By Donald Zuhn —
Economist Alex Brill, who last fall released a report on follow-on biologics, is back, this time focusing on proposals for "reforming" the U.S. patent system instead of suggestions for creating a follow-on biologics regulatory pathway. Patent Docs readers may recall that in November, Mr. Brill (at right), a research fellow at the American Enterprise Institute and former chief economist to the House Ways and Means Committee, issued a white paper asserting that a follow-on biologics regulatory pathway providing a data exclusivity period of seven years would be "sufficient for maintaining strong incentives to innovate while fostering a competitive marketplace" (see "Former House Ways and Means Economist Claims 7-Year Data Exclusivity Period Is Sufficient"). Today, in a commentary appearing on Forbes.com (see "What Should Congress Do With Liars and Cheaters?"), Mr. Brill argues that "[c]ompanies that feel overly burdened by current [inequitable conduct] law should take solace
in the fact that the government does not throw patent holders that lie
and cheat behind bars" as it has done with a "parade of executives sentenced to jail time over the last few years for securities fraud."
In the midst of continued Congressional debate over patent reform, Mr. Brill makes it clear that he favors harsher penalties for "patent holders that lie and cheat." Few would disagree with Mr. Brill's assertion that "it is vital that patent holders not commit fraud" while procuring patents. More than a few patent practitioners, however, would disagree with Mr. Brill's suggestion that Congress "put[] some more teeth into [the inequitable conduct defense]." Mr. Brill's proposal appears to stem from his belief that Congress has begun "contemplating changing the rules with regard to inequitable conduct" — rules changes that he believes might "defang the inequitable conduct defense." It is important to note, however, that the Senate patent reform bill (S. 515), which has already been reported out of Committee, and the House patent reform bill (H.R. 1260) do not address inequitable conduct. Thus, Mr. Brill's fears of a weakened inequitable conduct defense would seem to be (at least for now) unfounded.
In addition, while Mr. Brill contends that "[a] strong deterrent is necessary to produce confidence in the entire patent system so that investors are willing to risk their capital to develop new innovations," he provides no evidence that fraud before the USPTO has become so rampant that investor confidence can only be restored (or assured) by passing radical inequitable conduct reform. Moreover, Mr. Brill's proposed reform would only exacerbate a problem the Federal Circuit recognized more than twenty years ago when it called the frequent practice of pleading inequitable conduct a "plague on the patent system" (Burlington Industries Inc. v. Dayco Corp., 849 F.2d 1418 (Fed. Cir. 1988)). Thus, while Congress should take up the issue of inequitable conduct reform, it would best refrain from adding "criminal penalties, punitive damages or jail terms" to the current penalty of patent unenforceability, and instead consider ways in which the defense can be improved in order to encourage a more open dialog between applicants and the Patent Office.
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