New Patent Law Could Change How Academics Commercialize Discoveries

The first major overhaul of the U.S. patent system in nearly 60 years is about to become law. The U.S. Senate last night voted 89-9 to approve the American Invents Act (H.R. 1249), ending a 6-year battle over how best to reform a patent system beset by increasing delays and costly litigation. Although many major universities and large research-driven companies lobbied for the extensive reform package, some analysts worry it could complicate efforts by academic scientists and smaller start-up companies to commercialize their discoveries.

The legislation, which the House of Representatives approved overwhelmingly in March, "will enable U.S. inventors at universities and elsewhere to compete more effectively in the global marketplace," said a statement from six major university groups, including the Association of American Universities, Association of American Medical Colleges, and the Association of University Technology Managers (AUTM). They predict it will "improve patent quality and reduce patent litigation costs."

But others are skeptical. The changes will favor large companies and "are going to increase the costs of obtaining, maintaining, and enforcing patents for universities and individual inventors," predicts Carl Gulbrandsen, managing director of the Wisconsin Alumni Research Foundation (WARF) in Madison, which helps commercialize inventions from the University of Wisconsin. And some provisions could end up dampening scientific collaboration and "increasing secrecy," he fears.

The biggest change in the new legislation will bring the U.S. patent process into line with most other industrialized nations. Those nations have "first to file" patent systems, which issue patents to the first inventor to file a valid application. The United States, however, has had a "first to invent" system, which awards patents to inventors who can prove they were the first to make a discovery, regardless of when they filed their application. Critics argued that first-to-invent has promoted lengthy delays in approving patents and wasteful litigation, and successfully pressed Congress to shift to first to file.

University officials generally supported the shift, but they also wanted to protect academic researchers from being left behind in the race to the patent office. They argued successfully for language that gives researchers a year after disclosing their discovery, say, in a publication, to file for a patent. Universities also retain the ability to file "provisional" patent applications that protect a discovery while officials decide whether it is worth the cost of pursuing a full-blown patent. Typically, universities often wait to file a full application until they have found an investor willing to pay patenting costs, which can reach tens of thousands of dollars.

Gulbrandsen, however, is skeptical that such "safe harbor" language will protect researchers and universities worried about intellectual property rights. Any U.S. researcher seeking a foreign patent still will have to be the first to file, he says, since other nations don't give inventors the 1-year grace period. And he believes the first to file rule could create new pressure on both scientists and administrators seeking U.S. patents to stay mum about promising discoveries, to make sure they aren't "scooped" by competitors or even collaborators.

Gulbrandsen also foresees trouble for universities from language that expands so-called "prior user defenses." Those come into play if it turns out a company is already using a newly patented technology under trade secret protections. The new law is intended to prevent the "prior user" from being forced to pay royalties to the owner of the new patent--potentially decreasing the value of the patent.

But the real impact of that change, and the rest of the bill, won't be clear for many years, predict Gulbrandsen and other analysts. "It's the classic case of the devil being in the details" of how the law is implemented and interpreted by the courts, says Robin Rasor, AUTM's president and director of licensing at the University of Michigan, Ann Arbor. She's hopeful that "it won't cause big changes in how we operate."

Other provisions that could affect the scientific community include language meant to strengthen a ban on any patents making "a claim directed to or encompassing a human organism." The ban was already part of the Patent and Trademark Office's administrative policy, and attached to annual appropriations bills that fund the agency. Congress will no longer have to renew it each year. But the new act remains vague on exactly what constitutes a "human organism."

Another provision requires the patent office to deliver a study next year on how to ensure the availability of "confirming" genetic tests. Those tests are used to confirm diagnoses produced by other, patented tests. The study was prompted by fears that companies holding patents for the initial diagnostic tools could block the creation of confirming tests by others, or force their owners to pay royalties on the confirming tests.

President Barack Obama is expected to sign the act into law later this month. Some provisions will go into effect immediately, others will phase in over the next 2 years.