Supreme Court ruling raises concerns about pharmaceutical, tech patents

This article previously appeared in the Boston Business Journal

A U.S. Supreme Court ruling this week is raising questions for local biotech and technology companies, with some attorneys saying that it could put the validity of five years' worth of patents in jeopardy and upset collaborations and mergers.

The nine justices on Tuesday upheld a lower court's ruling on a patent lawsuit Swiss pharmaceutical company Helsinn Healthcare S.A. brought against Israeli drugmaker Teva Pharmaceutical Industries Ltd. in 2016.

In its initial lawsuit, Helsinn argued that Teva violated four patents when it filed an application with the FDA to start producing a generic version of Helsinn's anti-nausea treatment Aloxi in 2011. But Teva argued that Helsinn's patents were invalid under a new interpretation of the 2011 America Invents Act — an argument Supreme Court backed, upending many industry experts' reading of the law.

Here's a look at the ruling and how it could affect local biotech, pharmaceutical and technology companies.

What's the change to U.S. patent law?

Congress made several alterations to decades of patent case law when it passed the America Invents Act in 2011, including a change to the wording of the original federal statute stating that a company or inventor must file a patent application within one year of disclosing the invention in a printed publication, sale or means "otherwise available to the public."

Teva argued that because Helsinn had signed a distribution deal with another pharmaceutical company two years before filing any paperwork with the U.S. patent office, the patents were invalid. But Helsinn contended that the Aloxi patents held because the company hadn't publicly disclosed the formula, dosage or other proprietary proof-of-concept details about the drug.

Many attorneys and U.S. patent officials had previously interpreted the law in Helsinn's favor, causing surprise when the Supreme Court ruled otherwise this week, according to Choate, Hall & Stewart attorney Rob Sahr.

Who would be impacted?

Though the case focused on two pharmaceutical companies, the ruling affects a wide array of industries, including technology and biotechnology. Patents that have been awarded since the America Invents Act went into effect in 2013 under circumstances similar to Helsinn's could be invalid, which could affect any partnerships or mergers currently in the works, according to Choate, Hall & Stewart attorney Sophie Wang.

Local startups may be hardest hit, McCarter & English Partner Erik Paul Belt said. Small companies and inventors don't necessarily have the funds to quickly file patents on every new creation and often rely on partnerships and other deals with larger companies to advance their research and pipelines.

"As a policy matter, I don’t think it’s a great thing for the innovation community, particularly the Boston innovation community. It’s a shame, because a lot of the biggest innovations have come not from the big companies, but from small inventors that have more incentive to change the paradigm," Belt said.

What does this ruling mean for life sciences and technology industry long-term?

While Belt, local trade group MassBio and others have said that the ruling that was handed down this week could hinder startups and innovation, Davis, Malm & D'Agostine attorney Rich Sampson said it's a small change given that the U.S. has also adopted a "first-to-file" overall patent approach since 2011, putting anyone who doesn't file patent applications quickly at risk.

"It's just pushing things back to the way they were. The landscape prior to this was that any commercial sales or moves to benefit commercially from your product started that 12-month clock ticking," he said. "My view is that it’s a positive ruling. It will force clients to file sooner, which is going to benefit them."