Patent Rule Changes 4171

GOVERNMENT & LEGAL AFFAIRS

Although there is some dispute as to whether the U.S. Patent and Trademark Office (PTO) currently has the authority to implement its proposed rules regarding continuing applications, most intellectual property (IP) experts agree on one point: if implemented, the new rules would have a significant effect on medtech manufacturers' patenting strategies going forward.

A continuing application permits an applicant to refile the disclosure of a previously filed parent application, present different and often broader claims, and receive the benefit of the filing date of the parent application. Under current practice, there is no limit to the number of continuing applications that an applicant can file. Consequently, an unlimited number of patents can stem from an original application. However, PTO's proposed rule change would limit continuing applications to only one per each original application, with a narrow and uncertain exception.

“Under the current reform proposals, major innovations that receive regulatory approval many years down the line could end up having no patent protection as a result of the innovating companies not having the opportunity to file further continuations to protect the actual devices receiving regulatory approval,” says Wendy A. Choi, a partner at Woodcock Washburn LLP (Atlanta). “Medical device companies rely on continuations because they may not know for several years the final, approved form that their devices will take. As a result, medical device manufacturers will not be able to reap the fruits of their labor.”

According to Kevin W. Cyr, managing partner of Cyr & Associates PA (Minnetonka, MN), the proposed limitations on continuation applications would require medtech companies to have a strong understanding of their technology and business at an early stage in the protracted process of getting a device from concept to market. “Their challenge is to understand what pieces of their technology are going to be important to protect when the technology actually makes it to the marketplace or when they are looking for additional investment,” he says. “This strong understanding allows the foundational patent applications to be more relevant to the business as the company develops. Prior to the proposed reforms, companies have been able to develop this understanding over time and to varying degrees morph their protection along with their increased understanding.”

Without the freedom to file unlimited continuations, firms will be deprived of an important tool to combat their competitors' design-around attempts with their earlier-filed patent applications, says William C. Geary, a partner at Nutter McClennen & Fish LLP (Boston) and a member of the firm's life sciences practice group. “This strategy of using continuations to cover later-developed competing products is one that is not used solely by large firms, but also by emerging companies and even individual inventors,” he says.

“The new rule changes will create strong incentives for appealing patent office rulings,” he adds. “While the rule changes may be perceived to decrease the patent office's backlog, it may not actually reduce the number of applications filed. Moreover, the patent office could well become overloaded with appeals.”

Beyond limiting continuing applications, there are less-drastic tools that could be implemented to curb the perceived abuse of continuation procedures, says Stephen Jensen, a partner at Knobbe, Martens, Olson & Bear LLP (Irvine, CA). “For example, a consequence known as intervening rights, which currently applies for reissue applications, could be applied to continuation applications filed after an established reasonable period of time,” he says. “Although also having sweeping implications, this consequence is certainly less draconian than the current proposal that may authorize the patent office to limit continuation filings.”

The proposed patent rule changes could have varying effects on medtech firms depending on their size and stage of maturity. “Companies with greater resources will be able to weather the storm caused by the current reform proposal better by having more comprehensive searching completed before filing, preparing more-complete and detailed applications—especially possible design-arounds—and employing the appeals process during prosecution,” Choi says. “Smaller clients or clients with limited resources will be forced to choose among their innovations and only pursue those that they can effectively support. Overall, I believe the proposal will have a stifling effect on innovation across the board for large and small medical device companies alike.”

“Smaller companies will be more greatly affected by the increased patent prosecution costs, but medtech firms of all sizes will be affected in some way by these rule changes,” Geary says. “However, some companies may gladly trade the virtually unlimited freedom to file continuation applications for greater certainty as to the scope of their competitors' IP portfolios.”

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