Senator Orrin Hatch recently addressed the Generic Pharmaceutical Association and focused a large portion of his remarks on patent reform legislation.

As the Chairman of the Senate Subcommittee on Intellectual Property, Senator Hatch is expected to be an original sponsor of any major reform bill introduced in the Senate.  To date, Senator Hatch has played the issue close to the vest — making the his approach to patent reform one of the most significant open questions at this time.

His remarks before the GPA are worth reviewing because they provide a brief introduction and outline to the controversy underlying several of the proposed reforms.

You will be disappointed, however, if you’re looking for insight into the direction on which Senator Hatch is leaning on any particular reform issue.

Here are a few quotes:

On post-grant review and related quality issues

“Although there is little consensus regarding the details, there is some consensus for addressing this problem either by fixing the existing re-examination process or by creating a post-grant review process so that third parties can challenge suspect patents in an administrative process. Similarly, many support allowing third parties to submit prior art that is relevant to an applicant’s patent claims before the patent is issued.

I believe that any patent reform legislation that is to have a long-term impact will necessarily include one or more of these proposals.”

On harmonization issues (first-to-file, elimination of the best mode requirement, changing the definition of prior art, and publication of all applications at 18 months)

“In the context of patent reform legislation, we are working through the arguments regarding moving from our traditional first-to-invent regime to the internationally adopted first-to-file system; eliminating the best-mode requirement; requiring publication of all patent applications after 18 months; and, moving toward a more uniform definition of prior art that is closer to what is used internationally.

It seems clear that some of the harmonization proposals have significant support both in Congress and in the patent community. I would anticipate that aspects of international harmonization will be included in patent reform legislation this Congress.”

On litigation reforms

“Two approaches to dealing with the current problem of patent litigation have emerged in the patent reform debate.

One focuses on eliminating subjective elements and fact-intensive inquiries from patent litigation.  The other, and much more controversial, approach involves altering the remedies available to patent holders in litigation.

Crafting language that satisfactorily codifies a proportional contribution measure of damages is just one of the many challenges that Congress faces in the process of drafting patent reform legislation.”

Certainly non-committal and lacking insight.

The Senator’s closing remarks on the reform issue might be the most informative:

“As you may have guessed from my remarks, my sense is that patent reform still has a fair distance to go before a sufficient consensus forms in Congress around a particular set of reforms. In my experience, this is not uncommon for patent reform legislation, which often takes several years from conception to enactment.”

Fortune magazine, in its 75th Anniversary edition, recently ran a critique of the Bayh-Dole Act, the federal law that essentially grants title to inventions made with federal research dollars to universities.

The article, “The Law of Unintended Consequences,”acknowledges that the law essentially gave birth to the US biotech industry and spurred the formation of technology transfer departments across the country.  Nevertheless, its not a friendly view of the law.  Indeed, its a harshly critical one.

The author argues that the law has turned the American university into a sort-of school-corporation beast that has stifled innovation in pursuit of licensing revenue, particularly in the medical arts.  The thesis of the article, as I see it, is this:

because of Bayh-Dole (and a few other changes to patent law in the last several decades), academic scientists treat their inventions like property, protecting them from disclosure that may negatively impact their commercial value.

because of this paradigm shift in the way scientists think, the free-flow of ideas amongst academic scientists has all but stopped and has been replaced with expensive patent prosecution and litigation.

The author is right, of course.  Any academic institution worth its salt today has a technology transfer office.  Need evidence of the importance of technology licensing deals to your favorite university?  Check the alumni magazine…there’s likely to be an announcement of a recent deal.

The conclusion — Bayh-Dole has stifled biomedical innovation in the United States — is a little far-reaching if you ask me.

Here’s the money quote:  “…Bayh-Dole has served mostly as a nervous mother for a science that never needed one.  New biomedical discoveries are now coddled and kept out of the rain — and it’s hurting progress.”

There’s no doubt about it – Bayh-Dole has changed the way in which universities view scientific research and invention.

I’m just not convinced that this is a bad thing.

No matter your thoughts, the article is worth reading.

The Senate Judiciary Committee will hold a hearing, “Protecting copyright and innovation in a post-Grokster world,” on Wednesday, September 28, 2005 at 9:30 AM Eastern.

The hearing is scheduled as a hearing of the full Committee.  No witnesses have be announced.

With India’s new patent legislation in place, attention is now being paid to patent fees and pendency times.  Apparently the government is promising to reduce both.

Maybe the Indian system is more like the US system than previously thought.  Consider the money quote from this article:

“The government has been treating the patent office almost like its cash-cow.” (an anonymous Indian patent attorney).

Can fee diversion be far behind?

A World Health Organization (WHO) official is encouraging developing and underdeveloped countries to bypass patents on AIDS drugs.  According to this article, Dr. Bernard Fabre-Teste, a WHO AIDS advisor, said that poor countries should consider using international treaties and even taking unilateral action to bypass the patents.

The treaty option refers to a World Trade Organization agreement that allows countries to invoke a compulsory license to manufacture generic version of patented drugs when facing a public health emergency.  It also allows those countries to export drugs to other countries that have no domestic pharmaceutical industry.

Brazil recently made several threats to invoke the compulsory license provision.  To date, though, no country has formally invoked a WTO compulsory license.

Another option is unilateral action.  Malaysia recently did this by enacting a law that permits the importation of generic drugs for “noncommercial” or “non-profit” distribution, presumably despite any infringement issues.

The practical effect of all of this?  The calculus for determining the value of patent protection on pharmaceuticals around the world is undergoing significant change.  Will drug developers continue to seek protection in Brazil, Malaysia, and other developing nations?

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The PTP Patent Reform Library has been updated to include materials from the September 15, 2005 hearing of the House Subcommittee on Courts, the Internet, and Intellectual Property.

The hearing was not conducted as a markup of the Patent Act of 2005 (H.R. 2795).  In substance, it was really an oversight hearing.  Accordingly, I added the materials for this hearing to the House Oversight section.

The Library now includes the opening statement of Representative Lamar Smith and the prepared testimony of each of the witnesses from this hearing.  It also includes materials from all prior patent reform hearings conducted in the House and Senate.

As always, please let me know if there are any additional materials you would like added to the Library.

Today’s hearing of the House Subcommittee on Courts, the Internet, and Intellectual Property revealed a significant shift in the progress of the Patent Act of 2005 and, indeed, in the patent reform movement in general.

Compromises are indeed being made.  The draft amendment circulated by Representative Smith over the summer eliminates the controversial injunctive relief provision.  This appears to reflect a compromise by the software and high technology industries in consideration for the newly added venue provision.  But, even in light of the elimination of the injunctive relief provision, opposition to the venue provision is developing, particularly by the biotechnology industry.

Representative Smith gave a not-so-subtle hint in his opening statement – “We’re attempting to thread the needle on two key issues – transfer of venue and apportionment of damages.”

The pharmaceutical industry appears relatively pleased with the draft amendment save the apportionment of damages provision.  In particular, the industry is happy to see the elimination of the injunctive relief provision, the so-called “second window” of the post-grant review procedure, and the section granting authority to the Director of the Patent and Trademark Office to place limitations on continuation practice.  These three provisions of the bill as introduced have been the primary target of the industry since getting involved in the effort.  Now, with these provisions gone, the industry seems to be focusing its efforts on the apportionment of damages section.

Some members of the Subcommittee expressed reservation against moving toward the text of the draft amendment.  Notably, Representative Berman is clearly opposed to the elimination of the “second window” from the post-grant review procedure.

The Coalition Print, also known as the “September Redline,” has become a focus of attention.  That version of the bill is supported by a coalition of companies (reportedly to be 33 at this time) and the Intellectual Property Owners (IPO) Association.

What happens next?  A substitute bill has to be introduced at some point.  H.R. 2795, as introduced, is clearly dead as a means for meaningful patent reform worthy of broad-based support.  A bill that reflects current compromises will be better suited for advancement of the issue.  Broad support, generally speaking, appears to be shoring up despite the fact that controversy continues to surround a few provisions.

When a substitute is introduced, look first at the venue and apportionment sections.

Timing of a substitute is an open question.  The draft amendment or coalition print could probably be dropped quickly with minimal tinkering.  If more compromise and/or additional support is desired, a more thorough edit of either of these drafts may be warranted, which will take time.  And we’ve still got one eye on the Senate to see if Hatch plans to show his hand anytime soon.

Please visit the PTP Patent Reform Library for copies of all versions of the bill and testimony from the hearing (will be available soon).

IPO has created a “Coalition Print” version of the Patent Act of 2005.  You can view and/or download a copy of the print here.

I have also added the print to the PTP Patent Reform Library.

IPO prepared the bill prior to its annual meeting, currently being held in Seattle.  It is a redlined version of Representative Smith’s substitute bill, which will be discussed in tomorrow’s hearing of the House Subcommittee on Courts, the Internet, and Intellectual Property.

I have not yet reviewed the Coalition Print.

IPO promises that details on the background of the print will be provided tomorrow.

Tomorrow, the House Subcommittee on Courts, the Internet, and Intellectual Property will hold a hearing on the draft amendment to the Patent Act of 2005.

The witness list includes representatives from the Business Software Alliance (BSA), the Pharmaceutical Research and Manufacturers of America (PhRMA), and the Biotechnology Industry Organization (BIO).

The BSA, of course, strongly supported the controversial injunctive relief provision present in the Patent Act of 2005 as introduced (HR 2795).  PhRMA and BIO strongly opposed that and other portions of the bill.

The draft amendment, which is a substitute bill, is clearly one supported by both PhRMA and BIO.  It’s highly likely that BSA strongly opposes the draft amendment – it completely eliminates two of the provisions backed by the group (the injunctive relief provision and the “second window” for post-grant review proceedings in the Patent and Trademark Office).

The hearing should be quite interesting.  If only you could be a fly on the wall.  Oh, wait, you can — watch the webcast here.

Need some reading material to prepare for the hearing?  Check out the PTP Patent Reform Library.