Patent Office Assault on Pharma Industry

The Wall Street Journal reported this weekend that in November the US economy lost over 500,000 jobs, the largest single month job loss since 1974.  So why would any branch of our government seek to assault one of the largest industries we have?  Lets face it, the banks and financial institutions are in horrendous shape, the US auto makers have driven themselves straight into the ground.  Circuit City had filed bankruptcy, and the Journal is reporting that the Tribune may also file for bankrupcty.  Can anyone please explain to me why it makes sense for the US Patent Office to continue to pursue regulations that would cripple the pharmaceutical industry?  If pharmaceutical companies cannot file multiple applications to protect the numerous aspects of drugs that are allowed to be protected under the US patent laws it will become financially infeasible to engage in research and development and the entire industry would collapse.

Where would we be without the pharma industry?  I like the fact that there are drugs to treat illness and drugs to make chronic conditions more bearable.  What I think we need to be doing is having a dialogue about how to provide the incentives necessary to get the pharmaceutical industry to focus research and development efforts in areas that would benefit society the greatest.  These areas might not be as commercially lucrative, but new antibiotics and vaccines ought to be a priority.  But we cannot even have the conversation about how to get pharma to do more of what we want if there is not going to be a pharma industry.  You see, there needs to be a pharma industry in order for us to get the pharma industry to come up with the drugs we need now that tried and true remedies are not as effective because of resistance.  But if we want a domestic pharmaceutical industry in the US that will actually do research and development we simply cannot allow the Patent Office to enact the claims and continuations rules. 

Last week in anticipation of the oral arguments in the case between the US Patent Office, Dr. Tafas and GlaxoSmithKline I wrote that you can almost start to imagine what the government would be arguing to the panel of judges of the United States Court of Appeals for the Federal Circuit.  Based on what the USPTO said in its brief filed in July 2008, it seemed like the government would highlight the fact that the claims and continuations rules, which would limit the number of claims you can have to protect your invention as well as limit the number of applications you can file that cover various aspects of your invention, were necessary in order to help the Patent Office manage its work flow and deal with the ever growing number of pending patent applications, which at the end of fiscal year 2008 had grown to over 1.2 million applications yet unresolved.  James Toupin, who is also the General Counsel for the USPTO, did argue to the Federal Circuit that the rules are justified because they relate to Office efforts to expedite applications.  So it was mentioned, but not nearly as much as I had anticipated.

Recall that in July 2008 the Patent Office wrote in its brief:

The excessive use of continuation and continuation-in-part applications and RCEs has contributed to one of the most serious problems now facing the USPTO – the large and growing backlog of unexamined patent applications. In recent years, the backlog of unexamined applications has more than tripled, growing from 224,446 in 1998 to 701,147 in 2006. The growing backlog has had a crippling effect on the Office’s ability to examine new applications. The average time that an application remains pending before first Office action has grown to 22.6 months, and up to 43.9 months in certain areas. Such delays have a particularly acute effect on industries such as computer software and hardware technologies, where product life cycles are short and new improvements can quickly make the technology obsolete. Continuation and continuation-in-part applications and RCEs play a major role in this problem. As a percentage of all filings, continuation applications and RCEs increased from little more than a tenth (11.4%) in 1980 to nearly a third (29.4%) in 2006. As the USPTO spends more time reviewing applications that are a repetition of prior applications that have already been examined, it is necessarily diverted from reviewing new applications disclosing new technology and innovations.

Whether Toupin made the argument exactly as it was submitted in the papers filed with the Federal Circuit, it is clear that the Patent Office does believe that these rules are within the authority of the Patent Office to enact because they, in their opinion, relate to procedural matters that affect how the Patent Office administers its own workflow.  The trouble with this argument is that it simply contradicts very public statements made by Jon Dudas, the Undersecretary of Commerce for Intellectual Property.  So whether it is couched as relating to the expediting of applications or in terms of allow the Patent Office to cut through its backlog, the fact is that Dudas is on the record having said that these particular rules would have only minimal impact on the number of applications received by the Patent Office, so it is impossible to see how these rules could in an intellectually honest way be justified as relating to the laudable goal of expediting patent applications.

Recall that Congressman Howard Berman, chairman of the House of Representative’s Sub-committee on Courts, the Internet and Intellectual Property, submitted questions for the record to Jon Dudas, Undersecretary of Commerce for Intellectual Property. Dudas answered these questions in writing on February 28, 2008. One particularly interesting question lead to an answer from Dudas that undercuts the argument made in the brief and the argument made by Toupin during the oral arguments.  In the question Congressman Berman wanted clarification regarding the Patent Office’s projected 5% application growth rate, which Dudas testified at the hearing “may be affected by the Agency’s rule governing continuation practice.” In addressing this question Dudas minimized the impact that the continuations rules would have had on application growth rate, acknowledging that the rules would likely have only reduced the number of filed applications by 1%, or roughly 5,000 applications. Specifically Dudas said:

The USPTO, using historical and projected counts of continuation applications, assumed there would be a change in applicant behavior with implementation of the continuations rule. The limitations proposed in the continuations rule were assumed to result in a 1% reduction of applications received (approximately 5,000), beginning in FY2010. Although the reduced applications total assumed was not significant, the statement intended to inform the audience that the proposed continuations rule was an element of forecasted future year patent applications.

Obviously, the Patent Office and Undersecretary Dudas make contradicting arguments and statements whenever it suits their purposes. Unfortunately, the facts really do matter, and Dudas was correct when he said to Congressman Berman that the new continuations rules would have had a minimal impact on the number of patent applications filed.  Unfortunately, while the impact would have been minimal insofar as Patent Office workflow, it would severely cripple many industries, not the least of which would be the pharmaceutical industry. 

At this point in time there is a crisis at the Patent Office and something needs to be done to fix the US patent system.  The backlog of cases continues to grow by over 100,000 applications a year, and that has to be a trend that is reversed, but focusing on 5,000 applications a year will not reverse the trend, so why then has the Patent Office focused almost three years of time and energy on a reform that would create maybe 5,000 fewer applications a year?  That would mean that the backlog of cases would continue to grow by 95,000 cases a year, still a ridiculous and unsustainable number if we actually want to have a relevant patent system.  On top of that, these claims and continuations rules attack the most commercially relevant inventions, because those are the only ones you are going to file multiple applications on anyway. 

It makes no sense to continue to carry out this assault on the pharmaceutical industry.  All in the name of reducing patent application filings by 5,000 per year.  Like that is going to make a difference at all to the Patent Office. 


 

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Gene Quinn is a patent attorney and the founder of IPWatchdog.com

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