PATENTS IN ACTION

The most useful patents in the pharmaceutical arena are those that cover the composition of an effective drug and its application to treating particular diseases. No other company may manufacture that drug using any methods and sell that drug for any indications without first obtaining a license from the owner of the composition patent.

A utility patent, on the other hand, claims the use of a drug for treating a particular disease. For example, if the composition patent for a particular anti-inflammatory drug fails to claim its utility in treating leukemia, you may obtain a patent for this indication if you are the first to conceive of and provide evidence for this novel use. The company selling the drug for its anti-inflammatory indications would only need your license if it wanted to officially label the drug as a treatment for leukemia; practically speaking, physicians still could prescribe the drug off-label for leukemia without fear of being sued for patent infringement.

When pursuing a market for which there is already a patented product, it may be possible to engineer a new product that functions similarly enough to the existing product to address the same market without infringe on the original product's patents. In the case of drugs, the cost of such a project is sometimes so high that pharmaceutical companies would sooner in-license patents for the original drug than try to engineer around them. The value of these patents will depend in part on how much time is left before their expiration.

Patents covering manufacturing methods may also be commercially useful. Depending on the complexity of a manufacturing process, the high cost of making a drug may preclude its profitable sale. Therefore, a company that invents a cost-effective manufacturing process may be able to use its intellectual property to ensure that its product is the only affordable version on the market.

GENE PATENTS

In pharmaceutical development, though drug composition patents are considered most valuable, gene patents theoretically also have value since gene expression is frequently used in drug discovery and development. Any company that commercializes a drug discovered using a gene for which you have a patent would be infringing your intellectual property, assuming you can prove that the company physically used the gene (or its protein product) after your patent issued. In some cases, a gene patent may take so long to issue that, by the time it issues, other companies have progressed to a point in drug development (e.g. clinical trials) where they no longer need to use the gene itself. Even if it means infringing on a newly issued patent, companies may continue using the gene in their discovery effort until they decide that a particular gene corresponds to a valid drug target and only then seek a license to the key patent. Indeed, it does not seem prudent to pay for gene patents sooner since most of them won't lead to drugs and few companies will go so far as to sue.

Since patents are only valid and valuable if they can hold up in court, it should be noted that gene patents have not faired well under scrutiny. In University of Rochester vs. GD Searle; Rochester lost its claim that discovery of the Cox-2 gene and characterization of the Cox-2 receptor entitled it to royalties from sales of the Cox-2 inhibitor Celebrex.

Companies developing gene or even protein arrays for research or diagnostic use run into freedom-to-operate problems when they try to put content (i.e. gene probes or protein ligands) on their arrays. A single array with dozens of different spots may require dozens of licenses for specific probes from the patent holders. Consequently, many companies sell instruments and reagents for making arrays and leave it up to the end-user to spot their own content.