Industrial application at the EPO and the Court of Appeal: procedural co-operation ends in conflicting findings

Authors: Sebastian Moore and Andrew Bailey (Herbert Smith LLP)

Eli Lilly and Company v Human Genome Sciences, Inc [2010] EWCA Civ 33

Journal of Intellectual Property Law & Practice, doi:10.1093/jiplp/jpq041

The Court of Appeal for England and Wales confirms first instance decision that a patent application needs to disclose sufficiently specific and credible ways of exploiting the invention to satisfy the requirement for industrial applicability.

Legal context

Articles 52(1) and 57 of the European Patent Convention (EPC), as implemented into UK law by sections 1(1)(c) and 4 of the Patents Act 1977, provide that, in order for an invention to be patentable, it must be capable of industrial application.

In relation to biotechnological inventions, Article 5(2) of the Biotechnology Directive (98/44/EC) allows the patentability of gene sequences, even if the structure of that sequence is identical to that of a natural element; however, Article 5(3) requires that the industrial application of the sequence or partial sequence of a gene must be disclosed in the patent application.

The Recitals to the Directive shed further light on the interpretation of these provisions by stating that a mere DNA sequence, without indication of a function, does not contain any technical information and is therefore not a patentable invention. Further, in order to comply with the industrial application criterion, it is necessary in cases where a sequence or partial sequence of a gene is used to produce a protein or part of a protein, to specify which protein or part of a protein is produced or what function it performs.


In August 2005, Human Genome Sciences, Inc. (HGS) was granted a European patent over the gene and amino acid sequence for Neutrokine-alpha, a new polypeptide that is a member of the tumour necrosis factor (TNF) superligand family. The HGS scientists had identified the gene sequence for Neutrokine-alpha by bioinformatics (that is by using computational and statistical techniques to solve biological problems) rather than the standard route of a lab-based technique. As a result, HGS had speculated in the patent application as to the possible applications of the protein on the basis of what was already known about other members of the TNF family. Eli Lilly had brought opposition proceedings against the HGS patent at the European Patent Office (EPO) and launched revocation proceedings against the UK equivalent of the patent. Lilly claimed that the patent was invalid for lack of industrial application because HGS's predictions as to the activity of Neutrokine-alpha were speculative. HGS responded that, when the patent was applied for, other members of the TNF family had been shown to have industrial application.

In July 2008, at first instance Kitchin J found the patent in suit invalid, inter alia, for want of industrial applicability. HGS appealed. At a hearing in February 2009 to set the date for the appeal hearing, Jacob LJ made it clear that the parties should have informed the Court about ongoing EPO proceedings that might have made the UK appeal hearing unnecessary. He also criticized the patentee's perceived unwillingness to assist in accelerating the EPO appeal, despite cooperation on behalf of the Technical Board of Appeal (TBA) to offer an expedited timetable. His solution was to delay the Court of Appeal hearing until a date when the TBA decision would definitely have been given.

Meanwhile, in October 2009, the TBA held the patent valid, albeit after the claims had been restricted by HGS.

However, notwithstanding this finding of validity by the TBA, the Court of Appeal (leading judgment by Jacob LJ) affirmed the first instance decision of Kitchin J and found the patent invalid.


Industrial application

In reaching its finding, the Court of Appeal cited with approval Kitchin J's summary of what emerges from the application of Article 57 EPC and Article 5 Biotech Directive, namely that ‘in a nutshell, the industrial application of a gene must be disclosed in the application. If it encodes a protein then the protein or its function must be specified’.

The Court of Appeal emphasized that what is required is a sufficient specification of the function of the protein:
Just describing the existence of a protein and its structure is not enough. Nor is it enough to describe the function at a high level of generality – e.g. that the compound must have a significant function biologically and so it (or its antibodies) may be usable to treat some sort of disease. You have to say what it is for with more particularity. What amounts to a sufficient specification of function will depend on the facts of the case and involves a question of degree.
The Court of Appeal clearly found it influential that, on the facts, only one member of the superfamily had been found to have any use at all, and that even that use was not proved to be directly linked to the supposed common factor of the superfamily.

In the view of the Court of Appeal, the case provides an example of the danger of what can happen if patenting too far upstream is allowed, in that the patent system would be operating to prevent innovation, not to encourage it.

Co-operation between EPO and national courts

Evident from these proceedings is the willingness of the national courts and EPO to cooperate in expediting hearings where important commercial issues are at stake.

While Jacob LJ acknowledged that more often than not oppositions were started on a precautionary basis only, he noted that parallel litigation in the EPO and one or more national courts was only really likely to occur in cases where the patent may have an immediate and obvious important commercial impact. It was this relatively rare class of cases where co-operation can be most valuable.

TBA approach and procedure in English Courts v EPO

The court was at pains to stress the differences in procedure and approach between the English courts and the EPO, which it felt material in the differing results reached.

The process at a first instance trial in England involves an intensive investigation and testing of the evidence, with both factual and expert evidence severely tested by the process of cross-examination. The result of this is that ‘not only must a party put its cards on the table prior to the trial, it must find and play all its best cards at the trial’. On appeal, there are no new witnesses, expert opinions, or other new evidential matter, save in very exceptional circumstances. As a result, the Court of Appeal gives very considerable deference to the findings of fact of the first instance court.

The court contrasted this with the approach in the EPO, where the first instance proceedings are regarded as little more than ‘administrative', with much less room for the testing of evidence, no cross-examination, and no compulsory disclosure. Moreover, there is much more latitude for the admission of fresh material on appeal. (In this case, the TBA had permitted a further 700 pages of evidence from the patentee just three weeks before trial.)

In the Court's view, this difference in approach inevitably leads to the EPO being more of a ‘coarse filter' with something of a ‘benefit of the doubt' given to the patentee. Once a patent has been granted by the EPO and survived any opposition, the ultimate arbiter of its validity in any designated Contracting State is the national court system of that Contracting State deciding the case using its own fact finding procedures.

Findings of fact v setting of legal principle

Citing various English cases, the court considered it well-established that a national court can differ on determination of the facts or questions of degree from the TBA. However, it was well established that, when it comes to legal principles, decisions of the TBA are of ‘immense importance'. The English Courts will ‘follow any principle of law clearly laid down by the EPO, only reserving the right to differ if we are sure that the commodore is steering the fleet onto the rocks' (Actavis v Merck [2008] EWCA Civ 444).

In terms of questions of industrial applicability, the court was satisfied that both the Judge at first instance and the TBA had asked themselves the same key question but ultimately the case came down to an assessment of the specific facts. In this respect, the court felt obliged to follow the findings of Kitchin J, noting that his findings were arrived at following an intensive examination of the evidence and that the Court of Appeal was not bound to give deference to the TBA's findings of fact.

Practical significance

The decision is a clear reminder of the careful balancing act that faces biotech patent applicants between ensuring they are first to file in a highly competitive and fast-moving industry v the need to do sufficient research to disclose the use of the invention in the patent application.

The Court of Appeal's decision confirms that speculative, wide ranging uses identified at the point of patent filing are not enough to satisfy the requirement for industrial applicability. The patent needs to disclose specific and practical ways of exploiting the invention. As a minimum, there must be a real likelihood that a proposition made regarding the function of the product is true. It seems that discovering a nucleotide sequence encoding for a human protein and being able to show that the protein concerned has some common homology with known proteins may satisfy Article 57, but whether it does or not is case-dependent and in particular depends upon how well established the functions of the other members of the family are.

The resultant dilemma for patentees is deciding at what stage it has sufficiently established the function of a new product in order to file a patent.

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