Round one of the U.S. CRISPR patent battle is over - but what does the PTAB's no interference-in-fact decision really mean?

by Allen & Overy LLP
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On 15 February 2017 the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trade Mark Office (USPTO) delivered judgment in the interference proceedings between the University of California Berkeley (UCB) and the Broad Institute of MIT and Harvard (the Broad).1 These proceedings are part of a wider dispute over the ownership of the patent rights to the fundamental components of the CRISPR/Cas9 system currently taking place in the U.S. and Europe between UCB, the Broad and others.

Pursuant to a motion brought by the Broad on 23 May 2016, the PTAB found that the respective inventions claimed by UCB and the Broad are sufficiently different and distinct from one another so as to be separately patentable – there is no interference-in-fact between the relevant CRISPR patents and applications in question. The decision concerned 12 granted patents and one application filed by the Broad, and one patent application filed by UCB, and brings the interference proceedings to an end subject to any appeal by UCB.

The Broad and its affiliated entities have been quick to declare the result a resounding victory over UCB. The markets reacted accordingly, with Intellia Therapeutics (Intellia) and CRISPR Therapeutics (CRISPR Tx), licensees of UCB’s patents, and Editas Medicine (Editas), licensee of the Broad’s patents, all experiencing sharp changes in their respective share prices. However, in the long run, the decision may be less influential than these reactions might suggest.

In particular, the U.S. interference proceedings are unlikely to be indicative of the parties’ chances of success in opposition proceedings before the European Patent Office (EPO) or national invalidity proceedings. In addition, the decision has arguably not changed the fundamental strengths and weaknesses inherent in each party’s patent position, in particular for UCB if their U.S. patent application is now able to proceed to grant with its broad claims intact.

In this article we examine the PTAB decision and its ramifications for the parties in the short, medium and long term, and their current and prospective licensees and collaborators.

The PTAB’S Descision

The PTAB found that there is no interference-in-fact; that the respective inventions claimed by UCB and the Broad are sufficiently different and distinct from one another so as to be separately patentable (assuming other requirements of patentability are satisfied).

The Broad was able to convince the PTAB that its invention, a method for use of the CRISPR/Cas9 system in eukaryotic cells, was not obvious over the invention of CRISPR/Cas9 in any environment (including in prokaryotic cells or in vitro), as claimed by UCB’s patent application.2 Specifically, the PTAB found that a person of ordinary skill in the art (POSITA) would not have reasonably expected the CRISPR/Cas9 system to be successful in a eukaryotic environment, one of the key limbs of the test for obviousness in the U.S.
Ultimately the PTAB’s decision turned on the fact that, although they accepted that UCB had demonstrated a high level of motivation on the part of a POSITA to try the CRISPR/Cas9 system in a eukaryotic environment, this never rose to the level of a reasonable expectation of success. By contrast, the PTAB preferred the Broad’s interpretation of each issue in almost every case.

In particular, the PTAB placed “significant weight” on contemporaneous statements made by those in the art at the time of, and subsequent to, the publication of the seminal Jinek 2012 paper in which UCB’s inventors had demonstrated the CRISPR/Cas9 system working in vitro. These statements (including some from the UCB inventors and one of their expert witnesses) were found to support the Broad’s case and, in some cases, undermined UCB’s expert evidence.

The PTAB were also convinced by the technical arguments made by the Broad as to the difficulty and uncertainty in transferring a prokaryotic system into a eukaryotic environment. The packaging of eukaryotic DNA in chromatin structures was particularly singled out, but the Broad were also able to point to other prokaryotic, RNA-based systems which had only been transferred into eukaryotes with limited success and/or with great difficulty. Although UCB was able to establish that some of the techniques used to transfer systems into eukaryotes were known and routine to the POSITA, this was found not to be sufficient to give rise to a reasonable expectation of success.

Reactions of the parties to the decision

The reactions to the decision from the interested parties have been telling:

  • UCB released a long press release, recounting UCB’s PTAB arguments at length and featuring quotes from Harvard Medical School professors lauding the contributions of UCB’s inventors, Jennifer Doudna and Emmanuelle Charpentier. The release stresses that the PTAB did not cancel or finally refuse either party’s claims and leaves open the possibility of an appeal from their decision.
  • In a lengthy joint statement, Caribou Biosciences, Intellia, CRISPR Tx and ERS Genomics (which commercialise UCB’s patents) delve more deeply into the substance of the PTAB decision and parallel U.S. patent prosecution cases. Notably, they flag the possibility of a new interference based on a separate UCB patent application with specific eukaryote claims and emphasise that the PTAB did not decide who was “first to invent” the use of CRISPR/Cas9 in eukaryotes. The statement also seeks to offset news of the PTAB decision by announcing the grant of UCB patents in the UK.
  • Interestingly, the Broad’s statement adopts an almost conciliatory tone and includes an acknowledgement of the work carried out by Jennifer Doudna, Emmanuelle Charpentier, and their teams. The Broad’s statement also openly admits that “over the next few years there will be many patents issued in the CRISPR field to many institutions” and extols the virtues of its “inclusive innovation licensing model”.
  • Editas, which commercialises the Broad’s CRISPR patents, issued a very brief statement which emphasised the inventiveness of the Broad’s work.

Thus, the UCB camp appears to be trying to reassure its investors and supporters, highlighting the legal options at its disposal and noting the ongoing prosecution and international angles of the dispute. The Broad seems to be using the decision to invite licensing opportunities and collaboration.

The fundamental advantages and disadvantages for each side have not changed

Despite the hype, from a legal perspective the decision arguably simply maintains the status quo between the parties and their respective patent portfolios:

  • The advantages that UCB have always had, and continue to have, are that its patents claim earlier priority dates and cover a broader range of applications (including use in eukaryotic cells) of the CRISPR/Cas9 system than the Broad’s, which are later in time and limited to use in eukaryotes.
  • The advantages that the Broad have lie in the fact that they pursued accelerated grant and an aggressive filing strategy, which has led to them being granted more patents in more jurisdictions than UCB (or any other group), and the fact that they have pending patent applications over the second generation CRISPR/Cpf1 system.3

The PTAB’s decision does not change any of these fundamental factors in the balance of power between the parties. However, as noted by UCB, the termination of the interference proceedings leaves UCB’s pending patent application now free to grant. If UCB manage to maintain the claims of that patent in a form which includes the use of the CRISPR/Cas9 system in eukaryotes, this will be a far more significant development.

More worrying for UCB is the immediate effect that the decision might have on public perceptions and confidence, and whether the decision is considered indicative of how other courts and tribunals will view these patents and the arguments advanced by each side.

Is perception everything?

In the short term, we have already seen how the PTAB decision has impacted Intellia, CRISPR Tx and Editas, in terms of the sharp changes in their respective share prices.

On the day of the decision, shares in Intellia Therapeutics dropped around 16% before recovering to around 10% down when the stock market closed.

CRISPR Tx shares plunged 27% before recovering to around 8% down. On the other hand, Editas’ shares shot up by around 30%. Interestingly, within about a day of the decision, shares in Intellia and CRISPR Therapeutics had recovered to, or even improved upon, their position prior to the PTAB decision. By the end of February 2017 (the time of writing), CRISPR Tx shares are continuing to trade above their pre decision level, Intellia shares have been volatile and are presently above their pre-decision level, whilst Editas’ shares seem to have stabilised at around 25% above their pre decision level.

In the medium to long term, it remains to be seen whether this decision will either be the catalyst for settlement or will instead continue the dispute which has reportedly already cost the combined parties more than USD20 million. So far, most of the focus has been on the U.S. interference proceedings and ongoing prosecution of the parties’ patent applications. That is understandable given that it is the parties’ home market, and the jurisdiction with the largest market and greatest commercial importance. But there is a very significant global dimension to the dispute. In particular, the opposition and prosecution of UCB and the Broad’s respective patents in the EPO are ongoing. Thus, even a determinative outcome in the U.S. may not discourage litigation in Europe and around the world.

Significantly, the PTAB’s decision as to the separate patentability of UCB and the Broad’s respective inventions leaves open the possibility that, ultimately, both UCB and the Broad will retain valid CRISPR/Cas9 patents of broad scope which users of CRISPR/Cas9 technology (including UCB and the Broad themselves) will need to licence from each party. Should this come to pass, we may see more commercially attractive cross-licensing options emerge.

What can we learn from the PTAB decision as to how other patent offices and courts might perceive these patents?

For many observers, the true value of the PTAB’s decision is as an early indication of the relative strength of UCB and the Broad’s patents, and the first test of their respective arguments. However, for a number of reasons, not least the peculiarities of U.S. interference proceedings, the decision and its reasoning is not necessarily as influential as some first envisaged.

First, the PTAB did not clearly set out what is the appropriate level of skill, or the specificity of expertise, required by the POSITA – key questions given the highly technical nature of the claims in suit. Identifying the POSITA is fundamental to the analysis of obviousness in the U.S., as well as being relevant in many other jurisdictions. The PTAB notes that the expert witnesses are all in the field of “molecular biology” – however, this is a very broad term which encompasses multiple subdisciplines and areas of expertise, including gene editing, and is closely related to (and at times difficult to distinguish from) biochemistry and genetics.

Second, whilst the PTAB’s findings on the technical arguments made by the parties could be influential, the PTAB’s analysis of obviousness is dictated by the nature of the interference, which limits the prior art to the claims of the earlier UCB patent application. As the PTAB itself states, other prior art (which would normally be the basis for the obviousness attack) was only considered to the extent that it showed what was known to the POSITA at the time. Accordingly, in other proceedings the number of possible prior art references forming the basis of an obviousness attack will be far greater.

Third, the interference decision does not deal with any questions of priority, added matter, inventorship or other potentially decisive issues. It is highly likely that one or more of these issues will have a significant impact on any subsequent patent validity proceedings.

Fourth, the PTAB adopted an interesting approach to one of UCB’s key arguments – that there were known, routine steps for transferring a system into eukaryotes, that those techniques were applied by the laboratories attempting to use the CRISPR/Cas9 system in eukaryotes, and that those same techniques happened to work, not only for Feng Zhang, George Church and Jennifer Doudna, but many other groups too.4 The PTAB’s finding (at page 35, lines 3 to 16) that the knowledge and availability of such standard techniques merely founded a motivation to try, as opposed to a reasonable expectation of success, is a point on which reasonable minds (and courts) may differ.

Finally, this was a decision made by the PTAB of the USPTO after half an hour of oral argument (albeit with the benefit of extensive written expert testimony, submissions and exhibits). Clearly, the different law and procedures, including the length of the oral hearings and admission of evidence before other patent offices and national courts, could well lead to different outcomes in different courts and/or patent offices around the world. Round one may be over for now, but both UCB and the Broad will know the battle is only just beginning.

Indeed, given what is at stake, an appeal from UCB to the Federal Circuit seems highly likely and will further prolong the current position of uncertainty as to the ownership of the key CRISPR/Cas9 patents. That said, the success rate of all appeals (i.e. including actions other than interferences) to the Federal Circuit from the PTAB is poor. Such an appeal would likely be heard in late 2017, with a decision to follow in the first quarter of 2018.


1 The judgment and full text of the decision is available on the PTAB’s website here as documents 894 and 893, respectively.

2 DNA in eukaryotic cells is contained in the nucleus and exists in tightly packed chromatin structures bound to histones; by contrast, DNA in prokaryotic cells floats freely in the cell. This key difference (amongst others) poses technical challenges which must be overcome to transfer a prokaryotic system such as CRISPR into eukaryotic cells.

3 Cpf1 is a new type of Cas protein (Class 2 type V) which is able to be used in CRISPR-mediated gene editing in place of Cas9. Cpf1 has different characteristics to Cas9 which some think could give rise to a different range of applications for CRISPR/Cpf1. On 15 February 2017, the EPO communicated its intention to grant the Broad’s first European patent for the CRISPR/Cpf1 system (EP3009511).

4 Feng Zhang is the key inventor on the Broad patents concerned in the interference proceedings, and a central figure in the dispute. George Church, also affiliated with Harvard and the Broad, is an inventor on a separate suite of Broad CRISPR patents. Zhang and Church were the first to report the successful use of CRISPR/Cas9 in eukaryotes, publishing separately but simultaneously in the same issue of Science. Doudna’s team and other groups separately published their own work on CRISPR/Cas9 in eukaryotes soon after.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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