Emerging Legal Terrain: IP Risks from AI's Role In Drug Discovery

Despite the values brought to the business, the rapid implementation of AI might have created unintended effects in law that could severely impact a pharmaceutical company's right to the drug. The IP rights in AI-driven drugs, like those in drugs discovered using conventional methods, will mostly take the form of patent exclusivity before the generic market is open to competitors. Yet, AI use in drug discovery is still early enough, that if AI "discovers" the drug, the state of law has not yet been established to address whether the pharmaceutical company will enjoy a similar exclusivity. Two recent case decisions, despite not being related to drug discovery, are examples signifying that there can be circumstances where a pharmaceutical company may not be entitled to the same exclusivity. In a copyright registration case, the U.S. Copyright Office has denied the registration of an artwork named "SURYAST" that was generated by AI, finding insufficient human authorship in the creative work. On the patent front, in Thaler v. Vidal, 43 F.4th 1207 (Fed. Cir. 2022), the Federal Circuit held that the term "inventor" in the Patent Act refers to a natural person, and, thus, AI cannot be an inventor. The logical extension of the holding of Thaler is that, if AI is deemed the sole inventor of a drug, the drug will be ineligible for patenting under 35 U.S.C. §101, which states, "whoever invents … may obtain a patent …."

This article explores the benefits and risks of AI-driven drug discovery from the legal perspective. Since the law governing IP rights in AI-driven drug discovery is still in its infant state, any future legal development is likely to have significant implications in many areas. For example, new court or legislative outcomes can affect a pharmaceutical company's considerations in integrating AI tools into its discovery pipelines, M&A diligence of a big pharma acquisition of a pharmaceutical startup, a licensing deal between a pharmaceutical company and an AI company that provides AI tools, and day-to-day practice of scientists' R&D journaling and publication.