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BIO Opposes Patent Reform Legislation Pending in Congress

NEW YORK (GenomeWeb News) - The Biotechnology Industry Organization (BIO) says that patent reform legislation that is pending in Congress now would be bad for biotech businesses because it would undermine innovation, spook investors, and make commercialization efforts difficult.

In a statement accompanying a study that BIO released Thursday, the group said that “certain controversial elements” of the Patent Reform Act of 2007, introduced in the Senate and House of Representatives by Sen. Patrick Leahy (D-Vt.), Sen. Orrin Hatch (R-Utah) and by Rep. Howard Berman (D – Calif.), and Rep. Lamar Smith (R – Texas), would undermine the patent system.

At the time the bill was introduced, Leahy’s office said it would bring certainty and clarity to the patent system and would create “a more streamlined and effective way of challenging the validity and enforceability of patents.”

The study, entitled “The Economic Implications of Patent Reform: The Deficiencies and Costs of Proposals Regarding the Apportionment of Damages, Post-Grant Opposition and Inequitable Conduct,” was conducted by economist Robert Shapiro and health care policy analyst Aparna Mathur.

Their report concludes that changes in rules for apportioning damages would encourage patent infringement by reducing the cost of committing infringement. But it also would increase the overall cost of patent suits by “requiring that judges and juries assess massive amounts of new data.”

BIO also said that a new post-grant opposition system would increase uncertainty in investors by “dramatically increasing the odds” that patents would be challenged.  In addition, it would likely result in a huge spike in costs for re-examining patents, according to the report. Part of the researchers’ conclusions regarding this part of the legislation is based on examination of the effects of a post-grant opposition system in Europe.

Another problem BIO sees with the bill is that an inequitable conduct provision would “discourage the spread of innovations… by increasing investor uncertainties about the value of patents which they might buy or license.”

BIO CEO Jim Greenwood said the report “confirms our long-held views about these provisions, which as currently drafted make it easier to challenge patents and harder to enforce them.”

“While a limited post-grant opposition system may make sense, the costs and risks of a broad new challenge system are too high for the Congress to ignore,” he added.

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