Patent Reform Act of 2011: Innovating America to Prosperity

Senator Patrick Leahy

    Patent reform is once again on the Senate Judiciary Committee's legislative agenda.  S.23--the Patent Reform Act of 2011--was introduced on the Senate floor by Committee Chairman Patrick Leahy (D-VT) on January 25, 2011.  The bill, which resembles previous reforms, is co-sponsored by eight: three Republicans, four Democrats, and one Independent.

     In his introductory remarks on the floor, Leahy suggested that failing to pass patent reform this year would allow China to dominate the world in innovation activity.  Quoting a Newsweek study published last year, he said that only "41 percent of Americans believe that the United States is staying ahead of China on innovation. A Thompson Reuters analysis has already predicted that China will outpace the United States in patent filings this year. China, in fact, has a specific plan not just to overtake the United States this year in patent applications, but to more than quadruple its patent filings over the next 5 years." Leahy also called for reforming the patent system to "stimulate the American economy" through innovation.  He quoted Thomas Freidman, who wrote "We might be able to stimulate our way back to stability, but we can only invent our way back to prosperity."

     Senatory Orrin Hatch (R-UT), also speaking on the Senate floor in support of S. 23, noted that patent reform was needed to address the backlog of 700,000 patent applications pending in the Patent Office.  He said that number "reflects the vibrant, innovative spirit that has made America a world-wide leader in science, engineering, and technology, but also represents dynamic economic growth waiting to be unleashed."

     The current version of patent reform looks like previous ones.  A quick summary of the major provisions is shown below:

Sec. 1: Short Title
Sec. 2: First Inventor to File
Sec. 3: Inventor's Oath or Declaration
Sec. 4: Damages
Sec. 5: Post-Grant Review Proceedings
Sec. 6: Patent Trial and Appeal Board
Sec. 7: Preissuance Submissions by Third Parties
Sec. 8: Venue
Sec. 9: Fee Setting Authority
Sec. 10: Supplemental Examination
Sec. 11: Residency of Federal Circuit Judges
Sec. 12: Micro Entity Defined
Sec. 13: Funding Agreements
Sec. 14: Tax Strategies Deemed Within the Prior Art
Sec. 15: Best Mode Requirement
Sec. 16: Technical Amendments
Sec. 17: Effective Date; Rule of Construction

     What will be the fate of S.23?  If history is any indication, the reform measure may go the way of previous legislative attempts and end up scuttled before it gets much traction.  But at least this Congress is starting the process early.  Below is a list of previous Congressional attempts to reform the Patent Act and the fate of each bill.

111th Congress: S. 515 (Patent Reform Act of 2009: Dead)
111th Congress: S. 610 (Patent Reform Act of 2009: Dead)
111th Congress: H.R. 1260 (Patent Reform Act of 2009: Dead)
110th Congress: S. 1145 (Patent Reform Act of 2007: Dead)
110th Congress: S. 3600 (Patent Reform Act of 2008: Dead)
110th Congress: H.R. 1908 (Patent Reform Act of 2007: Passed House)
109th Congress: S. 3818 (Patent Reform Act of 2006: Dead)
 

     As it has in the past, the Biotechnology Industry Organization (BIO) came out in support of S. 23, with BIO President and CEO Jim Greenwood noting the legislation's benefits to bio: "Innovation in biotechnology is based upon the strong and predictable protection of intellectual property provided by our nation’s patent system. Without strong and predictable patent protection, investors would shy away from investing hundreds of millions of dollars, over a decade or more, in high-risk biotechnology companies, and will simply put their money into projects or products that are less risky or offer a more immediate return but are of less value to society."  Other stakeholders, as they have in the past, will undoubtedly step forward for or against the legislation.

Senate Patent Reform Moving Forward

     On March 12, 2008, Senate Judiciary Committee Chairman Patrick Leahy (D-VT) issued a press release outlining possible amendments to S.1145, the Patent Reform Act of 2007. As stated in the press release:

"Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.), Committee Member Orrin Hatch (R-Utah), and Ranking Member Arlen Specter (R-Pa.), have been working for months with a bipartisan coalition of senators in preparation of floor consideration of the Patent Reform Act, which would make the first reforms to the country's patent laws in more than 50 years. The Judiciary Committee passed the legislation last July, and Leahy, Hatch and Specter have held dozens of meetings and briefings in the months since, listening to concerns from stakeholders, and working to address the concerns of the wide cross-section of interested parties."

     Apparently, at least some of the Judiciary Committee members and other Senators have been "urging consideration of the legislation in the full Senate for months, and Majority Leader Harry Reid (D-Nev.) has signaled the chamber could take up the bill in April."

     The major proposed amendments to the bill are summarized below and contained in detail here (zip file):

  • “Best Mode” – eliminates ‘best mode’ as a ground for invalidating a patent, but maintains it as a requirement to obtain a patent

  • Ex Parte Provision – restores third party ex-parte reexamination

  • Federal Circuit Judges – ensures that any Federal Circuit judge who does not reside within a 50-mile radius of Washington, DC, must use the chambers of an existing courthouse in the district where they reside

  • Interference – provides technical amendment to allow for appeal to the Federal Circuit of USPTO board interference decisions commenced prior to the date of the Act; and amends the bill to delete interference-related provisions and replace with new derivation-related provisions

  • Interlocutory Appeals – limits interlocutory appeals of claim construction orders to those for which the District Court determines there is a reasonable basis for disagreement and the appeal may advance the ultimate termination of the litigation

  • Marking Provision – deletes the marking provision in the bill and maintains the current law

  • “Objective Recklessness” – codifies the Federal Circuit court’s ruling in Seagate, holding that infringement is only willful if the infringer acts with objective recklessness of the patent

  • Patent and Trademark Board Judges – ensures that the appointment of patent and trademark judges is consistent with the Appointments Clause

  • Patent Board Judges – technical amendment to clarify that the Patent Board’s duties include the conduction of derivation proceedings

  • Post-Grant Review – provides technical amendment to delete a redundancy in sec. 338 as created in S. 1145; corrects an inconsistency between S 337 (1) and (2), to preclude requesting or maintaining a post-grant review proceeding after a final decision in litigation on the same patent, based on any issue that was raised or could have been raised, in the litigation; defines “final decision” in the estoppel provision; and provides for technical amendment to delete a redundancy

  • Severability – establishes a severability clause in the bill 
     

    Several sources have reported in the last few weeks that proponents of the bill may not have the required votes to invoke the Cloture Rule, which limits the amount of debate on the floor prior to a vote (thereby blocking any filibuster).

Maryland IP Litigation 2008: Lawsuit Summary No. 7

     The following lawsuit filed in the U.S. District Court for the District of Maryland pits brand and generic drug makers (source: Justia).

  • #7: Forest Laboratories, Inc. v. Lupin Pharmaceuticals, Inc., No. 1:2008cv00239, filed January 28, 2008; assigned to J. Legg

     This Hatch-Waxman lawsuit involves Namenda® (memantine HCl). According to the complaint, plaintiff Forest Labs., Inc., a Delaware corporation based in New York, is the exclusive licensee of Orange Book-listed U.S. Patent No. 5,061,703. Plaintiff Forest Labs. Holdings, Ltd., is an Irish company based in Bermuda; plaintiffs Merz Pharma GmbH & Co. KGaA and Merz Pharma GmbH are German companies.

     Also according to the complaint, defendant Lupin Pharmaceuticals, Inc., a Virginia company based in Baltimore, MD, is the wholly-owned subsidiary and agent of Lupin Ltd., an Indian company based in Mumbai. Lupin Ltd. allegedly submitted, through its agent Lupin Pharma, an Abbreviated New Drug Application No. 90-051 to the FDA for approval to market generic Namenda®. It sent Forest the required notice of its ANDA submission on December 14, 2007.

     Plaintiff is asserting infringement of the ‘703 patent, and is seeking to enjoin Lupin from marketing its generic formulation before expiration of the '703 patent.

     Interestingly, plaintiffs also filed a concurrent lawsuit in the District Court for the District of Columbia because they claim not to be able to determine with certainty which one of Lupin, Inc., or Lupin Ltd. was the actual filer of the ANDA. This move was in anticipation of a jurisdictional challenge by Lupin (see related post here).