Reader Steve C. analyses patents for a living, and he's been taking an interest in the Ariad / Lilly litigation. He was kind enough to send along some analysis that he's been working on (on behalf of some paying clients, as opposed to me). After looking through the court documents, he thinks that Lilly has a very good chance of prevailing, and I thought I'd share some of his reasoning, with his permission. I should disclose (again) that I am short Ariad stock, because I expect them to lose their patent, and that I think that they (and others who attempt to claim such things) deserve to lose.

As is the manner of lawyers everywhere, both sides advance a number of arguments, hoping that one of them will stick. In Lilly's case, they claim (among other things) that the claims of Ariad's patent are invalid because they were obtained through inequitable conduct, and that they include non-statutory subject matter. That last part is the argument that I've been making here over the last few years - that Ariad's patent on regulating NF-kB every way under the sun is an attempt to own a naturally occurring process. But Steve, while agreeing with that in light of the Searle/Rochester COX-2 decision, says that Ariad may have even bigger problems

The inequitable conduct argument is one that I hadn't paid attention to before. Applicants for a patent have a duty of candor - you're supposed to inform the examiner of everything that you know of that has a bearing on your application and claims, whether it helps your case or hurts it. Concealing potentially damaging material is grounds for having your patent revoked or declared unenforceable. Lilly argues that figure 43 of Ariad's '516 patent is labeled as the nucleotide and amino acid sequence of a protein that would reduce NF-kB activity, but that it's actually a partial sequence, short some 56 amino acids. They further claim that this shortened peptide wouldn't work, and (crucially) that Ariad knew all about this, but didn't disclose it. As it turns out, this protein was a key piece of evidence during the (lengthy) examination of Ariad's application at the PTO, so losing it would be trouble.

And that leads to an even bigger problem. During the near-endless Ariad patent prosecution, US law changed to become more like international patent law. The term of a US patent used to be 17 years from date of issue, but since 1995 it's been 20 years from date of filing. Ariad had been working this case for sixteen years (no, that's not a typo), and was grandfathered in under the old law. But if they refiled, everything would have suddenly changed (and their patent would have already expired as of last January!)

Lilly is arguing that Ariad was doing everything they could to hide any problems severe enough to cause a refiling. Specifically, they charge that Ariad hid the problems with figure 43, which were crucial to the validity of their claims. They hammer on the fact that the protein in that figure is more or less the only thing in the whole patent that actually is capable of inhibiting NF-kB - without it, there's no enablement, just a bunch of talk about inhibiting and modulating NF-kB with no way shown of actually ever doing it. Ariad, for their part, claims that the whole thing was unintentional, that the examiner had all the information needed to check the figure, and that the difference was so subtle that even Lilly's expert witness didn't pick up on it.

Steve thinks, though, that this could be a killer issue for the whole bench trial. His view is that Ariad's trying to have it both ways: saying that the examiner had all the information needed makes it sound like it's a serious problem that had been dealt with, but then they claim that it was such a small matter that Lilly's witness didn't notice it. Those two defenses can't be simultaneously valid. The extreme importance of the issue makes Lilly's job easier, since they don't have to show as much intent on Ariad's part.

I have no word on when the judge's decision might be coming, but I'll be watching closely. The research world will be better off, I think, when patents like this are no longer an option or a temptation.