Medical device startups can benefit from patent reform
A 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.
- 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 climate 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.