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For inventors and investors, here’s food for thought: Patent owners are increasingly headed to court — and losing when they get there. That’s what Finnegan, Henderson, Farabow, Garrett & Dunner concludes in a report on biotechnology patent trends, released at the BIO 2004 Annual International Convention, held in San Francisco in June. The law firm found that of 37 pharmaceutical and biotech cases appealed to the U.S. Court of Appeals for the Federal Circuit in 2003, lower courts favored accused infringers over patentees by a 2-1 margin. Since the data note only those cases pursued to appeal, they do not provide a full picture of patent litigation. All the same, the numbers give the report’s editor pause. “This seems to say that the public has a problem with patents, and I personally think that’s a dangerous thing,” says Arie Michelsohn, a partner in Finnegan’s Washington, D.C., office. The Federal Circuit affirmed the lower court decisions 56 percent of the time in biotech cases and 82 percent of the time in pharmaceutical disputes. The authors also found that the explosive growth in biotech patenting in the 1990s appears to be leveling off. Michelsohn says that from 1993 to 2001 biotech patents grew at eight times the rate of other types of patents. While companies are getting fewer biotech and pharmaceutical patents, they are going to court more often to fight over them. The Finnegan report says that in the last five years there has been a steady increase in litigation, particularly cases involving pharmaceuticals. The report does not provide statistics on the number of lawsuits filed. The current level of litigation may reflect the jump in patenting a few years ago, Michelsohn says, noting it can take up to 10 years from the time a patent issues until legal disputes arise. In another trend, the report notes that the private sector has been acquiring more biotech patents compared to universities and the U.S. government. In 2003, universities, institutes, and other nonprofits were assigned just 20 percent of nucleic acid patents, one of the primary types of biotech patents, the report says. Finnegan’s study got some attention at the BIO conference, which drew more than 16,000 attendees. The firm sponsored the intellectual property breakout sessions at the event, kicking off the first session with a panel discussion of its report. WHAT HAPPENED? Stephen Kunin, deputy commissioner for patent examination policy at the U.S. Patent and Trademark Office, was one of the panelists. He offered explanations for some of the trends. The decline in biotech patents is in part due to budget restrictions at the PTO, which prevented the agency from hiring more examiners, Kunin said. The sector also lost financial momentum after the technology boom went bust. “The shift in the economy and the drying up of some venture capital and the lessening in the amount of federal dollars through grants to universities” helped slow patent activity, said Kunin. These factors also influenced the shift in patent ownership from universities to the private sector, he said. The PTO put a further brake on biotech patenting when it issued guidelines in 2001 requiring applicants to provide more data on the genes they were seeking to patent. The guidelines “made it harder to get a patent, so fewer were issued,” said Kunin. Brenda Sandburg is a reporter with The Recorder , an American Lawyer Media newspaper. She can be reached at [email protected].

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