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Biotech Firms Wary of Changes to Patent Application Regulations

Upcoming changes to U.S. Patent and Trademark Office rules are creating a stir in the biotech world, where intellectual property portfolios are the heartbeat of scientific advances.

New rules effective Nov. 1 will make it costlier and more time consuming for biotechnology companies to comply with patent application requirements and could place a heavier burden on the courts, local industry leaders say.

“People are trying to change the current mechanisms that are in place and many of the changes have unintended consequences that might make the process even more complicated and lengthy,” said John Benassi, an intellectual property attorney in the San Diego office of Heller Ehrman.

The changes involve restrictions on the number of continuations inventors are allowed to file. Continuations allow inventors to secure their original filing date while pursing additional claims.

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Under the current system, applicants can file as many continuations as they deem necessary. Under the new rules, applicants may file two new continuing applications and one request for continued examination, which allows the inventor to pay an additional filing fee and continue to argue a case after the office issues a final rejection.


Shortening The Process

“Basically it was an unbounded process,” said USPTO spokeswoman Jennifer Rankin Byrne.

She says the new restrictions should eliminate drawn-out patent applications that can last years and even decades.

The new rules also call for additional documentation if an application contains more than five independent claims or 25 total claims.

Additionally, the USPTO is revising its rules with regard to multiple applications with the same claimed filing or priority date, substantial overlapping disclosure, a common inventor and common ownership.

The reason behind all the changes? The patent office says the new restrictions will improve the effectiveness and efficiency of patent examination.

Currently, the number of patent applications pending has reached 750,000, according to Rankin Byrne. She says the agency has had to limit the number of patents it allows each year.

For fiscal 2006, the patent allowance rate was 54 percent. The rate refers to the percentage of applications reviewed by examiners that are approved.

But eliminating the USPTO’s burden and placing it on the applicant will require additional time and money for biotechnology firms already inundated with paperwork, according to Benassi.

“Obviously a small biotech company will not want to spend these types of funds so early in the process before they have a clear idea of whether their claims will be allowable,” he said.


Not The End Of The World

Richard Warburg, a partner in the Del Mar office of Foley & Lardner LLP and a member of its intellectual property department, says changes to the status quo will require adapting on the part of some companies not used to making changes.

“There’s a lot of pulling out of hair and stuff like that but I’m not sure I necessarily agree with all my colleagues where this is the end of the world,” he said. “But it is certainly going to cost our clients an awful lot more money and it’s going to create a lot more uncertainty.”

Inventors with limited funds could really feel the effects of the new rules. “If you’ve only got a budget of $30,000 for IP, all of a sudden you may be only able to do two-thirds of what you do,” Warburg said.

Pulling funds away from research efforts to place greater emphasis on protecting intellectual property could stall scientific progress, although the analysts interviewed say that is not likely to happen.

“Most will probably opt to minimize the number of claims and not spend the extra money to file the additional support documents,” Benassi said. “They’re going to have to make more decisions, spend more time deciding whether or not obtaining patent protection, especially meaningful patent protection, is going to be a valuable use of their resources.”

On the other hand, they say ignoring the importance of IP protection could pose a significant risk.

Legal experts say the new rules will place a heavier burden on the courts, potentially shifting the backlog from patent applications to patent appeals.

Under the current system, patent appeals take a year to process. Studies have estimated a two-year process under newly proposed patent reform.

Besides patent application changes initiated by the USPTO, lawmakers have proposed new legislation that could transform the industry.

A bipartisan bill promising to be the biggest patent system overhaul in 50 years was introduced in April. It aims to convert the U.S. patent system into a “first-to-file” system, which would give priority to the earlier-filed application for a claimed invention, among other things.

The proposals prompted at least one U.S. Court of Appeals for the Federal Circuit judge to address his concerns to the agency.

His letter cites a study suggesting one provision , making claim construction rulings immediately appealable , could double the amount of annual court filings.

“If so, substantial additional delays in deciding patent and all other appeals would ensue,” the letter read.

Inventors are expected to challenge the validity of the new rules through lawsuits.

Local firms will look to file continuations before the Nov. 1 deadline, according to local patent attorneys.

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