Medical Device Daily Washington Editor

Patent reform has persisted as an issue since at least 2005, and the most recent iteration of reform legislation, the Patent Reform Act of 2007, managed to get by in the House of Representatives toward the end of 2007. However, the Senate's version was unable to slog through to a floor vote despite lots of attention from the chairman and ranking member of the Senate Judiciary Committee, Pat Leahy (D-Vermont) and Arlen Specter (R-Pennsylvania), dying in committee in May 2008.

Recently, the Obama administration received a letter from a number of makers of medical devices and companies in other industries, the Manufacturing Alliance on Patent Policy (MAPP; Washington), which is urging the White House to carefully review any patent legislation to come out of Congress.

Among the signatories are the Advanced Medical Technology Association (AdvaMed) and the Medical Device Manufacturer's Association (MDMA; both Washington), but sound equipment maker Dolby Labs (San Francisco) also has signed the document.

The MAPP letter argues against a need for reform to deal with litigation, stating that "there is no explosion in patent litigation" in proportional terms. According to MAPP's numbers, 1.45% of patents granted in 1993 were litigated, while 1.48% were litigated in 2007. "The number fluctuates from year to year, but it has never indicated a system out of control," the letter says.

The authors state that the primary aim of the Patent Reform Act of 2007 was to give apportionment of damages "a pre-eminent position in damage calculations," but argue that "the claim that patent plaintiffs routinely win outrageously large awards does not withstand scrutiny" (apportionment essentially argues that damages should be calculated based only on how much value the allegedly infringed component adds to the overall value of the item being sold rather than basing awards on the total market value of the item that contains a purportedly infringed component).

The letter cites the case of Alcatel-Lucent v. Microsoft as a demonstration of the authors' position on apportionment because the original jury verdict "was overturned on the basis that damages were indeed excessive under current law." The jury trial resulted in an award of more than $1.5 billion to Alcatel-Lucent (Paris) over alleged infringement of digital recording technology used by Microsoft's Windows Media Player, but Microsoft (Redmond, Washington) eventually prevailed in the Court of Appeals for the Federal Circuit.

Perhaps the most persuasive argument made in the MAPP letter is that "a recent study focused on the impact of apportionment estimates that this change alone would put at risk up to 298,000 manufacturing jobs and reduce R&D investment by up to $66 billion." However, the signers also complain that the backlog of patent applications at PTO stands at about 700,000, a situation in need of redress. The letter is signed by more than 120 companies and industry organizations.

Mark Leahy, executive director of MDMA, told Medical Device Daily, "Now more than ever, when you look at the lagging economy and its impact on the device space, this is not the time to make it easier to infringe given the number of manufacturing jobs that are at stake."

Leahy said he is not sure whether the omission of the apportionment provision would make a new patent reform bill a non-starter for Sen. Leahy. As for whether Congress will try to move on patent reform in 2009, he said "it's uncertain at this point. I think some statements have been made Sen. Leahy that patent reform will be done" this year, but whether other matters will crowd patent reform off the 2009 calendar remains to be seen.

MDMA's Leahy reiterated his and MAPP's opposition to apportionment. "Anything with mandatory apportionment in place" is opposed, he said, and economically damaging. "That's why there's a whole consortium of folks concerned about those provisions in the bill."

Still, a new year offers a clean slate. "Now that the process is beginning anew, we want to be sure that all concerns are addressed on the front end" of the bill-writing process, Leahy said.

As for whether constricting the breadth of patent claims would ease the patent prosecution bottleneck at PTO, he said application fees should be dedicated to PTO rather than mixed in with general revenues so it could hire enough staff to cover all the patent applications, however they may be written. Such a move "would give the resources they need to deal with the backlog."

DME bidding may be postponed

Many suppliers of durable medical equipment (DME) railed against competitive bidding and lobbied successfully on Capitol Hill to get the bidding program at the Centers for Medicare & Medicaid Services pushed back. While the agency has vowed to move forward with the program despite the congressionally imposed suspension, a recent announcement in the Federal Register indicates that the agency is considering another 60-day setback.

However, the notice, posted in the Feb. 10 edition, states that anyone who wished to comment had only until the Feb. 13 to make their opinions known.

CMS states in the notice that it "is considering a temporary 60-day delay in the effective date to allow CMS officials the opportunity for further review of the issues of law and policy raised by this rule." However, the notice does not enumerate the issues in question.

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