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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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April 9, 2009

Ariad's Patent: Let Us Now Dance In Circles

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Posted by Derek

It's been some time since I've written about Ariad and their NF-kB patent. This has been a very long story, full of legal twists and turns, but I believe that it's finally come to an end.

Back in 2002, Ariad was issued an extremely broad patent on the uses of agents that affected the NF-kappaB pathway. And since it's basically impossible to talk about inflammation without talking about NF-kB at some point, the company believed that it had the legal means to claim that many other companies were infringing their intellectual property. Among the first to be sued was Eli Lilly - here was my reaction at the time. Short form: I was not pleased. I found it potentially catastrophic that one could lay claim to fundamental biochemical pathways and then assert that this naturally gave you a piece of the action for any compound that affected them. Update: it's worth noting that even as late as last month, Ariad's boilerplate at the bottom of their press releases included basically that process as part of their corporate strategy.

Well, the case finally was argued before a court in 2006, and to my surprise and disgust, a jury found for Ariad. Part of that surprise was a financial one, since (as I noted at the time) I'd gone short Ariad stock in anticipation of a more sensible verdict. (Note that I have no position in their stock or options now. They've significantly underperformed the market since 2006, which is no mean feat).

Every time I wrote about the company I would get beaten up on various message boards by its fans. I was a tool of Eli Lilly, Amgen (another of Ariad's legal opponents), or just of the Monied Interests in general. I was a shill, a moron, you name it. The glee was especially pronounced after that court case in 2006. A separate bench trial took place afterwards on whether the Ariad patent was enforceable at all, partly on the issues of its subject matter and possible inequitable conduct, but Ariad won that round as well.

The case then went to the Court of Appeals for the Federal Circuit, which is where all tough patent cases are going to end up eventually (a very small number go on from there to the Supreme Court). And last week the CAFC ruled: Ariad's key patent claims, they find, are in fact invalid. Lilly was right. The jury was wrong, and so was the verdict in the bench trial:

"Ariad claims methods comprising the single step of reducing NF-κB activity. Lilly argues that the asserted claims are not supported by written description because the specification of the ’516 patent fails to adequately disclose how the claimed reduction of NF-κB activity is achieved. The parties agree that the specification of the ’516 patent hypothesizes three classes of molecules potentially capable of reducing NF-κB activity: specific inhibitors, dominantly interfering molecules, and decoy molecules. Lilly contends that this disclosure amounts to little more than a research plan, and does not satisfy the patentee’s quid pro quo as described in Rochester. Ariad responds that Lilly’s arguments fail as a matter of law because Ariad did not actually claim the molecules. According to Ariad, because there is no term in the asserted claims that corresponds to the molecules, it is entitled to claim the methods without describing the molecules. Ariad’s legal assertion, however, is flawed.

I've been waiting to hear someone say that since 2002. I have never been able to figure out how the company could lay claim to such huge swaths of cellular biology with no real enablement, no demonstration that they could actually do what they were asserting the rights to. Well, in the end, they can't:

"Regardless of whether the asserted claims recite a compound, Ariad still must describe some way of performing the claimed methods, and Ariad admits that the specification suggests only the use of the three classes of molecules to achieve NF-κB reduction. Thus, to satisfy the written description requirement for the asserted claims, the specification must demonstrate that Ariad possessed the claimed methods by sufficiently disclosing molecules capable of reducing NF-κB activity. . .

. . .The ’516 patent discloses no working or even prophetic examples of methods that reduce NF-κB activity, and no completed syntheses of any of the molecules prophesized to be capable of reducing NF-κB activity. The state of the art at the time of filing was primitive and uncertain, leaving Ariad with an insufficient supply of prior art knowledge with which to fill the gaping holes in its disclosure. . .

Ariad sought and obtained the broad claims we now hold to be invalid. For its own reasons, Ariad maintained the breadth of these claims through claim construction and into trial. As Judge Rader observed, the situation presented in this case should not often occur, because “[i]n simple terms, a court would properly interpret the claim[s] as limited.” Univ. of Rochester v. G.D. Searle & Co., 375 F.3d 1303, 1312 (Fed. Cir. 2004) (dissenting from denial of petition for rehearing en banc). Nonetheless, as it stands, Ariad chose to assert claims that are broad far beyond the scope of the disclosure provided in the specification of the ’516 patent. Cf. Liebel-Flarsheim Co. v. Medrad, Inc., 481 F.3d 1371, 1380 (Fed. Cir. 2007) (“The motto, ‘beware of what one asks for,’ might be applicable here.”)."

On the other hand, the CAFC did not side with Lilly in their arguments about inequitable conduct or inherent anticipation of the patent's claims, finding that there was no clear evidence of intent to deceive on Ariad's part. But since they find that the key claims of the patent are invalid anyway due to lack of written description, it hardly matters. Ariad's patent is dead. And this ruling should deter anyone from trying another idiotic IP power grab like this in the future. Good news, and it only took seven years of constant legal wrangling to emerge. . .

Comments (28) + TrackBacks (0) | Category: Patents and IP


COMMENTS

1. SEC fan on April 9, 2009 8:27 AM writes...

I don't think you should have been blogging about companies that you own stock in in the first place.

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2. Craig on April 9, 2009 8:50 AM writes...

Ariad's Harvey Berger is perhaps the biggest loser in the biotech space. This guy has consistently wasted shareholder money since day 1, to pad his pockets with his lavish salary, and fill the Board of directors with his friends. This guy is exactly what the SEC should take a look at -- and not let these types of persons have anything to do with running a public company.

This patent case is a clear example of this guys pathetic ego. He's a little troll.

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3. Derek Lowe on April 9, 2009 8:55 AM writes...

Could be. On the other hand, in the few occasions when I have, I've been completely up front about it, so readers can draw their own conclusions.

And these conclusions could go either way: you could decide that I'm trying to make my trades come out well (in which case, you'd also have to conclude that I'm fairly delusional about my ability to move a stock's price). Or you could figure that I must be strongly attached enough to my opinions to put real money on them.

These days I rarely take positions in individual stocks, though.

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4. startup on April 9, 2009 9:01 AM writes...

I wonder - who provides technical background support to the judges when they work on such cases?

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5. Retread on April 9, 2009 9:25 AM writes...

Damn ! I was going to patent my cure for Alzheimer's disease by preventing the Abeta42 peptide from aggregating. Now I actually have to come up with an entity which actually does this.

Actually there is some evidence from an experiment of Nature that this can be done. I plan to post on the subject in the Skeptical Chymist in the future if I can get it in (the topic is biological, but the chemistry underlying it is fascinating). In the meantime, have a look at [ Science vol. 323 pp. 1473 - 1477 '09 ] and see if you see what I see.

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6. Alig on April 9, 2009 9:26 AM writes...

I still loved when the patent office re-examined this patent and invalidated most of the claims by saying that there was prior art in the Bible for most of the claims. Ariad was a few thousand years late to claim modifiying this pathway for therapeutic benefit. Too bad they left a few claims in place. At least the lawyers got paid.

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7. Anonymous on April 9, 2009 9:32 AM writes...

Wait a minute... are you trying to say that one cannot report/comment on a company that they own? that's idiotic.

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8. big biotech on April 9, 2009 9:51 AM writes...

Nothing wrong about discussing stocks you own, as long as it is disclosed.

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9. Hap on April 9, 2009 9:52 AM writes...

I don't know - I would much prefer watching their stock go round and round in circles, at least until it finally exits the toilet bowl, because if all you have is broad claims of biological pathways with no actual invention, well, your company theme song should probably be a funeral dirge, and you should consider looking for proper employment. I'm sure there are some local gangs looking for muscle.

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10. qetzal on April 9, 2009 10:37 AM writes...

FWIW, I actually enjoy the occasional post where you comment on a company in which you have a stock position.

As you say, as long as you disclose your interest, I see absolutely nothing wrong. Especially since you post under your real name. (I take for granted that you wouldn't post insider info even if you had access to it.)

I wonder what SEC fan thinks about all the anonymous posters on stock message boards. Should they not post anonymous pro-ARIA messages if they own stock? Hardly. After all, that's part of what makes it a stock market. People's public opinions are essential in helping to fairly value a stock.

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11. Sili on April 9, 2009 10:42 AM writes...

Well, the attempt to patent fiberoptics for use in endoscopese was thwarted by reference to 'prior art' by Marconi. Despite what he descriped was a use of internal radiotransmitters - a technology way beyond anything he had or could have constructed.

So patentlaw is pretty much black magic to me.

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12. CMC Guy on April 9, 2009 10:50 AM writes...

"fairly value a stock" does that really have any meaning in this day and age?

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13. Sili on April 9, 2009 10:51 AM writes...

I don't think you should have been blogging about companies that you own stock in in the first place.
What the hell?!

So next he shouldn't chat about his portfolio over lunch or at the gym?

This is the internet. Anyone can blog about whatever they want. Without disclosing anything one way or another.

It's up us readers/consumers to way the evidence and decide upon the reliability of the source.

If dr Lowe decides to disclose a 'conflict of interest' as if this were a scientific journal, more power to him, but he is as free to lie - both about having and not having any piece of the action.

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14. Edward on April 9, 2009 11:37 AM writes...

Actually I'd be up for a special segment:

"Lowe's short picks in Biotech".


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15. DerekF on April 9, 2009 11:49 AM writes...

In answer to startup's question, the Federal Circuit has, in addition to the law clerks for each judge (some of whom are patent attorneys and therefore have at least some science knowledge), a group of Technical Assistants whose job includes advising the court on matters of science. Perhaps someone who has worked there can elaborate. And to follow up on Alig, the reexamination had resulted in a final rejection of many of the claims, including I think the ones at issue in the Lilly litigation (although many other claims were also confirmed as patentable), and this was recently (March 19) appealed within the Patent Office. Ariad's brief in that appeal will be due in a little over a month.

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16. CF on April 9, 2009 12:52 PM writes...

Retread, you’re a sanctimonious hypocrite.

See your comment on mine (CF) from 2009/02/26: "Does glucophage make Alzheimer’s worse?" Linked under: Alzheimer's Disease.

Also regarding abeta, you may want to look at the direction of the correlation in Luheshi et. al. PLoS Biol 5(11) 2007, and any of the literature on aggregation in healthy brains. Maybe you were referring to membrane aggregation.

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17. Pat Pending on April 9, 2009 5:41 PM writes...

DerekF, The Fed Circuit has its technical experts who are attorneys with a science/engineering background but more importantly the Federal Circuit has the factual record made at the trial court during the trial. The Fed Circuit only reviews questions of law and the role of the technical expert is merely to explain background information and help in the drafting of background information in the written opinion and not to act as an expert in a factual rehearing/retrial of the case.

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18. SEC fan on April 9, 2009 8:12 PM writes...

Not saying you're anywhere near a fool as Cramer but:

1. Stock-Picking at SmartMoney
In 1995, Cramer mentioned four stocks as good buys in his SmartMoney column, mentioning that he had a stake in one of them. In fact, his firm Cramer & Co. owned shares in all four, including 10 percent stakes in two of them. All four stocks shot up in value after the column ran. The SEC launched an informal investigation, and Dow Jones, which owned SmartMoney, announced a new ethics policy to prevent columnists from writing about securities they own. The magazine eventually took the blame for leaving out the disclosure. Two years later, Cramer told CNN that the episode "turned my life upside down... I now mention to everybody in the press because it could happen again; I don't want it to... It was a horrible incident. I live with it every day." Lesson learned!


2. Shorting WavePhone
In 1998, while co-hosting Squawk Box, Cramer said out loud on television that, prior to interviewing the CEO of a company called WavePhone that morning, he had shorted 25,000 shares of the company because he thought it was overvalued. Later in the same show, he went after the CEO, and WavePhone's stock dropped 38 percent, making Cramer slightly richer. He later claimed that it had been "a terrible choice of words" to say, "I called my stock-loan department and said, 'Listen, I want to short 25,000 WavePhore because I think this thing is a big speculative bubble." In fact, he said, he was just curious if anyone else was shorting the company. CNBC suspended him and the SEC investigated, but found no wrongdoing.


3. Trading With the Enemy
In 2002, Nicholas Maier, who worked as a Cramer & Co. trader for five years, published a tell-all detailing Cramer's manipulation of his pals in the financial media for fast profit: Acquire exclusive intelligence on a stock, take a position on that stock, and then leak the intel to CNBC. "Jim's strategy was to put in an order to buy a stock...and then dial Maria [Bartiromo]," Maier wrote. "As soon as she announced the news on television, the stock would often jump.... We weren't just using the news, but making it. No sooner would Maria be thanking us for the help than we'd be getting a payback—a quick hit thanks to our friends at CNBC."

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19. Derek Lowe on April 9, 2009 10:24 PM writes...

Nope, you're right: I'm not that big a fool! The last thing I need is trouble with the SEC. It's been full disclosure all the way around here, and that's included a few times when I've had my wonderful investment ideas decompose right in front of me (and my readership).

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20. Petros on April 10, 2009 6:46 AM writes...

I was relieved to see that the courts have at last shown sense in this case.

Ironically it was googling for info on the original hearing that led me to Derek's blog some years back

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21. Chemjobber on April 10, 2009 7:08 AM writes...

Shows I'm investment-poor that when I read "SEC Fan", that I thought to myself "Southeastern Conference? After this Final Four, they have nothing to be proud of!"

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22. Joerg Kurt Wegner on April 11, 2009 11:49 AM writes...

For my taste are there are too many profane words in the content and comments of this post. Sure, you can talk about whatever you like, but how many of you would stand in front of a person and say "you are an idiot?".
Watch out, or (micro)blogging or comments can get you fired. See e.g. http://tinyurl.com/2hw9n7 and http://tinyurl.com/7s6jrh

Web 2.0 has benefits, but comes also with drawbacks, and we should never forget this.
http://tinyurl.com/socialdrugs

On the other hand, be bold and contribute! I agree with Nature that scientists should contribute more, but please constructively. http://dx.doi.org/10.1038/4571058a

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23. Still Scared of Dinosaurs on April 12, 2009 3:59 AM writes...

>> I read "SEC Fan", that I thought to myself "Southeastern Conference?

It was obvious to me that it was a reference to the Securities Exchange Corporation, the model for so many of Wall Street's biggest companies. (Securities Exchange Corporation was the name of Charles Ponzi's company.)

Actually, I read it as the athletic conference at first, also. Reminds me of the realization that for a long time you could predict the next SEC football program to get suspended by naming the last one to win the conference. Another fine model for Wall Street.

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25. Hap on April 13, 2009 9:54 AM writes...

#22: Thanks for your concern. I'll take that under advisement.

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26. Thoryke on April 14, 2009 10:22 AM writes...

So is the fact that Amgen _has_ a molecular entity that acts on a particular pathway for hematopoesis what makes their patent claims effective? I always thought it was odd that they were able to keep Roche's Micera out of the US market:

http://tinyurl.com/cz6x7q

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27. plusaf on April 15, 2009 1:52 PM writes...

yeah, reminds me of the "one-click checkout" flap at Amazon a few years back...

back in the '50's, checking out with mom at the local A&P, the cashier would ask, "is that all," and if the answer was Yes, they'd move one lever and hit the "total" key and we'd find out what we owed for those sacks of groceries.

if that isn't "pre-existing technology" for "one-click checkout", what is? just because it's done in software and not verbally, that should be "patentable"???? i assumed at that point that the US patent system was on a very slippery slope to destruction.

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