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Patent Legislation to Watch in 2020

Several patent law issues will likely get attention from Congress this year, including efforts to reduce drug prices by limiting pharmaceutical patents, overhaul the law on patent eligibility and fix a constitutional flaw in the Patent Trial and Appeal Board. Here's what to watch.

Drug Prices

Lawmakers introduced a slew of bills in 2019 aimed at curbing drug prices, and many of them included components that would alter patent law, such as by restricting the number of patents that could cover any one drug. Attorneys expect those efforts to get renewed attention in the coming year, since actions to cut drug prices may be viewed as a way to attract votes.

"I would especially think that given that it's an election year, this is going to get even more interest coming up," said Matthew Rizzolo of Ropes & Gray LLP. "We've seen multiple Democratic candidates really emphasize drug prices and specifically mention patents as part of the issue there."

The numerous measure floated so far include one aimed at cutting down the number of patents that are issued on the same drug, and one by several Democratic senators running for president that would create an agency with the power to revoke patents on drugs that are deemed to be priced too high.

"Although there is a wide variety of proposed legislation, a core theme from the proponents is to try to reduce the number of patents that cover a product and reduce the ability of patent holders to enforce those patents,” said Ellisen Turner of Kirkland & Ellis LLP.

Proponents say setting new limits on patents would allow lower-priced generic competition to enter the market more quickly. The branded drug industry objects that weakening patents would hinder development of new pharmaceuticals by making it harder to recoup investments.

"The high price of drugs is a problem in this country, but at the same time we don't want to deter further innovation," said Tania Shapiro-Barr of Dykema Gossett PLLC. "It's a balance between that and keeping prices reasonable. We've got to find a balance, and I think that's a tough job."

The bills that have been introduced to date appear to need work in order to attract support and may not work as the proponents predict, said Courtenay Brinckerhoff of Foley & Lardner LLP.

"I don't necessarily think they would achieve the intended purpose and would have a lot of of unintended consequences," she said. "Once people who understand the nitty gritty details of the patent system look at them, some of those will fall apart."

The sheer volume of bills that have been introduced on this topic speaks to a great interest in Congress in doing something to control what they view as high drug prices, Turner said. As lawmakers debate the issue, the proposals may be recalibrated to make them more politically palatable, but some action by Congress is likely, he said.

"Some focus needs to be brought to bear, but certainly this is not going to completely peter out. To satisfy groups interested in this issue, something will have to be done," he said. "So I do think that something will come of these various proposals."

Patent Eligibility

Many observers thought 2019 might have been the year that Congress took action to overhaul the law on what types of inventions are eligible for patents, but after numerous hearings and several draft proposals, the year ended with no bills being introduced on the topic.

It's not clear whether that effort will be renewed in the coming year, even though patent eligibility is an area "where there is a pretty broad view that something needs to be done for consistency and clarity," Turner said.

Recent U.S. Supreme Court decisions like Mayo and Alice  restricted the type of inventions that are eligible for patents, and critics of those rulings have long complained that they have resulted in too many patents being found invalid and vague, amorphous standards on what can be patented.

Sens. Thom Tillis, R-N.C., and Chris Coons, D-Del., leaders of the Senate Judiciary Committee's intellectual property subcommittee, met for months with industry groups to draft legislation to overhaul patent eligibility law. They said the goal was to effectively overturn Mayo and Alice and make more inventions patent-eligible.

After a series of hearings in June, during which witnesses raised some criticisms of their approach, the lawmakers said they planned to introduce a bill after the Fourth of July, yet no legislation ever materialized.

"As much as we really need something for patent eligibility, I think there's still too much separation between people with different views. I think that's reflected in the absence of revised legislation since the main hearings," Brinckerhoff said.

Crafting language that would clarify patent eligibility standards, and doing so in a way that could be embraced by the often-feuding pharmaceutical and high-tech industries, appears to have been tougher than proponents expected.

The effort "just completely lost all momentum and got derailed because stakeholders couldn't come to any kind of compromise, and there's a lot of frustration there," said Scott McKeown of Ropes & Gray LLP.

While there is a chance the bill could end up being introduced in 2020, making such a substantial change to a fundamental part of patent law could be a tough sell in an election year.

The effort could also be hindered if the Supreme Court were to take up a case on patent eligibility, since many are pending, and the U.S. Solicitor General suggested in December that the high court take one dealing with diagnostic patents.

"That could derail legislation, where people say, wait a minute, it looks like the Supreme Court is actually going to address this, let's give them another chance," Turner said.

Regardless of the appetite in Congress to address patent eligibility, many attorneys said legislation on the issue may be the only way to clear up confusion caused by the Supreme Court's rulings.

"This seems to have gotten delayed but I'm hoping that something is going to be done soon," Shapiro-Barr said. "It's certainly something needed as part of an effort by Congress to reform the patent system. A lot of people are watching this and waiting for what's going to happen."

PTAB Constitutionality

The Federal Circuit shook up the patent world on Halloween night, when it issued a decision that the structure of the PTAB is unconstitutional. Congress has already held one hearing about possible legislation in response to the ruling, and it appears likely that such a move could have enough support to become law.

The appeals court held that the appointment of PTAB judges flouted the Constitution's appointments clause because they don't have enough oversight from the director of the U.S. Patent and Trademark Office. The ruling purported to solve that problem by stripping out civil protections for the judges and letting the director fire them without cause, which the court said would convey adequate supervision.

However, some members of Congress said they are worried that approach undermines the board's ability to make impartial decisions, since judges now have to worry they'll be fired for issuing a ruling their boss doesn't like.

Members of a House panel proposed amending the law to restore job protections for the judges and instead allow the director to review the board's decisions, which they said would provide the oversight required by the Constitution. Such a change would be relatively uncontroversial and would cut off what could be protracted further litigation on the issue, attorneys say.

"It seems as though Congress is interested and feels that there's support to simply tweak the statute to solve this problem," McKeown said. "That could moot a lot of this debate before it gets to the Supreme Court."

Stronger Patents Act

This ambitious bill would make numerous changes aimed at bolstering patent owners, including making it easier to win injunctions when infringement is found and more difficult for the Patent Trial and Appeal Board to invalidate patents. The entire measure is unlikely to become law, but some of its less controversial parts could get support as separate legislation, attorneys say.

"I still don't think that ultimately that goes anywhere," Rizzolo said. "It's really a bridge too far in a lot of respects, in a more pro-patent owner sense."

For instance, the bill would effectively overturn the Supreme Court's 2006 eBay decision  making it difficult to win injunctions in patent cases, and restrict when and how often patents can be challenged at the PTAB.

Nevertheless, some parts of the bill that codify changes the patent office has already made, like using the same claim construction standard at the PTAB that is used in district court, would likely be uncontroversial and might find their way into other legislation if the Stronger Patents Act doesn't advance.

 "Maybe there will be some key provisions that make it through, but as a broad, overall act I think it's going to be tough to see come to fruition in 2020," Turner said.