The Andhra Journal of Industrial News
(An International Electronic Digest Published from the United States of America)
(dedicated to Andhra, My Mother's Homeland)

Chief Editor: Prof. Sreenivasarao Vepachedu, Esq
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Issue 38

5109 Kali Era, Sarvajit Year, Vaisakha/Jyesta month
2065 Vikramarka Era, Sarvajit Year, Vaisakha/Jyesta month
1929 Salivahana Era
Sarvajit Year, Vaisakha/Jyesta month
 2007 AD, May





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Changes in Patent Law: Obviousness Test/ Inventive Step

On April 30, 2007, the US Supreme Court reversed the Court of Appeals for the Federal Circuit (CAFC) in two cases. One case involved CAFC's test for finding a patented invention obvious.  The other case involved the CAFC's extension of patent damages to infringing conduct outside the United States1.

In the KSR International Co. v. Teleflex Inc., U.S. Supreme Court No. 04-1350 (April 30, 2007)2  patent dispute, the Supreme Court reversed CAFC’s decision that in turn reversed a district court ruling finding a Teleflex patent invalid due to obviousness.  CAFC's test holds a combination invention nonobvious absent some teaching, suggestion, or motivation (TSM) to combine the various pieces of prior art together.

Obviousness is one of the criteria involved in evaluating a patent application or invalidating an issued patent, defined under 35 U.S.C. § 1033 :
(a) A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made.

Before the creation of the Federal Circuit in 1982, Supreme Court interpreted Section 103 in Graham v. John Deere Co., 383 U.S. 1, 86 S. Ct. 684, 15 L. Ed. 2d 545 (1966)4 :

Under 103, the scope and content of the prior art are to be determined; differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background, the obviousness or nonobviousness of the subject matter is determined. Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc., might be utilized….  As indicia of obviousness or nonobviousness, these inquiries may have relevancy.

In the case at hand, KSR International manufactured gas pedals for GM trucks and SUVs and developed an electronic sensor that could automatically adjust the height of a vehicle's pedals to the height of a driver. Teleflex sued KSR for infringing on its patents.

Due to the importance of this case, Microsoft and Cisco had submitted a friend of the court brief5   supporting KSR's position. The brief argued that the lower court's test "establishes too lenient a standard for patentability, and it has had a stifling effect on true innovation because it encumbers ideas well beyond the limits imposed by Congress for patentable inventions."  Also, a group of law professors submitted a brief in support of KSR6 .  They argued that the appellate court had relegated the person having ordinary skill in the art to the role of a “reference librarian, assisting in locating appropriate prior art references but apparently incapable of applying them in light of his or her knowledge or skill.”

Now, the Supreme Court rejected the rigid TSM test developed by CAFC:
"We begin by rejecting the rigid approach of the Court of Appeals. Throughout this Court's engagement with the question of obviousness, our cases have set forth an expansive and flexible approach inconsistent with the way the Court of Appeals applied its TSM test here."

"The results of ordinary innovation are not the subject of exclusive rights under the patent laws," Justice Anthony Kennedy wrote for the Court. "Were it otherwise, patents might stifle rather than promote the progress of useful arts."

By doing so, the Supreme Court raised the bar to patentability.  The Supreme Court advocated an "expansive and flexible approach" to determine obviousness that focuses on 35 U.S.C. § 103 and Supreme Court precedents interpreting that statute, such as Graham v. John Deere Co.  Also, the Supreme Court declared that the "obvious to try" standard may render a patent obvious, which was rejected by the CAFC. Thus the intelligence of the person having ordinary skill in the art (PHOSITA) who couldn't combine prior art without a TSM is not so ordinary anymore.  Now PHOSITA is upgraded, probably, to a person having common sense, a little bit of creativity and, of course, skill in the art that doesn't need any rigid TSM to try and combine various pieces of prior art.  This may be a natural consequence of the age we are in, since the ordinary intelligence of a person has tremendously increased with the availability of Internet and Google, even in the remote villages in India. The Supreme Court thereby made it easier for Patent and Trademark Office (PTO) examiners to support obviousness rejections and for alleged infringers to invalidate patents based on obviousness.

The trend has already been set by CAFC in this direction, e.g., Norvasc® case in March 2007 (Pfizer Inc. v. Apotex, Inc7 ).  Norvasc® is Pfizer's patented drug for treating angina and hypertension. The CAFC has invalidated Pfizer's patent as obvious. Norvasc is amlodipine besylate. At the time of the invention, amlodipine and besylate independently were known, but amlodipine besylate was not prepared yet. Pfizer argued that the results of combining these would have been unpredictable and therefore non-obvious. The CAFC disagreed and reversed. However, the realization that the patent office applied the wrong legal standard to unexpired patents may erode confidence in the validity of these patents, claim some patent attorneys.

In the meantime, Congress is once again preparing to try and fix the US patent system. The Patent Reform Act of 20078  was introduced simultaneously in the Senate and House. Sponsored by Sen. Patrick Leahy (D-VT) and Sen. Orrin Hatch (R-UT) in the Senate and by Rep. Howard Berman (D-CA) and Rep. Lamar Smith (D-TX), the bill is an attempt to update current patent laws.  The new bill is very similar to bills introduced in 2005 and 2006 that failed to pass. It would change the US patent system from its current "first to invent" system to the "first to file" system used in almost every other country. It would also make some changes to how damage awards are calculated in infringement cases.

Indian Perspective
While US has been attempting to integrate with the rest of the world, India has been doing the same. India acceded to the World Trade Organization, and thereby to the TRIPs (Agreement on Trade Related Intellectual Property Rights) in 1995.  As a result, India was obliged to grant patents for pharmaceutical products from January 1, 2005.  Accordingly, India had amended the Patents Act, 1970 in 2005 to provide patent protection for substances capable of being used as pharmaceutical products or drugs.

The Indian Patent Office's Manual of Patent Practice and Procedure cites foreign case laws, including that of the US Court of Appeal of the Federal Circuit, the US Supreme Court and the EPO Board of Appeal. Therefore, the KSR International Co. v. Teleflex Inc. is of interest in the context of Indian patent law also.

While amending the patent law, India limited the patentability of pharmaceutical substances to new chemical entities. Section 3(d) of the Patents Act, 1970, as amended in 20059 , explains that the new form of a known substance is not different from the known substance and is, therefore, not an invention, unless there is a significant increase in efficacy.  The said Section lists various derivatives that cannot be treated as an `invention' within the definition of the term under Section 2(1)(j) of the Act. Section 3(d) of the Patents Act, 1970 states, as amended9:
the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.

Explanation: For the purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy."

This added requirement of the `inventive step' for pharmaceutical substances is purportedly intended to prevent "ever-greening". There is logically no public interest in preventing `ever-greening' of non-efficacious salts - which are useless to start with.  Section 3(d) is not required if the `inventive step' is properly defined. As it stands, Section 2(1)(j) of the Act defines `invention' as a new product or process involving an inventive step and capable of industrial application and Section 2(1)(ja) defines `inventive step' as a technical advance compared to the existing knowledge or having economic significance, or both, in addition to being not obvious to a person skilled in the art.

Recently, in a pre-grant opposition, the Patent Office rejected an application for a patent filed by Novartis for a pharmaceutical substance that is a beta-crystalline form of imatinib mesylate, which is sold worldwide under the brand name Gleevac/Glivec10 .  One of the grounds of opposition was that the beta-crystalline form of imatinib mesylate is the salt of a known substance without an increase in efficacy and, therefore, not an invention under Section 3(d).

Not surprisingly, Novartis took the Government of India and the Patent Office to court for rejecting its application under Section 3(d) of the Act.  In a writ petition filed before the Chennai High Court, Novartis claimed that India, being a signatory to the TRIPs Agreement, has failed to meet its obligations under TRIPs by having Section 3(d) in the Act, which allegedly is not in compliance with the TRIPs agreement. The Novartis case has been partially transferred recently, under section 117G, from the High Court in Chennai to Intellectual Property Appellate Board (IPAB). The case most probably will end up in the High Court later, and may even go all the way to Supreme Court.  Section 117G in the Patents (Amendment) Act provides for all pending appeals in the High Court shall be transferred to the Appellate Board set up under the Act, effective as of 2 April 2007.  However, judgment on compliance with the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), part of the Novartis case, is still pending with the High Court.

Currently, more than 100 pre-grant oppositions have been filed with the Indian Patent Office11. These oppositions may result in rejections and which in turn may subsequently escalate to the point where the Swiss company has challenged the legality of the Indian Patent law.  As John Dudas, the Director of USPTO advised on December 7, 2006 at Confederation of Indian Industries India International Center in New Delhi, "third parties are known to bring frivolous, pre-grant challenges to patent applications that add needless delay patent grants. Post-grant opposition provisions would make the Indian market more attractive to potential investors, as they provide a means to challenge invalid patents while not delaying the grant of valid patents"12.  Obviously the pre-grant opposition is an additional drag on the Indian patent system that is already burdened with huge amount of backlog. A substantial applications backlog is developing in India. According to an estimate, 30,000 applications from the pharmaceutical sector are pending in 2006-7 and the total number of patent applications in the country to rise by over 20 per cent every year13.  However, this is nothing in comparison to the backlog in the US, which is about a million or more applications14.

A country has the sovereign right to adopt national policies specific to the needs of its people. Yet, it is imperative upon the governments to form policies that serve the long-term interests of the nation rather than immediate populist vested interests.  Both India, a developing continental country, and the USA, a developed country, need to keep in mind while making policies and passing laws that science and technology are the established currency of geo-political power and innovation will continue to be the driving force for economic development and national security. 

  1. The second landmark SC case may help Microsoft lower the amount it needs to pay Alcatel-Lucent in the separate MP3 patent lawsuit, since approximately half of the $1.5 billion award was based on overseas sales. Not so surprisingly, claiming that two recent Supreme Court decisions have undercut a jury ruling, which resulted in the largest damages award ever in a patent case, Microsoft Corp. filed a motion seeking a new trial in its case with rival Alcatel-Lucent. Recently, a federal judge has signed off on a $1.53 billion jury verdict against Microsoft in a patent suit brought by Alcatel-Lucent SA. The legal case started in 2003, when Lucent filed 15 patent claims against Gateway and Dell for patent violations regarding MP3 playback. Microsoft added itself as a defendant in April and took a bullet for Dell and Gateway, as the patents were closely tied to its Windows operating system. Microsoft disputed that Alcatel-Lucent's patents were applicable, and that it licensed the MP3 code used in Windows Media Player from Fraunhofer-Gesellschaft, a German company that owns the MP3 code. 
  14. See for delays and backlogs: and

Crazy Patents
For the USPTO to issue a patent, the invention must be novel, non-obvious, and "useful." The standard for usefulness is certainly the weakest of the three -- any possible utility, no matter how small, will suffice. And, useful does not necessarily mean commercially viable. In other words, you can get a patent on some crazy things that will never make it to the shelves of your local store. It is a waste of money to obtain such patents that may never be commercialized.  But, you may wonder if anybody has money to waste on getting some crazy and useless patents! Of course, there are many and USPTO would gladly issue such patents because it only hurts the pocketbook of applicant.  For instance:

For some funny patent acartoons visit:

Patent Cliff for Pharma
A new report by Datamonitor says that the next decade will see a sharp spike in the number of generic drugs coming into the $643 billion global pharmaceutical market. Datamonitor says that knockoffs for drugs that earn $140 billion in sales will lose patent protection by 2016. Lipitor will be one of the next blockbusters to face a copycat competitor, which can reduce the price of a drug by as much as 80 percent in a matter of months. For some pharma companies, the loss of patent protection amounts to a "patent cliff" that seriously threatens the bulk of their revenue. This trend, though, has a distinct silver lining for the biotech industry. With patent deadlines looming, many of these same drug companies have been budgeting huge sums to either buy out promising developers or pay significant premiums to license key markets.

A Chilling Signal to Research-based Companies
Struggling Pharmaceutical Companies face yet another blow.  Recently Thailand and Brazil have been in the forefront in breaking the patents.  Brazil's president has authorized the country to bypass the patent on an Aids drug manufactured by Merck, a US pharmaceutical giant.  Brazil will import a cheaper, generic Indian-made version of the patented Efavirenz drug.  Thailand's decision to break Merck's Efavirenz patent, as well as drugs produced by two other firms, and Brazil's decision could discourage pharmaceutical firms from investing in treatments for illnesses prevalent in the developing world.

Merck offered Brazil almost a third off the cost, pricing the pills at $1.10 (£0.55) instead of $1.59.  But Brazil wanted its discount pegged at same level as Thailand, which pays just $0.65 per pill. Now, though, it will source Indian-made versions of Efavirenz for just $0.45 each.

However, Aids activists in Brazil and generic companies welcomed the decision.  "This is certainly an important advance in terms of widening access. We are very happy that Brazil is moving in the right direction," said Michel Lotrowska of NGO Medecins Sans Frontieres.  However, this approach is shortsighted and will have long-term implications for drug development, particularly drugs for diseases inflicting the third world, which Medecins Sans Frontieres and generic companies purportedly serve.  A better approach might be providing subsidies by third world governments and non-profit charities like the Clinton Foundation (see below) and Gates Foundation to procure drugs for the poor, instead of breaking the patents discouraging innovation and destroying the jobs of thousands of hardworking researchers, scientists, technicians, sales persons, administrators, managers etc in the discovery research.

The companies - Novartis, Merck and Pfizer - are resisting moves by India, Thailand and the Philippines respectively to use safeguards that are written into World Trade Organization (WTO) intellectual property rules in order to protect public health. Each company is trying to impose its patent monopoly on a big-selling medicine to stop the countries from exercising their rights to trade in cheaper generic equivalents. For examples, Abbott Laboratories has filed a lawsuit against an Indian pharmaceutical company and its U.S. subsidiary in a move to stave off efforts to horn in on the billion-dollar U.S. market for the drug Depakote.

Former President Bill Clinton announced agreements with drug companies on May 8, 2007 to lower the price in the developing world of AIDS drugs resistant to initial treatments and to make a once-a-day AIDS pill available for less than $1 a day.  The drugs to battle so-called "second-line" anti-retrovirals are needed by patients who develop a resistance to first-line treatment and currently cost 10 times as much, Clinton said. Nearly half a million patients will require these drugs by 2010.  Clinton's foundation negotiated agreements with generic drug makers Cipla Ltd. and Matrix Laboratories Ltd. that he said would generate an average savings of 25 percent in low-income countries and 50 percent in middle-income countries.  Clinton also announced a reduced price for a once-daily first-line AIDS pill that combines the drugs tenofovir, lamivudine and efavirenz. Since starting its HIV/AIDS Initiative in 2002, the Clinton Foundation has worked with 25 countries in Africa, the Caribbean and Asia to set up AIDS treatment and prevention programs.  The foundation also provides access to lower-priced AIDS drugs in 65 countries. Some 650,000 people are now receiving AIDS drugs purchased through the Clinton Foundation.

Actor Michael J. Fox said "Levodopa is the gold-standard treatment for Parkinson's ... But it's a little frustrating that the best drug we've got is one that's been around for 40 years. 40 years!" at the BIO International Convention.  Fox appealed to scientists and investors May 7, 2007 to aggressively translate scientific research into creative treatments for debilitating diseases, including the Parkinson's disease he has fought for more than a decade.  Fox said grants from the National Institutes of Health have created a system that mainly encourages academic scientists to publish papers that yield academically interesting answers. But the system fails to translate the discoveries into new treatments and cures.  Nor do pharmaceutical and biotechnology companies have an appetite for high-risk studies critical in determining whether creative ideas could yield therapies for the 20,000 human diseases that have no cure, Fox said. They are more interested in repackaging old ideas and compounds in an effort to continue reaping vast returns.   Generic drug companies have no research programs to develop new drugs, while companies that are in the business of developing new drugs are worried given the trend with AIDS drugs.

Generic Initiative
As part of the Critical Path Initiative, the FDA issued a new report identifying many of the roadblocks that prevent the development of generic versions of commonly used drugs. Companies must prove their generic drug's bioequivalence to brand-name therapies. For most drugs this can be established with blood plasma tests. However, it's more difficult to prove the bioequivalence of inhalers, nasal sprays, and topical skin applications, and fewer of these drugs are available in generic forms. The report calls for research on new bioequivalence methods for each challenging drug class By pinpointing the barriers preventing generics to enter the market, the FDA hopes to improve patients' accessibility to commonly-used treatments.

In addition, a bipartisan amendment added to a bill renewing drug user fees that passed the U.S. Senate Wednesday would alter the citizen petition process for Abbreviated New Drug Applications, making it harder for brand-name drug makers to use "frivolous" petitions as a way to delay generic drugs.

White Houses Opposes Generic Biologics
The White House on May 1st expressed firm opposition to any attempt to add a law that would pave the way for biotech generic or follow-on drugs to be approved to a bill allowing the Food and Drug Administration to collect fees that is currently being debated in the U.S. Senate.

Biotech Patents
With the number of patents on gene-related discoveries soaring, IP experts say that the process of gaining a patent has become much more complex. Isolating and sequencing a protein won't cut it anymore, say attorneys. You now have to demonstrate a "credible utility" outlining what it can do. Biotech patent applications are considered a prime reason why the total number of patent filings in the U.S. hit 409,500 last year. And many of these patents are out to protect new therapies rather than genetic links to disease. See also:^1349897

India: Intellectual Property Environment in India

FDA Warning
The Food and Drug Administration (FDA) is cautioning U.S. consumers about dangers associated with buying prescription drugs over the Internet. This alert is being issued based on information the agency received showing that 24 apparently related Web sites may be involved in the distribution of counterfeit prescription drugs.  On three occasions during recent months, FDA received information that counterfeit versions of Xenical 120 mg capsules, a drug manufactured by Hoffmann-La Roche Inc. (Roche), were obtained by three consumers from two different Web sites. Xenical is an FDA-approved drug used to help obese individuals who meet certain weight and height requirements lose weight and maintain weight loss.  None of the capsules ordered off the Web sites contained orlistat, the active ingredient in authentic Xenical. In fact, laboratory analysis conducted by Roche and submitted to the FDA confirmed that one capsule contained sibutramine, which is the active ingredient in Meridia, an FDA-approved prescription drug manufactured by Abbott Laboratories.

Scientists have a crucial role in educating the public about the importance of science if we are to have any hope of facilitating future innovation. A few notable scientists have taken this duty to heart, altering their career tracks to promote science and education.

Merck's Drugs
Pharmaceutical giant Merck & Co. Inc. has sued India’s Ranbaxy Laboratories Ltd. for infringing its patent on the antibacterial drug Primaxin.

While, the Food and Drug Administration rejected Merck and Co.'s request to market Arcoxia, a successor to its withdrawn arthritis drug Vioxx in the United States. Merck pulled Vioxx from the market in September 2004 after research showed it doubles risk of heart attacks and strokes.  Arcoxia is in the same class of drugs as Vioxx, which has become a poster child for drug safety problems. Despite the safety concerns in the United States, Arcoxia is on sale in 63 other countries.

Organic Food
Before chemical fertilizers and pesticides came into being, everybody ate organic food. But then pesticides and GM foods came along and now only rich can afford organic food. Organic food has become a niche market, a luxury for wealthy consumers. But researchers told a U.N. conference recently that a large-scale shift to organic agriculture could help fight world hunger while improving the environment. Crop yields initially can drop as much as 50 percent when industrialized, conventional agriculture using chemical fertilizers and pesticides is converted to organic. While such decreases often even out over time, the figures have kept the organic movement largely on the sidelines of discussions about feeding the hungry. Farmers who go back to traditional agricultural methods would not have to spend money on expensive chemicals and would grow more diverse and sustainable crops, the report said. In addition, if their food is certified as organic, farmers could export any surpluses at premium prices.

The United Nations defines organic agriculture as a "holistic" food system that avoids the use of synthetic fertilizers and pesticides, minimizes pollution and optimizes the health of plants, animals and people. It is commercially practiced in 120 countries and represented a $40 billion market last year.

Nanotechnology in Italy
NanoFab is one of the first European laboratories applying nanotechnology to industrial production. Created to promote interaction between the nanotechnology and business communities, it places at the disposal of businesses laboratories in the forefront in order to support technology and scientific expertise transfer. NanoFab proposes itself as a reference point for scientific consultancy through its own facilities as well as through its links with national and international academic institutions.

Source: The primary sources cited above,  BBC News, New York Times (NYT), Washington Post (WP), Mercury News,, Chicago Tribune, USA Today, Intellihealthnews, Deccan Chronicle (DC), the Hindu, Hindustan Times, Times of India, AP, Reuters, AFP,, Biospace etc.

Notice: The content of the articles is intended to provide general information. Specialist advice should be sought about your specific circumstances.

Copyright ©1998-2007
Vepachedu Educational Foundation, Inc
Copyright Vepachedu Educational Foundation Inc., 2007.  All rights reserved.  All information is intended for your general knowledge only and is not a substitute for medical advice or treatment for special medical conditions or any specific health issues or starting a new fitness regimen. Please read disclaimer.

Om! Asatoma Sadgamaya, Tamasoma Jyotirgamaya, Mrityorma Amritamgamaya, Om Shantih, Shantih, Shantih!
(Om! Lead the world from wrong path to the right path, from ignorance to knowledge, from mortality to immortality and peace!)
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