SBIR Reauthorization Effort Continues to be at Standstill

Written by on Tuesday, January 12th, 2010

Despite ongoing negotiations in the Senate and House throughout 2009, the new year is beginning with the SBIR reauthorization effort at a continued standstill.

While Congress did successfully save the SBIR/STTR from extinction by implementing a series of five continuing resolutions (“CR”) since the authorization expired back in September 2008, no permanent solution has been reached and the current CR is set to expire on January 31, 2010.  Thus, the SBIR/STTR programs continue to be in limbo.

If you have been following this issue at all and are familiar with the SBIR/STTR programs, you may be wondering why these programs continue to be in a perpetual state of almost extinction.

According to the SBIR Gateway, which has been covering this issue, the problem is that the Senate and the House cannot agree on the terms of a reauthorization bill.  There are apparently eight issues that are still being debated:

  1. Length of reauthorization;
  2. Venture capital participation in SBIR;
  3. Award levels;
  4. Sequential Phase II award;
  5. Retention of Phase I requirement;
  6. Allocation increase;
  7. Administrative funds; and
  8. Rural and state outreach.

SBIR Gateway attributes the problems to the fact that ” the more the Senate was willing to compromise, the more the House wanted” and asserts that the “House Small Business Committee under the leadership of Nydia Velazquez and her staffer Michael Day wanted to hold the SBIR program hostage.”  According to SBIR Gateway, a key issue is that Velazquez is receiving large campaign contributions from the National Venture Capital Association (“NVCA”) and biotech investors, and they are the groups who would stand to benefit from the House Bill the most.   So, the argument is that Velazquez is unwilling to agree to more than a two year reauthorization for this very reason.

Regardless of what is going on here, it is clear that the whole SBIR reauthorization effort has become bogged down in politics and has been therefore left on the backburner.  Based on what I personally have observed this past year, I would argue that this seems to be the current state of affairs for anything involving small business: Congress seems to have put small businesses in general on the backburner for whatever reason, despite the fact that small businesses, which include biotech companies and other start-ups, provide the majority of jobs in this country and unemployment as well as underemployment continues to be the overarching concern of most Americans today. So, small businesses have largely been left to fend for themselves through this recession and deal with the fact that access to capital has all but dried up, while Congress has been out bailing out banks, failed auto companies, and other “too big to fail” institutions–which employ only a small percentage of the nation’s workforce–with our taxpayer dollars.

Does any of this really make sense?

The California Biotech Law Blog would like to see Congress to reassess its priorities in 2010:  it is time to put the focus on small business.   I am certain that many of you in the biotech community would agree that getting serious about finally passing a  SBIR/STTR reauthorization bill would be a good start.


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What Small Businesses Need to Know to Protect their Companies’ Intellectual Property Assets

Written by on Tuesday, August 11th, 2009

Title: What Small Businesses Need to Know to Protect their Companies\’ Intellectual Property Assets
Location: Webinar
Link out: Click here
Description: Are you a small business owner who believes that your business has no intellectual property to protect? While it is true that there may be some small businesses which do not have intellectual property, the reality is that most small businesses do in fact have intellectual property, which is not being properly protected. This program is designed to educate small businesses on what they need to know to identify and protect the intellectual property assets in their companies.

The speaker for this event is Kristie Prinz, the Managing Principal of the intellectual property and e-commerce boutique law firm, The Prinz Law Office, located in Silicon Valley, CA. Ms. Prinz is a frequent speaker and media contributor on intellectual property-related issues. Her media interviews and appearances include Dow Jones, CNN Radio, American Public Radio’s “Marketplace,” IP360, California Lawyer, Genetic Engineering & Biotechnology News, and Sky Radio. She also authors the California Biotech Law Blog and the Silicon Valley IP Licensing Law Blog, and has been a regular contributor to the “Ask the Lawyer” column on intellectual property law for Lawyers.com.
Start Time: 10:00
Date: 2009-10-14
End Time: 11:00


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What Companies Need to Know About the Legal Risks of Business Blogging

Written by on Tuesday, August 11th, 2009

Title: What Companies Need to Know About the Legal Risks of Business Blogging
Location: Webinar
Link out: Click here
Description: Companies are increasingly launching blogs to advertise and promote their businesses. While the benefits of adopting a business blog can be extensive, companies may also face legal consequences if they start posting to a blog without first having a good understanding of the legal issues they may encounter through their activities. This program is designed to educate companies on what they need to know about the legal risks of business blogging.

The speaker for this event is Kristie Prinz, the Managing Principal of the intellectual property and e-commerce boutique firm, The Prinz Law Office, located in Los Gatos, CA. Ms. Prinz is a frequent speaker on blog law issues and recently completed work on a monograph titled “Managing the Risks of Employee Blogging,” which is scheduled to be published by the Science and Technology Law Section of the American Bar Association. Ms. Prinz is an avid blogger herself, currently running two legal blogs, the California Biotech Law Blog and the Silicon Valley IP Licensing Law Blog.
Start Time: 10:00
Date: 2009-09-09
End Time: 11:00


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Secrets to Launching an Effective Blog to Promote Your Business

Written by on Tuesday, August 11th, 2009

Title: Secrets to Launching an Effective Blog to Promote Your Business
Location: Webinar
Link out: Click here
Description: Have you heard stories about how other businesses have launched blogs to promote their businesses? Are you interested in launching a blog to promote your business as well? This program will share some of the secrets to launching an effective business blog, addressing such issues as:

* Choosing the best name and subject for a business blog;
* Selecting the best domain name for a business blog;
* Targeting the right audience;
* Choosing the right platform and host;
* Developing the right blog design and layout for a business blog; and
* Advertising and promoting a business blog.

The speaker for this program is Kristie Prinz, who is the Managing Principal of Prinz Law Management Consulting. Ms. Prinz is an avid blogger who recently launched the new Start-up Law Firm Blog and has two other legal blogs, the California Biotech Law Blog and the Silicon Valley IP Licensing Law Blog. Ms. Prinz is a frequent speaker on blog-related issues, and recently completed a monograph titled “Managing the Risks of Employee Blogging,” which is scheduled to be published by the Science and Technology Law Section of the American Bar Association. Her consulting practice advises small law firms on a variety of business issues such as building a web presence, blogging issues, small firm advertising and promotion, law firm technology, financing the law firm, and business development.
Start Time: 10:00
Date: 2009-08-26
End Time: 11:00


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Genetic Engineering & Biotechology News Interviews Kristie Prinz

Written by on Friday, March 27th, 2009

Following up on our recent coverage of the patent reform debate, Genetic Engineering & Biotechnology News recently interviewed me for their article Patent Reform Battle Pits Biotech against High-Tech. The interview addressed the competing perspectives of the biotech and high tech industries on the issue of patent reform.


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Patent Reform Debate Revived in Congress

Written by on Thursday, March 26th, 2009

Here we go again. . . .Patent reform is back on the table: two bills have been introduced and are again being debated in Congress.

The first of the two bills, the Leahy-Hatch bill, S. 515, was introduced on March 3, 2009.  According to a summary by the Congressional Research Service, the key points of this patent bill, also known as The Patent Reform Act of 2009, are as follows:

Defines “effective filing date of a claimed invention” as the filing date of the patent or the application for patent containing the claim to the invention (thus establishing a first-to-file system).
Declares that, to the extent consistent with U.S. obligations under international agreements, patent examination and search duties are sovereign functions. Requires that those functions be performed within the United States by U.S. citizens who are federal employees.
Revises various other rights and requirements related to patents, including regarding: (1) damages; (2) post-grant procedures; (3) citation of prior art; and (4) inter partes reexaminations; (5) preissuance submissions by third parties; (6) venue and jurisdiction; and (7) the regulatory authority of the Patent and Trademark Office.
Replaces the Board of Patent Appeals and Interferences with the Patent Trial and Appeal Board.
Revises provisions concerning the residency of federal circuit judges and the facilities and administrative support which must be provided to them.
The second of the two bills, S. 610, was introduced by Senator Kyl on March 17, 2009.  The most noteworthy distinction between the Kyl bill and the Leahy-Hatch Bill involves how the calculation of damages would be treated by each of the bills.  The Progress & Freedom Foundation explained this distinction as follows:

The most contentious issue for patent reform (lately, at least) regards calculation of damages.  Damages consumed much if not most of the time during the Senate hearing on the Leahy-Hatch bill a few weeks ago.  At the risk of over-simplification, the Leahy-Hatch bill tried to ensure a couple of things regarding reasonable royalties for damages:

(1)  If a patent covers a discrete component of an infringing system (e.g., the modem in a computer), damages should ordinarily be based on the value of the modem and not the entire market value of the computer.  This is the “entire-market-value rule” question and is currently up for decision in the Court of Appeals for the Federal Circuit.  (Disclaimer:  Several years ago, I worked on that case at the trial level.)

(2)  Damages should be assessed with reference to the “claimed invention’s specific contribution over the prior art.”  (quoting from page 27 of the Leahy-Hatch bill).  An extensive critique of such methodology appears here.  Such critics argue that the “specific contribution” formulations are unreasonably vague and sell short the value of patented inventions.

The Kyl bill backs off of both of these reforms.

Patently O provides an excellent summary of the controversial Leahy-Hatch damages provisions,  summarizing his points as follows:

Jury verdicts are quite unpredictable, and because the royalty rules are so loose, damages appeals are rarely successful.

The new legislation appears to take on these problems in a way to (1) reduce the average damage award; (2) make damage awards more rational and predictable; and (3) make damages judgment more subject to appellate review.

The practical approach of the legislation is to create a “standard for calculating reasonable royalty” which require a determination of the “specific contribution over the prior art” to determine damages. Some courts already follow the rules set out in the proposed legislation. Thus, legislation advocates may refer to the damages reforms as simply a clarification that limits the actions of rogue courts.

So, is this the year that one of these two patent bills will be enacted?

I have long held the opinion that some type of patent reform is inevitable.  I represent clients in the on both sides of the issue, and there is no question that high tech has been hammered by lawsuits and that this is a major problem for the industry.  So, there is certainly a lot of support on the high tech side for some sort of reform.

As for whether or not it will happen this year, that is a tougher question.  While on one hand it seems incredible to think that in the midst of such economic turmoil a patent reform bill could be voted into law, on the other hand, the truth of the matter is that the economic turmoil could provide just the right climate for patent reform to actually be enacted.   If you question that premise, just take a look around at the other legislation on the table right now–regardless of your political persuasion, I think many Americans would agree that legislation is on the table right now and is getting voted through Congress that would never in normal times get through so easily.

Moreover, I think most commentators would agree that the reason we have been at standstill on patent reform is in large part due to the vigorous lobbying efforts by both the tech and life sciences industries.  I think there is some question given the economy that either industry will have the same level of funds to spend on patent reform lobbying efforts right now.  Biotech companies are running out of money and in some cases filing for bankruptcy.  Tech companies are doing mass layoffs in an attempt to try to stay solvent.  And pharma companies are out looking for bargain basement deals to fund.  Which of these parties will be able to really invest in patent reform lobbying this year?  Your guess is as good as mine.

The California Biotech Law Blog will continue to keep you posted on any patent reform developments as this bill moves through Congress.  This should be interesting. . . .


Federal Circuit Rules on Case Involving New USPTO Patent Rules

Written by on Monday, March 23rd, 2009

The Federal Circuit issued a long-awaited decision late last week in  the case of Tafas v. Doll. 

At issue in this case was whether or not the USPTO had the authority to adopt a set of rules in 2007, which were aimed at reducing the backlog of unexamined patent applications and also at addressing the USPTO’s difficult in examining applications that contained a large number of claims.  The Federal Circuit held in its decision that the rules at issue were procedural in nature, and that they therefore did fall in the scope of the USPTO’s rulemaking authorit y.  However, the Court found that one of the rules, Final Rule 78, conflicts with 35 U.S.C. Section 120 and is therefore invalid.  The final decision on the status of the other rules is left to the lower courts, to which this issue is remanded. 

What were the particular USPTO rules at issue in this case?

Final Rule 78: This rule provided that an applicant is entitled to file two continuation applications, but to file any additional applications, the applicant is required to make a showing as to why the amendment, argument, or evidence could not have been submitted in a prior continuation application.

Final Rule 114: This rule provided than an applicant is entitled to file on request for continued examination per application family, but to file any additional requests, the applicant is required to make a showing as to why the amendment, argument, or evidence could not have been submitted prior to the close of prosecution in the application.

Final Rule 75: This rule provided an applicant who submits either more than five independent claims or twenty-five total claims must provide the examiner with an examination support document.

Final Rule 265: This rule set forth the requirements for the examination support document, which were as follows: (i) conducting a preexamination prior art search, (ii) providing a list of the most relevant references, (iii) identifying which limitations are disclosed by each reference, (iv) explaining how each independent claim is patentable over the references, and (v) showing where in the specification each limitation is disclosed. 

The decision focused on an analysis by the Federal Circuit on whether the rulemaking exercised by the USPTO was substantive or procedural.  The Federal Circuit found that Congress did not intend to give the USPTO substantive rulemaking authority, but that procedural rulemaking was in the scope of the USPTO’s delegated authority, stating:

While we do not purport to set forth a definitive rule for distinguishing between substance and procedure in this case, we conclude that the Final Rules challenged in this case are procedural.  In essence, they govern the timing of and materials that must be submitted with patent applications.  The Final Rules may "alter the manner in which the parties present . . .  their viewpoints" to the USPTO, but they do not, on their face, " foreclose effective opportunity" to present patent applications for examination.  JEM, 22 F.3d at 326, 328.

As for why Rule 78 was held to be invalid, the Federal Circuit stated:

Rule 78 is invalid because it attempts to add an additional requirement–that the application not contain amendments, arguments, or evidence that could have been submitted earlier–that is foreclosed by the statute. . . .[T]he statute is clear and unambiguous with respect to this issue.

The commentary on this case has been mixed, but there seems to be an overall feeling among commentators that a more definitive decision on the issue would be desirable. 

The Patent Baristas expressed some exasperation at the result, stating:

Apparently, the U.S. Court of Appeals for the Federal Circuit could not bear to see an end to the drama between the U.S. Patent and Trademark Office and its customers over proposed patent application rules. . . . .Expect everyone to find something to dislike about this ruling. . . .Will Congress ever step up and fix this mess?

Peter Zura of The 271 Patent Blog wrote:

While many are hopeful for en banc review, the odds don’t seem in favor of it right now. 

Since I do not personally prosecute patents, I must admit that my reaction to this decision is a bit muted.  As a patent and copyright licensing attorney, my practice is only tangentially affected by USPTO rulemaking, so I just do not have a strong opinion on the issue. 

Having said this, I must say that if you read over the rules that were at the heart of this case, it is easy to see why the USPTO set off a controversy when it enacted these rules.  Should the USPTO be able to enact this type of rule, which certainly puts some serious constraints on patent filing?  I think that the Patent Baristas are right: perhaps Congress needs to take a look at this issue as it revisits the patent reform issue this session.


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Biosimilars Legislation Introduced in House

Written by on Friday, March 20th, 2009

Two biosimilars bills have just been introduced in the House, each of which would establish regulatory path for biosimilars to be approved.

The first bill, HR 1427, the Promoting Innovation and Access to Life Saving Medicine Act, was introduced on March 11, 2009 by Representatives Henry Waxman (D-CA), Frank Pallone (D-NJ), Nathan Deal (R-GA), and Jo Ann Emerson (R-MO).

A second bill was introduced the following week. H.R. 1548, the Pathway to BioSimilars Act, was introduced on March 17, 2009 by Representatives Anna Eshoo (D-CA), Jay Inslee (D-WA), and Joe Barton (R-TX).

What are the key elements of each of the bills?

According to the HR 1427 Bill Summary, highlights of HR 1427 include as follows:

  • FDA authority to approve biosimilars;
  • approval process will require showing that (1) there are no clinically meaningful differences between the two products and (2) that the two products are highly similar in molecular structure and share the same mechanisms of action;
  • biosimilar may establish that it is “interchangeable” with the original product, and the first such biosimilar able to make such a showing will receive six months of exclusive marketing;
  • an original product with a novel molecular structure is entitled to five years of exclusive marketing, and a modification of a previously approved product is entitled to three years of exclusive marketing.  These periods can be extended by up to one year if it can be established that the product can be used for a new disease or that it conducts pediatric studies; and
  • a new procedure is established to resolve patent disputes prior to approval of the biosimilar, and penalties are put in place for failure to timely litigate such disputes.

In contrast, highlights of HR 1548 are as follows:

  • establishes safey standards for establishing interchangeability;
  • establishes exclusivity for the first  product found to be “interchangeable”  for a period of 24 months after the product has either been deemed to be interechangeable or goes on sale;
  • the reference product receives 12 years exclusivity, and that period of exclusivity will extend to 14 years in the event that a new indication is found for the product in the first 8 years after licensure;
  • an additional exclusivity period is also established for pediatric studies and use of product;

Which bill has been more widely received by the biotech industry?

Well, the biotech industry group BIO has indicated its preference for the second bill, according to reports by Fierce Biotech.    Fierce Biotech explained as follows:

For biotech companies, the difference between five years and 12 years of exclusivity could amount to billions of dollars.

In contrast, BIO did not have such a positive opinion of the first bill, stating in a press release as follows:

Unfortunately, the legislation introduced today would take patients and our industry down the wrong path – a path that jeopardizes the continued development of new breakthrough therapies and potential cures for debilitating diseases such as multiple sclerosis, HIV/AIDS and Alzheimer’s. . . .

“This bill seeks to cut prices but instead cuts corners.  This proposal leads us off the map as we seek an effective, fair and safe pathway to a biosimilars market.

“The legislation introduced today does not strike the necessary balance for patients or the economy.   Any biosimilars legislation must ensure safe and effective biosimilars, promote the continued development of new therapies and cures, and ensure the benefits of additional competition among biologics through the entry of biosimilars.

The California Biotech Law Blog will continue to follow this issue as debate on each of the proposed bills continues.


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Congress Reaches Compromise to Extend SBIR

Written by on Monday, March 16th, 2009

The House and Senate have reached a compromise to extend SBIR through July 31, 2009, according to a report that broke late this evening by the SBIR Insider.

The SBIR Insider reports that the House will originate the bill and that the legislation will amend PL 110-235 (the current CR), which expires on March 20, 2009.

The compromise was announced on the same day that President Obama announced his new plan to assist small businesses.  The President’s plan is intended to unfreeze the credit markets for small businesses by providing additional liquidity and guarantees of small business loans, and to also reduce lending fees and provide tax breaks for small businesses.

As the California Biotech Law Blog previously reported, support for SBIR reauthorization has been waning in Congress and there were genuine concerns that Congress would let the SBIR expire without taking action to save it before the March 20th deadline.  Apparently there was a last minute change of heart, however, with the President’s announcement today of his plans to help small businesses.

Of course, this bill has not yet been signed, so it is not yet a done deal.  The California Biotech Law Blog will keep you posted as any news breaks on this effort.


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Gilead Sciences to Buy CV Therapeutics for $1.4 Billion

Written by on Sunday, March 15th, 2009

Gilead Sciences has agreed to buy Palo Alto-based CV Therapeutics for $1.4 billion dollars.

According to SF Gate, Gilead Sciences will pay $20 per share for CV Therapeutics, which reported $154.5 million in revenue in 2008.  Most of that revenue comes from Ranexa, a drug from chronic angina.

Is this a good deal for Gilead Sciences?

Well, SF Gate reported that a Citi investment research analyst backed the deal as making "strategic sense" but described the price as "very steep."

The Mercury News explained the purchase as part of an overall Gilead strategy to acquire other companies and product lines in order to bolster their pipeline, which has been historically focused on HIV drugs.  The Mercury News reported:

[T]he company primarily owes its commercial success to its HIV drugs — Viread, Emtriva, Truvada and Atripla — which won FDA approval respectively in 2001, 2003, 2004 and 2006.Those drugs dominate the HIV-drug market and provide the vast majority of Gilead’s revenue, which totaled $5.34 billion in 2008, a 26 percent increase from 2007. On the basis of those sales, Gilead is the world’s third-biggest biotech company, behind Amgen of Thousand Oaks and Genentech of South San Francisco, according to data compiled by investment bank Jefferies & Co.To stay profitable, Gilead has been eager to branch out.

Some commentators, however, have suggested that the real value to this deal for Gilead Sciences is not so much the CV Therapeutics pipeline as it is the CV Therapeutics sales force. 

The In Vivo Blog reported as follows:

[Gilead] has also built a budding cardiovascular franchise centered around its pulmonary arterial hypertension drug Letairis and a Phase III drug for resistant hypertension called daruesentan. There’s a strategic fit argument, therefore, when it comes to Gilead’s buying CVT: the Palo Alto-based biotech provides the company with some additional diversification in a bulked up cardiology franchise–CVT already markets Ranexa and Lexiscan–as well as a ready-made sales force to market the products.

According to In Vivo Blog, there is the potential, however, for one additional Gilead benefit to doing this deal: full ownership rights in Lexiscan may eventually revert to CV Therapeutics, pending the outcome of litigation with Astellas.  if Gilead were to obtain full rights in Lexiscan, In Vivo Blog anticipates that this would be a real boost to Gilead’s bottom line. 

All in all, the consensus seems to be that Gilead took a bit of a financial risk in going forward with this deal, but that the risk is a reasonable one, which is in line with Gilead’s overall business strategy.  In the end, however, only time will tell if the move truly pays off for Gilead.


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