Copyright 1999 Federal News Service, Inc.
Federal News Service
JULY 1, 1999, THURSDAY
SECTION: IN THE NEWS
LENGTH:
1002 words
HEADLINE: PREPARED STATEMENT OF
THE
HONORABLE BRUCE A. LEHMAN
BEFORE THE HOUSE COMMITTEE ON THE
JUDICIARY
SUBCOMMITTEE ON COURTS AND INTELLECTUAL PROPERTY OF THE
SUBJECT - PATENT FAIRNESS ACT OF 1999 (H.R. 1598)
BODY:
Mr. Chairman,
Thank you for asking me
to appear before you as an expert witness this afternoon on the "Patent Fairness
Act of 1999," legislation that would transfer to the Patent and Trademark Office
the responsibility for holding hearings and making administrative determinations
concerning certain "pipeline drugs" that currently receive only a two year
extension (as opposed to a five year extension for similar drugs) under "The
Drug Price Competition and Patent Term Restoration Act of 1984" (commonly known
as the HatchWaxman Act).
For more than two decades, I have been keenly
interested and actively engaged in the public policy aspects of patent-specific
term restoration legislation. As you know, as counsel to the House Judiciary
Committee and its subcommittee on intellectual property during the 1970s and
early 1980s, I served as principal legal advisor in the early drafting stages of
the Hatch-Waxman Act. Even after leaving the Committee in 1983,
I remained very involved in these important legal and public policy issues,
testifying on these matters before the Senate Subcommittee on Patents,
Copyrights, and Trademarks in 1991.
During my recent term as Assistant
Secretary of Commerce and Commissioner of Patents and Trademarks (July 1993
through December 1998) under the Clinton Administration, I continued to give
considerable attention to the question of fairness or equity in drug patenting
and the related policy issue of private patent legislation.
Most recently,
as President and CEO of the International Intellectual Property Institute
(IIPI), a nonprofit organization dedicated to improving intellectual property
systems worldwide, I moderated an open public policy discussion, "Fairness in
Drag Patenting: The Role of Congress," June 10, 1999. While the subject of this
afternoon's hearing, H.R. 1598, is somewhat narrower in focus, the underlying
public policy issues are of great importance to the scientific and
pharmaceutical communities, courts, federal administrative agencies, Congress,
and the American public.
As I understand these issues, the task currently
facing Congress is to find a way to regularize the process of enacting
patent-specific term restoration legislation. Central to this task is to develop
a system that is fair to the public and patent holders. Certainly, to shorten
arbitrarily effective patent term for one of the industries whose innovations
have the greatest public benefits - the pharmaceutical industry - is unfair, and
discourages investment in those industries.
A brief comparison of the
ability of American innovation-based companies to attract funding in U.S.
capital markets will underscore my point. At the present time, innovators in the
computer components and software industries receive full twenty (20) year patent
protection for inventions which require far less capital and involve far less
risk than is the case in pharmaceutical innovation. Since most patents issue
after about two years' examining time, these innovators are receiving 18 years
of effective patent exclusivity. Is it no wonder that companies producing very
important, but far from life saving or disease-curing products, attract market
value and investment capital on a scale an order of magnitude beyond that of
pharmaceutical and biotech companies.9
Clearly, the current approach is not
fair. Since the enactment of the HatchWaxman Act in 1984 -- which included a
shorter, two-year restoration for certain drugs already in the FDA approval
process based on the assumption that these drags would be approved quickly --
Congress on seven occasions has enacted legislation to address particular
FDA-regulated products where the application of the two- year restoration period
would be unfair because of lengthy delays in the regulatory approval process
that were unanticipated at the time the Hatch-Waxman was passed
As I testified before the Senate Subcommittee on Patents, Copyrights, and
Trademarks in 1991, the root problem stems from basic weaknesses in the
HatchWaxman Act, which was evident even at the time of enactment. For example,
the twoyear restoration period for certain pipeline drugs was itself arbitrary,
apparently the result of political compromise rather than an informed
understanding of the complexities of the FDA review and approval process and the
lengthy delays that might arise as a drug works its way through that complex
process. Similarly, the time limits on the FDA testing phase for certain
pipeline drags were arbitrary rather than reasoned.
Related to, but distinct
from, the merits of specific claims for legislative term restoration for
particular FDA-regulated products, is the larger public policy question of how
Congress might go about regularizing the process of granting relief in cases
where the application of the general two-year rule in the
Hatch-Waxman Act would be unfair or inequitable. In 1991, I
testified that a fair and impartial method of considering private claims for
patent term extensions must be found to prevent the subcommittee from being
overcome with a deluge of similar requests and to ensure that all who seek
private relief are treated with uniform fairness. That need is as great today as
it was when I last testified almost a decade ago.
What alternatives are
available to Congress? In my 1991 testimony, I identified a number of approaches
for obtaining independent review and fact determination in these cases,
including referral of the bill to the Commissioner of Patents and Trademarks,
the alternative adopted in H.R. 1598. After serving as Commissioner of Patents
and Trademarks for almost five years, I remain convinced that such an approach
constitutes sound public policy. For that reason alone, and without the time
this afternoon to undertake a detailed discussion of this legislation, I can
strongly endorse the "Patent Fairness Act of 1999." H.R. 1598 is a sound
approach for achieving fairness and predictability in America's intellectual
property system.
END
LOAD-DATE: July 2, 1999
