Chances of patent reform this year look slim as Congress returns from summer break

Mark Cuban, entrepreneur, NBA team owner and star of the TV show Shark Tank (the US equivalent of the BBC’s Dragons’ Den) was on Capitol Hill this week in part to help bring a little stardust to the push for patent reform. Cuban is the backer of the ‘Mark Cuban chair to Eliminate Stupid Patents’ at the Electronic Frontier Foundation and has generally not been shy about staking out his position on the patent system. His visit, as Congress got back under way after its summer break, came as concerted lobbying activity around patent legislation picked up again as the pro-reform side, in particular, tried to build some momentum.

On Wednesday, Congressman Goodlatte, Chairman of the House Judiciary Committee and the key sponsor of the Innovation Act, tried to do his bit telling an industry event that his bill “will come to the floor soon.”  He then added, “I think the issue is making sure that the momentum stays strong.” In reality it looks like the House effort has been losing momentum ever since Republican House leader Kevin McCarthy confirmed that the bill would not be going to a vote before the summer recess.

And so the focus is where it has been for a while, on the Senate. According to a number of Hill sources there is much work happening behind the scenes to craft a bill to reach the floor of the upper chamber. Senator Grassley, chair of the Senate Judiciary Committee, has given a timeframe of mid-October to mid-November, but it’s clear that any bill faces a number of challenges in getting the green light this year, among them the Senate’s own packed schedule and the ongoing debate over changes to the inter partes review (IPR) process.

With the looming threat of a government shutdown at the end of this month, among other things on Congress’s agenda, finding time for a patent reform bill may not feature high on the Senate leader Mitch McConnell’s to-do list. “I think there’s very little chance that it will get to the Senate floor this year if for no other reason that the Senate agenda is packed,” one DC lobbyist observed. “As for next year, all bets are off,” they added.     

And then there is the Gordian knot that is IPR reform. For biotech and pharma the solution is relatively straightforward – give them a carve out so that most of their patents become unchallengeable by the likes of Kyle Bass and other investors, who have helped turn this debate upside down by throwing a series of drug patents into the IPR process.

It is perhaps testament to the power of the bio/pharma lobby, that a carve out remains under discussion even after Goodlatte and Grassley have voiced their concerns over the proposal. The Congressional Budget Office has also reportedly weighed in calculating that giving pharma an IPR exemption would cost $1.3bn over the course of a decade by delaying new generic medicines (the bio/pharma lobby was quick to question the CBO’s maths). In the grand scheme of things that’s not a lot of money but it adds a price tag to an issue that in the course of six months has transformed the reform debate.

Hanging over all of this is the patent system’s ongoing evolution thanks to the changes brought in by the AIA, recent decisions by the Supreme Court (particularly Alice) and initiatives led by the USPTO. While those are having the greatest impact on patent quality not frivolous litigation (which is where the current reform efforts are targeted) they are addressing what many see as the root of the problem. With new heightened pleading requirements due to kick in at the end of this year, even as reform is held up in Congress the US patent system is undergoing some profound changes that are increasingly hard to ignore.