Issue 29

Contents
USPTO Proposed Changes
Lessons for IP Owners
The Extraterritorial Reach of U.S. Patents
Ranbaxy Wins by Invalidating an Improper Claim
Who is an Employee?
WTO on GMO
Ranbaxy
Nanotechnology
PepsiCo's Indian-born CEO
Mercury Pollution
Morning After Pill
Suven and Eli Lilly & Co Tie Up
Dr. Reddy's Labs
Ocimum Biosolutions
Strides Arcolab Ltd.
Stem Cells
Goats Produce Human Milk
New Airport of Mumbai

USPTO Proposed Changes
The average time from filing an application to a first action in a newly filed patent application is 27.4 months for applications in molecular biology; 41.6 months in technologies related to simulation, modeling, and emulation of computer components; and 45.3 months for interactive video distribution technologies. The USPTO has proposed two radical changes to the patent rules to reduce its current backlog. The USPTO appears to be confident that it will finalize the rules as proposed before the end of the year, despite strong opposition.

The first rule change the USPTO proposes is to limit the number of continuing prosecution opportunities as a matter of right. The USPTO also intends to limit divisional application practice to those applications directly resulting from a restriction requirement in an immediately preceding case. Voluntary divisional applications will no longer be permitted. The narrow exception to the single continuation rule involves cases in which an applicant can establish that the amendment, argument, or evidence that necessitated the continuation application or request for continued application could not have been submitted prior to the close of prosecution. The proposed rules also limit an applicant’s right to file a patent application within two months of the filing date of another pending or patented non-provisional application, if it contains overlapping disclosure with that application, names at least one inventor in common, and is owned or subject to an obligation of assignment to the same entity, and applications filed by parties to a joint research agreement.

The second proposed rule is to limit initial examination of applications to focus on only 10 claims unless an applicant supplies an examination support document. All independent claims in an application must be designated for initial examination. If the application contains fewer than 10 independent claims, dependent claims may be designated for examination. Examination of non-designated claims that are dependant on designated claims may be held in abeyance until the application is otherwise in condition for allowance.
http://www.mondaq.com/article.asp?articleid=41280&email_access=on

Lessons for IP Owners
Handler et al write, "… IP owners need to undertake their own due diligence to determine other members’ patent ownership rather than relying solely on the organization’s rules of good faith voluntary disclosures of existing and pending patents and other voluntary policies designed to prevent anticompetitive holdup. Second, IP owners participating in standard-setting that are submitting applications to the U.S. Patent and Trademark Office should have legal counsel carefully review the organization’s disclosure rules and guidelines relating to disclosure of relevant patents. Last but not least, no participant should attempt to subvert the process to exclude others or to seek a market advantage for its own intellectual property. The Commission’s decision strongly suggests not only that standard- setting activities will continue to receive careful antitrust scrutiny but that, in the standard-setting context, intellectual property ownership will not be a defense to anticompetitive conduct by a participant," at: http://www.mondaq.com/article.asp?articleid=42194&email_access=on

The Extraterritorial Reach of U.S. Patents
Traditionally, infringement of a U.S. patent was deemed to be limited to activities performed wholly within the United States. In the seminal case of Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 532 (1972), the Supreme Court of the United States held that exporting domestically made components of a patented product for assembly abroad was not direct infringement under U.S. patent law. Since then, the U.S. Congress has expanded the statutorily defined scope of infringing activities in the wake of advancing technologies and a burgeoning global marketplace. Recent decisions by the U.S. Court of Appeals for the Federal Circuit (the "Federal Circuit"), such as Eolas Technologies Inc. v. Microsoft Corp., 399 F.3d 1325 (Fed. Cir. 2005), and NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282 (Fed. Cir. 2005), have also clarified the reach of U.S. patents within the context of newer technologies with cross-border applications. http://www.mondaq.com/article.asp?articleid=41276&email_access=on

Ranbaxy Wins by Invalidating an Improper Claim
The US Court of Appeals for the Federal Circuit has now confirmed that a patent claim can be invalidated on what was previously considered to be a minor technical defect. A dependant claim is invalid if it is not a subset of the claim from which it purports to depend. In the present case, the invalidated claim (claim 6) should have depended from claim 1. Claim 6 is dependent on claim 2 but does not narrow the scope of claim 2. Instead, the two claims deal with non-overlapping subject matter.

Claim 1. [R-(R *,R*)]-2-(4-fluorophenyl)-.beta.,.delta.-dihydroxy-5-(1-methylethyl)-3-phen yl-4-[(phenylamino)-carbonyl]-1H-pyrrole-1-heptanoic acid or (2R-trans)-5-(4-fluorophenyl)-2-(1-methylethyl)-N,4-diphenyl-1-[2-(tetrahy dro-4-hydroxy-6-oxo-2H-pyran-2-yl)ethyl]-1H-pyrrole-3-carboxamide; or pharmaceutically acceptable salts thereof.

2. A compound of claim 1 which is [R-(R*R*)]-2-(4-fluorophenyl)-.beta.-.delta.-dihydroxy-5-(1-methylethyl)-3 -phenyl-4-[(phenylamino)carbonyl]-1H-pyrrole-1-heptanoic acid.

6. The hemicalcium salt of the compound of claim 2.

Even though Ranbaxy won this point, its generic Lipitor was still held to have infringed Pfizer’s enantiomer patent which expires on 24 March 2010 (with pediatric exclusivity). The District Court’s claim construction was affirmed and consequently so was the finding of infringement. Pfizer Inc. v Ranbaxy Laboratories CAFC 06-1179 (2006).

Ranbaxy announced on 29th that a Norwegian court handed down a favorable decision for Ranbaxy in its case against Pfizer, involving two patents on atorvastatin in Norway. Atorvastatin is a cholesterol-lowering drug which is marketed by Pfizer as Lipitor(R).  The Oslo City Court sided with Ranbaxy by finding non-infringement of two of Pfizer's Norwegian patents (No. 177,566 and No. 180,199) covering particular intermediate compounds. Earlier, in November 2005, the Norwegian Court had found Ranbaxy's atorvastatin product not to infringe one of Pfizer's process patents (No. 309,322) but to infringe another of Pfizer's patents (No. 177,706) covering a particular intermediate compound. Ranbaxy has already appealed to the Norwegian Court of Appeals against the negative judgment on the one remaining intermediate compound patent.

Who is an Employee?
"Both the IRS and courts look to the common law to determine a worker’s employment status. Under common law rules, anyone who performs services for an employer arguably is the organization’s employee if the employer can control what will be done and how it will be done. From an employment tax perspective, the determination of who qualifies as an employee is important because an employer must withhold federal income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee (including a common law employee). An employer does not generally have to withhold or pay any taxes on payments to independent contractors.

The issue of whether someone is an employee or independent contractor for employment tax purposes often arises when the worker applies for unemployment benefits, and the employer informs the government that the worker is not an employee but rather an independent contractor. If the IRS (or local authority) investigates and concludes that a worker was not an independent contractor, but rather an employee, the employer may face serious employment tax consequences, including fines and penalties.27 Accordingly, employers should be mindful of the standards that the IRS will follow to determine whether a worker is an employee or independent contractor," Employee Law Journal, Vol .32, No .1, Summer 2006.

WTO on GMO
A recent World Trade Organization (WTO) interim ruling on the regulation of genetically modified organisms (GMOs), EC-Measures Affecting the Approval and Marketing of Biotech Products, will be of significant interest to companies operating in the food and agricultural sectors. The ruling arises from a dispute initiated in 2003 by the United States, Canada and Argentina against the European Community (EC) over its treatment of GMOs and products containing GMOs. These countries claimed that the EC approval system delayed the commercialization of GMOs, and that some European countries had effectively banned certain genetically modified crops.  The ruling signals a WTO preference for science rather than mere concern as a tool of justification of trade-restrictive measures designed to protect health or the environment. The WTO Panel concluded that these country bans were inconsistent with Articles 2.2 and 2.3 of the SPS, which prohibit a party from maintaining a restrictive measure without sufficient scientific evidence to justify it (Article 2.2), and from applying such measures in a way to constitute a disguised restriction on international trade (Article 2.3). The Panel recommended that the individual countries bring their safeguard measures into compliance, and remove the bans on the specified GMO products. The Panel is now receiving comments from the Parties, and is expected to issue its final decision in September. That decision may be appealed to the WTO’s Apellate Body, which may uphold, modify or reverse the Panel’s legal findings. If the EC fails to comply with the recommendations contained in a Panel or Appellate Body Report, the United States, Canada and Argentina may seek and obtain WTO authorization to impose trade sanctions against the EC until it complies with its WTO obligations. McCarthy Tétrault Legal Update, May 2, 2006.

Ranbaxy on a Buying Spree
India's Ranbaxy Laboratories is reportedly close to buying the Russian generic drug company Akrikhin for about $100 million. The Business Standard reported that Ranbaxy was looking to expand its presence in the Russian market. New Delhi-based Ranbaxy has been on a buying spree this year.  If it completes the deal it will mark the latest in a string of acquisitions in Italy, Spain, Romania and Belgium. Ranbaxy has been scouting the Canadian market as well. The company's shares were up 0.23% at Rs 409 on the Bombay Stock Exchange.

Nanotechnology
Nanotechnology is "the design, characterisation, production and application of structures, devices and systems by controlling shape and size at nanometre scale."1 One nanometre (nm) is one billionth of a metre. By controlling matter at such a scale, materials with new properties and uses can be created. These nanomaterials have a relatively large surface area to volume ratio when compared to the same mass of material produced in bulk form, which can make the nanomaterial more chemically reactive and affect its physical and chemical properties. At such a scale the electrons in the material are subjected to quantum mechanical effects, rather than the classical physics effects seen in materials at larger scale, affecting the optical, electrical and magnetic properties of nanomaterials.
http://www.mondaq.com/article.asp?articleid=41892&email_access=on

PepsiCo's Indian-born CEO
PepsiCo appointed Indian-born Indra Nooyi as its new chief executive. In doing so, the food and beverages firm becomes the biggest company in America (by stockmarket value) to be led by a woman. Ms Nooyi will become the world's most important female chief executive. She is the obvious successor in the public eye to Carly Fiorina. Both Archer Daniels Midland (run by Patricia Woertz) and Kraft (by Irene Rosenfeld) have slightly higher revenues, but PepsiCo is now the biggest company by stockmarket value with a female boss. A staunch vegetarian Hindu Tamil Brahmin, Nooyi has never tasted meat or drunk alcohol. Her family is Aiyar Saivites and devotees of the Shankaracharya of Kanchipuram in Tamil Nadu. Her mother-in-law is equally religious, with an affinity for Guruvayur, the Krishna temple in Kerala, and the Subramanyam Temple near Mangalore. Born on October 28, 1955, in Chennai, Nooyi graduated from Madras Christian College with a degree in chemistry, physics and math. She did an MBA in finance and marketing from IIM Calcutta, and began her career as a low-profile product manager at Johnson & Johnson and textile firm Mettur Beardsell. This determined, but poor Brahmin girl, who while studying in Connecticut, worked as a receptionist from midnight to sunrise to earn money and struggled to put together US$50 to buy herself a western suit for her first job interview out of Yale, where she had just completed her masters. Having got a master’s degree in management, she worked with Boston Consulting Group, Asea Brown Boveri and Motorola. She joined PepsiCo in 1994 and has served as president and CFO since 2001.
http://www.economist.com/displaystory.cfm?story_id=7803615&fsrc=nwl

An environmental group said bottles of Coca-Cola Co. and PepsiCo Inc. soft drinks in India still contained traces of pesticides, highlighting weak food safety laws in the country. The Indian Soft Drink Manufacturers Association, of which PepsiCo and Coca-Cola are members, said the soft drinks were safe to consume.

Mercury Pollution
Mercury is a trace element in coal and forms roughly 1 part per billion of the gas created by incineration. Most of the mercury that can become methylmercury, the form that accumulates in fish and can cause neurological damage in humans, would be captured under the Environmental Protection Agency's plan for a 70 percent rollback. That could be achieved mostly with existing technology, such as smokestack scrubbers, used for reducing other pollutants. A new system called Toxecon designed by industry researchers prevents gaseous mercury from escaping into the atmosphere by mixing it with carbon, creating ash that is collected in the fabric bags and trucked to landfills.  Detroit Edison is spending more than $1 billion on such equipment for its Monroe Power Plant, the biggest mercury emissions source in Michigan.

Morning After Pill
After three years of regulatory limbo, Barr Laboratories has won the right to market the Plan B contraceptive without a prescription. Women over 18 will be required to show proof of their age to buy the drug while under age girls will still need a prescription. Plan B has been a favorite cause on both sides of the political divide.