The Biotechnology Industry Organization (BIO) supports amendment of the current reexamination authority to enhance patent quality. Congress established the patent reexamination system in 1980 as an ex parte proceeding that could be initiated only on the basis of patents and printed publications. See, P.L. 96-517. Once the PTO initiated the proceeding, only the patent owner and the PTO would participate. This structure made reexamination efficient and fast, but fundamentally unattractive to third parties that wished to vigorously review patent validity. Ex parte reexamination initiated by third parties became usable only in the clearest situations where a manifestly explicit patentability defect exists– in essence, where the prior art cited in the proceeding could not be interpreted in a way other than to find the patent invalid, and typically only on anticipation grounds. The Advisory Commission on Patent Law Reform created in 1992 provided some recommendations for restructuring reexamination that would make it more attractive to third parties.
The Commission first recommended that the basis for and scope of reexamination be expanded to include compliance with all aspects of 35 U.S.C. § 112, except best mode in, order to ensure that all significant issues related to patent validity that are commonly raised and considered during the original prosecution may be addressed in a subsequent reexamination of the patent; and
The Commission also recommended providing third parties with more opportunities for substantive participation during the reexamination proceeding.
The Biotechnology Industry Organization (BIO) represents over 960 companies, state and affiliated organizations engaged in biotechnology research on medicines, diagnostics, agriculture, pollution control and industrial applications. BIO appreciates the leadership of the Subcommittee in providing strong support for intellectual property and appreciates the opportunity to participate in this hearing. We very much appreciate the understanding this committee has demonstrated regarding the critical role of intellectual property in enabling our industry to fund biomedical research. There is no industry that is more capital intensive or research intensive, takes greater risks, and produces more hope for mankind than the biotechnology industry. Valid patents are the linchpins of our industry, not only for attracting venture capital, but also for generating income to support future research and development of needed biomedical products.
BIO has continuing concerns that the resources made available to the PTO are inadequate to prevent slippage in the quality and timeliness of patent examination of complex biotechnology patent applications. The PTO needs to receive funding in a manner that will permit it to engage in multi-year planning to improve the size and quality of the examining corps as well as the infrastructure needed to support the examining corps. Resolving funding issues, among other steps, will help the PTO to improve quality and timeliness of patent examination even in the face of the heavy increase in the size and complexity of patent applications expected to be filed by members of BIO.
Patent Reexamination Reform
Patent reexamination is a critical element of the patent system that strengthens the public’s confidence in patent quality for inventions. The role of reexamination is to provide a limited, expedited alternative to the courts for reviewing patent validity in instances where there is a well-formed basis for the proceeding and where the United States Patent and Trademark Office (PTO) is competent to review the issue affecting patentability. The inter partes proceeding established by the American Inventor Protection Act of 1999 (AIPA) poses restrictions on reexamination in the following ways:
- Forecloses the ability of a third party to appeal a determination in favor of the patent owner to a court. Thus, for third parties, the proceeding starts and ends in the PTO. See, 35 U.S.C. 315(b).
- Under the AIPA, a party is barred from raising issues that not only were raised but also could have been raised during the proceeding, and this bar applies as soon as the PTO finds a basis for initiating the proceeding. In addition, third parties are estopped from taking the positions in relation to facts considered during the proceeding that are inconsistent with those taken in the context of the reexamination proceeding.
- An AIPA reexamination is limited to patents and printed publications.
The Biotechnology Industry Organization (BIO) advocates amendment of the current reexamination authority to incorporate or retain the following general attributes.
- The procedure should permit challenges only after the issuance of the patent.
- The procedure should be available for any patent, rather than being limited to patents in specific technological fields. Restricting the procedure to certain types of patents would likely raise concerns under the non-discrimination provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) of the World Trade Organization (WTO) Agreement. Moreover, any procedure that is balanced, fair and effective should be available for any patent issued by the PTO.
- The procedure should permit challenges based on the existing grounds, as well as other issues implicated by public use or sale, provided that such challenges are grounded on objective factual evidence that can be evaluated by the PTO.
- The procedure should also permit challenges to be based on non-compliance of a claim with the other statutory requirements of the patent laws, for example, 35 U.S.C. 112, other than best mode, which requires a subjective inquiry that is outside of the USPTO’s ability to determine independently. Since opinions on or evidence related to compliance of a patent are likely to become more complicated with the passage of time, it would be appropriate to put a time limit on when challenges under all grounds could be made (e.g., 9 to 24 months after the patent is granted). In addition, challenges based on information other than patents or printed publication should require the submission of some form of evidence to support the assertion of invalidity.
- The procedure should be available to review any patent that remains in force on the date the law takes effect.
- The PTO should be given a limited authority to review and resolve conflicts over facts that are material to the issue of patentability. The PTO Board of Patent Appeals and Interferences currently can conduct hearings where both sides can question a witness on a factual issue.
- The procedure should permit reconsideration of information originally considered by the PTO. Such a provision would have the effect of overruling the decision of In re Portola Packaging, 110 F.3d 786 (Fed. Cir. 1997), which held that the PTO was not permitted to initiate a reexamination on the basis of information considered during the original examination. The Portola ruling has been widely criticized for placing an unrealistic and undesirable prohibition on the use of reexamination to consider information not fully considered in the original examination.
- The PTO should be required to conduct reexaminations within a finite amount of time (e.g., not more than 18 to 24 months), with exceptions only in the most complicated proceedings. Imposing a time limit on the duration of the proceeding, along with strict enforcement of time limits for third party responses in the proceeding, will help prevent reexamination from becoming a way of entangling patent owners. - The fee for reexamination can be increased to compensate for the time limits required for conducting reexamination. Additionally, no estoppel should apply, only res judicata for the issues already presented, not those which could have been raised. The decision made should also be appealable.
- Any party to a reexamination should be able to appeal an adverse decision through the normal judicial routes. Significant uncertainty exists with regard to the application of fundamental patent law doctrines to biotechnology. Only the federal courts can resolve these questions. Because of long product development periods (average of 10+ years), the infringement exemption for clinical trials and the case or controversy predicate for federal court jurisdiction, few biopharmaceutical patents can be reviewed via usual litigation channels in a timely manner. Appeals from reexamination proceedings would permit the federal courts to address the current issues facing the biotechnology industry, rather than waiting for decades to have those questions resolved.
- Estoppel should only apply to issues that were raised and finally decided against a party. The PTO is neither equipped nor inclined to decide issues involving significant discovery. A party should be able to leave such an issue out of a reexamination without prejudice. Permitting a party to place only those issues before the PTO which it is best equipped to decide promotes the overall efficiency of the reexamination process. Forcing a party to bring every possible issue before the PTO will be an undue burden on the PTO without any corresponding benefit and delay the final resolution of reexaminations.
- It is critical that the procedure not be structured in such a way that permits unjustified and unsubstantiated challenges to patents. Fundamentally this procedure should not be a venue for harassing patent owners.
Patents are crucially important to so the U.S. biotechnology industry and thus any patent issued in the biotechnology arena must be valid and enforceable to have value to their owners and to respect the right of third parties. BIO favors enhanced patent quality and mechanisms for ensuring enhanced patent quality. All of the suggested modifications are possible under existing authority conferred on the PTO, and should not be pursued through amendments to the patent code.