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Cries to change patent law: Congress resumes hearings; Supreme Court considers three appeals
[April 30, 2006]

Cries to change patent law: Congress resumes hearings; Supreme Court considers three appeals

(Baltimore Sun, The (KRT) Via Thomson Dialog NewsEdge) Apr. 30--Ma Gray?

That's how the nation's phone system might have been known had Alexander Graham Bell's lawyer stopped for brunch on the way to the U.S. patent office on Feb. 14, 1876.

Just hours after the inventor's attorney submitted Bell's telephone patent application that Valentine's Day, a comparable idea came in from Elisha Gray, who wrote of plans to "transmit the tones of the human voice ... so that actual conversations can be carried on by persons at long distances apart."

But he was too late. Bell had won the race, and eventually, the patent - along with its ability to exclude others from using like technology. Gray unsuccessfully fought the Bell patent claim for years.

Intellectual property protections, provided for in the U.S. Constitution since 1787, have long been considered the backbone of the American economy.

They're meant to drive innovation and research by promising that original work cannot be copied without permission for a certain time period - currently 20 years for patent holders from the date their application is filed.

As the country has moved from a manufacturing base to knowledge industries such as life sciences and technology, the claims - and protection - of intellectual property have taken on greater weight in the business world.

Recent headlines have also brought patent issues into the mainstream, such as those spurred by the court case that nearly shut down the BlackBerry last winter for millions of wireless users after it was found to contain a component patented by another company.

Recommendations for reform have been offered from organizations such as the Federal Trade Commission and the National Academy of Sciences. This month, Congress resumed its own patent-reform hearings.

"It seems like every five to 10 years there is this upheaval in patent law. But my feeling is that this [time] is more substantive, because it's happening on a lot of fronts," said Christopher E. Jeffers, vice president of intellectual property at Alba Therapeutics Corp., a Baltimore biotechnology company.

The Supreme Court this year is also considering appeals in three patent cases, including one involving a Maryland biotechnology company, that could significantly alter the rules governing such claims. The court may issue opinions in two of the pivotal cases as early as next month.

In one, eBay v. MercExchange LLC of Great Falls, Va., the justices are weighing whether it's proper for courts to immediately order a patent infringer to cease operation, or if they should first consider certain mitigating factors, such as monetary compensation. That would reverse the general practice of the past century, which has held that injunctions are always issued unless doing so would be detrimental to the public.

In the other case with a possible May ruling, the court must decide whether the act of making a connection between a problem and a solution, such as a condition and a diagnosis, is patentable. Laboratory Corp. of America Holdings, a North Carolina company that commercializes medical diagnostic systems, is challenging such a claim in a patent held by Denver-based Metabolite Laboratories Inc.

In the third case, which won't be heard until the fall, the justices could ultimately redefine who has the right to file a lawsuit questioning a patent's validity. That case involves Gaithersburg-based MedImmune Inc. It sued a California competitor, claiming a patent it held - and MedImmune had licensed to use - was invalid.

The suit was tossed out after a court concluded MedImmune couldn't sue because its licensing arrangement suggested there was no problem.

The high court's determinations essentially will dictate whether the marketplace favors patent holders, as recent lower court rulings have held, or patent challengers. Or, as attorney David C. Doyle put it, it will come down to innovation versus competition.

"From a broad public policy perspective, that's the large question," said Doyle, who co-chairs Morrison & Foerster's intellectual property group from its San Diego offices. "The Supreme Court rarely takes patent cases and to have three pending at the same time is highly unusual."

Two modern and promising industries - biotechnology and information technology - have wound up on opposite sides of the reform argument.

Biotechnology and pharmaceutical businesses, which take years to bring a product to market, are lobbying to keep the rights of patent holders strong. That is necessary, they argue, to encourage new inventors and bolster the economy.

Meanwhile, many large technology companies are calling for a weakening of patent-holder rights. That outcome would promote competing products and the marketplace by introducing more choice, they contend.

"There is a major split between the [information technology] community and the life sciences community as to how to move forward," said Mark Heesen, president of the National Venture Capital Association, a trade organization representing investors.

The debate has spilled beyond courtrooms and boardrooms into the public domain.

Over the past few years, authorities have cracked down on people downloading copyrighted music without paying, handing out stiff fines and leading some colleges to strike deals with music catalogs so students can download music without getting entangled in illegal activity.

Company trademarks have been hijacked and attached to bogus e-mail requesting account information. And of course, there's Research in Motion's wireless BlackBerry.

"There's really sort of a public outcry for this patent reform, because it's starting to affect people's cell phones," said Jeffers, the biotech executive. "Before, no one really cared."

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