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Time is money When it comes to patents, how quickly and often you file means everything

Richard Gearhart, CEO and president of the Summit-based Gearhart Law, says new laws are adding clarity to patent issues.

Today, billions of dollars in sales may hinge on arriving at the patent office just an hour before your competitor.
Just ask Richard Gearhart.

In the life sciences industry, where securing a patent is everything, the attorney has seen a firm challenge a patent that a competitor filed on the exact same date.

And what may decide which company is awarded that all-important patent is a lower serial number, which implies it was filed earlier in the day.

“What we have now is a race to the patent office,” said Gearhart, CEO and president of Summit-based Gearhart Law.

Yet it wasn’t always this way.

Before the federal Leahy-Smith America Invents Act, the ownership of a patent was based on the date the idea was conceived of by its inventor. The rules were then overhauled, through this 2011-signed but 2013-enacted law, to give priority to the date its inventor dropped an application at the patent office instead.

The country’s patents had not been revised so considerably since 1952.

It had numerous implications for the life sciences industry in particular — not all of which are inherently bad.

Scattered documents, files on laboratory computers, scribbled passages in notebooks and more were once used for the lengthy fact-finding proceeding that proved a patent’s validity.

A filing date timestamp is patently less complicated.

“The nature of life science is such that, because research changes over time, determining exactly which invention was created when could definitely be difficult,” Gearhart said. “And so the new law does add clarity.”

The ostensible purpose of the America Invents Act, besides simplification, was bringing the United States in line with the rest of the world, which had long operated under the “first to file” system.

The U.S. long had the most enforceable patents, but also the most complications in the ownership aspect. This discrepancy made for an odd dynamic at global life science companies, Gearhart said.

As a former intellectual property attorney for Novartis, an international pharmaceutical corporation, he would know.

“Being a global company — before ‘first to file’ was implemented in the United States — you’d have to do one analysis for the U.S. and another for the rest of the world,” he said. “It was always a challenge.”

Making U.S. patent law congruent with what it is abroad eliminated that challenge for global firms.

But it may have created a new one for the smaller life science companies, which had more time for development and identifying funding sources prior to the patent office sprint.

“I think, because of that, the (‘first to file’ rule) does give a slight edge to the larger companies,” Gearhart said. “If it’s determined that the application is to be filed, then they’re less concerned with funding issues, whereas a startup has to take the cost of even filing an application into account.”

A patent application can cost up to $20,000, depending on complexity. A great deal can be spent by a company on the legal professionals required to analyze these claims beforehand.

The America Invents Act also broadened the scope of what can be used to reject patent applications and invalidate held patents — including mentions of the yet-to-be-awarded patent to the public within a certain period before the filing.

Keith McWha, an intellectual property attorney at McCarter & English, said smaller companies do tend to use publications, seminars and other public reveals as a means of raising capital and attracting investors in the development process.

“However, even larger biotech companies prefer to publish for business reasons,” he said. “(Given) that, both large and small biotech companies need to pay particular attention to what researchers are saying, because it might be used as an attack.”

He added that this leads to a cost-benefit analysis in which a company, in the life sciences sector or otherwise, decides how much it needs funding and how much patent-invalidation risk it’s willing to incur.

“One thing companies or inventors can do is file a provisional patent, and what that buys is 12 months of marketing and research,” McWha said. “That can be used to figure out whether or not the investment dollars are worth seeking full patent protection — if there’s a market.”

Though the prices vary significantly, provisional applications generally cost less than $5,000.

And it costs far less for a small-time inventor. Those that qualify for “micro-entity” status — four patents or less — can claim a 75 percent deduction on patent filing fees.

Beverly Lubit of West Orange-based Wolff & Samson has some suggestions for those who seek provisional applications as an answer to the patent overhaul:

“I see claims at all stages of development. I fully understand their dilemma, because I was a scientist myself,” she said. “My advice to clients is to file provisional applications that have much more substance.

“Also, file them on a rolling basis; in other words, as development proceeds, file an additional application to cover the new development. Nobody is going to know where the invention will ultimately be once development is complete.”

That tension that exists for the inventor in the life sciences arena — whether to hold back an invention until it’s more fully developed or risk getting scooped by competitors by publishing information without a non-provisional patent — she said that’s not going away.

And the questions about how the race to the patent office will play out and who it favors aren’t going anywhere, either.

When it comes to interpretations of the new law, the U.S. is far from the finish.

“This was a seismic shift in the U.S. patent law,” Lubit said. “And there are people still trying to figure out how exactly it’s going to work over here.”

E-mail to: brettj@njbiz.com
On Twitter: @reporterbrett

Can a company own your DNA?

This is not the premise of a dystopian sci-fi story — it’s a real question the U.S. Supreme Court was faced with last year. And it ultimately decided that segments of genetic material without alteration are ineligible for protection under patents.

The ethical implications abound, surely.

But in equal measure came the business ramifications of this case (Association for Molecular Pathology v. Myriad Genetics). Keith McWha of McCarter & English explained:

“As a result (of that case), life science companies have had to become more selective in what they seek for patent protection. Before, companies filed applications on a broader scope of diagnostic tests and subject matter; now the scope of biotech subject matter is narrower.”

For example, the patent Myriad Genetics had challenged was related to certain genes implicated in an increased risk of breast and ovarian cancer. Myriad claimed broad patent protection for the isolated DNA segments corresponding to these genes and utilized the identified genes for diagnostic testing.

“By obtaining patent protection for the isolated DNA segments, as a composition of matter, life science companies could protect the use of these genes in any diagnostic test, even new tests based on the patented genes that are developed by third parties after the patent has issued,” Jason Chumney, also with McCarter & English, said.

He added that, now, as a result of the Myriad decision, life sciences companies must resort to protecting significant man-made alterations to identified genetic material, if any, along with the features of the diagnostic tests that employ those genes.

 “Furthermore,” Chumney said, “the (Patent and Trademark Office) issued guidance in March, after the ruling in Myriad, that makes clear that patent examiners will now scrutinize all patent applications with claims arguably directed to natural products — inside and outside of biotech — to ascertain whether these products are significantly different from products already found in nature.” — Brett Johnson

 

Brett Johnson

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