When Barr Pharmaceuticals ( BRL) went to court last week against Johnson & Johnson ( JNJ), it wasn't a typical patent battle.

That's because the contest over J&J's Razadyne, a drug for mild to moderate Alzheimer's disease, will serve as an early test of how a recent Supreme Court ruling may improve the efforts of generic-drug makers to challenge patents.

What the highest court in the land decided April 30 wasn't a direct commentary on drugs or biotechnology but instead was focused on a patent dispute over the design of an adjustable gas pedal on vehicles that have electronic engine controls.

In the case, Teleflex claimed that KSR International infringed on its patent for the gas pedal. KSR argued that the patent was invalid. KSR had already won a lower court decision, but it was reversed on appeal. The Supreme Court agreed with the lower court and said existing patent-law guidelines were too strict.

Therein lies the relevance to the drug industry, and legal experts say the decision will have a broad reach. "Things will be tougher for Big Pharma," says Professor Margo Bagley, an expert on intellectual property at the University of Virginia's School of Law.

Several guidelines exist for establishing a patent, and the Supreme Court focused on the most difficult concept -- is an invention obvious to a person of "ordinary skill" in a specific technology? KSR argued that the Teleflex patent was, thus invalidating the patent.

When someone seeks a patent, they must convince authorities that their inventions aren't completely apparent and are therefore worthy of protection. "Now, there is more flexibility for patent examiners in establishing that an invention is obvious," Bagley says. "And that creates more challenges for patent applicants."

Bagley says the previous strict standards had been guided by the Court of Appeals for the Federal Circuit, which hears all appeals of patent-infringement cases. Because the Supreme Court rarely hears patent cases, the appeals court "was perceived to be a mini-Supreme Court" for patent law, she says.

In recent years, however, the high court has taken renewed interest in patent law. Now, inventors "will have to be more diligent" in making claims and providing data, Bagley says.

Room for Interpretation

Bruce Downey, chairman and CEO of Barr Laboratories, said the "obviousness" standard will play a key role in the Razadyne case, as well as in upcoming legal fights over J&J's oral contraceptive TriCyclen-Lo and Bayer's ( BAY) contraceptive Yasmin.

"I think the Supreme Court case has a very direct impact," Downey said in a meeting with analysts earlier this month. "It's a very significant development."

On May 11, Barr, who has contended that the J&J patent is invalid and whose dispute with the Razadyne maker has been in court since June 2005, received tentative approval from the Food and Drug Administration to market three dosage strengths of drug.

Not surprisingly, another big challenger of patents, Teva Pharmaceutical Industries ( TEVA), also welcomed the Supreme Court's ruling.

"Certainly on the surface, it does look like it is favorable to us," said George Barrett, president of Teva's U.S. division, during a May 2 conference call with analysts. "But we really need to digest this, and then we'll have a better read whether it has a direct impact on any of our cases."

Participants and observers in the arcane world of patent law say it will take a while before they can gauge how the U.S. Patent and Trademark Office and lower courts will interpret the ruling, which has already taken effect.

At first glance, they say it appears companies will have a tougher time defending patents, especially those related to incremental improvements on existing drugs, a practice known as patent life-cycle management.

The Supreme Court ruling "will have a significant impact on the issue of patent life-cycle management," said Steven Ludwig, a partner in Venable LLP, a law firm whose clients include the Pharmaceutical Research and Manufacturers of America, the trade association for big drug companies. "The standard has been lowered. It may be easier for generic companies to invalidate patents."

Cloudy Forecast

Although attorneys say each case is different, the ruling could influence patents on a drug's administration, for example a once-a-day pill vs. a twice-a-day pill or on different ways a drug is absorbed in the bloodstream. Chemical cousins, in which different drugs have similar molecules, also could be affected.

The ruling "has cast a little bit of a cloud over our patents," says Hans Sauer, associate general counsel of the Biotechnology Industry Organization. "We need all of the certainty we can get. We have less certainty now."

Many so-called incremental improvements "can make a big difference" in medications, says Sauer. Plus, even small changes require a lot of time, money and effort. "There is value to the consumer in making a drug better."

Meanwhile, Ludwig is telling clients and fellow lawyers that they must do more, and earlier, preparation to prove their invention is capable of clearing the "obviousness" hurdle.

For example, they should locate test data and laboratory notebooks that illustrate the difficulty in developing a new and improved drug. They also should compile data that shows how successful the improved product has been. And they should try to show that a product meets a "long-felt need," a legal term that means a problem is addressed that hadn't previously been solved.

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