GATT's Glitch for Biotechnology Industry

Congress wants to 'fast track' a decision on the trade pact, and part of it could erode the U.S. patent system

The coming rush in Congress to pass the General Agreement on Tariffs and Trade could leave behind weakened patent protection for biotechnology and other key U.S. industries.

As with all patent law, the reasons why are neither simple nor without controversy.

The White House is putting the finishing touches on legislation to implement "fast track" consideration of the long-negotiated treaty. Buried deep within is a measure to change the term of U.S. patents from the current 17 years from issuance to 20 years from application filing.

It may seem minor, but observers say the change could be catastrophic because many patent terms will be effectively eroded. For example, biotech companies can wait up to 14 years for patents to come through potential mazes of appeals and interferences.

Such a case would leave only six years of patent protection under the new system.

"It is entirely possible we will come out of GATT with a reduced patent term," said Chuck Ludlam of the Biotechnology Industry Organization in Washington, D.C.

Software and pharmaceutical developers are similarly susceptible because of long patent-approval times.

For the software industry, patents are less of an issue, though about 10 percent of all software is patented. The rest is copyrighted, said Mark Traphagen of the Software Publishers Association.

The danger is heightened because there is a limited opportunity to modify fast-track legislation before it is taken up in the GATT and undergoes a single "yea" or "nay" vote in Congress.

At the root of the problem are disagreements on exactly how long it takes to win a U.S. patent. Michael Kirk, deputy commissioner of the Patent and Trademark Office, says patents take an average of 26 months to issue. However, opponents say that does not include re-filings, which often occur and can take years to process.

"That effectively means that all administrative delay will detract from the term of the patent," said inventor Gil Hyatt, who holds a patent for the microprocessor.

Under the new system, the onus will fall on inventors to quickly move their applications along. "It puts the burden on the applicant to process his application diligently," Kirk said.

Rep. Dana Rohrabacher, R-Calif., takes exception to that: "Patent prosecution delays are under the control of the Patent Office, not the applicant," he said.

By his reckoning, the most an applicant can delay a patent is 21 months through various appeals.

Rohrabacher has waded into the debate firmly on the side of small business and inventors and says the Clinton administration is trying to sneak the new patent term into law without proper public comment.

"It's being done in a very underhanded way," Rohrabacher said. "99 percent of the public has no idea that major changes in patent law are included in the GATT legislation."

He also contends, as do other critics of the measure, that the GATT actually requires only a minimum of 20 years from filing, not a maximum.

Why the change? There is heavy international pressure on the U.S. to adopt the new patent term to harmonize with the rest of the world. "There are a lot of good reasons why the 20-year term is a good way to go," said Kirk.

But opponents, like D.C. -based patent attorney Don Banner, say the change is a concession won by Japan in an agreement with Patent Commissioner Bruce Lehman last January. In that agreement, the U.S. got the right to file for Japanese patents in English in return.

"There had to be some kind of quid-pro-quo," said Lehman in a recent interview. He also admitted that due to bureaucratic delays, "A lot of people, in effect will lose on their patent terms," but he said he doubted any specific industry would be hurt.

Many industries, in fact, will probably be glad. The new measure will severely limit the number of so-called "submarine" patents -- those which take decades to pend. When such patents finally surface, affected companies unhappily find they must pay sizeable royalties on technology thought to be public domain.

Sources within the U.S. Trade Representative's office say the measure has been widely discussed and has broad support in industry, bar associations and on Capitol Hill.

Patent attorney Stan Fisher agrees, and says improvements in patent-approval time make the issue generally moot, "I don't think it makes that much difference anymore," he said.

According to the trade representative's office, the new language will not mandate any public disclosure of patent applications, as had been rumored.

The fast-track legislation is expected mid-month and will be sent to congressional committees for review.

Reps. Rohrabacher and Helen Bentley, R-Md., are anticipating its arrival and will seek to redefine the new patent term as 17 years from issuance, or 20 years from filing -- whichever is longer.

In a June 27 letter to U.S. Trade representative Mickey Kantor, the Biotechnology Industry Organization suggested the same modification.


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