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FIRST-TO-FILE PATENT SYSTEM IN U.S. COULD REDUCE COSTS, CREATE GREATER PATENT CERTAINTY, GENENTECH COUNSEL SUGGESTS; "BEST MODE" DISCLOSURE IS ALSO DIFFICULT

Executive Summary

A first-to-file patent system in the U.S. would eliminate costly interference proceedings and provide industry with greater patent certainty, Genentech Senior Patent Counsel Max Hensley suggested at the seventh annual meeting of the Industrial Biotechnology Association, Oct. 27 in Coronado, California. "Stripped of its fairness shield . . . the interference system is the major contributor of high cost and uncertainty in the patent field," Hensley said. "Under European practices, you know where you stand 18 months after filing date. From the late filer's standpoint, that's early enough to cut a deal, to drop out ]or[ explore non-infringing alternatives." Acknowledging the principle of fairness in the first-to-invent system, Hensley described the interference system, which is used in the U.S. to determine the first inventor, as "extremely complex and involved." "Who actually wins ]the patent[, in fact, may be the party who keeps the most reliable notebook and who has the craftiest motions attorney," he said. "I'm not sure the costs associated with the procedure don't outweigh the disadvantages of paying for it." Genentech is no stranger to patent litigation. Among the firm's major patent disputes include a U.S. action on Factor VIII and a suit covering TPA in the U.K. In the latter, a British court found Genentech's patent for the thrombolytic to be invalid. An appellate decision on that case is anticipated imminently. "The principal disadvantage is that interference makes it quite difficult to predict the outcome of multi-applicant invention technologies," the attorney continued. "If you are faced with investing $ 100 mil. in clinical trials for a product and two other applicants have filed within two months of you, you may consider settlement to be a very viable alternative. Where is the equity in that?" Hensley's remarks on problems in the U.S. patent system also touched on the issues of closed dealings with the Patent & Trademark Office and the "best mode" requirement under current law. "The courts . . . have been distrustful of the so-called 'X-party' procedure where an inventor is allowed to deal with the examiner without any public input," he observed. As a result, the courts have promulgated a "duty of candor" doctrine. Applicants have been obligated to provide all "material" information to the Patents & Trademark Office during a prosecution. "According to a recent survey," Hensley noted, "about 40% of the patents in which the defense of failure to comply with the duty of candor has been raised have been held invalid on this ground." Hensley called the "best mode" requirement, "another trip wire for the hapless patentee," especially in the biotech area. Under "best mode," a U.S. inventor must disclose the best method of carrying out an invention before filing. "Does the best mode require that one disclose the optimal culture condition used to culture a transformant?" he asked. "What if the inventor's notebook describes one procedure but the application suggests another?" Noting that in the biotech industry the preferred embodiment at the time the application is filed is a long way from any commercial viability, Hensley observed that the requirement "certainly provides another basis to patent uncertainty and in turn increases costs and litigation."
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