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European Biotechnology Science & Industry News March 2013 SPECIAL II Intellectual Property

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Page 1: European Biotechnology News Special 3/2013 - Intellectual Property

EuropeanBiotechnology

Science & Industry NewsMarch 2013

SPECIAL

II Intellectual Property

33_EBSIN_SPECIAL_IP_Titel_tg.indd 33 06.03.2013 16:40:11 Uhr

Page 2: European Biotechnology News Special 3/2013 - Intellectual Property

Join the European Biotechnology Network!The European Biotechnology Network is dedica-ted to facilitating co-operation between profes-sionals in biotechnology and the life sciences all over Europe. This non-profi t organisation brings research groups, universities, SMEs, large com-panies and indeed all actors in biotechnology to-gether to build and deliver partnerships. Do you want to know more about the advantages of a (free) membership? Just have a look at our website: www.european-biotechnology.net

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34_EBSIN3_13_EBN.indd 1 06.03.2013 18:30:19 Uhr

Page 3: European Biotechnology News Special 3/2013 - Intellectual Property

Euro|Biotech|NewsNº 3 | Volume 12 | 2013 35

Special: ip

Stratified medicine has become a real-ity. However, the full potential of individ-ualisation has not yet been tapped. “Af-ter all, not even our clothes are one-size-fits-all,” noted Prof. Dr. Jochen Maas at the 6th Berlin Conference on IP in Life Sci-ences. Sanofi’s chief scientist in Germany knows what he’s talking about. Personal-ised medicine is a topic close to his heart – and he’s far from alone in that. More than 100 people had travelled to the Dutch Em-bassy in Berlin, where the meeting was held, to discuss companion diagnostics and other IP topics. Patient classification is

Intro

Bio-IP experiencing continental driftA strong patent position is a necessary prerequisite for commercial prosperity. this is especially true in the field of companion diagnostics, where the combination of pre-cise testing systems with efficient treatments defines economic success. recent legal judgments in the US, however, indicate crumbling judicial support for patents based on genetic sequences. In Europe, on the other hand, patent offices remain friendly to innovation in the area. Are the two continents drifting apart? Questions like this concerning companion diagnostics were discussed at the Berlin Conference on IP in Life Sciences in February.

only the first step on the customised med-icines agenda. To truly establish the con-cept successfully, a social consensus still has to be struck in many areas. Maas not-ed that this will include a broad public de-bate – one that can’t avoid sensitive issues like the handling of patient data or the re-imbursement for drugs, even though “there should be no discussions about cost at the patient’s bedside.”

But there’s no getting around the fact that cost will play an important role in the development of personalised medicine. That topic was addressed by Sachin

Soni from the Dutch investment bank Kempen & Co. He vividly portrayed the ways in which biotech companies could position themselves to sell their products successfully – alone or in cooperation with a larger partner.

Recent rulings on iVD

While advances in technology are driving the diffusion of personalised medicines forward, setbacks are coming from the legal side. Two recent rulings – Myriad Genetics and Prometheus – show that in the US, patents based on DNA sequences are now facing strong headwinds. “In the current situation, it is necessary to support a claim with additional elements that ensure a practical application. The claim has to be more than just a law of nature,” said Jennifer Gordon, a representative from Baker Botts LLP. According to Aliki Nichogiannopoulou from the European Patent Office, the EPO is currently much more friendly to innovation in the area than its counterpart in the US.

Mathis Brauchbar (EvalueScience), Gabriele Pestlin (Roche), Peter van der Spek (University of Rotterdam) and Jos Rijntjes (Philips) reported from their daily activites, emphasising how much white space is left on the personalised medicine map. An interesting perspective was also put forward by Iris Simon from Dutch breast cancer diag nostics specialist Agendia BV, which has built up its global marketing from scratch. Regulatory matters were treated by Mirella Marlow from Britain’s NICE. The institute has implemented interesting strategies for a cost/benefit assessment of new diagnostic tools. Tobias Ostler (Regulanet) and Heiner Lüdemann (TÜV Rheinland) also touched on a sensitive point: due to a new EU legal initiative, the classification for in vitro diagnostics could soon become significantly more expensive, affecting niche products in particular. “A good diagnostic makes 20 million euros per year,” said Stephen Little from German industry leader Qiagen. That’s small change in pharma terms, but it means even minor alterations to pricing can mean major changes to the bottom line. B

Patenting is a living issue – over 100 participants took part in the 6th Berlin Conference on IP in Life Sciences, which was organised by BIoCoM in cooperation with the Dutch Embassy.

35_EBSIN3_13_IP_Conference_pad.indd 35 06.03.2013 16:42:54 Uhr

Page 4: European Biotechnology News Special 3/2013 - Intellectual Property

36 Euro|Biotech|News

special: ipNº 3 | Volume 12 | 2013

IntervIew

“A blueprint for future drug development” For the first time, pharmaceutical companies are opening up their compound libraries to biotechs and researchers. In the course of the eU's D196m european Lead Factory pro-gramme (see p. 15), seven Big Pharma firms are contributing 300,000 compounds to a Joint european Compound Collection (JeCC), while SMes are chipping in 200,000 newly synthesised scaffolds as well as drug targets and assays. the entities will be screened in a european Screening Library. euroBiotechnews spoke with Dimitrios tzalis, one of the coordinators, about IP protection within the Innovative Medicines Initative (IMI) project.

Euro|BioTech|News ?Dr. Tzalis, what distinguishes this project from others?

tzaLIS: !The European Lead Factory is a threefold paradigm shift in drug discovery. The sev-en pharma partners are for the first time opening the doors to their substance li-braries – and thus their very special IP – for free. Second, academic researchers and biotech companies will receive full access to resources for screening 500,000 compounds with subsequent hit validation – which is far beyond their current finan-cial scope. Last but not least, for the first time the project is pooling the productiv-ity of SMEs, the creativity of academic re-searchers and the development know-how of Big Pharma. It’s a real cooperative open innovation approach that can serve as a blueprint for future drug develop-ment projects.

Euro|BioTech|News ?What can you tell us about IP protection within such a large project?

tzaLIS: !The 30 partners in the consortium have signed a project agreement that ensures confidentiality and non-use obligation. Those requirements also govern the IP of third parties that contribute proposals for

substance libraries or innovative targets for screening. Information about the structures stored within the Joint European Compound Collection – including substance properties – are further protected by a special software supported process called “Honest Data Bro-ker Process”. It limits access to a few au-thorised people to data that are relevant to the screening programmes.

Euro|BioTech|News ?Are there any project-specific IP rules?

tzaLIS: !Ownership of results and access rights are detailed in a project agreement which was negotiated and signed between the participants in accordance with the IMI-IP Policy and the associated guidance docu-ment issued by IMI. Pharma partners have a preferential right to negotiate on option agreements with the owner of a target.

Euro|BioTech|News ?Who gets what when there’s a hit?

tzaLIS: !Access is regulated in the project agree-ment. The owner of a target or an as-say decides how to deal with the re-sults; whether to commence with R&D or commercialisation. Limitations could only come from the IP of a pharma part-ner who has brought in the compound or

from third-party rights. The drug patent rights of the pharma partner, however, cannot block further development.

Euro|BioTech|News ?What’s the IP situation when a group con-tributes a specific scaffold to the library?

tzaLIS: !Within the European Lead Factory, the five leading SMEs have each assigned 2-3 ac-ademic partners who will synthesise the compound libraries. The latter will be re-sponsible for validating the scaffolds. Own-ership of a scaffold and of the resulting li-brary is split equally between the SMEs and the academic partners within the consorti-um. The right of commercial use is ruled by a milestone payment schedule that grants the exclusive rights for a substance to the project owners. As I said, the owner of a tar-get or assay gets to select the best path for further development.

Euro|BioTech|News ?Can external groups contribute?

tzaLIS: !Yes. A public web-submission portal for submission and evaluation of external pro-posals will be starting in 2014.� B

Dr. Dimitrios tzalis is the founder and CeO of taros Chemicals. He received his PhD at the University of California, San Diego. within the european Lead Factory, taros is synthesising a part of the library and coordinating the overall synthesis of the library by providing the It infrastructure taros Gate.

36_EBSIN3_13_Special_IP_Interview_tg.indd 36 08.03.2013 12:29:42 Uhr

Page 5: European Biotechnology News Special 3/2013 - Intellectual Property

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We represent clients from all over the world with respect to patents, utility models, trademarks and

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Page 6: European Biotechnology News Special 3/2013 - Intellectual Property

38 Euro|Biotech|News Nº 3 | Volume 12 | 2013

Special: ip

SubStance Protection

Hands off gene patents! Dr. Ute Kilger, Dr. Markus Engelhard, Dr. Jan Krauss, Boehmert & Boehmert, Berlin

in europe, patents on animals, plants and genes are under increasing pressure, while absolute substance protection is being eroded. is the continent heading down a path that will turn it into a wasteland for innovation?

Did you know that what are known as ‘bio-patents’ are facing major challenges in both Germany and Europe? The field pri-marily involves proprietary rights to ge-netically modified animals and plants, but refers to gene patents as well. Now bio -patent ghosts are being systematical-ly hunted down in Germany, and not only by the Greens and the political left. Asso-ciations like the German Farmers’ Asso-ciation, breeders’ associations and other political players are also lending a hand. They have already frightened off the en-tire agri-biotechnology headquarters for the BASF Group, which has been moved to the US. Its disputed genetically modified potato Amflora, which produces an im-

portant product for this sector, has been “mashed”. In Europe, at least, the ghost-busters have reached their goal.

For some time, the US has been more re-search- and patent-friendly when it comes to bio-patents, but this also changed with a recent Supreme Court Decision (Mayo vs. Prometheus). The top US judicial body ruled that certain diagnostic methods are not eli-gible for patenting per se, as they reflect a law of nature rather than an invention. The Supreme Court is now examining the long-disputed Myriad case. Myriad’s patent is di-rected at the human genes that correlate to a risk of contracting breast or ovarian can-cer. The question up for discussion is wheth-er human genes are patentable The court

has now set oral arguments for April 15, 2013. It will be interesting to see whether the ghostbusters succeed again. If they do, it could also have effects in other fields as, for example, genetic engineering within the pharmaceutical sector and the patentabil-ity of innovations in these areas. Let’s take a closer look at the ghostbusters.

A large percentage of the population in Europe is fearful about genetically modified foods. There are also church associations and conservationists who view it as unethical to manipulate and patent living things at all. Furthermore, there are farmer and breed-er associations. The farmers say they fear a possibly dangerous privatisation of biologi-cal diversity and the economic exploitation of genetic material as exclusive personal prop-erty, as well as a depletion of the gene pool. Many are worried that the “gene industry” will gain control over the entire food chain, and ultimately over the world’s genetic her-itage. One hears over and over that there must be no patents for an animal or a plant because just such an organism could pos-sibly also come about through selective bi-ological breeding which, as a result, would cause the biological farmer or breeder to be blocked by such gene patents. Which genet-ic engineering products could be affected? GTC Therapeutics has invented a transgen-ic goat whose milk yields the recombinant human antithrombin-alpha. This protein in the goat’s milk is the subject-matter of the first approval in the US for a transgenic ani-mal drug. Moreover, there is the sheep that produce Factor VIII or Factor IX in its milk, as well as many others (see table).

Where’s the logic here?

How likely is it that natural breeding might produce a sheep or goat that in turn pro-duces specific drugs? Isn’t the probability close to zero? And why should such a goat or sheep – one that produces a medical-ly valuable protein in its milk – not be the subject-matter of a patent? Up to now, re-combinant proteins have been produced in micro organisms such as E. coli, yeasts or even CHO cells. Genetically modified micro-organisms like this can be patented. The same is true for genetically modified plants. The Amflora potato, for example, produces

table 1: Substances produced in transgenic animals

Substance Description Source/animal Sales of animal/year

A tPA Tissue plasminogen activator to dissolve clots

milk/goat US$75,000

A Factor VIII Blood clotting factor, haemophilia treatment

milk/sheep US$37,000

A Factor IX Blood clotting factor, haemophilia treatment

milk/sheep US$20,000

A Hemoglobin Blood replacement blood/pig US$3,000

A Lactoferrin Nutritional supplement for children

milk/cow US$20,000

A CFTR Cystic fibrosis transmembrane conductance regulator, CF treatment

milk/sheep, mice

US$75,000

A Human protein C Anticoagulant, treatment for thrombosis

milk/pig US$1,000,000

38-40_EBSIN3_13_Special_Boehmert&Boehmert_tg.indd 38 08.03.2013 12:30:19 Uhr

Page 7: European Biotechnology News Special 3/2013 - Intellectual Property

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Page 8: European Biotechnology News Special 3/2013 - Intellectual Property

40 Euro|Biotech|News Nº 3 | Volume 12 | 2013

Dr. Ute Kilger (Boehmert & Boeh-mert, Berlin) studied chemistry at Ger-many’s University of Merseburg. Since completing her doc-torate in biochem-istry at the Freie Universität Berlin, she has worked for more than a decade

in the patent departments of large pharma-ceutical companies, including Boeh ringer Mannheim, Roche and Schering. Her fi elds of interest are molecular biology, immunol-ogy, biochemistry and pharmacology.

SPECIAL: IP

of farmers and breeders. But demonising bio-patents and eroding the patent system is the worst way to do that, because it’s at most hostile to research. Patents are im-portant instruments for the protection of innovation, and thus must be the fi rst line of advancement. For this reason, patents are an indispensable resource for a coun-try not rich in raw materials like oil, gold or timber. Innovation is a valuable raw ma-terial that becomes usable only through patenting.

In the German Bundestag, the parliamen-tary groups of the CDU/CSU, SPD, FDP and Bündnis 90 /Greens have put forward a cross-party proposal to amend bio -patent guidelines, to amend the European Patent Convention, and to anchor these amend-ments in the new Patent Law. They are demanding, among other things, that so-called product-by-product claims no long-er mean absolute substance protection in animals and plants, but must be restricted to the method actually used. This is an ero-sion of the principle of substance protection. Other representatives on the left demand that no more patents be granted for genes at all, as these are ‘a part of nature’.

If genes can’t be patented, why then is it possible to do so with naturally-occurring proteins or natural chemical substances like penicillin? They have been patentable up to now because they were fi rst made availa-ble by an innovator. Who would be helped by the existence of penicillin in nature if no one knew about it? By making natural substanc-es available and usable, an innovator gains the right to patent protection. If there were no more patents for such substances, there would be no incentive to invest in such inno-vations. The same is true for genes.

Moreover, if there was no absolute sub-stance protection for important innovations, but the protection was restricted to a cer-tain purpose or method, then patents would be too easy to circumvent, and innovations could not be effectively protected.

And so our plea: hands off absolute sub-stance protection! The lawmaker can fi nd better ways to satisfy justifi ed interests. For example, there is the option of limit-ing the effect of a patent. In Sec. 11 of Ger-man Patent Law, we fi nd such limitations, for example, on actions in personal use, for the privilege of research and many others. In the same way, farmers or breeders who use purely natural methods could be exclud-ed from the effects of a biopatent, as long as they really did renounce any gene technol-ogy innovations and products. There would also be the option of compulsory licenses for patents that adversely affect breeders and farmers. Surely anything would be better than to erode substance protection? Other-wise, there will be another ghost roaming Europe’s innovation wasteland.

Dr. Markus Engel-hard (Boehmert & Boehmert, Munich) studied biology, chemistry and bio-chemistry in Frank-furt/Main, Witten-Herdecke and Cam-bridge (UK), where he also completed his doctorate. His interests lie in IP protection in the areas of biochemistry, molecular biology and pharmacology.

Dr. Jan Krauss (Boehmert & Boeh-mert, Berlin) stud-ied biology at the Freie Universität Berlin. After finish-ing his training as a patent attorney, he worked with a large US law firm in Frankfurt/Main. His fields of inter-

est are molecular biology, immunology, plantgenetics and biotechnology.

pure amylo pectin instead of the amylo pectin/amylose mixture found in natural potatoes. Amylopectin is an important raw material for the paper and textile industries, as well as in building materials and adhesives. Be-cause amylose is unsuitable for industrial purposes, the mixture in the natural potato must fi rst be separated in a very labour-in-tensive process. How likely is it that an Am-fl ora potato would come about through bio-logical breeding?

Cultivation of what’s called Bt-maize has been prohibited in Germany. Genetically modifi ed MON810 Bt maize produces a Bt-toxin that also acts as a pesticide. Allegedly – and this is the reason for this prohibition – the toxin also has harmful effects on other incidental organisms like butterfl ies. The strange thing is that apparently no one has a problem with the fact that pure Bt toxin is regularly sprayed on maize fi elds as a pesticide. Where’s the logic here?

Under threat – innovation

Why all this ghostbusting after gene tech-nology and biopatents? Isn’t it about vest-ed fi nancial interests – at least as far as the farmers and breeders are concerned? Are potential needs being served by the gene technology industry that can no longer be satisfi ed through convention-al methods? In the face of a growing glo-bal population, increasing resistance to pests and shrinking natural resources, there appears at fi rst glance to be a great need for innovation in the area of plant and animal breeding. Couldn’t we stop cut-ting down the rain forests if we had other ways of producing the raw materials we need? For example, through green gene technology? Couldn’t we fi ght hunger in Africa better if there were heat-resist-ant species that could better withstand droughts? Couldn’t we stop emptying oil reserves if genetically modifi ed plants were used as an energy source? Is it that farmers are afraid that the gene tech-nology industry will make them largely super fl uous – like horse-and-carriage drivers after the invention of the internal combustion engine?

If there’s a political will, lawmakers can certainly fi nd a way to protect the interests

38-40_EBSIN3_13_Special_Boehmert&Boehmert_tg.indd 40 08.03.2013 12:30:27 Uhr

Page 9: European Biotechnology News Special 3/2013 - Intellectual Property

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Page 10: European Biotechnology News Special 3/2013 - Intellectual Property

42 Euro|Biotech|News Nº 3 | Volume 12 | 2013

Special: ip

Outlicensing

Out-licensing in the life sciences sector

Peter Homberg, Salans LLP, Frankfurt/Main

no matter what the industry, every company at some point faces a specific challenge – finding a financing model that is a good fit. in addition to traditional credit financing, however, the significance of alternative financing options has grown dramatically over the past few years, particularly in the life sciences sector. life sciences firms generally have a high proportion of intellectual Property (iP), which means out- licensing iP rights and expertise is a very attractive financing option. increasingly in the last few years, licensing agreements between biotechs and Big Pharma have be-gun to be sealed during clinical Phase i, or even during the pre-clinical phase. When it comes to licensing projects at a stage this early, Big Pharma firms characteristi-cally capitalise on biotech expertise within the scope of continued development of in-licensed technologies – for example by increasing commissions to out-licensing biotechnology companies as R&D service providers.

As in other segments characterised by IP rights and expertise, numerous legal chal-lenges in the life sciences sector have to be met in the run-up to and during the actual negotiations of a license project, and must at least be taken into consideration during the preparation phase.

It is almost inevitable that confidential in-formation and/or development results have to be exchanged in the run-up phase, as well as during contract negotiations or within the framework of research and development

contracts, licensing agreements, or similar agreements. Such an exchange of informa-tion can occur only unilaterally – from one contractual partner to the (potential) other partner. A bilateral exchange of confiden-tial information also often occurs in which both parties disclose valuable knowledge. In practical terms, it is therefore advisa-ble that the conclusion of a confidentiality agreement is considered a first step in an early stage of contract negotiations, in order to ensure the best possible protection of in-

formation and development results that are disclosed by the contractual parties. The re-spective design of the confidentiality agree-ment (i.e. the question of whether such an agreement should be unilateral or bilater-al) depends on practical application in each individual case. One aspect of tantamount importance is the conclusion of a custom-ised confidentiality agreement, and ensur-ing complete and traceable documentation regarding the information provided. One possible foundation for this which is very common in practical applications is a sam-ple contract, but one must consider that the particularities of each individual case always require a specific modification of standard clauses. The precise definition of the term “confidential information” is of particular importance, and one must ensure that this is customised to the specific situation in as much detail as possible.

During the negotiations on the confi-dentiality agreement, as well as any sub-sequent out-licensing, the parties should consider the option of negotiating an ar-bitration clause. The greatest advantage of this is the non-publicity of arbitration proceedings. As mentioned above, this is of great importance in light of the sig-nificance of confidential expertise for the companies involved. The arbitration and

Peter Homberg is partner at the international law firm salans llP in Frankfurt, and heads its german life sciences Practice group. His expertise focuses on all kinds of transactions in the field of iP, Private equity and M&A for clients from the pharmaceutical, diagnostics, med-tech and biotechnology sector.�

42_44_EBSIN3_13_Special_Homberg_tg.indd 42 07.03.2013 14:01:48 Uhr

Page 11: European Biotechnology News Special 3/2013 - Intellectual Property

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Page 12: European Biotechnology News Special 3/2013 - Intellectual Property

44 Euro|Biotech|News Nº 3 | Volume 12 | 2013

Special: ipEuro|Biotech|News

(ICC, France). However, one must note that the ICC has revised and updated the cur-rently valid version of the arbitration rules that have been in force since 1998. The re-vised ICC arbitration rules were formally introduced in Sept ember 2011, and came into force in January 2012. The extensive revision addresses the increasingly com-plex situation of cases that are the object of disputes, and seeks to increase efficien-cy and lower costs.

The new ICC arbitration rules now regu-late even complex multi-party processes in a separate section, and include regula-tions regarding the bundling of arbitration processes. A new “Emergency Arbitrator” enables parties to file for urgent, prelim-inary or precautionary measures prior to involving an arbitration court. This pro-vides preliminary legal protection within arbitration proceedings, and can be im-portant particularly in protecting confiden-tial information if another violation against

confidentiality regulations or a repeated disclosure of confidential information is to be eliminated. The regulations involving procedure have also been revised.

To design negotiations for licensing transactions as efficiently as possible, the creation of a “Term Sheet” should also be considered during the prepara-tion phase. This can ensure that the con-tracting parties are clear on the most important commercial items at an early phase of negotiations, and prevents possi-ble deal-breakers during end-stage con-tract negotiations.

In summary, one could say that the basis for the success of an out-licensing model is identifying the interests of every partic-ipant as early in the process as possible, and the creation of a balanced, contract-ual solution that is acceptable for all par-ties. Then nothing will stand in the way of a successful licensing transaction, even if it also functions as a financing model. B

procedural rules negotiated by the parties are decisive for the contractual negotiation of the arbitration clause. Different institu-tions offering the execution of arbitration proceedings provide standard clauses for negotiating arbitration clauses, which can then be adjusted to an individual case. In principle, arbitration clauses for individ-ual institutions differ only in details. One should always ensure that the arbitration rule and other procedural aspects – i.e. the location of the arbitration court or number of arbitrators – is clearly regulated in the arbitration clause in order to prevent any disputes regarding formal aspects. Further procedures are also the result of a nego-tiated arbitration clause, and are regulat-ed by an arbitration rule. In principle, the parties are free to select arbitration rules and agree on the basic points listed above. In international contract practice, parties often agree to apply procedures agreed by the International Chamber of Commerce

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