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Ted Ebersole on Clearing the Genomics IP Thicket with Patent Pools

Ted Ebersole
Sterne, Kessler, Goldstein & Fox PLLC

At a Glance

Name: Ted Ebersole

Title: Associate, Sterne, Kessler, Goldstein & Fox PLLC

Professional Background: 2003 — present, associate, Sterne, Kessler, Goldstein & Fox PLLC, Washington, DC.

Education: 2003 — JD, the University of Pittsburgh; 2000 — PhD, University of Notre Dame, biology; 1995 — BSc, York College of Pennsylvania.

A study published last week in the journal Science reveals that nearly 4,000 genes, or one fifth of all human genes demarcated in the Human Genome Project, are covered by US patents.

Opponents of gene patenting claim that obtaining licenses to genes or mutations for which different parties may own up to 20 patents may present an obstacle for many researchers. Gene patents could present an even greater issue in array technology because chips are often the technology of choice for exploring the human genome.

Enter into this IP environment the concept of a patent pool, where a group of patent holders decide that, for the benefit of the industry, they will share the IP wealth for particular genes. While the concept is not a new one, it is new in biotechnology, and it is one that the Biotech/Chemical Practice Group at the Washington, DC-based law firm of Sterne, Kessler, Goldstein & Fox have been pushing with recent publications in Drug Discovery World, IP & Tech Law Journal, and Nature Biotech.

Ted Ebersole, an associate at Sterne, Kessler, Goldstein & Fox and a co-author of the papers, attended the Advances in Microarray Technology conference held Oct. 11-13 in London to discuss the concept, and BioArray News spoke with Ebersole last week to learn more about patent pools.

Maybe I can start by asking you how you got involved in dealing with this fairly specialized area.

I started at this law firm in September '03, and during a presentation in house, Jorge Goldstein, the managing director, briefly mentioned that this topic, diagnostic genetics, is a very interesting topic. He felt that it was going to pick up and become very heated in the next couple years and that a paper on diagnostic genetics and the potential of a patent pool might be useful.

I approached him after the seminar in late 2003 and we agreed to write a draft, begin our research, and it has taken off since then.

What are the issues in the industry right now that would necessitate implementing something like a patent pool?

Jorge was involved with some publications that had several different articles going back and forth regarding patenting in general, and one or two of the articles discussed the fact that you had gene patents and what happens is that you have these 'patent thickets' where you have multiple patentees who own different patents on mutations for genes and diseases and so on, and if people, doctors in particular, want to research or test for a particular disease, they need to get licensed for all of these particular patents from the different patentees. And so, you end up having this patent thicket, sort of a stack of patents where you want to go through and test for a disease, you might have to license each one of these patents from different patentees and that can become very burdensome. Also, if you do license them, you may have to deal with 'stacking' of the patents, so you might have multiple royalties that you have to pay out to five, six, seven patentees and it can become expensive.

That's not to say that I am against these patents. They are perfectly legitimate. But what happens is that people [who] are seeking to develop tests for disease are blocked and they might stop testing or researching — so [the patents] might inhibit development or research.

Maybe you can go over these two terms you brought up in the [IP Tech & Law Journal and Nature Biotech] papers, 'exclusivity' and 'stacking.' What would be an example of each?

If you have the patents on a particular gene, and that patentee offers only an exclusive license to a third party, then that third party basically has full control over what's going to be tested. And so that ends up blocking other people from testing for a particular mutation, because someone has the rights to it and exclusively licensed it. On the other hand, you might have a patentee that doesn't offer an exclusive license but offers non-exclusive licenses to different parties. And so everybody can sort of become part of the action.

Patent stacking is related. It is just where you have multiple patents involved, and in order to test for something you need to access all these patents. You don't want to infringe on those patents, so you need to get a license to them. So, the decision is, do I: a), continue doing the research I'm doing and run the risk of infringement; b), do I stop completely; or c), do I just get a license to these patents to make sure that I am not infringing?

You mention in [the Nature Biotech] paper that individuals working with multiplex arrays may be likely to confront these issues. Why is that?

Well, diagnostic genetics and array technology go hand in hand. People have different types of arrays where they have a gene, multiple genes, SNPs, mutations, et cetera, on this array and so you have this area where the problems of exclusivity and patent stacking occur in microarray technologies. They overlap, because people who want to develop chips also have to get rights to these different patents.

If you have an array-making company, I can imagine that if they want to test for a particular disease, in order to put the right genes on there, unless it's public, they're going to have to get the rights to it. Science is rapidly advancing, and things are just going to get more complex and there are going to be more mutations detected for more diseases — so you can just imagine a scenario where you have an array, and you just want to test for a certain disease, but this company just can't get the rights for certain mutations and genes that are necessary to test for it because [they are] patented. There's a hold up. And that's where we have been going with this idea.

What is your definition of a patent pool?

There are multiple definitions, but one that Jorge, [paper co-author] Marvin Guthrie, and myself agreed on is two or more patent owners agree to license certain patents to one another and/or third parties. That definition came from 1995 guidelines from the US Department of Justice and Federal Trade Commission.

But how does it actually work?

My understanding is that with some of the more recent patent pools — and we mentioned them with radio and aircraft in the paper to show that patent pools have been around for more than a century — in the electronics industry, DVDs, and software, the way they work is that you have an individual or group that identifies a disease or diseases that problems exist in, maybe there are patent thickets or multiple patents involved, and they realize that there is some kind of hold up for each one of those diseases.

Let's hypothetically take the idea of a patent pool in diagnostic genetics. In order to effectively begin that, you may have an individual and four or five others that form a group with an attorney and discuss which diseases there are out there where the issue of a patent pool could be helpful, and sort of approach it that way. I imagine that you would have to have a person or committee to sort of take the initiative and on the one hand, start working on some agreements that the patent pool members would sign. Then you would have to go out there and talk to the industry players that have those patents — because some of these people might not want to join a pool, which could be a problem, they could hold up the pool.

I envision a committee of people that would involve scientists, patent attorneys, an anti-trust attorney or two, a licensing specialist or two — you'd have all these different people because there are a lot of issues that would come up with a patent pool.

You mention in the articles that there could be some skepticism from people in the genomics industry…

I think there has been a discussion of a patent pool before in genomics. I am not sure what exactly [critics have had] in mind, but [some] responded by saying that that wouldn't work because the science is developing so rapidly, and the actors have such different interests. What we are saying is that our pool isn't broadly for genomics. It's much narrower: It's for diagnostic genetics of a disease. So, some of the issues or criticisms about patent pools in genomics generally would not apply to ours because ours would be narrower. These issues would be less likely to exist.

So how did your presentation go over at Advances in Microarray Technology?

It went over fine. There were about 150 people in the room, mostly from European industries, or the European offices of those industries. And the questions I got mostly concerned the financing of it all — What would the fees be and how much would royalties be? How would the licensing work?

What was your response?

Well I told them it's one of those things where you would probably have to have a licensing attorney. But this is sort of a new idea — the application of a patent pool in biotech. This is a developing industry. These kinds of issues will be resolved as you go along, but I can't give you any definitive numbers up front. But all of the questions resolved around licensing.

So what are you going to do with regard to spreading this idea?

We are looking at possibly publishing another paper or two discussing standards setting, which is a concept that comes up when you talk about patent pools. Just briefly, the idea is that in order to form a patent pool you only want to include essential patents. So if you have a disease that has 50 mutations, and there are 25 different patentees owning those 50 different mutations. It may be that 25 of those mutations are only predictive of the disease — like 1 percent [predictive value] or some real low number — and they may not be seen as worth it, or essential for a doctor or researcher to further develop to diagnose this disease. So you need to determine which patents are essential and which ones are not essential. You should have a mutation that gives you the predictive value of a disease greater than 2 percent. Then you would look around and see which of the mutations do that and those types of mutations would be considered essential and so you'd want to have the patents that cover those mutations in the pool.

We already have talked about this in the previous papers, but it would just be elaborating on standards setting. We think it's an important topic. And it's generated a ton of interest. We were at Chips to Hits in Boston in 2004 and we were at Advances in Microarray Technology this month in London. I think the idea is spreading. It started off as just idea but it's steamrolled into multiple conferences and multiple publications.

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