Stephanie Anderson is a first year J.D. candidate at Osgoode Hall Law School.
The United States has long been awaiting Congress to finally agree on proposed patent reform issues, and it seems the anticipation may soon end in the coming months for scientists and researchers. Preliminary hearings are scheduled for March and April of this year, with much of the same proposed reformations under the Patent Reform Act of 2007, as well as the changes made to the Act in 2008. It will be interesting to see how the recent stimulus package delivered by President Barack Obama will affect the biotechnology and large research companies in conjunction with new patent measures. While the President is devoting a relatively large proportion of funding to alternative energy research, the potentially large expenses companies will face to meet the standards of patent quality and continuation applications proposed in the Act could discourage the development of the technology needed to help solve our energy concerns.
Obama’s stimulus package, released on February 17th, includes $21.5 billion for science and research spending, with a larger proportion of funding directed at the biotechnology industries. The final number is higher than what was proposed by both the Senate ($17.9 billion) and the House ($13.2 billion). $8.5 billion of the stimulus package has been allocated for research and grants. However, with patent reform early on the agenda for the 111th Congress, more than 130 manufacturing companies, none of which were pharmaceutical companies, that would be affected by patent reform have expressed their concerns, indicating that adopting many of the patent proposals from 2008 would risk upwards of 300 000 manufacturing jobs and cause a decline in research and development investments by $66 billion. Small startup biotechnology companies will be affected much more than large pharmaceutical companies because a company’s value is largely affected by their patents, which pharmaceutical companies already have an abundance of in comparison. The companies argue that weakening patent protection will reduce American competitiveness in the global research and development market. Some commentators argue that the judicial system has indirectly helped reform the patent system by ensuring that damage awards are reduced to deter patent infringement and compensate those whose legal rights have been violated.
Members of Congress have seen differently in recent years and feel that a major overhaul of the United States Patent System is needed to meet global standards and expectations, which the court system cannot achieve. The United States is the only country that gives priority to the inventor who claims the earliest invention date instead of when the application is filed with the Patent Office. Supporters argue that this benefits small inventors who may be unaware of the laws within the patent system. One of the major problems cited with the patent system in the United States is the generally ill-prepared patent applications that the USPTO receives, a problem which could be exacerbated if a “first-to-file” system is instilled without improving the required standards of patent applications. Rushed and messy patent applications can lead to complications in trials of patent infringement. Both the recent House and Senate versions of the bill would create a new requirement for Applicant Quality Submissions (AQS), which would include a patentability analysis to the effect of an Examination Support Document (ESD) for all claims that would grant few supporting documentation exceptions to applicants. Many companies believe that the new AQS regulations would result in higher costs and thus discourage patent application for smaller companies and individuals.
Continuation applications, which are generally only filed in the United States, are also expected to be severely limited. This change could result in increased litigation expenditures because the opportunities to establish a patent will be limited and researchers may wait to file their applications until final modifications have been made. Large costs, lower chances of success, and decreased damages awards could all serve to hinder the innovation process. Biotechnology companies in particular could feel the crunch due to the complexity and expensive nature of the technology itself and the often complicated examination process, which could theoretically slow research of new energy sources. With $15 billion of the stimulus package set to be used to develop alternative energy sources, it will be interesting to see if there is an increase in innovation and patent applications, or if the likely patent reform bill will hinder such progress. Alternative energy sources is a hot topic globally and will definitely be subject to the pressure of the race to the finish line to develop new fuel technologies given the current state of the oil industry. However, companies may hold off on patent applications due to their expense and restrictions on continuation applications. Thus progress in developing alternative energy sources could stall. While there is consensus that patent reform is necessary in the United States, it would be wise for Congress to consider the financial implications to companies that the changes may bring. Perhaps alternative reform measures which favour development of alternative energy sources could benefit the patent system. The current state of the economy along with the proposed dramatic patent reform is a combination that could lead to a wide range of possible outcomes that will begin to unfold possibly in the next few weeks.