© 2015 Waller Lansden Dortch & Davis, LLP. All Rights Reserved. Ready to Patent? Value and Risk Considerations Nicolo Davidson

* Forbes, 2014

| 4 Baby Patting Machine U.S. Patent No. 3,552,388

| 5 Portable Automobile Partition U.S. Patent No. 6,260,903

| 6 Valuation Market Freedom to Operate (Risks) Scope

| 7 Scope  Claims define protected invention  Claims are amended during prosecution to overcome prior disclosures (prior art)  Continuation applications can seek broader claims

| 8 Scope Claims must be described in application TClaims CLAIMS SPECIFICATION

| 9 Market  What is the market?  How big is the market? – Is market growing?  How long will it take to enter the market? – Scale up – Regulatory

| 10 Market  How much of the market do you expect to control? – Limited to certain segments? – Geographical limitations? – Do you have freedom to operate?  Who are your competitors? – Barriers to entry? – IP or other exclusive rights?

| 11 Freedom to Operate Invention AInvention BComponent A Component B  Patent filed for Invention A before Invention B patentable  Is Invention B patentable over Invention A? practice  Can one practice Invention B?

| 12 Freedom to Operate – Patentability Claim Comparison Invention A. A composition for treating a fever, comprising: 70% - 90% of Component A; and 10% - 30% of Component B. Invention B. A composition for treating a fever, comprising: 50% - 80% of Component A; and 20% - 50% of Component B.

| 13 Freedom to Operate – Patentability Different limitations Invention A. A composition for treating a fever, comprising: 70% - 90% of Component A; and 10% - 30% of Component B. Invention B. A composition for treating a fever, comprising: 50% - 80% 65% of Component A; and 20% 35% - 50% of Component B.

| 14 Freedom to Operate Patentability – New Use  Discovery of unappreciated (inherent) property – NOT PATENTABLE – Inherent property must necessarily flow from prior art – Property need not be appreciated in prior art  “Products of identical chemical composition can not have mutually exclusive properties.” In re Spada (Fed. Cir. 1990).  New use for old compound may be patentable

| 15 Freedom to Operate Patentability – New Use  Prior patent - Method of treating anxiety by use of fluoxetine hydrochloride  New use patent - Method of blocking serotonin uptake by use of fluoxetine hydrochloride  New use held to be inherent in first patented use – New “use” = result of same structure/compound Eli Lilly & Co. v. Barr Laboratories, Inc. (Fed. Cir. 2001)

| 16 Freedom to Operate Patentability – New Use  Jansen patent – Method of treating or preventing macrocytic-megaloblastic anemia [MMA] by administering folic acid and vitamin B 12 to a human in need thereof (i.e., recognized need)  Rexall – Folic acid and vitamin B 12 for maintenance of proper blood homocysteine levels  New use held not to infringe Jansen  Method performed for different intended purpose  New “use” = unexpected new property Jansen v. Rexall Sundown (Fed. Cir. 2003)

| 17 Freedom to Operate Infringement  35 USC 271(a) -... whoever without authority makes, uses, offers to sell, or sells any patented invention, within the [US] or imports into the [US] any patented invention during the term of the patent therefor, infringes the patent.  35 USC 271(e)(1) - It shall not be an act of infringement to make, use, offer to sell, or sell … a patented invention... solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.

| 18 Freedom to Operate  New use, formulation, or delivery of patented for composition of matter  New use of composition not under patent  New delivery / formulation of composition not under patent  No patent = lack of exclusivity – Orphan Drug (<200K patients) – 7 – New Chemical Entity – 5 years – “Other” – 3 years (e.g., new studies for new use)

| 19 Freedom to Operate  New use, formulation, or delivery of patented for composition of matter  INFRINGE  Anyone who “makes, uses, offers to sell, or sells” composition of matter is liable for infringement  Requires permission (i.e., license) from patent owner – Costly – Little incentive

| 20 Freedom to Operate  New use of composition not under patent – NO INFRINGEMENT – May be patentable  Are you protected from off-label use?  Weak pricing power  Who is infringing? Who will you enforce against?  Is new use patentable or is it inherent?

| 21 Freedom to Operate  New delivery / formulation of composition not under patent  NO INFRINGEMENT; may be patentable  High bar to patentability  Drug repurposing is crowded field  KSR v. Teleflex (2007) – “obvious to try”  New combinations?  Look for superior and unexpected results

| 22 Freedom to Operate  New uses or formulations often are done by the same company

| 23 Bringing it Together scope  Patent scope can define your exclusive rights market  Must consider market to see how you can monetize your exclusive rights freedom to operate  Without freedom to operate, there is no market

| 24 Nicolo Davidson Waller Lansden Dortch & Davis, LLP Nashville, TN