MIPLC Studies 19

Hyewon Ahn

Second Generation Patents in

Pharmaceutical Innovation

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MIPLC Studies
Edited by
Prof. Dr. Christoph Ann, LL.M. (Duke Univ.)
Technische Universität München
Prof. Robert Brauneis
The George Washington University Law School
Prof. Dr. Josef Drexl, LL.M. (Berkeley)
Max Planck Institute for Intellectual Property and
Competition Law
Prof. Dr. Thomas M.J. Möllers
University of Augsburg
Prof. Dr. Dres. h.c. Joseph Straus,
Max Planck Institute for Intellectual Property and
Competition Law
Volume 19

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Hyewon Ahn

Second Generation Patents

in Pharmaceutical Innovation

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The Deutsche Nationalbibliothek lists this publication in the Deutsche
Nationalbibliografie; detailed bibliographic data is available
in the Internet at http://dnb.d-nb.de .

a.t.: Augsburg, Univ., Diss., 2013

ISBN 978-3-8487-0874-1

1. Edition 2014
© Nomos Verlagsgesellschaft, Baden-Baden 2014. Printed in Germany.

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Acknowledgements

This dissertation was accepted by the University of Augsburg for the degree
of doctor juris in July 2013. The study takes into account statutory and case
law available until the end of 2013.
It would not have been possible to write this doctoral thesis without the
help and support of people around me, to only some of whom I can give
particular mention here.
First and foremost I would like to express my heart-felt gratitude to my
supervisor Prof. Dr. Christoph Ann for his continuous support of my PhD
study, endless encouragement, patience, and scholarly input. He has always
made himself available to clarify my doubts and has been willing to help me
to move forward whenever I faced obstacles throughout the whole period of
research. Under his constant and invaluable guidance I could successfully
overcome many difficulties. For all these reasons and many more, I am eter-
nally grateful.
I would also like to sincerely thank Prof. Dr. Ulrich M. Gassner for his
insightful critique and interest in my research and for being the second ref-
eree of this thesis.
I will forever be thankful to my second supervisor Prof. Dr. Nari Lee who
indeed had recommended that I should pursue the PhD study and always
stood beside me, for her guidance, insights and integral view of my research.
Her enthusiasm and love for research and teaching has been contagious. I
feel privileged to be associated with a person like her during my life.
I am very much indebted to Prof. Dr. Joseph Straus who kindly shared
with me his immense knowledge no matter whether he was in his office or
even on a cruise, especially for his extensive discussions around my work.
And I will remember one of many pieces of advice from him which speeded
my research up greatly, i.e. “Well, a PhD thesis is not supposed to save the
whole globe.”
I owe Prof. Martin Adelman lots of gratitude for his valuable advice, many
thoughtful and detailed comments, as well as constructive criticism through-
out the study. He always supported and enlightened me and knew how to
make a person moved with one sentence, i.e. “So, how’s your thesis go-
ing?”.

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Acknowledgements

I am also thankful to Chief Judge Randall R. Rader across the Atlantic

who provided me with a great chance to experience and learn how the court
system works in the CAFC. I was very much privileged to learn from him
and grateful for his encouragement, advice and deep insights into U.S. and
comparative patent law.
My sincere gratitude is extended to Prof. Dr. Joseph Drexl for the aca-
demic support to carry out the research work at the Institute. I also take this
opportunity to acknowledge the Max-Planck Institute for the Intellectual
Property and Competition Law that provided a scholarship and thus made
my Ph.D. work possible.
I am also thankful to the MIPLC program director, Dr. Gintare Surblyte,
who made available her support in many ways.
My time at MPI was made enjoyable in large part thanks to the many
friends that now become a part of my life. Ilho Lee deserves special mention
here for his constant support and helping me when I faced difficulties or
queries throughout my study. I also would like to thank Max Wallot and
Eugenio Hoss for their support, helpful discussions and listening to my aca-
demic woes. Special thanks must go to Dr. Monica Donghi and Dr. Jörg
Habermann for their support for my PhD study as well as kind proofreading
with their technical and legal knowledge. I am also grateful to my office
colleagues, Nicole van der Laan, Rachel Alemu, Kan He, Magdalena Kolasa,
and Seyhan Ugurlu, who went through hard times together, cheered me on,
celebrated each accomplishment, and made a stimulating and fun filled en-
vironment.
I extend my deep thanks to Kyounghee Paek, Yeonhee Kim, and Jeongeun
Lee who helped me to update the development of Korean Jurisprudence and
have been there for me as always. Their support, friendship, and belief in
me were a treasure and will always be remembered.
Lastly, I would like to thank my parents and my sister. Their love and
support all the way from Korea allowed me to finish this journey. I owe them
everything and just wish I could show them how much I love and appreciate
them.

December 2013 Hyewon Ahn

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List of Abbreviations 15

I. INTRODUCTION 21
A. Overview 21
B. Outline of the dissertation 25
C. Scope of the dissertation 25

II. PHARMACEUTICAL INVENTIONS, INNOVATIONS &

PRODUCTS 28
A. Cumulative nature of inventions 28
1. Basic and second generation inventions 29
a) Improvement inventions 30
b) Selection inventions 30
B. Inventions and innovations in pharmaceutical field 32
1. Inventions and patents in pharmaceutical field 32
a) Product invention and the absolute character of its
protection 33
b) Hierarchy of pharmaceutical patents 34
2. Innovations in pharmaceutical field 36
a) Invention v. innovation 36
b) NMEs as the core of pharmaceutical innovation 37
C. Second generation inventions and patents in pharmaceuticals 38
1. Product inventions and patents 39
a) Species selection inventions 39
b) Optical isomers 43
c) Crystalline forms 46
d) Metabolites and prodrugs 47
e) Esters and salts 49
f) Dosage forms 49
g) Combinations of active ingredients 50

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2. Use inventions 50
a) New Use/New method of treatment 50
b) Dosage regime 52
3. Process inventions 52
a) Process 52
b) Intermediates 53
D. Pharmaceutical products in the market 53
1. New medical entities, new molecular entities 54
2. Similar or equivalent “me-too” products 54
3. Second generation products 56
4. Generic drugs 57
E. Summary 58

III. SPECIFICITIES IN PHARMACEUTICALS AND RECENT

DEVELOPMENTS 59
A. Innovating and inventing in pharmaceutical industry 59
1. Specificities in the drug development process 59
a) Highly regulated industry 59
b) R&D – a costly and lengthy road to a medicine 60
c) Uncertainties in post-invention development 64
(1) Scientific uncertainty: Unpredictability of substances 64
(2) Regulatory and market uncertainties 65
d) Information rich chemicals 66
2. Specificities in the market for pharmaceuticals 67
a) Imitation with negligible cost and much reduced risk 67
b) Prescription based purchase: A disconnection between
choosers and payers 68
c) Information asymmetry and high loyalty to a medicine 69
d) Pricing 70
3. Specificities of the patent protection for pharmaceuticals 72
a) Patent protection for industrial technologies 72
b) Patent protection in the pharmaceutical industry 74
B. Challenges and overcoming efforts 76
1. Decreased R&D productivity 78
2. Dearth of new medical entities 80
a) Significance of NMEs 80
b) Decreased number of NMEs 80

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c) Potential reasons for the decrease 83

(1) Decrease in solvable scientific problems 83
(2) Stringent safety regulations 84
(3) Problem of over-disclosure 84
(4) Early and numerous abandonments of potential
candidates 85
3. Patent cliffs of blockbuster medications 86
4. Frequent merger and acquisitions (M&As) and in-licensing 86
5. Drastic increase of second generation inventions 88
a) Life cycle management or evergreening 89
b) Drastic increase of this activity supported by the number
of second generation patents 91
C. Summary 93

IV. STANDARDS OF PATENTABILITY FOR

PHARMACEUTICAL SELECTION INVENTIONS 95
A. Novelty and anticipation 96
1. Introduction 96
2. Examination of novelty 98
3. Inherent anticipation and enablement 103
4. Novelty of selection inventions 106
a) Species selection inventions 106
b) Optical isomers 117
c) Crystalline forms 127
d) Metabolite 130
5. Analysis and conclusion 133
B. Inventive step / Non-obviousness 134
1. Inventive step in patentability requirements 135
2. Examination of inventive step 136
3. Inventive step requirement for selection inventions 144
a) Species selection invention 144
b) Optical isomers 150
c) Crystalline forms 157
d) Metabolites 164
4. Analysis and conclusion 164
C. Disclosure requirement 167
1. Written description requirement 168

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2. Enablement requirement 171

a) Enablement requirement 171
b) Enablement requirements in the patent law 175
(1) Enablement as a requirement for anticipation 175
(2) Basic similarity of the two enablement requirements 176
(3) Differences between the two enablement requirements 177
3. Disclosure requirement of selection inventions 178
a) Species selection invention 178
b) Optical isomers 179
c) Crystalline forms 180
D. Conclusion 180

V. IMPLICATIONS OF THE PATENTABILITY

REQUIREMENTS ON INNOVATION AND COMPETITION
IN THE PHARMACEUTICAL INDUSTRY 184
A. Concerns about lowered patentability 185
1. General concerns about lowered patentability 185
a) Superfluous second generation patents 185
b) Increased patent exclusivities and amplified uncertainties
thereof 187
c) Encouraged waste of resources 190
d) Hindrance of pharmaceutical innovation 192
2. Concerns about the novelty requirements 194
a) Language dependent prior art disclosure problem 194
b) Rendering inventive step requirement meaningless 196
c) Potential concerns of “direct and unambiguous” disclosure
requirement 198
B. Implications considering the breadth of selection patents 198
1. Scope of the protection 199
2. Scope of selection patents 203
a) Species selection patents 203
b) Optical isomers 203
c) Metabolite 206
d) Polymorphs 208
3. Analysis and conclusion 209

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C. Implications considering the length of selection patents 210

1. Patent term and patent term extension 211
a) In Europe 212
b) In the United States 213
c) In Korea 214
2. Patent term extension on selection patents 215
a) Species selection patents 215
b) Optical isomers 215
c) Polymorphs 218
d) Metabolite 218
3. Analysis and conclusion 218
D. Implications on the competition in the pharmaceutical industry 222
1. Introduction 222
2. Quasi-obstacles of generics market entry 225
a) Scope of second generation patents 225
b) Length of second generation patents 227
c) Delayed filing of second generation patent applications 227
3. Real obstacles to generics’ market entry 229
a) Automatic thirty-month stay and new list up in the Orange
Book in the United States 229
b) Pendency of patent applications: Uncertainty 231
(1) Pendency of patent applications 231
(2) Filing of divisional applications 232
c) Active movement of the market to new products 237
d) Along with very specific patents on the secondary products 240
4. Analysis and conclusion 242
E. Summary and conclusion 243

VI. PROPOSALS 245

A. Introduction 247
B. Nature of selection inventions 249
1. Different natures of selection inventions 249
a) Species selection invention 249
b) Other selection inventions 251
2. Selection inventions from the era of penicillin to the 21th
century 251
a) Early medications and the novelty requirement 251

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b) “Made available to the public” for the first time 252

3. Analysis and conclusion 254
C. Proposals on the breadth of patents 255
1. Arguments on the breadth of patents 255
a) Arguments for a broader patent scope 256
b) Arguments against a broader patent scope 258
c) Arguments on patent scope with consideration of other
relevant factors 260
2. Interim conclusion 261
3. Solutions to the overlapping scope with species selection
invention 264
a) Voluntary licensing agreements 265
b) Non-voluntary licenses 266
(1) Compulsory licenses 267
(2) Case law relevant to compulsory licenses 269
c) Reverse doctrine of equivalents 272
d) Conclusion 274
D. Proposals on the length of patents 275
1. Arguments on the length of patents 275
2. Proposals on the length of patents 277
a) Proposal on the length of basic patents 277
(1) Introduction 277
(2) Proposed term of basic patents 278
(3) The basis of the proposal 279
(4) Expected effects 281
b) Proposal on the patent term extension of second generation
patents 282
E. Proposals on the patentability requirements 283
1. Introduction: Technology specific patentability standards 283
2. Proposals on the novelty requirement 286
a) Arguments on the novelty requirement 286
b) Proposal on the novelty requirement of species selection
invention 287
(1) Meaning of something “made available to the public”
in the pharmaceutical industry 287
(2) A patent as a double-edged sword to NMEs 289

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(3) Statutory exceptions to the novelty requirement and

considerations thereof 290
(4) Proposed novelty requirement for NMEs 291
(5) Appreciation of the Olanzapine decision and its
expected results 293
c) Discussion on the novelty requirement of other selection
inventions 294
3. Proposals on the inventive step requirement 294
a) Arguments on the inventive step requirement 295
(1) Arguments for a strict inventive step requirement 295
(2) Arguments for a strict inventive step requirement
together with broader protection 296
(3) Arguments against a strict inventive step requirement 297
(4) Arguments for the relaxed inventive step requirement
in risky and expensive R&D fields 297
b) Proposal on the inventive step of species selection
inventions 299
c) Proposal on the inventive step of other selection inventions 300
(1) Introduction 300
(2) Proposed standard to assess the inventive step 301
(3) Basis of the proposal 301
(4) Expected effects 304
4. Discussions on the sufficiency requirement 306
a) Discrepancy between the scope of and the disclosure of a
genus claim 306
b) Stringent disclosure requirement of the basic invention 307
c) Conclusion 309
F. Conclusion 309

VII. FINAL CONCLUSIONS 312

List of Statutory Instruments 321

List of Case Laws 323

Bibliography 333

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List of Abbreviations

AB Appellate Body
ABPI Association of the British Pharmaceutical Industry
Adv. Genet. Advances in Genetics
aff’d affirmed
AIPLA Q. J. AIPLA Quarterly Journal
Aliment Pharm. Ther. Alimentary Pharmacology & Therapeutics
Am. U. L. Rev. American University Law Review
Art. Article
B. C. L. Rev. Boston College Law Review
BeckRS Beck-Rechtsprechung
Bell J. Econ. Bell Journal of Economics.
Berkeley Tech. L. J. Berkeley Technology Law Journal
BGH Bundesgerichtshof, Federal Supreme Court of Germany
Bioorgan. Med. Chem. Bioorganic & Medicinal Chemistry
Biotechnol. Law Rep. Biotechnology Law Report
BOA Board of Appeal of the European Patent Office
BPatG Bundespatentgericht, Federal Patent Court of Germany
BpatGE Entscheidungen des Bundespatentgerichts
Brit. Med. J. British Medical Journal
Brookings Paper on Econ. Brookings Paper on Economic Activity
Activity
B. U. L. Rev. Boston University Law Review
Cal. L. R. California Law Review
Case W. Res. L. Rev. Case Western Reserve Law Review
cert. certiorari
C.F.R. Code of Federal Regulations
CIPA Chartered Institute of Patent Attorneys
CJEU Court of Justice of the European Union
Clin. Chem. Clinical Chemistry
Clin. Dermatol. Clinical Dermatology
Clin. Infect. Dis. Clinical Infectious Diseases

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List of Abbreviations

Clin. Microbiol. Infec. Clinical Microbiology & Infection

Clin. Pharmacokinet. Clinical Pharmacokinetics
Clin. Pharmacol. Ther. Clinical Pharmacology & Therapeutics
Colum. L. Rev. Columbia Law Review
Conn. J. Int'l L. Connecticut Journal of International Law
Cornell L. Rev. Cornell Law Review
Discov. Med. Discovery Medicine
DPMA Deutsches Patent- und Markenamt, German Patent and
Trademark Office
Drug Discov. Today Drug Discovery Today
Drug Info. J. Drug Information Journal
Duke L. J. Duke Law Journal
Econ. J. The Economic Journal
e.g. exempli gratia, for example
EFPIA European Federation of Pharmaceutical Industries and
Associations
EIPR European Intellectual Property Review
Epilepsy Res. Epilepsy Research
EPO European Patent Office
Eur. J. Drug Metab. Ph. European Journal of Drug Metabolism and
Pharmacokinetics
Eur. J. Health L. European Journal of Health Law
FDA U.S. Food and Drug Administration
Fed. Law. Federal Lawyer
Food & Drug L.J. Food and Drug Law Journal
Fordham Int'l L. J. Fordham International Law Journal
Fordham L. Rev. Fordham Law Review
FTC Federal Trade Commission
Geo. L. J. Georgetown Law Journal
Geo. Mason L. Rev. George Mason Law Review
GPA German Patent Act
GRUR Gewerblicher Rechtsschutz Und Urheberrecht
GRUR Int Gewerblicher Rechtsschutz und Urheberrecht
Internationaler Teil.
GRUR-Prax Gewerblicher Rechtsschutz und Urheberrecht, Praxis im
Immaterial- und Wettbewerbsrecht

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 List of Abbreviations

GSK GlaxoSmithKline
Harv. Int’l L. J. Harvard International Law Journal
Harv. L. Rev. Harvard Law Review
Health Affair. Health Affairs
High Tech. L. J. High Technology Law Journal
Hist. & Tech. History and Technology
Hous L. Rev. Houston Law Review
Hum. Psychopharm. Human Psychopharmacology
ICTSD International Centre for Trade and Sustainable
Development
IDEA IDEA: The Journal of Law and Technology
IDSA Infectious Diseases Society of America
IG Rule The rule established in the I.G. Farbenindustrie's A.G.’s
Patent case
IIC International Review of Intellectual Property and
Competition Law
Ill. L. Rev. Illinois Law Review
IMD Incrementally Modified Drugs
In Vivo: Bus. Med. Rep. In vivo: The Business and Medicine Report
INN International Non-proprietary Name
Int. J. Health Care Fi. International Journal of Health Care Finance &
Economics
Int. J. Ind. Organ. International Journal of Industrial Organization
Intell. Prop. Q. Intellectual Property Quarterly
IP Intellectual Property
IPR Intellectual Property Right
IR Infrared
J. Chem. Inf. Comp. Sci. Journal of Chemical Information and Computer Sciences
J. Copyright Soc'y U.S.A. Journal of the Copyright Society of the USA
J. E. C. L. & Pract. Journal of European Competition Law and Practice
J. Econ. Behav. Organ. Journal of Economic Behavior & Organization
J. Econ. Manage. Strat. Journal of Economics & Management Strategy
J. Econ. Perspect. Journal of Economic Perspectives
J. Financ. Econ. Journal of Financial Economics
J. Generic Med Journal of Generic Medicine
J. Health Econ. Journal of Health Economics

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List of Abbreviations

J. Ind. Econ. Journal of Industrial Economics

J. Law Econ. Journal of Law & Economics
J. Legal Stud. Journal of Legal Studies
J. Manage. Journal of Management
J. Marketing Res. Journal of Marketing Research
J. Med. Chem. Journal of Medicinal Chemistry
J. Pat. & Trademark Off. Journal of the Patent and Trademark Office Society
Soc'y
J. Pat. Off. Soc'y Journal of the Patent Office Society
J. Pharmaceut. Marketing Journal of Pharmaceutical Marketing and Management
Manage.
J. Tech. L. & Pol’y Journal of Technology Law & Policy
J. Technol. Transfer Journal of Technology Transfer
Lancet Infect. Dis. Lancet Infectious Diseases
LJ Lord Justice
Manage. Decis. Econ. Managerial and Decision Economics
Manage. Sci. Management Science
Mich. Telecomm. Tech. L. Michigan Telecommunications and Technology Law
Rev. Review
Minn. L. Rev. Minnesota Law Review
Modern Drug Discov. Modern Drug Discovery
Nat. Rev. Drug Discov. Nature Reviews Drug Discovery
NBER National Bureau of Economic Research
New Eng. J. Med. New England Journal of Medicine
NIHCM The National Institute for Health Care Management
Research and Educational Foundation
NME Mew Medical Entity or New Molecular Entity
NMR Nuclear Magnetic Resonance
Nw. U. L. Rev. Northwestern University Law Review
N.Y.U. L. Rev. New York University Law Review
OECD Organisation for Economic Co-operation and
Development
Open Access J. Clin. Trials Open Access Journal of Clinical Trials
OTC Over-The-Counter
Para paragraph
PCT Patent Cooperation Treaty

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 List of Abbreviations

PHC Paroxetine hydrochloride

PHOSITA The person having ordinary skill in the art
PLOS Med Plos Medicine
Probl. Perspect. Manage. Problems and Perspectives in Management
R&D Research and Development
RAND J. Econ. RAND Journal of Economics
reh’g rehearing
Res. Policy Research Policy
San. Diego L. Rev. San Diego Law Review
Santa Clara Computer & Santa Clara Computer and High Technology Law Journal
High Tech. L. J.
SAR Structure-Activity Relationship
Sci. & Pub. Pol’y Science and Public Policy
Sec. Section
Seton Hall L. Rev. Seton Hall Law Review
SME Small and Medium Enterprise
SMU L. Rev. SMU Law Review
Soc. Philos. Policy Social Philosophy & Policy
SPC Supplementary Protection Certificate
St. John's J. Legal Comment. St. John's Journal of Legal Commentary
Stan. Tech. L. Rev. Stanford Technology Law Review
Sup. Ct. Rev. Supreme Court Review
Tenn. L. Rev. Tennessee Law Review
Tex. Intell. Prop. L.J. Texas Intellectual Property Law Journal
Tex. L. Rev. Texas Law Review
TFEU Treaty on the Functioning of the European Union
THC Terazosine hydrochloride
Trademark Rep. Trademark Reporter
TRIPS The Agreement on Trade Related Aspects of Intellectual
Property Rights
Tul. J. Tech. & Intell. Prop. Tulane Journal of Technology & Intellectual Property
U. Chi. L. Rev. University of Chicago Law Review
UC Irvine L.R. UC Irvine Law Review
U. Dayton L. Rev. University of Dayton Law Review
U.K. United Kingdom
UNCTAD United Nations Conference on Trade and Development

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List of Abbreviations

U. Pa. J. Int’l Econ. L. University of Pennsylvania Journal of International

Economic Law
U.S. United States
U.S.C. United States Code
USPTO U.S. Patent & Trademark Office
Va. L. Rev. Virginia Law Review
Vand. L. Rev. Vanderbilt Law Review
Wake Forest L. Rev. Wake Forest Law Review
Wash. U. J. L. & Pol’y Washington University Journal of Law and Policy
Wash. U. L. Rev. Washington University Law Review
WHO World Health Organization
Wid. L. Symp. J. Widner Law Symposium Journal
WIPO World Intellectual Property Organization
Wm. & Mary L. Rev. William and Mary Law Review
World Pat. Info. World Patent Information
WTO World Trade Organization
XRPD X-ray powder diffraction
Yale J. Health Pol’y L. & Yale Journal of Health Policy, Law, and Ethics
Ethics
Yale L. J. Yale Law Journal

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I. INTRODUCTION

A. Overview

“Over the past two decades, the pharmaceutical industry ‘has moved very far
from its original high purpose of discovering and producing useful new drugs.
Now primarily a marketing machine to sell drugs of dubious benefit, this in-
dustry uses its wealth and power to co-opt every institution that might stand in
its way, […].”1
This is the much-quoted statement of Dr. Marica Angell, the former editor-
in-chief of the New England Journal of Medicine. It is a sobering reflection
on the operational reality that the development of new medications and im-
provements to those medications play a crucial role in ensuring continued
gains in health and longevity. The need for new medicines is never-ending.
To spur the investment needed for the continued research and development
(“R&D”) of new medicines, economic incentives are essential prerequisites.
These incentives can also be provided by intellectual property protection --
particularly patents -- government funding, or other administrative policies.
However, achievements of R&D are not enough to provide a constant and
efficient flow of new medicines to the market. The pressure exercised by
competitors such as generic companies leads to a reduction in drug prices
and this too is necessary.
The following purposes of the patent system have been discussed: i) Pro-
viding motivations for making useful inventions,2 ii) disclosing and dissem-
inating information and inventions to the public,3 and iii) allowing for more
efficient exploration of the possibilities inherent in prospective inven-

1 Angell, 2004, xvii-xviii.

2 Luski/Wettstein, 1 Probl. Perspect. Manage. 31, 31 (2004); Ann, 2009, 361; Crouch,
16 Geo. Mason L. Rev. 141, 141 (2008); Graham v. John Deere Co., 383 U.S. 1, 9
(1966) (“The patent monopoly was not designed to secure to the inventor his natural
right in his discoveries. Rather, it was a reward, an inducement, to bring forth new
knowledge.”); Crouch, 39 Seton Hall L. Rev. 1125, 1134 (2009); cf. Kamien/
Schwartz, 1982, 190-91 (noting “[t]he monopolist […] chooses to spend less on de-
velopment than would a social planner because his reward from innovation is smaller
than the total social benefit.”).
3 Friebel et al., 2006, 21; Eisenberg, 56 U. Chi. L. Rev. 1017, 1028-30 (1989).

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I. INTRODUCTION

tions.4 The patent system can be used as a way of creating prior art and
preventing others from obtaining a patent that an original inventor might
later infringe.5 More importantly, the patent system encourages investment
in potentially risky commercialization activities6 and turns inventions into
new goods and services7 by providing the opportunity to recoup that invest-
ment.8 In other words, it creates the incentives to develop nascent inventions
into marketable products, since the prospect of a patent provides greater
efficiency in the development of inventions.9 Jerome Frank J noted in
1942:
“The controversy between the defenders and assailants of our patent system may
be about a false issue – the stimulus to invention. The real issue may be the
stimulus to investment.”10
This function of the patent system can be clearly seen in the responses to the
Court of Justice of the European Union (“CJEU”) decision,11 in which the

4 Kitch, 20 J. Law Econ. 265 (1977); Mazzoleni/Nelson, 27 Res. Policy, 273, 275-80
(1998); Pfaff v. Wells Electronics, Inc., 525 U.S. 55, 63 (1998), reh’g denied (ac-
knowledging two purposes of the patent system, i.e. “creating and the publicly dis-
closing new inventions.”).
5 Jaffe, 29 Res. Policy 531, 539-40 (2000); Levin et al., 1987 Brookings Paper on Econ.
Activity, 783, 798 fn. 29 (1987). However, if this was the purpose, it will be the
cheaper and easier way to publish the invention to the proper media. See e.g. Licht-
man/Baker/Kraus, 53 Vand. L. Rev. 2175, 2175-76 (2000).
6 Roin, 87 Tex. L. Rev. 503, 509 (2009); Merges, 7 High Tech. L. J. 1, 69-70 (1992)
(“[P]atents may spur development more than invention per se. […] this may in fact
be such an important function that it more than outweighs the contribution patents
make to incentives to invent.”); Jaffe/Lerner, 2004, 43 (“Patents protect an individ-
ual’s or firm’s investment in the development of an idea, as much as they protect the
invention itself.”); Svatos, 13 Soc. Philos. Policy 113, 114 (1996); Scherer, 1984,
22-25 (with the example that an investor entered into partnership with the inventor
of the steam engine owing to the patent); Duffy, 71 U. Chi. L. Rev. 439, 440 (2004).
7 Kieff, 85 Minn. L. Rev. 697, 707-12 (2001); Merges, 7 High Tech. L. J. 1 (1992).
8 See e.g., Eisenberg, 56 U. Chi. L. Rev. 1017, 1036-46 (1989); Blair/Cotter, 10 Tex.
Intell. Prop. L. J. 1, 78-80 (2001); Hoffman, 89 Cornell L. Rev. 993, 1022 (2004)
(noting a patent gives an opportunity to recoup R&D costs, thereby providing in-
centives to invest in further research); Svatos, 13 Soc. Philos. Policy 113, 119 (1996)
(noting “[j]ust as there is no guarantee that patents will not allow “monopoly” profits,
there is also no guarantee that a patent will help capture even normal profits, even if
the invention socially useful; this can result from a lack of marketing know-how,
excessive litigation costs, etc.”).
9 Kitch, 20 J. Law Econ. 265, 276 (1977).
10 Picard v. United Aircraft Corp., 128 F.2d 632, 643 (2nd Cir. 1942).
11 C-34/10, Oliver Brüstle v. Greenpeace e.V., 2011.

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 A. Overview

Court held that human embryonic stem cells were not patentable subject
matter in Europe. Among the many concerns and objections voiced regard-
ing the decision, the major worries were the impediments to competition in
the international market for new disease therapies,12 and the lack of incentive
for innovative companies to invest in this field of R&D in Europe.13
The Board of Appeal of the European Patent Office (“BOA”) noted in
one case that it must be assumed that inventors invent not out of idle cu-
riosity, but with some concrete technical reason in mind.14 However, it is
often observed that inventions may arise as a result of felicitous curiosity,
by serendipity, as a result of a flash of insight, or simply due to human nature
without recourse to specific grounds. 15 It follows that inventions may arise
without patent protection. However, the necessary investment needed to de-
velop such innovation is unlikely to follow without patent protection. With
strong protection, companies will invest hundreds of millions of dollars in
their R&D in anticipation of substantial reward.16 Thus, although the patent
system is subject to criticism with regard to the high prices that may be
entailed by patent protection, there is little doubt that it is crucial to spurring
pharmaceutical innovation.17
Specifically, the pharmaceutical industry may be regarded as one of those
industries in which the economic rationale for patents works best to protect
inventors from imitators, provides the incentive for bearing the cost of in-
novation,18 as well as ensuring essential protection.19 However, in spite of
this protection, the number of innovative new medicines per year has de-
creased or remained the same.20 This seem to undermine the above argu-
ments21 that patent protection provides incentives for real innovation and
promotes the progress of technological development in this field. In addition,

12 Abbott, 471 Nature 280 (2011) (citing Dr. Brüstle’s own word, namely “if we are
not allowed to protect our inventions in Germany, we won’t be able to compete in
the international market for new disease therapies.” ).
13 Smith, 472 Nature 418 (2011).
14 Agrevo/Triazoles, T 939/92, OJ EPO 1996, 309, 320.
15 Crouch, 39 Seton Hall L. Rev. 1125, 1134 (2009); Burk/Lemley, 89 Va. L. Rev. 1575,
1581 (2003).
16 Scherer, 20 Health Affair. 216, 220 (2001).
17 Cohen/Nelson/Walsh, 2000, 3.
18 Bessen/Maskin, 40 RAND J. Econ. 611 (2009).
19 Roin, 87 Tex. L. Rev. 503, 513-15 (2009); Bessen/Meurer, 2008, 88-89.
20 See subsection III.B.2.
21 See subsection III.A.3.b).

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I. INTRODUCTION

the pharmaceutical industry is facing numerous challenges, such as major

capital losses in revenue as the patent terms on some blockbuster drugs have
expired, spiralling costs for the development of new drugs, particularly in
running clinical trials, more stringent regulatory requirements, and increas-
ingly cost-constrained healthcare systems.22
Consequently, the focus has shifted towards alternative strategies of rev-
enue generation. Such strategies may include a move away from creating
innovative new medicines in favour of lower-risk solutions, such as im-
provements or applications. These second generation inventions are also re-
ferred to as blocking patents, incremental improvement patents, surrounding
patents, fencing patents, and second-tier patents. The strategies used to de-
velop these second generation inventions are referred to as life cycle man-
agement, evergreening patenting, patent thicketing, and patent clustering.
This increase in the number of second generation inventions in the pharma-
ceutical industry is particularly worrisome in light of the concomitant dearth
of innovative medications and it is questionable whether the movement to-
ward second generation inventions and products is well aligned with the
health needs of societies.23 In addition, second generation patents may ad-
versely impact competition by preventing generic companies from entering
into the market or at least making them hesitant to do so.
Since superior new medications are essential to maintaining and improv-
ing the health of a society, these concerns about the dearth of new medica-
tions and the increase in the number of second generation patents are im-
portant and serious. This dissertation will analyze and review whether these
concerns are justified, and, if so, whether or how patent law could help to
eliminate or lessen these concerns. Amongst others, the following issues will
be addressed: Whether the patent system is associated with the dearth of new
medications, whether the patent system sufficiently encourages manufac-
turers to invest in new medications, whether there is a correlation between
the increased number of second generation patents and any change in patent
law, whether there has been any change in the patentability requirements of
second generation inventions, whether all kinds of second generation in-
ventions retain the same value, whether second generation inventions hinder
true innovation, such as new medicines, whether second generation inven-
tions delay or prevent the entry of generic products, and, if so, whether and

22 See e.g., Federsel, 18 Bioorgan. Med. Chem. 5775, 5775 (2010); Paul, et al., 9 Nat.
Rev. Drug Discov. 203, 203 (2010).
23 Avorn, 309 Science 669, 669 (2005).

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 C. Scope of the dissertation

how the patent system can improve the situation that confronts pharmaceu-
tical companies and society in general.

B. Outline of the dissertation

This dissertation approaches and analyzes the above issues from various
perspectives, mainly within the patent system, and is structured as follows:
Chapter 1 presents a short introduction to the dissertation. Chapter 2 de-
fines the nature of inventions, considers the definition of inventions and
innovations in the pharmaceutical art, discusses the range of products in the
pharmaceutical market, and explores second generation inventions in phar-
maceutical technology along with their backgrounds. Chapter 3 examines
the specificities of pharmaceutical development procedure and of the drug
markets as well as the central role of the patent system in the industry. It
further presents recent challenges, such as the dearth of new medications
and efforts to overcome this problem. Chapter 4 revisits the patentability
requirements of selection inventions, reviews recent court cases and amend-
ed patent examination guidelines and explores the changes therein. Based
on the findings in chapter 4, chapter 5 examines concerns about the changes
in patentability requirements and assesses the implications thereof with con-
sideration of the scope and the duration of patent protection conferred by
second generation patents. Further, an understanding of the implications for
competition in the market of generic versions engendered by second gener-
ation patents is sought. After reviewing different natures of selection inven-
tions, chapter 6 seeks to formulate proposals on the scope, terms, and
patentability requirements of species selection inventions and other selection
inventions, to remove uncertainties for private players and users of the patent
system and to provide greater benefits to society. Finally, chapter 7 provides
a summary and a conclusion.

C. Scope of the dissertation

In the discussion of second generation inventions, the focus will mainly be

on chemical selection inventions, such as species selection inventions, op-
tical isomers, metabolites, and crystalline forms. These inventions are cho-
sen not only because they are characteristic examples of second generation
inventions, but also because species selection invention can represent fea-

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I. INTRODUCTION

tures of a basic invention. Therefore, they provide a good basis for further
discussion of pharmaceutical inventions and innovations. Subsequently, this
research results reported in this dissertation could be applied to all other
second generation inventions insofar as they also originate from basic in-
ventions.
Jurisdictions are selected based upon an evaluation of the extent of patent-
ing activity and of the pharmaceutical market. Firstly, patenting activity is
considered. According to the World Intellectual Property Organization
(“WIPO”) report,24 the top five countries for originating Patent Cooperation
Treaty (“PCT”) filings in 2011 were the United States, Japan, Germany,
China, and the Republic of Korea. The combined shares of these five coun-
tries accounted for 73.1% of total PCT filings.25 Furthermore, the top five
countries for originating PCT applications in the field of pharmaceuticals in
2011 were the United States, Japan, Germany, France and the Republic of
Korea.26
The market for pharmaceuticals is further considered, and the number of
national phase entries per relevant patent office is analyzed as an indicator
of the commercial attractiveness of the country or region. The top five patent
offices showing the highest number of national phase entries in 2011 were
the offices of the United States, Europe, China, Japan and Republic of Ko-
rea.27 In addition, the actual size of market is considered. According to one
report on the pharmaceutical industry, the North American market was the
world’s largest with a 41.8% share, followed by Europe, accounting for
26.8%, and Japan for 12%, in 2011.28 In addition, the most highly developed
pharmaceutical markets in 2011 were reported to be the United States, Japan,
Germany, France, Italy, Spain, Canada, the United Kingdom and the Re-
public of Korea.29
Thus, based on the patenting activities and the importance of the phar-
maceutical markets, Germany, the United Kingdom, the United States, and
Korea were selected as representative. In addition, the practice before the
European Patent Office (“EPO”) will be analyzed.

24 WIPO, 2012.
25 WIPO, 2012, 26-27.
26 WIPO, 2012, 44.
27 WIPO, 2012, 55.
28 European Federation of Pharmaceutical Industries and Associations (“EFPIA”),
2012, 14.
29 IMAP, 2012, 16.

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 C. Scope of the dissertation

This paper takes into account the fact that there are other regimes sup-
porting the progress and development of pharmaceutical innovation and se-
curing sustainable access to medicines for the public. Examples would be
regulatory exclusivities in pharmaceutical law, prizes, or government fund-
ing for research in this area. Nevertheless, this paper will focus exclusively
on the patent system. Furthermore, while issues in the area of competition
law are not treated exhaustively, such issues will be discussed to the extent
that second generation inventions are involved.

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II. PHARMACEUTICAL INVENTIONS, INNOVATIONS &
PRODUCTS

A. Cumulative nature of inventions

Most inventions have been developed based on previous inventions.30 This

has never been so accentuated as in the current evolution of high technolo-
gies.31 The cumulative nature of technological innovation poses a problem
for operating an optimal patent system,32 namely, today’s patent can hinder
tomorrow’s innovations.33 Thus, every potential inventor can be a potential
infringer,34 although this is not always immediately obvious.35
The literature on law, economics or patents is inconsistent in its use of
terms to describe previous inventions and subsequent inventions.36 Repre-
sentative terms would be first/second generation, earlier/later inventions,37

30 E.g., “[d]warfs standing on the shoulders of giants,” in Latin: nanos gigantium

hemeris insidentes, Wikipedia, available at: http://en.wikipedia.org/wiki/ Stand-
ing_on_the_shoulders_of_giants; it is a Western metaphor meaning “one who de-
velops future intellectual pursuits by understanding the research and works created
by notable thinkers of the past. (Last accessed on December 20, 2013).
31 Scherer/Ross, 1990, 264 (noting “growth of technology is cumulative and richly
interactive”); Scotchmer, 5 J. Econ. Perspect. 29 (1991) (stressing the importance of
the cumulative nature of innovation); Arrow, 1962, 616-619 (noting that today’s
invention is the input for future innovations); Vossius, 59 J. Pat. Off. Soc'y 180, 180
(1977) (noting “[a] completely pioneer invention is a rare occurrence in today’s
world.”).
32 Scotchmer, 5 J. Econ. Perspect. 29, 30 (1991).
33 Luski/Wettstein, 1 Probl. Perspect. Manage. 31, 31 (2004).
34 Merges/Nelson, 90 Colum. L. Rev. 839, 916 (1990); O’Donoghue, 29 RAND J.
Econ. 654, 655 (1998); Heller/Eisenberg, 280 Science 698 (1998) (noting strong IP
right would rather impede research than promote it).
35 Scotchmer, 27 RAND J. Econ. 322, 329 (1996).
36 Cf. Janis, 40 Harv. Int’l L. J. 151, 151-152 (1999) (using “second tier patent” as a
generic label encompassing utility models, petty patents, and so on which is different
from the regular patent system.).
37 Gallini/Scotchmer, 2002, 65.

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 A. Cumulative nature of inventions

primary/secondary patents, basic inventions/applications,38 pioneer/subse-

quent patents,39 broad/subservient patents,40 dominant/subservient
patents,41 and basic/future inventions. 42 Similarly, terms that refer to the
inventors of both inventions include first/second inventors, initial/later in-
ventors, or original developer/subsequent improvers.43 The earliest inven-
tion or patent has been referred to as the original invention, the breakthrough
invention, the initial patent, 44 the originating patent, or the parent patent.
Another comparable notion is upstream invention and downstream inven-
tion.45 The terms will be disambiguated in the following sections, and “basic
invention” and “second generation invention” will be adhered to in this pa-
per.

1. Basic and second generation inventions

An invention that is a breakthrough or pioneering invention, which provides

the roots and routes for future innovations, is often called a basic inventi-
on.46 In contrast to basic inventions, second generation inventions are gen-
erally improvements and applications of the basic inventions. A class of
invention called a “selection invention” is particularly relevant in pharma-
ceutical and chemical inventions and is discussed in detail below.

38 Matutes/Regibeau/Rockett, 27 RAND J. Econ. 60, 60-61 (1996); cf. basic/applied

research: Eisenberg, 56 U. Chi. L. Rev. 1017, 1017 (1989). (basic research which
directed solely toward expanding human knowledge vs applied research which di-
rected toward solving practical problems),.
39 Merges/Nelson, 25 J. Econ. Behav. Organ. 1, 13 (1994).
40 Merges/Nelson, 25 J. Econ. Behav. Organ. 1, 21 (1994).
41 Chang, 26 RAND J. Econ. 34, 49 (1995).
42 Friebel et al., 2006, 26.
43 Lemley, 75 Tex. L. Rev. 989 (1997).
44 Matutes/Regibeau/Rockett, 27 RAND J. Econ. 60, 60-61 (1996).
45 Heller/Eisenberg, 280 Science 698 (1998).
46 Friebel et al., 2006, 26-29.

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II. PHARMACEUTICAL INVENTIONS, INNOVATIONS & PRODUCTS

a) Improvement inventions

An improvement invention refers to an invention that essentially builds upon

a basic invention,47 or to an invention that could not have occurred until the
basic invention was available.48 Thus, improvement inventions can only oc-
cur in the wake of basic inventions are the outcome of research activities
directed to improvements or applications of previous inventions.49 In the
context of patent law, an improvement invention may be referred to as a
dependent invention, which may not be used without infringing the basic
patent, until it expires.50 Improvement inventions are ubiquitous as most
technological progress builds upon previous inventions.51 They are most
commonly found in the software industry, where incremental improvement
is endemic for various reasons.52

b) Selection inventions

Improvements can also be achieved through selection in some technical

fields. Although it is difficult to find a statutory definition, a “selection in-
vention” is generally understood as an invention that has a particular concept
which is selected from a prior broader or larger generic concept of an in-
vention and that presents superior or advantageous properties compared to

47 Bessen/Maskin, 40 RAND J. Econ. 611, 612 (2009) (improvement inventions as an

example of sequential inventions).
48 Denicolò/Zanchettin, 20 Int'l. J. Indus. Org. 801, 804 (2002).
49 Gallini/Scotchmer, 2002, 65.
50 See e.g., Korean Patent Act, Art. 98 (Relation to Patented Invention etc. of Another
Person) Jackson, 9 J. Tech. L. & Pol’y, 117, 119 (2004); Gallini/Scotchmer, 2002,
65.
51 CFMT, Inc. v. Yieldup Intern. Corp., 349 F.3d 1333, 1340 (Fed. Cir. 2003).
52 See in general, Burk/Lemley, 89 Va. L. Rev. 1575, 1620-24 (2003).

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 A. Cumulative nature of inventions

the broader concept, which were not disclosed in the prior art.53 It is an
invention that falls under the scope of the prior art disclosure, but has not
been individually disclosed in the prior art.54 A patent document from which
a selection invention is derived is referred to as a dominant patent.55Selection
inventions are also referred to as “improvement inventions” since they usu-
ally provide some unexpected results or benefits, which also help to over-
come challenges to patentability based on assertions of the obviousness
thereof.56 Selection inventions can be generally categorized into three types,
according to the selection of an individual element, sub-sets, or sub-ranges
respectively.57
Selection inventions can be found in various technical fields. When a class
of a mechanical invention is a group of structural elements, one of which is

53 Bayer/E-Isomers of N-alpha-(2-Cyan-2-alkoximino-acetyl)-amino acid derivatives

and peptides, T12/90 (1990), point 2.7 (stated “the term ‘selection’ is the singling
out of a narrow portion from a relatively broad scope immanent.”, quoting Bayer/
Diastereomer, T 12/81 OJ EPO 1982, 296, 301); see also Nastelski, Review of In-
tellectual Property and Competition Law (“IIC”) 1972, 267, 291 (describing a se-
lection invention as an invention providing a particular representative (or a subgroup)
of already disclosed product group by the first inventor which showing particularly
distinguishing effects when used as indicated by the first inventor or has the possi-
bility of a different type of use.); see also Vossius, Gewerblicher Rechtsschutz Und
Urheberrecht (“GRUR”) 1976, 165, 165 (describing that a chemical selection exists
when an second inventor has select one or more representatives from a group of
substances, one component from a mixture, or a narrower range of alloy components
from a [broader] alloy area.); see also Grubb/Thomsen, 2010, 232 (describing se-
lection invention as an invention that is the selection of a particular compound or
relatively small group of compounds from the larger group previously disclosed in
broader terms, and the compound or the small group of compounds are individually
new but fall within an earlier discloser.); see also, Blanco White, 1983, 104-106
(noting “[a] special case arises where, although the subject-matter of the claim con-
cerned has never specifically been disclosed before, there has been a prior publication
covering that subject-matter in general terms; or (in other words) there is an earlier
document which “contains a broad description or claim covering the whole area
within which the subsequent selection falls.”).
54 See, e.g., Agranat/Caner, 4 Drug Discov. Today 313, 313-314 (1999).
55 Miller/Evans, 2010, 14-15.
56 Miller/Evans, 2010, 14, fn12.
57 Guidelines for Examination in the European Patent Office, June 2012, (herein after
“EPO Examination Guidelines”), G-VI, 8 (“Selection inventions deal with the se-
lection of individual elements, sub-sets, or sub-ranges, which have not been explicitly
mentioned, within a larger known set or range”).

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II. PHARMACEUTICAL INVENTIONS, INNOVATIONS & PRODUCTS

selected as being particularly useful, it is a selection invention.58 Examples

of such inventions can be found in the field of alloys, where a specific range
of compositions are chosen, or in the field of engineering and manufacturing,
where specific operating conditions are selected. Selection inventions are
typically encountered in pharmaceutical and chemical technologies. In the
field of chemistry, any competent researcher who invents one compound and
discovers its usefulness, can enumerate derivatives that may be equally use-
ful, even though it remains beyond the power of the researcher to manufac-
ture more than a few of those compounds at the time of filing.59
Although second generation patents can be found in all technological
fields, this thesis will focus on those in the pharmaceutical industry. Phar-
maceutical selection inventions could be a selection of a compound or of
compounds, the use of a compound, a chemical process, dimensions, a range
of values, parameters, crystal forms,60 nanoscales, dosage regimes, and so
on.61 A more extreme case of a selection invention would be claiming a
known compound with a very high level of purity.62

B. Inventions and innovations in pharmaceutical field

1. Inventions and patents in pharmaceutical field

Categories of pharmaceutical patents are not generally different from patents

in different fields of technology. Compounds and processes can be subject
to patent protection, but a new use of a known compound can be patented
depending on the particular jurisdiction. Typical pharmaceutical patents can
protect active ingredients and their metabolites, hydrates, salts, esters, in-
termediates and the like combinations of more than two active ingredients,
methods of manufacturing the active ingredient and its intermediates, dif-
ferent methods or uses of medical treatment of known medications (includ-

58 Grubb/Thomsen, 2010, 64.

59 See e.g., Blanco White, 1983, 104.
60 Smith Kline & French Laboratories v. Evans Medical [1989] Fleet Street Report
(“F.S.R.”) 561,563 (Aldous J. noted “the polymorph patent is said to be a selection
patent, in that the [basic] patent disclosed Cimetidine makes no mention that it can
exist in A, B or C [crystal] form.”[Emphasis added]).
61 See generally Miller/Evans, 2010, 14-15; for the dosage regime, refer Abbott Respi-
ratory/Dosage Regime, G 2/08 (2010), para 6.3.
62 Grubb/Thomsen, 2010, 237.

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 B. Inventions and innovations in pharmaceutical field

ing dosage regimes), and formulations of a drug, including new dosage

forms, devices such as patches, drug delivery systems.63 These inventions
and patents will be explained in detail in chapter II.C. The protection covers
various aspects of pharmaceutical innovation. It is possible to form a hier-
archy among compound, use or process claims of patents based on the scope
of protection that the patents provide.

a) Product invention and the absolute character of its protection

A claim to structures rewards patentees with exclusive rights to all properties

and manufacturing processes thereof, regardless of whether properties or
processes discovered subsequently were acknowledged by the applicant at
the time of filing. If the product is a compound, this is called “absolute com-
pound protection”,64 which differs from “purpose-limited protection”, where
the patent can cover only the purpose of the compound as indicated in the
patent application.65 Regarding the broader scope of the exclusivity of the
product, Jacob LJ noted:
“[A]ny product claim is apt to give the patentee "more than he has invented" –
and in two ways. Firstly such a claim will have the effect of covering all ways
of making the product including ways which may be inventive and quite dif-
ferent from the patentee's route. Secondly it will give him a monopoly over all
uses of the patented compound, including uses he has never thought of.”66
Although there are arguments for purpose-limited protection,67 the Federal
Supreme Court of Germany (“BGH”) clearly addressed the effect of absolute
chemical protection on the pharmaceutical industry. In the Klinische Ver-

63 Voet, 2011, 59.

64 Kraßer, 2009, 130 et seqq.; Bacher/Melullis in: Benkard et al., 2006, § 1 Rdns 12
and 16; Deutsches Patent- und Markenamt (“DPMA”), 2008, 29; Merges/Duffy,
2011, 393; cf. Case C-428/08, Monsanto Technology LLC v. Cefetra BV and
Others, E.C.R. 2010, I-06765 (holding the Art. 9 of Council Directive 98/44/EC of
6 July 1998 on the legal protection of biotechnological inventions did not confer
absolute protection to the patented product, i.e. a patented DNA sequence, when it
was contained in soy meal, where it did not perform the function for which it was
protected); see also Kilger/Feldges/Jaenichen, 87 J. Pat. & Trademark Off. Soc'y
569 (2005) (for the German perspectives of purpose-limited compound protection
for the sequences of human genes in German Patent Act ).
65 DPMA, 2008, 29.
66 Lundbeck v. Generics Ltd. [2008] EWCA Civ 311, para 54.
67 Domeij, 2000, 85 et seqq.; Merges/Duffy, 2011, 399.

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II. PHARMACEUTICAL INVENTIONS, INNOVATIONS & PRODUCTS

suche case, the BGH held that as a consequence of dependent patents, the
product patent kept its economic value, since in order to exploit the use
patent, the later patentee would need the approval of the product patentee.
Accordingly, the earlier patent retained its full validity with respect to third
parties regarding the use protected by the later patent. 68 This increases the
value of the product patent and allows the holder to exploit the exclusive
right of the earlier patent.69

b) Hierarchy of pharmaceutical patents

The hierarchy of pharmaceutical patents can be established according to the

scope of patents. The most valuable is a compound patent, because it affords
absolute compound protection in that it covers a product independent of its
formulation, manufacture, or use and without regard to how much of the
patented compound it contains, as long as it contains an active ingredient
covered by the compound patent.70
A medical use patent covers the (un)approved second or further medical
use of a previously patented compound with a first medical use.71 Since this
type of patent also covers any product claiming the protected medical use,
it is the second most valuable patent. However, given the problems of en-
forcement associated with this type of patent, it is not easy to encourage
pharmaceutical manufacturers to invest their R&D resources in this new use
of old drugs. 72 Induced infringement can be found only when a drug product
has an instruction for the other’s patent-protected medical use. The off-label

68 BGH/Klinische Versuche (Clinical Trials), GRUR 1996, 109, 115. Since official
translations of materials in language other than English are not always available, the
author did it by consulting other’s translation or by herself. For accuracy, please
check its original version.
69 BGH/Klinische Versuche (Clinical Trials), GRUR 1996, 109, 115.
70 Nastelski, IIC 1972, 267, 271-72 (noting an unlimited protection provided to the
patented product which has no definite external form, and only the patentee is au-
thorized to make the product or the chemical substance commercially, to bring it into
commerce, to offer it for sale or to use it.); Grubb/Thomsen, 2010, 77’ Voet, 2011,
60; SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331, 1341-42 (Fed. Cir.
2005) (holding no matter how small the amount is, as long as the product contains a
compound protected by a patent, it infringes the compound patent.).
71 Voet, 2011, 60.
72 Eisenberg, 5 Yale J. Health Pol’y L. & Ethics 717, 724-25 (2005).

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use by the doctors73 - the prescription of a medication in a manner different

from that approved by regulatory authorities - can be a serious problem for
the patentee of a new medical use seeking to enforce his patent right.
The remaining types of patents can be ranked below the previous two.
The scope of these patents is normally narrow, and sometimes excessively
specific. Consider, for example, the scope of a patent covering a product
manufacturing process. As the Imperial Supreme Court of Germany held in
1888, the protection of a manufacturing process included those products
made directly by the protected process.74 However, it cannot prevent anyone
from making the same products by a completely different method, if
any.75 In addition, a patent might be less useful for a process than a product,
because it is more difficult to prove patent infringement for a process.76 A
process patent can be enforceable when the use of that process invention can
be determined from the end-product or from other evidence, such as trace
impurities.77 For this reason, TRIPS requires that the onus of proof is re-
versed and imposed upon the alleged infringer of the patented process if the
compound is novel.78
This narrow but overly specific claim often makes it very difficult to de-
sign around the patent. A patent with a very narrow scope of protection can
therefore be extremely valuable in preventing the market entry of generic
versions.79 As patents for compounds, new uses and processes offer different
strategic values to the patent holder, industries often recognize the hierarch-
ical differences and strategically seek protection accordingly.

73 Stafford, 358 N. Engl. J. Med., 1427 (2008).

74 Methylenblau, 22 Reichsgericht in Zivilsachen 8 (holding “the product manufactured
by means of the (protected) process does not fall outside of subject-matter of inven-
tion, and constitutes the end-point as characterized by patent law. Thus the process
comprises the product manufactured by the by said process as part of the subject-
matter of the invention.”).
75 Grubb/Thomsen, 2010, 77-78; Nastelski, IIC 1972, 267, 272 (a third party patent on
method of preparation or forms of use of the product is dependent on the product
patent, and he cannot practice his patent commercially without the approval of the
holder of the product patent.).
76 Cohen/Nelson/Walsh, 2000, 10.
77 Grubb/Thomsen, 2010, 245.
78 TRIPS Art. 34 (Process Patents: Burden of Proof), In other words, the court would
assume that it has been produced by the patented process unless the alleged infringer
would prove otherwise.
79 See subsection V.D.3.d).

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2. Innovations in pharmaceutical field

The pharmaceutical industry has been referred to as one of the best examples
of an industry for which patents are regarded as socially desirable, since
incentives arising from patents appear to be prerequisites for the vast ma-
jority of pharmaceutical innovations. If there is an invention that cannot be
categorized as such, however, its protection might be unjustified. Therefore,
it will be helpful to define what pharmaceutical innovation is and what it is
not.

a) Invention v. innovation

The distinction between invention and innovation returns us to Schumpeter’s

Theory of Economic Development.80 Schumpeter distinguishes the act of
innovation, which is a new combination of known and/or unknown means
of production, from the act of invention, which creates a new means of pro-
duction.81 He further argues that invention of itself does not produce an eco-
nomically relevant effect.82 In contrast, innovation brings incessant changes
in economics through a so-called “process of creative destruction.”83 Eisen-
berg notes that an innovation may be defined as putting existing inventions
to practical use.84 Svatos argues that the innovation is the final product that
appears on the market and is different from the invention for which a patent
was granted.85 He further argues that patents therefore stimulate a combi-

80 Nelson/Winter, 1982, 263.

81 Schumpeter, 1964, 100-101 (Innovation comprises: (1) the introduction of a new
good or of a new quality of a good; (2) the introduction of a new method of production
which includes a new way of handling a commodity commercially; (3) the opening
of a new market for the good, irrespective of the prior existence of the market; (4)
the conquest of a new source of supply of raw materials or half-manufactured goods;
(5) the carrying out of the new organization of any industry, such as the creation of
a monopoly position or the breaking up of a monopoly position.); Schumpeter, 1942,
139-140 (mentioning the competition of these types of innovations); He distin-
guished these two without mentioning “innovation,” which appears in his later pub-
lication, Business Cycle, 1939, 84).
82 Schumpeter, 1939, 80.
83 Schumpeter, 1942, 137-38.
84 See e.g., Eisenberg, 56 U. Chi. L. Rev. 1017, 1036-37 (1989).
85 Svatos, 13 Soc. Philos. Policy 113, 122 (1996).

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nation of invention and marketing skill.86 Merges similarly holds that “[a]n
invention refers to the practical implementation of the inventor’s idea. […]
An innovation is the ‘debugged’ and functional version of the invention: the
version first offered for sale.”87 He further contends that the innovation
significantly differs from the invention because of the changes necessary to
turn the invention into a commercial product.88 While the distinction be-
tween invention and innovation is somewhat simplified, since the process
of development is a continuum,89 the two ends, i.e. invention and innovation
are relatively easy to distinguish.
Chronologically, once an invention has been made, substantial investment
is often needed to ready the invention for the market.90 Such investment can
involve the construction of a new plant or equipment, promotion or adver-
tisement.91 Indeed, innovation, in conjunction with investment and devel-
opment, is more sensitive to economic variables than invention.92 Convert-
ing inventions into innovations is a core feature of technological
progress.93

b) NMEs as the core of pharmaceutical innovation

Every product available on the pharmaceutical market which is developed

from an invention can be considered an innovation. However, the signifi-
cance of an innovation can vary substantially between a second generation
product and new medical entities (“NMEs”).94 In other words, for some
products, such as NMEs, substantial investment in preclinical and clinical
trials to meet regulatory requirements must be made to bring the invention
to market, in contrast to second generation products. More importantly,
NMEs are basic inventions that bring constant changes in market economics

86 Svatos, 13 Soc. Philos. Policy 113, 122 (1996).

87 Merges, 76 Cal. L. R. 803, 807 (1988).
88 Merges, 76 Cal. L. R. 803, 807 (1988) (also noted this distinction between invention
and innovation has been criticized as a simplified dualism by some economists, who
argue that the process of development is actually much more of a continuum).
89 Nelson/Winter, 1982, 263-64; Merges, 76 Cal. L. R. 803, 807 (1988).
90 See e.g., Eisenberg, 56 U. Chi. L. Rev. 1017, 1037 (1989).
91 See e.g., Eisenberg, 56 U. Chi. L. Rev. 1017, 1037 (1989).
92 Scherer, 1984, 26.
93 Chandy, et al., 43 J. Marketing Res. 494 (2006).
94 See subsection II.D.1.

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through various second generation products. Thus, NMEs are the really
valuable innovations in the pharmaceutical industry. In this context, we must
question whether current patent protection for pharmaceuticals incentivizes
R&D of truly valuable innovation.

C. Second generation inventions and patents in pharmaceuticals

As noted above, some evidence in the cases involving second generation

inventions is complicated.95 After a basic research period, leading to the
identification of a “lead compound”, the typical procedure in developing a
medicine can be briefly summarised as follows: “With the selection of the
lead compound, the chemist and biologist embark on an extensive program
to improve its potency, the specificity of biological effect with concomitant
reduction in toxicity, oral absorption, duration of action, metabolic profile
and pharmacokinetic pattern. This typically involves extensive structure-
activity relationship (“SAR”) studies.”96
The lead compound or the lead compound series are to be patentable,97
and generally, the outputs from subsequent developments are also the objects
of patent protections. Using the concept of basic and second generation in-
ventions, the lead compound will be the basic invention, and the following
inventions will be second generation inventions. The second generation in-
ventions from the lead compound can be salts, esters, ethers, polymorphs,
metabolites, pure form, particle size, isomers, mixtures of isomers, com-

95 Laboratoires Servier v. Apotex, [2008] EWHC Civ 445, para 41.

96 deStevens, 1990, 266; Domeij, 2000, 26.
97 deStevens, 1990, 266; Domeij, 2000, 26.

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plexes, combinations and other derivatives of known substance, and the like.
These inventions are eligible for patent protection in most jurisdictions.98
Beyond second generation, there can be (n+2) generation inventions, such
as, a new crystal form of a known salt of a basic medication,99 a new use of
a known metabolite, 100 solvates or hydrates of a known salt form, and the
like. However, all of these types of invention will be comprehensively re-
ferred to as second generation inventions in this dissertation since all such
inventions arise subsequent to the basic invention.
The relevant inventions, patents and types of claims for second generation
inventions are explained briefly here, according to the three types, i.e. prod-
uct patents, use patents, and process patents.

1. Product inventions and patents

a) Species selection inventions

In the U.S., the United States Patent and Trademark Office (“USPTO”) de-
fines a species selection invention as an invention that is a different embod-
iment or a species that could fall within the scope of a generic inven-
tion.101 Further, a generic invention should require no material element ad-

98 In some jurisdictions, such as India, these cannot be patent eligible if these second
generation inventions are regarded as the mere discoveries of new properties or new
uses for a known substance. See Sec. 3(d) of Indian Patents Act, 1970 (“The mere
discovery of a new form of a known substance which does not result in the en-
hancement of the known efficacy of that substance or the mere discovery of any
new property or new use for a known substance or of the mere use of a known
process, machine or apparatus unless such known process results in a new product
or employs at least one new reactant.”); see further Manual of Patent Office Practice
and Procedure in India, 08.03.05.04 (Ver. 01.11, as modified on March 22, 2011)
(“Explanation: For the purposes of this clause, salts, esters, ethers, polymorphs,
metabolites, pure form, particle size, isomers, mixtures of isomers, complexes,
combinations and other derivatives of known substance shall be considered to be
the same substance, unless they differ significantly in properties with regard to
efficacy.” [Emphasis added]).
99 E.g., Laboratoires Servier v. Apotex, [2008] EWHC Civ 445 (crystalline forms of
tert-butylamine salt of perindopril were claimed).
100 E.g., Teva v. Merrell [2007] EWHC 2276 (Ch) (the new uses of a metabolite of a
known substance were claimed).
101 U.S. Patent & Trademark Office, Manual of Patent Examining Procedure (8th ed
2010) (“MPEP”), § 806.04; see also Chisum, 2012, § 12.03[3].

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ditional to those required by a species invention and each species invention

must require all of the limitations of the generic invention.102 Similarly, in
Europe, EPO considers that a selection invention deals with the selection of
individual elements, which have not been explicitly mentioned within a
larger known set as a selection invention.103

Markush type claim

The use of a Markush type claim104 was first reported in a U.S. case involving
Eugene Markush, who filed a patent application in 1924 for pyrazolone dyes
where a generic structure was claimed.105 This type of claim is used when
no generic term describes the desired individual species that share common
significant features, similar properties or activities, or at least one common
function, or which have an equivalent basis for categorization in the same
group.106 The scope of this kind of claim in chemistry is limited by the com-
pounds that can be manufactured by combining various alternatives men-
tioned for the different positions in the formula. One famous example is a
claim in respect of a cheese cigarette filter, which reads: “A cigarette filter
according to claim1 in which the cheese comprises grated particles of cheese
selected from a group comprising Parmesan, Romano, Swiss and Cheddar
cheeses.”107
Although there are some downsides to using it,108 this type of claim is
very popular and common as it has several advantages. It may offer broader
protection for the patentee and it is easier to file as one multinational patent

102 MPEP § 806.04 (d).

103 EPO Examination Guidelines”), G-VI, 8.
104 Markush type claims are one of the formats of claiming, such as Jepson type claims,
product-by-process claims, means-plus-function claims, step-plus-function claims,
and the like.
105 Fitt, 20 Biotechnol. Law Rep. 17, 18 (2010).
106 See e.g., Durham, 1999, 57; Valance, 1 J. Chemical Documentation, 87, 87-88
(1961); Miller/Evans, 2010, 146-48.
107 U.S. Patent No. 3,234,948 (February 15, 1966, under the title of “Cheese-Filter
Cigarette”).
108 These disadvantages could be the difficulty to search through the normal database,
increased prosecution time and examination errors, undermining their status as the
prior arts, and being unclear in their scope of protection, see e.g. Brown, 31 J. Chem.
Inf. Comp. Sci. 2, 3-4 (1991) (also noting “it is unreasonable to expect that so many
compounds will exhibit activity similar to the activity shown by substances for
which practical data is supplied.”).

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application rather than several separate patent applications. Furthermore, it

can provide the licensor with a stronger basis for cross-licensing agreements
with licensees, who own improvement (selection) patents that use the licen-
sor’s invention.109
The following is an example of a Markush type claim in U.S. Patent No.
4,115,574,110 which can also be referred to as a “genus” claim.

(Underlines added).

109 Brown, 31 J. Chem. Inf. Comp. Sci. 2, 2-3 (1991); see also Miller/Evans, 2010,
146-48 (noting “the power of Markush claiming is most evident when combinations
of Markush groups are all used within the same claim. The number of possible
embodiments of the invention multiplies in a combinatorial fashion not practically
reproduced by drawing all of the embodiments separately.”).
110 U.S. Patent No. 4,115,574 (September 19, 1978, under the title of “Benzodiazepine
derivatives”), this claim was simpler than the correspondent claim of a U.K. patent,
and is a good example of a basic invention.

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A species claim
About 15 years after U.S. Patent No. 4,115,574 was granted, a combination
of the optional variables mentioned above, such as R1, R2, and the substitu-
tion in the thiophene ring, was filed by the same applicant as follows:111

This is referred to as a “species” claim because it is a claim directed to a

specific species from a genus.
The compound named above has the following chemical formula:

One can arrive at this formula by selecting the underlined groups from the
above “genus” claim 1 of the U.S. Patent, i.e., C1 alkyl(-CH3) group for
R6; hydrogens for both R1 and R2; and the thiophen ring, which is substituted
by a C1 alkyl (-CH3) group in the 2-position. This compound was later named
“Olanzapine”. It is evident that the structure of the compound itself was
already disclosed in the prior art as one of the possible combinations, al-
though it was not disclosed specifically. This kind of invention, like the
invention of “Olanzapine” is achieved through a specific and particular se-
lection from a group disclosed in the prior art, and thus is referred to as a
species selection invention.

111 U.S. Patent No. 5,229,382 (July 20, 1993, under the title of “2-methyl-thieno-ben-
zodiazepine”).

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b) Optical isomers

Organic chemical compounds contain carbon atoms (“C”s) which are co-
valently bonded to other atoms. Each carbon atom normally forms four
bonds.112 If a carbon atom has four single bonds, the four other atoms around
the carbon atom usually form a tetrahedral spatial arrangement (See Figure
1).113 Compounds with the same molecular formula or atomic composition,
but with a different spatial arrangement are called stereoisomers. Optical
isomers114 are one type of stereoisomers and can be classified further into
enantiomers and diastereomers.115 Enantiomers are a pair of stereoisomers
that differ only in their spatial arrangements and have at least one “stereo-
center,” which is a carbon atom (C) with four different groups attached.116
The spatial structure is the nonsuperimposable mirror image of the other,
designated “chiral,” which is derived from the Greek cheir, meaning
“hand.”117 Its three dimensional molecular structure is depicted with wedges
and dashes and the enantiomers of the amino acid alanine are presented in
Figure 1 as an example. Various naming conventions are used to distinguish
between the enantiomers, such as “(+)” or “(-)”, “(d)” or “(l)”, “(D)” or “(L)”,

112 William 1999, 18.

113 Macomber, 1996, 97 (Further noting the study of this kind of three-dimensional
structure of molecule and the spatial relationship among the atoms is called stere-
ochemistry. Macomber, 1996, 189).
114 This is because a pure enantiomer rotates plane-polarized light in a particular di-
rection, such as clockwise, or counterclockwise.
115 “Diastereomers” are the optical isomers which occur when there are more than one
chiral centers in the compound and which are non-superimposable, non-mirror im-
ages of others. And “epimers” are diastereomers that differ in configuration of only
one stereogenic center.
116 For example, two different mirror-imaged forms are a “right handed form” and a
“left-handed form.” In Figure 5, the carbon atom in the center is a stereocenter to
which four different groups has been attached, namely –COOH, -NH2, -CH3, and
H. The solid wedge is used to indicate that the methyl group (–CH3) is projecting
out of the page (toward to the viewer), while the hashed line indicates that the
hydrogen atom (H) is behind the page (away from the viewer). Some compounds
having more than two chiral centers result in multiple possible three-dimensional
arrangements which are known as diastereomers.
117 See generally William 1999, 612-613; see also Ortho-McNeil Pharm., Inc. v. Mylan
Labs., Inc., 348 F. Supp. 2d 713, 720 (N.D.W.Va. 2004), aff’d, 161 Fed.Appx. 944
(these kinds enantiomeric compounds are thus often analogized to a person’s left
and right hands).

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and “(R)” or “(S)”,118 and for the racemates, “(±)” or “(dl)” or (RS) are
used.119 A “racemic mixture” or a “racemate” refers to an equal mixture of
R and S enantiomers.120

Figure 1: Example of an enantiomer - an amino acid, alanine.

Research into drug chirality has been underway since 1874.121 Although
enantiomers have nearly identical physical properties, they often have dif-
ferent activities and side effect profiles. This has long been recognized both
by academia, by industry and by regulatory authorities.122 These are the
medications that are separated from the racemate mixtures; the components
obtained are responsible for beneficial pharmacological action, while other
components that are usually responsible for side effects are excluded.123
More than half of the drugs listed in the Pharmacopoeia124 are chiral

118 These systems are not interchangeable.

119 Unless otherwise indicated, R/S system is used in this paper.
120 Racemates are normally produced through a chemical reaction which prepares a
chiral compound from an achiral compound in normal conditions.
121 Mansfield/Henry/Tonkin, 43 Clin. Pharmacokinet. 287, 287 (2004).
122 Caldwell, 16 Hum. Psychopharm. S67, S67, S70 (2001) (noting the existence of
optical enantiomer was recognized in 1848, and the research into enantiomers has
become to be more active since 1980s according to the technical progresses on
separation, analysis, and production on an industrial scale of enantiomers); Dar-
row, 2 Stan. Tech. L. Rev. 1, para 7 (2007) (noting enantiomers can exhibit sub-
stantially different biological, pharmacological, or toxicological activity).
123 The National Institute for Health Care Management Research and Educational
Foundation (“NIHCM”), 2002, 5.
124 Pharmacopoeia is a book containing directions for the identification of samples
and the preparation of compound medicines, and published by the authority of a
government or a medical or pharmaceutical society.

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molecules,125 including many of the world’s best-selling products, such as

Lipitor®, Plavix® and Nexium®.126 Other well-known chiral drugs include
Ibuprofen, Claritin®, Allegra®, Prilosec®, Zyrtec®, and even thalido-
mide.127
Enantiomer patents claim selected individual enantiomers of racemic
mixtures that were previously disclosed in the prior art, mainly, their basic
patents. For this reason, an enantiomer patent may be categorized as a se-
lection invention. The importance of enantiomer patents is reflected in the
“patent cliff”128 threat by the expiration of enantiomer patents on blockbuster
chiral drugs.129 Knowledge of the structure of one enantiomer, or of a race-
mate, necessarily furnishes a person skilled in the art with knowledge of the
structure of the other or both enantiomers.130 This leads to a fundamental
inquiry regarding the novelty or obviousness of enantiomer inventions.131
The validity of enantiomer patents has often been challenged, mostly by
generic pharmaceutical companies on the grounds of lack of novelty, lack
of inventive step, lack of utility, double patenting, and insufficiency of dis-
closure.132

125 Ariëns/Wuis, 42 Clin. Pharmacol. Ther.361, 361-62 (1987) (showing 949 out of
1675 drugs listed in the Pharmacopoeia were chiral, 461 of the 469 natural or semi-
synthetic chiral products (98.3%) are single enantiomers, but only 58 of 480 syn-
thetic chiral products (12.1%) are single enantiomers).
126 IMS Health, 2010 (the top three best-selling global drugs from 2007 to 2009 and
top three out of top four best-selling global drugs in 2010 are single enantiomers).
127 Darrow, 2 Stan. Tech. L. Rev. 1, para 2 (2007).
128 See chapter III.B.3; See also Mansell, 1 Scrip Executive Briefing 1, 1–16, (2008)
(explaining that “patent cliff” is a term for the loss of revenue which occurs when
the monopoly granted by patents is lost and the generic versions of drugs enter into
the market. It is expected that the patent cliff reaches its peak in 2010-2011 as
patents of many blockbusters including SanofiAventis‘ Clopidogrel, Pfizer’s Ator-
vastatin, and others expire.).
129 Agranat/Wainschtein, 15 Drug Discov. Today, 163, 169 (2010).
130 Darrow, 2 Stan. Tech. L. Rev. 1, paras 5-6 (2007).
131 See e.g., Darrow, 2 Stan. Tech. L. Rev. 1, paras 5-6 (2007).
132 Agranat/Wainschtein, 15 Drug Discov. Today, 163, 163 (2010); Darrow, 2 Stan.
Tech. L. Rev. 1, para 3 (2007) (noting the patentability of chiral molecules has taken
on increased significance and is a subject of litigation.).

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c) Crystalline forms

Polymorphs are different crystalline forms of the same compound. Poly-

morphism denotes the ability of a material to exist in more than one form or
crystal structure. It was discovered in the 19th century that many substances
could be crystallized into solids with different melting points and crystal
habits.133 The molecules in the crystalline form are arranged in an organized
pattern called a “lattice”; which is different from an amorphous form, in
which the molecules are randomly distributed.134 Among the substances that
exist in crystalline form, some can be in one crystalline form, which is re-
ferred to as a monomorphic substance, for example, wax or common window
glass. Others that exist in more than one organized pattern, such as the cocoa
butter in chocolate,135 are referred to as polymorphs. According to the shape
of the crystals, polymorphs can often exhibit different physico-chemical
properties, such as stability, solubility, hygroscopicity,136 and hardness,137
although their chemical composition is identical in all forms. Examples
among drugs include Ranitidine (Zantac®), Paroxetine (Deroxat®), and
Cefnidir (Omnicef ®). A patent for a polymorph can be extremely valuable
when the patent covers the most stable form at ambient conditions, consid-
ering that less stable forms may spontaneously convert to the most stable
form.
Co-crystals such as solvates or hydrates are called pseudo-polymorphs.
If the substances are dissolved in a solution, they are normally recovered by
evaporation of the solvent. 138 If this evaporation is conducted with carefully
controlled parameters (e.g. “in water solvent,” such as humidity, or drying /
evaporating), some substances can retain a certain number of water

133 Brittain, 2009, 1.

134 Giron, 73 J. Thermal Analysis & Calorimetry 441, 441-42 (2003).
135 Cacao butter could exist in six different crystalline forms; the most thermodynam-
ically stable form (form VI) has a dull surface and soft texture; however, form V is
the most appreciated by consumer and shows the crispy hardness and glossy surface.
In order to make chocolates crystallize exclusively in the preferable form (form V),
the crystallization process must be controlled by a sophisticated temperature
regime, see in general, Von der Freien, 39 Chemie in Unserer Zeit, 416, 423 (2005).
136 “Hygroscopicity” means the readiness of a substance to absorb moisture from the
atmosphere.
137 Brittain, 2009, 2-3.
138 Seager/Slabaugh, 2010, 279.

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molecules as part of the solid crystalline structure.139 This type of crystalline

form is called a “hydrate.”140 If the same procedures are followed “in a sol-
vent other than water,” the resulting crystalline form is called a “solva-
te”.141
Claims to polymorphs can be suitably drafted by using their physico-
chemical parameters, which are determined by Single crystal X-ray diffrac-
tion (SXD), X-ray powder diffraction (XRPD), Infrared(IR)- or Raman
spectroscopy, solid state 13C-Nuclear Magnetic Resonance (NMR) spec-
troscopy, and the like. Thus, in a properly drafted claim for polymorphs,
many figures are listed.142

d) Metabolites and prodrugs

Metabolites are substances produced in the body through the metabolism of

other substances and in some cases are responsible for the pharmacological
effects observed. The metabolism of substances absorbed in the body makes
the ingested substance more water-soluble and readily excreted by the kid-
ney.143 This is one of the major pathways by which a xenobiotic substance,
such as a medication, is inactivated.144 However, it is not uncommon to find
that a metabolite itself has pharmacological effects, while the parent medi-
cation that is metabolized to it does not.
Prodrugs are bioreversible derivatives of active drugs. The active ingre-
dients exerting the pharmacological effects are released through biotrans-

139 Seager/Slabaugh, 2010, 279.

140 Seager/Slabaugh, 2010, 279 (the retained water in the crystalline structure is called
the water of hydration, and according to the number(n) of water molecules in the
crystalline structure, they are called anhydrate (n=0), hemihydrates (n=1/2), mono-
hydrate (n=1), dihydrate (n=2), and the like.).
141 Giron, 73 J. Thermal Analysis & Calorimetry 441, 442 (2003) (further noting
solvates were new crystalline compounds formed with the solvent, i.e. were the
combination of solvent molecules with the compound molecules).
142 Claim 1 of GB Patent No. 1,543,238 (March 28, 1979, under the title of “Polymorph
of Cimetidine”)
A substantially crystallographically pure polymorphic form of Cimetidine (Cime-
tidine A) which is characterised by an infra red spectrum (1% KBr disc) having
very strong, broad peaks at 1400 and 1385cm-1, a strong, sharp peak at 1205 cm-1
and a medium-sharp peak at 1155 cm-1 and having no peak at 1180 cm-1.
143 Ionescu/Caira, 2005, 3.
144 Ionescu/Caira, 2005, 41.

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formation in the body. Prodrugs account for 5-7% of the drugs approved
worldwide.145 Prodrugs are chemicals with little or no pharmacological ac-
tivity, but they are used to improve the efficacy of established drugs.146
Through this approach, one can improve the bioavailability of the active
drugs or make oral administration possible by overcoming poor solubility,
instability, insufficient oral absorption, local irritation, and the like.147 Ex-
amples of prodrugs include the well-known proton pump inhibitor148
Omeprazole, the ACE inhibitor149 Enalapril, and the antibiotic Hetacillin.150

Figure 2: A simplified representative illustration of the prodrug concept151

a | The drug–promoiety is the prodrug that is typically pharmacologically inactive. In

broad terms, the barrier can be thought of as any liability or limitation of a parent drug
that prevents optimal (bio)pharmaceutical or pharmacokinetic performance, and which
has to be overcome for the development of a marketable drug. The drug and promoiety
are covalently linked via bioreversible groups that are chemically or enzymatically labile,
such as those shown here. The ‘ideal’ prodrug yields the parent drug with high recovery
ratios, with the promoiety being non-toxic.

145 Rautio, et al., 7 Nat. Rev. Drug Discov. 255, 255 (2009); Oellerich/Armstrong, 47
Clin. Chem. 805, 805 (2001).
146 Ionescu/Caira, 2005, 372.
147 Rautio, et al., 7 Nat. Rev. Drug Discov. 255, 255 (2009); Oellerich/Armstrong, 47
Clin. Chem. 805, 805 (2001).
148 A proton pump inhibitor has long-lasting effect to reduce the gastric acid production
and used for the treatment of a couple of disorders related to the over-secretion of
gastric acid, such as gastritis or peptic ulcer disease.
149 An ACE inhibitor is an “angiotensin-converting-enzyme” inhibitor and used for the
treatment of hypertension and congestive heart failure.
150 Hansen/Hirsch, 1997, 342.
151 Rautio, et al., 7 Nat. Rev. Drug Discov. 255, 256 (2009).

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How substances are categorized depends on when their characteristic is

identified. Two main cases may be distinguished. If the pharmacological
effect of a medication is due to the transformation of a drug into a metabolite,
the medication may be called “a drug” and an “active metabolite”. If, on the
other hand, said effect is due to the release of the drug from a larger chemical
entity, then the medication may be called “a drug” and “a prodrug”.

e) Esters and salts

Esters are chemical compounds that react with water to produce alcohols
and organic or inorganic acids. Thus, when a medication is in alcohol form,
it can be converted to its ester form via reaction with acids. In turn, when
this ester form is administered to the patient, it will be hydrolyzed in the
physiological condition to yield alcohols or acids that will have pharmaco-
logical effects.152 Aspirin, which is remarkably versatile, is an acetyl ester
of salicylic acid.153
Salts are compounds that result from the neutralization reaction of a base
and an acid. Salts are composed of positively charged ions (cations) and
negatively charged ions (anions); and can be organic or inorganic (metal-
lic).154 Salt forms may enhance absorption in the body or the stability of
product, or they may be formulation-friendly.

f) Dosage forms

A dosage form is the entity administered to patients in order that that they
receive an effective dose of a drug, such as tablets, capsules, injections, and
transdermal patches.155 These kinds of inventions may include different
strengths, an extended release form, or another delivery system such as an
inhaler, or implanted device.156 A sustained release drug delivery system,
for example, aims to maintain therapeutic blood levels of the drug for an
extended period by controlling the rate of release of the drug from the dosage

152 Seager/Slabaugh, 2010, 481-82.

153 Seager/Slabaugh, 2010, 481.
154 Seager/Slabaugh, 2010, 278-79.
155 Mahato/Narang, 2012, 15-16.
156 NIHCM, 2002, 5.

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form.157 This can be achieved by providing multiple doses of a drug within

a single dosage form, which are released at periodic intervals, or by delaying
the timing of the first release.158 Over the past forty years, the sustained
release drug-delivery system has attracted considerable attention, since it
can reduce the frequency of dosing, increase effectiveness of the drug by
reducing the dose required, reduce the incidence of adverse effects, provide
uniform drug delivery, and simplify dosing regimes.159

g) Combinations of active ingredients

A new product can be provided by combining the active ingredient of an

approved drug with one or more other active ingredients.160 As in other
technical fields, a mixture of known substances can be patentable if it meets
the requirements of patentability. For example, the combination of aspirin
and another pain-killer, such as Naproxen,161 can be created to enhance their
analgesic or anti-inflammatory therapeutic effect; or a combination of two
diuretics (amiloride and hydrochlorothiazide) with different mechanism of
action can exhibit more than additive effects. Thus, said combinations can
be claimed.162

2. Use inventions

a) New Use/New method of treatment

A medical indication is a symptom or particular circumstance indicating the

advisability or necessity of a specific medical treatment or procedure. The
nature of a medical use invention is based on a newly identified effect, and

157 Jantzen/Robinson, 2002, 748.

158 Jantzen/Robinson, 2002, 748.
159 Jantzen/Robinson, 2002, 747; see also Actavis UK Ltd v. Novartis AG [2010] EW-
CA Civ 82, para 62 (Jacob LJ noted a sustained release might provide better efficacy
or fewer side effects or better compliance).
160 NIHCM, 2002, 5.
161 E.g., Willkens/Segre, 19 Arthritis & Rheumatism 677, 680-81 (2006).
162 Merck & Co., Inc. v. Biocraft Laboratories, Inc., 874 F.2d 804 (Fed. Cir. 1989),
cert. denied, 493 U.S. 975 (1989) (holding the patent was invalid because of lack
of inventive step over prior art).

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is a new teaching that results from that discovery.163 Often, pharmaceuticals

have several different indications. For example, aspirin was discovered as a
highly effective pain-killer in 1897 by Hoffmann, Eichengrün and Dreser at
Bayer. However, the mechanism of its action, namely the inhibition of the
biosynthesis of prostaglandins from arachidonic acid, was first discovered
by John Vane at the Royall College of Surgeons as late as 1971.164 Since
then, it has turned out to have many more additional therapeutic indications,
especially in preventing heart attacks and strokes.165 Revisiting old drugs in
this way may lead to therapeutically interesting new discoveries, and new
benefits to the patients. The industry has coined this repositioning approach
“teaching an old drug new tricks.”166
Patent law deals with medical treatment differently from other methods
or use claims related to medicines. Medical treatment and procedures are
often excluded subject matter for patenting, as is the case in Europe.167 If a
previously unknown substance is proven to have a novel therapeutic or di-
agnostic effect, a patent applicant can obtain an exclusive right to all uses of
the substance.168
The prohibition in Europe has been relaxed by the introduction of the new
provision of Art. 54(5) of the European Patent Convention (“EPC”) 1973
regarding first medical use. The first medical use of a known substance can
be patented, and has come to be regarded as a product patent. Moreover, if
one can prove a second medical use for a substance, which was known to
have a first therapeutic effect, it is possible to claim a second medical use as
well. For a second medical use, the applicant would have exclusivity only
on the second medical use in Europe.169 The practice was derived from the
EPO’s G 5/83 decision170 and various technical board of appeal cases re-
garding second medical use, is now finally based on the statutory language
of the Art. 54(5) of EPC 2000. In the United States, however, patents on uses

163 Klöpsch, IIC 1982, 457, 467.

164 Dutfield, 2009, 17-20.
165 Dutfield, 2009, 20.
166 Scudellari, The Scientist, April 1, 2011.
167 European Patent Convention, Art. 53 (c).
168 Cf. However, in the past, if the substance was known, a patent could be granted
neither on the product, which would be lacking in novelty, nor on the new use, as
the patent grant would contravene the provision banning patents for medical pro-
cedures.
169 Eisai/Second medical indication, G 5/83, OJ EPO 1985, 64.
170 Eisai/Second medical indication, G 5/83, OJ EPO 1985, 64.

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are limited to a particular “method-of-use”, which does not protect the prod-
uct as such.171

b) Dosage regime

Dosage regime provides instructions for the proper way to take a medication,
such as “three times per day after a meal,” “once a day before sleep,” or “40
mg once a day in the morning for 4 to 8 weeks.” For example, if the single
novel feature of an invention is the direction “once a day prior to sleep” of
a well-known substance to cure the same illness, the Enlarged BOA held
that this use was not excluded from patentability under the EPC. 172

3. Process inventions

a) Process

A chemical process invention denotes the invention of a process to manu-

facture a product. In Germany, since the Kongo-Rot decision in 1889,173 so-
called “analogous chemical processes”174 are also patentable if the product
resulting from the process demonstrates unexpected and advantageous char-
acteristics or effects in comparison to known chemical products.175 In the
United Kingdom and under EPO practice, if a compound is patentable, both
the claims directed to the compounds and to the process for the manufacture

171 LabCorp v. Metabolite, Inc., 548 U.S. 124 (2006); UNCTAD-ICTSD, 2005, 356.
172 Abbott Respiratory/Dosage Regime, G 2/08 (2010) (a referral to the Enlarged Board
of Appeal for the decision that a feature of a claim relating to a specific dosage
regime reflected a medical activity which was excluded from patentability under
Art. 52(4) EPC 1973, Kos Lifesciences/ Dosage regimen, T 1319/04, OJ EPO 2009,
36).
173 Kongo-Rot, Decision of the Reichsgericht (Imperial Supreme Court) of May 8,
1889, Patentblatt 1889, 209, 212.
174 “Analogous chemical processes” are processes for making a new chemical product.
These processes are neither chemically new nor unusual, have different starting
materials but with an analogous constitution, interacting with one another in the
same procedural manner (or same starting analogous procedural manner) to obtain
definite new chemical products of a new constitution corresponding to specific
expectation.
175 Nastelski, IIC 1972, 267, 269-70.

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 D. Pharmaceutical products in the market

of that compound are patentable, even if the starting material and the process
are already known.176 In the United States, this type of analogous process
patent is considered to be obvious,177 unless it is a biotechnological pro-
cess.178

b) Intermediates

Intermediates are compounds that normally have no pharmaceutical activi-

ties on their own, but can be used in a chemical process to manufacture an
active pharmaceutical ingredient. They are patentable either by their func-
tion in a chemical method of production or by the novel properties of the
new end product.179 A patent on an intermediate essential to produce the
basic medicine could effectively prolong the control of the resulting drugs’
markets.

D. Pharmaceutical products in the market

Although the value and size of innovation vary, every product available on
the market developed from an invention, can be an innovation. Pharmaceu-
tical innovations, namely, pharmaceutical products – more commonly
known as medicines or drugs – are a fundamental component of both modern
and traditional medicine.180 It is essential that such products are safe, ef-
fective, and of good quality, and that they are prescribed and used rational-
ly.181 For this reason, they are heavily regulated and influenced by the types
of pharmaceutical products that are already on the market. Incentives for a
new innovation in this market need to account for market regulations. Ac-
cordingly, this chapter will explore the types of marketed products.

176 Grubb/Thomsen, 2010, 246.

177 In re Durden, 763 F.2d 1406, 1410 (Fed. Cir. 1985).
178 35 U.S.C. (2007) § 103(b).
179 Hansen/Hirsch, 1997, 345.
180 WHO, Pharmaceutical products, available at: http://www.who.int/topics/pharma-
ceutical_products/en/. (Last accessed on December 20, 2013).
181 WHO, Pharmaceutical products, available at: http://www.who.int/topics/pharma-
ceutical_products/en/. (Last accessed on December 20, 2013).

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1. New medical entities, new molecular entities

An NME is an active ingredient that has never been marketed before in any
form, or in the product containing it.182 Thus, the manufacturers must prepare
all of the efficacy and safety data through experiments and trials.183 The first
product with an International Non-proprietary Name (“INN”) of an active
ingredient can also be regarded as an NME. An INN is a unique name that
is globally recognized; it is public property;184 and it is given to a pharma-
ceutical substance as designated by the World Health Organization
(“WHO”). The significance of NMEs and the current status of new drug
development will be further elaborated in chapter III.B.2.

2. Similar or equivalent “me-too” products

Once a new medical structure with interesting pharmacological properties

has been reported to the public, many other companies perform their own
research around said identified structure, and the research that they undertake
regarding the new medical structure is sometimes called “me-too” re-
search.185 A product resulting from this research is often derogatorily called
a “me-too” product, because it follows the research prospects that others
have already successfully identified. A “me-too” product can be any drug
entity that is in the same class and is used for the same main indication as
the prototype drug.186 These may be also NMEs, and they will be subject to
all preclinical and clinical trials to prepare the data necessary to meet the
regulatory requirements.
In the sense that the research follows a relatively easier path of a previ-
ously identified medical structure, the follow on research leading to similar

182 Paul, et al., 9 Nat. Rev. Drug Discov. 203, 203 (2010); FDA, Drugs@FDA Glossary
of Terms, available at: http://www.fda.gov/Drugs/informationondrugs/
ucm079436.htm#M (Last accessed on December 20, 2013); Pisano, 2006, 119
(noting “new molecular entities (NMEs)-both small molecules and biologics-”).
183 NIHCM, 2002, 4.
184 WHO, International nonproprietary name, available at: http://www.who.int/
medicines/services/inn/en/ (Last accessed on December 20, 2013); this INN can be
also called as a “generic name” that is contrasting to the “brand name,” however,
in order to avoid any future confusion, this term is not used in this thesis.
185 Hansen/Hirsch, 1997, 324.
186 Wertheimer/Santella/Chaney, 17 J. Pharmaceut. Marketing Manage. 25, 29 (2005).

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or equivalent products are viewed negatively. Furthermore, with regard to

the efficacy of me-too products, some argue that a me-too drug has dimin-
ished value, serving merely to increase a pharmaceutical company’s prof-
its.187 However, they provide several advantages. Firstly, they may offer
wider choice for physicians and patients and can contribute to cost-contain-
ment in pharmaceutical care.188 They enable physicians to treat diverse pa-
tients with precision and provide options when the first medicine treated is
either ineffective or not tolerated.189 In addition, they have been also asso-
ciated with overall cost savings, especially through competition among
drugs in a therapeutic class.190
Secondly, a me-too product differs from second generation products in
that it is a product that is based on an NME. As they are based on new
molecules, the improvement through me-too products is sometimes more
valuable than improvement through second generation products. This is
mainly because analogous studies provide molecules which have different
characteristics. These molecules “are as different from the parent molecule
as a recent car compared to a 40-year-old model.”191 Furthermore, once the
drug is on the market, more people will be exposed to it. This may reveal
rarer side effects, which sometimes cause the manufacturer to withdraw the
drug from the market. However, it may also lead to the identification of
further medical uses of the drug, such as in the cases of Minoxidil192 or
Sildenafil.193
Thirdly, they may manifest entirely new properties, which can lead a
therapeutic derivative to become a new lead structure. A representative ex-
ample of this is Imipramine synthesized as an analogue of the antipsychotic
drug Chlorpromazine. Imipramine demonstrated antidepressive activity and
has provided an effective therapy for the treatment of depression since

187 See e.g., Angell, 2004, 75-76, 80-83; Avorn, 309 Science 669, 669 (2005).
188 Wertheimer/Levy/O'Connor, 2001, 79-82.
189 Wertheimer/Levy/O'Connor, 2001, 80-81.
190 Wertheimer/Levy/O'Connor, 2001, 100-105.
191 Wermuth, 2008, 129; see also Wertheimer/Levy/O'Connor, 2001, 78-79 (arguing
that it was better to have multiple drugs in the same class).
192 Zins, 6 Clin. Dermatol. 132 (1988), minoxidil’s hair growth activity was observed
on the patents who took it for the treatment of hypertension.).
193 Ghofrani/Osterloh/Grimminger, 5 Nat. Rev. Drug Discov. 689 (2006); Kling, 1
Modern Drug Discov. 31 (1998), The sildenafil, an active ingredient of Viagra®
was initially synthesized and studied for use in the treatment of hypertension and
then of angina pectoris (a symptom of ischaemic heart disease).

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1954.194 Thus, a new drug that may seem similar to an older one can provide
a major advance in pharmaceutical technology195 and can become a true
pharmaceutical innovation.

3. Second generation products

Second generation products result from follow-up R&D essentially based

on an existing product (an NME) and have essentially the same mode of
action. 196 These second generation products may have the same INN as the
first product (e.g., second products involving inter alia new formulations,
crystalline forms, particle sizes or medical uses) or a different one (e.g.
combinations, individual stereoisomers separated from mixtures or metabo-
lites of an existing INN).197 They are also called Incrementally Modified
Drugs (“IMDs”), which either rely on an active ingredient present in a drug
already approved for the market, a closely related chemical derivative of
such an ingredient,198 or have been modified by the manufacturer, such as
new formulations, combinations, salts or esters, and the like.199 Although
some commentators use different definitions for second generation prod-
ucts,200 or for follow-on products,201 this thesis will use the term “second
generation products” according to the definition set out above.

194 Wermuth, 2008, 129.

195 Wertheimer/Santella/Chaney, 17 J. Pharmaceut. Marketing Manage. 25, 29-30
(2005) (reporting 81% of the drugs in the list of essential medicines by the World
Health Organization were me-too products).
196 DG Competition, 2009, 351; in general, Scotchmer, 27 RAND J. Econ. 322, 329
(1996) (defining “improvements” as a new version of the patented product with
greater commercial value).
197 DG Competition, 2009, 351.
198 Such as new salts or esters.
199 NIHCM, 2002, 4.
200 Den Exter, 17 Eur. J. Health L. 125, 131 (2010) (noting second generation drug as
me-too products).
201 Wertheimer/Santella/Chaney, 17 J. Pharmaceut. Marketing Manage. 25, 29 (2005)
(considering “follow-on drugs” as those that had approved indication in addition to
their originally approved indication).

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Re-evaluation of old drugs, such as single enantiomers, can be successful

on occasions,202 which can lead some companies specializing in chiral syn-
thesis to develop single isomers and, subsequently, to enter into licensing
agreements with the originators of the racemate.203 These second generation
products can certainly provide a high return on investment. The development
of a medicine using an active ingredient, the safety and efficacy of which
have already been established, is normally less time consuming, less expen-
sive, and less risky than using a compound about which little is known. The
high cost potential for IMDs can make modifying older products attrac-
tive.204

4. Generic drugs

A generic drug, or a “generic”, is identical to or bioequivalent to a brand

name drug in dosage, safety, strength, route of administration, quality, per-
formance, and intended use. 205 A generic drug product must contain iden-
tical amounts of the same active ingredient(s) as the brand name product and
have equal effect and little difference when substituted for the brand name
product.206 Although generic drugs are chemically identical to their branded
counterparts, they are typically sold at substantially discounted prices from
the branded prices. The U.S. Food and Drug Administration (“FDA”) has
noted that generic drugs save consumers an estimated $8 to $10 billion a
year at retail pharmacies, and billions more can be saved when hospitals use
generics.207

202 Hutt/Valentová, 50 Acta Facultatis Pharmaceuticae Universitatis Comenianae 7, 14

(2003) (noting failure of developing single enantiomers, such as dilevalol, sotalol,
and fluoxetine).
203 Tucker, 355 Lancet 1085, 1085 (2000) (providing Sepracor as an example of these
specialized companies); see also Darrow, 2 Stan. Tech. L. Rev. 1, para 113 (2007)
(noting Sepracor obtained patents on single enantiomer versions of sixteen chiral
drugs previously sold as racemates by other firms.).
204 NIHCM, 2002, 4.
205 FDA, available at: http://www.fda.gov/Drugs/ResourcesForYou/Consumers/Ques-
tionsAnswers/ ucm100100.htm (Last accessed on December 20, 2013).
206 FDA, available at: http://www.fda.gov/Drugs/ResourcesForYou/Consumers/Ques-
tionsAnswers/ ucm100100.htm (Last accessed on December 20, 2013).
207 FDA, Generic Drugs: Same Medicine, Lower Cost, available at: http://
www.fda.gov/downloads/ ForConsumers/ConsumerUpdates/UCM340458.pdf
(Last accessed on December 20, 2013).

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E. Summary

Since no invention can occur in a vacuum, today’s technology depends upon

yesterday’s.208 The path of invention and innovation in pharmaceutical tech-
nology is no exception. Inventions in pharmaceuticals can thus be divided
into basic inventions and second generation inventions. When there is in-
vestment, these inventions become innovative products that reach the mar-
ket.209
In this chapter, we have explored the disctinction between basic and se-
cond generation invention. As seen above, basic inventions can be developed
into NMEs, which can then lead to second generation inventions, and the
products that usually follow successful NMEs. Among the second genera-
tion inventions, species selection inventions have been shown to be different.
Unlike other second generation inventions, a species selection invention can
be another basic invention, in the sense that it can also be developed into an
NME, which can in turn lead to other second generation inventions. In this
sense, a species selection invention has a dual nature – it can be both a basic
and a second generation invention.
In the product market, in addition to NMEs and second generation prod-
ucts, there are “me-too” products and generic drugs in the pharmaceutical
market place. A me-too product is a drug entity that is in the same class and
used for the same medical purposes as the prototype drug. However, these
are also NMEs, since they are active ingredients that are marketed for the
first time. In contrast, generic products are the bioequivalents of a reference
drug in dosage, safety, strength, route of administration, quality, perfor-
mance, and intended use, but are sold at a much lower price.
The definitions and concepts of inventions and products are crucial to
understanding the law on the patentability of inventions, the market situation
where the products a play role, and the phenomena that we are facing.210 As
presented in chapter I.C, selection inventions will be the focus of the dis-
cussion as representatives of second generation inventions.

208 Luski/Wettstein, 1 Probl. Perspect. Manage. 31, 31 (2004).

209 Chandy, et al., 43 J. Marketing Res. 494 (2006).
210 See chapter III.B.

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DEVELOPMENTS

A. Innovating and inventing in pharmaceutical industry

While the cumulative development of knowedge and path of innovation may

still be the same, each industry has different and specific characteristics.
These characteristics include the ease with which inventions can be imitated,
the need for cumulative innovation rather than stand-alone development, the
speed and cost of R&D. The extent to which patents cover an entire product
or a mere component thereof, are all dependent on the industry.211 The phar-
maceutical industry has attracted attention among regulators and policy
makers, because it is one of the most profitable and innovative industries
and because its products are directly connected to public health. This chapter
will explore the specific factors that distinguish the process of R&D and
innovation in the pharmaceutical industry from that of other technological
industries.

1. Specificities in the drug development process

a) Highly regulated industry

Few industries bear such high regulatory burdens on initial innovations as

the pharmaceutical industry.212 Without regulatory approval, any exclusivity
is worthless since the product cannot be marketed. 213 The mission of the
drug regulatory authority is to ensure that drugs marketed in a country are
safe and effective. To do so, they review the evidence produced and sub-
mitted by the companies that seek to market drugs. This rigor on the part of
regulatory authorities intensified in the aftermath of scares such as the adul-

211 Burk/Lemley, 89 Va. L. Rev. 1575, 1577 (2003).

212 Bessen/Meurer, 2008, 89; Roin, 87 Tex. L. Rev. 503, 516 (2009) (raising examples
such as agricultural-chemicals and medical-equipment industries which are gov-
erned by regulatory regimes.).
213 Teece, 15 Res. Policy 285, 300 (1986).

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terated sulfamilamide case in the United States and regulation became even
more stringent following the thalidomide tragedy in the late 1950s and early
1960s.214 The Vioxx®’ withdrawal in 2004 was one of the most recent events
that alarmed authorities.215
In order to ensure the safety of the public, it is right and proper that drugs
be thoroughly tested and that information regarding safety and efficacy be
produced before the drugs are marketed. This demanding requirement, how-
ever, typically leads to prolonged preclinical and clinical trials.216 Moreover,
the regulation has become ever more stringent over time.217

b) R&D – a costly and lengthy road to a medicine

The process of developing a drug typically is sequential. First, a compound

is identified which may have promising therapeutic efficacy throughout lead
compound identification and repeated chemical optimizations in the labo-
ratory. Next, the selected compound must pass preclinical testing in vitro
and in animals, a new drug application must be filed with the administrative
authority, three phases of clinical trials in humans must be completed,218 and

214 Scherer, 2007, 22; William, 1999, 87 (noting after the prescription of thalidomide
for pregnant women to treat morning sickness, it was found that thalidomide was
responsible for the fetal defects, and that one of enantiomers was responsible for
the beneficial effect and the other was for the side effect.); Mann/Andrews, 2007,
3 (also mentioning after this thalidomide disaster, drug regulatory mechanisms of
today had been established).
215 Horton, 364 Lancet 1995, 1995 (2004).
216 Clinical development accounts for around 63% of the costs for developing each
NME, and 53% of the costs are incurred from Phase II to launch. See e.g., Paul, et
al., 9 Nat. Rev. Drug Discov. 203, 205 (2010).
217 Dutfield, 2009, 295-96; Federsel, 18 Bioorgan. Med. Chem. 5775, 5777 (2010).
218 Phase I trial is performed on a small number of (usually) healthy volunteers to obtain
information on toxicity and safe dosage ranges in human. In phase II trial, the drug
is administered to a large number of individuals who were selected from the patients
for whom the drug is intended to be beneficial. In final phase III trial, many patients
are enrolled and it is tried to detect adverse reactions which less frequently occur
in patient populations. During these clinical trial phases, extensive toxicology ex-
perimentations on animals, long term stability testing, additional dosage formula-
tion work, process development to supply enough compounds for the clinical testing
also often occur in parallel. See e.g., DiMasi/Hansen/Grabowski, 10 J. Health. Econ.
107, 110 (1991); See e.g., Scherer, 2007, 5-8.

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a drug must survive a final administrative authority’s review.219 The con-

siderable increase in the duration of clinical and pre-clinical studies is due
to an escalation in the obligatory numbers of subjects for the clinical tri-
als,220 the increased requirement of mandatory analytic, pharmacologic,
toxicological, and clinical trials,221 and the increased number of studies on
the treatment of chronic conditions, such as cancers, immunological disor-
ders,222 and cognitive disorders. This whole process currently takes 10 to 13
years, significantly longer than it was 40 years ago, when the average period
was 8 years.223 Figure 3 shows a recent example.

Figure 3: R&D, a long and costly process224

219 See generally, DiMasi/Hansen/Grabowski, 10 J. Health. Econ. 107, 109-11 (1991);

Schuster/Laggner/ Langer, 11 Current Pharmaceutical Design 3545, 3545 (2005).
220 DiMasi/Hansen/Grabowski, 22 J. Health Econ. 151, 177 (2003).
221 Brandt, 1996, 129; Dickson/Gagnon, 3 Nat. Rev. Drug Discov. 417, 420 (2004)
(e.g.: more extensive regulatory requirements to mandate to include women and
children in the test).
222 Dickson/Gagnon, 3 Nat. Rev. Drug Discov. 417, 420 (2004).
223 Dickson/Gagnon, 4 Discov. Med. 172 (2004); see also EFPIA, 2012, 6 (reporting
10 years of R&D period and 2~3 years of administrative procedure); Grabowski/
Kyle, 2008, 275 (noting the R&D process of a medication from the synthesis of a
compound synthesis to marketing approval of it typically takes more than a
decade.).
224 Association of the British Pharmaceutical Industry (“ABPI”), 2011, 10.

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The process is of course costly.225 However, just because something is ex-

pensive does not mean that it is good, and there is no reason that the cost
should be maintained at this level. In this respect, the figures sometimes
speak for themselves. Though the process of estimating the cost of NMEs
largely varies by therapeutic indications and is complicated, since the money
spent on R&D is regained in revenue over several years, studies have shown
a dramatic increase in cost. The average cost of preclinical and clinical stud-
ies for traditional products (small chemicals) was estimated at 0.8 billion
USDs in 2000,226 which was double the cost of the previous fifteen
years.227 An updated estimate of the same type of products was 1.3 billion
USD in 2010.228 The introduction of new drugs to the market is financed
almost entirely by the private sector, even though the result of investment is
regarded as a public benefit.229 Some scholars have argued that the initial
stages of high risk projects could be subsidized by government, since basic
research projects often involve high costs and potentially high but uncertain
rewards.230 A contrasting example is the computer industry, where two pro-

225 ABPI, 2011, 10; Schuster/Laggner/ Langer, 11 Current Pharmaceutical Design

3545, 3545 (2005); cf. Cockburn, 2006, 13, 25 (noting the trend of increasing R&D
expenditure was “to some degree” overstated however admitting the growth in R&D
spending was “substantial.”).
226 DiMasi/Hansen/Grabowski, 22 J. Health Econ. 151, 166-67 (2003).
227 Anonymous, 418 Nature 353 (2002).
228 Federsel, 18 Bioorgan. Med. Chem. 5775, 5777 (2010), in 2009, the average cost
of R&D to bring an NME to the market by large pharmaceutical companies is es-
timated to be up to around 1.8 billion USD. See Paul, et al., 9 Nat. Rev. Drug
Discov. 203, 204 (2010); See also O’Hagan/Farkas, Bain Insights [online] 1 (2009)
(noting “Bain’s drug-economics model shows that the situation is untenable. In the
late 1990s, pharma companies spent $1.1 billion, on average, to develop and launch
a new drug. Today, just a decade later, the investment has doubled to $2.2 billion.”);
Recently Forbes even has reported the average drug developed by major pharma-
ceutical companies costs at least 4 billion USDs and could come to 11 billion dollar,
see Herper, Forbes, February 2, 2012 (introducing Eli Lilly’s average cost of bring-
ing a new drug to market is 1.3 billion USDs which is the price that would buy 371
Super Bowl ads, 16 million official NFL footballs, two pro football stadiums, pay
of almost all NFL football players, and every seat in every NFL stadium for six
weeks in a row).
229 Dickson/Gagnon, 3 Nat. Rev. Drug Discov. 417, 427 (2004); see also Tuominen,
2011, 4; see also U.S. Department of Commerce International Trade Administra-
tion, 2004, vii.
230 Merges, 7 High Tech. L. J. 1, 47 (1992); Nelson, 2000, 98.

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grammers could develop a commercial software program in a garage.231

Even though the cost of writing code for operating systems has increased,
this takes considerably less time and is cheaper than developing a new
drug.
Even the figures given above may represent an underestimate of the real
costs of drug discovery.232 Significantly, the figures do not include costs
incurred prior to the target validation.233 The research required to identify
and validate a given target varies by subject, which makes the underlying
parameters difficult to quantify.234 Most importantly, these figures do not
include the R&D costs for products that cannot be launched on the mar-
ket,235 which is the main expense in the industry. It has been reported that
75% of the fully capitalized cost of developing a new medication is the av-
erage cost of failures.236 As Jacob LJ puts it simply: “The few winners must
pay for all the losers.”237 These failures are also based on uncertainty in
developing a drug.

231 Burk/Lemley, 89 Va. L. Rev. 1575, 1582 (2003) (e.g. Steve Jobs and Steve Wozniak
for Apple Computer; Bill Hewllet and David Packard for Hewlett-Packard started
in a garage).
232 Some scholars also argued expenditure for marketing support or cost for post-mar-
ket surveillances, line extensions, development of new indications, and the devel-
opment of new formulations, dosage forms and so on must be added., see Feder-
sel, 18 Bioorgan. Med. Chem. 5775, 5777 (2010); see Munos, 8 Nat. Rev. Drug
Discov. 959, 962-63 (2009); See also Pisano, 2006, 120.
However, these are mainly not the cost to bring a NME to the market, thus it would
not be proper to include them.
233 Paul, et al., 9 Nat. Rev. Drug Discov. 203, 205 (2010); In the drug discovery, a
“target” can mean a target protein which plays key role in the function of normal
and abnormal cells, which leads to the formation of hypothesis that the modulating
the function of this protein which linked to disease could be a route to a new med-
ication. This kind of disease-linked protein is referred to as a target, and the process
of confirming such hypothesis is usually referred as “target validation.” See Know-
les/Gromo, 2 Nat. Rev. Drug Discov. 63, 63 (2003).
234 Paul, et al., 9 Nat. Rev. Drug Discov. 203, 205 (2010).
235 Paul, et al., 9 Nat. Rev. Drug Discov. 203, 205 (2010).
236 Cockburn, 2006, 17.
237 Jacob, December, CIPA 711 (2008).

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c) Uncertainties in post-invention development

“A hallmark of medical decision-making is choice under uncertainty.”238 “

[D]rug development remains part science and part art.”239 These statements
reflect the uncertainty of even post-invention development in this field. At
least three levels of risk are are derivable from scientific, regulatory, and
economic uncertainty respectively.240

(1) Scientific uncertainty: Unpredictability of substances

Firstly, scientific uncertainty arises because of the unpredictability of sub-

stances. Owing to this unpredictability, only one of every 10,000 new sub-
stances reaches market approval.241 It is well established that the properties
of chemical compounds are substantially contingent upon their chemical
structures. However, it is no longer disputed that a small structural modifi-
cation may result in major differences in biological activity,242 which is to
say, reasonable predictions of relations between structure and activity can
be found in general with some limit beyond which no such prediction can
be validly made.243 This unpredictability is also clearly demonstrated by the
reasoning of the courts, which require higher disclosure in this field than in
other technological fields.244 In other words, since there is less room for the

238 Frank, 2004, 9.

239 Bartfai/Lees, 2006, 258.
240 Dickson/Gagnon, 3 Nat. Rev. Drug Discov. 417, 419-420 (2004).
241 Hansen/Hirsch, 1997, 326; ABPI, 2011, 10 (reporting pharmaceutical industry has
an attrition rate of NMEs, from discovery to product, of 25,000:5); see also Heil-
man, 4 Quality Assurance, 75, 75 (1995); see also EFPIA, 2012, 6 (reporting one
or two out of every 10,000 substances may successfully become marketable
medicines); see also Kola/Landis, 3 Nat. Rev. Drug Discov. 711, 712 (2004) (re-
porting 62 percent of drug candidates that made it through Phase I failed to pass
Phase II, and 45percent of those that did fail to pass Phase III); see also Figure 3.
242 Agrevo/Triazoles, T 939/92, OJ EPO 309, 325 (1996), point 2.6.2.
243 Agrevo/Triazoles, T 939/92, OJ EPO 309, 325 (1996), point 2.6.2.; see also Ciba-
Geigy/Benzothiopyran derivatives, T 20/83, OJ EPO 1983, 419, 421 (noting “[a]s
a rule, prediction by persons skilled in the art is no longer possible where the sub-
stances whose properties have to be assessed have been theoretically synthesized,
by interchanging all the structural elements from compounds forming the state of
the art and having the same kind of effect. Such is the case in this instance.”).
244 Brandi-Dohrn, Gewerblicher Rechtsschutz und Urheberrecht Internationaler Teil
(“GRUR Int”) 1995, 541, 543; see also infra 899.

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person skilled in the art to be able to know possession of an invention, more

variants need to be enabled to meet the disclosure requirement in the phar-
maceutical art. Thus, when many compounds are disclosed in the prior art,
it would be unreasonable to expect that these compounds would exhibit
similar technological effects to those shown by substances for which prac-
tical data are provided.245

(2) Regulatory and market uncertainties

During the long period of acquiring regulatory approval, the high probability
of failure in each clinical trial phase and thus failing to acquire regulatory
approval risks the business in this sector.246 Many failures occur in the later
stages of development such as during clinical trials.247 Indeed, 78% of NMEs
that survive all of the phases of clinical trials are never marketed.248 Across
the entire process of the product development path, therefore, pharmaceu-
tical companies need to review the status of development and make a so-
called “Go/No-Go” decision, namely, a decision about whether to continue
to develop or not at several points until the final decision to launch the end
product.249
Even after a launch, there are some uncertainties in the market environ-
ment, such as the acceptance of a new medical product not only by the patient
but also by physicians who show a high degree of loyalty to familiar medi-
cations.250 Furthermore, information generated by the pharmaceutical com-
panies after the launch can indicate that the drugs are unsafe or not suffi-
ciently effective. 251 This information can cause sales to plummet,252 or cause

245 Brown, 31 J. Chem. Inf. Comp. Sci. 2, 3-4 (1991).

246 Dickson/Gagnon, 3 Nat. Rev. Drug Discov. 417, 419-420 (2004).
247 Cockburn, 2006, 17-18.
248 Frank, 22 J. Health Econ. 325, 327 (2003); DiMasi/Hansen/Grabowski, 22 J. Health
Econ. 151, 165 (2003).
249 DiMasi/Hansen/Grabowski, 10 J. Health. Econ. 107, 109 (1991) (noting these de-
cisions would be dependent upon potential therapeutic efficacies, frequency and
severity of adverse drug reactions, marketing, distributing, productions costs, patent
protectability, and the like.).
250 Dickson/Gagnon, 3 Nat. Rev. Drug Discov. 417, 419-420 (2004).
251 Eisenberg, 5 Yale J. Health Pol’y L. & Ethics 717, 718 (2005); this is also partly
because that some side effects can be only found after disclosing the medication to
a larger population than that of clinical trials.
252 Eisenberg, 5 Yale J. Health Pol’y L. & Ethics 717, 718 (2005).

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the product to be removed from the market.253 The most famous case in point
is Vioxx®, which revealed a serious adverse cardiovascular effect after FDA
approval.254 This caused Merck to remove the product from the market and
resulted in a catastrophic loss of value, including high litigation costs there-
after.255

d) Information rich chemicals

Information is, by nature, expensive to produce, cheap to reproduce, and

difficult to profit from.256 Unlike other chemicals, such as organic solvents,
drugs are information-rich chemicals. This is partially because regulation
demands production and disclosure of the huge amount of information that
is necessary to meet the regulatory authorities’ standards must be accumu-
lated and disclosed.257 This information concerning the use of chemicals is
expensive to produce as discussed in chapter III.A.1.b). Once produced and
disclosed, however, it is easy to reproduce and difficult to keep exclusive.
Risks surrounding the information and its non-excludability further con-
tribute to the uncertainty of the drug development process.

253 Schuster/Laggner/ Langer, 11 Current Pharmaceutical Design 3545 (2005) (noting

“[o]ver 90% of the market withdrawals were caused by drug toxicity.”).
254 Bresalier, et al, 352 New Eng. J. Med. 1092, 1098 (2005).
255 Litigation costs were 4.85 billion USDs funding to the expected settlement to re-
solve roughly 50,000 lawsuits in 2007, or 58 million USDs to settle allegations
advertising Vioxx® with 30 US states in 2008. See Martinez, et al., Wall St. J., Oct.
1, 2004, at A1; see also Merck, Merck Press Release, Nov. 9, 2007.
256 Nordhaus, 1969, 70.
257 Eisenberg, 5 Yale J. Health Pol’y L. & Ethics 717, 717 (2005); see also DiMasi/
Hansen/Grabowski, 22 J. Health Econ. 151, 166 (2003) (estimates average costs to
develop a new drug at $802 million in 2003); Burk/Lemley, 54 Case W. Res. L.
Rev. 691, 726-728 (2003); creating the information can be risky considering some
information generated during or after the R&D procedure of a drug can make the
medication withdrawn from the market.

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2. Specificities in the market for pharmaceuticals

a) Imitation with negligible cost and much reduced risk

Imitation is a typical example of information spillover.258 The risk of imi-

tation, of course, haunts all investments in any field of R&D.259 Imitation
follows closely and only on the heels of successful innovation.260 The in-
novator’s R&D returns can be maximized by an intermediate delay between
his own invention and the successful imitation thereof.261
The relative ease of imitation with or without patent protection is one of
the main factors that differentiates the pharmaceutical industry from oth-
ers.262 Sherer takes the aircraft industry as an example, which also utilizes
sophisticated technology and spends billions of dollars to develop new prod-
ucts.263 Even without patent protection, however, in attempting to imitate
anAirbus A380, a firm would spend nearly as much as Airbus did to develop
its own A380. Moreover, by the time the imitator had completed its rival
A380, Airbus would be a decade ahead in sales and would enjoy a substantial
production cost advantage. The software industry is another example. Even
after a product embracing the invention is available on the market, reverse
engineering is both difficult and time consuming.264
In contrast, in the pharmaceutical industry, much R&D is directed to se-
curing information,265 and, once the required knowledge is accumulated, if
there is no protection, it ipso facto becomes available to any interested party.
With such information, it is relatively cheap and quick for an imitator to

258 Dasgupta, 98 Econ. J. 66, 74 (1988).

259 Jaffe/Lerner, 2004, 41; cf. Bessen/Maskin, 1999, 2 (noting, however, for industries
like software and semiconductors, imitation promotes innovation and long patents
of broad scope would inhibit it, because the innovation in these industries are both
sequential and complementary.).
260 Cadot/Lippman, 1995, 1; see also Christie, et al, 8 PLoS Med 1 (2013) (In addition
to these imitating activities, there are patenting activities by the companies other
than the drug’s originator to seek monopoly control over innovations to block-
busters ).
261 Cadot/Lippman, 1995, 15-17.
262 Scherer, 2007, 33-34.
263 Scherer, 2007, 33-34.
264 Johnson-Laird, 19 U. Dayton L. Rev. 843, 843-44 (1994); Burk/Lemley, 89 Va. L.
Rev. 1575, 1584 (2003).
265 See subsection III.A.1.

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identify the composition of a new medication and to manufacture it.266 In

addition, the knowledge of an innovator’s success itself reduces the risk of
failure for the imitator. The knowledge of success, in other words, reduces
a great deal of an imitator’s uncertainty,267 which cannot be compared with
that of innovator. Thus, there are few barriers to imitation, without patent
protection.268 This can be clearly observed in the quick and vast market
erosion once the patent term of a product expires and generic versions of
that product enter the market.269

b) Prescription based purchase: A disconnection between choosers and

payers

As in other industries, medicines are produced by pharmaceutical companies

and consumed by end-users, i.e. patients. However, unlike other consumer
products, medicines are often chosen and/or prescribed by medical doctors
and normally paid for or reimbursed by insurance companies or the relevant
health system.270 This is especially true of prescription drugs that cannot be
sold without a doctor’s prescription. Consequently, the person who pre-
scribes the drug, the purchaser, and the end-consumer of the drug may in
fact be different in most cases. This disconnection between the person who
selects and the person who pays and consumes causes the demand for pre-
scription drugs to be more price-inelastic than that of over-the-counter

266 Mansfield/Schwartz/Wagner, 91 Econ. J. 907, 913 (1981); mentioned in Roin, 87

Tex. L. Rev. 503, 511 (2009) (noting generic drug manufacturers spend on average
about $2 million on the approval process).
267 Kieff, 85 Minn. L. Rev. 697, 709 (2001).
268 Teece, 15 Res. Policy 285, 300 (1986); Roin, 87 Tex. L. Rev. 503, 516 (2009)
(raising examples such as agricultural-chemicals and medical-equipment industries
which are governed by regulatory regimes.).
269 The asymmetry between pharmaceutical innovators and imitators was not as glaring
before the regimes like Hatch-Waxman Act or Regulation on SPC with Bolar ex-
ceptions were introduced. Until early 1980s, generic drug providers could have
invested nearly as much as the original companies did. See Scherer, 2007, 34-35;
see also Bond/Lean, 1977.
270 DG Competition, 2009, 21-22 (see also Figure 2 in page 22).

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(“OTC”) drugs, which may be sold without prescription.271 In contrast, for

prescription drugs, the prescribers do not pay for the drugs that they or-
der.272 As this disconnection causes prescription drugs to be cost-insensitive,
demand curves can be easily manipulated through advertisement and pro-
motion.273

c) Information asymmetry and high loyalty to a medicine

Markets for medical care are also characterized by asymmetric information

between physician and patient.274 Patients do not have enough information
generally, which leads to fear, anxiety, and reluctance to switch to another
version of a medicine.275 Unwavering loyalty to a particular medicine also
induces patients or doctors to stay with the same product.276 This loyalty
makes it difficult not only to leave a familiar product for a new product in
the same therapeutic class, but also for a generic version of the same product.
Since doctors and patients are accustomed to brand-named products, al-
though available generic substitutes containing exactly the same active in-
gredients are much cheaper, they remain reluctant to substitute any unknown
generic versions for the brand-named drug, even if health authorities guar-
antee their bioequivalencies.277 Another contributing factor is that the price
changes have a small effect on the quantity of the drug in demand. Some

271 Temin, 10 Bell J. Econ. 429, 434-5 (1979) (noting that the customers were changed
from patients to doctors who had a peculiar characteristic; “they did not pay for the
drugs they ordered. In fact, they did not even know how much these drugs cost.”);
Steele, 5 J. Law Econ. 131, 139-43 (1962) (noting the demand curve for the physi-
cians’ were an upward slope, but “the demand curve of the patient is perhaps nearly
vertical up to prohibitively high prices if he trusts the judgment of his physician.”);
Teece, 15 Res. Policy 285, 301 (1986) (noting “FDA regulation which had the de
facto effect of reducing the elasticity of demand for drug…”).
272 Temin, 10 Bell J. Econ. 429, 434-35 (1979) (noting that the customers were changed
from patients to doctors who had a peculiar characteristic; “they did not pay for the
drugs they ordered. In fact, they did not even know how much these drugs cost.”);
Steele, 5 J. Law Econ. 131, 139-43 (1962).
273 Rai, Ill. L. Rev. 173, 206 (2001).
274 Frank, 2004, 10.
275 Frank, 2004, 27-28; Yu/Gupta, 2008, 31.
276 Landes/Posner, 2003, 190, 313-14; Grabowski/Vernon, 35 J. Law Econ. 331,
333-35 (1992).
277 Landes/Posner, 2003, 314; von Hippel, 1988, 53.

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evidence suggests that, even after the expiration of the basic patent term, the
price of product covered by the basic patent sometimes does not substantially
decrease.278

d) Pricing

“Every day in our lives monopoly takes its toll.”279 One may recall the term
monopoly from the term patent. Monopoly, however, is a term that relates
to a market rather than to any particular good or service sold in that mar-
ket.280 While all property rights can be regarded as monopolies, only those
that convey effective control over the relevant market can provoke economic
inefficiencies associated with monopolies, such as when there are no ad-
equate market alternatives and consumers are consequently willing to pay a
monopoly price.281 In the same vein, patent law does not confer an economic
monopoly, but only the right to exclude others from producing products
covered by the patent.282
Though some scholars argue that there is no competition where patented
drugs are concerned,283 the reality is different. Firstly, the prices of pre-
scription drugs are largely regulated.284 As Landes and Posner noted, “The
evidence is consistent with government regulation that limits the ability of

278 Grabowski/Vernon, 35 J. Law Econ. 331, 374 (1992); Even there were evidences
that branded-drug prices raised after the patent expiry and generic’s entrance;
Berndt, 16 J. Econ. Perspect. 45, 63 (2002); Davis/Murphy/Topel, 2001, 2.
279 Kefauver, 1966, 3.
280 Kieff, 2008, 21; Dam, 23 J. Legal Stud. 247, 249-50 (1994) (noting “it is readily
apparent that the right to exclude an-other from "manufacture, use, and sale" may
give no significant market power, even when the patent covers a product that is sold
in the market. Also “leading companies may obtain 1,000 or more patents in a single
year, and yet many such firms are unlikely ever to obtain even a single monopoly
in the market”); Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28, 46
(2006) (“Congress, the antitrust enforcement agencies, and most economists have
all reached the conclusion that a patent does not necessarily confer market power
upon the patentee.”).
281 Kieff, 2008, 21; Hovenkamp, et al, 2010, § 4.2.
282 Hovenkamp, et al, 2010, § 4.2.
283 See e.g., Steele, 5 J. Law Econ. 131, 147 (1962).
284 Vernon, Regulation, 22, 22 (2002-2003, Winter) (for example, direct price control,
profit control, reference pricing, approval delays, procedural barriers, and reim-
bursement).

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drug manufacturers to charge monopoly prices to certain segments of the

population.”285 According to a report about pharmaceutical price controls in
Organisation for Economic Co-operation and Development (“OECD”)
countries, almost all governments rely on some sort of price controls286 to
limit spending on pharmaceuticals, to prevent pharmaceutical companies
from charging a market/based price for their products, and to require that
they be transparent about the rationale for prices or reimbursement
amounts.287
The most direct method is to set the sale price and to make sales at any
other price illegal, which generally results in lowering prices below what
they would have been in a free market.288 Another method used is to set the
reimbursement price of a new drug at levels well below the free market
price.289 Even in Germany, where pharmaceutical companies could have
decided the drug price, rendering Germany one of the highest drug price
countries in Europe along with the Netherlands and Sweden, new laws took
effect in January of 2011, which forced a company to negotiate new drug
prices with health insurers after determining whether the new medication
had an additional benefit.290
Furthermore, getting a better price and reimbursement is no longer
enough, and manufacturers must further prove the effectiveness of products
in the real world and provide a pharmacoeconomic analysis that includes
cost-effectiveness.291 Thus, it is more difficult to charge high prices. Sec-

285 Landes/Posner, 2003, 315.

286 U.S. Department of Commerce International Trade Administration, 2004, vii-viii;
see also Vernon, Regulation, 22, 22 (2002-2003, Winter); see also, UK Office of
Fair Trading, 2007, 1-2 (UK had broadly two components; profit controls which
set a maximum level for the profits which a company could earn from the supply
from branded drugs to the NHS and price controls which provided companies with
freedom to set the initial price of new active substances but impose restrictions on
subsequent price increase or cut the price at the time of scheme renegotiations); In
the US, there are no government price controls over private sector purchases, but
the government relies on a strong generic pharmaceutical industry to create added
competitive pressures. See, Ellery/Hansen, 2012, 14.
287 Ellery/Hansen, 2012, 12-16; U.S. Department of Commerce International Trade
Administration, 2004, viii.
288 U.S. Department of Commerce International Trade Administration, 2004, ix.
289 U.S. Department of Commerce International Trade Administration, 2004, ix.
290 Bohsem, Süddeutsche Zeitung, January 23, 2012.
291 Ellery/Hansen, 2012, 13-14 (noting a drug company used to only need to prove
safety, efficacy, and quality to obtain approval and to market a product.).

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ondly, therapeutic competition is more common. Once an innovative drug

comes onto the market, the market becomes more competitive, since more
than one company may be developing compounds with similar mechanisms
of action, even though the compounds themselves are different and can be
patent protected.292 Indeed, there are practically always alternative medica-
tions on the market for products treating the same disorders, such as
headaches,293 unless the drug is the first in its class, regardless of whether
the alternatives are protected by the patent. Thus, a patent in the pharma-
ceutical industry does not provide protection that will permit a complete or
almost complete market.294
On the other hand, it is true that patent rights can confer some power in
the market, and the anticipation of a price above the marginal cost creates
the incentive to engage in research in the first place.295 In addition, consid-
ering the fact that the manufacturing cost of medications is usually low, the
public may have to pay higher prices even for a limited amount of time,
which is inherent in the patent system. This can be particularly problematic
in this industry, given that the product is a medication, which can improve
health condition and save lives.296

3. Specificities of the patent protection for pharmaceuticals

a) Patent protection for industrial technologies

There is a strong assumption that patents have played and are playing a
crucial role in promoting innovation and the growth of industries.297 How-
ever, it is also clear that, in many areas of technology, their role has

292 Dickson/Gagnon, 3 Nat. Rev. Drug Discov. 417, 421-422 (2004); see also subsec-
tion II.D.2.
293 Landes/Posner, 2003, 314 (noting the manufacturers of differentiated drugs are
competing with each other in a market).
294 Domeij, 2000, 174.
295 Hovenkamp, et al, 2010, § 4.2.
296 Rai, Ill. L. Rev. 173, 187-88 (2001).
297 Luski/Wettstein, 1 Probl. Perspect. Manage. 31, 31 (2004); Ann, 2009, 361;
Crouch, 16 Geo. Mason L. Rev. 141, 141 (2008); Graham v. John Deere Co., 383
U.S. 1, 9 (1966) (“The patent monopoly was not designed to secure to the inventor
his natural right in his discoveries. Rather, it was a reward, an inducement, to bring
forth new knowledge.”); Crouch, 39 Seton Hall L. Rev. 1125, 1134 (2009).

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changed.298 Arguably, patent protection did not seem to be crucial in most

industries except the drug industry,299 where exploitation of the lead time,
moving rapidly along the learning curve, use of complementary sales, ser-
vice capabilities and secrecy are more emphasized than patent exclusivi-
ty.300 For example, the computer software industry can rely on trade secrecy
and copyright protection as alternative intellectual property protection to
patents.301 In the semiconductor industry, since semiconductor chips are
covered by many different patents302 and many companies are pursuing the
same faster and smaller chips, they can file applications for similar inven-
tions with overlapping claims and face a greater likelihood of infringing
others’ patents. Thus, patents can be used actively albeit rather defensively
to prevent companies from being sued.303 Along with these two industries,
the computer industry has been among the most innovative in recent years
in spite of relatively weak patent protections and rapid imitations, partly
because these innovations are both very sequential and complementary.304
In the end, the usual result in these industries is cross-licensing with a modest
royalty fee.305

298 Kash/Kingston, 28 Sci. & Pub. Pol’y 11, 11 (2001).

299 Mansfield/Schwartz/Wagner, 91 Econ. J. 907, 915 (1981); Levin et al., 1987 Brook-
ings Paper on Econ. Activity, 783, 802 (1987) (noting “the three industries in which
product patents were viewed as most effective [were] organic chemicals, pesticides,
and drugs.”); Cohen/Nelson/Walsh, 2000, 1-2, 9, 14; Cadot/Lippman, 1995, 4 (not-
ing “[a]fter patents, the most important isolating mechanism emanates from lead
times or lags.”); Teece, 15 Res. Policy 285, 287 (1986) (noting “although [patent]
do afford considerable protection on new chemical products”). Some survey results
have found that large majority of innovations are not patented in certain sectors. See
Arundel/Kabla, 27 Res. Policy, 127, 138 (1998) (providing examples of such sec-
tors, such as food, tobacco, petroleum refining, basic metals, automobiles, and other
transport equipment); Bessen/Meurer, 2008, 89.
300 Bessen/Meurer, 2008, 89 ; Levin et al., 1987 Brookings Paper on Econ. Activity,
783, 783-84, 816 (1987); Cohen/Nelson/Walsh, 2000, 1.
301 Landes/Posner, 2003, 313; Burk/Lemley, 89 Va. L. Rev. 1575, 1628 (2003).
302 Such as circuit designs, materials, packaging, manufacturing process, and the like.
303 Burk/Lemley, 89 Va. L. Rev. 1575, 1628 (2003).
304 Bessen/Maskin, 1999, 2-3 (“complementary” was meant that each potential inno-
vator takes a different research line and thereby enhances the overall probability
that a particular goal is reached within a given time.); Bessen/Maskin, 1999, 11-13
(also noting that distinctive pattern of cross-licensing in these industries).
305 von Hippel, 1988, 53.

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Companies not only have different reasons to patent across technolo-

gies,306 but also different controlling power over the products.307 An indi-
vidual patent that can protect a whole product or a process is rare.308 For
example, in “complex technology”, such as technologies involved in elec-
tronic products comprised of a large number of patentable elements, where
a new commercializable product or process is comprised of numerous
patentable elements,309 firms rarely have proprietary control over all of the
essential components of the products that they are developing.310 It is diffi-
cult to have sole controlling power over products where standard-essential
patents have to be exploited. Consequently, in these industries, patents are
used as trading currencies.311 By contrast, in “discrete technology” fields,
such as drugs or chemicals, which are comprised of relatively few patentable
elements,312 firms often have full power to control their products and, as a
result, patent exclusivity provides significant benefits.313

b) Patent protection in the pharmaceutical industry

The pharmaceutical industry has been famously dependent upon patent pro-
tection to recover its R&D costs.314 The profit power of innovative drugs
overwhelmingly hinges upon the extent to which the patent rights cover the

306 Cohen/Nelson/Walsh, 2000, 30.

307 Cohen/Nelson/Walsh, 2000, 19; Kash/Kingston, 28 Sci. & Pub. Pol’y 11 (2001).
308 Scherer/Ross, 1990, 624.
309 Kash/Kingston, 28 Sci. & Pub. Pol’y 11 (2001); Cohen/Nelson/Walsh, 2000, 19.
310 Cohen/Nelson/Walsh, 2000, 19.
311 Kash/Kingston, 28 Sci. & Pub. Pol’y 11, 16 (2001.).
312 Cohen/Nelson/Walsh, 2000, 19; Merges/Nelson, 90 Colum. L. Rev. 839, 911 (1990)
(noting invention in chemical industry has discrete and cumulative features).
313 von Hippel, 1988, 53.
314 Eisenberg, 5 Yale J. Health Pol’y L. & Ethics 717, 721 (2005); See also Weiss-
man, 25 U. Pa. J. Int’l Econ. L. 1079, 1085-94 (2004) (noting that pharmaceutical
industry keep insisting stronger patent protection); Kash/Kingston, 28 Sci. & Pub.
Pol’y 11, 21 (2001) (asserting the need of change the emphasis of patent system on
serving large firms in simple technologies); Mansfield/Schwartz/Wagner, 91 Econ.
J. 907, 913-915 (1981); Jaffe/Lerner, 2004, 39-41; Cadot/Lippman, 1995, 3; Levin
et al., 1987 Brookings Paper on Econ. Activity, 783, 824 (1987) (noting pharma-
ceutical industry is one of the few in which patents really do seem to matter);
Harhoff, 2009, 32 (noting “impact of patent protection is particularly pronounced
in the field of pharmaceuticals”); Abramowicz/Duffy, 120 Yale L.J. 1590, 1615
(2011); contra, Boldrin/Levine, 2010, 212 et seqq.

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 A. Innovating and inventing in pharmaceutical industry

product.315 The existence of this relationship can be seen in the fact that the
pharmaceutical industry and the chemical industry are not influenced by
increases in the cost of patenting.316 The expectation of patent protection
plays a more important role.317 It has been empirically shown that when more
patent protection is provided, greater R&D productivity occurs in pharma-
ceuticals and biotechnology.318 Even a leading patent-sceptic economist,
Nelson, mentions the need for patents to protect the product.319
The importance of the patent system matches well with the specificities
of the pharmaceutical industry. To begin with, although pharmaceutical
companies have very high fixed R&D costs, their marginal costs are very
low, which means that they cannot help counting upon their patent and
patent-protected revenues to recover their R&D expenditure.320 As Landes
and Posner properly point out, the greater the fixed costs of research and
development, the greater the degree of patent protection required to create
adequate incentives to invest in developing the invention in the first
place.321 Secondly, enormous uncertainties lining the path to the approval
of a new drug and the resulting high failure rate seem to justify the impor-
tance of patents in this industry. 322 This means that patent protection allows
pharmaceutical firms to capture much of the value of successful trials, even

315 Kash/Kingston, 28 Sci. & Pub. Pol’y 11, 14 (2001); Cohen/Nelson/Walsh, 2000,
23; Bessen/Meurer, 2008, 88-89 (noting pharmaceutical industry is atypically de-
pendent on the patents, which is different from most other industries); Glasgow, 41
IDEA 227, 231 (2001).
316 Lanjouw/Schankerman, 114 Econ. J. 441, 454-55 (2004); cf. Cohen/Nelson/
Walsh, 2000 (noting one of the reasons that people less use patent system is the
costs of obtaining and enforcing patents).
317 Scherer, 2007, 1.
318 Arora/Ceccagnoli/Cohen, 26 Int. J. Ind. Organ. 1153, 1170-73 (2008) (further not-
ing that it leads much less additional innovations in other industries such as elec-
tronics and semiconductors.).
319 Mazzoleni/Nelson, 27 Res. Policy, 273, 276 (1998) (noting “[t]he collection of small
and medium sized firms in the American biotechnology industry is, of course, a
striking example of enterprises that would not have come into existence without the
prospect of a patent, and which depend on patent protection to make their profits,
and to attract capital […].”).
320 Landes/Posner, 2003, 313.
321 Landes/Posner, 2003, 295, 300; Roin, 87 Tex. L. Rev. 503, 537 (2009). It is in the
same vein that the conventional rationale for granting patent exclusivity is the dif-
ficulty that a manufacturer may encounter while trying to recoup the investment in
his R&D when the invention is readily copiable without protection.
322 Scherer, 2007, 33.

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III. SPECIFICITIES IN PHARMACEUTICALS AND RECENT DEVELOPMENTS

though it does not recover the cost of failed trials.323 Thirdly, the fact that a
pharmaceutical compound may be information rich can be one of the reasons
why patent protection is provided in the form of a license for exclusivity on
information.324 Kitch notes that “the patent owner has an incentive to make
investments to maximize the value of the patent without fear that the fruits
of the investment will produce unpatentable information appropriable by
competitors.”325 Even though the majority of information, the generation of
which consumes time and money and from which generic producers are
exempted, is usually produced after the patent filing and cannot be protected
with patents,326 nonetheless, patent exclusivity functions for innovators to
recoup investment in the production of information. Fourthly, the ratio of
the cost of innovation to the cost of copying makes patent protection a pre-
requisite to encouraging firms to invest in their R&D programs.327 As Arrow
argued, there would be little or no incentive for innovators to carry out in-
novation if the imitation cost is substantially lower than the cost of innova-
tion.328 Fifthly, the necessity of patent protection is clearly adducible from
the fact that partners in the industry of the inventors in universities or gov-
ernment institutions are not willing to fund the development of drugs unless
they are patent protected.329

B. Challenges and overcoming efforts

“Conventional wisdom has long held that drug companies are a safe haven for
capital during times of economic turbulence. People don’t stop getting sick, the
argument goes, so companies who make medicines should be insulated from all
but the worst economic weather.”330

323 Eisenberg, 5 Yale J. Health Pol’y L. & Ethics 717,721 (2005).

324 Nordhaus, 1969, 70.
325 Kitch, 20 J. Law Econ. 265, 276 (1977).
326 Eisenberg, 5 Yale J. Health Pol’y L. & Ethics 717, 721 (2005); Roin, 87 Tex. L.
Rev. 503, 511 (2009).
327 See e.g., Mansfield, 32 Manage. Sci. 173, 174-75 (1986) (reporting the survey re-
sults showing that 65% of new pharmaceutical would not have been introduced
without patent protection).
328 Arrow, 1962.
329 Owen-Smith/Powell, 26 J. Technol. Transfer 99, 108 (2001); Mazzoleni/Nelson, 27
Res. Policy, 273, 276 (1998) (noting the patent protection has contributed for the
small and medium sized firms to have survived and thrived).
330 Holmes, 379 Lancet 1863, 1863 (2012).

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 B. Challenges and overcoming efforts

In addition to the above-cited conventional wisdom, pharmaceutical com-

panies that are investor-owned and publicly traded entities, perform their
duties very well, which are to provide shareholders with an optimal return
on their investments.331 Is the pharmaceutical industry still profitable, or is
conventional wisdom these days being put to the test? Since 2000, the phar-
maceutical industry has collectively destroyed shareholder value and
showed a decline in R&D productivity.332 Some investors have expressed
doubts about receiving returns from drug developments, drug companies
have been forced to reduce their R&D investments, and it has been reported
that big pharmaceutical companies are struggling to gain returns on invest-
ments.333 According to one report on R&D spending, the net present value
and the number of new drug approvals showed that with the single exception
of Novartis, the situation was not promising.334 There have been several
reports on cost-reduction plans by many companies that include reducing
the number of employees and closing plants or research centers.335 This ag-
gressive reduction in jobs has been blamed in part on frugal insurers, generic
competition, and a dearth of new medicines. 336 The estimates for top-line

331 Avorn, 309 Science 669, 669 (2005).

332 Lindgardt/Reeves/Wallenstein, 26 In Vivo: Bus. Med. Rep. 1, 1 (2008); O’Hagan/
Farkas, Bain Insights [online] 1 (2009); Paul, et al., 9 Nat. Rev. Drug Discov. 203,
203 (2010).
333 Jack, Fin. Times, page 20, October 17, 2011.
334 Jack, Fin. Times, page 20, October 17, 2011 (reporting Company, R&D spending,
Net present value of new drug approvals, and number of new drug approvals, re-
spectively as follows: Roche, $35.1bn, $6.0bn, 2; Sanofi, $28.7bn, $10.2bn, 5; No-
vartis, $28.7bn, $37.7bn, 15; GSK, $28.3bn, 19.6bn, 16; AstraZeneca, $22.5bn,
$7.1bn, 3; and Bayer, $10.6bn, $6.6bn, 3).
335 The world’s largest pharmaceutical company, Pfizer, is continuing a cost-reduction
plan including firing 19,000 employees, closing 8 plants and shutting 6 research
centers. And even before this plan was enacted, Pfizer eliminated about 40,000 jobs
during the 6 years till 2009, see Randall, Bloomberg, February 1, 2011; Soon after
its anti-cholesterolemic pill Lipitor began facing generic versions, Pfizer has
pledged to trim $1 billion from operations in 2012, see Armstrong, Bloomberg,
April 12, 2012; U.K. drug maker AstraZeneca also announced to eliminate another
7,300 jobs, resulting its total job cuts over the last five years to almost 30,000, see
Whalen/Stovall, the Wall Street Journal, February 2, 2012; In addition, AstraZeneca
further announced it would cut 8,000 jobs worldwide in 2010; and GSK announced
that 12,000 positions will be eliminated by 2014. See Ellery/Hansen, 2012, 26.
336 Whalen/Stovall, the Wall Street Journal, February 2, 2012.

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III. SPECIFICITIES IN PHARMACEUTICALS AND RECENT DEVELOPMENTS

growth for the leading pharmaceutical companies from 2013-2014 is not

promising either.337

1. Decreased R&D productivity

There has been increasing concern about whether the pharmaceutical indus-
try is facing an R&D productivity crisis. R&D productivity is the relationship
between the value created by a new medicine and the investments required
to generate that medicine.338 In reality, however, it is not easy to measure
either the value or the size of an investment. Thus, proxies are used to mea-
sure it.
R&D productivity can be gauged by outputs, such as patents, but this can
be problematic, because the definition of patents has changed and certain
industries can obtain patents more easily than others.339 In 2012, Thomson
Reuters provided a list of the top 100 global innovators based on their
patenting activities.340 The report was not based on all kinds of patents, but
mainly on the companies’ activities on “innovative” patents, which, accord-
ing to its definition, means “the first publication in a patent document of a
new technology, drug, business process, etc., [which] could also be called
‘basic’ patents.”341 As in 2011,342 the pharmaceutical industry was ranked
last.343 While distinguishing the pharmaceutical industry as “molecule-fo-
cused” as compared to other industries that are “technology-focused”, the
report added that the pharmaceutical industry is nevertheless innova-
tive.344
Ultimately, the targeted output of R&D of pharmaceutical companies are
the available medications. Cockburn insists that the number of NMEs may

337 Ellery/Hansen, 2012, 26 (Top 10 pharma sales growth forecast: Pfizer, -1.7%
growth; Novartis, 2.9% growth; GSK, 6.2%; Merck & Co., -0.6%; Roche, 1.9%;
Sanofi, 2.5%; AstraZeneca, 1.4%; Johnson & Johnson, -0.5%; Abbott, -3.1%; Eli
Lilly, -9.4%).
338 Paul, et al., 9 Nat. Rev. Drug Discov. 203, 204 (2010).
339 Hunt, 1999, 39.
340 Thomson Reuters, 2012.
341 Thomson Reuters, 2012, 4.
342 Thomson Reuters, 2011, 13.
343 Thomson Reuters, 2012, 12. Other industries ranked at the last were Agriculture &
Forestry, Healthcare, Media/Internet, Petroleum, and Primary Metals.
344 Thomson Reuters, 2012, 18.

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 B. Challenges and overcoming efforts

not be the proper proxy for the R&D program’s true output for comparing
low R&D productivity with high R&D expenditure.345 However, he did not
counterargue that the number of NMEs is a major measurement of produc-
tivity; he simply argued that a more accurate measure of R&D productivity
in the pharmaceutical industry must include more factors than the number
of NMEs.346 Other factors that he insists be considered347 prove only that
the industry was working more on second generation inventions and prod-
ucts than on basic breakthrough inventions. He also notes that the declining
counts of new drug approvals are “worrisome.”348 Furthermore, many ana-
lysts have carefully distinguished between the approval of NMEs and that
of minor chemical modifications of existing drugs. The number of NMEs is
one of the most representative indicators of pharmaceutical R&D activity,
and NME development, as a whole, is therapeutically and economically sig-
nificant.349 Lastly, although patents and/or new chemical entities are not the
best measures of R&D activity, much evidence on productivity is concen-
trated on these two measures.350

345 Cockburn, 2006, 4-11.

346 Cockburn, 2006, 4-11 (pointing out, from the input side, the value adjustment of
inflation; from the output side, the much larger volume of approvals of minor
chemical modifications, ii) significant variance of drugs value, iii) complete igno-
rance of incremental innovation and iv) time lag between the investment period and
the time of market approval).
347 Cockburn, 2006, 5-10 (such as i) consideration of the much larger volume of ap-
provals of minor chemical modifications of existing drugs, new formulations,
dosage strengths, new combinations of already approved drugs, or new indication
other than NMEs ii) significant variance of drugs in their scientific significance,
health impact, and economic value while comparing breakthrough innovation and
the “me-too” products; iii) complete ignorance of incremental innovation because
of only focus on NMEs; and the like).
348 Cockburn, 2006, 25.
349 DiMasi/Hansen/Grabowski, 10 J. Health. Econ. 107, 108 (1991); See also Paul, et
al., 9 Nat. Rev. Drug Discov. 203, 204 (2010); Higgins/Graham, 326 Science 370,
370 (2009) (noting “[i]mprovements in pharmaceutical research and development
(R&D) depend on product innovation. But the number of new compounds approved
annually by the U.S. Food and Drug Administration(FDA) has fallen from an av-
erage of 35 in 1996-2001 to 20 in 2002-2007.”).
350 Grabowski/Kyle, 2008, 273.

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2. Dearth of new medical entities

a) Significance of NMEs

“Statistical studies show an historical correlation since the 1950s between the
number of new drugs introduced and declines in mortality and other health in-
dicators across a wide range of diseases and health problems.”351
NMEs are medications containing an active ingredient that has not been
previously approved for marketing in any form.352 The role of NMEs is vital
to the morbidity and mortality of human beings. Further, newer drugs are
significantly better than their predecessors in terms of greater efficacy, fewer
side effects, and easier dosing.353 Although the “drug-offset effect” - whether
the use of a new drug reduces total health system costs - is arguable,354 the
development of new medication certainly provides net benefits to soci-
ety.355

b) Decreased number of NMEs

Pharmaceutical companies invest vastly in R&D in the hope that this in-
vestment will produce new medications. However, it does not always turned
out that way. The number of approvals of NMEs by the FDA provides a
telling example. Although it concerns the number of approvals in only one
country, since in the pharmaceutical industry globally the United States is
its largest market, the figures are indicative of overall trends.356 Although
investment in pharmaceutical R&D has increased tremendously,357 the num-

351 Cockburn, 2006, 2-3, Lichtenberg, 5 Int. J. Health Care Fi. 47, 70 (2005) (reporting
that launches of New Chemical Entities (NCEs) had a strong positive impact on the
probability of survival, based on the relationship between the launches of new drugs
and the longevity based on the data from 52 countries).
352 See subsection II.D.1.
353 Cockburn, 2006, 7.
354 Lichtenberg, 20 Health Affair. 241, 250 (2001) (arguing huge “drug-offset effect”
meaning the use of certain new and effective drugs may reduce total health system
costs; the savings can more than offset the increase in drug costs; therefore there
might be net cost savings to society); cf. Zhang/Soumerai, 26 Health Affair. 880
(2007) (insisting the said drug-offset effect was not proven).
355 Zhang/Soumerai, 26 Health Affair. 880, 884 (2007).
356 Paul, et al., 9 Nat. Rev. Drug Discov. 203, 204 (2010).
357 See subsection III.A.1.b).

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ber of new drugs approved by the FDA has remained consistently low over
the last sixty years.358 In particular, over the last decade, the cost of R&D
has increased by around 70% with a reduction for the first time in 2009,
while the output of NMEs on the market has seen a reduction of around 40%,
despite a slight increase in 2009.359 (See Figure 4) Even if one treats NME
output as stable, taking the increased R&D expenditure and the scientific
progress of technology into account360 reveals the number of potential NMEs
has incontestably fallen. Additional statistics show that only some newly
marketed medications are breakthrough drugs,361 the first in their class,362

358 Munos, 8 Nat. Rev. Drug Discov. 959, 959 (2009) (further noting until 1980, the
trend line is basically flat; for the next 15 years, the slope gently upwards; and since
1996, approvals have dropped to their historical range.); See also Pisano, 2006, 118
(noting this phenomenon suggests “we are spending more but getting less.”); see
as another example, Carmichael, News Wk. May 15, 2010 (noting from 1996 to
1999, the U.S. FDA approved 157 new drugs, while during the comparable period,
from 2006 to 2009, only 74 drugs were approved). There was a peak in 1996, which
was speculated to be caused by the FDA processing a backlog of application on
drugs awaiting approval; Scherer, 2007, 4-5.
359 See also, Ellery/Hansen, 2012, 4-5 (noting “the FDA approved half as many NMEs
as in the period of 1996 - 2010”).
360 Cockburn, 2006, 17; For example, estimated number of “druggable targets” in the
human body has risen from around 500 (Drews, 1999, 77) to over 3,000 after the
human genome project. See Hopkins/Groom, Nature Rev. Drug Discov. 727, 728
(2002); Russ/Lampel, 10 Drug Discov Today. 1607, 1607 (2005) (suggesting the
count is up to 3,000).
361 Morgan, et al., 331 Brit. Med. J. 815, 815 (2005) (reporting in Canada between
1990 and 2003, only 6% of new drugs met the “breakthrough drugs” criteria, and
88% of new drugs did not provide a “substantial improvement” over existing drug
products.); Patented Medicine Prices Review Board, 2005, 11 (defining the break-
through drugs as “the first drug to treat effectively a particular illness or which
provides a substantial improvement over existing drug products” while distinguish-
ing from other medicines).
362 Paul, et al., 9 Nat. Rev. Drug Discov. 203, 203 (2010) (reporting out of 21 and 24
new drugs approved by the FDA in 2008 and 2009, only 29% and 17% could have
been considered first-in-class.); cf. FDA, 2011, 4, 13-17 (reporting approval of 35
NMEs in 2011 including two new treatments for hepatitis C (boceprevir and
teleprevir), the first new drug to treat Hodgkin’s lymphoma in 30 years (brentux-
imab vedotin), and the first new drug to treat lupus in 50 years(belimumab)).

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or treated disorders in a novel way.363 These statistics indicate that the num-
ber of truly innovative new medicines approved by the regulatory bodies
around the globe is decreasing.364

Figure 4: Global R&D expenditure, development times, global pharmaceu-

tical sales and new molecular entity output in 2000-2010.365

In particular, chronic disorders such as diabetes, obesity, Alzheimer’s dis-

ease, Parkinson’s disorder, and schizophrenia still do not have efficient and
tolerable medications, and no new broad-spectrum antibiotics have been
marketed in almost 40 years.366

363 NIHCM, 2002, 3 (Only around 35% of FDA newly approved drugs between 1989
and 2000 were based on new molecular entities that treats diseases in novel ways
and most of approvals contained marketed active ingredients, and remaining 65%
contained marketed active ingredients. Of these 65%, 54% of approval (incremen-
tally modified drugs: IMDs) were only differed from the marketed product in dosage
form, route of administration, or were combined with another active ingredient, and
11% of approvals were identical to products already available on the U.S. market. ).
364 Paul, et al., 9 Nat. Rev. Drug Discov. 203, 203 (2010).
365 Arrowsmith/Harrison, 2012, 11 (originally reproduced from CMR International
2011 Pharmaceutical FactBook and the widening gap between the global sales and
R&D curves may be attributable to the rise in generic drug sales).
366 Cockburn, 2006, 3.

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 B. Challenges and overcoming efforts

c) Potential reasons for the decrease

In addition to the uncertainties discussed in above chapter A.1.c), the fol-

lowing reasons may explain the decrease.

(1) Decrease in solvable scientific problems

Since there are still many diseases that are not well understood, researchers
must depend to a large extent on serendipity.367 Despite the sky-rocketing
incidence and severity of antimicrobial resistances, which seriously impact
the management of infections such as malaria, tuberculosis, pneumonia, and
AIDS, pipelines for anti-infective agents have also been dry, and pharma-
ceutical companies have been halting their research in this area.368 The less
costly scientific problems were resolved in previous decades, leaving the
industry with only the complex and systemic problems, such as
Alzheimer’s.369 The shift in focus to more complex disorders, such as
Alzheimer’s, strokes, obesity, diabetes, and arteriosclerosis, where there is
a high degree of unmet medical need, has confronted the industry with huge
challenges.370 The challenge to find efficient treatment paradigms is enor-
mous, since the biochemistry and the disease pathology underlying complex
disorders are much more difficult and expensive to investigate, which has
naturally resulted in the design of highly sophisticated clinical study proto-
cols to show both efficacy and safety in humans.371

367 Dutfield, 2009, 296.

368 Talbot, et al., 42 Clin. Infect. Dis. 657, 665-666 (2006) (reporting some causes,
such as relatively small size of market and unpredictability); Norrby/Nord/Finch,
5 Lancet Infect. Dis. 115, 116-117 (2005) (pointing out more rapid emergence of
resistance of antimicrobials having higher sales figures as one of the reasons why
the companies are leaving this field).
369 Cockburn, 2006, 14.
370 Federsel, 18 Bioorgan. Med. Chemistry 5775, 5777 (2010); Cockburn, 2006, 14-15.
371 Federsel, 18 Bioorgan. Med. Chemistry 5775, 5777 (2010); Cockburn, 2006, 14.

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(2) Stringent safety regulations

More stringent safety regulations are among the best explanations for the
decrease.372 While tough regulations are indisputably appropriate, they make
it more likely that several drugs which could have provided substantial
benefits for patients despite their side effects have been weeded out. In fact,
if current safety standards had been applied, even Aspirin® and Tylenol®
might well have not been approved.373 However, this is not to imply that
relaxing safety regulations would be a desirable solution.

(3) Problem of over-disclosure

In the field of pharmaceuticals, there is a tendency to early and over disclo-

sure, owing not only to the way in which research is published and the norms
of academic publication, but particularly with respect to patenting practice
in the industry. Firstly, researchers in universities rush to disclose their re-
sults by publishing them in well-known scientific journals, which reward
them more, before trying to secure patent rights over them.374 Secondly, on
the one hand, it is relatively easy to show the structure of something being
invented in the field of chemistry without actually having done it. A skilled
person in the art can easily draw a chemical structure and make quite an
accurate assumption about its physicochemical properties.375 On the other
hand, this disclosure can be more than sufficient to destroy the novelty of a
compound which may show a promising effect and can be developed further.
Thirdly, while a Markush type claim is an extremely helpful tool when
claiming a large number of compounds,376 using them can theoretically dis-
close and ruin the futures of millions of potential medications.
Last but not least, pharmaceutical companies file patent applications at
very early stages in the R&D process, sometimes when they are still selecting
a lead compound from numerous candidates. Thus, the patent applications
may disclose a group of compounds as broadly as possible, while the appli-

372 See subsection III.A.1.a); Dutfield, 2009, 295-96; Federsel, 18 Bioorgan. Med.
Chem. 5775, 5777 (2010).
373 Dutfield, 2009, 295-96.
374 Roin, 87 Tex. L. Rev. 503, 527 (2009).
375 See e.g., Szabo, IIC 1995, 457, 484-85.
376 See supra 104 -109 and accompanying texts.

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cants have not decided yet which one they will develop. When its relevant
properties are either disclosed prematurely or reasonably predictable at the
time of invention, it is unpatentable regardless of whether its efficacy has
already been proven, which might mean society would not have access to
the potential medications.377 Consequently, since such potential medications
would no longer represent opportunities for investment, not only the medi-
cations themselves but also the second generation products therefrom would
be unlikely to appear on the market.

(4) Early and numerous abandonments of potential candidates

The over-disclosure problem becomes more serious in conjunction with

scrutinized go/no-go decisions.378 This decision making process is a regular
practice, and from the outset of R&D activities, pharmaceutical companies
start to screen the patentability of their drugs.379 As a result, the ones with
weak or no patent protection or the ones which may infringe others’ patents
will be eliminated from the candidate list and will seldom be developed for
medical use.380 Companies eliminate the candidates as early as possible,
because the cost of terminating the project at an early stage is obviously
less.381
The real problem here is that an NME that may succeed in reaching the
market is one of the thousands of compounds in the patent claim, and the
rest may not be developed further. For the patent holder, the clock on their
patent terms has started to run long before, and they expect that the window
of potential market exclusivity is too diminished to recover their invest-
ments. Other potential investors have little incentive to invest in them either
because of concerns about patent infringement or because they doubt their
potential to recoup the investment even without patent exclusivities.

377 Roin, 87 Tex. L. Rev. 503, 517-545 (2009).

378 See supra 249 and accompanying texts; Roin, 87 Tex. L. Rev. 503, 569 (2009).
379 deStevens, 1990, 266 (“Needless to say, the lead structure series must be
patentable.”). After this initial screening of patentability, the candidates would go
through at least twice more screening before clinical trials, such as before the filing
of patent applications and before the first clinical trials. The last audit is regarded
as a “gate-keeping event” before the commencement of clinical trials.
380 Roin, 87 Tex. L. Rev. 503, 507 (2009).
381 Pisano, 2006, 145; Dickson/Gagnon, 3 Nat. Rev. Drug Discov. 417, 419-420 (2004)
(noting the late stage failures are extremely costly).

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3. Patent cliffs of blockbuster medications

One distinguishing feature of the field in the mid 1980s and 90s was the
generation of high revenues from the sale of blockbuster drugs which were
protected by patents. However, these blockbuster drugs came up against the
so-called patent cliff, which refers to the sharp fall in profits caused by com-
petition from generic versions of medications after expiration of the patents
on those drugs, and is one of the most widely publicized challenges that big
drug companies face.382 In the U.S., this phenomenon was triggered by the
introduction of a key legislative change, the Drug Price Competition and
Patent Term Restoration Act 1984 (“Hatch-Waxman Act”) with the Bolar
exception, which allowed generic manufacturers to enter the market merely
by proving bioequivalency.383 Generic competition has increased in several
respects, which are typically observed after the blockbuster drugs’ patents
expire.384 For example, sales in the United States of the world’s best-selling
drug, Lipitor®, dropped by around 40% in the last three months of 2011
compared with the same period a year earlier, despite measures taken to
maintain its sales.385 The fate of Pfizer’s Lipitor® ($5.3 billion in the 2010
in U.S. American market) was followed by Eli Lilly’s antipsychotic drug
Zyprexa® ($2.5 billion), Johnson & Johnson’s antibiotic Levaquinin® ($1.3
billion), among others.386

4. Frequent merger and acquisitions (M&As) and in-licensing

The pharmaceutical industry has been characterized by both significant con-

solidation of large pharmaceutical firms and the vertical disintegration of
the R&D process. A study has shown that eight of the top ten ranked phar-

382 Holmes, 379 Lancet 1863, 1863 (2012); Whalen/Stovall, the Wall Street Journal,
February 2, 2012.
383 See subsection V.C.1.b).
384 Grabowski/Kyle, 28 Manage. Decis. Econ. 491, 496, 501 (2007).
385 Holmes, 379 Lancet 1863, 1863 (2012).
386 Alazraki, Daily Finance February 27, 2011 (further reporting Bristol-Myers Squibb
and Sanofi-Aventis’ anti-platelet drug Plavix (6.1 billion$), AstraZeneca’s antipsy-
chotic drug Seroquel (3.7 billion$), Merck’s anti-asthmatic drug Singulair (3.2 bil-
lion$), Takeda’s anti-diabetes drug Actos (3.4 billion$), and Amgen’s anti-arthritis
drug Enbrel (3.3 billion$) would lose their patent protection in 2012.); see also
Wilson, The New York Times, March 6, 2011.

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 B. Challenges and overcoming efforts

maceutical companies in 2004 had completed major mergers with other

pharmaceutical companies, with two notable exceptions, Merck and Johnson
& Johnson.387 Traditional economic motives for mergers, such as increasing
market share and marketing power to gain competitive advantage, have not
been major issues in large pharmaceutical mergers.388 Various researchers
have pointed out that companies in economic distress with pipeline gaps,
ageing portfolios of marketed drugs, and expired patents for major products
are more likely to engage in mergers and acquisitions.389 Along with these
factors,390 higher R&D costs have been also cited as one of the main factors
underlying the trend toward more mergers and industry consolidation.391
Although some companies have contended that these mergers were intended
to pursue R&D efficiencies, the benefits from increased size and diversity
were reported as less than expected,392 and there is still little evidence that
the mergers have increased long-term R&D performance or outcomes.393
Along with M&As, there has been a significant shift toward license-in
technology from biotechnological companies and small and medium enter-
prises (“SMEs”) to reduce R&D costs and effort. 394 While facing and
preparing for the eventual patent expiry of their own best sellers and the
resulting revenue loss, innovative companies, such as Pfizer, which saw its
Lipitor patent expired in 2011, and Bristol-Myers, which saw its Plavix
patent expired in 2012, have focused on acquiring small biotech compa-

387 Grabowski/Kyle, 2008, 263-64 (other eight companies: Pfizer, GlaxoSmithKline,

Sanofi-Aventis, Novartis, AstraZeneca, Roche, BMS, and Wyeth).
388 Grabowski/Kyle, 2008, 270.
389 Higgins/Rodriguez, 80 J. Financ. Econ. 351 (2006); Danzon/Epstein/Nicholson, 28
Manage. Decis. Econ. 307, 307 (2007); Burgess/Terblanche, 3 Open Access J. Clin.
Trials 45, 45 (2011) (noting M&As are attempts to retain profitability). One report
estimated sales at risk from patent expiration would be over 183 billion USD in
2011/14 (EvaluatePharma, 2009, 6); Munos, 8 Nat. Rev. Drug Discov. 959, 965-66
(2009) (noting revenue losses caused by the expiration of patents on key blockbuster
drugs with continuing the current business model may result in a reduction of
5~10% in sales and 20~30% in new income in 2012-2015.).
390 Grabowski/Kyle, 2008, 262.
391 DiMasi/Hansen/Grabowski, 22 J. Health Econ. 151, 152 (2003).
392 Henderson/Cockburn, 27 RAND J. Econ. 32, 53 (1996).
393 Grabowski/Kyle, 2008, 283; Munos, 8 Nat. Rev. Drug Discov. 959, 965 (2009)
(noting “[f]or now, the evidence suggests that M&A can help small companies, but
are not an effective means to boost NME output among larger companies.”).
394 Holmes, 379 Lancet 1863, 1863-64 (2012).

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III. SPECIFICITIES IN PHARMACEUTICALS AND RECENT DEVELOPMENTS

nies.395 These kinds of alliances or in-licensing can also function as previous

measures before the mergers and acquisitions in the pharmaceutical
area.396 Many research-based pharmaceutical companies are also quite ac-
tive in the generic business directly, through affiliate companies, or mergers
with generic companies.397 These activities, such as M&As, in-licensing, or
engagement of generic business can be understood as ways of investing
money in other businesses which are less risky and less costly.

5. Drastic increase of second generation inventions

“Because it gets more and more difficult and expensive to find and develop new
drugs, more effort is being put into finding ways of delivering existing drugs
more effectively.”398

395 Thomas, The New York Times, May 1, 2012.

396 Higgins/Rodriguez, 80 J. Financ. Econ. 351, 352-53 (2006).
397 For example, a Japanese pharmaceutical company, Daiichi-Sankyo took 35% stake
in an Indian generic drug maker, Ranbaxy. See Anonymous, New York Times, June
11, 2008; Pfizer announced it had entered into major licensing agreement with three
India-based pharmaceutical companies, such as Aurobindo Pharma Ltd., Claris
Lifesciences Ltd. and Strides Arcolab, thereby adding new non-Pfizer products to
its portfolio, see Pfizer, Annual Review 2009, 27; Also while announcing “[g]ener-
ics are an increasingly important part of Sanofi-aventis’ plans to become a diver-
sified global healthcare company”, Sanofi-Aventis announces it has created the
third largest generic company in the European market by unifying the Group’s
generic activities under the name of Zentiva. See Zentiva, Zentiva Press Release,
Apr. 4, 2011; Most representatively, Novartis grouped together the generic sections
under the name of Sandoz in 2003; subsequently acquired BASF Generics, Lec,
Hexal, and Eon; an reached the second biggest generic company in the world after
Israeli company, Teva. See Ellery/Hansen, 2012, 27; Also the generic companies
buy innovative companies. For example Teva not only acquire the generic compa-
nies, such as US company - Barr pharmaceuticals or German one - Ratiopham; but
also it completed its acquisition of US biopharmaceutical company, Cephalon in
2011. See Teva, Teva News Release, Oct. 14, 2011.).
398 Grubb/Thomsen, 2010, 258.

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 B. Challenges and overcoming efforts

a) Life cycle management or evergreening

The incentive to maximize the monopoly period of brand name drugs is

huge.399 Different strategies are pursued by pharmaceutical firms to maxi-
mize the exclusivity of their particularly successful drugs,400 which are col-
lectively known as “evergreening” or “life cycle management.”401 Others
refer to these strategies as “line extensions” or “product reformulation.”
Whatever the term used, through these methods pharmaceutical firms in-
crease R&D costs on second generation inventions, heighten barriers to
market entry that may become excessive, and thereby restrict competition
beyond the 20-year patent term.402 Some refer to this as building “patent
walls” in the attempt to broaden the scope of the basic patent.403 This phe-
nomenon is well recognized as important by the industry404 and markedly
noticeable when the companies are heavily dependent on a small number of
highly profitable products;405 or when the product is a so-called “block-
buster”, just as generic competition is directed at products achieving larger
markets. Angell argues that the pharmaceutical industry has been “ingenious
in finding ways to extend patents on its bestselling drugs.”406 Firms can move
the high pricing potential of NMEs to second generation products by effec-
tively modifying older products in order to make them attractive.407 When

399 Dutfield/Suthersanen, 8 Intell. Prop. Q. 379, 389 (2004); Glasgow, 41 IDEA 227,
232 (2001).
400 Dutfield/Suthersanen, 8 Intell. Prop. Q. 379, 389 (2004); Glasgow, 41 IDEA 227,
233-254 (2001).
401 See e.g. GSK, 2011, 1 (noting “‘[e]vergreening’ is an inherently pejorative term.”).
402 Gaudry, 29 Nature Biotech. 876, 876 (2011); Dutfield/Suthersanen, 8 Intell. Prop.
Q. 379, 389 (2004); Shadowen/Leffler/Lukens, IIC 2011, 698, 699; Rathod, 7 J.
Generic Medicines 227, 227 (2010) (defining “evergreening is a strategy by which
technology producers, using serial secondary patents and other mechanisms, keep
their product sales protected for longer periods of time than would normally be
permissible under the law.”).
403 Hopenhayn/Mitchell, 32 RAND J. Econ. 152, 163 (2001).
404 Ellery/Hansen, 2012, 3-4 (a series of interviews with pharmaceutical industry ex-
ecutives in a survey conducted on pharmaceutical lifecycle management in 2004
reported that the executives felt that LCM had been important, and 90% predicted
that its importance would growing during 5 years following the report publication
(2006-2010), while 60% expecting it to become much more important.).
405 Dutfield/Suthersanen, 8 Intell. Prop. Q. 379, 389 (2004).
406 Angell, 342 New Eng. J. Med. 1902 (2000); cf. Holmer, 343 New Eng. J. Med. 1415
(2000).
407 NIHCM, 2002, 4.

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the line extension is positioned and designed properly, it can improve the
value proposition and the whole status of the previous NME,408 thereby
driving revenue growth. In the 1990s, when the evergreening practice first
appeared, second generation inventions were polymorphs, metabolites,
enantiomers, change in strength/dosage and the like. Since then, however,
the list of second generation patents has lengthened to include patents on a
much larger number of characteristics, such as impurities/substantially pure
compounds, new methods of use, additional process, new dosing route,
packaging/patient instructions, pharmacokinetic/pharmacodynamic param-
eters regarding drug delivery system, combination with other drugs, seg-
mented patient populations, and the like.409
In addition to the companies who hold patents for original active ingre-
dients, other companies will seek to obtain patents on second generation
inventions.410 Indeed, an empirical study conducted in Australia has found
that there are substantial patenting activities undertaken by companies other
than originators of high-cost drugs, including generic companies.411 Nu-
merous forces have joined to encourage manufacturers to modify drugs that
are already on the market. Firstly, pharmaceutical firms may expect it to be
vastly less time-consuming, expensive and risky to invest in the R&D of
second generation medicine containing an active ingredient whose safety
and efficacy have already been established.412 The development of one or
even many line extensions can be much easier than that of an NME. Sec-
ondly, if the original manufacturers are the developers of next generation
drugs, they can benefit from the experience already gained from the basic
substance.413 Furthermore, since they already have real market experience,
the companies already know the potential concerns.414 Thirdly, other frame-

408 Ellery/Hansen, 2012, 15, but it would be difficult to get a premium price over the
original.
409 See e.g., Rathod, 7 J. Generic Medicines 227, 229 (2010); Dutfield/Suthersanen, 8
Intell. Prop. Q. 379, 389 (2004), Parthasarathy/Goddar, IIC 2009, 38, 41 (noting
secondary inventions including new versions of the active compound such as enan-
tiomers, salts, esters, or polymorphs, or new uses of a drug, the metabolite of a pro-
drug, and the like).
410 Dutfield/Suthersanen, 8 Intell. Prop. Q. 379, 389-90 (2004) (the other firms will be
willing to license their patents to the original patent holders.).
411 Christie, et al, 8 PLoS Med 1, 6 (2013).
412 NIHCM, 2002, 4.
413 Landes/Posner, 2003, 330.
414 Ellery/Hansen, 2012, 15.

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 B. Challenges and overcoming efforts

works of protection, especially market exclusivity by regulatory regimes,

rewards manufacturers for making even modest changes to their products
by providing three years of market exclusivity for the new version of the
product, the new use, new dosage form, new route of administration, or
combinations of older drugs, and the like.415 Fourthly, as some scholars have
affirmed, this phenomenon has bolstered the at-risk revenues by the gener-
ics’ challenges to their basic patent. 416 Lastly, there are other driving forces,
such as remarkable advances in the drug delivery system and separation
technology of a single component, regulatory promotion for the IMDs,417 an
effective mechanism to prevent generic entry by acquiring patents on IMDs
(+ 30 months’ automatic stay418 in the United States) and the like.419

b) Drastic increase of this activity supported by the number of second

generation patents

One study analyzing drugs that were associated with at least one patent and
approved by the FDA from 2000 to 2010 reported that drug companies fre-
quently explored the evergreening strategy.420 It was further reported that
the phenomenon of acquiring additional patents, whose validity or applica-
bility are often dubious, have increased.421 It was estimated that about 30%
of R&D spending is devoted to bringing “line extensions” to market.422 A
report of the European Commission on the pharmaceutical sector423 further
identified the following trends: i) A markedly sharp increase in the number
of patent applications in pharmaceutical inventions was observed during the
period of 2000 to 2007;424 ii) 93% of the pending applications were classified

415 NIHCM, 2002, 4, 15-18; Title 21 United States Code - Food and Drugs (“21
U.S.C.”) § 355; Council Directive 2001/83/EC, Art. 10.
416 Higgins/Graham, 326 Science 370, 370 (2009).
417 e.g. 505(b) way of the 21 U.S.C.
418 See infra 1221 and accompanying texts.
419 NIHCM, 2002, 15-18.
420 Gaudry, 29 Nature Biotech. 876, 876 (2011).
421 Engelberg/Kesselheim/Avorn, 361 New Eng. J. Med. 1917 (2009); Hemphill/Sam-
pat, 31 J. Health Econ. 327, 327 (2012).
422 Cited in Frank, 22 J. Health Econ. 325, 327 (2003).
423 See DG competition, 2009.
424 This statistics was based on the IPC (International Patent Classification) A61K with
some exceptions (e.g.: preparations for dentistry(A61K6) and so on), which can be
regarded as the closest proxy for pharmaceutical applications.

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as selection inventions;425 and iii) 84% of the granted patents were catego-
rized as selection inventions. Clearly, the number of patents for selection
inventions had soared.

Figure 5: Patent portfolio life cycles as a function of claim types for the top
20 INNs by total sales (2000 –2007).426

The uppermost line in Figure 5, which shows the cumulative number of

patent applications for non-formulation products (such as salts, particles,
polymorphic forms, and so on, except NCEs), provides evidence of the trend
toward patent filings for selection inventions which are the focus of this
paper. Even though it represents the cumulative number of patent filings,
this line indicates a marked preference for second generation invention re-

425 The terminology in the pharmaceutical Sector Inquiry is “secondary patent (appli-
cation) ” which is an application not related to the first the patent (application) for
the active molecules for which the contrary category of “primary patent (applica-
tion)” is used.
426 DG competition, 2009, 179.

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 C. Summary

lated claims.427 It is clear that life cycle management strategies have brought
the industry to a more complex and confusing patent landscape for nearly
all drug patents.428

C. Summary

The pharmaceutical industry is one in which the economic rationale for

patents works to protect inventors from imitations and provides incentives
to bear the cost of innovation.429 The patent system is therefore highly ef-
fective, and its protection is essential.430 However, even though the patent
system as it has existed for some time, the number of real medicines has not
changed, which challenges the theory that patent protection provides incen-
tives for real medicines and promotes progressive technological develop-
ment in this field. As has been argued in this chapter, this industry is facing
challenges, such as a decline in performance so that fewer products are
reaching the market, with concomitant losses of billions of dollars in revenue
as some of the blockbuster medications go off patent, the cost of developing
new drugs and conducting clinical studies spirals, more stringent regulatory
requirements are imposed, and healthcare systems become increasingly cost-
constrained.431
“Perhaps the industry has finally reached bottom, and it recognises the enormous
need to look for a new business model.”432
Thus, it has become increasingly important to have strategies to protect and
to take full advantage of existing patents, or to invest assets in less risky and
costly areas. A possible consequence of this is that the pharmaceutical in-

427 DG competition, 2009, 179, the report was arguing there is clear trend for companies
to file patent applications as the expiry date of the primary patent approaches.
However, patents are only granted to the novel inventions, and there are many
competitors in the same field of research. Thus, even if the companies want to file
them as late as possible, the later they file applications, the more risks they will face
to get a patent. Thus, above argument is not persuasive.
428 Howard, 4 J. Generic Med 231, 236 (2007).
429 Bessen/Maskin, 40 RAND J. Econ. 611 (2009).
430 Roin, 87 Tex. L. Rev. 503, 513-15 (2009); Bessen/Meurer, 2008, 88-89.
431 See e.g., Federsel, 18 Bioorgan. Med. Chem. 5775, 5775 (2010); Paul, et al., 9 Nat.
Rev. Drug Discov. 203, 203 (2010).
432 Holmes, 379 Lancet 1863, 1863 (2012).

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dustry is led in a direction that might be lucrative but not well aligned with
public health requirements.433
On the one hand, the number of NMEs is decreasing because of the over-
disclosure problem in relation to the novelty requirement, more stringent
safety regulations,434 and for various scientific reasons, including the exis-
tence of diseases which are poorly understood,435 and the shift of focus to
more complex disorders, such as Alzheimer’s, strokes, obesity, diabetes, and
arteriosclerosis, where there is a high degree of unmet medical need.436 On
the other hand, the number of second generation patents is drastically in-
creasing. One may argue that at least there are more patents and/or product
inventions, which one hopes have been practically improved. However, one
must consider whether more patents mean more and better innovations.437
Moreover, companies other than the basic patentee are also seeking to ac-
quire more patents for the second generation inventions and are becoming
more dependent on those patents for cost reduction and product improve-
ments, because they lack the first mover’s advantages or the learn-by-doing
knowledge of the basic patentees.438 In this regard, Avorn argues that patent
law guarantees a patent to manufacturers who make trivial changes in ex-
isting active ingredients, even if the “new” drug has the same clinical ef-
fect.439 This can also allow companies to extend the life of a blockbuster
product by making a virtually identical drug and shifting use to the new
drug.440
Therefore, the dearth of NMEs is sensitive to a wide range of factors,
which have been discussed at length in this chapter, and the increased num-
ber of second generation patents is influenced by several factors. The next
chapter will analyze the role that patent law and the patent system have
played in the changing landscape of pharmaceutical innovation.

433 Avorn, 309 Science 669, 669 (2005).

434 See subsection III.B.2.c)(1).
435 Dutfield, 2009, 296.
436 Federsel, 18 Bioorgan. Med. Chemistry 5775, 5777 (2010) (noting this led to the
design of highly sophisticated clinical study protocols to show both efficacy in man
and safety); Cockburn, 2006, 14-15.
437 Landes/Posner, 2003, 325.
438 Landes/Posner, 2003, 330.
439 Avorn, 309 Science 669, 669 (2005).
440 Angell, 2004, 76.

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IV. STANDARDS OF PATENTABILITY FOR
PHARMACEUTICAL SELECTION INVENTIONS

So far we have explored specificities and recent developments in the field

of pharmaceuticals. As noted, patent protection is crucial for pharmaceutical
innovation. Based on these observations, such as high regulation in the in-
dustry, the characteristics of the technology, market factors, as well as the
norms that dictate the behaviour of researchers in universities or institutes,
we have seen a trend towards second generation inventions, products and
patents. In this chapter, we explore the patentability of these second gener-
ation inventions.
In order to obtain a patent, patent law requires a claimed invention to be
new, to involve an inventive step (non-obviousness), to be susceptible to
industrial application (utility), and to be sufficiently supported by a descrip-
tion (sufficiency of disclosure), although these elements are expressed
slightly differently from jurisdiction to jurisdiction.441 It is difficult to in-
terpret these requirements of patentability and the requirements are judicially
determined, administered by the patent offices, and litigated in courts.442 To
determine whether there is any correlation between the drastic increase of
second generation inventions and patentability standards, this chapter ex-
amines the basic test for patentability requirements as they are applied to
selection inventions. It will also analyze whether or how the present re-
quirements in Europe and in the United States have been lowered by com-
paring the former requirements in those jurisdictions with those of Korea,
respectively.

441 It was noted that these requirements as a series of doors through which an applicant
should pass in order to acquire a patent right. See e.g. In re Bergy, 596 F.2d 952,
960 (C.C.P.A. 1979). One thing to note is, no Patent law, in fact, provides the
definition of invention, although some provide what shall not be regarded as an
invention. E.g. EPC Art. 53.
442 Luski/Wettstein, 1 Probl. Perspect. Manage. 31, 42-43 (2004) (further noting that
there were no fixed set of rules to judge patents in the court, but the decisions are
rather very discretionary in nature.); Scotchmer/Green, 21 RAND J. Econ. 131,
131-32 (1990).

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A. Novelty and anticipation

1. Introduction

The novelty requirement is not controversial.443 It is a concept that is fun-

damental to patentability444 and “a separate examination” step from other
requirements when examining patentability.445 There are several concepts
of novelty that have been applied to inventions in different jurisdictions, such
as absolute novelty,446 local novelty,447 or mixed novelty.448 Novelty of an
invention is required to avoid double patenting,449 to prevent patenting in-

443 Duffy, 71 U. Chi. L. Rev. 439, 502 (2004).

444 Jacob, IIC 1996, 170, 170; Chou/Haller, 1995, 1 (noting along with “inventive
step,” novelty is the most important patentability criteria).
445 BGH/Olanzapine, IIC 2009, 596, 599 (noting “with regard to the purpose of the
(separate) examination of novelty”).
446 Anten, 54 J. Pat. Off. Soc'y 75, 76 (1972) (noting absolute novelty means “the
invention cannot have been made known by prior publication or prior use anywhere
in the world.”); Dessemontet, 1976, 195 (noting “absolute novelty means the nov-
elty that exists in relation to the world state of the technique, without limit in time
or space, and by relative novelty is understood that situation which exists within a
given country, or within a specific period of time”); Green Lane Products Ltd v.
PMS International Group Plc & Ors [2008] EWCA Civ 358, para 20.
447 “Local novelty” means the rule that a prior publication or use have to occur within
the country in order to destroy the novelty of invention. Grubb/Thomsen, 2010, 62
(providing example of this system, which is the early days of patents in England,
when patents were frequently granted for inventions, that, although it was known
abroad, were brought into the kingdom for the first time by the patentee to U.K.).
448 Grubb/Thomsen, 2010, 63-64; See also Anten, 54 J. Pat. Off. Soc'y 75, 76 (1972)
(noting “mixed novelty” system have been applied in some countries, like USA,
that a later patent application is rendered invalid by written publication anywhere
in the world, but by oral publication or use of the invention only in USA.).
449 Tilmann, IIC 2010, 149, 151-152 (noting “[o]utdated, because, according
to Art. 54(2) EPC, not only a patented invention may destroy novelty but any kind
of prior art information. And even if there is a prior patented (or applied
for, Art. 54(3) EPC) invention, “avoiding double patenting” (as the alleged aim of
the novelty requirement) is not restricted to mean, that the claims of that patented
invention are the same as the claims of the invention under examination; the dis-
closure may also be given by the description or by the drawings of the first patented
invention.”). Double patenting is not acknowledged under the EPC.

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formation that already exists in the public domain by a first disclosure,450

and thus to assure that information remains in the public domain for the free
use of the public.451 An invention is generally considered new if it does not
form part of the state of the art.452 If the concept of an invention is completely
disclosed within a single piece of prior art, 453 it lacks novelty, regardless of
whether it was independently developed from the earlier invention.454 “An-
ticipation” is a conclusion as to the failure of the invention to meet the nov-
elty requirement.455 A claim is said to be “anticipated” by a prior art that
identically discloses the claimed invention,456 when the prior disclosure en-

450 Bayer/Diastereomer, T 12/81 OJ EPO 1982, 296, 301 (noting “[t]he purpose of
Article 54(1) EPC is to prevent the state of the art being patented again.”); Dupont/
Copolymer, T 124/87, OJ EPO 1989, 491, 495; Tilmann, IIC 2010, 149, 151-152;
Seymore, 60 Duke L. J., 919, 919, 931 (2011) (noting “novelty serves to safeguard
the public’s right to enjoy what it already possesses.”); Jacob, IIC 1996, 170, 170
(noting this concept was described as a “golden thread” running through patent
jurisprudence).
451 Aronson v. Quick Point Pencil Co., 440 U.S. 257, 262 (1979); Bonito Boats, Inc. v.
Thunder Craft Boats, Inc., 489 U.S. 141, 148 (1989) (holding “[s]ections
102(a) and (b) operate in tandem to exclude from consideration for patent protection
knowledge that is already available to the public.”).
452 See, e.g., EPC 54 (1); 35 U.S.C. § 102.
453 Spenner, 90 J. Pat. & Trademark Off. Soc’y, 477, 510 (2008). Prior arts cannot be
combined to show the elements of the claimed invention.
454 Mauer/Scotchmer, 69 Economica 535, 535 (2002) (noting “patents differ from other
forms of intellectual property in that independent invention is not a defense to in-
fringement.” ); cf. Diener/Shear, T305/87, OJ EPO 1991, 419, 429 (holding it was
not permissible to combine separate items belonging to different embodiments de-
scribed in one and the same document (which was a catalogue) merely because they
were disclosed in that one document, unless of course such combination had been
specifically suggested there.).
455 Chisum, 15 AIPLA Q. J. 57, 58 (1987).
456 Chisum, 15 AIPLA Q. J. 57, 58 (1987).

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ables the entire claimed invention in addition to disclosing each and every
element of the invention.457

2. Examination of novelty

Assessing the novelty requirement may on the face of it appear fairly

straightforward.458 The sole test of novelty is the comparison between the
invention and the whole knowledge from the prior art, and the invention will
be determined as novel if there is a difference from the prior art.459 However,
the determination of novelty is not as simple as it sounds. Firstly, the deter-
mination involves multiple factors and is dominated by standards that apply
to various elements as with the determination of other patentability require-
ments.460 For example, to determine whether an invention is anticipated in
an enabling manner, we should judge the level of ordinary skill of a person
skilled in the art and the degree of experiments which would be regarded as
“undue,”461 In addition, to determine what is “undue,” several factors must

457 Kieff/Schwartz/Newman, 2011, 490-91; See. e.g., Elan Pharmaceuticals., Inc. v.

Mayo Foundation, 346 F.3d 1051, 1054 (Fed. Cir. 2003) (holding a reference is
enabled when its disclosures are sufficient to allow one of skill in the art to make
and use the claimed invention, quoting Bristol-Myers Squibb Co. v. Ben Venue
Labs., Inc., 246 F.3d 1368, 1374 (Fed. Cir. 2001)); See also Atlas Powder Co. v.
Ireco, Inc., 190 F.3d 1342, 1346 (Fed. Cir. 1999) (holding that in order to anticipate
a claim, a prior art reference must disclose every limitation of the claimed invention,
either explicitly or inherently, quoting In re Schreiber, 128 F.3d 1473 (Fed. Cir.
1997)); RCA Corp. v. Applied Digital Data Systems, Inc., 730 F.2d 1440, 1444 (Fed.
Cir. 1984) (noting “[a]nticipation is established only when a single prior art refer-
ence discloses, expressly or under principles of inherency, each and every element
of a claimed invention.”); Synthon BV v. SmithKline Beecham plc [2005] UKHL
59, para 14 (noting if an earlier published document discloses the claimed invention
and a person skilled in the art can perform the claimed invention when he tries to
do so by using the matter disclosed in the earlier document and-or his common
knowledge, the claim is anticipated by the earlier document.).
458 Kieff, 45 B. C. L. Rev., 55, 86-87 (2003); Grubb/Thomsen, 2010, 67.
459 Dessemontet, 1976, 195.
460 Duffy, 51 Wm. & Mary L. Rev. 609, 638-639 (2009).
461 Duffy, 51 Wm. & Mary L. Rev. 609, 638 (2009); see also Advanced Display Sys.,
Inc. v. Kent State Univ., 212 F.3d 1272, 1282 (Fed. Cir. 2000) (holding that antic-
ipation requires describing every element of the claimed invention, either expressly
or inherently, such that a person of ordinary skill in the art could practice the in-
vention without undue experimentation).

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 A. Novelty and anticipation

be determined.462 To judge “inherent anticipation” – “[the invention] is in-

herently disclosed only if it is the natural result flowing from the explicit
disclosure of the prior art” –463 it should first be decided what is to be re-
garded as a “natural result.”464 Secondly, the determination of novelty also
depends on the developmental status of inventions. The novelty requirement
is usually easier to achieve for fundamental inventions (e.g. basic patents)
than for improvement inventions465 taking into consideration the accumu-
lated amount of prior arts over time. Thirdly, the complexity of determining
novelty varies according to the field of technology. Determining novelty is
more straightforward in relatively predictable fields, like electrical or me-
chanical engineering; however, it is more difficult for chemical, biotechno-
logical, or pharmaceutical inventions, which lie in unpredictable fields.466
Considering these complexities, one may be surprised to learn that antici-
pation is a finding of fact “with which an appellate court should be reluctant
to interfere.”467 Last but not least, the novelty requirement, including the
level of enablement, depends on the jurisdiction and on the developmental
status of law, as will be discussed in chapter IV.A.4.

462 See e.g. MPEP§ 2164.01(a) (providing exemplary multi-factors to determine “un-
due” experiments as follows: (A) The breadth of the claims; (B) The nature of the
invention; (C) The state of the prior art; (D) The level of one of ordinary skill; (E)
The level of predictability in the art; (F) The amount of direction provided by the
inventor; (G) The existence of working examples; and (H) The quantity of experi-
mentation needed to make or use the invention based on the content of the disclo-
sure, quoting In re Wands, 858 F.2d 731, 737 (Fed. Cir. 1988)).
463 For details, see subsection IV.A.3.
464 Duffy, 51 Wm. & Mary L. Rev. 609, 638 (2009); See also Schering Co. v. Geneva
Pharmaceuticals, 339 F.3d 1373, 1379 (Fed. Cir. 2003) (holding “a limitation or
the entire invention is inherent and in the public domain if it is the “natural result
flowing from’’ the explicit disclosure of the prior art.”).
465 See also Van Dijk, 44 J. Ind. Econ. 151, 152-153 (1996); see the differences and
difficulties in pharmaceutical art in subsection VI.E.2.b).
466 Seymore, 60 Duke L. J., 919, 933-936 (2011).
467 Synthon BV v. SmithKline Beecham plc [2005] UKHL 59, para 38; Merck v. Teva
Pharmaceuticals USA, 347 F.3d 1367, 1369 (Fed. Cir. 2003) (“Anticipation is a
question of fact, and after a bench trial is reviewed under the clearly erroneous
standard”); Eli Lilly and Company v. Zenith Goldline Pharmaceuticals. Inc., 471
F.3d 1369, 1375 (Fed. Cir. 2006) (anticipation is a question of fact, including
whether or not an element is inherent in the prior art and the prior art reference must
disclose each and every feature of the claimed invention, either explicitly or inher-
ently).

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The construction of the concept and the assessment of novelty differ

among patent offices. In Europe, an invention is considered new if it does
not form part of the state of the art,468 which comprises everything made
available to the public before the critical date of patent filings.469 To test this
novelty, EPO, representatively, uses a strict definition of the disclosure of
a prior art, the so-called “photographic novelty approach,” as in T 12/81
through “purposive selection” as in T 198/84, which is contrary to “arbitrary
selection.”470 Consider a range selection as an example: Although a range
of value falls within the scope of a previously disclosed range, it could be
found novel when the selected interval i) is narrower; ii) is sufficiently far
removed from the preferred alternatives in the prior art; and iii) is not an
arbitrary choice from the prior art but results in a better effect (“purposive
selection”).471 This “non-arbitrary” but “purposive selection” can be found
when only the selected range has some better properties, not over the whole
known range, which in turn makes the selection a new invention.472 The
novelty will be denied only when a skilled artisan could have seriously con-
templated the claimed invention by applying the technical teaching of the
prior art in the overlapping range.473 According to this approach, an implicit
disclosure of an invention in the prior art may not be sufficient to deny the
novelty thereof, which can allow some pieces of existing knowledge to be
patented.474 Some scholars have even warned that this kind of novelty re-
quirement could be met just by cleverly drafting a patent application.475
Until the Olanzapine decision, the greatest discrepancy between the
EPO’s and the German interpretation of novelty was the one between this
“photographic” theory and the “list” theory.476 Germany had a typical in-
terpretation for assessing the novelty of a selection invention - the so-called

468 EPC Art. 54(1); German Patent Act 2011 (“GPA”) Section 3(1); UK Patents Act
1977 (as amended 2011, “UK Patents Act 1977”), Section 2(1).
469 EPC Art. 54(1); GPA Section 3(2); UK Patents Act 1977, Section 2(2).
470 Weaver/Perakis/Riolo, 15 World Pat. Info. 81, 83 (1993).
471 Hoechst/Thiochloroformates, T198/84, OJ EPO 1985, 209, 209; see also Texaco/
Novelty, T279/89 (1991), point 4.1.
472 Hoechst/Thiochloroformates, T198/84, OJ EPO 1985, 209, 214, point 7.
473 Unilever/Washing Composition, T 666/89, OJ EPO 1993, 495, 503; see also To-
shiba/Thickness of Magnetic Layers, T 26/85, OJ EPO 1990, 22, 22.
474 World Bank, 2003, 180.
475 See e.g., Correa, 2006, 3.
476 Singer/Lunzer, 1995, 54.15B.

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 A. Novelty and anticipation

“Bruchhausen doctrine”.477 The BGH held that, in the absence of any other
indication, patent claims would lead a person skilled in the art to expect that
the desired result can be achieved in all values within the specified
range.478 It further held that this was because, according to the rules of arith-
metic, the indication of a quantitative range, e.g. 0.1-50 ppm, was a simpli-
fied representation of all conceivable intermediate values within the
desired result can be achieved in all values within the specified range.478 It further held that
range. 479 In the Inkrustierungsinhibitoren case, where the disclosure of prior
this was because, according to the rules of arithmetic, the indication of a quantitative range,
art was questioned, while explicitly disagreeing with the EPO’s jurispru-
e.g. 0.1-50 ppm, was a simplified representation of all conceivable intermediate values within
dence, the BGH confirmed that, since the indication of a quantitative range
the range. 479 In the Inkrustierungsinhibitoren case, where the disclosure of prior art was
was a simplified representation of the continuous intermediate value, all in-
questioned, while explicitly disagreeing with the EPO’s jurisprudence, 480 the BGH confirmed
termediate values were as a rule to be regarded as disclosed. The range of
that, since the indication of a quantitative range was a simplified representation of the
disclosure according to these two theories can be well understood by the
continuous intermediate value, all intermediate values were as a rule to be regarded as
following diagram, and the same principle was applied to selection inven-
disclosed.480 The range of disclosure according to these two theories can be well understood
tions:
by the following diagram, and the same principle was applied to selection inventions:

Figure 6: The scope of disclosure of “0.1-50 ppm” according to both theo-

Figure 6: The scope of disclosure of “0.1-50 ppm” according to both theories481
ries481
0.1 ppm 50 ppm 0.1 ppm 50 ppm

Disclosure according to list theory Disclosure according to photographic theory

TheTheBritish novelty
British test, which
novelty is referred
test, which to as theto
is referred “clear
as theand unmistakable
“clear direction test”,
and unmistakable
482
is direction
set out in test”,
the General Tire v. Firestone case as follows:
is set out in the General Tire v. Firestone case as A claim
482 is follows:
regarded as
anticipated
A claimeither if the prior
is regarded art included aeither
as anticipated clear if
disclosure
the prior to do
art something
included that would
a clear
infringe
disclosure to do something that would infringe the patentee’s claim, orwould
the patentee’s claim, or if following the direction provided by the prior art if
result inevitably
following theindirection
something provided
that wouldby fallthe
within theart
prior patentee’s claim.483
would result Lord Hoffman
inevitably in
something
affirmed that would
that when a prior fall within the
art disclosing thepatentee’s
subject matter that483would
claim. Lordunavoidably
Hoffman af- have
firmedthe
infringed that when
patent if it aperformed
prior artafter
disclosing
granting thethepatent,
subjectthis matter
prior art that wouldtheun-
anticipated later
484
avoidably
claimed have
invention. infringed the patent
Further, since whetherif aitperson
performed after or
is working granting the patent,
not an invention is an
objective fact, the person’s awareness of what he is doing does not matter.485 However, as the
House of Lords acknowledged, there is one exception to this test, i.e. an act performed
secretly or without knowledge of the relevant facts, even if it would amount to infringements
477 Singer/Lunzer,
afterwards, 1995, 54.15B.
will not anticipate the invention before.486
478 BGH/Crackkatalysator (Cracking catalyst), GRUR 1990, 510, 512.
479 BGH/Crackkatalysator (Cracking catalyst), GRUR 1990, 510, 512. 487
In 480
the United States, even though the law (Incrustration
BGH/Inkrustierungsinhibitoren regarding novelty is more complicated,
inhibitors), GRUR 2000,basically,591,
novelty 593-94.
is destroyed by a previous disclosure, a prior use, or other forms of public
481 This figure
communication. AsisLearned
preparedHandby the author “a
J stated, on prior
the basis of Hansen/Hirsch,
art patent 1997, 141.
or other publication to be an
482 General Tire v. Firestone [1972] RPC 457.
483 General Tire v. Firestone [1972] RPC 457, 485-86.
478
BGH/Crackkatalysator (Cracking catalyst), GRUR 1990, 510, 512.
479
BGH/Crackkatalysator (Cracking catalyst), GRUR 1990, 510, 512.
480
BGH/Inkrustierungsinhibitoren (Incrustration inhibitors), GRUR 2000, 591, 593-94.
481
This figure is prepared by the author on the basis of Hansen/Hirsch, 1997, 141. 101
482
General Tire v. Firestone [1972] RPC 457.
483 https://doi.org/10.5771/9783845250861, am 19.10.2021, 18:43:37
General Tire v. Firestone [1972] RPC 457, 485-86.
484 Open Access –
Synthon BV v. SmithKline Beecham plc [2005]- http://www.nomos-elibrary.de/agb
UKHL 59, paras 22-24.
485
Synthon BV v. SmithKline Beecham plc [2005] UKHL 59, para 22.
486
Merrell Dow Pharmaceuticals Inc v. HN Norton & Co Ltd [1995] UKHL 14, para 29 (noting there is a gap
IV. STANDARDS OF PATENTABILITY FOR PHARMACEUTICAL INVENTIONS

this prior art anticipated the later claimed invention.484 Further, since
whether a person is working or not an invention is an objective fact, the
person’s awareness of what he is doing does not matter.485 However, as the
House of Lords acknowledged, there is one exception to this test, i.e. an act
performed secretly or without knowledge of the relevant facts, even if it
would amount to infringements afterwards, will not anticipate the invention
before.486
In the United States, even though the law regarding novelty is more com-
plicated,487 basically, novelty is destroyed by a previous disclosure, a prior
use, or other forms of public communication. As Learned Hand J stated, “a
prior art patent or other publication to be an anticipation must bear within
its four corners adequate directions for the practice of the patent invalidat-
ed.” 488 In Korea, the invention should be considered as novel, unless it is
(i) an invention publicly known or worked in the Republic of Korea or a
foreign country or (ii) an invention described in a publication distributed in
the Republic of Korea or a foreign country, or iii) an invention publicly
available through certain telecommunication lines before the filing date of
the patent application.489
In the case of a compound invention, the ability to produce the compound
in question is the common basic requirement in many jurisdictions, i.e., the
novelty-destroying prior art must enable the compound. However, if all el-
ements of the claimed invention are disclosed in a single reference, other
references as common knowledge might be used to show that the claimed

484 Synthon BV v. SmithKline Beecham plc [2005] UKHL 59, paras 22-24.
485 Synthon BV v. SmithKline Beecham plc [2005] UKHL 59, para 22.
486 Merrell Dow Pharmaceuticals Inc v. HN Norton & Co Ltd [1995] UKHL 14, para
29 (noting there is a gap between the tests for infringement and anticipation after
the 1977 Act.).
487 35 U.S.C. (2007) § 102 and 35 U.S.C. (2011) § 102.
488 Dewey & Almy Chemical Co v. Mimex Co., 124 F.2d 986, 989 (2nd Cir. 1942)
(further holding “[i]f the earlier disclosure offers no more than a starting point for
further experiments, if its teaching will sometimes succeed and sometimes fail, if
it does not inform the art without more how to practice the new invention, it has
not correspondingly enriched the store of common knowledge, and it is not an an-
ticipation.”).
489 Korean Patent Act, Art. 29 (1).

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 A. Novelty and anticipation

invention is enabled.490 In any event, it is unclear what is common knowl-

edge and what is simply another publication.491

3. Inherent anticipation and enablement

“It would certainly not be absurd to say that no one can obtain a claim that
literally covers an item described in a prior art reference even if a method of
making the described item was not disclosed or known in the art. In such a
situation, it can be argued that a person who later invents a method of making
that item is entitled to no more than that - a process claim to the method of
making. Nevertheless, the contrary view that a prior art publication or a patent
must be enabling in order to constitute an anticipation is the prevailing one
today.”492
The basic novelty question is whether the public already “possesses” the
invention,493 and the question of possession matters more when inherent
anticipation is to be determined, which is more diverse from one jurisdiction
to another. To constitute an anticipation of an invention, a description in a
prior art must be sufficient to place the invention in the possession of the
public, i.e. it must be enabling.494 Namely, a prior art disclosure must enable
the invention either explicitly or inherently, such that the person skilled in
the art could practice the invention without undue experimentation.495 The
House of Lords reformulated the novelty test in the General Tire case with-

490 See e.g. In re Donohue, 766 F.2d 531, 533 (Fed. Cir. 1985) (noting “even if the
claimed invention is disclosed in a printed publication, that disclosure will not suf-
fice as prior art if it was not enabling. […]It is not, however, necessary that an
invention disclosed in a publication shall have actually been made in order to satisfy
the enablement requirement.); See also, In re Wiggins, 488 F.2d 538, 543 (C.C.P.A.
1973) (noting “[e]very patent application and reference relies to some extent upon
knowledge of persons skilled in the art to complement that disclosed in order that
it be “enabling” within the meaning of § 112 and to satisfy the requirements of a
reference under § 102. […] In closer cases, where it might be reasonably doubted
that a reference or patent application satisfies § 102 or § 112, other references can
be cited as evidence of the level of skill in the art.”).
491 Grubb/Thomsen, 2010, 67.
492 Chisum, 15 AIPLA Q. J. 57, 59-59 (1987).
493 Seymore, 60 Duke L. J., 919, 929 (2011).
494 Holbrook, 59 SMU L. Rev. 123, 151 (2006); Chisum, 15 AIPLA Q. J. 57, 61 (1987).
495 See Kieff/Schwartz/Newman, 2011, 174-75, 182-83; see also Smithkline Beecham
Corporation v. Apotex Corp., 403 F.3d 1328, 1329-30 (Fed. Cir. 2005); see also In
re Brown, 329 F.2d 1006, 1011 (C.C.P.A. 1964).

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out significant change, and confirmed that anticipation had two require-
ments, prior disclosure and enablement,496 and that the requirement of each
was distinct from the other.497 Similarly, in the United States, this enable-
ment requirement in the context of anticipation has been consistently af-
firmed.498
Under EPO practice, assessing novelty requires determining not what
may have been “inherent” in what was made available, but what was “made
available” to the public, for example, by a written description or by a prior
use.499 A hidden or secret use is not a ground for rejection.500 Since these
secret prior uses do not make the invention available to the public, it seems
that there is no such thing as an inherent lack of novelty501 before the EPO.
This approach was followed by the House of the Lord in a metabolite case,
i.e. Merrell Dow Pharmaceuticals v. HN Norton.502 In the United King-
dom, since an invention is a piece of information and making it available to
the public requires the communication of information, for an invention to be
anticipated by prior use, the use must have made the necessary information
available.503 Thus, acts performed secretly or without the knowledge of the
relevant facts, even if they would amount to infringements, will not antici-
pate the invention.504 On the other hand, if the procedure in the prior art that
inevitably produces the substance is part of the prior art, so is the substance
made by the procedure.505

496 Synthon BV v. SmithKline Beecham plc [2005] UKHL 59, para 19.
497 Synthon BV v. SmithKline Beecham plc [2005] UKHL 59, paras 28-33.
498 Sanofi-Synthelabo v. Apotex, Inc., 550 F.3d 1075, 1083-85 (Fed. Cir. 2008).
499 Mobil Oil/Friction Reducing Additives, G2/88, OJ EPO 1990, 93, 111.
500 Mobil Oil/Friction Reducing Additives, G2/88, OJ EPO 1990, 93, 111; Bayer/Plant
growth regulating agent, G 6/88, OJ EPO 1990, 114, 123.
501 Grubb/Thomsen, 2010, 248; CPC/Flavour concentrates, T 303/86 (1988), para 2.1.
(Once the technical Board of Appeal held it was sufficient to destroy the novelty
of the claimed process, when the claimed process and the process in the prior art
were identical with respect to starting materials and reaction conditions, since pro-
cesses identical in these features must inevitably yield identical products.).
502 Merrell Dow Pharmaceuticals Inc v. HN Norton & Co Ltd [1995] UKHL 14.
503 Merrell Dow Pharmaceuticals Inc v. HN Norton & Co Ltd [1995] UKHL 14, para
28.
504 Merrell Dow Pharmaceuticals Inc v. HN Norton & Co Ltd [1995] UKHL 14, para
29.
505 Merrell Dow Pharmaceuticals Inc v. HN Norton & Co Ltd [1995] UKHL 14, para
44.

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 A. Novelty and anticipation

In the United States, a prior art may be anticipating despite being silent
about a feature of the claimed invention when that missing descriptive matter
was necessarily present or inherent in the single prior art.506 A prior art in-
cludes the inherent feature when it is the “natural result” flowing from the
explicit disclosure of that prior art.507 This inherent feature of a prior art
reference does not need to be perceived as such by a person skilled in the art
at the time of invention.508 A secret or confidential use of an invention could
give rise to the public use bar.509 For instance, a product constitutes prior art
although the knowledge needed to produce the product was not publicly
available. Such a product is called a “non-informing” product.510 In the
Metallizing Engineering case, the patentee used a secret process to recon-
dition worn metal parts for its customers before the critical date of the rele-
vant patent application, and this fact rendered the patent invalid.511 The
principle underlying this doctrine of inherent anticipation is to ensure that
the public remains free to exploit the invention, regardless of whether they
understand its makeup sufficiently to allow them to operate.512 The Federal
Circuit in Atlas Powder v. Ireco held as follows:
“Anticipation of a patent claim requires a finding that the claim at issue ‘reads
on’ a prior art reference. In other words, if granting patent protection on the
disputed claim would allow the patentee to exclude the public from practicing
the prior art, then that claim is anticipated, regardless of whether it also covers
subject matter not in the prior art.”513

506 Continental Can Co. USA, Inc. v. Monsanto Co., 948 F.2d 1264, 1268 (Fed. Cir.
1991).
507 In re Kratz, 592 F.2d 1169, 1174 (C.C.P.A. 1979); Eli Lilly & Co. v. Barr Labs.,
251 F.3d 955, 970 (Fed. Cir. 2001).
508 Atlas Powder Co. v. Ireco, Inc., 190 F.3d 1342, 1348-49 (Fed. Cir. 1999); Schering
Co. v. Geneva Pharmaceuticals, 339 F.3d 1373, 1378 (Fed. Cir. 2003); Toro Co.
v. Deere & Co., 355 F.3d 1313, 1321 (Fed. Cir. 2004) (holding “the fact that a
characteristic is a necessary feature or result of a prior-art embodiment […] is
enough for inherent anticipation, even if that fact was unknown at the time of the
prior invention”).
509 35 U.S.C. § 102(b); see, e.g., Metallizing Engineering Co. v. Kenyon Bearing &
Auto Parts Co., 153 F.2d 516 (2nd Cir, 1946).
510 Merges/Duffy, 2011, 395-96.
511 Metallizing Engineering Co. v. Kenyon Bearing & Auto Parts Co., 153 F.2d 516
(2nd Cir, 1946).
512 Atlas Powder Co. v. Ireco, Inc., 190 F.3d 1342, 1348 (Fed. Cir. 1999).
513 Atlas Powder Co. v. Ireco, Inc., 190 F.3d 1342, 1346 (Fed. Cir. 1999).

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In Korea, anticipation is not a concept which appears in the determination

of novelty of inventions.

4. Novelty of selection inventions

“Selection” is an act of selecting or rejecting one or more things. In other

words, the selected item has already existed before, or at least at the time of
selection. This initiates the whole discussion on the novelty of selection in-
ventions.

a) Species selection inventions

A single prior art disclosing a species within a patent’s claimed genus reads
on the generic claim; thus, the species prior art anticipates the genus
claim.514 Therefore, to acquire a patent, an applicant must limit the claim to
an extent which does not overlap with the prior art disclosure of species. A
genus prior art, however, does not stop the applicant from filing a selection
patent to claim species with certain useful properties.515 As long as no mem-
ber of the narrow subgroup is specifically disclosed in the publication, the
compounds in the subgroup are considered novel, though they may have
been described in general terms.516 Therefore, although the species invention
was disclosed in the prior genus invention, a patent on the species invention

514 Atlas Powder Co. v. Ireco, Inc., 190 F.3d 1342, 1346 (Fed. Cir. 1999) (holding it
is also true for the range selection inventions); see also Titanium Metals Corp. v.
Banner, 778 F.2d 775, 783, 782 (Fed. Cir. 1985) (holding “a claim covers several
compositions, the claim is ‘anticipated’ if one of them is in the prior art.”).
515 Integra Lifesciences I, Ltd. v. Merck KGaA, 331 F.3d 860 (Fed. Cir. 2003), cert.
granted, 545 U.S. 193 (2005).
516 Robinson, IIC 1972, 139, 143 (noting “[t]he selected group is regarded as novel
because the disclosure, by generalization from a few specific investigated products,
of a general class, comprising hundreds or thousands or even millions of members,
cannot be considered a disclosure specifically of each member of that class.”);
Grubb/Thomsen, 2010, 64; Chisum, 2012, § 3.02[2][b]; Metabolite Laboratories,
Inc. v. Laboratory Corporation of America Holdings, 370 F.3d 1354, 1367-68 (Fed.
Cir. 2004) (holding that a prior art reference that discloses a genus still does not
inherently disclose all species within that broad category); See also Meier-Beck,
GRUR 2009, 893, 895.

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 A. Novelty and anticipation

can be granted. Thus, there can be overlapping scope of patents between a

prior genus patent and a species patent. See Figure 7.

Figure 7: Genus v. species invention517

Prior art claimed invention novel/granted invention

Species
invention
Genus
invention

Species
Genus invention
Overlap
invention

In the EPO
The teaching of a prior art is not confined to the detailed information given
in the examples of how the invention is carried out, but embraces any in-
formation in the claims and description enabling a person skilled in the art
to carry out the invention.518 However, a generic disclosure does not gener-
ally deprive specific compounds of novelty.
The BOA distinguished between the following two situations; (i) if the
subject matter of a claimed invention is a second family of compounds that

517 This figure is prepared by the author.

518 Bayer/Diastereomer, T 12/81 OJ EPO 1982, 296, 301 (holding the disclosure of
the starting substance and the reaction process is always prejudicial to novelty be-
cause those data inevitably establish the end product, however, if two classes of
starting substances are required to prepare the end products and examples of indi-
vidual entities in each class are given in two lists of some length, then the resultant
from the reaction of a specific pair from the two lists can nevertheless be regarded
as new.).

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IV. STANDARDS OF PATENTABILITY FOR PHARMACEUTICAL INVENTIONS

partially covered the first class in the prior art, the invention is not new;519
and (ii) if the subject matter is a defined compound, whereas the prior art
discloses a family of compound defined only by a general formula covering
the defined compound but not describing it explicitly, the invention must be
considered novel.520
The former is the case where the invention was not found novel when a
major part of the previously disclosed class was claimed. In T 133/92, the
prior art was a product patent where part of the structural formula was an
alkyl between 1 and 20 carbon atoms, and preferably the alkyl group was
alkyls with between 6 and 15 carbon atoms (C6-C15 alkyl group).521 The
application in suit claimed alkyl groups with between 6 and 10 carbon atoms
(C6-C10 alkyl group), which totally fell within the scope of the earlier patent,
but no part of the compounds had been explicitly disclosed in the earlier
patent. Though the Board noted an improved effect within the selected area,
since the selection comprised almost half of the generic disclosure, the se-
lection lacked novelty.522 The Board further found that the selection of the
alkyl groups between 6 and 8 carbon atoms (C6-C8 alkyl group) was not
novel, but the selection of five specific examples (n-hexyl, n-octyl, 2-ethyl-
hexyl, 3,5,5-trimethylhexyl or n-decyl group) was narrow enough and nov-
el.523 The Board reiterated the EPO’s position as follows:
“[A] distinction must be drawn between the novelty of a group of compounds
defined by a general formula, and the novelty of particular individual com-
pounds, because of the concept of individualisation which only applies to the
structural definition of a single compound […].”524
It is not clear from this decision, however, if the five compounds had been
defined in a general formula, whether the same selection would have been
found to lack novelty. This would barely be reasonable. Meanwhile, it is
assumed that in the case where the selection was made from relatively small
numbers of a group disclosed in the prior art, it would be more problematic

519 Dupont/Copolymer, T 124/87, OJ EPO 1989. 491, 497.

520 Draco/Xanthines, T 7/86, OJ EPO 1988, 381, 385 (holding the novelty was in
question in the case a prior document disclosed a class of compounds and the
claimed invention was concerned with the selection of a class of compounds, not
the specific individual compounds).
521 AKZO/Bleaching activators, T 133/92, 1994, point 4.2.2.
522 AKZO/Bleaching activators, T 133/92, 1994, point 2.1.3.
523 AKZO/Bleaching activators, T 133/92, 1994, point 2.1.3.
524 AKZO/Bleaching activators, T 133/92, 1994, point 4.2.2.

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 A. Novelty and anticipation

to establish the novelty thereof; thus, the general disclosure might be re-
garded as the disclosure of each member.525
Other than the relative size of the selection, the distinction between the
disclosure of a generic formula and that of individual substances in prior art
seems to be a separate criteria and to have taken root within the EPO case
law to assess novelty.526 In T181/82, it was held that, when the products of
the reaction of specific compounds with a ‘C1-4 alkyl bromide’ was dis-
closed, a product as a result of the reaction with C1 alkyl bromide is the only
lack of novelty. This was because, among eight alkyl bromides,527 only
methyl bromide was disclosed, since C1 was mentioned as the lower end of
the range and was only the methyl.528 This decision was interpreted in the
later decision529 as holding that only methyl bromide was disclosed in an
individualized form, and that no special alkyl group with more than two
carbon atoms was disclosed, and that the four individual groups comprised
in the upper basic value (C4) were disclosed only as a generic term.530

In Germany
The patentability of a “selection invention” was widely debated in Germany,
especially right after the prohibition against product protection was repealed

525 Grubb/Thomsen, 2010, 234; cf. Vivian, IIC 1989, 303, 306 (noting the size of genus
itself is normally not decisive as to the question of anticipation regardless of whether
the selection was one from a class of 10 million or one from a class of two.).
526 see also EPO Examination Guidelines G-VII, Annex 3.1.(iv) (noting that if the
selected group has not been specifically disclosed in the prior art, it would have
been the question of lacking of novelty rather than obviousness.).
527 C1-C4 alkyls are 8 alkyls as follows: C1 alkyl is methyl; C2 alkyl is ethyl; two C3
alkyls are n-propyl and isopropyl; and four C4 alkyls are n-butyl, isobutyl, sec-
butyl, and tert-butyl.
528 Ciba-Geigy/Spiro compounds, T 181/82, OJ EPO 401 (1984).
529 Hoechst/Enantiomers, T296/87, OJ EPO 1990, 195, 206.
530 Hoechst/Enantiomers, T296/87, OJ EPO 1990, 195, 206; see also PFIZER/Penem
Derivatives, T 1048/92, point 2.1.

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IV. STANDARDS OF PATENTABILITY FOR PHARMACEUTICAL INVENTIONS

as of January 1, 1968.531 In the Fluoran decision, the BGH held that a

Markush claim disclosure in the prior art would be enough to be a novelty-
destroying reference of a selection invention and to be regarded as disclosing
an individual species, when a person skilled in the art was able to implement
the invention on the basis of the indications given regarding the contested
compound of the prior art publication.532 It further held that “[t]he fact that
a chemical compound falls within a previously published formula says noth-
ing about the question of novelty […]. The only decisive factor is whether
the information contained in a previous publication alone enables a person
skilled in the art to make the invention relating to this chemical compound,
i.e. to produce the substance in question.”533 Thus, the compounds were not
novel, because a person skilled in the art could have worked the invention.
After this decision, it was very difficult to get patents for selection inventions
until the Olanzapine decision in late 2008.
In the Olanzapine case, the BGH held that all compounds embraced by a
generic formula would not automatically be regarded as individually dis-
closed.534 Lilly’s patent in suit535 was on a single chemical compound “olan-
zapine.”536 One of the most relevant prior arts was a patent document that
was also filed by Lilly and that was acknowledged in the very patent spec-
ification.537 This patent document disclosed a general formula covering the-
oretically millions of individual compounds, identified around 100 com-

531 Katzenberger, IIC 1972, 357, 364-365 (providing arguments against granting se-
lection patent such as, i) anticipatory prior art effect of the patent covering that
group of compounds and ii) prohibition against double patenting; and arguments
for selection patent such as, discovery of a new and valuable compound from a
group of compounds valued as much as discovering a new group of compounds.);
see also Schmied-Kowarzik, IIC 1970, 190, 196 (arguing selection inventions must
be able to obtain an absolute product protection); see also Nastelski, IIC 1972, 267,
291-294 (especially arguing selection patent shouldn’t be deemed to be novel, even
if the products have not been individually designated, “if the producibility of an
appropriate variety and number of individual representatives of the group is exper-
imentally proven so that in accordance with the decision the manufacture or exis-
tence of the remaining products belonging to the group has also been substantiated
for the skilled artisan”); see also Vossius, GRUR 1976, 165, 171.
532 BGH/Fluoran, GRUR 1988, 447.
533 BGH/Fluoran, GRUR 1988, 447, 449.
534 BGH/Olanzapine, IIC 2009, 596.
535 EP 0,454,436, US 5,229,382.
536 a widely prescribed anti-psychotic agent used for the treatment of schizophrenia.
537 GB 1,533,235.

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 A. Novelty and anticipation

pounds by name, but did not disclose olanzapine specifically. Another prior
art (“Chakrabarti” article)538 document disclosed the Structure-Activity-Re-
lationship539 observations of a group of compounds and several compounds
closely structured to olanzapine, but did not disclose olanzapine. The ques-
tions at issue were the effect of a particular kind of disclosure, namely, a
“Markush” formula, the consideration of structural similarity of compounds,
and whether a person skilled in the art could have modified or supplemented
the prior art’s teaching to determine the disclosure of prior art.
The Federal Patent Court of Germany (“BPatG”) held that, since a skilled
person would be able to obtain all necessary information540 to manufacture
olanzapine from Chakrabarti prior art, it was a novelty-destroying disclo-
sure of olanzapine.541 In contrast to this ruling, the BGH held that it was not
necessary to determine in what form a person skilled in the art could perform
a certain general teaching, using his technical knowledge, or how he can
modify this teaching, if necessary.542 The important point was exclusively
what a person skilled in the art derived from the prior publication as the
content of the specific (general) teaching.543 The BGH went on to say that
the decisive question was rather what can be “directly and unambiguously”
derived from a document, from the point of view of a person skilled in the
art, which was in line with the jurisprudence of the BOA of the EPO.544

538 Chakrabarti, et al., 28 J. Med. Chem. 874 (1980).

539 This is the relationship between the chemical 2D or 3D structure of a molecule and
its biological activity. This analysis enables to determine the chemical groups re-
sponsible for a target biological effect. This in turn makes modification of the effect
or potency of the medication by changing its chemical structure. The chemists uses
this relations ship to insert or delete some chemical groups into/from the compound
and test the modification, and finally modify its biological effect.
540 The court illustrated this information as follows: lead structure of formula I, a group
of only 12 compounds, 3 specific compounds immediately “neighboring” olanza-
pine, neuroleptic activity of compounds which is useful for treating diseases such
as schizophrenia.
541 Barth/Zimmer, 27 Biotechnol. Law Rep. 532, 532-533 (2008).
542 BGH/Olanzapine, IIC 2009, 596, 599.
543 BGH/Olanzapine, IIC 2009, 596, 599.
544 BGH/Olanzapine, IIC 2009, 596, 599; The Federal Court of Justice cited the rele-
vant BOA decision as follows: Bayer/Diastereomer, OJ EPO 1982, 296; Ciba-
Geigy/Spiro compounds, T 181/82, OJ EPO 1984, 401, 411; Draco/Xanthines, T
7/86, OJ EPO 1988, 381, 38; Hoechst/Enantiomers, T296/87, OJ EPO 1990, 195,
206-207; Hoechst/Diastereomers of 3-cephem-4-carboxylic acid-1-(isopropoxy-
carbonyloxy) ethyl ester, T 940/98 (2003); See also Meier-Beck, GRUR 893, 895
(2009); Grubb/Thomsen, 2010, 64.

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IV. STANDARDS OF PATENTABILITY FOR PHARMACEUTICAL INVENTIONS

The BGH held that the determination of what was not explicitly men-
tioned in the characteristics of the claim, and in the text of the specification,
but was obvious for a person skilled in the art to implement the teaching
being protected and therefore did not require any special disclosure, was not
aimed at supplementing the disclosure with the technical knowledge.545 The
purpose was not different from determining the meaning of a claim, i.e. the
technical information that a person skilled in the art derives from the source
with the background of his technical knowledge.546 Citing the Elektrische
Steckverbindung decision,547 the BGH held that modifications would be al-
lowable only if the modifications were so obvious to a person skilled in the
art in the entire content of the document that they were easily evident when
reading the document attentively, paying attention less to the words than to
their meaning, so that he essentially “reads them along” in his thoughts.548
The BGH then applied this principle to the chemical compound invention
as follows: “The decisive factor is whether the concrete compound is dis-
closed or not, and for this purpose, information that easily enables a person
skilled in the art to specifically implement the invention relating to this
chemical compound, i.e. to obtain the specific substance, is required.”549 The
BGH clarified its position against the Fluoran decision by explaining that
the Fluoran case was decided under the Patent Act of 1968 and that the Court
did not adhere to this decision for the current law. The BGH held further that
an individual compound that was not explicitly disclosed could only be con-
sidered to have been disclosed if a person skilled in the art “read it along”
in the sense of the Elektrische Steckverbindung decision, for example, be-
cause it was familiar to him as the usual implementation of the stated general
formula and therefore occurred to him as also having been meant when he
read the general formula.550 Otherwise, the disclosure of the individual com-
pound was necessary to destroy novelty.551

545 BGH/Olanzapine, IIC 2009, 596, 599.

546 BGH/Olanzapine, IIC 2009, 596, 599.
547 BGH/Elektrische Steckverbindung (Electronic Plug-in connection), GRUR 1995,
330.
548 BGH/Olanzapine, IIC 2009, 596, 599.
549 BGH/Olanzapine, IIC 2009, 596, 600.
550 BGH/Olanzapine, IIC 2009, 596, 600.
551 BGH/Olanzapine, IIC 2009, 596, 600.

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 A. Novelty and anticipation

In the United Kingdom

Species selection inventions have been patentable for many decades fol-
lowing a specific rule for these kinds of inventions established by Maugham
J in the I.G. Farbenindustrie's A.G.’s Patent case (“IG Rule”). 552 The IG
Rule stated the following three traditional requirements: i) a selection patent
to be valid must be based on some substantial advantage to be secured by
the use of the selected members (the phrase will be understood to include
the case of a substantial disadvantage to be thereby avoided); ii) the whole
of the selected members must possess the advantage in question; and iii) the
selection must be in respect of a quality of a special character that can fairly
be said to be peculiar to the selected group.553 Although the second require-
ment was criticized as impractical, it was well followed in the United King-
dom in other cases, without distinguishing between novelty and inventive
step.554
Jacob LJ declared the end of the IG Rule’s life in the Olanzapine deci-
sion.555 In his opinion, Jacob LJ firmly rejected the argument that “every
chemical class disclosure discloses each and every member of the class” for
two reasons: i) being an a priori consideration and ii) not being consistent
with the jurisprudence of the BOA of the EPO, particularly the Hoechst/
Enantiomers decision.556 He reiterated that “an anticipation is an ‘individ-
ualized description’ of the later claimed compound or class of com-
pounds.”557 With respect to the a priori consideration, he argued as fol-
lows:
“An old question and answer runs as a[sic] follows: ‘Where does a wise man
hide a leaf? In a forest.’ It is, at least faintly, ridiculous to say that a particular
leaf has been made available to you by telling you that it is in Sherwood Forest.

552 I.G. Farbenindustrie's AG’s Patent 47 R.P.C. 289, 322-3 (1930); see also Blanco
White, 1983, 105-106.
553 I.G. Farbenindustrie's AG’s Patent 47 R.P.C. 289, 322-3 (1930); see also Blanco
White, 1983, 105-106.
554 Dr Reddy’s Laboratories Ltd v. Eli Lilly & Company Ltd, [2009] EWCA Civ 1362,
paras 36-39.
555 Dr Reddy’s Laboratories Ltd v. Eli Lilly & Company Ltd, [2009] EWCA Civ 1362,
para 37 (holding that the IG rule was just “a part of legal history,” but not part of
the living law (post-1977 law)); See also Manual of Patent Practice - UK Patents
Act 1977, paragraph 3.89-3.90 (October 2012).
556 Hoechst/ Enantiomers, T296/87, OJ EPO 1990, 195.
557 Dr Reddy’s Laboratories Ltd v. Eli Lilly & Company Ltd, [2009] EWCA Civ 1362,
para 30.

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IV. STANDARDS OF PATENTABILITY FOR PHARMACEUTICAL INVENTIONS

Once identified, you can of course see it. But if not identified you know only
the generality: that Sherwood Forest has millions of leaves.” 558
Jacob LJ noted that the “selection invention” rule of I.G. Farbenindustrie’s
Patent was developed to avoid a finding of anticipation, it did not draw a
distinction between lack of novelty and obviousness, and it was too strict,
because it is difficult to show that a group (compound) has a “substantial
advantage” over the whole prior class without an enormous range of exper-
iments.559 Lord Neuberger noted that this issue was “not dissimilar from the
enantiomer/racemate issue”560 and recognized the difficulty in the applica-
tion of the IG Rule, where the prior class of compounds was very large.561
Consequently, when the invention can be found novel in the first place, there
is no longer any need to consider whether it is a valid selection invention
according to the IG Rule.562

In the United States

Unlike other jurisdictions, the U.S. American (“American”) patent law does
not use the term “selection inventions” as a category of invention. Instead,
the terms “genus” and “species” are often used in practice, though not as a
statutory category, and a significant body of case law has evolved.
In In re Petering,563 the Court held that a prior art reference disclosing a
limited genus of twenty compounds rendered every species within the genus
unpatentable. The Court pointed out that the significance was not in the mere

558 Dr Reddy’s Laboratories Ltd v. Eli Lilly & Company Ltd, [2009] EWCA Civ 1362,
paras 25-30. This argument was in line with the separate judgment of Neuberger L.
see para 108.
559 Dr Reddy’s Laboratories Ltd v. Eli Lilly & Company Ltd, [2009] EWCA Civ 1362,
paras 36-39.
560 Generics Ltd. v. Lundbeck [2009] UKHL 12.
561 Generics Ltd. v. Lundbeck [2009] UKHL 12, paras 103-104.
562 See e.g., Fitt, 20 Biotechnol. Law Rep. 17, 18 (2010).
563 In re Petering, 301 F.2d 681 (C.C.P.A. 1962).

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 ing the limited number of variations for R, only two
e unchanging patent structural nucleus. 565 The Court
A. Novelty and anticipation
publication, a person skilled in the art would “envisage
number of compounds in the prior document,564 but in the total circum-
it is no moment that each
stances, including compound
the limited is not specifically
number of variations for R, only two alterna-
and a large unchanging patent structural nucleus.565 The
tives for Y and Z,566
a in that publication.” In In re Schaumann, in which
Court further held that, on reading the prior publication, a person skilled in
the art would 567member of” the genus and that “it is no moment
“envisage each
rteen possible compounds, the Court held that, when
that each compound is not specifically named or shown by structural formula
y limited number of compounds,”
in that publication.” it would inevitably be
566 In In re Schaumann, in which the prior art disclosure

taught only fourteen possible compounds,567 the Court held that, when a
s a description
prior artof those embraced
disclosure compounds just asnumber
“a very limited surely as if
of compounds,” it
would
568 inevitably be concluded that “the reference provides a description of
by name.”those In Bristol-Myers
compounds just as surely as ifSquibb v. BeninVenue
they were identified the reference by
name.” 568 In Bristol-Myers Squibb v. Ben Venue Laboratories, the Federal
so noted that
Circuit “the disclosure
also noted of a ofsmall
that “the disclosure genus
a small genus may may
anticipate the
species of that genus even if the species are not themselves569 recited.”569 Thus,
en if the species are not themselves recited.” Thus,
when the genus embraces a limited number of compounds, the individual
mber of compounds, the individual description does not
velty of a species invention.570
564 U.S. Patent No. 2,155,555 (April 25, 1939, under the title of “Iso-alloxazine deriva-
tives and process for the manufacture of same”), and the generic formula was as
follows:

HL 12.
HL 12, paras 103-104.
17, 18 (2010).
1962).
1939, under the title of “Iso-alloxazine derivatives and process for

565 In re Petering, 301 F.2d 681, 681-82 (C.C.P.A. 1962).

566 In re Petering, 301 F.2d 681, 682 (C.C.P.A. 1962).
567 In re Schaumann, 572 F.2d 312,. 314 (C.C.P.A.1987); the prior patent was U.S.
mula was as follows:
Patent No. 2,344,356 (March 14, 1944, under the title of “Chemical compounds
C.C.P.A. 1962). beta-(meta-hydroxyphenol)-isopropylamines”) and the disclosed generic formula
.P.A. 1962). with single variable (R) was read as:
4 (C.C.P.A.1987); the prior patent was U.S. Patent No. 2,344,356
compounds beta-(meta-hydroxyphenol)-isopropylamines”) and the
R) was read as: .
568 In re Schaumann, 572 F.2d 312, 316-17 (C.C.P.A.1987).
7 (C.C.P.A.1987).
569 Bristol-Myers Squibb Co. v. Ben Venue Labs., Inc., 246 F.3d 1368, 1380 (Fed. Cir.
e Labs., Inc., 2462001).
F.3d 1368, 1380 (Fed. Cir. 2001).
c. U.S.A., Inc., 868 F.2d 1251, 1262 (Fed. Cir. 1989) (rejecting once
tly disclose all species” as wholly meritless). 115
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IV. STANDARDS OF PATENTABILITY FOR PHARMACEUTICAL INVENTIONS

description does not seem to be necessary to destroy the novelty of a species

invention.570
In the Olanzapine decision, the defendants argued that the Chakrabarti
article anticipated the patent in view of the holdings in In re Petering and
In re Schaumann. However, in his opinion, Rader J distinguished the Olan-
zapine case, where the Chakrabarti article disclosed millions of compounds,
from these two cases, because limited numbers of specific preferences,
namely “some 20 compounds,” or “14 compounds” were disclosed, respec-
tively. He reiterated that, “[t]o anticipate, a prior art reference must place the
inventive compound or composition in the possession of the public. Thus,
the prior art reference must disclose each and every feature of the claimed
invention, either explicitly or inherently.”571 He then noted that the
Chakrabarti patent document had not “expressly spelled out a definite and
limited class of compounds that enabled a person of ordinary skill in the art
to at once envisage each member of this limited class.”572 Rader J also stated
that “one would have to depart from the teaching of the article and recombine
the components of the specific illustrative compounds with hindsight” to
make the olanzapine starting from another prior art disclosing structure and
activity relationship.573

In Korea
As it is reiterated by the Korean Patent Court in the Olanzapine case,574 it is
established case law that, to deny the novelty of selection invention, the prior
art document should specifically disclose the concept of a selection inven-
tion, and it could also be that a person skilled in the art could directly learn
the existence of the selection invention from the prior document based on

570 Corning Glass Works v. Sumitomo Elec. U.S.A., Inc., 868 F.2d 1251, 1262 (Fed.
Cir. 1989) (rejecting once the argument “a claim to a genus would inherently dis-
close all species” as wholly meritless).
571 Eli Lilly and Company v. Zenith Goldline Pharmaceuticals. Inc., 471 F.3d 1369,
1375 (Fed. Cir. 2006).
572 Eli Lilly and Company v. Zenith Goldline Pharmaceuticals. Inc., 471 F.3d 1369,
1376 (Fed. Cir. 2006). In fact, this was the first decision among four jurisdictions
which upheld the validity of Olanzapine patent.
573 Eli Lilly and Company v. Zenith Goldline Pharmaceuticals. Inc., 471 F.3d 1369,
1377 (Fed. Cir. 2006).
574 Korean Patent Court/Olanzapine, 2010Heo371, Nov. 11, 2010.

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 A. Novelty and anticipation

the disclosure thereof and on common knowledge at the time of applicati-

on.575
In this case, the Korean Patent Court held the novelty of selection inven-
tion was not denied, since (i) olanzapine was not specifically disclosed in
the prior art references, (ii) though olanzapine was included in the preferred
compound groups, the number of compounds comprised in the preferred
compound groups was too large for a skilled person to directly learn the
existence of Olanzapine, and (iii) there was no indication in the prior art for
a skilled person to directly recognize olanzapine.576

b) Optical isomers

It seems that the narrower the selection is made with regard to the generic
term, the more likely the selection can be deemed novel. What, then, if one
is selected out of two? Indeed, the optically active form of a racemate can
be considered an extreme example of selection inventions, and it has been
arg ued that this invention cannot be novel if the racemate is known, since
the racemate can be considered an equimolar mixture of each enan-
tiomer.577 More generally, the enantiomer invention is about a substantially
or totally pure compound that is not contaminated by other possible
stereoisomers.578

In the EPO
In the early decision on the novelty of optical isomers, the Board stated that
“[a] substance selection can come about in various ways, e.g. if an unmen-
tioned compound or group of compounds having formula covered by the
state of the art is found, in the absence of any information as to the starting
substance or substances.”579 Namely, a specific compound covered by a
generic formula of the prior art will be novel if the prior art does not provide
any specific information, given in the examples of how the invention was
carried out, but embraces any information in the claims and the description

575 Korean Patent Court/Olanzapine, 2010Heo371, Nov. 11, 2010, para 3.Ka.
576 Korean Patent Court/Olanzapine, 2010Heo371, Nov. 11, 2010, para 3.Na.2).
577 Grubb/Thomsen, 2010, 236.
578 Eli Lilly/Enantiomer, T 600/95 (1996), point 3.2.
579 Bayer/Diastereomer, T 12/81 OJ EPO 1982, 296, 303.

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enabling a person skilled in the art to carry out the invention.580 Afterwards,
it was often confirmed by the Boards that the conceptual disclosure of two
possible configurations without any pointer to the individual member was
insufficient for the novelty to be denied.581
In T 296/87, in which the claimed invention was a mixture containing
80% of D-enantiomer, and the prior art made no mention of enantiomers and
indicated only a chemical substance with an asymmetric carbon atom, i.e.
the racemate, the Board presented the “photographic approach” to test the
novelty in the enantiomer invention and held as follows:
“The novelty of the D- and L-enantiomers is therefore not destroyed by the
description of racemates. The situation is different if the state of the art includes
enantiomers – however designated (D, d, L, l or + or -) – which are specifically
named and can be produced. […] the only technical teachings prejudicial to
novelty are those which disclose a substance as the inevitable result of a pre-
scribed method or in specific, i.e. individualized, form.”582
This decision demonstrates that novelty was already established when a
choice between two possibilities was made. The Board further held that the
configuration of one enantiomer was different from the racemate, and the
fact that the prior art disclosed only racemates in detail did not disclose the
enantiomer’s specific configurations. 583 However, it is the context of basic
organic chemistry, and once a person skilled in the art sees the chemical
structure having chiral carbons, he will automatically know the special con-
figuration of each enantiomers.
In addition, before the EPO, it seems that, even though a skilled person
could have successfully separated the racemate into the enantiomers with
the help of general knowledge, the claimed enantiomer would be regarded
as novel over the previously disclosed racemate. This can be seen in the
following paragraph of the decision:
“In taking this view the Board is aware that the two enantiomers, far from falling
merely intellectually within the definition of the structure in question, actually

580 Bayer/Diastereomer, T 12/81 OJ EPO 1982, 296, 303 (The Board, however, did
not acknowledge the novelty of a compound because it would have been inevitably
produced according to the disclosed method and the starting materials).
581 Pfizer/Penem Derivatives, T1048/92 (1994), point 2.5; see also ZENECA/Enan-
tiomer, T1046/97 (1999), point 2.1.1.6. (held optically-active form in the prior art
provides no information about any specific stereochemical form(s) of the chemical
compound.).
582 Hoechst/Enantiomers, T296/87, OJ EPO 1990, 195, 206-207.
583 Hoechst/Enantiomers, T296/87, OJ EPO 1990,195, 195.

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 A. Novelty and anticipation

exist unseparated in the racemate. Generally, the latter can also be separated by
converting the enantiomers into a mixture of diastereomers, e.g. using optically
active substances, then resolving the mixture and recovering the enantiomers
from the resulting products. These considerations are immaterial to the question
of novelty, however, and will be more usefully applied to the examination as to
inventive step.”584
Furthermore, an enantiomer was found novel despite the prior patent hold-
er’s attempt to include all individual isomers and all mixtures. 585 Namely,
even a disclosure conveying the previous patentee’s desire to cover all pos-
sible isomers does not destroy the novelty of a later selection of an isomer,
if the previous patent did not disclose the specific isomers.
To sum up, it is EPO’s consistent jurisprudence that, unless the prior art
contains both an individualized disclosure and a particular method and start-
ing materials that will inevitably lead to the claimed compound, this kind of
a chemical selection will be found novel over the racemate disclosed in the
prior art.586

In Germany
In its early decision, where the patentability of an epimer587 over the prior
art description of the presence of an asymmetric carbon atom of the com-
pound was issued, the BGH held that “[a] chemical compound is no longer
novel if it is identified in a previous publication as a chemical individual and
a skilled person was able to produce [it]. It is insignificant whether the com-
pound had actually already been manufactured.”588
A case was decided in 2007, in which the patent in issue claimed an enan-
tiomer of atorvastatin589 over the prior patent disclosing structure of ator-
vastatin with the wedges and dashes.590 Referring to Elektrische Steckver-

584 Hoechst/Enantiomers, T296/87, OJ EPO 1990,195, 207.

585 Pfizer/Penem Derivatives, T1048/92 (1994), points 2.3-2.5. (holding “as will be
appreciated, various optically active isomers of the new compounds are possible.
The present invention embraces such optically active isomers and mixtures the-
reof.”[Emphasis added]).
586 E.g., Eli Lilly/Enantiomer, T 600/95 (1996) (holding one isomer is not novel over
the prior art description of the very isomer and of the method to obtain it).
587 See supra 115 .
588 BGH/ α-aminobenzylpenicillin, GRUR 1978, 696, 698.
589 Atorvastatin is the active ingredient of an anti-cholesterol drug sold under the brand
name Lipitor® which was the best selling drug in the world.
590 BPatG/Atorvastatin, Beck-Rechtsprechung (“BeckRS”) 2007, 18183.

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bindung and Schmierfettzusammensetzung,591 the BPatG held that, accord-

ing to the jurisprudence of the BGH, the disclosure of a document belonging
to the prior art was not limited to the literal description, but encom-
passed everything that the skilled person supplemented self-evidently or
nearly essentially, or that he recognized directly with his careful study of the
document and read along in thoughts.592 The Court further held that
“These principles which refer to the disclosure content of a prior publication in
the field of mechanics are applicable in the field of chemistry, provided that a
chemical compound is viewed as prejudicial to novelty, when a prior publication
or a document with earlier priority date conveys to the skilled person a concrete
indication to the compound in question, that is that a skilled person easily reads
this compound in his thoughts and because of this indication he is directly put
in the position of laying his hands on the compound in question. It is not nec-
essary to that the compound has actually already been prepared. The mere pos-
sibility of its preparation and, thus thereby being made available suffices (re-
ferring α-Aminobenzylpenicillin, Fluoran, and Herbicid wirksames Enan-
tiomer).”593
The Court further held that the novelty of stereoisomer (epimer, enantiomer,
diastereomer) was thus already to be denied, when the stereoisomer was
recognizably described to the skilled reader in the form of a mixture of its
stereoisomers, and was accessible to him without difficulties by means of
conventional separation methods from this mixture.594 The Court also prop-
erly stated that “an indication or an explicit naming of the stereoisomer in
question is as little necessary as a specification or description of method to
its isolation.”
However, the BGH confirmed its new position on this issue in the Esci-
talopram decision, the first decision on the patentability of an enantiomer
after its Olanzapine decision.595 The main issue for debate was again whether
the prior patent disclosure of racemate, Citalopram,596 allowing a person
skilled in the art clearly to recognize two enantiomers, i.e. (S)- and (R)-

591 BGH/Schmierfettzusammensetzung(Grease composition), GRUR 2000, 296.

592 BPatG/Atorvastatin, BeckRS 2007, 18183, point II.1.a).
593 BPatG/Atorvastatin, BeckRS 2007, 18183, point II.1.a).
594 BPatG/Atorvastatin, BeckRS 2007, 18183, point II.1.a).
595 Zu Waldeck und Pyrmont, Gewerblicher Rechtsschutz und Urheberrecht, Praxis im
Immaterial- und Wettbewerbsrecht (“GRUR-Prax”), 2010, 13 (stating that the Es-
citalopram decision seems to show that the Court continues its new line regarding
the concept of disclosure stated in its Olanzapine decision.).
596 Citalopram is a selective serotonin reuptake inhibitor anti-depressant.

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 A. Novelty and anticipation

enantiomers, was enough to destroy the novelty of a patent on the (S)-enan-

tiomer, ES-Citalopram. 597
In this case, the BPatG held that the patent was invalid for lack of novelty
for the similar reasons that a chemical compound having one chiral atom
was no longer novel when claimed in the form of an enantiomer, if specific
indication of the enantiomer in a prior publication had been given, and if a
skilled person was able to produce the compound on the basis of this indi-
cation and his general knowledge.598 The Court found that the person skilled
in the art would easily have been able to separate the Escitalopram from the
racemic mixture disclosed in the prior art patent specification in a way that
was commonly used before the priority date of the Escitalopram patent.599
While admitting that the person skilled in the art on the basis of his general
knowledge was able to recognize that citalopram having a chiral carbon had
two different structures, the BGH stated nevertheless that this fact did not
lead to a disclosure that was detrimental to novelty.600 Citing the Olanzapi-
ne decision, the Court said that, to “make them [the individual enantiomers]
available to the skilled person for the purpose of novelty examination, further
information was as a rule required, in particular with regard to their indi-
vidualization.”601 The Court concluded that, since the prior document did
not directly and unambiguously disclose the individual enantiomers to the
person skilled in the art, and since he had to find a way to resolve the race-
mate, the prior patent was not detrimental to novelty.602

In the United Kingdom

The Ranbaxy v. Warner-Lambert case concerned two patents owned by
Warner-Lambert, one of which covered a class of compounds including

597 EP 0,347,006, U.S. RE34, 712.

598 BPatG/Escitalopram, BeckRS 2007, 14624, para II, especially II b).
599 BPatG/Escitalopram, BeckRS 2007, 14624, para II, especially II b).
600 BGH/Escitalopram, GRUR 2010, 123, 125.
601 BGH/Escitalopram, GRUR 2010, 123, 126.
602 BGH/Escitalopram, GRUR 2010, 123, 126.

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In the United Kingdom

IV. STANDARDS OF PATENTABILITY FOR PHARMACEUTICAL INVENTIONS
The Ranbaxy v. Warner-Lambert case concerned two patents owned b
of which
atorvastatin 603 andcovered
the othera covered
class of compounds
a single enantiomerincluding atorvastatin 601 a
of atorvastatin
(Lipitor®).604 Ranbaxy appealed against the decision refusing a602
single enantiomer of atorvastatin (Lipitor®). declaration Ranbaxy appeale
of non-infringement of the previous patent with respect to its particular
refusing
compound, a declaration
enantiomeric of non-infringement
atorvastatin calcium salt, and of the previous patent with
Warner-Lambert
cross-appealed the decision ruling that the enantiomer patent was invalid for
compound, enantiomeric atorvastatin calcium salt, and Warner-Lam
lack of novelty and obviousness.605 The Court of Appeal held that the patent
decision
claiming ruling that
an enantiomer the enantiomer
was anticipated patent
by the prior art, was
whichinvalid for lack of nov
did not dis-
close the salt of the pure enantiomer, but clearly taught that one of the things
The Court of Appeal held that the patent claiming an enantiomer was
that could be made was the single enantiomer, and the way of carrying out
art, which
the teaching of thedid notpatent
earlier disclose the salt
application of necessarily
would the pure enantiomer,
infringe the but clear
later claim of an enantiomer.606 This case was slightly different from other
things that could be made was the single enantiomer, and the way of c
cases, because the general formula of the earlier patent on the compounds
of the
showed earlier
a three patentarrangement.
dimensional application607would necessarily infringe the later cl
In Lundbeck v. Generics, while citing Synthon BV v. Smithkline Beecham
Plc,608 Lord Hoffmann restated that, to anticipate a patent, the prior art must
have disclosed the claimed invention and enabled a ordinary skilled person
to perform it. He also stated that it was settled jurisprudence in the EPO609
that disclosure of a racemate did not in itself amount to disclosure of each
596
BPatG/Escitalopram,
of its enantiomers. 610 Regarding the BeckRS 2007,14624,
plaintiff’s argumentpara
that II, especially
claim 1 was II b).
597
BPatG/Escitalopram, BeckRS 2007, 14624, para II, especially II b).
598
BGH/Escitalopram, GRUR 2010, 123, 125.
599
BGH/Escitalopram,
603 EP No. 0247633 (January 30, 1991,GRUR 2010,
under the title123, 126.
of “Trans-6-(2-(3- or 4-carbox-
600
BGH/Escitalopram,
amido-substituted GRUR 2010, 123, 126. inhibitors of choles-
pyrrol-1-yl)-alkyl)-4-hydroxypyran-2-one
601
terol EP No.claim
synthesis”), 0247633 (Januaryof30,
1: A compound 1991, under
structural formulathe title of “Trans-6-(2-(3- or 4-ca
1-yl)-alkyl)-4-hydroxypyran-2-one inhibitors of cholesterol synthesis”), claim 1: A co

I […].
602
Ranbaxy (UK) v. Warner-Lambert, [2006] EWCA Civ 876.
603
[…]. Ranbaxy (UK) v. Warner-Lambert, [2006] EWCA Civ 876, para 1.
604
Ranbaxy
604 Ranbaxy (UK) (UK) v. Warner-Lambert,
v. Warner-Lambert, [2006]
[2006] EWCA Civ 876. EWCA Civ 876, paras 36-40.
605 Ranbaxy (UK) v. Warner-Lambert, [2006] EWCA Civ 876, para 1.
606 Ranbaxy (UK) v. Warner-Lambert, [2006] EWCA Civ 876, paras 36-40.
607 See subsection II.C.1.b).
608 Synthon BV v. SmithKline Beecham plc, 20 October 2005, [2005] UKHL 59.
609 Lundbeck v. Generics Ltd. [2008] EWCA Civ 311 (citing the decisions T 296/87
(OJ EPO 1990, 19, point 6.2), T 1048/92 and T 1046/97).
610 Lundbeck v. Generics Ltd. [2008] EWCA Civ 311, para 9.

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 A. Novelty and anticipation

not only directed to the isolated enantiomer, namely that claim 1 could in-
clude the racemate, thus, to that extent the claim was anticipated by the prior
art, Lord Hoffmann noted that the claim did not include an unresolved part
of the racemate, based on the title of the patent (“new enantiomers and their
isolation”), and the knowledge of a person skilled in the art.611 Jacob LJ
stated further that this was a pure question of construction, namely whether
claim 1 covered the (+) enantiomer when in the racemate, and he held that
claim 1 obviously did not – the patentee was plainly not intending to cover
the racemate, thus, how much more than 50% of the (+) enantiomer must
have been present for a product to fall within the claim was simply a moot
point as far as the case was concerned.612
After this decision, the Court in Generics (UK) v. Daiichi Pharmaceuti-
cal reaffirmed, since the prior patent on a racemate (ofloxacin, an anti-mi-
crobial agent) neither taught nor suggested the resolution of racemate into
enantiomers, and the prior art disclosing ofloxacin did not anticipate one
enantiomer, i.e. levofloxacin.613

In the United States

Unlike other jurisdictions, challenges to the patentability of chiral molecules
based on novelty and non-obviousness have been asserted since as early as
1948, and have been met with a rule favorable to pharmaceutical compa-
nies.614 In In re Williams, while quoting the famous Aspirin® case, the Court
held that “the existence of a compound as an ingredient of another substance
does not negative novelty in a claim to the pure compound, although it may,
of course, render the claim unpatentable for lack of invention.”615 Apart from
the Aspirin® case, which was decided in 1910, among the three countries
where patents for aspirin were granted, the American patent was the only

611 Lundbeck v. Generics, [2008] EWCA Civ 311, paras 10-13.

612 Lundbeck v. Generics Ltd. [2008] EWCA Civ 311, para 50; Since the challenge
based on lack of novelty had failed in both courts below, it was not renewed before
the House of Lords. See Generics Ltd. v. Lundbeck [2009] UKHL 12, paras 11, 43,
65 (also noting that the patentee would not have intended to cover racemate).
613 Generics (UK) v. Daiichi Pharmaceutical [2008] EWHC 2413 (Pat), para 317-18.
614 In re Williams, 171 F.2d 319 (C.C.P.A. 1948); Darrow, 2 Stan. Tech. L. Rev. 1,
para 13 (2007).
615 In re Williams, 171 F.2d 319, 320 (C.C.P.A. 1948).

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one that survived. 616 Furthermore, in In re May in 1978, the Court held that
the novelty of an optical isomer was not negated by the prior art disclosure
of its racemate;617 and, in Brenner v. Ladd in 1965, the Court held it did not
matter even that a racemate may dissociate in the solution.618
In Sanofi-Synthelabo v. Apotex, Inc., the prior art patent disclosed clopi-
dogrel,619 in which there was one chiral center and which consisted of two
enantiomers, and claimed that the invention related both to each enantiomer
and their mixture.620 Like the BOA,621 the Federal Circuit, while mentioning
the difficulty of separating enantiomers and the unpredictability of their
properties, held that a reference that did not enable the separation of those
enantiomers, would not have enabled a person skilled in the art to obtain
clopidogrel substantially separated from the l-enantiomer.622
In Forest Labs., Inc. v. Ivax Pharms., Inc., the District Court found that
the alleged prior art did not disclose “substantially pure” Escitalopram and
did not enable the person skilled in the art to obtain the product, since the
separation technique at the time of the invention was relatively new and
unpredictable, and the inventor himself failed to separate the enantiomer
several times.623 The Federal Circuit did not find errors in the District Court’s

616 Kuehmsted v. Farbenfabriken of Elberfeld Co., 179 F. 701 (7th Cir. 1910) (holding
that a pure compound might be patentable, under certain conditions, over the same
compound in an impure form.); cf. infra 1335 -1338 and accompanying texts;
Among three patent applications claiming Aspirin in US, UK, and Germany, those
patents in UK and Germany were invalidated on the ground of lack of novelty.
617 In re May, 574 F.2d 1082, 1090 (C.C.P.A. 1978); see also Pfizer Inc. v. Ranbaxy
Laboratories Ltd., 405 F.Supp.2d 495, 519 (D.Del. 2005), remanded in a different
ground (holding “a prior art disclosure of a racemate does not anticipate the indi-
vidual isomers of the racemate or render the individual isomers of the racemate
obvious.”).
618 Brenner v. Ladd, 247 F.Supp. 51, 56 (D.D.C. 1965) (holding enantiomer should not
be considered to be anticipated by the solution of racemate disclosed in the prior
art, even though a racemate may dissociate in solution).
619 Clopidogrel is an antiplatelet agent used to inhibit blood clots, and this antiplatelet
agent is used to inhibit blood clots in coronary artery disease, peripheral vascular
disease, and cerebrovascular disease.
620 U.S. Patent No., 4,529,596 (July 16, 1985, under the title of “Thieno [3,2-c] pyridine
derivatives and their therapeutic application”), column 1, lines 39-41.(“These com-
pounds having an asymmetrical carbon may exist in the form of two enantiomers.
The invention relates both to each enantiomer and their mixture.”).
621 See Pfizer/Penem Derivatives, T1048/92 (1994), points 2.3-2.5.
622 Sanofi-Synthelabo v. Apotex, Inc., 550 F.3d 1075, 1085 (Fed. Cir. 2008).
623 Forest Labs., Inc. v. Ivax Pharms., Inc., 501 F.3d 1263, 1265 (Fed. Cir. 2007).

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 A. Novelty and anticipation

conclusions.624 The Federal Circuit affirmed that, since the prior art, which
in effect did state Escitalopram, did not enable the person skilled in the art
to prepare the enantiomer and did not anticipate the claimed invention.625
In any case, this rule of novelty of enantiomers over their racemates seems
to have been consistently applied for over a century. The difficulty of sep-
aration with the technology in the early 20th century is understandable and
the novelty should be decided from case to case. However, one may doubt
whether it is still as difficult as it was a hundred years ago to separate one
ingredient from another.

In Korea
In the Clopidogrel case, 626 a patent on d-enantiomer627 of clopidogrel was
challenged,628 with the same relevant facts as Sanofi-Synthelabo v. Apotex,
Inc. in the United States.629 The Supreme Court of Korea reiterated that to
deny the novelty of selection invention, the prior document should specifi-
cally disclose the concept of a selection invention, and it could also be that
a person skilled in the art could directly learn the existence of the selection
invention from the prior document based on the disclosure thereof and on
common knowledge at the time of application.630 Based on the same dis-
closure,631 however, the Court stated that the prior document disclosed the
claimed d-enantiomer of clopidogrel, because the prior document i) dis-
closed clopidogrel itself, and ii) noted that the invention related both to each
enantiomer and their mixture and the each enantiomer of clopidogrel was d-
and l-enantiomer, respectively.632 Further, the Court held that the use of

624 Forest Labs., Inc. v. Ivax Pharms., Inc., 501 F.3d 1263, 1267 (Fed. Cir. 2007).
625 Forest Labs., Inc. v. Ivax Pharms., Inc., 501 F.3d 1263, 1268-69 (Fed. Cir. 2007).
626 Korean Supreme Court/Clopidogrel, 2008Hu736 & 2008Hu743, Oct. 15, 2009.
627 “Dextro-rotatory” and “levo-rotatory” is another way of indicating the chirality of
each enantiomer. However, there is no fixed relation to the (R)- or (S)- enantiomer.
For example, an (R) isomer can be either dextro-rotatory or levo-rotatory.
628 The prior patent disclosed especially “[…] is an asymmetric carbon atom. In fact,
this formula represents both the dextro-rotatory molecule claimed as well as its
levo-rotatory enantiomer.”.
629 See supra 619 -622 and accompanying texts.
630 Korean Supreme Court/Clopidogrel , 2008Hu736 & 2008Hu743, Oct. 15, 2009,
para 1.Ka.
631 See supra 622 ; both enantiomer and mixture.
632 Korean Supreme Court/Clopidogrel, 2008Hu736 & 2008Hu743, Oct. 15, 2009,
para 1.Na.

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clopidogrel also lacked novelty, since the prior art already disclosed clopi-
dogrel and its use.633 The Court finally held that, since it was specifically
disclosed and the person skilled in the art would have acknowledged the
racemate, its d-enantiomer, and l-enantiomer as separate compounds, it was
not necessary that the method of separation or possibility of separation of
enantiomers from racemates to obtain enantiomers be disclosed unless the
invention is directed to the method of separating d-enantiomer.634
In Warner Lambert v. CJ et al.,635 the issue was the same as the BPatG/
Atorvastatin in Germany.636 While citing the Clopidogrel case,637 the
Supreme Court held that, even though only the racemate of R-trans-hep-
tanoic acid and S-trans-heptanoic acid was disclosed, considering that a car-
boxamide compound of formula I was acknowledged as separate 4 enan-
tiomers and not as a mixture, a person skilled in the art could have acknowl-
edged formula I’s open-ring form, namely, R-trans-heptanoic acid and S-
trans-heptanoic acid, as separate enantiomers, too, and, thus, the prior art
disclosed the R-trans-heptanoic acid.638 The Court restated that the selection
invention was recognized as separate enantiomers, not as a mixture in the
prior document, and that it was not necessary to disclose the method of sep-
aration or the possibility of separation of the enantiomer from racemates
unless the invention was directed to the method of separating the dextroro-
tatory enantiomer.
However, most patent offices consider the optical isomer of known race-
mates as novel per se as long as the individual enantiomers have not been
explicitly disclosed or separated.639

633 Korean Supreme Court/Clopidogrel, 2008Hu736 & 2008Hu743, Oct. 15, 2009,
para 1.Na. (describing the use as “a therapeutic composition having blood-platelet
aggregation inhibiting activities and antithrombotic activities containing the above
compound and a pharmaceutically acceptable carrier.”).
634 Korean Supreme Court/Clopidogrel, 2008Hu736 & 2008Hu743, Oct. 15, 2009,
para 1.Na.
635 Korean Supreme Court/Atorvastatin, 2008Hu3469, Mar. 25, 2010.
636 See supra 590 .
637 Korean Supreme Court/Clopidogrel., supra 626 .
638 Korean Supreme Court/Atorvastatin, supra 635 , at para 1.Na.
639 Hoechst/Enantiomers, T296/87, OJ EPO 1990, 195, 206-207; In re May, 574 F.2d
1082, 1090 (C.C.P.A. 1978) (holding “the novelty of an optical isomer is not negat-
ed by the prior art disclosure of its racemate.”).

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 A. Novelty and anticipation

c) Crystalline forms

In the EPO
The Board held that a chemical substance was new once it differed from a
known substance in a reliable parameter.640 Since the physicochemical prop-
erties of the polymorphs are different from each other, which can be repre-
sented by reliable parameters, as long as the applicants can prove the dif-
ferences, it would be held novel.
In SmithKline Beecham/Paroxetine methanesulfonate, the parameters in-
dicating the polymorph in the prior art and those of the claimed invention
were not identical.641 The Board, however, held that this difference did not
mean that the two crystalline forms are different because the list of peaks
was not limiting; the claimed invention had no further distinctive technical
features other than the parameters;642and the claimed form was sufficient to
be produced by a skilled person.643
The prior document for the crystal forms, of course, must enable the in-
vention in question. The Board held that, even if the prior art unambiguously
taught that finasterid existed in two polymorphic differentiations, since there
was no indication of how the polymorph form I might be prepared, the prior
art was not an enabling disclosure and was not a novelty-destroying disclo-
sure for the claimed invention.644 While noting that the submission was not
supported by any evidence, the Board did not accept the examining div-
ision’s submission that the crystal forms were accessible by means of any
known crystallisation method and that a skilled person would not have had

640 Hoechst/Enantiomers, T296/87, OJ EPO 1990, 196, headnote (this case was about
the patentability of an enantiomer).
641 The Claim 1 of granted patent EP-B-0 970 955: “1. Paroxetine methane sulfonate
in crystalline form having inter alia the following characteristic IR peaks:1603,
1513, 1194, 1045, 946, 830, 776, 601, 554, and 539 4 cm–1; and/or the following
characteristic XRD peaks [...] .”.
The disclosure of prior art: Preparation of crystalline paroxetine mesylate, which
was characterized by the following list of IR peaks:3023, 2900, 2869, 2577, 1615,
1515, 1500, 1469, 1208, 1169, 1100, 1038, 962, 931, 838, 777, 546, and 531 cm–
1 (and no XPRD spectrum).
642 Smithkline Beecham/Paroxetine methanesulfonate, T 0885/02 (2004), points
3.4.10-3.1.13.
643 Smithkline Beecham/Paroxetine methanesulfonate, T 0885/02 (2004), points 3.6
and 3.7.
644 Merck/Finasteride, T605/02 (2005), point 3.2.1.

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any difficulty in finding out under which crystallisation conditions either of

two polymorphic forms could have been obtained.645 Thus, even if the prior
art discloses the claimed invention, if it does not enable the invention, it is
not novelty destroying. In the case where the novelty of the crystalline forms
of Famotidine was issued, the Board held that the product prepared accord-
ing to the process disclosed in a prior art was the same as the claimed poly-
morph, thus the polymorph was not novel.646

In Germany
In the Kristallformen, the BPatG held that a compound, in the sense of patent
law, was every individual chemical that could be reliably differentiated from
another, if they provide sufficient and appropriate parameters.647 This case
involved two polymorphic forms of an already known antibiotic, Ce-
faloridin, which showed non-hygroscopicity. The Court further ruled that
compounds having the same chemical composition were basically identical,
did not apply for special forms of compounds, if these forms could not have
been produced.648

In the United Kingdom

Smith Kline & French Laboratories v. Evans Medical involved a polymorph
of the first H2-blocker Cimetidine (Tagamet®).649 After some years of filing
of the basic patent application covering cimetidine, the patentee claimed one
polymorphic form of the same compound.650 The Court dismissed the case
noting that this patent was anticipated over its basic patent because the
claimed form A of cimetidine was inevitably obtained by following the pro-
cess disclosed in the prior art.651
Similar to the BOA’s decision,652 in the case on a crystal form of Paro-
xetine methansulphonate, the House of Lords held that the incorrect data
indicating that the claimed invention was different from the subject disclosed

645 Merck/Finasteride, T605/02 (2005), point 3.2.1.

646 Richter Gedeon/Famotidine, T 226/98, OJ EPO 2002, 498, 509-514.
647 BPatG/Kristallformen(Crystal forms),Entscheidungen des Bundespatentgerichts
(“BPatGE”) 20, 6, 6.
648 BPatG/Kristallformen, BPatGE 20, 6.
649 Smith Kline & French Laboratories v. Evans Medical [1989] F.S.R. 561.
650 Smith Kline & French Laboratories v. Evans Medical [1989] F.S.R. 561, 561.
651 Smith Kline & French Laboratories v. Evans Medical [1989] F.S.R. 561, 579.
652 SmithKline Beecham/Paroxetine methanesulfonate, T 0885/02 (2004).

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 A. Novelty and anticipation

in the prior art were irrelevant because the evidence showed that the claimed
invention would have inevitably resulted from the prior art and that the prior
art was enabling, because the person skilled in the art would have tried a
different solvent if the solvent in the main example was not suitable for
crystallization.653
In Laboratories Servier v. Apotex, while noting that “the individual peaks
of the table should not have too much significance attached to them – it is
the overall set that matters,” Jacob LJ held that the claimed polymorph was
not novel when it would inevitably be obtained by carrying out the process
disclosed in the earlier patent for the basic substance.654 While pointing out
that the exclusivity based on this crystalline form could have extended to
2020, Jacob LJ remarked that “[i]t is the sort of patent which can give the
patent system a bad name.” 655

In the United States

In Abbott Laboratories v. Geneva Pharmaceuticals, the novelty of an an-
hydrous crystalline form IV of Terazosine hydrochloride (“THC”)656 over
sales of a product containing this form of THC without the parties’ knowl-
edge was in issue.657 The Federal Circuit held that the third party’s sales of
the anhydrous crystalline form of THC before the patent filing date rendered
the patent on that particular anhydrous crystalline form of THC invalid, even
though the parties to those sales did not know that they were dealing with
the particular form claimed in the patent.658 The Court further clarified that
if a product offered for sale inherently possesses each of the limitations of
the claims, then the invention was on sale, whether or not the parties to the

653 Synthon BV v. SmithKline Beecham plc [2005] UKHL 59, paras 34-38.
654 Laboratoires Servier v. Apotex [2008] EWCA Civ 445, paras 21-38 (a case about
the novelty of one crystal form of the t-butylamine salt of perindopril).
655 Laboratoires Servier v. Apotex, [2008] EWHC Civ 445, para 9.
656 Terazosin is a medication for the treatment of hypertension and benign prostatic
hyperplasia.
657 Abbott Laboratories v. Geneva Pharmaceuticals, Inc., 182 F.3d 1315 (Fed. Cir.
1999).
658 Abbott Laboratories v. Geneva Pharmaceuticals, Inc., 182 F.3d 1315, 1315 (Fed.
Cir. 1999).

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transaction recognized that the product possessed the claimed characteris-

tics.659
In SmithKline Beecham v. Apotex, Apotex, which was seeking to practice
the invention in the prior art, was found to have infringed the patent, based
on which, logically, the prior art should have anticipated the claim before
the patent filing date.660 The Federal Circuit held that the patent covering
crystalline Proxetine Hydrochloride (“PHC”) hemihydrate661 was invalid,
because it was inherently anticipated based on the fact that the process of
making PHC anhydrate in the prior art, which did not discuss PHC hemi-
hydrate, inherently resulted in the production of at least trace amounts of the
hemihydrates.662
There is no equivalent case law regarding novelty of crystalline form in
Korea.

d) Metabolite

In the United Kingdom

Merrell Dow was a patentee of an anti-histamine called terfenadine (Tel-
dane®). The subsequent research on the product showed that the anti-his-
taminic effect was due to a specific metabolite. After the determination of
the structure of the metabolite, called Fexofenadine (Allegra®), Merrell
Dow filed a new patent application. After the basic patent for the terfenadine
expired in 1992, the patent holder for the metabolite, Merrell Dow, sued a
generic company selling Terfenadine for infringing not the basic patent but
the metabolite patent, which would not expire until 2000.663 Merrell Dow
argued that the supply of terfenadine provided the essential means for mak-
ing the patent protected metabolite, and thus for puting the patented inven-

659 Abbott Laboratories v. Geneva Pharmaceuticals, Inc., 182 F.3d 1315, 1319 (Fed.
Cir. 1999) (further noting “The question is not whether the sale, even a third party
sale, ‘discloses’ the invention at the time of the sale, but whether the sale relates to
a device that embodies the invention.”).
660 SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331, 1341 (Fed. Cir. 2005).
661 See supra 140 .
662 SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331, 1342-46 (Fed. Cir.
2005).
663 Merrell Dow Pharmaceuticals Inc v. HN Norton & Co Ltd [1995] UKHL 14, paras
7-8.

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 A. Novelty and anticipation

tion into effect.664 The House of Lords found that the acid metabolite of the
anti-allergic drug terfenadine lacked novelty. It held that the metabolite was
not novel, not because of its previous use but because of the previous dis-
closure of “a part of the chemical reaction in the human body produced by
the ingestion of terfenadine and having an anti-histamine effect,” which
contained sufficient information and enabled the public to work the inven-
tion to make metabolites in their livers by taking the medication.665 The
Lords rejected the argument that the metabolite was made available to the
public by the clinical trials of terfenadine, because they did not make the
necessary information of its metabolite available, i.e. they did not enable
anyone to perform the metabolite invention.666 The Lords seemed to accept
that the metabolite could be patented provided that the claim was limited to
the metabolite produced by methods other than metabolism in the body.667

In Germany
The same case that was litigated in the United Kingdom668 was appealed to
the Munich Higher Regional Court in 1992, which held that the patent of
metabolite was not infringed, since it was not manufactured, sold, or kept
for filing by the defendants.669 Because of the bifurcated system in Germany,
the Court could not rule on the validity of the patent in issue.

In the United States

After first construing the word “compound” in the patent on metabolite, the
District Court limited the patent scope only to the synthetically produced
version of acid metabolite of terfenadine.670 However, the Court did not
question the patentability of the metabolite patent in this case. In In re Bu-

664 Merrell Dow Pharmaceuticals Inc v. HN Norton & Co Ltd [1995] UKHL 14, para
8.
665 Merrell Dow Pharmaceuticals Inc v. HN Norton & Co Ltd [1995] UKHL 14, paras
22-48.
666 Merrell Dow Pharmaceuticals Inc v. HN Norton & Co Ltd [1995] UKHL 14, paras
22-48; Jacob, IIC 1997, 880, 880-81.
667 Merrell Dow Pharmaceuticals Inc v. HN Norton & Co Ltd [1995] UKHL 14, para
15; Jacob, IIC 1997, 880, 881.
668 Merrell Dow Pharmaceuticals Inc v. HN Norton & Co Ltd [1995] UKHL 14.
669 OLG München/Terfenadine, GRUR, 1994, 746.
670 Marion Merrell Dow Inc. v. Baker Norton Pharmaceuticals, Inc., 948 F.Supp. 1050,
1055-56 (S.D.Fla.,1996), appeal dismissed, 152 F.3d 941 (Fed. Cir. 1998).

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spirone Patent Litigation, the District Court held that the fact that the use of
the parent drug was described in a package insert of the parent drug and that
it was prescribed more than one year prior to the filing date of metabolite
patent application alone were sufficient to decide the issue of invalidity.671
In Schering Co. v. Geneva Pharmaceuticals, the Federal Circuit held that
a metabolite of Loratadine was anticipated over the prior art, which disclosed
the administration of loratadine to a patient, since it “necessarily and in-
evitably” resulted in the formation of the metabolite.672 The Federal Circuit
further held that inherent anticipation required neither the recognition of the
person skilled in the art, nor the actual creation or reduction to practice of
prior art subject matter before the priority date, i.e. the actual administration
of the patent drug to any patients, but required only enabling disclosure.673
Unlike the House of Lords, the Federal Circuit also restated that “that which
would literally infringe if later in time anticipates if earlier.”674 Interestingly,
Rader J noted that these metabolites might not receive protection via bare
compound claims, which were defined by structure only, since the scope of
these claims could include the compounds in any surroundings, including
those with the body as metabolites of a drug. However, he stated that it could
be claimed in its pure and isolated form,675 since the prior art would not
provide an enabling disclosure to anticipate such claims.676 Thus, in the
United States, as in the United Kingdom, a metabolite may be patentable if
it is claimed in its pure and isolated form.677
Novelty of metabolites has not been issued in Korea.

671 In re Buspirone Patent Litigation, 185 F. Supp. 2d 340, 360 (S.D.N.Y., 2002).
672 Schering Co. v. Geneva Pharmaceuticals, 339 F.3d 1373, 1378 (Fed. Cir. 2003).
673 Schering Co. v. Geneva Pharmaceuticals, 339 F.3d 1373, 1378-80 (Fed. Cir. 2003),
quoting In re Donohue, 766 F.2d 531, 533 (Fed. Cir. 1985).
674 Schering Co. v. Geneva Pharmaceuticals, 339 F.3d 1373, 1379 (Fed. Cir. 2003),
quoting Bristol-Myers Squibb Co. v. Ben Venue Labs., Inc., 246 F.3d 1368, 1378
(Fed. Cir. 2001).
675 Examples were a pharmaceutical composition, a method of administering the
metabolite or the corresponding pharmaceutical composition.
676 Schering Co. v. Geneva Pharmaceuticals, 339 F.3d 1373, 1381 (Fed. Cir. 2003).
677 Schering Co. v. Geneva Pharmaceuticals, 339 F.3d 1373, 1381 (Fed. Cir. 2003).

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 A. Novelty and anticipation

5. Analysis and conclusion

For species selection inventions, the EPO has the most extreme approach,
i.e. to destroy the novelty of a species selection invention, the prior art must
disclose the same, as it is the photograph of a later invention.678 Germany
and the United Kingdom relaxed their previous stringency in this regard to
allow assessment of the novelty of species selection inventions, and it was
declared by the courts that the Fluoran decision or the IG Rule exist only in
history; therefore, the novelty requirement is much lowered. The United
States, where the decision on Olanzapine was first held, appears to consider
the size of the genus from which the selection was made. Although there are
some differences from jurisdiction to jurisdiction, a species selection inven-
tion will be found novel unless it is individually spelled out in the prior art.
This seems to be based on the difficulty of identifying and envisaging a
specific species selection invention with effects that distinguish it from the
millions of others as per Jacob J’s a priori consideration.679
This lowered novelty requirement applied to the optical isomers inven-
tions, although differently. The novelty of an optical isomer is already es-
tablished over the racemic mixture, if its structure is clearly disclosed and it
is acknowledged by the person skilled in the art that one or the other would
exert its pharmacological effect, unless purification of that isomer from the
racemate is not disclosed and is difficult. For example, while referring to the
Olanzapine decision, the BGH held that an enantiomer was not available to
the public, since the prior document did not directly and unambiguously
disclose an enantiomer because the person skilled in the art should find the
way to resolve the racemate. This is also because anticipation requires the
enablement of the invention.
For the crystalline forms, the issue of novelty arose mainly because the
claimed crystalline forms were inevitably produced according to the process
disclosed in the prior art, and novelty was generally not found. If a new
crystalline form were shown, it would have no difficulty being found novel.
The reasoning on novelty of metabolites in the United Kingdom and the
United States shows an interesting contrast. In the United States, where a
secret or confidential use of an invention could give rise to the public use
bar, so that “non-informing” prior art can be the prior art, the Federal Circuit

678 This extreme approach could make novelty test be subject to the skill of drafting
person.
679 See supra 558 .

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found that it was not-novel based on its rule that “that which would literally
infringe if later in time, anticipated if earlier.” However, the House of Lords
held that the metabolite was available not by the previous use of its parent
drug, but by a disclosure which was common knowledge.680 This is because,
in the United Kingdom, to make something available to the public, the com-
munication of information is required,681 but the use of the parent drug does
not present any information about the metabolite. Thus it could not be a prior
art. Through this effort, it seems that the House of Lords invoked the “golden
thread” that a patent cannot stop someone from doing something that was
old,682 which is the basis of the novelty requirement. Since the non-enabling/
communicating use – the ingestion of the parent drug - does not constitute
the prior art, if the Court could not have found another way, the metabolite
patent could ultimately have prevented the public from practicing the parent
drug. Thus, the Court held that the metabolite lacked novelty based on the
prior disclosure, which merely described the same non-enabling use, while
the use would inevitably produce the metabolite. Indeed the patent on the
metabolite precisely patents the state of the art again, insofar as it precludes
the use of the parent drug as an anti-histamine treatment.683

B. Inventive step / Non-obviousness684

“We are like dwarfs on the shoulders of giants, so that we can see more than
they, and things at a greater distance, not by virtue of any sharpness on sight on
our part, or any physical distinction, but because we are carried high and raised
up by their giant size.”685
No invention occurs in a vacuum, and every invention is built upon previous
inventions. The inventive step requirement in patenting ensure that patented
invention is qualitatively distinguised from previous invention.

680 See supra 665 -666 and accompanying texts.

681 See supra 666 and accompanying text; see also Jacob, IIC 1996, 170, 171 (arguing
the disclosure of a process made available to the public, for the purposes of that
process, everything that inevitably took place as part of the process, whether ap-
preciated or not.).
682 Jacob, IIC 1997, 880, 880.
683 Jacob, IIC 1996, 170, 171.
684 “Inventive step” and “non-obviousness” are used in this thesis without distinction.
685 Bernard of Chartres, 1130 AD.

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 B. Inventive step / Non-obviousness

1. Inventive step in patentability requirements

The novelty requirement is not controversial, and utility will be found on a

relatively trivial showing.686 The two other requirements are arguably rela-
tively “mild”687 compared to the rigor of the inventive step requirement. The
inventive step requirement is considered the “final gatekeeper of the patent
system”688 and the “ultimate condition of patentability.”689 In other words,
even if relatively trivial changes to the prior art could survive these two
requirements, inventive step functions as the ultimate requirement and filters
the patentable from the unpatentable.690
The inventive step requirement has been traditionally justified as a corol-
lary to the “reward theory” of patent law.691 The purpose of having this
requirement is to encourage invention, while not over-rewarding it.692 The
inventive step asks whether a development is a significant enough technical
advance to merit the award of a patent.693 Without this requirement, the
possibility of using the variations of prior art from everyday practice would
be jeopardized.694 The requirement guarantees that the information inherent
in the claimed invention has a minimum threshold quantum of value in ex-
change for a patent.695 As Lord Hoffman noted, “[t]he question was whether,
in accordance with this policy, the patent in suit disclosed something suffi-
ciently inventive to deserve the grant of a monopoly.”696 This requirement
is also to ensure that the patent system rewards those inventions that would

686 Duffy, 71 U. Chi. L. Rev. 439, 502-03 (2004).

687 Merges/Duffy, 2011, 619.
688 Merges/Duffy, 2011, 619-20 (also noting “nonobviousness can accurately be de-
scribed as a ‘non-triviality’ requirement in patent law.”).
689 Witherspoon, 1980.
690 Merges/Duffy, 2011, 620.
691 Duffy, 71 U. Chi. L. Rev. 439, 503 (2004) (noting “[n]ew and useful creations that
are also relatively obvious do not deserve the reward of a patent because the social
benefits of the invention are outweighed by the social costs of the patent
monopoly.”).
692 Merges, 7 High Tech. L. J. 1, 3 (1992).
693 Merges/Duffy, 2011, 620.
694 Kraßer, 2009, 301-02; Grubb/Thomsen, 2010, 68.
695 Merges, 7 High Tech. L. J. 1, 18-19 (1992).
696 Societe Technique de Pulverisation Step v. Emson Europe Ltd. and others [1993]
R.P.C. 513.

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not have been created without the inducement of a patent.697 Thus, the in-
herent problem was to develop some means of selecting out those inven-
tions.698
One cannot claim a patent right on a subject matter that, though it is not
fully anticipated, would nevertheless be obvious to a person skilled in the
art at the applicant’s date of invention or of filing.699 Thus, the inventive step
assures that, although the invention may be novel in some technical sense,
it is not merely a straightforward extension, a simple application of some
familiar invention,700 or an incremental development of technology.701

2. Examination of inventive step

An invention may be obvious to the person skilled in the art over more than
one piece of prior arts.702 In other words, if a subject matter is obvious to the
person skilled in the art over the entire state of the prior art, a patent will not
be granted. This judgment of whether an invention involves an inventive
step is one that is intrinsically much more difficult than that of novelty, since
to some extent judgement of the inventive step is rather subjective.703 Thus,
the assessment of the inventive step raises largest single cause of uncertainty

697 Graham v. John Deere Co., 383 U.S. 1, 11-17 (1966); Kitch, 1966 Sup. Ct.
Rev. 293, 301 (1966) (noting if an invention would not have been developed absent
the prospect of a patent, it should be granted); Gilfillan, 31 J. Pat. & Trademark
Off. Soc'y 611, 611 (1949) (“A patent is helpful and proper when it rewards suffi-
ciently useful creative work which might not have been done without that prospec-
tive reward.”).
698 Graham v. John Deere Co., 383 U.S. 1, 11 (196) (holding “[t]he inherent problem
was to develop some means of weeding out those inventions which would not be
disclosed or devised but for the inducement of a patent.”).
699 Chisum, 15 AIPLA Q. J. 57, 58 (1987).
700 Grady/Alexander, 78 Va. L. Rev. 305, 340 (1992).
701 Holbrook, 59 SMU L. Rev. 123, 170 (2006).
702 Spenner, 90 J. Pat. & Trademark Off. Soc’y, 477, 510 (2008); EPO Examination
Guidelines G-VII, 6; Examination Guidelines for Patent and Utility Model in Korea
(“Korean Examination Guidelines”), January 2011, Ch 5.1.
703 Grubb/Thomsen, 2010, 67.

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about the validity of patents, and has thereby resulted in a rich jurispru-
dence.704

In the EPO
An invention shall be considered as involving an inventive step if, having
regard to the state of the art, it is not obvious to a person skilled in the
art.705 Even though the BOA held that this approach was no more than one
possible route to assessing inventiveness,706 the practice in the EPO basically
applies the “problem-and-solution approach” to assessing the inventive step.
This can be divided into three main stages:
“(i)Determining the ‘closest prior art’
(ii) Establishing the ‘objective technical problem’ to be solved; and
(iii)Considering whether or not the claimed invention, starting from the
closest prior art and the objective technical problem, would have been
obvious to the skilled person.”707
This approach is based on the principle that every invention is a solution to
a technical problem. “The objective technical problem” in the second step
concerns the aim and the task of modifying or adapting the closest prior art
to provide the technical effects of the invention over the closest prior art,
which may be different from what is presented as “the problem” in the patent
application, and this in turn could require the reformulation.708 While noting
that the “reformulation” involved the court artificially, creating a problem
that was supposed to be solved by the invention, Jacob LJ pointed out that

704 Cornish/Llewelyn/Aplin, 2010, 210 (noting “[t]he evaluative issue that this intro-
duces is the largest single cause of uncertainty about the validity of patents and
hence a frequent inflator of the scale and length of patent disputes.”).
705 EPC Art. 56, first sentence; GPA Section 4, first sentence; UK Patents Act 1977,
Section 3.
706 Alcan/Aluminium alloys, T 465/92, OJ EPO 1996, 32, 50 (holding that “[T]he
problem and solution approach ought to be considered as one amongst other pos-
sible approaches, each of which has its own advantages and drawbacks.”).
707 EPO Examination Guidelines G-VII, 5.; See e.g., Bayer/Carbonless copying pa-
per, T 1/80, OJ EPO 1981, 206; EPC Rule 42(1)(c) (The description shall disclose
the invention, as claimed, in such terms that the technical problem, even if not
expressly stated as such, and its solution can be understood, and state any advan-
tageous effects of the invention with reference to the background art.).
708 EPO Examination Guidelines G-VII, 5.2 (further noting this could be specially the
case when “the prior art cited in the search report may put the invention in an entirely
different perspective from that apparent from reading the application only.”).

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IV. STANDARDS OF PATENTABILITY FOR PHARMACEUTICAL INVENTIONS

this reformulation might be the weakest part of the problem-and-solution

approach.709 To answer the question in the third step, the word, “would”
must be defined. The point here is not whether the skilled person could have
arrived at the invention, i.e. that it was within their technical ability, but
whether he would have done so because the prior art motivated him to do so
while wishing to solve the objective technical problem or expecting some
improvement or advantages.710 It is not sufficient that the person skilled in
the art could have arrived at the invention from the prior art; it must be shown
that he would have done so.711 This last step is similar to the TSM test in the
United States.712
Some secondary considerations are relevant to the last step again, espe-
cially in determining whether the person skilled in the art “would” have made
the claimed modifications to the closest prior art to solve the objective tech-
nical problem, and include unexpected or synergistic technical effects, long-
felt need or commercial success.713 However, commercial success is not to
be regarded as a sole criterion and needs to be coupled with evidence of long-
felt need.714

In the United Kingdom

An invention shall be considered as involving an inventive step if, having
regard to the state of the art, it is not obvious to a person skilled in the
art.715 The British Court’s approach to assessing the inventive step was set
out in Pozzoli v. BDMO, which provided four steps:
“1. a) Identify the notional “person skilled in the art”
b) Identify the relevant common general knowledge of that person;
2. Identify the inventive concept of the claim in question or if that cannot
readily be done, construe it;

709 Actavis UK Ltd v. Novartis AG [2010] EWCA Civ 82, paras 30-34; see also Ranbaxy
UK & Anor v. Warner-Lambert [2005] EWHC 2142, para 71 (noting this kind
reformulation of the problem could provide a substantial risk that would lead to a
finding of non-obviousness based on the after-discovered advantages.).
710 EPO Examination Guidelines G-VII, 5.3.
711 Actavis UK Ltd v. Novartis AG [2010] EWCA Civ 82, para 46 (further commenting
this seemed, however, to be self-evident).
712 See infra 732 -733 and accompanying texts.
713 EPO Examination Guidelines G-VII, 10.
714 EPO Examination Guidelines G-VII, 10.3.
715 UK Patents Act 1977, Section 3.

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3. Identify what, if any, differences exist between the matter cited as form-
ing part of the “state of the art” and the inventive concept of the claim
or the claim as construed;
4. 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?”716
Jacob LJ explained that (i) the only thing that mattered for step 2 was what
was claimed, and (ii) the meaning of “obvious” for the purpose of step 4,
which is the key statutory step, was technically rather than commercially
obvious.717
In the United Kingdom, obviousness is a multifactorial question. Namely,
the Court makes a full multifactorial assessment of all relevant facts of each
case, which may include commercial success, a long-felt want, a motive to
find a solution to the problem, the number and extent of the possible avenues
of research, the effort involved in pursuing them, and the expectation of
success.718 Unexpected results can only fail to defend against an obviousness
attack, when there is a real motivation to use the idea apart from that ad-
vantage, since only then will the person skilled in the art more or less in-
evitably bump into the unexpected advantage.719

In Germany
An invention shall be considered as involving an inventive step if, having
regard to the state of the art, it is not obvious to a person skilled in the
art.720 In Betrieb einer Sicherheitseinrichtung, the BGH placed the focus on
whether the person skilled in the art had motivation to develop the prior art
further in the direction of the claimed subject matter. 721 The BGH held that
seeing the use of an approach that deviated from previous approaches as not
only possible but as obvious to the skilled person required additional im-

716 Pozzoli v. BDMO [2007] EWCA Civ 588, para 122 (reviewing the English Court’s
approach in the earlier case, Windsurfing v. Tabur Marine [1985] RPC 59.).
717 Actavis UK Ltd v. Novartis AG [2010] EWCA Civ 82, paras 18-21.
718 Actavis UK Ltd v. Novartis AG [2010] EWCA Civ 82, paras 26, 41 (citing Conor
Medsystems Inc v. Angiotech Pharmaceuticals Inc & Ors [2008] UKHL 49, para
42).
719 Napp Pharmaceuticals v. Ratiopharm [2009] EWCA Civ 252, para 115.
720 GPA Section 4, first sentence.
721 BGH/ Betrieb einer Sicherheitseinrichtung (Operating a Safety Device), GRUR
2009, 746.

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pulses, stimuli, suggestions or other motives going beyond discernability of

a technical problem to prompt the skilled person to solve the technical prob-
lem by inventive means.722 However, there seems to be no formal approach
to assessing the inventive step.
The secondary indications cannot establish or replace the inventive step.
Further, they may only be the occasion in exceptional cases for a particularly
critical review of the solutions known in the state of the art to determine
whether they provide sufficient indications for the obviousness of the subject
matter of the claimed invention against the background of general technical
knowledge and whether they merely appear to contain a suggestion leading
to the invention from a post-hoc point of view.723 Secondary considerations
often applied are economic success based on the invention, overcoming dif-
ficulties, satisfaction of a long lasting need, evidence of others’ failures,
unexpected technical progress, overcoming prejudices, and unexpected re-
sults.724

In the United States

A patent may not be obtained 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 the subject matter per-
tains.725
Under the Graham decision,726 which established a basic framework for
judging non-obviousness, courts must identify (1) the scope and content of
the prior art, (2) the differences between the prior art and the claimed in-
vention, and (3) the level of ordinary skill in the art. Then, they must deter-
mine whether the subject matter of the claimed invention is obvious.727
These are referred to as the “Graham factors.” The Graham Court further
held that secondary considerations, which are subsequently called the fourth

722 BGH/ Betrieb einer Sicherheitseinrichtung (Operating a Safety Device), GRUR

2009, 746, 748.
723 BGH/Dreinahtschlauchfolienbeutel (Three-Seam Tubular Sachet), GRUR 2010,
44, 46-47.
724 Pagenberg, GRUR Int 1986, 83 et seqq.
725 35 U.S.C. § 103(a).
726 Graham v. John Deere Co., 383 U.S. 1 (1966).
727 Merges/Duffy, 2011, 670.

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 B. Inventive step / Non-obviousness

Graham factors,728 such as commercial success, long felt but unsolved needs,
failure of others, etc., might be utilized to determine obviousness.729 How-
ever, the Graham decision does not specify precisely how a court is to make
this ultimate determination.730 The imaginary person, typically referred to
in the United States as a PHOSITA (a person having ordinary skill in the
art), is the yardstick by which the bar to obtaining patent protection can be
adjusted to specific technological fields.731
Soon after its creation, the Federal Circuit articulated what would become
its exclusive test for deciding obviousness, which was known as the “Teach-
ing, Suggestion or Motivation” or the so-called TSM test.732 The Federal
Circuit held that “[o]bviousness cannot be established by combining the
teachings of the prior art to produce the claimed invention, absent some
teaching or suggestion supporting the combination.”733 However, this test
came under increasing scrutiny, and the Supreme Court granted certiorari
on the question whether the Federal Circuit had erred in holding that a
claimed invention could be deemed “obvious” by applying the TSM test too
rigidly.734

728 Transocean Offshore Deepwater Drilling, Inc. v. Maersk Drilling USA, Inc., 699
F.3d 1340, 1348-49 (Fed. Cir. 2012).
729 Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966); cf. Newell Companies, Inc.
v. Kenney Mfg. Co., 864 F.2d 757, 768 (Fed. Cir. 1988) (holding although secondary
considerations must be considered, they do not necessarily control the obviousness
conclusion); cf. Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1372 (Fed. Cir. 2007),
reh’g denied, cert. denied.
730 Merges/Duffy, 2011, 670.
731 Strandburg, 1 UC Irvine L.R.,265, 267 (2011); For the PHOSITA, see MPEP
§ 2141.03, citing In re GPAC, 57 F.3d 1573, 1579 (Fed. Cir. 1995); Custom Ac-
cessories, Inc. v. Jeffrey Allan Industries, Inc., 807 F.2d 955, 962-63, (Fed. Cir.
1986); Environmental Designs, Ltd. V. Union Oil Co., 713 F.2d 693, 696 (Fed. Cir.
1983) (noting “the factors that may be considered in determining the level of ordi-
nary skill in the art may include: (A) type of problems encountered in the art; (B)
prior art solutions to those problems; (C) rapidity with which innovations are made;
(D) sophistication of the technology; and (E) educational level of active workers in
the field. And in a given case, every factor may not be present, and one or more
factors may predominate.”).
732 Merges/Duffy, 2011, 672.
733 ACS Hosp. Systems, Inc. v. Montefiore Hosp., 732 F.2d 1572, 1577 (Fed. Cir. 1984)
(further noting “[u]nder section 103, teachings of references can be combined on-
ly if there is some suggestion or incentive to do so.”).
734 KSR Intern. Co. v. Teleflex Inc., 548 U.S. 902 (Mem) (2006).

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In KSR v. Teleflex, the Supreme Court held that “[i]f a person of ordinary
skill can implement a predictable variation, § 103 likely bars its patentabil-
ity.” The Court rejected the Federal Circuit's “rigid approach” to obviousness
in favour of a more “expansive and flexible” approach.735 The Court held
that “any need or problem known in the field of endeavour at the time of
invention and addressed by the patent can provide a reason for combining
the elements in the manner claimed.”736 The Court added an “obvious to try”
test: “When there is a design need or market pressure to solve a problem;
and there are a finite number of identified predictable solutions; then a person
of ordinary skill has good reason to pursue the known options, and this leads
to the anticipated success.”737
When evaluating obviousness, the American patent system further uses a
procedural device called the “prima facie case of obviousness,” which differs
from obviousness and was established to shift the burden of proof to the
applicant.738 The prima facie case of obviousness is initially established by
an examiner based on the application of the first three Graham factors and
maintained unless and until the applicant provides sufficient evidence to
demonstrate non-obviousness, such as “secondary considerations.”739 To
establish prima facie obviousness in the field of chemistry, size of the genus,
structural similarities, and reasonable expectation of success can be used.
To rebut the prima facie obviousness in the field, in addition to the factors
presented in Graham, industry acclaim, unexpected results, prior art teach-
ing away from the invention,740 industry praise, copying, industry scepti-
cism, and licensing are secondary considerations. 741 Regarding a “teaching
away,” a court found that a prior art reference “taught away” from combining
references could alone defeat an obviousness claim.742 For commercial suc-

735 KSR Intern. Co. v. Teleflex Inc., 550 U.S. 398, 401, 415 (2007).
736 KSR Intern. Co. v. Teleflex Inc., 550 U.S. 398, 401, 420 (2007).
737 KSR Intern. Co. v. Teleflex Inc., 550 U.S. 398, 401, 421 (2007).
738 In re Piasecki, 745 F.2d 1468, 1471-72 (Fed. Cir. 1984).
739 MPEP § 2142; In re Dillon, 919 F.2d 688, 692-93 (Fed. Cir. 1990) (noting the
applicants can prevail this prima facie obviousness if they overcome it by providing
evidences).
740 Eli Lilly and Company v. Zenith Goldline Pharmaceuticals. Inc., 471 F.3d 1369,
1380 (Fed. Cir. 2006); In re Sullivan, 498 F.3d 1345, 1351 (Fed. Cir. 2007).
741 Transocean Offshore Deepwater Drilling, Inc. v. Maersk Drilling USA, Inc., 699
F.3d 1340 (Fed. Cir. 2012).
742 Alza Corp. v. Mylan Labs. Inc., 388 F. Supp. 2d 717, 738 (N.D. W. Va. 2005), aff’d,
464 F.3d 1286 (Fed. Cir. 2006).

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cess, the Federal Circuit declared that the presence of certain secondary
considerations of non-obviousness were not sufficient as a matter of law to
overcome its conclusion that the evidence supported only a legal conclusion
that claims would have been obvious.743
Recently, however, while referring to Stratoflex, Inc. v. Aeroquip
Corp,744 the Federal Circuit further held that the evidence of secondary con-
siderations must have been “considered as part of all the evidence, not just
when the decision maker remains in doubt after reviewing the art. Thus, in
order to determine obviousness, the decision maker must be able to consider
all four Graham factors.” 745

In Korea
If a person with ordinary skill in the art to which the invention pertains would
have easily been able to perceive the invention based on the prior art, the
patent shall not be granted for such an invention.746 To assess the inventive
step, one shall consider the overall state of the art, the purpose, technical
structure, and advantageous effects of the invention, while paying attention
to the opinion of the applicant, in consideration of its specific purpose and
effectiveness, and the difficulty of the technical structure of the claimed
invention. 747 The main factors to be considered are: (a) whether the prior
art provides any motivation to a person skilled in the art to reach the claimed
invention; (b) whether the difference between the prior art and the claimed
invention is considered as an exercise of ordinary creativity; and (c) whether
the claimed invention has any advantageous effects over the prior art. 748
Regarding the motivation to reach the claimed invention, the Korean Patent
Court held that to say the claimed invention could have been easily conceived
by the combination of the cited references, there should be a suggestion of
combination in the cited references.749

743 DyStar Textilfarben GmbH & Co. Deutschland KG v. C.H. Patrick Co., 464 F.3d
1356, 1371 (Fed. Cir. 2006).
744 Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1538-39 (Fed. Cir. 1983).
745 Transocean Offshore Deepwater Drilling, Inc. v. Maersk Drilling USA, Inc., 699
F.3d 1340, 1349 (Fed. Cir. 2012).
746 Korean Patent Act, 2012, Art. 29(2).
747 Examination Guidelines for Patent and Utility Model in Korea (“Korean Exami-
nation Guidelines”), January 2011, Ch3. 5.
748 Korean Examination Guidelines, January 2011, Ch3. 5.
749 Korean Patent Court/Kimchi fridge, 2002Heo8424, Sept. 04, 2003, para 2.Na.(3)
(Ba).

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Secondary considerations, such as teach away, long-felt but unmet need,

and commercial success, can be considered to assess the inventive step.750
However, while commercial success alone is not enough, it can be consid-
ered as indicative of the inventive step when the applicant proves that the
success was derived from the technical features of the invention.751 Based
on overwhelming commercial success, the Korean Patent Court found the
invention nonobvious once, because, in contrast to the prior inventions,
which failed to be commercialized or were withdrawn right after being on
the market, the product based on the claimed invention achieved commercial
success owing to the significant effects derived from the claimed inven-
tion.752 For the long-felt but unmet need, the Korean Patent Court held that
the claimed invention could not have been easily conceived from the cited
invention considering the fact that the claimed invention had not emerged
over eight years.753

3. Inventive step requirement for selection inventions

a) Species selection invention

In the EPO
The EPO Examination Guidelines provides an exemplary case when the
selections from the Markush formula are found to be obvious (a) if they are
neither described as having nor shown to possess any advantageous prop-
erties not possessed by the prior art examples; or (b) if they are described as
possessing advantageous properties compared with the compounds specifi-
cally referred to in the prior art, but these properties are ones which the person
skilled in the art would expect such compounds to possess, so that he is likely
to be led to make this selection.754 Once the selection of compounds is re-
garded as novel, then the compounds must show either the advantageous
properties over those not possessed by the prior art examples or unexpected
advantageous properties that were possessed by the prior art examples.

750 Korean Examination Guidelines, January 2011, Ch3. 8.

751 Korean Examination Guidelines, January 2011, Ch3. 8 (2).
752 Korean Patent Court/Kimchi fridge, 2002Heo8424, Sept. 04, 2003, para 2.Na.(3)
(Ba).
753 Korean Patent Court/A combining method, 98Heo8397, Apr. 23, 1999, para 3.Na.
754 EPO Examination Guidelines G-VII Annex 3.1.(iv.).

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In Germany
In Olanzapine decision, the BGH held that the claimed compound was not
obvious to the person skilled in the art over either the “Chakrabarti” docu-
ment or other prior art in any other manner.755 In this case, the BGH made
it clear that its position was not in line with the EPO’s way of determining
obviousness, in “only” applying the so-called “problem-solution ap-
proach,”756 which started from its fundamental step in identifying the “clos-
est prior art.” While disagreeing with the BPatG’s assumption that a person
skilled in the art would have chosen the Chakrabarti document first, the Court
stated that there was no such higher ranking of the “closest prior art” and
that only from a retrospective view did it become clear which prior publi-
cation came closest to the invention and how an inventor could have ap-
proached the problem to arrive at the solution according to the inven-
tion.757 It appears that the BGH was concerned about the risk of hindsight
if, as a starting point for the determination of an inventive step, one selected
the closet prior art. The Court also stated that the selection of the starting
point therefore required the justification that generally lay in the efforts of
a person skilled in the art to find a better solution for a specific purpose than
the known state of the art makes available.758
While elaborating the structure and activity relationship of the disclosed
compounds, the Court held that, since the “Chakrabarti” document taught
away or did not provide a skilled person the information, according to which
the further research appeared to be interesting or promising, it was not ob-
vious.759

In the United Kingdom

In the Patent Court of olanzapine case,760 Floyd J employed the structured
approach of the obviousness test developed in the Windsurfing v. Tabur

755 BGH/Olanzapine, IIC 2009, 596, 601.

756 See supra 707 and accompanying texts.
757 BGH/Olanzapine, IIC 2009, 596, 601.
758 BGH/Olanzapine, IIC 2009, 596, 601-602.
759 BGH/Olanzapine, GRUR 2009, 382, 387.
760 Dr Reddy's Laboratories (UK) Ltd v. Eli Lilly & Company Ltd [2008] EWHC 2345.

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IV. STANDARDS OF PATENTABILITY FOR PHARMACEUTICAL INVENTIONS

Marine case.761 He found the “skilled addressee” to be a team of scientists

with a particular interest in finding anti-psychotics led by a medicinal
chemist having access to other disciplines such as pharmacology and toxi-
cology,762 found “common general knowledge,” such as medicinal chem-
istry, including structure-activity-relationships, psychological disorders and
associated side effects,763 and held the patent was not obvious over all prior
arts argued.764 Considering that the determination of what a person skilled
in the art perceived at the filing date was crucial to judging obvious-
ness,765 this Court seems to start from the very basic element. In addition,
he found that “commercial success” is not helpful in deciding obviousness,
since that fact alone did not support obviousness if olanzapine was techni-
cally obvious.766 He emphasized that the commercial success was not be-
cause the third parties had not appreciated the advantages of olanzapine, but
because the basic patent covering olanzapine had prevented the manufacture
and sale of olanzapine.767
On appeal, Jacob LJ stated that the objection of obviousness could be
made where there was “no real technical advance” in the art, since the patent
monopoly could be justified by the technical contribution to the art.768 While
endorsing Jacob LJ’s position on this issue, Lord Neuberger noted that it

761 Windsurfing International Inc. v. Tabur Marine (GB) Ltd. R.P.C. 59 (1985). (4 step
tests to the obviousness: (1) (a) Identify the notional "person skilled in the art" (b)
Identify the relevant common general knowledge of that person; (2) Identify the
inventive concept of the claim in question or if that cannot readily be done, construe
it; (3) 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; (4) 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?").
762 Dr Reddy's Laboratories (UK) Ltd v. Eli Lilly & Company Ltd [2008] EWHC 2345,
para 140.
763 Dr Reddy's Laboratories (UK) Ltd v. Eli Lilly & Company Ltd [2008] EWHC 2345,
paras 141-148.
764 Dr Reddy's Laboratories (UK) Ltd v. Eli Lilly & Company Ltd [2008] EWHC 2345,
paras 149-184.
765 Spenner, 90 J. Pat. & Trademark Off. Soc’y, 477, 477 (2008).
766 Dr Reddy's Laboratories (UK) Ltd v. Eli Lilly & Company Ltd [2008] EWHC 2345,
para 185.
767 Dr Reddy's Laboratories (UK) Ltd v. Eli Lilly & Company Ltd [2008] EWHC 2345,
para 186.
768 Dr Reddy’s Laboratories Ltd v. Eli Lilly & Company Ltd, [2009] EWCA Civ 1362,
paras 40-52.

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 B. Inventive step / Non-obviousness

should be asked whether the selection was arbitrary or whether the teaching
of prior art established that the selection achieved “a particular technical
result.”769 If there was no technical advance, it was just an arbitrary selection
that was obvious. However, since olanzapine provided its superior thera-
peutic effect to the prior art, and selection from almost millions of com-
pounds could not be regarded as random,770 it was nonobvious over the prior
art.

In the United States

In the Olanzapine case, the Federal Circuit held that several prior art refer-
ences, in fact, taught away from exploring the compounds that did not pos-
sess an electron-withdrawing group in one benzene ring, because olanzapine
has exactly one hydrogen atom, which was an electron-withdrawing
group.771 While the Court recognized the structural similarity with a com-
pound that has an ethyl group (“ethyl-olanzapine”) instead of a “methyl”
group of olanzapine, the Court noted that patentability for a chemical com-
pound did not depend only on structural similarity, but also accounted for
the unexpected beneficial significant properties that might render the inven-
tion nonobvious.772 After Rader J noted the similarity with the case of
Yamanouchi Pharm. Co., Ltd. v. Danbury Pharmacal, Inc., 773 he stated that
the defendants did not sufficiently show the motivation for a person skilled
in the art to select the above “ethyl-olanzapine” as a lead compound that did
not contain an electron-withdrawing group.774 This analogy is interesting,
since, in Yamanouchi, an entire complex combination was required, select-
ing and combining separate parts of two embodiments followed by further

769 Dr Reddy’s Laboratories Ltd v. Eli Lilly & Company Ltd, [2009] EWCA Civ 1362,
para 109.
770 Dr Reddy’s Laboratories Ltd v. Eli Lilly & Company Ltd, [2009] EWCA
Civ 1362, paras 54-57, 98-101, 109-115.
771 Eli Lilly and Company v. Zenith Goldline Pharmaceuticals. Inc., 471 F.3d 1369,
1378 (Fed. Cir. 2006).
772 Eli Lilly and Company v. Zenith Goldline Pharmaceuticals. Inc., 471 F.3d 1369,
1378-80 (Fed. Cir. 2006).
773 Yamanouchi Pharm. Co., Ltd. v. Danbury Pharmacal, Inc., 231 F.3d 1339, 1344
(Fed. Cir. 2000) (holding that [The ANDA filer] did not show sufficient motivation
for person skilled in the art at the time of invention to take any necessary steps to
reach the patented invention from the prior arts).
774 Eli Lilly and Company v. Zenith Goldline Pharmaceuticals. Inc., 471 F.3d 1369,
1378-79 (Fed. Cir. 2006).

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chemical reactions to produce the patented compound. However, there was

only a single difference between the compounds in the prior art (ethyl group)
and that in the patent at issue (methyl group) in the Olanzapine case. While
citing Yamanouchi again, he stated that to make obvious the combination as
a whole was not the mere identification in the prior art of each component,
but rather a motivation to select the reference and to combine them in the
particular claimed manner to reach the claimed invention.775 The Court held
that it was not obvious based on the above “teaching away” and extensive
“secondary considerations of non-obviousness” such as (i) a long-felt and
unmet need; (ii) failure of others; (iii) industry acclaim; and (iv) unexpected
results.
The size of the genus has special impacts on the finite obvious to try case;
where there is a finite number of possibilities from which to start, a technique
that is within the grasp of the person skilled in the art is used to modify the
prior art to arrive at the claimed invention, and the results are not unexpected,
then the invention is obvious.776 In Pfizer v. Apotex, a prior patent claimed
amlodipine and its pharmaceutically acceptable salts, disclosed maleate as
the best salts, but did not explicitly disclose besylate.777 A later patent ap-
plication claiming amlodipine besylate salt was rejected on the basis of a
reasonable expectation of success over the above prior patent in combination
with the Berge reference that disclosed fifty-three FDA-approved, commer-
cially marketed anions that were useful for making pharmaceutically-ac-
ceptable salts and included besylate.778 The Court found the fact that there
were a limited number of choices to start from, and a reasonable probability

775 Eli Lilly and Company v. Zenith Goldline Pharmaceuticals. Inc., 471 F.3d 1369,
1379 (Fed. Cir. 2006).
776 See Spenner, 90 J. Pat. & Trademark Off. Soc’y, 477, 510 (2008).
777 Pfizer, Inc. v. Apotex, Inc, 480 F.3d 1348, 1353 (Fed. Cir. 2007), reh’g denied, 488
F.3d 1377 (Fed. Cir. 2007), cert. denied 552 U.S. 941 (2007).
778 Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1355 (Fed. Cir. 2007) reh’g denied, 488
F.3d 1377, 1383-84 (Fed. Cir. 2007) (This denial of rehearing en banc decision was
not unanimous, i.e., Judges Newman, Lourie, and Rader wrote their own dissents.
Regarding the “obvious to try” analysis, Judge Rader stated that since a salt selection
was unpredictable, there would not have been a reasonable expectation of success.).

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of success to make the salt, prevented its unexpected results from rebutting
the prima facie obviousness.779

In Korea
In August, 2012, the Korean Supreme Court upheld the validity of Eli Lilly's
patent on olanzapine.780 The Supreme Court reiterated that for the inventive
step of a selection invention not to be denied, all specific concepts in the
selection invention must exhibit qualitatively different or qualitatively the
same but quantitatively superior effects over the prior invention, and that
these effects should be clearly disclosed in the specification of the selection
invention patent by either a description of qualitative differences or data
supporting any quantitative advantages.781 The Supreme Court did not ac-
knowledge the therapeutic superiority of olanzapine over prior art, since the
superiority of parameters comparing the therapeutic effects thereof were not
consistent.782 Based on the description of the patent specification regarding
the avoidance of side effects,783 however, the Supreme Court held that such
effects were qualitatively different, since these were not disclosed in the prior
art, and a person skilled in the art could not anticipate from the prior art that
olanzapine would have such effects.784 Further, the Supreme Court noted
that where a selection invention had multiple effects, the selection invention
could be recognized as showing qualitatively different effects compared to
a prior art, even if only a part of the effects of the selection invention, not
all of the effects, was recognized as being qualitatively different or quanti-
tatively remarkable compared to the prior art.785

779 Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1372 (Fed. Cir. 2007) reh’g denied, cert.
denied (holding “even if Pfizer showed that amlodipine besylate exhibits unex-
pectedly superior results, this secondary consideration does not overcome the strong
showing of obviousness in this case.”).
780 Korean Supreme Court/Olanzapine, 2010Hu3424, Aug. 23, 2012 (this was the first
case to upheld the validity of a selection invention).
781 Korean Supreme Court/Olanzapine, 2010Hu3424, Aug. 23, 2012, para 1.
782 Korean Supreme Court/Olanzapine, 2010Hu3424, Aug. 23, 2012, para 2.Na.
783 Korean Patent No. 195566, 11-3 (noting "[i]n dog toxicity studies with a closely
analogous compound (ethyl olanzapine), at a dosage of 8 mg/kg, it was observed
that four out of eight dogs showed a significant rise in cholesterol levels, whereas
the compound of the present invention (olanzapine) did not show any rise in choles-
terol levels.").
784 Korean Supreme Court/Olanzapine, 2010Hu3424, Aug. 23, 2012, para 2.Da.
785 Korean Supreme Court/Olanzapine, 2010Hu3424, Aug. 23, 2012, para 2.Ra.

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b) Optical isomers

Considering that the novelty of the optical isomer is not negated by the earlier
disclosure of disclosed racemate, the patentability of this invention would
more likely hinge on the question of the inventive step. To establish the
inventive step, the inventor should show that the optical isomer has surpris-
ingly superior properties in comparison with the known racemate.786 One
may recall that the existence of the chiral center means the existence of
optically active forms, and it is generally recognized that one optical isomer
normally has higher activity than the others.787

In the EPO
Initially BOA found the invention of a mixture containing at least 80% of
one of two enantiomers novel over the prior art disclosing a mixture of two
enantiomers containing 50% of each. However, BOA found it lacking an
inventive step.788 The Board noted that test of different ratios of mixture to
analyze their effects was a routine procedure.789
“Long before the contested patent´s priority date, it was generally known to
specialists that, in physiologically active substances (e.g. herbicides, fungicides,
insecticides and growth regulators, but also pharmaceuticals and foodstuffs)
with an asymmetrical carbon atom enabling them to occur in the form of a
racemate or one of two enantiomers, one of the latter frequently has a quanti-
tatively greater effect than the other or than the racemate. If – as here - the aim
is therefore to develop agents with increased physiological activity from a phys-
iologically active racemate the obvious first step - before any thought is given,
say, to synthesizing structurally modified products - is to produce the two enan-
tiomers in isolation and test whether one or the other is more active than the
racemate. Such tests are routine. Under established Board case law, an enhan-
ced effect cannot be adduced as evidence of inventive step if it emerges from
obvious tests. Since, in the present case, tests with the enantiomers were obvious
in view of the task at hand, discovery of the claimed effect of the D-enantiomers

786 Grubb/Thomsen, 2010, 236.

787 See e.g., Forest Labs., Inc. v. Ivax Pharms., Inc., 501 F.3d 1263, 1269 (Fed. Cir.
2007) (Forest’s argument: “the general expectation in the art that one enantiomer
would be more potent than the other provided reason for a person of ordinary skill
in the art to isolate the enantiomers” ).
788 Hoechst/Enantiomers, T296/87, OJ EPO 1990, 195, 206, 209.
789 Hoechst/Enantiomers, T296/87, OJ EPO 1990, 195, 206, 209.

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compared with corresponding racemates does not involve an inventive step.” 790
[Emphasis added]
Ten years later in T 229/97,791 however, the Board held that a patent on hemi-
calcium salt of R-enantiomer of atorvastatin (Lipitor®)792 involved an in-
ventive step over the prior patent claiming sodium salt of the racemate of
atorvastatin.793 Based on the experimental evidence of favourable handling
properties of a claimed invention submitted just one month before the appeal
hearing, the Board held that i) the problem to solve was providing a hypoc-
holesterolemic compound having improved handling properties, i.e. im-
proved hygroscopicity and solubility, and that ii) the closest prior art gave
no hint of how to solve the problem nor any incentive to modify those salts
of the racemates in the hemicalcium salt of the particular R-enantiomer.
Thus, the claimed invention involved the inventive step.794 However, the
original patent specification as filed did not mention either the problem of
handling the substance nor the solution thereof, i.e. the evidence showed a
radically different problem and solution disclosed by the original patent
specification. As Pumfrey J noted, this reformulation of the problem i.e. the
better handleability of calcium salt of atorvastatin over the sodium salt, could
provide a substantial risk that would lead to a finding of non-obviousness
based on the later discovered advantages.795

In Germany
In the Atorvastatin decision in 2007, after holding that claims 1 to 3 directed
to product invention were not novel,796 the BPatG held that claim 4 directed
to the process to produce atorvastatin did not involve the inventive step, since
a person skilled in the art would have been able to manufacture it according
to the method described in the prior art.797

790 Hoechst/Enantiomers, T296/87, OJ EPO 1990, 195, 206, 209.

791 Warner-Lambert/Atorvastatin, T 0229/97 (2000).
792 EP No. 0,409,281 (October 31, 2001, under the title of “(R-(R*R*))-2-(4-fluo-
rophenyl)-beta,delta-dihydroxy-5-(1-methylethyl-3-phenyl-4((phenylamino)-car-
bonyl)-1H-pyrrole-1-heptanoic acid, its lactone form and salts thereof”).
793 U.S. Patent No. 4,681,893 (July 21, 1987, under the title of “Trans-6-[2-(3- or 4-
carboxamido-substituted pyrrol-1-yl)alkyl]-4-hydroxypyran-2-one inhibitors of
cholesterol synthesis”).
794 Warner-Lambert/Atorvastatin, T229/97 (2000), paras 4.2.-4.7.
795 Ranbaxy UK & Anor v. Warner-Lambert [2005] EWHC 2142, para 71.
796 See supra 589 -594 and accompanying texts.
797 BPatG/Atorvastatin, BeckRS 2007, 18183, para II.4.

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In the Escitalopram decision, the BPatG held that it was obvious to resort
to the method of chiral chromatography to separate the enantiomers.798 The
BGH agreed with the BPatG in that a person skilled in the art had reason as
of the date of priority to attempt to produce or isolate the citalopram’s enan-
tiomers, since it was known that one enantiomer can have a better effect and
another might have the opposite or a side effect.799 However, based on the
fact that there was no obvious way to obtain the escitalopram as of the date
of priority, that it was not certain which way would provide an industrially
useful scale production, that there was not enough motivation to choose the
method, that there was uncertain expectation of success, and that there were
many failures to separate it, the Court held that the invention was not obvi-
ous.800 All of the reasoning was directed to the difficulty of the method in
separating escitalopram, and it was the precisely reason for finding that the
escitalopram was “novel.”

In the United Kingdom

The differences from the EPO approach were drawn into sharp focus in the
Ranbaxy v. Warner-Lambert case. In this case, the Patent Court found that
a patent relating to the hemi-calcium salt of atorvastatin (Lipitor®) was in-
valid for the lack of obviousness.801 This contrasted markedly with an earlier
decision of the EPO’s Technical Board (T 229/97), in which the same patent
was found to involve an inventive step over an equivalent piece of prior
art.802 The Court noted the following: i) by 1989 resolution of racemates
with pharmaceutical activity was well established; ii) for the family of
statins, the skilled person would have known that the activity would reside
in a specific enantiomer; iii) the salts would likely be more soluble than the
free acid; and iv) testing the properties of salts was standard practice.803 The
Court also held that the difference between the claimed invention and the
prior art was most certainly obvious, since the resolution of the racemate
was common general knowledge, and the seven salts were specifically de-
scribed including calcium.804 The Court further explained that, according to

798 BPatG/Escitalopram, BeckRS 2007, 14624, para II.1.b).

799 BGH/Escitalopram, GRUR 2010, 123, 126.
800 BGH/Escitalopram, GRUR 2010, 123, 127-130.
801 Ranbaxy UK & Anor v. Warner-Lambert [2005] EWHC 2142.
802 See supra 791 -794 and accompanying texts.
803 Ranbaxy (UK) v. Warner-Lambert [2006] EWCA Civ 876, paras 55-57.
804 Ranbaxy (UK) v. Warner-Lambert [2006] EWCA Civ 876, para 62.

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the IG Farbenindustrie AG’s Patents case, although the selection of a single

element having advantageous properties from a class was possible, the prior
disclosure had to be a disclosure of a class rather than a disclosure of the
individual members of that class.805 In the appeal, the Court noted that it was
unnecessary to consider the obviousness point.806
However, in Lundbeck v. Generics Ltd., a patent for an enantiomer (esc-
italopram) of the known drug citalopram was held valid. Before the Court
of Appeal, whether the so-called amino diol route for resolving the racemate
would have been obvious was an issue.807 Lord Hoffmann stated that the
Court might reverse the trial judge’s finding when the error of principle
occurred, because the judge failed to consider whether it was obvious for the
skilled person to try the reaction to see if it worked, as in the Biogen808
case.809 While stating that Kitchin J applied the state of the law correctly to
the facts of this case, Lord Hoffmann rejected the obviousness argument.
Jacob LJ rejected the plaintiff’s argument that a person skilled in the art could
have come to the invention by doing a short and simple experiment, stating
that, by itself, it was insufficient, as one could say that “with hindsight” of
many inventions, and as it was not enough motivation for a skilled person
to carry it out. Therefore, the invention was not obvious.
On appeal, the obviousness was not a major issue before the House of
Lords, since the attack based on obviousness failed in both courts below. On
the other hand, Lord Neuberger summarized basic knowledge that had long
been known about enantiomers as follows: i) Two enantiomers could have
different properties from each other; ii) a racemate’s therapeutic effect might
be mainly dependent on one enantiomer; iii) the other enantiomer might have
toxic or side effects; iv) the only way to tell which one had which effect was
to separate one from another and to compare; v) however, that was not pos-
sible to predict yet.810 He continued that the notion to obtain a pure thera-
peutic form from a racemate was obvious, but to obtain a pure form was not
obvious, and it was particularly difficult to separate (S)-citalopram from the

805 Ranbaxy (UK) v. Warner-Lambert [2006] EWCA Civ 876, para 63.
806 Ranbaxy (UK) v. Warner-Lambert [2006] EWCA Civ 876, para 32.
807 Lundbeck v. Generics Ltd. [2008] EWCA Civ 311, para 14.
808 Biogen Inc v. Medeva Plc [1996] UKHL 18.
809 Lundbeck v. Generics Ltd. [2008] EWCA Civ 311, para 23.
810 Generics Ltd. v Lundbeck [2009] UKHL 12, para 61.

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IV. STANDARDS OF PATENTABILITY FOR PHARMACEUTICAL INVENTIONS

racemate.811 The difficulty of separating the racemates again seemed to be

weighted to determine obviousness.
After this Escitalopram case, the Court of Appeal again held that an
enantiomer of ofloxacin, i.e. Levofloxacin, was not obvious over a prior art
disclosing the method of producing other compounds having the same core
structure as ofloxacin.812 Specifically, Jacob LJ held:
“I am not sorry to reach this conclusion. Daiichi’s work led to a better medicine
than ofloxacin. Levofloxacin is not just twice as active as ofloxacin (which
might have been expected) but is a lot more soluble and less toxic than was
predictable. It can be used in higher dosages than might have been expected
with corresponding medical benefit.”813

In the United States

Unlike the Levofloxacin case in the United Kingdom where the equivalent
prior art was found not to provide enough motivation to resolve the lev-
ofloxacin, the Ortho-McNeil Court found that the prior art provided ample
motivation to separate optical isomers of the racemate in question.814 How-
ever, the Court held that, even though the prior art enabled the production
of enantiomer and provided enough motivation, the patent was not invalid,
since there was no evidence showing that the improved result was reasonably
expected in light of secondary considerations.815 Simply put, the prima fa-
cie obviousness that was established by enabling the difficult way of pro-
duction was rebutted based on its unexpected effect.816
The Atorvastatin case in the United States was somewhat simpler. In Pfi-
zer, Inc. v. Ranbaxy, the Federal Circuit held that one claim at issue over
Atorvastatin was invalid for failure to satisfy 35 U.S.C. § 112 and remanded

811 Generics Ltd. v Lundbeck [2009] UKHL 12, paras 61-65.

812 Generics (UK) Ltd v. Daiichi Pharmaceutical [2009] EWCA Civ 646, paras 30-44.
813 Generics (UK) Ltd v. Daiichi Pharmaceutical [2009] EWCA Civ 646, para 45.
814 Ortho-McNeil Pharm., Inc. v. Mylan Labs., Inc., 348 F. Supp. 2d 713, 752
(N.D.W.Va. 2004), aff’d, 161 Fed.Appx. 944 (quoting a part of the book “[W]ith
the development of synthesis methods via stereoselection and improvement in the
analytical methods of optical isomers in the recent years, many came to believe that
only one of the enantiomers is the important substance and that the other one is, if
bluntly said, almost an impure substance.”).
815 Ortho-McNeil Pharm., Inc. v. Mylan Labs., Inc., 348 F. Supp. 2d 713, 752-62
(N.D.W.Va. 2004), aff’d, 161 Fed.Appx. 944.
816 Ortho-McNeil Pharm., Inc. v. Mylan Labs., Inc., 348 F. Supp. 2d 713, 754
(N.D.W.Va. 2004), aff’d, 161 Fed.Appx. 944 (noting “levofloxacin is pharmaceu-
tically superior to ofloxacin in virtually every relevant aspect”).

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the case to the District Court.817 However, since Pfizer sought to reissue the
patent at issue to correct the above error and provided Ranbaxy with a con-
venant not to sue Ranbaxy on all remaining claims of the original
patent,818 and since the patent was unenforceable, the District Court dis-
missed this allegation.819
In Forest Labs. v. Ivax Pharms., the District Court found that the alleged
prior art did not provide a reasonable expectation of success of obtaining the
enantiomer (escitalopram) for similar reasons to those that supported a find-
ing of enablement regarding the same prior art.820 The Court further found
that one of ordinary skill in the art at the time of the invention would generally
have been motivated to develop new compounds rather than undertake the
difficult and unpredictable task of resolving a known racemate.821 In the
appeal, the Federal Circuit noted that Ivax emphasized only the evidence
that was favorable to its desired outcome without addressing the evidence
favorable to Forest, such as the failure of the inventors to resolve citalopram
without undue experiments, and so on,822 and concluded that it was not ob-
vious to the person skilled in the art. Considering that this decision was
rendered several months after KSR, the decision is interesting, because the
Federal Circuit did not consider more than the ordinary view regarding ob-
viousness while relying on the District Court’s finding based on Graham v.
John Deere Co.
One week after the Escitalopram decision, the Federal Circuit answered
the same question, i.e. whether the one stereoisomer of Ramipril with five
chiral centers, 5(S) Ramipril was obvious over its prior racemate. 823 While
quoting the KSR decision, the Federal Circuit reasoned that requiring an
explicit teaching to purify the 5(S) stereoisomer was precisely the sort of
rigid application of the TSM test that was criticized in KSR.824 The Federal

817 Pfizer, Inc. v. Ranbaxy Laboratories Ltd., 457 F.3d 1284, 1291-92 (Fed. Cir. 2006).
818 Pfizer, Inc. v. Ranbaxy Laboratories, Ltd., 525 F.Supp.2d 680, 684 (D.Del.,2007).
819 Pfizer, Inc. v. Ranbaxy Laboratories, Ltd., 525 F.Supp.2d 680, 685 (D.Del.,2007).
820 Forest Labs., Inc. v. Ivax Pharms., Inc., 501 F.3d 1263, 1267 (Fed. Cir. 2007).
821 Forest Labs., Inc. v. Ivax Pharms., Inc., 501 F.3d 1263, 1267 (Fed. Cir. 2007);
contra BGH/Escitalopram, GRUR 2010, 123, 126; contra Darrow, 2 Stan. Tech.
L. Rev. 1 paras 21 and 39 (2007).
822 Forest Labs., Inc. v. Ivax Pharms., Inc., 501 F.3d 1263, 1268 (Fed. Cir. 2007).
823 Aventis Pharma Deutschland GmbH v. Lupin, Ltd., 499 F.3d 1293, 1300 (Fed. Cir.
2007).
824 Aventis Pharma Deutschland GmbH v. Lupin, Ltd., 499 F.3d 1293, 1301 (Fed. Cir.
2007).

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Circuit found that the prior art motivated a person skilled in the art to isolate
5(S) Ramipril and taught how to do so, based on the facts (i) that one ther-
apeutically active racemate contained only two enantiomers, namely SSSSS
and SSSSR,825 (ii) that the person skilled in the art would have reasons to
believe that the mixture derived properties from particular components of
the compound,826 and (iii) that the prior art taught that the stereoisomers of
ramipril “can be separated by conventional chromatographic or fractional
crystallization methods.” 827 The Federal Circuit also held that there was no
evidence that separating 5(S) Ramipril from the above therapeutically active
racemate was beyond the capability of a person skilled in the art and the
patentee failed to prove unexpected results over the above mixture, since the
potency of an isomer precisely varied with the absolute amount of the isomer
in the racemate.828
In Sanofi-Synthelabo v. Apotex, Inc., experts testified about the degree
and kind of stereoselectivity of a selected enantiomer, i.e. a situation where
one enantiomer having biological activity and the other having toxicity was
rare and could not have been predicted, since usually if one enantiomer has
better biological activity than the other, that activity also includes the adverse
as well as the beneficial properties.829 The Federal Circuit held that these
unexpected and unpredictable properties of Clopidogrel would not be what
one would have expected in the Ramipril case.830 In response to the argument
that potential regulatory pressure for the separation of enantiomers would
have motivated to resolve the racemate, the Court found that the resolution
was undertaken not because of the potential regulation but because of the
purpose to study the adverse neurological effects.831

825 This seems to be similar to the situation one enantiomer was selected from a race-
mate with one chiral center.
826 Prior art provided the molecules with close structural relationship to Ramipril, such
as enalapril or captopril were more active in the (S) form.
827 Aventis Pharma Deutschland GmbH v. Lupin, Ltd., 499 F.3d 1293, 1302 (Fed. Cir.
2007).
828 Aventis Pharma Deutschland GmbH v. Lupin, Ltd., 499 F.3d 1293, 1302 (Fed. Cir.
2007).
829 Sanofi-Synthelabo v. Apotex, Inc., 550 F.3d 1075, 1081 (Fed. Cir. 2008).
830 Sanofi-Synthelabo v. Apotex, Inc., 550 F.3d 1075, 1089 (Fed. Cir. 2008); see Aventis
Pharma Deutschland GmbH v. Lupin, Ltd., 499 F.3d 1293, 1302 (Fed. Cir. 2007)
(holding that the ramipril isomer’s potency was “precisely what one would expect,
as compared to a mixture containing other, inert or near-inert stereoisomers.’’).
831 Sanofi-Synthelabo v. Apotex, Inc., 550 F.3d 1075, 1089-90 (Fed. Cir. 2008).

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Even though the motivation to resolve the racemate could be found and
the separation method in general may be known, particular enantiomers may
not be obvious, since various factors, including the obviousness of the res-
olution method, may play a role in determining obviousness.832

In Korea
With regard to obviousness in the Clopidogrel decision, 833 the Supreme
Court held that, for the inventive step not to be denied, all specific concepts
in the selection invention must show effects that are qualitatively different
or qualitatively same but quantitatively superior to those of the prior inven-
tion,834 and these effects should be clearly disclosed in the specification of
the selection invention by either a description of qualitative differences or
data supporting any quantitative advantages.835 The Court further noted that
a two-fold superiority in platelet aggregation inhibition or around 1.6-fold
superiority in acute toxicity to the racemate in the prior art could not be
regarded as superior considering that the administration of one enantiomer
yielded approximately 2-fold better effects than that of a racemate, which is
a 50:50 mixture of enantiomers.836
In the Atorvastatin decision, the Supreme Court determined that the enan-
tiomer invention was also obvious, since, even under the consideration of
hygroscopicity or solubility, which were argued by the patentee, there was
no special disclosure in the specification which could show any qualitatively
different or qualitatively identical but quantitatively superior effects.837

c) Crystalline forms

The systematic investigation of a compound to determine whether it is prone

to polymorphism as well as the nature of polymorphism is routine practice

832 Spenner, 90 J. Pat. & Trademark Off. Soc’y, 477, 487-88 (2008).
833 Korean Supreme Court/Clopidogrel, 2008Hu736 & 2008Hu743, Oct. 15, 2009.
834 This requirement seems to be similar to those of I.G. Rule in U.K.
835 Korean Supreme Court/Clopidogrel, 2008Hu736 & 2008Hu743, Oct. 15, 2009,
Headnote 2.
836 Korean Supreme Court/Clopidogrel, 2008Hu736 & 2008Hu743, Oct. 15, 2009,
para 2.Na.
837 Korean Supreme Court/Atorvastatin, 2008Hu3469, Mar. 25, 2010, para 2. Na.

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IV. STANDARDS OF PATENTABILITY FOR PHARMACEUTICAL INVENTIONS

in pharmaceutical pre-formulation studies.838 This understanding forms the

part of the common general knowledge in the art.

In the EPO
In T 51/97, where an issue was whether one crystalline form of a compound
established its inventive step over another modified form of the same com-
pound, the Board held that it was obvious over the combination of the closest
prior art which was acknowledged in the specification of the patent in suit
and another prior art which indicated the incentives and a concrete hint as
to how to solve the dispersion instability at high temperatures.839 The Board
further held that it was not necessary to establish that the success of a solution
of a technical problem was predictable with certainty; it was sufficient to
establish that the skilled person would have done so with a reasonable ex-
pectation of success. 840
One recent Technical BOA decision that attracted considerable attention
in the pharmaceutical industry was T 777/08, where crystal forms II and IV
of atorvastatin were claimed, and two closest prior arts each disclosing
amorphous forms of atorvastatin were identified.841 After explaining the
common knowledge at the priority date of the patent in suit [in 1995],842 the
Board held that, in the absence of any technical prejudice, the mere provision
of a crystalline form of a known pharmaceutically active compound could
not be regarded as involving an inventive step.843 The Board further held as
follows:
“[I]n view of his general knowledge, as reflected in this excerpt from [another
prior art], the skilled person, starting from the amorphous form of a pharma-
ceutically active compound as closest prior art, would have a clear expectation
that a crystalline form thereof would provide a solution to the problem [to pro-

838 Caira, 1998, 165.

839 Nippon/Crystalline dye, T 0051/97 (2000), points 2.6. and 2.7.
840 Nippon/Crystalline dye, T 0051/97 (2000), point 2.7.3.
841 Warner-Lambert/Atorvastatin polymorphs, T 0777/08 (2011).
842 Warner-Lambert/Atorvastatin polymorphs, T 0777/08 (2011), Headnote 1 (“At the
priority date of the patent in suit, the skilled person in the field of pharmaceutical
drug development would have been aware of the fact that instances of polymor-
phism were commonplace in molecules of interest to the pharmaceutical industry,
and have known it to be advisable to screen for polymorphs early on in the drug
development process. Moreover, he would be familiar with routine methods of
screening.”).
843 Warner-Lambert/Atorvastatin polymorphs, T 0777/08 (2011), point 5.2.

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vide atorvastatin in a form having improved filterability and drying character-

istic]. Although this might not be true of every crystalline form obtained [ex-
amples], it was nevertheless obvious to try this avenue with a reasonable ex-
pectation of success without involving any inventive ingenuity. […] [A]n arbi-
trary selection from a group of equally suitable candidates cannot be viewed as
involving an inventive step.”844
Thus, it must be expected that the inventiveness of a new polymorph can be
acknowledged only if it is associated with an unexpected pharmaceutical
activity, while improved physical and/or physicochemical properties will
not be sufficient. As the Board also noted, one should not overlook the fact
that it is not always the case that every single polymorph provides improved
characteristics. As McCrone famously noted in 1965, “[…] every compound
has different polymorphic forms and that, in general, the number of forms
known for a given compound is proportional to the time and money spent in
research on that compound.”845

In the United Kingdom

In the case on a crystal form of Paroxetine methansulphonate, obviousness
was not the issue.846 In another case on a crystal form of t-butylamine salt
of perindopril, the Court of Appeal held that the claim on the process to
produce the crystal form, i.e. a solution “is heated at reflux and is then cooled
gradually until crystallisation is complete,” which differed from the prior art
procedure only in the qualification “gradually,” was obvious over the prior
art.847
In Leo Pharma v. Sandoz, where a single crystalline form of Calcipotri-
ol848 monohydrate which was said to have superior stability and technical
properties useful in the manufacture of suspension formulations, the inven-
tive step of claimed crystalline form over the prior art disclosed anhydrous
form of crystalline calcipotriol was one of the issues in the appeal.849 The
Court found this case unusual, since Sandoz argues that the skilled person

844 Warner-Lambert/Atorvastatin polymorphs, T 0777/08 (2011), point 5.2.

845 Cited in Bernstein, 2002, 9; indeed there are a good number of companies who are
specialized in polymorph screening, such as Analytics-Pharm, Poly Crystal Line,
Crystal Pharmatech, Avantium and the like.
846 Synthon BV v. SmithKline Beecham plc [2005] UKHL 59.
847 Laboratoires Servier v. Apotex [2008] EWCA Civ 445, paras 13-20 (a case about
the novelty of one crystal form of the t-butylamine salt of perindopril).
848 Calcipotriol is a Vitamin D3 analogue.
849 Leo Pharma v. Sandoz Ltd [2009] EWCA Civ 1188.

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would, using his technical knowledge, have come across the invention
(namely the hydrate and its beneficial technical properties) without any ex-
pectation of successfully finding a better product.850 Sandoz argues that,
given the instructions disclosed in the prior art for an aqueous suspension
cream containing calcipotriol, it was obvious to find and use calcipotriol
monohydrate. The Court of Appeal considered the four different approaches
argued by Sandoz against the finding of non-obviousness,851 but held in each
case that the lower court’s conclusion could not be faulted. The Court further
held that it was not universal practice to conduct a polymorph screen and
that a skilled team would not regard such a screen as mandatory.852 The Court
held that the demand of the regulatory authorities could not be equated to
knowledge of the person skilled in the art.853 The Court held that it was not
obvious to use the screen and so to find the hydrate as a part of a routine
check in the course of stability studies or in anticipation of a regulatory
requires, since it was not proven that the above investigation would reveal
the hydrate.854 The Court of Appeal further held that, although the wet-
milling855 was accepted at first instance to be an obvious variant to dry
milling, as the hydrate would have been produced only 50% of the time, the
lower court was correct to conclude that it did not make the hydrate obvi-
ous.856 The Court of Appeal also rejected the argument that routine crys-
tallisation experiments would have produced the hydrate, since the nature

850 Leo Pharma v. Sandoz Ltd [2009] EWCA Civ 1188, para 9.
851 Leo Pharma v. Sandoz Ltd [2009] EWCA Civ 1188, para 11 ((i) obviousness over
the acne use patent because it was obvious to conduct a full polymorph screen,
during which the monohydrate and its properties would have been discovered; (ii)
obviousness over the acne use patent because a product screen would have revealed
the monohydrate and its technical properties; (iii) obviousness over the acne use
patent because wet milling instead of dry milling would have produced the mono-
hydrate and its technical properties would have then been revealed; (iv) obviousness
in the light of common general knowledge alone because experiments into crys-
tallisation would have revealed the monohydrate and its technical properties.).
852 Leo Pharma v. Sandoz Ltd [2009] EWCA Civ 1188, paras 51-63; contra Warner-
Lambert/Atorvastatin polymorphs, T 0777/08 (2011), point 5.2. (noting it was the
routine tasks of the skilled person involved in the field of drug development to
screen for solid-state forms of a drug substance); contra McCrone, cited in Bern-
stein, 2002, 9.
853 Leo Pharma v. Sandoz Ltd [2009] EWCA Civ 1188, para 54.
854 Leo Pharma v. Sandoz Ltd [2009] EWCA Civ 1188, paras 64-68.
855 Milling is one of the most efficient methods of producing small particle size. And
wet milling is a process in which the substance is steeped in water.
856 Leo Pharma v. Sandoz Ltd [2009] EWCA Civ 1188, paras 69-71.

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 B. Inventive step / Non-obviousness

of the experimental programme was neither established nor sufficiently de-

fined to enable a conclusion as to what it would have uncovered.857
The problem with each approach outlined by Sandoz was that the skilled
person would not have necessarily had any expectation of finding calcipotri-
ol monohydrate. On the one hand, all approaches pursued by Sandoz were
essentially plausible; on the other hand, a non-obviousness challenge based
on “obvious to try” must have a fair expectation of success for the skilled
person. The British courts seem to require a relatively high standard for a
non-obviousness case based on “obvious to try.”

In Germany
Unlike the British case, where it was mainly argued that the way to make
monohydrates was part of the common knowledge of a skilled person, the
same prior arts disclosing three other Vt. D3 monohydrates were used as
main references to challenge the inventive step of the claimed crystalline
form of calcipotriol mononhydrate. Figure 8 presents the respective struc-
tures of three other Vt D3 analogues and Calcipotriol.

Figure 8: The structures of Vt D3 analogues and Calcipotriol

The BGH held that, in the assessment of inventive step, the question of
whether the skilled person had an incentive to adopt the measurement de-
scribed in the prior art and to apply a known scheme to a known subject
matter grew in importance depending on whether the skilled person could
reasonably expect to succeed this way in solving the technical problem.858
The BGH further held that these requirements were fulfilled in this case,

857 Leo Pharma v. Sandoz Ltd [2009] EWCA Civ 1188, paras 73-76.
858 BGH/Calcipotriol-Monohydrat, GRUR 2012, 803, 807.

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since, based on those three prior arts, the skilled person had the incentive to
adopt the described measurement – solution of the solid in organic solvent
with the addition of water – and to apply it to the Calcipotriol; consequently,
he could have obtained the calcipotriol monohydrate.859 The implementation
of these measurements would have been with a view to the structurally re-
lated Vt. D analogues in the prior art and a possible similar reaction of cal-
cipotriol coupled to the reasonable expectation of success; moreover, the
effort to be introduced – use of organic solvents and water – in relation to
an expected result was to be proportionate.860

In the United States

Obviousness was not the issue in either Abbott Laboratories v. Geneva
Pharmaceuticals861 or SmithKlein Beecham v. Apotex.862

In Korea
The Supreme Court reiterated the inventive step requirement for crystalline
form as follows:
“It is well-known in the field of pharmaceutical compounds that the same com-
pounds may have various crystalline forms and that the pharmaceutical prop-
erties thereof, such as solubility, stability, etc., may vary. Thus, prior to design-
ing a preparation method of a compound, it is common to first confirm the
existence of polymorphism of the compound. Accordingly, an invention for a
compound having a specific crystalline form, which is different from a com-
pound disclosed in the prior art only in terms of the crystalline form, namely,
an invention relating to a crystalline form, is recognized as having an inventive
step only if the effect thereof is qualitatively different from a compound dis-
closed in the prior art or is quantitatively very different, but not necessarily
qualitatively different, from a compound disclosed in the prior art. Although not
absolutely required to provide comparative experimental data with the prior art,
the specification of the invention relating to a crystalline form must clearly
describe the above effect, in order for the effect to be considered when deter-
mining the inventive step of the invention. If the effect is questionable, the ap-
plicant or the patentee must specifically demonstrate the effect through reliable
comparative experimental data after the filing date of the application.”863

859 BGH/Calcipotriol-Monohydrat, GRUR 2012, 803, 807.

860 BGH/Calcipotriol-Monohydrat, GRUR 2012, 803, 807.
861 Abbott Laboratories v. Geneva Pharmaceuticals, Inc., 182 F.3d 1315 (Fed. Cir.
1999).
862 SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331 (Fed. Cir. 2005).
863 Korean Supreme Court/Lercanidipine, 2010Hu2872, Jul. 14, 2011, para 1.

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 B. Inventive step / Non-obviousness

In this case, the Supreme Court acknowledged that the results of experiments
regarding the bioavailability, solubility, and reduced batch-to-batch vari-
ability were clearly described in the patent specification.864 Since the
bioavailability disclosed in the patent specification was based on the blood
concentration of the claimed racemate of Lercanidipine hydrochloride, the
submitted result of bioavailability on the prior art was based on the blood
concentration of S-enantiomer of Lercanidipine hydrochloride, and, even
though each condition of the experiment could not be acknowledged by the
submitted document, the Court held that the superior bioavailability of
claimed crystalline form over the prior art could not be recognized.865 In
addition, for argument that the solubility of the claimed crystalline form was
improved, the Court noted that according to the submitted experimental data,
it was not confirmed whether the crystalline form compared to those of prior
art was also non-hydrate as those disclosed in the prior art, and it was already
known at the time of patent filing that 5~10 times of improved solubility
could be obtained by the change of crystalline form.866 The Court further
held that, since it was not recognized what kind of specific pharmaceutical
effect was achieved by the 5 times improved solubility of claimed crystalline
form, the 5 times improved solubility could not be regarded as a superior
effect.867 The reduced batch-to-batch variability in mono-crystalline form
was a logical result, since less variability would have been derived from the
mixture ratio of different crystalline forms.868 Accordingly, the Court held
that, since the claimed crystalline form was not recognized as having a dif-
ferent or quantitatively remarkable effect in comparison to the compound
disclosed in the prior art, the invention lacked an inventive step.869
In Ibandronate case, the Supreme Court noted that the patent specification
disclosed the stability of the crystalline form under certain conditions and
the particle size distribution of the claimed crystalline form. However, the
experimental data submitted by the plaintiff included only the results of
testing the stability of the claimed crystalline form without providing com-
parative experimental results with the compound disclosed in the prior

864 Korean Supreme Court/Lercanidipine, 2010Hu2872, Jul. 14, 2011, para 2.

865 Korean Supreme Court/Lercanidipine, 2010Hu2872, Jul. 14, 2011, para 2.
866 Korean Supreme Court/Lercanidipine, 2010Hu2872, Jul. 14, 2011, para 2.
867 Korean Supreme Court/Lercanidipine, 2010Hu2872, Jul. 14, 2011, para 2.
868 Korean Supreme Court/Lercanidipine, 2010Hu2872, Jul. 14, 2011, para 2.
869 Korean Supreme Court/Lercanidipine, 2010Hu2872, Jul. 14, 2011, para 3.

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IV. STANDARDS OF PATENTABILITY FOR PHARMACEUTICAL INVENTIONS

art.870 Thus, the Supreme Court held that, since the degree of improvement
of the claimed invention over the prior art could not be confirmed and the
pharmaceutical effect achieved by the improved stability of particle size
distribution of the claimed crystalline form could not be confirmed, the
claimed crystalline form was not recognized as having a different or quan-
titatively remarkable effect in comparison to the compound disclosed in the
prior art. Thus, the invention lacked an inventive step.871

d) Metabolites

The case laws on the patentability of metabolites have focused mainly on

the novelty of inventions, and inventive step thereof has not been the issue.

4. Analysis and conclusion

For species selection inventions, the courts in each jurisdiction acknowl-

edged the advantageous effects over the prior art, i.e. the technical advance
in the art through the selection; subsequently, the selection was regarded as
non-arbitrary. The size of the genus from which the selection invention is
made is important in establishing an inventive step. However, because of the
lowered inventive step requirement, the advantageous effects do not need to
be shown over the whole scope of the prior art.
For the optical isomers, the much lower inventive step requirements are
distinctly observed. Unlike the early rulings that the stereochemistry and the
different effect of one enantiomer from another were known, and that the
production of an enantiomer and the testing of the activity thereof were rou-
tine, meaning even the advanced effects could not be the evidence of inven-
tive step,872 the BOA held an enantiomer invention established an inventive
step based on the radically different problem and solution from those dis-
closed in the patent specification as filed.873 In addition, in Germany, after
the Olanzapine decision, the BGH held an enantiomer invention established
its inventive step simply based on the difficulty of separating the racemate.

870 Korean Supreme Court/Ibandronate, 2010Hu3554, Sept. 8, 2011, para 2.

871 Korean Supreme Court/Ibandronate, 2010Hu3554, Sept. 8, 2011, para 2.
872 See supra 790 and accompanying texts.
873 See supra 791 -794 and accompanying texts.

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 B. Inventive step / Non-obviousness

The same seems to be true in the United Kingdom. In contrast to the decision
holding that the enantiomer was obvious because the resolution of the race-
mate was common general knowledge,874 even if these facts regarding the
enantiomer invention were known, there was either not enough motivation
to resolve the racemate or the separation was not predictable, such that the
inventive step of racemate was established.875 In the United States, ac-
knowledging that there was ample motivation to separate an enantiomer,
based on the difficulty of separation, or even based on the expectation that
the person skilled in the art would have worked on the new compounds rather
than try to resolve the racemate, the enantiomer inventions were held to be
non-obvious. At best, a two-fold increase in activity could be expected,876
and this modest increase in activity would be offset by the difficulty and
complexity of resolving the racemates.877
The decisions on the inventive step of enantiomer of clopidogrel in the
United States and Korea showed quite stark differences. The Federal Circuit
acknowledged the inventive step of one enantiomer, because the fact that
one enantiomer was responsible for the biological activity and the other one
was responsible for the side effect was not predictable. However the Korean
Supreme Court held that it was obvious because a two-fold superiority in
the therapeutic effects and around 1.6-fold superiority in acute toxicity to
the racemate could not be regarded as better than that of the racemate con-
sidering that the administration of one enantiomer gave around 2-fold better
effects than that of a racemate which is a 1:1 mixture of enantiomers.878
For the crystalline forms, the inventive step of one crystalline form was
denied either because it was sufficient to establish that the person skilled in
the art could have done so with a reasonable expectation of success, or be-
cause it was a clear expectation that a crystalline form would provide a so-
lution to the performance of substance. The Korean Supreme Court held that
the properties of crystalline forms were well known, and it was a common
practice to confirm the existence of polymorphism of a substance.879 The

874 See supra 803 -804 and accompanying texts.

875 See supra 809 -811 and accompanying texts.
876 Ortho-McNeil Pharm., Inc. v. Mylan Labs., Inc., 348 F. Supp. 2d 713, 747
(N.D.W.Va. 2004), aff’d, 161 Fed.Appx. 944 (stating “a difference in [activity] of
two, a two-fold difference ordinarily would not be considered to be a substantial
difference.”).
877 Pfizer Inc. v. Ranbaxy Laboratories Ltd., 405 F.Supp.2d, 495, 517 (D.Del. 2005).
878 See supra 836 and accompanying texts.
879 See supra 863 and accompanying texts.

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Supreme Court specifically held that it could not acknowledge the improved
“pharmaceutical effect” achieved by the improved physical characteristics
of a crystalline form,880 and it further noted that the reduced batch-to-batch
variability in mono-crystalline form was just a logical consequence.881
For the metabolite inventions, the novelty was the central issue, and the
inventive step was not.
The tendency to a lowered inventive step requirement is also observable
from the fact that even if there is clear motivation leading to the invention,
the unexpected effects from the obvious test was well adapted to defend the
non-obviousness attack. In other words, unexpected or enhanced results
could fail to establish the inventive step when there is a real motivation to
use the idea, i.e. the effects emerged from obvious tests.882 Of course, no
recipe to obtain separation of enantiomers883 or crystalline forms is infallible,
and the separation can be a paradigm of trial and error.884 However, decisions
to develop either a single enantiomer or racemates as a drug substance are
already a key milestone in the drug R&D process.885 There is also the regu-
latory pressure to require separation of enantiomers from its racemic mix-
ture.886 The situation is similar in crystalline form identification and devel-
opment.887 However, either the courts do not acknowledge these as motiva-
tion,888 or the motivation is countervailed by unexpected results.
The case law could develop and change, but the current direction of the
changes seems to be going against or at least not considering the develop-
ment of scientific technology.

880 See supra 867 and accompanying texts.

881 See supra 868 and accompanying texts.
882 Napp Pharmaceuticals v. Ratiopharm [2009] EWCA Civ 252, para 115; Hoechst/
Enantiomers, T296/87, OJ EPO 1990, 195, 206, 209.
883 Sanofi-Synthelabo v. Apotex, Inc., 550 F.3d 1075, 1088 (Fed. Cir. 2008).
884 Sanofi-Synthelabo v. Apotex Inc., 492 F.Supp.2d 353, 370 (S.D.N.Y.,2007).
885 Beary, 339 Lancet 495 (1992); Caldwell, 16 Hum. Psychopharm. S67, S69 (2001);
Mansfield/Henry/Tonkin, 43 Clin. Pharmacokinet. 287, 287 (2004).
886 Sanofi-Synthelabo v. Apotex, Inc., 550 F.3d 1075, 1089-90 (Fed. Cir. 2008).
887 Korean Supreme Court/Lercanidipine, 2010Hu2872, Jul. 14, 2011, para 1.
888 Sanofi-Synthelabo v. Apotex, Inc., 550 F.3d 1075, 1089-90 (Fed. Cir. 2008).

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 C. Disclosure requirement

C. Disclosure requirement

The concept of “possession” or “occupancy” is one of the most fundamental

concepts in property,889 which provides the boundaries of what is mine or
another’s. Due to the nature of intellectual property, the object that someone
possesses, such as an invention, is intangible. This is the fundamental reason
why patent law sets out the disclosure requirement, which is divided into a
written description and the enablement.890 In general, the written description
requirement helps to define the boundary of possession of the invention, and
the enablement requirement works to prove that the inventor did not just
describe the invention but really possessed the invention at the time of filing.
As evidence of possession, either the embodiment that was physically cre-
ated and existed or the disclosure that enabled others to do so without many
difficulties will usually be provided.
The purposes of this disclosure requirement are i) to permit others to make
use of a patented invention once the patent expires, thereby ensuring that the
invention will ultimately enter the public domain, and ii) to enable others to
improve on the patented technology, either by designing around the patent,
or by developing improved versions.891 Thus, this disclosure requirement is

889 See generally, Rose, 52 U. Chi. L. Rev. 73 (1985).

890 EPC Art. 84, the second sentence (“[The claims] shall be clear and concise and be
supported by the description) and EPC Art. 83 (“The European patent application
shall disclose the invention in a manner sufficiently clear and complete for it to be
carried out by a person skilled in the art.”); 35 U.S.C. § 112 (“The specification
shall contain (i) a written description of the invention, (ii) and of the manner and
process of making and using it, in such full, clear, concise, and exact terms as to
enable any person skilled in the art to which it pertains, or with which it is most
nearly connected, to make and use the same, (iii) and shall set forth the best mode
contemplated by the inventor of carrying out his invention.”); the best mode re-
quirement of U.S. patent law would not be discussed in this dissertation; Chisum,
15 AIPLA Q. J. 57, 58 (1987); Synthon BV v. SmithKline Beecham plc [2005]
UKHL 59, para 19 (stating two requirements for anticipation is prior disclosure and
enablement).
891 Burk/Lemley, 17 Berkeley Tech. L.J. 1155, 1161 (2002).

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the quid pro quo for granting patent exclusivity.892 This requirement for the
chemical invention, however, has seldom been the subject of decisions at
the highest legal level, and most of the litigation has been fought in the areas
of novelty and the inventive step.893 Thus, the disclosure requirement will
be only briefly discussed.

1. Written description requirement

As a result of disclosure, later inventors can build on their own inventions

based on the information disclosed, and the overall knowledge of society
increases. Thus, courts have regarded disclosure as a crucial standard for the
patent system.894 As Newman J stated, this requirement sets forth what was
invented and sets boundaries for what can be claimed.895 This requirement
limits the claims to the extent that they are adequately disclosed in the spec-
ification.896 To the question of whether the claims constitute a description,
the Gardner Court once answered that the claim, which was an original

892 Enzo Biochem, Inc. v. Gen-Probe Inc., 323 F.3d 956, 971 (Fed. Cir. 2002), reh’g
denied, (Lourie, J., concurring) (“The statute states that the invention must be de-
scribed. That is basic patent law, the quid pro quo for the grant of a patent; the public
must receive meaningful disclosure in exchange for being excluded from practicing
the invention for a limited period of time.”); Capon v. Eshhar, 418 F.3d 1349, 1357
(Fed. Cir. 2005) (noting “[t]he written description requirement thus satisfies the
policy premises of the law, whereby the inventor's technical/scientific advance is
added to the body of knowledge, as consideration for the grant of patent exclusiv-
ity.”); J.E.M. AG Supply, Inc. v. Pioneer Hi-Bred Intern., Inc., 534 U.S. 124, 142
(2001) (“The disclosure required by the Patent Act is ‘the quid pro quo of the right
to exclude.’”); Ariad Pharmaceuticals, Inc. v. Eli Lilly and Co., 598 F.3d 1336,
1361 (Fed. Cir. 2010); Beecham Group v. Bristol Laboratories S.A. [1978] RPC
521, 579 (“The quid pro quo for the monopoly granted to the inventor is the public
disclosure by him in his specification of the special advantages that the selected
members of the class possess.”).
893 Hansen/Hirsch, 1997, 51 (further noting recently this got to play a role at the area
of biotechnology, such as the inventions involving gene technology).
894 Anonymous, 118 Harv. L. Rev. 2007, 2011 (2005) (noting courts had embraced the
disclosure rationale as a centerpiece of patent policy. However, the author has a
contrary opinion.).
895 Enzo Biochem, Inc. v. Gen-Probe Inc., 323 F.3d 956, 975 (Fed. Cir. 2002) , reh’g
denied, (Newman, J., concurring) (noting “[t]he description of invention has always
been the foundation of the patent specification. It sets forth what has been invented
and sets boundaries of what can be claimed.”).
896 Tronzo v. Biomet, Inc., 156 F.3d 1154, 1158 (Fed. Cir. 1998).

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 C. Disclosure requirement

claim, in itself constituted a description in the original disclosure equivalent

in scope and identical in language to the total subject matter being claimed,
and nothing more was necessary to comply with the description require-
ment.897
The written description requirement traditionally played a role in limited
circumstances: i) When determining whether the claims were entitled to the
application’s filing date after claims were amended or newly-added, ii) when
assessing whether a patentee was entitled to the benefit of the filing date of
an earlier application claiming a priority date, and iii) when an interference
mattered.898 More recently, the requirement has been invoked against claims
that were not originally filed as part of the written description, although
commentators have heavily criticized this as a heightened written description
requirement. 899
In Europe, separately from the enablement requirement embodied in
Art. 83 EPC, the written description requirement is set out in Art. 84 EPC,
which requires that the claim be clear and concise and be supported by the

897 In re Gardner, 475 F.2d 1389, 1391 (C.C.P.A., 1973), reh’g denied 480 F.2d 879,
879-80 (holding that the original claim in itself adequate written description of the
claimed invention, and whether the descriptive part of the specification should be
amended to include the language of the claim in suit was more of an administrative
matter.).
898 Janis, 2 Wash. U. J. L. & Pol’y 55, 57, 59-60 (2000); Rai, 34 Wake Forest L.
Rev. 827, 830 (1999); In re Wright, 866 F.2d 422, 424 (Fed. Cir. 1989) (holding
the essence of written description requirement is to judge whether the newly claimed
subject matter was described in the patent application as filed, in the case that the
scope of a claim has been amended and directed to a different invention than the
original claim.).
899 Sampson, 15 Berkley Tech. L.J. 1233, 1262 (2000) (The primary argument against
the Federal Circuit’s heightened written description requirement for biotechnolog-
ical invention is that … it also ‘reduces incentives to invest in innovation by de-
priving potential patentees of the opportunity to fully benefit from their research.’”);
Rai, 34 Wake Forest L. Rev. 827, 834-35 (1999) (“the Lilly court used the written
description requirement as a type of elevated enablement requirement.” “[T]he
CAFC’s is based on its view that DNA-based technology is simply a subset of
chemical technology generally.”); Mueller, 13 Berkeley Tech. L.J. 615, 617 (1998)
(“The Lilly decision establishes uniquely rigorous rules for the description of
biotechnological subject matter that significantly contort written description doc-
trine away from its historic origins and policy grounding. The Lilly court’s elevation
of written description to an effective ‘super enablement’ standard of uncertain scope
and applicability […]”); Moba, B.V. v. Diamond Automation, Inc., 325 F.3d 1306,
1326 (Fed. Cir. 2003).

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description. The BOA explained that a principle purpose of this requirement

in Art. 84 is to ensure that the monopoly given by a patent normally corre-
sponded to the invention described in the application, and that the claim is
not drafted so broadly that it dominates activities that do not depend upon
the invention described in the application. 900 The Board further made clear
that the term “supported” applies to a claim in a generalized form.901 In the
Exxon case, the Board noted that “a claim might be well supported by the
description in the sense that it corresponded to it, but still encompassed sub-
ject-matter that was not sufficiently disclosed within the meaning of Art. 83
EPC, as it cannot be performed without undue burden, or vice versa.” 902
In the United States, a written description was not a separate requirement
from the enablement requirement before 1967. That year, however, the Court
in In re Ruschig903 created a new written description doctrine for the sole
purpose of enforcing priority issues.904 It could have been based on the his-
torical rationale derived from the Supreme Court’s interpretation of a pre-
decessor to § 112 in Evans v. Eaton, which was decided when American
patent law had not required to contain claims.905 In Evans v. Eaton, the
Supreme Court held that a patent specification had two objects: (i) To enable
artisans to make and use the invention, and (ii) to put the public in possession
of what the party claimed as his own invention.906 Some scholars argued that
the distinction between the written description and the enablement require-
ment was arbitrary and redundant.907 However, the Federal Circuit recently
reaffirmed the distinction between these two requirements in the Ariad v.
Lilly case.908

900 Xerox/Amendments, T 133/85, OJ EPO 1988, 441, 448.

901 Xerox/Amendments, T 133/85, OJ EPO 1988, 441, 448. .
902 Exxon/Fuel oils, T 409/91, OJ EPO 1994, 653, 662; see also Mycogen/Modifying
plant cells, T 694/92, OJ EPO, 1997, 408, 414-15 (noting “it follows that, despite
being supported by the description from a purely formal point of view, claims may
not be considered allowable if they encompass subject-matter which in the light of
the disclosure provided by the description can be performed only with undue burden
or with application of inventive skill.”).
903 In re Ruschig, 379 F.2d 990, 995-96 (C.C.P.A. 1967).
904 See, Moba, B.V. v. Diamond Automation, Inc., 325 F.3d 1306, 1323 (Fed. Cir.
2003); cf. Janis, 2 Wash. U. J. L. & Pol’y 55, 57, 62-69 (2000) (arguing this dis-
tinction between the written requirement and enablement requirement is artificial.).
905 Vas-Cath Inc. v. Mahurkar, 935 F.2d 1555, 1561 (Fed. Cir. 1991).
906 Evans v. Eaton, 20 U.S. 356, 433-34 (1822).
907 See e.g., Janis, 2 Wash. U. J. L. & Pol’y 55, 80-88 (2000).
908 Ariad Pharmaceuticals, Inc. v. Eli Lilly and Co., 598 F.3d 1336 (Fed. Cir. 2010).

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In Korea, the written description is set out in the Korean Patent Act,
Art. 43(4), which requires the claim to be supported by the description and
to define the invention clearly and concisely. The enablement requirement
is set out in Art. 42(3) which requires the detailed description of an invention
states the invention clearly and fully in a manner that allows a person skilled
in the art to carry out the invention easily.

2. Enablement requirement

a) Enablement requirement

The enablement requirement requires that patent applicants disclose the

description of the invention sufficiently to enable the person skilled in the
art to make and use it.909 This disclosure, which is a trade off between the
patentees and the public, is one of the fundamental functions of patent law.910
This can be read in the U.S. Supreme Court’s language: “[T]o obtain a utility
patent, a [patentee] must describe the [invention] with sufficient specificity
to enable others to ‘make and use’ the invention after the patent term ex-
pires.”911
This requirement ensures that the invention is available to be taught to the
public once it is published and to enable others to practice the invention once
the patent term expires.912 This is the proper way to answer the question of
“possession” of an invention by the inventor, 913 and, at the same time, guar-

909 See e.g., EPC Art. 83, 35 U.S.C. § 112.

910 Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 489 (1974); Burk/Lemley, 17
Berkeley Tech. L.J. 1155, 1161 (2002).
911 J.E.M. AG Supply, Inc. v. Pioneer Hi-Bred Intern., Inc., 534 U.S. 124, 142 (2001).
912 United States v. Dubilier Condenser Corp., 289 U.S. 178, 186-87 (1933) (“ An
exclusive enjoyment is guaranteed him for seventeen years, but, upon the expiration
of that period, the knowledge of the invention inures to the people, who are thus
enabled without restriction to practice it and profit by its use.”); J.E.M. AG Supply,
Inc. v. Pioneer Hi-Bred Intern., Inc., 534 U.S. 124, 142 (2001).
913 Enzo Biochem, Inc. v. Gen-Probe Inc., 323 F.3d 956, 988 (Fed. Cir. 2002) , reh’g
denied, (Linn, J., dissenting) (“The question presented by 35 U.S.C. § 112, para-
graph 1, is not, ‘Does the written description disclose what the invention is, or does
it merely describe what it does?’ The question is, ‘Does the written description
describe the invention recited and described in the claims-themselves part of the
specification-in terms that are sufficient to enable one of skill in the art to make and
use the claimed invention?’” ).

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antees that the public will be in possession of the invention.914 In other words,
this requirement seeks to ensure that the inventor actually has conceptual
possession of the invention at the time of filing.915
To meet the enablement requirement, the specification, which is part of
the application for a patent, must describe not only the invention but also the
manner of making and using the invention in sufficiently full terms as to
enable a person skilled in the art to make and use the invention without resort
to “undue” experimentation.916 The patent specification does not need to
disclose all of the ways to enable the invention. For example, even if only
one way of performing the invention is disclosed, it can be sufficient as long
as it allows the person skilled in the art to perform the invention in the whole
range that is claimed.917 Accordingly, the scope of enablement inversely
varies with the degree of unpredictability of the factors and the arts in-
volved.918 The patentee is entitled only to a scope that is commensurate with
the scope of his innovation, which is represented by the disclosure in the

914 Janis, 2 Wash. U. J. L. & Pol’y 55, 63 (2000); See generally, Holbrook, 59 SMU
L. Rev. 123 (2006) (noting this teaching function of patent disclosure was rather
limited, however, functioned more to demonstrate the inventor’s possession of the
invention.).
915 Burk/Lemley, 89 Va. L. Rev. 1575, 1653 (2003) (further explaining that after the
written description requirement was served by the claim in the United States, this
requirement had evolved to serve a new purpose, i.e. enablement); Tronzo v. Biomet,
Inc., 156 F.3d 1154, 1158 (Fed. Cir. 1998).
916 Chisum, 15 AIPLA Q. J. 57, 58 (1987); see also Synthon BV v. SmithKline Beecham
plc [2005] UKHL 59, paras 28-33; Martek Biosciences Corp. v. Nutrinova, Inc.,
579 F.3d 1363, 1378 (Fed. Cir. 2009) (noting “the specification of a patent must
teach those skilled in the art how to make and use the full scope of the claimed
invention without undue experimentation.”, quoting In re Wright, 999 F.2d 1557,
1561 (Fed. Cir. 1993)); In re Wands, 858 F.2d 731, 736-37 (Fed. Cir. 1988); see
also subsection IV.A.3.
917 BGH/Textilgarn, GRUR 1959, 125, 125; Exxon/Fuel oils, T 409/91, OJ EPO 653,
662-63 (1994) point 3.5.(further noting the disclosure of the invention was sufficient
if it enabled the skilled person to obtain substantially all embodiments falling within
the ambit of the claims.).
918 Brandi-Dohrn, GRUR Int 1995, 541.

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patent specification.919 Thus, this demarcation is especially important in the

field of unpredictable arts. Given that it is harder to predict the technical
result in chemical reactions, and especially physiological responses, than to
predict those in other fields, the level of enablement in pharmaceutical art
seems to be naturally higher than those in other fields. Conducting a large
number of tests to monitor the results of a minor structural change would be
of little value. However, the extent to which the invention should be enabled
is not certain and must be determined in each case.920
The effort to be expected of the person skilled in the art is the total sum
of the experimental effort necessary to advance successfully step-by-step
toward the desired final goal, even though each individual experimental step
can be considered feasible with a certain amount of trial and error.921 “With-
out undue experimentation” therefore means that it allows certain sensible
degree of trial and error. In Europe, this experimentation must lead to the
desired result with “an acceptable statistical expectation rate” in case of ran-
dom experiments.922 In the United States, the relevant factors to determine
this include “the quantity of experimentation that was actually needed, the
amount of guidance provided in the reference, the presence or absence of
actual examples of the experimental procedure, the state of the knowledge
already available concerning the subject matter at issue, and the predictabil-
ity or unpredictability in the specific area of science or technology.”923 The
determination of “undueness” is “not a single, simple factual determination,

919 See e.g., Chiron Corp. v. Genentech, Inc., 363 F.3d 1247, 1263 (Fed. Cir. 2004)
(Bryson, J., concurring) (noting the proper approach is “to address cases of new
technology by construing claims, where possible, as they would have been under-
stood by one of skill in the art at the time of the invention, and not construing them
to reach the as-yet-undeveloped technology that the applicant did not enable. That
approach preserves the benefits of patent protection for the invention that the ap-
plicant has actually conceived and enabled, without extending those benefits for an
invention that the applicant may not have conceived and certainly has not en-
abled.”).
920 In the pharmaceutical field where there is narrower room for the person skilled in
the art could have known the inventor’s possession of the invention, the broader
variants need to be shown to be enabled.
921 MIT/Biopolymers, T639/95 (1998), point 15; Molecular Biosystems/Oligonucleo-
tide therapeutic agent, T 994/95 (1999), point 9.
922 Unilever/Stable bleaches, T 0226/85, OJ EPO 1988, 336, 340.
923 Sanofi-Synthelabo v. Apotex, Inc., 550 F.3d 1075, 1085 (Fed. Cir. 2008).

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but rather a conclusion reached by weighing many factual considera-

tions.” 924
However, the enabling disclosure of the specification must be correlated
with the scope of the claim under consideration.925 A specification may only
enable part of a claim. For example, the chemical embodiments in the spec-
ification might not include the whole number of the generic class of com-
pounds. Similarly, a specification might enable a broader scope than the
claim. For example, a claim may be narrowed down by adding a limitation,
but the specification fails to provide sufficient information as to the limited
scope of the claim. These limitations are imposed, because a patent should
not control inventions that it does not enable.926 In the Exxon/Fuel Oils case,
the application was refused, because, while it claimed fuel oils containing
certain crystals with an average particle size of “less than 4000 nm,” it pro-
vided only an example thereof with a crystal particle size of 1200 nm and
gave no further teaching regarding the production of smaller particles.927
The Board held that, to fulfil the requirement of Art. 83 EPC, the application
as filed should have contained sufficient information to allow a person
skilled in the art, using his common general knowledge, to carry out the
invention within the whole area that was claimed.928
As the BGH held, “claims for chemical compounds, in which generic
formulae characterise the claimed compounds, may not cover compounds
which it is established were not available to the skilled person at the time of
the patent application.”929 In traditional chemistry, however, since the in-
formation in the patent application has made it feasible to manufacture the
compounds with generally available starting materials and standardized re-
actions, the more valuable information concerns the use of the compounds,

924 Martek Biosciences Corp. v. Nutrinova, Inc., 579 F.3d 1363, 1378 (Fed. Cir. 2009)
(quoting In re Wands, 858 F.2d 731, 737 (Fed. Cir. 1988)).
925 Chisum, 15 AIPLA Q. J. 57, 61 (1987); National Recovery Technologies, Inc. v.
Magnetic Separation Systems, Inc., 166 F.3d 1190, 1195-96 (Fed. Cir. 1999) (noting
“[t]he enablement requirement ensures that the public knowledge is enriched by the
patent specification to a degree at least commensurate with the scope of the
claims.”); MPEP § 2164.08 (“All questions of enablement are evaluated against the
claimed subject matter. The focus of the examination inquiry is whether everything
within the scope of the claim is enabled.”).
926 Merges/Nelson, 25 J. Econ. Behav. Organ. 1, 18 (1994).
927 Exxon/Fuel oils, T 409/91, OJ EPO 653, 657 (1994) point 2.
928 Exxon/Fuel oils, T 409/91, OJ EPO 653, 657 (1994) point 2.
929 BGH/7-Chlor-6-demethyltetracyclin, GRUR 1978, 162, 165.

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not the way to manufacture them.930 Self-evidently, each invention should

lead to the described results as well, when one applies the relevant technical
teaching.931

b) Enablement requirements in the patent law

Although there was a case requiring enablement in the context of obvious-

ness rejection, 932 enablement requirements are generally found in the dis-
closure requirement and in the novelty requirement.

(1) Enablement as a requirement for anticipation

As discussed in chapter IV.A.3, an enabling disclosure is required in addition

to the disclosure requirement for anticipation of the invention in main juris-
dictions. For example, the BGH held in the Olanzapine decision that the
concept of disclosure was exclusively what a person skilled in the art directly
and unambiguously derived from the prior art as the content of teaching,
thereby enabling him specifically to carry out the invention.933 The House
of Lords explained that there is a difference in the role of the person skilled
in the art for the two requirements of anticipation. For the disclosure re-
quirement, the person skilled in the art is taken to be trying to understand
what the author of the prior art meant, and, once the meanings of the prior
disclosure are determined, the author has no further part to play.934 For the
purpose of the enablement requirement, however, the question is no longer
what the skilled person would think the disclosure meant, but whether he
would have been able to work the invention.935 Enablement has played a key

930 Domeij, 2000, 45.

931 Hansen/Hirsch, 1997, 56.
932 In re Payne, 606 F.2d 303, 314 (C.C.P.A. 1979) (“References relied upon to support
a rejection under 35 USC 103 must provide an enabling disclosure, i. e., they must
place the claimed invention in the possession of the public.”).
933 BGH/Olanzapine, IIC 2009, 596, 599.
934 Synthon BV v. SmithKline Beecham plc [2005] UKHL 59, para 32.
935 Synthon BV v. SmithKline Beecham plc [2005] UKHL 59, para 32.

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role in the context of anticipation; however, it has rarely been dis-

cussed.936

(2) Basic similarity of the two enablement requirements

The BOA held that any prior art cited under the novelty provisions must
contain an enabling disclosure to destroy novelty and that this enabling re-
quirement was identical to that under Art. 83 EPC. Thus, the cited document
must have disclosed the invention in a manner sufficiently clear and com-
plete for it to be carried out by a person skilled in the art.937 In other words,
the same degree of clarity and practical usefulness is required regarding the
possibility of using the invention, which is part of the state of the art, and
that of using the invention in the application filed.938 Tilman also noted that
the prior art document must have clarity, such as a patent claim would have,
and that this requirement comes close to the wording of Arts. 83 and 84 EPC.
Thus it was correct to require that the information in a prior art disclosed
“directly and unambiguously” the subject matter of a claim to avoid double
patenting.939 Lord Hoffman mentioned that he could think of no reason why
there should be any difference between the test of enablement of a prior
disclosure for the purpose of anticipation and the test of enablement of the
patent itself for the purpose of sufficiency.940 He held that the authorities on
section 72(1)(c) regarding the grounds for the revocation of a patent were
equally applicable to enablement for the purpose of sections 2(2) and (3)
regarding novelty.941 Thus, the tests of enablements may seem to have no
difference.

936 Seymore, 60 Duke L. J., 919, 925 (2011); see also, e.g., Chester v. Miller, 906 F.
2d 1574, 1576 n.2 (Fed. Cir. 1990) (noting that for being prior art under section
102(b), the reference must place the anticipating subject matter at issue into the
possession of the public through an enabling disclosure).
937 See e.g., ICI/Herbicides, T 206/83, OJ EPO 1987, 5, 9; Collaborative/Preproren-
nin, T81/87, OJ EPO 1990, 250, 257.
938 Domeij, 2000, 136.
939 See Tilmann, IIC 2010, 149, 152.
940 Synthon BV v. SmithKline Beecham plc [2005] UKHL 59, para 27 (noting “[i]n the
present case the Court of Appeal was reluctant to say that the test of enablement of
a prior disclosure for the purpose of anticipation was the same as the test of en-
ablement of the patent itself for the purpose of sufficiency. But I can think of no
reason why there should be any difference […].”).
941 Synthon BV v. SmithKline Beecham plc [2005] UKHL 59, para 27.

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(3) Differences between the two enablement requirements

The differences between enablement as a requirement for anticipation and

as a requirement for sufficiency of disclosure can be summarized as follows.
The first distinction depends on whether the requirement is introduced by
legislation or by judicial bodies. The statutes clearly state the enablement
requirement (sufficiency of disclosure) for obtaining a patent.942 However,
the enablement requirement for anticipation is specified neither in Art. 54
EPC, nor 35 U.S.C. § 102, nor anywhere else in the patent statutes. This
requirement for anticipation was established by the courts.943
The second difference depends on whether the utility of the invention is
to be enabled as well. The Federal Circuit in Novo Nordisk Pharms., Inc. v.
Bio-Tech. Gen. Corp.944 confirmed that the standard for enablement of a
prior art reference for purposes of anticipation under § 102 differed from the
enablement standard under 35 U.S.C. § 112; namely, the specification
should enable a person skilled in the art to “use” the invention to meet the
requirement under § 112, but the specification need not do so to meet the
requirement under § 102.945
The third difference is whether the scope of the invention has to be enabled
when the prior art reference is a patent (application) itself. To meet the en-
ablement requirement for the “patent-obtaining purpose” under Art. 83 EPC

942 EPC Art. 83 (2010); 35 U.S.C. § 112 ¶1 (2006); Korean Patent Act Art. 42(3).
943 Mueller/Chisum, 45 Hous. L. Rev. 1101, 1137-38 (2008) (stating “the courts have
read the enablement requirement into anticipation under § 102(b).”); see also In re
LeGrice, 301 F.2d 929, 939 (C.C.P.A. 1962) (holding that anticipation under
§ 102(b) “requires that the description of the invention in the printed publication
must be an ‘enabling’ description”).
944 Novo Nordisk Pharms., Inc. v. Bio-Tech. Gen. Corp., 424 F.3d 1347, 1355 (Fed.
Cir. 2005); Rasmusson v. SmithKline Beecham Corp., 413 F.3d 1318, 1325 (Fed.
Cir. 2005).
945 Novo Nordisk Pharms., Inc. v. Bio-Tech. Gen. Corp., 424 F.3d 1347, 1355 (Fed.
Cir. 2005) (citing In re Hafner, 410 F.2d 1403, 1405 (C.C.P.A.1969) stating “sec-
tion 102 makes no such requirement as to an anticipatory disclosure.”); see also In
re Schoenwald, 964 F.2d 1122, 1124 (Fed. Cir. 1992) (citing In re Donohue, 632
F.2d 123, 126 (C.C.P.A. 1980) (“proof of utility is not a prerequisite to availability
of a prior art reference under 35 U.S.C. § 102(b)”); see also Bristol-Myers Squibb
Co. v. Ben Venue Labs., Inc., 246 F.3d 1368, 1379 (Fed. Cir. 2001)) (holding that
“anticipation does not require actual performance of suggestions in a disclosure.
Rather, anticipation only requires that those suggestions be enabled to one of skill
in the art.”). This can be viewed differently in different jurisdictions.); Rasmusson
v. SmithKline Beecham Corp., 413 F.3d 1318, 1325 (Fed. Cir. 2005).

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or 35 U.S.C. § 112, the specification must enable the whole scope of the
claimed invention. In contrast, to meet the enablement requirement for the
“patent-defeating purpose”, it is enough to enable the scope of the invention
at issue.946 Thus, the description of a single embodiment for a broad claim
in an earlier patent (application) can enable the invention for anticipation
purposes, but the same embodiment alone may not be enough to provide a
sufficient description for the earlier patent (application) itself.947 However,
even in this case, the single embodiment of the prior art reference (earlier
patent) could have enabled a narrower claim scope in the earlier patent cov-
ering at least the embodiment itself.

3. Disclosure requirement of selection inventions

Unlike novelty or inventive step requirements, the disclosure requirement

for the chemical invention has seldom been the subject of decisions at the
highest legal levels.948 Thus, only a few relevant cases are discussed under
this title.

a) Species selection invention

In Dr Reddy's Laboratories v. Eli Lilly in the United Kingdom, the lack of

sufficiency was challenged by Dr. Reddy’s Laboratories. The main ground
raised before the Patent Court was that the patent specification did not dis-
close alleged superior advantages to other members of preferred classes in
the prior art,949 which was required to meet a selection invention. In other
words, this insufficiency attack was based on the premise that the patent
could be upheld over the prior disclosure only if it was a valid selection
patent. However, since the Patent Court found that the patent was valid
without relying on the selection principles, the insufficiency attack lost its

946 Vas-Cath Inc. v. Mahurkar, 935 F.2d 1555, 1562 (Fed. Cir. 1991); see also Kieff/
Schwartz/Newman, 2011, 207-211.
947 In re Lukach, 442 F.2d 967, 970 (C.C.P.A. 1971) (noting the difference of the
enablement requirement for the patent obtaining purposes from that for the patent
defeating purposes).
948 Hansen/Hirsch, 1997, 51.
949 Dr Reddy's Laboratories (UK) Ltd v. Eli Lilly & Company Ltd [2008] EWHC 2345,
para 188.

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ground.950 Jacob LJ on appeal restated that, since Lilly had not complied
with the ‘old selection rules’, it was unnecessary to discuss this issue.951

b) Optical isomers

In the first instance of the Escitalopram decision in the United Kingdom,

while citing the Biogen decision,952 Kitchin J held that the claims were not
sufficient, basically because the scope of protection was broader than the
invention’s technical contribution. He restated that enantiomer’s inventive
idea is only one way to make it, neither on the discovery of the enantiomer
nor on its medicinal effect.953 He further stated that, since the claim in issue
was to a monopoly of that enantiomer but the specification provided only
one way to make it, the patentee was not entitled to a monopoly of every
way of making it i.e. a product per se claim. Consequently, the claim was
not sufficient.954
While distinguishing a product-by-process claim, as in the Biogen case,
from an ordinary product claim, Lord Hoffmann955 held that, “since the
product itself is the invention, it is sufficiently enabled if the specification
and common general knowledge enables the skilled person to make it and
one method is enough.”956 The difference between this case and Biogen was
whether the product made by the inventive procedure was available before
the invention. While agreeing with the EPO’s decision on the Exxon
case,957 Lord Hoffmann concluded that, “if the patentee had found a non-
obvious way of making the product, he was entitled to a product claim, with

950 Dr Reddy's Laboratories (UK) Ltd v. Eli Lilly & Company Ltd [2008] EWHC 2345,
para 189.
951 Dr Reddy’s Laboratories Ltd v. Eli Lilly & Company Ltd, EWCA Civ 1362, paras
75-76.
952 Biogen Inc v. Medeva Plc [1996] UKHL 18, para 75.
953 Lundbeck v. Generics Ltd. [2008] EWCA Civ 311, para 26.
954 Lundbeck v. Generics Ltd. [2008] EWCA Civ 311, para 26.
955 Lord Hoffmann the very who gave Biogen decision specially stepped down an in-
stance and sat on the Court of Appeal where he had served more than ten years ago.
956 Lundbeck v. Generics Ltd. [2008] EWCA Civ 311, para 27.
957 Lundbeck v. Generics Ltd. [2008] EWCA Civ 311, para 59 (citing the Technical
Board of Appeal said in Exxon/ Fuel Oils T409/91 as "The extent of the patent
monopoly, as defined by the claims, should correspond to the technical contribution
to the art in order for it to be supported or justified.").

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IV. STANDARDS OF PATENTABILITY FOR PHARMACEUTICAL INVENTIONS

the full monopoly of the product which that conferred.”958 Jacob LJ noted
that the product claim actually provides a broader monopoly959 and con-
cluded that the fact that the patentee should not have more than he deserved
did not form part of the statutory test for sufficiency.960
The House of Lords’ reasoning was very much in line with Lord Hoff-
mann’s. Lord Walker noted the discussion before the House of whether "in-
ventive concept" meant the same as “technical contribution to the art.” He
stated that they are certainly connected, but that “inventive concept” was
concerned with the identification of the core of the invention, while the in-
vention's “technical contribution to the art” was concerned with the evalu-
ation of its inventive concept.961 Lord Neuberger stated that based on the
fact that the patentee’s “technical contribution” was to make the invention
available for the first time, the patentee was entitled to claim the enantiomer.
This decision brought the British patent courts into line with EPO jurispru-
dence and with a more patentee friendly disposition.

c) Crystalline forms

In T1066/03, where a process for the preparation of amorphous atorvastatin

(Lipitor ®) and hydrates was claimed, the Board revoked the patent based
on the lack of sufficiency, since the patent did not enable the skilled person
to produce without undue burden the crystalline form I of atorvastatin, i.e.
the starting material (seed crystal) to be used in the claimed process.962

D. Conclusion

The patentability requirements on selection inventions have been explored

and analyzed. Regarding species selection invention, the novelty require-
ment has been lowered in Germany and the United Kingdom, where the
courts declared that their established patentability requirements for the
species selection invention were no longer valid. To establish novelty re-

958 Lundbeck v. Generics Ltd. [2008] EWCA Civ 311, para 37.
959 Lundbeck v. Generics Ltd. [2008] EWCA Civ 311, para 54.
960 Lundbeck v. Generics Ltd. [2008] EWCA Civ 311, para 57.
961 Generics Ltd. v. Lundbeck [2009] UKHL 12, para 30.
962 Warner-Lambert/Polymorphic Atorvastatin, T 1066/03 (2006), para 2.6.

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 D. Conclusion

quires overcoming the difficulty of identifying and isolating a specific mem-

ber from the genus disclosure. The inventive step of a species selection in-
vention was mainly established based on its advantageous effects.
The novelty of optical isomers was based on the difficulty of separation,
regardless of the extent to which the structures were clearly disclosed in the
prior art and regardless of whether it was well-known to a person skilled in
the art that one or the other would exert its pharmacological effect. The
difficulty of resolution was key in assessing novelty, because for an inven-
tion to be anticipated by a prior art, it must not only disclose the element of
invention but also enable the invention. The much relaxed inventive step
requirement on optical isomers was glaring. For example, the routine test
became the non-routine test after ten years. In many jurisdictions except
Korea, unlike their earlier rulings, it was held that the inventive step was re-
established based on the difficulty of separation or on the fact that the sep-
aration could not have been achieved with reasonable expectation thereof,
even though there was ample motivation to do so.
For crystalline forms, the issue of novelty was mainly about the extent to
which the claimed crystalline forms were inevitably produced according to
the process disclosed in the prior art, and novelty was generally not found.
In addition, the inventive step for crystalline forms was denied either because
there was a reasonable expectation of success or because the argued better
effects were expected. The Korean Supreme Court noted that the improved
pharmaceutical effect achieved by the altered physical characteristics of a
crystalline form was not acknowledged.
Even though the reasoning behind the novelty of metabolite inventions in
the British and American decisions was different, it was very clear that the
courts acknowledged that the new exclusivity could have prevented the pub-
lic from continuing to do something that was done before. If the metabolite
had been found to be novel, the patent would have been granted on it, and
the scope of the metabolite patent could have covered the metabolite gen-
erated by the body, thereby leading to an absurd result.
In addition, by granting these patents with lowered patentability require-
ments, the patent system could have influenced manufacturers to do the re-
search on it separately or laterally. For example, the inventive step for optical
isomers was identified because of the difficulty of resolution or the unpre-
dictability of which isomer among the racemic mixture would exert the
pharmacological effect of the racemate and which isomer would exert the
side effects thereof. If this is so, should the manufacturers not be encouraged
to do so from the very beginning, not after the research on the racemates is

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IV. STANDARDS OF PATENTABILITY FOR PHARMACEUTICAL INVENTIONS

done? This would be tantamount to exposing the public to drugs containing

risky components.963
The low quality of pharmaceutical patents can also be seen in the report
by the American Federal Trade Commission (“FTC”). The FTC report pre-
sented data from the litigation that resulted from paragraph IV challenges
from 1992 to 2000, in which 73% of the para. IV filers prevailed.964 Although
winning a suit not only invalidates the challenged patent or leads to aban-
donment by the reference drug company, it also means non-infringement of
the generic version. The high number is enough to imply that the quality of
these patents is poor. The Pharma Sector Inquiry further confirmed that the
opposition rate before the EPO was consistently higher for the pharmaceu-
tical sector (about 8%) than it is in the organic chemistry sector (about 4%)
and across all sectors (overall EPO average was about 5%).965 The Pharma
Sector Inquiry further reported that generic companies exclusively opposed
second generation patents and prevailed in approximately 60% of the final
decisions rendered by the EPO (including the BOA) in the period 2000 to
2007, and that the scope of the originator patent was restricted in another
15% of cases.966 Furthermore, an empirical study on completed patent liti-
gation on all drugs that first became eligible for challenges between 2000
and 2008 (covering 277 patents and 147 drugs) reported i) that for the patents
at issue in settled litigation, 89% were secondary patents,967 and ii) that for
the patents litigated to completion (not settled), the brand name companies
nearly always won a suit asserting an NMEs (92%), however, they usually
lost suits asserting secondary patents (32% wins).968
Patentability requirements are assessed by a person skilled in the art. Thus,
these lowered patentability requirements could well mean that a person
skilled in the art has even fewer skills in the most scientifically developed
era. Further, the much relaxed patentability requirements made both the
newer version of products and the older versions concurrently available in

963 Daniels/Nestman/Kerr, 31 Drug Inf. J. 639, 643 (1997) (noting regulatory bodies
would be more interested with the toxicological aspects of the stereochemistry is-
sues, and they would expect full toxicological evaluation of each enantiomer if the
toxicity had been detected.).
964 FTC, 2002, 20.
965 DG Competition, 2009, 239-253.
966 DG Competition, 2009, 239-253.
967 Hemphill/Sampat, Bhaven N., 339 Science 1386, 1387 (2013).
968 Hemphill/Sampat, Bhaven N., 339 Science 1386, 1387 (2013).

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 D. Conclusion

the market.969 Although the case law may develop and change, the direction
of the changes seems to be running counter to or at least not to be taking into
consideration the development of scientific technology.

969 Hutt/Valentová, 50 Acta Facultatis Pharmaceuticae Universitatis Comenianae 7, 8

(2003).

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V. IMPLICATIONS OF THE PATENTABILITY
REQUIREMENTS ON INNOVATION AND
COMPETITION IN THE PHARMACEUTICAL INDUSTRY

The patent system grants the right to exclude others from practicing the
claimed invention. However, it does not convey the freedom to operate the
invention.970 The question of the freedom to operate mainly concerns
whether one can practice in a certain area without infringing a patent held
by another party.971 It is quite possible for overlapping patents to be held by
different parties leaving no single party with the freedom to operate.972 If
practicing the invention infringes another’s patent, one patentee may con-
sider avoiding another’s patent, while trying to obtain a license from him,
or invalidating his patent.973 Sometimes designing-around the other patent
is originally impossible, such as in the case of practicing a combination of
active ingredients, one ingredient of which is covered by a valid patent; or
in the case where it is very hard to separate one polymorph, since it is easily
included even in trace amounts in the process of manufacturing the basic
substance.
Chapter IV argued that there is a gradual relaxation of patentability re-
quirement for selection invention in EPO practices and the case laws of
Germany, the U.S., the U.K., and Korea. The lowered thresholds of
patentability have a significant impact on competition. In particular, as the
scope and length of patents defines what competitors may do, this chapter
will examine the scope and length of second generation patents in this con-
text.

970 Miller/Evans, 2010, 2-5; See e.g. 35 United States Code (“35 U.S.C.”) § 154 (2010)
“the right to exclude others from making, using, offering for sale, or selling […] or
importing the invention”.
971 Miller/Evans, 2010, 6.
972 Miller/Evans, 2010, 6.
973 Miller/Evans, 2010, 4.

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 A. Concerns about lowered patentability

A. Concerns about lowered patentability

Firstly, patent offices are gate keepers of patent quality. Once the patent
offices fail to fulfil their duties, the quality of patents issued deteriorates.
One result of low quality patents is patent litigation war that is waged by the
companies that can afford the cost of litigation and that try to obtain patent-
based property rights on existing technologies.974

1. General concerns about lowered patentability

a) Superfluous second generation patents

The radical increase in patent applications and patents on second generation

inventions was discussed in chapter III.B.5. To explain some impacts of
these increases, the lesson from the “wild card patent term extension” is
noted here. It was the key recommendation of a white paper prepared by the
Infectious Diseases Society of America (IDSA) to incentivize the pharma-
ceutical companies to research into anti-infectious agents as supplementary
intellectual property protection.975 The IDSA recommended a balance be-
tween the special efforts needed to bring more medications to patients and
the concerns about the social costs of those efforts.
A so-called, “wild card” patent term extension is a kind of transferable
patent term extension concept. A company which successfully develops and
acquires marketing approval for a certain antibiotic could extend the market
exclusivity period of “another” FDA-approved drug for 2 years.976 As is
clear from the term “wild card” itself, the company may choose any other
approved drug in its portfolio for which to apply for patent term extension.
A study reported that this kind of patent extension as the compensation for
treating multi-drug-resistant pseudomonas aeruginosa would be cost-neu-
tral for 10 years after approval of the new antibiotics and would save society
around $4.6 billion for 20 years after approval.977

974 Jaffe/Lerner, 2004, 74.

975 IDSA, 2004, 24.
976 IDSA, 2004, 24.
977 Spellberg, et al., 35 Infection 167, 170 (2007).

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V. IMPLICATIONS OF THE PATENTABILITY REQUIREMENTS

However, this proposal has been highly controversial and its proposed
inclusion in the Project Bioshield II Act of 2005978 was ultimately rejected.
One of the bases for rejection was that this kind of newly created patent right
would not only be inefficient, but would also create tens of billions of dollars
in annual patent taxes979 on other common diseases.980 Critics also argued
that this is very unfair for those patients who must pay an extra patent tax
on the particular drug which is chosen for extension.981 This is mainly be-
cause the patent term extension on the blockbuster drug would provide a
tremendous income by transferring the cost to the patients, which would in
turn be an extra burden to the health insurers. This would also be anticom-
petitive, because only the companies that already have a patent whose ex-
tension was exceptionally lucrative would contend for the reward982 and
because the generic companies would have to wait another two years to
launch their products onto the market.
Similar conditions can be observed in the thriving area of second gener-
ation patents. By obtaining second generation inventions, the move of mar-
ket exclusivity to these types of patents983 could work like a patent term
extension. Namely, the patients would have to pay an extra patent tax, which
means higher exclusivity prices on the product covered by the selection
patents; this would be a burden on society and on health insurers. The generic
company would have to wait years longer, and the selection patents would
follow the lucrative patents. More important, unlike the wild card patent term
extension, society would not acquire something such as new antibiotics in
the case of second generation patents. There is hardly any reason not to grant
a patent to an invention that meets patentability requirements, but the social
costs should be taken into consideration. If this is a consequence of lowering
patentability requirements, the patent system could help to fix the prob-
lem.984

978 Project Bioshield II Act of 2005. S. 975, 109th Congress (2005–2006).

979 Patent tax means the pharmaceutical patent rent appropriation upon consumers and
insurers through higher prices during the period of marketing exclusivity.
980 Outterson/Samora/Keller-Cuda, 7 Lancet Infect. Dis. 559, 561-62 (2007).
981 Power, 12 Clin. Microbiol. Infec. 25, 32 (1998); Nathan/Goldberg, 4 Nat. Rev.
Drug Discov. 887, 888-89 (2005); Outterson/Samora/Keller-Cuda, 7 Lancet Infect.
Dis. 559, 562 (2007).
982 Nathan/Goldberg, 4 Nat. Rev. Drug Discov. 887, 889 (2005).
983 See subsection V.D.3.c).
984 See subsection VI.E.

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 A. Concerns about lowered patentability

b) Increased patent exclusivities and amplified uncertainties thereof

Along with the lowered novelty requirement, the lenient obviousness re-
quirement more than any other has resulted in increased number of marginal
patents, which could constrain the freedom to operate basic inventions.985
The relaxed enablement requirement986 would bring broader patent
scopes.987 Thus, the lower the patentability requirement becomes, the more
patent applications (with a broader scope of patents) would be filed, the less
attention would be paid to patent examinations considering the limited
amount of resources and time in the patent offices, which would in turn lead
to poorer quality of patents.988 Lemley argues, regarding the low standard
of patent examination (“Rational Ignorance”), that it would be socially ef-
ficient to ignore the low standard itself, since i) the majority of patents would
have small economic importance and cost little to grant despite being invalid,
and ii) only a fraction of all patents carrying heavy importance would be
dealt with in the judicial system, which is expensive but still more efficient
because of the small numbers that would be litigated.989
However, since it would be easier to obtain patents thanks to lower
patentability requirements, the incentives to file marginal patent applications
would increase and would complete this vicious circle.990 For example, a
single search for the keyword “esomeprazole” in the patent database of EPO
as of December 20, 2013, showed 347 patent applications filed by many
applicants, including AstraZeneca.991 If the patent applications mentioning
different terms of esomeprazole, such as its chemical name, are also taken
into account, the number increases. In addition, this number includes only
the second generation patent applications for esomeprazole, not those for

985 Thomas, 52 Am. U. L. Rev. 771, 773 (2003) (“A lenient view of nonobviousness
is ordinarily seen as inventor-friendly and propatent. But this trend allows the
patenting of marginal inventions, increasing the possibility that primary inventors
will have to share the rewards of their pioneering inventions with follow-on inven-
tors of improvements.”).
986 This was not observed in the selection patents.
987 Burk/Lemley, 89 Va. L. Rev. 1575, 1953-54 (2003) (This is because if the invention
is not enabled by the patent specification, the permissible breadth of a patent would
be narrowed.).
988 Friebel et al., 2006, 36; Jaffe/Lerner, 2004, 175-76.
989 Lemley, 95 Nw. U. L. Rev. 1495 (2001).
990 Jaffe/Lerner, 2004, 174-76.
991 Espacenet, available at: http://worldwide.espacenet.com. (Last accessed on De-
cember 20, 2013).

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V. IMPLICATIONS OF THE PATENTABILITY REQUIREMENTS

omeprazole. Moreover, the difficulty of appealing to a court should not be

overlooked simply because of the cost of litigation, which pre-empts op-
portunities for many people to obtain judicial review. In other words, Lem-
ley’s rational ignorance argument can be applied to the case when most ap-
plicants can afford the costs of litigation. Furthermore, the poor quality of
issued patents would result in overly broad patent claims and patent thick-
ets.992 These all, in turn, would force society to pay the increased exclusivity
tax.993
Even the companies that could afford the litigation costs would still face
the difficulty of accessing their positions because of rationally ignored low
patentability standards. Using omeprazole as an example, in Europe, in 1994,
AstraZeneca filed a patent application for a salt of an enantiomer, Nexium®,
which the EPO granted a patent in 2000, with the following claim 1:
“The magnesium salt of [S-enantiomer of omeprazole, i.e. Nexium®].”994
Following opposition by Ratiopharm in 2001, the EPO finally revoked the
patent for this enantiomer in 2007.995 But the story did not end there. As-
traZeneca thereafter filed a divisional application of the patent application
in 2000,996 for which the EPO granted a patent in 2009 with the following
claim 1:
“The use of a magnesium salt of [S-enantiomer of omeprazole, i.e. Nexium
®] with an optical purity of ≥ 99.8% enantiomeric excess (e.e.) for the manu-
facture of a medicament for the inhibition of gastric acid secretion.”997 [Under-
line added]
However, oppositions was filed first by Hexal AG and then by others, and
the patent was revoked in August 2011. 998 AstraZeneca immediately ap-

992 Ann, 2009, 363.

993 Kefauver, 1966, 3 (noting “[e]very day in our lives monopoly takes its toll”).
994 European Patent No EP0652872B1.
995 European Patent Register of European Patent No EP0652872 B1, available at:
https://register.epo.org/ espacenet/regviewer (Last accessed on December 20,
2013).
996 This is one of the reasons the EPO limited the duration during when an applicant
can file divisional applications under Rule 36.
997 European Patent No EP1020461B1, available at: https://register.epo.org/espacenet/
regviewer (Last accessed on December 20, 2013).
998 European Patent Register of European Patent No EP1020461B1, with the record of
33 notices of oppositions.

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 A. Concerns about lowered patentability

pealed to the decision based on the suspicion of partiality, but it was rejected
in November 2012.999
The situation in the United States is somewhat different. AstraZeneca
settled with the first Paragraph IV1000 filer Ranbaxy Pharmaceuticals in
2008, with Teva Pharmaceuticals in 2010, with Dr. Reddy’s Laboratories in
2011 1001, with Sandoz and Sun Pharm in 2011, and with Lupin Limited in
2012. 1002 While the ANDA filers conceded that all patents at issue were
valid and enforceable, AstraZeneca granted licenses to these ANDA filers
to allow them to enter the US American market in 2014.1003 Meanwhile,
AstraZeneca has either received a Paragraph IV notice letter from, or com-
menced a patent infringement action against four other companies.1004
Nexium® was launched in the European market in 2000 and in the Amer-
ican market in 2010,1005 although the generic version of Nexium® will be
available in some European countries when the 10-year data exclusivity has
run out1006 and in the American market in 2014 after the expiration of the
patent. One may wonder why the long settlement history is enumerated here.
Three reasons: Firstly, neither the validity of the omeprazole, nor the validity
of the enantiomer of omeprazole (esomeprazole), nor even the validity of
the magnesium salt of the esomeprazole, but the validity of certain purity of
the same salt in esomeprazole entailed this long history. Secondly, even
without resorting to harsh arguments and reports on the dubious effective-

999 AstraZeneca/Hexal et al., T 1760/11 (2012).

1000 Code of Federal Regulations Title 21, § 314.94(a)(12)(i)(A)(4): “[...]the applicant
shall provide the patent number and certify, in its opinion and to the best of its
knowledge, [...]that the patent is invalid, unenforceable, or will not be infringed
by the manufacture, use, or sale of the drug product for which the abbreviated
application is submitted. The applicant shall entitle such a certification ‘Paragraph
IV Certification.’”.
1001 AstraZeneca, AstraZeneca Annual Report 2010, 186.
1002 AstraZeneca, AstraZeneca Annual Report 2011, 185.
1003 AstraZeneca, AstraZeneca Annual Report 2010, 186; AstraZeneca, AstraZeneca
Annual Report 2011, 185.
1004 AstraZeneca, AstraZeneca Annual Report 2011, 185.
1005 AstraZeneca, AstraZeneca Annual Review 2000, 7.
1006 For example, http://www.shop-apotheke.com/arzneimittel/6456801/esomepra-
zol-ratiopharm-40mg-hartkapseln.htm?know=search%3Aesomeprazole~. (Last
accessed on December 20, 2013).

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V. IMPLICATIONS OF THE PATENTABILITY REQUIREMENTS

ness of S-omeprazole over omeprazole,1007 both the results of revocation for

the patent covering a magnesium salt of esomeprazole in Europe and the
tedious list of settlement with generic manufacturers in the United States,
have established little if any improved effect of esomeprazole over omepra-
zole. Last but not least, even if the patent were ultimately invalidated, As-
traZeneca have successfully delayed the launch of generic versions by com-
petitors for many years.
The practice of granting a patent mistakenly or easily to a less significantly
advanced invention, in turn, would cause substantial expense for society,
because a technology that was already in the public domain could become
private property.1008 More important, the uncertainties created by overlap-
ping patent claims and the uncertainties about the validity of patents due to
the poor quality of examination would be major problems for players in the
industry.1009

c) Encouraged waste of resources

Furthermore, the expensive process of obtaining a patent results in the waste

of resources and money. In addition, almost every single step incurs cost.
Consequently, the increased number of patents and of patent applications
themselves threatens industry as well as society. Firstly, search costs should
be mentioned. A large number of second generation patents must be searched
and analyzed to determine whether there is room for further research or
whether a generic version will infringe any of them. In addition to the in-
novative companies that secured the basic patents, other competitors, both
other innovative companies and generic manufacturers, have actively filed
patent applications surrounding the basic invention, either to gain a better
position in licensing or to secure more tactical means after the expiration of
the basic patent. Indeed, an empirical study found three-quarters of patents
connected to high-cost drugs were owned by companies other than the drug’s

1007 E.g., Angell, 2004, 78-79 (reporting trials which compared not likely equivalent
doses but higher doses of Nexium® with Prilosec®, and two of the four trials
showed Nexium® had marginal improvement); Harris, The Wall Street Journal,
June 6, 2002.
1008 Merges, 76 Cal. L. R. 803, 876 (1988).
1009 Jaffe/Lerner, 2004, 174-76.

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 A. Concerns about lowered patentability

originator.1010 The study further reported that non-original companies are

investing substantial resources in second generation inventions related to
blockbuster drugs.1011 Even in the U.S., where the Orange book, a list of
patents that covers a launched medicine, is available, simply looking at the
list is insufficient,1012 and those who wish to launch their own products
without risk or with reduced risks need to spend a great deal of time and
effort in conducting their own analyses. This response by the companies to
the high number and low quality of patent application filings makes the sit-
uation worse for the industry, simply by adding more confusion, uncertainty
and cost to the development process.1013
There are also costs involved in obtaining a patent, after filing a patent
application. In the U.S., as long ago as 2001, it was reported to cost about
$10,000 to $30,000 in filing fees, attorneys’ fees, and other expenses to pre-
pare a patent application.1014 The increased number of patent rights on trivial
improvements owing to lowered patentability requirements would result in
blocking patent technology or increasing transaction costs without offsetting
advantages in innovation.1015 Considering the territoriality principle of
patent protection,1016 cost would be multiplied by the number of countries
in which an applicant would seek a patent.
This problem is compounded by the fact that pharmaceutical companies
will resort to creative litigation tactics, especially in securing evergreening
patents.1017 Based on these secured patents, companies not only try to bring
the reformulated drugs to the market through regulatory approvals, but also
turn to litigation to stifle competition based on those patent rights. Naturally,
this adds to the cost incurred by generic companies in challenging or cir-
cumventing low-quality improvement patents.1018 It is always easier and less
costly to prevent patent applications from being patented than it is to inval-
idate the patents. Increasing numbers of challenges have been brought
against patents covering products with revenues below $100 million as well

1010 Christie, et al, 8 PLoS Med 1, 4 (2013) (further reporting that a multitude of players
seek monopoly control over innovations to blockbuster drugs).
1011 Christie, et al, 8 PLoS Med 1, 4-6 (2013).
1012 Christie, et al, 8 PLoS Med 1, 4 (2013).
1013 Howard, 4 J. Generic Med 231, 235-36 (2007).
1014 Lemley, 95 Nw. U. L. Rev. 1495, 1498 (2001).
1015 Landes/Posner, 2003, 319.
1016 Doi, 26 Fordham Int'l L.J. 377 (2002).
1017 Eisenberg, 13 Mich. Telecomm. Tech. L. Rev. 345, 348-49 (2007).
1018 Howard, 4 J. Generic Med 231, 235-36 (2007).

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as those covering the blockbusters with annual sales in excess of $1 bil-

lion.1019 Long and tedious battles over dozens of patents on one drug force
not only patent holders but also challengers to waste valuable re-
sources.1020 Yet, once again, this cost applies only to those who can afford
to carry on the costly litigation procedure. The situation is worse in the
United States than in other countries, since defending against patent in-
fringement suits is particularly expensive there.1021 In addition, the Ameri-
can civil procedure makes it easy for claimants to sue, basically because
attorneys can charge contingency fees, and because there is no duty to re-
imburse the attorney fees of the winning party. Thus, right holders incur little
financial risk at the time of filing a patent infringement suit.1022

d) Hindrance of pharmaceutical innovation

At the end of the day, all of the activities discussed above certainly distract
the pharmaceutical companies from their genuine task of “providing the so-
ciety with new medicines.”1023 Considering that when the number of NMEs
increases, mortality and health problems decline, 1024 the problems caused
by lowered patentability could hinder real pharmaceutical innovation and
threaten our health. Some scholars have even argued that more than 90% of
the “countering” drugs to recent challenges were likely to be reformulations
or second generation products, at best marginal improvements over present-
day pharmaceuticals, as compared with all other product introduction. 1025
Launch of these new forms of (older) drugs does not help to increase human
longevity.1026 Indeed, second generation patents have little to do with the
drugs’ medical use. Rai also argued that there were drugs that provided little
or even no therapeutic advantage over existing drugs as follows:

1019 Grabowski/Kyle, 28 Manage. Decis. Econ. 491, 495-496 (2007).

1020 See subsection V.A.1.c).
1021 Jaffe/Lerner, 2004, 68.
1022 Ann, 2009, 363-64.
1023 Herper, Forbes, February 5, 2002.
1024 Cockburn, 2006, 2-3.
1025 Higgins/Graham, 326 Science 370, 370 (2009).
1026 Lichtenberg, 5 Int. J. Health Care Fi. 47, 70 (2005) ( “Launches of (older) drugs
that are not NCEs - any of which may already have been on the market -do not
increase longevity. […] increasing the ratio of non-NCE to NCE launches reduces
the fraction of people consuming NCEs, which in turn reduces longevity.).

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“The cost-effectiveness of me-too drugs, particularly in the [well established

categories], is questionable. Although the me-too drug may prove more effective
than the innovator drug for a certain population of patients, this marginal benefit
is likely to be small.”1027
Here, she meant “me-too drugs”1028 as drugs addressing the same illness
while managing to do so without infringing innovator patents,1029 such as
cimetidine (Tagamet®), ranitidine (Zantac®), or famotidine in the category
of H2-receptor antagonist.1030 These me-too drugs, however, at least can
play some roles in curbing prices through limitation of the scope of exclu-
sivity enjoyed by any given patented drug1031 can function to generate an-
other patient population which can be better treated by them,1032 or can pro-
vide the patients with more choices. Contrary even to these me-too drugs,
the therapeutic advantage would be harder to expect from the products (e.g.
Esomeprazole) covered by second generation patents (e.g. S-enantiomer of
omeprazole), which arguably contains the same active ingredient as
Omeprazole. New versions (e.g. isomer) of basic drugs can often eliminate
or mitigate their side effects, which were present in the old version of the
drugs.1033 However, it is debatable whether these incremental therapeutic
advantages, can justify these new monopoly costs to the patients.1034
Apart from the effectiveness of second generation products, basic paten-
tees greatly increased the spending attributable to line extensions as set out
above, short-term priorities encouraged marginal inventions that provided
more reliable returns on investment at the expense of major changes,1035 and
the market became flooded with products that did not provide significant
clinical improvement over older medications.1036 These factors result in
more imitative research and fewer actual breakthroughs and drugs.1037 This

1027 Rai, Ill. L. Rev. 173, 205-06 (2001).

1028 See subsection II.D.2.
1029 Rai, Ill. L. Rev. 173, 201 (2001).
1030 H2-receptor antagonists are used in the treatment of dyspepsia or peptic ulcer
disease.
1031 Rai, Ill. L. Rev. 173, 206 (2001).
1032 For example, the prototypical H2-blocker, Cimetidine has serious drug interac-
tions with other drugs, but famotidine does not have serious interactions, which
allows the patients to be less careful to take multiple medications.
1033 Glasgow, 41 IDEA 227, 251 (2001).
1034 Glasgow, 41 IDEA 227, 251 (2001).
1035 Munos, 8 Nat. Rev. Drug Discov. 959, 966 (2009).
1036 NIHCM, 2002, 18-19.
1037 Munos, 8 Nat. Rev. Drug Discov. 959, 966 (2009).

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becomes a greater problem in conjunction with the lowered patentability of

second generation patents. Merges and Nelson note that where incentives
for improvement are increased, incentives for innovative inventions are de-
creased.1038 Hunt also contends that, if protection were extended to more
obvious inventions, there would be an additional social cost of monopolies
and also additional losses, if firms redirect their research toward less risky
projects.1039 In addition, crucially, the uncertainty created by overlapping
patent claims and the questionable validity of patents due to the poorer qual-
ity of examination with the increased number of patent applications will
undermine incentives to invest even in new technology and will stifle inno-
vation.1040 Consequently, considering the limited resources of most compa-
nies and the effort required for second generation inventions, granting se-
lection inventions may siphon off resources that can be exploited to research
the new medical entities that society has found in short supply. Some
scholars have also warned that there will be a clear risk of diverting a sig-
nificant proportion of investment from more innovative research and from
areas particularly in need of therapeutic breakthroughs.1041 Therefore, the
lowered patentability criteria on second generation inventions can actually
hamper meaningful innovation in the pharmaceutical industry. Most impor-
tantly, the inordinate delay for marginal benefits disadvantages patients in
need of new medicines.1042

2. Concerns about the novelty requirements

The problem faced by selection inventions concerns the most fundamental

patentability requirement, novelty.

a) Language dependent prior art disclosure problem

As discussed in chapter IV.A.4., the amount of disclosure is more dependent

upon the language of the claim than upon the disclosure perceived by the

1038 Merges/Nelson, 90 Colum. L. Rev. 839, 873-78 (1990).

1039 Hunt, 1999, 11.
1040 Jaffe/Lerner, 2004, 174-76.
1041 Pifferi/Perucca, 20 Eur. J. Drug Metab. Ph. 15, 24 (1995).
1042 Beary, 339 Lancet 495 (1992).

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 A. Concerns about lowered patentability

person skilled in the art. In particular, the distinction between the disclosure
of generic formulae and that of individual substances in prior art seems to
have taken root within EPO case law in assessing novelty.1043 In T181/82,
the BOA stressed that there was a strict distinction between the “purely in-
tellectual content” of the definitions and their “information content in the
sense of a specific teaching with regard to technical action.”1044 In other
words, the novelty of the selection invention was judged differently when
the prior art disclosed the invention in a generic term rather than an indi-
vidualized form.
However, it is very difficult to understand the absurd conclusion that the
same expressions in scientific language, such as “C1-4 alkyl” and “alkyl with
less than five carbon atoms” disclose different radicals in legal lan-
guage.1045 According to the BOA, “C1-4 alkyl” discloses only C1 alkyl i.e.
methyl, while the latter phrase discloses nothing, because this expression
does not disclose any individual alkyl group. This method of interpretation
does not appear to be performed through the eyes of a person skilled in the
art, who cannot differentiate between these expressions. In addition, the as-
sessment of novelty becomes dependent on the draft of the claim. For ex-
ample, the applicant would need to draft depending upon whether he wants
to destroy all prior art or whether he wants to leave room for another appli-
cation to other parties or even to himself. For an applicant to achieve a “de-
fensive patent application” or a “defensive publication,” he must disclose
every possible element other than the efficiency of disclosure. For example,
according to the BOA, to disclose “C1-4 alkyl,” one must disclose methyl as
a C1 alkyl; ethyl as a C2 alkyl; n-propyl and isopropyl as C3 alkyls; and n-
butyl, isobutyl, sec-butyl, and tert-butyl as C4 alkyls. But if he wants to keep
some for further application, the applicant would disclose only “C1-4 alkyl”
or even “alkyl with less than five carbon atoms.” He would still be able to
enforce the patent against the third party if he used it, since the claim would
cover all eight alkyls in any case. The situation would be different if a third
party patented it. This photographic approach to assessing novelty is prob-
lematic.

1043 See EPO Examination Guidelines G-VII, Annex 3.1.(iv) (noting that if the selected
group has not been specifically disclosed in the prior art, it would have been the
question of lacking of novelty rather than obviousness.).
1044 Ciba-Geigy/Spiro compounds, T 181/82, OJ EPO 1984, 401, 411.
1045 Grubb/Thomsen, 2010, 235.

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V. IMPLICATIONS OF THE PATENTABILITY REQUIREMENTS

b) Rendering inventive step requirement meaningless

Novelty examination is a separate test to determine patentability1046 and is

not the first step in examining obviousness. However, by lowering the bar
for novelty, the courts appear to fail to sufficiently distinguish between the
test of novelty from that of obviousness. In particular, the Escitalopram
Courts in major jurisdictions made significant efforts to evaluate “the diffi-
culty of the separation of citalopram” in order to assess novelty, after ad-
mitting that it was apparent that a racemate of a chemical compound like
citalopram had equal amounts of two enantiomers. In the end, the courts
found that difficult separation did not lead to Escitalopram being anticipated.
This could be interpreted as rendering novelty dependent on the “difficulty”
or amount of effort and time involved in obtaining a claimed compound,
whose structure was described in the prior art based on the common knowl-
edge of a person skilled in the art.
The level of enablement of the prior art reference is determined to assess
novelty. 1047 This could be one of the reasons why the determination of nov-
elty has become more relative and, to some extent, similar to that of obvi-
ousness. In the United States, for example, prima facie obviousness estab-
lished based on the prior art disclosure of racemates and de facto disclosure
of the enantiomer itself was rebutted based on no reasonable expectation of
success and the difficulty of separation.1048 It is indeed difficult to differen-
tiate how difficult it will be for a skilled person to obtain the claimed in-
vention within the context of anticipation depending on whether there was
any expectation of success in separating within the context of non-obvious-
ness. Once it is determined that the claimed invention was not easy to obtain
from the prior art disclosure, the inventive step of the invention could also
be established to some extent. This in turn suggests that the courts may not
clearly distinguish between the novelty and the non-obviousness require-
ments, which is contrary to what the BGH has postulated in Germany.1049
Indeed, the BOA addressed a distinction between novelty and the inven-
tive step of selection inventions to the arguments that deciding selection

1046 BGH/Olanzapine, IIC 2009, 596, 599.

1047 See subsection IV.A.3.
1048 See Sweet, 24 Berkeley Tech. L.J. 129, 142 (2009); See also Forest Labs., Inc. v.
Ivax Pharms., Inc., 501 F.3d, 1263, 1269 (Fed. Cir. 2007); See subsection IV.B.
3.b).
1049 BGH/Olanzapine, IIC 2009, 596, 599.

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 A. Concerns about lowered patentability

novelty was identical or closely similar to that used to determine obviousness

as follows:1050
“[T]he Respondent sought to convince the Board that the legally correct ap-
proach for deciding selection novelty was identical or closely similar to that
employed in determining obviousness. In particular, he put forward the propo-
sition that in cases of overlapping ranges of compounds, a claim to a narrower
range as compared with a broader prior art range was always selectively novel
if it could be demonstrated that the narrow range was inventive over the broader
range. […] Whereas it is undoubtedly true that there can be no selection novelty
in a range of overlap where the choice of moving into that overlapping range
from the prior art one is obvious, it doesn't either as a matter of law or as a matter
of logic follow that the converse is true, namely that if a choice of a narrower
range is inventive, then there must of necessity be selective novelty in it. For
the above reasons, the Respondent's argument in this respect cannot be accept-
ed.”1051
Simply put, the Board admitted that if the selection from the prior art is
obvious, then there is no novelty in the selection thereof. As the Board further
noted, it is not always true; if the selection is inventive, then there is the
novelty of selection. However, and importantly, the contrapositive of the
first sentence is also undoubtedly true.1052 If there is novelty in the selection
in a range of overlap, then the choice of moving into the overlapping range
from the prior art one is not obvious. Therefore, even borrowing the Board’s
own words, the same test is repeated in both steps, or both steps are deter-
mined by a single test for the assessment of patentability. In the end, can it
be said that the test for novelty is placed in the broader context of the test
for “inventive step”?1053
Furthermore, to assess inventiveness, more information is often required
in addition to the teaching from the prior art disclosure. Given that that in-
formation seems to be close enough, such as the difficulty of separation, the
additional information could already be used to destroy novelty. Thus, again
it appears that, to some extent, the examination of patentability is de facto
reduced to the examination of novelty, thereby making the test of obvious-
ness redundant.

1050 AKZO/Bleaching activators, T 133/92, 1994.

1051 AKZO/Bleaching activators, T 133/92, 1994, point 2.1.4.
1052 Peterson, 1974, 9-10 (explaining when a statement is true, a contrapositive of the
sentence is also true).
1053 See e.g., Tilmann, IIC 2010, 149, 158-59.

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V. IMPLICATIONS OF THE PATENTABILITY REQUIREMENTS

c) Potential concerns of “direct and unambiguous” disclosure requirement

According to the case law in selection inventions, the courts require that the
prior art disclose the selection inventions “directly and unambiguous-
ly.” 1054 However, there are further areas in which the rules for disclosure
play a role. Firstly, the disclosure of priority application(s) matters to the
validity of priority claiming compared with the disclosure of application
claiming the priority. Secondly, the content of the application, in terms of
the disclosure of patent specification matters to the sufficiency of the dis-
closure regarding the scope of the claim. Thirdly, the disclosure of the orig-
inally filed content of the patent application matters in whether it supports
the amended claims. It is especially important that the species is not disclosed
by the genus patent but falls within the scope of the same genus patent.
Fourthly, when a patentee limits the scope of the patent, the disclosure of
the granted patent specification matters to the scope of the limited patent.
Therefore, it will be interesting to see whether the courts will uniformly
apply this concept of disclosure in terms of novelty to other areas of disclo-
sure, and, if not, to what extent they will do so individually.

B. Implications considering the breadth of selection patents

A selection invention is generally chosen from the available broader prior

art and directed to a specific species or a subgroup thereof which falls within
the scope of the prior wider genus. As the other side of the coin, this kind of
invention can be an overlap invention, as the result of which the later selec-
tion patent invention can be practiced only by licenses from the prior paten-
tee, since the patent claiming general class will protect each member of the
class, even though it is not considered a disclosure of those specific mem-
bers.1055 This is one of the cases where such claims may reach beyond the

1054 See e.g. Tilmann, IIC 2010, 149, 159; See also Bublak/Coehn, GRUR 2009, 382,
389.
1055 Robinson, IIC 1972, 139, 143; Nastelski, IIC 1972, 267, 293-94 (describing “prod-
uct protection is simultaneously granted for every individual member of this group
irrespective of whether or not such member has been specially designated in the
group formula.”).

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 B. Implications considering the breadth of selection patents

scope that even the patentee had in fact invented in three circum-
stances.1056 Needless to say, this phenomenon will often be observed ac-
cording to the increased number of second generation inventions based on
the lowered patentability requirements thereof. For this reason, the scope of
second generation patents will be analyzed first, after which the impact of
lowered patentability will be examined.

1. Scope of the protection

Even though the breadth of a patent is a more abstract concept than its length,
the allowable breadth of claims is determined by examiners and upheld by
the judiciary,1057 and the “doctrine of equivalents” and “reverse doctrine of
equivalents” are adopted by the courts.1058
The scope of the claim is a matter of quantity, and the clarity of the claim
is a matter of quality. The claims are interpreted with the help of description
and drawings.1059 If there is another definition in the description, this defi-
nition is decisive in determining the scope of the patent.1060 Thus, it is the
function of the claims to define clearly and with precision the monopoly
claimed, so that others may acknowledge the exact boundaries of the area
within which they will be trespassers.1061 In the EPO, the extent to which
the breadth of the claims should be allowed is considered under Art. 83 EPC
and Art. 84 EPC second sentence. Although Art. 83 EPC is directed to the

1056 Lemley, 75 Tex. L. Rev. 989 (1997) (The other two cases are the case where the
doctrine of equivalents can be applied; and the case when patent claims may reach
new and unanticipated inventions made after the patent issues, but which fall
within the literal language of the claims.).
1057 Scotchmer, 5 J. Econ. Perspect. 29, 30 (1991).
1058 Friebel et al., 2006, 22.
1059 See e.g., EPC Art. 69 and the Protocol on the Interpretation of Article 69 EPC, 35
U.S.C. § 113.
1060 See e.g., BGH/Bierklärmittel (Beer Fining Agent), GRUR 1984, 425, 426 (holding
that if the definitions used in the patent specification differed from those in the
literature in the field, the definitions in the specification prevailed for the inter-
pretation of the patent); see also, Electric & Musical Industries Ltd v. Lissen Ltd
[1939] R.P.C. 23, 57 (holding “[i]f the claims have a plain meaning in themselves,
then advantage cannot be taken of the language used in the body of the specifica-
tion to make them mean something different.”).
1061 Electric & Musical Industries Ltd v. Lissen Ltd [1939] R.P.C. 23, 39; See e.g.,
EPC Art. 84, 35 U.S.C. § 112, second sentence.

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V. IMPLICATIONS OF THE PATENTABILITY REQUIREMENTS

disclosure of the invention, the underlying purpose thereof is the same as

Art. 84 EPC, namely, to secure the grant of the proper breadth of patent
exclusivity that can be justified by the technical contribution to the art.1062
This reflects quite well the so-called “reward theory” of the patent system,
which could be the most common justification. Regarding the claim con-
struction, in the Catnic case, the British court tempered its previous way of
interpreting claims, the “literal approach”1063 to the “purposive construc-
tion.”1064 And the scope of patent is not generally limited to the version that
the inventor invented, but could cover the subsequently modified versions
as long as each falls within the scope.1065
Beyond the literal scope of claims, courts may consider an equivalent of
certain elements in the claims, the so-called doctrine of equivalents. The
application of the doctrine of equivalents in each jurisdiction is quite diverse.
Notably, it is argued that there is no general doctrine of equivalents in British
courts,1066 which instead have used the so-called “pith and marrow” ap-
proach that is a similar principle.1067 This means that the use of the pith and
marrow of the invention, i.e. its important parts, is an infringement even
though there are insubstantial differences between the allegedly infringing
embodiment and the patent claim. There was a case in which the court ap-
plied its pith and marrow doctrine to the product claim.1068 Similar to the
terfenadine cases below, the issue was whether the prodrug infringed the
metabolite patent. An acetone adduct (Hetacillin) of another medication
(Ampicillin) was immediately hydrolyzed in the body to the medication
(Ampicillin), and hetacillin in itself did not have an antibiotic effect. The
Court held that the accused product infringed the patent, because it was a

1062 Exxon/Fuel oils, T 409/91, OJ EPO 653, 661-62 (1994) point 3.5.
1063 Electric & Musical Industries Ltd v. Lissen Ltd [1939] R.P.C. 23, 39 (expressly
noting that there was nothing like infringement of the equity of a patent).
1064 Catnic Components Limited and another v. Hill & Smith Limited [1982] R.P.C.
183, 243 (holding “[a] patent specification should be given a purposive construc-
tion rather than a purely literal one […]”).
1065 Kitch, 20 J. Law Econ. 265, 268-69 (1977) (further noting this feature of the patent
system is important to the drug industry, just as a new use invention to a known
drug, e.g. secondary therapeutic indications.).
1066 See e.g., Occlutech GmbH v. AGA Medical Corp [2010] EWCA Civ 702, paras
23; see also Kirin-Amgen Inc v. Hoechst Marion Roussel Limited, [2004] UKHL
46 (Lord Hoffman asserted again there was no doctrine of equivalents in UK).
1067 Kirin-Amgen Inc v. Hoechst Marion Roussel Limited, [2004] UKHL 46, paras
36-37.
1068 Beecham Group v. Bristol Laboratories Ltd. [1978] RPC 153.

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 B. Implications considering the breadth of selection patents

temporarily disguised or altered form of the medication.1069 A similar line

of analysis is found in German jurisprudence, such as whether the allegedly
infringing embodiment achieves the same function, or whether a person
skilled in the art could replace the changed features while expecting the same
effect.1070
In Germany, the following conditions must be met to find patent in-
fringement: (i) Whether the modified embodiment solves the problem un-
derlying the invention by means which have objectively the same technical
effect, (ii) whether a person skilled in the art by means of his specialist
knowledge is able to identify the modified means as having the same effect,
(iii) whether the considerations that the person skilled in the art applies are
drawn from the technical teaching of the patent claim (so that the person
skilled in the art takes the modified embodiment into account as the equiv-
alent solution in question), and (iv) whether the modified embodiment is
anticipated or made obvious by the state of the art (the so-called “Formstein
objection”).1071 Even though prosecution history estoppel,1072 which re-
quires an extensive research on the file wrapper, is not accepted, one may
raise the Formstein defence that the allegedly infringing embodiment argued
to be an equivalent would not be patentable over the prior art, either because
it is known from the prior art, or because it is obvious in view of the prior
art.1073 This is obviously because the allegedly infringing product within the
scope of the patent is not patentable over the prior art, and the patent claiming

1069 Beecham Group v. Bristol Laboratories Ltd. [1978] RPC 153, 192 (noting “[t]he
mere temporary cloaking or masking of a product does not in general suffice to
avoid infringement of letters patent whose specification claims that product.”).
1070 See e.g., BGH/Schneidermesser I (Cutting blade I), GRUR 2002, 515, 517; see
also Catnic Components Limited and another v. Hill & Smith Limited [1982]
R.P.C. 183, 243; see also Kirin-Amgen Inc v. Hoechst Marion Roussel Limited,
[2004] UKHL 46, paras 41-42, 75; cf., Occlutech GmbH v. AGA Medical Corp
[2010] EWCA Civ 702, para 28 (even though the decision is denying general ex-
istence of doctrine of equivalents in UK, it found German approach is lacking one
question which is applied by the UK court, i.e. “[w]ould the reader skilled in the
art nevertheless have understood from the language of the claim that the patentee
intended that strict compliance with the primary meaning was an essential re-
quirement of the invention? If yes, the variant is outside the claim”).
1071 BGH/Schneidermesser I (Cutting blade I), GRUR 2002, 515, 517; BGH/Form-
stein, GRUR 1986, 803, 805-06.
1072 See infra 1077 -1078 and accompanying texts.
1073 BGH/Formstein, GRUR 1986, 803, 805-06.

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V. IMPLICATIONS OF THE PATENTABILITY REQUIREMENTS

infringement also has a reason for invalidity. In other words, this is to prevent
something in the prior art from being taken away from the public.
In the United States, this doctrine originated more than a century
ago.1074 Hand J noted that the purpose of this doctrine was to temper un-
sparing logic and to prevent an infringer from stealing the benefit of the
invention.1075 This was acknowledged by the Supreme Court in the Graver
Tank case, where it held that to find the infringement under this doctrine, the
alleged embodiment had to perform substantially the same function in sub-
stantially the same way to obtain the same result.1076 In Warner Jenkinson
v. Hilton Davis, while upholding this doctrine, the Supreme Court also noted
that “prosecution history estoppel”1077 was available as a defence to in-
fringement, unless the amendment’s purpose was not related to patentabil-
ity. 1078 The following additional exceptions to prosecution history estoppel
were provided in the Festo case: i) The equivalent might have been unfore-
seeable at the time of the application, ii) the rational underlying the amend-
ment might bear no more than a tangential relation to the equivalent in ques-
tion, or iii) there might have been other reasons.1079
In Korea, the Supreme Court recognized a five-step test of the doctrine
of equivalents: When an element of an invention is substituted in an accused
device, the substituting element of the accused device is equivalent to the
substituted element of the patented invention, if i) the problem solving prin-
ciples are the same in the patented invention and the accused device, ii) the
substituting element of the accused device provides substantially the same
operational effects as the substituted element of the patented invention, iii)
the substitution is obvious to one having ordinary skill in the art, iv) the

1074 Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S. 605, 608 (1950)
(noting “[o]riginating almost a century ago in the case of Winans v. Denmead, 15
How. 330, 14 L.Ed. 717, it has been consistently applied by this Court and the
lower federal courts, and continues today ready and available for utilization when
the proper circumstances for its application arise.”).
1075 Royal Typewriter Co. v. Remington Rand, Inc., 168 F.2d 691, 692 (2nd Cir. 1948).
1076 Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S. 605, 608 (1950).
1077 A patentee who had made narrowing amendments to the application in order to
meet the patentability requirements, may not invoke the doctrine of equivalent to
recapture the scope of his claims which he already surrendered.
1078 Warner-Jenkinson Co., Inc. v. Hilton Davis Chemical Co., 520 U.S. 17, 40-21
(1997).
1079 Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd., 535 U.S. 722, 740-41
(2002).

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 B. Implications considering the breadth of selection patents

accused device was not known or could not have been easily conceived from
known technologies by a person skilled in the art at the time of filing the
application for the patent, and v) there are no special circumstances such as
intentional exclusion of the substituting element of the accused device from
the claimed scope during the prosecution of the patent.1080

2. Scope of selection patents

a) Species selection patents

It is well established that a species selection patent falls within the scope of
the previous genus patent,1081 although there was an exceptional decision in
Italy. 1082 In that case, a Markush type claim covered some 10 million com-
pounds, and the active substance in Cimetidine was not explicitly mentioned
in the patent specification.1083 The Supreme Court of Italy held that a phar-
macologically active substance, such as Cimetidine, which could be deter-
mined from a patented formula only through further complex research and
experiments, was not eligible for the protection of the patent, because it was
not clearly and completely described in the patent document.1084 However,
this decision was an exception.

b) Optical isomers

In Europe
In Ranbaxy v. Warner-Lambert, the issue was whether the claim1085 was
limited only to racemates or also covered enantiomers. 1086 Ranbaxy tried to
argue that the claim must be limited to the racemates. It argued that since
the patentee would have known that one enantiomer was ineffective, there

1080 Korean Supreme Court/Bayer Aktiengesellschaft v. Union Quimico Famaceuti-

ca, S.A, 97Hu2200, Jul. 28, 2000, para 2.
1081 See e.g., Domeij, 2000, 317.
1082 Corte di Cassazione/Cimetidin, GRUR Int 1991, 497.
1083 Corte di Cassazione/Cimetidin, GRUR Int 1991, 497.
1084 Corte di Cassazione/Cimetidin, GRUR Int 1991, 497, 498-99.
1085 See supra 603 .
1086 Ranbaxy (UK) v. Warner-Lambert, [2006] EWCA Civ 876.

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was no reason to claim this ineffective enantiomer. Thus, he could not have
intended to claim the other single enantiomer either.1087 It further argued that
if the patentee wished to, he could have done so easily by claiming one type
of enantiomer explicitly. Therefore, the patent covered only the race-
mate.1088 However, Jacob LJ reiterated the point in the Kirin-Amgen
case1089 regarding the purposive claim construction that the claim construc-
tion was an exercise in discerning what the person skilled in the art would
have understood the claim to mean, not an exercise in over-meticulous se-
mantic analysis.1090 Jacob LJ dismissed this argument on the basis that, since
the purpose of the claim was to “demarcate” the invention, there was no
rational basis for assuming that the patentee would have intended to exclude
the pure enantiomer, which he would have known was the substance that
really mattered.1091 Ranbaxy further argued that, according to convention,
the structural formula shown in the patent could represent either a particular
enantiomer or a racemate, but not both.1092 This argument also failed, since
this convention needed to be proved as a matter of fact, but the judge in the
first instance had made no such finding.1093 Accordingly, in the context of
the patents, claim 1 was construed as covering both the racemate and either
of the enantiomers.
Neuberger LJ further explained why the patent covered the enantiomers.
He noted that although the racemate was the racemic mixture which would
have been regarded as a different substance from either of the two enan-
tiomers of which it was composed, it was a 50/50 mixture of the two enan-
tiomers.1094 He further noted as follows:
“[W]here a racemate is administered as a drug, one enantiomer is likely to have
all, or the great majority, of the biological activity, and that activity will be either
unaffected or reduced by the presence of the other enantiomer. The fact that the
racemate in the present case has the claimed pharmaceutical effect shows that
it is no exception. This demonstrates that the sole or mainly effective enantiomer
maintains its character and (at least to a substantial extent) its effectiveness,

1087 Ranbaxy (UK) v. Warner-Lambert, [2006] EWCA Civ 876, para 18.
1088 Ranbaxy (UK) v. Warner-Lambert, [2006] EWCA Civ 876, para 18.
1089 Kirin-Amgen Inc v. Hoechst Marion Roussel Limited, [2004] UKHL 46, paras
32-35.
1090 Ranbaxy (UK) v. Warner-Lambert, [2006] EWCA Civ 876, para 7.
1091 Ranbaxy (UK) v. Warner-Lambert, [2006] EWCA Civ 876, para 19.
1092 Ranbaxy (UK) v. Warner-Lambert, [2006] EWCA Civ 876, para 23.
1093 Ranbaxy (UK) v. Warner-Lambert, [2006] EWCA Civ 876, para 24.
1094 Ranbaxy (UK) v. Warner-Lambert, [2006] EWCA Civ 876, paras 44-45.

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notwithstanding that it is administered as part of a racemic mixture. Accord-

ingly, it appears to me that it is wrong to conclude that a racemate, and in par-
ticular the racemate in this case, cannot be regarded as a mixture of the two
enantiomers. […] “A+B” can be regarded both as a single entity, namely (A
+B), and as a mixture of two entities, namely A and B.”1095
Even though the patent claiming an enantiomer was held invalid because of
the lack of novelty based on the fact that the prior art disclosed the method
for producing the enantiomer,1096 this Court clearly noted that one enan-
tiomer was responsible for the efficacy of the racemate thereof, and a race-
mate was the mixture of two enantiomers. Even though Neuberger LJ noted
that this construction was dependent upon the facts and on the context,1097
a claim on a racemate can be construed so that it also covers the enan-
tiomers.
To the contrary, the scope of a claim over an enantiomer does not extend
to the old racemate, as Jacob LJ noted “such would be an absurd construction
given the fact that the patent acknowledges that [the racemate] is old, having
been disclosed in [the previous patent].”1098

In the United States

In Pfizer v. Ranbaxy, as it did before the British court, Ranbaxy argued that
the structural formula I was limited to racemates.1099 The specification of
patent disclosed as follows: “The compounds of structural formula I above
possess two asymmetric carbon centers … [which] gives rise to four possible
isomers, two of which are the R-cis- and S-cis-isomers and the other two of
which are the R-trans- and S-trans-isomers. This invention contemplates
only the trans-form of the compounds of formula I above.” Based on this
intrinsic evidence, even though the claim 1 presented the formula of race-
mate, the Federal Circuit held that the patentee disclaimed the R-cis- and S-
cis-isomers out of four isomers.1100 The Federal Circuit further noted that
the terms “racemate” or “racemic mixture” did not appear in the patent

1095 Ranbaxy (UK) v. Warner-Lambert, [2006] EWCA Civ 876, paras 45-46.
1096 See supra 605 -606 and accompanying texts.
1097 Ranbaxy (UK) v. Warner-Lambert, [2006] EWCA Civ 876, para 47.
1098 Generics (UK) v. Daiichi Pharmaceutical [2009] EWCA Civ 646, para6; see also
Generics (UK) v. Daiichi Pharmaceutical [2008] EWHC 2413 (Pat), para 317.
1099 Pfizer, Inc. v. Ranbaxy Laboratories Ltd., 457 F.3d 1284, 1288-89 (Fed. Cir.
2006).
1100 Pfizer, Inc. v. Ranbaxy Laboratories Ltd., 457 F.3d 1284, 1289 (Fed. Cir. 2006).

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specification. Thus, there was no intrinsic evidence that limited claim 1 to

trans-racemates, as opposed to an R-trans enantiomer, an S-trans enantiomer
or any mixture thereof.1101 Moreover, against Ranbaxy’s contention that the
examples did describe reaction sequences that produced racemates, the Fed-
eral Circuit held that “restricting claim 1 on this basis would improperly
import limitation from the specification into the claims, which should be
avoided unless the patentee clearly intends for the claims and the embodi-
ments in the specification to be strictly coextensive.”1102 Accordingly, the
Court held that the claim was correctly construed to include enantiomers and
that the Ranbaxy’s product infringed the patent.

c) Metabolite

In the United Kingdom

Section 64 of UK Patents Act provides a person with a personal right to
continue an act if he or she was performing effective and serious preparations
to carry out an act that would have been an infringement if the patent were
in force, before the priority date.1103 In Merrell Dow Pharmaceuticals Inc
v. HN Norton & Co Ltd case, Merrell Dow argued that the existence of
Section 62 showed that the Parliament recognized the effect of the new 1977
Act that people might find themselves unable to go on doing what they or
someone else had done before. The House of Lords, however, held that this
argument may produce results that seem contrary to common sense and,
furthermore, that this provision had no application to the case, since no de-
fendants were marketing terfenadine before the priority date of the acid
metabolite patent.1104 On the other hand, the Court solved the difficulty that
the exclusivity of the parent drug could have been extended by the metabolite
patent by holding that the patent was invalid because of the lack of novel-
ty.1105

1101 Pfizer, Inc. v. Ranbaxy Laboratories Ltd., 457 F.3d 1284, 1289 (Fed. Cir. 2006).
1102 Pfizer, Inc. v. Ranbaxy Laboratories Ltd., 457 F.3d 1284, 1290 (Fed. Cir. 2006).
1103 UK Patents Act 1977, Section 64.
1104 Merrell Dow Pharmaceuticals Inc v. HN Norton & Co Ltd [1995] UKHL 14, paras
19-20.
1105 See supra 663 -666 and accompanying texts.

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In Germany
The Munich Higher Regional Court held that the patent of metabolite was
not infringed if, according to the expired patent, a pharmaceutically active
ingredient could be made and used which was converted in the body to a
substance protected under a new patent.1106 The Court’s holding was based
on the facts that the defendant did not sell, market, or keep for the file the
metabolite and that the terfenadine produced and marketed by the defendant
was exactly the same compound protected by the plaintiff’s patent that had
expired. 1107 The Court held that, if the patent was expired, and the inventor
was rewarded enough, the teaching of a patent must have been applica-
ble.1108 It further stated that, if scientific knowledge (in this case, active
metabolite) has suddenly made the manufacturing of the old medication into
“a purposive manufacture of medication,” this way of interpreting the con-
cept of manufacture was not in line with the patent protection.1109

In the United States

In the same terfenadine case, the District Court held that the patent on the
metabolite was valid. However, it was not infringed because the scope of
the patent to the metabolite was limited to the synthetic version of the
metabolite.1110 This approach seems to be difficult to reconcile with “con-
tributory infringement.”1111
In other cases, however, the Federal Circuit stated that a person might
infringe a claim directed to a metabolite when the parent drug was admin-
istered to the person, since it would be metabolized to the claimed inven-

1106 OLG München/Terfenadine, GRUR, 1994, 746 (Because of the bifurcate system
in Germany, this Court could not nullify the patent).
1107 Vossius/Vossius/Vossius, GRUR 1994, 472, 474, 476 (also noting that the defen-
dant did not suggest another use either).
1108 Vossius/Vossius/Vossius, GRUR 1994, 472, 476.
1109 Vossius/Vossius/Vossius, GRUR 1994, 472, 476.
1110 Marion Merrell Dow Inc. v. Baker Norton Pharmaceuticals, Inc., 948 F.Supp.
1050, 1055-56 (S.D.Fla.,1996), appeal dismissed, 152 F.3d 941 (Fed. Cir. 1998).
1111 Grubb/Thomsen, 2010, 253.

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tion.1112 In Zenith Laboratories, Inc. v. Bristol-Myers Squibb, however, ow-

ing to the absence of evidence, the Federal Circuit reversed the District
Court’s decision holding that the patent had been infringed,1113 the Federal
Circuit stated that a compound as a form before the ingestion would fall
within the scope of a compound claim to the metabolite.1114 In a later case,
Federal Circuit restated that it recognized this possibility of infringement of
a patent claim directed to metabolite by taking medication, while holding a
claim directed to the “bare” metabolite was anticipated by a prior art which
disclosed administration of the parent drug.1115 In other words, Rader J stated
that one might obtain a patent on the synthetic version of something that was
already in the public, unless it was an unrestricted product claim.1116

d) Polymorphs

The SmithKlein Beecham v. Apotex case involved the claim construction of

one crystalline form of a known substance. In the late 1970s, a British com-
pany, Ferrosan, invented and acquired a patent over a compound known as
paroxetine, which was licensed to SmithKline. Ferrosan eventually de-
veloped a process to produce the crystalline hydrochloride salt of paroxetine,
or paroxetine hydrochloride (“PHC”).1117 In 1985, a chemist at SmithKline
discovered a new crystalline form of PHC hemihydrates. These compounds
were different from the PHC anhydrate which was Ferrosan’s original form,
because they comprised of PHC crystals with one bound water molecule for
every two PHC molecules so that the compounds were more stable and easily

1112 Zenith Laboratories, Inc. v. Bristol-Myers Squibb Co., 19 F.3d 1418, 1421-22
(Fed. Cir. 1994) (holding infringement may occur if the administered product is
converted in vivo into the claimed product); Hoechst-Roussel Pharmaceuticals,
Inc. v. Lehman, 109 F.3d 756, 759 (Fed. Cir. 1997) (“the right to exclude may arise
from the fact that when administered, [parent drug] metabolizes into another prod-
uct, [metabolite], which [patentee] has claimed).
1113 Zenith Lab. Inc. v. Bristol-Myers Squibb Co., 1992 WL 340761 (D.N.J.1992)
(holding the use of a compound which would converted to the metabolite by a
patient who took the parent drug was an infringing use).
1114 Zenith Laboratories, Inc. v. Bristol-Myers Squibb Co., 19 F.3d 1418, 1422 (Fed.
Cir. 1994).
1115 Schering Co. v. Geneva Pharmaceuticals, 339 F.3d 1373, 1380 (Fed. Cir. 2003).
1116 Schering Co. v. Geneva Pharmaceuticals, 339 F.3d 1373, 1380-81 (Fed. Cir.
2003).
1117 SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331, 1334 (Fed. Cir. 2005).

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 B. Implications considering the breadth of selection patents

packaged.1118 In this case, while construing claim 1 - “crystalline paroxetine

hydrochloride hemihydrates” (“crystalline PHC”) - to cover crystalline PHC
without further limitation, i.e. in any amount, the Federal Circuit held that
the Apotex’s product would infringe this claim 1, based on the factual finding
that Apotex’s PHC anhydrate tablets would contain “trace amounts” of PHC
hemihydrates.1119 In this case, the claim was invalidated based on the in-
herent anticipation doctrine.1120 The Federal Circuit acknowledged the Dis-
trict Court’s concern that the above claim construction could result in “a
considerable extension in the effective patent term of paroxetine, because it
might become difficult or even impossible to manufacture the pure anhy-
drous form after the Ferrosan patent expired.”1121

3. Analysis and conclusion

Genus patents are generally strong, because one can usually apply for a
patent not only on the core structure molecules but also their ana-
logues.1122 Further, the patents are difficult to design around, which can
make the patent holders wealthy.1123 The difficulty of inventing around is
not only technological but also a consequence of the product loyalty of both
patients and doctors.1124 This is clear in species invention, i.e. species in-
vention falls within the scope of the genus patent. Thus, if a species selection
patent holder is different from the patentee of the basic patent in force, the
former cannot exploit his invention without licensing the basic patent (the
so-called “blocking effect”). If the species selection patent is owned by the
patentee of the basic invention, it could increase the possibility of extension
of exclusive rights (the so-called “evergreening effect”). This is notable
when one considers that the entire scope of a patent, in general, should be
in the public domain once the patent has lapsed.1125

1118 SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331, 1334 (Fed. Cir. 2005).
1119 SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331, 1340-42 (Fed. Cir.
2005).
1120 See supra 660 -662 and accompanying texts.
1121 SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331, 1342 (Fed. Cir. 2005).
1122 See supra 109 and accompanying texts: One single claim can claim millions of
different but analogous compounds.
1123 von Hippel, 1988, 53; Landes/Posner, 2003, 313.
1124 Landes/Posner, 2003, 313-14.
1125 Grubb/Thomsen, 2010, 335.

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V. IMPLICATIONS OF THE PATENTABILITY REQUIREMENTS

For the optical isomers, with the same issue, the British court held that
the claim covered both the racemate and the enantiomers, while the Amer-
ican court held that the claim covered only the enantiomers. This case was
special because the claim was drafted to show the structure in three dimen-
sions. However, in general, the claim on the racemate would not cover the
enantiomer; otherwise the enantiomer would not have been patented, and
the scope of the enantiomer, of course, would not extend to the racemate.
In contrast to other jurisdictions, where it was held that selling a parent
drug would not infringe the metabolite patent, the United States Federal
Circuit repeatedly held that it “would” or “may” infringe the metabolite
patent and that, when administered, it could metabolize into the claimed
invention. One must wait for the development of case law on metabolites in
the United States. Based on the decided cases, however, if a patent on the
metabolite is granted, the scope should be restricted to the synthesized ver-
sion.
The patent on a crystalline form was invalidated in the United States ow-
ing to inherent anticipation. However, the Court held that, if the crystalline
form was included even in a trace amount, it could have infringed the patent
on the crystalline form. One can imagine that, during the course of the pro-
duction of a basic product, this kind of crystalline form would be co-pro-
duced and a patent infringement could be found, at least in the United States.
Of course, the lowered novelty or inventive step requirements have little
to do with the scope of these patents. The relaxed sufficiency requirement
would result in the broader scope of patent; however, it was not observed in
the case law regarding the selection inventions. Nevertheless, the implication
could be seen from a different angle, i.e. whether they could affect the entry
of generic versions of the product covered by the basic patent, which will be
discussed in chapter V.D.2.a).

C. Implications considering the length of selection patents

The term of a patent is the maximum period during which it can be main-
tained and enforced. It is normally expressed in the number of years from
the filing date of the patent application, although it can be extended through
the patent term extension. The exclusivity can also be prolonged based on
the grant of selection patents on the specific characteristics of the basic
compounds. This becomes more important if the substance of the selection

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patents (e.g., enantiomer) can be eligible for the issuance of a patent term
extension which provides further exclusivity.1126

1. Patent term and patent term extension

The “statutory” patent term is generally 20 years from filing in major juris-
dictions.1127 However, the race to the door of the patent office shortens the
real time in which the inventor can enjoy the exclusivity.1128 The “effective”
patent term, which can be defined as the length of the period for which a
product is marketed with the benefit of enforceable patent protection, is
shorter. The effective patent terms for pharmaceuticals, probably the patent
terms after the marketing approval, were reported to average between nine
and eleven years,1129 which is a bitter pill to the drug companies, because
their long R&D periods encroach on their time of exclusivity.1130
Thus, the patent term extension can be applied for and granted to com-
pensate the term which was subject to the regulatory approvals for the phar-
maceuticals and agrochemicals. As a benefit in return for these patent term
extensions, for example, the Hatch-Waxman Amendments in the United
States insulates generic manufacturers from patent infringement actions
during the term of the patent on the reference drug to obtain regulatory ap-
proval of their generic versions.1131 Before the Hatch-Waxman act, it was
considered a patent infringement if a generic company began the regulatory
approval process before the patent term on the reference drug expired.1132 A
Supplementary Protection Certificate (herein after “SPC”) in Europe is a
kind of interface between the patent system and the regulatory system, since
granting SPC protection relies on holding both a patent and a marketing
authorization for a highly regulated product, such as a medication. These

1126 BGH/Escitalopram, GRUR 2010, 123, 131.

1127 The U.S. did not adopt this 20 years patent term until 1994, when it amended the
patent law to comply with the TRIPS Agreement. See 35 U.S.C. § 15 (C)(1).
1128 Landes/Posner, 2003, 302.
1129 Grabowski/Vernon, 10 Suppl 2 Pharmacoeconomics, 110 (1996).
1130 See subsection III.A.1.b).
1131 Coggio/Cerrito, 52 Food & Drug L.J. 345, 346 (1997).
1132 Eidson, 82 Wash. U. L. Rev. 1169, 1169 (2004).

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provisions are intended to encourage research and accelerate the release of

new medications to the public.1133

a) In Europe

Different countries in Europe independently introduced corresponding leg-

islation to the Hatch-Waxman Act in the United States in the early
1990s.1134 Thus, the discrepancy of legislation, especially different exten-
sion periods of patent terms, resulted in the promulgation of Regulation
1768/92 in January, 1993. According to the Regulation creating the Sup-
plementary Protection Certificate (“SPC”) for pharmaceuticals,1135 a patent
term can be extended for the period equal to the time between the grant of
the first marketing authorization in the European Community and the patent
filing date, and reduced by five years, up to a maximum duration of five
years.1136 Since SPCs are national rights, a patentee should apply the SPCs
in each member state within six months of either the date of the patent grant
or the date of the marketing authorization, whichever is later.1137 The mar-
keting approval may be obtained from the regulatory authority of each coun-
try or centrally from the European Medicines Agency. Only one SPC can be
granted to one patentee for a single product for the basic patent,1138 even if
the basic patent covers more than one marketed product,1139 or more than

1133 Coggio/Cerrito, 52 Food & Drug L.J. 345, 346 (1997); contra, Engelberg, 39
IDEA 389, 419-25 (1999) (arguing special extensions of patent terms on pharma-
ceutical inventions were unnecessary).
1134 Domeij, 2000, 267.
1135 Council Regulation (EEC) 1768/92 of 18 June 1992 concerning the Creation of a
Supplementary Protection Certificate for Medicinal Products, which was codified
under Regulation (EC) No 469/2009 of the European Parliament and of the Coun-
cil (“Council Regulation 469/2009”) that had various amendments but no sub-
stantive changes.
1136 Council Regulation 469/2009, Art. 13.
1137 Council Regulation 469/2009, Art. 7.
1138 Case C‑181/95, Biogen v. Smithklein Beecham [1997] ECR I‑357, para 28 (holding
if a product was protected by a number of basic patents in force, which might
belong to a number of patent holders, each of those patents might be designated
for the purpose of the procedure for the grant of a certificate, however, under article
3(c) of the Regulation, only one certificate might be granted for each basic patent).
1139 Council Regulation 469/2009, Art. 3(d).

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 C. Implications considering the length of selection patents

one substance.1140 If the patentee has more than one patent on the same
product, no more than one certificate may be granted.1141 The scope of pro-
tection extends only to the product covered by the marketing authorization
and for the use of the product as a medicinal product that has been authorized
before the expiration of the certificate.1142
Medicinal products are the category of products which are eligible for the
SPC, and the product refers to the active ingredient, which receives the ex-
clusivity right. In other words, the SPC is granted to the active ingredient of
the medicinal product. Article 1 of the Council Regulation 469/2009 defines
“medicinal product” as “any substance or combination of substances pre-
sented for treating or preventing disease in human beings or animals and any
substance or combination of substances which may be administered to hu-
man beings or animals with a view to making a medical diagnosis or to
restoring, correcting or modifying physiological functions in humans or in
animals.” It defines “product” as “the active ingredient or combination of
active ingredients of a medicinal product.” However, “the active ingredient”
in Art. 1(b) is not defined in the Regulation. In this regard, the BGH stated
that, through the definitions of a product and a medicinal product above, “the
active ingredient” could be indirectly described as a component of the prod-
uct, which was presented for treating or preventing human disease.1143

b) In the United States

According to the Hatch-Waxman Act, the patent term can be extended for a
period corresponding to half of the clinical testing time of an investigative
new drug (IND), plus all approval time of the new drug application (NDA),
up to a maximum of five years, if the maximum patent term does not exceed
14 years from the NDA approval date and if any such IND or NDA time
period to the grant of the patent is not taken into account.1144 Only one patent
can be extended in connection with the first NDA approval, i.e. first per-

1140 Council Regulation 469/2009, Art. 3(c).

1141 Regulation (EC) No 1610/96 of the European Parliament and of the Council of 23
July 1996 concerning the Creation of a Supplementary Protection Certificate for
Plant Protection products (“Council Regulation 1610/96”) Art. 3. Para 2 and
Recital 17.
1142 Council Regulation 469/2009, Art. 4; Brückner/von Czettritz, 2011, Art. 4 Rdn 32.
1143 BGH/Doxorubicin-Sulfate, GRUR 2009, 41, 41.
1144 35 U.S.C. § 156 (c).

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V. IMPLICATIONS OF THE PATENTABILITY REQUIREMENTS

mitted commercial marketing or use of the product,1145 and a patent cannot

be extended more than once, though it covers more than one FDA approved
products.1146 This can thus be summarized as “one patent extension per
patent, one patent extension per product, and one product per patent exten-
sion.”1147 The scope of protection is limited to the “approved product” for
any approved use.1148 Thus, only the scope covering the product is extended.
The product as an objective of the patent term extension means a drug
product or any medical device subject to regulation under the FDA Act, and
the drug product means the active ingredient of a new drug, including any
salt or ester of the active ingredient.1149
Under the Hatch-Waxman Act, if the paragraph IV ANDA applicant suc-
cessfully challenges the patent validity, he is offered 180 days of exclusivity,
which prevents other generic makers from entering the market.1150 The 180
day exclusivity holder will gain a large profit by pricing just below the ref-
erence drug without concern about competition from any other generics.
However, in Europe, where no such 180 day exclusivity exists, once the first
validity challenger is successful, other generics will benefit from the inval-
idation, and the first challenger will not easily recover the litigation cost.

c) In Korea

The term of the patent concerning drugs can be extended by a period of up

to five years, during which the patented invention cannot be practiced, be-
cause an approval under other Acts is required to work a patented invention,
and it takes an extended period to complete the efficacy or safety tests that
are necessary to obtain such approval, and these are prescribed by Presi-
dential Decree.1151

1145 35 U.S.C. § 156 (a)(5).

1146 35 U.S.C. § 156 (a)(2); Merck v. Kessler, 80 F.3d 1543, 1547 (Fed. Cir. 1996).
1147 Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., No., 96-1718-c H/G, 2001 U.S.
Dist. LEXIS 5753, 26 (S.D. Ind. 2001).
1148 35 U.S.C. § 156 (b)(1); Merck v. Kessler, 80 F.3d 1543, 1547 (Fed. Cir. 1996)
(holding that the restoration period of the patent did not extend to all products
protected by the patent but only to the product on which the extension was based).
1149 35 U.S.C. § 156 (f)(2).
1150 21 U.S.C. § 355(j)(5)(B)(iv).
1151 Korean Patent Act Art. 89.

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 C. Implications considering the length of selection patents

In contrast to the other jurisdictions, more than one patent can be extended
for one approval of the product. However, the same patent cannot be ex-
tended even if it covers more than one product approved by the regulatory
authority. The scope of the patent term extension is also limited solely to the
approved product for the approved use.

2. Patent term extension on selection patents

The issue with regard to a patent term extension on a selection patent is

whether the subject matter of the patent can be the subject of the patent term
extension as a separate product from the products covered by their basic
patents.

a) Species selection patents

Although the scope of a species selection patent can be overlapped with that
of the genus patent, since the active ingredient covered by the species se-
lection patent will be different from that of the genus patent, the patent term
extension will be granted to the species patent. Consequently, if the patentee
of the species selection patent is the same as the genus patentee, he can enjoy
much longer exclusivity. However, if the basic patentee would have de-
veloped the compound covered in the basic patent without securing a species
patent, he can enjoy only the 20 years from the filing date of the genus
patent.

b) Optical isomers

In Germany
While distinguishing from the Doxorubicin-sulfate case, the BGH held that
a marketing authorization for a medicinal product containing racemate as an
active ingredient did not present a bar to granting an SPC for a medicinal
product that contained an enantiomer as an active substance, and that was
also the subject matter of both a later marketing authorization and of its own

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patent.1152 In the Doxorubicin-sulfate case, even if the applicant argued that

doxorubicin-sulfate had improved potency, better pharmacological effect
and reduced side effects in comparison to doxorubicin-hydrochloride, the
BGH dismissed the case and held that a previous SPC granted for doxoru-
bicin-hydrochloride opposed the grant of an SPC of doxorubicin-sulfate,
because the active compound was still the same as doxorubicin.1153

In the United Kingdom

The Appeal Court in Generics (UK) v. Daiichi Pharmaceutical also held that
the previously granted SPC on a racemic compound (Ofloxacin) did not
hinder granting an SPC for the enantiomer (Levofloxacin). 1154 The Court
further held that this was because, while successive SPCs for mere variants
of an active substance were not allowed, levofloxacin was not a minor variant
but a novel and inventive improvement owing to its own distinctive activity,
bioavailability, and toxicity.1155 In Justice Jacob’s words, “[o]nly a curmud-
geon would say there was no invention there.”1156

In the United States

The question whether enantiomers can have “first commercial marketing or
use status” for the purpose of patent term extension was answered in Ortho-
McNeil Pharmaceutical v. Lupin Pharms. 1157 The Federal Circuit upheld
the District Court’s decision that, regardless of its existence as a component
(even the active component) of the previously approved and marketed
ofloxacin, levofloxacin was the first permitted commercial marketing or use
of this drug.1158 In this case, the Federal Circuit also affirmed that the FDA
and the USPTO practices were in accordance with Glaxo v. Quigg, in which
the Court held that “product,” as used in § 156(a), was “the active ingredient

1152 BGH/Escitalopram, GRUR 2010, 123, 131; see also BPatG/Escitalopram II,
29.03.2011- 3 Ni 22/10 (a dismissed another challenge of nullity action against
the granting of SPC based on the argument that escitalopram had no substantially
different or improved pharmaceutical effect over the racemate citalopram).
1153 BGH/Doxorubicin-Sulfate, GRUR 2009, 41.
1154 Generics (UK) v. Daiichi Pharmaceutical [2009] EWCA Civ 646.
1155 Generics (UK) v. Daiichi Pharmaceutical [2009] EWCA Civ 646, para 68.
1156 Generics (UK) v. Daiichi Pharmaceutical [2009] EWCA Civ 646, para 45.
1157 Ortho-McNeil Pharmaceutical v. Lupin Pharms., 603 F.3d 1377 (Fed. Cir. 2010).
1158 Ortho-McNeil Pharmaceutical v. Lupin Pharms., 603 F.3d 1377, 1381 (Fed. Cir.
2010).

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 C. Implications considering the length of selection patents

present in the product,” not the biologically “active moiety.” The Court also
extended the term of the patent on a new ester of an acid, even though salts
of the same acid had previously been approved.1159 In order to clarify the
availability of a patent term extension, the cases relevant to the salts are
discussed.
In Glaxo v. Quigg, in which Glaxo sought an extension for its patent cov-
ering cefuroxime axetil, an ester of its biologically active moiety, cefurox-
ime, the Federal Circuit held that the “active ingredient of a new drug” in
§ 156 meant the “actual active ingredient in the product” as opposed to the
“active moiety of the active ingredient”, and affirmed the patent term ex-
tension on cefuroxime axetil over the previously marketed product including
two salts of cefuroxime.1160 However, about 15 years after the Glaxo case,
Pfizer, which had a marketing approval for and sold amlodipine besylate
salt, sued Dr Reddy’s Lab, which sold amlodipine maleate salt, based on a
patent whose term was extended.1161 In Pfizer Inc. v. Dr. Reddy's Labora-
tories, the CAFC held that the patent term extension applied not only to the
particular salt of molecule being used in marketing approval but also to all
salts and esters of molecule covered by the patent.1162 While reasoning that
the “statute foresaw variation in the salt or ester of an active ingredient, and
guarded against the very loophole now urged”1163, the Federal Circuit held
that the “product” was the active moiety, which seems to be different from
the ruling in the Glaxo case.1164 In PhotoCure v. Kappos, the Federal Circuit
distinguished this case from the Pfizer case: “The issue in Pfizer was whether
infringement of an extended patent on the drug amlodipine was avoided by

1159 Glaxo Operations UK Ltd. v. Quigg, 894 F.2d 392 (Fed. Cir. 1990).
1160 Glaxo Operations UK Ltd. v. Quigg, 894 F.2d 392 (Fed. Cir. 1990).
1161 Pfizer Inc. v. Dr. Reddy's Laboratories, Ltd., 359 F.3d 1361 (Fed. Cir. 2004).
1162 Pfizer Inc. v. Dr. Reddy's Laboratories, Ltd., 359 F.3d 1361, 1365-67 (Fed. Cir.
2004) (quoting also Title 21 Code of Federal Regulation - Food and Drugs (“21
C.F.R.”) § 60.3(b)(10): “[h]uman drug product means the active ingredient of a
new drug or human biologic product […], including any salt or ester of the active
ingredient, as a single entity or in combination with another active ingredient).
1163 Pfizer Inc. v. Dr. Reddy's Laboratories, Ltd., 359 F.3d 1361, 1366 (Fed. Cir. 2004).
1164 See also Pfizer Inc. v. Dr. Reddy's Laboratories, Ltd., 359 F.3d 1361, 1367 (Fed.
Cir. 2004) (In his dissent, however, Meyer Chief J stated the patent term extension
should be limited to the specific product which was the subject of FDA approval,
since the product which was eligible for a patent term must have been subject to
a regulatory review period before its commercial marketing or use, which was
neither amlodipine, nor amlodipine maleate, but amlodipine besylate).

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changing the salt.” 1165 The Federal Circuit further noted that “Pfizer did not
hold that extension is not available when an existing product is substantively
changed in a way that produces a new and separately patentable product
having improved properties and requiring full FDA approval.”1166 Accord-
ing to PhotoCure, therefore, separate patentability alone could justify find-
ing a drug product distinct from a previously approved product for the pur-
pose of § 156.1167

c) Polymorphs

In the case of Laboratoires Servier v. Apotex, after the first and basic patent
for the active substance (perindopril) expired in 2003 with the effective ex-
tension by an SPC, if the second patent on the crystalline form of the active
substance is valid, the exclusivity would be extended to 2020.1168 Thus, the
polymorph seems to be regarded as a different active ingredient from the
basic product.

d) Metabolite

There seems to be no case law regarding the patent term extension on a

metabolite. However, based on the above discussed cases, once the metabo-
lite is patented, it will likely be able to enjoy the patent term extension as
well.

3. Analysis and conclusion

For the optical isomers, the BGH distinguished the ofloxacin case from the
doxorubicin-sulfate case by holding that, because the active compound of
doxorubicin-hydrochloride and the doxorubicin-sulfate were the same as
doxorubicin, the previously granted SPC opposed the grant of an SPC for
the doxorubicin-sulfate. However, it is difficult to understand the reasoning

1165 PhotoCure v. Kappos, 603 F.3d 1372, 1376 (Fed. Cir. 2010).
1166 PhotoCure v. Kappos, 603 F.3d 1372, 1376 (Fed. Cir. 2010).
1167 PhotoCure v. Kappos, 603 F.3d 1372, 1376 (Fed. Cir. 2010).
1168 Laboratoires Servier v. Apotex, [2008] EWHC Civ 445, paras 4 and 9.

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 C. Implications considering the length of selection patents

behind distinguishing the levofloxacin case from the doxorubicin case, be-
cause the active ingredient in citalopram is also the one enantiomer, i.e.
escitalopram. It is equally hard to understand the reasoning of the ofloxacin
case in the British court. The Court held that levofloxacin was patentable,
thus, a different SPC should be granted after the SPC on the ofloxacin.
Similarly, in the United States, even if the product covered by the second
generation invention shares “an active moiety” with the previously approved
drug, the applicants could obtain the patent term extensions as long as “the
active ingredients” of the products are different.
In general, for other second generation inventions, as long as it could
acquire a patent, the SPC would be granted on top of the SPC on the product
covered by the basic patent.

Lowered patentability requirements on second generation inventions and

the SPC
The scope of the patent extension covers the derivatives, such as salts and
esters, which are protected by the basic patent, thereby preventing the third
party preparing salts other than the basic patentee’s substance and devaluing
its SPC protection.1169 However, if these derivatives are subject to patents
specifically covering them, another SPC or patent term extension for deriva-
tives of the substance can be granted.1170 This could lead the basic patentee
to work more on the trivial modifications of an active moiety, which was
subject to the authorization of previous products. The phenomenon could be
accelerated, because the patentability requirements on the second generation
inventions have been lowered, and more derivatives may be patented. Name-
ly, the lowered patentability requirement will allow more patents on the

1169 Council Regulation 1610/96, points 13 (“[w]hereas the certificate confers the same
rights as those conferred by the basic patent; whereas, consequently, where the
basic patent covers an active substance and its various derivatives (salts and esters),
the certificate confers the same protection.”) and 17 of preamble (“[w]hereas the
detailed rules in recitals 12, 13 and 14 and in Articles 3 (2), 4, 8 (1) (c) and 17 (2)
of this Regulation are also valid, mutatis mutandis, for the interpretation in par-
ticular of recital 9 and Articles 3, 4, 8 (1) (c) and 17 of Council Regulation (EEC)
No 1768/92”).
1170 Council Regulation 1610/96, points 14 (“[w]hereas the issue of a certificate for a
product consisting of an active substance does not prejudice the issue of other
certificates for derivatives (salts and esters) of the substance, provided that the
derivatives are the subject of patents specifically covering them.”) and 17 of
preamble; PhotoCure v. Kappos, 603 F.3d 1372 (Fed. Cir. 2010).

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V. IMPLICATIONS OF THE PATENTABILITY REQUIREMENTS

second generation inventions, which in turn will result not only in longer
exclusivity, but also in more incentives to working on second generation
inventions than breakthrough innovations.

Patent term extension system and pharmaceutical innovation

The patent term extension system apparently encourages R&D more on the
second generation inventions than on the NMEs.1171 This is especially true
for the medications whose safety testing and/or the toxicity testing takes
longer than others. For example, for medicines that treat chronic diseases,
Alzheimer’s disease, or cancers, the maximum cap of five years of extension
risk discourages companies from pursuing research in these medicinal
fields.1172 As discussed in chapter III.B.2.c), one of the reasons for the
drought of new medications was the movement of focus to complex disor-
ders such as these chronic diseases.
The condition of the SPC in Europe can be more serious, because the
calculation system of the SPC is much more favourable to the secondary
products than the NMEs. Under the SPC regulation, as seen in Figure 9, the
maximum effective patent term protection of the product that succeeded in
launching its product from five to ten years after the patent application date
is not affected by actual durations. Thus, the medications that need more
than ten years to reach the market from the patent filing date can never enjoy
fifteen years of effective patent term.1173

1171 See also subsection VI.D.2.a)(1).

1172 Domeij, 2000, 282.
1173 This is different from the Korean patent term extension system which considers
the whole period of clinical trials and of regulatory approvals or from the U.S.
patent term extension system which considers the 1/2 of clinical trials and whole
period of regulatory approvals.

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 C. Implications considering the length of selection patents

Figure 9: Effective patent term with the compensation of SPC in Europe1174

By contrast, the medications that would take between five and ten years from
the patent application date to acquire a market approval will enjoy the max-
imum effective patent term. Obviously, the gap between the patent applica-
tion date and the market approval date should be much shorter for second
generation products and could well be less than ten years. When the basic
and second generation patentees are the same, the patentee could even have
leeway to control the timing of the market launch up to ten years after the
patent application date on the second generation invention. Given that the
companies try hard to extend their exclusivities on products protected by
their basic patents, this would increase the risk that the patentees who can
enjoy the secondary SPC protections may try to use the leeway to bring their
products to market later than the moment when society could have earlier
access to those products.1175 These can certainly be among the motivations
for the pharmaceutical industries to focus more on second generation patents
and products than NMEs.

1174 This figure is prepared by the author.

1175 Of course, this would be the case when they can make no gap from the basic
patent’s exclusivity.

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V. IMPLICATIONS OF THE PATENTABILITY REQUIREMENTS

D. Implications on the competition in the pharmaceutical industry

1. Introduction

According to Schumpeter, the existence of monopoly power spurs innova-

tions by allowing the firm with the monopoly to appropriate the surplus
generated by such innovations.1176 He further argues that the old monopoly
would eventually be challenged and replaced by the newer one by introduc-
ing the concept “Creative Destruction”: A process through which the eco-
nomic structures are revolutionized from within, by opening up new markets
that will destroy the old one, and repeating this incessantly.1177 In addition,
as other commentators have noted, the arrival of new knowledge renders the
old obsolete,1178 and an inventor’s descendants can actually become the in-
struments of his destruction.1179 If there is no competition in the market,
however, a patentee who holds an intellectual property right (“IPR”) will
also have little incentive to reinvest in further innovation,1180 since this com-
pany could already control the market and impose monopoly prices.1181
According to Arrow, the incentive to innovate can exist even in perfect
competition, and, by charging the royalty to a competitive industry, the in-
ventor can receive a return equal to the monopoly profits. He therefore argues
that the incentive of innovation is greater under competitive condition than
under monopolistic conditions.1182 If perfect competition exists in the mar-
ket, exploitation cannot be confused with the pursuit of profits.1183 If there
is no intellectual property (“IP”) protection, however, patentees will be con-
cerned that competitors in the market will easily copy the product.1184 Ex-

1176 Schumpeter, 1942, 134-175 (holding that the firms with monopoly power are the
main engines of innovation).
1177 Schumpeter, 1942, 137-138 (“[der] Prozess, … der unaufhörflich die Wirtschafts
struktur von innen heraus revolutioniert, unaufhörflich die alte Struktur zerstört
und unaufhörlich eine neue schafft.”).
1178 Belenzon, 2006, 2.
1179 Gallini/Scotchmer, 2002, 65.
1180 Kamien/Schwartz, 1982, 190-91 (noting that IPR holders would do so because his
reward from innovation is smaller than the total social benefit).
1181 Drexl, 2007, 18.
1182 Arrow, 1962, 619-22.
1183 Seißer, 2008, 2.
1184 Drexl, 2007, 18; Kamien/Schwartz, 1982, 190 (noting perfect competition corre-
sponds to zero year of patent life, thus there is no reward from innovation, followed
by no innovation.).

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 D. Implications on the competition in the pharmaceutical industry

amples can be easily observed in history. For example, the price of penicillin,
which was not patented, and the price of streptomycin, which was licensed
on an unrestricted basis, dropped dramatically as the result of the rapid in-
crease in demand during and after World War II and by the competition
among many new suppliers.1185 Therefore, the new “wonder drugs” were
found to be unprofitable.1186 Furthermore, this could make the companies
hesitate to or not invest in R&D.1187
Competitive pressure could further result in socially wasteful over-in-
vestment in R&D or induce defensive investment by those who try to
strengthen their bargaining position in the field.1188 In addition, “more com-
petition” may also involve social costs, such as duplication of entry costs,
inefficient production, multiplied investments in the same products, and the
like.1189 In reality, competition is never perfect, and the market can be dis-
torted by many factors, such as government regulation, central planning,
monopolistic structures, and so on.1190 Moreover, considering the limitation
of an IPR’s life (especially a patent), since the companies cannot enjoy their
monopoly position perpetually, companies must reinvest to find another
source of income. Furthermore, even if the innovation occurs at a slower
pace than is socially optimal, the innovation occurs under monopoly.1191
During the limited period of their monopoly rights, both IP laws and com-
petition laws should be combined to promote dynamic competition.1192
Regarding the situation concerning second generation inventions, Merges
and Nelson argue that, since there would be uncertainty, namely, that dif-
ferent technologies would be developed from the common basic innovation
by different approaches from different parties, it would be better to let a

1185 Comanor, 31 Economia, 372, 373 (1964) (noting “[t]he price of a standard form
of penicillin dropped from $20 for 100,000 units in 1943 to 41 cents in 1950.”);
Steele, 5 J. Law Econ. 131, 138, fn24 (1962) (e.g. noting “[f]or the ten-year period
1951-1960 the bulk price of streptomycin dropped from $3.24 to $0.36 for ten
grams”); Temin, 10 Bell J. Econ. 429, 436 (1979).
1186 Scherer, 2007, 11.
1187 Drexl, 2007, 18; Kamien/Schwartz, 1982, 190 (noting perfect competition corre-
sponds to zero year of patent life, thus there is no reward from innovation, followed
by no innovation.).
1188 Cockburn, 2006, 21-22, 25.
1189 Denicolò, 44 J. Ind. Econ. 249, 263 (1996).
1190 Seißer, 2008, 2.
1191 Kamien/Schwartz, 1982, 190-91.
1192 Drexl, 2007, 18.

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V. IMPLICATIONS OF THE PATENTABILITY REQUIREMENTS

variety of minds try.1193 This provides economic support for improvement

patents.1194 Since, under the monopoly situation, the patent holder or some
licensees can be expected to develop only some of the improvements further,
many potential improvements might be underdeveloped or even ig-
nored.1195 Landes and Posner also mention, however, that it might be more
efficient to leave the improvements to the original inventors at a slower speed
and at a lower cost.1196 In the end, the answer to the question of whether it
would be better to have many improvements, depends on whether and how
much these kinds of improvement inventions are needed.
Pharmaceutical companies can face antitrust challenges, because there is
a thin line between their aggressive approach in this sector and anti-com-
petitive behaviour.1197 Some have argued that evergreening tactics and life
cycle management based on second generation patents have caused delayed
market access not only for the generic companies but also for the pa-
tients.1198 For example, it was reported that the generic entry to the market
was delayed, on average, seven months after patent expiration, with the range
from zero to more than fifty months.1199 According to the European Com-
mission, tactics employed to respond to generic entry includes patenting
activities of originators; contacts, disputes and litigation between originator
and generic companies;opposition procedures and appeals before patent of-
fices; patent settlements and other agreements between originator and gener-
ic companies; interventions of originator companies before national author-
ities deciding on marketing authorization, pricing and reimbursement of
generic products; promotional activities; and second generation prod-
ucts.1200 Other than interventions in national authority decisions, all of these

1193 Merges/Nelson, 90 Colum. L. Rev. 839, 873-74 (1990); see also von Hippel, 1988,
3-5 (showing generally different sources of innovations according to the field of
industries and manufacturer was the sources of innovation in chemical industries,
e.g. engineering plastics and plastics additives.).
1194 Landes/Posner, 2003, 190, 318-319 (also noting a quasi-Darwinian process, which
is “a process almost of trial and error in which the market selects from among
diverse approaches whose relative promise cannot be assessed in advance”).
1195 Merges/Nelson, 90 Colum. L. Rev. 839, 873-74 (1990).
1196 Landes/Posner, 2003, 190, 322.
1197 Safir, 50 Food & Drug L. J. 335, 335 (1995).
1198 See e.g., Rathod, 7 J. Generic Medicines 227, 227 (2010).
1199 DG Competition, 2009, 70-71.
1200 DG Competition, 2009, 16.

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 D. Implications on the competition in the pharmaceutical industry

tactics are deployed in patenting. Even promotional activities can focus on

second generation products covered by second generation patents.
On the one hand, the pharmaceutical industry was certainly “ingenious in
finding ways to extend patents on its bestselling drugs,” such as marketing
a new combination of two old drugs.1201 Gaudry insists that filing as many
patents as possible with regard to the product would not only increase the
total scope of patent protection but also achieve apparently competing pur-
poses.1202 On the other hand, it is theoretically possible that the generic
companies would practice at least the basic patent once the patent expires.
In addition, as EU pharmaceutical law clearly specifies, the development,
application, and registration of a generic version are allowed before the ex-
piration of the patent covering the product.1203 In the following section,
therefore, the substantive roles of second generation patents in the compe-
tition in generic markets will be analyzed.

2. Quasi-obstacles of generics market entry

a) Scope of second generation patents

There have been concerns that second generation patents could be used to
extend the patent protection of basic products unjustifiably.1204 Some have
argued that second generation inventions would significantly impair generic
competition but provide modest therapeutic gains for a small subset of the
patient population, and thus government intervention must be made to pre-
vent the losses from impaired competition while allowing access to the re-
formulation for those patients who really value it.1205 Some also call these
strategies “patent walls”, which can be built where the innovator acquires
patents on the variety of inventions related to the basic invention, but which

1201 Angell, 342 New Eng. J. Med. 1902 (2000) (providing Vytorin (a combination of
Ezetimibe and Simvastatin claimed in U.S. patent No. 5,846,966) as an example);
see also Glasgow, 41 IDEA 227, 250-51 (2001).
1202 Gaudry, 29 Nature Biotech. 876, 877 (2011).
1203 Art. 10. 6 of Council Directive 2001/83/EC of 6 November 2001 on the Commu-
nity code relating to medicinal products for human use, as amended (“Council
Directive 2001/83/EC).
1204 Grubb/Thomsen, 2010, 249; Rathod, 7 J. Generic Medicines 227, 227 (2010).
1205 Shadowen/Leffler/Lukens, IIC 2011, 698, 700.

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exist less for the value than to protect the central innovations.1206 However,
second generation patents do not always prevent generics from entering the
market, if generic manufacturers want to sell the older version covered by
the basic patent after its expiration.
Although a species selection invention certainly infringes the basic patent,
the exploitation of a basic patent after its expiration will not infringe the
selection invention, since the scope of the species patent could not cover the
older product. Thus, generic versions of the product covered by the basic
patent would be sold soon after its expiration. Although the Atorvastatin
decision held that the patent covers both racemates and the enantio-
mers,1207 the decision seemed to be based on a claim drafting issue. More
importantly, if the racemate infringes the enantiomer patent, the patent on
the enantiomer must be invalidated according to the “infringement test” so
that marketing the racemate will not infringe the enantiomer patent. For the
metabolite patent, as the Munich Higher Regional Court held, exploitation
of the parent drug does not infringe the metabolite patent, since the metabo-
lite was not marketed. One may still worry about the contributory or in-
ducement infringement. In addition, the Federal Circuit in the United States
has continued to hold that it “would” or “may” infringe the metabolite patent
and that, when administered, it could be metabolized into the claimed in-
vention. One may need to await the further development of case law on
metabolites in the United States. However, as we have seen from the House
of Lords’ decision, to find infringement would prevent someone from doing
what he had already done before the filing date. Thus, even if a patent claim-
ing a synthesized version of metabolite is granted, its scope should not be
extended to the metabolite naturally made by the body.
For a polymorph, the concern can be justified. As the Federal Circuit held,
if it is difficult or even impossible to manufacture one pure form of poly-
morph after the basic patent expires – e.g., in the course of manufacturing
the basic product, the polymorph form could be synthesized together – a
considerable extension in the effective patent term of basic invention will
be concerned.1208 However, if the probability of co-production is high, there

1206 Hopenhayn/Mitchell, 32 RAND J. Econ. 152, 163 (2001).

1207 See subsection V.B.2.b).
1208 SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331, 1342 (Fed. Cir. 2005).

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 D. Implications on the competition in the pharmaceutical industry

will also be higher probabilities that the polymorph patent will be found
invalid as inherent anticipation.1209
Therefore, there could be real concerns, such as species selection inven-
tion or the polymorph. However, contrary to the conventional perception, it
could be said that there are fewer cases of the exploitation of a basic patent
to be found than those infringing second generation patents.

b) Length of second generation patents

Apart from the patent term extension system’s inherent problems,1210 the
patent term of second generation patents matters to the extent that their scope
can prevent the generics’ entry onto the market.

c) Delayed filing of second generation patent applications

While presenting Figure 10, the European Commission argued that the sec-
ond generation patents were filed at the very end of a patent term of basic
invention.1211

1209 SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331, 1342-46 (Fed. Cir.
2005).
1210 See supra 1172 -1175 and accompanying texts.
1211 DG Competition, 2009, 176-77.

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V. IMPLICATIONS OF THE PATENTABILITY REQUIREMENTS

Figure 10: Post-launch patent portfolio for one of the top ten INNs by total
sales (2000 – 2007)1212

Of course, the timing of second generation patenting is crucial. The later

they are filed (but are granted before the primary patent expiration), the
longer they can help to extend exclusivity in certain circumstances. How-
ever, this argument fails in two crucial respects in this field. First, the later
the companies file patent applications, the more likely they will face prior
arts and the less likely they will be issued as patents. Secondly, since the
innovative companies are not the only ones that can file second generation
patent applications, they cannot safely sit and wait to enjoy longer exclu-
sivity with the help of second generation patents. Thus, the patentee of a
basic patent cannot wait to file the patent applications until the expiration of
the term of the basic patent.
The following issues are more burdensome to the generic manufacturers.

1212 DG Competition, 2009, 176-77.

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 D. Implications on the competition in the pharmaceutical industry

3. Real obstacles to generics’ market entry

a) Automatic thirty-month stay and new list up in the Orange Book in the
United States

A patent linkage system refers to the practice of linking marketing approval

or pricing/reimbursement status of generic drugs to the status of patents on
the reference products. The American Orange Book is such a system. A new
medication is usually relevant to more than one patent, and each patent listed
in the Orange Book will likely have different patent expiration dates. One
of the most significant problems with this system is the difficulty of evalu-
ating the validity of patents claimed as being related to the reference prod-
ucts,1213 because validity can finally be confirmed only by the courts.
When a New Drug Application (“NDA”) is filed with the US FDA, the
NDA applicant must submit a list of all patents that cover the drug regarding
which a claim of infringement could be asserted.1214 The FDA publishes the
list of these patents with their expiration dates in the Orange Book1215 to give
notice to potential ANDA applicants that such patents may hinder them from
introducing their generic versions. The generic manufacturers can prepare
to launch their products after the analysis of patents listed in the Orange
Book. However, the sudden announcement of a new patent grant covering
the product will deter and prolong the generics’ market entry, as occurred in
the In re Buspiron Patent Litigation case.
Bristol-Myers obtained a patent for the compound buspirone in 1980,
obtained marketing approval in 1986, and sold it on the market.1216 On
November 21, 2000, less than one day before the basic patent was set to
expire, Bristol-Myers obtained a patent claiming one of the metabolites of
buspirone.1217 Around eleven hours before the original patent expired, Bris-

1213 Gaudry, 29 Nature Biotech. 876, 876 (2011).

1214 21 U.S.C. § 355(b)(1)(G); 21 C.F.R. § 314.53.
1215 Orange Book: Approved Drug Products with Therapeutic Equivalence Evalua-
tions, available at: http://www.accessdata.fda.gov/scripts/cder/ob/default.cfm
(Last accessed on December 20, 2013).
1216 In re Buspirone Patent Litigation, 185 F. Supp. 2d 340, 345 (S.D.N.Y., 2002). It
was sold under the Trademark “Buspar”.
1217 U.S. Patent No. 6.150,365 (November 21, 2000, under the title of “Anxiety
method”, in original claim as filed the use of buspirone as a prodrug of the metabo-
lite was also claimed); In re Buspirone Patent Litigation, 185 F.Supp.2d 340, 350
(S.D.N.Y., 2002); Langreth/Murphy, Forbes, Apr. 2, 2001.

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tol-Myers hand-delivered copies of the metabolite patent to the FDA and

applied to have it listed in the Orange Book1218 as covering buspirone.1219
The listing with the FDA triggered an automatic forty-five day period during
which Bristol-Myers could bring patent infringement suits against generic
competitors, who intended to market generic versions.1220 Bristol-Myers
filed suits for patent infringement against competitors within this forty-five
day period, which in turn triggered an automatic stay of the FDA’s approval
of generic versions for up to the earlier of thirty months or until the relevant
patent disputes were decided.1221 One of the generic companies had already
manufactured and was ready to ship its product at 12:00 am on November
22, 2000.1222 The District Court held that the claim of the later patent did not
cover uses of buspirone itself.1223 In a different case, the Supreme Court
reversed the Federal Circuit’s decision1224 and found that the patent delisting
provision1225 provided a mechanism for a generic company to challenge the
accuracy of the use code in association with an Orange Book listed
patent.1226

1218 Listing in the Orange Book is important mainly because when the generic company
submit an ANDA, it is required to address each patent listed in the Orange Book
that claims the drug. According to 21 USC § 355(j)(2)(A)(vii), an ANDA applicant
must address for each patent listed i) that such patent has not been filed (paragraph
I filing), ii) that such patent has expired (paragraph II filing), iii) the date on which
the patent will expire (paragraph III filing), or iv) that such patent is invalid or will
not be infringed by manufacture, use, or sale of the new drug for which the appli-
cation is submitted.
1219 In re Buspirone Patent Litigation, 185 F. Supp. 2d 340, 350 (S.D.N.Y., 2002).
1220 In re Buspirone Patent Litigation, 185 F. Supp. 2d 340, 343 (S.D.N.Y., 2002).
1221 In re Buspirone Patent Litigation, 185 F. Supp. 2d 340, 343 (S.D.N.Y., 2002);
21 U.S.C. § 355(j)(4)(B)(iii).
1222 Mylan Pharmaceuticals, Inc. v. Thompson, 268 F.3d 1323, 1327 (Fed. Cir. 2001),
cert denied (holding neither the patent laws nor the Hatch-Waxman amendments
permitted a private right of action to delist a patent from the Orange Book).
1223 In re Buspirone Patent Litigation, 185 F. Supp. 2d 340, 363 (S.D.N.Y., 2002).
1224 Novo Nordisk A/S v. Caraco Pharmaceutical Laboratories, Ltd., 601 F.3d 1359
(Fed. Cir. 2010).
1225 21 U.S.C. § 355(j)(5)(C)(ii)(I).
1226 Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S, 132 S. Ct. 1670,
1688 (U.S. 2012) (holding “[t]he statutory counterclaim we have considered en-
ables courts to resolve patent disputes so that the FDA can fulfill its statutory duty
to approve generic drugs that do not infringe patent rights. The text and context
of the provision demonstrate that a generic company can employ the counterclaim
to challenge a brand's overbroad use code.”).

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 D. Implications on the competition in the pharmaceutical industry

However, the NDA filers can have thirty months exclusivity without hav-
ing to prove anything to anybody. Thus, the minimum of thirty months’ delay
in the generic entry certainly harmed not only the generics’ businesses but
also the public’s access to the medication at substantially lower prices. Cer-
tainly, such a sudden delay must have damaged the generic companies’ legal
and economic expectations. Some commentators even argued that a refer-
ence drug patent holder could keep filing second generation patents for the
same basic drug product with the FDA to receive almost unlimited consec-
utive thirty month stays, since a generic drug manufacturer had few ways to
remove the listing until a Supreme Court decision in 2012.1227 Second gen-
eration patents play pivotal roles in enabling these kinds of activities, and
the impact will be expected in other countries1228 that adopt similar patent
linkage systems.

b) Pendency of patent applications: Uncertainty

(1) Pendency of patent applications

“How on earth can this invention be patented?!” was the question which the
author was asked by a researcher about the Pfizer’s patent application on the
salts of amlodipine,1229 which ultimately was invalidated. From her question,
one may notice two important points. Firstly, she lacked the legal knowledge
required to avoid confusing a patent with a patent application, which is often
the case for researchers. Secondly, her scientific instinct was correct; thus,
she could not understand how that kind of invention could be patented.
However, considering that the application was granted by the USPTO and
invalidated by the Federal Circuit, no one could have guaranteed whether
the application would be granted or rejected.

1227 Mahn, 54 Food & Drug L.J. 245, 250-52 (1999) (noting that the examples of such
patents were specially coated tablets, new formulations, crystalline forms of the
same active ingredient, and variations on the drug delivery technologies; and that
broadening the scope of patents which could be listed in the Orange Book, ad-
vantages accrued to NDA holders).
1228 Other examples are PMNOC proceeding in Canada, Administrative Action in
Portugal and Mexico, similar system in Singapore, Patent certification processes
in Australia, Indonesia, HK, and Italy.
1229 U.S. Patent No. 4,876,303 (November 7, 1989, under the title of “Pharmaceutically
Acceptable Salts”).

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V. IMPLICATIONS OF THE PATENTABILITY REQUIREMENTS

The pendency of a patent application, especially one filed by a major

player in the pharmaceutical industry such as Pfizer,1230 can cause re-
searchers or companies to spend time searching and analyzing before they
dive into a new field of research. That is to say, the uncertainty and insecurity
about the patent ownership for competitors created by the patent pendency
play important roles.1231 Unlike the United States, where the patent office
examines the invention regardless of whether the applicant has requested an
examination or not, many other jurisdictions, such as Germany,1232 the Unit-
ed Kingdom,1233 and Korea1234 require the applicant to request the substan-
tive examination to proceed with the patent application. Thus, in these ju-
risdictions, the pendency of a patent application can be even longer and
depend upon the decision each applicant makes. In addition, these uncer-
tainties in the pharmaceutical industry can increase given the already in-
creased number of second generation patents derived from the lowered
patentability requirements for second generation inventions.

(2) Filing of divisional applications

The number of pending applications can be effectively increased by the filing

of continuation applications in the United States or divisional applications.

Divisional applications
An applicant can file a divisional application with respect to subject-matter
that does not extend beyond the content of the earlier application as
filed.1235 The date of filing of a divisional application would be that of the
earlier, parent application,1236 as a result of which the period of protection
is the same as the parent’s. Typically, a patent applicant files a divisional
application after the communication from a patent office that an application

1230 She probably was not that much surprised if the application was filed by a small
nameless company.
1231 Somaya, 38 J. Manage. 1084, 1100 (2012); Henkel/Jell, 2009, 1-2.
1232 GPA, Art. 4.
1233 U.K. Patent Act, Art. 18 (Substantive examination and grant or refusal of patent).
1234 Korean Patent Act, Art. 59 (Request for examination of a patent application).
1235 See e.g., EPC Art. 76 (1).
1236 See e.g., EPC Art. 76 (2).

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 D. Implications on the competition in the pharmaceutical industry

covers more than a single general inventive concept.1237 However, a patentee

can also file a divisional application without a patent office’s requirement.
Voluntary divisional applications have been exploited to ward off a rejection,
which has increased the incidence of double patenting.1238 As the European
Commission clearly pointed out, voluntary divisional patent application was
a legitimate way of splitting an (initial) parent application, and could not
extend the content of the original application nor the protection period.1239

Arguable abuse of procedural possibility

The possible problem appears to reside in the increase number of pending
patent applications. This could also extend the examination period, as the
examination of divisional applications continues even after the parent ap-
plication’s withdrawal or revocation, which, under certain conditions, could
add to legal uncertainty for generic companies.1240 This is particularly trou-
blesome, since divisional applications are often filed at a late stage in the
parent application, even though the late filing can arise from a change in the
applicant’s interests to another subject matter disclosed in the parent patent
application.1241
In Napp Pharmaceuticals v. Ratiopharm, where there were “no less than
nine divisional stemming from the original application,”1242 Jacob LJ point-
ed out that, since each divisional application would stand or fall on its own
merits, and each application could enforce its own right, the clutch of divi-
sionals was likely to make it more difficult for the third parties to assess the
position.1243 He even noted that it was questionable whether this voluntary
aspect of the divisional system should continue to be permitted.1244
Another interesting case involving divisional application was Ratiopharm
v. Pfizer in Italy in 2012, where Pfizer was sanctioned with a more than 10
million Euro fine for alleged abuses of the patent system in violation of
Art. 102 of the Treaty on the Functioning of the European Union

1237 See e.g., EPC Art. 82.

1238 Germinario, IIC 2011, 387, 387.
1239 DG Competition, 2009, 201.
1240 DG Competition, 2009, 201.
1241 Günzel, GRUR Int 2008, 644, 644-65.
1242 Napp Pharmaceuticals v. Ratiopharm [2009] EWCA Civ 252.
1243 Napp Pharmaceuticals v. Ratiopharm [2009] EWCA Civ 252, paras 11-12.
1244 Napp Pharmaceuticals v. Ratiopharm [2009] EWCA Civ 252, para 12; cf. EPC
Rule 36(1) (introducing the time limit for voluntary filing a divisional application).

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V. IMPLICATIONS OF THE PATENTABILITY REQUIREMENTS

(“TFEU”),1245 which was later annulled.1246 In this case, Pfizer filed appli-
cations in 1997 for SPCs in all European countries except Italy. Thus, it was
expected that the patent term would expire in July 2001 for other countries
and in September 2009 in Italy.1247 Pfizer filed a divisional application of
the parent patent before the EPO in 2002, which was granted in 2009 and
which was translated and validated only in Italy in June 2009,1248 but was
revoked in October 2010.1249 Based on this divisional application, Pfizer
applied for and received an SPC in Italy in July 2011,1250 although it was
also withdrawn according to the revocation of the patent.1251 The Competi-
tion Authority found that Pfizer abused its dominant position by blocking or
delaying market access to generics based on these activities. This case was
different from the AstraZeneca decision of the CJEU, where the conduct in
question was the submission of misleading information to the patent offices,
not the use of the patent regime as such.1252 Later, the decision was annulled
by the Court, mainly because the Competition Authority failed to prove “a
clear exclusionary intent based on a quid pluris as opposed to the mere sum-
mation of behaviours regarded as legitimate according to the administrative
and judicial system.”1253 However, seeking a divisional application can be
regarded as an abuse of procedure under certain circumstances, at least by
competition authorities.

1245 Ratiopharm v. Pfizer, Italian Competition Authority, p23194, Jan 11, 2012.
1246 Pfizer v. Italian Competition Authority et al., Regional Administrative Court for
Latium, Case No. 07467/2012, Sept. 3, 2012.
1247 Ratiopharm v. Pfizer, Italian Competition Authority, p23194, Jan 11, 2012, para
73.
1248 Ratiopharm v. Pfizer, Italian Competition Authority, p23194, Jan 11, 2012, paras
79-81.
1249 Ratiopharm v. Pfizer, Italian Competition Authority, p23194, Jan 11, 2012, para
96.
1250 Ratiopharm v. Pfizer, Italian Competition Authority, p23194, Jan 11, 2012, para
81.
1251 Ratiopharm v. Pfizer, Italian Competition Authority, p23194, Jan 11, 2012, para
96.
1252 Case C-457/10, AstraZeneca AB v. European Commission, 2012.
1253 Pfizer v. Italian Competition Authority et al., Regional Administrative Court for
Latium, Case N. 07467/2012, Sept. 3, 2012., para 4.1. (appealed to the Italian
Council of State (Italy’s highest administrative court).

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 D. Implications on the competition in the pharmaceutical industry

An attempt to adjust this phenomenon by the USPTO

In 2007, the USPTO proposed two regulations that would limit the chances
of filing further patent applications. Specifically, an applicant would be per-
mitted to file only two continuation applications and one request for con-
tinued examination per application family.1254 These rules were challenged,
and the District Court held that the rules were void because they substan-
tively altered the existing law.1255 On appeal, the Federal Circuit held that
the rules were procedural in nature and within the scope of the USPTO’s
rulemaking authority.1256 The challengers filed a petition for rehearing en
banc, which was granted.1257 Ultimately, however, the USPTO announced
that it would rescind the proposed rules due to vehement opposition from
patent applicants, who felt that the rules unduly restricted their capacity to
protect their IPs.1258

Rule 36 EPC
This problem was also acknowledged by the BOA,1259 especially in a case
where the application under the appeal was the third one in a sequence A1,
A2, and A3 of divisional applications, each divided from its predecessor and
stemming from a root (originating) application A0.1260 Based on the
Art. 76(1) and Rule 25 of EPC 1973 related to the divisional application, the
BOA held that sequences of divisional applications each containing the same
broad disclosures of the original patent application with unamended des-
cription could be pending for up to twenty years. The BOA could not see
any proper reason to impose an additional requirement.1261 However, the
BOA found this practice unsatisfactory and noted that, “It appears that what
applicants consider a legitimate exploitation of the procedural possibilities

1254 Tafas v. Dudas, 541 F.Supp.2d 805 (E.D.Va.,2008).

1255 Tafas v. Dudas, 541 F.Supp.2d 805, 817 (E.D.Va.,2008).
1256 Tafas v. Doll, 559 F.3d 1345, 1364-65 (Fed. Cir. 2009).
1257 Tafas v. Doll, 328 Fed.Appx. 658 (Fed. Cir. 2009).
1258 USPTO, USPTO Press Release #09-21 (Oct. 8, 2009), available at: http://
www.uspto.gov/news/09_21.jsp
(Last accessed on December 20, 2013).
1259 Astropower/Divisional, G1/05 (2007); Seiko/Sequences of Divisionals, G1/06
(2007) (since similar sets of questions had been referred to the EBA and two pro-
ceedings were consolidated, “G1/05” is only referred).
1260 Seiko/Sequences of Divisionals, G1/06 (2007).
1261 Astropower/Divisional, G1/05 (2007), paras 13.3- 13.5.

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V. IMPLICATIONS OF THE PATENTABILITY REQUIREMENTS

afforded by the EPC, others consider an abuse in relation to the law as they
think it ought to be rather than as it is.”1262
The BOA considered this an issue of legal security for third parties, and
recommended that the legislator consider this issue while mentioning some
administrative measures.1263 As Teschemacher points out, “the lesson
should be clear, i.e. the more speedily examining divisions deal with divi-
sional applications, the less the possibilities for abuse are.”1264 These views
seemed to be reflected in Rule 36 of EPC 2000 in shortening the time span
for filing a divisional application, namely, all divisionals must be filed within
24 months from either the issuance of the first communication from the ex-
amining division or the issuance of a lack of unity objection. 1265 Considering
the still increasing numbers of divisionals and the continuing complaints of
the users, above Rule 36 is de facto abandoned,1266 however, a new Rule
38(4) EPC is instead provided with effect from April 1, 2014, i.e. imposing
additional fee for second (or subsequent) generation divisional applications.
The legal uncertainty and difficulty of assessing the third parties’ pos-
itions through the pendency of patent applications are certainly the cause of
anxiety. This phenomenon could be amplified by the increased number of
second generation patent applications and patents.

1262 Astropower/Divisional, G1/05 (2007), para 13.5.

1263 Astropower/Divisional, G1/05 (2007), para 13.5 (further mentioning administra-
tive measures, such as giving priority to the examination of divisional applications
and bundling and speedily deciding co-pending divisional, in order to minimize
the possibility for applicants to keep the subject-matter alive).
1264 Teschemacher, IIC 2007, 703, 706.
1265 EPC 2000 Rule 36 [European divisional applications]
“(1) The applicant may file a divisional application relating to any pending earlier
European patent application, provided that: (a) the divisional application is filed
before the expiry of a time limit of twenty-four months from the Examining Div-
ision's first communication in respect of the earliest application for which a com-
munication has been issued, or (b) the divisional application is filed before the
expiry of a time limit of twenty-four months from any communication in which
the Examining Division has objected that the earlier application does not meet the
requirements of Article 82, provided it was raising that specific objection for the
first time.”.
1266 EPC 2000 Rule 38(4) EPC
“(4) The Rules relating to Fees may provide for an additional fee as part of the
filing fee in the case of a divisional application filed in respect of any earlier
application which is itself a divisional application.”

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 D. Implications on the competition in the pharmaceutical industry

c) Active movement of the market to new products

In general, once a patent on a product expires, consumers can choose to buy

the products at a price lowered by the competition.1267 Reformulation of
products hardly hampers competition in most other markets, since con-
sumers who decide whether the “improved product” deserves a higher price
can simply buy a competing product instead.1268 In the pharmaceutical mar-
ket, however, the consumers choosing the product (physicians) do not have
to pay for it, and those who have to pay for it, the patients or insures, do not
choose it.1269 Even though spending on direct-to-consumer advertisement
has been reported as continuing to increase,1270 the main interaction in this
market is between the health care funder and the pharmaceutical indus-
try.1271 These circumstances may lead this market to suffer from a significant
market failure, 1272 especially on new products based on second generation
patents.

Efforts to move the market to products covered by second generation patents

In the late 1960s, Kefauver argued that the pharmaceutical industry had made
a huge expenditure on marketing and promoting drugs, which was reflected

1267 Scherer/Ross, 1990, 624.

1268 Shadowen/Leffler/Lukens, IIC 2011, 698, 700.
1269 See subsection III.A.2.b); see also McGuire/Drummond/Rutten, 2004, 130-31
(noting “The clinician, acting as the agent for the patient, does not bear full, if any,
financial responsibility for the purchase and may be affected by promotional ac-
tivities of the companies.”); Shadowen/Leffler/Lukens, IIC 2011, 698, 700; Ke-
fauver, 1966, 29 (also noting this peculiar market structure is the reason the drug
industry is particularly susceptible to monopoly control).
1270 Donohue/Cevasco/Rosenthal, 357 New Eng. J. Med. 673, 677-80 (2007); Gilbody/
Wilson/Watt, 14 Quality & Safety in Health Care 246, 246 (2005); United States
General Accountability Office, 2008, 1.
1271 McGuire/Drummond/Rutten, 2004, 131.
1272 Shadowen/Leffler/Lukens, IIC 2011, 698, 700.

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in turn in the prices thereof.1273 This argument continues to be made.1274 For

example, companies spend money on aggressive promotion of new versions
of old drugs before the date of the basic patent expires.1275 The drug makers
typically bring a newly named drug for the same condition at the end of the
basic patent’s market exclusivity and then launch a huge promotional cam-
paign to convert users to the new drug.1276 One commentator argues that the
pharmaceutical industry is famous for its superior ability to inform physi-
cians about the results of clinical trials.1277 When the physicians are per-
suaded to switch their patients to the new versions, such conversion efforts
could protect the drug maker from market share erosion after the date of
generic entry. 1278 This in turn will result in substantially elevated costs, both
directly through their own relatively high prices and indirectly by reducing
access to generics.1279

Example of Nexium®
One of the most telling stories is the case of AstraZeneca’s “purple pill.”
After its glittering success with racemic Omeprazole (Prilosec®) and shortly
before the patent on Omeprazole was about to expire, the company com-
menced a massive and unprecedented advertising campaign to persuade pa-
tients and doctors to move from Prilosec® to Nexium®.1280 To promote this
switch, AstraZeneca priced Nexium® a bit lower than Prilosec®, gave dis-
counts, distributed free samples to doctors, and even offered coupons in
newspapers, all of which cost the company half a billion dollars in 2001

1273 Kefauver, 1966, 68-97.

1274 United States General Accounting Office, 2002, 3 (reporting “[p]harmaceutical
companies spend more on research and development initiatives than on all drug
promotional activities, including [direct-to-consumer] advertising.”); Gagnon/
Lexchin, 5 PLOS Med. 29, 32 (2008) (Based on the estimate derived from a re-
search comparing the data from two market research companies, namely, IMS and
CAM, Gagnon and Lexchin argued that “it appears that pharmaceutical companies
spend almost twice as much on promotion as they do on R&D”, which was contrary
to the industry’s claim).
1275 NIHCM, 2002, 18; Angell, 2004, 77; Harris, The Wall Street Journal, June 6, 2002;
Hall, The New York Times, March 11, 2001.
1276 Because of the high loyalty of patients and doctors (see subsection III.A.2.c)),
fiercer promotional activity is required to convert.
1277 See e.g., Privitera, 68 Epilepsy Res. 52, 56 (2006).
1278 NIHCM, 2002, 4, 18.
1279 NIHCM, 2002, 4.
1280 Angell, 2004, 77; Harris, The Wall Street Journal, June 6, 2002.

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 D. Implications on the competition in the pharmaceutical industry

alone.1281 Again, AstraZeneca basically cut Prilosec® in half, though not

without difficulty. The only important question was whether the new drug
would be better than the old. The truth is that the new version is little better
or even different.1282
This is also a good example of a phenomenon called “chiral-switch,”
which is often observed in chiral drugs that are already approved as a mixture
of optical isomers that have been reevaluated, redeveloped and launched
later as a single enantiomer.1283 This is the line extension of established
clinically effective and commercially profitable drugs, which provides a
strategy to extend the profitable life of drugs, may result in extended patent
protection, and may give an advantage against generic competition.1284 Ob-
viously, whether one may get a patent on the enantiomer will substantially
affect profitability.1285 It is axiomatic that AstraZeneca would not have in-
vested in switching to S-omeprazole without patent protection. Based on the
litigation and settlements in the United States and the appeals in Europe, the
generic version of Nexium® seems to be available in some European coun-
tries after the ten-year regulatory exclusivity1286 and will be available in 2014
in the American market at the earliest after the patent expires.1287 Even if
the patent were ultimately invalidated, thanks to the lowered patentability
requirements and the patents granted as the result thereof, AstraZeneca suc-

1281 Angell, 2004, 77-78; Harris, The Wall Street Journal, June 6, 2002.
1282 Harris, The Wall Street Journal, June 6, 2002.
1283 Agranat/Caner, 4 Drug Discov. Today 313, 313 (1999); Caldwell, 16 Hum. Psy-
chopharm. S67, S69-S70 (2001); Tucker, 355 Lancet 1085, 1085 (2000); cf. Pif-
feri/Perucca, 20 Eur. J. Drug Metab. Ph. 15, 24 (1995) (arguing these 'chiral
switch' can be justified not only in terms of technological innovation and marketing
appeal but also, in terms of sound scientific motivations. Otherwise, they warned
there would be a clear risk to divert a significant proportion of investment from
more innovative research and from areas which are in particular need of thera-
peutic breakthroughs.).
1284 Tucker, 355 Lancet 1085, 1085 (2000); Hutt/Valentová, 50 Acta Facultatis Phar-
maceuticae Universitatis Comenianae 7, 15 (2003); BGH/Escitalopram, GRUR
2010, 123, 126.
1285 Hutt/Valentová, 50 Acta Facultatis Pharmaceuticae Universitatis Comenianae 7,
15 (2003).
1286 For example, http://www.shop-apotheke.com/arzneimittel/6456801/esomepra-
zol-ratiopharm-40mg-hartkapseln.htm?know=search%3Aesomeprazole~. (Last
accessed on December 20, 2013).
1287 See subsection V.A.1.b).

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V. IMPLICATIONS OF THE PATENTABILITY REQUIREMENTS

cessfully delayed the launches of generic versions for a good number of

years.

Example of Clarinex®
Another famous example is the story of Clarinex®, which is a repeat of the
Nexium® story. Clarinex®, the metabolite of Claritin® of Schering-Plough
successfully replaced its parent drug before its patent expired, thanks in large
part to the massive promotional campaign that made the brand ubiqui-
tous.1288 As Angell properly noted, Clarinex was approved for additional
use, i.e. indoor allergies, “only because the company decided to test it for
that use. If they had tested Claritin [the parent drug] for indoor allergies, it
would undoubtedly have been the same as Clarinex – because it is the
same.”1289
The scope of the patent on enantiomer does not cover the racemate. Thus,
generic companies can principally sell the racemate form. However, if the
whole market moves to the enantiomers due to the efforts of the company,
generics which include the “old” racemate form, are seen as “outdated” or
perceived as “less effective” even if no actual benefit results. This market
switch to the new version, in turn, is very useful for the innovating company
in extending patent exclusivity.

d) Along with very specific patents on the secondary products

Life cycle management strategy for maximizing the period of exclusivity

includes a complex combination of patents, which are sometimes too specific
and hard to invalidate. The narrow scope of second generation patents often
provides ineffective protection, since their limited scope allows generic
manufacturers to design around the patent and launch the generic version
without infringing the patents.1290 In addition, these second generation
patents are often challenged with regard to validity over their own basic
patent disclosures. On the other hand, once the patentee overcomes the chal-
lenge, some of these incredibly specific scopes can be extremely valuable
in stopping generic entries.

1288 Angell, 2004, 78.

1289 Angell, 2004, 78-79.
1290 Roin, 87 Tex. L. Rev. 503, 548 (2009).

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 D. Implications on the competition in the pharmaceutical industry

There is a tension between regulatory requirement and patent infringe-

ment for generic products. On the one hand, to meet the regulatory require-
ment, i.e. bioequivalency of the generic version, the product should be as
close to the reference drug as possible, since the similarity to the reference
drug really matters in the market place. Namely, a generic drug maker may
have marketing approval by showing that their versions are the same dosage
form, contain the same dose and the same chemical form, and are equivalents
of the innovator’s drug.1291 Thus, they will likely copy the reference product
exactly to avoid the expense and time of clinical trials required by the FDA
for an even slightly different version.1292 In other words, some slight change
in dosage form, route of administration, strength, or the like, which can be
normally covered by second generation patents, would most likely trigger
clinical trials.1293
On the other hand, to avoid a patent infringement, the same generics
should be as different as possible. Thus, because the patent covering the new
version of a product is too specific to avoid it and survived after the validity
challenge, the generic manufacturers will be hard pressed to bring the generic
versions to market. One of the most specific claims would be the one claim-
ing certain pharmacokinetic parameters related to the formulation.1294 In the
case of the European Patent No EP0973527, covering the “Extended release
formulations of clarithromycin,”1295 claim 1 is as follows:

1291 Rosenbaum, 2011, 195-198 (further explaining the bioavailability of a dosage

form is the rate, and extent to which, the drug reaches the systemic circulation;
bioequivalence is a special type of relative bioavailability; and two or more prod-
ucts would be regarded as bioequivalent when it is shown that the products have
essentially the same bioavailability.).
1292 Scherer, 351 New Eng. J. Med. 927, 927 (2004) (noting “[d]rug patents provide
particularly strong protection against competition from other companies because
even a slightly different molecular variant must undergo the full panoply of clinical
tests required by the FDA”); Voet, 2011, 62-63.
1293 See e.g., 21 U.S.C. § 505(b)(2) (this application procedure also allows a company
to rely, at least in part, on the FDA’s finding of safety and/or efficacy for the
reference drug, and to save money and time).
1294 Grubb/Thomsen, 2010, 268.
1295 European Patent No. EP0973527 (B1) (November 5, 2003, under the title of “Ex-
tended release formulations of clarithromycin”).

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avoid it and survived after the validity challenge, the generic manufacturers will be hard
pressed to bring the generic versions to market. One of the most specific claims would be the
one claiming certain pharmacokinetic parameters related to the formulation.1292 In the case of
theIMPLICATIONS
V. European PatentOF NoTHE
EP0973527, covering REQUIREMENTS
PATENTABILITY the “Extended release formulations of
clarithromycin,”1293 claim 1 is as follows:

The specificityofofthetheclaim
The specificity claimis isapparent,
apparent, i.e.,i.e.,
claimclaim 1 claims
1 claims the the composition
composition of the
of the formulation, its dosage regime, and the pharmacokinetic profiles afterof
formulation, its dosage regime, and the pharmacokinetic profiles after the administration
the administration
the formulation, such asof Cthe Tmax,1294 and AUC
max,formulation,
1295
such as Tmax,1296 and AUC
Cmax,pharmacokinetics
. Since 1297the
includes .
study ofpharmacokinetics
Since the mechanisms of absorption
includesand thedistribution
study of the of anmechanisms
administered drug, and the like,
of absorption
if a patent
and covers notofonly
distribution the composition drug,
an administered of the formulation
and the like, but if
also what thecovers
a patent body doesnotto
the drug,
only theitcomposition
will be very difficult
of the toformulation
design around. butThus,
also once
whatthethemarket
bodyis does
movedtotothethis
second generation product, the generic drug of the older version
drug, it will be very difficult to design around. Thus, once the market is will not sell well, and the
launch of the generic of the new version should be postponed
moved to this second generation product, the generic drug of the older ver- until the second generation
patents
sion expire.
will not sellAt this point,
well, andone theclear option
launch of for
thethe genericof
generic company
the newtoversion
launch itsshould
product
1296
would again be trying to invalidate the second generation patents
be postponed until the second generation patents expire. At this point, one through litigation.
clear option for the generic company to launch its product would again be
4.
tryingAnalysis and conclusion
to invalidate the second generation patents through litigation.1298

1290
Scherer, 351 New Eng. J. Med. 927, 927 (2004) (noting “[d]rug patents provide particularly strong
4. Analysis
protection against and conclusion
competition from other companies because even a slightly different molecular variant must
undergo the full panoply of clinical tests required by the FDA”); Voet, 2011, 62-63.
1291
See e.g., 21 U.S.C. §505(b)(2) (this application procedure also allows a company to rely, at least in part, on
Life cycle
the FDA’s
1292 management
finding or evergreening
of safety and/or efficacy
Grubb/Thomsen, 2010, 268.
hasandbeen
for the reference drug, to savediscussed in this section
money and time).

especially
1293
Europeanin Patent
respect No. of whether
EP0973527 (B1)it(November
can unfairly
5, 2003,hinder
under thea title
generic’s market
of “Extended release
formulations of clarithromycin”).
entry. ASuch
1294
“Cmax”tactics can
is the peak be deployed
plasma concentrationonof athe
drugbasis
after itsof second generation
administration, patents.
and a “Tmax” is the time at
However, contrary
which the peak plasma
1295 to theof aprevailing
concentration drug occurs, seeperception,
Rosenbaum, 2011, not all kinds of selection
164-195.
An “AUC” is a measure of the body’s exposure to the drug, and proportional to the effective dose, see
inventions
Rosenbaum, 2011,
1296
can196.prevent entrance of a generic version once the basic patent
See subsection V.A.1.c).
expires. To the extent that second generation patents can prevent the entry
of generics, a second generation patent granted thanks to the relaxed 168
patentability requirement can prevent the marketing of generics for another
some years. The argument on the purposely delayed filing of second gener-
ation patent applications to delay the entry of generics was shown not to be
justified.

1296 A “Cmax” is the peak plasma concentration of a drug after its administration, and
a “Tmax” is the time at which the peak plasma concentration of a drug occurs, see
Rosenbaum, 2011, 164-195.
1297 An “AUC” is a measure of the body’s exposure to the drug, and proportional to
the effective dose, see Rosenbaum, 2011, 196.
1298 See subsection V.A.1.c).

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 E. Summary and conclusion

Many serious concerns were found in other fields. The pendency of patent
applications on second generation inventions would create much increased
legal uncertainty and make it more difficult for the generic companies to
assess their positions and legal security. Moreover, the active market shift
to the newer version of the product based on second generation patents, along
with the very specific scope thereof could make the market for generics
unattractive. This is possible with the specificities of the pharmaceutical
markets, such as high loyalty, disconnection between the decision-makers
and buyers, and the like. In addition, although the case would be limited to
the United States, the new list up in the Orange Book could seriously delay
generic entry.

E. Summary and conclusion

Lowered patentability requirements on second generation inventions natu-

rally increases the number of second generation patents.1299 In particular,
the relaxed novelty requirement has led to concerns about the patent disclo-
sure depending on the language, reducing the examination of patentability
de facto to the examination of novelty, and other potential concerns about
the applications of disclosure requirements in other fields of patent law. This
greatly increased number of second generation patents has amplified the
patent exclusivities, thereby creating a more complicated and uncertain
landscape. This has also caused companies to incur more costs in their search
for the freedom to operate, in the process of obtaining second generation
patents, and in the litigation and invalidation of such patents. The relaxed
patentability requirements could be one of the reasons why basic patentees
greatly increased the spending attributable to line extensions and why short-
term priorities encourage marginal inventions that provide more reliable re-
turns on investment at the expense of major changes.1300 Eventually, the
market becomes flooded with second generation products,1301 which results
in more imitative research and fewer breakthroughs and drugs1302 and which
hinders real pharmaceutical innovation and could threaten health.

1299 Thomas, 52 Am. U. L. Rev. 771, 773 (2003).

1300 Munos, 8 Nat. Rev. Drug Discov. 959, 966 (2009).
1301 NIHCM, 2002, 18-19.
1302 Munos, 8 Nat. Rev. Drug Discov. 959, 966 (2009).

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V. IMPLICATIONS OF THE PATENTABILITY REQUIREMENTS

The increased number of marginal patents with the case law involving the
patent term extensions on second generation patents seems to promote more
work on the second generation inventions rather than on the basic inventions.
Namely, patent term extensions seem to be granted based on the extent to
which, if they are patented, they will be distinctive from the basic substances
and can enjoy the extensions of terms.1303 In the end, after the patent term
and the SPC of the basic patent, which is desirable, many additional years
of patent term on the second generation invention can be obtained. In addi-
tion, unlike other patent term extension systems, the calculation system of
SPC seems to penalize even the basic inventions, the R&D for which takes
longer.1304 In contrast, since the disclosure requirement does not seem to be
lower, there is little influence on the breadth of the second generation
patents.
The implications on the competition in the industry were also discussed.
Firstly, contrary to the dominant perception, there are fewer cases in which
the exploitation of the basic patent was held to infringe the second generation
patents. Secondly, only to the extent that second generation patents can pre-
vent a generic’s entry can second generation patents stop the marketing of
generics for additional periods of years. Thirdly, the common argument on
the purposely delayed filing of second generation patent applications was
shown to have no merit.
Serious concerns were found in other areas. The automatic thirty-month
stay and new list up in the Orange Book in the United States could seriously
delay generic entry. The pendency of patent applications on second gener-
ation inventions increases legal uncertainty and makes it difficult for the
generic companies to assess their legal security. Moreover, the active move-
ment of the market to the new version of the product based on second gen-
eration patents, along with the very specific scope thereof, can make the
market unattractive for generics.

1303 See subsectionV.C.2..

1304 See supra 1173 -1175 and accompanying texts.

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VI. PROPOSALS

In the literature on economics, particular emphasis has been placed on the

best way to design optimal patent policies.1305 Much debate about the patent
system has focused on the trade-off between the dynamic benefits of inno-
vation and the static costs of monopoly power given to the innovators as
rewards.1306 The status costs are generally measured by “deadweight loss”,
which is the value of inventions that would be under-used, because a patentee
would charge a monopoly price. Consequently, only those buyers willing
and financially able to pay the monopoly price could use the inven-
tions.1307 However, overprotecting intellectual property is as harmful as un-
derprotecting it,1308 as Kozinski J noted:
“Creativity is impossible without a rich public domain. Nothing today, likely
nothing since we tamed fire, is genuinely new: Culture, like science and tech-
nology, grows by accretion, each new creator building on the works of those
who came before. Overprotection stifles the very creative forces it's supposed
to nurture.”1309
There has also been a tension between providing strong patent rights to en-
courage break-through innovations, thereby possibly discouraging the de-

1305 Luski/Wettstein, 1 Probl. Perspect. Manage. 31, 31 (2004).

1306 Gilbert/Shapiro, 21 RAND J. Econ. 106, 106 (1990); Arrow, 1962; Kamien/
Schwartz, 1982, 195 (noting according to the increase of the reward for innovation,
total expected expenditure of participants is raised collectively and increase the
expected appearance of the innovation); Svatos, 13 Soc. Philos. Policy 113, 119
(1996); Scherer/Ross, 1990, 624; O’Donoghue, 29 RAND J. Econ. 654, 658
(1998).
1307 See e.g.: Friebel et al., 2006, 23.
1308 White v. Samsung Electronics America, Inc., 989 F.2d 1512, 1513 (9th Cir. 1993).
1309 White v. Samsung Electronics America, Inc., 989 F.2d 1512, 1513 (9th Cir. 1993)
(Kozinski, J. dissenting); see also Gordon, 102 Yale L. J. 1533, 1556-57 (1993);
Matutes/Regibeau/Rockett, 27 RAND J. Econ. 60, 78-80 (1996) (arguing that it
should be expected that the patentee would effectively be granted exclusive rights
to the applications of a basic discovery and also could acquire protection on ap-
plications which they had not yet worked out.).

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VI. PROPOSALS

velopment of subsequent improvements.1310 And balancing between two

inventors has also been an important issue,1311 as noted by Lord Mansfield
in 1785.1312
This tension exists because we live in active investment climates in which
companies invest to improve each other’s products/innovations in various
ways. However, it is not easy to balance the rights of all concerned. For
example, if we do not provide broad enough protection to the first innova-
tions, we will hamper the incentive to create in the first place. However, if
we provide complete exclusivity to the first generation innovations, we will
stifle R&D by second generation inventors.1313 However, as discussed so
far, more weight should be given to the basic inventions in the pharmaceu-
tical industry, which can bring more NMEs to the public. As instruments to
this end, many scholars have considered the trade-off among patent breadth,
length, and patentability requirements, and so on.1314 This chapter will
present the arguments on each instrument by scholars, which will be fol-
lowed by the practical proposals on the instruments for pharmaceutical in-
ventions.

1310 Jaffe/Lerner, 2004, 50; Scotchmer, 5 J. Econ. Perspect. 29-41 (1991); Friebel et
al., 2006, 27; Heller/Eisenberg, 280 Science 698 (1998); Merges/Nelson, 90 Co-
lum. L. Rev. 839, 916 (1990); Merges/Nelson, 25 J. Econ. Behav. Organ. 1, 20-23
(1994); cf. Bessen/Maskin, 40 RAND J. Econ. 611 (2009) (arguing even patent
would inhibit the innovation in complementary and sequential innovation).
1311 Lemley, 75 Tex. L. Rev. 989, 989-990 (1997).
1312 Sayre v. Moore, 1 East 361 n.(b), 102 Eng. Rep. 139, 140 n.(b) (K.B.1785), cited
in Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 480 n. 33
(1984). (on a copyright case against improved navigational chart noting “we must
take care to guard against two extremes equally prejudicial; the one, that men of
ability, who have employed their time for the service of the community, may not
be deprived of their just merits, and the reward of their ingenuity and labour; the
other, that the world may not be deprived of improvements, nor the progress of
the arts be retarded.”).
1313 Lemley, 75 Tex. L. Rev. 989, 990 (1997); Merges/Nelson, 90 Colum. L. Rev. 839,
871-79 (1990); see also Sony Corp. of Am. v. Universal City Studios, Inc., 464
U.S. 417, 480 n. 33 (1984) in the copyright context, supra 1312 .
1314 See e.g., Friebel et al., 2006, 21-23.

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 A. Introduction

A. Introduction

In the art of pharmaceutical sciences, the first issue between the two prob-
lems in this dissertation, the dearth of NMEs and the drastic increase of
second generation inventions, has generally been of interest. While it has
not been easy to overcome or even suggest overcoming the dearth of NMEs,
some scholars have suggested that the key would be to increase substantially
the number and quality of innovative, cost-effective new medicines, without
incurring unsustainable R&D costs.1315 To do so, many scholars have pro-
posed transiting from “me-too” or “me-slightly better” drugs to highly in-
novative medicines and re-focusing resources such as money and talent on
discovery research.1316 One chief officer of a pharmaceutical company that
has been facing revenue loss announced that the company needed to rely
much more on new medicines.1317 The U.S. government has also attempted
to overcome the crisis created by a lack of new medications by implementing
the so-called “wild card patent term extension” but this proposal was finally
rejected.1318 How, then, can the patent regime help to bring more new basic
medicines to the public?
Providing general patent policy recommendations is difficult, since the
framework is dynamic and complicated in nature, and the strategic behaviour
of many firms is involved. However, in general, as profit opportunities have
expanded, firms have competed to exploit them by increasing R&D invest-
ment. 1319 Patents create incentives and chances to explore the known or
unknown possibilities that may exist within the scope of the patent.1320
Prospect theory is in the same vein. According to Kitch’s prospect theory,
the broad prospect of intellectual property can allocate better resources and

1315 Paul, et al., 9 Nat. Rev. Drug Discov. 203, 203 (2010) (noting “our parametric
analyses further reveal where the greatest improvements in productivity must oc-
cur.”).
1316 Paul, et al., 9 Nat. Rev. Drug Discov. 203, 213 (2010).
The recommendations from the scientific point of view were much more im-
provements in understanding of human (disease) biology, and fostering scientific
creativity and being opportunistic for serendipitous scientific and medical find-
ings.
1317 Armstrong, Bloomberg, April 12, 2012.
1318 Project Bioshield II Act of 2005. S. 975, 109th Congress (2005–2006); See supra
978 and accompanying texts.
1319 Scherer, 20 Health Affair. 216, 220 (2001).
1320 Domeij, 2000, 90.

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VI. PROPOSALS

activities to innovations once they are made.1321 This theory recognizes that
many patents appear at the beginning of the process that starts with concep-
tion and ends with innovation.1322 Namely, this theory envisages inventions
as something made by a single firm as only the first step in a long and ex-
pensive process of innovation.1323 There is always pressure to file a patent
application as early as possible, since competition is fierce. Moreover, the
patent system only requires something that works and not the end product
that is finished and commercially available.1324 Even though this theory at-
tracts criticism, such as limitation to the scope of patents1325 and dense
thickets of intersecting, overlapping, and cross-blocking patents, the benefits
of this theory fit the pharmaceutical industry best.1326 One thing is clear:
Without patent protection, the threat of competition hampers investment in
R&D.1327
In addition, the evidence that companies terminate many projects on
commercial grounds suggests that many more drug candidates may be de-
veloped if the markets can be made more economically attractive.1328 In the
following sections, the way to help to increase the new medications and
decrease the second generation inventions in the pharmaceutical industry
will be analyzed and recommendations will be made. Before that the dis-
cussion will focus on the main issues, and the nature and value of selection
inventions will be analysed.

1321 Kitch, 20 J. Law Econ. 265, 276-280 (1977) (based on Schumpeterian tradition
that there is not sufficient incentive to innovate in market place and prospect of
realizing monopoly profits would provide with the incentive for innovation); See
also Kamien/Schwartz, 1982, 189-90 (noting monopolist would make an efficient
allocation of fixed level of resources); Burk/Lemley, 54 Case W. Res. L. Rev. 691,
726-727 (2003).
1322 Kitch, 20 J. Law Econ. 265, 283 (1977).
1323 Burk/Lemley, 89 Va. L. Rev. 1575, 1615 (2003).
1324 Kitch, 20 J. Law Econ. 265, 270-71 (1977).
1325 Merges, 76 Cal. L. R. 803, 840-42 (1988).
1326 Burk/Lemley, 54 Case W. Res. L. Rev. 691, 726-728 (2003).
1327 Machlup, 1958, 36-37.
1328 Cockburn, 2006, 26.

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 B. Nature of selection inventions

B. Nature of selection inventions

1. Different natures of selection inventions

The definition of each selection invention was provided in chapter 2. Here,

the nature and value of species selection invention will be further explained
in comparison with other selection inventions.

a) Species selection invention

The value of a species selection invention exists in the choice of one com-
pound out of a range of candidates (sometimes millions). A similar situation
exists in the invention of a DNA sequence. Apart from the issue of whether
a DNA sequence is a patentable subject matter,1329 the existence thereof in
nature, or of a DNA library, including the multitude of DNA sequences, does
not automatically render the sequence non-novel, unless the sequence con-
cerned had recognisably been made available.1330 Like the genus claim, a
DNA library of many gene fragments, does not enable a person skilled in
the art to locate the gene in question.
In Association for Molecular Pathology v. U.S. Patent and Trademark
Office, Bryson J used his leaf analogy to argue that a gene simply isolated
from the body cannot be patentable subject matter just as a naturally grown

1329 There are some jurisdictions, where the patentable subject matter is mattered on
the DNA sequence invention. See e.g., Association for Molecular Pathology et al.
v. Myriad Genetics Inc. et al. 133 S.Ct. 2107, 2109 (2013) ("A naturally occur-
ring DNA segment is a product of nature and not patent eligible merely because
it has been isolated, but cDNA is patent eligible because it is not naturally occur-
ring.”).
1330 Biogen/Alpha interferons, T301/87, OJ EPO 1990, 335, 351.

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VI. PROPOSALS

leaf cannot be patentable simply because it was snapped from the tree.1331
To this dissent, the majority argued as follows:
“With respect, no one could contemplate that snapping a leaf from a tree would
be worthy of a patent, whereas isolating genes to provide useful diagnostic tools
and medicines is surely what the patent laws are intended to encourage and
protect. Snapping a leaf from a tree is a physical separation, easily done by
anyone. Creating a new chemical entity is the work of human transformation,
requiring skill, knowledge, and effort.”1332
The majority’s opinion seems to differentiate a DNA sequence from a leaf
based on the difficulty of isolation and the usefulness of genes. It could have
been relatively difficult to isolate a DNA at the time of this invention. How-
ever, the separation was already very well known and was not difficult to a
person skilled in the art, once he knew the sequence of the DNA. The ma-
jority values more highly and differentiates the usefulness of the DNA in-
vention from a leaf, thus arguing that the DNA invention must have been
encouraged and protected. In this sense, it would be fair to say that, if a
snapped leaf from the whole forest were useful, say to cure breast cancer,
which the Myriad’s DNA invention tried to diagnose, no one would argue
that a patent should not be granted on the leaf. Consequently, the majority
appears to distinguish the inventions according to their value and thereby
tries to grant a patent to encourage and protect the invention.
The extreme undue burden that would have been necessary to enable a
person skilled in the art to locate and to make practical use either of the
genetic sequence or of the species compound and the particular beneficial
use thereof rendered this type of selection invention novel and/or
patentable.

1331 Association for Molecular Pathology v. U.S. Patent and Trademark Office, 689
F.3d 1303, 1352 (Fed. Cir. 2012) (“[E]xtracting a gene is akin to snapping a leaf
from a tree. Like a gene, a leaf has a natural starting and stopping point. It buds
during spring from the same place that it breaks off and falls during autumn. Yet
prematurely plucking the leaf would not turn it into a human-made invention. That
would remain true if there were minor differences between the plucked leaf and
the fallen autumn leaf, unless those differences imparted "markedly different
characteristics" to the plucked leaf.” ), aff'd in part, rev'd in part, Association for
Molecular Pathology et al. v. Myriad Genetics Inc. et al. 133 S.Ct. 2107 (2013).
1332 Association for Molecular Pathology v. U.S. Patent and Trademark Office, 689
F.3d 1303, 1332 (Fed. Cir. 2012), aff'd in part, rev'd in part, Association for Mole-
cular Pathology et al. v. Myriad Genetics Inc. et al. 133 S.Ct. 2107 (2013).

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 B. Nature of selection inventions

b) Other selection inventions

The other selection inventions discussed, i.e. optical isomers, crystalline

forms, or metabolites are selected from a much smaller group. The size of a
group from which an enantiomer is chosen depends on the number of chiral
carbon atoms in the molecule, and the optical isomers can be selected out of
two options. Crystalline forms are selected out of a couple of forms,1333
unless they are a newly synthesized form. Metabolites are also screened out
of a couple of substances, which are acquired after analyzing and profiling
the sample of the subject who received the parent drug. Thus, the nature of
other selection inventions seems to relate more to the difficulty of separation/
isolation from the previous mixtures.

2. Selection inventions from the era of penicillin to the 21th century

a) Early medications and the novelty requirement

Lack of novelty was already the major hurdle that early medications had to
overcome to secure patents. One very early case was aspirin (acetyl salicylic
acid). Patents on it were filed in Germany,1334 the United States, and the
United Kingdom.1335 However, only the patent1336 filed in the United States
in 1898 managed to survive after an infringement suit in 1909.1337 Consid-
ering that the compound is simple and was already available on the market,
the results are not surprising. The cases of early antimicrobial drugs were
not much different from that of aspirin. Neither sulphanilamide, whose ap-
pearance in 1935 foreshadowed the technological change in the drug indus-
try, nor penicillin, which was the first antibiotic, was patented.1338 The for-

1333 However, the novelty requirement seems to be higher than other selection inven-
tions.
1334 Dutfield, 2009, 18 (noting the German application was granted but rejected later
because only processes were patentable and the compound was not new).
1335 Dutfield, 2009, 18 (noting the British application was filed in 1898 but invalidated
in 1905 in an infringement case based on the lack of novelty).
1336 U.S. Patent No. 644,077 (February 27, 1900, under the title of “acetyl salicylic
acid”).
1337 Kuehmsted v. Farbenfabriken of Elberfeld Co., 179 F. 701 (7th Cir. 1910).
1338 Temin, 10 Bell J. Econ. 429, 435 (1979).

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VI. PROPOSALS

mer was a previously known substance, and the latter was a known natural
substance.1339

b) “Made available to the public” for the first time

The infringement cases of two patents 1340 on adrenaline1341 in 1911 appear

to be the first to require a court to consider the patentability of a “purified
form” of natural products extracted from living organisms.1342 The decision
delivered by the renowned Hand J held that the novelty of such extracts was
not destroyed by the fact that it was merely an extracted product without
change. Consequently, he upheld the patentability thereof.1343 More impor-
tantly, he further noted,
“Takamine was the first to make it available for any use by removing it from
the other gland-tissue in which it was found, and, while it is of course possible
logically to call this a purification of the principle, it became for every practical
purpose a new thing commercially and therapeutically.”1344
Streptomycin was the second antibiotic that came to the market after peni-
cillin and the first to be effective against tuberculosis. In 1948, Streptomycin
was covered by two patents. One was granted to the Rutgers Research and
Endowment Foundation and was related to methods of extraction and pro-
duction.1345 The other one was granted to Merck and covered complex salts

1339 Temin, 10 Bell J. Econ. 429, 435 (1979); for the penicillin, see also Dutfield, 2009,
141 (noting “penicillin was not patented, as aspirin should probably not have been
on account of its already being known about”); American Cyanamid Co. v.
F.T.C., 363 F.2d 757, 760 (6th Cir. 1966).
1340 U.S. Patent No. 730,176 (June 2, 1903, under the title of “Glandular extract prod-
uct”); U.S. Patent No. 753,177 (February 23, 1904, under the title of “Glandular
extract compound”).
1341 This is a hormone produced by adrenal glands and which increases heart rate,
constricts blood vessels, dilates air passages and participates in the fight-or-flight
response of the sympathetic nervous system.
1342 Dutfield, 2009, 108-09.
1343 Parke-Davis & Co. v. H.K. Mulford Co., 189 F. 95, 103 (C.C.N.Y., 1911); reversed
in part in Parke-Davis & Co v. H K Mulford & Co, 196 F. 496 (2nd Cir. 1912)
(reversed to the extent that the claim didn’t have the limitation such as “of product
of the suprarenal glands.”).
1344 Parke-Davis & Co. v. H.K. Mulford Co., 189 F. 95, 103 (C.C.N.Y., 1911).
1345 U.S. Patent No. 2,449,866 (September 21, 1948, under the title of “streptomycin
and the process of preparation”).

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 B. Nature of selection inventions

of streptomycin containing inorganic salts.1346 Even though streptomycin

was also a natural product, the patent claimed to the satisfaction of the ex-
aminer that “for the first time streptomycin is available in the form which
not only has valuable therapeutic properties but also can be produced, dis-
tributed, and administered in a practicable way.”1347 Patents were also grant-
ed in 1951 on the invention of Vitamin B12, which was indeed the extraction
of a pure substance1348 and in 1955 on the composition containing VtB12 and
the process to prepare it.1349 The validity of these patents was attacked. The
Appeals Court upheld the validity of the first patent entirely based on the
Court’s determination that the invention provided the world with a medica-
tion for the first time that could successfully treat pernicious anemia without
having the unfavourable reaction from the earlier liver extracts, and that the
isolated form had not existed in nature.1350 In the United States, therefore,
at least a naturally occurring substance either in the composition or in less
purified form does not anticipate the claims directed to the pure materi-
al.1351 The patents on the substances isolated or purified from the mixture
were granted because they made the medication available to the public for
the first time.
In Germany, precedents were established in the Reichspatentamt1352 in
the 1920s and 1930s by granting patents on hormones, and were used to
consolidate the notion that purified biological products could generally be-

1346 U.S. Patent No. 2,446,102 (July 27, 1948, under the title of “complex salts of
streptomycin and process for preparing same”); Temin, 10 Bell J. Econ. 429, 436
(1979) (noting “the chemical modifications made to streptomycin to enable it to
be purified created a new product and both this new product and the process by
which it was made were patentable.”).
1347 Dutfield, 2009, 23 (citing the words of the U.S. patent No. 2,449,886).
1348 U.S. Patent No. 2,563,794 (August 7, 1951, under the title of “Vitamin B12”).
1349 U.S. Patent No. 2,703,302 (March 1, 1955, under the title of “Vitamin B12-active
composition and process of preparing same”).
1350 Merck & Co. v. Chase Chemical Co., 273 F.Supp. 68, 84 (D.N.J. 1967) (noting
“the patentees of the ‘794 patent have given to the world, for the first time, a
medicine that can be used successfully in treating all patients suffering with per-
nicious anemia, a medicine that is subject to accurate standardization, and avoids
the unfavorable reactions of the earlier liver extracts. It did not exist in nature in
the form in which the patentees produced it, and nothing in the prior art either
suggested or anticipated it.”).
1351 In re Kratz, 592 F.2d 1169, 1174 (C.C.P.A. 1979); In re Bergstrom, 427 F.2d 1394,
1401-02 (C.C.P.A. 1970).
1352 German Imperial Patent Office.

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VI. PROPOSALS

come proprietary.1353 However, until recent years the important difference

from the American practice was that, as in most of continental Europe,1354
only process patents to manufacture a drug could be granted in Ger-
many.1355

3. Analysis and conclusion

The nature of selection inventions is different. Namely, their nature is to

locate and characterise one out of numerous, sometimes millions, of candi-
dates. The nature of the rest of the selection inventions exist in their isolation
or the separation from the mixture. As discussed, isolated or separated
chemical compounds were patented. However, these decisions1356 were de-
cided a century ago when the pharmaceutical industry was arguably not yet
a research-based industry but a manufacturing industry.1357 The knowledge
of the average skilled person in the pharmaceutical art has dramatically in-
creased yearly ever since.1358 Furthermore, patents were granted to isolated
compounds, based mainly on the fact that the compounds were available for
the first time in the form that could cure the disease therapeutically and
commercially.
One may doubt whether subsequent selection inventions have also made
something available to the public for the first time. Even if they have, how-
ever, the public already had the older versions, which usually were covered
by the basic patent. One may also doubt whether it is proper to apply the

1353 Gaudillière, 24 Hist. Technol. 107, 125 (2008).

1354 For example, the U.K. has interesting history of development, i.e. it prohibited
claims to the chemical substance in 1919 and removed this prohibition in 1949.
In addition, the Section 4 (7) of UK 1949 Patents Act had stated that a claim to a
new substance shall be construed to as not extending to the substance when found
in nature.
1355 For example, product patents on pharmaceuticals and chemicals had been granted
in Germany from1968, in Japan from 1976, in Switzerland from 1977, and in
Italy from 1978 and in Spain and in Portugal from 1992; See e.g.,ter Meer, 57 J.
Pat. Off. Soc'y 763, 763 (1975) (noting “there have been changes in the German
patent law, particularly in the chemical field, in large measure due to the change
of the Patent Law in 1967 which abolished the prohibition against the claiming of
chemical products, per se.”); Nastelski, IIC 1972, 267, 267.
1356 See supra 1340 -1353 and accompanying texts.
1357 Dutfield, 2009, 59-60.
1358 Hansen/Hirsch, 1997, 51.

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 C. Proposals on the breadth of patents

patentability requirement of a century ago to the inventions in the present

highly developed technological era. One may also doubt whether the abso-
lute product protection afforded by a patent is appropriate for second gen-
eration inventions. Usually, the patentability of these inventions was ac-
knowledged because of the difficulty of separation. If the technical contri-
bution to the art were the method of separation of something out of the mix-
ture that already existed and provided the therapeutic contribution to the
public, the protection of the method to manufacture the substance would be
enough. Some scholars argue that the various second generation patents do
not have that much value, because they function only to protect the funda-
mental innovations, and these scholars even argue that these kinds of activ-
ities are obviously be wasteful from a societal point of view.1359 This is
different from species selection inventions that make a new medicine avail-
able to the public. More importantly, the difference between species selec-
tion invention and the rest is that the former would be the NMEs that could
open an entirely new field of second generation inventions and the latter
would be IMDs.
Considering the different values of selection inventions and the needs of
the society, the proper ways for the patent law to help bring more NMEs to
the public will now be discussed.

C. Proposals on the breadth of patents

1. Arguments on the breadth of patents

Although it should not be taken for granted that better protection necessarily
leads to more innovation,1360 the allowable breadth of the claims is decisive
for the consequences of the patent system,1361 and is one of the key means
to incentivize innovation.1362 Thus, many arguments have been brought for-
ward regarding the proper scope of the patent to send messages to the in-
dustry to help to foster more useful innovations.

1359 Hopenhayn/Mitchell, 32 RAND J. Econ. 152, 163 (2001).

1360 Levin et al., 1987 Brookings Paper on Econ. Activity, 783, 787 (1987).
1361 Lerner, 25 RAND J. Econ. 319 (1994).
1362 Scotchmer, 5 J. Econ. Perspect. 29, 30 (1991).

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VI. PROPOSALS

a) Arguments for a broader patent scope

Many arguments have been brought forward regarding the broader scope of
patents. The scope of protection conferred by patents can be broadened to
increase rewards for basic inventions.1363 Many scholars claim that a broader
scope in patents would increase the power of the patentee to exclude com-
petition, which would lead to more innovations for various reasons here
adduced. For example, Kitch argues that broad patent rights were mandatory,
basically because enhanced breadth would provide incentives to develop
technology by allowing the inventors to appropriate the full benefits of the
development.1364 Harrelson contends that broader and stronger exclusivity
must be given, because the underprotection of patent rights would decrease
the quantity and quality of new products beneficial to society in the long
run.1365 Along with Klemperer, Gilbert and Shapiro argue that broadening
the scope of patents increases the per-period profit for the innovator, because
a broader patent protection would allow the innovator to charge a high pre-
mium or would prevent competitors from selling close substitutes, respec-
tively.1366 Green and Scotchmer argue that the broader scope of the patents
in sequential innovations would determine the division of profit between
them rather than the level of per-period profit.1367
Eisenberg and Strandburg also contend that based on a reduction of the
strength of patent monopolies, the use of patented invention would increase,
however, to put existing technologies into use – i.e., the investment itself -
would be undermined.1368 Scotchmer further argues that the patentee of the

1363 Avorn, 309 Science 669, 669 (2005).

1364 Kitch, 20 J. Law Econ. 265 (1977).
1365 Harrelson, 7 Wid. L. Symp. J. 175, 187-88 (2001).
1366 Gilbert/Shapiro, 21 RAND J. Econ. 106, (1990) (defining breadth as anything
increasing the flow rate of innovator’s profits uniformly during the period of pro-
tection); Klemperer, 21 RAND J. Econ. 113 (1990) (defining breadth as a quality
advantage conferred on the patentee); cf. Green/Scotchmer, 26 RAND J. Econ. 20
(1995) (arguing that broader patents in the sequential innovations would determine
not the level of per-period profit, but the division of profit between them.).
1367 Green/Scotchmer, 26 RAND J. Econ. 20 (1995) (defining scope protecting inno-
vator from quality improvements).
1368 See e.g., Eisenberg, 56 U. Chi. L. Rev. 1017, 1036-44 (1989); Strandburg, 1 UC
Irvine L.R.,265, 276 (2011).

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 C. Proposals on the breadth of patents

original invention will collect a larger share of the profit if second generation
products are not patentable.1369
Other arguments arising from the nature of intellectual assets provide
further support for broader scope of rights. Namely, the broader upstream
patents would be helpful for SMEs. Lerner argues that this is so, because
increasing the patent’s scope increases the value of the firm, as the result of
which broader patents help to attract capital investment.1370 In addition,
based on Lerner and Merges’ report that the allocation of control rights to
the smaller parties at the time of licensing increases with its financial
health,1371 one can argue that the broader patent scope can be useful if it
confers bargaining power either directly or by facilitating financing that en-
hances SMEs’ bargaining power.
Grady and Alexander also maintain that granting broader patent rights to
a nascent invention, which is in early development and can signal many
various improvements, would avoid the possibility of races to patent the
improvements, but would likely induce a rush to patent the original
concepts.1372 Scotchmer and Chang urge that broad patent protection could
provide a necessary spur to further innovation, because it would motivate
R&D investment in the initial basic technologies, the stand-alone values of
which are less than their subsequent innovations.1373 O’Donoghue and
Friebel et al., claim that to induce a large target innovation, larger rewards
for larger innovations or some protection against future innovations must be

1369 Scotchmer, 27 RAND J. Econ. 322 (1996); Chang, 26 RAND J. Econ. 34, 48-49
(1995) (arguing that broadest protection should be provided not only to those that
are very valuable relative to possible improvements, but also those that have very
little value relative to the improvements (=which has relatively low stand-alone
value)).
1370 Lerner, 25 RAND J. Econ. 319, 325-28 (1994) (by noting that the increase in patent
scope leads to increase in the firm’s valuation).
1371 Lerner/Merges, 1997, 27-28.
1372 Grady/Alexander, 78 Va. L. Rev. 305, 318 (1992).
1373 Scotchmer, 5 J. Econ. Perspect. 29, 31 (1991); Chang, 26 RAND J. Econ. 34, 48-49
(1995) (further argued that broadest protection should be provided not only to
those that are very valuable relative to possible improvements, but also those which
has relatively low stand-alone value because it may also be a breakthrough inno-
vation in the sense that it might generate great spillovers in the form of improve-
ments.).

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VI. PROPOSALS

provided by the patent system.1374 Acording to O’Donoghue et al., without

some leading breadth of patents, the effectiveness of the patent system to
promote innovation will be seriously impeded.1375
For the biopharmaceutical field, Mazzoleni and Nelson believe that
granting patents in the biotechnology field, in which there is a long way to
go to reach practical applications, has helped spur research specialist
firms.1376 In addition, they contend that a patent holder with a monopoly on
the basic innovation will develop the basic innovation and some of the im-
provements as well,1377 not only because the original inventors would earn
the entire profit from the improvements,1378 but also because they have more
and better (or perhaps the most and best) knowledge of and experience with
the basic substances in this sector.1379 Burk and Lemley distinguish the
pharmaceutical industry from other industries, such as the software and most
semiconductor industries, in which inventions were characterized by more
incremental improvements.1380 While insisting that those incremental im-
provements would not be entitled to the broader scope of the protection, they
claim that inventions in the pharmaceutical industry should be entitled to it,
because innovations in this industry were likely to take the form of discrete
new inventions that usually open up an entire field of inquiry.1381

b) Arguments against a broader patent scope

To the contrary, Merges and Nelson argue that allowing and enforcing
broader patent rights would tend to hinder technical progress, harass the

1374 O’Donoghue, 1996, 49-50; See also Friebel et al., 2006, 26 (noting that some
protection against future innovations should be provided to the basic inventions,
for early inventors to fully consider the value of his contribution to future R&D
or to allow them to compete with future inventors).
1375 O'Donoghue/Scotchmer/Thisse, 7 J. Econ. Manage. Strat. 1, 3 (1998).
1376 Mazzoleni/Nelson, 27 Res. Policy, 273, 282 (1998).
1377 Merges/Nelson, 90 Colum. L. Rev. 839, 873 (1990).
1378 Scotchmer, 5 J. Econ. Perspect. 29, 32-33 (1991) (“under broad patent protection,
the incentive for the first innovator to develop a second generation product will
be stronger than for an outside firm (provided the first innovator has expertise to
develop the new product, and thinks of it), since the first innovator will earn the
entire incremental profit.”).
1379 Landes/Posner, 2003, 330.
1380 Burk/Lemley, 89 Va. L. Rev. 1575, 1657 (2003).
1381 Burk/Lemley, 89 Va. L. Rev. 1575, 1657 (2003).

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 C. Proposals on the breadth of patents

competitors out of the field, and cut down diversity and creativity of the
development.1382 Following this, Nelson with Mazzoleni repeat that stronger
patent protection might hinder both technological and economic progress in
the field of industries, such as semiconductors, computers, telecommunica-
tion, and so forth, because it would induce more litigation and increase costs,
and it would hinder the entry of new players.1383
Barnett even argues that imperfect patent protection would generate as
much incentive to develop as those generated by broader patent protections,
because it would encourage upstream researchers, who work on research
that is relatively far removed from a commercial end product, to collaborate
with downstream firms to appropriate at least some of the spillover appli-
cations of the patented research.1384 Landes and Posner are concerned that
broad protection might result in an excessive return of the inventor’s fixed
costs of invention. 1385
For the biopharmaceutical field, Rai also maintains that patents on early-
stage, nascent biopharmaceutical inventions should not be given broad pro-
tection because the protection on those inventions is different from the pro-
tection on the end-product drugs, and most cumulative innovation in the
industry occurs before a drug is produced.1386 Heller and Eisenberg claim
that strengthening IPR would impede and discourage research rather than
promote it; the so-called “anticommon problem.”1387 The “anticommon” is
characterized by fragmented property rights. Only by aggregating these
rights is it possible to make effective use of the property.1388 To aggregate
the fragmented property rights, high search and negotiation costs are nec-
essary to locate and bargain with the many right holders.1389

1382 Merges/Nelson, 25 J. Econ. Behav. Organ. 1, 20-23 (1994) (however, noting that
a strong patent may be essential if the inventor of a new chemical product is to
profit from the invention); Merges/Nelson, 90 Colum. L. Rev. 839, 843-44 (1990)
(noting “[w]ithout extensively reducing the pioneer’s incentives, the law should
attempt at the margin to favor a competitive environment for improvements, rather
than an environment dominated by the pioneer firm”).
1383 Mazzoleni/Nelson, 27 Res. Policy, 273, 280-83 (1998) (noting also broad and
strong patent rights would benefit some industries, though they didn’t give separate
examples.).
1384 Barnett, 37 San Diego L. Rev. 987, 1031-32 (2000).
1385 Landes/Posner, 2003, 323.
1386 Rai,16 Berkeley Tech. L. J. 813, 818, 836-38 (2001).
1387 Heller/Eisenberg, 280 Science 698, 700 (1998).
1388 Heller, 111 Harv. L. Rev. 621, 670-72 (1998).
1389 Burk/Lemley, 89 Va. L. Rev. 1575, 1611 (2003).

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c) Arguments on patent scope with consideration of other relevant factors

Value dependent
While stressing the heterogeneity of innovations, Hopenhayn and Mitchell
contend that the courts could give a broader scope of protection to funda-
mental breakthroughs.1390 Merges and Nelson seem to admit the argument
to grant a broad set of claims for breakthrough innovations. They note that,
“since the inventor may have enabled a broad new range of applications,
courts reason, it is unfair to limit her to the precise embodiment through
which she discovered the broader principle claimed.”1391

Situation dependent
Patent breadth has an impact on the difficulty and cost of inventing around
the patent and, thereby, on the entrance of competitive products onto the
market. Taking Bell’s invention of the telephone as an example, Grady and
Alexander explain as follows: If we were to grant a very narrow protection
on it, an incremental improvement would not infringe Bell’s patent, and a
second generation improver could enjoy not only the revenue derived from
the improved portion but also the entire revenue from Bell’s basic telephone
invention. This kind of system would punish the first innovator and reward
only the second, and revenue dissipation at the level of second generation
invention would get worse.1392 On the other hand, with a broad protection,
Bell would control all opportunities for developing new communication de-
vices, thereby reducing revenue dissipation at the improvement stage. How-
ever, granting such a large reward to Bell, who introduced a nascent and
generally crude device to society, would lead to revenue dissipation at the
pioneer level of innovation.1393 Finally, they contend that the courts might
reconcile these effects by adjusting patent scope on a case-by-case basis. For
example, when the improvement-stage revenue dissipation is serious, it will

1390 Hopenhayn/Mitchell, 32 RAND J. Econ. 152, 162-64 (2001) (arguing so in a spe-

cial setting where the patent authorities can offer a menu of patent types with
different lengths and breadths).
1391 Merges/Nelson, 90 Colum. L. Rev. 839, 848 (1990); Hoffman, 89 Cornell L.
Rev. 993, 1041-42 (2004).
1392 Grady/Alexander, 78 Va. L. Rev. 305, 307-308 (1992).
1393 Grady/Alexander, 78 Va. L. Rev. 305, 307-308, 316-321 (1992).

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 C. Proposals on the breadth of patents

give broad protection to the original patents, thereby effectively eliminating

the possibility of revenue-dissipating rushes to the modifications.1394
Landes and Posner point out that the patent system makes no effort to
match the degree of patent protection to the variables, such as fixed cost or
R&D, ease of inventing around, or the degree of patent protection to create
adequate incentives to invest.1395 Posner insists that the cost of inventing
must be compared to the cost of copying in order to determine the optimal
patent protection for an inventor, while comparing the software industry
where the cost of invention is relatively low with the pharmaceutical indus-
try, where it is very high.1396
There is also an interesting suggestion that the patent breadth should be
determined by the cost of R&D and the type of invention.1397 Specifically,
when the R&D cost is low, protection of the product should be narrow and
protection of the process should be broader. When the R&D cost is high,
protection of the product should be high, and the protection of the process
innovation should be narrow. However, this argument seems intended to
protect process invention more efficiently.1398

2. Interim conclusion

Granting broad protection to basic inventions would provide basic inventors

with maximum incentives, but could discourage improvements, because the
probability of infringing the original patent by an improvement inventor
would be higher.1399 As shown in the previous chapter, many arguments have
been advanced for and against a broader scope of patents. Among the argu-

1394 Grady/Alexander, 78 Va. L. Rev. 305, 318 (1992); cf. Matutes/Regibeau/Rockett,

27 RAND J. Econ. 60, 79 (1996).
1395 Landes/Posner, 2003, 300.
1396 Posner, Sep, 30, 2012.
1397 Eswaran/Gallini, 27 RAND J. Econ. 722 (1996).
1398 Eswaran/Gallini, 27 RAND J. Econ. 722 (1996).
1399 Jaffe/Lerner, 2004, 48-51; Scotchmer, 5 J. Econ. Perspect. 29, 30-35 (1991); Levin
et al., 1987 Brookings Paper on Econ. Activity, 783, 788 (1987) (noting strong
protection of individual achievement may retard the advance of technology, since
technological development is often an interactive and cumulative process); cf.
Gilbert/Shapiro, 21 RAND J. Econ. 106 (1990) (discussing breadth of patent pro-
tection in the context of single innovation with hardly focusing on cumulative
innovation).

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VI. PROPOSALS

ments against a broader scope of patents, Nelson with Mazzoleni repeat that
stronger patent protection might hinder progress, however, they insist that
this could happen in certain fields of industry, such as semiconductor, com-
puter, telecommunication,1400 but not in the field of biopharmaceutical in-
dustry. Barnett could have argued so, because he does not address the down-
stream inventors’ incentives.1401 In other words, even though upstream in-
ventors may try to collaborate with downstream inventors, the downstream
inventors will be less willing to collaborate with the upstream inventors,
since they have more and better room to research because of the narrower
scope of patents on the upstream inventions. Landes’ and Posner’s concern
does not apply to pharmaceuticals, because the fixed costs of pharmaceutical
inventions, if they are NMEs, are among the highest in any industries, and
because these costs must embrace all of the failures that enabled the product
to reach the market.1402
There are also specific arguments for the narrow scope of protection for
the biopharmaceutical patents. However, Rai’s hierarchy given to cumula-
tive inventions is one level higher than the one on which this dissertation
focuses; i.e. the early stage invention in the scope of this dissertation is the
end-product drug, and the later stage inventions are improvements on that
drug. A word about the “anticommon problem” is necessary. The problem
with the anticommon theory is not necessarily the scope of the patent but
rather the number of rights held by different owners.1403 Furthermore, Rader
Chief J argued in his blistering dissent that this problem just did not happen
because of little commercial value of experiments and the increased need
for cooperation.1404 Moreover, there was no empirical research substantiat-
ing these alleged concerns.1405 Finally, since in the field of the pharmaceu-
tical art usually one, not many, basic invention is required to exploit second
generation inventions, the IPRs in this art are not that fragmented.

1400 Mazzoleni/Nelson, 27 Res. Policy, 273, 280-83 (1998) (noting also broad and
strong patent rights would benefit some industries, though they didn’t give separate
examples.).
1401 Rai,16 Berkeley Tech. L. J. 813, 829-30 (2001).
1402 See subsection III.A.1.c).
1403 Burk/Lemley, 89 Va. L. Rev. 1575, 1613 (2003).
1404 Momenta Pharmaceuticals, Inc. v. Amphastar Pharmaceuticals, Inc., 686 F.3d
1348, 1375 (Fed. Cir. 2012) (Rader Chief J. dissenting).
1405 Momenta Pharmaceuticals, Inc. v. Amphastar Pharmaceuticals, Inc., 686 F.3d
1348, 1375 (Fed. Cir. 2012) (Rader Chief J. dissenting); See also e.g., Caulfield,
84 Chi.-Kent L. Rev. 133, 137 (2009).

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The question ultimately returns to what kind of invention we need, and

the answer for this industry was already given in chapter III.B, i.e. encour-
aging more breakthrough innovations. Thus, as many scholars have insisted,
to obtain more basic inventions in the pharmaceutical field of technology, it
would be advisable to provide them with a broader scope of protection. This
broader scope of a patent’s power to exclude others in turn “forces other
firms, if they want to compete in the broad product field, to work on alter-
natives that may be very different from what is already presented.”1406 Thus,
on the one hand, broad patent protection might reduce patent racing as
pointed out by Kitch’s critics; on the other hand, it could shift the race to the
earlier period of invention, i.e. the race for the broad patent.1407
Since a breakthrough invention would have less prior arts in the new field
that it has just opened, it would have a broad scope of protection. However,
how can we practically grant the broad scope of patent in the field of phar-
maceutical inventions? The doctrine of equivalents can be applied to ac-
complish this goal. In practice, however, it can hardly be applied to the
pharmaceutical art. The way that the doctrine of equivalents is applied in
Germany provides an example.1408 In brief, the alleged embodiment would
not be found to infringe the patent under the literal infringement, because
the alleged embodiment is “modified.” At this point, the unpredictability of
pharmaceutical art is an important factor.1409 Because of this lack of pre-
dictability in the activity, pharmacokinetics and efficacy of compounds,
which leads one atom modification of a known compound to be ineffective
or promisingly effective, the second condition1410 would be very difficult to
meet, i.e. the person skilled in the art would not be able to find the modified
element as having the same effect. Thus, equivalent protection for this in-
dustry is neither easily nor properly applied.1411 Infringement under this
doctrine could still be found if the patent is claiming a process inven-
tion1412 or if there is a relationship between prodrugs and metabolites, such

1406 Mazzoleni/Nelson, 27 Res. Policy, 273, 275 (1998).

1407 Landes/Posner, 2003, 324.
1408 See supra 1071 -1073 and accompanying texts.
1409 See subsection III.A.1.c)(1).
1410 “Whether a person skilled in the art by means of his specialist knowledge is able
to identify the modified means as having the same effect.”.
1411 Hansen/Hirsch, 1997, 326.
1412 See e.g., BGH/Metronidazol, GRUR 1975, 425 (holding the infringement of a
process patent by equivalent means, in the case where the infringing embodiment
differed from the wording of the claim).

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as in the hetacillin case in the United Kingdom.1413 Therefore, granting a

broader scope of patent claims for selection inventions is not a proper tool
for the promotion of pioneering innovations.
Although granting a broad scope of patent does not help to promote basic
invention in this art, the already broad scope of genus patent could be a
problem because of the overlapping scope of patents with species selection
inventions. In the next section, the solutions that can minimize this problem
will be discussed.

3. Solutions to the overlapping scope with species selection invention

While a patent on the basic invention, such as an NME, is still in force,

second generation patents will be subservient to the earlier patent. A patent
in this situation can be called a “blocking patent,”1414 i.e. each patentee may
block the other from using second generation patents without a license.1415
The absolute product protection and the broad claim, such as the Markush
type claim, make this blocking effect possible. Suggested solutions to this
problem include licensing, the doctrine of reverse equivalents, and a com-
pulsory license.1416

1413 Hansen/Hirsch, 1997, 343.

1414 It is important to distinguish the concept of “blocking patents” in this thesis from
that described in the Pharma Sector Inquiry. DG Competition defined the “block-
ing patents” as follows: “[Another originator company] filed several "paper"
patent applications related to [our company's molecule]. The only objective was
to impede [our company] from developing [our company's molecule], as far as (i)
no research laboratory data and/or work exists related to this paper patent appli-
cations, and (ii) [the other company] has no right on [our compound] compound,
protected by patents owned by [our company] A letter […] was received by [our
company] from [the other company], […] stating that [the other company] is not
ready to achieve any settlement at all regarding the blocking patents.” See DG
Competition, 2009, 391.
1415 Jackson, 9 J. Tech. L. & Pol’y, 117, 119 (2004); Merges/Duffy, 2011, 398.
1416 Merges/Nelson, 90 Colum. L. Rev. 839, 904 (1990); O’Donoghue, 29 RAND J.
Econ. 654, 658 (1998). (noting strength of leading breadth could be determined
by the interpretation of “use of technology”, the doctrine of equivalents, and the
doctrine of reverse equivalents.); Merges, 62 Tenn. L. Rev. 75 (1994).

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a) Voluntary licensing agreements

Licensing is certainly one way to solve this problem. The second generation
inventor will try to secure a license from the controlling patentee. Licensing
is also advantageous to the basic patentee, because transactions that involve
patents are important in monetizing the value of the patent. The basic paten-
tee knows that his patent’s value is constantly declining because of its limited
term and the threat of new competing technologies, especially considering
the limited ways to extract value from an asset that awards only a right to
exclude, not a right to use.1417
Licensing agreements can occur at two stages: ex ante or ex post. The
difference is whether the second inventor has already incurred the R&D cost
for the second generation invention at the time of the license negotiation.
Both inventors can negotiate at ex ante license before second generation
inventors invest any R&D costs. Green and Scotchmer argue that ex ante
licensing is proper with the wide patent breadth of a basic patent.1418 Con-
versely, in ex-post licensing, where the second inventor can bargain only
after he has incurred the cost and finished the R&D project, firms may un-
derinvest in the second generation inventions, since they know that they will
have less bargaining power, because they have incurred costs.1419 However,
these second generation inventions in the pharmaceutical art usually follow
the success of a product covered by the basic patent, i.e., either the basic
patentee or the secondary inventor will try to pursue these kinds of inven-
tions. Consequently, the order between licensing and the investment does
not make a significant difference. Ex ante licensing is especially difficult
and is typically excluded from consideration.1420
Licensing agreements also occur in mutual directions. Cross-licensing
between two patentees can be a solution in the situation where the patents
block each other and the most efficient invention is to be employed. 1421
Along with Scotchmer, Chou and Haller suggest that t he basic patentee

1417 Kieff, 2008, 16.

1418 Green/Scotchmer, 26 RAND J. Econ. 20 (1995); see also Gallini/Scotchmer, 2002,
72.
1419 Friebel et al., 2006, 27.
1420 Denicolò, 31 RAND J. Econ. 488, 488 (2000); Heller/Eisenberg, 280 Science 698,
699-700 (1998).
1421 Landes/Posner, 2003, 317; Merges/Nelson, 90 Colum. L. Rev. 839, 865-66
(1990).

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VI. PROPOSALS

might be able to extract more of the profit facilitated by the basic innovation
by offering a licensing contract that the subsequent inventor can ac-
cept;1422 and the improvers can use their inventions without being concerned
about infringement.
However, problems have arisen regarding licensing agreements.1423 First-
ly, because licensing lessens competition, raises antitrust concerns, and may
retard innovation.1424 Secondly, ex ante licensing will prevent innovations
from appearing in the patent race.1425 Thirdly, ex post licensing can create
incentives for inefficient entry by imitators, who seek to “invent around” the
original patent.1426 Fourthly, if the transaction cost is high, it might limit the
use of contracts.1427 Lastly, but importantly, obtaining licenses may not be
always possible, because the patentees may prefer to have exclusivity either
to avoid competition or sometimes even to attempt to dominate the industry,
if they are able.1428 Since patents matter more in the pharmaceutical industry,
companies in these fields might be even less willing to participate in patent
pools that would undermine their exclusivity.1429 In the same manner, they
might not be willing to license out to their competitors.

b) Non-voluntary licenses

If the second generation patentee fails to acquire a license, he could try to

ask the competent authorities to grant a license against the basic patentee’s

1422 Chou/Haller, 1995; Scotchmer, 27 RAND J. Econ. 322 (1996); Chang, 26 RAND
J. Econ. 34, 43-48 (1995); Green/Scotchmer, 26 RAND J. Econ. 20 (1995) (also
arguing it can be achieved by broadening the first inventor’s patent protection);
Matutes/Regibeau/Rockett, 27 RAND J. Econ. 60, 77-78 (1996).
1423 Merges/Nelson, 90 Colum. L. Rev. 839, 874 (1990) (noting general problems in
licensing, e.g. steep transaction costs.).
1424 Chang, 26 RAND J. Econ. 34, 49 (1995) (arguing the lax antitrust scrutiny of
collusion despite reducing the dead weight loss, both because such collusion would
be unnecessary and because collusion between holders of competing patents would
be desirable only in limited circumstances).
1425 Gallini/Scotchmer, 2002, 68.
1426 Chang, 26 RAND J. Econ. 34 (1995).
1427 Mazzoleni/Nelson, 27 Res. Policy, 273, 279-80 (1998).
1428 Svatos, 13 Soc. Philos. Policy 113, 120 (1996).
1429 Heller/Eisenberg, 280 Science 698, 700 (1998); Patent pools may be more needed
for industries with a strong need of standardization to achieve compatibility
amongst various devices.

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 C. Proposals on the breadth of patents

will, if it is available in his jurisdiction. Under this title, the area of non-
voluntary licensing agreement will be explored to try to find solutions.

(1) Compulsory licenses

As Ann noted, compulsory licenses would be the only exception to the gen-
eral rule, i.e. patents should do no more than reward and promote innovative
activity and encourage the disclosure of the results of their innovative ac-
tivities.1430 This exceptional measure of a license authorized by a govern-
mental body to a third party for working the patent without the patentee’s
consent can be granted for various reasons.1431 The three most prevalent
circumstances under which compulsory licensing provisions are applied are
when a dependent patent is blocked, when a patent is not worked, and when
an invention is related to food or medicine. 1432 In addition, compulsory li-
censing can be applied as a remedy in antitrust or misuse situations.1433 The
most relevant ground for this dissertation is that a compulsory license can
be granted on dependent patents.1434 Among the selected jurisdictions, the
patent acts of Germany,1435 the United Kingdom,1436 and Korea1437 provide
provisions for compulsory licensing of dependent patents. The United States
Patent Act does not include an explicit authority for a court to order a com-
pulsory license.1438 Even in the selected jurisdictions, relatively few such
compulsory licenses have actually been granted.1439 Since these provisions
are rarely used, a German case concerning gamma-interferon will be re-
viewed to explore the possibility of granting a compulsory license for a de-
pendent patent.

1430 Ann, 2009, 361.

1431 Reichman/Hasenzahl, 2003, 12-15; See also Haracoglou, 2008, 50; TRIPS Agree-
ment, Art. 31 (1) (providing the grounds for the grant of compulsory license, de-
termined by the member states, but not binding).
1432 See in general, Julian-Arnold, 33 IDEA 349 (1993).
1433 See in general, Julian-Arnold, 33 IDEA 349 (1993).
1434 This is because the older form of medication is available in the public, thus the
reason for the medicine would be hardly applied.
1435 GPA Art. 24(2).
1436 U.K. Patents Act of 1977, §§ 48, 48A(1)(b)(i), (4).
1437 Korean Patent Act Art. 138, para. 1.
1438 Reichman, 46 Hous L. Rev. 1115, 1139 (2009).
1439 Reichman, 46 Hous L. Rev. 1115, 1139 (2009).

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VI. PROPOSALS

From 1961 to 2003, twelve applications for compulsory license were filed
with the BPatG, only one of which was granted.1440 This grant allowed the
German company Bioferon to produce, to offer, and to market “Polyferon”
containing recombinant human gamma-interferon for the new medical in-
dication - chronic polyarthritis, which was widespread in Germany. Bioferon
had developed Polyferon. This decision was interpreted in a way that the
BPatG desired to stimulate the development of new medical uses of known
products and enhanced medical care by granting compulsory licenses.1441 It
was further interpreted that the acknowledged necessary “public interest”
under § 24(1) German Patent Act (“GPA”)1442 could be i) a drug at issue
showing characteristics which were not shown by an already marketed drug,
or ii) a drug avoiding undesired side effects of a marketed drug.1443 However,
BGH revoked this license, mainly based on the lack of sufficient “public
interest” to justify granting a compulsory license.1444 On this decision,
Thomas comments that “a German court will not grant a compulsory license
in order to redress the private interest conflict between the parties, but if
exploitation of the invention is in the public interest, then a German court
may consider granting a compulsory license.”1445 However, it appears that
the BGH decided the way it did because the basis of the original decision
was § 24(1), not § 24(2) GPA.
Considering that the product was for a new medical indication, one may
wonder if the conclusion would have been different had a compulsory license
under the GPA § 24(2) argued before the same court. Namely, in a case like
Olanzapine, if the two patentees had been different, would the second paten-
tee have had recourse to § 24(2) GPA to allow the grant of a compulsory
license for a dependent patent, which cannot be exploited without using an-
other invention protected by a previous patent? § 24(2) GPA clearly provides
the opportunity to obtain a compulsory license under the condition that the

1440 Buhrow/Nordemann, GRUR Int 2005, 407, 409.

1441 Jaenichen, 11 Biotechnol. Law Rep. 369, 375 (1992).
1442 GPA § 24(1): A non-exclusive authorization to commercially use an invention
shall be granted by the Patent Court in individual cases in accordance with the
following provisions (compulsory license) if 1. the person seeking a license has
unsuccessfully endeavored during a reasonable period of time to obtain from the
patentee consent to use the invention under reasonable conditions usual in trade;
and 2. public interest commands the grant of a compulsory license.
1443 Jaenichen, 11 Biotechnol. Law Rep. 369, 375 (1992).
1444 BGH/Polyferon, GRUR, 190, 1996.
1445 Thomas, 23 Santa Clara Computer & High Tech. L. J. 347, 364-65 (2007).

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 C. Proposals on the breadth of patents

improvement patent contain an important technical advance of considerable

economic significance, in comparison with those of the basic patent.1446 As
Straus commented, § 24(2) GPA would play a role in preventing hindrance
of the innovation by blocking patents1447 as well as in improving techno-
logical development. Moreover, one can consider this impact in regard to
the SPC system in Europe. The SPC not only grants the same rights as con-
ferred by the basic patents, but the granted SPC is also subject to the same
limitations and the same obligations.1448 If the compulsory licenses for the
SPC could also be issued as the British Patents Court once held,1449 when
the basic patent acquired the SPC, the blocking effect would not be pro-
longed. Therefore, even though the difficulty in setting the right royalty rate
is fully understandable, the preferable solution would be to enact or imple-
ment compulsory licensing provisions for the dependent patent.1450

(2) Case law relevant to compulsory licenses

In the United States: eBay Inc. v. MercExchange, L.L.C.

An injunction is an effective way of enforcing a patentee’s right.1451 Before
the eBay case, injunctive relief was regularly granted in an infringement
case. In eBay v. MercExchange, however, the U.S. Supreme Court unani-
mously rejected the claim that as a "general rule a permanent injunction will

1446 GPA Sec. 24(2) ("If the applicant for a license is unable to exploit an invention
for which he holds protection under a patent of later date without infringing a
patent of earlier date, he shall be entitled within the framework of subsection (1)
to request the grant of a compulsory license with respect to the owner of the patent
of earlier date if his own invention comprises, in comparison with that under the
patent of earlier date, an important technical advance of considerable commercial
significance. The patentee may require the applicant for a license to grant him a
counter license under reasonable conditions for the exploitation of the patented
invention of later date.").
1447 Straus, 1 J.E.C.L. & Pract. , 189 (2010).
1448 Council Regulation 469/2009, Art. 5.
1449 Research Corp's Supplementary Protection Certificate [1994] R.P.C. 667, 674.
1450 See also Reichman/Dreyfuss, 57 Duke L. J. 85, 116 (2007) (addressing when nec-
essary, compulsory licenses to unblock dependent patents and enable improvers
to reach the market could also be enacted, a solution that remains fully consistent
with the TRIPS Agreement.); for the public interest, see Thomas, 23 Santa Clara
Computer & High Tech. L. J. 347, 365 (2007).
1451 cf. eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006).

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VI. PROPOSALS

issue once infringement and validity have been adjudged"1452 and formalized
the notion that a court should consider the public impact before granting an
injunction to stop infringement. Even though the Supreme Court did not
mention a compulsory license as a remedy to the denial of an injunction,
many lower courts have granted such relief, i.e. “ongoing royalties” after the
denial of a permanent injunction.1453
In the eBay case, the Supreme Court held that the plaintiff claiming in-
junctive relief must demonstrate (i) that he had suffered an irreparable injury,
(ii) that remedies available at law were inadequate to compensate for that
injury, (iii) that considering the balance of hardships between the plaintiff
and the defendant, a remedy in equity was warranted, and (iv) that the public
interest would not be disserved by a permanent injunction.1454 This sort of
a compulsory license is not a necessary remedy, and, indeed, on remand in
the eBay case, the District Court did not impose a compulsory license.1455
Instead, the Court warned that there could be a “real potential for enhanced
damages” for the possible post-trial infringement.1456
Damage awards for infringements and injunctive relief to prevent in-
fringement through judicial orders to shut down the infringers’ production
or sales are fundamentally different remedies.1457 The potentially continued
infringement is serious. Without the threat of an injunction, the patentee
would be forced to negotiate with the infringing party about granting a li-
cense. The risk of incurring treble damages under American law is a strong
inducement to the allegedly infringing party to negotiate in good faith. Of
course, a myriad of various factors should be considered before granting this
kind of remedy. However, this could resolve the mutual blocking problem.

In Germany: Orange Book Standard case

The blocking effect of basic patents in the competition law area may be
attacked by claiming a so-called “compulsory license objection” or the “Eu-

1452 eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 394-395 (2006).
1453 See e.g., z4 Technologies, Inc. v. Microsoft Corp., 434 F.Supp.2d 437 (E.D.Tex.
2006); Finisar Corp. v. DirecTv Group, Inc., 2006 WL 2709206 (E.D.Tex. 2006),
reversed in part with different ground, Finisar Corp. v. DirecTV Group, Inc., 523
F.3d 1323 (Fed. Cir. 2008); Merges/Duffy, 2011, 952-53.
1454 eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006).
1455 MercExchange, L.L.C. v. eBay, Inc., 500 F.Supp.2d 556, 585 (E.D.Va.,2007).
1456 MercExchange, L.L.C. v. eBay, Inc., 500 F.Supp.2d 556, 581 n.23 (E.D.Va.,2007).
1457 Ann, 2009, 362.

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 C. Proposals on the breadth of patents

ro-defense”1458 against a suit for patent infringement. If an attack succeeds,

the plaintiff will not receive the benefit of an injunction and cannot claim it.
The BGH held its decision on the Orange Book Standard case, in this re-
gard.1459
At issue was a patent on the “Orange Book Standard” and was related to
the manufacture of writable CDs. The primary issue was whether the paten-
tee had abused a dominant position contrary to Art. 102 TFEU1460 by refus-
ing to grant a license. The Court provided significant prerequisites for this
compulsory license defense. The defendant had to act like a “true licensee,”
which required that i) the party seeking a license should have made to the
patentee an unconditional offer which the patentee cannot refuse and remains
bound by said offer, ii) if the alleged infringer has already used the subject
matter of the patent before the patentee has accepted the offer, the alleged
infringer must pay or guarantee the payment of the license fees resulting
from the contract,1461 and he can do so by rendering accounts about the extent
of his acts of use and by complying with the payment obligation, such as
depositing the license fees.1462 The dominance of an essential patent is sim-
ilar to the dominance of the basic patent over second generation inventions.
However, it would be better to wait some time before applying this defense
in dependent patent cases. Many questions remain to be answered by the
Court, including what is a reasonable amount of royalty, about which the

1458 See Hays, 91 Trademark Rep. 675, 679 (2001) (addressing the “Euro Defense” as
follows: “Euro Defense” is a legal tactic akin to alleging “unclean hands”. A de-
fendant asserts that, while it may have infringed upon an intellectual property right
under other circumstances, enforcement of that right would be a violation of the
EC’s competition laws, particularly of EC Treaty Articles 81 and 82 (now EFTU
Articles 101 and 102)).
1459 BGH/Orange Book-Standard, GRUR 2009, 694.
1460 Article 102 of TFEU: “Any abuse by one or more undertakings of a dominant
position within the common market or in a substantial part of it shall be prohibited
as incompatible with the internal market in so far as it may affect trade between
Member States." Such abuse may, in particular, consist in: (a) directly or indirectly
imposing unfair purchase or selling prices or other unfair trading conditions; (b)
limiting production, markets or technical development to the prejudice of con-
sumers; (c) applying dissimilar conditions to equivalent transactions with other
trading parties, thereby placing them at a competitive disadvantage; (d) making
the conclusion of contracts subject to acceptance by the other parties of supple-
mentary obligations which, by their nature or according to commercial usage, have
no connection with the subject of such contracts.”.
1461 BGH/Orange Book-Standard, GRUR 2009, 694, 696.
1462 BGH/Orange Book-Standard, GRUR 2009, 694, 697.

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patent holder and the alleged infringer are likely to disagree, whether a run-
ning royalty, which was apparently featured by the BGH, is proper, whether
the defendant can still raise a non-infringement argument, and others. Unlike
the eBay case in the United States, however, the German court appears to
grant the injunction if the infringement is confirmed and the existence of
market dominance or the abuse thereof is denied.1463

c) Reverse doctrine of equivalents

A judicially devised counterpart to the doctrine of equivalents is the “reverse

doctrine of equivalents.” As some scholars have argued, improvers could
escape liability under this doctrine.1464 The source of this doctrine is the
following statement in the Graver Tank case.1465
“The wholesome realism of this doctrine is not always applied in favor of a
patentee but is sometimes used against him. Thus, where a device is so far
changed in principle from a patented article that it performs the same or a similar
function in a substantially different way, but nevertheless falls within the literal
words of the claim, the doctrine of equivalents may be used to restrict the claim
and defeat the patentee's action for infringement.”1466
This doctrine can be a good remedy in the situation where a dependent
patentee and a dominant patentee are unable to reach a license agreement,
and the introduction of the invention to the market can be facilitated. Once
a patentee establishes literal infringement, the alleged infringer can try to
establish noninfringement under the reverse doctrine of equivalents.1467 As
Merges argues, this doctrine can be used to influence reluctant patent holders

1463 BGH/Orange Book-Standard, GRUR 2009, 694, 697 (holding “Just as the pro-
posed licensee cannot be denied the possibility to defend himself first of all against
the accusation of infringement, the consequence being that the action has to be
dismissed in its entirety if the accusation of infringement turns out to be unjustified,
the patent holder cannot be prohibited from first of all asserting the claim for
injunctive relief based on the patent, the consequence being that this claim must
be adjudged if the infringement is confirmed and if the court negates a dominant
position on the market or an abuse of the same.”).
1464 Lemley, 75 Tex. L. Rev. 989, 1010-13 (1997); Merges/Nelson, 90 Colum. L.
Rev. 839, 911 (1990); Merges, 62 Tenn. L. Rev. 75, 91-99 (1994).
1465 Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S. 605, 608-09 (1950).
1466 Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S. 605, 608-09 (1950).
1467 SRI Intern. v. Matsushita Elec. Corp. of America, 775 F.2d 1107, 1023-24 (Fed.
Cir. 1985).

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 C. Proposals on the breadth of patents

who considered using “holdup rights” against improvers,1468 and it can be

valuable, since it can help to maintain a balance in infringement cases by
mitigating the impact of literal infringement.1469 Lemley also insists that this
doctrine will serve as a crucial release valve that will prevent the patentees
from stifling improvements.1470
Most importantly, the doctrine will be applied in the cases where there is
a “considerable added value” in the contested embodiment.1471 According
to Lemley, the radical improver is the inventor of an improvement suffi-
ciently different to constitute a departure from all that came before it.1472
Landes and Posner also note that, “if the contribution made by the improve-
ment greatly exceeds the contribution made by the original patented inven-
tion, the improver is allowed to practice his invention without being deemed
an infringer, even though he is making use of the prior invention without a
license from the patentee.” 1473 This is permitted because the degree of the
blocking problem is dependent on the situations. The problem will be more
significant if the contribution of the prior inventor is of very little value
compared to the improvement; the problem will be less significant if the
contribution of prior invention is of the same or greater value than the se-
lection patent.1474
The application of this doctrine should be limited,1475 and, indeed, courts
have rarely applied it.1476 One of the biggest concerns is that both patents
should be evaluated to confirm the additional contribution by a species se-
lection invention. However, considering that a species selection invention
can be developed into another NME, the species selection inventions could
be at least as valuable as the genus patent if a medicine covered by the basic
patent was developed; it could be even more valuable if no medicine covered
by the basic patent was developed. Thus, this doctrine is more likely to be

1468 Merges, 62 Tenn. L. Rev. 75 (1994).

1469 Merges, 73 J. Pat. & Trademark Off. Soc'y 878, 880 (1991).
1470 Lemley, 75 Tex. L. Rev. 989, 1010-13 (1997).
1471 Domeij, 2000, 129.
1472 Lemley, 75 Tex. L. Rev. 989, 1010 (1997).
1473 Landes/Posner, 2003, 317.
1474 Merges/Nelson, 90 Colum. L. Rev. 839, 865-66 (1990).
1475 Domeij, 2000, 129 (noting like the uncertainty caused by the doctrine of equiva-
lence, there is uncertainty to interpret the claims and the case is exceptional).
1476 Durham, 1999, 148-419.

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VI. PROPOSALS

applied for species selection inventions,1477 because there is less concern

about assessing the values of both patents. Moreover, since this assessment
would be made not before the patent office but before a court, which would
have a greater opportunity to consider evidence as the patent lives, one may
not need to worry too much about the difficulty in applying this doctrine.
Therefore, it would advisable for courts to apply this doctrine when a broader
prior genus patent holds up the sale of a new medication or at least to try
applying it actively to encourage manufacturers to invest their resources in
the products that are literally covered by the broader earlier patent.

d) Conclusion

There have been many proposals by scholars1478 about voluntary license

agreements. Since the pharmaceutical companies usually do not want to un-
dermine their exclusivities by licensing, apart from the license agreements
with academia or SMEs, voluntary license agreements do not seem to be of
practical use. Among the judicially acknowledged compulsory licenses, the
eBay case appears to be the most applicable to dependent patents. Most
properly, either an implementation of the statutory compulsory license or an
improved use of the reverse doctrine of equivalence would be desirable to
solve the problem created by using the dominant patent to block the ex-
ploitation of a dependent patent. The same approach could be applied to the
situation in which the basic patent blocks the use of inventions on dosage
forms, combinations of active ingredients, or especially new medical uses.

1477 This situation is different from the doctrine of equivalents can scarcely be applied
for the chemical selection inventions; or also different from other selection in-
ventions would be still difficult to be applied this doctrine because of their com-
parably low value.
1478 See supra 1418 -1422 and accompanying texts.

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 D. Proposals on the length of patents

D. Proposals on the length of patents

1. Arguments on the length of patents

The breadth and length of a patent are often contrasted, but they are substi-
tutes.1479 The limited patent term is one of the devices employed to minimize
the social cost of patent exclusivity.1480 Empirical research has shown that
the economic benefit of having patents often vanishes before they ex-
pire.1481 It is also reported that the de facto term is chosen by the patentee in
return for renewal fees.1482 Indeed, reportedly no more than 50% of patents
are maintained longer than 10 years across technologies and countries.1483
The effective economic life of a patent ends at the moment when any non-
infringing but competitive improvements emerge in the market.1484 Again,
there are substantial inter-industry variations. Unlike in industries in which
the life cycle of a product is very short and its turnover is frequent, such as
electronics, the lifetime of a patent is more relevant in the pharmaceutical
industry.1485 The value of patent protection in this industry is clearly demon-
strated by the market erosion that occurs when generic versions are intro-
duced after a patent expires.
In contrast to the breadth of patents, their duration is not hotly debated,
probably because many patent systems set a statutory 20-year patent term.
While disagreeing with the uniform patent life, Cornelli and Schankerman
assert that “differentiated patent lives can be welfare improving because of
an ‘incentive effect’: allowing firms with high R&D capabilities to choose
longer patent lives gives these firms an incentive to invest more R&D re-

1479 Landes/Posner, 2003, 331.

1480 Landes/Posner, 2003, 302.
1481 Hunt, 1999, 2; See for instance, Mansfield/Schwartz/Wagner, 91 Econ. J. 907
(1981).
1482 Scotchmer, 30 RAND J. Econ. 181 (1999); Cornelli/Schankerman, 30 RAND J.
Econ. 197 (1999).
1483 Scotchmer, 30 RAND J. Econ. 181, 182 (1999); Cornelli/Schankerman, 30 RAND
J. Econ. 197, 197 (1999); O'Donoghue/Scotchmer/Thisse, 7 J. Econ. Manage.
Strat. 1, 2 (1998).
1484 Scotchmer/Green, 21 RAND J. Econ. 131 (1990) (noting “the effective life of the
patent is the time until it is superseded by a superior technology.”); Friebel et
al., 2006, 30; O'Donoghue/Scotchmer/Thisse, 7 J. Econ. Manage. Strat. 1 (1998)
(defining “effective patent life as a life which is “the expected time until a patented
product is replaced in the market”).
1485 Levin et al., 1987 Brookings Paper on Econ. Activity, 783, 816 (1987).

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VI. PROPOSALS

sources.”1486 While arguing that the patents used for good inventions live
much longer than the existing statutory maximum term, they contend that it
might be optimal to grant a zero patent life for inventions with low value,
and an infinite life for inventions with high value.1487 Under the circum-
stances of cumulative inventions, Green and Scotchmer argue that a longer
duration of a patent should be attributed, especially to the first inventor, if a
sequence of innovations was provided by different inventors rather than by
the concentrated effort of one company. They reason that it is difficult to
divide profit between the first and second inventors and that the incentive to
undertake basic research will inevitably be too weak.1488 Other scholars dis-
cuss this issue in consideration of other factors. Gilbert and Shapiro argue
that the optimal patent life should be infinite, while the patent breadth should
be narrow.1489 Alternatively, as O'Donoghue et al., maintain, although the
statutory life of a patent and its effective economic life differ, both can co-
incide when the breadth of the patent is so broad as to cover every subsequent
innovation in a product that infringes the basic patent.1490
As Nordhaus shows, however, a longer patent life brings a more inventive
input to society, but it also prolongs the deadweight loss of such inven-
tions.1491 Thus, the optimal life of a patent should be finite and should end
at the point at which the increased number of inventions and the length of
the monopoly are in balance.1492 The determination of this point remains
unsolved.

1486 Cornelli/Schankerman, 30 RAND J. Econ. 197, 197 (1999).

1487 Cornelli/Schankerman, 30 RAND J. Econ. 197, 198, 209 (1999).
1488 Green/Scotchmer, 26 RAND J. Econ. 20, 20-21 (1995).
1489 Gilbert/Shapiro, 21 RAND J. Econ. 106, 111-112 (1990) (But also mentioning
that “overly-long patent would retard subsequent innovation by establishing
monopoly rights to an entire line of research”).
1490 O'Donoghue/Scotchmer/Thisse, 7 J. Econ. Manage. Strat. 1,2 (1998).
1491 Nordhaus, 1969, 70-75.
1492 Nordhaus, 1969, 76-86.

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 D. Proposals on the length of patents

2. Proposals on the length of patents

a) Proposal on the length of basic patents

(1) Introduction

Since the pharmaceutical industry is very susceptible to the terms of patents,

the patent term can be certainly and efficiently applied to basic pharmaceu-
tical patents to incentivise the drug companies to invest more in the R&D
targeting NMEs. The current term of a patent, however, does not serve this
purpose well.
The uniform patent term starts to run from the patent filing date, but the
effective patent term runs from the date when the product reaches the market.
The latter date varies highly from industry to industry and from product to
product. Generally, the longer it takes to bring a drug to market, the greater
the investment that must be made will be, and the better the protection pro-
vided to the product will need to be in order to justify incurring the R&D
cost. This is quite the reverse of what it should be. First, without consider-
ation of a patent term extension, the drugs containing NMEs that take longer
than ten years to get to market could enjoy fewer than ten years of exclusivity.
In contrast, second generation inventions or even dosage regimes, such as
“once a day prior to sleep” can theoretically enjoy at least 17 years of ex-
clusivity if the patent examination is completed within three years.1493
Therefore, there have been significant deadweight losses by second gener-
ation patents, and the uniform patent term has not provided enough incen-
tives for basic innovations. In this sense, the patent system seems to provide
de facto reverse-discriminatory protection to basic inventions, because it
takes so long time to get each invention to market.
Even if the patent term extension, which aims to compensate the reduced
exclusivity period because of the long R&D 1494 is considered, the situation
is not significantly improved. As the preamble to the Council Regulation
469/2009 clearly states, the purpose of this system is to encourage research,
especially long and costly research on medicinal products.1495 In the United
States, one-half of the time during which the drug is evaluated as an inves-

1493 Of course, it is not possible to note that this kind of invention does not deserve the
17 years’ exclusivity.
1494 See e.g., Rai, Ill. L. Rev. 173, 182-83 (2001).
1495 Council Regulation 469/2009, Preamble (3).

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VI. PROPOSALS

tigational new drug, plus the time during which the drug is pending approval
at FDA, would be compensated.1496 In Europe, neither the date of the patent
grant nor the duration of clinical trials is relevant to the duration of the SPC,
because only the date of first marketing approval in the community mat-
ters.1497 The medication that gains first marketing approval between five and
ten years from the patent filing date, is most likely covered by second gen-
eration inventions, and could enjoy fifteen years of maximum effective
patent life. However, those medications that are launched ten years after the
filing date can never enjoy the maximum effective life1498 (see Figure 9). In
Korea, the situation is comparably better, since the whole period necessary
for the clinical trial and the regulatory approval can be extended. However,
the extension period still has a five year cap, as do the systems in other
jurisdictions. The basic reason for this is probably that the patent term ex-
tension system was not originally meant to compensate for the loss of ex-
clusivity because of the long R&D period, but was instead meant to offset
the accelerated generic entry into the market. Some scholars point out that
the effective patent terms for inventions having unduly long R&D periods
might not be effective enough to convince manufacturers to invest in such
inventions, which can cause society to lose these innovations.1499

(2) Proposed term of basic patents

How can this problem be remediated? Ideally, the system must award each
invention in accordance with the extent that it contributes to society or in an
amount that will compensate the cost and time of R&D. However, calculat-
ing the amount of such an award would be very difficult and, even if possible,
would incur significant administrative costs.1500 Considering the discrepan-
cies discussed above and the shortage of basic medications, therefore, it
would be advisable to include a provision on the patent term of the basic
invention as follows:

1496 35 U.S.C. § 156.

1497 Council Regulation 1768/92, Article 13.
1498 See subsectionV.C.3..
1499 White, 38 J. Pat. Off. Soc'y 839, 853 (1956).
1500 In addition, there could be an invention which comes just out of the brilliance of
inventor, even though it does hardly apply to the pharmaceutical inventions.

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 D. Proposals on the length of patents

“The term of a patent, which covers a product containing an active ingredient

that has not been subject to the marketing approval process related to the first
commercial marketing of the active ingredient, shall be the later of either i) 15
years after the marketing approval date or ii) 20 years after the patent filing
date.”

(3) The basis of the proposal

According to the proposal, an NME that gains marketing approval from the
regulatory authority would enjoy fifteen years of effective term,1501 but, if
it fails to gain marketing approval, it would still enjoy the conventional
patent term. The fifteen year effective term is based on the maximum ef-
fective patent term with SPC protection,1502 and considers the regulatory
exclusivity available in Europe, which is eight to ten years for the new med-
ical entities,1503 and which is longer than the one in the United States. The
second option, which is to set the patent term at 20 years after the patent
filing date, was added in consideration of the decision in Canada – Term of
Patent Protection. In this dispute, the Panel, and afterwards the Appellate
Body of the WTO, reviewed Canada’s patent term calculation based on sev-
enteen years after the grant of the patent. They found a violation of Art. 33
TRIPS, because this calculation failed to provide a patent term of at least
twenty years from the patent application filing date, regardless of the fact
that the calculation would often lead to a longer term.1504 Since the TRIPS
Agreement sets out the minimum standards of protection to be provided by
each member,1505 further protection could be provided.

1501 Domeij, 2000, 283.

1502 In fact, considering the R&D for the chronic diseases, Alzheimer’s disease, or
cancers, it would be much advisable to provide longer protection, however, it was
found very difficult to propose something without any further basis.
1503 Council Directive 87/21/EEC of 22 December 1986 amending Directive 65/65/
EEC on the approximation of provisions laid down by law, regulation or admin-
istrative action relating to proprietary medicinal products.
1504 WTO-Panel Report, Canada-Term of Patent Protection, WT/DS170/R (May 5,
2000); WTO-Appellate Body Report, Canada-Term of Patent Protection, WT/
DS170/AB/R (Sep 18, 2000).
1505 TRIPS Art. 1(1) “Members shall give effect to the provisions of this Agreement.
Members may, but shall not be obliged to, implement in their law more extensive
protection than is required by this Agreement, provided that such protection does
not contravene the provisions of this Agreement.” [Emphasis added].

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VI. PROPOSALS

TRIPS compliance must be considered further. Canada challenged the

same issue before the WTO-Panel contending that the SPC regulation was
incompatible with the obligation of the non-discrimination principle based
on the field of technology (Art. 27(1)),1506 since it is available only for phar-
maceuticals and for agricultural chemical products. 1507 However, this re-
quest was not pursued by Canada. In the same manner as this SPC regulation,
the German Patent Act1508 and the British Patents Act,1509 the American
Patent Act1510 and the Korean Patent Act contain provisions that benefit only
the pharmaceutical and agrochemical industries.
Many scholars have discussed the scope of this non-discrimination prin-
ciple according to Art. 27(1) TRIPS and argued that Art. 27(1) did not re-
quire a single level of protection for all technologies and that it must be
distinguished from “differentiation” for legitimate reasons.1511 This princi-
ple was also considered by the WTO Panel in Canada-Patent Protection of
Pharmaceutical Products.1512 The Panel noted that “[t]he ordinary meaning
of the word ‘discriminate’ is potentially broader than these more specific
definitions.” It certainly extends beyond the concept of differential treat-

1506 TRIPS Art. 27(1): “inventions, whether products or processes, in all fields of tech-
nology, provided that they are new, involve an inventive step and are capable of
industrial application. Subject to paragraph 4 of Article 65, paragraph 8 of Article
70 and paragraph 3 of this Article, patents shall be available and patent rights
enjoyable without discrimination as to the place of invention, the field of techno-
logy and whether products are imported or locally produced.” (Emphasis added).
1507 Request for Consultations by Canada, European Communities ‑ Patent Protection
for Pharmaceutical and Agricultural Chemical Product, December 7, 1998, WT/
DS153/1. This dispute was indeed initiated by Canada as a kind of a counter-claim
against the dispute initiated by the EC on the provisions of Canadian Patent Act
(Canada-Patent Protection of Pharmaceutical Product, March 17, 2000, WT/
DS114/R), however, it have not been pursued by Canada.
1508 GPA Sec. 49a.
1509 U.K. Patents Act, Sec. 128B and Schedule 4A.
1510 35 U.S.C. § 156; see also 35 U.S.C. § 103(b) (2000).
1511 Correa, 3 Tul. J. Tech. & Intell. Prop. 1, 7 (2001) (noting “differential treatment
does not necessarily mean discriminatory treatment, because different technolo-
gies might require different treatment.”); Dinwoodie/Dreyfuss, 13 Mich.
Telecomm. Tech. L. Rev. 445, 452 (2007) (“We suggest that those defending an
exclusion as compliant with Article 27 should be permitted to rebut a showing of
disparate treatment by demonstrating a legitimate purpose.”); Berger, 17 Conn. J.
Int'l L. 157, 200 (2002).
1512 WTO-Panel Report, Canada - Patent Protection of Pharmaceutical Products, WT/
DS114/R (Mar 17, 2000).

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 D. Proposals on the length of patents

ment. It is a normative term, pejorative in connotation, referring to results

of the unjustified imposition of differentially disadvantageous treat-
ment.”1513 This could be interpreted as allowing members to treat different
fields of patent protection differently if they do so for a legitimate regulatory
purpose.1514 The panel further noted that “Article 27 does not prohibit bona
fide exceptions to deal with problems that exist only in certain product ar-
eas.”1515 This further suggests that the members may adopt different rules if
the differences are adopted for bona fide purposes and if such measures are
consistent with other provisions of TRIPS.1516 Thus, this proposed provision
should be interpreted as not violating the TRIPS Agreement. Even if it does,
since the existing industry-specific provisions have encountered little chal-
lenge, the threat of such an attack would likely be limited.1517

(4) Expected effects

The guaranteed effective patent term proposed by the proffered provision

could motivate the pharmaceutical industry to incur the investment of the
R&D of new medical entities with less concern about the period to recover
the R&D costs. Furthermore, ample litigation and invalidity actions have
already occurred with regard to the validity of patent term extensions. By
adapting this provision, the unnecessary waste of resources through litiga-
tion would be substantially reduced. Additionally, the manufacturers could
invest the saved resources in R&D as long as the patentee is confident about
the patentability of the ultimate invention. This optimized effective patent
term would also provide the SMEs with more bargaining power and would
help them to attract funding. In the end, and most importantly, this could
increase the number of NMEs and ultimately the health of society.
One may argue that this proposal may delay access to medicine. However,
it is undeniable that medicine must first be available before access can be
taken into consideration.

1513 WTO-Panel Report, Canada - Patent Protection of Pharmaceutical Products, WT/

DS114/R (Mar 17, 2000), para 7.94.
1514 Gervais, 2012, 2.369.
1515 WTO-Panel Report, Canada - Patent Protection of Pharmaceutical Products, WT/
DS114/R (Mar 17, 2000), para 7.92.
1516 Gervais, 2012, 2.369.
1517 Roin, 87 Tex. L. Rev. 503, 558 (2009).

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VI. PROPOSALS

b) Proposal on the patent term extension of second generation patents

As Landes and Posner worry, protection might realize a return vastly in

excess of the inventor’s fixed cost of innovation. This would be especially
true if the inventor could effectively extend his patent term by obtaining
improvement patents.1518 In fact, a patentee could enjoy the patent term of
a selection invention plus its SPC in addition to those of the basic patent.
These proliferating patent rights and SPCs on second generation patents have
signalled the manufacturers to invest more in second generation inventions.
Following the same logic that supports protecting basic inventions, it
would be proper to provide a shorter protection period to the second gener-
ation patents. However, since the TRIPS Agreement sets out the minimum
standards of protection that should be provided by each member,1519 it would
be absurd to do so.
However, the patent term extension on second generation patents could
be limited in two ways. Firstly, it could be reduced through the heightened
patentability requirements, which will be discussed in the next chapter, and
the reduced number of second generation patents that would result. Sec-
ondly, until the effect of heightened patentability requirements is estab-
lished, grants of patent term extensions could be restricted. As long as a
biologically active moiety is the same, the patent term extension would be
granted to the first substance applied, as in the Doxorubicin-sulfate case in
Germany. This could further be applied to granting a patent term extension
to salts or esters.

1518 Landes/Posner, 2003, 323.

1519 See TRIPS Art. 1(1).

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 E. Proposals on the patentability requirements

E. Proposals on the patentability requirements

Patents should be granted to the extent necessary to encourage the innovation

that otherwise would not reach the public,1520 and that are socially desir-
able.1521 These can be controlled through the patentability requirements.

1. Introduction: Technology specific patentability standards

The Imperial Supreme Court of Germany has held that the question of
whether an invention exists cannot be answered differently for an invention
in the field of the chemical industry than for an invention in the field of the
mechanical industry.1522 As some scholars note, the law must be the same
for all patents and types of inventions.1523 Certainly, in the past, the inven-
tions were more homogeneous than they are today, and it made more sense
to have a unified set of rules for inventions. 1524 Some scholars also advocate
for a uniform patent system, because of the difficulty of implementing dif-
ferential treatment.1525 Jaffe and Lerner argue for a uniform system, because
as soon as patentees in a particular category receive the better treatments,
there would be an inevitable tendency for people to position themselves to

1520 Lessig, 11 St. John's J. Legal Comment. 635, 638 (1996) (noting “while we protect
real property to protect the owner from harm, we protect intellectual property to
provide the owner sufficient incentive to produce such property. ‘Sufficient in-
centive,’ however, is something less than ‘perfect control’.”); Lemley, 83 Tex. L.
Rev. 1031, 1065 (2005) (noting “[g]ranting intellectual property rights imposes a
complex set of economic costs, and it can be justified only to the extent those rights
are necessary to provide incentives to create.”); Roberts v. Sears, Roebuck &
Co., 723 F.2d 1324, 1345-46 (7th Cir. 1983) (Posner, J. concurring in part and
dissenting in part, especially noting “[t]he inherent problem was to develop some
means of weeding out those inventions which would not be disclosed or devised
but for the inducement of a patent.”).; Burk/Lemley, 89 Va. L. Rev. 1575, 1598-99
(2003).
1521 Roin, 87 Tex. L. Rev. 503, 512 (2009).
1522 Kongo-Rot, Decision of the Reichsgericht (Imperial Supreme Court) of May 8,
1889, Patentblatt 1889, 209, 212.
1523 Harmon/Homan/McMahon, 2010, 14.
1524 Allison/Lemley, 82 B.U.L.Rev. 77 (2002). Considering this, one may doubt
whether it is still appropriate to apply the same rules in today’s increasingly com-
plex landscape of inventions.
1525 Jaffe/Lerner, 2004, 203-05.

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VI. PROPOSALS

get the most favourable treatment.1526 At the same time, however, they ac-
knowledge the differences between the technologies and the specificities of
the pharmaceutical industry and further admit that it is vitally important to
resolve the problems with patenting in different areas.1527 Regarding these
inter-industry differences, Wagner argues there need be no concern, because
they are merely factual differences.1528 However, “‘[o]ne-size-fits-all’ ulti-
mately fits few”,1529 and this approach has been repeatedly challenged.1530
We have a uniform patent system, which provides technology-neutral
protection to all kinds of inventions.1531 However, although technology-
neutral in theory, patent law is technology-specific in application.1532 For
example, for software patents in the United States, a series of decisions has
not only eliminated the enablement and best mode requirements, but has also
found that a high-level functional description is sufficient to meet these re-
quirements.1533 In contrast, for patents in biotechnology, the courts have
focused on the unpredictability of the arts, and emphasized proof of the

1526 Jaffe/Lerner, 2004, 203-05.

1527 Jaffe/Lerner, 2004, 205 (“[…] the problems in business methods, software, and
biotechnology derive from the unique properties of these technologies.”).
1528 Wagner, 50 Adv. Genet. 367 (2003).
1529 Crews, 49 J. Copyright Soc'y U.S.A. 549, 564 (2001).
1530 Hilty, 2009, 92.
1531 Burk/Lemley, 17 Berkeley Tech. L.J. 1155, 1156 (2002).
1532 Burk/Lemley, 89 Va. L. Rev. 1575, 1577 (2003); Burk/Lemley, 17 Berkeley Tech.
L.J. 1155, 1156 (2002). (also noting the legal rules were the same, but the appli-
cation of those to different industries were different from each other); cf. Moba,
B.V. v. Diamond Automation, Inc., 325 F.3d 1306, 1323-27 (Fed. Cir. 2003) (not-
ing but criticizing technology specific requirements between the biotechnology
(Reagents of the University of California v. Eli Lilly & Co., 119 F.3d 1559, 1566-69
(Fed. Cir. 1997)) and software invention (e.g.: Northern Telecom, Inc. v. Datapoint
Corp., 908 F.2d 931, 941-43 (Fed. Cir. 1990), cert denied, 498 U.S. 920 (1990));
See also Klemperer, 21 RAND J. Econ. 113, 127 (1990) (noting optimal patent
policies vary across different classes of products).
1533 Burk/Lemley, 17 Berkeley Tech. L.J. 1155, 1162 (2002); e.g., Fonar Corp. v. Ge-
neral Electric Co., 107 F.3d 1543, 1549 (Fed. Cir. 1997) (“[…] writing code for
such software is within the skill of the art, not requiring undue experimentation,
once its functions have been disclosed.”); see also Mahajan, 67 Fordham L.
Rev. 3297, 3317 (1999) (noting, for example, it was not mandatory to disclose the
source code of the patented program).

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 E. Proposals on the patentability requirements

structure of the invention.1534 As is noticeable from the name itself, a person

skilled in the art is very specific to the particular technology in which the
inventions are involved. This imaginary person is involved in determining
many doctrines in the patent law, such as non-obviousness, enablement dis-
closure, definiteness of patent claims, claim construction, doctrine of equiv-
alents, and others. Thus, the assessments of these doctrines are already tech-
nology specific. A skilled person in the software industry is so skillful as to
need little guidance from the prior art to implement a new idea in software.
However, a skilled person in the biotechnology industry is apparently less
skillful, and so needs much more information from the prior art to enable an
invention. If one imagines that the same standard were applied in biophar-
maceutical inventions and software inventions, it would be tantamount to
requiring disclosure of the entire source code, symbol by symbol, including
all source code permutations that would not alter the function of the soft-
ware.1535 Indeed, this concept of an imaginary person leaves the discretion
to the courts or patent offices, and proper exploitation of this concept will
allow the flexible tailoring of the law to the different fields of technology.
Some scholars suggest adopting technology specific patent rules to deal
with the specific attributes of different technologies.1536 As a representative
characteristic, the field of biotechnology is considered less “predictable”
than the fields of mechanics or electronics.1537 The Federal Circuit perceived
unpredictability in the pharmaceutical field that might distinguish pharma-
ceutical inventions from mechanical inventions in its assessment of obvi-
ousness.1538 In the Eli Lilly case, the Federal Circuit heightened the written

1534 See e.g., Reagents of the University of California v. Eli Lilly & Co., 119 F.3d 1559,
1568 (Fed. Cir. 1997) (“A definition by function, […] does not suffice to define
the genus because it is only an indication of what the gene does, rather than what
it is.[…] It is only a definition of a useful result rather than a definition of what
achieves that result. Many such genes may achieve that result. The description
requirement of the patent statute requires a description of an invention, not an
indication of a result that one might achieve if one made that invention. […]
Accordingly, naming a type of material generally known to exist, in the absence
of knowledge as to what that material consists of, is not a description of that ma-
terial.”).
1535 Moba, B.V. v. Diamond Automation, Inc., 325 F.3d 1306, 1325 (Fed. Cir. 2003).
1536 See e.g., Long, 55 Fed. Law. 44, 49 (2008); Meurer, 8 Wash. U. J. L. & Pol’y 309
(2002) (arguing the scope of business method patents should be construed nar-
rowly).
1537 See, e.g., In re Vaeck, 947 F.2d 488, 496 (Fed. Cir. 1991).
1538 Sanofi-Synthelabo v. Apotex, Inc., 550 F.3d 1075, 1090 (Fed. Cir. 2008).

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description requirement specifically for biotechnological inventions,1539

which received heavy criticism from many scholars.1540 Considering the
heterogeneity of inventions and technologies and the developments thereof,
the uniform application of patent requirements would not only be difficult,
but also unfair. Instead, they contended that industries must be treated dif-
ferently through the existing patent law provisions and doctrines.1541 Based
on these de facto technology specific patentability standards, the proposals
on the patentability of pharmaceutical inventions including the way to im-
plement this principle will be analyzed and provided.

2. Proposals on the novelty requirement

a) Arguments on the novelty requirement

Many scholars argue that a more demanding patentability requirement would

result in a higher level of innovations. Luski and Wettstein contend that
lowering the novelty requirement would result in lowering the levels of R&D
and innovation and that heightening the novelty requirement would prevent
firms from pursuing sub-optimally small innovations and increase R&D ex-
penditures and social welfare.1542 Scotchmer and Green caution against a
weak novelty requirement, which would induce firms to patent even incre-
mental inventions.1543 They further argue that, with a strong novelty re-
quirement, the market would be more concentrated (e.g. possibly only com-
petition between advanced innovation and the base-level technology) by
softening post-innovation competition. Thus, the innovators would realize
a better profit flow at the second stage, and a strong requirement would

1539 Reagents of the University of California v. Eli Lilly & Co., 119 F.3d 1559 (Fed.
Cir. 1997).
1540 See supra 899 .
1541 Burk/Lemley, 89 Va. L. Rev. 1575, 1638-68 (2003); see also Long, 55 Fed. Law.
44, 49 (2008).
1542 Luski/Wettstein, 1 Probl. Perspect. Manage. 31, 40-42 (2004); See also La Man-
na, 10 Int'l. J. Indus. Org. 81, 81-82 (1992) (noting that a high minimum patentabil-
ity standard would be more optimal instrument than setting patent life, and would
demand the patentees to develop his idea into a well-defined form with specifically
beneficial properties to be granted as patents).
1543 Scotchmer/Green, 21 RAND J. Econ. 131 (1990).

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induce more innovators to enter into the race.1544 Van Dijk coins a new term,
“patent height,” which is mainly determined by the stringency of the novelty
requirements and defines the degree of protection against rival improve-
ments.1545 He explains that patent height could be deployed as a policy in-
strument to incentivize certain types of research, thus high protection would
stimulate basic research.1546
Abramowicz and Duffy maintain that it could even be considered as a
way of permitting patents to issue on products that are not technologically
novel if they do not exist in the market place.1547 Roin argues for relaxing
the novelty requirement for basic inventions in the pharmaceutical art and
proposes amending the novelty requirement to allow patenting drugs that
have not yet been developed and are not otherwise covered by a valid patent
or a pending patent application.1548 At the same time, he recommends ap-
plying the traditional patentability standards to drugs that are derived from
certain minor changes to existing drugs.1549

b) Proposal on the novelty requirement of species selection invention

(1) Meaning of something “made available to the public” in the

pharmaceutical industry

Owing to the cumulative nature of technologies, some patents granted today

can hinder the follow-on inventions,1550 as long as they are still valid and
can exclude others from exploiting their inventions. However, after patent
term expiration, these inventions are available to the public, and the public
must be free to use them. The U.S. Supreme Court held as follows:
“First, patent law seeks to foster and reward invention; second, it promotes
disclosure of inventions, to stimulate further innovation and to permit the public

1544 Scotchmer/Green, 21 RAND J. Econ. 131 (1990) (cf. In the same literature, they
also argued the weak patentability would be attractive as well, since it would per-
mit the technologies to be patented and this is also socially valuable.).
1545 Van Dijk, 44 J. Ind. Econ. 151, 152 (1996).
1546 Van Dijk, 44 J. Ind. Econ. 151, 165-66 (1996).
1547 Abramowicz/Duffy, 83 N.Y.U. L. Rev. 337, 398 (2008).
1548 Roin, 87 Tex. L. Rev. 503, 558, 567 (2009) (further distinguishing the one which
did not need to go through the clinical trials from those which needed to do so.).
1549 Roin, 87 Tex. L. Rev. 503, 558, 567 (2009).
1550 See subsection II.A.

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to practice the invention once the patent expires; third, the stringent require-
ments for patent protection seek to assure that ideas in the public domain remain
there for the free use of the public.”1551
In other words, the information already disclosed to the public must keep
providing free access to them and cannot be subject of further patent pro-
tection.1552 To accomplish this, those inventions that have been made avail-
able to the public constitute the prior art and claims to identical inventions
would lack novelty. As Merges notes, “[t]he logic behind [the novelty re-
quirement] is fairly straightforward, [since, if] information is already in the
public domain when the ‘inventor’ seeks to patent it; society has no need to
grant a patent to get this information.”1553 In addition, denying an invention
a patent because of the lack of novelty could mean that an idea has been
available to the public. This is proper for such industries as mechanics,
where, once the idea, like the structure of a wheel, is available, the public
can easily exploit the idea and enjoy the product.
However, what is the meaning of an idea being available to the public in
the pharmaceutical art? One may look at one genus invention claimed as a
Markush type claim1554 and consider what kind of invention the public can
practice once the patent expires, or what kinds of ideas become public do-
main and remain for the free use of the public. A person skilled in the art
may have a fairly good idea about the structures and expected potential ther-
apeutic effects of millions of compounds, and he could work on them for
future development. However, the public could hardly benefit from a new
medication, unless someone has invested and succeeded in gaining market-

1551 Aronson v. Quick Point Pencil Co., 440 U.S. 257, 262 (1979); see also Ann, 2009,
361 (noted “[p]atents, as a rule, shall do no more than reward and promote inno-
vative activity and encourage the disclosure of its results.”).
1552 Eisenberg, 53 Vand. L. Rev. 2081, 2088 (2000) (“Granting patents on technologies
that are not new would impose the social costs of monopolies without the coun-
tervailing benefits of promoting development and introduction of welfare-enhanc-
ing inventions.”); Merges, 7 High Tech. L. J. 1, 12-13 (1992).
1553 Merges, 7 High Tech. L. J. 1, 12-13 (1992); see also Art. 54(2) EPC (“The state
of the art shall be held to comprise everything made available to the public by
means of a written or oral description, by use, or in any other way, before the date
of filing of the European patent application.” [Emphasis added]); See also 35
U.S.C. 2011 Art. 102(a) (“A person shall be entitled to a patent unless—(1) the
claimed invention was patented, described in a printed publication, or in public
use, on sale, or otherwise available to the public before the effective filing date
of the claimed invention.” [Emphasis added]).
1554 See e.g. supra 110 and accompanying texts.

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 E. Proposals on the patentability requirements

ing approval for it as a drug.1555 In this sense, the novelty requirement seems
to treat the pharmaceutical field more strictly than it does other technical
fields, since novelty is judged based on whether the idea of the invention is
new, not on whether the product is or has been accessible to the public.1556
Put differently, the mere earlier disclosure of an idea, not the accessibility
of a product, can keep the invention from being patented, thereby possibly
depriving the pharmaceutical companies of opportunities to invest in launch-
ing a product. The situation has been getting worse because of the over and
immature disclosure problem,1557 which has prevented more potential drugs
from becoming patentable. The same would be true for any industry where
the itinerary from the invention to the product is long and costly, and in-
vestment is unlikely to be decided upon without the patent protection.

(2) A patent as a double-edged sword to NMEs

In contrast to what has been observed hitherto, a patent can be a double-

edged sword to NMEs, because patent law better protects tangible products
and processes than it does information. A medication is rich in information,
which costs time and money.1558 This could also be because the patent is not
granted in exchange for subsequent investments,1559 but for the creation and
disclosure of inventions, which is secured through the novelty requirement.
On the one hand, many pharmaceuticals could not have reached the public
without a patent protecting them from the copycats; on the other hand, the
prior arts which are mainly the prior patents, and the stricter novelty re-
quirement in this industry have potentially prevented medicines from being
further developed, because the basic idea was disclosed somewhere. This
simply results in much reduced health gains as compared to those that could
have been produced by the medications.
A more liberalized approach to the patentability requirements of species
selection inventions, therefore, would provide more opportunities for com-

1555 See also, Straus, 2009, 482.

1556 Roin, 87 Tex. L. Rev. 503, 517-518 (2009).
1557 See subsection III.B.2.c)(3).
1558 See subsection III.A.1.
1559 Kitch, 20 J. Law Econ. 265, 276 (1977) (“[…] the development of patented in-
ventions generally requires significant investments that lead to unpatented infor-
mation.”).

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VI. PROPOSALS

panies to conduct research. This approach would be in line with earlier cases
in which courts have held to grant patents on the medications that were pu-
rified from a mixture of natural products, because the inventions made the
medications available for the first time for any uses.1560 How, then we can
reach the goal? This will be reviewed in light of statutory examples, pro-
posals, and the implications of the Olanzapine decisions.

(3) Statutory exceptions to the novelty requirement and considerations

thereof

According to the UK Patents Act 1949, an invention was not deemed to have
been anticipated solely because it was published in the United Kingdom
either in a specification filed in pursuance of an application for a patent made
there more than fifty years earlier or in a specification describing the inven-
tion for the purposes of an application for protection in any country outside
the United Kingdom made more than 50 years earlier.1561 This provision
means that an inventor who unearths lost technology might make a signifi-
cant contribution to scientific progress.1562
There are also a few existing exceptions in the form of industry specific
provisions, such as Art. 54(4) and (5) EPC (special novelty provision for
1st and 2nd medical use) and 35 U.S.C. § 103(b) (special non-obviousness
provision for biotechnological invention). The former provides statutory
exceptions to novelty to the extent that, even if a substance is not new, it is
still patentable for any medical method if the use for any medical method
was not comprised in the state of the art. In addition, even if the substance
was patented for one medical use, it is still patentable for a new use of the
same substance. By now it should be easy to be noticed that the novelty
exceptions provided by the EPC seem to have a similar basis to the decisions
on the early medications, i.e. “made it available to the public for the first
time as a medication.” In any case, it seems to be possible to make an ex-
ception in the patentability standards for drugs. However, there are further
concerns. Firstly, dramatic alterations to the patentability standards would
likely produce unexpected results given this industry’s creative litigation

1560 See subsection VI.B.2.b); see e.g., Parke-Davis & Co. v. H.K. Mulford Co., 189
F. 95, 103 (C.C.N.Y., 1911).
1561 UK Patents Act, 1949, Section 50(1).
1562 Keeling, 2003, 41.

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 E. Proposals on the patentability requirements

tactics.1563 Secondly, it would be difficult to implement specifically different

treatment, and even if it could be done, it is doubtful whether the law can
keep pace with the real progress in the development of technology. Thirdly,
there is still concern about violating Art. 27(1) TRIPS.1564
Some scholars also argue against industry-specific patent legislation.1565
Instead, they contend that industries must be treated differently through the
existing patent law provisions and doctrines.1566 As Long maintains, tailor-
ing the application of different rules to the relevant circumstances can be
done without the intervention of Congress.1567 This would provide a degree
of flexibility in the patent system for pharmaceutical inventions without in-
volving legislative changes. Therefore, possible applications to pharmaceu-
tical inventions will now be explored and suggested.

(4) Proposed novelty requirement for NMEs

Many scholars contend that a strong novelty requirement would bring more
robust and advanced inventions and less incremental inventions. However,
most of them do not seem to consider the specificities of the pharmaceutical
art, such as the broad disclosure of the Markush type claim, the attrition rate
of drug candidates, the easy and over-disclosure problem, and the unpre-
dictability in this art. Roin, however, specifically discusses the problems in
the industry and proposes increasing the amount of information necessary
to make a drug not novel, such that a prior disclosure would not be adequate
unless the disclosure were sufficient to support the invention as a drug (“his
proposal”).1568 He further contends that Congress would be justified in re-
forming patent law as above to ensure that such doctrines would no longer
deter the development of socially valuable drugs.1569 In the same article,
however, he rejects his own proposal for the following reasons: that it could
be a violation of the Constitution, namely, the two doctrines - (i) Congress
can use the patent system only to “promote the progress of … useful

1563 Roin, 87 Tex. L. Rev. 503, 559 (2009).

1564 See supra 1506 -1517 and accompanying texts.
1565 Burk/Lemley, 89 Va. L. Rev. 1575, 1634-38 (2003).
1566 Burk/Lemley, 89 Va. L. Rev. 1575, 1638-68 (2003); see also Long, 55 Fed. Law.
44, 49 (2008).
1567 Long, 55 Fed. Law. 44, 49 (2008).
1568 Roin, 87 Tex. L. Rev. 503, 560 (2009).
1569 Roin, 87 Tex. L. Rev. 503, 560 (2009).

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VI. PROPOSALS

arts,”1570 (ii) based on this Congress may not “authorize the issuance of
patents whose effects are to remove existent knowledge from the public do-
main”,1571 that it could be misused to evergreen the old drugs, that it could
not solve the problems caused by the non-obviousness standard,1572 and that
it could violate Art. 27(1) TRIPS.1573
In light of this concern about overcoming non-obviousness hurdle, he
gives up his proposal too early, if this was the reason for the rejection. Over-
coming the novelty requirement is impossible as long as the invention is
anticipated by the prior art. However, once it is different from the prior art,
there are many grounds upon which to argue that the invention involves an
inventive step. In addition, according to his proposal, the amount of prior art
would be greatly reduced. Since non-obviousness is assessed over the prior
art, this standard would not be that problematic. Instead, it is important to
provide applicants with room to argue by relaxing the novelty requirement.
The real concern regarding his proposal arises from his intention to sub-
stantially reduce the prior art to only that which discloses the information
which provides sufficient support for a drug. This would involve regarding
something as novel that is not novel. This justifies his concern about the
potential violation of the Constitution. In addition, as discussed, the amount
of potential prior art would be substantially reduced. Since this provision
could open the patent door too wide, which would increase the opportunity
for double patenting. Further, as he mentions, this provision could be mis-
used, since, as long as there is no prior art disclosing that the invention was
available as a drug, the possibility of receiving a patent would be raised. In
the end, the enforceability of these potentially overlapping patents would
naturally create serious problems. Thus, while his apprehensions about the
unpatentable drug are understandable, the proposal is somewhat at odds with
patent law.
In fact, some of these problems appear to be solved by the Olanzapine
decision within the realm of patent law, and it is therefore advisable to ap-
preciate and apply it.

1570 U.S. Const. Art. I, § 8, cl. 8.

1571 Graham v. John Deere Co., 383 U.S. 1, 6 (1966).
1572 Roin, 87 Tex. L. Rev. 503, 559-60 (2009).
1573 Roin, 87 Tex. L. Rev. 503, 558 (2009). Regarding this concern, see subsection
VI.D.2.a)(3).

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 E. Proposals on the patentability requirements

(5) Appreciation of the Olanzapine decision and its expected results

The Olanzapine decision1574 may be the result of efforts to try to solve this
problem. While giving up its earlier efforts to reconcile the discrepancy be-
tween the scope and the disclosure of the invention (See Figure 11), the BGH
finally held that, unless the prior art disclosed the claimed invention clearly
and unambiguously, the prior art does not deprive the novelty of the inven-
tion. Namely, contrary to its traditional position of denying selection inven-
tions, the BGH increased the amount of information necessary to anticipate
the later claimed invention. Therefore, this decision solved the problem
sagely without changing the fundamental framework of the patent system.
Since the earlier disclosure of the genus claim is too broad, it is hardly
possible to realize the full scope of invention. Thus, it would certainly be
beneficial to provide an invention to find a narrower subgroup having par-
ticular properties which might have been difficult to find by trial and er-
ror.1575 Even if the much relaxed novelty requirement in the Olanzapine
decision raises some concerns,1576 it enhances the possibility of resuscitating
an invention in the lists of thousands of theoretically generated and published
compounds.
Furthermore, a species invention does not create the situation in which a
prior user unexpectedly identifies a new patent stopping him from continuing
the work that he has long been undertaking. In In re Cruciferous Sprouts
Litigation, the Federal Circuit reinforced the basic rule that a patentee must
not have gained exclusive rights over something that was previously in the
prior art.1577 A species patent could prevent the genus patentee from working
on the very species invention, but the species patent would not stop someone
who has been working so far, because a species invention could have been
patented, since no one appreciated the invention. On the contrary, a species
patent could increase the possibility of making a new medication available
to the public, which would allow society to benefit from further medications
that would otherwise hardly have garnered investment and reached the mar-
ket.1578

1574 See e.g., BGH/Olanzapine, IIC 2009, 596.

1575 Grubb/Thomsen, 2010, 335.
1576 See subsection V.A.2.
1577 In re Cruciferous Sprout Litigation, 301 F.3d 1343, 1350 (Fed. Cir. 2002).
1578 See also, Straus, 2009, 483.

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VI. PROPOSALS

c) Discussion on the novelty requirement of other selection inventions

Novelty of selection inventions is mainly based on the identification, pu-

rification, or selection of the invention. As Lord Neuberger stated, the tech-
nical contribution of selection invention is to make a selected invention – in
this case, an enantiomer - available for the first time.1579 One may recall the
earlier meaning of “make available to the public.” Patents were granted on
the early medications that were products of extraction and purification from
mainly natural sources when the nature of this industry was more a manu-
facturing industry than a research-based industry.1580 These early medica-
tions were indeed made available to the public for the first time, as the result
of which they could cure disorders for the first time. In a similar fashion,
selection inventions, such as enantiomers, polymorphs, and metabolites,
were also made available for the first time. However, the public already had
access to the older ones, such as racemates, a group of polymorphs, or parent
drugs.
Even though the level of contribution of other selection inventions is much
lower, they were enabled for the first time. In addition, the anticipation has
required both the specifically clear and unambiguous disclosure and enable-
ment, and the prior art generally did not enable the selected ones. Therefore,
it would be absurd to argue in favour of applying a different novelty re-
quirement to other selection inventions.

3. Proposals on the inventive step requirement

The importance of the non-obviousness doctrine accords with the difficulty

of the inquiry because this requirement attempts to measure technical ac-
complishment, which is a quality more abstract than novelty or utility.1581
Thus, non-obviousness is described as a “nontriviality” requirement in
patent law.1582

1579 Generics Ltd. v. Lundbeck [2009] UKHL 12, para 83.

1580 Dutfield, 2009, 59-60.
1581 Merges/Duffy, 2011, 620.
1582 Merges/Duffy, 2011, 620.

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 E. Proposals on the patentability requirements

a) Arguments on the inventive step requirement

(1) Arguments for a strict inventive step requirement

Many scholars contend that the demanding inventive step requirements

would work better to promote R&D on advanced and major inventions.
O’Donoghue shows that, when there are transaction costs, a patent system
based on strict non-obviousness requirements is a better regime, which can
stimulate R&D investment and increase dynamic social welfare.1583 He ex-
plains that this is because, when an improvement is patentable only if it meets
a stricter patentability requirement (or its size is large enough), inventors
must pursue more ambitious projects, which will take longer to realize.1584
In other words, a higher patentability requirement would stimulate R&D
investment without significantly increasing market power and would pro-
vide forward protection by delaying the next patentable innovation and
slowing down the market turnover.1585 Similarly, Hunt argues that increasing
the standard of non-obviousness would stimulate R&D investment or in-
crease the average flow profit of patentable discoveries and the economically
effective life of patents.1586 Avorn contends that patent laws could take a
more conservative view to determine whether a minor change of an existing
molecule, such as one-atom changes or isomerisations, warrant patent ex-
clusivity.1587 Burk and Lemley also mention that lowering the obviousness
threshold would make marginal inventions more likely be patented, but this
would do nothing to encourage inventions that would have met the non-
obviousness standard anyway.1588 Merges similarly maintains that the strict
non-obviousness requirement was to encourage companies to engage in
“risky” R&D projects, where there is “relatively” high uncertainty of com-

1583 O’Donoghue, 29 RAND J. Econ. 654, 664 (1998) (noting this is so because weaker
patentability requirement might retard R&D because it provide less protection
from future innovators); See also Hunt, 1999, 37-38.
1584 O’Donoghue, 29 RAND J. Econ. 654 (1998).
1585 O’Donoghue, 29 RAND J. Econ. 654, 673 (1998); Hunt, 1999.
1586 Hunt, 1999 11, 30-35 (also noting that lowered non-obviousness requirement
would be less likely to raise R&D activity in industries that already innovate
rapidly).
1587 Avorn, 309 Science 669, 669 (2005); See also, Angell, 2004, 240.
1588 Burk/Lemley, 89 Va. L. Rev. 1575, 1682 (2003).

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mercial success.1589 Scotchmer argues that a strong patentability require-

ment would weaken the incentives of subsequent inventors, and even that
patents should not be granted on the applications and other second generation
products.1590

(2) Arguments for a strict inventive step requirement together with broader
protection

Some scholars recommend higher patentability requirements in the consid-

eration of the broad scope of a basic patent. To protect basic inventions
against future inventions, either the patent protection for second generation
inventions could be denied or made harder through a high patentability re-
quirement, or second generation inventions could infringe the patents of ba-
sic innovations by granting a broad patent scope of basic innovations.1591
Both policies have a blocking effect on second generation inventions, since
the second generation inventor would hesitate to invest or would not invest
in them, either because the invention would be hard to obtain a patent for,
or because the inventor would have less bargaining power. Denicolò and
Zanchettin argue that granting a broader patent scope on the first invention
would nevertheless be better, since, as long as the second innovation was
patentable, it creates mutual blocking which might be solved through an ex
post licensing agreement that would have a sharing effect.1592
However, a broader scope of patent would increase the market power and
deadweight loss, thus, a higher patentability requirement would a better tool
to achieve the goal with fewer side effects.

1589 Merges, 88 Cal. L. Rev. 2187, 2225-2226 (2000) (noting “high-cost research jus-
tifies a less stringent standard of purely technical nonobviousness.”); Merges, 7
High Tech. L. J. 1, 3-4 (1992) (argued moderate lowering of patentability standards
are required for the very high-cost research.).
1590 Scotchmer, 27 RAND J. Econ. 322, 323 (1996) (further arguing that the first in-
novators can collect more profit even by denying patents on second generation
products than by granting some of them).
1591 Friebel et al., 2006, 26; Denicolò/Zanchettin, 20 Int'l. J. Indus. Org. 801, 801-802
(2002); Denicolò, 31 RAND J. Econ. 488, 489 (2000); Gallini/Scotchmer, 2002,
66.
1592 Denicolò/Zanchettin, 20 Int'l. J. Indus. Org. 801, 825-826 (2002).

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(3) Arguments against a strict inventive step requirement

In contrast, some scholars warn that too high a hurdle on the patentability
requirement would prevent desirable secondary innovations from occur-
ring.1593 Denicolò explains that this is because, when the second invention
was seldom patentable, on the one hand only the first inventor would be
willing to develop the second invention and fully internalize the benefit of
the future innovation; on the other hand, the second innovation would be
underinvested, because R&D competition would be eliminated.1594 Lemley
also notes that it would discourage improvements too strongly, thus freezing
development at the first generation of products.1595 As Friebel et al,. point
out, demanding patentability requirements would weaken the second inven-
tors’ incentives only when (i) the prior art patents are still in force and (ii)
where the inventions take place in more than two stages.1596 Theoretically,
this might result in so-called ‘patent-thicket problems.’1597

(4) Arguments for the relaxed inventive step requirement in risky and
expensive R&D fields

Regardless of their basic positions, some scholars have justified a relaxed

standard of non-obviousness in the field of technology, because its R&D is
very risky and expensive.1598 Merges especially urges that a moderate low-
ering of patentability standards, such as the non-obviousness requirement,
would be required for the very high-cost research.1599 Roin considers low-
ering the non-obviousness requirement to patent drugs that have not yet been

1593 Denicolò, 31 RAND J. Econ. 488 (2000); Friebel et al., 2006, 29.
1594 Denicolò, 31 RAND J. Econ. 488 (2000).
1595 Lemley, 75 Tex. L. Rev. 989, 990 (1997).
1596 Friebel et al., 2006, 29.
1597 Friebel et al., 2006, 29; Denicolò/Zanchettin,20 Int'l. J. Indus. Org. 801, 803
(2002) (noting demanding patentability requirement would not have blocking ef-
fect on second generation inventions when the original innovator obtains the sec-
ond generation innovation.).
1598 Boyd, 12 Berkeley Tech. L. J. 311, 337-343 (1997); Merges, 7 High Tech. L. J. 1,
3-4 (1992); Merges, 88 Cal. L. Rev. 2187, 2225-2226 (2000).
1599 Merges, 7 High Tech. L. J. 1, 3-4 (1992); Merges, 88 Cal. L. Rev. 2187, 2225-2226
(2000) (noting “high-cost research justifies a less stringent standard of purely
technical nonobviousness.”).

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developed. 1600 Boyd also asserts that a lowered standard of non-obviousness

is required to permit the industry to overcome the risk aversion that is oth-
erwise problematic.1601
Many scholars comment on the post-invention costs and the uncertainty
of commercializing inventions in the assessment of non-obviousness, al-
though these considerations are not relevant to the determination of obvi-
ousness.1602 Benjamin and Rai argue that, where the economic expense or
the risk of development of an invention is substantial, allowing a patent on
even an obvious invention could be useful.1603 Shavell also notes that, if an
invention tends to fail the non-obviousness requirement, but its development
cost is high and would clearly not be covered by the profits in the absence
of patent protection, not awarding a patent on that invention would be a
mistake under an economic analysis.1604 Burk and Lemley also contend that,
for patents to drive innovation and not merely invention, courts must con-
sider the cost and uncertainty of post-invention testing and development.1605
Abramowicz and Duffy argue that it makes sense to weaken the non-obvi-
ousness standards to encourage the commercialization of new prod-
ucts,1606 or even to extend this theory to permit patents to issue on products
that are technologically non-novel if they do not exist in the market place.
Considering that these assertions were for inventions with high post-inven-
tion costs or uncertainty, the same can be argued for the basic patents on the
pharmaceuticals which are the inventions themselves.

1600 Roin, 87 Tex. L. Rev. 503, 558, 567 (2009) (further distinguishing the one which
did not need to go through the clinical trials from those which needed to do so).
1601 Boyd, 12 Berkeley Tech. L. J. 311, 339 (1997).
1602 Graham v. John Deere Co., 383 U.S. 1,11 (1966) (providing outline of basic non-
obviousness test).
1603 Benjamin/Rai, 95 Geo. L. J. 269, 278 (2007); Kitch, 20 J. Law Econ. 265, 265-67,
269 (1977) (advocating development as a significant consideration for granting
patent rights).
1604 Shavell, 2004, 152-53, fn 31.
1605 Burk/Lemley, 89 Va. L. Rev. 1575, 1678 (2003); see also Merges, 7 High Tech.
L. J. 1, 47, 33-34 (1992) (noting to consider the commercial uncertainty to as-
sess non-obviousness).
1606 Abramowicz/Duffy, 83 N.Y.U. L. Rev. 337, 398 (2008).

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b) Proposal on the inventive step of species selection inventions

There are further considerations on the expenditure of money on the creation

of inventions to assess the inventive step. In the United States, several de-
cisions noted that the expenditure of a large amount of money to make the
invention tended to show that the invention was non-obvious.1607 Commer-
cial success has long been to be one of the secondary considerations in es-
tablishing an inventive step. Consideration of commercial success while
judging obviousness helps to foster technological innovation.1608 Post-in-
vention costs are in the same vein as these considerations.
Expensive research alone, however, has not been regarded as an important
indicator of patentability, and courts have considered this factor in a limited
class of cases.1609 Critics have also noted that commercial success is not a
good indicator of patentability, because it is indirect and depends on a long
chain of inferences that are weak,1610 and because commercial success might
instead indicate “sales promotion ability, manufacturing technique, ready
access to markets, consumer appeal design factors, and advertising bud-
get.”1611 Simply put, the weak point of these arguments rests upon whether
there is causal relationship between these factors and the technical value of
the invention.
However, it would be still advisable to consider post-invention costs or
high-uncertainty in the course of development as among the secondary con-

1607 See for instance, Panduit Corp. v. Dennison Mfg., 774 F.2d 1082, 1099 (Fed. Cir.
1985) (fact that patentee took a couple of years and spent millions of dollars is one
of the evidence that the invention is non-obvious); Edoco Technical Products, Inc.
v. Peter Kiewit Sons’ Co., 313 F. Supp. 1081, 1086 (C.D. Cal. 1970) (the fact that
a long and expensive period of experimentation was required to solve the problem
was an important evidence of non-obviousness); see also Sanofi-Synthelabo v.
Apotex, Inc., 470 F.3d 1368, 1379 (Fed. Cir. 2006), reh’g denied (Jan. 19, 2007)
(the extensive time and money [the patentee] spent developing the racemate before
redirecting its efforts toward the enantiomer was one of the indicators of non-
obviousness); cf. United States v. Ciba-Geigy Corp., 508 F. Supp. 1157, 1168
(D.C.N.J. 1979) (a costly research undertaken should be rewarded with a product
patent).
1608 Merges, 76 Cal. L. R. 803, 837-388 (1988).
1609 Merges, 7 High Tech. L. J. 1, 55 (1992).
1610 Kitch, 1966 Sup. Ct. Rev. 293, 330-35 (1966) (also noting courts should even more
cautious to hold the patents valid, since commercially successful patents can truly
impose a monopoly tax on the market ).
1611 Kitch, 1966 Sup. Ct. Rev. 293, 332 (1966); see also Landes/Posner, 2003, 305.

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VI. PROPOSALS

siderations for the following reasons. Firstly, the patent system aims to pro-
mote not only the invention but also the innovation. If high post-invention
costs are incurred to bring an invention to the innovation or uncertainty in
the same course, fewer innovations will be realized without patent protec-
tion. Commercial success has been used to transform the patentability doc-
trine partially into an instrument that rewards innovation rather than inven-
tion.1612 Secondly, the benefit of the invention to the patients who are await-
ing new medications must be considered. If an invention regarding a new
drug failed to acquire a patent based on its relatively weak inventive step,
the invention could hardly reach the market as a medicine. In the end, the
loss of even one NME may be seen as a loss.
When considering post-invention costs or uncertainty, there appears to be
a greater opportunity to argue that the basic invention establishes the inven-
tive step which allows the patentee to secure a patent on it. Thus, the in-
creased incentives could bring more NMEs to the public, which could in turn
provide new opportunities to save or prolong life, or to improve the quality
of life. On the other hand, the impact may not be so dramatic, since this factor
can be considered only by the courts, not by the patent offices. The courts
are in a better position to consider this factor basing their decisions on the
evidence gathered in the period of time up to and during the litigation.

c) Proposal on the inventive step of other selection inventions

(1) Introduction

Many scholars argue that a heightened inventive step requirement would

result in better and advanced inventions, while too high a hurdle could stifle
second generation inventions.1613 Thus, a demanding inventive step require-
ment is to be recommended to encourage the manufacturers to work more
on basic inventions. However, no proposal has been advanced to suggest
how to raise the inventive step requirement, especially for the pharmaceu-
tical art.

1612 Merges, 76 Cal. L. R. 803, 876 (1988).

1613 See subsection VI.E.3.a).

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 E. Proposals on the patentability requirements

(2) Proposed standard to assess the inventive step

“Therapeutic contribution” as a secondary indicia

The inventive step requirement prevents granting patents on inventions that
are likely to reach the public without the inducement of the patent system
and excludes such slight advances from the patent protection.1614 Since
patent exclusivity can be justified by this technical advance or contribution
to the art, when there was no real technical advance in art, the objection of
obviousness must be made.1615 Therefore, the measurement of the technical
contribution to the art is important in assessing the inventive step.
It is advisable to assess the level of “therapeutic contribution” of phar-
maceutical inventions as a consideration of the technical contribution in this
field. The value of a patent is calibrated by structural features; however, the
value of a pharmaceutical patent is the therapeutic effect itself.1616

(3) Basis of the proposal

Technical contribution of inventions

The patentability requirement of computer-implemented inventions is de-
fined in the EPO glossary as follows: “To be patentable, they must have
technical character and solve a technical problem, be new and involve an
inventive technical contribution to the prior art.”1617 [Emphasis added].
However, it does not further define the inventive technical contribution to
the prior art, which seems to refer to the inventive step of the computer-
implemented invention. While distinguishing “inventive concept,” which
was concerned with the “identification” of the core of the invention, the
House of Lords held that “technical contribution” was concerned with the
evaluation of its inventive concept, i.e. how far forward had it carried the

1614 Eisenberg, 19 Berkeley Tech. L.J. 885 (2004).

1615 Dr Reddy’s Laboratories Ltd v. Eli Lilly & Company Ltd, [2009] EWCA Civ 1362,
paras 40-52; Agrevo/Triazoles, T 939/92, OJ EPO 309, 319-20 (1996), point 2.4.2.
(“it has for long been a generally accepted legal principle that the extent of the
patent monopoly should correspond to and be justified by the technical contribu-
tion to the art […].”).
1616 Domeij, 2000, 87.
1617 EPO glossary, available at: http://www.epo.org/service-support/glossary.html.
(Last accessed on December 20, 2013).

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VI. PROPOSALS

state of the art.1618 The European Examination Guidelines also note that, if
an invention is shown to have considerable technical value, which provides
a new and surprising technical advantage, this technical advantage is of great
importance in assessing the inventive step.1619 In turn, the test of inventive
step is directly linked to the social practical value of the invention that is
newly created by the inventor.1620
This technical contribution is also the basis for determining the breadth
of a claimed invention, since the extent of exclusivity should not exceed the
technical contribution to the art made by the invention as described in the
specification.1621 In other words, a patent should not be granted if the benefits
do not exceed the costs.1622 The provision of a product, such as other species
inventions, is also one of the technical contributions to the art. According to
the case laws, contributions of other species inventions lie more in the iden-
tification and purification of the claimed inventions. As Kitchin J properly
pointed out, however, the inventive idea connected with an enantiomer is
neither the discovery of the enantiomer nor its medicinal effect, only the
process required to synthesize it.1623 Although the exclusivity should not
exceed the technical contribution to the art, instead of granting a patent on
the process to manufacture the enantiomer, a further absolute compound
protection is provided to these inventions. As a result, both old and new
versions of the same drugs, i.e. enantiomer and racemate, polymorphs,
metabolites and the parent drugs are concurrently available in a number of
countries.1624

The genuine technical contribution of drug patents: Therapeutic

contribution
The genuine technical contribution of a drug invention to the pharmaceutical
art should be the “therapeutic contribution.” This has been more often re-
quired in other regimes than the patent system. For example, some scholars

1618 Generics Ltd. v. Lundbeck [2009] UKHL 12, para 30.

1619 EPO Examination Guidelines G-VII, 8.
1620 Domeij, 2000, 205.
1621 Biogen Inc v. Medeva Plc [1996] UKHL 18, point 80.
1622 Mazzoleni/Nelson, 27 Res. Policy, 273, 275 (1998).
1623 Lundbeck v. Generics Ltd. [2008] EWCA Civ 311, para 26; Generics (UK) Ltd &
Ors v. Lundbeck A/S [2007] EWHC 1040 (Pat), paras64-66.
1624 Hutt/Valentová, 50 Acta Facultatis Pharmaceuticae Universitatis Comenianae 7,
8 (2003).

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 E. Proposals on the patentability requirements

propose the contribution of innovations, which is a therapeutic contribution

in the case of a pharmaceutical innovation, as a ground for awarding a
“prize,”1625 which is a kind of a reward to the innovator as a lump sum
payment and is an incentive to invest in the invention.1626 The therapeutic
contribution is also considered as an important factor in reimbursement
schemes, such as controlling costs of the newer and costly drug, the thera-
peutic contribution of which may be small,1627 in contrast to the innovative
drugs which offer major therapeutic advances.1628 The Korean Supreme
Court has considered whether the claimed technical contribution of selected
inventions also contribute to showing the pharmaceutical effects (benefits)
over the basic inventions.1629 It would be also highly advisable to require
pharmaceutical inventions to prove their therapeutic contributions over the
prior art. Such therapeutic contributions could also consist in the enhance-
ment of absorption of a substance, prolongation of the duration of effects,
mitigation of the side effect of main substance, and the like.

Therapeutic contributions of other selection inventions

One may need to consider the extent to which the other selection inventions
contribute to the treatment as a medicine over their older versions. Higgins
and Graham contend that even though those new products which are covered
by improvement patents reach the market sooner, they are much less likely
to provide improvement over previous products.1630 Rai also insists that
there are drugs that provide little or even no therapeutic advantage over ex-
isting drugs.1631 These non-NMEs do little to increase the length of human
life.1632 Some new drugs covered by secondary fresh patents are frequently
associated with higher potential monopoly costs, without providing mea-
surable economic and/or clinical advantages.1633 Many scholars doubt the
clinical benefits of the enantiomer inventions over the racemates. Some sci-

1625 Arbex, 2009, 3; Abramowicz, 2003, 91-118.

1626 Rockett, 2010, 355-56.
1627 Schweitzer, 2007, 126; see also Rucker, 1996, 73.
1628 Schweitzer, 2007, 146.
1629 Korean Supreme Court/Lercanidipine, 2010Hu2872, Jul. 14, 2011, para 2.; Ko-
rean Supreme Court/ Ibandronate, 2010Hu3554, Sept. 8, 2011, para 2.
1630 Higgins/Graham, 326 Science 370, 370 (2009).
1631 Rai, Ill. L. Rev. 173, 205-06 (2001).
1632 Lichtenberg, 5 Int. J. Health Care Fi. 47, 70 (2005).
1633 Zhang/Soumerai, 26 Health Affair. 880, 884 (2007).

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VI. PROPOSALS

entists note “some new chemical entities1634 might be minor modifications

of older agents without offering measurable clinical benefits, such as es-
omeprazole (Nexium) versus omeprazole (Prilosec).”1635 Other scientists
also observe that the overall degree of clinical improvement that could be
expected from the purified preparation of one isomer might be limited unless
the total dose was correspondingly increased.1636 They add that there is no
published evidence to indicate any advantage of esomeprazole 40mg over
omeprazole 40mg.1637 Although the different physical properties of poly-
morphs could contribute the characteristics required to handle the sub-
stances, such as filterability or drying properties, it could hardly provide
better therapeutic effects. The only action that could contribute to the clinical
benefit of the metabolites would be to onset the therapeutic effects slightly
earlier.
Regarding the two crystalline forms of atorvastatin, the BOA made it clear
that although not every crystalline form provides improved filterability or
drying characteristics, trying this carries a reasonable expectation of suc-
cess.1638 Therefore, the provision of crystalline forms that present nothing
more than the obvious advantages of crystalline forms based on their im-
proved physical and/or physicochemical properties would not be sufficient
to find as an inventive. However, crystalline forms could be found non-
obvious, if they provided unexpected pharmaceutical activity. Likewise,
separation of enantiomer from the racemate or identification of a metabolite
would provide virtually expected results.

(4) Expected effects

Consideration of the therapeutic contribution as one of the secondary indi-

cations would provide drugs with improved effects, could discourage in-
ventors from working on the rather obvious modifications and variations of

1634 According to the criteria provided by this dissertation, Es-omeprazole is not a new
chemical entity, but a second generation product.
1635 Zhang/Soumerai, 26 Health Affair. 880, 884 (2007).
1636 Sachs/Shin/ Howden, 23 (Suppl. 2) Aliment Pharm. Ther. 2, 7 (2006).
1637 Sachs/Shin/ Howden, 23 (Suppl. 2) Aliment Pharm. Ther. 2, 7 (2006) (For exam-
ple, although esomeprazole 40 mg has been shown in some trials to be superior to
omeprazole 20 mg, there is no published evidence to indicate any advantage of
esomeprazole 40 mg over omeprazole 40 mg.).
1638 Warner-Lambert/Atorvastatin polymorphs, T 0777/08 (2011).

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 E. Proposals on the patentability requirements

existing medications, and lead them to carry out research on more ambitious
projects. Furthermore, since there is little monopoly situation in the phar-
maceutical market,1639 once an inventor acquired the patents on second gen-
eration inventions that show therapeutically advanced effects, these patents
would provide them with more competitiveness in the market place as
well.
In addition, the loss of these second generation inventions should not be
of too much concern. Firstly, with some effort, work on second generation
inventions can be performed without the help of a patent. Secondly, even if
this leads to the loss of these inventions, since these kinds of inventions have
followed successful basic inventions, the public would still have the “older”
versions. In this regard, Roin notes that “this effect may be rather benign,
such as when patent protection is denied to drugs that are so closely related
to an older drug that they are unlikely to provide any additional therapeutic
benefits.”1640 Indeed, these criteria would not foreclose the patent grant on
second generation inventions. For example, if it mitigates the toxic effect of
the racemate, the choice of an enantiomer will be patentable. If the parent
drug is too much of a burden to the patient’s metabolism and could be toxic,
and a metabolite without this toxicity is found, this metabolite should be
allowed patent protection. Therapeutic contribution could be further ac-
knowledged when a new dosage form enables a certain group of patients to
take the basic medication. Examples of such improvements are oral dosage
forms when the original form was a parenteral drug, or combinations of
active ingredients showing a synergistic effect, thereby allowing the dose of
a drug to be lowered.
The adaptation of these secondary criteria could be expedited under the
recent decision of Federal Circuit holding that evidence of secondary con-
siderations must be considered as part of all of the evidence, not just when
the decision maker remains in doubt after reviewing the art. 1641

1639 See subsection III.A.2.d).

1640 Roin, 87 Tex. L. Rev. 503, 537 (2009).
1641 Transocean Offshore Deepwater Drilling, Inc. v. Maersk Drilling USA, Inc., 699
F.3d 1340, 1349 (Fed. Cir. 2012).

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VI. PROPOSALS

4. Discussions on the sufficiency requirement

a) Discrepancy between the scope of and the disclosure of a genus claim

In the Fluoran decision, the Court clarified that, even if the compound falls
under a general formula in the prior art, nothing was said about the disclosure
of the individual compound.1642 In other words, the disclosure of a general
chemical formula is not equivalent to the disclosure of all of the individual
compounds that fall within the scope of the formula. However, all of these
individual compounds literally infringe the claim that is characterised by the
same general formula.1643
Similarly, the BOA noted that the question of the scope of the claims was
distinct from the question of disclosure of these claims.1644 According to the
Board, there is a distinction between the extension of the concept and the
intention of the concept, which extended from the individual examples and
depended upon the person skilled in the art.1645 (1) The maximum scope
would be the full extent of the claim, (2) the next largest scope would be that
which can be derived from the sum of individual examples by the person
skilled in the art, and (3) the minimum scope would be the one indicated by
the individual examples. It can be better understood by the following dia-
gram.

1642 BGH/Fluoran, GRUR 1988, 447, 449 (holding it was more essential whether the
skilled person could have produced the compound).
1643 Hansen/Hirsch, 1997, 336.
1644 Amazonen-Werke/Zustreicher, T 378/94, 1996, point 3.1.1.
1645 Amazonen-Werke/Zustreicher, T 378/94, 1996, point 3.1.1. (“The scope of pro-
tection is related to the "extension" of the concept defined in the claim, ie the sum
of all individual objects that show all the features of the concept. In comparison,
the disclosure is associated with the "intention" of the concept, i.e. all the features
that allow an intellectual summary of individual objects. […] If a claim is con-
cerned with general concepts, then it discloses only these general concepts and
does not all of specific examples which come under these general concepts.”).

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 E. Proposals on the patentability requirements

Figure 11: Discrepancy between the scope of and the disclosure of a genus
claim1646

This discrepancy is hardly observed in other fields. The BGH’s earlier ap-
proaches before its Olanzapine decision were that the disclosure was a sim-
plified representation, as a result of which either the individual compounds
in the compound selection1647 or the intermediate values in the range selec-
tion (e.g., see Figure 6), 1648 which fall within the scope of disclosure, must
be regarded as disclosed. Therefore, a patent on the selection could not be
granted. Some scholars interpret the BGH’s earlier general tendency not to
grant the selection patents by broadening the content of disclosure of the
generic formula as an effort to solve the discrepancy,1649 i.e. to make the
gray area in Figure 11 narrower by extending the area of middle circle to the
outer circle. However, the end of this approach was declared through the
novelty doctrine in the Olanzapine decision. Even if this approach may no
longer be possible, one may still try to resolve the discrepancy by shrinking
the biggest circle to reach the middle one, i.e. restricting the scope of the
claim by applying the stricter disclosure requirement.

b) Stringent disclosure requirement of the basic invention

Patentability requirements, such as non-obviousness and enablement, rarely

relate to the patent scope,1650 but a stringent disclosure requirement would

1646 This figure is prepared by the author.

1647 BGH/Fluoran, GRUR 1988, 447.
1648 BGH/Inkrustierungsinhibitoren (Incrustration inhibitors), GRUR 2000, 591,
593-94.
1649 Hansen/Hirsch, 1997, 336.
1650 Chisum, 15 AIPLA Q. J. 57, 58 (1987).

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VI. PROPOSALS

lead to patents with narrower scopes. Burk and Lemley argue that written
description and enablement doctrines need to be recalibrated (reduced) to
permit broader claiming of inventions.1651 In contrast, Merges and Nelson
maintain that more consistent and stricter interpretation of enablement and
equivalents doctrines is necessary to achieve sounder policy.1652
The disclosure requirement is divided between the written description and
the enablement. One may first consider applying a stricter enablement re-
quirement. However, the enablement issue in respect of compounds is rarely
raised. For example, olanzapine is a relatively simple chemical compound
and is easily synthesized by the traditional method of manufacture. Thus,
enablement was never drawn into question in this case. Next, in considering
the written description, the specification must disclose the structure of the
compounds and the claiming effects thereof that are commensurate with the
scope of the claimed invention. As discussed in chapter III.B.2.c)(3), it is
relatively easy to draw the structure, and there is a relatively fair relation
between the structure and the technical effects. The unpredictability of in-
ventions can play a role here, such that, if one can prove that some claimed
compounds, for which a technical effect has not been demonstrated explic-
itly, do not show the predicted effects, part of the claim can be revoked. The
examiners are hardly in a position to prove this and have to rely on third
party observations in the course of the proceedings or during the opposition
period after grant. However, once the scope of the basic invention becomes
an issue, the selection patentee could test the compounds, invoke the lack of
this requirement, and limit the scope of claims. One thing to note here is that
the same scenario could not be realized in certain jurisdictions, such as the
EPO, where violation of Art. 84 EPC, second sentence1653 matters only dur-
ing the original examination. Indeed, the non-availability of this in the re-
vocation grounds has been well criticized,1654 especially in the context of
the allegedly overly broad claims in the field of chemistry and biotechnol-
ogy.1655 Some decisions by the BOA illustrate that the circumstances that

1651 Burk/Lemley, 89 Va. L. Rev. 1575, 1681-83 (2003).

1652 Merges/Nelson, 25 J. Econ. Behav. Organ. 1, 22-23 (1994).
1653 The claims shall [...] be supported by the description.
1654 Brandi-Dohrn, GRUR Int 1995, 541; Wibbelmann, EIPR, 1997, 515.
1655 Roberts, EIPR, 1994, 371, 371, 373 (also arguing that European law must be
changed to include Art. 84 lack of support objections in opposition grounds before
EPO).

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 F. Conclusion

were relevant to Art. 84 EPC might also be relevant to Art. 83 EPC, and,
therefore, the claim could be revoked.1656

c) Conclusion

If one could prove that a part of a claimed invention in the basic patent was
not sufficiently disclosed in the specification, to the extent that the claim
would be nullified, the discrepancy (See Figure 11) would be resolved to the
same extent and more freedom to operate would be created. However, prov-
ing that some compounds claimed in the basic invention do not show the
claimed effect would not help the patentee of a species selection invention
to exploit the invention without concerns, because the species invention must
show the expected technical effects. Thus, although consideration of a strin-
gent disclosure requirement for the basic invention would help to solve the
discrepancy, it would not help the selection patentee to acquire the freedom
to operate.

F. Conclusion

A species selection invention is importantly distinguished from the other

selection inventions in the sense that it can be developed to the product that
is available for the first time in the form of medication. The technical con-
tribution of other selection inventions lies mainly in the isolation or the sep-
aration thereof from the mixture in the prior art. The patents on earlier med-

1656 Exxon/Fuel oils, T 409/91, OJ EPO 1994, 653, 662 (noting “the reasons why the
invention defined in the claims does not meet the requirement of Article 83 EPC
are in effect the same as those that lead to their infringing Article 84 EPC as well,
namely that the invention extends to technical subject-matter not made available
to the person skilled in the art by the application as filed, since it was not contested
by the appellant that no information was given to perform the claimed invention
successfully without using the structurally defined class of additives.”); Genen-
tech/Human t-PA, T 923/92, OJ EPO 1996, 564, 584 (holding “in order to fulfill
the requirement of Article 83 EPC, the application as filed must contain sufficient
information to allow a person skilled in the art, using common general knowledge,
to carry out the invention within the whole area that is claimed. Claims which by
omission of an essential feature extend to subject-matter which, after reading of
the description, would still not be at the disposal of the person skilled in the art,
are objectionable under both Article 83 and Article 84 EPC.”).

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VI. PROPOSALS

ications that were generally purified or isolated were also granted on the
basis that they were available for the first time in a therapeutic and com-
mercial manner. However, one may doubt whether it is proper to apply sim-
ilar standards a century later. The proposals from the various perspectives
were made to promote the R&D on the more ambitious projects and thereby
to bring more NMEs and fewer second generation inventions to the public.
The findings and proposals on species selection inventions were as fol-
lows: Firstly, providing the broader scope of patents to species selection
inventions does not appear to be appropriate to promote R&D, because the
equivalent protection in this industry is neither easy nor properly applicable,
and because granting a broader scope of patent would increase the dead-
weight loss. Secondly, in contrast, the already broad scope of the genus
patent could stop the species selection patentee from exploiting his inven-
tion. Application of the lesson from the eBay case, implementation of the
statutory compulsory license system or improved use of the reverse doctrine
of equivalence would be desirable to resolve this blocking issue. Thirdly,
considering that the pharmaceutical industry is sensitive to the term of pro-
tection, and that the patent term extension system is more favourable to sec-
ond generation inventions, the R&D for which take a shorter period of time
than the basic invention, a provision guaranteeing a fifteen year effective
patent term was proposed for the species selection inventions to promote
research on NMEs. Fourthly, regarding the novelty requirement, the appre-
ciation and application of the requirement in the Olanzapine decision of
“clear and unambiguous” prior art disclosure to destroy a claimed invention,
was recommended. Lastly, in consideration of some of the specificities in
the pharmaceutical industry, such as high uncertainty along the way to mar-
keting approval and high post-invention costs, both factors were recom-
mended as secondary considerations in assessing the inventive step of
species selection inventions.
The following proposals were made on the other selection inventions.
Firstly, since the case law on the patent term extension seems to encourage
more investment in second generation inventions, it was proposed that, if
the biologically active moiety is the same and the first one enjoyed a patent
term extension, no further patent term extension should be granted. Sec-
ondly, to judge the inventive step requirement, it was suggested that the
therapeutic contribution of other selection inventions be one of the secondary
considerations. Other systems, such as prizes or reimbursement schemes for
medication, consider the genuine technical contribution of a drug invention
as the therapeutic contribution. Similarly, in assessing the inventive step, the

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 F. Conclusion

Korean Supreme Court considered whether the claimed invention contribut-

ed to showing the pharmaceutical effects over the basic inventions. Thus, it
was recommended that the therapeutic contribution be considered in judging
the inventive step of other selection inventions.
The discrepancy between the scope and the disclosure of the genus claim
that was firmly established by the Olanzapine decision, was discussed. Even
though the stringent disclosure requirement of the basic invention can help
to decrease this discrepancy, it will not help the species selection patentee
to acquire the freedom to operate because the selection invention must show
the expected result claimed in the basic patent.

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VII. FINAL CONCLUSIONS

A steady supply of new medications is vital to public health. The patent

system and patent exclusivity have been among the most important incen-
tives in encouraging continuing investment in the research and development
(“R&D”) of innovative medications. In addition, to ensure an efficient flow
of medicines to society, competitive pressure plays an important role in
lowering drug prices.
Pharmaceutical inventions are generally divided into basic inventions,
which can be further developed into new medical entities, and second gen-
eration inventions. The latter include species selection inventions, optical
isomers, crystalline forms, metabolites, prodrugs, esters, salts, dosage forms,
combinations of active ingredients, new uses or new methods of treatment,
dosage regimes, processes, intermediates, and more.1657 Products in the
pharmaceutical field fall into the categories of new medical entities, me-too
products, second generation products and generic drugs.1658 This disserta-
tion has focused mainly on chemical selection inventions, such as species
selection inventions, optical isomers, crystalline forms, and metabolites, as
representatives of second generation inventions. Species selection inven-
tions can also represent basic inventions, since, unlike other second gener-
ation inventions, they can be the basis for further improvements or applica-
tions, as long as they are developed to New Medical Entities (“NMEs”).
The pharmaceutical industry differs from other industries in various ways.
It is one of the few industries that bears high regulatory burdens, especially
on initial innovations. The development process of these innovations is long
and costly, and it includes production of the information needed to meet
regulatory requirements. Transforming an invention into an NME involves
enormous scientific, regulatory, and market uncertainties.1659 These uncer-
tainties raise the cost of developing new medications even further, since
manufacturers must also absorb the costs incurred by all of their failures. In
contrast, imitation involves negligible costs and significantly reduced risks.

1657 See subsection II.C.

1658 See subsection II.D.
1659 See subsection III.A.1.c).

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 VII. FINAL CONCLUSIONS

This is one of the main reasons why the pharmaceutical industry depends so
greatly on patent protection.1660
Despite the existing patent system, the number of NMEs has decreased,
especially during the last decade, which has been the most technologically
advanced period in history.1661 This has caused great concern, since NMEs
have made important contributions to reductions in morbidity and mortality
of the population. In comparison to the declining number of new medical
entities, the number of second generation inventions and products has in-
creased dramatically over the same period.1662 The industry is accused not
only of neglecting its real mission of providing new medications while it
generates second generation inventions, but also of preventing less expen-
sive generic products from entering the market. Thus, this dissertation has
reviewed and analyzed whether these concerns are justified.
To begin with, this dissertation analyzed whether the patent system has
changed, especially in conjunction with chemical selection inventions. The
novelty requirements of a species selection invention and optical isomer
inventions were found to have become less stringent. For species selection
inventions, Germany and the United Kingdom have changed their earlier
strict ways of assessing novelty according to the Fluoran decision and the
IG Rule respectively.1663 In the United States, the size of the genus in the
prior art from which the species selection was made, has become an impor-
tant factor in the assessment of novelty. Assessment of novelty of these in-
ventions seems to be based on the difficulty of identifying and selecting a
specific species which has a therapeutic effect distinguishing it from the rest
of the genus.1664 For optical isomers, based on the enablement requirement
for assessing anticipation of the prior art,1665 novelty is established over
racemic mixtures, if purification of one isomer from the racemate is not
disclosed, and this is difficult, even if the structure is clearly disclosed. In
the past novelty standards of inventions were based on the difficulties of
isolation or separation just as they are today, however, more advanced tech-
niques have now incomparably decreased those difficulties, and the isolation
of isomers is made out of a well-known targeted mixture. Thus, the novelty

1660 See subsection III.A.3.b).

1661 See subsection III.B.2.
1662 See subsection III.B.5.
1663 See subsections IV.A.4.a).
1664 See supra 558 - 559 and accompanying texts.
1665 See subsections IV.A.3. and IV.C.2.b)(1).

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VII. FINAL CONCLUSIONS

standards of inventions connected with purification, such as the isolation of

an optical isomer have relaxed over the past century. For crystalline forms,
the issue of novelty arises mainly when the claimed crystalline forms are
produced according to the process disclosed in the prior art, in which case
novelty generally is not found. Similarly, though their reasoning was dif-
ferent, the courts in the United Kingdom and in the United States both held
that metabolite invention was not novel.1666 To some extent, the ruling in
this case is natural, because the patent on the metabolite is a repetition of the
prior art, insofar as it precludes the use of the parent drug as an anti-histamine
treatment.1667 Therefore, except for the crystalline forms, this thesis con-
cludes that satisfaction of the novelty requirement for selection patents has
become less demanding.
Furthermore, the inventive step requirement for selection inventions was
found to have been significantly reduced. For species selection inventions,
the courts in each jurisdiction acknowledged advantageous effects over the
prior art. In addition, the size of the genus from which the selection invention
is made is important for establishing the inventive step. Due to the changed
inventive step requirement, however, the superior effects do not need to be
shown over the whole scope of the prior art. For optical isomers, the early
rulings held that the different effects of one enantiomer from the other were
known, and that it was routine both to produce an enantiomer and to test its
activity. Thus, even advanced effects were not considered evidence of the
inventive step.1668 However, the BOA held that an enantiomer invention
establishes the inventive step based on a radically different problem and a
solution disclosed by the original patent specification; the BGH held the
same based on the difficulty of separating the racemate, and the decision was
similarly reached in the United Kingdom. The earlier decision held that the
enantiomer was obvious because resolution of a racemate was common
knowledge.1669 However, unless there was enough motivation to resolve the
racemate or the separation was predictable, the Court found an inventive step
in the enantiomer invention.1670 In the United States, even acknowledging
that there was ample motivation to separate an enantiomer, an inventive step

1666 Because of the bifurcate system in Germany, the Court on the same metabolite
issue held only the non-infringement of selling the parent drug.
1667 Jacob, IIC 1996, 170, 171.
1668 See supra 790 and accompanying texts.
1669 See supra 803 -804 and accompanying texts.
1670 See supra 809 -811 and accompanying texts.

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 VII. FINAL CONCLUSIONS

of the enantiomer was found based on the difficulty of separation. However,

the Korean Supreme Court ruling contrasted sharply with those in other ju-
risdictions. For example, the Federal Circuit found one enantiomer to be
inventive, because the fact that one enantiomer was responsible for the bi-
ological activity and the other for the side effect was not predictable. In the
corresponding case, the Korean Supreme Court held that the invention was
obvious, because a two-fold superiority in therapeutic effect and the 1.6-fold
superiority in acute toxicity in comparison with the racemate were not
significantly better than the activity of the racemate.1671 For crystalline
forms, the inventive step was denied either because of a reasonable expec-
tation of success or because of a clear expectation that a crystalline form
would provide more desirable characteristics. The Korean Supreme Court
held that the properties of crystalline forms were well known, that it was a
common practice to confirm the existence of polymorphism of a substance,
and specifically the Court could not acknowledge the improved “pharma-
ceutical effect” achieved by the improved physical characteristics of a crys-
talline form.1672 For metabolite inventions, novelty was the central issue, and
the inventive step was not. Therefore, except for the crystalline form, the
inventive step requirements of species selection inventions in the selected
jurisdictions have been lowered or are lower than the standard in Korea.
For these reasons, it was concluded that the patentability standards of
second generation inventions in selected jurisdictions have a tendency to-
ward a lowered novelty requirement and a significantly relaxed inventive
step requirement. In a certain sense, the case law seems to be more harmo-
nized, although the observed direction of the changes may be worrisome.
These lowered patentability requirements have led to an increased number
of superfluous second generation patents and to greater uncertainties on the
landscape of exclusivities. Moreover, considering that manufacturers have
finite resources, these lowered requirements may siphon off resources and
divert them away from breakthrough drug developments, thus potentially
hindering future pharmaceutical innovations. Furthermore, they result in

1671 See supra 836 and accompanying texts (with the comparison that the adminis-
tration of one enantiomer gave around 2-fold better effects than that of a racemate
which is a 1:1 mixture of enantiomers).
1672 See supra 863 -867 and accompanying texts.

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VII. FINAL CONCLUSIONS

higher cost for searches, prosecutions, and especially litigations,1673 which

are incurred both in the attack and the defence of these patents. Since second
generation patents are also eligible for patent term extensions, this provides
further incentives for those companies whose drugs contain older active in-
gredients to extend their R&D efforts, marketing resources, and capital on
second generation inventions.
The scope of patent term extensions on second generation patents seems
to encourage R&D efforts to focus more on second generation inventions.
Since, another SPC or patent term extension can be granted if the derivatives
are covered by the patent,1674 this can lead the original patentee to work more
on trivial modifications of those active moieties which were already autho-
rized in previous products. This concentration on trivial modifications is
exacerbated by the fact that lowered patentability requirements make it eas-
ier to patent derivatives.
Furthermore, the patent term extension system apparently compensates
for the cost and period of R&D more on second generation inventions than
on NMEs.1675 This is especially so for medications that require more exten-
sive safety testing, toxicity testing, or both. For example, for medicines to
treat chronic diseases, Alzheimer’s disease, or cancers, the maximum cap of
five years to an extension risks discouraging the companies from pursuing
research in these fields.1676 The situation in Europe may be more serious,
because the calculation system for the SPC is much more favourable to sec-
ondary products than to new medical entities. Unlike medications that take
five to ten years from the patent application date to acquire market approval,
those that need more than ten years can never enjoy fifteen years of the
maximum effective patent term.1677 The gap between the two dates should
be much shorter for second generation products, ideally less than ten years,

1673 For example, in the United States, litigation costs to take a patent case through to
appeal range from $650,000 to $4.5 million. In Germany, the overall cost for each
party of a small to middle-scale patent case ranges €50,000 to €250,000 at first
instance, and ranges €90,000 to €190,000 at second instance for both validity and
infringement. In the U.K., the cost of a similar case ranges from €150,000 to €1.5
million at first instance and €150,000 to €1 million at second instances, and an
average patent case in the U.K. lies well over €1 million. EPO, 2006, 10-12; see
also Holderman/Guren, 2007 U. Ill. J.L. Tech. & Pol'y 101, 110 (2007).
1674 See subsection V.C.2.
1675 See also subsection VI.D.2.a)(1).
1676 Domeij, 2000, 282.
1677 See subsection V.C.3.

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 VII. FINAL CONCLUSIONS

which would increase the chances for them to enjoy maximum effective
patent term.1678
The impacts of increased second generation patents on generic manufac-
turers, which are referred to as life cycle management or evergreening, must
also be mentioned. Against the grain of prevailing perceptions, only in a few
specific cases can selection inventions impact the entry of generic versions
of older products.1679 To the extent that second generation patents can pre-
vent the entry of generics, the patent term and term extension of second
generation patents can cause delays. What is more noteworthy is the manu-
facturers’ augmented legal uncertainty and insecurity in the preparation of
its generic versions because of the increased patent pendency of second
generation inventions. Furthermore, although the case has limited applica-
tion in the United States, the automatic thirty-month stay and the new listing
in the Orange Book, which are usually based on second generation patents,
effectively delay the entry of generics. In addition, the active market move-
ment to second generation versions in conjunction with the very specific
scope of second generation patents make the market for the older version
very unattractive. The disconnect between decision-makers and payers for
a medicine may also help to diminish the attractiveness of older medications,
considering that there is probably no other industry where quality is so dis-
paraged on account of lower prices.1680
The nature of a species selection invention is different from that of other
selection inventions because the former can be developed into NMEs. In
addition, whereas the value of the former is that it has been identified from
among millions of candidates, the nature of the latter is in the isolation or
separation from a mixture. Isolated or separated inventions have been patent-
ed for over a century. However, many of these decisions were taken a century
ago1681 when the pharmaceutical industry was arguably not yet research-
based but a manufacturing industry. In addition, the average skilled person
has since become dramatically more knowledgeable. More importantly,
even if other selection inventions were available to the public for the first
time, the public already has access to older versions developed from the basic
inventions. In addition, patentability of the majority of the other selection
inventions is based on the difficulty of separation from a well-known mix-

1678 See subsection V.C.3.

1679 See subsection V.B.3.
1680 Steele, 5 J. Law Econ. 131, 142 (1962).
1681 See subsection VI.B.2.b).

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VII. FINAL CONCLUSIONS

ture. Accordingly, one might doubt whether the absolute product protection
afforded by a patent is appropriate for second generation inventions. On the
basis of the different sets of values inherent in selection inventions and the
needs of society, this dissertation has analyzed and proposed optimal ways
for patent law to help bring more NMEs to the public.
Firstly, to move research capacity and investments from second genera-
tion research to basic research on NMEs, the main arguments for granting a
broader scope of patent protection to the basic invention were explored.
However, because of the unpredictable character of selection inventions, the
granting of a broader scope of patent protection is not regarded as a proper
tool for the promotion of pioneering innovations.1682 Because of the problem
presented by the already broad scope of the genus patent, several possible
solutions were explored for acquiring the freedom to operate the species
selection invention. Although scholars have offered many proposals for vol-
untary license agreements,1683 pharmaceutical companies usually do not
want to undermine their exclusivities based on licensing. Consequently, li-
censing does not seem to be of practical use. Instead, application of the lesson
from the eBay case, implementation of the statutory compulsory license
system or improved use of the reverse doctrine of equivalence were put for-
ward as more desirable solutions to resolving the blocking issue. The same
solutions can be applied to the situation in which the basic patent stops the
use of new dosage forms, combinations of active ingredients, or especially
new medical uses. Secondly, given that the pharmaceutical industry is one
of the few that is sensitive to the term of protection, and that the patent term
extension system is more favourable to second generation inventions, a pro-
vision that guarantees fifteen year patent exclusivity from the time of market
approval is proposed for new medical entities.1684 Thirdly, in order to assess
the novelty requirement of species selection inventions, application of the
teaching in the Olanzapine decision is recommended, which requires “clear
and unambiguous” prior art disclosure to destroy a claimed invention.1685
This recommendation is based on the observation that a patent system is a
double-edged sword for the pharmaceutical industry, which differs from the
prevailing conception. Fourthly, this dissertation recommends that post-in-
vention costs and uncertainties in the course of product development be

1682 See subsection VI.C.2.

1683 See subsection VI.C.3.a).
1684 See subsection VI.D.2.a).
1685 See subsection VI.E.2.b).

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 VII. FINAL CONCLUSIONS

considered as secondary considerations in accessing the inventive step re-

quirement of basic inventions such as species selection inventions.1686
For other second generation inventions, it is firstly proposed that, if the
biologically active moiety is the same and the earlier one enjoyed a patent
term extension, no further patent term extension should be granted.1687 Sec-
ondly, the therapeutic contribution of these inventions is recommended as a
secondary consideration in judging the inventive step.1688
Even though these observations were made for selection inventions, the
same rationale could be applied to other second generation inventions.
Through these efforts, much R&D could be directed toward new medical
entities, and more new medications could be offered to patients who are
awaiting them at this very moment.

Further research directions

This dissertation also proposes a series of additional research questions.
Crucial among these are detailed evaluation and refinement of proposals that
were made in chapter 6. Further, an in-depth study on competition issues,
including movement of the market to second generation products would be
desirable.
Considering that pharmaceuticals are information-rich substances,
changes in other regimes that protect the information itself, such as regula-
tory exclusivities,1689 could be further researched and compared with the
protection provided by patent law. In particular, further exploration and
analysis would be warranted to determine whether it would be proper to
extend exclusivity in the regulatory regime and, if so, how the non-disclosure
problem in “data protection” could be resolved, or even, in the end, whether
both systems should be run parallel but in a different manner from existing
ones.
Pharmaceutical companies are facing an increasing number of challenges
from private and governmental health systems, which put companies under
pressure to reduce prices.1690 These intensified price controls, including
changing reimbursement mechanisms, significantly reduce the funding

1686 See subsection VI.E.3.b).

1687 See subsection VI.D.2.b).
1688 See subsection VI.E.3.c).
1689 Roin, 87 Tex. L. Rev. 503, 564-68 (2009).
1690 Wilson, The New York Times, March 6, 2011.

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VII. FINAL CONCLUSIONS

available for R&D,1691 and they may also add to the already substantial costs
involved in bringing new products onto the market.1692 For instance, cur-
tailing reimbursement impacts on the company’s marginal rate of return on
innovation, and reduces R&D expenditure on future projects. 1693 Consid-
ering the high failure rate in developing new medical entities, the decrease
in reimbursement could significantly affect innovations which would oth-
erwise have market potential.1694 The effect would be even greater since
lower profits for pharmaceutical companies discourage investment in R&D
and clog the pipeline for new drug treatments, which in turn shortens ex-
pected life spans.1695 Considering the fact that the two largest pharmaceutical
markets, i.e. the United States and Germany, are not, or were not until re-
cently, subject to price controls by the government, it also would be inter-
esting to study the relationship between pharmaceutical innovation and price
regulation. Therefore, it would be advisable to research the relationship be-
tween pharmaceutical R&D and reimbursement mechanisms in order to
propose measures such as pricing schemes that would promote R&D on both
basic inventions and second generation inventions.

1691 Vernon, Regulation, 22, 25 (2002-2003, Winter); U.S. Department of Commerce

International Trade Administration, 2004, x.
1692 McGuire/Drummond/Rutten, 2004, 131-32.
1693 McGuire/Drummond/Rutten, 2004, 131-32; U.S. Department of Commerce Inter-
national Trade Administration, 2004, x-xi.
1694 McGuire/Drummond/Rutten, 2004, 131-32.
1695 Lakdawalla, et al., 28 Health Affairs w138, w148-w149 (2009); Holmes, 379
Lancet 1863, 1864 (2012).

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List of Statutory Instruments

Council Directive 2001/83/EC of 6 November 2001 on the Community code relating to

medicinal products for human use, as amended.
Council Directive 87/21/EEC of 22 December 1986 amending Directive 65/65/EEC on
the approximation of provisions laid down by law, regulation or administrative action
relating to proprietary medicinal products, as amended.
Council Regulation (EEC) 1768/92 of 18 June 1992 concerning the Creation of a Sup-
plementary Protection Certificate for Medicinal Products, as amended.
Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the
legal protection of biotechnological inventions, as amended.
European Patent Convention (as amended).
German Patent Act (as amended).
Implementing Regulations to the Convention on the Grant of European Patents (as
amended).
Indian Patents Act (as amended).
Korean Patent Act (as amended).
Protocol on the Interpretation of Article 69 EPC.
Regulation (EC) No 1610/96 of the European Parliament and of the Council of 23 July
1996 concerning the Creation of a Supplementary Protection Certificate for Plant
Protection products, as amended.
Regulation (EC) No 469/2009 of the European Parliament and of the Council of 6 May
2009 concerning the Supplementary Protection Certificate for Medicinal Products, as
amended.
The Agreement on Trade Related Aspects of Intellectual Property Rights of April 15,
1994.
The Constitution of the United States of America (as amended).
The Treaty on the Functioning of the European Union.
U.S. Food, Drug, and Cosmetic Act, 21 U.S.C. (as amended).
U.S. Patent Act, 35 U.S.C. (2007).
U.S. Patent Act, 35 U.S.C. (2011).
UK Patents Act 1977 (as amended).

Examination Guidelines for Patent

Examination Guidelines for Patent and Utility Model in Korea (January 2011).
Guidelines for Examination in the European Patent Office (June 2012).
Manual of Patent Office Practice and Procedure in India (March 2011).
Manual of Patent Practice - UK Patents Act 1977 (October 2012).

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List of Case Laws

EUROPEAN UNION
Case C-457/10, AstraZeneca AB v. European Commission, 2012.
Case C‑181/95, Biogen v. Smithklein Beecham [1997] ECR I‑357.
Case C-428/08, Monsanto Technology LLC v. Cefetra BV and Others, [2010] ECR
I-06765.
Case C-34/10, Oliver Brüstle v. Greenpeace e.V., 2011.

BOARD OF APPEAL OF THE EUROPEAN PATENT OFFICE

Abbott Respiratory/Dosage Regime, G 2/08 (2010).
Agrevo/Triazoles, T 939/92, OJ EPO 1996, 309.
AKZO/Bleaching activators, T 133/92, 1994.
Alcan/Aluminium alloys, T 465/92, OJ EPO 1996, 32.
Amazonen-Werke/Zustreicher, T 378/94 (1996).
AstraZeneca/Hexal et al., T 1760/11 (2012).
Astropower/Divisional, G1/05 (2007).
Bayer/Carbonless copying paper, T 1/80, OJ EPO 1981, 206.
Bayer/Diastereomer, T 12/81 OJ EPO 1982, 296.
Bayer/E-Isomers of N-alpha-(2-Cyan-2-alkoximino-acetyl)-amino acid derivatives and
peptides, T12/90 (1990).
Bayer/Plant growth regulating agent, G 6/88, OJ EPO 1990, 114.
Biogen/Alpha interferons, T301/87, OJ EPO 1990, 335.
Ciba-Geigy/Benzothiopyran derivatives, T 20/83, OJ EPO 1983, 419.
Ciba-Geigy/Spiro compounds, T 181/82, OJ EPO 1984, 401.
Collaborative/Preprorennin, T81/87, OJ EPO 1990, 250.
CPC/Flavour concentrates, T 303/86 (1988).
Diener/Shear, T305/87, OJ EPO 1991, 419.
Draco/Xanthines, T 7/86, OJ EPO 1988, 381.
Dupont/Copolymer, T 124/87, OJ EPO 1989, 491.
Eisai/Second medical indication, G 5/83, OJ EPO 1985, 64.
Eli Lilly/Enantiomer, T 600/95 (1996).
Exxon/Fuel oils, T 409/91, OJ EPO 1994, 653.
Genentech/Human t-PA, T 923/92, OJ EPO 1996, 564.
Hoechst/Diastereomers of 3-cephem-4-carboxylic acid-1-(isopropoxycarbonyloxy)
ethyl ester, T 940/98 (2003).

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List of Case Laws

Hoechst/ Enantiomers, T296/87, OJ EPO 1990, 195.

Hoechst/Thiochloroformates, T198/84, OJ EPO 1985, 209.
ICI/Herbicides, T 206/83, OJ EPO 1987, 5.
Kos Lifesciences/ Dosage regimen, T 1319/04, OJ EPO 2009, 36.
Merck/Finasteride, T605/02 (2005).
MIT/Biopolymers, T639/95 (1998).
Mobil Oil /Friction Reducing Additives, G2/88, OJ EPO 1990, 93.
Molecular Biosystems/Oligonucleotide therapeutic agent, T 994/95 (1999).
Mycogen/Modifying plant cells, T 694/92, OJ EPO 1997, 408.
Nippon/Crystalline dye, T 0051/97 (2000).
Pfizer/Penem Derivatives, T1048/92 (1994).
Richter Gedeon/Famotidine, T 226/98, OJ EPO 2002, 498.
Seiko/Sequences of Divisionals, G1/06 (2007).
Smithkline Beecham/Paroxetine methanesulfonate, T 0885/02 (2004).
Texaco/Novelty, T279/89 (1991).
Toshiba/Thickness of Magnetic Layers, T 26/85, OJ EPO 1990, 22.
Unilever/Stable bleaches, T 0226/85, OJ EPO 1988, 336.
Unilever/Washing Composition, T 666/89, OJ EPO 1993, 495.
Warner-Lambert/Atorvastatin polymorphs, T 0777/08 (2011).
Warner-Lambert/Atorvastatin, T 0229/97 (2000).
Warner-Lambert/Polymorphic Atorvastatin, T 1066/03 (2006).
Xerox/Amendments, T 133/85, OJ EPO 1988, 441.
Zeneca/Enantiomer, T1046/97 (1999).

GERMANY

Imperial Court of Justice

Kongo-Rot (Kongo-Red), Patentblatt 1889, 209, 212.
Methylenblau (Methyleneblue), 22 Reichsgerichts in Zivilsachen 8.

Federal Supreme Court of Germany

BGH/ Betrieb einer Sicherheitseinrichtung (Operating a Safety Device), GRUR 2009,
746.
BGH/ α-aminobenzylpenicillin, GRUR 1978, 696.
BGH/7-Chlor-6-demethyltetracyclin, GRUR 1978, 162.
BGH/Bierklärmittel (Beer Fining Agent), GRUR 1984, 425.
BGH/Calcipotriol-Monohydrat, GRUR 2012, 803.
BGH/Crackkatalysator (Cracking catalyst), GRUR 1990, 510.
BGH/Doxorubicin-Sulfate, GRUR 2009, 41.

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BGH/Dreinahtschlauchfolienbeutel (Three-Seam Tubular Sachet), GRUR 2010, 44.

BGH/Elektrische Steckverbindung (Electronic Plug-in connection), GRUR 1995, 330.
BGH/Escitalopram, GRUR 2010, 123.
BGH/Fluoran, GRUR 1988, 447.
BGH/Formstein, GRUR 1986, 803.
BGH/Inkrustierungsinhibitoren (Incrustration inhibitors), GRUR 2000, 591.
BGH/Klinische Versuche (Clinical Trials), GRUR 1996, 109.
BGH/Metronidazol, GRUR 1975, 425.
BGH/Olanzapine, GRUR 2009, 382.
BGH/Olanzapine, IIC 2009, 596.
BGH/Orange Book-Standard, GRUR 2009, 694.
BGH/Polyferon, GRUR, 1996, 190.
BGH/Schmierfettzusammensetzung(Grease composition), GRUR 2000, 296.
BGH/Schneidermesser I (Cutting blade I), GRUR 2002, 515.
BGH/Textilgarn, GRUR 1959, 125.

Federal Patent Court of Germany

BPatG/Atorvastatin, BeckRS 2007, 18183.
BPatG/Escitalopram II, 3 Ni 22/10, 29.03.2011. available at: http://www.juris.de/jporta
l/portal/t/1581/page/jurisw.psml/screen/JWPDFScreen/filename/MPRE134660964.
pdf
BPatG/Escitalopram, BeckRS 2007, 14624.
BPatG/Kristallformen(Crystal forms), BpatGE 20, 6.

Higher Regional Court

OLG München/Terfenadine, GRUR, 1994, 746.

INTERNATIONAL
WTO-Appellate Body Report, Canada-Term of Patent Protection, WT/DS170/AB/R.
WTO-Panel Report, Canada - Patent Protection of Pharmaceutical Products, WT/DS114/
R.
WTO-Panel Report, Canada-Term of Patent Protection, WT/DS170/R.

ITALY
Corte di Cassazione/Cimetidin, GRUR Int 1991, 497.
Pfizer v. Italian Competition Authority et al., Regional Administrative Court for Latium,
N. 07467/2012, Sept. 3, 2012.
Ratiopharm v. Pfizer, Italian Competition Authority, p23194, Jan 11, 2012.

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KOREA

Supreme Court
Korean Supreme Court/Atorvastatin, 2008Hu3469, Mar. 25, 2010.
Korean Supreme Court/Bayer Aktiengesellschaft v. Union Quimico Famaceutica, S.A,
97Hu2200, Jul. 28, 2000.
Korean Supreme Court/Clopidogrel, 2008Hu736 & 2008Hu743, Oct. 15, 2009.
Korean Supreme Court/Ibandronate, 2010Hu3554, Sept. 8, 2011.
Korean Supreme Court/Lercanidipine, 2010Hu2872, Jul. 14, 2011.
Korean Supreme Court/Olanzapine, 2010Hu3424, Aug. 23, 2012.

Patent Court
Korean Patent Court/A combining method, 98Heo8397, Apr. 23, 1999.
Korean Patent Court/Kimchi fridge, 2002Heo8424, Sept. 04, 2003.
Korean Patent Court/Olanzapine, 2010Heo371, Nov. 11, 2010.

UNITED KINGDOM

The House of Lords

Beecham Group v. Bristol Laboratories Ltd. [1978] RPC 153, 192.
Biogen Inc v. Medeva Plc [1996] UKHL 18.
Catnic Components Limited and another v. Hill & Smith Limited [1982] R.P.C. 183.
Conor Medsystems Inc v.Angiotech Pharmaceuticals Inc & Ors [2008] UKHL 49.
Electric & Musical Industries Ltd v. Lissen Ltd [1939] R.P.C. 23.
General Tire v. Firestone [1972] RPC 457.
Generics Ltd. v.Lundbeck [2009] UKHL 12.
I.G. Farbenindustrie's AG’s Patent [1930] R.P.C. 289.
Merrell Dow Pharmaceuticals Inc v.HN Norton & Co Ltd [1995] UKHL 14.
Synthon BV v.SmithKline Beecham plc, [2005] UKHL 59.

Court of Appeal
Actavis UK Ltd v. Novartis AG [2010] EWCA Civ 82.
Dr Reddy’s Laboratories Ltd v. Eli Lilly & Company Ltd, [2009] EWCA Civ 1362.
Generics (UK) Ltd v. Daiichi Pharmaceutical [2009] EWCA Civ 646.
Green Lane Products Ltd v. PMS International Group Plc & Ors [2008] EWCA Civ 358.
Laboratoires Servier v. Apotex [2008] EWCA Civ 44.
Leo Pharma v. Sandoz Ltd [2009] EWCA Civ 1188.
Lundbeck v.Generics Ltd. [2008] EWCA Civ 311.

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Napp Pharmaceuticals v. Ratiopharm [2009] EWCA Civ 252.

Occlutech GmbH v. AGA Medical Corp [2010] EWCA Civ 702.
Pozzoli v. BDMO [2007] EWCA Civ 588.
Ranbaxy (UK) v.Warner-Lambert [2006] EWCA Civ 876.
Smith Kline & French Laboratories v. Evans Medical [1989] F.S.R. 561.
Societe Technique de Pulverisation Step v. Emson Europe Ltd. and others [1993] R.P.C.
513.
Windsurfing International Inc. v. Tabur Marine (GB) Ltd. [1985] R.P.C. 59.

Patents Court
Dr Reddy's Laboratories (UK) Ltd v. Eli Lilly & Company Ltd [2008] EWHC 2345.
Generics (UK) Ltd & Ors v. Lundbeck A/S [2007] EWHC 1040 (Pat).
Generics (UK) v. Daiichi Pharmaceutical [2008] EWHC 2413 (Pat).
Ranbaxy UK & Anor v. Warner-Lambert [2005] EWHC 2142.
Research Corp's Supplementary Protection Certificate [1994] R.P.C. 667.
Teva v. Merrell [2007] EWHC 2276 (Ch).

UNITED STATES

Supreme Court
Aronson v. Quick Point Pencil Co., 440 U.S. 257 (1979).
Association for Molecular Pathology et al. v. Myriad Genetics Inc. et al., 133 S.Ct. 2107,
2109 (2013).
Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141 (1989).
Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S, 132 S.Ct. 1670
(U.S. 2012).
eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006).
Evans v. Eaton, 20 U.S. 356 (1822).
Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd., 535 U.S. 722 (2002).
Graham v. John Deere Co., 383 U.S. 1 (1966).
Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S. 605 (1950).
Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28 (2006).
J.E.M. AG Supply, Inc. v. Pioneer Hi-Bred Intern., Inc., 534 U.S. 124 (2001).
Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974).
KSR Int’l Co. v. Teleflex Inc., 127 U.S. 1727 (2007).
LabCorp v. Metabolite, Inc., 548 U.S. 124 (2006).
Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S.Ct. 1289 (2012).
Pfaff v. Wells Electronics, Inc., 525 U.S. 55, 63 (1998).
Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984).

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United States v. Dubilier Condenser Corp., 289 U.S. 178 (1933).

Warner-Jenkinson Co., Inc. v. Hilton Davis Chemical Co., 520 U.S. 17 (1997).

Courts of Appeals
Abbott Laboratories v. Geneva Pharmaceuticals, Inc., 182 F.3d 1315 (Fed. Cir. 1999).
ACS Hosp. Systems, Inc. v. Montefiore Hosp., 732 F.2d 1572 (Fed. Cir. 1984).
Advanced Display Sys., Inc. v. Kent State Univ., 212 F.3d 1272 (Fed. Cir. 2000).
Alza Corp. v. Mylan Labs. Inc., 388 F. Supp. 2d 717 (N.D. W. Va. 2005).
American Cyanamid Co. v. F.T.C. 363 F.2d 757 (6th Cir. 1966).
Ariad Pharmaceuticals, Inc. v. Eli Lilly and Co., 598 F.3d 1336 (Fed. Cir. 2010).
Association for Molecular Pathology v. U.S. Patent and Trademark Office, 689 F.3d 1303
(Fed. Cir. 2012).
Atlas Powder Co. v. Ireco, Inc., 190 F.3d 1342 (Fed. Cir. 1999).
Aventis Pharma Deutschland GmbH v. Lupin, Ltd., 499 F.3d 1293 (Fed. Cir. 2007).
Bristol-Myers Squibb Co. v. Ben Venue Labs., Inc., 246 F.3d 1368 (Fed. Cir. 2001).
Capon v. Eshhar, 418 F.3d 1349 (Fed. Cir. 2005).
CFMT, Inc. v. Yieldup Intern. Corp., 349 F.3d 1333 (Fed.Cir. 2003).
Chester v. Miller, 906 F.2d 1574 (Fed. Cir. 1990).
Chiron Corp. v. Genentech, Inc., 363 F.3d 1247 (Fed. Cir. 2004).
Continental Can Co. USA, Inc. v. Monsanto Co., 948 F.2d 1264 (Fed. Cir. 1991).
Corning Glass Works v. Sumitomo Elec. U.S.A., Inc., 868 F.2d 1251 (Fed. Cir. 1989).
Custom Accessories, Inc. v. Jeffrey Allan Industries, Inc., 807 F.2d 955 (Fed. Cir.
1986).
Dewey & Almy Chemical Co v. Mimex Co., 124 F.2d 986 (2nd Cir. 1942).
DyStar Textilfarben GmbH & Co. Deutschland KG v. C.H. Patrick Co., 464 F.3d 1356
(Fed. Cir. 2006).
Elan Pharmaceuticals., Inc. v. Mayo Foundation, 346 F.3d 1051 (Fed. Cir. 2003).
Eli Lilly & Co. v. Barr Labs., 251 F.3d 955 (Fed. Cir. 2001).
Eli Lilly and Company v.Zenith Goldline Pharmaceuticals. Inc., 471 F.3d 1369 (Fed. Cir.
2006).
Environmental Designs, Ltd. V. Union Oil Co., 713 F.2d 693 (Fed. Cir. 1983).
Enzo Biochem, Inc. v. Gen-Probe Inc., 323 F.3d 956 (Fed. Cir. 2002).
Finisar Corp. v. DirecTv Group, Inc., 523 F.3d 1323 (Fed. Cir. 2008).
Fonar Corp. v. General Electric Co., 107 F.3d 1543 (Fed. Cir. 1997).
Forest Labs., Inc. v. Ivax Pharms., Inc., 501 F.3d 1263 (Fed. Cir. 2007).
Glaxo Operations UK Ltd. v. Quigg, 894 F.2d 392 (Fed. Cir. 1990).
Hoechst-Roussel Pharmaceuticals, Inc. v. Lehman, 109 F.3d 756 (Fed. Cir. 1997).
In re Bergstrom, 427 F.2d 1394 (C.C.P.A. 1970).
In re Bergy, 596 F.2d 952 (C.C.P.A. 1979).

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In re Brown, 329 F.2d 1006 (C.C.P.A. 1964).

In re Cruciferous Sprout Litigation, 301 F.3d 1343 (Fed. Cir. 2002).
In re Dillon, 919 F.2d 688 (Fed. Cir. 1990).
In re Donohue, 632 F.2d 123 (C.C.P.A. 1980).
In re Donohue, 766 F.2d 531 (Fed. Cir. 1985).
In re Durden, 763 F.2d 1406 (Fed. Cir. 1985).
In re Gardner, 475 F.2d 1389 (C.C.P.A., 1973).
In re GPAC, 57 F.3d 1573 (Fed. Cir. 1995).
In re Hafner, 410 F.2d 1403 (C.C.P.A.1969).
In re Kratz, 592 F.2d 1169 (C.C.P.A. 1979).
In re LeGrice, 301 F.2d 929 (C.C.P.A. 1962).
In re Lukach, 442 F.2d 967 (C.C.P.A. 1971).
In re May, 574 F.2d 1082 (C.C.P.A. 1978).
In re Payne, 606 F.2d 303 (C.C.P.A. 1979).
In re Petering, 301 F.2d 681 (C.C.P.A. 1962).
In re Piasecki, 745 F.2d 1468 (Fed. Cir. 1984).
In re Ruschig, 379 F.2d 990 (C.C.P.A. 1967).
In re Schaumann, 572 F.2d 312 (C.C.P.A.1987).
In re Schoenwald, 964 F.2d 1122 (Fed. Cir. 1992).
In re Schreiber, 128 F.3d 1473 (Fed. Cir. 1997).
In re Sullivan, 498 F.3d 1345 (Fed. Cir. 2007).
In re Vaeck, 947 F.2d 488 (Fed. Cir. 1991).
In re Wands, 858 F.2d 731 (Fed. Cir. 1988).
In re Wiggins, 488 F.2d 538 (C.C.P.A. 1973).
In re Williams, 171 F.2d 319 (C.C.P.A. 1948).
In re Wright, 866 F.2d 422 (Fed. Cir. 1989).
In re Wright, 999 F.2d 1557 (Fed. Cir.1993).
Integra Lifesciences I, Ltd. v. Merck KGaA, 331 F.3d 860 (Fed. Cir. 2003).
Kuehmsted v. Farbenfabriken of Elberfeld Co., 179 F. 701 (7th Cir. 1910).
Martek Biosciences Corp. v. Nutrinova, Inc., 579 F.3d 1363 (Fed. Cir. 2009).
Merck & Co., Inc. v. Biocraft Laboratories, Inc., 874 F.2d 804 (Fed. Cir. 1989).
Merck v. Kessler, 80 F.3d 1543 (Fed.Cir.1996).
Merck v. Teva Pharmaceuticals USA, 347 F.3d 1367 (Fed. Cir. 2003).
Metabolite Laboratories, Inc. v. Laboratory Corporation of America Holdings, 370 F.3d
1354 (Fed. Cir. 2004).
Metallizing Engineering Co. v. Kenyon Bearing & Auto Parts Co., 153 F.2d 516 (2nd
Cir, 1946).
Moba, B.V. v. Diamond Automation, Inc., 325 F.3d 1306 (Fed. Cir. 2003).

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Momenta Pharmaceuticals, Inc. v. Amphastar Pharmaceuticals, Inc., 686 F.3d 1348 (Fed.
Cir. 2012).
Mylan Pharmaceuticals, Inc. v. Thompson, 268 F.3d 1323 (Fed. Cir. 2001).
National Recovery Technologies, Inc. v. Magnetic Separation Systems, Inc., 166 F.3d
1190 (Fed. Cir. 1999).
Newell Companies, Inc. v. Kenney Mfg. Co., 864 F.2d 757 (Fed. Cir. 1988).
Northern Telecom, Inc. v. Datapoint Corp., 908 F.2d 931 (Fed. Cir. 1990).
Novo Nordisk A/S v. Caraco Pharmaceutical Laboratories, Ltd., 601 F.3d 1359 (Fed.
Cir. 2010).
Ortho-McNeil Pharmaceutical v. Lupin Pharms., 603 F.3d 1377 (Fed. Cir. 2010).
Panduit Corp. v. Dennison Mfg., 774 F.2d 1082 (Fed. Cir. 1985).
Parke-Davis & Co. v. H.K. Mulford Co., 189 F. 95 (C.C.N.Y., 1911).
Pfizer Inc. v. Dr. Reddy's Laboratories, Ltd., 359 F.3d 1361 (Fed. Cir. 2004).
Pfizer, Inc. v. Apotex, Inc, 480 F.3d 1348 (Fed. Cir. 2007).
Pfizer, Inc. v. Ranbaxy Laboratories Ltd., 457 F.3d 1284 (Fed. Cir. 2006).
PhotoCure v. Kappos, 603 F.3d 1372 (Fed. Cir. 2010).
Picard v. United Aircraft Corp., 128 F.2d 632 (2nd Cir. 1942).
Rasmusson v. SmithKline Beecham Corp., 413 F.3d 1318 (Fed.Cir.2005).
RCA Corp. v. Applied Digital Data Systems, Inc., 730 F.2d 1440 (Fed. Cir. 1984).
Reagents of the University of California v. Eli Lilly & Co., 119 F.3d 1559 (Fed. Cir.
1997).
Roberts v. Sears, Roebuck & Co., 723 F.2d 1324 (7th Cir. 1983).
Royal Typewriter Co. v. Remington Rand, Inc., 168 F.2d 691 (2nd Cir. 1948).
Sanofi-Synthelabo v. Apotex, Inc., 470 F.3d 1368 (Fed. Cir. 2006).
Sanofi-Synthelabo v. Apotex, Inc., 550 F.3d 1075 (Fed. Cir. 2008).
Schering Co. v. Geneva Pharmaceuticals, 339 F.3d 1373 (Fed. Cir. 2003).
SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331 (Fed. Cir. 2005).
SRI Intern. v. Matsushita Elec. Corp. of America, 775 F.2d 1107 (Fed. Cir. 1985).
Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530 (Fed. Cir. 1983).
Tafas v. Doll, 559 F.3d 1345 (Fed. Cir. 2009).
Titanium Metals Corp. v. Banner, 778 F.2d 775 (Fed. Cir. 1985).
Toro Co. v. Deere & Co., 355 F.3d 1313 (Fed. Cir. 2004).
Transocean Offshore Deepwater Drilling, Inc. v. Maersk Drilling USA, Inc., 699 F.3d
1340 (Fed. Cir. 2012).
Tronzo v. Biomet, Inc., 156 F.3d 1154 (Fed. Cir. 1998).
Vas-Cath Inc. v. Mahurkar, 935 F.2d 1555 (Fed. Cir. 1991).
White v. Samsung Electronics America, Inc., 989 F.2d 1512 (9th Cir. 1993).
Yamanouchi Pharm. Co., Ltd. v. Danbury Pharmacal, Inc., 231 F.3d 1339 (Fed. Cir.
2000).
Zenith Laboratories, Inc. v. Bristol-Myers Squibb Co., 19 F.3d 1418 (Fed. Cir. 1994).

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District Court
Brenner v. Ladd, 247 F.Supp. 51, 56 (D.D.C. 1965).
Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., No., 96-1718-c H/G, 2001 U.S. Dist.
LEXIS 5753, 26 (S.D. Ind. 2001).
Edoco Technical Products, Inc. v. Peter Kiewit Sons’ Co., 313 F. Supp. 1081 (C.D. Cal.
1970).
Finisar Corp. v. DirecTv Group, Inc., 2006 WL 2709206 (E.D.Tex. 2006).
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MercExchange, L.L.C. v. eBay, Inc., 500 F.Supp.2d 556 (E.D.Va. 2007).
Merck & Co. v. Chase Chemical Co., 273 F.Supp. 68 (D.N.J. 1967).
Ortho-McNeil Pharm., Inc. v. Mylan Labs., Inc., 348 F. Supp. 2d 713 (N.D.W.Va. 2004).
Pfizer Inc. v. Ranbaxy Laboratories Ltd. 405 F.Supp.2d 495 (D.Del. 2005).
Pfizer, Inc. v. Ranbaxy Laboratories, Ltd., 525 F.Supp.2d 680 (D.Del. 2007).
Sanofi-Synthelabo v. Apotex Inc., 492 F.Supp.2d 353 (S.D.N.Y. 2007).
Tafas v. Dudas, 541 F.Supp.2d 805 (E.D.Va. 2008).
United States v. Ciba-Geigy Corp., 508 F. Supp. 1157. (D.C.N.J. 1979).
Zenith Lab. Inc. v. Bristol-Myers Squibb Co., 1992 WL 340761 (D.N.J.1992).
Marion Merrell Dow Inc. v. Baker Norton Pharmaceuticals, Inc., 948 F.Supp. 1050
(S.D.Fla.1996).
z4 Technologies, Inc. v. Microsoft Corp., 434 F.Supp.2d 437 (E.D.Tex. 2006).

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