By Lisa Seachrist
WASHINGTON — Patent reform began its legislative journey toward becoming a bill as the subcommittee on Courts and Intellectual Property heard testimony from Congress, industry and the U.S. Patent and Trademark Office (PTO) on three bills to affect patents.
HR 400 attempts to correct losses in patent term that occurred with the enactment of the General Agreement on Tariffs and Trade (GATT) treaty. HR 673 attempts to stop the diversion of funds from the PTO. And, HR 811 is an alternative to HR 400.
"We have been working on this issue since April of 1994, and we haven't given up," Chuck Ludlum, vice president for government relations for the Biotechnology Industry Organization said. "This bill addresses all of the issues that directly affect the biotech industry."
Previous to the GATT treaty, a U.S. patent afforded 17 years of exclusivity once it had been granted. When the U.S. joined GATT, a patent granted 20 years of patent protection from the date it was filed. Most inventors gained patent term in the deal as a typical patent takes one and one-half years to wend its way through the PTO. Biotech patents, however, take much longer.
"Biotech has the most patent term to lose," Ludlum said. "The complexity of biotech patents slows the patent office. These patents experience the most interferences, the most challenges. Really everything about these patents eats away at patent term."
Ludlum noted that the some companies end up with only five to 10 years of patent protection when all is said and done.
HR 400 restores patent term for delays that occur in the patent office whether they result from patent office error or challenges from competitors.
Rep. Dana Rohrabacher (R-Calif.), introduced a similar bill to address the problem of lost patent term by allowing for patent protection for 17 years after the date of issue. However, the bill doesn't call for publication of the patent application which could open up the "submarine patent loophole." An inventor files a patent, continually delays the processing of that patent until someone produces a product that infringes on the idea and then collects royalties as a result of infringement.
Rohrabacher claimed publishing patent applications "allows the cheats and copycats access to every one of our innovative ideas. And it is the little guy who is going to get hurt."
Ludlum disagreed noting that almost all biotech companies apply for patents in other countries when they file applications in the U.S. As a result, the patent is published after 18 months if the inventor has applied for patent protection in Europe and Japan.
"The purpose of patent protection is to allow for open discussion and publication," Ludlum said. "The idea that publication puts U.S. inventors at a competitive disadvantage is absurd."
Ludlum pointed out that it doesn't matter whether a competitor reads about an invention 18 months after filing or at the time a patent is granted because by filing a patent application first, inventors gain priority at the PTO. And, a competitor will have the same choices: either infringe upon the patent or develop a new technology.
"When you are in a river and a flash flood comes you have the choice to get out of the river or get washed away," Ludlum told BioWorld Today. "By not publishing patent applications, U.S. inventors are at a disadvantage because they can't find out what innovations are coming from foreign [inventors]."
PTO commissioner Bruce Lehman pointed out to the subcommittee that the economy is becoming increasingly globalized and that it is important to make sure U.S. patent protections afford the same protections that are available worldwide.
Lehman also addressed the issue of keeping PTO examiners long-term. "It typically takes three years to train an examiner, at which point large law firms come poaching and lure our employees away with much higher pay," Lehman said. "Because of federal law and budget constraints, we can't make suitable salary offers."
HR 673 would begin to address that problem by making the PTO a government corporation rather than a government agency, relieving the PTO of certain federal regulations. But, more importantly, the move would make PTO a self-funding entity and prevent funds generated from user fees from being diverted to other government agencies.
"It is wrong to take innovators' user fees and treat them as general taxpayer revenue," said Alan Holmer, president of the Pharmaceutical Research and Manufacturers of America. "We support HR 673 to stop this diversion."
In response, Rep. Barney Frank (D- Mass.) said it has become fashionable to think of government "as a concept as a bad thing." However, he noted that government in specific, like the PTO, is something that people usually want funded.
Last Congress HR 3460 * a bill very similar to HR 400 * unanimously passed the full committee, but never reached the House floor. Rep. Zoe Lofgren (D-Calif.) said she hoped the bill could make fast tracks. Ludlum is "hopeful that the bill will be in mark-up over the next few weeks."
Senator Orrin Hatch (R-Utah) is expected to introduce similar legislation soon in the Senate. *