House Judiciary Committee’s Patent Reform Bill is in Need of Reform, Says BIO

PRESS RELEASE

WASHINGTON, D.C. (Friday, April 15, 2011) – Biotechnology Industry Organization (BIO) President and CEO Jim Greenwood released the following statement regarding the America Invents Act, H.R. 1249, which passed the House Committee on the Judiciary yesterday:
 
“BIO has consistently praised House Judiciary Committee Chairman Lamar Smith (R-TX) for his introduction of a comprehensive patent reform bill similar to the bill adopted by the U.S. Senate earlier this month by a nearly unanimous vote.  Unfortunately, given the addition of the Goodlatte supplemental examination amendment, added to the bill during Committee consideration, we have no choice but to oppose floor consideration of the bill until this issue is repaired.

“The supplemental examination provision as passed by the Senate and originally included in the House bill would allow patent holders to seek a review of their issued patents at their own risk.  The Goodlatte amendment undercuts this provision by creating disincentives for patent owners to use the new procedure by having the U.S. Patent and Trademark Office (PTO) act as quasi-investigative body.

“We commend Chairman Smith for all the work he has done to craft a bill, the America Invents Act, which is a clear improvement over prior House versions of patent reform legislation.  BIO was very supportive of Chairman Smith’s Manager’s Amendment.  We are pleased that the legislation will end, once and for all, the diversion of fees collected by the PTO, allowing the agency to use all of its fees to hire more examiners, reduce the backlog of pending applications, and make other improvements to its operations.  We also commend the inclusion in the bill of many other reforms that will improve the patent system and enhance patent quality, including transition to a “first-to-file” system, the creation of an inter partes review system, and the elimination of other subjective elements of patent law.
 
“Nonetheless, given the importance of adopting a supplemental examination provision much like that which passed the Senate on a bipartisan, 95-5 vote, BIO notes our objection to this bill being considered on the House floor.  We commit to work with Chairman Smith and others to rectify this issue, so that a patent reform bill with broad support can be brought to the floor of the House.”

BIO’s Amicus Brief: Microsoft v. i4i

The Biotechnology Industry Organization, along with AUTM and CropLife International, filed an amicus brief in the Microsoft v. i4i Supreme Court case.

This case is widely viewed as one of the most fundamental and important patent cases to reach the Supreme Court in probably a decade. Most basically, this case is about the level of certainty a jury or judge must have before finding a patent invalid in litigation. Historically, the law has required a high level of proof, “clear and convincing evidence,” before a patent that has been examined and issued by the US Patent and Trademark Office can be declared invalid by a court. In the Microsoft v. i4i case, the Supreme Court is now being asked to adopt a lower burden of proof, under which patents can more easily be found invalid by a lower “preponderance of the evidence.”

In our joint brief, BIO, AUTM and CLI explain that the current high burden of proof has deep historic roots in Supreme Court law, and has been consistently applied by the lower courts for many decades. Under the current standard, issued patents benefit from a clear and meaningful presumption of validity that cannot be easily overcome. In this way, patents play their intended role as enduring legal instruments that confer real rights, and that developers and investors can rely on for investment and product development decisions. The importance of being able to rely on patent rights is illustrated very clearly in the biotech industry, which would not be able to make large investments over very long development times without assurances that the fruits of their investments are protected by robust patent rights. Lowering the standard for patent validity would frustrate decades of investment-backed reliance interests and would negatively impact biotechnology innovation going forward. Our brief explains that the existing high burden of proof to invalidate a patent is entirely consistent with other instances where the law imposes high burdens of proof to protect the public’s reliance on existing property rights.

In our brief, we also point out that Congress permits patents to be invalidated on a lower burden of proof only by the expert Patent Office, and then only on certain kinds of reliable evidence. Litigants who prefer to argue to a lay jury or generalist judge, or who want to use less reliable evidence, can do so only under a higher burden of proof. Any change to this carefully-crafted balance would have to be made by Congress, not the courts.

The United States’ brief in this case forcefully argues against changing the current standard of patent validity.

Patent Reform Bill good for Biotech

Patent Reform Passes the Senate and Moves to the House

 

Posted by Roy Zwahlen, manager of intellectual property and technology transfer policy at BIO.

On March 8th, the Senate approved the America Invents Act (S. 23) by an overwhelming vote of 95-5.  BIO supports this bipartisan, consensus-oriented bill, formerly known as the Patent Reform Act of 2011.  Once enacted into law, it will strengthen and improve our nation’s patent system, spurring innovation and job creation.

Patents are often the main assets of small biotech companies, and they rely on this intellectual property to attract investors to fund the lengthy and expensive research and development process necessary to bring breakthrough new therapies and other biotech products to patients and consumers.  The improvements made by the America Invents Act would benefit the biotechnology industry, and indeed all sectors of the U.S. economy, by enhancing patent quality and the efficiency, objectivity, predictability, and transparency of the patent system.

Increased Resources for the PTO

The America Invents Act contains two provisions that would provide greater resources and operational flexibility for the Patent and Trademark Office (PTO).  First, it would end the diversion of fees collected by the PTO in excess of its budget, and would permit the PTO to retain such fees for use in either the current or future budget years.  It would also give the PTO the authority to set and adjust fees for patent applications, while requiring discounts in fees for small businesses.  These measures will help the PTO improve its long-range budgeting and planning for capital and human resources, hire more examiners to process the more than 350,000 patent applications it receives annually, and reduce the current backlog of more than 700,000 pending applications.

Improvements to PTO Re-Examinations

The America Invents Act would create new and improved proceedings for interested members of the public and the patent owner to seek review of issued patents by the PTO.  The new procedures would result in a more transparent and efficient system of patent quality review. Importantly, patent owners would have a new procedure under which they could go back to the PTO whenever they find new information that might affect the validity or scope of their patent claims without fear of later being accused of concealment or misrepresentation in court by an alleged infringer under the much-maligned inequitable conduct doctrine.  These new procedures would create more business certainty, less risk in investment in biotechnology products, greater assurances in licensing rights, and greater enforceability of patents.

False Patent Marking Litigation

False patent marking litigation occurs when a manufacturer labels a product with an incorrect or expired patent number.  Current law allows any member of the public to sue and sets the fine at $500 per falsely marked article, which has spawned a cottage industry of law firms using this law to shake down industry for settlements in return for promises to drop the lawsuits.  Historically, this was not of great concern until 2009 when the number of these lawsuits greatly increased.  The America Invests Act would require that, in order to sue, someone must have suffered a competitive injury.  This utilizes a common legal principle to ensure that those actually injured are receiving compensation, while excluding those trying to take advantage of a statutory loophole for personal gain.

First Inventor to File

One of the most hotly debated provisions of the America Invents Act would change America’s first to invent system to a first inventor to file system.  This system is embedded in international patent practice, with the United States as the only exception.  While some argue that America’s first to invent system is superior, it is inherently fraught with uncertainties, and problems arise when biotechnology companies try to protect their inventions here and abroad. This bill would remove these uncertainties, while providing adequate protections against misappropriation of an invention by someone other than the true inventor.

Additional Benefits

The America Invents Act would provide several additional benefits for the biotechnology industry, including making it easier for the actual owners of the invention to file patent applications and eliminating the “best mode” requirement as a defense in infringement litigation.  Generally, the removal of subjective elements of patent law helps to create a more equal playing field for all interested parties of an invention.

Senate Judiciary Chairman Patrick Leahy (D-VT), Ranking Member Charles Grassley (R-IA), and the other members of the Senate Judiciary Committee are to be commended for their tireless efforts to build bipartisan consensus on this legislation, which resulted in wide support of its passage in the Senate.

 

We look forward to working with the House Committee on the Judiciary as it continues its consideration of patent reform, and hope to see meaningful patent reform signed into law later this year.

 

WSJ: “Patent Office to Get a Boost”

An article from the Wall Street Journal regarding the Adminstration’s budget proposal for the Patent Office. 

Highlights:

WASHINGTON—The Obama administration’s budget blueprint for fiscal 2012 seeks to boost the speed and quality of services of the U.S. Patent and Trademark Office, including through the use of temporary surcharges on patent fees.

The Obama administration said the fee surcharge, along with regulatory and legislative reforms, would provide the Patent Office with $2.7 billion in resources in 2012, a 34% increase from 2010 levels.

USPTO to Issue Proposal for “Track One” Accelerated Patent Examination in Flexible “Three Track” Patent Processing Program

In case you missed this last week, the USPTO will be issuing a Federal Register Notice requesting comments on their proposed Track One Accelerated Patent Examination requirements. 

The forthcoming Federal Register notice will request comments from the public on a number of different proposed requirements for participation in Track One, including (a) the proposed fee of $4,000 for each application (to recover the full cost of resources necessary to prevent the delay of other, non-prioritized applications); (b) limits on the number of claims to four independent claims and 30 total claims; (c) application filing through the USPTO’s electronic filing system (EFS-Web); and other such requirements.  The comment period will close 30 days after the notice is published. 

Press Release

Patent backlog hinders nation’s job creation

Article from the Milwaukee Journal Sentinel with interesting numbers. 

Highlights:

-Many of the missing jobs – hundres of thousands or possibly millions – are buried under the backlog of 1.2 million unprocessed patent applicatoins that have accumulated over the past 10 years at the U.S. Patent and Trademark Office.

-A single U.S. patent can create three to ten jobs. 

-Nothaft estimates more than 2 million new jobs are buried in the backlog

-“Innovation is our competitve advantage… It’s not manufacturing costs.  It’s not labor costs.  It’s innovation and our ability to protect those innovations and turn those innovations into products.”

President Obama’s Plan to Win the Future by Catalyzing Invention, Innovation, and Economic Growth through Patent Reform

The White House Office of Public Engagement released the patent factsheet, “President Obama’s Plan to Win the Future by Catalyzing Invention, Innovation and Economic Growth through Patent Reform,” the night of Obama’s Jan. 25, 2011, State of the Union address.  Here are some highlights.

“ Improve the Operations of the Patent and Trademark Office (PTO): The President’s budget enables the PTO to address a backlog of over 700,000 patent applications.

Promote U.S. Cooperation with International Patent Standards to Help U.S. Firms to Compete in the Global Economy: By moving towards greater coordination between patent systems, the United States can enable its innovators to receive lower-cost and higher-qualitypatents, enabling them to better compete and protect their inventions around the world.

Address the Costs of Our Inefficient Patent Litigation System: To improve the patent system, President Obama has pledged to work with Congress to devise a post-grant review system to improve efficiency.”