House Passes Patent Term Extension Bill

    By Kevin E. Noonan --

In 2001, The Medicines Company failed to file a patent term extension application for its anticoagulant drug Angiomax® (bivalirudin) within the 60-day time limit set forth under 35 U.S.C. § 156(d)(1); the application was filed one day late.  Since that time, there have been efforts to remedy this deficiency by legislation (including H.R. 5120; S. 1785; and provisions of S. 1145, the patent "reform" act; as well as an earlier "stand alone" version of the bill introduced as H.R. 1778 earlier in this Congress).  Last Monday, the House finally passed a bill containing the necessary provisions.

The bill, H.R. 6344, sets forth the changes in patent term extension law in Section 4:

SEC. 4. AUTHORITY OF DIRECTOR OF PTO TO ACCEPT LATE FILINGS.

(a) Authority -- Section 156 of title 35, United States Code, is amended by adding at the end the following new subsection:
(i) Discretion to Accept Late Filings in Certain Cases of Unintentional Delay --

(1) IN GENERAL -- The Director may accept an application under this section that is filed not later than three business days after the expiration of the 60-day period provided in subsection (d)(1) if the applicant files a petition, not later than five business days after the expiration of that 60-day period, showing, to the satisfaction of the Director, that the delay in filing the application was unintentional.
(2) TREATMENT OF DIRECTOR'S ACTIONS ON PETITION -- If the Director has not made a determination on a petition filed under paragraph (1) within 60 days after the date on which the petition is filed, the petition shall be deemed to be denied.  A decision by the Director to exercise or not to exercise, or a failure to exercise, the discretion provided by this subsection shall not be subject to judicial review.

(b) Fee for Late Filings --

(1) IN GENERAL -- In order to effect a patent term extension under section 156(i) of title 35, United States Code, the patent holder shall pay a fee to the United States Treasury in the amount prescribed under paragraph (2).
(2) FEE AMOUNT --

(A) FEE AMOUNT -- The patent holder shall pay a fee equal to --
(i) $65,000,000 with respect to any original application for a patent term extension, filed with the United States Patent and Trademark Office before the date of the enactment of this Act, for a drug intended for use in humans that is in the anticoagulant class of drugs; or
(ii) the amount estimated under subparagraph (B) with respect to any other original application for a patent term extension.
(B) CALCULATION OF ALTERNATE AMOUNT -- The Director shall estimate the amount referred to in subparagraph (A)(ii) as the amount equal to the sum of --
(i) any net increase in direct spending arising from the extension of the patent term (including direct spending of the United States Patent and Trademark Office and any other department or agency of the Federal Government);
(ii) any net decrease in revenues arising from such patent term extension; and
(iii) any indirect reduction in revenues associated with payment of the fee under this subsection.
The Director, in estimating the amount under this subparagraph, shall consult with the Director of the Office of Management and Budget, the Secretary of the Treasury, and either the Secretary of Health and Human Services or (in the case of a drug product subject to the Act commonly referred to as the 'Virus-Serum-Toxin Act'; 21 U.S.C. 151-158) the Secretary of Agriculture.

(3) NOTICE OF FEE -- The Director shall inform the patent holder of the fee determined under paragraph (2) at the time the Director provides notice to the patent holder of the period of extension of the patent term that the patent holder may effect under this subsection.
(4) ACCEPTANCE REQUIRED -- Unless, within 15 days after the Director provides notice to the patent holder under paragraph (3), the patent holder accepts the patent term extension in writing to the Director, the patent term extension is rescinded and no fees shall be due under this subsection by reason of the petition under section 156(i)(1) of title 35, United States Code, pursuant to which the Director provided the notice.
(5) PAYMENT OF FEE -- The extension of a patent term of which notice is provided under paragraph (3) shall not become effective unless the patent holder pays the fee required under paragraph (2) not later than 60 days after the date on which the notice is provided.
(6) FEE PAYMENT NOT AVAILABLE FOR OBLIGATION -- Fees received under this subsection are not available for obligation.
(7) DIRECTOR DEFINED -- Except as otherwise provided, in this subsection, the term 'Director' means the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.

(c) Applicability --

(1) IN GENERAL -- This section and the amendments made by this section shall apply to any application --

(A) that is made on or after the date of the enactment of this Act; or
(B) that, on such date of enactment, is pending before the Director or as to which a decision of the Director is eligible for judicial review.

(2) TREATMENT OF CERTAIN APPLICATIONS -- In the case of any application described in paragraph (1)(B), the 5-day period prescribed in section 156(i)(1) of title 35, United States Code, as added by subsection (a) of this section, shall be deemed to begin on the date of the enactment of this Act.

These terms are reminiscent of so-called "private bills" that have long been introduced in Congress to address specific changes in the law targeted at particular constituents.  An early use of such bills occurred in the aftermath of the Civil War, where patent terms were extended for patents that had been suppressed by the Northern government as part of the war effort.  This tactic was famously employed by G.D. Searle & Co. in the early 1980's to extend the term of its patent for aspartame (NutraSweet®) at a time prior to the existence of the Hatch-Waxman regime for pharmaceutical patents.  (The bill was introduced by Congressman Donald Rumsfeld, who represented Searle’s home district.)  H.R. 6344 was introduced by Rep. William Delahunt (10th District, MA), but also includes seven co-sponsors, including John Conyers of Michigan (who moved to suspend the rules and permit the bill to be passed without amendment by voice vote, thereby avoiding the need for the position of each of the members of Congress to be on the record).

Here, The Medicines Company will pay a hefty price ($65 million) for its extension, but the amount of the extended term (1,773 days, or until December 15, 2014) and the expected market for Angiomax ($500 million by 2010) clearly justify the cost.  It remains to be seen, however, if the Senate will acquiesce to a solution to one company's problem that will impose additional costs on the American health care system.  On the one hand, Senator Kennedy reportedly introduced a version of the PTE "savings" provisions into S. 1145 (and Senator Leahy reportedly incorporated Senator Session's gift to the banking industry as part of the patent "reform" bill with little debate).  On the other hand, Senator Leahy evinced great concern over the cost to Medicare occasioned by Genentech's intention to prevent pharmaceutical formularies from reformulating its Avastin® VEGF monoclonal antibody as a lower-cost alternative to its AMD drug Lucentis®; his veiled threat to "look into" the matter may have been instrumental in resolving the pricing crisis over these drugs (see "Finally, Some Good News for Genentech on Avastin®").  Lobbying against the bill is sure to ensue, by generic drug companies, consumer advocates, and "watchdog" groups.  Already, Elizabeth Wright, Vice President of Government Relations for Citizens against Government Waste was quoted by CBS News as saying "[w]e call this the dog-that-ate-my-homework act.  It's outrageous and very sneaky.  This could develop into a game that many companies end up playing."  (Ms. Wright opines more extensively on the bill on the group's blog, The Swine Line.)  Expect similar rhetoric from other stakeholders, with uncertain results in this election year.

Comments

[NIPRA anonymous]

Horrible. Now you can buy your way to the patent rights and remedies of your choice. Is anything not for sale in Congress? PatentDoc$, why don't *you* take a $tand against this?

Next year, all the CPF will need to do is pay $70 million (a paltry figure compared to RIM's $612.5 million loss), and Pharmas' strong patent rights and remedies will go bye-bye. Watch and see - if there is any justice, it may come back and bite you.

To quote a PatentDocs article which had exactly the opposite tone about legislated private remedies, "Just coming into focus recently, flying 'under the radar' of the major changes to U.S. patent law contained in the bill, are two provisions nicely illustrating the benefits that can accrue to companies and industries that understand the political process. And in both cases the effects will be increased costs to the public that have little to do with 'reforming' U.S. patent law.... The Senators say 'Now is the time. We agree: now is the time to defeat this bill. Write your Senators."

http://www.patentdocs.net/patent_docs/2008/02/the-unintended.html

Obviously, PatentDocs wasn't taking the moral high ground against letting private funds drive the American political process, in as much as they have nary a negative word to say when the money is being shelled out by a pharmaceutical company to benefit the pharmaceutical industry (which, by the way, provides the comfortable salarie$ for the PatentDocs).

PatentDocs, I'd say your turning-the-convenient-blind-eye to this (just because it helps a pharmaceutical company) and your attempted historical "this is the way it's always been done" after-the-fact justification is hypocritical at best - I can't say what it might be at worst.

[Kevin E. Noonan]

Dear NIPRA:

I’m sorry the piece sounded to you like Patent Docs approves of H.R.6344; we don’t, but then except for its Congressional sponsors (and, presumably The Medicines Company) we are not aware of anyone in favor of this bill. This is in stark contrast with S.1145, the subject of our earlier posts that you cite in comparison in your comment. That bill needed a call to arms, since it was being touted by the “patent crisis” crowd as being necessary despite all the evidence to the contrary. When put in perspective, the ills occasioned by H.R. 6344 pale in comparison the S.1145, and that in part accounts for the difference in our rhetoric level (and the bill benefiting a pharmaceutical company has nothing to do with it).

In addition, we didn’t think stridency was necessary - the facts speak for themselves. And the facts we recounted are not favorable to H.R. 6344. We noted that in the past, such private patent term extension bills were used to restore term lost due to government suppression during the Civil War, and for NutraSweet during a time before the Hatch-Waxman provisions had been past. These situations are in stark contrast to H.R. 6344, which seeks to excuse the failure to timely file the PTE application. (And frankly, we hadn’t seen anyone else put the bill in some historical perspective. Agree with it or not, but this isn’t something no one has ever done before.) We also noted that Congressman Conyers had to use the legislative maneuver of the voice vote to permit members of Congress to vote in favor of the bill but not be on the record for having done so. And the only voice we quoted was Elizabeth Wright of the Citizens Against Government Waste, a watchdog group sharply critical of the bill. (If you went to the website link, swineline.org, Ms. Wright has even more to say and more stridently, but rather than extensively quoting her we provided the link. Contrast this treatment with how we have discussed ETC, Michael Crichton, Lori Andrews and other anti-patent voices on our blog.)

Having reviewed our blogging brethren and their treatment of the bill, we found no one in favor of it, and many who made the same points you make in your comment. We have been passionate about many subjects on our blog, but in this case we didn’t think in necessary to beat a dead horse, or wear our passion on our sleeves. Besides being predictable it would be tedious to be just another naysayer on a bill whose passage is, in our view and as we said in the post, unlikely in view of the size and identities of its likely opponents, particularly in this election year.

Thanks for giving us the opportunity to clarify our position, and thanks as always for the comment.

[NIPRA anonymous]

Dear PatentDocs,

Sorry for jumping to the wrong conclusion. Unfortunately, with the CPF and with Patent Troll Tracker, it seems to me it has become "acceptable" and commonplace for patent attorneys take (or not take) political positions for the purpose of producing financial gain for their clients, without even attempting to look to the greater ramifications of those positions on America at large, the patent system in general, or innovation. I wrongly feared your piece was more of the same.

Your blog is perhaps the most informative and reasoned source for analysis relating to the current politics of patent law. I long for yesterday, when patent law was about invention and wasn't so political, but I doubt we will ever be able to go back home again. Maybe it's time for a new career.

Thank you for your informative blog entries.