Law Times

PAGE 12 FOCUS AUGUST 25 / September 1, 2008 • Law times New rule intended to have retroactive effect O BY JULIUS MELNITZER For Law Times n Nov. 1, 2007, the most dramatic changes to U.S. patent law practice in de- cades were poised to come into ef- fect. They didn't. On Oct. 31, 2007, Dr. Tri- antafyllos Tafas, an independent inventor and GlaxoSmithKline obtained a last-minute injunc- tion preventing the U.S. Pat- ent and Trademark Office from implementing the changes. Five months later, on April 1, the U.S. District Court for the Eastern District of Virginia declared the new rules "null and void" as "otherwise not in accor- dance with law" and "in excess of statutory jurisdiction [and] authority." The ruling perma- nently enjoined implementation of the new rules. The USPTO has appealed. "It's quite possible that the fate of the rules won't be fi- nally resolved until 2009, and even later, if the Supreme Court takes up the case," says Dr. Serge Lapointe, a patent agent with Fasken Martineau DuMoulin LLP's Montreal office. The delay gives Canadian organizations that rely on U.S. patents — particularly Canadian universities, pharmaceutical com- panies, and biotechnology firms — a chance to draw their breath. According to Lapointe, how- ever, the respite is brief because there is a great deal at stake. "The changes, which limit a patent applicant's ability to pursue patent protection by re- stricting the number of patent applications and total number of claims, disproportionately affect biotechnology and life science industries." There are many reasons for this. To begin with, continuations are most common in these indus- tries, which have a continuation rate of about 40 per cent compared to only 20 to 25 per cent of elec- tronics and mechanical patents. 'A 2006 strategic plan prepared by the USPTO predicted that the time it took to process claims would rise from the current 31 or 32 months to 45 months,' says Konrad Sechley. Biotech and pharma products also take more time to develop and bring to market. At the same time, such companies are under pressure to file patent ap- plications early to protect their initial concepts. "They then file additional patents as the technology is be- ing developed, and the new rules would limit this practice," Lapointe says. Otherwise, biotech and phar- ma companies face challenges unique to what has been coined the "unpredictable arts" — those where the inventors can never be sure how the product will finally work, whether it will be effec- tive, and what the side effects will be. These challenges include the frequent intrusion of com- plex patentability questions such as enablement and definiteness. To make matters worse, the new rules are intended to have retroactive effect. "In 2006, the Biotechnol- ogy Industry Organization es- timated that retroactivity alone would cost applicants between $100 [million] to $120 mil- lion," Lapointe says. The rules would also increase the costs for patent applicants by requiring a more thorough search of the prior art, the im- plementation of strategies to draft broader and more complex applications, the filing of more distinct applications, and engen- der more appeals and petitions. Finally, the increased cost and complexity may well widen the innovation gap between Canada and other G7 countries by dis- couraging small applicants from seeking patent protection. "Canada currently files the To advertise in an upcoming issue, contact our sales team: Karen Lorimer 905-713-4339 klorimer@clbmedia.ca Kimberlee Pascoe 905-713-4342 kpascoe@clbmedia.ca Rose Noonan 905-726-5444 rnoonan@clbmedia.ca fewest patents per capita in the G7, and only one-quarter as many as does the U.S.," Lapointe says. According to Lapointe, Ca- nadian companies and univer- sities who have limited budgets for intellectual property devel- opment could be forced to put their inventions into the public domain or turn to trade secrets as an alternative means for pro- tecting their IP. "The rules may also chill new investment because investors would not risk development of commer- cially promising technologies with- out the assurance of proper patent protection," he says. Although the number of pat- ents has been going down since the turn of the century, filings have been rising. The USPTO has been unable to keep up with demand. "A 2006 strategic plan prepared by the USPTO predicted that the time it took to process claims would rise from the current 31 or 32 months to 45 months," says Konrad Sechley, a patent agent with Gowling Lafleur Henderson LLP's Vancouver office. The options were to reduce the number of claims, shift the searching burdens to applicants or to hire more examiners. "The estimate was that the USPTO needed an additional 1,000 examiners, and they ei- ther couldn't find them or didn't have the budget to hire them," Sechley says. But there's something wrong here, according to Sechley. "To be sure, the USPTO work- load is quite high, but the Euro- pean Union's patent office, which has a similar workload, doesn't have the same problems," he says. One of the difficulties is that the USPTO has a unique way of interpreting an invention. "For example, if I invent a drug and have a claim to the drug, I can also claim a method to use the drug and a method of treatment," Sechley says. "In Eu- rope, that's one invention, but in the U.S. it amounts to three in- ventions, which effectively triples the USPTO workload. There's a tendency in the U.S. to split up applications into three or five or 10 applications, and all that does is increase their numbers and the costs of processing." 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"They may resurrect in some form in new legislation from Congress," he says. "But most probably this will happen only after the new administration takes office in 2009." On the other hand, Canadi- an stakeholders should be aware that a new and discrete set of rules is in preparation. These seek to shift the burden for ex- amination from the examiner to the applicant and require appli- cants to state how their claims differ from the prior art. "The difficulty with making these kinds of assertions is that these kinds of statements may be admissible in subsequent litiga- tion as statements against inter- est," Sechley says. This final version of this lat- est set of rules is not yet public. A proposed version was pub- lished for comment, however, in July 2006, with a revised version approved in December 2007 by the White House's Office of Management and Budget. LT

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