Townhall.com, Where Your Opinion Counts
Talk Radio:   Bill Bennett   Mike Gallagher   Dennis Prager   Michael Medved   Hugh Hewitt   
BREAKING NEWS  LeftArrow - Townhall.com : Conservative, Political, Republican   RightArrow - Townhall.com : Conservative, Political, Republican  
Columns, funnies & more in your inbox!
  • Check the boxes and send us your email address to receveive your free newsletter
  • Your daily must-read of conservative columns, cartoons and news. Coulter, Sowell, Krauthammer and more.
  • Townhall.com’s weekly inside scoop on what’s happening behind the scenes in the world of politics. When news breaks, we report.
  • Signup to receive the latest daily Townhall cartoons
Friday, March 07, 2008
Merrill Matthews :: Townhall.com Columnist
Protect Inventors from Patent Pirates
by Merrill Matthews
Vote on It:
Average Vote:
[+] Text [-]
 
Poll
Will the Dems' health care Christmas Present to America be an improvement or detriment to our health care system?


Have you ever wondered why virtually no breakthrough drugs are invented in garages, as various Internet and software companies have done?

Maybe it's because the science of modern medicine is so complex that it requires a nano-molecular-bio-chemical laboratory to invent, say, a purple pill.

But there's a darker reason why new medicines aren't being developed in your neighbor's garage: It's simply too hard to enforce patents.

If your neighbor had invented Nexium, he'd need an army of lawyers to protect his patent — because it would come under attack the minute he filed it.

Today's patent protection process is fundamentally broken. And its weaknesses are being exploited by copycat artists looking to make a quick buck off someone else's hard work. Congress is hoping to fix the problem, but it will get a lot of resistance.

When even the big pharmaceutical companies are losing ground in court, the little guy doesn't stand much of a chance.

It's a shame. Inventors of drugs are responsible for literally thousands of life-saving treatments. Yet every time they invent a cure, they're forced to play Russian roulette in the courtroom defending their patents from constant lawsuits filed by generic companies.

Much of this problem stems from an area of patent law known as "inequitable conduct," which is grounds for invalidating a patent.

Here's how it works:

Let's say you invent a green pill that cures hangovers. So you immediately file a patent to protect it. When filing that patent, you must disclose a wide range of information to government authorities, including how the drug was invented, lab results about its effects, and profiles of similar drugs already on the market. Your application is reviewed, accepted, and you are issued a patent giving you exclusive rights to sell the green pill for 17 years.

But what if you stole part of your invention from someone else's existing patent but didn't mention it in your application? In that case, your green-pill patent could be challenged — even after it had been issued — on the grounds of "inequitable conduct."

If a court found that you deliberately withheld required information from your patent application in order to deceive regulators, your patent could be ruled unenforceable by a judge. In legal speak, you'd have been found guilty of "inequitable conduct."

Or at least, that's how the inequitable conduct rule is supposed to work.

In reality, this process is often abused — and has become backdoor for undermining even the most legitimate inventions.

The problem arises from the fact that the standards currently used to determine inequitable conduct are vague and inconsistent. On the issue of what information needs to be disclosed, the law says that an applicant needs to provide any information that would be expected by a "reasonable examiner." Needless to say, that leaves far too much for interpretation.

And what constitutes an indicator of "intent to deceive" varies from court to court — sometimes from judge to judge.

That vagueness is being exploited by generic drug manufacturers. Every so often, they hit a jackpot when a judge with an especially broad definition of "relevant material" decides to invalidate a patent.

The result is an epidemic of frivolous inequitable-conduct claims. In the words of one federal circuit court judge, "the habit of charging inequitable conduct in almost every major patent case has become an absolute plague."

That drives up the cost of patent litigation, wastes the scarce resources of government regulators, clogs up the courts, and destroys the incentive for people to invent new cures.

Jon Dudas, director of the U.S. Patent and Trademark Office, which oversees all patent applications, says that "inequitable conduct allegations are frequently made but not often found, and thus add substantially to litigation cost and duration."

Much like ambulance-chasing lawyers, patent-challengers don't need to win every lawsuit. If they win just one inequitable-conduct ruling, the original patent holder loses the right to exclusively sell a drug. And most drugs cost about $1 billion to develop these days.

Generic manufacturers can take the drug's billion-dollar formula, produce copycat pills on the cheap, flood the market, and siphon away a hefty chunk of the profits.

Even if an inventor is found innocent of an inequitable-conduct charge, the arbitration process itself is expensive and time-consuming.

Obviously, we should expect full disclosure from anyone trying to patent a product. But the patent-approval process is breathtakingly complex — an honest mistake shouldn't spell disaster. And the people filing frivolous charges need to be held accountable.

With Congress currently debating how to update our patents laws, policymakers should consider reforming the rules governing inequitable conduct. There would still be no guarantee that the ultimate cure for hangovers would be invented in your neighbor's garage, but stranger things have happened.

Share:
Vote on It:
Average Vote:
 
About The Author

Merrill Matthews, Ph.D., is a resident scholar with the Institute for Policy Innovation.

Good job, GunnyG
I thought their was something oddly familiar about these various jerks - and the background exaggerations that just didn't fit the lameness of their comments seemed to be a common denominator. Maybe Hal's lilly as well...

It's like the hydra of Greek mythology.
________________________________________________

Phyllis Schlafly has already written of the latest attempts to gut the patent process with the 'first to file' legal scam. Rather than apply the correct remedy to the US patent process, which would be to fund it at the level it deserves, given its constitutionally mandated importance and the complexity of the process, its funding is treated the way the left treats another constitutionally mandated authority, i.e. military funding.

If need be, provide it with the funding and staff it requires, at the expense of non-mandated, wasteful and extraneous agencies such as education, energy, commerce, etc that are little more than homes for liberal lawyers and others who can't make it in the real world.

The Lawyers are the Problem
Once again, here is a huge debate over an important part of our country that is being ruined by ambulance chasers. The answer is loser pays. If the cost of the endless failed lawsuits against patent holders (or doctors, or drug companies, or insurance companies, or people that build playgrounds or shovel the snow from their sidewalks, etc.) were put fully upon the lawyers who are knowingly using this tactic as extortion and/or a lottery, this would stop. We could then discuss the real problems with the patent system (healthcare system, drug development, lack of playgrounds, absurd warning labels on coffee, etc) if there really are any. But, once again, we're talking about major changes to the patent system here rather than a simple change to the tort system.

"... of the lawyers, by the lawyers, and for the lawyers..."

I provided an argument, Michael
Did you not read what I linked to? It's written by a patent lawyer! Further, I explained about not being able to own a process. You can only own the ingredients and the end result. Your view of "well, you can patent it, therefore you can own it" is no different from someone in the 1700s saying "well, people do have slaves, so therefore you really can own people."

So when you bother to actually learn about IP: get back to me. Until then: keep your smug ignorance to yourself.

knight_of_baawa answered
Contradiction is not the same thing as argument, as the old Monty Python sketch illustrated.

The "violation of property rights" would be some parasite stealing the inventor's creation. Calling it an "artificial monopoly" doesn't justify your position any more than if you tried to steal your neighbor's car on the basis that he shouldn't have an "artificial monopoly" on his car!

The creativity of U.S. inventors and authors may be our chief advantage over foreign competition. The Chinese or Indians can fabricate CD disks or drugs cheaper than we can, but no one wants to listen to Chinese or Indian music, not even the Chinese and Indians. The value lies in the creativity and talent of the U.S. artists, not some foreign thief with a CD burner.

The "recipe" for a drug obviously IS ownable if it is patentable. It's been done successfullly for years. It's not only possible, it's done all the time.

Why do it?
No one can dispute that bringing a new drug to market is a long and extremely expensive undertaking. Drug companies, like any business, will not commit the requisite resources without a reasonable expectation of being able to recover its expenses.
When I heard the initial calls for the Medicare drug program accompanied by the tales of seniors having to choose between prescriptions and food, I wondered how long it would take to brand such a plan as corporate welfare by those who think these drugs come from the Easter Bunny.

DRUG LOBBY SPENDING
The reference made above re drug lobbyists' spending was, I believe, limited to one state. Multiply that by approximately 50, and you'll probably come a little closer to what the companies spend on lobbying in one form or another.

Just a note here: Usually if I disagree with one of Townhall's "guest" columnists, I simply ignore it. There are some columns I cannot ignore. They seem not to tell a complete story.

I fought tooth and nail against the Medicare Prescription Drug Plans, which have turned into paths of monumental spending. It has been claimed by knowledgeable people to have been written by the drug industry. And, in my opinion, that means by the drug industry, of the drug industry and for the drug industry. Maybe a few insurance companies, too. Don't forget them.

As I have said many times, I believe heartily in company profits. However, I do not, I repeat, I do not, believe in profiteering, particularly at the expense of the U.S. taxpayer. Maybe I'm simply too conservative for most of the country.

Once one begins delving into the workings of this industry, one finds a swamp full of alligators. Enter with courage and determination.

IP is garbage, Michael
It is an artificial monopoly. It is a violation of property rights. It does not protect the well-being of the US.

The recipe for a drug is NOT ownable in any sense other than writing it down and being able to own the item so written on. You can own X and Y and make Z from them, but you can't own the process by which X and Y are turned into Z. It's just not possible.

http://www.mises.org/journals/jls/15_2/15_2_1.pdf

GUNNY'S "GOTCHA"
Thank you, thank you, thank you, GunnyG, for your expose of our spelling-challenged wobbles. That's just for starters. Now, how did you spell "moooooorrrrrrrooooooooooonnnnnnnnnnn"? That's correct, according to my lights.

Now, according to some research I've done, the total expenditures for all of 2006 on "Pharmaceuticals/PACE Lobbying Expenditure Details" was $1,140,846.01. Wow, down to the penny. That was from http://www.pasenategop.com/lobbyists/policydetail.aspx?pol icy-Pharmaceuticals%2fPACE.

Also, according to Arnold S. Relman and Marcia Angell, "...The great majority of new drugs coming to market these days, although patented, are not new at all. They are variations on older drugs already on the market. These are called 'me-too' drugs, and the represent attempts to capitalize on the success of 'blockbuster' drugs....The few drugs that are truly innovative have usually been based on taxpayer-supported research done in nonprfit academic medical centers or at the National Institutes of Health...." Reference at http://www.commercialalert.org/relmanangell.pdf.

One thing to remember, however, that the Relman-Angell report was dated 2002. That doesn't change what was said, however.

One might also be edified to read Marcia Angell, M.D.'s book "The Truth About The Drug Companies - How They Deceive You and What To Do About It." Fascinating reading.

Take all the money lobbying, apply it to research, and I'll feel more generous toward what I believe is the luckiest industry going in the U.S. The subject is one endless to discuss -- a little like religion or politics.


It is worse than you thought
The "inequitable conduct" doctrine exists only in the United States; other patent systems do just fine without it.
But the recent Supreme Court decision in KSR v. Teleflex effectively makes it impossible to build a business based on patents. It has essentially done away with some of the objective rules formerly applied to decide whether an invention is "obvious", and replaced them with vague principles firmly aligned against the patent owner.
Trust Congress, though--pending legislation will make matters much, much worse.

Those clever software companies...
"Have you ever wondered why virtually no breakthrough drugs are invented in garages, as various Internet and software companies have done?"

Please name one breakthrough drug invented by either an internet or software company.

Jetpilot AKA Wobbie AKA Hal Donohue
I 've got ONE WORD for you.

BUSTED!

From George Will's article yesterday (7 mar) in the comments, Wobbie AKA jetpilot AKA HalD screwed the pooch.

Hal Donahue writes: Thursday, March, 06, 2008 9:24 PM

Robert

"...The pressure to do this will grow because I doubt there is goign to be an serious momenteum one way or the other toward the super delegates going in large numbers to one side or the other."

After the PA vo te if no movement then I suspect the "elders" will get a solution... We shall see

"...I really dont see an ending for this that is well good. Unless someone starts winning or losing take your pick."

I suspect Hil is going to do the winning; we shall see. The cash is flowing in. But realy the issue is how do we end this well. I think it can and will be done. In the mean time, I suspect the McCain (McSame seems to be sticking btw) crowd will be shut out

Robert
----------------------
The IDIOT forgets which ego is posting what and signs off as Wobbie! haha. Then the stupid fool claims he "cut and pasted" it by accident!

So please, all rise, and join me in saying to
Wobbie AKA jetpilot AKA Hal Dorkus...

"MOOOOOORRRRRRROOOOOOOOOOONNNNNNNNNNN!"

Oh yea I have been wounder this????
Doctor Merrill Matthews is director of the Council for Affordable Health Insurance, a Washington D.C.-based research and advocacy organization. Who is he working for?

>Have you ever wondered why virtually no
>breakthrough drugs are invented in garages, as
>various Internet and software companies have
>done? NO NO NO

Yes inventing, getting approval and manufacturing drugs is complex and expensive to develop. (Expensive = 0.5 BILLION on average per drug) So someone should just be able to change one compound or make it different color or shape and claim its their's??

The FDA approval process is ridiculously super expensive.

Last even the big Pharmaceuticals are getting ripped off by who................. The Chinese.

The Chinese have no shame, morals and stealing is OK. All the boot leg drugs and even Movies and music is costing billions to our economy.

The scary part is some of their drugs are just not affective. So a person takes a serious Heart Med and it does not work (because its bootleg and made with drywall). So the doctor prescribes more or different drugs. The person dies OH WELL.

The person writing the article has PERSONAL interest to campaign; he gets paid to be "THE STAFF DOCTOR" for the bootleg drug makers. He works and makes money for himself as an advocate. I doubt it is for altruistic means. What does Doctor make a year to bash drug companies?

The real problem is FDA approval and China stealing from the USA, not DRUG companies trying to protect patent infringements.

Now talk about Bush's drug welfare program that cost tax payers $159 BILLION over 5 years. Thanks BUSH!

IP critical to U.S.A.'s well-being
knight_of_baawa writes: "Abolish intellectual property. It's just a mythical, chimeric thing anyway. IP does not exist."

The Founders put patent and copyright protection into Article 1 of the Constitution for a reason: to give inventors and authors an incentive to create and disclose their works to the public. It's no coincidence that the result has been more creativity and advancement over the past 2 centuries than the previous million years. The public has benefited immeasurably more than the inventors and authors. Another example of the amazing wisdom of America's Founders. Why would anyone invest millions of dollars and years of time to invent a new drug that could be appropriated by anyone?

Abolish intellectual property
It's just a mythical, chimeric thing anyway. IP does not exist.

Frigglesnitz: Not Quite There.
Frigglesnitz, that 20 years from the date the application is filed. Knock off 3-5 years for the examination process. Then, knock off 7-10 years for delivery system development, multiple rounds of clinical trials, FDA approvals, yadda-yadda. Next, knock off a couple more years to make it mass-manufacturable, launch the product, and market it sufficiently to make it popular. What's left is 3-10 years, tops, to make enough money to recoup all of that upfront money, and to generate enough cash to start/continue R&D on the next round of product. Narrow and limited extensions *may* be available.

No startup has the right to infringe on the product, regardless of the socially-convenient reasons for doing so. In exchange for giving up sufficient information on how to make, use, and sell the patented material in the drug, the Constitution grants the inventors a limited monopoly.

To change this is to destroy our Nation's 230 year scientific and technical lead in the world.

DRUG PATENTS
Reading a recent FDA publication online quite recently, it was stated that a drug patent is for a 20-year duration.

After numerous years of a patentee's exclusivity patent rights, an "upstart" generic manufacturer may file an application to begin manufacturing generics.

When that happens, the original patent holder may (probably usually does) file a petition in opposition, automatically triggering many more months of patent protection. For obvious reasons one can hardly blame the original patent holder for filing an opposition. It likely means billions of dollars and is worth every cent he (the patent holder) pays a good law firm for defending against the upstart.

As a very ordinary consumer, I believe that as an American I have invested a lot of money in the patent holder. After all, I have helped R&D, including marketing research, I have helped by contributing through U.S. research entities, I have helped offset advertising, taxes, manufacturing, drug detailing and continuing medical education. In other words, I've helped subsidize the patent holder.

After a time, it seems appropriate to allow upstarts to start up.

Be all that as it may, and I do have philosophical quarrels with drug companies, it seems to me that the most dangerous and frequent patent attacks are from other countries, China, for instance. The U.S. needs to invent a way to prevent other countries from allowing or encouraging rip-offs of American patents.

There is no easy answer for that one, although the FDA and HHS are very well aware of this enormous problem.

However, you will pardon me if I do not fall all over myself feeling sorry for drug companies.

Inequitable Conduct
Is the Patent Litigator's garotte, their favorite tools against Patent Prosecutors and their infringed client. The sheer volume of materials that can be searched during discovery can be a boon to a vexatious plaintiff's team.

Among the thousands of note, letters, publications, and e-mails produced may be enough bits and pieces to cobble together a suggestion of inequitable conduct that may be presented with sufficient artfulness to "confirm" both willfulness and inequitable conduct. The actual facts and circumstances don't seem to matter.

Recent USPTO measures and Court decisions (especially CAFC) have created a nightmare for Patent Prosecutors and their clients.

In the name of expedited examination, the USPTO continues to push the notion of shifting the primary responsibilities for searching and examination upon the Applicant.

At the same time, the USPTO is moving to impose severe limitations/penalties on Applicants for providing "too much" relevant information, putting the Applicant in a position to pick and choose which references are brought forward.

When these decisions are viewed 10 years later in hindsight, specious allegations of inequitable conduct can be made to stick.

To make matters worse, Congress continues to tap the Applicants' fees for general budget social engineering programs that impedes the USPTO efforts to modernize and that push the USPTO to make such bizarre choices.

It doesn't help that there is a cabal in DC with the mission of unifying our patent system with the Second and Third World. Our patent system made us the most advanced, technically advanced society in the world. So, why should we be ashamed?
Sign Up to Post Your CommentsSign Up to Post Your Comments
If you are already registered, click here to login. Otherwise, please take a few seconds to register with Townhall.com. Once you sign up, you’ll be able to post your comments immediately, use the action center, get podcasts, and more!
Note: Fields marked with a red asterisk (*) are required.
Salutation:
First Name:
*
Last Name:
*
Email:
*
Nickname:
*
Note: Nick name will be shown when you post comments.
Address 1:
*
Address 2:
City:
*
State:
*
Zip:
*
Phone:
      
Your daily must-read of conservative columns, cartoons and news. Coulter, Sowell, Krauthammer and more.
(Bi-Weekly) We highlight the best opportunities from our partners for surveys, action items and more.