12:00 AM
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Apr 13, 2009
 |  BioCentury  |  Regulation

Compromise infiltrates patent reform

Patent reform has been debated on Capitol Hill since 2005 but has never been enacted because of disagreements among the various players, including biotech, pharma, generics, large-tech, small-tech, manufacturing and academia. The latest bill, moved by the Senate Judiciary Committee earlier this month, represents a compromise on the two most divisive issues and is viewed more favorably by the biotech industry than legislation introduced during the last Congress.

On one of the sticking points, the addition of language to modify the process for determining damages appears to be a done deal. On the other, comments by dissenting senators suggest tweaks to the post-grant reexamination procedure are likely - considered a plus for biopharma.

Another likely change before the bill moves to the full Senate is a revision of the inequitable conduct doctrine - which many biotech and pharma companies would like to repeal, and which represents the third most divisive issue. The new Patent Reform Act of 2009 (S. 515) does not address the doctrine.

With key dissenters still to be brought on board, the timetable for bringing the measure to the full Senate remains uncertain.

Roadblocks

The two biggest changes from past Senate bills are in provisions concerning the apportionment of damages during litigation and the creation of a new post-grant opposition procedure.

The key roadblock in previous bills was a provision that would have required a jury to emphasize the economic value of a patent's advances over prior art when setting damages in infringement lawsuits. The provision was intended to reduce the size of damages paid by big tech companies to "patent trolls," who file patents on inventions they never intend to practice. The trolls then wait for a product that uses a similar technology to hit the market and then sue for infringement.

The provision was backed by big tech companies because their products are covered by hundreds of patents and they can introduce improvements to the market every few months. This makes them constantly vulnerable to patent trolls on multiple fronts. Drug companies, on the other hand, want patents that are sufficiently broad and strong to incent the lengthy and expensive process of drug development.

The biotech and pharma argument was backed by the device industry, small-tech companies, manufacturing companies, academia, Chief Judge Paul Michel of the Court of Appeals for the Federal Circuit, and the U.S. Department of Commerce, which oversees the PTO (see BioCentury, July 23, 2007).

Despite the opposition, the House of Representatives passed a patent reform bill (H.R. 1908) in 2007 that included the damages provision. But the Senate version (S. 1145) stalled on the floor because of the opposition.

The Patent Reform Act of 2009 removes the contentious language and instead opts for a process by which the courts and parties would identify the appropriate methods and factors to be used for calculating damages in an infringement lawsuit.

"I think this is where we wanted to be, where there was some consensus across the patent users that could bring about at least a substantial meeting of the minds," Sen. Dianne Feinstein (D-Calif.) said at the April 2 markup...

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