By Donald Zuhn --
On Thursday, the California Healthcare Institute (CHI), an independent organization comprising more than 250 biomedical companies, academic and research institutions, and companies involved in supporting the biomedical community, released a white paper entitled "Impact of Patent Law Changes on Biomedical Investment and Innovation." The CHI white paper analyzes the implications of recent patent law developments on the biomedical industry, and concludes that a handful of Supreme Court decisions, Congress' attempt to enact patent reform legislation, and the Patent Office's push for new patent rules have combined to reduce the value of life sciences patents will have a "chilling effect on biomedical investment and innovation."
According to the white paper, the first challenge to the patenting of life sciences inventions comes from the Supreme Court's "apparent growing anti-patent stance," which is reflected in a number of Supreme Court decisions, including: Merck KgaA v. Integra Lifesciences I, Ltd. (2005), eBay Inc. v. MercExchange, L.L.C. (2006), MedImmune, Inc. v. Genentech, Inc. (2007), and KSR Int'l Co. v. Teleflex Inc. (2007). In particular, the report contends that the Court, in Merck, "weakened the ability of patent holders to enforce their rights against companies performing drug research." The report also concludes that the Court's decision in eBay, which reduces the availability of permanent injunctions to patentees, "weakens the value of patent rights for patent owners who are not commercializing their inventions by making it more difficult for those parties to enjoin an infringer." With respect to the MedImmune decision, the report observes that the Court has made it easier for a patent licensee to challenge the validity of a licensed patent. Finally, the report concludes that the Court's decision in KSR lowers the standards used to evaluate obviousness, thus making it harder for applicants to obtain patents and easier for defendants to invalidate them.
The second challenge to the patenting of life sciences inventions comes from Congress' attempt to enact patent reform legislation. The report contends that the most recent round of proposed patent reforms reflects fundamental differences in business models of two distinct high-tech industries: life sciences on one side and software/IT on the other. The report notes that because life sciences products are long-lived and less susceptible to incremental improvement, and further because investors must be able to rely on patent protection to justify the costs of bringing life science products to market, the relative value of life sciences patents is much higher than the relative value of software/IT patents.
According to the CHI report, the final challenge to the patenting of life sciences inventions comes from the "heavy handed approach taken by the U.S. Patent and Trademark Office (USPTO) towards making and promulgating new patent rules." The report takes the Patent Office to task for its proposed limitations on the permissible number of claims and continuation applications, contending that such modifications will "significantly change the way applicants file their applications and would decrease an applicant's ability to obtain full patent coverage for its inventions," and predicting that the proposed changes to the rules will "have a devastating effect on mid-sized and start-up life science companies." The report believes that if the proposed rules changes are implemented, life sciences companies will motivated to accept narrower claims in order to obtain the allowances needed to secure investment funding, or even worse, will be forced into a lengthy appeal process that could preclude investment altogether.
The CHI white paper ultimately concludes that these three areas of change "represent an extensive and dramatic shift that will make patents harder to obtain, easier to invalidate, and cheaper to infringe, thus creating incalculable problems for the life sciences community in procuring and maintaining the essential patent protections for their inventions."
For additional information regarding the recent patent law developments discussed in the CHI white paper, please see: