The Biotechnology Market Organization (BIO), along with a substantial group of industry organizations and providers opposed to the Patent Reform Act of 2007, are breathing a small much easier now that the bill is tied up in a Senate committee that apparently has better issues to do in an election year. And with senators undoubtedly receiving an earful of conflicting lobbying, it is entirely probably that the reform act, which passed the House last fall, will remain stalled in the far more deliberate legislative body for some time.
The Patent Reform Act of 2007 is largely the item of the Coalition for Patent Fairness, led by Microsoft. Coalition members see the reform act as a way to stem the flood of patent litigation and multi-million-dollar awards that threaten their profitability. They want to make it tougher for patent trolls in specific to extort significant payouts to avoid even significantly more pricey trials, and they want to safeguard licensing revenues.
BIO is aligned with the biotech and pharmaceutical industries, the patent bar, the Patent Workplace Expert Association and 13 other unions with a vested interest in the existing program. The organization cites a study it sponsored, titled "The Financial Implications of Patent Reform," which says that the legislation would boost patent-related fees and undermine the United States' technological leadership. BIO is particularly wary of provisions dealing with damages tied to infringement, opposition to the patent right after it has been granted and the legal idea of inequitable conduct.
Infringement Damages
According to the study that economist Robert J. Shapiro and well being care policy professional Aparna Mathur conducted, the way the reform act would award damages for patent infringement will indirectly encourage infringement and threaten innovation. Under the existing law, courts assess damages case by case, based on losses incurred or the value to the infringer, and it protects the patent holder's right to recover lost revenues or licensing royalties. The new law would award damages based on the patent's value as compared to what was in place prior to the patent.
The study says the cost of infringement suits will enhance substantially below the new law simply because judges and juries will need to assess all elements of an infringed patent and every little thing that existed just before the patent to determine the economic difference. Fees associated to study and time to know all art might possibly be especially damaging in the biomedical business. In contrast to industries such as IT and software, exactly where innovations are incremental and the relative value of new inventions as compared with prior art is easy to assess, the contribution of a new patented element in the biomedical market place may well be far extra complicated and its importance in the overall art hard to assess.
Redefining how damages are calculated in this manner is most likely to result in smaller awards, and if the financial consequences of infringement decline, infringements could possibly develop into "just a enterprise selection." That in turn will adversely affect the rate of patenting, and innovation will suffer.
Post-Grant Opposition
The reform act replaces post-grant patent re-examination with a European Union-style post-grant opposition. Both approaches permit a third party to ask the patent office to reconsider patentability based on relevant prior art. Under re-examination, the USPTO examiner and the patent holder are the crucial parties, while a challenger plays only a little role. In an opposition, a challenger participates in the method and can bring experts, new experimental data, and other relevant data for examination.
The BIO study says the adjust will increase post-grant expenses. Litigation in the U.S. fees much more than it does in the EU, where lawyer fees for opposition proceedings are strictly regulated. The BIO analysis shows post-grant opposition would inflict a staggering enhance to fees of these rulings and choices in the U.S. to an estimated $1.6 billion annually from the current price of under $15 million. That will drain resources that could be devoted to innovation. Further, investors will extra seriously question the risks of patenting.
Inequitable Conduct
If the doctrine of inequitable conduct becomes part of federal patent law, an entire patent could be canceled whenever intentional omissions or misrepresentations in any portion of the application are uncovered.
The broad use of the doctrine will improve investor uncertainties as to danger, value, and economic prospective of patents, which they may well otherwise finance, order or license. This would discourage innovation. A narrower version of the doctrine that could be implemented assures that a patent would be unenforceable only if the misrepresentations or omissions could be proved that they would have changed the USPTO's original choice to grant the patent.
Together, these three provisions would make patents tougher to secure, easier to invalidate, and less pricey to infringe. The net effects would lower the value of patents, dampen R&D and the slow the pace of innovation as we know it in the United States. The differences in the difficulty of assessing damages across industries raises the idea that possibly rules around patents ought to be tailored to every single business.
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