Patent Docs

Biotech/Pharma Business Briefs

    By Jason Derry --

Medicines Co. to Buy Targanta

The Medicines Company and Targanta Therapeutics have announced that Medicines Co. will buy Targanta for $42 million.  Medicines Co. has agreed to increase the purchase price by an additional $1.20 a share if Targanta's oritavancin, a product for treating skin infections, is approved by the FDA as a single dose infusion product. 

Abbott to Acquire Advanced Medical Optics 

On January 12, 2009, Abbott Laboratories and Advanced Medical Optics (AMO) announced an agreement under which Abbott will purchase AMO for about $2.8 billion.  The acquisition of AMO will expand Abbott's business into the ophthalmic medical device field.  AMO currently markets products for cataract surgery, laser vision correction surgery (LASIK), and other eye care products.

Jason Derry, Ph.D., who graduated with honors from DePaul University College of Law, is a molecular biologist and founding author of Patent Docs.

Manufacturing Alliance on Patent Policy: Apportionment of Damages Provision Will Have Adverse Effects

    By Donald Zuhn --

Yesterday, the Manufacturing Alliance on Patent Policy (MAPP) released a report which indicates that the apportionment of damages provisions found in the Senate (S. 1145) and House (H.R. 1908) patent reform bills would have several adverse effects.  The apportionment of damages provisions in these bills attempt to apportion the value of a product that can be attributed to a patented invention and the portion that can be attributed to other components or aspects of the product.  The report notes that while proponents of the above bills have argued that apportionment is needed to fix a flawed U.S. patent system, "in all of the rhetoric about the inadequacy of the U.S. patent system, the resulting problems faced by innovators in this country, and the need to elevate apportionment of damages to solve those problems, careful examination of the likely effects of an apportionment-centric system of damages have been lost."

The results of the 12-page report, entitled "The Likely Adverse Effects of an Apportionment-Centric System of Patent Damages," were announced on Wednesday during a press teleconference attended by Patent Docs.  MAPP representative Stan Fendley, the Director of Legislative and Regulatory Policy for MAPP member Corning Inc., noted that the debate on patent reform, which has been fought by the IT and biotech/pharma industries, was missing an objective analysis of the possible effects of patent reform legislation.  As a result, eleven companies and organizations formed MAPP, and commissioned Dr. Scott Shane (at left), a Professor of Economics at Case Western Reserve University, to prepare a report on the impact of apportionment of damages.  In his report, Dr. Shane concludes that an apportionment-centric system of damages would have five specific adverse effects, including:

1.  Decreasing the value of U.S. patents by $34.4 billion to $85.3 billion;
2.  Decreasing the value of U.S. public companies by $38.4 billion to $225.4 billion;
3.  Decreasing research and development spending in the U.S. by $33.9 billion to $66 billion per year;
4.  Putting between 51,000 and 298,000 U.S. manufacturing jobs at risk; and
5.  Favoring industries employing fewer people over those employing more people.

Reduction in the value of patented technology

Dr. Shane estimates that under an apportionment-centric system of damages, the value of U.S. patents would decrease by $34.4 billion to $85.3 billion.  He arrived at this estimate by first determining how the amount of patent damages would change were patent reform legislation containing an apportionment of damages provision enacted.  To do this, a randomly selected group of patent attorneys were surveyed and asked whether the apportionment of damages provisions in S. 1145 and H.R. 1908 would, if enacted, lead to an increase or decrease in damage awards.  The group estimated that these provisions would lead to a 20-39% decrease in damage awards.  Next, Dr. Shane calculated the value of U.S. patents by multiplying the average patent value ($93,463 to $118,988; as determined in three separate studies discussed in the report) by the total number of U.S. patents in force (1,838,242; as determined in a separate study).  Finally, the expected reduction in damages was multiplied by the value of U.S. patents, since the report concludes that the value of a patent is a function of the amount of damages that one can collect in an infringement suit.

Reduction in the value of public corporations

Dr. Shane estimates that under an apportionment-centric system of damages, the value of U.S. public companies would decrease by $38.4 billion to $225.4 billion.  He arrived at this estimate by taking the average of two different methodologies:  one conservative and one liberal.  Under the conservative approach, the portion of the value of public companies that can be attributed to patents (0.8-1.0%) is determined by dividing the value of U.S. patents in force that are held by public companies ($77.3 billion to $98.4 billion; determined using two separate studies) by the total value of U.S. public companies ($9.8 trillion).  Therefore, under the conservative approach, a 20-39% decrease in 0.8-1.0% of the value of public companies that can be attributed to patents yields a reduction in the value of public companies of $15.5 billion to $38.4 billion.  Under the liberal approach, which utilizes algorithms devised by Ocean Tomo, the value of public companies that can be attributed to patents is 11.3%.  Therefore, under the liberal approach, a 20-39% decrease in 11.3% of the value of public companies that can be attributed to patents yields a reduction in the value of public companies of $225.4 billion to $431.2 billion.  By taking the higher of the conservative range and the lower of the liberal range, Dr. Shane estimated that the value of U.S. public companies would decrease by $38.4 billion to $225.4 billion, which constitutes a reduction in value of 0.4-2.3%.

Decreased investment in research and development

Dr. Shane estimates that under an apportionment-centric system of damages, research and development spending in the U.S. would decrease by $33.9 billion to $66 billion per year.  He arrived at this estimate by first determining that apportionment would lead to a 14.0-27.3% decline in R&D investment (as explained in more detail in the report), and then multiplying this decrease by U.S. R&D expenditures ($342.9 billion, $241.8 billion of which was paid by corporations; as determined in a separate study).

Adverse impact on manufacturing employment and compensation

Dr. Shane notes that in 2006, U.S. manufacturers had $5.02 trillion in total receipts and employed slightly less than 13 million people who received $757.5 billion in total compensation (as determined in a separate study).  Using the 0.4-2.3% reduction in value calculation discussed above, and an estimated market value for manufacturing companies of $5.02 trillion (i.e., equivalent to total receipts), Dr. Shane determined that apportionment would reduce the value of U.S. manufacturing companies by $20 billion to $115 billion, which would translate to a loss in annual revenue of $20 billion to $115 billion.  If U.S. manufacturers were to attempt to recover the lost revenue by cutting jobs, Dr. Shane estimates that 51,000 to 298,000 manufacturing jobs could be lost (as explained in more detail in the report).

Favors some industries over others

The report states that "[e]ffective patent reform needs to enhance innovation in all industries, not enhance innovation in one industry at the expense of innovation in another," concluding that "[t]he apportionment legislation fails to meet this condition because it benefits some industries at the expense of others."  In the report, Dr. Shane describes two broad classes of industries:  complex technology industries, in which products comprise numerous separate patentable elements, and discrete technology industries, in which products comprise a small number of patentable elements.  Because each patent is more valuable to discrete technology industries, and further, because patented elements are more likely to make a disproportionate contribution to the value of discrete technology products, Dr. Shane contends that discrete technology industries would be more adversely affected by apportionment.  Moreover, discrete technology industries employ 8.1 million people as compared with the 5.0 million employed by complex technology industries (as explained in more detail in the report).  Thus, Dr. Shane concludes that apportionment would favor industries employing fewer people.

In re Kubin: The Obviousness of DNA

    By Kevin E. Noonan --

The Federal Circuit heard oral argument for In re Kubin last week, and a very hot bench (Judge Rader presiding, joined by Judges Linn and Friedman) sharply challenged the positions of both Kubin and the Patent Office.  While it is foolish to attempt to read the tea leaves of judicial intention when listening to oral argument, the questions from the bench point out once again that obviousness remains a legal issue intimately dependent on the underlying facts (and misapprehension of those facts).

Judge Rader immediately raised the "obvious to try" issue with Barbara Rudolph, representing Kubin.  After letting Ms. Rudolph get about 80 words into her presentation, Judge Rader asked her "If I use the O'Farrell standard of a reasonable expectation of success, don't I come out with the office?" which, he reminded her, preceded In re Deuel and thus would be controlling precedent.  She reminded the Court that the O'Farrell standard for "obvious to try" sets forth two situations where what is obvious to try is not obvious.  One of these is when all possible parameters are varied with no direction from the art on which parameter to vary or how.  That was the situation here, according to Ms. Rudolph. 

Judge Friedman then gave counsel the opportunity to take a breath and set forth some background information, asking for a brief synopsis of what the patent applicants were trying to do.  She responded by explaining the underlying immunology of natural killer (NK) cells.  In response to renewed questioning from Judge Rader, that the prior art Valiante reference "taught p38 which is NAIL" (the subject matter of the Kubin application was a cDNA encoding human NAIL), she reminded the Court that what Valiante disclosed was "a band on a gel," i.e., that the Valiante patent disclosed an antibody immunologically reactive to p38, and therefore, that Valiante did not disclose purified p38, but merely its detection on a Western blot (where it would be expected to be in the presence of a multiplicity of other proteins).

At this point the Court went off the factual rails a bit.  Judge Rader asked:

You're talking process to me, and frankly the only difference with the Valiante process and the Kubin process is the difference between a liquid immunoabsorption technique and a solid immunoabsorption technique, but we are not talking processes anyway.

From which Judge Rader came to the conclusion that:

We're talking p38 is NAIL isn't it.  . . .  So the prior art teaches what is claimed here, and you're trying to say:  "But they got there a different way."

Frankly, no.  Ms. Rudolph reminded the Court that Kubin was claiming a cDNA and the prior art taught the p38 protein, and that Kubin's claim was not to the entirety of the NAIL sequence but just to a fragment of it.  This led the Court to what seemed to be a greater misunderstanding of the underlying facts:

Judge Rader:  You're right, they actually claimed the probe that binds to NAIL, but once you [have] the probe that binds to NAIL, and the methods for producing the sequence, why hasn't the prior art shown a reasonable expectation they get to everything you claimed very quickly?

Rudolph:  Well, what they claim was the gene fragment encoding NAIL, but not all of NAIL, just a particular . . .

Judge Rader:  Yeah, they claimed that, but remember what they taught:  p38, which is NAIL.  They were smart; they claimed the probe.  The probe is what is of value anyway, so that's what you claim.  But they taught p38, which is NAIL.

Rudolph:  They taught only . . . they did not teach p38 in the sense of giving its . . . any information to identify . . .

Judge Rader:  No, they didn't give its sequence.  But again, that's where you can use the commonly used methods [that] anyone with skill in the art knows to get the sequence, and the only difference between the way they got the sequence and [the way] you got the sequence is the difference between the liquid and the solid immunoabsorption technique.

This colloquy seems to indicate that the Court is at least receptive to the Patent Office position that the cloning methods were "routine."  But this ignores, of course, the critical factual distinctions between the prophetic example from the prior art Valiante patent and what Kubin actually did.  Ms. Rudolph tried to get the Court back on track:

Rudolph:  No, because there is no reasonable expectation of success, because there are things that are missing in Valiante.  First is the NK cell library.  Valiante does not disclose the starting material, and what does Matthews teach us?  Mathew teaches us when you use a conventional method [to] isolate this gene, it does not work.  And what they used was a NK cell library with total RNA from NK cells, and that did not work.

Judge Rader seemed to continue to miss Ms. Rudolph's point that what was deficient in the art were not cloning methods, but a source for preparing a cDNA library:

Judge Rader:  We get the library out of Sambrook.  That is why they cite that part.  Matthew is kind of a reinforcing reference that shows [that] they did do everything you said they haven't done in the murine context, which shows again [that] it's easy for one of skill in the art to do it.  They can do it in mice.  They can do it in humans.  [They’re] closely related genomes.

As anyone familiar with the underlying science will recognize, you don't "get the library out of Sambrook."  You get generic cloning methods from Sambrook, but the predicate for using these methods is having a biological source, a cell or tissue, that expressed the protein encoded by a cDNA of interest, from which source Sambrook can be used to prepare a library.  It is ironic that one of the classic scientific limitations of gene cloning was ignorance of the source of such important cDNAs like blood clotting Factor VIII.

Judge Linn commented that, on the one hand, the Matthew reference "troubled" him as a teaching away, but also said he thought that example 12 of the Valiante reference was "of consequence" to the obviousness question.  In response to Judge Linn's question about the significance of Example 12 being a prophetic example, Ms. Rudolph responded that while its prophetic nature "didn't matter," looking at the evidence as a whole showed there was no reasonable expectation of success that practicing Example 12 would result in Kubin's invention.

Judge Rader continued to emphasize the existence of the antibody probe, combined with using "the Sambrook libraries," and then (voila!) "you find the sequence."  Ms. Rudolph responded succinctly:  "Probe it in what?  . . .  [Y]ou need a starting material from which to probe.  And if you have a NK cell library, that's not going to produce p38 or sufficient amounts [of it]."  Judge Rader then asserted that "Valiante had already produced p38," to which Ms. Rudolph reminded the Court that had been done for the protein and not for the cDNA.  Specifically, she correctly asserted that "you need a starting cell library that will have a sufficient amount of that particular gene that will produce that particular protein."  Unfazed, Judge Rader responded:

Well that is the kind of thing you assign to your lab assistant -- you assign your lab assistant to do it.  And yes, it's trial and error; and yes, you make lots of mistakes.  But remember, we have dealt with that in our case law:  Atlantic, Atlas Powder for instance.  You can have lots of mistakes and still produce it, and fully enable your invention.

Ms. Rudolph made one more attempt to clarify the issue:

Rudolph:  But the Board hasn't identified -- jumping to a different aspect of the claim -- the Board has not identified any basis for identifying a specific binding region -- what the structure of that binding region is -- and it hasn't identified any basis for finding CD48-binding obvious. And those are claim limitations that the Board would consistently like to ignore, or the PTO would like to consistently ignore.  And those are important limitations that could not have been predicted from Valiante, or any of the cited references, or Sambrook.  Which is really . . . Sambrook does not contain a recitation of NK cell library, Sambrook is just a general cloning . . .

Judge Rader:  No, it tells one of skill in the art how to produce those libraries, and when you [have] the probe it's not so hard to do.

Rudolph:  It does not tell one with skill in the art how to produce a NK cell library, and if you look at the methodology that's recited in the specification, what they used was a specific mixture of resting cells, resting NK cells and NK cells stimulated with a very specific cocktail of activators.  That's not disclosed in Sambrook.  That's not disclosed in Valiante.  That's not disclosed anywhere, and nor is any of the CD48-binding aspects of this claim disclosed anywhere.  And this is really getting down to the problem that we see with the Board's analysis -- [the Board] is looking at the methodology and that's not the proper way.  It's easy to say, sure . . . could someone have used a hammer and a nail to get there?  Could someone have used conventional tools to get there?  That's a different question from:  Is this claimed subject matter as a whole obvious than what came in the prior art?  And looking at this invention, as is should be looked at -- the genetic basis for the binding region for an very important interaction between NAIL and CD48 -- when that interaction was not known in the prior art and has significant biological consequences.

Janet Gongola, Associate Solicitor for the Office of the Solicitor, argued for the Patent Office.  Judge Rader started her off with Deuel, asking her the converse of his O'Farrell question to Kubin's counsel.  She distinguished Deuel based on the statement in Deuel that:

Identification of a structurally similar molecule in the prior art is normally where you would start to make a chemical obviousness finding.  Normally -- that word is key because it is descriptive of one way you can establish chemical obviousness.  It's not prescripted  . . . so you always have to do it that way.

A unique argument to anyone with a memory of the In re Bell / In re Deuel dyad of cases and the Federal Circuit's clear holding (followed de facto by the Patent Office ever since) overruling the same arguments the Office now makes against Kubin's claims.  Judge Rader persisted, asking Ms. Gongola to "distinguish the rule of Deuel, which says general methodologies are irrelevant.  [And if so,] you lose Sambrook, and if you don't have Sambrook, you can't have the libraries [and] you can't use example 12 to get to Kubin."  Her response:

Gongola:  Respectfully, your Honor, I disagree with that Deuel goes on to general methodologies for making an undefined cDNA molecule.  The Court there said that it was irrelevant to whether a specific molecule would have been obvious.  In the very next sentence, the Board explained what to do -- I'm sorry, the Court -- explains what to do with this specific method, and the Court said:  "A prior art disclosure of the process reciting a particular compound is another matter raising issues of anticipation and obviousness."  We are that other matter, and what the Board did here is [it] looked at the teaching of Valiante.  Valiante identified p38 cDNA, [which] gave [the skilled artisan] motivation to make it, and then provided a methodology of doing so.  So Deuel envisions the situation we have here, and says the result would be different.  We have a specific method, teaching how to make a specific DNA molecule, falling within the scope of the genus.

Judge Linn then asked her about the statements by Kubin's counsel that Valiante did not show a library.  Ms. Gongola responded:

If you listen to what exactly Ms. Rudolph said, she explained to you that Example 12 did identify starting materials -- a specific kind of NK cell library that a person of skill of the art would have known to use.  This kind of goes to the question of reasonable expectation of success -- Matthews [sic] provides that reasonable expectation of success.  Matthews followed the method of Valiante identically except [for] using mouse NK cells instead of human [cells] as a starting material, and instead of using a probe specific for human p38 cDNA.  Matthews used [a probe] for 2B4 cDNA.  But Matthews successfully followed the method otherwise, and obtained 2B4 cDNA, the mouse counterpart to human NAIL.

So, the Board made specific findings in this regard on page A9 of its decision.  It explained that Matthews is cumulative to Valiante and provides the reasonable expectation of success.  Kubin itself, before the Board -- and the Board made this finding at Finding of Fact 13, admits that conventional cloning methodologies were known in the art.  People knew how to clone.  The Board capitalized on this, found that Valiante taught a prior art species, that [this] species was obvious in light of the method used to make it, and then in turn said that the prior art disclosure of an obvious species under the line of Lilly renders the claimed genus obvious.

There are, of course, two errors of fact and one of law in this argument.  The first is that neither the Matthew reference nor the Valiante reference taught that mouse 2B4 was the murine homolog of human NAIL.  That understanding was evident only when Kubin succeeded in cloning NAIL cDNA and compared it to the mouse 2B4 reference.  Second, the reason that Matthew could use substantially the same method that Valiante prophetically taught for cloning the murine p38-encoding gene is that mouse NK cells make sufficient 2B4 mRNA that a conventional murine cDNA library will be capable of producing cDNA clones encoding the sought-after gene.  Kubin (and Matthew) show that this isn't the case for human NK cells.  Ms. Gongola, and the Board, continue to base their obviousness argument on the obviousness of the cloning methods -- "People knew how to clone" -- but as Judge Lourie realized in Deuel, that isn't the standard:

The PTO's focus on known methods for potentially isolating the claimed DNA molecules is also misplaced because the claims at issue define compounds, not methods.  See In re Bell, 991 F.2d 781, 785, 26 USPQ2d 1529, 1532 (Fed. Cir. 1993).  In Bell, the PTO asserted a rejection based upon the combination of a primary reference disclosing a protein (and its complete amino acid sequence) with a secondary reference describing a general method of gene cloning.  We reversed the rejection, holding in part that "the PTO's focus on Bell's method is misplaced.  Bell does not claim a method.  Bell claims compositions, and the issue is the obviousness of the claimed compositions, not of the method by which they are made."  Id.

And KSR does nothing to change that.

Interestingly, in view of the professed desire of the Office to have the Federal Circuit overturn Deuel, Ms. Gongola did not assert any deficiencies in Deuel per se occasioned by the Supreme Court's KSR decision:

Judge Rader:  Deuel, is it consistent with KSR?

Gongola:  Yes, your Honor, except for one small feature of KSR.  Deuel . . .

Judge Rader:  You don't seem -- the Board doesn't seem to agree with you.

Gongola:  I would disagree with that characterization.  The Board explained -- if we look at page A8 of their decision -- they don't say that KSR overturns Deuel or anything along those lines.  The Board pointed out that KSR may cast doubt on Deuel to the extent that the Federal Circuit has rejected an obvious to try test.  In KSR, the Supreme Court said that in certain circumstances, obvious to try may be the standard for obviousness.  And that's what the Board is saying here, that to the extent people are citing Deuel for the proposition [that] obvious to try can't be the standard, well . . . KSR cast doubt on that.  But otherwise, Deuel remains good law.

Judge Rader:  Well, KSR said rather persuasively on page 12 here [that] it might have been obvious to try the combination of Asano, and the big mistake, of course, was rejecting Asano, because obvious to try . . . and they cite Deuel for the mistaken methodology of not trying the combination of Asano.  Doesn't that cast a little doubt on Deuel?

Gongola:  Only to the extent that Deuel says obvious to try can't be the standard.  I think the Supreme Court went on to clarify that when there is a design need or a market identifies a problem, and there's a finite number of identified solutions, and those solutions are predictable, then obvious to try can be the standard.  And the Board here applied that principle in an alternate fashion, so we've got the obvious species grounds and separate obvious to try grounds for finding [that] Kubin's claimed invention would have been obvious.  Here the Board said that the problem was to identify or isolate NAIL cDNA, there were a limited number of methodologies to do so, and a person of skill in the art would have followed those methodologies and met with success.  The Board was correct.  Valeinte teaches one and one only one method for isolating p38 cDNA.  Matthews comes along and provides the reasonable expectation of success, showing, hey, they followed that same method, and they obtained 2B4 cDNA.

She also asserted, in response to Judge Linn's comment that KSR involved simple mechanical technology, that the Supreme Court in KSR envisioned that its principles would be applicable across other technologies.  Ms. Gongola based this assessment on dicta in KSR that the application of such principles to other technologies might not be as easy as it had been for the Court in KSR.  She also cited the Federal Circuit's Takeda Chem. Indus., Ltd. v. Alphapharm Pty., Ltd. decision as one "that helps us in this case," again asserting the "facts" before the Court in Kubin.  The Federal Circuit's decision in finding Takeda's claims non-obvious was based on the "hundreds of [related] compounds" in the prior art and the failure of the art to teach "compound b" as a desirable compound.  Here, according to Ms. Gongola:

Our facts stand in direct contrast to those facts in Takeda.  Here we have a limited number of methodologies -- we have one method being taught by Valiante's Example 12.  And Matthews evidences the expectation of success.  So, this is a classic case to apply obvious to try in a unpredictable art, and to demonstrate it will work.  That's what the Board meant at pages A8 and A9 of its decision when it applied obvious to try to these facts.

Both Kubin and amici had the opportunity to argue in their briefs the factual distinctions and misapplication of the facts in the Board's obviousness analysis.  However, unless one of the judges or their clerks digs down far enough to understand the limitations of the art, and the hindsight recognition that mouse 2B4 and NAIL are homologs, the Court may need to defer to the Office's factual findings under Dickinson v. Zurko.  And Ms. Gongola's protestations that the Office does not seek to overturn Deuel should preclude a sea change in Patent Office examination even if the court upholds the Kubin rejection. 

A decision is expected (but not guaranteed) within 90 days.

For information regarding this and other related topics, please see:
• "Kubin Panel Questions Motivation behind Reversal in New Written Description Training Materials," January 8, 2009
• "In re Kubin to Be Argued before the Federal Circuit on Thursday," January 7, 2009
• "Docs at BIO: Panel Discusses IP Strategies after KSR," June 26, 2008
• "Docs at BIO: 'Gotcha' Games Continue at USPTO," June 25, 2008
• "Docs at BIO: Representatives from JPO, EPO, SIPO, and USPTO Discuss Recent Developments in Japan, Europe, China, and the U.S.," June 22, 2008
• "Briefs for In re Kubin filed by Amgen and BIO," June 12, 2008
• "USPTO's Bruce Kisliuk Addresses ACI Conference," March 3, 2008
• "DNA Non-obviousness under Ex parte Kubin (It Gets Worse)," October 18, 2007
• "Ex parte Kubin (B.P.A.I. 2007)," July 18, 2007

PatentBuddy.com Examines Impact of Economic Recession on Patent Practice

    By Donald Zuhn --

Last week, we received a press release from PatentBuddy.com regarding an analysis of employment statistics performed by the patent networking website.  PatentBuddy.com is an online database of patent attorneys and agents registered to practice before the U.S. Patent and Trademark Office.  The website allows registered practitioners to create personal profiles providing information regarding their background, experience, areas of technical expertise, work product, and publications, and then network with other registered users. 

In PatentBuddy.com's analysis, the site tracked the percent of new patent registrants between October 2007 and November 2008 that were affiliated with a corporation, affiliated with a law firm, or not affiliated with either a corporation or law firm.  Over the six-month period from October 2007 to March 2008, PatentBuddy.com determined that there were 1,010 new patent registrants, of which 41.6% (420) were unaffiliated with a corporation or law firm, 50.0% (505) were affiliated with law firms, and 6.8% (69) were affiliated with corporations.  Between April 2008 and November 2008, the distribution of new registrants was as follows:

Chart provided by PatentBuddy.com

Over the eight-month period ending November 2008, PatentBuddy.com determined that there were a total of 1,468 new patent registrants, of which 48.0% (705) were unaffiliated, 44.4% (651) were affiliated with law firms, and 7.6% (112) were affiliated with corporations.  When comparing the two time periods, PatentBuddy.com's analysis shows a 7.4% rise in unaffiliated new registrants and a 5.6% drop in new registrants affiliated with law firms.  These changes appear to be due to differences between unaffiliated registrants and law firm affiliated registrants in September and October of last year (i.e., the plots for each of these categories otherwise appear to be somewhat similar):

While economists now agree that the current recession began in December of 2007 (see New York Times report), the disconnect between unaffiliated registrants and law firm affiliated registrants in September and October may correlate with the country's recent recognition of the economic crisis.  Patent practitioners will no doubt be keeping an eye on these numbers in the coming months.

Patent Profile: Cytori Therapeutics Announces Issuance of Adipose-Derived Stem Cell Patents

    By Donald Zuhn --

Last week, Cytori Therapeutics, Inc. announced that the U.S. Patent and Trademark Office had issued U.S. Patent No. 7,473,420.  The '420 patent, which is directed to a method of treating patients with stem cells obtained from adipose tissue, is Cytori's sixth U.S. patent.  The San Diego-based biotech company is also named as an assignee on two U.S. patent application publications.

Cytori's announcement regarding the '420 patent follows the company's press release late last month announcing that the USPTO issued U.S. Patent No. 7,470,537.  The '537 patent is directed to adipose-derived stem cells (ADSCs) for use in generating differentiated tissues and structures, producing molecules in culture, and providing cultured media to support the growth and expansion of other cell populations.  While Cytori's release notes that the company has licensed the '537 patent from the University of California, no assignee is listed on the face of the '537 patent, and no assignment has been recorded for this patent.

According to Cytori's press release on the '420 patent, this patent, in conjunction with U.S. Patent No. 7,390,484, covers Cytori's Celution System technology for the bedside processing of stem and regenerative cells derived from adipose tissue.  In particular, Cytori states that the '420 patent covers methods to combine the Celution System output with additives such as scaffolds, matrices, or other agents to increase therapeutic effect, optimize or localize cell delivery, enhance specific cell properties, or promote cell differentiation.  In Cytori's announcement regarding the '537 patent, the company stated that this patent covers a population of stem cells, progenitor cells, and other replicating cells, which can be obtained from human adipose tissue.  According to Cytori's website, adipose tissue has proven to be one of the richest sources of adult stem cells in the human body, containing more than a hundred times more stem cells per unit volume than bone marrow.

The '420 patent issued from U.S. Application No. 10/614,431, filed July 7, 2003, which is a divisional of U.S. Application No. 10/316,127, which claims the benefit of U.S. Provisional Application No. 60/338,856, filed December 7, 2001.  Independent claim 1 of the '420 patent recites:

1.  A method of processing a cell population that comprises adipose-derived stem cells comprising:
    removing adipose tissue that comprises a cell population that comprises adipose-derived stem cells from a patient;
    introducing the removed adipose tissue that comprises said cell population that comprises adipose-derived stem cells into a self-contained adipose-derived stem cell processing unit configured to maintain a closed pathway, wherein said self-contained adipose derived stem cell processing unit comprises:
    a tissue collection container that is configured to receive adipose tissue that is removed from a patient, wherein said tissue collection container is defined by a closed system;
    a first filter that is disposed within said tissue collection container, wherein said first filter is configured to retain a first component of said unprocessed adipose tissue and pass a second component of said unprocessed adipose tissue, such that said first filter separates said first component from said second component, and wherein said first component comprises a cell population that comprises adipose-derived stem cells and said second component comprises lipid, mature adipocytes, and saline;
    a cell collection container, which is configured to receive said first component comprising a cell population that comprises adipose-derived stem cells from said tissue collection container, wherein said cell collection container is within said closed system;
    a conduit configured to allow passage of said first component comprising a cell population comprising adipose-derived stem cells from said tissue collection container to said cell collection container while maintaining a closed system;
    a cell concentrator disposed within said cell collection container, which is configured to facilitate the concentration of said first component comprising a cell population that comprises adipose-derived stem cells so as to obtain a concentrated population of cells that comprises adipose-derived stem cells, wherein said cell concentrator comprises a centrifuge or a spinning membrane filter; and an outlet configured to allow the aseptic removal of said concentrated population of cells that comprise adipose-derived stem cells;
    separating and concentrating said cell population that comprises adipose-derived stem cells from said removed adipose tissue within said self-contained cell processing unit while maintaining said closed pathway; and
    contacting said concentrated cell population that comprises adipose-derived stem cells with an additive.

The '537 patent issued from U.S. Application No. 10/740,315, filed December 17, 2003, which claims the benefit of a series of applications dating back to March 10, 1999.  The '537 patent consists of three independent claims, which recite:

1.  An isolated population of stem cells, obtained from human adipose tissue having a CD marker profile comprising a combination of STRO-1+, CD29+, CD44+, CD71+, CD49D+, low or undetectable levels of CD 106, CD90+, and CD105+.

2.  An isolated population of stem cells, obtained from human adipose tissue having a CD marker profile comprising
    (a) STRO-1,
    (b) CD49d,
    (c) low or undetectable levels of CD106, and
    (d) any one or more of CD29, CD44, CD71, CD90, SH3, and CD105, and
wherein the CD marker profile further comprises CD31-, and CD45-.

3.  An isolated population of stem cells, obtained from human adipose tissue having a CD marker profile comprising a combination of STRO-1+, CD29+, CD44+, CD49D+, low or undetectable levels of CD106, CD71+, CD90+, CD105+, CD31-, and CD45-.

USPTO News: Patent Office Closed on January 19th & 20th

    By Christopher P. Singer --

The U.S. Patent and Trademark Office announced in a Notice posted on its website today that January 19th (Martin Luther King Day) and January 20th (Inauguration Day) are considered Federal holidays within the District of Columbia, under 35 U.S.C. § 21(b).  Consequently, any action or fee due on either day will be considered timely if the action is taken or the fee is paid on Wednesday, January 21, 2009, which is the next business day.  The Office's Notice also states that any correspondence (e.g., papers or fees) deposited with the Express Mail Service of the United States Postal Service (USPS) on the 19th or the 20th will be considered to be filed on the date of deposit (as shown by the "date-in" on the Express Mail mailing label) with the USPS.  Similarly, while the Electronic Business Center will be closed on those days, the Notice states that EFS-Web will be available for receiving transmissions on both days, and that electronically transmitted correspondence (if complete) will receive a date of submission as indicated on the EFS-Web Acknowledgment Receipt.

Three More Patentees File § 154(b)(4)(A) Actions against Director Dudas

    By Donald Zuhn --

Last month, Medarex, Inc., Eurand, Inc., and Alexion Pharmaceuticals, Inc. joined the growing list of patentees that have filed complaints against U.S. Patent and Trademark Office Director Jon Dudas alleging that the Patent Office miscalculated the Patent Term Adjustment (PTA) for their patents.  Medarex, Eurand, and Alexion became the eighth, ninth, and tenth patentees to file suit against Director Dudas seeking revised PTA determinations.

As we reported last fall, the District Court for the District of Columbia issued an important decision that impacts the manner in which PTA determinations are made (see "Wyeth v. Dudas (D.D.C. 2008)").  In Wyeth v. Dudas, the District Court determined that the USPTO had misconstrued 35 U.S.C. § 154(b)(2)(A), and as a result, had denied Wyeth a portion of patent term to which it was entitled under U.S. Patent Law.

At issue in Wyeth was the interplay, under § 154(b)(2)(A), between the patent term guarantee provision of § 154(b)(1)(A) that provides a one-day extension of patent term for every day that the issuance of a patent is delayed by the failure of the USPTO to comply with various enumerated statutory deadlines ("A delay") and the patent term guarantee provision of § 154(b)(1)(B) that provides a one-day term extension for every day greater than three years after the filing date that it takes for the patent to issue ("B delay").  According to the Patent Office's interpretation of § 154(b)(2)(A), the start of the B delay period is an application's filing date rather than the date occurring three years after the application's filing date, and as a result, any A delay occurring during the first three years of prosecution would overlap with any B delay the application might accumulate.  Thus, under the USPTO's procedure for determining PTA, "the applicant gets credit for 'A delay' or for 'B delay,' whichever is larger, but never A + B."  The Wyeth Court determined, however, that the proper formula for determining PTA is:

A delay + B delay - A delay that overlaps with B delay - applicant's delay

While the District Court's decision in Wyeth specifically impacts only the two patents that were at issue in that case (U.S. Patent Nos. 7,179,892 and 7,189,819), the decision has had a significant, albeit indirect, impact by raising awareness concerning the Patent Office's flawed interpretation of § 154(b)(2)(A).  In addition, because 35 U.S.C. § 154(b)(4)(A) specifies that "[a]n applicant dissatisfied with a [PTA] determination made by the Director . . . shall have remedy by a civil action against the Director filed in the United States District Court for the District of Columbia within 180 days after the grant of the patent" (emphasis added), patentees finding themselves in Wyeth's position have had little choice but to file complaints seeking revised PTA determinations or risk waiving the additional patent term.  Prior to the new filings, the list of patentees filing complaints included:

• Complaint filed on August 16, 2007 -- Wyeth seeks additional 294 days of PTA for U.S. Patent No. 7,179,892, and additional 230 days of PTA for U.S. Patent No. 7,189,819;
• September 5, 2008 -- Napo Pharmaceuticals, Inc. seeks additional 554 days of PTA for U.S. Patent No. 7,341,744;
• November 7, 2008 -- Ironwood Pharmaceuticals, Inc. seeks additional 291 days of PTA for U.S. Patent No. 7,371,727;
• November 28, 2008 -- Solvay Pharmaceuticals GmbH seeks additional 99 days of PTA for U.S. Patent No. 7,381,729;
• December 1, 2008 -- Biogen Idec Inc. seeks additional 649 days of PTA for U.S. Patent No. 7,381,560;
• December 1, 2008 -- Purac Biochem B.V. seeks additional 563 days of PTA for U.S. Patent No. 7,410,556;
• December 1, 2008 -- Molecular Insight Pharmaceuticals, Inc. seeks 669 days of PTA for U.S. Patent No. 7,381,399; and
• December 1, 2008 -- Molecular Insight Pharmaceuticals, Inc. seeks 669 days of PTA for U.S. Patent No. 7,381,745.

The most recent additions to the above list include:

• Medarex, Inc. of Princeton, NJ, which filed a complaint on December 12, 2008 asserting that the correct PTA for U.S. Patent No. 7,387,776 (which issued June 17, 2008) should be 521 rather than the 231-day period determined by the Office (see complaint);

• Eurand, Inc. of Vandalia, OH, which filed a complaint on December 12, 2008 asserting that the correct PTA for U.S. Patent No. 7,387,793 (which issued June 17, 2008) should be 655 days rather than the 470-day period determined by the Office (see complaint); and

• Alexion Pharmaceuticals, Inc. of Chesire, CT, which filed a complaint on December 23, 2008 asserting that the correct PTA for:

• U.S. Patent No. 7,393,648 (which issued July 1, 2008) should be 758 days rather than the 462-day period determined by the Office (see complaint);
• U.S. Patent No. 7,396,917 (which issued July 8, 2008) should be 654 days rather than the 413-day period determined by the Office (see complaint);
• U.S. Patent No. 7,399,594 (which issued July 15, 2008) should be 990 days rather than the 512-day period determined by the Office (see complaint);
• U.S. Patent No. 7,408,041 (which issued August 5, 2008) should be 306 days rather than the 258-day period determined by the Office (see complaint);
• U.S. Patent No. 7,414,111 (which issued August 19, 2008) should be 870 days rather than the 549-day period determined by the Office (see complaint);
• U.S. Patent No. 7,427,665 (which issued September 23, 2008) should be 812 days rather than the 379-day period determined by the Office (see complaint); and
• U.S. Patent No. 7,435,412 (which issued October 14, 2008) should be 1,012 days rather than the 343-day period determined by the Office (see complaint).

Patent Docs will continue to monitor newly filed actions in the District Court for the District of Columbia in order to identify other patentees seeking corrected PTA determinations.

For information regarding this topic, please see:

• "Top Stories of 2008: #13 to #10," January 1, 2009
• "More Patentees Follow Wyeth's Lead in Seeking Additional PTA," December 3, 2008
• "USPTO to Appeal Wyeth v. Dudas," December 2, 2008
• "Two Patentees Follow Wyeth's Lead in Seeking Additional PTA," November 12, 2008
• "Wyeth v. Dudas (D.D.C. 2008)," October 16, 2008

Court Report

    By Sherri Oslick --

About Court Report:  Each week we will report briefly on recently filed biotech and pharma cases, and a few interesting cases will be selected for periodic monitoring.

Eurand Inc. et al. v. Impax Laboratories Inc.
1:09-cv-00018; filed January 7, 2009 in the District Court of Delaware

Infringement of U.S. Patent No. 7,387,793 ("Modified Release Dosage Forms of Skeletal Muscle Relaxants," issued July 17, 2008), licensed to Cephalon, following a Paragraph IV certification as part of Impax's filing of an ANDA to manufacture a generic version of Cephalon's Amrix® (cyclobenzaprine hydrochloride, used for relief of muscle spasm associated with acute, painful musculoskeletal conditions).  Complaint currently unavailable.

Galderma Laboratories, LP et al. v. Paddock Laboratories Inc.
4:09-cv-00002; filed January 7, 2009 in the Northern District of Texas

Infringement of U.S. Patent No. 5,972,920 ("Formulation Containing a Carrier, Active Ingredient, and Surfactant for Treating Skin Disorders," issued October 26, 1999) following a Paragraph IV certification as part of Paddock's filing of an ANDA to manufacture a generic version of Galderma's Clobex® (clobetasol propionate, used for the treatment of moderate to severe plaque psoriasis).  View the complaint here.

OptiGen, LLC v. International Genetics, Inc. et al.
5:09-cv-00006; filed January 5, 2009 in the Northern District of New York

Infringement of U.S. Patent Nos. 5,804,388, ("Chromosome 9 and Progressive Rod-Cone Degeneration Disease Genetic Markers and Assays," issued September 8, 1998) and 7,312,037 ("Identification of the Gene and Mutation Responsible for Progressive Rod-Cone Degeneration in Dog and a Method for Testing Same," issued December 25, 2007), licensed to OptiGen, based on International Genetics' sale of its Pawsitive I.D. kit to test for Progressive Rod-Cone Disease in dogs.  View the complaint here.

Pozen Inc. v. Alphapharm Pty Ltd. et al.
1:09-cv-00001; filed January 2, 2009 in the District Court of Delaware

Pozen Inc. v. Alphapharm Pty Ltd. et al.
6:09-cv-00003; filed January 2, 2009 in the Eastern District of Texas

The complaints in these cases are substantially identical.  Infringement of U.S. Patent Nos. 6,060,499 ("Anti-migraine Methods and Compositions Using 5-HT Agonists with Long-Acting NSAIDS," issued May 9, 2000) and 6,586,458 ("Methods of Treating Headaches Using 5-HT Agonists in Combination with Long-Acting NSAIDS," issued July 1, 2003), licensed to GlaxoSmithKline, following a Paragraph IV certification as part of Alphapharm's filing of an ANDA to manufacture a generic version of GSK's Treximet® (sumatriptan and naproxen sodium, used to treat migrane attacks).  View the Delaware complaint here.

Endo Pharmaceuticals Inc. et al. v. Sandoz Inc.
1:08-cv-00970; filed December 30, 2008 in the District Court of Delaware

Infringement of U.S. Patent No. 5,958,456 ("Controlled Release Formulation (Albuterol)," issued September 28, 1999) following a Paragraph IV certification as part of Sandoz's filing of an amendment to its ANDA (adding additional dosage forms) to manufacture a generic version of Endo's Opana® ER (oxymorphone hydrochloride, used to treat moderate to severe pain in patients requiring continuous, around-the-clock opioid treatment for an extended period of time).  View the complaint here.

Conference & CLE Calendar

January 12-13, 2009 - Pharmaceutical and Biotech Patent Opinion Writing*** (American Conference Institute) - San Diego, CA

January 20-21, 2009 - Bio/Pharmaceutical Summit on Legal and Regulatory Product Lifecycle Strategies*** (Center for Business Intelligence) - Baltimore, MD

January 26-27, 2009 - Structuring and Negotiating Pharma & Biotech Collaborative Agreements (C5) - London, England

January 27-28, 2009 - ITC Litigation (American Conference Institute)*** - Washington, DC

January 28-29, 2009 - 6th National Conference on Pharma/Biotech IP Due Diligence (American Conference Institute) - New York, NY

January 29-30, 2009 - Commercialization of Life Sciences Inventions (Law Seminars International) - Phoenix, AZ

January 29-30, 2009 - Fourth Annual Conference on Best Practices in Patent Monetization (Law Seminars International) - San Francisco, CA

February 13, 2009 - Fourth Annual Workshop on Patent Claim Construction (Law Seminars International) - Chicago, IL

February 17-18, 2009 - Pharma/Biotech Patent Litigation (C5) - Amsterdam, Netherlands

February 23-24, 2009 - Pharmaceutical and Biotech Patent Claim Drafting*** (American Conference Institute) - Palo Alto, CA

February 25-26, 2009 - Optimizing Patent Strategies at Patent Forum 2009 (World Research Group) - San Francisco, CA

March 9-10, 2009 - Pharmaceutical and Biotech Patent Claim Drafting*** (American Conference Institute) - Research Triangle Park, NC

March 30-31, 2009 - Pharmaceutical and Biotech Patent Claim Drafting*** (American Conference Institute) - New York, NY

***Patent Docs is a media partner of this conference or CLE

Biotech/Pharma Business Briefs

    By Jason Derry --

Endo to Acquire Indevus

On January 5, 2009, Endo Pharmaceuticals Holdings Inc. announced that it will buy Indevus Pharmaceuticals Inc. for an initial payment of about $370 million and an additional $267 million, based on certain milestones.  Currently, Indevus has marketed products for the treatment of overactive bladder, prostate cancer, hypogonadism, and central precocious puberty.  Indevus also has a number of potential products in its pipeline.  Endo has a number of marketed pain management products.  The acquisition will bolster Endo's sales force and product line.

Escalon Acquires Hematology Business

On January 2, 2009, Escalon Medical Corp. announced the acquisition of Immunodiagnostic Systems Holdings' hematology business.  According to the press release, the acquisition will cost Escalon $5.9 million spread over the next four years.

Roche Licenses Anti-inflammatory Compounds

On December 30, 2008, BusinessWeek reported that Roche has entered a licensing agreement with Synta Pharmaceuticals for certain preclinical anti-inflammatory compounds.  The initial licensing fee is reportedly $25 million in cash.  The deal may be worth more than $1 billion in milestones and royalties if three products emerge to market from the licensed compounds.

Jason Derry, Ph.D., who graduated with honors from DePaul University College of Law, is a molecular biologist and founding author of Patent Docs.

U.S. Chamber of Commerce Provides Detailed Recommendations to New Administration Regarding USPTO

    By Christopher P. Singer --

Given the recent news of Governor Bill Richardson's withdrawal from consideration as Commerce Secretary, and the impending resignation of U.S. Patent and Trademark Office Director Jon Dudas, the incoming administration may be giving renewed attention and interest to the Department of Commerce and the USPTO in particular.  On December 23, 2008, the U.S. Chamber of Commerce published a report which contains a number of recommendations to the incoming administration about how PTO policies and procedures could be improved.  The report identifies specific issues confronting the USPTO, and eleven goals that should help improve the agency.  For each goal, the report provides several ways in which the incoming administration can implement procedures that could help the USPTO to achieve these goals. 

One can hope that this report will be considered seriously by the Obama administration, as the list of contributors has gravitas in areas of intellectual property and government administration (as the report notes, the contributors have over 200 years of combined experience with the USPTO).  The contributors include Dana Robert Colarulli, Q. Todd Dickinson, Nicholas P. Godici, Brad Huther, Esther Kepplinger, Michael K. Kirk, Stephen G. Kunin, Gerald J. Mossinghoff, Charles E. Van Horn, and Herbert C. Wamsley.  Perhaps some of these contributors can form the basis of a short list of candidates for the next Director of the USPTO?

The eleven goals identified in the report are listed below, along with some of the suggested ways in which those goals could be achieved.

1.  Improve the Quality of U.S. Patents

To help maintain and improve the quality of the patents issued by the USPTO, the report suggests a number of potential solutions, such as:  (1) introducing fee and order of examination incentives for applicants that participate in (a) pre-search interviews to discuss the content of the application and the search strategy and (b) pre-first action interviews to discuss search results and how they relate to the claimed subject matter; (2) expanding and enhancing PTO-based training programs for examiners; (3) developing a cooperative effort between patent users and the Office to develop models for drafting high-quality patent applications that meet the requirements of patentability, particularly 35 U.S.C. §§ 101 and 112; (4) improving the quality of searching resources to examiners; (5) revising existing methods or developing new methods for measuring examination quality as well as patent quality; (6) reviewing restriction practice and its impact on the backlog and loss of rights for inventors because of increased filing costs; (7) reevaluating the duty of disclosure without forcing new requirements upon applicants; and (8) ensuring that claims are adequately supported by the specification.

2.  Provide Adequate Resources

The report concludes that in order to even begin addressing the mounting application backlog, the USPTO needs adequate funding, and advocates for a legislative remedy to end future fee diversion.  The report also suggests that funds raised by increasing user fees, as circumstances require, would provide additional funding for critical new initiatives that could improve the quality and timeliness of application examination.

3.  Reform the Examiner Production System

The report states the current production system, unchanged since 1976, is a primary factor creating dissatisfaction among the examining corps.  The report recommends several possible solutions such as (1) reviewing the current system and adjusting the goals so they are more equitably established in light of the relative complexity of various technologies; (2) revising the count system to change the credit given for certain actions, such as reducing credit for continuations, while allowing for more time for first-filed cases; (3) providing more time after final rejection to consider additional amendments and arguments without the need for RCE filings; (4) considering a flat goal awards program; (5) reconsidering counts given in an application, such as whether a first action and disposal should be counted equally, whether other actions should be given a count, and additional counts given for initial patentability determinations; and (6) encouraging pre-search and pre-first action interviews in order to improve efficiency.

4.  Improve Timeliness of Actions

To help improve the PTO's timing in issuing administrative actions, the report suggests implementing several actions including:  (1) continuing to hire, train, and retain qualified examiners to address increasing workload demands; (2) identifying the most relevant prior art by:  (a) outsourcing prior art searches to qualified vendors, (b) improving communication and cooperation between foreign examining authorities in corresponding foreign applications, and (c) considering options that would encourage applicants to conduct searches and timely submit search results; (3) expanding the First Action Interview pilot program and the use of First Action Interview pilot program telephone interviews;  (4) recognizing search and/or examination results from first-filing offices; and (5) improving the atmosphere for the examining corps by revising the Second-Pair-of-Eyes Review program.

5.  Strengthen the Relationship Between the PTO and Users

The report states that the PTO has in the past few years formulated policies without consideration of any outside input, which has created an atmosphere of distrust between the PTO and its users.  The report recommends that this relationship can be improved by opening the lines of communication to create a more cooperative atmosphere.  Potential solutions include:  (1) clearly stating the problems that the PTO faces and holding public hearings and town hall meetings to allow for public participation in creating solutions to these problems; (2) increasing speaking opportunities for senior level PTO employees to increase awareness of issues and constraints the PTO faces; (3) making use of advance notices of proposed rulemaking when seeking to make significant changes to current practices; and (4) increasing the transparency of PTO operations, including publishing information about application pendency, the number of RCEs, appeals, reexaminations, etc.

6.  Enhance Organizational Management

The report also believes that the PTO should be established as a governmental corporate entity, which would help to enable the Office to adjust its operations more quickly and effectively than it can under its current structure as a performance-based organization.

7.  Appoint a Well-Qualified Undersecretary and Director

As to Mr. Dudas' future replacement, the report concludes that the PTO's next director should be "a top-caliber, knowledgeable intellectual property executive" with a background and skill set that would include experience in patent and trademark prosecution or litigation, a knowledge of copyright issues, a record of successful leadership and management of a large entity, experience in congressional and international IP policy issues, and experience with strategic planning, budgeting, and financial management.

8.  Improve the Retention of Patent Examiners

The report recognizes that simply hiring new examiners will not be sufficient to address the problem of the application backlog -- the Office has to work harder to retain experienced examiners.  To help retain and develop an experienced examining corps, the report suggests:  (1) reviewing and revising the current production goal system based on complexity of technology and volume of searches; (2) increasing mentoring programs; (3) establishing required meetings among examiners to discuss recent case law and technological developments; (4) improving communication between management and examiners; (5) providing more work flexibility; (6) increasing the number of senior level positions; (7) revising the retirement plan; and (8) reviewing and evaluating hiring and training practices.

9.  Permit Deferred Patent Examination

The report suggests that the application backlog would likely be reduced if a system of deferred examination was established.  While deferred examination could introduce public uncertainty about the status of pending applications, the potential benefit of such a system to the backlog as well as applicants would likely outweigh its drawbacks.

10.  Adjust Fee Schedule

The report suggests that the fee schedule could be adjusted to provide incentives for a more efficient examination.  Some suggestions include reduced fees for electronic filings; increasing fees for successive continuation or RCE filings; increasing fees for additional independent or total claims; reducing or eliminating multiple dependent claim fees; and charging fees for an IDS that contains more than 25 references or fees for each additional reference above 25 cited in an IDS.

11.  Enhance Examination Efficiency by Reforming Incentives

In order to have an efficient patent system, the report states that the PTO should make a patentability determination on an application in as few actions as possible.  The report suggests that the PTO could increase efficiency by analyzing how RCE and continuation filings have impacted the backlog, and more particularly, the motivation examiners and applicants have for making such filings.  If it would benefit efficiency, the report suggests that the PTO could adjust the credit given to examiners for RCE filings, and how to incentivize applicants to accelerate resolutions to pending applications.

For information regarding other related topics, please see:

• "BIO Gives President-elect Obama Its Ideas on Patent Reform," January 6, 2009

Kubin Panel Questions Motivation behind Reversal in New Written Description Training Materials

    By Donald Zuhn --

As we reported yesterday, the Federal Circuit heard oral argument today in In re Kubin (see "In re Kubin to Be Argued before the Federal Circuit on Thursday").  Kevin Noonan will be providing a complete analysis of the oral argument in this case in a subsequent post.  One interesting aside, however, involved an exchange between the Court (specifically Circuit Judge Rader) and USPTO Associate Solicitor Janet Gongola regarding Example 11 of the new Written Description Training Materials.

Last March, the Patent Office announced that it had updated the training materials to be used by examiners in the examination of patent applications for compliance with the written description requirement.  The revised training materials replaced the previous set of training materials issued by the Office in 1999.  Perhaps the most interesting of the seventeen examples in the new training materials is Example 11, which concerns claims that are directed to a polynucleotide or polypeptide sequence that shares percent identity with another sequence  (see "An Analysis of the New Written Description Training Materials - DNA Hybridization & Percent Identity").

Example 11 is divided into two sections, one in which there is no art-recognized structure-function correlation for the claimed sequence (Example 11A), and one in which there is an art-recognized structure-function correlation for the claimed sequence (Example 11B).  Both subparts present identical exemplary claims reciting an isolated nucleic acid that encodes a polypeptide with at least 85% amino acid sequence identity to SEQ ID NO: 2, and nearly identical exemplary claims reciting an isolated nucleic acid that encodes a polypeptide with at least 85% amino acid sequence identity to SEQ ID NO: 2; wherein the polypeptide has a recited activity.  The only difference between the hypothetical specification of Example 11A and the hypothetical specification of Example 11B is that the latter identifies two domains -- a binding domain and a catalytic domain -- that are critical to the recited activity.  The training materials specify that the first exemplary claim in each subpart satisfies the written description requirement.  The training materials also state that while the second exemplary claim in Example 11B satisfies the written description requirement, the second exemplary claim in Example 11A does not.

Last June, during a presentation at BIO 2008, Group 1600 Director Dr. George Elliott acknowledged that Example 11 represented a reversal in the Office's position (see "Docs at BIO: Representatives from JPO, EPO, SIPO, and USPTO Discuss Recent Developments in Japan, Europe, China, and the U.S.").  In particular, Dr. Elliott noted that the Office's position had previously been that claims lacking functional language (such as the first exemplary claim in Examples 11A and 11B) failed to comply with the written description requirement and that claims possessing such language (such as the second exemplary claim in Examples 11A and 11B) complied with the requirement.  Dr. Elliott contended that claims with functional language (where the specification lacks any teaching regarding the amino acid residues that are tolerable to change) do not satisfy the written description requirement because "the minute you add function, you've limited the claim to a subset of species, and you don't know which species are in the subset and which species aren't."  In other words, absent any teaching of structure/function relationships, the Patent Office's position is that one cannot determine the species that share at least 85% sequence identity with the recited sequence and also possess the recited function.  For a more thorough discussion of the rationale behind the USPTO's reversal on functional limitations, Dr. Elliott recommended that attendees read Ex parte Porro, which involved an application filed in June of 2003 (for a discussion of the Porro decision, see "The Written Description Training Materials and Ex parte Porro").

With respect to today's oral argument in Kubin, the Court speculated that the Patent Office may have reversed its position on the fact pattern set forth in Example 11 in order to support its argument that Kubin lacked an adequate written description despite the recitation in claim 73 of an activity limitation (i.e., binding CD48).  A transcript of the exchange between the Court and Associate Solicitor Gongola follows:

Gongola:  I'd like to move now -- if the Court has no more questions on obviousness -- into the written description area.  This Court found that written description was not satisfied under the only two tests that Kubin ever raised before the Board:  the representative number of species test and the structure-function correlation test.  Now, the Board found, at Finding of Fact 20 and 21, that the specification only taught how to make cDNA molecules that encode NAIL identically.  That's one subgenus.  The Board found, at Finding of Fact 22, that the specification did not teach anything about any variants.

Court:  What about the conservative substitutions set forth at page 63?

Gongola:  The language on conservative substitution, using the Board's own findings, does not demonstrate -- Finding of Fact 23 -- which 20% of the amino acid residues should be changed to maintain function.  So that discussion of conservative substitution may teach how to make the variants, but it doesn't teach what those variants are.  It doesn't describe them so that a person of skill in the art would understand that Kubin possessed the variants.  There -- the Board Finding of Fact 25 says that there are a very large number of modifications that can be made.  One in five amino acids can vary.  We have no idea which of the 21 to 220 -- 22 to 221 portion of NAIL to change and maintain binding -- which amino acids have to remain and which can be substituted.  But more than that, even if this Court would accept the discussion that the conservative substitution could somehow provide written description support for variants, it wouldn't still do so for the full scope of the genus.  That discussion would only apply to variants made by substitution.  Applicant -- Kubin has defined a variant to be made by a substitution, an insertion, or a deletion.  Conservative substitution dialog doesn't speak to anything about variants made by insertions, or variants made by deletions.  So therefore, Applicant Alonso still has -- I'm sorry, Kubin . . .

Court:  Yes, but the description of the variations is also linked to a protein having activity Y.  Therefore, this satisfies the function-structure alternative test for written description, doesn't it?

Gongola:  No, your Honor.  The function-structure test requires an identification of a structure common to all members of the genus.  We do not have that identification of a common structure.  Twenty percent . . .

Court:  I'm quoting almost out of PTO's manual on written description -- verbatim -- when I give my example there, am I not?  The variations plus the activity Y -- protein having activity Y -- isn't that exactly the PTO's manual on written description?

Gongola:  Are you referring to the training materials?

Court:  Yes, I am.

Gongola:  That language may be found in the training materials, but it is not -- it's guidance.  It's -- each case of written description has to be decided on its own facts.

Court:  The Patent Office is guiding applicants on how to do things wrong?

Gongola:  No, your Honor, but guidance provided in a training document cannot be taken and applied to each case.  Each case has to be decided on its own facts.

Court:  So it's just guidance to examiners on how to do it wrong?

Gongola:  No, your Honor -- respectfully -- it is guidance to the public as well, but . . .

Court:  But if we take that guidance, we don't get to your result, do we?

Gongola:  No, your Honor, I respectfully disagree; we do.  In Carnegie Mellon, this Court has explained that when there's substantial variation within a genus, an applicant has to describe a sufficient number of species to reflect the variation.  Kubin has not done that here.  Kubin hasn't described any variation.  If we want to look at the training materials, the Board only . . .

Court:  It's interesting that this was revised immediately after Kubin -- the Kubin result -- wasn't it?

Gongola:  That . . .

Court:  Which is kind of an admission that the example did track Kubin and was detrimental to your position, wasn't it?

Gongola:  No, your Honor.

Court:  So, despite your smiling defense, the facts tend to give us a different conclusion.

Gongola:  No, your Honor, that's not correct.  The training materials were not revised post-Kubin to somehow capture Kubin.  The revisions have been in the works for a very long time.

Court:  I see, okay.

Gongola:  So it's just coincidence that Example 11 may seem to look like the Kubin fact pattern.  But if we actually look at Example 11, it is distinguishable from the facts here.  Example 11 goes to a nucleic acid that encodes a polypeptide that has certain homology -- 85% homology -- and a certain activity.  Now here's where -- that sounds a lot like Kubin's claim.  I agree with that.  But here's where the difference resides:  the specification in Example 11 disclosed two specific domains that were responsible for the activity.  Kubin's specification here doesn't contain any similar disclosure.  So the fact pattern here is different from the fact pattern in the revised training materials.  But I also want you to know -- these materials, as you point out, were not even in existence when the Board rendered its decision.  So it really isn't proper to be considering them right now, since the Board didn't have a chance to consider them in the first instance.  And on top of that, they're only guidance.  They're not a rigid rule.

In re Kubin to Be Argued before the Federal Circuit on Thursday

    By Kevin E. Noonan --

The Federal Circuit will hear oral argument on Thursday for In re Kubin, a case having great significance for biotechnology patenting.  At issue is the question of whether the existence in the prior art of a purified protein, combined with "routine" cloning methods, renders obvious a claim to a nucleic acid encoding the protein.  This was the Patent Office position twelve years ago, which was rejected by the Federal Circuit in the In re Bell and In re Deuel decisions.  But the Supreme Court's KSR Int'l Co. v. Teleflex Inc. decision emboldened the Patent Office to challenge the Federal Circuit on this issue.  As a bonus, the Court will also be asked to opine on how the Office has interpreted its frequently-conflicting written description jurisprudence.

To recap, the case involved an application claiming an isolated cDNA encoding Natural Killer Cell Activation Inducing Ligand (abbreviated as NAIL).  The Board determined that all the claims would stand or fall together, since they were not argued separately; accordingly, its analysis was confined to claim 73:

73.  An isolated nucleic acid molecule comprising a polynucleotide encoding a polypeptide at least 80% identical to amino acids 22-221 of SEQ ID NO:2, wherein the polypeptide binds CD48.

The Board cited three prior art references, including (1) Valiante, which identified the existence of a protein, p38, present on the cell surface of natural killer cells and a monoclonal antibody specific for p38; and (2) Sambrook et al., a standard reference work describing gene cloning techniques (otherwise known as the "Maniatis manual").  The Valiante reference contained a prophetic example to the effect that the gene encoding the p38 protein could be isolated using methods such as those disclosed in Sambrook et al.  The Board considered but did not rely upon a reference to Matthews, which disclosed a mouse protein, 2B4, expressed on the cell surface of natural killer cells (2B4 is the mouse ortholog of human p38 although that was not disclosed in the art).  The Board stated that it found Matthews "cumulative" of the teachings of Valiante and Sambrook et al.; nevertheless, it used this reference as an "illustration" of how a gene could be isolated.  The evidence from the applicants' specification was that their NAIL cDNA clones were produced using an expression library screened with a commercially-available monoclonal antibody against human p38.

The Board based its factual determinations on the notion that the art had progressed since the time Deuel was decided.  These differences included:

1.  In Kubin, a cell "unambiguously" (see below) expressing the gene was known; in Deuel, the cloned gene was isolated from a cDNA library prepared from placenta, even though the protein encoded thereby was expressed specifically in brain.

2.  In Kubin, the art provided an isolated preparation of the cognate protein and a monoclonal antibody that binds to the protein; in Deuel, the art disclosed isolated preparations of three different brain-specific proteins but no antibodies.

3.  In Kubin, the art provided a monoclonal antibody specific for the gene product of the desired cDNA and thus providing a specific probe; in Deuel, the probes were a plurality of degenerate oligonucleotides prepared from the partial amino-terminal amino acid sequences.

4.  In Kubin, the art has developed expression cloning technology and provided an antibody probe specific for the gene product of the desired clone; in Deuel, the absence of a specific antibody precluded use of expression cloning technology.

Even if the Board was correct in considering these factual distinctions, the Board's decision demonstrated that it did not learn the fundamental lesson from the Federal Circuit's decision in Deuel:  that the obviousness of a method for producing a cloned nucleic acid is not sufficient to render obvious the cDNA itself.  Rather, the Board attempted to apply the Supreme Court's statements from KSR regarding the obviousness of what is "obvious to try."  Expressly citing the Supreme Court's language:

When there is motivation to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp.  If this leads to anticipated success, it is likely the product not of innovation but of ordinary skill and common sense.  In that instance the fact that a combination was obvious to try might show that it was obvious under § 103.  KSR Int'l Co. v. Teleflex Inc., 127 S. Ct. 1727, ___, 82 USPQ2d 1385, 1397 (2007).

the Board opined, "[t]his reasoning is applicable here."  The Board then went on to state:

The "problem" facing those in the art was to isolate NAIL cDNA, and there were a limited number of methodologies available to do so.  The skilled artisan would have had reason to try these methodologies with the reasonable expectation that at least one would be successful.  Thus, isolating NAIL cDNA was "the product not of innovation but of ordinary skill and common sense," leading us to conclude NAIL cDNA is not patentable as it would have been obvious to isolate it.

Using this reasoning as its basis, the Board showed its willingness to continue to conflate whether the method for making a cDNA such as the NAIL cDNA would be obvious with the obviousness of the cDNA itself.  This is consistent with the reasoning, and the mistakes, made by the Board in Deuel:

The PTO's focus on known methods for potentially isolating the claimed DNA molecules is also misplaced because the claims at issue define compounds, not methods.  See In re Bell, 991 F.2d 781, 785, 26 USPQ2d 1529, 1532 (Fed. Cir. 1993).  In Bell, the PTO asserted a rejection based upon the combination of a primary reference disclosing a protein (and its complete amino acid sequence) with a secondary reference describing a general method of gene cloning.  We reversed the rejection, holding in part that "the PTO's focus on Bell's method is misplaced.  Bell does not claim a method.  Bell claims compositions, and the issue is the obviousness of the claimed compositions, not of the method by which they are made."  Id.

We today reaffirm the principle, stated in Bell, that the existence of a general method of isolating cDNA or DNA molecules is essentially irrelevant to the question whether the specific molecules themselves would have been obvious, in the absence of other prior art that suggests the claimed DNAs.  . . .  There must, however, still be prior art that suggests the claimed compound in order for a prima facie case of obviousness to be made out; as we have already indicated, that prior art was lacking here with respect to claims 5 and 7.  Thus, even if, as the examiner stated, the existence of general cloning techniques, coupled with knowledge of a protein's structure, might have provided motivation to prepare a cDNA or made it obvious to prepare a cDNA, that does not necessarily make obvious a particular claimed cDNA.  "Obvious to try" has long been held not to constitute obviousness.  In re O'Farrell, 853 F.2d 894, 903, 7 USPQ2d 1673, 1680-81 (Fed. Cir. 1988).  A general incentive does not make obvious a particular result, nor does the existence of techniques by which those efforts can be carried out.  Thus, Maniatis's teachings, even in combination with Bohlen, fail to suggest the claimed invention.

The problem with the Board's analysis is that KSR requires a "finite number of identified, predictable solutions" (something that does not apply to nucleic acids and which was the basis for the Federal Circuit's decisions in In re Deuel and In re Bell).  Such a "finite number" of "identified, predictable" solutions were not known in the prior art cited by the Board.

An important factor discounted by the Board comes from the disclosure of the Matthews reference, relating to the isolation of the mouse ortholog of the human NAIL cDNA.  This reference was not considered by the Board, which seemed to recognize that the art did not teach that p38 was the mouse ortholog of NAIL.  Moreover, the Matthews reference contained Northern blot experiments (for detecting mRNA expression of NAIL) from human cells and tissues indicating that NAIL expression could not be detected in the immune cell types that applicants used for cloning the human NAIL cDNA.  The Board thus ignored evidence in the art that reduced the likelihood that the human NAIL cDNA could be isolated using the methods disclosed in the Sambrook et al. reference, since the art taught that human cells that actually expressed the NAIL cDNA did not do so.  This is an important distinction with Deuel:  in that case the gene was isolated from a tissue where its expression was not expected, while in Kubin the art taught affirmatively that the gene was not expressed in the tissue source of the cDNA used by applicants.

The other issue to be decided by the Federal Circuit involves the Board's decision to affirm the Examiner's determination that the application failed to satisfy the written description requirement for claims reciting nucleic acids encoding proteins at least 80% identical to the disclosed amino acid sequence of the claimed human NAIL protein.  The Board held that Kubin was not entitled to a claim to an isolated nucleic acid encoding a protein having 80% identity to the disclosed amino acid sequence and that bound to CD48.  Kubin's specification disclosed the amino acid sequence of the protein encoded by the NAIL gene, as well as domains of the protein (signal peptide, extracellular domain, transmembrane domain, and cytoplasmic domain), including the portion of the protein that bound to CD48 (amino acids 22-221).  The specification also disclosed conservative substitutions of these sequences, in addition to deletions, insertions, and fusions.  These teachings were generic, however, and no specific amino acid sequence variants were disclosed.  The Board held that the absence of any specifically-disclosed variants was a failure to satisfy the written description requirement and upheld rejection on these grounds.

The Federal Circuit's decision on the written description issue may be at least as important as its determination of what is non-obvious, since it presents a question not yet squarely put to the Federal Circuit.  The Federal Circuit has developed its written description jurisprudence (in Regents of the University of California v. Eli Lilly & Co., Enzo Biochem, Inc. v. Gen-Probe Inc., and University of Rochester v. G.D. Searle & Co.) generally in the context of patent infringement litigation and, except for dicta in its second Enzo decision, has not had the opportunity to provide guidance to the Office on how (or whether) its Guidelines are properly applying the Court's case law.  The Patent Office has applied its Guidelines to effectively preclude an applicant from claiming "conservative substitutions," on the basis that there was no disclosure of a "representative number of species."  (Of the 8,367 issued U.S. patents reciting "isolated" and "nucleic acid" in the claims, only 20 contain the term "conservative substitution.")  It has become clear that the Office's use of the Guidelines would prevent an applicant from ever disclosing a sufficient number of substitutions that the Office would consider "representative" based on the type of generic disclosure set forth in Kubin's specification, and that it was impractical if not impossible to comply with the Office's requirements.  The Office appears to have extended the Federal Circuit's requirement that structural domains important for biological activity be identified, to require that an applicant identify which amino acid residues can be modified and which cannot.  This is a clear extension of the analysis set forth in Eli Lilly that has no support in any Federal Circuit decision.  Yet, the Office routinely refuses to allow claims containing "conservative substitutions" within their scope.  In re Kubin puts the question squarely before the Federal Circuit for the first time.

Patent Docs will provide a synopsis of the argument in a subsequent post.

For information regarding this and other related topics, please see:
• "Docs at BIO: Panel Discusses IP Strategies after KSR," June 26, 2008
• "Docs at BIO: 'Gotcha' Games Continue at USPTO," June 25, 2008
• "Docs at BIO: Representatives from JPO, EPO, SIPO, and USPTO Discuss Recent Developments in Japan, Europe, China, and the U.S.," June 22, 2008
• "Briefs for In re Kubin filed by Amgen and BIO," June 12, 2008
• "USPTO's Bruce Kisliuk Addresses ACI Conference," March 3, 2008
• "DNA Non-obviousness under Ex parte Kubin (It Gets Worse)," October 18, 2007
• "Ex parte Kubin (B.P.A.I. 2007)," July 18, 2007

BIO Gives President-elect Obama Its Ideas on Patent Reform

    By Kevin E. Noonan --

A change of administration always gives stakeholders a chance to make their policy views known, in an effort to influence the new people and policies taking power in Washington.  This is particularly true in this season of (welcome) change, and even more important for U.S. patent law, in view of the proposed (legislative), actual (judicial), and thwarted (administrative) changes in patent law and practice over the past few years. 

James Greenwood (at right), President and Chief Executive Office of the Biotechnology Industry Organization (BIO), took this opportunity to share BIO's views on patent reform in a letter recently sent to President-elect Obama.  In his letter, Mr. Greenwood reminds the President-elect of the importance of patents to the members of his organization, comprising "more than 1,250 biotechnology companies, academic institutions, state biotechnology centers and related enterprises across the United States and in more than 30 other countries."  These companies are on the cutting edge not only in the traditional fields of pharmaceuticals and medicine, but also in agriculture, energy, and environmental sciences.  According to Mr. Greenwood, "[s]trong patent protection is essential to the success and, in some instances, survival of biotechnology in this country.  Patents allow biotechnology companies and their life science partners to transfer technology, attract capital, and make business decisions that lead to the development of medicines and diagnostics for intractable diseases, and agricultural, energy, and environmental products to meet growing global needs."

In view of the importance of strong patent protection for biotechnology, BIO and its members have a unique interest in making U.S. patent law more effective in promoting innovation.  However, one of the most important players in U.S. patenting, the Patent and Trademark Office, is an "agency in crisis," according to Mr. Greenwood.  The problem:  the more than 1.2 million patent applications currently pending in an examiner corps of 6,000.  Despite large increases in the number of examiners (four-fold) and the PTO's budget (10-fold) over the past 10 years, Mr. Greenwood asserts that the Office has not been able to cope with the "ever-growing influx" of new applications, resulting in a backlog of unexamined applications and a 50% increase in pendency.  And it can be expected to get worse, according to Mr. Greenwood, in view of Patent Office statistics showing a 6% increase in patent application filings expected to continue for several years.

Mr. Greenwood does not believe that current Patent Office efforts have been effective in addressing these problems.  He cites "aggressive" production goals for examiners that have increased examiner attrition, and the inconsistencies in the amount of time allotted for examination of applications that have become "more and more complex."  The inappropriate production goals are also having the expected bureaucratic effect of increasing the rate of rejection to "historically-high levels."  Even in the face of these trends, which might under other circumstances increase confidence in those patents that are granted, Mr. Greenwood rightly stated that there is an "erosion of confidence in the quality of U.S. patents."  (He neglects to mention the political motivations of groups like the Coalition for Patent Fairness that tout the lack of patent quality because it fits with their anti-patent agenda.)

Mr. Greenwood also thinks that the efforts in the last two Congresses to "reform" U.S. patent law were ill-advised for focusing on "patent litigation and other divisive back-end changes to the patent system" rather than PTO problems.  He also notes that many of the policy drivers for legislative reform have been addressed by the courts, in cases such as KSR Int'l Co. v. Teleflex Inc., eBay Inc. v. MercExchange L.L.C., and In re Seagate.  In view of these changes in the law that have already effectuated much of what the proponents of patent reform legislation asserted as the bases for legislation, Mr. Greenwood posits that the proper place for patent reform is in the Patent Office using administrative remedies.

And Mr. Greenwood has a number of such remedies that he proposes in his letter.  These include the following:

• Reassessment of examiner compensation, retention, and production goals and incentives (citing the fact that the Office's production system in use today was established in 1976 and has not been fundamentally changed since):   Mr. Greenwood proposes that production goals and time per application should be adjusted for complexity of the subject matter, and that the Office should not treat all applications equivalently, recognizing that examiners should receive more "credit" for examining applications of greater complexity that require more time and effort for proper examination.  He also mentions reforms that would reduce incentives for examiners to elicit practices, such as requests for continued examinations, that some patent reform proponents have characterized as being improper applicant behavior (not taking into account the incentives in the current system for examiners to desire RCE filings).

• PTO branch offices and other measures to facilitate hiring and access to talent:  BIO and Mr. Greenwood recognize that the complex applications examined by the Office today require individuals with the appropriate science and engineering backgrounds, and that the Office should have all the tools available to recruit and retain these people.  Thus, he proposes that the Office establish (or at least consider establishing) branch offices outside the Washington, D.C. area, using technology (PAIR, teleconferencing) in combination with branch offices to ensure consistency and adequate examiner supervision.

• Pre-first action interviews and issuance of "short form" search reports:  BIO and Mr. Greenwood propose expansion of certain features now used during "accelerated examination" that provide opportunities for applicants and examiners to have "informal" pre-examination conferences.  The advantages of such conferences would be that "applicants and examiners could meet for an informal pre-examination conference to discuss the application, explain the underlying technology, and agree on ways the application could be improved for more efficient substantive examination."  The goal would be to streamline the examination process by identifying art and amendments to overcome such art early in examination.  (An unspoken corollary of such a system would be that the examiner or applicant make expressly of record the substance of such pre-examination activities.)

• Reassessment of current restriction practice in light of the European unity-of-invention concept:  One of the unacknowledged (by the Office) inconsistencies of the now-enjoined new continuation rules was that divisional applications constituted a major portion of the applications vilified as "rework" in the Office's philosophical justification for the rules.  Mr. Greenwood and BIO propose that the Office consider using international standards for restriction practice, to reduce the incentive or capacity for examiners to "restrict . . . an invention down to every patentably distinct embodiment" and producing divisional applications in the process that increase the backlog of unexamined applications.

• Incentives for applicants to abandon obsolete applications:  BIO and Mr. Greenwood recognize that there are instances where the importance of patent applications diminishes over time, whether because the underlying technology is never commercially viable, the technology becomes obsolete, or the applicant simply runs out of time due to the patent term limit of twenty years from the earliest priority date.  Mr. Greenwood cites Patent Office statistics that over 10% of applications are abandoned for failure to respond to a first office action, and posits that this represents a waste of Office resources.  However, Mr. Greenwood also wants to ensure that there is no disincentive for an applicant to wait until receiving a first office action to make the decision to abandon an application.  One way to address this situation, according to Mr. Greenwood, would be to require an applicant to affirmatively request examination, noting that "up to 30% of all patent applicants decide that they no longer want to seek a patent on their application" in foreign jurisdictions imposing this requirement.  BIO's letter also suggests that the Office offer incentives for abandoning applications on obsolete technology, such as "offering a partial refund of search and/or examination fees for withdrawn applications" or advancing examination of "other, commonly-owned applications in the examination queue for every obsolete application that is withdrawn before substantive examination."  An additional proposal is to provide accelerated or deferred examination at an applicant's option, citing the use of such practices in the EU, Japan, China, Canada, Germany, and Korea.

• International work sharing:  This proposal is in line with current efforts by the Office to "workshare" patent search and examination with patent offices in Australia, Japan, Korea, and elsewhere.  The advantage is that almost half (45%) of all patent applications pending in the Office were filed from abroad, and that international patent filing strategies are "routinely" used by U.S. businesses as well.  In these efforts the Office has recognized the inefficiencies in having essentially the same application subjected to patent searching by multiple patent offices worldwide.  Technology, such as electronic file sharing, could be used to promote consistency and efficiency in these efforts.  Mr. Greenwood also suggests adopting strategies employed in countries like Australia and Israel where an applicant can elect to accept a patent having "identical scope" as a granted foreign counterpart patent.

• Transparency and public assistance in patent examination process:  Public PAIR and the decision to open patent prosecution records to the public for published applications are the types of "transparency" reforms supported by Mr. Greenwood and BIO, and this type of transparency in the patenting process should be expanded, including permitting third parties to submit prior art to the Office to "improve the patent examination process."

• USPTO fees:  Finally, BIO and Mr. Greenwood propose that the fee structure of the Office be modified to permit examination fees to be "more directly proportional" to the amount of effort required for adequate examination work required.  As part of these reforms, Mr. Greenwood proposes that the Office be allowed to "retain and reinvest its revenues" and that fee diversion be permanently prohibited.

Who is appointed as Patent Office Director, and the direction the Office takes under the Obama administration has been the subject of wide speculation since the election.  The recent withdrawal by Governor Richardson from consideration as Commerce Secretary has made these questions even less clear.  BIO and Mr. Greenwood attests that the organization is "eager to engage constructively in the continuing debate on improving the timeliness, quality, transparency, and efficiency of the patent system."  It will be refreshing if the new administration proves to be more willing to listen to the ideas proposed by BIO and others, rather than to seek justification and support for policies produced by Patent Office bureaucrats without the benefit of input from the companies and other stakeholders most invested in solving the real problems facing the Office, patent applicants and the public.