Government & Politics  July 28, 2011

Patent reform still pending, after six decades

FORT COLLINS – In developing vaccines and recombinant proteins to stave off infectious diseases and illnesses, Ventria Bioscience works inside miniscule manufacturing spaces: grains of rice and barley.

“The plant is essentially the factory that makes the medicine,´ said Ventria CEO Scott Deeter.

The plant-based technology enables the small, Fort Collins biotech company to develop products that are both cost-effective and affordable for production and distribution around the world. Within the competitive field of biopharmaceuticals, Ventria’s innovative system has relied on the U.S. patent program to protect its medicines, technologies and uses. To date, the company holds 23 patents, with 29 more applications pending.

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“The (patent) process is a little difficult because it’s so unique to each country,´ said Deeter, whose company targets a worldwide market. For startup tech and bioscience companies in Colorado and other parts of the country, just making their case to the U.S. patent office in Arlington, Va., near Washington, D.C., is “logistically difficult,” Deeter added.

Many business leaders and inventors share those criticisms, and most applicants have withstood long delays because of a massive backlog at the U.S. Patent and Trademark Office. Roughly 1.2 million patents are pending in the office and more than 700,000 of them haven’t even gone through a preliminary evaluation.

The country’s patent program hasn’t undergone a significant overhaul in 60 years. Over the past six years, Congress has tried to take up the cause of patent reform, with little progress. But a current bill that would align U.S. patent policy with European practices and also clear the way for new satellite patent offices outside the Beltway – including, potentially, one in Denver – could finally make its way into law.

Sen. Michael Bennet, D-Colorado, has championed the America Invents Act, and Denver as a likely candidate for a satellite office. Such an office could reduce application wait times for local inventors and small businesses, allowing them to more easily meet with patent examiners to explain their applications.

Both the House of Representatives and the Senate have passed versions of legislation and President Obama has expressed support for reform. But the details still need to be settled, and patent attorneys and others said reform could present a new set of problems for small businesses and inventors.

The Patent and Trademark Office issued more than 1,700 patents to Colorado companies in 2009, although many more applications are awaiting consideration.

“Colorado is a place where creativity and entrepreneurial horsepower are in abundant supply,” Bennet said. “We’re home to the highest-caliber research institutions and a forward-thinking business community that places a high premium on invention and innovation. Making it more affordable to bring new innovations to market will help unleash a new wave of innovation that creates high-paying jobs and grows our economy.”

First to file or invent?

The heart of the patent-reform effort is a change to a “first-to-file” system, used in Europe and most of the world. The United States now operates under the principle of “first to invent.” Reform backers, including Deeter, said revising the standard would improve efficiency and predictability and minimize disputes for the patent office and inventors.

“‘First to file’ clears up a lot of the ambiguity,” Deeter said, since the current U.S. system enables would-be inventors to take credit and claim patents for products they haven’t filed on.

Proposed changes would also simplify the examination timeline through an accelerated and cheaper review process for small entities. The patent process takes an average of three years, but can stretch even longer in the case of a dispute, costing companies valuable time and money. Among bioscience and pharmaceutical firms, such as Ventria, that must also endure a decade-long review from the U.S. Food and Drug Administration, the current timeline for patent evaluation threatens a business’ ability to profit from developing technologies.

A shortage of patent examiners and the office’s otherwise constrained budget are major causes of the backlog that could also be remedied through a reform bill. Under the current system, Congress can divert a percentage of filing fees to other federal needs. Over the past two decades, the patent office has reported that Congress has raided $800 million for other projects, hamstringing the agency even as it faces an annual increase in applications.

Bennet is among a group of senators who have supported ending fee diversion, but that’s among the sticking points as legislation wends through Congress. The House version of the bill continues the fee diversion.

Despite the general enthusiasm for reform, patent attorneys said many of the intended revisions would actually hurt small businesses and inventors.

Favor big corporations

Bill Cochran, a Fort Collins patent attorney who began his career as a patent examiner and later worked as intellectual-property litigation director at Hewlett-Packard, called the reform bill an “abomination” that will slow innovation and small-business job creation. A change to the “first-to-file” system and other reforms favor big corporations that have deep pockets and teams of lawyers who can quickly shoot off applications and challenge filings from smaller entities, he said.

He cited the case where Microsoft recently lost an appeal to a small Canadian firm, i4i, which sued the software giant for $290 million in 2007. According to i4i, Microsoft infringed on a patent on an editing program that later showed up in its Office products. In that case, the small company held off the corporate Goliath, but Cochran said changing the U.S. patent system would favor Microsoft the next time around in a similar situation.

“This significantly increases the burden on the patentee,” Cochran said. “Small companies are where the innovative patents come from, but this will kill jobs and reduce the amount of innovation coming out of the private sector.”

“From my perspective, that’s not a fair criticism,” Deeter, of Ventria, responded. “Big companies (already) have the resources. I don’t know that patent reform is going to change that.”

Cochran and other patent attorneys said they do support the creation of satellite offices, but without eliminating fee diversion, that isn’t very likely. Plans for the first satellite office – to be located in Detroit – are on hold for now.

Bennet and his fellow senators are scheduled to reconsider the House version of the America Invents Act in September. Backers remain hopeful that funds will support satellite office expansions to Denver and elsewhere, but they also insist any change is good change for the beleaguered and backlogged patent program.

“It’s not as good as it could be,” Deeter said, of the bill and the possible holdup for satellite offices. “But it’s still an improvement.”

FORT COLLINS – In developing vaccines and recombinant proteins to stave off infectious diseases and illnesses, Ventria Bioscience works inside miniscule manufacturing spaces: grains of rice and barley.

“The plant is essentially the factory that makes the medicine,´ said Ventria CEO Scott Deeter.

The plant-based technology enables the small, Fort Collins biotech company to develop products that are both cost-effective and affordable for production and distribution around the world. Within the competitive field of biopharmaceuticals, Ventria’s innovative system has relied on the U.S. patent program to protect its medicines, technologies and uses. To date, the company holds 23 patents, with…

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