Reconsidering the U.S. patent system: lessons from generics.

AuthorChen, Molly F.M.

ABSTRACT

Scholars and pharmaceutical industry representatives consider the United States a worldwide leader in pharmaceutical innovation. However, the recent expansion of the international generics market has threatened the strength of the U.S. pharmaceutical industry. The pressure has led to the U.S. market's overreliance on a patentability standard that blocks generics competition without contributing substantially to the state of the art. This Note contrasts the U.S. nonobviousness standard and patent linkage regime with those of generics giants India and Israel and considers the effects of these policies on the relevant national and international generics industries. This Note proposes that the United States revise its current approach to patent protection of pharmaceuticals by adopting a heightened nonobviousness standard and lengthening the available patent-term-restoration period through modifications to the linkage regime. Only by balancing these two legal mechanisms will the United States maintain its status as the international leader in blockbuster pharmaceuticals.

TABLE OF CONTENTS I. INTRODUCTION II. THE IMPACT OF NONOBVIOUSNESS ON PATENT VALIDITY A. In the United States B. In India C. In Israel III. THE CHOICE TO ADOPT LINKAGE REGULATION AND ITS IMPACT ON THE GENERICS INDUSTRY A. In the United States B. In India C. In Israel IV. THE IMPACT OF PATENT POLICY ON THE GENERICS INDUSTRY A. In the United States B. In India C. In Israel V. PROPOSED ALTERATIONS TO THE U.S. PATENT SYSTEM A. Heightening the Nonobviousness Standard B. Holding on to Patent-Term Restoration VI. CONCLUSION I. INTRODUCTION

Many people criticize brand-name drug manufacturers in the U.S. pharmaceutical industry for monopolizing drug therapies, thereby limiting global access to life-saving drugs. (1) The United States encourages high-risk research and development in the industry by ensuring strong intellectual property protection of pharmaceutical technologies domestically through (1) a relatively low standard of nonobviousness for patentability, and (2) the ability to extend the life of a patent beyond the standard term. (2) These pro-patent tools are intended to reduce the inherent risks associated with costly drug development, motivating U.S. manufacturers to continue advancing in the field. (3) Indeed, the United States has evolved into a pharmaceutical giant, with its manufacturers today producing brand-name drugs and technology available in the international marketplace. (4) Meanwhile, patient populations in less wealthy countries often cannot afford to pay the prices necessary to support the costs of developing pioneer pharmaceutical therapies. (5) Thus, many believe that the U.S. nonobviousness standard (6) and patent-term-extension program need readjustment. (7)

In 1995, members of the World Trade Organization (WTO) signed the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which sets forth standardized measures for securing and enforcing patent protection. (8) The agreement seeks to promote international trade while recognizing the "special needs" of developing countries. (9) Among other considerations, TRIPS requires that a patentable invention be new, involve an "inventive step," and be "capable of industrial application." (10) More controversially, the agreement allows developing countries to impose compulsory licenses on pharmaceutical patents, thereby giving these countries a means to provide medication to citizens that are unable to afford brand-name medications. (11) A later WTO agreement extended this policy, allowing compulsory licensees to supply drugs to foreign markets. (12)

Despite widespread adoption of TRIPS, there remains great variation among countries' patent policies. On one end, the United States, by supporting "follow-on" patents and evergreening practices, has allowed pharmaceutical giants to effectively extend their monopolies on brand-name drugs. (13) Furthermore, the country has implemented a linkage regime that requires burgeoning generics manufacturers to enter into high-cost litigation proceedings in order to move their product to market. (14) As generics manufacturers gain an increasing presence in the international marketplace, U.S. pharmaceutical companies have relied on these pro-patent tools to shift focus away from research and development toward merely maintaining a status quo and protecting existing technologies against follow-on patents brought by a competitor. (15) However, this system is not self-sustaining and ultimately requires a shift back toward a steady output of blockbuster products.

Other countries, however, do not necessarily endorse follow-on patents and patent linkage regimes. For example, India has firmly rejected a patent linkage regime, (16) and the country recently upset U.S. pharmaceutical company Bayer when it issued its first compulsory license. (17) And despite Israel's implementation of a patent linkage regime, its patent-term restoration is inadequate. (18) The variation in patent systems creates tension between countries and frustrates the purpose of the TRIPS agreement.

This Note compares and contrasts the patent policies of the United States, India, and Israel in the context of the pharmaceutical industry and proposes a combination of policies that together should ensure the continued development and availability of pharmaceutical products. Part II investigates the nonobviousness patentability requirement or its equivalent in each of the three countries. Part III explores whether each country has implemented a patent linkage regime and analyzes the effects of such implementation or lack thereof. Part IV determines (1) the effect of each country's policies on its domestic generics industry and (2) each policy's effects on the international pharmaceutical trade. Finally, Part V proposes that the United States should implement a heightened standard for overcoming the nonobviousness bar while expanding the duration of patent-term extension offered to pioneer pharmaceutical technologies through the patent linkage regime.

  1. THE IMPACT OF NONOBVIOUSNESS ON PATENT VALIDITY

    In order for an inventor to obtain patent protection on an invention in any country, the inventor must first overcome the hurdle known alternatively as nonobviousness, inventive step, or inventive level. Under the TRIPS agreement, member countries have the flexibility to define "inventive step." (19) Thus, the standard for interpreting whether an invention is obvious varies from country to country. For example, in the United States, [section] 103 of the American Patent Act instructs that an invention is nonobvious when, taken as a whole, it would not be obvious to a "person having ordinary skill in the art" (PHOSITA) at the time of invention. (20) While the current U.S. patent system applies its nonobviousness requirement relatively loosely, allowing applicants to protect trivial distinctions between technologies, India and Israel raise the bar so high that development of pharmaceutical products becomes impractical.

    1. In the United States

      In the United States, judges typically take an industry-specific approach and lower the bar for nonobviousness in the biotechnology and pharmaceutical fields. (21) One explanation for this behavior is that courts may be actively relaxing the nonobviousness bar for pharmaceutical inventions in response to policy rationales. Bringing a drug to market is an extremely expensive endeavor, (22) and pharmaceutical laboratories typically must demonstrate a reasonable likelihood of success in order to obtain research funding. (23) However, if likelihood of success correlates with obviousness, the drug may not be patentable. Thus, institutions investigating potential drug solutions find themselves in a catch twenty-two, where patent protection is only available in scenarios where they are incapable of obtaining research funding to develop the technology. By lowering the bar for the pharmaceutical sector, courts can promote the development of research into drug advancements, furthering the patent system's goal of promoting innovation.

      The relaxed nonobviousness standard in the pharmaceutical field may also be due to the high failure rate and the high costs of drug development. In determining whether an invention is obvious, courts look at secondary considerations, such as "commercial success, long felt but unmet needs, [and] failure of others," that can shed light on whether the PHOSITA would consider the invention obvious. (24) These factors weigh in favor of patentability despite the existence of prior art that suggests development of the technology would be logical. (25) In the pharmaceutical industry, the amount of time, resources, and funding necessary to move a pharmaceutical technology through the pipeline will often lead to an inference of nonobviousness. (26) Thus, the U.S. patent system's consideration of market forces and research effort will naturally favor a finding of nonobviousness in the pharmaceutical context.

      The Supreme Court has been reluctant to endorse any bright-line rules for nonobviousness and has paved the way for an industry-specific approach. (27) For example, in KSR International Co. v. Teleflex Inc., (28) the Court rejected a strict application of a bright-line rule because "[r]igid preventative rules that deny factfinders recourse to common sense ... are neither necessary under our case law nor consistent with it." (29) Following KSR, the Court of Appeals for the Federal Circuit has instructed that "[e]ach case must be decided in its particular context, including the characteristics of the science or technology." (30)

      Although some scholars argue that the U.S. nonobviousness standard is changing, it is unlikely that the Federal Circuit's 2009 decision in In re Kubin (31) will result in a heightened standard of obviousness throughout the pharmaceutical sector. (32) In In re Kubin, the Federal Circuit...

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