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The Passage of Patent Reform: Is this Really a Win for the Biotech Industry?

Written by on Sunday, September 25th, 2011

Now that President Obama signed the patent reform bill into law on Sept. 16, 2011, it is only fitting to ask whether the passage of this bill was a win for the biotech industry?

According to Roy Zwahlen, manager of intellectual property and technology transfer policy at BIO, the answer is a clear “yes.” He posted a blog posting on the BIO website, in which he articulated a number of reasons why he thought the bill was good for biotech:

1) Greater resources and operational flexibility for the PTO;
2) New and improved proceedings for patent quality review;
3) Will end the abuse of a loophole in false patent marking litigation;
4) Change America’s first to invent system to a first to file system;
5) Make it easier for inventors to file a patent; and
6) Eliminate the “best mode” requirement in patent litigation.

I thought Mr. Zwahlen’s apparent support for the patent reform bill was interesting in light of the industry he represents. Like many of my Bay Area counterparts, I have a completely different take on the issue.

While I am all in favor of making government agencies work better, as someone who regularly works with start-ups, I simply fail to see how changing our prior first to invent system in the U.S. to a first to file system could possibly have been good for the biotech industry. There is no question that the rest of the world has been using a first to file system and that our system was out of sync with the system adopted by the rest of the world. Yet, I would argue that our first to invent system was beneficial to cash-strapped start-ups and small businesses, which often do not have the budget when they first launch their businesses to immediately file patents to protect their inventions. As a lawyer working with start-ups, I frequently get the question “how much time do I have to file?” Particularly in the current times, when start-ups and small businesses are arguably more cash-strapped than they have ever been and investment money is so difficult to come by, patent prosecution costs are a huge concern. It’s hard to see how it can be in the best interests of a start-up to have to race to file a patent on an invention or to risk losing the opportunity to own the rights on the invention altogether.

Moreover, I can’t help but ask the question: in light of the challenges posed by the current economy, why in the world did Congress and the President choose now to impose yet another burden on start-ups and innovators?

Stepping back from this issue a bit, as a small business owner myself, I’ve been very vocal in my criticism over what I think is our country’s recent misguided financial support for so-called too-big-to-fail businesses at the peril of small businesses, which I would argue are the backbone of our country and of our country’s future. The average small business in this country (with a few notable exceptions such as the scandal-ridden and bankrupt Solyndra) has not been able to so much as pay a financial institution to loan it money in this environment. Yet, all kinds of taxpayer money has been handed out to large institutions since the recession started. This is not a criticism of any particular administration, as both the Bush and Obama administrations have taken this approach, as well as the past few Congresses. Moreover, while I’ve listened over and over again to the arguments in support of why these decisions have been made, I continue not to agree with them. My position is that the innovation we are all seeking to give our economy a much-needed boost is just not going to come from a large business, and that starving small businesses of capital and funding instead the largest businesses in this country is just a very misguided policy approach. So, this is the perspective I come from as a small business myself, whose business is largely comprised of working with start-ups. And that is the perspective from which I approach this issue.

The bottom line: I would argue that the decision to move to a first to file system in a bad economy is yet another example of enacting policies that hurt the little guy in tough times. And I think that it ultimately is bad for the biotech start-up out there who is trying to come up with cash to fund a patent program, or for the inventor who is trying to do something productive with his or her invention.

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Category: Biotech Industry News, Biotech Legislative Developments  |  Comments Off on The Passage of Patent Reform: Is this Really a Win for the Biotech Industry?

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