By Lisa Seachrist
WASHINGTON ¿ The U.S. House of Representatives has taken the first step toward reforming the patent system, which was disrupted with the enactment of the General Agreement on Tariffs and Trade (GATT) in 1995.
The issue of how to restore patent term lost to delays at the Patent and Trademark Office (PTO) proved a contentious battle in the 105th Congress. However, Howard Coble (R-N.C.), chairman of the House Judiciary Committee¿s Subcommittee on Courts and Intellectual Property, is in the process of drafting legislation which his main critic, Dana Rohrabacher (R-Calif.), is mostly in agreement with.
At a subcommittee hearing March 25, Chuck Ludlam, vice president for government relations for the Biotechnology Industry Organization (BIO), testified about the importance of Coble¿s legislation.
¿We¿ve been working on this issue for five years now,¿ Ludlam said. ¿While it¿s the same old issue, there is a new political atmosphere. There is no stalemate. This is a huge improvement.¿
Patent term became an enormous issue for the biotechnology industry with the approval of GATT in 1994. When the treaty took effect on June 8, 1995, U.S. patents no longer provided 17 years of exclusivity from the time of issuance. Instead, a company or inventor had 20 years of exclusivity from the time the patent application was filed with the PTO.
The purpose of the change was to provide an incentive to companies to file more complete patent applications, and to avoid unnecessary extensions and delays.
In addition to providing incentives, the GATT treaty eliminated the practice of ¿submarine¿ patents, where a patent applicant files a patent, and then continually files delays until an invention becomes commonly used ¿ at which point, the applicant obtains the patent and seeks royalties from ¿infringers.¿
Submarine patents have always been uncommon, but a few cases which occurred in the electronics and software industries raised so much ire that the PTO and those industries have adamantly opposed legislation that would bring such practices back.
While not supporting the concept of submarine patents, the biotechnology industry got caught in a loophole in GATT provisions. Biotechnology patents often are complicated to begin with, and often are contested. As a result, some may not be issued for up to 10 years.
The time these patents spend in the PTO being evaluated and contested effectively shortens the patent term. In the past, Rohrabacher has argued vehemently to maintain the 17-year patent term, starting from the date of issue.
¿Biotechnology patents have the most to lose from the change to the 20-year patent term,¿ Ludlam said. ¿We do like the old 17-year patent term. But, realistically, it allowed for submarine patents. We just have to make sure that the 20-year patent term isn¿t damaging for the biotechnology industry.¿
The industry is beholden to capital formation to fund almost all of its efforts, and a loss in patent term hurts a company¿s chance to raise capital because investors see a reduced opportunity to profit from their investment.
The Coble bill calls for the restoration of that lost time for all delays in the PTO and the courts, as long as the patent applicant isn¿t the source of those delays. Unlike those who previously attempted to right the loss in patent term, Rohrabacher isn¿t demanding a return to the former patent system.
¿This legislation will ensure that diligent patent applicants aren¿t penalized for delays which are beyond their control,¿ Ludlam said. ¿We are very excited about the possibility that Coble and Rohrabacher will come to agreement on this. We here at BIO have worked very hard for this.¿
Should the two congressmen agree, the bill must pass the House and a similar provision must make it through the Senate. During the 105th Congress, the House passed a patent reform bill, but the Senate failed to pass such legislation, despite the efforts of Sen. Orrin Hatch (R-Utah), chair of the Senate Judiciary Committee.
¿We are hopeful that a stronger showing of support from the House will lead to action in the Senate,¿ Ludlam said.