BIO 2001 International Biotechnology Conference &
Exhibition, San Diego, CA

On the road for Info.Resource, publisher of NewJerseyLifeScience.com

By Lorraine Ruff, David Gabrilska and Scott Sipes
Milestones, the critical thinking company
Seattle, WA

Biotechnology, now a 25-year old industry, has almost exclusively established its intellectual property (IP) position with patents. In addition to a defined period of market exclusivity, patents provide a ready measure of tangible value for investment, and collaboration when a company’s financial and product development strategies include corporate partnerships.

While this is certainly true for drug development organizations, it may not be true for bioinformatics companies whose best business practices for protecting IP may be through (1) trade secrets, or (2) the use of a relatively new category of patent law: the business process patent. Both are fraught with issues that are problematic to this new branch of biology in silico.

"There have been relatively fewer patent filings by bioinformatics companies contrasted to patent filings by biopharmaceutical companies," said Bio 2001 International Convention and Exhibition panelist Thomas D. Webster, Ph.D., a patent attorney at Eli Lilly and Company. A recent search among bioinformatics patent filings, shows only about 200 patents filed with approximately 50 issued.

In contrast, since 1977 there have been approximately 26,700 patents issued in category 424, which includes drug, bio-affected and body treating compositions.

• U.S. biotechnology patents issued, 1977 - 2000 (chart)

A bioinformatics company produces products based on analytical strategies and algorithms, which in practice are difficult to patent effectively, and even more difficult to protect in the courts. This is due in part to a determination centuries ago that mathematic equations are not patentable.

Beginning in 1968, the U.S. Supreme Court reversed precedent and thereafter has consistently ruled that software – prior to 1968 considered to be mathematic equations - can be patented if it meets the standard rules for patentability.

Demonstrating the continuing difficulty in predicting the outcome of patent litigation in the courts was panelist Rachel Leheny, PhD, a sell-side analyst at Lehman Brothers, in a number of admitted "missed calls" in biotechnology herself. Further, she pointed out, companies are engineering around existing patents instead of challenging them in court.

Webster pointed out that trade secrets may be the more efficient and cost-effective method toward protecting this IP. The trade secret strategy was endorsed by panelist Charles Lipsey, Esq., a partner at Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. He questioned the strength and patentability of process claims for patents, the difficulty of proving infringement, and the use of these technologies outside the U.S. or ‘extra-territorial use’ that may provide additional loopholes. "It is yet to be determined by the courts whether they will extend protection for extra-territorial use."

As is evidenced from the computer industry, when standards are established and integrated, the industry has consistently risen to a higher technological plane and is able to take significant steps forward. Despite the risks, there is a substantial international movement among life science and information technology organizations to define and develop a framework for data integration and application interoperability for life sciences.

For the bioinformatics sector to mature technically and commercially, panelist Caroline Kovac, Ph.D., vice president of Life Sciences Solutions at IBM, stated that it would be necessary for these sectors to adopt standards. For example, one such set of protocols, I3C (Interoperable Informatics Infrastructure Consortium), is supported by 47 public and private organizations.

"At the present stage of development bioinformatics standards are very crude," said Bob Cottingham, chief technical officer of the newly formed VizX Labs, LLC, a Seattle-based bioinformatics company, in an interview following the conference. If the computer industry is any example, "standards go through a life cycle during which they are very loose, with a lot of competing interests and infighting, after which consensus is attained," he said. "During ensuing years, the standards will embody more and more complexity, and [in parallel fashion] companies will have protected what makes them unique and competitive." Cottingham said there is "great value to a company to participate in the development of standards. But what we contribute to the market as a company will go far beyond standards," he said.

We’re reminded of an important lesson from the settling of the American West: the scouts take the arrows (in the back) while the settlers – who follow – lay claim to and profit from the land.

To avoid the obvious arrows, the "scouts" who invest in the bioinformatics sector need to do so using a variety of paradigms with which to judge future tangible value and return on investment. Investment criteria must certainly include the extent to which a bioinformatics company’s IP has been protected by traditional means – patents, trade secrets, and copyrights. But it must also include a thoughtful evaluation of a management team’s ability to fundamentally understand how the molecular biologist integrates data management, data acquisition and computational tools and strategies into the laboratory.

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1. Data gathered from the U.S. Patent and Trademark Office, July, 2001
2. There are four initial requirements for patentability: novelty, non-obviousness, utility, patentable subject matter. Source: USPTO.
3. For a comprehensive list of intellectual property related links, please visit the firm’s IP links page

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