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AAU’s Executive VP Weighs in on Patent Reform from the University’s Perspective


John Vaughn
Executive Vice President
American Association of Universities
NAME: John Vaughn
POSITION: Executive vice president, American Association of Universities, since 1996
BACKGROUND: PhD, experimental psychology, University of Minnesota; Postdoc, Duke University, 1977-1979; various positions, AAU, since 1980
As a contentious patent reform bill passed in September by the US House of Representatives moves ever closer to a Senate vote – possibly this week, according to sources – debate surrounding specific proposals in the bill continues to heat up.
While the Senate Judiciary Committee continues to contemplate the bill, S. 1145, the White House, via the US Department of Commerce and the US Patent and Trademark Office, said last month in a letter to the SJC that while it agrees with a majority of the bill’s provisions, work still needs to be done to ensure that it does not undermine US innovation and entrepreneurship (see BTW 2/6/2008).
The latest salvo in the debate was fired last week again by the US Department of Commerce in the form of another letter to the Senate Judiciary Committee from Secretary of Commerce Carlos Gutierrez.
That letter, which can be seen in full here, highlights many of the same positions as last month’s letter, but makes a special point of strongly supporting language that would improve the quality of patent applicant submissions. The letter also supports changes to the current doctrine of inequitable conduct – although it opposes such changes without reform to applicant quality submissions, arguing that such a scenario would invite fraud upon the patent system.
The legislation continues to march on and a vote on it seems inevitable. If the bill passes, it could be bad news for life sciences and university tech-transfer concerns: In general, the bill has been portrayed in the media as catering to the high-tech and IT industries while containing provisions that would cripple innovation and patent protection in the biotech, pharmaceutical, university, and small business communities.
However, according to many industry, university, and government representatives, the debate is more complex than that because even members of the same communities have nuanced arguments for and against specific provisions of the legislation.
This week, John Vaughn, executive vice president of the American Association of Universities, discussed with BTW the views of the university community on S.1145.

Does the university community share the views of the Department of Commerce and the USPTO to improve the quality of applicant submissions and to change the doctrine of inequitable conduct?
The problem with inequitable conduct is that on its face it is a really solid provision that says if you deliberately misrepresent information or withhold information from the PTO, you ought to pay a penalty, which includes loss of part or all of your patent.
The problem is that procedure has been so overused to challenge patents. I think the National Academies presented some data that said pretty clearly that charges of inequitable conduct are infrequently sustained. But it’s a procedure used to carry out a challenge to a patent, often as a countercharge to someone who is being charged with infringing. Meanwhile, you’re gaining the benefit of that infringement and you can string it out in the courts.
It’s a well-intentioned provision that doesn’t appear to be working well on pragmatic grounds. So what a lot of groups have been asking is to either eliminate it altogether, because there are other ways to punish bad actors, or sharply narrow it to make it harder to issue as a harassing challenge.
The focus has been trying to get language – the so-called ‘but for’ language – saying that unless the inequitable conduct was sufficiently severe that the patent examiner would not have granted the patent ‘but for’ the misinformation or missing information, then you don’t wipe out the patent. In other words, somebody might be guilty of inequitable conduct, technically, by misinforming, but not severely enough to have altered the decision to grant the patent.
That’s the key thing here. Senator [Orrin] Hatch [R-Utah] recently tried to deal with this by issuing a new approach that, rather than having the whole procedure carried out in court, the court would refer the patent back to the PTO, and they essentially would do a reissue of the patent after going through the charges of inequitable conduct and maybe eliminate some or all of the claims.
I think generally the university community would like to see those kinds of changes in inequitable conduct that make it harder to engage it as a harassing tactic, along the ‘but for’ standard.
But I think a lot of us are disturbed by the linkage between inequitable conduct, this revised procedure, and applicant-quality submissions that was made in the recent letter from the Secretary of Commerce. I must confess I’m a little mystified by the linkage. I think there is almost universal opposition to the AQS in the external patent community. There are so many competing interests within the patent community, but the only issue I know of on which every group is unified is opposition to the AQS.
Is this because it is more work, time, and money for everyone?
Yes. The argument in favor of it, and I see the merit of it, is that if you’re going to apply for a patent, and you’re asking for a 20-year monopoly, is it unreasonable to ask you to do the prior art search that further substantiates that you should be granted this patent? But looked at differently, with the Congressional Budget Office estimate of a $5,000 to $10,000 increase in the cost of filing, it seems like mandatory cost shifting from the federal government to the external community.
And it’s more difficult for universities to bear those costs?
You bet.
The university community has been lobbying for its interests in this bill, just as the biopharma and high-tech communities have. Are all members of the university technology-transfer community aligned in their opposition to certain parts of the bill?
I think we essentially have all the same issues, and we want to see them resolved generally all in the same direction. I think the difference is how demanding you are on your solutions. Some universities are very troubled by some of the proposals.
There are five major issues with patent reform that everybody is concerned with: apportionment of damages; post-grant opposition; AQS; inequitable conduct; and venue. The university associations that have been following this have been dealing mostly with the first three. Some universities would require very extensive changes. Others are willing to consider some provisions that would deal with problems in other sectors as long as they aren’t crippling to them. For instance, they say, ‘We’re not going to insist on our optimal solution to damages as long as it’s not so severe that it would compromise our ability to license our patents.’
So I think that it’s more a matter of degree than kind.
Are certain types of university or tech-transfer concerns more demanding for change than others? Would more prominent tech-transfer operations, such as the University of California system or the Wisconsin Alumni Research Foundation be more vocal?
I think there is a little bit of that. UC is basically 10 campuses combined, and is the largest patenter in the university community. WARF is very active as well. But it’s not just that. It’s a difference in institutional point of view.
One of the underlying issues is that it kind of depends on where in the university you’re looking at this from. If you’re looking at it from the tech-transfer office, most of the major universities have gotten very good at working within the existing patent system, so change can be destabilizing. Others are looking at it from some aspects of the current system that don’t work so well. If, for example, you’re in the general counsel’s office of the university, and you’re paying a lot of money for interferences – challenges to patents that often arise in the first-to-invent system that we have now – then maybe it doesn’t look so good to you.
Some university presidents who have looked at the system overall see changes that may require universities to adjust how they operate, but ultimately, they believe the overall system and universities themselves will benefit from improving patent quality, reducing patent litigation costs, and making the system run better.
Senate majority leader Harry Reid (D-Nev.) has said he was committed to bringing the bill up for debate, at least, in this work period, if not for vote. Is that realistic? Do you see this being voted on soon?

I’m hearing recently that we may see a manager’s amendment with very comprehensive changes in the current bill reported this week, and that within a couple of weeks, the bill may go to the floor. Of course, the intensity of the rhetoric on both sides – those for the bill; opposed to the bill; or those in the middle, who have concerns but would like to see a bill move forward – is really increasing, so there could be swings. But it is looking to me like it is heading to the floor in the relatively near future.

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