Posts in Legislation

Although complementary, patents and data exclusivity protection incentivize innovation in different ways and serve distinct purposes. Patents provide protection for innovations that meet the standards of patentability and are novel, nonobvious, and useful. In the context of biopharmaceuticals, patents protect both breakthrough discoveries as well as incremental improvements. Due to the length of the drug-development and patent-approval processes, effective patent terms rarely correspond to FDA approval. Accordingly, in some cases innovative therapies may experience patent expiry shortly after making it to market. In contrast, data exclusivity protects the tremendous investments of time, talent, and financial resources required to establish a new therapy as safe and effective. This is accomplished by requiring competing firms seeking regulatory approval of the same or a similar product to independently generate the comprehensive preclinical and clinical trial data rather than rely on or use the innovator’s data to establish safety and efficacy of their competing product.

MUIR: “There are approximately 40 countries around the world that have enacted their own version of the Bayh-Dole legislation because they have seen the numbers. They have seen the success that the United States has had in commercializing these discoveries. We truly are the envy of the rest of the world. In three or four months I’m going to be visiting about six different countries. What they want to hear about is how is the U.S. achieving this level of success. So oftentimes we look at our own backyard and don’t have a full appreciation of the beautiful flowers growing there but there are lots of beautiful flowers growing in our tech transfer profession in the United States.”

The Federal Trade Commission testified on consumer protection issues involving patent demand letters, patent assertion entities (PAEs), and proposed legislation to prohibit deceptive patent demand letters. Delivering testimony before the House Subcommittee on Commerce, Manufacturing, and Trade of the Committee on Energy and Commerce, Lois Greisman, Associate Director of the FTC’s Division of Marketing Practices at the Federal Trade Commission, provided lawmakers with comments on a draft bill regarding deceptive patent demand letters, and recognized that demand letters raise broader issues about patents and the U.S. patent system.

I think that the Supreme Court decision will be enough to prevent the so-called “patent reform” from gaining any traction in the Senate. The cynical view is that there is so much lobbying money flowing why would Congress want to turn that spigot off when it could easily flow into the next Congressional term? Further, there has been a growing and steady effort by those opposed to the pending patent legislation. Opponents were already making their case heard as the Senate continued to time after time postpone dissemination of the Manager’s Amendment, signaling the consensus that some Senators desperately wanted to reach was illusive, if not impossible. Now with the Supreme Court decisions in these two cases those on the Hill who were already skeptical have more than enough ammunition to slam on the brakes, at least for now, to see what the ultimate ramifications of the decisions will be on the reality of patent litigation.

The purpose of the U.S. patent system has been to promote innovation. The various ”Patent Reform” bills will in fact retard innovation and cost America jobs. They are contrary to the Founding Fathers’ intent in Article 1, Section 8, Clause 8 of the Constitution, contrary to the policies of over 220 years of patent law, contrary to the advice of the Office of Advocacy of the Small Business Administration, and contrary to prior statements of President Obama.

In this Part IV, we will discuss the proposal that all interested parties by plaintiffs, the enhanced pleading requirements, limitations on discover and customer stays. While some of these provisions may seem to make sense on their surface, and tailored to provide greater transparency, the reality is that the provisions are extraordinarily burdensome. For example, as written one proposal would require a corporation bringing a patent infringement lawsuit to disclose every stockholder no matter how few shares are owned. Furthermore, by micromanaging patent litigation discretion will be taken away from district court judges while at the same time onerous obligations are placed on small businesses before they can even begin to assert patent infringement, which is problematic because so many entities already knowingly choose to infringe rather than negotiate licenses or engineer around patent rights.

In this Part III, we will discuss the Covered Business Methods (CBM) expansion and the proposed elimination of post grant review estoppel. If these provisions are enacted it will provide greater incentive to challenge granted patents, making serial challenges the new norm. This will substantially and negatively impact small business innovators who will be forced to continually fight to keep the patents they have obtained after having already spent many years during patent prosecution to obtain the rights. This means patent rights will never be more than an expectation and not a true property right. Therefore, if these provisions are enacted it will mean no patent is every truly safe, no title is every quieted, and this will substantially, and negatively, impact investment opportunity and ultimately the commercialization of innovations.

The US House passed the Innovation Act (HR3309) in December 2013. The Senate is now well on its way to incorporating this legislation which will make Americans poorer. The bills have many problems that will inhibit small inventors, but the most insidious are “Loser Pays” and “Pay to Play”. It changes the law, singling out inventors as a class so onerous that only they must pay the other side’s legal fees if they don’t win every claim. Pay to Play makes inventors guarantee payment up-front. Some proposed Senate bills (e.g.: S.1013 & S.1612) make sure that almost all Americans and most small companies will never be able to afford to enforce their patents on their inventions.

For small business, patents will become mostly unenforceable due to the proposed much higher upfront cost of litigation, thus making small business patents significantly less valuable. Loss of patent value constricts new company formation, chilling new investments, and choking job formation. Legislating disincentives for capital investments will result in the loss of many hundreds of billions of dollars of wealth in America and dry up the major source of new jobs, small inventing businesses… Patents are the number one indicator of regional wealth according to the Federal Reserve Bank… If these “Patent Reform” bills are signed into law, they will discourage small business patents, and the contrapositive indicates that we will be a poorer nation.

The government is funding basic research at universities, not drug development. Bayh-Dole allows schools to own resulting inventions and license them for commercialization. These discoveries are more like ideas than products. The expense and risk of development falls on the private sector. A study in Nature Biotechnology on drugs commercialized from federally-funded inventions finds: “the private sector spends 100-fold or more to bring the product to market than the PSRI (public-sector research institution) spends in research directly leading to the invention.” Here’s why: for every 10,000 compounds about 250 make it to preclinical testing, 5 go to clinical trials, and one enters the marketplace. Of these just 20% turn a profit– and they must pay for all those which died in the pipeline.

The National Institutes of Health recently made its long anticipated ruling on a petition seeking to use the “march in” provisions of the Bayh-Dole Act as a mechanism for the government to control prices on drugs derived from federally-funded research by issuing compulsory licenses. The petition was a reiteration of one dismissed in 2004 seeking to have the government march in to control the price of Norvir, part of the AIDS “cocktail.” … Before Bayh-Dole not a single drug was commercialized when the government took patent rights away from inventing organizations. Under the law at least 153 new drugs and vaccines are now alleviating human suffering world-wide.

Senate Judiciary Committee Chairman Patrick Leahy (D-VT) asked NIH in a July 12 letter to force compulsory licensing of Myriad’s BRCA breast and ovarian cancer genetic test under the “march-in rights” provision of the Bayh-Dole Act. Myriad received an exclusive license to develop the test from universities operating under Bayh-Dole Act. The law allows nonprofit institutions receiving federal R&D funds to own and license resulting inventions so they can be commercialized for use by the public. Critics of Bayh-Dole have long sought to reinterpret its statutory standards under which the government can compel universities to issue compulsory licenses as a weapon to control prices. This was not the intent of the law.