By Lisa Seachrist

Washington Editor

WASHINGTON — Patent reform appears closer to reality as legislation that would restore patent term lost from delays within the Patent and Trademark Office (PTO) hit the House floor last week.

H.R. 400, introduced into Congress by Chair of the House Subcommittee on Courts and Intellectual Property Howard Coble (R-NC), on Thursday met opposition from Rep. Dana Rohrabacher (R-Calif.), who moved to substitute his bill, H.R. 811, for H.R. 400. The House membership, however, voted 179 in favor and 226 against to defeat Rohrabacher's motion.

The vote effectively removes the primary obstacle to patent reform in the 105th Congress.

"The margin of the vote is rather large and that is encouraging," said Dave Schmickel, patent and legal counsel for the Biotechnology Industry Organization (BIO). "This vote is really significant and I think that it makes it almost certain that the 105th Congress will pass patent reform."

Other amendments provide for special considerations for small companies as well as the establishment of an undersecretary of intellectual property at the Commerce Department.

The House will decide Wednesday and Thursday on the eleven remaining amendments to Coble's H.R. 400 and vote on the bill itself. Sen. Orrin Hatch is expected to take up patent reform for the Senate with S. 507 as soon as legislation clears the House.

Patent term has been an issue for the biotech industry since the approval of General Agreements on Tariffs and Trade (GATT) in 1994. When the treaty took effect 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 that they filed their patent with the PTO. The move provided an incentive to companies to file more complete patent applications and to avoid unnecessary extensions and delays.

In addition to providing incentives to complete patents in a timely manner, the GATT treaty also eliminates the practice of submarine patents, where a patent 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, the few cases of submarine patents that have occurred have raised such ire that the PTO and the electronics and software manufacturers adamantly oppose any legislation that would allow these practices to once again surface.

For many inventors the result of the GATT treaty provided an extension of patent term because most patents make it through PTO in approximately 18 months. The problem for the biotechnology and pharmaceutical industries is that biological pharmaceuticals can take up to 10 years to navigate through the patent office because the technology is complicated and often contested.

"Biotechnology is the industry with the most patent term to lose," Schmickel said.

H.R. 400 solves the problem of lost patent term by allowing diligent patent applicants to receive credit for any delays at the patent office that aren't the fault of the applicant, including challenges to the patent that the applicant ultimately wins.

Rohrabacher's move to substitute H.R. 811 for H.R. 400 would have protected patent term, returning the U.S. patent term to 17 years from issuance, but it would have done nothing to prevent abuses of the patent system. Such a bill would have little chance of making it through the Senate, said BIO's vice president for government relations, Chuck Ludlum.

"The debate in the House was quite heated and contentious," Schmickel said. "The issue created some very strange alliances between Republicans and Democrats that ordinarily have nothing in common. And [Rep.] Barney Frank [D-Mass.] actually served as a moderate."

Committee chairman Coble noted, "This is the first time in history there has been excitement around a patent bill."

With Rohrabacher's defeat, Schmickel and Ludlum, sent a letter to members of the House urging them to vote on the final passage of H.R. 400 regardless of the votes on the other amendments, because H.R. 400 simply uses a different means to guarantee patent term while preventing submarine patents. The letter also tried to sway Rohrabacher's supporters.

"The Rohrabacher amendment rejected by the House would have provided a guaranteed 17-year patent term from grant even to applicants which intentionally delay the issuance of a patent, a fundamental flaw in the amendment. A guaranteed term encourages games and abuse — submarine patents — and that is why we opposed it," Schmickel and Ludlum wrote.

The letter encourages all members to vote for passage of H.R. 400 because "the status quo is the enemy here."

However, President of the Pharmaceutical Research and Manufacturers of America Alan Holmer advocates a somewhat different tack. In a letter to the members of the House, he urges that they pass H.R. 400 without any additional amendments.

Once the bill passes the House, Schmickel said he expects the Senate will act quickly to move it's own patent reform legislation forward.

"With Rohrabacher out of the way, the Senate will likely act quickly," he said. "We can expect patent reform legislation in the 105th Congress." *