The biotechnology industry is not a creature of science alone. Many forces beyond science helped make this industry what it is today. Money and a welcoming infrastructure are among the greatest. So is law.
Biotechnology could not have changed the world as it has without laws. Those laws help transform discoveries into products. They help ensure that those products are safe and effective. They also safeguard the rights and rewards of the companies, institutions, universities, and scientists moving the industry forward. Without these laws, biotechnology’s commercial triumphs—recombinant antibodies, CRISPR-based gene editing, molecular diagnostics, adoptive cell therapy, transgenic animals and plants, microarrays, high-throughput screening, next-generation DNA sequencing, and more—would scarcely have transcended academia.
There is no singular edict titled “biotechnology law.” No individual statute or rule governs all aspects of this field. Nor does any one court decision. What is more, there is no universally accepted definition of biotechnology law. What, then, is meant by the first two words of this book’s title?
A broad definition of this term could reasonably include any law affecting the development, manufacture, use, or marketing of a biotech product or service. Corporate law, tax law, labor law, and product liability law, for instance, fall neatly into this category. That is, each of these sweeping practice areas affects the biotech industry in some way. Biotherapeutic companies all pay taxes. They must also contend with such matters as corporate structure and shareholder rights, employee hiring practices and health care rights, and possible harm to consumers caused by faulty products.
Yet, three fields of law shape the biotech industry perhaps more profoundly than any other. They are patent law, regulatory law, and contract law. Each field is deeply intertwined with the science it governs. This makes scientific knowledge useful, and often necessary, for understanding many of the concepts integral to it. Such is the case, for example, with understanding the scope of a patent claim to a recombinant antibody drug, the relative merits of pursuing regulatory approval for a biosimilar or biobetter drug, or the possible shortcomings of the grant clause in a patent license agreement relating to cell-based therapeutics.
These fields are also intertwined with each other, not just with the science they govern. For instance, it is hard to understand certain parts of regulatory law without first understanding patent law. It is also hard to understand certain biotech-related contract provisions without first understanding both patent and regulatory law.
In short, these three legal fields and their underlying science form an organic whole at the heart of the biotech industry. It is this organic whole that we explore in the following chapters.
When we speak of patent, regulatory, and contract laws, we must also be clear about which patent, regulatory, and contract laws we mean. Every country has its own patent laws and its own laws governing drug approval and contracts. These laws overlap in some ways and, naturally, differ in others. Discussing each country’s laws on biotechnology would be an encyclopedic chore best suited to a multivolume treatise. Our approach is decidedly simpler.
The United States is central to the world’s biotechnology innovation and commerce. And, in many ways, its laws governing the industry are as relevant overseas as they are domestically. For at least these reasons, the patent, regulatory, and contract laws of the United States form the subject of this book.
The title of this book names two things: its topic and its audience. We’ve discussed the former. What about the latter? Who is a scientist for the purpose of this book? Why should scientists learn about biotechnology law? And how should they learn about it?
We define scientist broadly. For this book, a scientist is anyone who understands biotechnology. Naturally included are academicians, corporate and government researchers, postdoctoral fellows, and graduate students. Perhaps the largest segment of the intended audience, though, includes those who understand the science but do not call the laboratory home. This diverse sector includes start-up founders, biotech investors, technology transfer officers, regulatory specialists, journalists, business students, consultants, and analysts. The list goes on.
The world benefits when science becomes business. So do scientists. Understanding the legal machinery through which this happens has immediate relevance to scientists—for the start-up founder filing her first patent application, the university technology transfer officer negotiating clinical trial–based milestone payments, or the private equity analyst studying a target biotech company’s patent portfolio. No longer a mere luxury, this understanding is now a requisite part of a scientist’s training.
Familiarity with patent, regulatory, and contract law also helps scientists in another important way. Simply put, it makes them better clients for their attorneys. The best clients are informed clients. As such, they can avail themselves of legal services more comprehensively, more efficiently, and, of course, more affordably than uninformed clients.
We segue into answering this question by asking and answering another question first: How have scientists gone about learning this subject until now?
Quizzing one’s attorney on the basics of patent, regulatory, and contract law has always been an easy approach. For an hourly fee of hundreds of dollars, most attorneys are perfectly willing to tutor their clients on the fundamentals of patent claim scope, infringement defenses, Hatch–Waxman litigation, freedom-to-operate opinions, and grant clauses in patent license agreements. Even for the client willing to spend thousands of dollars in this way, the end result is usually little more than an oral exchange of limited scope without written material to study afterward.
For graduate students able to invest the time, some universities now offer courses covering legal aspects of the biotechnology industry. The law course I teach at Columbia is one example. Unfortunately, this is not an option for most scientists.
To be sure, there are excellent books and treatises that either independently or collectively cover biotechnology-related patent, regulatory, and contract law. Most are voluminous, expensive, and, alas, written solely for attorneys. They present the law in robust detail. They err on the side of overinclusion by describing statutes, rules, and court decisions in all their nuanced glory, while also detailing the constellations of exceptions and caveats that accompany them. It is no surprise that these texts are of little use to scientists.
Some books do target nonattorneys. They, too, have their shortcomings. Some are prohibitively expensive. Others cast a wide net and cover too many legal fields to serve as ideal learning tools for scientists. Still others focus instead on only one aspect of biotech law, such as patents, without giving much weight to the others.
Suffice it to say that until now, learning about biotechnology law has been an exercise in frustration for the vast majority of scientists attempting to do so. A dearth of biotechnology law books written just for them lies at the heart of this frustration.
Self-evident from the title is my humble opinion that reading this book is how scientists should learn about biotechnology law. Next, I briefly discuss how the book’s contents and approach uniquely serve this purpose.
This book concisely presents its subject matter in three sections. Section I covers patent law. Section II covers regulatory law. And Section III covers contract law. There is a reason the sections are in this order. Section I precedes Section II since understanding the regulatory concepts of Section II requires understanding several patent law principles, whereas understanding patent law does not require much familiarity with regulatory law. Section III on contract law is last since understanding some of the agreements it presents requires familiarity with both patent and regulatory law.
Section I presents patent claim scope and function, patent claim construction, patentability, and patent prosecution. It also covers patent inventorship, infringement, and related defenses. Finally, this section introduces patent-related legal opinions, patent portfolios, and the interplay between patent and trade secret protection.
The biotechnology and pharmaceutical industries overlap considerably. Given this overlap, and despite this book’s focus on biotechnology, it would be incomplete without also covering the generic drug industry and the Hatch–Waxman Act that helped create it. Understanding that act is essential for those in the biotech world since, among other reasons, it creates a framework for understanding the biosimilar laws that came later.
With this in mind, Section II introduces the U.S. Food and Drug Administration’s distinct regulatory pathways for approving small-molecule innovator drugs and biologic innovator drugs. It presents relevant parts of the Hatch–Waxman Act governing generic drugs and the Biologics Price Competition and Innovation Act governing biosimilar drug approval. This section also highlights the interplay between patent and regulatory protection and covers important topics such as evergreening, the patent dance, and biobetters.
Section III introduces the basics of an enforceable contract. It then covers four contracts integral to the biotech industry: material transfer agreements, confidentiality agreements, patent license agreements, and collaboration agreements. Many of the patent and regulatory law principles covered in Sections I and II are applied here concerning licenses and collaboration agreements.
My mission in writing this book is to educate scientists on the law most vital to shaping the biotech industry. Just as important is my mission to do so in a way that makes it immediately useful to the reader, whether as a textbook for a course or a resource for independent study. I have employed certain themes in this regard.
First, no one wants to read an eight hundred–page book if reading a three hundred–page book yields the same result. With this in mind, I have made brevity my mantra. Indeed, I have written this book in the hope that even the independent reader, if so inclined, would be undaunted by reading it in its entirety.
Since the book is for scientists and not attorneys, I have also put a premium on clarity and straightforwardness. Toward that end, I have included a wealth of examples illustrating key concepts. These examples are simple. Yet, they all relate to the real world of biotechnology. Many are modeled on actual products and scenarios in the industry. I know from teaching that some concepts are particularly hard to understand without graphics. I have therefore also included figures where appropriate.
Again with the scientist in mind, I have excluded topics that would interest only attorneys. Procedural nuances and obscure points of substantive law have no place here. I have also spared the reader the names of all but the most important statutes, cases, and concepts. For those seeking a deeper understanding of the material, I have provided references and some commentary at the end of the book, in the Further Reading section, as a starting point. These notes are minimal, and mostly include citations to key statutes, rules, cases, and texts.
Writing a concise, nonencyclopedic textbook is an exercise in strategic omission. This book is no exception. Treatises on patent law can reach thousands of pages in length, as can tomes on regulatory and contract law. No paragons of brevity are they. At only a few hundred pages, this book lies at the other end of the spectrum. It presents biotechnology law—a wildly complex and nuanced subject—in a tiny package. Once again, concision is an exercise in omission, and I had to leave much on the cutting room floor.
Of the topics omitted from this book, the most important are laws unique to medical devices, software-based methods, and agricultural biotechnology. These technologies are vital to the life sciences, as are the therapeutic and molecular diagnostic technologies on which this book focuses. Therapeutics and diagnostics represent a vast and growing portion of the total health care economy. In fact, this market share is easily as large as, if not larger than, the market share of any omitted technology. Therapeutics and diagnostics also embody the disciplines—biochemistry, molecular biology, and the like—most closely associated with biotechnology. For these reasons, and for brevity’s sake, I use these two subjects as a model for understanding the legal concepts presented here.
The substance of this book does not exist in the abstract. It does not inhabit a void, untethered to any fixed body or system. The patent, regulatory, and contract laws relating to biotechnology occupy specific places within this country’s legal anatomy. The government organs that create these laws are different from the ones that interpret and execute them. The relationships between them matter, as do the hierarchies of authority within each and the means by which each carries out its functions. What also matters is this country’s hallmark distinction between federal and state power, and the often-unclear limits of each.
Understanding the following chapters requires no prior knowledge of U.S. law or government. I made sure of that. Still, knowing at least something about how biotechnology law fits within the greater scheme of U.S. law can only benefit the reader. I provide the following snapshot for this reason.
The U.S. Constitution is the supreme law of the land. It created the federal government’s three branches: the legislative branch, the executive branch, and the judicial branch. The legislative branch, known as Congress, includes the U.S. Senate and the House of Representatives. The executive branch includes the president of the United States and the various departments and agencies under presidential control. And the judicial branch includes the U.S. Supreme Court and the lower federal courts. Each branch of government acts separately from the other two. Moreover, each branch, in its own way, checks the powers of the other two. The power of the federal government is limited to what the Constitution gives it. The states hold all other power.
It is Congress that passes new federal laws in the form of acts. Once passed, these acts, or statutes, are codified in the United States Code (U.S.C.). Each federal department and agency makes rules to implement the statutes it is charged with executing. These rules are found in the Code of Federal Regulations (CFR). Each state, too, has its own legislature to pass laws and its own system for implementing them.
U.S. federal courts interpret laws. They do so on a case-by-case basis. They also do so under a “common law” system used in most states and many foreign countries. Under this system, prior judicial decisions affect how courts will rule in future cases. It is this collective case law to which a federal judge must look when ruling on a new case. So, for instance, when a federal district court renders a decision in a particular case, it must follow the decisions of higher courts, namely, the U.S. Supreme Court and courts of appeals. Courts of appeals must also follow the Supreme Court’s decisions. Even the Supreme Court gives weight to its own prior decisions when rendering new ones. It is no surprise, then, that the judicial branch—and the Supreme Court in particular—plays a vital role in shaping U.S. law.
Patent law protects inventions. Since inventions are creations of the mind, patent law is one type of intellectual property law. The other types are trademark law, copyright law, and trade secret law. Trademark protection is based on identifying the source of a product or service. Copyright law protects the expression of an idea, as opposed to protecting the idea per se. Trade secret law, as the name indicates, protects information that is valuable owing to its secrecy and is the subject of efforts to maintain that secrecy.
U.S. patent law arises from the Patent Act, a federal statute found in title 35 of the U.S.C. As such, it is federal law and acted upon by the federal government. The U.S. Patent and Trademark Office is an arm of the U.S. Commerce Department within the federal government’s executive branch. It examines applications for U.S. patents, issues all U.S. patents, and conducts certain administrative proceedings like appeals and inter partes reviews. It also promulgates rules found in title 37 of the CFR and publishes additional guidelines found in the Manual of Patent Examining Procedure (MPEP).
Federal courts try patent cases. Typically, a patent suit begins in one of nearly one hundred federal district courts in the United States. If the losing party appeals the district court’s decision, the case proceeds to the U.S. Court of Appeals for the Federal Circuit (Federal Circuit). On occasion, the U.S. Supreme Court hears appeals from the Federal Circuit’s patent decisions.
In the abstract, the term regulatory law is a sweeping one largely unrelated to the substance of this book. In the U.S. biotech and pharmaceutical sectors, though, the term is often used in reference to the FDA’s drug approval process and matters relating to the generic drug and biosimilar industries. I have adopted this narrower meaning here.
The U.S. Food and Drug Administration (FDA) is responsible for approving small-molecule and biologic drugs, among other products. The FDA is an administrative agency within the U.S. Department of Health and Human Services, which, in turn, is part of the federal government’s executive branch. The Federal Food, Drug, and Cosmetic Act (FDCA) governs the FDA’s actions and is found in title 21 of the U.S.C. Its implementing rules are found in title 21 of the CFR.
The FDCA and the Patent Act both protect newly approved pharmaceutical and biologic products, although in different ways. And, both generic drug and biosimilar litigation bring the FDCA and the Patent Act into play before the federal courts.
It is worth noting that despite the FDA’s exclusive role in approving drugs, states regulate other key aspects of the medical world. The conduct of health care providers and the workings of the health insurance industry are but a few of the things states control.
Contract law in the United States is, in essence, state law. Each state has its own statutes and common law governing contract creation and enforcement. It is state courts that normally adjudicate contract disputes. This is true even for contracts that, like a patent license or drug development agreement, relate to matters otherwise governed by federal law.