Innovation, Generic Drugs, Patents In Congress Follow Obama’s State of the Union Speech

American lawmakers aren’t wasting any time getting down to business after President Obama stressed the importance of spurring innovation during his annual State of the Union address this week and cited the need for the United States to regain its competitive edge, particularly when up against countries such as China and India. A slew of related bills are emerging in Congress.

The first step toward “winning the future” is to maintain a free enterprise system that drives ideas and innovation, Obama said.

“What we can do – what America does better than anyone else – is spark the creativity and imagination of our people,” Obama said. “We’re the nation that put cars in driveways and computers in offices; the nation of Edison and the Wright brothers; of Google and Facebook.”

“In America,” he added, “innovation doesn’t just change our lives. It is how we make our living.”

Although 14.5 million Americans are currently unemployed and nations like China and India are educating their children earlier and investing more in research and new technologies, Obama said the United States is still a power to be reckoned with.

“No workers are more productive than ours. No country has more successful companies, or grants more patents to inventors and entrepreneurs,” the president said in the 25 January speech.

While groups such as the US Chamber of Commerce hailed these sentiments, they said this innovation and intellectual property must be better protected from theft, particularly from internet-related IP crimes.

“Our economic recovery, and the jobs that will drive it, depends on the innovation and creativity of the American people. The effective protection of copyrights, patents and trademarks in the US and abroad is an essential prerequisite for our nation’s success,” said Steve Tepp, senior director for the Chamber’s Global Intellectual Property Center. “We stand ready to work with the Administration to strengthen and promote IP laws and rights abroad.”

Technology industry groups such as the Information Technology and Innovation Foundation also praised the emphasis on innovation.

Obama also said that in order to attract new businesses to the US, the country needs not only fast transportation but high-speed internet as well. Noting that South Korean homes now have greater internet access than American homes, Obama vowed that within the next five years, businesses will be able to deploy the next generation of broadband coverage to 98 percent of all Americans to allow more access to knowledge, medicine and other benefits.

“It’s about a rural community in Iowa or Alabama where farmers and small business owners will be able to sell their products all over the world,” he said. “It’s about a firefighter who can download the design of a burning building onto a handheld device; a student who can take classes with a digital textbook; or a patient who can have face-to-face video chats with her doctor.”

But any program that requires the government to spend money could run into trouble in Congress. With Republicans now in control of the House and having a larger minority in the Senate, they have vowed across-the-board spending cuts to get the deficit under control and balk at the idea of spending money the government does not have.

Patent Reform & Biologics

Lawmakers are now scrambling to introduce or reintroduce legislation addressing some of the issues Obama highlighted.

Senator Patrick Leahy, the Vermont Democrat who chairs the Senate Judiciary Committee, used Obama’s remarks as a call-to-action on patent reform. He said enacting the Patent Reform Act (S. 23) he reintroduced on the same day as the speech “will support the president’s call to promote innovation and job creation, and will do so without adding a penny to the deficit.” That bill is among his committee’s first legislative priorities.

S. 23 is a product of compromises made during the last three Congresses among a bipartisan group of senators and includes moving the patent application process to a “first-inventor-to-file” system; improving the quality of patents issued by the US Patent and Trademark Office (USPTO) by introducing quality-enhancing measures; providing more certainty in patent litigation; and inter partes review and post-grant review language.

Leahy also stressed the importance of the gatekeeper compromise on damage awards reached in the last Congress, to “ensure an award of a reasonable royalty is not artificially inflated or based on irrelevant factors.” Given that China is set to outpace the United States in patent filings this year and that that country has been modernising its patent laws while the US has not, “we can no longer wait” to enact reform, Leahy said. His panel will take up the bill on 3 February.

Included in the Senate patent reform bill is another bill from Iowa Republican Charles Grassley and others that would prevent patents from being granted for strategies for paying taxes, which he said in a statement could interfere with taxpayers’ efforts to voluntarily pay their taxes.

Senator Charles Schumer, a New York Democrat, is reportedly circulating an amendment that would authorise a pilot program for review of business method patents. The House Judiciary Subcommittee on Intellectual Property, Competition and the Internet on 25 January also held a hearing on how an improved USPTO can create jobs. At that hearing, which addressed issues such as USPTO funding and patent quality, some witnesses voiced their support for action on patent reform.

Meanwhile, the Biotechnology Industry Organization (BIO) said that with a “strong and predictable patent system, science-based regulatory systems, and appropriate tax policy and incentives,” the US biotech sector can help drive growth and give competitiveness a boost.

BIO is just one of many groups anxiously awaiting the Food and Drug Administration’s next move in forming a regulatory pathway to bring follow-on biologics drugs, or “biosimilars,” to market. The healthcare reform act passed last year calls for such a pathway and affords brand companies 12 years’ data exclusivity in creating and marketing their products before generic firms can use their data to make their own biosimilars.

A bipartisan group of senators on 25 January wrote a letter to the FDA, urging regulators to ensure timely access to biosimilars and to reject efforts to further block generic competition.

The lawmakers say they have learned the FDA has received suggested statutory interpretations of the biologics law, which, if implemented, could result in generic competition being delayed beyond the 12 years. “Absent generic competition, biologic drugs will continue to cost patients thousands of dollars for a single dose,” the letter says. “We strenuously object to any efforts that would further block or delay generic competition at the expense of patients in need.”

Obama and Congress are looking for further ways to rein in healthcare costs, much of which are attributable to Medicare and Medicaid. The Generic Pharmaceutical Association (GPhA) touted the benefits of generic drugs to the federal government’s bottom line, and to patients’ wallets. It urged congressional leaders to “look to generics as one of the answers to lowering government spending without sacrificing quality health care for our citizens.”

Boosting Manufacturing and Trade

Virginia Republican Rep. Frank Wolf on Wednesday reintroduced The Bring Jobs Back to America Act, which would develop a national job repatriation strategy focused on returning manufacturing and call center jobs to America that have been outsourced to China and other countries.

“Reducing the unemployment rate and restoring a vibrant economy will take new and creative ideas that allow us to compete in a global economy,” Wolf said. “This is a commonsense, first step toward reducing the competition gap that exists between the US manufacturing industry and the rest of the world.”

Meanwhile, Sen. John D. Rockefeller, a West Virginia Democrat who chairs the Senate Commerce, Science and Transportation Committee, said he will hold a hearing in the coming weeks on boosting American manufacturing and encouraging exports.

Obama also called on Congress to pass a South Korea bilateral trade agreement finalised by the administration in December that it says will support at least 70,000 American jobs. Groups like the International Intellectual Property Alliance applauded that move, saying it will be a “significant step forward” for the US economy, including those sectors that or depend on copyright protection.

“On the issues of copyright law reform and copyright enforcement, the KORUS FTA is one of the strongest and most progressive trade agreements ever negotiated,” the IIPA said in a statement. “It also includes important steps to further open the Korean market to U.S. copyright industries. The sooner these copyright and market access provisions of the FTA come into force, and the sooner they are fully implemented by the Korean government, the sooner the positive impacts will be felt by American creators, innovators, and workers.”

The National Foreign Trade Council also welcomed the KORUS FTA, and encouraged the administration to work swiftly on the Trans-Pacific Strategic Economic Partnership (TPP) negotiations and the Colombia and Panama free trade agreements. The TPP, which includes negotiations between Singapore, New Zealand, Chile, Brunei, the US, Australia, Peru, Vietnam and Malaysia, attempts to forge a path to trade liberalisation in the Asia-Pacific region.

Other bills that have been introduced this year relating to intellectual property include:

HR 243 The Patent Lawsuit Reform Act – Amends federal patent law to specify that the fine for falsely marked articles (articles falsely labeled or advertised to deceive the public into believing such articles are patented) is limited to $500; limits damages in civil actions to $500.

HR 96 Internet Freedom Act – Prohibits the Federal Communications Commission (FCC) from proposing, promulgating, or issuing any regulations with regard to the internet or IP-enabled services.

HR 166 Internet Investment, Innovation, and Competition Preservation Act – Prohibits the FCC from regulating Internet or information services without proving market failure.

HR 307 Seed Availability and Competition Act – Permits a person who plants patented seed or seed derived from patented seed to retain harvested seed for replanting so long as that person: (1) notifies the Secretary of Agriculture (USDA) of the type and quantity of seed to be retained; and (2) pays the appropriate fee. Also establishes the Patented Seed Fund in the Treasury into which such fees shall be deposited and from which the Secretary shall pay appropriate fees to patent holders. The bill imposes an additional duty on the imported product of exported genetically modified seed on which royalties or other fees are charged by the patent owner to purchasers of the seed in the United States and on which no fees or lesser fees are charged to purchasers of the exported seed in a foreign country. Requires that such duties be deposited in the Fund for distribution to the appropriate patent holders.

S 27 Preserve Access to Affordable Generics Act – A bill that aims to prevent “pay-for-delay” – a practice during which generic drug makers agree to limit or forego research, development, manufacturing, marketing, or sale of a drug product in exchange for payment from a brand company.

S 139 Equal Access to Tax Planning Act – Included in the proposed Patent Reform Act, this bill aims to prevent individuals and firms from being able to receive patents on tax strategies.

S 74 Internet Freedom, Broadband, and Consumer Protection Act – Codifies the six network neutrality principles in the FCC’s November 2009 Notice of Proposed Rulemaking for preserving the open internet; prohibits broadband operators from requiring content, service, or application providers from paying for prioritised delivery of their IP packets; calls for broadband providers to work with local providers on fair and reasonable terms and network management conditions; and applies to both wireline and wireless broadband platforms.