emphasis on “what was not known in the prior art”, a danger is that future cases might come to focus too much on point(s)-of-novelty and depart from the required evaluation of obviousness based on the claimed subject matter “as a whole”.

    It will be interesting to see how this line of case precedent develops.

    1. Well yes, it will be interesting to see how precedent develops in the USA. The whole notion of “point of novelty” is problematic and contested (except in the established and blissfully uncomplicated EPO jurisprudence on obviousness).

      I’m interested in the characteristics of the hypothetical test person for obviousness; and what the precedent deems that person to know. Take for example the specialist patent court in England. When considering obviousness, it doesn’t mosaic documents. It takes just one document and a background of the common general knowledge (cgm) of the PHOSITA. No one real person has exactly the cgm of the PHOSITA.

      Can we all agree, that what the inventor knew, or what some other real person knew, is irrelevant to the assessment?

      1. Can we all agree, that what the inventor knew, or what some other real person knew, is irrelevant to the assessment?

        Definitely. The PHOSITA is a legal fiction. Panduit Corp. v. Dennison Mfg., 810 F. 2d 1561, 1566 (Fed. Cir. 1987). S/he does not actually exist, just like the “reasonable man” in tort law. The PHOSITA is familiar with all relevant prior art—even the stuff published in one thesis application, catalogued in one Russian university library. No real person knows all of this stuff, but that is beside the point because obviousness is not assessed relative to real people.

  9. Next step for Big Pharma: showing possession of utility at the time of filing

    …just like all the rest of the arts.

    😉

    Note to FDA and/or generics: feel free to highlight the number of failed trials as indicative of NOT possessing utility prior to successful completion of the human trials…

    1. I think we are probably in agreement here on the general concept but is it”utility” under 101 that you’re referring to? Or is it enablement? Or written description? Maybe all three?

      The utility requirement is pretty low. A drug can diminish tumor size in a rat and that’s a utility. The side effects may be deemed unacceptable for administration to a human under one presidential administration but not under another (“regulations are bad!”). Does the “utility” of the claimed drug (or a claimed smelting method) change when Republicans are in control?

      1. The utility requirement is pretty low.

        The entire requirements of Section 101 are meant to be that selfsA “pretty low.”

        And yet, “feelings” and propaganda are massively (ab)used, are they not?

        Let’s remind everyone what 101 is supposed to do:
        1) have the right type of utility; and
        2) fit at least loosely into one of the statutory categories.

        That
        Is
        It

        1. The entire requirements of Section 101 are meant to be that selfsA “pretty low.”

          “Lowness” is mostly a non-sequitur when we’re talking about subject matter eligibility.

          I realize that’s way too much nuance for you, however.

          Let’s put it this way: the reason that subject matter eligibility is a big deal has very very little to do with “raising the bar for subject matter eligibility” and very very much to do with a massive bolus of ineligible junk being shoved at the USPTO.

          In other words, the width of a gate isn’t changed simply by placing 1 million whining crying elephants in front of the gate. It’s the same gate. The problem is the whining crying elephants.

          Now fill that river up with your crocodile tears. I need the laughs.

          1. To paraphrase right back at you, Malcolm:

            In other words, the width of a gate isn’t changed simply by placing 1 million whining crying donkeys in front of the gate. It’s the same gate. The problem is the whining crying donkeys.

            The width of the gate is ALSO not something that is meant to be set by the Supreme Court – just in case you forgot.

            1. Excep that the width of the gate was changed by the CAFC (it was opened up, elephant size).

              It was closed back up pretty quickly and permanently because the elephants did what elephants do: clumsily step all over everything and lay gigantic d00d00s everywhere.

              That was entirely predictable, of course.

          2. “Lowness” is mostly a non-sequitur when we’re talking about subject matter eligibility.

            Except for when we are talking about the actual law as written by Congress – right?

          3. ‘Lowness’ is mostly a non-sequitur when we’re talking about subject matter eligibility.

            Not at all, given that we are talking about the single section of law.

        2. Let’s remind everyone what 101 is supposed to do:
          1) have the right type of utility; and
          2) fit at least loosely into one of the statutory categories.

          I’m not sure where you picked up this mythology.

          I am sure that I don’t care where you picked up.

          I’m also sure that I know who the major purveyors of this nonsense are. They are the least credible people on the planet, and also (shocking!) totally self-interested in pressing their mythology on everyone else. They don’t care about anything except the thickness of their own wallets which are already thicker than pretty much everybody elses. G e t a l i fe already.

          1. That “mythology” happens to be the law.

            You might want to take note of it, even as the cognitive dissonance of being in a field (and creating work product) of something you simply do not believe in screams from your writings.

            1. Is “at least loosely” a recognized legal term?

              What’s the “right type” of utility? I saw a new statute and it made me happy. Is that the “right type” of utility for 101?

              1. See Chakrabarty for the “at least loosely” meaning.

                As to “right type” that would be Useful Arts versus the Fine Arts.

                Please tell me this is something that you already know…

    2. anon makes a good point: that the results of all trials (not just those the patent owner selects) should be made available to the public:

      link to en.wikipedia.org

      I should be interested, incidentally, in what MM thinks on that point.

      anon makes a bad point too: that it is premature to file for a patent before Trials have proved not only that the efficacy of the molecule is plausible but also that it does really work and that there are any side effects are tolerable.

      I mean, do we want companies to invest what it takes to bring a new drug to market? Or don’t we?

      1. MaxDrei,

        It is not about “want,” as much as it is about having the required possession at the time of filing.

        The rules are the same for all art units (leastwise, they still are).

        1. It is not about “want,” as much as it is about having the required possession at the time of filing.

          You really want to push this bit about “at the time of filing”?

          Please, please please say that you do.

          1. I have zero problem with this, Malcom.

            Of course, you do have to realize that constructive reduction to practice fully complies with having actual possession as those terms are understood in the context of patent law.

            Or did you merely want to obfuscate outside of the well understood context of patent law?

      2. “that it is premature to file for a patent before Trials have proved not only that the efficacy of the molecule is plausible but also that it does really work and that there are any side effects are tolerable.”

        None of that is required by the patent lawls. If you’re wanting to amend them, I mean, maybe. Maybe not.

        1. Utility very much is required 6.

          Staking a claim prior to actually possessing the utility (vis a vis the numerous F ailed trials) is a clear sign that at the time of filing that the utility was NOT possessed.

          That’s kind of the point here.

          1. I hear what you’re saying anon, but I’m not 100% sure that you have to have it at the time of filing.

            Further, I don’t know how many applications are being filed on things that they have no idea of any utility for.

                1. Simply look at the reality of the F ailings at the FDA trial stage….

                  Did all of those F ailings somehow “lose” what they had at the earlier filing date?

                  You just cannot close your eyes to that.

                2. Simply look at the reality of the F ailings at the FDA trial stage….

                  Did all of those F ailings somehow “lose” what they had at the earlier filing date?

                  You just cannot close your eyes to that.

                3. “Simply look at the reality of the F ailings at the FDA trial stage”

                  Failing at the FDA trial stage doesn’t mean that the drug is wholly not efficacious for everything and at every dose and etc. etc. At least I don’t believe it does anon. We can ask MM maybe but I don’t think that’s what’s up.

                  It is true that there are a lot of failures anon, but the FDA testing is not sufficient to establish that the “failures” are wholly without utility. Sorry man, they’re just not robust enough of testing.

                4. 6,

                  The required utility to be possessed at the time of filing is “substantial utility.”

                  That is measured by at least taking into consideration the scope of the claim.

                  If the scope of the claim includes utility for humans, than the “substantial utility” that needs to be possessed AT THE TIME OF FILING is commensurate with that level.

                5. further, 6, please be my guest to enjoy ALL (any) of the utility of those items that F ail the FDA gauntlet.

                  You know that you will not, right?

                6. “If the scope of the claim includes utility for humans, than the “substantial utility” that needs to be possessed AT THE TIME OF FILING is commensurate with that level.”

                  Um, the “scope of the claim” is many times just a composition of matter, some substance that might be used to treat organisms (like humans etc.). But yes, if the scope of the claim is for instance a claim about treating human beings, or similar, then sure thing, it would be good to take special notice of whether utility was possessed at time of filing. But as I understand it those kinds of claims often aren’t the subject of our discussion right now, rather it’s mostly composition of matter claims or rather generic administration thereof claims.

                  “further, 6, please be my guest to enjoy ALL (any) of the utility of those items that F ail the FDA gauntlet.

                  You know that you will not, right?”

                  Anon, I get the feeling that your understanding of what precisely goes on in FDA testing, what actually happens, and what it means to have “failed”, and by what standards failure are assessed is even lower than my own understanding. This is because there are known to be many many many many compositions that fail FDA testing but which I (or any other individual) may very well perfectly enjoy and/or benefit quite a lot from, but which are not suitable for the general population as a whole if a (very) high standard for safety, and sometimes a decent standard of efficacy, like that of the FDA is imposed.

                  Respectfully brosef, I think you’re sticking your nose where you do not yet have a very good understanding. Much as you constantly tell MM etc. when he pokes his nose in software.

      3. it is premature to file for a patent before Trials have proved not only that the efficacy of the molecule is plausible but also that it does really work and that there are any side effects are tolerable.

        If someone is actually advancing the assertion that you cannot be said to have possession until you show not only that your claimed molecule works, but also that is lacks intolerable side effects, then I agree that this is a poor choice of standard to apply. I am not sure that I have actually read anyone advancing that assertion.

        I mean, do we want companies to invest what it takes to bring a new drug to market? Or don’t we?

        I agree that the no-patent-until-you-show-lack-of-side-effects rule would totally sap the incentives for pharma R&D. That said, I think that it probably would be a healthy development if the law were changed to explicitly require animal testing before utility/enablement can be acknowledged for a new compound or composition.

        Right now—in a first to file world—your incentive is to get the app on file as soon as you have even the barest hint of in vitro efficacy, because you worry that if you tarry to test in mice, your competitor might steal a march on you and file with only in vitro results. Of course, this means that even a number of compounds that really do work, are not honestly enabled as of their filing dates. If you knew, however, that the law is no-enablement-without-animal-data (and, correspondingly, that an app that files on a compound without including animal data will be regarded as non-enabled art, and thus will not count against you for 102 purposes), then you would not need to worry as much about competitors stealing a march on you, and you could afford the time necessary to test the compounds properly before filing.

        In other words, there is a poor equilibrium prevailing right now, but it could be improved with a change in law that makes the industry players more comfortable about waiting for the data before filing.

        1. Right now—in a first to file world—your incentive is to get the app on file as soon as you have even the barest hint of in vitro efficacy, because you worry that if you tarry to test in mice, your competitor might steal a march on you and file with only in vitro results.

          This “file right away” incentive has existed in pharma for a long time because pharma has been playing the patent game globally for a long time (many years before the US became a first to file country anyway).

          1. Sure. My point is that if you changed the rules, so that an application unsupported by data could neither support a patent nor disqualify another patent, then you would create an equilibrium where all players would feel comfortable running more tests, doing more research, generating more data (etc) before filing. We should want more data rather than less data, so we should want to arrange the rules to favor more data.

            I take your point, however, about the role of global coordination here. If the U.S. were to change its rule unilaterally, it might not have the effect we are seeking (although, then again, it might, given the preeminent importance of the U.S. market in the pharma business). Ideally, we would have international coordination on this rule change to get the best result.

            1. Absolutely Greg.

              Your logic though even applies to the full possession requirement of working in humans (per FDA requirements).

              The same equilibrium would exist.

              Now if you wanted only patents for things that worked in animals (and did not care about the human element), then your “stopping short” would be OK.

              1. Your logic though even applies to the full possession requirement of working in humans (per FDA requirements).

                Three responses:

                (1) I am not sure what you mean by “full possession requirement.” If I discover a compound, I must disclose a utility before I can claim it. If that utility is that it suppresses angiogenesis, it really does not matter whether it suppresses angiogenesis in rats or in humans. Either one is a substantial utility. If I show that it works in rats, that is enough to support a valid patent claim. Anything that supports a valid claim seems like “full possession” to me. Did you mean something different by the phrase?

                (2) Requiring human trials to satisfy the enablement requirement really would vitiate any incentive for pharma R&D. Human trials are the really expensive part of pharma research. It only makes sense to begin investing funds in human trials once you know that you have exclusivity. No major pharma player starts phase III trials before the patent has granted.

                If we were to require phase III data before filing, no one would do the work, because it would not be profitable to sink resources into proving the drug’s efficacy in humans if you do not know in advance that you will have market exclusivity.

                In a world in which we required human trials as a precondition to filing, all of the capital would shift out of human drugs and over to some other related field (veterinary drug research, crop pest prevention research, etc). Maybe this would be a happier equilibrium (there is a plausible argument to be made that we are extending human life past the point where the added years make people happier). If one were to take that step, however, it would be best if one took it with one’s eyes open.

                Requiring human data for pharma patent protection is tantamount to legally prohibiting privately financed pharma R&D. It would not be profitable to run the business on those terms. Under such a legal regime, we would continue to have the drugs that we have, but essentially no new drugs would come to market ever again, absent a government intervention.

                3) Requiring human trials to establish enablement would not be putting pharma on the same footing as other arts. It would be requiring much more from pharma than other arts. One does not need to fun field tests of airbags to prove epidemiologically that they really are safe before one can patent a new airbag technology. The fact that a given airbag is later recalled from the market by NHTSA does not negate the enablement of the patents on that airbag technology, or evidence that the inventors somehow lacked possession of the technology at the time of filing.

                Technology is not required to be perfect for patenting. It needs merely to be minimally functional. Human trials prove perfection, not minimum functionality.

                1. I disagree that human trials prove perfection – instead they merely prove the desired utility in the first place.

                  Secondly, the very logic you use elsewhere on this thread (to support testing in animals) FULLY applies to the further step of testing to show actual utility – the “playing field” remains the same for all – if the rules are applied to all – this is true even at the different level of human testing. Your argument for animal testing (or rather, the logic of your argument still applies FULLY – and that is what is meant by “fully”)

                  As I indicated, if the scope if what you want to protect is limited to the drug utility in animals, then more power to you. However, if you want the higher scope of having the actual utility (to cover humans), then you need to posses that actual utility – at the time of filing.

                  And contrary to your assertion, this is most definitely NOT more than what is required in other arts.

                  You seem to not want to reflect on either the differences in scope for utility in animals and utility in humans and the fact that so many drugs F ail the latter test.

                2. I disagree that human trials prove perfection – instead they merely prove the desired utility in the first place.

                  Secondly, the very logic you use elsewhere on this thread (to support testing in animals) FULLY applies to the further step of testing to show actual utility.

                  As I indicated, if the scope if what you want to protect is limited to the drug utility in animals, then more power to you. However, if you want the higher scope of having the actual utility (to cover humans), then you need to posses that actual utility – at the time of filing.

                  And contrary to your assertion, this is most definitely NOT more than what is required in other arts.

                  You seem to not want to reflect on either the differences in scope for utility in animals and utility in humans and the fact that so many drugs F ail the latter test.

          2. Indeed. I do not see a “poor” equilibrium, Greg, from my viewpoint in Europe. Over here, the optimal point in time for filing has been clear for decades. Also if you jump too soon, in the end you get nothing.

            1. The point that started this sub-thread, MaxxDrei, is that the possession requirement has nothing to do with any sense of “optimal point” for filing.

              You are required (in ALL art fields) to have actual possession at the time of filing.

              As can be seen by the F ail rate during FDA testing, actual possession by Big Pharma (having nothing at all to do with any sense of ‘optimal timing’) simply is a mirage.

              The requirement of possession (in U.S. law) does NOT have an exception for Big Pharma.

              If Congress wants to add such an exception, they (and only they) are the duly anointed branch of OUR government to do so.

              To date, they have not.

            2. I am not really clear on what you regard as a “poor” equilibrium (or, by converse, a “good” equilibrium). I gather from your response that you may not be clear on what I regard as a “good” equilibrium. Allow me to clarify.

              Patents exist to encourage three goods: (1) R&D; (2) disclosure; & (3) commercialization. A “good” equilibrium is one that maximizes those three.

              By incentivizing applicants to file ASAP, one necessarily minimizes the amount of research that gets done prior to filing. That is a bad thing. We should want researchers to feel comfortable about taking the time necessary to do the work right and get all of their ducks in a row before filing. That is the “poor” equilibrium of which I was speaking.

              I am sure, as you say, that everyone in Europe knows (and has known for a long time) the “right” time to file, but that “right” time is defined in terms of maximizing one’s likelihood of achieving a patent—not in terms of maximizing the social utility that accrues from the disclosure. The fact that everyone knows to file at the socially suboptimal time reflects a legal failing to get the most social utility “bang” for the buck, not a success that you have clearly communicated to everyone “file early.”

              1. By incentivizing applicants to file ASAP, one necessarily minimizes the amount of research that gets done prior to filing. That is a bad thing. We should want researchers to feel comfortable about taking the time necessary to do the work right and get all of their ducks in a row before filing. That is the “poor” equilibrium of which I was speaking.

                Absolutely — which is why FTI is inherently a better system to promote invention.

                The counter-argument from Pharma and big business is that (its) markets are WW, filings have to be made abroad, which places them, at least, on a FTF system because the ROTW is already on a FTF system — a race.

                But, when one pauses and thinks just for a second about the kind of patents such races beget, more along the line of research projects than descriptions of fully functional prototypes, it becomes abundantly clear that a FTF system is so inherently flawed that we should never have been diverted from the good path by the Sirens of deception.

                Moreover, FTI is important if not critically important to the startup who simply cannot afford to file early and often. They need the luxury of time and the husbanding of critical resources.

                Taken together, the move to a FTF system benefited in the US that had all the benefits of a FTI system. But it certainly benefited foreign companies who did not conduct R&D in the US and who wanted to eliminate the advantages the FTI system gave the US.

                The new Trump administration would be advised to revisit the whole of the AIA, and not just IPRs.

                1. I do not really see this as a FTI vs FTF issue. The rule I am proposing will work just fine with a FTF regime, so long as you enforce the rule that poorly researched, and therefore insufficiently enabled filings, do not negate the patentability of a later, thoroughly researched application, precisely because they are not enabling.

                  In other words, the rule could be characterized “first to file a genuinely enabling application.”

                2. Exactly right, the FTF system only advantage is that it is administratively easy for the PTO. But granting patents without examination would be administratively easy, too. Doesn’t mean it is a good idea.

                  You also bring up a good point Ned that small inventors do not file quickly. Most inventors a) don’t patent their inventions at all or b) only think of it late. While the AIA knew that this wasn’t good for the little guy, and they tried to make it cheaper to file for patents and also started a great pro bono program to help… the AIA failed to recognize the world of invention outside the patent system.

                  And if I am allowed to second another of Ned’s points… FTI was a huge advantage for the US. It was an advantage to patent owners inside the United States, and disadvantaged foreign companies. That’s a good thing, because its one thing if American companies are shutting down other American companies, and its another thing for foreign companies to shut down American companies. The former may have some social harm (some would argue none), but the latter is very harmful. That sacrifice on the alter of “harmonization” was a huge mistake.

                3. Greg, but what you want is shear fantasy. The earlier patent is prior art to the latter at least for obviousness purposes, if not for anticipation.

                  Further, on FTI v. FTF, when ever did the likes of IBM ever sue a competitor for the purposes of protecting a premier product? That’s right. It has been a long time, if ever.

                  The big boys like IBM use patents for cross licensing and for imposing royalties as a tax on businesses in their space. What IBM does not like is FTI that allows an inventor to sue them if they got there first with any invention.

                  But such a system only promotes and sustains big business while disfavoring the small inventor for reasons previously stated.

                  Add reexaminations, IPRs and the like to the inherently pro-monopoly aspects of FTF, big business all but shields itself from the startup. Efficient infringement ho.

                  FTF is an aspect of socialism, fascism or crony capitalism. Take you pick of ism’s. But all it amounts to is the use of Government by Big Business to foster and maintain their monopolies.

                4. Greg’s “so long as you enforce the rule that poorly researched, and therefore insufficiently enabled filings, do not negate the patentability of a later, thoroughly researched application, precisely because they are not enabling.” is desired by Greg to include “animal testing” and yet, he seems to draw a hissy if that includes “human testing.”

                  There is zero sustainable difference though in his OWN purported logic concerning “enforcing the rules” between animal and human testing for the desired utility of a claim that encompasses proper utility in humans.

                5. There is zero sustainable difference… between animal and human testing for the desired utility of a claim…

                  As a theoretical matter, I am sure you are correct. My only point is that, in practice, it would be impossible for the pharma industry to run at a profit if human trials were required before filing. As a result, private industry would abandon R&D if we instituted that rule.

                  I am not really making a strong argument here against the rule, because I am not sure that the outcomes would be all that awful if capital that is current deployed in pharma R&D were redirected into biofuels R&D, or Ag biotech R&D, or any of the other things that pharma investors would likely fund in a world in which pharma was not available to be part of their portfolios. I just want people to understand what is being suggested when one talks of requiring human trials before filing. That is, in effect, the same as saying “I think that we have enough drugs already, and should stop looking for more.”

                6. Your parade of horribles is simply not correct – and your own logic (to the point of requiring animal testing) is exactly why.

                  As I said, there is zero difference, and that, by your own logic.

                7. Your parade of horribles is simply not correct – and your own logic (to the point of requiring animal testing) is exactly why.

                  Rat trials typically take ~6 months and cost a few thousand dollars.

                  Human trials frequently take ~5 years and cost millions.

                  I realize that these are differences of degree rather than of kind, but degrees can make a difference. It simply will not be profitable to run R&D in a world in which you need to sink millions of dollars and years of time into a research project before one might even be allowed to try for exclusivity. The game will not be worth the candle under such a regime.

                8. Your “degrees” simply does not make a difference for the very proposition to which you advanced the animal testing in the first place, Greg.

                  If all players have to do it, then all players have to do it right.

                9. Your “degrees” simply does not make a difference… If all players have to do it, then all players have to do it right.

                  Please forgive me if you know all of this already, but your response indicates a lack of familiarity with Hatch-Waxman law, so please permit me to make a small educational digression on the way to a response.

                  Before you can sell a drug in this country, you must first prove to the FDA—with human clinical data—that your drug is (1) safe for human consumption and (2) effective for the indicated use. However, only one entity needs to prove these points. After the first one generates the data, anyone else is allowed to market the same drug for the same purposes, as long as they show that their formulation achieves the same serum concentrations (i.e., “bioequivalence”) as the “brand” drug over the same time frame.

                  If I spend $100,000,000 generating the data necessary to prove to the FDA that my drug is legally marketable, and you spend $100,000 merely to show that your drug is bioequivalent to mine, then you are going to be able to sell your drug for much less per unit dose and still turn a profit. I will not be able to compete on an open market with you, except by lowering my price to a point at which I will lose money. Therefore, the only way that it is financially plausible for me to invest that $100,000,000 in proving safety and efficacy is if I know that I will have market exclusivity. Only a fool would fund those human trials without having that exclusivity already in hand.

                  It does not matter that all of my “brand” competitors will also have the same handicap, because I am not competing only against other “brand” drugs. I am also competing against generics, and generics do not do phase III human trials. In other words, it simply is not the case—as you appear to believe—that “all players have to do it… .”

                  In a world in which human efficacy trials are a pre-requisite to patent application, there simply will not be either human trials or patent applications. Instead, there will be veterinary drug trials, or biofuels research, or some other venture that can be accomplished with the same sort of scientists who know how to do drug discovery, because it will not longer be profitable to run a “brand” drug company.

                10. but your response indicates a lack of familiarity with Hatch-Waxman law,

                  Absolutely not – my response does nothing of the sort.

                  All my response does is show that your very own logic (as applied to ANY ‘even playing field’ works exactly the same if all players need to get to the animal testing point OR to the human efficacy testing point).

                  It is your OWN logic that I am showing back to you.

                  If you don’t like it, then you need to recognize your own handiwork.

              2. Well J, the socialist likes to control the means of production, which means they actually favor big business and controlling such for their purposes. These businesses, whether state owned or controlled, are the instruments of their power. During the Third Reich, the regime had party members on the boards of big companies. The modern socialist will do the same thing, simply by requiring that the state maintain control of the BOD even while allowing private investment.

                To the socialist state, the problem of patents presents a potential problem of loss of control and of harassment. Thus, they will allow a patent system, but not to the extent it may impact major companies that are effectively state enterprises.

                Obviously the Fascist state is a variance on this theme where the corporations private business interests control the state for their private benefit. Patents represent a problem.

                And of course, crony capitalism will use corruption to feather the nests of the vested interests at the expense of the outsider.

                All these systems oppose a viable patent system. Thus they support the system only to the extent it support the vested interests.

                1. “Well J, the socialist likes to control the means of production, which means they actually favor big business and controlling such for their purposes. These businesses, whether state owned or controlled, are the instruments of their power.”

                  Yeah, that’s not really unique to socialists. Wouldn’t that apply to autocratic monarchies, as well?

                2. Absolutely J. Take a look at my reference to the Third Reich. Most socialists do not want to be associated with that state despite its claims to being socialist. Autocratic regimes generally want to control the means of production, political parties, labor unions and the media. Any wildcards in the mix can cause a lot of problems. That is why none of these favor a strong patent system.

                  The move away from a patent system that actually favored patent owners to one that favors big business is a move away from freedom and to the autocratic.

                3. Any wildcards in the mix can cause a lot of problems. That is why none of these favor a strong patent system.

                  Enjoy the swagger of Malcolm being this blog’s Trump.

              3. Greg, I think your understanding of FtF is flawed. What you are asking for is a system that encourages filers to get all their ducks in a row before they file. But exactly that is the encouragement found under the EPC in Europe. File any earlier than that and the consequences include i) early publication of your innovation but then, later ii) failure, when the time comes to assert.

                You speak of filing when there is an enabling disclosure. Of course. Exactly that is what you need so as not to fail in Europe.

                BTW a fetish in Europe is that the scope of protection thou shalt receive shall be “commensurate” with that which you have enabled.

                As far as I can see, the journey the USA has embarked upon, under the AIA is a journey on which Europe took its first steps in 1978. I expect it to lead in the end to the same destination, driven by a balance between the legitimate needs of filers and the legitimate needs of their competitors.

                What do you say now?

            3. And now my response to Max is caught in the filter. Just wait until you see it, and then tell me if you can possibly imagine what could have triggered its capture.

        2. Pharmaceutical companies are not worried about the PTO when they are testing whether their drugs work. They are worried about the FDA.

          PTO approval is going to be given long before FDA approval.

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