According to an article in Patently-O, so far in 2012 the USPTO has issued 24 patents with pre-GATT filing dates. The same Patently-O article estimates that 200 pre-GATT applications remain pending.

One example of a recently granted pre-GATT patent is Monsanto’s U.S. Patent 8,273,954, directed to “Genetically Transformed Plants.” The patent issued on September 25, 2012, from an application that was filed October 30, 1985. The application was a continuation of an even earlier application, filed in January of 1983–almost 30 years ago. Because the application was filed before GATT’s 20-year term provisions took effect, the term of the ‘954 patent runs 17 years from its grant date. That means that the patent’s 17-year term will expire in 2029, just under 44 years from its filing date, and over 46 years from the filing date of its priority application.

The existence of pending pre-GATT applications and recently granted pre-GATT patents pose at least three serious problems for businesses and the intellectual property community.

First, there is an argument that granting a 17-year term to a pre-GATT application at this point in time is a “windfall.” For example, in the context of Monsanto’s extensive plant genetics patent portfolio, which includes many related and now expired patents, the ’954 patent may give the patent owner 46 years of assertable rights. Such a windfall is unconnected to any public policy goal (such as compensating the patent holder for market exclusivity time lost to the FDA approval process), and occurs irrespective of the cause for the delay in granting the patent, and without regard to the merit of the subject matter, its importance, or other considerations.

Second, such “late” granting of a pre-GATT patent creates significant asymmetry between the patent owner and competitors. For example, the ’954 patent is directed to technology that is no longer considered cutting edge but rather is part of standard and routine practices. By comparison, competitors’ patents by and large may already have expired, and so are not available to counter Monsanto’s position.

Third, the continued existence of pending pre-GATT applications creates significant uncertainty for businesses and investors. An industry could suddenly, without warning, find itself threatened with a patent on what is now basic technology that has long been thought to be in the public domain. The impact of this effect is exacerbated by the confidential, secret nature of pre-GATT applications.

Thus, while pre-GATT applications can be extremely valuable to patent owners, they can be very costly and disruptive to competitors and the marketplace. Indeed, it is reasonable to assume that the majority of pre-GATT applications are associated with skewed value, because most applicants would not continue to pursue a patent on technology that is at least 17 years old unless it expected to achieve a significant return on its investment.

Does HR 6621 Solve the Problem?

HR 6621 seeks to remedy some of the problems created by pending pre-GATT applications by retroactively eliminating the 17-year term provisions. For any pre-GATT application not issued within one year of the bill’s enactment into law, post-GATT patent term provisions would apply, such that the term would be 20 years from the application’s earliest U.S. filing date. This change would, in effect, eviscerate the potential term of any pending pre-GATT application. Indeed, the USPTO might decide to suspend processing of the applications.

While Congress should address the problem of pending pre-GATT applications, HR 6621 is not a viable solution. HR 6621 does not address the problems created by pre-GATT patents that issue before its effective date, and would create new problems that could be worse than the disease it seeks to cure.

HR 6621 Would Punish Applicants for USPTO Delays

HR 6621 would apply to all pending pre-GATT applications, without regard to the cause of the prolonged pendency. Because these applications are confidential, we do not know whether the applicants caused or contributed to the delay in all cases, or otherwise engaged in dilatory behavior. Before Congress eviscerates these patent rights, it should investigate why it has taken the USPTO more than 17 years to grant these patents.

In the case of the ‘954 patent, for example, the USPTO took 5 years to examine the application before suspending examination for a potential interference (1990). It took three years to declare the interference (1993), and eleven years to decide the interference in favor of the applicant (2004). The USPTO then subjected the application to further prosecution, culminating in an appeal (2009), which it took two years to decide in favor of the applicant (2011). Even after that, it took more than 9 months to grant the patent.

Another pre-GATT case, U.S. Patent 8,278,099, was delayed for 10 years pending the outcome of an interference in a different application.

Such delays are harmful not only to the patent applicant, but also to competitors and the public, and have been well-known and documented for decades. For applicants already subject to decades of USPTO delay and probably hundreds of thousands of dollars in patent prosecution expenses, HR 6621 adds insult to injury.

HR 6621 Would Effect an Unconstitutional Taking

By eliminating the property rights embodied in the expected patent term, HR 6621 would effect a taking of private property without just compensation, and denial of due process. The fact that HR 6621 would apply across the board without any Congressional hearings to establish a compelling public need that justifies the taking, or without any due process, further undermines its Constitutionality. With a strong legal case, and strong business reasons for applicants to protect their pre-GATT patent rights, Congress should expect legal challenges to HR 6621.

HR 6621 Would Exacerbate the Problem

If HR 6621 is enacted and then challenged by a pre-GATT patent applicant, the time it takes to resolve the legal issues would further exacerbate the problems HR 6621 seeks to solve. Indeed, such a Constitutional challenge could take a decade to reach final resolution, if taken to the U.S. Supreme Court. In the meantime, pre-GATT applications could be granted with an uncertain patent term, or could be suspended pending the outcome of judicial review. Thus, rather than solving the problem presented by pre-GATT examination delays, HR 6621 could add years of additional delay to the pre-GATT examination process. Do we want to face a scenario where pre-GATT applications issue in 2023 with a judicially-approved 17 year term?

Alternative Solutions

Many of the worst problems of pre-GATT applications could be mitigated by two reforms without the same risks found in HR6621:

Compulsory publication of all pending pre-GATT applications would provide competitors with notice of pending patent applications and the claims being pursued. This would give competitors more complete information about the marketplace in which they operate, and would provide an opportunity to design around the claimed invention, secure licenses on more favorable terms, or take other appropriate measures. Publication should not be found to effect an unconstitutional taking, and would serve a strong countervailing public interest. Indeed, it is likely that most of the inventions already have been published in foreign patent applications, related post-GATT applications, or scientific articles.

Accelerated processing of all pre-GATT applications would protect the interests of applicants and limit the harm that would be caused by further examination delays. While accelerated processing may requires additional USPTO resources, Congress and the USPTO should find room in the USPTO budget to complete examination of the approximately 200 applications at issue.

All in all, HR 6621 seeks to torpedo submarine patents by retroactively applying the 20-year term provisions to pre-GATT patents, but fails to address the underlying problem and may make the problem far worse. While it is good to see Congress paying attention to the problem of pending pre-GATT applications, it should think through the likely consequences of HR 6621 and consider less drastic alternatives that would balance the interest of pre-GATT applicants, their competitors, and the public.