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Press Releases > USPTO Round Table on Harmonization - Remarks, Nancy J. Linck

USPTO Round Table on Harmonization

Remarks
of
Nancy J. Linck
Sr. Vice President, General Counsel & Secretary

December 19, 2003


Guilford Pharmaceuticals is a small, publicly-held pharmaceutical company in Baltimore, Maryland. At present, it has approximately 230 employees. It has one commercial product, GLIADEL Wafer, used to treat brain cancer. The company's main focus is on products to treat neurological disorders, such as Parkinson's Disease, and hospital-based products. Guilford is not yet profitable and thus relies on investors and partners to support its operations.

Guilford holds more than 100 U.S. patents and more than 170 U.S. patent applications. It also has more than 100 foreign patents and more than 750 foreign applications corresponding to its U.S. cases. Because of the high cost of foreign filing and prosecution and the present economic environment, today Guilford limits its foreign filings to Europe, Canada, Japan, Australia and Mexico. To further control the cost of foreign protection, Guilford has been forced to abandon a number of foreign applications and not maintain issued foreign patents. Considering the large up-front investment, such action, while necessary, is reluctantly taken.

The high cost of obtaining foreign patents is a major stumbling block for Guilford. A large part of that cost is due to translation fees. Translation fees depend upon the size of an application. Thus, typically pharmaceutical companies are impacted more than companies in other fields because pharmaceutical cases are typically longer and more complex.

Translation fees can be postponed for 30 months by filing through the PCT, but, even then it is often difficult to know whether a drug product candidate will be successful. Thus, the choice is to pay the money (which ultimately may turn out to be wasted), or to forego foreign patent protection in many countries (which ultimately may cost the company substantial income).

Patent harmonization may not address the translation problem. Each country makes money on translations. Thus, as I understand it, countries are reluctant to give up the requirement for a separate translation, even when two countries speak the same language. Of course, if harmonization ultimately results in one patent being honored throughout the world (or at least the industrialized world), the translation problem will vanish. I do not believe this will happen in my lifetime, however.


Harmonization is key to addressing other major challenges. But, until the U.S. agrees to go to a first-to-file system, harmonization is not likely to be achieved. Thus, the U.S. should adopt a "first inventor to file system" as soon as possible.

Differences in substantive laws contribute to the cost of obtaining foreign patent protection. Today, to a large degree, a different foreign representative is necessary for each country. And oversight of foreign representatives requires the ability to understand the laws and practice in each country. Thus, a small company like Guilford must engage outside counsel to prosecute U.S. cases and to oversee foreign prosecution by a foreign representative. As a general rule, in order to oversee foreign prosecution, outside counsel will engage additional staff with special expertise. Harmonization would significantly decrease the complexity of foreign patent prosecution and thus lower the cost.

Lack of any grace period in many countries is also a problem. This is particularly true when a small company licenses technology from a university. Frequently university inventors, often professors, publish their invention before filing a patent application. The one year grace period in the U.S. permits the professor to file in the U.S. but foreign rights are usually lost. In prior harmonization discussions, most foreign countries were open to providing some type of a grace period, in exchange for the U.S. agreeing to adopt first to file. Thus, harmonization could address this issue.

The scope of protection available from country to country is also a problem, particularly in the pharmaceutical area. Some countries do not offer protection for certain drug-related products. For example, recently Canada held the Harvard oncomouse was not patentable subject matter, in spite of its patent protection in the U.S., Japan and Europe. Others require compulsory licensing and/or working of a patented product. These issues could be eliminated or at least minimized through harmonization.

Patent enforcement is a major problem in many, if not most, foreign countries. After expending large sums to obtain patent rights, those rights may well prove to be of little value. And, even in countries where litigation with a positive outcome is possible, the extent of damages available may not be sufficient to cover the cost of litigation. On the other hand, since enforcement may not be needed for many years, it's difficult to know the future value of patent rights in countries with enforcement problems today. Given the high cost of obtaining foreign rights, however, companies with limited financial resources typically forego obtaining such rights in countries with limited enforcement. In earlier harmonization discussions, enforcement and damages issues were included. Thus, harmonization could provide at least a partial solution to these problems.

Some have suggested that the U.S. government should subsidize small companies' foreign costs. I don't not believe that is a good solution. Given that the U.S. government does not even subsidize small companies' U.S. patent costs, any subsidy would likely fall on the shoulders of larger entities. Larger entities should not be required to provide further subsidies to small entities.

In has also been suggested that the PTO educate private companies and individuals about how to obtain foreign patent protection. I also oppose taking this action. The PTO is already overburdened with examining patent applications and performing other necessary tasks. Thus, it should not be asked to assume this additional responsibility. To the extent small entities and individuals want to learn about foreign practices, the materials are available already.

In sum, major hurdles to obtaining meaningful foreign patent rights are: (1) cost, particularly that due to translations; (2) differences in substantive laws, including lack of a grace period overseas; (3) lack of a meaningful scope of protection, particularly in the pharmaceutical area; (4) difficulty in enforcing patent rights; and (5) inability to obtain sufficient damages. Harmonization would at least lower many of these hurdles.


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