Editor’s note: Of the many important issues addressed by entrepreneurs and researchers today is the protection of intellectual capital. IP legislation and debate are among the hottest topics on Capitol Hill these days.

Attorneys from Alston & Bird recently moderated a panel discussion about those issues at the Biotechnology Industry Organization’s conference, and Local Tech Wire requested that the firm provide proceedings from that discussion to give its readers insight into the IP debate as it rages in Congress. What follows is the first of a three-part presentation of that panel discussion, edited slightly for length. It was chaired by Murray Spruill and Ed Ergenzinger.

Murray Spruill: Samuel Clemens, better known as Mark Twain, once wrote, “a country without a patent office and good patent laws [is] just a crab, and [can’t] travel any way but sideways or backways.” He knew what he was talking about. A staunch advocate of intellectual property laws, including, obviously, copyright laws, Twain received three patents in his lifetime. Since I know you’re probably wondering what they were for, I won’t keep you in suspense. The first was to adjustable and detachable straps for garments in order to do away with suspenders, which he considered uncomfortable. The other two were for a self-pasting scrapbook, and a history trivia game.
Over 130 years later, Twain’s words still ring true. America’s continued global technology leadership is in large part a result of having a patent system that is admired throughout the world. It is well known that patents have played a central role in our industrial and economic history since the founding of our Nation. Our system is rooted in the Constitutional balance providing inventors incentives to make investments and to take chances in order to make discoveries for the public’s enjoyment.
The Framers could scarcely have imagined the types of technological advances being discussed at this convention. It is a testament to their genius that our system allows for an ebb and flow between the malleability needed to adapt to the special demands of cutting edge research areas such as biotechnology and the certainty needed by both the public and patent holders to understand their respective rights and obligations.
We’re here today to discuss how we can continue to strengthen the United States patent system. I am honored to be able to present to you such a distinguished panel to discuss current patent legislation and initiatives that will impact the biotechnology industry.
To my left is Congressman Lamar Smith of Texas, Chairman of the House Subcommittee on Courts, the Internet, and Intellectual Property. Chairman Smith has represented the residents of the 21st Congressional District since 1987. In the most recent election, he received the highest number of votes of any Texas congressional candidate with major party opposition.
The respected magazine National Journal has named Chairman Smith one of the 100 most influential people in Washington, D.C. In 2002, the Business Software Alliance honored Chairman Smith with its Cyber Champion Award for his leadership on high-tech issues.
Chairman Smith’s Subcommittee has jurisdiction over digital rights, copyright and patent protections, piracy, secure networks, peer-to-peer networks, fair use standards, litigation management, cyber-security, state sovereign immunity, patent and trademark office reform and e-commerce. He also sits on the Immigration Subcommittee of the House Judiciary Committee and the House Science Committee. He is second in seniority and continues as a member of the Science Committee’s Space and Research Subcommittees.
In addition, he was recently selected by the Speaker of the House to be a member of the new Select Committee on Homeland Security —
Representative Lamar Smith: It is well-known that patents have played a central role in our industrial and economic history since Thomas Jefferson served as the first patent commissioner.
In fact, one of my predecessors, Representative Benjamin Butterworth of Ohio, Chairman of the House Committee on Patents in 1891, offered this critique of intellectual property and its contributions to the growth and development of the United States:
“… Neither the most profound thinker nor the wildest dreamer could have anticipated such marvelous changes and improvements as have been wrought out under our Patent System….If some member of the [Constitutional Convention], endowed with the gift of prophesy, had arisen in his place, and in plain speech disclosed what their children would behold at the close of the first century as a result of the power conferred upon Congress, … his associates would have felt an anxious concern in regard to his mental health.”
This is what Chairman Butterworth said about the value of our patent system
more than 100 years ago. What would he say today, surrounded as we are by computers, high-definition television sets, cell phones, and other patented inventions?
The jury is in and the verdict is unanimous: patents are critical to the economic health of our nation and the quality of life of our citizens. A corollary of this truth is that an efficient system by which we approve patents is crucial. And that is one of the reasons why we are here today — to discuss ways to strengthen the operations of the U.S. Patent and Trademark Office.
Since becoming chairman of the Intellectual Property Subcommittee I have been committed to PTO reform that leads to job creation, a higher standard of living, and a consuming public that will benefit from patented products that reach the market through an efficient and effective process.
PTO reform is critical to the health of high technology industries and our economy. Americans lead the world in the production and export of intellectual property and related goods and services. Time is money in the intellectual property world. If the PTO cannot issue quality patents and trademarks in a timely manner, then inventors and trademark filers are the losers.
Last year the Intellectual Property Subcommittee conducted an oversight hearing on the original PTO Plan, which led to informal discussions between the agency and the major user groups.
The talks were productive and we now have a revised Strategic Plan that incorporates many of the constructive suggestions offered by the user groups.
The Subcommittee recently passed legislation that implements the PTO’s revised Plan to transform the agency’s operations. It incorporates a fee schedule that generates an additional $200 million in revenue. This is the first step toward improving patent and trademark quality while reducing application backlogs at the agency.
Of course, the patent fees paid by the biotechnology industry impact their emerging technologies. Since the industry files a more complicated application, one biotechnology patent application may require more than one fee. We want to ensure the revenue is used wisely. —
Everyone in this room is aware of the ongoing appropriations practice of using a portion of PTO fee revenue to subsidize other programs unconnected to the agency. None of us like it, but progress has been made in the past two or three years in curtailing fee diversion.
We all want an efficient and productive PTO that has the resources it needs to serve the inventors and trademark holders of the United States.
The fee increase is a major legislative priority, but we must also consider what the extra revenue buys. We know about out-sourcing the search function at PTO; ramping-up paperless operations at the agency; and overhauling the certification of employees. My Subcommittee is in the process of evaluating these and the other proposals that are part of the revised Plan.
One thing to remember: reform does not happen without your active participation in the legislative process. I want to encourage everyone here to contact members of Congress and, especially, the leadership, with your concerns.
The individual inventors and companies that pay PTO fees can have influence. All that’s required is the initiative to take it. —
(Recently) the subcommittee considered the “Intellectual Property Protection Restoration Act of 2003,” which addresses the problem of state infringement on intellectual property.
In 1790, Congress passed the first intellectual property protection laws. As a result, the intellectual property of the United States is the envy of the world. It is one of the top U.S. exports, generates billions of dollars in revenue, creates jobs, and enriches the lives of the American people.
Since the enactment of these laws, it was understood that the states were subject to suit for intellectual property infringement in federal court, notwithstanding the sovereign immunity states enjoy under the Eleventh Amendment.
Based on its Article I “Commerce Clause” powers, Congress specifically expressed its intent to abrogate the Eleventh Amendment immunity by enacting three statutes subjecting the states to suit in federal court for damages resulting from state infringement of patents, trademarks, and copyrights. However, in 1999, the Supreme Court issued three rulings that invalidated these statutes.
These decisions adversely impact intellectual property owners and thousands employed in the industry. States now have the ability to infringe copyrights, patents, and trademarks with impunity.
And states are increasingly using this as a defense to infringement claims. This is particularly frustrating for intellectual property owners because states are also owners of copyrights, patents, and trademarks, and can sue for infringement of their intellectual property.
In one example of this disturbing trend, hundreds of pirated software programs were found on computers owned by a Maryland state hospital. Damages ranged from $250,000 to $750,000. Although the hospital initially engaged in settlement negotiations, it ultimately shielded itself from liability by declaring sovereign immunity. This alarming behavior is permitted under the Supreme Court’s decisions, a result that clearly conflicts with the spirit of Article I, section 8, of the Constitution.
Given the Supreme Court’s response to previous congressional attempts to resolve this problem, Congress, affected government agencies, and the intellectual property community have carefully considered possible solutions that would protect the rights of all intellectual property owners while passing Constitutional muster.
The Intellectual Property Protection Restoration Act is a balanced solution to the growing problem of state infringement of intellectual property. It prevents the award of damages for infringement of intellectual property owned by a state if that state has not waived its immunity under the Eleventh Amendment for infringement of intellectual property.
This approach is fair: if states are going to take advantage of intellectual property laws for their own benefit, they should also be willing to enforce the laws for the benefit of others. These are two sides of the same patented coin.
The IP subcommittee recently held a hearing on legislation that encourages cooperative research and development projects involving American universities, public institutions and private companies.
Congress should act to promote innovation and communication among researchers, and streamline patent application approval.
The stunning success scientists achieved in rapidly identifying the cause of severe acute respiratory syndrome (SARS) is a recent example of how unprecedented collaboration among government and private labs can save lives and protect the public.
The reaction to the SARS virus demonstrates that in an increasingly connected world, it is necessary for our public and private organizations to adapt to new challenges and develop new ways of doing business.
Understanding this, Congress enacted a series of Patent Law Amendments in 1984. One of these amendments created a “safe harbor” for inventions that were the product of a collaboration involving co-inventors within a single company.
The amendment changed the U.S. patent system to reflect the manner in which companies actually conduct their internal research activities.
The legislative history makes clear that Congress intended to discourage individuals from attempting to use nonpublic information, also known as “secret prior art,” to challenge the issuance or validity of a patent. This applies to co-inventors who voluntarily exchange confidential information concerning a prior invention developed by one or more of the research partners.
What the legislative history leaves unclear are the arguments for and against expanding the secret prior art exception to collaborations involving researchers at more than one organization.
Unlike 1984, today’s biotech, pharmaceutical, and nano-technology companies conduct much of their research with partners such as universities or other public or private organizations.
Achieving medical breakthroughs is neither simple nor inexpensive. Solving any complex problem requires the integration of numerous disciplines and the involvement of scientists, engineers, and researchers who are located at multiple organizations.
Anything that discourages open communication or causes a “chilling” effect among researchers is likely to prevent or delay this vital research. Critics of the Federal Circuits’ 1997 Oddzon decision believe its’ effect has been negative.
Recognizing the need to adapt the patent law to this new research paradigm, the Ranking Member on my subcommittee, Congressman Howard Berman, and I introduced the Cooperative Research and Technology Enhancement (CREATE) Act of 2003, along with nine cosponsors.
The CREATE Act’s purposes are:

  • To promote communication among “team researchers” located at multiple organizations.
  • To discourage those who would use the discovery process to impede co-inventors who voluntarily collaborated on research resulting in a patentable invention.
  • To increase public knowledge.
  • And to accelerate the commercial availability of new inventions.

The CREATE Act benefits all industries that engage in collaborative and cooperative research involving more than one organization. The classic example is biotechnology since it has a culture and a business model that is multi-disciplinary.
I’ve highlighted what the CREATE ACT does, but I want to emphasize why this legislation is needed.
When a biotechnology company decides to partner with a university, we want to prevent that partnership from being harassed by some third party. Biotech investment dollars dedicated to research should and must be used in an efficient and effective way without the possibility of a lawsuit or other grievance interrupting it.
We want to establish a secure professional environment for research. Research is seldom conducted by an isolated individual or an isolated lab.
The three issues I’ve mentioned today — PTO reform, sovereign immunity and collaborative research — infuse American life. They are critical to a growing economy that creates jobs and a research community that strives for breakthrough discoveries.
Let’s remember that the wisdom of our Country’s founders regarding intellectual property issues still rings true today. The authors of the Constitution understood that the incentive to create would greatly benefit the public.
Part Two: Comments from Michael Kirk, executive director of the American Intellectual Property Law Association.