[Ip-health] NYT - Patent Law Battle a Boon to Lobbyists

[Riaz K Tayob]

The New York Times

April 30, 2008
Patent Law Battle a Boon to Lobbyists
By ROBERT PEAR

Correction Appended

WASHINGTON =97 A fight has erupted in Congress over the question of
whether drug makers and other companies should be allowed to keep
patents they obtained by misrepresentation or cheating.

The issue has emerged as a contentious point in legislation to overhaul
patent laws. In several cases, the courts have voided patents after
finding that companies intentionally misled the Patent and Trademark Office=
.

The legislation, affecting a wide swath of the American economy, has
been a boon to lobbyists. In 15 months, two dueling business coalitions
have spent $4.3 million lobbying on the legislation, which calls for the
biggest changes in United States patent law in more than 50 years.
Companies from almost every major industry have joined the battle.

Patents can protect an invention for up to 20 years. But federal judges
can void patents after finding that companies engaged in =93inequitable
conduct,=94 meaning that they misrepresented or concealed information with
an intent to deceive the patent office. In such cases, judges can
declare the patents unenforceable.

Robert A. Armitage, a senior vice president and general counsel of Eli
Lilly & Company, said, =93This is like imposing the death penalty for
relatively minor acts of misconduct.=94

Brand-name drug companies are urging Congress to eliminate the penalty =97
or to curtail it as proposed under a bill passed by the House.

Debra S. Barrett, a vice president of the American unit of Teva
Pharmaceutical Industries, the world=92s largest maker of generic drugs,
said the changes sought by brand-name drug companies =93would make it
easier for them to cheat and get away with it, easier for them to defend
their patents and more difficult for us to get generic products onto the
market in a timely way.=94

Consumer groups like AARP share that concern. They want to speed access
to generic medicines, which can cost 30 percent to 80 percent less than
the equivalent brand-name drugs.

The House has approved a comprehensive patent bill that would make it
harder to prove inequitable conduct. Senators are haggling over a
companion bill, approved by the Senate Judiciary Committee, and hope to
take it to the floor this summer.

In the last 15 years, the United States Court of Appeals for the Federal
Circuit, which handles patent cases, has affirmed findings of
inequitable conduct in at least 40 cases, including 14 that involved
pharmaceutical or health care products. Similar findings have been
issued by federal district judges in an unknown number of cases that
were not appealed.

Courts have found that drug makers knowingly submitted false statements
to the patent office, inaccurately described experiments and concealed
information that contradicted their claims.

In one case, the appeals court said that Novo Nordisk Pharmaceuticals
improperly failed to disclose that it had not performed an experiment
described in its application for a patent related to synthetic human
growth hormone. In another case, the court said Pharmacia had used an
=93inaccurate and misleading=94 affidavit in obtaining a patent for a
glaucoma medication.

Brand-name drug companies say that generic drug makers routinely attack
their patents by accusing them of inequitable conduct when they are
blameless or guilty of no more than honest mistakes.

The aggressive use of such accusations has become =93a plague on the
patent system,=94 the Biotechnology Industry Organization, a trade group,
told Congress.

Harry F. Manbeck Jr., who was commissioner of patents and trademarks
under the first President Bush, said the existing penalty was a powerful
deterrent to misconduct.

=93Patents can be very valuable,=94 Mr. Manbeck said. =93There are strong
incentives to want to get them. Cheating occurs from time to time. The
inequitable conduct doctrine says that if you cheated to get a patent,
you should not be able to enforce it.=94

Under federal regulations, people applying for a patent have a duty to
deal with the patent office in =93candor, good faith and honesty.=94 They
are supposed to disclose if their invention was previously known or used
by others, offered for sale or described in a publication. In that case,
it may not be innovative enough to warrant a patent.

In reviewing an application, patent examiners can search the relevant
literature, but may not find all the pertinent information, so they
depend on applicants to be forthright.

=93If Congress eliminated or reduced the penalty for inequitable conduct,
applicants would no longer have a reason to disclose all the information
they are aware of,=94 said Robert D. Budens, president of the Patent
Office Professional Association, which represents 5,500 examiners.

Mr. Armitage, the Lilly executive, said: =93The doctrine of inequitable
conduct is used so aggressively in litigation that it has unintended
consequences. Applicants give the Patent and Trademark Office too much
information, to avoid allegations that they concealed anything, and they
refuse to explain the information, to avoid later allegations that they
engaged in some form of misrepresentation.=94

James C. Greenwood, president of the Biotechnology Industry
Organization, said, =93The poor patent examiner gets a dump truck full of
information that he has to pore over without any assistance from the
applicant.=94

The number of patent applications =97 467,243 in 2007 =97 has nearly double=
d
in the last 10 years and has more than tripled since 1987.

Jon W. Dudas, the under secretary of commerce for intellectual property,
said: =93We are getting more and more unpatentable ideas, worse and worse
quality applications. Historically, in the last 40 years, the allowance
rate =97 the percentage of applications ultimately approved =97 hovered
around 62 percent to 72 percent. It went up to 72 percent in 2000, but
dropped to 43 percent in the first quarter of this year.=94

A major impetus for the patent legislation is the desire of technology
companies to limit the damage awards and legal costs they sometimes face
when they are accused of infringing patents. Companies like Cisco and
Palm say the disputes drain resources that could be better spent on
research and innovation.

Many of these companies have banded together in the Coalition for Patent
Fairness, which in the last 15 months has spent $2.5 million for a small
army of lobbyists including Mark W. Isakowitz, a Republican, and Steven
A. Elmendorf, a longtime Democratic strategist.

A rival group, the Coalition for 21st Century Patent Reform, consists of
about 50 companies that zealously guard their intellectual property and
are more likely to file suit to protect their patents. It includes
pharmaceutical and biotech companies like Genzyme, Lilly, Merck and
Pfizer. This coalition has paid $1.8 million to lobbyists, much of it to
the law firm of Akin Gump.

This article has been revised to reflect the following correction:

Correction: May 3, 2008
A chart with an article on Wednesday about legislation to overhaul
federal patent laws omitted a unit of measurement. The figures for the
number of patent applications for the last 20 years were in thousands. A
corrected chart is at nytimes.com/business.