IPR ASSIGNMENT

TOPIC – Biotechnology Patents and the problem of non-obviousness

Submitted by-

Shubhrajit Saha

BA LLB (H) – 9th semester

Enrolment No. – A90811115045

INTRODUCTION

Biotechnology plays a very important role in the fields of medicine, food, fertilizer, energy,
and protection of the environment. It concerns living organisms, such as plants, animals and
micro-organisms, as well as the non-living biological materials, such as seed, cells, enzyms,
plasmids, etc.1

In the recent years, there has been a massive growth in the research of biotechnology,
especially in DNA recombinant engineering. Over the years, the society has witnessed the
completion of the human genome project, the success of animal cloning, pharmaceutical
research, and other notable developments. These recent developments promise to bring us a
much higher standard of living by benefits in medicine, agriculture, and industry. 2 Therefore,
the inventions in the field of biotechnology must be adequately protected in order to ensure
continued innovation. The growth of the biotechnology industry is directly related to the
number of biotechnology patent applications that have been filed and the patent law plays an
important role in the protection of biotechnological inventions.

“Biotechnological inventions” are those inventions, which are concerned with a product
consisting of a biological material or a process by means of which a biological material is
produced, processed or being used.3 “Biological material” means any material, which
contains some genetic information and it is also capable of reproducing itself or being
reproduced in a biological system. Therefore, these inventions pose some unique challenges
to the patent system. In spite of much controversy relating to the issue of whether it is
appropriate to patent biotechnology inventions, it is now much clear that the biotechnological
inventions are seen from the same perspective as other inventions as far as patent law is
concerned. However, there may be some adaptations, which need to take into account the fact
that research often involves living material.

The basis for deciding the fate of patent application involving biological material as well as
other kinds of inventions is described in the TRIPS Agreement. 4 “Patents shall be available
for any inventions, whether products or processes, in all fields of technology, provided that
they are new, involve an inventive step and are capable of industrial application”. This is an

1
V K Ahuja, Law Related to Intellectual Property Rights, Lexis-Nexis, Nagpur,2007, 1st and, p.403.
2
https://www.google.co.in/?
gws_rd=cr&ei=yHFjUsmZO8eprAe39oCAAg#q=biotechnology+patents+and+the+problem+of+non+obviousnes
s visited on 09 oct, 2013.
3
WIPO,Background Reading Material on Intellectual Property, Geneva, 1988,p.375
4
Art. 27(1) of the TRIPS Agreement.
attempt in order to bring some international uniformity to the access requirement for a patent.
However, it only sets some minimum patentability standards with which the signatories must
comply. Thereafter, the national rules may vary and the member states are free to set their
own access requirements.

NON-OBVIOUSNESS AND BIOTECHNOLOGY PATENTS

The concepts of ‘inventive step’ and ‘non-obviousness’ are very similar in nature and they
reflect the same general patentability requirement present in most of the patent laws,
according to which an invention should be sufficiently inventive i.e., it should be non-
obvious in order to be patented. In other words, the principle of non-obviousness verifies
whether the invention maintains an adequate distance beyond or above the existing state of
the art.

The expression “inventive step” is used in Europe, while the expression “non-obviousness” is
used in the United States’ patent law. Although the underlying principle is roughly the same,
the yardstick for the assessment of the inventive step or non-obviousness varies from one
country to another. For example, the practice of the European Patent Office (EPO) differs
from that of the United Kingdom.5

The sole purpose of the requirement of inventive step or non-obviousness is to avoid granting
patents for inventions which only follows from “normal product designs and development”,
and also to achieve a proper balance between the incentives provided by the patent system
which mainly encourages innovation and the social cost of the patent system, namely
conferring temporary monopolies.

Biotechnology has faced problems in obtaining equal protection in the patent. The question
whether biotech innovations are patentable subject matter or not has to be fought out in the
courts. The Kolkata High Court, in the Dimminaco matter, had held that the biotech
innovations are patentable. However, there has been not much development in the Indian
circuit after that.

Out of the three standards for access requirements, industrial application is a relatively more
important as the majority of innovation in biotechnology usually has some aspect of use or

5
Minh Chau Dao, Novelty and Non-Obviousness of Biotechnological Inventions Under EU and US Law, Institute
of Intellectual Property Studies, Issue- July 2010.
otherwise, they would not be pursued. The most difficult concept in determining the
patentability is the notion of novelty and non-obviousness, especially in a field that is rapidly
growing and complex. The subject matters that are new and inventive may become frequently
routine and obvious in only a few years‘ time.6

Below, the non-obviousness or inventive-step according to different laws are provided :

European Patent Convention (EPC)

Article 52(1) read with Article 56 of the European Patent Convention says that the European
patents shall be granted mainly for the inventions that involve an inventive step, that is, the
invention, having regard to the state of the art, must not be obvious to a person skilled in the
art.

Problem-solution approach

The Examining Divisions, the Opposition Divisions, and the Boards of Appeal of the EPO
always apply the “problem-solution approach” to decide whether an invention involves an
inventive step or not. The approach consists of:

i. Identifying the closest prior art or the most relevant prior art;
ii. Determining the objective technical problem, i.e. , determining, keeping in mind
the closest prior art, the technical problem which the claimed invention addresses
and successfully solves; and
iii. Examine the claimed solution to see whether or not the solution for the objective
technical problem is obvious for the skilled person in view of the state of the art in
general.

United Kingdom

A set of rules regarding the approach taken by the United Kingdom courts was laid out by the
Court of Appeal in Windsurfing International Inc. v Tabur Marine (GB) Ltd.7, in determining
the requirements for the inventive step:

i. Identifying the inventive concept embodied in the patent;

6
Jitesh Kumar, Biotechnology Patenting, Journal of IPR, Vol 9, Supreme Court of India, NewDelhi,2004,p.474
7
[1985] RPC 59
 ii. Imputing to a normally skilled but unimaginative addressee what was common
general knowledge in the art at the priority date;
iii. Identifying the differences if any between the matter cited and the alleged
invention; and
iv. Deciding whether those differences, viewed without any knowledge of the alleged
invention, constituted steps which would have been obvious to the skilled man or
whether they required any degree of invention.

United States

“Non-obviousness” is the term used in US patent law to describe one of the requirements that
an invention must meet to qualify for patentability, codified in 35 U.S.C. sec. 103. One of the
main requirements of patentability is that the invention being patented is not obvious,
meaning that a “person having ordinary skill in the art” would not know how to solve the
problem at which the invention is directed by using exactly the same mechanism.

Teaching-suggestion-motivation (TSM) test

Further, the combination of previously known elements can be considered obvious. As stated
by Winner Int’l Royalty Corp. v. Wang8, there must be a suggestion or teaching in the prior
art to combine elements shown in the prior art in order to find a patent obvious. Thus, in
general, the critical inquiry is whether there is something in the prior art to suggest the
desirability, and thus the obvious nature, of the combination of previously known elements.

This requirement is generally referred to as the “teaching-suggestion-motivation” (TSM) test

and serves to prevent against hindsight bias9. As almost all inventions are some combination
of known elements, the TSM test requires a patent examiner (or accused infringer) to show
that some suggestion or motivation exists to combine known elements to form a claimed
invention. Some critics of the TSM test have claimed that the test requires evidence of
explicit teaching or suggestion to make a particular modification to the prior art, but the
Federal Circuit has made clear that the motivation may be implicit, and may be provided for
example by an advantage resulting from the modification. In other words, an explicit prior art

8
202 F.3d. 1340, 1348 (Fed. Cir., 2000)
9
In re Kahn, Fed. Cir. 2006
teaching or suggestion to make a particular modification is sufficient, but not required for a
finding of obviousness.

The TSM test has been the subject of much criticism. The U.S. Supreme Court addressed the
issue in KSR v. Teleflex (2006). The unanimous decision, rendered on April 30, 2007,
overturned a decision of the Federal Circuit and held that it “analyzed the issue in a narrow,
rigid manner inconsistent with sec.103 and our precedents,” referring to the Federal Circuit’s
application of the TSM test. The court held that, while the ideas behind the TSM test and the
Graham analysis were not necessarily inconsistent, the true test of non-obviousness is the
Graham analysis. However, according to former Chief Judge Michel and current Chief Judge
Rader, the TSM test remains a part of the Federal Circuit’s analysis, though it is applied
mindfully of the decision in KSR10. A KSR-style obviousness analysis was used in Perfect
Web Technologies, Inc. v. Info USA11, Inc. to invalidate a patent due to the obvious nature of
the asserted claims.

Canada

The Supreme Court of Canada affirmed the test for non-obviousness laid out in Windsurfing
International Inc. v. Tabur Marine (Great Britain) Ltd.12

i. Identify the notional “person skilled in the art” and identify the relevant common
general knowledge of that person;
ii. Identify the inventive concept of the claim in question or if that cannot readily be
done, construe it;
iii. Identify what, if any, differences exist between the matter cited as forming part of
the “state of the art” and the inventive concept of the claim or the claim as
construed;
iv. Viewed without any knowledge of the alleged invention as claimed, do those
differences constitute steps which would have been obvious to the person skilled
in the art or do they require any degree of invention?

The novelty cases do not answer the obviousness question, the second hurdle to patentability.
How can the isolated, purified form of a protein fail to be obvious if it is otherwise identical
to a naturally occurring protein, which we already know about? This is a complicated
question that the courts have struggled with. But the courts have not tried to construct a
10
KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398 (2007)
11
587 F.3d 1324 Fed. Cir. Dec. 2, 2009
12
[1985] R.P.C.
separate biotechnology patent doctrine. Rather, they have used the traditional approach of
comparing what is claimed with the prior art. The crucial point is that the prior art is not what
is known to nature, but what is known to man.

For example, if what is known to man is a protein and what is claimed is a gene and the gene
has been isolated and purified so that it clears the novelty hurdle, then the obviousness
question is not whether it is obvious that a particular gene having a particular nucleotide
sequence exists in principle, but whether it would be obvious to one skilled in the art to
identify and isolate it.

The leading case of In re Bell held that while “it may be true that knowing the structure of the
protein, one can use the genetic code to hypothesize possible structures for the corresponding
gene and that one thus has the potential for obtaining that gene,” nevertheless, the
degeneration of technologies that simply because a new research approach is ‘obvious to try’
does not mean that a resulting product would be obvious. Thus, unless there is something in
the prior art that would suggest to a researcher a particular gene in question, as opposed to the
thousands or millions of other possible nucleotide sequences that might possibly encode the
particular protein, the resulting isolated and purified DNA molecules are not obvious and
may be patented.

While the processes any of the genetic code is such that there are more than 1036 different
possible nucleotide sequences in a gene that might code for that protein. This recognition of
the special nature of the genetic code does not involve, however, any separate doctrine
favoring biotechnology patents, but rather constitutes an application of the long-established
principle applied across a wide range for looking for the right nucleotide sequence might
be known, it is not obvious how to pick the right one out of this human haystack.13

This approach seems eminently good common sense in the protein to gene case, but it does
not provide a rule for the protein-to-protein situation where biotech methods are used to
produce a protein identical to a protein found in nature. The patent application may meet the
novelty test if the protein is isolated and purified, but does it meet the obviousness test? One
possible, but inadequate, the answer is that if the biotech process used to obtain the biotech
form of the protein is new and non-obvious, then, of course, the patentability standard is met.
But the problem is that the inventor can obtain a process patent, not a product patent, and as
the courts have recognized in the pharmaceutical cases, process patents may be so hard to

13
Jidesh Kumar, Biotechnology Patenting, Journal of IPR, Vol 9, Supreme Court of India, NewDelhi, 2004.
enforce that they do not provide a sufficient property rights basis to finance the risky
development and clinical trials necessary to bring a new drug to market. The effort to
emphasize the incentive function through the isolation and purification rationale has created a
problem of deterring future innovation.

14
In the Scripps case, a patent involving a blood growth factor produced by a chemical
purification process was held potentially infringed by the biotech version of the same
product. The full impact of that decision on innovation over time becomes clearer when one
considers that its doctrine could presumably preclude a subsequent biotech firm from
producing the same growth factor through still newer and even more superior biotech
processes. As biotechnology has progressed, the obviousness question tends not to arise in
the simplistic way just discussed in which the applicant claims the biotech equivalent of the
naturally occurring substance, for example, a protein or a gene, but rather claims some new
bio-technological half-way house. To the extent that biotechnology today creates substances
that do not exist in nature, the obviousness issue rather becomes the generic issue of what
would have been obvious to one skilled in the art.

INDETERMINACY IN THE NON-OBVIOUSNESS STANDARD

The dominant current perception in patent law is that the core requirement of non-
obviousness is applied too leniently, resulting in a proliferation of patents on trivial
inventions that actually retard technological innovation in the long run. The non-obviousness
standard is not too low, but both too high and too low. It is indeterminate. Three principal
factors produce non-obviousness indeterminacy: a failure to identify the quantum of
innovation necessary to satisfy the standard, a failure to define the baseline level of ordinary
skill against which to measure an innovation, and the epistemic infeasibility of requiring a
technologically lay decision maker to judge from the perspective of a more highly trained and
educated person of ordinary skill in the art.15

Indeterminacy in non-obviousness decisions has several unexpected consequences. First,

indeterminacy results in an excessive total number of patent grants, and in many patent grants
on obvious inventions. Second, indeterminacy leads to too many patent applications on

14
ibid
15
Gregory Mandel, The Non-Obvious Problem: How the Indeterminate Non-obviousness Standard Produces
Excessive Patent Grants, University of California, Davis ,Vol.57, 2008.
obvious inventions and too few applications on non-obvious inventions. Third, uncertainty
causes more patent litigation than is optimal and leads to incorrect litigation outcomes.
Fourth, indeterminacy leads to inefficiently low incentives to research and develop great
advances, and excessively high incentives to invest in mundane innovation. All of these
effects occur even assuming that decision makers apply the non-obviousness standard
correctly on average.

That many of the current patent system ills may result from indeterminacy rather than from
too low a non-obviousness standard has significant consequences for the patent system and
for current recommendations for reform. Perhaps most critically, arguments for raising (or
lowering) the non-obviousness threshold, a mainstay of recent legal and economic analysis,
may be somewhat inapposite, unless and until we can establish greater specificity in the
standard.16

The core requirement for obtaining a patent is that the invention was not obvious at the time
it was made. An inventor does not receive a patent for a merely new and useful invention, but
only for an invention that measures a significant advance over existing technology. The non-
obviousness requirement protects society against the social costs both of denying a deserving
patent and of granting an undeserving monopoly. Improper application of the non-
obviousness standard results either in inefficiently low incentives to innovate (reducing
technological innovation) or permits the patenting of trivial advances, leading to patent
thickets and other inefficiencies, and similarly reducing future technological advance. Patent
litigation demonstrates the importance of the non-obviousness requirement; it is the most
commonly litigated patent validity issue and the requirement most likely to result in patent
invalidation. The non-obviousness requirement stands at the center of innovation policy and
the technology economy in the United States.17

Section 103 of the Patent Act establishes the non-obviousness requirement, providing that a
patent may not be obtained on an invention: if the differences between the subject matter
sought to be patented and the prior art are such that the subject matter as a whole would have
been obvious at the time the invention was made to a person having ordinary skill in the art to
which said subject matter pertains. The statutory non-obviousness standard thus requires an
inquiry that involves several elements. The first is determining what a person of ordinary skill
in the art would have already known. This current state of the art presents a baseline against
16
ibid
17
ibid
which to measure non-obviousness. The second is establishing the quantum of innovation
beyond the baseline necessary to satisfy non-obviousness. The final element requires
measuring the advance provided by the invention over prior art. Combining these three
elements answer the ultimate non-obviousness question: whether the inventor’s advance over
the baseline exceeds the required quantum necessary to satisfy the Sec. 103 standard.

Current non-obviousness doctrine is indeterminate because neither the measure of ingenuity

necessary to satisfy the standard nor the manner of determining the level of ordinary skill in
the art are adequately defined. The failure to define the quantum of advance required may be
the most spectacular flaw. The Supreme Court and Federal Circuit have provided some
instruction on determining the level of ordinary skill in the art.

Non-obviousness is a mixed question of fact and law. The factual part of the inquiry concerns
the prior art, the differences between the invention and the prior art, the level of skill in the
art and other considerations. The legal part of the inquiry requires determining whether the
differences between the invention and the prior art would have been obvious to one of
ordinary skill in the art. The Supreme Court has delineated only limited aspects of the non-
obviousness inquiry. The opinions have either developed the jurisprudence of the factual
portion of the inquiry or have stated a conclusion concerning the legal part of the inquiry
(some opinions do both). The opinions have not, however, developed the legal standard of
non-obviousness.

THE INDETERMINATE NON OBVIOUSNESS STANDARD

PRODUCES EXCESSIVE PATENT GRANTS

Appropriate application of the non-obviousness standard is critical to the function of patent

law. Too high a non-obviousness standard reduces the incentives for innovators to invent and
disclose. Too low a non-obviousness standard allows excessive patenting, resulting in
inefficient patent thickets, anti-commons, minefields, hold-ups, and other problems. This too
can reduce innovators’ incentives to invent. Either too lax or too restrictive a non-
obviousness standard can retard technological progress and be socially and economically
detrimental.

Because the non-obviousness standard is undefined, it is impossible for decision makers to

apply the standard consistently. Simply using the term “non-obvious” as a standard does not
create an applicable metric; it is nothing more than a bare legal conclusion. They only
intended the standard to serve as a basis for the development of criteria to judge obviousness.
Because this development has not occurred, what remains is an empty legal conclusion
without standards to provide a framework for decision-making, a consequence that is
woefully indeterminate. Not surprisingly, non-obviousness determinations are highly
inconsistent and unpredictable.

Viewed in this light, the strong and widespread recent criticism of the judicial system and
Patent Office for improperly applying too low a non-obviousness standard appears to be at
least partially misplaced. Decision makers cannot consistently or accurately apply an
indeterminate standard. Though criticism of the failure to define the non-obviousness
standard is warranted, criticism for failure to apply it correctly may not be well-grounded.

CONCLUSION

Non-obviousness is the most important and also the most ambiguous patentability
requirement. Determination of non-obviousness is very complicated because of the
ambiguities inherent in making the assessment.18 Patent protection for biotechnology did not
require a ‘go/no go’ decision by either legislature or courts. The only question was under
what circumstances biotech patents met the standards of novelty, utility, inventive step and
non-obviousness. However, as we shall see, the courts did have to wrestle with some
judicially created exceptions to the patentable subject matter. Since Parliament did not
undertake to protect biotechnology by copyright, protection has been sought and accorded
only by patent despite the fact that Parliament also took no action under the patent code. This
differential result of Parliament’s non-action in both fields is significant not just because
there is secondary literature suggesting copyright protection for biotechnology, but because at
least some of the field would lend itself to copyright protection insofar as it has the equivalent
of letters, words, and sentences. Among the steps for making the assessment, the mode of
combination of the prior art is a critical step.

Biotechnology has faced problems in achieving equal protection in the patent system. Nearly
every principle of patent law has to be rethought and interpreted anew in biotechnology,
which is a reason why so many leading patent law decisions of the last decade have resulted
from biotech cases19. For this reason and in order to explore more deeply the application of
the incentive and access principles to contemporary patent law, it is worth reviewing not
18
http://www.lawschool.cornell.edu/research/cornell-law-review/upload/cannon-note.pdf last visited on 19
oct,2013.
19
Diamond v Chakrabarty, 447 US 303 (1980)
merely patentable subject matter, but also, how the courts have handled other core patent
issues, such as novelty, non- obviousness and utility in the biotechnology field.

The TSM test made the mode of combination of prior art objective and certain to some extent
and was effectively used by courts to ascertain non-obviousness. However, the KSR case
expanded the test for combining prior art for assessing non-obviousness beyond the TSM test
and the broadened test increases ambiguity in such a determination. While the increased
ambiguity would impact non-obviousness assessment in all fields, the impact would be
higher in the field of biotechnology as the field is filled with uncertainties. This increases the
intricacies in patentability analysis of biotechnology inventions and makes it difficult to
predict patentability of an invention. Furthermore, the expanded test exposes granted patents,
which were issued based on the TSM test open for invalidation based on obviousness because
the broadened test allows consideration of factors other than teaching, suggestion or
motivation. Such a situation adds complications in making strategic decisions relating to
patent protection.

Indian biotech companies have been filing and acquiring numerous biotechnology patents in
the USA. About 629 patents have been granted to Indian organizations in the USA till Dec.
2007. Around eighty Indian organizations have acquired biotech patents in USPTO. Such
organizations include CSIR, AIIMS, Aurobindo Pharma, Biocon, Cadillac, Bharat Biotech,
Dabur, Dr. Reddy’s Labs and so on. In the light of the change in the law relating to non-
obviousness, the companies have to be wary in making strategic decisions on patent filings.
They should look beyond the TSM test and be aware of the uncertainties inherent in non-
obviousness assessment.