Save America’s Patent System

 

"The injector pen is not, by any stretch, a new invention. Drugmakers of every ilk have been using it for decades to deliver all sorts of crucial medications into the bloodstream. By adding this old technology to its insulin drug, Glargine, however, the pharmaceutical giant Sanofi was nonetheless able to secure additional patents for a lucrative product. The drug’s existing patents were expiring, and new ones enabled the company to maintain its monopoly — and the bounty that goes with it — much longer. But for the patients who depend on this life-sustaining drug? Too many are still struggling to afford it.

Sanofi is not alone, of course. Other drugmakers have patented scores of uninspiring tweaks to their existing products: making a tablet instead of a pill, changing the dose, adding a flavor. When it comes to protecting a drug monopoly, it seems no modification is too small.

Drugmakers for decades have argued that patents are essential to American innovation. For all that lip service to medical advancement, though, a recent investigation by the House Oversight Committee concluded that market share is more likely the point. Twelve of the drugs that Medicare spends the most on are protected by more than 600 patents in total, according to the committee. Many of those patents contain little that’s truly new. But the thickets they create have the potential to extend product monopolies for decades. In so doing, they promise to add billions to the nation’s soaring health care costs — and to pharmaceutical coffers.

And for all the hand-wringing over how to lower prescription drug costs in recent years, little has been said about the patent system or its many failings. Put simply: The United States Patent and Trademark Office is in dire need of reform.

The agency was created more than two centuries ago for the express purpose of protecting and promoting innovation. For most of the ensuing decades, it has stood as a beacon of American ingenuity. But critics say that by the time the office issued its 11 millionth patent last year, it had long since devolved into a backwater office that large corporations game, politicians ignore and average citizens are wholly excluded from. As a result, not only is legal trickery rewarded and the public’s interest overlooked, but also innovation — the very thing that patents were meant to foster — is undermined.

The trouble goes well beyond prescription drugs. “The patent office holds sway over huge swaths of the U.S. economy,” said Priti Krishtel, an attorney and co-founder of the Initiative for Medicines, Access and Knowledge, a nonprofit dedicated to patent system reform. “It has the power to shape markets, and just about every industry you can think of, from agriculture to technology, is impacted by its shortcomings.”

Given that import, it’s concerning that the agency spent the past year without a permanent director. With that post now filled — the Senate confirmed Kathi Vidal, a Silicon Valley patent attorney, this month — there’s a fresh opportunity to modernize and fortify the patent system. Ms. Vidal and Congress should seize that opportunity quickly. Here’s how they can start.

Enforce existing standards. The best way to ensure that patents spur innovation instead of thwarting it is to set a high standard for what deserves patent protection in the first place and then to honor it.

In the United States, that standard already exists:

 To secure a patent, an invention must be truly novel and nonobvious, it must be described in enough detail for a reasonably qualified person to build and use it, and it must actually work.

The problem is these rules are poorly enforced.

The pharmaceutical industry is a good example. Nearly 80 percent of the drugs associated with new patents between 2005 and 2015 were not new. But the issue is not confined to drugmakers. The Theranos debacle, to take just one other example, was touched off by officials who granted scores of patents for a device that had never been built and that turned out not to work. The company was able to secure those patents without disclosing almost any technical information about its product.

It will take comprehensive reform to repair these deficiencies, but one simple thing that officials can do right now is give patent examiners more time and resources to do their jobs.

Even the most complicated patent applications receive just 19 hours of scrutiny, on average, according to a Brookings Institution report. Some 70 percent of patent examiners have said that that’s not nearly enough time.

Capping the number of times an inventor can resubmit a rejected application would also help — in part by reducing the administrative burden and resulting backlog, as well as by removing the incentive for examiners to approve dubious applications just to get them out of the way.

Improve the process for challenging bad patents. Bad patents have steep costs. They gum up the wheels of innovation by making it harder for would-be inventors to proceed with their work. They strain budgets by preventing cheaper products from entering the market. And they leave honest inventors vulnerable to patent trolls — people who buy up weak patents not to create anything new or useful but to hold legitimate inventions ransom.

But the process of weeding these patents out once they’ve been granted remains fraught: It can take years and many thousands of dollars to challenge a bad patent in court, and even when the case seems obvious, success is never guaranteed.

The Patent Trial and Appeal Board, a panel of judges that reviews and decides on patent challenges without lengthy court battles, was meant to solve at least some of these problems. But it has been beset by criticism and legal challenges since its creation in 2012. It has also been undermined by Trump-era policies that allow the patent office to deny legitimate patent challenges for purely bureaucratic reasons. During the Trump administration, critics say, such discretionary denials allowed scores of dubious patents to stand.

Lawmakers should pass the Restoring the America Invents Act, a bill that would limit such discretionary denials, and Ms. Vidal should use her authority to curb this practice in the meantime. Officials should also consider broader fixes: Make it easier to challenge bad patents before they are granted. Force secondary pharmaceutical patents to undergo an automatic review by the appeal board. Rethink the legal structure for patent challenges.

“The appeals court tends to be an echo chamber,” said Matthew Lane, a patent lawyer with the public advocacy group InSight Public Affairs. “Because judges there tend to come from and listen to the patent bar.”

Eliminate potential conflicts of interest. Too many patent office directors have come from or gone to industry jobs within months of holding the federal post. This revolving door poses a real risk to the integrity of the patent office. The most recent example of that comes from the Trump administration appointee Andrei Iancu. During his tenure, the patent office used its discretionary powers to deny a challenge to a patent held by a company that his former law firm represented. He then returned to that firm as soon as his time in government was up.

The office’s finances also need to be reconfigured. The majority of its revenue comes from issuance fees, which are assessed only after a patent is granted. This means that the agency charged with serving as patent gatekeeper has a direct incentive to keep that gate as open as possible. It’s hard to say whether or how much patent examiners are influenced by this incentive, but some research has found that when patent office coffers ebb, patent approvals tend to flow.

Officials could solve this problem by revising the patent agency’s fee schedule, so that a majority is due when an application is filed. (Rebates and other supports would help ensure that smaller companies aren’t priced out.) The patent office could also develop a sliding scale system in which the largest and wealthiest patent filers subsidize the smallest and least endowed.

Collaborate with other agencies. There is a natural overlap of the interests and responsibilities of federal regulatory agencies like the Food and Drug Administration and the Environmental Protection Agency and the concerns of the patent office. But there are very few formal mechanisms and hardly any rules that compel those camps to work together. Companies of all types routinely exploit this gap, like children playing two disconnected parents against each other.

In 2014, for example, the E.P.A. discovered that some pesticide makers were routinely amplifying the novel effects of their latest products in patent applications, only to downplay the same effects to federal regulators. “They would tell the patent office that their pesticide deserved a patent because it was different than what was already out there,” said Charles Duan, a public interest attorney and a member of the patent office’s public advisory committee. (This is Mr. Duan’s own opinion; he was not speaking for the committee.) “Then they’d tell the E.P.A. that the same pesticide didn’t need extra regulatory clearance because it was no different than what was already out there.”

Experts have long warned that the same thing could easily be happening at the F.D.A.: Existing regulations allow medical device makers to sidestep burdensome regulatory approvals if their newer products are deemed similar to ones that already exist. Critics say that pharmaceutical companies also have a habit of describing certain drugmaking processes as common when talking to regulators and novel when applying for patent extensions. The key to breaking such habits is communication among agencies.

Ms. Vidal should make collaboration with regulatory agencies the rule. She should also work with the Federal Trade Commission, an agency whose job it is to ferret out exactly the kind of anticompetitive practices that the patent office is vulnerable to.

Let the public participate. For too much of its history, the patent office has treated inventors and companies as its main customers while all but ignoring the people whose lives are affected by patenting decisions. That needs to change. Officials can start by appointing more public representatives to the patent office’s public advisory committee. Right now, six of the committee’s nine members are attorneys who represent commercial clients or private interests; only one works in public interest.

Officials should also establish a public advocate service similar to the one that exists at the Internal Revenue Service and should make a concerted effort to ramp up their public outreach. “The patent system has gotten so complicated that it’s impossible for anyone who’s not an inventor or a lawyer to penetrate it,” said Mr. Duan.

The patent system affects everyone, though. It’s time the people in charge of it recognize that."