Could Creating a U.S. "Utility Model" Patent Fulfill the "Need" for Patent Law Reform?

    By Kevin E. Noonan --

Last week, Simran Trana (at right), director of Purdue Research Foundation's Office of Technology Commercialization acknowledged the 800 lb. gorilla that everyone talking about patent reform has been ignoring.  Speaking on a panel discussing patent reform legislation at BIO 2007 in Boston, Ms. Trana said that the need for patent law "reform" stems from the disparate needs of technologies like biotechnology and pharmaceuticals on the one hand and the information technology (IT) industry on the other.  IT "has different rules and moves at a different pace" than biotech/pharma, Ms. Trana said.  And the perceived "problems" with patent law - as evidenced by Eolas Tech., Inc. v. Microsoft Corp., the Amazon.com "one-click" patent (U.S. Patent No. 5,960,411) case against Barnes and Noble, and eBay Inc. v. MercExchange, LLC - come from trying to "adapt patenting - which is a long-term, research-intensive system of preserving value - to a vastly evolving quick-turnover technology."

Ms. Trana accurately set out the competing interests.  On the one hand, biotechnology and pharmaceutical research requires vast investments of time and resources in an inherently unpredictable art, where one drug gets to market for every 500-1,000 drug lead compounds tested.  It is not only research that drives costs, but the need to show that a drug is safe and effective, and to do so with sufficient evidence to obtain regulatory approval from the Food and Drug Administration.  In order to be worth the investment, this industry needs solid patent protection so as to be able to recoup the investment and to have the resources to continue the search for new drugs.

IT, on the other hand, is beset by short times-to-market and quick obsolescence, whether as a result of technology-driven imperatives such as Moore's law, or pressures from the market place for "new and improved" products.  Investments are in people who write and develop code, and for all the complexities this endeavor may have, it is orders of magnitude lower than in the biotech/pharma arena, and inherently predictable in outcome.  There is also no need for approval from anyone other than the market place, which imposes additional pressure for development of new products.  Under this regime, patenting provides much less intrinsic value.

With its "one-size-fits-all" patent regime, U.S. patent law has no way to accommodate the differing needs of these two technologies.  Since the U.S. gives one kind of patent, with the same statutory requirements for patentability and the same patent term, what is necessary, even vital, to biotech/pharma has created a wave of complaints from the IT industry that patents are anticompetitive and prevent progress in their technological art, whereas the biotech/pharma industry is vitally dependent on patents to protect their technology.  Given these differences in how the patent system is viewed and used by these industries, compromise is an unsatisfactory solution:  anything less than strong patent protection critically weakens the biotech/pharma industry, while anything close to the type of patent system now in place provides protections both unneeded and unwanted by the IT industry.

One way to address this issue (that has not been part of the present discussion on patent law reform) is to provide different types of patents, with different patentability requirements and different terms, to the two industries, perhaps providing the applicant with a choice of which type of patent the applicant wants.  Such a patenting scheme exists in Europe and many other countries (see list below), where a more limited type of patent, called a "utility model" patent, is available by applicant election.  Having its origins in Germany, the utility model patent requires novelty but is held to a lower standard of non-obviousness, and is particularly useful for inventions having only incremental improvements over the prior art.  Utility model patents have the advantage of being obtained more quickly than "regular" or (in the U.S.) "utility" patents, having shorter terms (typically 2-3 years, although they can be renewed for up to 7-10 years) and being examined under less rigorous standards (and having an appropriately lower presumption of validity); typically a search is performed but there is little or no substantive examination.  Also advantageous is that in most countries, utility model and utility patents can be pursued at the same time, providing a relatively rapid road to patent protection.

Establishing a utility model scheme would provide the U.S. patent system with flexibility for different kinds of inventions requiring different levels of protection.  Novelty can remain the unrelenting standard, since what is not new cannot satisfy the Constitutional mandate for promoting "Progress" in the useful arts.  Lessening or eliminating the non-obviousness requirements, particularly for incremental inventions, would prevent much of the mischief expected to result from the U.S. Supreme Court's KSR Int'l Co. v. Teleflex Inc. decision, which will most likely be directed at just such incremental improvements.  Additional provisions of current proposals, such as expanding the prior user defense to infringement of utility model patents, and requiring applicants to search for novelty-destroying prior art, could be implemented to speed utility model patent procurement and prevent misuse in their enforcement.  Moreover, certain kinds of patents in the biotech/pharma area, such as new formulations, may also benefit, since the bulk of the developmental and regulatory burden for bringing a new drug to market is borne by the active pharmaceutical ingredient molecule, whereas new formulations are relatively more easily produced.

What certainly will not suffice are current efforts to modify the patent system (specifically, The Patent Reform Act of 2007, HR 1908) that decrease infringement costs or reduce the levels of protection available for those inventions where the economic realities of the market place demand them.  Many are apprehensive about the proposed changes, as evidenced from the remarks of Hans Sauer, associate general counsel for BIO: "I think it's a very patent-hostile bill," he said, "there being hardly a single change that does not tilt the advantage to patent infringers."  The U.S. has benefited disproportionately from the biotech and IT boom of the last 25 years, coincident with a time when U.S. patent rights became more consistent and certain.  In view of the many challenges to American prosperity that we are facing, now is not the time for that to change.

Utility model patent protection is currently available in Australia, Argentina, Armenia, Austria, ARIPO, Belarus, Belgium, Brazil, Bulgaria, China, Colombia, Costa Rica, Czech Republic, Denmark, Estonia, Ethiopia, Finland, France, Georgia, Germany, Greece, Guatemala, Hungary, Ireland, Italy, Japan, Kazakhstan, Kenya, Kyrgyzstan, Malaysia, Mexico, Netherlands, OAPI, Peru, Philippines, Poland, Portugal, Republic of Korea, Republic of Moldova, Russian Federation, Slovakia, Spain, Tajikistan, Trinidad & Tobago, Turkey, Ukraine, Uruguay and Uzbekistan.

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Thank You !

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[Anonymous]

http://www.smudailymustang.com/?p=12045

Will Patent Law now change for other countries like Argentina?