In Corliss O. Burandt v. Jon W. Dudas, Director, United States Patent and Trademark Office (07-1504), the U.S. Court of Appeals for the Federal Circuit showed no mercy for a patentee that tried to reinstate his patent for failure to pay the maintenance fee a decade later.

Burandt designed internal combustion engines for Investment Rarities, Inc., and entered into an assignment agreement with IRI providing that IRI would fund Burandt’s research and get rights to any patent application or patent resulting from that research.  Burandt was entitled to receive a percentage of the profits derived from the patents and to repurchase the patents from IRI in the event IRI ceased funding Burandt’s research.

Burandt filed a patent application that issued as U.S. Patent 4,961,406 with IRI as the assignee.  Burandt tried to exercise his repurchase rights before the patent issued and claims that he gained equitable title to the patent.   IRI, as the legal title holder, was required to pay maintenance fees.

As you could guess, IRI failed to pay the first maintenance fee by the end of the six-month grace period, and the patent expired on October 9, 1994.  Then, according to Burandt, he became mentally disabled at some point before 1992.  Burandt submitted a declaration from his psychiatrist stating that Burandt had been suffering from an anxiety disorder.

Burandt learned of the expiration of the ’406 patent seven years after the patent had expired, when he contacted the PTO about his patent after reading an article about Honda’s introduction of a variable valve engine.  Burandt admits that he did not inquire about the ’406 patent at any point before then – over a decade of time.

Burandt filed a petition in the PTO under 37 C.F.R. § 1.378(b) for acceptance of a delayed maintenance fee payment, asserting that the failure to pay the maintenance fee was unavoidable arguing that he should not be bound by IRI’s actions becasue he held equitable title in the patent and he was excusably unable to pay the fee.  Burandt urged the PTO to consider the reasons for his inaction in deciding whether the delay in the payment of the maintenance fee was unavoidable.  The PTO said no.

Burandt brought an action against the Director under the Administrative Procedure Act and the district court granted summary judgment in favor of the Director.  The court determined that IRI was the party responsible for making payment here and that Burandt failed to proffer any evidence showing that IRI exercised due care in paying the maintenance fee.

On appeal, Burandt raises four primary arguments.  First, Burandt argues that the district court erred by giving deferential review to the PTO’s determination regarding unavoidable delay.  Second, Burandt asserts that the court erred by focusing on the actions of IRI as the legal title holder in determining whether there was unavoidable delay rather than focusing on the actions of Burandt as the equitable owner.  Third, Burandt contends that the court erred by failing to find that Burandt’s delay in paying the maintenance fee was literally unavoidable.  Lastly, Burandt argues that the court erred in sustaining the denial of the Rule 183 Petition.

The CAFC sided with the PTO:

We agree with the Director.  The Patent Act governs whether a patent that has expired due to nonpayment of maintenance fees can be reinstated.  Pursuant to 35 U.S.C. § 41(b), maintenance fees are to be paid at three different intervals during the life of a patent.  35 U.S.C. § 41(b).  In the event payment of a maintenance fee is not received in the PTO by the due date or within a six-month grace period, “the patent will expire as of the end of such grace period.”  Id.  The statute further provides that:

(c)(1) The Director may accept the payment of any maintenance fee required by subsection (b) of this section which is made within twenty-four months after the six-month grace period if the delay is shown to the satisfaction of the Director to have been unintentional, or at any time after the six-month grace period if the delay is shown to the satisfaction of the Director to have been unavoidable.

35 U.S.C. § 41(c)(1) (emphases added).  Thus, the statute provides the Director with the discretion to accept a late maintenance fee any time after the close of the grace period if the delay is shown to the satisfaction of the Director to have been unavoidable.

Here, IRI, as the legal title holder of the patent, was the party responsible for paying the maintenance fee and IRI allowed the ’406 patent to expire, as it had deliberately allowed three others of Burandt’s patents to expire.  See Ray, 55 F.3d at 609.

Burandt also cited Futures Technology, Ltd. v. Quigg, 684 F. Supp. 430, 431 (E.D. Va. 1988) that the relevant inquiry should have been whether Burandt, as the equitable owner, intentionally abandoned the patent but that also fell on unsympathetic ears

Here, unlike the plaintiff in Futures, the record shows that Burandt did not make repeated inquiries about the status of his patent.  Burandt conceded that he did not inquire about the ’406 patent at any point during the time period between when the patent issued in 1990 and when he read the Honda article in 2001—over a decade later.  Moreover, there is no evidence in the record that IRI made misrepresentations to Burandt about the status of the ’406 patent as the company had done in Futures.  Significantly, Burandt conceded that he was aware that IRI had previously allowed three of his other patents to expire; yet he continued to rely on IRI to make the maintenance fee payments.  Burandt’s reliance on Futures is therefore misplaced.

The lesson here is that if you have an interest in keeping a patent alive, don’t wait a decade to check on how things are going.  Unless you can get Congressional relief.  But, if it cost the Medicines Company $65,000,000 for one day, imagine what it would cost for a decade.

Posted June 30th, 2008 by Stephen Albainy-Jenei in USPTO
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The book “Best Practices in Biotechnology Business Development” is a guidebook for those seeking to understand how to practice the business of biotechnology in order to become empowered to better manage their operations.

This is not a typical page 1 to end (page 186) storyline with a nice plot and happy ending.  Instead, this is a series of 11 missives covering a variety of topics having to do with the business of biotech.  From how to communicate with investors to managing intellectual property to getting a grip on cash flow, the various segments guide you through individual useful segments.

You can get your money’s worth just in the section on the Top Five Mistakes by Entrepreneurs by Carlos Velez of the Erie Hudson Group.  In my experience, these are right on as the type of hard news struggling start-ups need to hear.  For example:

Mistake #2 - Taking the Wrong First Step

What this means is that newly set forth entrepreneurs often think that the first step is to run out and get some money (via VCs, angels, etc.).  In fact, these companies struggle precisely because they are unwilling to take the necessary personal risk and invest themselves.  They want others to take on all the risk.

But, who wants to invest in a company if the founders/management are not personally (and severely) at risk themselves?  Investors want to know that those involved are going to be sufficiently motivated to move quickly, decisively and (more importantly) prudently.  Nothing propels one to get things right like fear of total devastation.

I see a lot of entrepreneurs start companies but fail to quit their day jobs.  These companies with great promise eventually founder after years of fits and starts because they are not sufficiently invested.  More often than not, these are people with secure jobs (like tenured faculty members) who like living in a nice environment free from risk and it’s just too difficult to leave that behind for the wild ride of a business start-up.

Best Practices in Biotechnology Business Development is edited by Yali Friedman, author of Building Biotechnology a coursebook for biotechnology.  His other projects include the Biotech Blog and Drug Patent Watch.

You can get the book here: Best Practices in Biotechnology Business Development: Valuation, Licensing, Cash Flow, Pharmacoeconomics, Market Selection, Communication, and Intellectual Property

Posted June 30th, 2008 by Stephen Albainy-Jenei in Book Reviews
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25 Shocking Facts

Laura Milligan uncovered 25 of the most shocking facts about the pharmaceutical industry.  While some aren’t really shocking — like the price of drugs is increasing faster than anything else a patient pays for — some are not widely known — like pharmaceutical companies spend more on marketing than research.  The reasons for these realities and whether or not they’re justified is another matter but I’ll leave that to others.

Trademark Valuations

James Berger and Diana Tadzijeva write about Marketing Perspectives on Brand Valuation when dealing with trademark infringement litigation.  The key to trying to make that determination is the ability to calculate what the brand or trademark is worth from a marketing perspective.  The marketing valuation is far different from the accounting valuation and the authors review some of the most popular techniques for determining the marketing value of the brand or trademark.

All Things Genomic

The Genomics Directory is a tremendous new resource center for bioentrepreneurs, scientists, and students in the field of biotechnology.  It provides a wide variety of resources useful during design, implementation, and running of a biotechnology project. I haven’t had the time to wade through all of the resources but looks like it offers a good one-stop shop for information.

Patent Quality Reports

The PatentCafe offers Patent Quality Reports in its free CAFC Library. The new Patent Factor Index (PFi) Reports, available for public downloading without cost, statistically score more than 2 dozen indicators of patent quality, many of the indices correlating directly to how the CAFC has decided on cases involving these patents.

Espresso, Anyone?

Emerjent, which offers web applications that track emerging technologies, is now offering Espresso™, an emerging technology information search engine. According to Emerjent, Espresso™ delivers a single site for up-to-date and in-depth information on the most promising technologies, people and companies that make up today’s knowledge-based economy. You can either take it for a test run without registering, or complete the free registration and use the more full-featured version.

Posted June 27th, 2008 by Stephen Albainy-Jenei in Friday Round-Up
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After vigorous debate, H.R. 6344 passed in the U.S. House of Representatives to amend 35 U.S.C. 156, the statute governing patent term extensions based on regulatory review delay.

This has been bounced around for several years now, and is intended (very specifically) to help Massachusetts-based The Medicines Company, which submitted its PTE application for U.S. Pat. No. 5,196,404 for ANGIOMAX (bivalirudin) 61 days after FDA approved its New Drug Application (NDA) .  In case you haven’t already guessed, the patent term extension law requires the submission within 60-days of the date of NDA approval.

Known as the “Dog Ate My Homework Act”, Section 4 of the bill involves a grant of authority to the Director or the United States Patent and Trademark Office (USPTO) to excuse specific late filings—this time, in connection with unintentional human error.  Section 4 would provide the USPTO with the authority to accept an application for patent term restoration under the Hatch-Waxman Act if that application is filed within three business days after the expiration of the 60-day period provided in subsection (d)(1) if the applicant files a petition, not later than five business days after the expiration of that 60-day period, showing, to the satisfaction of the Director, that the delay in filing the application was unintentional.

What’s most amazing is that the Act requires a payoff in order to effect a patent term extension — the patent holder must pay a fee to the United States Treasury equal to:

(i) $65,000,000 with respect to any original application for a patent term extension, filed with the United States Patent and Trademark Office before the date of the enactment of this Act, for a drug intended for use in humans that is in the anticoagulant class of drugs; or

(ii) the amount estimated under subparagraph (B) with respect to any other original application for a patent term extension.

Subparagraph (B) says the Director will estimate the amount required as the amount equal to the sum of:

(i) any net increase in direct spending arising from the extension of the patent term (including direct spending of the United States Patent and Trademark Office and any other department or agency of the Federal Government); (ii) any net decrease in revenues arising from such patent term extension; and (iii) any indirect reduction in revenues associated with payment of the fee under this subsection.

I supposed that $65M is not a bad deal for getting a patent extension depending on the patent.  The Medicines Co. wants its patent to be extended 1,773 days, giving it exclusive rights to the drug until Dec. 15, 2014.  Medicines expects Angiomax to generate more than $500 million in sales in the United States by 2010.

What a Diff’rence a Day Makes!

Posted June 26th, 2008 by Stephen Albainy-Jenei in Pharmaceutical, FDA, USPTO
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Elizabeth Edwards is a woman on a mission and her mission is healthcare.  Mrs. Edwards wants us to know that we are facing a crisis in healthcare.  Ours is a system that is the best in the world but that is too expensive for many.

Last week at the BIO 2008 conference, Amgen hosted a media event to discuss the importance of innovation in medicine and the support needed to achieve success.  The keynote speaker was Elizabeth Edwards, who shares her husband’s (former Sen. John Edwards) commitment to improving healthcare.

She sees the cause in a nation with a fast-food mentality.   We’re a nation that wants what it wants and wants it now.  But we don’t save, invest or plan for the future.  She wants us to adopt a long-term planning strategy as a nation and this will require collaboration of all the players in the system if it is to produce a win.  And a win requires winners at all levels although acknowledging that to win, all players will need to give up something along the way.

While not all problems with heathcare can be solved with collaboration, it is a necessary first step with a nation that won’t even wait for french fries.

What is holding us back?  There is little will to analyze the efficiencies of our system.  Collaboration is viewed suspiciously at all levels.  There is a lack of common goals.  Mrs. Edwards believes that to achieve our goals, we need to have long-range planning, an ability to take risks and a system that is patient-centered.

So, what would a win look like?

A Win for Citizens

A win for citizens/patients would be healthcare made available at an obtainable cost with assured access to (reasonable) choices.  Our government needs to understand this.

Mrs. Edwards said “The disease holds all the cards and the researchers and doctors are the ones that get to play.  I don’t get to know most of the rules.  But I am not only willing to play, I need to play.”

A Win for Healthcare Providers

A win for healthcare providers would be healthcare with a manageable caseload — for a reduction of errors — and at a reasonable compensation.  “This depends on a universality of paying patients,” said Mrs. Edwards.

Right now, our system shifts the cost from the uninsured to the insured.  This is generally ignored in discussions of healthcare as though universal healthcare would mean millions of people suddenly getting care they wouldn’t have otherwise.

A Win for Government

A win for the government would be healthcare that is not cost prohibitive for patients or the government.  Joking that not even her husband John Edwards will touch it, Mrs. Edwards points out that no one is even discussing the looming crisis of long-term care for an aging population.

A Win for the Industry

A win for the pharma industry would be getting buy-in from the public (trust) with increased transparency.

So, how do we get all this?

Mrs. Edwards believes that we need a greater role by the federal government to make this happen.

First, we need increased funding of research by the NCI and NIH to get more innovation.  However, the funds need to be doled out in a different manner.  Under the current system, research grants typically to research proposals where the results are largely assumed (the established researchers).  Mrs. Edwards noted that “If you look at the past, it is when people went in new directions that there are successes.”

Second, we need to improve reporting capabilities.  The current system at the FDA relies on flawed (her words) system of self-reporting of effects.  She also points to increased user fees that put stress on the FDA to earn those dollars.  She wants to see more user fees used for reporting.  She also wants to see more efforts at pursuing treatments that don’t just favor the more profitable ones.

In closing, Mrs. Edwards tells that her breast cancer has now metastasized to her bones.  But she still feels lucky.  Noting that “cancer does not care if you have insurance,” she points out that because she can afford better insurance and is near quality research facilities, she received the best in care.  In many poor and rural areas, this would not be the case and she doesn’t see that as fair.

Everyone should hold out such hope.

Posted June 25th, 2008 by Stephen Albainy-Jenei in Conferences, Biotech, Current Affairs
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BIO2008 conference attendee Ben Keeton, of the Kentucky BioAlliance, won a Patent Baristas iPod this week.  Ben was the first person to find me at the 2008 BIO International Convention in San Diego and ask for the Patent Baristas’ iBarista iPod.

Ben picked up a nice teal-colored iPod shuffle after asking for it Thursday.  Ben was attending BIO and coordinating the Commonwealth of Kentucky Reception for Gov. Steven L. Beshear, which was quite an affair atop the Marriott.

Admittedly, Ben had a bit of an advantage since we’d met a couple of times in the past so he recognized me immediately — as anyone on the convention floor knows, reading the tiny print on the name badges of strangers as people flood by is not too easy.

While several bloggers in attendance recognized me at the conference, they declined to accept an iPod saying they wanted to let them go to the nonbloggers.  Now, I have some iPods left over so I’ll be looking for suggestions on how to give them away.

Posted June 19th, 2008 by Stephen Albainy-Jenei in Light Roast, Conferences
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You couldn’t swing a dead cat at the BIO2008 conference today without smacking at least one governor out pressing the flesh and showing their state’s support for the biotech industry.

Joining Wisconsin Governor Jim Doyle in announcing initiatives for biosciences and stem cell research, Colorado Governor Bill Ritter gave a talk today on Colorado’s growing biotech and bioscience economic sector, representing over 400 bioscience companies in the state.

Gov. Ritter just signed a bill putting $26.5 million investment in the industry through the new Colorado Bioscience Discoveries Grant Program. Gov. Ritter noted that private research is increasing and that venture capital funding is improving.

When asked about the outlook for bioscience research funding, Gov. Ritter said that the change in administration will most certainly bring a change in the mindset within the government. He felt both candidates would support increased research and noted that Sen. Barack Obama has a belief in biotech as a 21st century economy.

The Governor said that there will not only be additional research funding with a change in the administration but that he also foresees a different mindset at the FDA, which will lead to increased efficiencies in the drug approval process.

Also on tap later today, California Gov. Arnold Schwarzenegger.

Posted June 18th, 2008 by Stephen Albainy-Jenei in Ventures, Conferences, Biotech
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The BIO 2008 Convention was in full swing this week as over 20,000 attendees all crushed together gathered in the San Diego Convention Center.  With everything from a golf swing analysis to an oxygen bar, attendees are being treated to an all-out marketing blitz.

With a new billion-dollar initiative seemingly announced daily, the stakes certainly are high. Wisconson noted it spends $250,000 per conference saying that this is Main Street for biotech and if you want the business, you need to have a storefront on Main Street.

You can follow my coverage, as well as many other bloggers, at Bio On The Road — similar to last year’s BIO Voice.  If you’re attending BIO this week, drop me a note and we’ll meet up.  And don’t forget, I’m giving away some iPods from Patent Baristas while I’m hanging out around the Exhibition floor (see details here).  In the meantime, be sure to check out the BIO Party List - Ohio’s reception is tonight at Buster’s Beach House.

Posted June 18th, 2008 by Stephen Albainy-Jenei in Conferences, Biotech
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