Title: The Touchstone Effect
1The Touchstone Effect
- The Impact of Pre-grant Opposition on Patents
by Feroz Ali Khader, Advocate feroz.ali.k_at_gmail.c
om 9444217156
2A story in three parts
- Long ago, before the continent of Australia was
discovered, the old world knew and believed that
all swans were white. - It was in Australia that the first black swan was
sighted. - The single sighting invalidated a general
statement derived from millennia of confirmatory
sightings of millions of white swans.
3Part 1 Black Swan
- What is a Black Swan?
- Nassim Taleb in his book The Black Swan The
Impact of the Highly Improbable stretches the
idea of Black Swan to define events that share
the following three characteristics - It is an outlier an event that lies outside the
realm of regular expectations. - It carries an extreme impact.
- It can be predicted only after it happens.
4Part 1 Black Swan
- In other words, a Black Swan
- Is a rarity
- Has extreme impact and
- Has retrospective predictability
- Everything of importance around you will qualify
for a Black Swan - 9/11 is a Black Swan So is Google same can be
said about the end of Soviet Union and the
spread of Internet.
5Part 1 Black Swan
- This combination of low predictability and large
impact makes the Black Swan a great puzzle. - Black Swan logic makes what you don't know far
more relevant than what you do know. - Black Swans exist in all businesses.
- It is the next BIG thing, the Killer
Innovation the wonder drug which is new,
non-obvious and cannot be conceived by others. - More importantly, Black Swans dominate the
pharmaceutical industry.
6Part 2 Black Swan Innovation
- Innovation is an effort to create purposeful
focused change in an enterprises economic or
social potential Peter F. Drucker - Innovations could lead to patentable inventions
and vice-versa. - Innovation refers the process of bringing out
patentable inventions. - Technological Innovation can be
- Radical innovation Eg. Post-it
- Incremental innovation Eg Colour, Shapes
7Radical Innovation
- Very rare and by nature unpredictable true
Black Swans - Radical innovation in pharmaceuticals have low
predictability but high impact they become
blockbusters. - Blockbusters are drugs with sales of over a
billion dollars a year - Pfizers Lipitor, Novartis Gleevec etc
8Serendipitous Discoveries
- Every serendipitous discovery qualifies for a
radical or Black Swan Innovation. - Penicillin was discovered serendipitously.
- The same is true about Pfizers anti-impotence
drug, Viagra (sildenafil citrate), which was
initially used for treating hypertension and
angina pectoris. - Minoxidils hair growing properties were noticed
fortuitously while treating some bald patients
for hypertension. - The anaesthetic use of nitrous oxide (laughing
gas) and ether were discovered accidentally.
9Incremental innovation
- Are the minor changes and developments made to a
radical innovation - Common industrial practice to invent a radical
innovation and to develop it further
incrementally. Eg Detergents, Dentifrices and
Diapers PG can be called the 3(d) Company. - And Section 3(d) regulates the patenting of
incremental innovations
10Me too
- Me too drugs are the incarnations of
incremental innovation. - High-priced editions of existing drugs
variations of older drugs already in market - Nexium (www.purplepill.com)
- Six best-selling statins Mevacor, Lipitor,
Zocor, Pravachol, Lescol and Crestor.
11Looking out for blockbusters
- Blockbusters means easy profit the lure of huge
pay offs - Lipitor earns Pfizer an annual revenue of 13
Billion. - AstraZenecas Prilosec (for heartburn) earned a
revenue of 6 billion in 2001.
12How innovative is the industry?
- The output of innovative drugs have been far and
few - The real source of innovation are the academic
institutions, small biotech companies and public
funded research organisation. - AZT, the first AIDS drug was developed by
National Cancer Institute and Duke University
later licensed to GSK
13How innovative is the industry?
- Taxol (paclitaxel), leading cancer drug,
developed by National Cancer Institute and
Florida State University licensed to
Bristol-Myers Squibb - Amgens Epogen was developed by University of
Chicago and Columbia. - Gleevec benefitted from NIH funded university
researcher
14Part 3 Painting the Swan Black
- The pharmaceutical industry has a tendency to
paint a white swan black or to repaint a faded
old Black Swan - Opposition acts as a check on this phenomenon
- With the pipeline of new drugs dwindling, the
industry now focuses on packaging what is known
as Black Swans
15When pipelines dwindle
- New Drugs Approved by the US FDA between 1996 and
2004 - Painting Swans Black is a consequence of the
industry reality of fewer new drugs
16When Blockbusters go off-patent
- Pharmaceutical companies lose huge part of the
market share when their patents expire. - Eli Lillys patent on Prozac expired in 2001.
- AstraZenecas patent for Prilosec (the original
purple pill) expired in 2001 when the drug had a
revenue of 6 billion in annual sales. Replaced
by Nexium - Bristol-Myers Squibb lost its best seller
Glucophage. - Schering-Plough lost Claritin and tried to
replace it unsuccessfully with Clarinex.
17Opposition as a touchstone
- Opposition acts as a touchstone for checking the
quality of patents or as sandpaper to check the
plumage of Swans - It helps in the development of a strong patent
system where only the right inventions get
rewarded and the wayward gets rejected - Helps the Patent Office to take informed
decisions on grant
18What is Pre-grant Opposition?
- Peer-initiated challenge mechanism under the
Patents Act. - Challenge initiated before the grant at the
Patent Office. - Administrative in nature and not judicial.
- Helps the patent office to overcome information
asymmetry - The purpose of opposition proceedings is to give
a competitor/interest groups the opportunity of
opposing unjustified protective rights.
19Pre-grant Opposition is
- risk avoidance.
- Helps you avoid the risk of facing an expensive
infringement suit. - In-house procedure keeps you in control
- The most important part of patent enforcement, ie
filing suits for infringement is an activity that
is outsourced and involves a gamut of different
and highly unpredictable players. Opposition
helps you to decide the course of action.
20Why Pre-grant Opposition is important.
- A patent application will disclose technical
information about the area in which the invention
is claimed. - Patent Offices around the world have difficulties
in keeping pace with the rapid advancement of
technology in all areas of science. - The knowledge about an earlier invention or a
disclosure more likely to come from the
competitors who have expertise in that particular
field of technology in which the invention is
claimed.
21Its relevance from a systemic viewpoint
- The device of opposition by competitors is a
means to equip the Patent Office with information
that may not be available to it. - Opposition proceedings will be significant in
determining the grant of patents for the
applications currently pending before the Patent
Office. - In the case of pharmaceutical patents, opposition
proceedings will play an important role not only
in the development of patent law but also in the
future course of the pharmaceutical industry.
22Efficient Procedure
- Time-bound proceedings
- The Act and the Rules stipulate specific
time-limits for completing the opposition process
efficiently. (Rule 55) - Summary proceedings
- The underlying principle the opposition procedure
is of early and complete presentation of the
parties cases as opposed to the piecemeal and
tardy introduction of arguments and supporting
evidence.
23Cost-Effective Procedure
- A comparatively straightforward procedure
- Results in quick disposal on merits thereby
reducing the costs incurred in contesting the
proceedings. - Trial and appreciation of evidence in the
traditional manner in which it happens in the
courts of law do not occur in opposition
proceedings. - No fee stipulated for filing a pre-grant
opposition. - But, there could be costs when opposition fails.
24Time-bound Procedure
- Representation for opposition should be filed
within six months from the date of publication of
application (safe period) - Publication of the application under section 11 A
- Applicant has three months time to file response.
- Hearing signifies the final step in a pre-grant
opposition, after which the Controller gives his
decision. - Controller shall give the decision within one
month after the completion of hearing.
25The Rs.120 Crore (or more) Question
- Do you need a strategy on opposing patents?
- the company lost about Rs 120 crore in sales
because of the delay in launching the Flame - - Mr Venu Srinivasan, MD, TVS
- TVS found out that it needed one after Bajaj sued
it for patent infringement of its twin-spark plug
technology. - The experts at TVS knew about Bajajs patent and
yet did not oppose. - Opposition doesnt cost much. But not initiating
one does.
26Bajaj Auto Ltd
- Bajajs taking TVS to task over its spark plug
patent. - Bajaj seems to have a strategy on opposition so
far opposed applications - Patent No.176906 (223/BOM/ 1993) of Automotive
Research Asso. of India, (Failed) - Patent No. 176968 (419/BOM/ 1992) of Greaves
Cotton Co Ltd (Succeeded) - Patent No. 184001 of Piaggio (Failed)
27Hindustan Unilever
- HLL ( now HU) also seems to have a strategy on
opposition - Patent No.190644 (102/BOM/1998) by Alphacon
Containers Pvt. Ltd (Failed) - Patent No.198399 (931/CHE/2003) Post-grant
Opposition (Failed) but patent amended.
28PG
- Unilevers global rival appears to be taking
Unilever to the task - Patent No. 174429 (100/BOM/92) of HLL opposed by
PG Far East Inc (US Company) Succeeded - Patent No. 174537 (237/BOM/1992) of HLL opposed
Succeeded - Patent No.174044 (249/BOM/1991) of HLL Failed
- Patent No. 176112 (303/BOM/92) of HLL Succeeded
- Patent No.173958 (316/BOM/I99I) of HLL Failed-
Patent amended.
29Ranbaxy
- Ranbaxy (Soon Daiichi Sankyo) has an open
strategy on challenging patents. - Patent No. 85/DEL/1995 of Eli Lilly Co -
partially succeeded only process patents
granted - Patent No. 190/MAS/1998 of Roche Succeeded
- Patent No. 1440/MAS/1998 of Novartis Succeeded
- Patent No. 1602/MAS/1998 of Novartis Gleevec
case Succeeded - IN/PCT/2000/00084/CHE of Pfizer Failed Patent
amended. - IN/PCT/2001/00788/CHE of Pfizer Failed
30The Role of Strategic Oppositions
- Helps you to keep track of competition
- Patents keeps you informed about how others are
growing and a strategy will help you to find your
place - Increases your market share whenever a patented
drug is kept out of market - Gives reliable information on your RD efforts
Where you put your money
31Please visit
- The web page of my forthcoming book
- The Touchstone Effect The Impact of Pre-grant
Opposition on Patents - by LexisNexis Butterworths
- www.thetouchstoneeffect.blogspot.com