Comments from Paul C. Flattery



TELEPHONE:          (708)948-2000
FAX:                (708)948-3948


    The following comments are directed to the proposed amendment to
37 CFR Sec. 1.785(C) and to the PTO's construction of 35 USC Sec. 156
that the amendment is based upon.


    In my opinion, the PTO's construction and proposed rule is
contrary to the intent of the Patent Term Restoration Act. It
penalizes universities, research centers, small businesses and
individual inventors who do not ordinarily have the resources or are
even eligible to apply for FDA approval for their inventions. It
penalizes patent licensees who will have a shorter time in which to
recover their investment before others can practice the invention


    Under the Federal Food Drug and Cosmetic Act, an application for
approval of a new drug or medical device must be filed by a party who
intends to manufacture that drug or device.


    The PTO's construction of 35 USC Sec. 154 means that a patent
owner, such as a university or other small entity, who exploits its
inventions solely by granting licenses could never obtain a patent
term extension because it would never be the party who obtained the
FDA approval.


    The PTO's notice implies that term extension might be granted if
the licensee were an "agent" of the licensor. However, in nearly
every case the licensor - licensee relationship is not an agency
relationship. The university licensor does not and cannot exercise
control over the FDA application. The application is the sole
responsibility of the drug company licensee who will manufacture the
drug. Moreover, it is doubtful that licensors such as universities
would be willing to accept a characterization of "principal" because
of the impact it would have on the licensor's potential civil and
criminal liability for product defects or for failure of the
manufacturer to conform to FDA regulations.


    There is very little merit to the PTO's argument that patent term
extension should be denied to a licensor applicant because "the
patent owner has not lost any effective patent life since it never
invested time and resources necessary to obtain approval for
commercial marketing and use," 1169 OG 34. The purpose of patent term
restoration is to give back to the patent owner a portion of the
exclusionary rights that have been taken away by the time that is
needed for FDA approval process. That process delays entry of the
invention into the market place. Whether the patent owner is a
manufacturer or a licensor, that delay shortens the term over which
the patent's rights can be exploited, and the shorter term of
exclusivity makes it more difficult for the patent owner to find
licensees who have the resources to do the manufacturing and who are
willinq to risk time and money on the clinical trials that are needed
to obtain FDA approval.


    In reviewing patent term extension applications, the public
policy issue for the PTO to resolve is to determine whether the
regulatory process was diligently pursued by the party who was
responsible for obtaining FDA approval. If a patent owner lacks the
resources to become a manufacturer and arranges for commercialization
through a third party, that should be immaterial to the PTO's
determination, because it has no effect upon the time that elapses
between when the FDA application is filed, and when approval is


    Arguably there is an ambiguity in the statute which supports the
PTO construction. However, that ambiguity can be resolved by
construing the term "applicant" in the context that it is used in 35
USC Sec. 156(d)(I)(D) and 35 USC Sec. 156(d)(2)(B)(i) to mean the
applicant for regulatory approval, and not solely the applicant for
patent term extension.


    If the PTO persists in its view that, under the current statute,
patent term extension can be granted only if the patent owner was
also the applicant for regulatory approval, I strongly recommend that
the Commissioner of Patents and Trademarks initiate action to bring
this anomaly to the attention of Congress, with the recommendation
that remedial legislation be enacted.

Last Modified: march 1995