AI as an inventor: Defining ownership in the pharma sector

The global pharmaceutical industry is witnessing a surge in innovation, with the industry experiencing a 5% growth in the number of AI-related patent applications in Q1 2024 and 58% growth in AI-related deals compared with Q1 2023.

AI algorithms are proving invaluable in analysing vast datasets, identifying hidden trends, and predicting complex protein structures, ultimately accelerating the development of life-saving treatments.

However, the UK supreme court ruling late last year cast a shadow of legal uncertainty over this exciting frontier. The court's decision that AI cannot be an inventor under the Patents Act 1977 presents a unique set of challenges for pharmaceutical companies heavily invested in AI-driven innovation. Similarly, in the US, in the decision of Thaler v Vidal (Thaler v. Vidal, 43 F.4th 1207 (Fed. Cir. 2022)) it was also decided by the Federal Circuit that an inventor can only be a natural person.

This article delves into the implications of this ruling and outlines proactive strategies for pharma companies looking to secure intellectual property in this uncharted legal territory.

Lab assistant to lead innovator: The role of AI in drug discovery

AI is rapidly transitioning from a mere lab assistant to a potential lead innovator in drug discovery. Its applications are diverse and impactful, ranging from high-throughput screening of millions of potential drug compounds to the development of personalised medicine tailored to specific genetic profiles.

AI is also proving invaluable in repurposing existing drugs for new applications, potentially unlocking treatments for diseases where traditional approaches have failed. Furthermore, researchers are exploring how AI can optimise clinical trial design and recruitment, analysing patient data to identify ideal candidates and accelerating the drug development process.

The efficiency and cost-effectiveness AI brings to R&D is undeniable – especially when drug go-to-market plans take 12 years and between £1.7bn-£2.5bn of investment on average. It holds the key to unlocking breakthrough treatments for currently incurable diseases, potentially revolutionising healthcare as we know it. However, as AI becomes increasingly sophisticated, the line between tool and inventor becomes blurred, raising complex questions about ownership and inventorship.

Untangling the legal knots of AI inventorship

The landmark US Supreme Court ruling in the Thaler case has sent ripples through the world of AI and intellectual property.

The case, which centred around Dr Stephen Thaler's attempt to name his AI system, DABUS, as the inventor on patent applications, ultimately concluded that an "inventor" under the Patents Act 1977 must be a natural person. It also concluded that an owner of a machine has no independent right to obtain a patent in respect of any technical advance created by such machine. Thaler v Vidal also concluded that inventors can only be natural persons.

These rulings have significant implications for pharmaceutical companies utilising AI in their R&D processes, such as Merck and Pfizer, who are betting on AI-drug design partnerships to reduce development times and predict patient responses to new inventions.

It raises critical questions about inventorship when AI plays a substantial role in an invention. For example, can a person claim inventorship if AI significantly contributed to the invention? And what constitutes sufficient human intervention to secure patent protection?

Our view is that, in light of the rulings mentioned above, the solution relies on how AI is viewed by patent applicants and how problems can be avoided by focusing instead on human contributions, rather than anthropomorphising AI. For example, US Patent Office Guidelines on AI Related Inventions (February 2024) prescribe that, for AI-assisted inventions, natural persons who significantly contributed to the invention should be named and AI systems must not be named as inventor, even if instrumental in creation of the invention. The guidelines further set out three guiding principles or so-called “Pannu factors” (from the 1998 Federal Circuit case Pannu v. Iolab Corp., 155 F.3d 1344) for determining inventorship.

Proactive strategies for securing IP in the age of AI

Despite the legal complexities, pharmaceutical companies can take proactive steps to mitigate risks and protect their Intellectual Property (IP) in the age of AI.

First and foremost, establishing clear IP ownership protocols is essential. Defining roles and ownership rights in AI-driven projects from the outset, with contracts clearly outlining the contributions of humans and AI systems, is crucial. These contracts should also clearly define how ownership of any resulting IP will be determined.

Secondly, implementing robust documentation practices is paramount. Meticulously tracking human input, AI contributions, and the iterative development process will be crucial in demonstrating human inventorship and establishing ownership should any disputes arise. While patents are a cornerstone of pharmaceutical IP protection, exploring alternative strategies, such as trade secrets, data protection, and contractual agreements, can provide additional safeguards for your innovations.

Third, focus on human contributions when naming inventors. The general approach of following the so-called “Pannu factors” may be helpful not only in the US, but in other jurisdictions as well. Each named inventor must contribute in some significant manner to the invention and satisfy the three Pannu factors:

• First Pannu factor – each named inventor must contribute in some significant manner to the conception (or reduction to practice) of the claimed invention. Importantly, reduction to practice of an invention conceived by another does not constitute inventorship.
• Second Pannu factor – each named inventor must make a contribution to the claimed invention that is not insignificant in quality, when the contribution is measured against the dimension of the full invention.
• Third Pannu factor- An inventor must do more than merely explain to the real inventors well known concepts and/or the current state of the art.

Failure to meet any one of these factors precludes a person from being named an inventor or joint inventor.

Staying ahead of the curve

Finally, staying informed about legal developments is critical. The legal landscape surrounding AI and IP is constantly evolving. Monitoring changes in legislation, case law, and guidelines from the United Kingdom Intellectual Property Office (UKIPO) and the USPTO will allow you to stay ahead of the curve. Seeking early legal counsel from experienced IP professionals is highly recommended, as the tailored strategies can be baked into the drug development procedure in the beginning, ensuring all innovations are protected.

AI has the potential to revolutionise the pharmaceutical industry, leading to the development of groundbreaking treatments and improving countless lives. While the Thaler ruling presents challenges, it also underscores the importance of establishing clear IP strategies in the age of AI.

By taking proactive steps and seeking expert guidance, pharmaceutical companies can navigate this evolving landscape and unlock the full potential of AI-driven drug discovery.