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Why startup medical device companies should enjoy patent reform

September 26, 2011 5:13 pm by | 1 Comments

patent office logoA provision for fast track approval in the Leahy-Smith America Invents Patent Reform Act that went into effect this week could benefit some medical device companies.

Meanwhile, it seems unlikely that the immediate changes in the law will have any significant impact with the pharmaceutical and biotechnology sectors. The main reason: Companies in these areas are spending so much to get products to market already they won’t notice the fees.

The legislation passed by Congress represents the biggest changes to patent law in this country since 1952. Although many believe that large corporations stand to benefit the most from the changes – particularly the shift in awarding a patent to the party that is first to file rather than the first to invest -  this change is not scheduled to go into effect for another 18 months.

Meanwhile, other changes are already taking place.

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  • The U.S. Patent and Trademark Office effective Monday has added a 15 percent surcharge on most fees charged, including filing fees, excess claims fees, examination fees, patent search fees and re-examinations fees.
  • The Leahy-Smith Act sets the filing fee for the new prioritized examination at $4,800 for large entities and $2,400 for small entities. The effective date for filing for prioritized patent examination also began Monday. 

Getting prioritized examination, which shortens the regulatory approval process to one year with a limit of 10,000 patent applications, could be an asset to small medical device companies seeking funding, said Mary Merchant, the head of the biotechnology team in Ballard Spahr’s patent group and a member of the group’s chemical, pharmaceutical, and medical device technology teams in Philadelphia.

“If you are a small company trying to raise money it’s helpful;  it might be something that’s a benefit for funding,” Merchant said. “If a company is trying to raise money and it has patent approval it makes it sound more legitimate.”

On the other hand, a fast track for approval could also get a negative response earlier. “But in a tough economic client where it’s a challenge to raise money this could be helpful,” Merchant said.

Louis W. Beardell Jr., a partner in Morgan Lewis & Bockius’ Intellectual Property practice in Philadelphia, says one  potential benefit is the fee increases could help reduce the patent application backlog. Some  medical device products with a shorter regulatory approval process would get patents granted faster, preventing competitors from knocking off their products, he said.

Beardell also said the cost to get a product to market for pharmaceutical and biotechnology companies makes these early changes largely irrelevant. “The fee increase, while significant, still represents a small part of the overall cost,” Beardell said. “It also takes longer for them to get regulatory approval.  Still, any increase in costs may affect the number of filings companies can pursue.”

Despite the changes, Merchant doesn’t expect immediate impact. With the current patent approval backlog and no additional funds to implement the changes, it could take awhile before life science companies feel the full impact of the patent reform act, she said.

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Stephanie Baum

By Stephanie Baum

Stephanie Baum is the East Coast Innovation Reporter for MedCityNews.com. She enjoys covering healthcare startups across health IT, drug development and medical devices and innovations deployed to improve medical care. She graduated from Franklin & Marshall College in Pennsylvania and has worked across radio, print and video. She's written for The Christian Science Monitor, Dow Jones & Co. and United Business Media.
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1 comments
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They should have called the bill the America STOPS Inventing Act or ASIA, because that’s where it is sending all our jobs. “This is not a patent reform bill” Senator Maria Cantwell (D-WA) complained, despite other democrats praising the overhaul. “This is a big corporation patent giveaway that tramples on the right of small inventors.” "patent reform" Senator Cantwell is right. Just because they call it “reform” doesn’t mean it is. The agents of banks, huge multinationals, and China are at it again trying to brain wash America. The patent bill is nothing less than another monumental federal giveaway for banks, huge multinationals, and China and an off shoring job killing nightmare for America. Even the leading patent expert in China has stated the bill will help them steal our inventions. Who are the supporters of this bill working for?? Patent reform is a fraud on America. This bill will not do what they claim it will. What it will do is help large multinational corporations maintain their monopolies by robbing and killing their small entity and startup competitors (so it will do exactly what the large multinationals paid for) and with them the jobs they would have created. The bill will make it harder and more expensive for small firms to get and enforce their patents. Without patents we cant get funded. Yet small entities create the lion's share of new jobs. According to recent studies by the Kauffman Foundation and economists at the U.S. Census Bureau, “startups aren’t everything when it comes to job growth. They’re the only thing.” This bill is a wholesale slaughter of US jobs. Those wishing to help fight this bill should contact us as below. Small entities and inventors have been given far too little voice on this bill when one considers that they rely far more heavily on the patent system than do large firms who can control their markets by their size alone. The smaller the firm, the more they rely on patents -especially startups and individual inventors. Congress tinkering with patent law while gagging inventors is like a surgeon operating before examining the patient. Please see http://truereform.piausa.org/default.html for a different/opposing view on patent reform. http://docs.piausa.org/