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TRENDSPOTTER: Housey v. Bayer Decision Limits Reach-Through Infringement

In a case of first impressions, the legal question of how much an assay claim in a patent may cover was recently addressed by the US District Court in Delaware.  In Bayer v. Housey Pharmaceuticals, Chief Judge Sue Robinson dismissed claims by Housey that Bayer infringed its assay patents by selling compounds in the US that were allegedly discovered in Europe using the assay. 


The Housey patents—US Patents Nos. 4,980,281; 5,266,464; 5,688,655; and 5,877,007—are directed to methods for screening for or identifying compounds with a potential for development as pharmaceuticals. 


Housey did not allege that Bayer actually used the patented screening methods in the US—which could have provided the basis for a charge of traditional patent infringement pursuant to Section 271(a) of the US Patent Law (35 USC). Rather, Housey brought charges under a specific infringement provision, 35 USC §271(g), which provides that in the case of a patented method or process, a party might be guilty of infringing the patent by using, importing, selling, or offering to sell a product in the US that are made using the patented process. 


Cinching a loophole


Section 271(g) was enacted in the late 1980s to close a loophole in US patent law in which the patent was directed to a process or method for making a product. Before the provision was enacted, a patentee's competitor could make the product using the process of the patent so long as the procedure was carried out outside the US. The product could then simply be imported into the US to be sold with the patentee having no remedy for the infringement on his patent. 


Infringement of a US patent is territorial—that is, acts that constitute infringement must be carried out in the country. Section 271(g) thus provides the basis for a patent infringement suit against the party importing and selling the product made by the patented process. In a patent litigation arising under Section 271(g), the law also provides a rebuttable presumption that the accused product was actually made by the patented process.


In keeping with this aim, Section 271(g) has previously been applied only to manufacturing processes in which a product is actually made outside the US only to be imported to and sold in the US. Housey attempted to expand the application of Section 271(g) to research methods, like assays, used to identify compounds.


In his suit, Housey claimed that Bayer was selling a product of his patented assay methods when the German drugs giant sold a drug in the US shown to inhibit or activate a target protein using the patented methods. Housey also defined as an act of infringement Bayer's alleged import or use in the US of knowledge and information reflecting the identification or characterization of a drug acquired from using the patented methods. 


The District Court dismissed Housey's claims because Bayer's acts simply were not acts of infringement under the statute. According to the court, Bayer would have been guilty of infringing on Housey’s patents if Housey's patented methods constituted steps in the manufacture of final drug products. The Court found that the statute was not intended to apply to the situation at hand, in which the patented methods were directed to assays for identifying a potential drug candidate.


This decision dovetails with the USPTO's recent commentary on "reach-through claims" to preclude claims to compounds identified by a novel (and patentable) assay, absent a direct showing and description of such compounds. Reach-through claims are primarily directed to a molecule identified by an assay, where the basis for the patent claim to the small molecule rests solely upon the description of the assay itself and there is no description of compounds identified. 


In light of the USPTO's reach-through policy, the inventor of, say, a novel receptor and an assay to screen for inhibitors of the receptor may obtain a patent for the receptor and the method of the assay. The inventor may not obtain a patent for the inhibitors discovered unless a great deal of description of the inhibitors is provided. 


The Housey decision now makes it more difficult for an inventor to sue a party for using the assay or the receptor to detect inhibitors outside the US. Since what is imported, used, and/or sold in the US is either information to identify a drug or a candidate drug identified by the assay and the decision indicates that import, use or sale of a manufactured final product is necessary, and no remedy under §271(g) is possible. 


An inventor of a tool such as a receptor and its use in an assay still has substantial patent rights. The inventor can preclude others from using the receptor or the assay in the US without a license from the inventor. However, companies may choose to "design around" the assay, or develop new assays to identify useful compounds to avoid licensing assays and other such tools, especially if the amount of royalties attached to each assay used in developing a drug becomes excessive, called “royalty stacking.”


Such assays are generally used in the early stages of the development of a drug product. However, most of the cost involved in developing a marketable drug usually comes much later, after the point at which the assay is important. Thus, the value an individual assay in the overall scheme of  a drug's development may not be significant.


The application or not of Section 271(g) to infringement of assay or other research tool patents should become clearer in the future. There are several additional pending lawsuits claiming that the importation and sale of drugs infringes assay patents, including another Housey case in Delaware in which Housey has sued about 20 companies for allegedly infringing the same patents as in the Bayer case. It is expected that all of the cases will be appealed to the Court of Appeals for the Federal Circuit for further resolution. Stay tuned.


Rochelle K. Seide is a partner at the law firm of Baker Botts. She is experienced in biotechnology, intellectual property, and patent issues, and also has a Ph.D. in human genetics. Michelle LeCointe is an associate at Baker Botts and a registered patent agent. They can be reached at [email protected]and [email protected].


TrendSpotter is a weekly column that focuses on how trends in politics, patent law, and the US and European markets will affect the genomics industry. The column appears every Friday. To access previous columns just enter the word "Trendspotter" in the archive search window on the homepage.

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