The Cross-Border Biotech Blog

Biotechnology, Health and Business in Canada, the United States and Worldwide

Threats in 2009: Patent Reform

The United States Congress is expected to take up patent reform legislation again in 2009. For biopharma companies, it is safe to say that last year’s version of the bill would not bode well for industry innovation and investment.

 H.R. 1908  passed the U.S. House of Representatives in September 2007 but failed in the U.S. Senate after key Judiciary Committee members failed to reach a compromise over provisions relating to the apportionment of damages. That provision limits the damages that can be brought against an infringing party to the estimated sale of a patented item, as opposed to the estimated sale of a finished product of which the patented item is a component.

The apportionment of damages provision was a “make it or break it” issue that placed high-technology companies on one side and biopharmaceutical companies on the other. Politics does make strange bedfellows! On this issue, financial firms sided with the high-technology companies, while labor unions shared biopharmaceutical company concerns about the damages provision.

This year, the scenario may seem less favorable for the biopharma industry. The Democrat majority in the Senate has widened slightly, and a Democrat President will now be in office. Last year Senate Republicans and a Republican President raised opposition to the legislation and posed obstacles to the bill moving forward. In addition, manufacturing giants Corning Inc., DuPont, Monsanto and PepsiCo are among a handful of companies joining a new coalition that hopes to influence the forthcoming congressional debate over changes to U.S. patent law. The Manufacturing Alliance on Patent Policy, launched yesterday, will focus on passing patent reform legislation, specifically to change how damages are apportioned in infringement lawsuits.

The new group joins the Coalition for Patent Fairness whose high-tech and media sector members support the damages language. Case Western Reserve economics professor Scott Shane, in a report (pdf), concluded that reduced patent damages will lessen patent value by as much as $85.3 billion and could reduce R&D spending by as much as $66 billion.

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