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At BIO, TTOs, Biotechs Lament Pending Patent Reform Bill

BOSTON – Proposed patent reform legislation currently under bicameral review in Congress is “patent-hostile,” may squelch university-based innovations, and may actually be detrimental to the US economy, said attendees of the Biotechnology Industry Organization meeting held here last week.
 
When considered alongside several recent US Supreme Court decisions, several experts said that the proposed legislation signals a patent reform climate that favors fast-changing industries such as the information technology sector, while hampering biotechnology-related patenting and university technology transfer.
 
Speaking during a patent reform panel at BIO, representatives of the pharmaceutical, biotechnology, venture capital, and technology transfer communities voiced their concerns with The Patent Reform Act of 2007, HR 1908, which was introduced to the US House of Representatives and Senate in mid-April as an update to bipartisan patent reform legislation introduced to Congress last year.
 
Although the bill proposes a wide range of changes to the current US patent system, panelists singled out a few specific components as having the most potential for damaging the biopharmaceutical industry and university patenting.
 
Most notably, industry representatives said they were concerned with the proposed “first-to-file” system, under which patents would be granted to the first party to file an application, as opposed to the current method of awarding patents to the first inventor based on, for example, prior scientific literature.
 
Simran Trana, director of Purdue Research Foundation’s Office of Technology Commercialization, told GenomeWeb News sibling publication Biotech Transfer Week that universities would be negatively affected if the US adopts a system where inventors have no grace period to communicate with other researchers, navigate the IP landscape, and file patents at a later date.
 
“With the current system, if we worked on it and developed it, and somebody else ends up patenting it, we always have the ability to prove that we are the first to invent, and to preserve that IP on behalf of the university,” she said.
 
Panelists also questioned a proposal that would allow any member of the public to request a USPTO re-examination of a patent throughout its lifetime, and voiced concern over changes in the possible reduction in royalty damages that patent infringers would have to pay to patent holders.
 
“I think it’s a very patent-hostile bill,” Hans Sauer, associate general counsel for BIO, said during his presentation. “There is hardly a single change that does not tilt the advantage to patent infringers.”
 
According to Sauer, the proposed reduction in royalty damages would “make infringement cheaper, and put a front-end squeeze on negotiated licensing agreements. Anybody who thinks about taking license to an invention is now going to think, ‘What’s it going to cost me to just infringe?’”
 
Stephen Sammut, a venture partner with San Francisco-based life sciences VC firm Burrill and Co., said that the proposed bill would drive down the cost of infringement. “Companies will start looking overseas for patents because it will be cheaper,” he said.
 
Many members of the biotechnology community view the current IP battle as representing biotech versus the IT industry, where there is rapid technology turnover and where many inventions rely on a large number of previously disclosed technologies – but where the industry cannot rely on peer-reviewed publications as prior art.
 
“The issue is created by this whole new industry we’ve created that is IT,” Purdue’s Trana said. “That has different rules and moves at a different pace. We’re trying to adapt patenting – which is a long-term, research-intensive system of preserving value – to a vastly evolving quick-turnover technology, and we have nothing to protect that.”
 
Also weighing on the minds of BIO attendees were the outcomes of several recent court cases, most notably this month’s Supreme Court ruling in the legal battle between auto parts manufacturers KSR v. Teleflex. Many industry insiders feel the Court of Appeals for the Federal Circuit too narrowly and too rigidly addressed the question of patent obviousness in its decision.
 
Other recent Supreme Court decisions more specific to the biotech and life sciences industry include MedImmune v. Genentech, in which the Court allowed MedImmune to challenge a fundamental Genentech monoclonal antibody patent while continuing to license the IP; and its 2005 ruling in Merck KGaA v. Integra, which determined that a company could use another firm’s protected research tool without taking a license to it if the research was not directly related to the eventual submission of data to the US Food and Drug Administration in support of a new drug.
 
“You really have to look seriously as to whether there is any value in filing research patents anymore, or patents on methods of use,” Purdue’s Trana said. “It appears that everything you do is for regulatory approval ultimately, or it’s for efficacy and safety, so what is the space left for research patents that people need to file to use?”
 
A complete version of this article appears in this week’s issue of Biotech Transfer Week.

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