Why Biopharmas Are Watching ‘Patent Troll’ Legislation

Biopharmaceutical companies are closely watching bills in Congress that are meant to curb “patent trolls,” even though biopharmas don’t yet have a dog in that fight.

“Patent trolls” are companies whose main business is acquiring patents and filing patent litigations to make money rather than making products. The Innovation Act, which died in the last Congress, and The Support Technology and Research for Our Nation’s Growth Patents Act of 2015 (The STRONG Patents Act) were introduced in the House last month to curb the effect of patent trolls.

Generally, patent trolls haven't been seen as a threat to life sciences companies, although many have warned that these entities may target biopharmas in the near future. And yet the Biotechnology Industry Organization and the Pharmaceutical Research and Manufacturers of America opposed the Innovation Act as passed by the House in the last Congress as well as the Senate version of the bill that was ultimately withdrawn. The House bill included such measures as “fee shifting,” also known as “loser pays,” which would require the party that loses the litigation to pay attorneys' fees and court costs.

BIO and PhRMA argued that such legislation could impose substantial burdens on the ability to enforce legitimate patents and thus could decrease the value of patents and weaken the incentives for innovation.

This year, BIO supported the STRONG Patent Act, which doesn’t have a fee-shifting provision. BIO said the bill balances incentives necessary to maintain U.S. leadership in biotech innovation with the creation of high-wage, high-value jobs throughout our country.

A Senate Judiciary Committee hearing on patent litigation abuses held on March 18  and a March 19 hearing of the Senate Committee on Small Business and Entrepreneurship both suggested that the fee-shifting provision of the House bill that caused the concern last year of BIO, PhRMA and enough senators to scuttle the legislation is still a divisive issue this year.

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