In previous articles, we wrote about the emerging psychedelics industry and its newfound focus on intellectual property. The recent and dramatic increase in patent filings gives rise to questions about how to evaluate intellectual property within the relatively new (but no longer infant) psychedelics space.
At a high level, analyzing psychedelic patents is pretty straight forward. Start with the claims in the application and ask whether the subject matter defined by those claims is (1) New, (2) Non-obvious, and (3) adequately enabled, described, and defined within the application. These criteria highlight the critical importance of the patent’s priority date, which determines what body of evidence is available to inform those questions.
In practice, evaluating a patent portfolio can take weeks and tens or hundreds of thousands of dollars of analysis from a patent attorney. This article seeks to give investors some tips for performing a simple litmus test for a psychedelic patent portfolio.
Below are 5 key questions for investors to consider when evaluating a psychedelic patent portfolio.
Five Key Questions for Investors to Ask about Psychedelic Patents
1. When you say “Patents,” do you mean Patented or Patent Pending?
- The term “patent” is often used interchangeably to describe any type of patent application. See, e.g., Troy Farah’s most recent Double Blind article (published July 10, 2020) about toad venom, where he describes the subject matter published in a pending application (WO2014115113A1) as “already been patented.” This article illustrates the widespread confusion in the psychedelic space between patents, patent applications, patent publications. And, there is a big difference between a published or pending application and a granted (or issued) patent. For example, the “patent” identified by Mr. Farah is not a patent but rather a pending application that has been abandoned in all but one of the territories where the applicants initially sought patent coverage.
- The word “patent” describes a granted patent not a pending patent application. The former refers to claims that have issued after being examined by the patent office in view of the post relevant prior art. Granted patents are presumed to be valid because they have been evaluated by the patent office prior to issuance. The patent office has determined that the claims are new (aka novel) and non-obvious.
- Pending applications have not been granted; many have not been substantively examined; some haven’t been examined at all. Evaluating pending patent applications requires determining how the patent office will examine the claimed subject matter and making an educated guess as to what claims will be allowed. The documents exchanged between a patent applicant and the patent office are published, providing insight as to the ultimate disposition of the case.
- Provisional applications are not published and never get examined. They merely serve as priority documents for applicants wishing to pursue non-provisional applications. Accordingly, there is no objective information about the value of a provisional application available in the patent file, leaving all of the guesswork to investors.
2. What is the priority date of the patent or application?
- Only new and non-obvious inventions are patentable. The novelty and non-obviousness (or inventive step) of those inventions are evaluated based on the priority date of the application.
- An invention is new if it was not disclosed in any publication before the priority date of the patent application claiming the invention.
- Any disclosures published prior to the priority date of the patent application are collectively referred to as the “prior art.” The priority date determines what is (and is not) prior art. Was the invention new and not obvious at the time of the priority date. As we discussed elsewhere, the recent explosion of psychedelic technologies didn’t really start until 2018 or 2019. So, inventions having priority dates prior to this gold rush have a tremendous advantage as to what constitutes prior art during examination. By contrast, applications filed in 2019 or 2020 have significantly greater risks of encountering “prior art” issues.
- An invention is non-obvious if the prior art would not have rendered it “obvious” to a person of ordinary skill in the psychedelics industry.
- The priority date is critical because it defines what is (and is not) prior art. This is critical in the psychedelics industry where technology is evolving rapidly. Today’s groundbreaking idea could seem obvious next year. To maintain objectivity during the examination process, an invention is evaluated for novelty and non-obviousness based on its priority date.
- Below is an example of a patent document, which shows where the priority information is printed. This is Compass Pathway’s crystalline form patent. Note the priority date of October 9, 2017. In the relatively new psychedelics space, a priority date from 2017 is excellent because it precedes the ongoing race to file patents on psychedelic technology.
3. What is the claim scope of the patent or patent application?
- The most important part of any patent document is the claims. The claims define the invention. The claims define the property that is owned (or sought to be owned in a pending application) by the applicant. Often patent documents have flashy titles or expansive language in some parts of the application but extremely narrow claims. Accordingly, it’s important to evaluate the claimed property, which is defined by the claims.
- Do the claims define compounds, compositions, methods, processes, or something else? David Nichols, Ph.D., a professor emeritus of medicinal chemistry and molecular pharmacology at Purdue University correctly explains that “The strongest patents are based on novel molecules,” i.e. compounds or compositions of matter. Patents claiming compounds or compositions of matter provide protection for all uses of those materials and offer the highest possible level of protection for psychedelic inventions.
- An article published in Lucid News describes several fall back positions for claiming patentable subject, including Compass Pathways’s strategy for patenting a novel crystalline form of psilocybin.
- Companies that do not have compound (or composition of matter) patents will likely argue that claims to other types of subject matter (e.g., methods of use) are just as good. That’s a red flag. The company is already working with derivative technology. The compounds or compositions are already in the prior art, which is why they can’t claim them. For a recent example, see MindMed’s July 2020 Corporate update where Stephen Hurst repeatedly de-emphasized the importance of composition of matter patents. Because the MindMed team is working with prior art compounds, LSD and 18-MC, they are unable to claim compositions of matter. Accordingly, the “close to a dozen” patent applications they filed (since March 2019) are probably directed to methods of use and/or other less valuable subject matter.
- Do the claims in the patent cover the company’s product? This sounds like a dumb question but it’s often overlooked. Even if a psychedelics a company has an extensive patent portfolio and a promising product line, a smart investor should ask to see how the claims cover each specific product of interest. This can be accomplished with a claim chart, which is beyond the scope of these high-level tips.
4. How many claims are in the patent or patent application?
- Does the patent portfolio have multiple claims directed to the technology of interest? Does it claim the technology in multiple different ways?
- Each patent claim is a distinct property. Protecting a product with multiple patent claims multiples the level of protection. A competitor challenging the validity of the IP would need to invalidate all claims covering the product. Ideally, a company would protect a compound, compositions (or formulations) containing the compound, methods of making the compound and the formulations, and methods of using them to treat various diseases and conditions.
- Ideally a patent has a collection of claims that define the invention as various levels of generality, with some claims capturing the broadest reaches of the innovation and other narrowly tailored to a particular embodiment in order to avoid prior art problems. Here, companies often claim a genus of compounds, various subgenuses of compounds, specific molecules, and also specific forms or formulations of the molecules.
5. How many applications are in the portfolio?
- Much like the number of claims in an application, the number of applications in the portfolio provides some high-level insight regarding a company’s IP strategy.
- Does the company frequently and consistently capture new innovation in patent application throughout the research and development process? Or was the company happy enough to simply check the “IP” by filing a couple of applications? Either of these strategies allows a company to say that they “have IP.” But, the value of that IP can be considerably different.
Conclusions – Look for lots of claims with early priority dates
The above 5 tips are simple, high-level questions to get started with evaluating a patent portfolio for a psychedelics company. Assessing the value of a specific portfolio requires studying each claim in each application in view of the prior art that was available at the earliest priority date for that application. That analysis can be resource intensive. The above tips are intended to offer investors some simple ways to quickly identify potential strengths and weaknesses in a psychedelic company’s IP portfolio. While anyone can file a provisional patent application and boast “we have patents pending,” portfolios that have diverse claims, carefully directed to the product(s) of interest, with early priority dates are probably going to provide the most value in the long run.