BIO Expresses Some Concern with House Patent Reform

By Jim Greenwood
March 31, 2011

Biotechnology Industry Organization (BIO) President and CEO Jim Greenwood released the following statement on the introduction of the America Invents Act, H.R. 1249, in the U.S. House of Representatives:

BIO praises House Judiciary Committee Chairman Lamar Smith (R-TX) for his introduction of a comprehensive patent reform bill similar to the bill adopted by the U.S. Senate earlier this month by a nearly unanimous vote.

The America Invents Act is a clear improvement over prior House versions of patent reform legislation. We are pleased that the legislation will end, once and for all, the diversion of fees collected by the U.S. Patent and Trademark Office, allowing the agency to use all of its fees to hire more examiners, reduce the backlog of pending applications, and make other improvements to its operations. We also commend the inclusion in the bill of many other reforms that will improve the patent system and enhance patent quality, including transition to a “first-to-file” system, the elimination of other subjective elements of patent law, and a new supplemental examination proceeding for use by patent owners.

BIO has serious concerns with several significant changes made in the House bill regarding the inter partes review system. Taken as a whole, these changes would make it easier to bring frivolous challenges to patents, harder for patent owners to enforce them, and more likely that patent owners will find themselves in duplicative and costly patent-related proceedings. These changes negatively alter the carefully-crafted balance between patent owners and accused infringers that was achieved in the Senate bill – a bill that won support not only from 95 Senators, but from a wide range of industries, universities, and small businesses across the spectrum of American innovation.

BIO also is concerned about the inclusion of broader prior user rights in the House bill, and believes that this issue, coupled with the harmful inter partes review changes, could set back efforts to pass meaningful patent reform this year by undermining the broad coalition of American innovators currently supporting patent reform.

Small biotech companies rely on intellectual property to attract investors to fund the lengthy and expensive research and development process necessary to bring breakthrough new therapies and other biotech products to patients and consumers. It is critical that patent reform legislation preserves and enhances the incentives necessary to sustain our nation’s global leadership in biotechnology innovation and to spur the creation of high-wage, high-value jobs throughout the country. Improving our patent system can help America retain its global competitive advantage in biotechnology and other innovative industries, and will spur more investment and job creation at a time when both are sorely needed.

BIO thanks Chairman Smith for beginning the patent reform process in the House, and we look forward to working with him and the other members of the House Committee on the Judiciary to ensure that patent reform legislation enhances patent quality and increases the efficiency, objectivity, predictability, and transparency of the patent system to benefit all sectors of our nation’s economy.

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Jim Greenwood

Jim Greenwood

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Discuss this

There are currently 3 Comments comments.

  1. Paul F. Morgan April 1, 2011 7:45 pm

    Re: “BIO also is concerned about the inclusion of broader prior user rights in the House bill.”
    This is not nearly as serious a problem as some of your members must think, even if adopted.
    The prior user’s rights would NOT be “broadened”, they would remain narrow and limited. Only the patents this section of the statute would apply to would be increased.
    My and other’s research cannot find a single patent that has ever been successfully defended against by using the existing “prior use” statute, 35 U.S.C. 273, even though this exising statute already covers all “business method” patents. There have been tens of thousands of such business method patents issued since this statute was enacted in 1999, and many of those patents have been asserted, yet no one has yet ever successfully asserted this statute as any defense! The existing statute’s coverage is thus both large enough and long term enough to provide a real-world statistical sample sufficient demonstrate that even if this statute would be expanded beyond “business method” patents, as proposed in the House bill, it will not be extensively used.
    Furthermore, an expanded patents-scope prior user statute will still retain all of its present severe scope limitations on ts use, it’s punishment for misuse, and its limited effect, as shown below:

    “35 U.S.C. 273 Defense to infringement based on earlier inventor.”
    ***
    “(b) DEFENSE TO INFRINGEMENT.—
    (1) IN GENERAL.— It shall be a defense to an action for infringement under section 271 of this title with respect to any subject matter that would otherwise infringe one or more claims for a method in the patent being asserted against a person, [ONLY] if such person had, acting in good faith, actually reduced the subject matter to practice at least 1 year before the effective filing date of such patent, and commercially used the subject matter before the effective filing date of such patent.
    (C) NOT A GENERAL LICENSE.— ….
    (4) BURDEN OF PROOF.— A person asserting the defense under this section shall have the burden of establishing the defense by clear and convincing evidence.
    (5) ABANDONMENT OF USE.— A person who has abandoned commercial use of subject matter may not rely on activities performed before the date of such abandonment …
    (6) PERSONAL DEFENSE.— The defense under this section may be asserted only by the person who performed the acts necessary to establish the defense and …
    (7) LIMITATION ON SITES.— …
    (8)UNSUCCESSFUL ASSERTION OF DEFENSE.— … the court shall find the case exceptional for the purpose of awarding attorney fees under section 285 of this title.
    (9)INVALIDITY.— A patent shall NOT be deemed to be invalid under section 102 or 103 of this title solely because a defense is raised or established under this section.”

    [P.S. I have no interest in, or position on, this or other provision of patent reform legislation, other than to see a more factual legal discourse.]

  2. Gene Quinn April 2, 2011 11:23 am

    Paul-

    I think you are mistaken about the correlation between business method patents and the types of inventions that would suffer real damage under an expanded prior user rights system.

    The way 273 is written the only things that could satisfy to prove prior user rights are those things truly kept in a black box. The law requires actual reduction more than 1 year prior to the patent filing and use starting before the patent filing. So it seems pretty clear to me that the intent and function is to allow prior user rights in situations that would otherwise create a 102(b) bar but for it being secret. It is not really easy to keep most, if any, business methods secret, certainly not the Internet methods and communications related business methods that make up your statistical data set. On the other hand, processes performed within a laboratory, which is what the BIO companies are heavily involved in, are definitely black box innovations. So I don’t think you can tell much from comparing non-black-box inventions with truly black box inventions.

    -Gene

  3. patent enforcement April 5, 2011 1:50 am

    One might expect the House to be more attentive than the Senate to the needs of independent inventors, but some of the House’s provisions indicate the opposite. The next time patent reform comes before Congress, our legislators should do more to solicit the input of independent innovators and other SMEs.
    http://www.genengnews.com/gen-articles/watson-the-pto-needs-you/3611/