Fixing The Drug Industry's Patent System

by: Derek Lowe

For a good long time now, a massive piece of patent legislation has been working its way through Congress. It's cleared the House and is on its way to the Senate, so the number of twists and turns it can take is still substantial. And there's no telling if the President will sign it, since the administration has expressed its worries about the bill as it stands. In its current form, this law would change things around quite a bit.

For one thing, it would finally make the US a first-to-file country, like basically everywhere else in the world. The first-to-invent regime is one of the reasons that chemists throughout the country are harangued to get their lab notebooks witnessed promptly, because if it came down to a notebook-and-calendar fight, the company with the earlier witness date would likely win. First-to-file eliminates that particular worry (while not obviating the need for witness signatures), but could replace them with others. You hear a lot about how this will benefit larger players at the expense of smaller ones, since it makes the trouble and expense of filing a patent the determining factor. I think that this is exaggerated a bit, though. The trouble and expense of proving that you were the first to invent is pretty significant, too. (Admittedly, some of the parts of this bill look to make filing a patent even more expensive than it is now).

But there are many other provisions in this bill, ones which have managed to split the high-tech part of the US economy into camps.. Software companies are mostly lining up for the new legislation, while biotech and pharma are coming down against it. The arguing ground is a set of new rules about how easily patents can be obtained, and how easily they can be challenged after they’re granted.

In short, the computer sector feels victimized by people who get some useful step or technology patented and camp out on it, shaking everyone down for fees. (The real problem, as far as I can see, is that patent quality is just awful in this area, and all kinds of junk gets granted). At any rate, software and hardware companies would like to see fewer such things get patented, and are looking forward to some new tools to get them invalidated in a more timely fashion.

But over here in the drug industry, we’re jumpy about that sort of thing. Many companies in this area feel that their patents are being challenged enough already, thanks very much, and would rather not give the generic companies more new tools to tie things up in court. I think that the overall quality of patents is much higher in the pharma business, which helps to explain the difference of opinion. We generally have fewer, tougher patents protecting our important stuff over here, as compared to more (and weaker) ones in the software world.

It’s not so simple a breakdown, though. The flow can reverse in either industry. We do have some cases of smaller outfits getting some IP that they try to beat everyone up with – Ariad’s NF-kB patent, which I haven’t written about in a while, is a good example. And it’s not like the computer giants don’t ever get their patents challenged, either. Both industries are playing the percentages – this change won’t suddenly remake the whole landscape for either of them.

Overall, even though I’m a drug-industry guy, I think I come down on the side of making patent challenges a bit easier. After all, most of our patents in the industry stand up anyway – we shouldn’t have as much to fear. And I think that it’s easier to do harm by rent-seeking on a patent of dubious validity than it is to do harm by uselessly challenging an existing one. When you get down to it, the argument is about who you fear more: the patent office, for allowing junk to issue, or the courts, for making incorrect rulings when they’re challenged.

It’s a tough call, but I think the patent office is a bit more disgraceful. Frankly, I think if so many bad patents weren’t being granted, we wouldn’t be having this discussion at all. But before I sound like I’m beating up on the PTO, I should note that their funding and staffing has not come close to keeping up with their duties over the years. There are a lot of decent examiners there working under ridiculous conditions, so it’s not surprising that we find ourselves in the shape we’re in.

For more on this bill, I refer you to excellent posts (for example, here and here) at PatentBaristas and at Patently Obvious – those guys are lawyers, while I’m merely a client.