By Lisa Seachrist

Washington Editor

Stating that the "United States has led the world in innovation for decades," Sen. Orrin Hatch (R-Utah), chairman of the Senate Judiciary Committee, initiated patent reform discussion in the Senate.

The committee, however, got a glimpse of the rancor surrounding patent reform issues as Rep. Henry Hyde (R- Ill.), chair of the House Judiciary Committee, and Rep. Dana Rohrbacher (R-Calif.) reiterated views that characterized the cantankerous debate in the House last month.

"First of all, my good friend Dana Rohrabacher is our major antagonist in this endeavor," began Hyde, whose committee reported the bill to the House floor. "Mr. Rohrabacher and I disagree comprehensively on these patent reform issues."

Rohrabacher began his testimony by calling H.R.400 and S.507 "an abomination that would represent an historic rip-off of small inventors."

Hatch's S.507 is substantively similar to H.R.400, which passed the House last month including provisions to restore the patent term for delays in the patent office, to publish patents 18 months after the patent is filed and to restructure the Patent and Trademark Office (PTO) as a government corporation.

The biggest issue for the biotechnology industry is the least contentious: restoring patent term lost during delays at PTO. Since the enactment of the General Agreements on Tariffs and Trade (GATT) in 1994, U.S. patents no longer provide 17 years of exclusivity from the time of issuance. Now, companies and inventors have 20 years of exclusivity from the date they file their patent with PTO. The move provided an incentive to companies to file more complete patent applications and to avoid unnecessary extensions and delays.

Submarine Patents Called Atomic Bombs

In addition, the provisions eliminate the practice of submarine patents where an applicant files a patent, continually files delays until an invention becomes commonly used, and then obtains the patent and seeks royalties from "infringers." While uncommon under the previous patent system, PTO Commissioner Bruce A. Lehman testified that "each submarine patent levies a 'tax' of between $500 million and $1 billion on the industries that are using the technology."

The problem for biotechnology companies is that their complex and often-contested patents can take as long as 10 years to issue from PTO. H.R.400 and S.507 restore patent term for any delays in the patent office.

Rohrabacher simply proposed to guarantee 17 years of exclusivity from date of issuance in his defeated bill, H.R. 811. However, that provision wouldn't prevent submarine patents. Committee member Sen. Richard Durbin (D-Ill.) pointed out that of the 200,000 patents issued each year only 13 could be classified as "submarine patents" and he questioned whether the PTO was overreacting to the problem by supporting S.507.

"Senator, I think that your are underreacting," Lehman said. "There aren't that many atomic bombs being set off, but one is devastating. Submarine patents are the atomic bombs of the patent world."

Publication Issues Controversial

The most contentious debate surrounded the 18 month publication provisions found in both H.R.400 and S.507. The House version of the bill passed only after Rep. Marcy Kaptur (D-Ohio) attached an amendment that would exempt small investors from the publication requirement. The Senate bill currently has no such provisions

Hyde pointed out that publication "allows other inventors to discover what inventions have already been applied for and encourages them to invest their time and efforts in other inventions that further benefit the country."

Lehman also noted that upon publication an inventor has provisional protections on the invention and may collect back royalties once the patent issues.

"Publication invites the whole world to rip-off the innovations of the small inventor," Rohrabacher argued. "It is a cruel joke to the small guy to say that you can sue the person who steals your invention. How can he afford that?"

Lehman pointed out that more than 50 percent of all patent applications filed in the U.S. also are filed in other countries where publication occurs 18 months after filing. "It is really a disadvantage to American inventors that inventors in other countries have access to patent applications--in their own language--that are also filed in the U.S. where we don't publish."

Lehman also noted that the Clinton Administration opposes the Kaptur amendment and a bill presented to the president containing such language may trigger a veto.

"First of all, most submarine patents come from individuals," Lehman said. "And, such a bifurcated system may slow processing patents."

The publication issue has started rumors that Secretary of Commerce Ron Brown, who died in a plane crash in Bosnia last year while on a trade mission, made a secret agreement with the Japanese to institute patent publication. Lehman denied any such deal was made noting that "in conversations with the innovative community in America, they are overwhelmingly in favor of 18 months publication." *