Revisions to Bayh-Dole Act Regulations Governing Rights to Federally Funded Inventions

By Kathryn Noll. A member of our Patent Practice Group

Rules affecting recipients of federal research and development funding have recently been revised, adding new deadlines and obligations. Changes to the regulations implementing the Bayh-Dole Act went into effect on May 14, 2018. The Bayh-Dole Act governs the rights to inventions made under government grants, contracts, and co-operative agreements, even if the federal government is not the sole source of the funding. The Act applies to funding provided to nonprofit organizations, large and small businesses, and universities.

The final rule that changes the regulations applies to funding agreements that are executed after May 14, 2018.  Existing funding agreements that are subsequently amended may be made subject to the revised regulations at the discretion of the funding agency.

The Bayh-Dole Act and its implementing regulations require the recipients of federal funding, or “contractors”, to take certain actions to properly manage inventions conceived during projects that receive federal funding. The following is a summary of some of the key requirements in the revised regulations and the changes made to them:

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Section 101 Gains a Toehold in IPRs

By W. John Keyes, Ph.D. and Robert Asher. Member of our Patent Practice and Chair of our Patent Office Litigation Practice

August 2018 PTAB Alert

Inter partes reviews (IPR) are limited by statute to grounds of invalidity under 35 U.S.C. §§ 102 (novelty requirement) and 103 (nonobviousness requirement) and on the basis of prior art patents or printed publications.

Other grounds for challenging patent validity, such as insufficient written description or lack of enablement, are unavailable. Also unavailable are challenges under 35 U.S.C. § 101, which excludes abstract ideas, laws of nature and natural phenomena from subject matter eligibility.

Or so we thought, until we read the recent decision in Praxair Distribution, Inc. v. Mallinckrodt Hospital Products IP Ltd. A crack can now be discerned in the prohibition on asserting section 101 issues in IPR proceedings.

Under the “printed matter doctrine,” which has its roots in 35 U.S.C. § 101, claim limitations directed to the content of information were not entitled to patentable weight unless there was a functional relationship to the substrate on which the printed matter was applied. While the printed matter doctrine was originally limited to matter physically printed on substrates like labels and information leaflets, its current reach extends to information stored on electronic media such as databases.

A claim element denied patentable weight is effectively plucked out of the claim when its subject matter is compared to the prior art, so the excluded element can no longer be relied upon to uphold claim patentability under 35 U.S.C. §§ 102 and 103.

In Praxair, the Federal Circuit brought not only the “printed matter doctrine” into play, but further extended the doctrine’s reach to include certain mental steps. As a result, even though 101-based challenges are formally prohibited by the IPR statute, they have now found an expanded role in IPR proceedings.

Patentability of Informing Steps

U.S. Patent 8,846,112 claims methods of distributing nitric oxide gas cylinders for treating neonates with hypoxic respiratory failure. Praxair researchers discovered a side effect of nitric oxide treatment, namely, that in neonates with left ventricular dysfunction, inhaled nitric oxide may lead to pulmonary edema.

In an effort to obtain patent protection for this finding, a number of claims are aimed at distributors that supply medical providers with nitric oxide in combination with a warning against treating a patient with left ventricular dysfunction.

For example, claim 1 includes the steps of:

“supplying […] nitric oxide gas to a medical provider […]” and

“providing to the medical provider

(i) information that a recommended dose of inhaled nitric oxide gas for treatment of neonates with hypoxic respiratory failure is 20 ppm nitric oxide and

(ii) information that, in patients with preexisting left ventricular dysfunction, inhaled nitric oxide may increase pulmonary capillary wedge pressure (PCWP), leading to pulmonary edema,

the information of (ii) being sufficient to cause a medical provider considering inhaled nitric oxide treatment for a plurality of neonatal patients […] to elect to avoid treating one or more of the plurality of patients”

In construing the claims, the PTAB applied the printed matter doctrine, finding that claim limitations directed to the content of information supplied to the medical provider are not entitled to patentable weight.

The CAFC affirmed, citing to precedent establishing that (1) a claimed step of informing someone about an inherent property of a method is printed matter, and (2) merely adding an instruction sheet or other informational content to a drug product is not sufficient to create a functional relationship.

Mental Steps Are Also Not Entitled to Patentable Weight

Importantly, the PTAB expanded the reach of the printed matter doctrine to steps where the printed subject matter is mentally processed. Claim 3 of the patent, for instance, included evaluating steps performed in a medical provider’s mind on the basis of the information supplied in combination with the results of a diagnostic test:

“performing at least one diagnostic process […]

evaluating the potential benefit of treating [a] patient in order to arrive at a decision of whether or not to treat the […] patient […]”

Claim limitations reciting mental steps are not entitled to patentable weight, said the PTAB. The Federal Circuit agreed, stating that the evaluating limitation in claim 3 is directed to a mental step that

is also printed matter […] This limitation merely requires a medical provider to think about the information claimed in the providing information limitation of claim 1. But adding an ineligible mental process to ineligible information still leaves the claim limitation directed to printed matter. To hold otherwise would make the printed matter doctrine a dead letter, requiring no more than a “think about it” step to give patentable weight to a claim limitation directed to information content.

Struggling to preserve the patentable weight of the mental steps, the patent owner objected that whether claims are directed to mental steps may only be considered in determining patent eligibility, not obviousness. The Federal Circuit disagreed, effectively opening the door to eligibility-based challenges in IPR proceedings, at least where mental steps can be defined as the processing of patent-ineligible information.

Though eligibility challenges are not part of IPR proceedings, the customary novelty and obviousness analyses may now be influenced by denying patentable weight to certain types of mental steps based on their subject matter ineligibility.

The Right to Try Act: A New Avenue for Use of Experimental Drugs

By Amy DeCloux, Ph.D.. A Member of our Biotech Patent Practice Group

On May 30, President Trump signed the Right to Try Act.  The Act authorizes the use of experimental drugs without pre-approval or oversight by the Food and Drug Administration. Both the patient and the drug must meet certain qualifications.

The patient must have been diagnosed with a life-threatening condition, have exhausted approved treatment options, have provided to the treating physician written informed consent regarding the drug, and be unable to participate in clinical trials involving the drug.

For the drug to qualify under the Act, it must have completed an FDA phase 1 clinical trial, must not have been approved for use in humans by the FDA as a new drug or as a biologic (e.g., virus, toxin, vaccine, blood component), and be the subject of ongoing development and investigation.  In addition, production of the drug must not have been discontinued by the manufacturer.

The drug need not be used to treat the condition to which the FDA phase 1 clinical trial was directed.  The Act protects the sponsor or manufacturer against any liability with respect to treatment with the drug, and insulates the prescriber or dispenser against liability absent reckless or willful misconduct, gross negligence, or an intentional tort.  Manufacturers and sponsors are also exempt from liability for not providing drugs under the Act.

The Act exempts the manufacturer or sponsor from having to obtain initial approval from an FDA-designated Institutional Review Board to use the drug in the treatment of humans.  The use of a drug under the Act will not be monitored periodically by the FDA as is the case under new drug applications. Outcomes of use under the Act will generally not be used by the FDA in evaluating the drug’s new drug application unless the sponsor requests such use.

The manufacturer or sponsor must provide the FDA with an annual summary describing the use of the drug under the Act, reporting the number of doses supplied, the number of patients treated, the uses for which the drug was made available, and any known serious adverse events.

The manufacturer or sponsor is exempted from the need to comply with several of the FDA requirements for labeling the packaging of FDA-approved drugs. However, as with investigational new drug applications, the Act requires that the packaging of the drug state: “Caution: New Drug – Limited by Federal (or United States) law to investigational use.” The packaging must not represent that the drug is safe or effective for the purposes for which it is being investigated.

Neither the sponsor nor the investigator of the drug can promote the drug as safe or effective.  Further, a sponsor cannot unduly prolong an investigation after finding that the results of the investigation appear to establish sufficient data to support a marketing application.

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