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T’s not easy being cutting-edge. Biotech is still in its infancy, and although law firms have embraced the burgeoning business, the stock market is giving it the cold shoulder, the courts are cramping its style, and the patent office is getting tough. What’s a biotech GC to do? Firms are raking in the bio-tech business partly because biotech patent law is experiencing growing pains. The U.S. Patent and Trademark Office and the U.S. Court of Appeals for the Federal Circuit are both struggling with gene patents. The patent office has been criticized for its utility requirements for biotech inventions. The office requires that gene patents have “real-world” utility, or some practical application. It is unclear what practical means. Must a patent apply only to genes that have a proven therapeutic application? Or is the requirement more flexible? The Federal Circuit has also come under fire for its handling of the written description requirement, which compels an inventor to provide specific instructions on how to reproduce an invention. Because genetic sequences and proteins are difficult to fully describe in writing, inventors often rely on the use of biological deposits to fulfill the requirement. In April 2002, in Enzo Biochem, Inc. v. Gen-Probe Inc., a three-judge panel of the Federal Circuit disposed of the practice. After an uproar from the legal community, the panel reconvened and reversed itself in August 2002. Still, there are those who feel the issue should be taken up en banc. What does all this controversy mean to the lawyers on the inside? We asked three in- house biotech counsel to give us their insights: Tim Hofmeyer, patent attorney at Paradigm Genetics, Inc.; Donald Bollella, chief patent counsel at Burstein Technologies, Inc.; and Vern Norviel, former general counsel of Perlegen Sciences Inc. Norviel joined Palo Alto’s Wilson Sonsini Goodrich & Rosati as of counsel in January 2003. Law firms are rushing to get into biotech IP practice, but the stock market isn’t embracing biotech companies. Why? Firms are eager to collect premium biotech legal fees and don’t require their clients to be profitable. The stock market, on the other hand, is eager to realize returns on a few biotech stocks with clear views toward profitability. — Hofmeyer Actually, it seems Wall Street has treated the biotech sector relatively well compared to dot-coms and telecom start-ups. — Bollella The biotech industry remains a fantastic place for value creation. While the stock market has punished biotech and many other industries, the private capital markets still recognize the future and value of this industry. Law firms are making a reasonable business decision in this respect, and not following overall market fads. — Norviel Is the U.S. Court of Appeals for the Federal Circuit too restrictive in its biotech patent rulings? Take its original ruling in Enzo, for example. Enzo I was botched. Enzo II comes closer to getting it right. Eventually, the full panel of the court will need to revisit the written description, given the current disharmony among the judges. — Hofmeyer I believe that standard has been well established. The level of disclosure required in a patent specification is that needed to enable one of ordinary skill in the art to practice the invention. Why do we need new case ruling on this point? This standard should work as well for biotech as it does for any other technology. — Bollella Many patents have been issued with “thin” disclosure (at best). The Federal Circuit needs to be vigilant, and they are. — Norviel Are the patent office’s utility requirements too tough on the biotech industry? The PTO’s clearly articulated utility requirements, when evenly applied, are the “tough love” that biotech needed. — Hofmeyer They seem about right. — Bollella The patent office needed to meet a lot of concerns from many very diverse constituencies to come up with the utility requirements. From their point of view, it was a good balance. — Norviel How is your company’s ability to raise money affected by recent trends in biotech patent law? It’s not. You can have a very strong patent portfolio but have a poor business model and, for that reason, not be attractive to investors. The reverse is also true. — Hofmeyer Our company is not involved in any biotech research or development that involves these bioethical and biolegal issues. — Bollella The changes in the capital markets in general have been so overwhelming that any changes as a result of changes in the law are completely lost in the noise. In the absence of the general market volatility, any changes in biotech law would not have had a material impact in any event. — Norviel Do you care that Canadians aren’t going to allow patents on higher life forms? We care, but not that much. It doesn’t alter how we, at Paradigm, conduct our business. I don’t expect a lot of biotech research to migrate to Canada. — Hofmeyer If by higher life forms the Canadian law prohibits patents on inventions that are more complicated than one cell, then so be it. Let the Canadians decide what is right for them. But let me ask this question: Will prohibiting patents on higher life forms prevent them from being invented? Probably not. — Bollella While we do the best we can to keep up with the latest changes in biotech law in Canada, we’ll probably continue to spend more time worrying about the United States, Europe, and Japan. — Norviel This article originally appeared in IP Law & Business, a Corporate Counsel sibling publication.

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