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Small biotechs hit hard by PTO proposed changes

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During 2006, the U.S. Patent and Trademark Office has proposed a series of rule changes that, if adopted, will significantly affect patent prosecution practice. Many predict the changes will be especially disastrous for small biotech companies.

Some, most notably the PTO, view the rule changes as a way to streamline patent examination and issuance. Others, including many small companies, view the new rules as overly restrictive and unfair to inventors with limited funds. Since 1995, when the PTO established that patents are valid for 20 years from the date of filing, the office has been under pressure to examine patent applications without delay. The patent office also is chronically short of examiners.

This tension between timely examination and a relative lack of examiners is probably a driving force behind the proposed rule changes. All the proposed changes aim to either reduce the burden on examiners, speed time to patent issue, or both.

Some proposed changes, such as the accelerated examination procedure, might succeed if patentees choose to use them as proposed. Others, like the new continuation and divisional rules, might reduce the number of filings, but only because applicants can't afford to front-load prosecution costs. Increased up-front expense under the proposed rules will be especially difficult for small companies and individual inventors .

The proposed new rules can be divided into four major categories. 1. Limiting the number of continuation applications that can be filed from an original disclosure. 2. Examining only 10 claims on the merits. 3. Changing how inventors disclose potential material information to the PTO. 4. Instituting an accelerated examination program.1. 1.

The proposed continuation rules could hit small companies hard and small biotech companies harder. Current standard practice is for an inventor to file a broad disclosure on his invention and claims relating to several aspects of that invention; for example, a compound, its production, its use to treat disease and pharmaceutical products that contain the compound. In biotech practice, especially, the first office action is usually a restriction requirement. This informs the inventor that his patent application contains many different inventions and divides the application into that many different parts. Inventors typically elect to prosecute each of the more limited "divisional" applications in turn, until each separate invention has been prosecuted.

Under the proposed rules, all divisional applications must be prosecuted at the same time, in parallel. This would force companies to spend significant amounts of money all at once, up front, to protect an early-stage invention. Small companies will no longer be able to afford to patent the entire scope of their inventions, especially in biotech where the commercial manifestations of new technologies are unclear, because it will simply be too expensive to pursue all divisional applications at once.

The new rules also close off the alternate path, in which a company might re-file the original disclosure but add new claims. The PTO will now allow only one continuation application on each original filing, preventing companies from spreading out the costs of patent protection over time.

The PTO also has proposed a new rule stipulating that the applicant must elect 10 "representative" claims for initial examination in each application. Only when the representative claims are allowed will the remaining claims be considered. An applicant who wants to have more than 10 claims examined must do a prior art search, show support for the claims in the specification, explain why their claims are patentable, and submit all of this in an Examination Support Document (ESD). An applicant can undoubtedly make good faith statements in an ESD that could later be used against him.

New rules on Information Disclosure Statements (IDSs) would limit submissions to 20 documents , each no longer than 25 pages. If either of these requirements were exceeded, the applicant would be required to submit an explanation with his IDS.

In newer fields such as biotech, a higher proportion of patent applications disclose inventions that are broad and pioneering rather than incremental improvements on established concepts. This broader scope dictates a more extensive disclosure of potentially relevant art. It is nearly impossible to disclose a broad biotech invention without naming at least 20 other documents that might be relevant.

On Aug. 25, the Revised Accelerated Examination Program and Petition to Make Special Procedures changed at the PTO. The stated goal of this program was to allow patentees the option to finish patent examination within 12 months from the filing date. In addition to a number of formal requirements and shortened deadlines, this program requires the applicant to limit the application to three or fewer independent claims and 20 total claims. The applicant also must submit supplemental information to the patent office, similar to the ESD mentioned above. Participation in this program is optional and unlikely to affect most applicants, as few are expected to participate.

The new proposed rules will increase disparities in access to the patent system. Companies with huge patent budgets will absorb the changes, but small companies with limited resources will no longer be able to file early on broad inventions and later prioritize prosecution based on commercial viability.


Dillahunty is a principal with Fish & Richardson specializing in patents for biotechnology, pharmaceuticals and chemistry. Brenda Hefti, a law clerk in the patent group, assisted with the preparation of this article.

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