Op-Ed: Congress Needs to Fix Flaw in Laws Governing Life-Sciences Patents

Dean J. Paranicas | June 30, 2015 | Opinion
Major loophole in intellectual property protections threatens to stifle advances in life-saving medicines and treatments

Dean J. Paranicas, president and chief executive officer, HealthCare Institute of New Jersey
New Jersey has one of the highest concentrations of life-sciences companies in the world. Many of them make New Jersey their global, North American or U.S. headquarters. They employ over 320,000 people in our state and support $87 billion in New Jersey economic activity annually.

These companies work every day on the next generation of life-saving treatments and cures for some of the world’s most dreaded diseases. They depend on a strong, robust patent system to protect the intellectual property needed to discover these treatments and cures.

In 2011, Congress passed, with bipartisan support, the America Invents Act (AIA), which was intended to protect intellectual property more fully and curb frivolous litigation. However, the implementation of specific provisions of the AIA has unintentionally — and unfairly — put patent holders at a disadvantage.

Due to a standard of review that favors patent challengers, the Patent Trial and Appeal Board (PTAB) has become a preferred forum for invalidating patents – even those previously upheld by federal courts – in so-called “post-grant” proceedings. This encourages patent challenges that would not survive in federal court.

Not only could this weaken patent rights and stifle innovation, but such challenges also could become part of an investment strategy employed to adversely impact shareholder value in targeted companies.

Focused efforts to curb abusive patent challenges are clearly needed, provided they do not undermine the ability of legitimate patent holders to enforce their rights. Restoring balance in post-grant proceedings at the PTAB is critical to this effort.

To make sure PTAB proceedings are fair to both patent owners and challengers, and to prevent repetitive challenges under different standards, the PTAB should apply the same “clear and convincing” evidentiary standard used in federal courts, rather than the lesser “preponderance of the evidence” standard the PTAB currently applies.

Congress also should restrict the institution of “inter partes” (IPR) and post-grant (PGR) review proceedings to avoid revisiting patents upheld in court or in previous IPR/PGRs (thus avoiding serial attacks on patents).

Innovation is the lifeblood of New Jersey’s economy, and it drives the medical advances necessary to benefit patients around the world. Life-sciences companies support efforts to curb the abusive practices of patent trolls, and we will work with Congress to craft legislation that strikes the right balance without undermining the ability of legitimate patent holders to enforce their rights.