Ferring v Finch: Ripples from the Decision

Three patent claims, one present in each of three US patents held by the Finch Therapeutics Group Inc. (Finch), have been found to have been infringed by Ferring Pharmaceuticals Inc.’s (Ferring) activities in the US and relating to their enema IMT product, REBYOTA®.

This decision, laid down by a jury in a federal trial in Delaware on 9 August 2024, concluded with an award of $25 million in damages and future royalties to be paid to Finch.

Commercial-IP strategies are almost never won or lost in a single court skirmish, but what might this practically mean for Ferring, for Finch, and indeed the wider community of microbiome therapeutic developers?

These proceedings were first brought by Ferring in December, 2021to request a judgement of invalidity or non-infringement for seven patents held by Finch. Presumably, this was part of a strategy to “clear the way” in the US for the launch of their REBYOTA® product, a product that was approved for sale in the US by the FDA in 2022. Over the course of the litigation additional patents were added in counterclaims and others were dropped.  Only three patents remained after the various rounds of submissions to be considered in the final decision.  Claims found to be both valid and infringed by Ferring’s activities would appear to be broadly characterised as:

• An enema product for treating difficile infection, which includes polyethylene glycol as the cyroprotectant for the protection of the viable non-pathogenic fecal bacteria of the product (claim 16 of US Patent No. 10,675,309).
• An enema delivery system that includes a sealed container that contains a pharmaceutical composition. The composition including a cryoprotectant and a viable non-pathogenic fecal bacteria.  The system protecting the fecal bacteria from destruction when the sealed container is frozen or exposed to the air (claim 2 of US Patent No. 11,541,080)
• A method of decreasing the relative abundance of one or more members of the phylum Proteobacteria by at least 10% in a patient, whilst at the same time increasing the fecal microbiota diversity of that patient,  by administering at least 6 specified classes of bacteria all derived from a fecal extract and after processing using a 0.5 mm sieve (claim 7 of US Patent No. 10,251914.

For the jury to conclude as they did, they cannot have been persuaded by Ferring’s arguments that the subject matter of above claims 2 and 16 was obvious at the time the subject matter of those claims was first filed by Finch in 2011, and that the subject matter of above claim 7 was not accompanied on filling with adequate evidence to demonstrate that the inventors were in possession of the full scope of the invention claimed.

Where does this leave Ferring? They can of course accept the conclusions and incorporate the payment of the damages, and the ongoing requirement to pay Finch royalties, into their cost of doing business in the US. It is however important to note that these proceedings were conducted in front of a jury, who had to consider complex technical arguments before drawing their conclusions.  Ferring has the opportunity to appeal this decision. An appeal would bring their arguments in front of a panel of judges, rather than a jury. If Ferring considers that such a panel are more likely to appreciate the technical aspects of their argument, it would be expected that an appeal will be filed. A less likely option would be for Ferring to amend key aspects of their product so as to lower the risk that the amended product would be found to infringe the above claims (e.g., avoid the use of polyethylene glycol). Such actions of course risk  loss of marketing authorisations from the FDA for sale of their product in the US, and the cost of re-doing the process of seeking such approval may be commercially prohibitive.

Turning to Finch, it is important to note that in 2023 Finch pulled their lead product in phase 3 and reportedly laid off 95% of its staff. At the same time, comments from its new management team appeared to hint at a focus on building a revenue based on licensing of its large IP portfolio, as opposed to directly developing to launch its own products. In short, many consider that Finch has become a “non-practicing entity,” also known as a “patent troll.” Since then, we have not seen any news of any big licensing deals struck by Finch. This win will now no doubt embolden their activity.   Building a business based on a patent licensing model requires the industry as a whole to generally feel that the IP in question is relevant and valid. Getting in those first few significant licensees is normally important. A delay in getting to that point however may teach the industry as a whole that there is insufficient confidence in the validity or relevance of the IP. The window of opportunity could close if an appeal is filed and is successful. An appeal will however be unlikely to conclude for another 15 to 18 months . An important factor in the success of such a licensing model is the setting of the cost for the licenses. If the cost is too high, particularly if validity or relevance is questioned, many will conclude the risk of going to court is adequate. If set about right, the industry as  whole will see that taking a license is a reasonable expense to achieve legal certainty.  We look forward to seeing how Finch rides this win in developing their licensing strategy.

These proceedings will likely have relevance to a large number of businesses in the therapeutic microbiome field. These businesses will have to reflect on the effect the decision could have on their own freedom to operate in the US, as well as how this may be viewed by investors as a risk during pre-investment due diligence.  If those businesses can distinguish their products from the subject matter claimed in those claims discussed above, then they can argue that the decision is not relevant to their business. The decision also included the conclusion that some of Finch’s claims, not discussed above, were invalid. This may be useful information if your product aligns with the subject matter of the invalid claims.

It is also important to note that the proceedings discussed above started with an analysis of seven Finch patents, only a small proportion of the large portfolio held by Finch, and in the end focused on only three of Finch’s patents.  The focus was likely driven by their relevance to Ferring’s activities.  Consequently, other patents in Finch’s portfolio may be more relevant to microbiome companies with alternative products than those of the current proceedings.  For example, many consider that the Finch portfolio only has relevance to IMT products. Whilst the language of the claims considered in these proceedings suggest such a focus, it is important to note that not all claims in the wider Finch portfolio are explicitly restricted to IMT products.  It is therefore generally advisable to those in the industry to familiarise themselves with the Finch portfolio, and understand why they can distinguish themselves from that which is claimed, or consider ways in which their products can be modified early in the development stages so as to lower the risk of infringement.

Finally, the proceedings concerned themselves with US patent rights, and so are only relevant to activities practiced in the US. Finch, of course, have also obtained patents in other jurisdictions. Looking at Europe, it is apparent that the European Patent Office was much more selective than the US PTO in rejecting much of what Finch tried to patent. Only a single patent was granted in Europe, and that focuses on IMT, like the three considered in the above US proceedings. Navigating the risks associated with the Finch patent portfolio in Europe is therefore likely to be considerably easier for most when compared to the task in the US, particularly after the conclusion of these proceedings.

Read the original article below:

This article was prepared by HGF Partner and Patent Attorney Craig Thomson and Nixon Peabody Partner Mark Fitzgerald for Microbiome Times