Keeping IP Strong
As an innovation industry, biotech relies on strong intellectual property (IP) protection that allows inventors of new products and processes to profit from their discoveries. If Congress weakens the patent system and makes patents harder to get or easier to challenge or infringe upon, our nation will achieve less innovation. If innovative technology sectors experience reduced predictability and increased risk, investment capital will go elsewhere.
The biotech industry should welcome and encourage improvements to the country’s patent system, particularly those that increase patent quality, encourage public participation, and provide additional resources to the U.S. Patent and Trademark Office (PTO). Unfortunately, the Patent Reform Act, which passed the House of Representatives last year and is under consideration in the Senate, includes several provisions that would decrease the value of patents and incentives for innovation.
Various universities, labor unions, patient groups, major manufacturers, small businesses, patent judges, and independent inventors as well as the American Intellectual Property Lawyers Association, the PTO, and many others have joined BIO in expressing grave concerns about the Patent Reform Act.
This Act would introduce a new procedure for determining and applying reasonable royalty damages. The legislation, if passed, will require courts to peel away from the patented and infringed invention all previously known elements and ascribe value only to the remaining parts. Damages would no longer reflect the full value linked to how the patent infringer used the invention. Infringement would be cheaper, and thus the incentives for licensing patented technology would be undermined.
The legislation also adds a new postgrant, adversarial opposition procedure that essentially allows a patent to be challenged throughout its full term repeatedly and without the protections afforded under current law. Such challenges could be brought on a wide range of subjective grounds, even after patent owners have made significant investments based upon the presumed validity of their patents.
The Patent Reform Act also lacks any meaningful reform of the much-abused inequitable conduct doctrine. This rule permits courts to hold an objectively valid patent unenforceable for alleged misconduct by the original patent applicant even if unrelated to the current patent owner or the actual validity of the patent. The rule does not exist in other industrialized nations and should be repealed or at a minimum, dramatically reigned in.
The aggressive use of inequitable conduct accusations in patent litigation chills communication between patent applicants and examiners and negatively impacts patent examination quality. The National Academy of Sciences has called for the elimination or reform of this doctrine as part of their recommendations to make our patent system more objective and efficient.