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Freedom to operate

Establishing the strength of a biopharma company's intellectual property before the commercialisation of an idea

There are two main themes of creativity in the human mind: artistic or commercial ideas. The first may take the form of poetry, literature, music, painting, sculpture or software. The second may be a new device, an industrial process, a tool or a chemical reaction. Both may be protected by various forms of IP rights, for example patents, trademarks or copyrights.

In today's biopharmaceutical domain a myriad of specialist R&D professionals are focused on creating and preserving IP that can be commercialised profitably. An important aspect of this effort is getting the 'freedom to operate'.

Consider the following scenario. An aspiring biochemist enjoys mixing and matching reagents at his home at the weekend. In the past, he has stocked various sophisticated reagents, some still under patent, from a well-known laboratory supplier. During the holidays he comes up with a mixture that when tried on home-lab-grown bacteria, results in a brownish excretion that proves to be a powerful new antibiotic. Should he rush to the patent office on Monday morning? He had better not.

The same example applies to most biopharmaceutical startups. They have a core team of bright scientists who continuously labour towards the next great innovation. In the process, they come up with all kinds of inventions, potentially useful in human therapeutics. Are they free to patent them as their own? Only if they have not used any other patented products, processes, or tools in the process. If all this applies, then they possess freedom to operate.

Freedom to operate is the ability to capitalise on an invention, without challenges from any other parties, private or otherwise. It also means that throughout an invention's creation period, the inventor took extra care in ensuring that no other products or processes were used that had been patented by others previously. Freedom to operate is therefore a right to capitalise commercially on a biotechnological invention and is not interchangeable with the patent. That is, an inventor may hold a patent but not the freedom to operate. In order to avoid such a serious obstacle, it is preferable to ensure freedom to operate in advance of acquiring the patent.

Gaining freedom
In the biopharmaceutical industry, it usually takes more than a decade to bring a new invention to the marketplace. Over this time- and resource-consuming process, a plethora of raw materials, tools, chemical reactions, techniques and processes are used by countless R&D professionals. To ensure eventual freedom to operate requires two complementary steps: first, the collection and recording of every single material, tool, process and so on required for creating the invention and second, identifying and studying any potential existing exclusivity claims on each and every ingredient used along the way to the invention.

Biopharmaceutical R&D is a sequential process, comprising seven major steps:

1) Discovery and technology
2) Identification of candidate molecules
3) Manufacturing
4) Selection of indications and dosages
5) Validation of target product profile
6) Compilation of the regulatory dossier
7) Regulatory submission.

Step 1 entails the use of in vitro and in vivo disease models and the application of dedicated process, discovery and manufacturing technologies. Step 2 covers the lead identification and preclinical development. Step 3 includes the selection of a host system, isolation and purification of the active substance, improving the production yield, scaling up and full-scale production.

Every process undertaken during these three significant R&D steps needs to be fully described. In other words, record who did what, how, with the help of what and where. This will reveal thousands of steps, each with respective inputs, processes and outputs. All of these are then taken through an IP screening, which includes, for example, who has patent claims, what these include, where they are valid and for how long. The search is conducted by experienced IP professionals across free or proprietary databases. When this step is completed, patent attorneys undertake the task of ascertaining which of the thousands of R&D steps infringes on someone else's patents. Finally, getting the freedom to operate is the decisive step before the company may proceed with its own commercial applications of the patent.

Every process undertaken during these three significant R&D steps needs to be fully described

Four methods
There are four main methods a company can use to gain the required freedom to operate before it takes a new biopharmaceutical candidate through its rigorous clinical trial process. It can pay for it, or it can exchange one of its technologies with somebody else's technology rights. It can also bypass a licensed obstacle by 'inventing around' it, or create a patent pool with other interested biopharmaceutical or pharmaceutical companies.

Paying for it
A biopharma in need of an important patent it does not already own can request the patent holder to either sell the patent outright, or licence it. This enables the licensee to go ahead with its own development plan, which will hopefully repay the costs of acquiring a patent from the outside. For the licenser company, it may not be a priority patent and letting someone else use it for a different product may give it additional revenue over the patent life. The price of such licence or sale is commensurate with the rarity of the patent in question, or the anticipated sales potential of the new product based on the licensed patent.

Exchanging a technology
Two biopharma companies holding large patent portfolios on their own may decide to exchange patent rights on some of their portfolio holdings, giving them access to much-needed new expertise and future sales potential. For example, one company may hold a patent on fast-screening thousands of candidate molecules, each a chemical modification of an archetype, while the other may hold rights on an animal disease model, for example rat type II collagen arthritis, an animal model useful for the study of rheumatoid arthritis. Once again, terms and conditions are based on future valuations of the technologies involved.

Inventing around
Consider the case where a biopharma company has managed to sequence the gene responsible for interferon alpha, which is naturally-occurring in the body, and later succeeds in inserting the gene into a host system, eventually producing the recombinant molecule with a given yield. Later into development, the use of a patented chromatography column leads to a 50-fold increase in the yield. Before licensing the expensive rights to the proprietary column used, the internal development department comes up with a similar column, using a different absorbent material which is not only patent-free, but may revolutionise interferon biomanufacturing in the future. The discovery eventually leads to the company's chromatography patent, as well as a means to 'invent around' the manufacturing technique.

Patent sharing
In this example, three academic institutions active in the fields of gene sequencing, come up with complementary ideas for enhancing and accelerating the process of gene sequencing on the way to sequencing the first ever mammalian species' complete genome. Instead of labouring individually for years, in the race to the genome characterisation, they come together by forming a patent-sharing pool, each allowing the others to share, use and improve upon the respective patents, with all eventual improvements to be shared among the three. In the end, their pooled patents attract the interest of a major biopharmaceutical company, which licenses the pool from the three academic parties. In retrospect, if it were not for the patent pool, no individual parties would have progressed enough in the sequencing, nor would they have access to any significant royalties, plus the biopharma would not have capitalised on the genome knowledge to produce its own therapeutic interventions.

So, there are several ways to ensure freedom to operate that will, in turn, enable patenting and a future for an idea.

Dimitris Dogramatzis

The Author

Dimitris Dogramatzis is the author of Healthcare Biotechnology - A Practical Guide (CRC Press, 2010). He is a registered pharmacist and pharmacologist and was previously the regional VP of Northern Europe for Serono.




22nd August 2011


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