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Monday
Oct232017

STRONGER Protections May Be Answer to Drug Patent Trolls

When Congress addressed patent reform earlier this decade, their attempt to stop “patent trolls” culminated in a law that the National Center’s Jeff Stier says ended up being “a solution in search of a problem.”  As a result, there are now patents at an increased risk of being trolled unless Congress revisits and fixes the problem.

In a new commentary published by The Hill, “Medical Innovation Shouldn’t Cause Pioneers to Jump Through Hoops,” Stier – the director of the National Center’s Risk Analysis Division – and Hoover Institution Fellow Henry I. Miller point out that efforts to protect our nation’s inventors turned the patent process into a “legal chess game” where some very dubious moves are now being made.

An important issue, patent protection goes back to the America’s founding when it was included in the Constitution.

 

Patent reform was passed in 2011 to stop business interests from using their purchase of similar patents to target and wage legal warfare on more successful innovators.  The America Invents Act (AIA) ended up being written in a way that promotes trolling when it comes to patents involving prescription drugs.  As Stier and Miller note:

The AIA was intended to stymie patent trolls that bought up patents they never intended to use.  Hedge funds, individuals and companies purchased patents not with the intent to protect their manufacture of innovative products, but to sue innovators who had their own, similar patents.  Stopping this practice was a laudable goal that made sense for technology like software code and cell phone hardware. 

However, it was never intended to be applied to pharmaceutical innovation, where the so-called “Hatch-Waxman” law, which created a pathway for generic drugs, had already effectively balanced the interests of brand-name and generic drug manufacturers.

 

How bad have things gotten?  One drug maker is trying to protect a patent in what might be called a sweetheart deal so it can avoid the pitfalls of the AIA.  Allergan, the company that created the dry-eye drug Restasis, transferred its patents related to the drug to a group of Native Americans rather than face the challenge created by the AIA:

In a move that could bring tears to the eyes of even the most jaded lawyers, Allergan last month transferred the Restasis patents to New York’s Saint Regis Mohawk Tribe, whose sovereign immunity shields it from patent litigation.  The tribe was remunerated up-front and with the prospect of future royalties, and promptly leased the patents back to Allergan.

If the tactic is successful, analysts expect pharmaceutical giants Eli Lilly and Pfizer to follow suit.

Allergan recently lost a court challenge to protect its Restasis patents, so this tactic is more important than ever for them without a change to the current interpretation of the AIA.  As Stier and Miller wrote:

The key problem is that the 2011 law which sought to make it easier to challenge dubious patents also made it easier to challenge valid ones.  Ironically, in an effort to prevent trolling, the 2011 law created a group of reverse-patent trolls: generic drug makers seeking to undermine legitimate patents already subject to adjudication by the courts.  

Is there a solution?  Stier and Miller point to the Support Technology and Research for Our Nation’s Growth and Economic Resilience (STRONGER) Act that’s currently under consideration in the U.S. Senate.  It would require challengers to provide “clear and convincing evidence” of their case, restoring the traditional burden of proof standard upset by the AIA when it came to the relationship between innovative drug makers and those manufacturing generic alternatives.

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