`
`Chapter Title: Introduction
`
`Book Title: FTO (Freedom to Operate) in the Pharmaceutical Industry
`Book Author(s): Hirotaka Nonaka
`Published by: Nomos Verlagsgesellschaft mbH. (2018)
`Stable URL: https://www.jstor.org/stable/j.ctv941tn6.3
`
`JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide
`
`range of content in a trusted digital archive. We use information technology and tools to increase productivity and
`
`facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.
`
`Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at
`
`https://about.jstor.org/terms
`
`
`
`This book is licensed under a Creative Commons Attribution-NonCommercial-
`NoDerivatives 4.0 International. To view a copy of this license, visit
`http://creativecommons.org/licenses/by-ne-nd/4.0/.
`
`Nomos Verlagsgesellschaft mbHis collaborating with JSTOR to digitize, preserve and extend
`access to FTO (Freedom to Operate) in the Pharmaceutical Industry
`
`
`
`JSTOR
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`This content downloaded from 172.8.132.220 on Wed, 10 Apr 2019 16:55:35 UTC
`All nee enhiert ta hitnc//ahoant ictar ara/terme
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`
`
`I. Introduction
`
`When a companyintends to place a new product or service on the market,
`it must understandthe risk of infringing the third parties’ intellectual prop-
`erty. It is a common practice for the company to conduct a Freedom-to-
`Operate (FTO)! search to determine and reduce the risks of potential
`patent infringementprior to launching a new productor service. The FTO
`search is performed to find relevant third parties’ patents that may cover
`the new product or service. The FTO is also called “Patent Clearance”. If
`the company completely neglects the FTO search, and then, later on, the
`product is found to infringe a third parties’ patent, it is most likely that the
`company would be sued by the patentee as an infringement ofthe patent.
`Asa result of losing the infringement case at the court, the company hasto
`stop selling its product and to compensate the damage that the patentee
`suffered from. Therefore, the FTO search is indispensable to perform prior
`to placing the new product or service on the market. Even if the company
`finds some relevant patents as a result of the FTO search, the company
`should not necessarily give up marketing the product because the compa-
`ny still has a chance to obtain a license from the patentee. With this licens-
`ing-in activity, the company can operate its business freely in the market.
`Therefore, this activity is called “FTO-licensing”.
`In part II of this paper, I would like to focus on the FTO-licensing in the
`pharmaceutical industry. There are many characteristic aspects in this in-
`dustry that are never seen in other industries, which makes the FTO-li-
`censing in the pharmaceutical industry very special. These characteristic
`aspects roughly consist of the following four points. First, the economical
`scale of the market in the pharmaceutical industry is incomparably large,
`with an estimated 716 billion Euro at ex-factory prices in 2015 in the
`
`1 “Freedom to Operate (FTO)is the ability to proceed with the research, development
`and/or commercial production of a new product or process with a minimalrisk of a
`new infringing the unlicensed intellectual property (IP) rights or tangible property
`(TP) ofthird parties” (Stanley P. Kowalski, Freedom to Operate: The Preparations,
`ipHandbookof Best Practices (last visited September 5, 2016), http:/(www.iphandb
`ook.org/handbook/ch14/p02/).
`
`This content downloaded from 172.8.132.220 on Wed, 10 Apr 2019 16:55:35 UTC
`All use subject to https://about.jstor.org/terms
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`
`
`L. Introduction
`
`world.2 This market is still growing rapidly in some highly populated
`countries. Second, the cost of a research and development (hereinafter re-
`ferred as “R&D”) for a new drug is very expensive. One of the reasons for
`the high cost is clinical trials, which would cost approximately 2 billion
`Euro according to the recent survey. Third, in spite of such an expensive
`R&Dcost, success rates are extremely low.It is reported that the total suc-
`cessrate is calculated to be 0.01%.‘ Forthis characteristic, R&D for a new
`drug is a highly risky business. Fourth, a duplication of the drug made by
`another company is quite easy compared to conducting R&D for a new
`drug on its own. Accordingly, patent protection in the pharmaceutical in-
`dustry is much more essential to recoup R&D investment than that in oth-
`er industries. In order to recoup the investment, pharmaceutical companies
`in general wish to monopolize the marked andsell the drugs rather than to
`conductlicensing-out becauseselling the drugs in the monopolized market
`is the most profitable way. Taking into account this low probability of ob-
`taining a license from another company, a pharmaceutical company must
`conduct a thorough FTO search at the beginning.
`Because of the above-mentioned obligation, the part III of this paper fo-
`cuses on how to achieve the FTO in the pharmaceutical industry. I would
`like to describe not only the characteristic points regarding the FTO in the
`pharmaceutical industry but also an FTO in general. It should be noted
`that even if 99% of an FTO is conducted properly, the other uncompleted
`1% could ruin the whole FTO search because that 1% might contain the
`relevant third parties’ patent which covers the technology that the pharma-
`ceutical company intends to include in its product/service. To perform a
`thorough FTO,it is important to first describe how to build an FTO team,
`how to search relevant patents, how to interpret potentially adverse patents
`and how to deal with adverse patents, especially pointing out the charac-
`teristic features about the FTO in the pharmaceutical industry.
`
`N European Federation of Pharmaceutical Industries and Associations (hereinafterre-
`ferred as “EFPIA”), The Pharmaceutical Industry in Figures, 2016 Edition 14 (last
`visited September 5, 2016), http:/(Awww.efpia.eu/uploads/Modules/Documents/the-p
`harmaceutical-industry-in-figures-2016.pdf.
`Id. at 6.
`M.Dickson, J.P. Gagnon, The Cost ofNew Drug Discovery and Development (June
`20, 2009), http://www.discoverymedicine.com/Michael-Dickson/2009/06/20/the-co
`st-of-new-drug-discovery-and-development/.
`
`Bw
`
`10
`
`This content downloaded from 172.8.132.220 on Wed, 10 Apr 2019 16:55:35 UTC
`All use subject to https://about.jstor.org/terms
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`
`
`I. Introduction
`
`In part IV ofthis paper, I would like to describe two issues with regard
`to FTO-licensing, and analyze them. Thefirst one is the issue on FTO-li-
`censing and EU competition law. When a pharmaceutical company wishes
`to license-in, it concludes a license agreement which includes the obliga-
`tion on royalty payment. Basically, the parties of a technology license are
`free to determine the amount and nature of royalty payments. But in some
`cases, the license will have the risk of being interpreted to be anticompeti-
`tive. Royalties on products produced without using licensed technologyis
`one of these cases. I analyzed the TTBER and the Guidelines, taking into
`account the characteristic features in the pharmaceutical industry, then I
`pointed out the possibility that the Guidelines should not be applied to the
`royalty on drugs. The second oneis the issue on FTO-licensing between a
`bio-venture company and a pharmaceutical company. Recently, an in-
`creasing number of pharmaceutical companies have mapped out the strate-
`gy to license-in the technology of a bio-venture company mainly because
`they want to diminish the risk of R&D failure. These companies tend to
`license-in or buy a promising candidate for a new drug regarding certain
`type of disease. And nowadays there are many bio-venture companiesthat
`are willing to license-out their technologies to pharmaceutical companies.
`However, the reality of licensing-in/out is contradictory to their high ex-
`pectations. After analyzing the situation, I proposed somesolutions.
`
`This content downloaded from 172.8.132.220 on Wed, 10 Apr 2019 16:55:35 UTC
`All use subject to https://about.jstor.org/terms
`
`11
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`
`
`Nomos Verlagsgesellschaft mbH
`
`Chapter Title: Key features of innovation in the pharmaceutical industry
`
`Book Title: FTO (Freedom to Operate) in the Pharmaceutical Industry
`Book Author(s): Hirotaka Nonaka
`Published by: Nomos Verlagsgesellschaft mbH. (2018)
`Stable URL: https://www.jstor.org/stable/j.ctv941tn6.4
`
`JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide
`
`range of content in a trusted digital archive. We use information technology and tools to increase productivity and
`
`facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.
`
`Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at
`
`https://about.jstor.org/terms
`
`
`
`This book is licensed under a Creative Commons Attribution-NonCommercial-
`NoDerivatives 4.0 International. To view a copy of this license, visit
`http://creativecommons.org/licenses/by-ne-nd/4.0/.
`
`Nomos Verlagsgesellschaft mbHis collaborating with JSTOR to digitize, preserve and extend
`access to FTO (Freedom to Operate) in the Pharmaceutical Industry
`
`
`
`JSTOR
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`This content downloaded from 172.8.132.220 on Wed, 10 Apr 2019 16:57:25 UTC
`All nee enhiert ta hitnc//ahoant ictar ara/terme
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`
`
`II. Key features of innovation in the pharmaceutical industry
`
`A, Huge and growing market
`
`The world pharmaceutical market was estimated to be around 716 billion
`Euro at ex-factory prices in 2015. The bigest three markets in the world
`pharmaceutical markets are US, EU and Japan. The market share of these
`three regions are estimated to be around 48.7% (349 billion Euro) in the
`US, 22.2% (159 billion Euro) in EU and 8.1% (58 billion Euro) in Japan,
`respectively.> In addition to this market share, it should be noted that there
`is a rapid growth in the market and R&D environmentin highly populated
`emerging markets such as Brazil, China and India. The Brazilian and Chi-
`nese markets grew by 14.0% and 7.0%, respectively. This growth is rapid,
`compared with an average market growth of 5.9% for the EU market and
`8.5% for the US market.®
`
`B. High R&D investment
`
`The development of a new drug requires a substantial investment of capi-
`tal, human resources, and technological expertise. Even if a pharmaceuti-
`cal company successfully finds a promising candidate for a new drug,it
`has to tackle the next obstacles of strict adherence to regulations on testing
`and manufacturing standards before a new drugis used in reallife. All
`these requirements become the factors to increase the cost of R&D for a
`new drug.’ According to the survey in 2016, the cost of R&D for a new
`drug is estimated to be nealy 2 billion Euro.’ This survey showsthat the
`cost has been increasing since 1970 at the rate of becoming double in ten
`years.? The pharmaceutical industry is known as the sector with the high-
`est ratio of R&D to net sales. The survey investigated the overall R&D
`
`5S EFPIA,supra note 2, at 14.
`6 EFPIA, supra note 2, at 4.
`7 Dicksonetal., supra note 4.
`8 EFPIA,supra note 2,at 6.
`9 EFPIA, supra note 2,at 9.
`
`12
`
`This content downloaded from 172.8.132.220 on Wed, 10 Apr 2019 16:57:25 UTC
`All use subject to https://about.jstor.org/terms
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`
`
`C. High Failure rates
`
`percentage ofnet sales in many industries!° and found that the Pharmaceu-
`tical and Biotechnology sector ranks the highest with the percentage of
`14.4%. It is followed by Software & Computer Services (10.1%) and
`Technology Hardware & Equipment (8.0%). And the average ofall 41 in-
`dustries is 3.4%.!! This number clearly shows how outstanding the R&D
`cost in the pharmaceutical industry is.
`One of the reason for this costly R&D mainly lies in increased regula-
`tory requirements.!? Before a pharmaceutical company puts a new drug on
`the market, it has to survive long and costly clinical trials. These clinical
`trials require more participants and longer period oftrials than before be-
`cause the trends in the type of new drug development have recently
`changed.It is also reported that recent R&Ds for new drugsare shifting to
`the treatment of chronic diseases, which needs a prolonged period of time
`for curement. Thus, the clinical trials would accordingly take a longer pe-
`riod to examine medical safety than drugs for other diseases. Therefore,
`for developing a new drug,one survey indicates that it would take an aver-
`age 12.8 years currently, which showssignificant increase from an aver-
`age only 7.9 years in the 1960s.!3
`
`C. High Failure rates
`
`One ofthe characteristic features in R&D for a new drugis very high fail-
`ure rate. R&D for a new drug is roughly classified into two stages. The
`first one is the laboratory stage. The researchers try to examine many can-
`didate chemical sibstances that they believe to be promissing. They usual-
`ly obtain these substances by the extraction from naturally occuring prod-
`ucts, the artificial organic synthesis or the combination of both methods.
`The process of extracting and synthesizing chemical substances takesa lot
`of investment, labor and time because the molecular structures of effective
`
`
`10 Data relates to the top 2,500 companies with registered offices in the US (829),
`EU (608), Japan (360) and the rest of the world (703), ranked by total worldwide
`R&Dinvestment (with R&D investment above 17.9 million EURO).
`11 European Commission, EU R&D Scoreboard (The 2015 EU Industrial R&D In-
`vestment Scoreboard) 53, http://iri.jre.ec.europa.eu/scoreboard15.html. The table
`3.2 (Ranking of the top 11 industrial sectors by overall R&D in the 2015 Score-
`board.) showsthese figures in the first column “Global R&D intensity (%)”.
`12 Dicksonet al., supra note 4.
`13 Dicksonet al., supra note 4.
`
`This content downloaded from 172.8.132.220 on Wed, 10 Apr 2019 16:57:25 UTC
`All use subject to https://about.jstor.org/terms
`
`13
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`
`
`I. Keyfeatures ofinnovation in the pharmaceuticalindustry
`
`drug components are nawadays so complex that it often includes many
`steps before final chemical substances are obtained. Then they conduct
`screening experiments using animals for all candidates in order to check
`characteristics including effectiveness and toxity. The successful rates for
`the candidates to survive the first stage is considered to be significantly
`low. If they are lucky enough to obtain good results, they will go on the
`second step; the clinical development, which is the experimental step in-
`volving human to check effectiveness and side effect on human body.
`There are several phases (PhaseI, II and IID) that should be passed until a
`pharmaceutical company finally obtains final approval. According to the
`survey in recent ten years,!* the overall likelihood of approval from Phase
`I for all developmental candidates wasreportedto be only 9.6 %.!5 Chron-
`ic diseases are the hard category to obtain final approval with its overall
`likelihood of approval being 8.7 %.!6 For calculating total successfulrates,
`it is necessary to multiply these two stages. It is reported that on the aver-
`age only about one of every 10,000 (0.01%) chemical substances re-
`searched will successfully become a marketable drug,!7 and behind one
`successful project
`there are at
`least 9 unsuccessfull projects which
`nonetheless must have been financed.!8 Since a successful drug has to pro-
`duce enough profit of R&D for next future drugs, this situation is put in
`very clear words by Sir R. Jacob: “The few winners must pay for all the
`losers.” !9
`
`14 The survey was conducted by Biotechnology Innovation Organization that is the
`world’s largest trade association representing biotechnology companies, academic
`institutions, state biotechnology centers and related organizations across the Unit-
`ed States and in more than 30 other nations. It analyzed individual drug program
`phase transitions for ten years, from January 1, 2006 to December 31, 2015. Its
`world largest database includes 7,455 clinical drug development programs, across
`1,103 companies.
`15 Biotechnology Innovation Organization, Clinical Development Success Rates
`2006-2015 (June 2016), https://www.bio.org/sites/default/files/Clinical%20Develo
`pment%20Success%20Rates%202006-2015%20-%20BIO,%20Biomedtrack-
`er,%20Amplion%202016.pdf.
`16 Id. at 16.
`17 Dicksonet al., supra note 4.
`18 Tudor I. Oprea, Current trends in lead discovery: Are we lookingfor the appropri-
`ate properties? 16 J. Comp.Mol.Des. 325, (2002).
`19 Robin Jacob, IP and Other Things: A Collection of Essays and Speeches 233 (Ox-
`ford and Portland, Oregon 2015).
`
`14
`
`This content downloaded from 172.8.132.220 on Wed, 10 Apr 2019 16:57:25 UTC
`All use subject to https://about.jstor.org/terms
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`
`
`D. Significance ofpatents as safeguard ofinnovator ’ profits
`
`D. Significance ofpatents as safeguard ofinnovator ’ profits
`
`Asdescribed above, the development of a new drug is cost intensive and
`highly risky business for pharmaceutical companies, requiring them to in-
`vest high R&D cost and take a risk of high failure rates. On the other
`hand, the duplication of the new compoundis a simple technical matter.
`This is an especially important issue in the pharmaceutical research be-
`cause the development of a new drug involves the long lag time from dis-
`covery of a novel compound to marketing.2° A pharmaceutical company
`as an innovator needs to exclude the following third party whotries to
`copy its invention from the market until they recoup their investment and
`make enough profits for further innovation. That’s the reason whyit al-
`ways needs patent protection for a new drug. Patent is the legal protection
`that is the exclusive right for a limited period of time regarding the new
`and inventive invention. This patent protection allows a pharmaceutical
`company to have enough time to recoup their significant investment in
`R&D. Without patent rights, competitors can simply copy biopharmaceuti-
`cal innovations as soon as they are proven safe and effective, offering their
`own versions in the market without investing the time and money to de-
`velop the drug. Innovators in the pharmaceutical industry could lose the
`ability to recoup their substantial investment in a new drug development,
`making it more challenging to find funding. In this way, patent protection
`in the pharmaceutical industry is significant as safeguard of innovator’s
`profits.
`
`20 Dicksonetal., supra note 4.
`
`This content downloaded from 172.8.132.220 on Wed, 10 Apr 2019 16:57:25 UTC
`All use subject to https://about.jstor.org/terms
`
`15
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`
`
`Nomos Verlagsgesellschaft mbH
`
`Chapter Title: How to achieve freedom to operate (FTO)
`
`Book Title: FTO (Freedom to Operate) in the Pharmaceutical Industry
`Book Author(s): Hirotaka Nonaka
`Published by: Nomos Verlagsgesellschaft mbH. (2018)
`Stable URL: https://www.jstor.org/stable/j.ctv941tn6.5
`
`JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide
`
`range of content in a trusted digital archive. We use information technology and tools to increase productivity and
`
`facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.
`
`Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at
`
`https://about.jstor.org/terms
`
`
`
`This book is licensed under a Creative Commons Attribution-NonCommercial-
`NoDerivatives 4.0 International. To view a copy of this license, visit
`http://creativecommons.org/licenses/by-ne-nd/4.0/.
`
`Nomos Verlagsgesellschaft mbHis collaborating with JSTOR to digitize, preserve and extend
`access to FTO (Freedom to Operate) in the Pharmaceutical Industry
`
`
`
`JSTOR
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`This content downloaded from 172.8.132.220 on Wed, 10 Apr 2019 16:57:54 UTC
`All nee enhiert ta hitnc//ahoant ictar ara/terme
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`
`
`III. How to achieve freedom to operate (FTO)
`
`A, Overviews ofFTO analysis preparations
`
`We havealready found how unique the key features of innovation in the
`pharmaceutical industry are, and accordingly how significant patents are
`for pharmaceutical companies to recoup their investments. Therefore,
`pharmaceutical companies are much more desperate to monopolize the
`market compared with companies in other industries. In case of finding
`the patent infringing activities by third parties, a pharmaceutical company
`would take all possible measures to exclude them from the market. This
`means when a pharmaceutical company would like to start researching
`and marketing its new drug, the pharmaceutical company must make sure
`that it would not infringe other pharmaceutical companies’ patents. Dis-
`continuance of the project for developing a new drug due to patent in-
`fringement of third parties must be avoided by any meanspossible be-
`cause it could be almost amount to the failure of the project. Therefore,
`examining third parties’ patents and making sure that the new drugis to-
`tally free from patent infringement is very important.
`The procedure for assessing whether the product/processis free to sell
`or not is called an FTO analysis.2! As much of the money andtimeisin-
`vested in one project in the pharmaceutical industry, it is absolutely indis-
`pensable for a pharmaceutical companyto carry out intensive research on
`the FTO analysis from the very early stage of its R&D.
`
`B. Building up the multidisciplinary FTO team
`
`Ideally, an FTO team leader should have special expertise of pharmaceuti-
`cal product and process because comprehensive and sophisticated under-
`standing of its own product and processis essential for the team leader to
`
`
`
`21 Stanley P. Kowalski, Freedom to Operate: The Preparations, ipHandbook of Best
`Practices, at 1329 (last visited September 5, 2016), http://www.iphandbook.org/ha
`ndbook/ch14/p02/
`
`16
`
`This content downloaded from 172.8.132.220 on Wed, 10 Apr 2019 16:57:54 UTC
`All use subject to https://about.jstor.org/terms
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`
`
`C. The FTO search
`
`accomplish intensive FTO analysis.22 Additionally, the FTO team leader
`must have considerable expertise in IP-related issues, such as a technology
`transfer professional officer, intellectual property practitioner like a patent
`agent, a scientist who has participated in various IP rights and technology
`transfer courses, workshops, or seminars.”3 In this way, the FTO team
`leader must be capable in two different professional fields since an FTO
`analysis is conducted in the domain where science and law overlap.
`Other than the team leader, the FTO membersshould include scientists
`who had supervised the project, technology transfer personnel, and techni-
`cians/support staff.24 A participation of technicians/support staff is very
`important because they know what exactly happened during the product
`research, development, and commercialization.It is also helpful to include
`business personnel (depending on the stage of commercialization) and
`possibly administrative staff to the FTO team. They might have informa-
`tion on relevant communications, documents, and agreements.?5
`One important thing when building up the FTO team is to make con-
`stituent team stuffs multidisciplinary. Opinions from several points of
`view and discussions would make their FTO analysis more precise and in-
`depth.
`
`C. The FTO search
`
`The FTO search is normally conducted by a competent professional
`searcher*®, The searcher will normally use the patent clasification codes
`and keywords in order to narrow the scope ofthe third parties’ relevant
`patents and patent application. This FTO search is extremely important
`and must be conducted in the most deliberate manner. The FTO team will
`examine and pick up most relevant patents and patent application among
`the search result. If the searcher fails in picking up even one relevant third
`parties’ patent, the FTO team will not able to find it in later procedure no
`matter how intensively the FTO team conducts FTO analysis. It should be
`noted that just one patent could kill whole one pharmaceutical project.
`
`22 Id. at 1331.
`23 Id. at 1331.
`24 Id. at 1332.
`25 Id. at 1332.
`26 H.Jackson Knight, Patent Strategy 158 (3rd ed. Wiley 2013).
`
`This content downloaded from 172.8.132.220 on Wed, 10 Apr 2019 16:57:54 UTC
`All use subject to https://about.jstor.org/terms
`
`17
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`
`
`II. How to achievefreedom to operate (FTO)
`
`One should carefully bear in mind that the FTO searchis totally differ-
`ent from a patentability search.2” The purposeofa patentability seach is to
`find relevant prior arts which could destroy the subject patent or patent ap-
`plication. These prior arts basically need to disclose concrete example in
`order to destroy the broad claim of the subject patent or patent application.
`This is as we call “Species/Genus anticipation rule”, which means that
`species anticipates genus, but genus does not necessarily anticipate
`species.28 On the other hand, the purpose of the FTO search is to look for
`patents and patent applications which might have a great impact on the le-
`gal practice of the invention. Therefore, the searcher must look for patents
`and patent applications that have broad claim that might cover the product/
`process a pharmaceutical company is going to market, even though thein-
`vention is not specifically mentioned.29 There are many patents and patent
`applications that look irrelevant to the product/process at first sight, but
`nevertheless it is likely that the claims of which are described broadly
`enough to cover them. In other words, it is quite common that the claims
`of relevant patents and patent applications don’t contain keywordsto spec-
`ify the product/process at all. For example, when you would like to con-
`duct the FTO search for your newly developing drug with a new chemical
`entity X, the typical keywords for finding relevant patents and patent ap-
`plications could be chemical structure of X, molecular name of X and
`characteristic functioning group of X. However, you have to pay attention
`to numeric value patents, functional patents and product by process claim
`patents, all of which might not contain typical keywords for X butstill
`cover X within the scope of the claims. This makes the FTO search very
`difficult to conduct accurately. The searcher must accurately predict what
`kind of wordings are used in the claim of possible relevant patents and
`patent applications.
`
`D. Pharmaceutical Technical Considerations
`
`The FTO team should consider pharma-product/process-specific compo-
`nents.?° First, the FTO team hasto take into account the compounds them-
`
`
`27 Id.
`28 Janice M. Mueller, Patent Law 176-177 (4th ed. Wolters Kluwer 2013).
`29 Knight, supra note 26.
`30 Kowalski, supra note 22, at 1335.
`
`18
`
`This content downloaded from 172.8.132.220 on Wed, 10 Apr 2019 16:57:54 UTC
`All use subject to https://about.jstor.org/terms
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`
`
`E. Pharmaceutical Patent Information
`
`selves including the form of the compounds(ex. crystalline form, amor-
`phous form), the steric structure of the compounds(ex. enantiomers), and
`the components which will be produced by metabolic process in human
`body (ex. metabolites, prodrugs). Second, the type of pharmaceutical com-
`positions (ex. delivery system, vehicles and adjuvants) must also be con-
`sidered. Third, the methods, steps, and components involved in the prod-
`uct synthesis are also critical. Drug synthesis normally consists of many
`steps. In each step, the reagents, the intermediates, purification techniques,
`and handling techniques of the third parties’ patented invention might be
`involved. Fourth, downstream considerations (ex. method of use, modes
`of treatment, dosimetry, and limiting side effects) are also important to
`keep in mind.
`In case of vaccines, there are additional FTO analytical considerations
`specific for vaccine research, development, manufacture and deployment,
`including expression systems, fusion partners, immunostimulators, adju-
`vant systems, excipients, and delivery devices.?!
`These pharma-product/process-specific considerations are very compli-
`cated. But an interview with technicians/support staff would greatly help
`the FTO search because they are the PHOSITA (Person Having Ordinary
`Skill In The Art) who might have information on “dangerous or safe”
`technique for patent infringement.
`
`E. Pharmaceutical Patent Information
`
`In addition to the standard patent search tools and resources, pharmaceuti-
`cal patent search needs to check specific patent resource materials. The
`Orange book, the Merck Index and the actual file wrapper search are typi-
`cal examples.32
`The FDA?3 publishes a list of all drugs approved for marketing in the
`US underthe title “Approved Drug Products with Therapeutic Equiva-
`lence Evaluations”, which is also called “Orange Book”. Orange Bookis
`
`
`
`31 Kowalski, supra note 21, at 1336,
`32 Kowalski, supra note 21, at 1340.
`33 U.S. Department of Health and Human Services, Food and Drug Administration
`
`This content downloaded from 172.8.132.220 on Wed, 10 Apr 2019 16:57:54 UTC
`All use subject to https://about.jstor.org/terms
`
`19
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`Mylan Ex.1085
`Mylan v. Sanofi - IPR2018-01675
`
`
`
`II. How to achievefreedom to operate (FTO)
`
`daily updated and can be readily accessed via the Internet.34, 35 The FTO
`team can obtain information about approved drug products with therapeu-
`tic equivalence, as well as the expiration dates of patents on therapeutic
`small molecules and on approved indications and compositions*®.
`The Merck Index is a one volume encyclopedia of chemical, drugs and
`biologicals that contains more than 10,000 monographs, which lists
`patents and publications on older drugs and reagents.>7 The Merck Index
`is available as a printed edition or online.38 One of the advantages of the
`Merck Index Onlineis its accurate search ability by the chemical formula.
`It is risky to rely on only keyword patent searching because in pharmaceu-
`tical patents, a claim often contains a chemical formula to define the scope
`of the claim. And this chemical formula cannot normally be found only by
`keyword patent searching. The FTO team can easily and accurately search
`the patents by the chemical formula of the product.
`It is prudent that the FTO team actually goes to the patent office to ex-
`amine the boxes containing patent prior arts.79 This is sometimes neces-
`sary to know the differences in nomenclature used by various patent
`drafters since some of differences might not be readily identified and sort-
`ed out in electronic searching.*? As described above, there is the possibili-
`ty that relevant patents and patent applications use a different nomencla-
`ture in the claims from the ones the FTO team grasps and include as the
`keywords. One of the purposes of examining patentpriorarts filled in the
`patent office is to obtain the information on other possible nomenclatures.
`There are many ways to describe only one chemical entity. For example,
`an alcohol, which is contained in beer and has simple chemicalstructure,
`could be described either as “alcohol”, “drinking alcohol”, “ethanol”,
`“ethyl alcohol”, “1-ethylalcohol”, ”C,H,O”, “C,H;OH”, “CH3;CH,OH”,
`
`34 Orange Book, Approved Drug Products with Therapeutic Equivalence Evaluations
`(last visited September 6, 2016), http://www.accessdata.fda.gov/scripts/cder/ob/.
`35 John R. Thomas, Pharmaceutical Patent Law, 418 (Bna Books 2005).
`36 Kowalski, supra note 21, at 1340.
`37 Kowalski, supra note 21, at 1340.
`38 The Merck Index Online(last visited September 6, 2016), https://www.rsc.org/mer
`ck-index?e=1.
`39 Thisis the case in