Ex-USPTO Head, Retired Judge Back China Pharma IP Reform

By Dorothy Atkins
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Law360 (May 28, 2020, 10:07 PM EDT) -- Speaking to IP attorneys at a virtual event Wednesday, the former USPTO director and a retired Federal Circuit chief judge agreed that the pandemic and ongoing US-China trade talks have created a "golden opportunity" to urge China to reform its patent laws to make them friendlier to pharmaceutical innovators.

Former U.S. Patent and Trademark Office Director David Kappos, now a partner at Cravath Swaine & Moore LLP, told listeners that "basic patents" covering key pharmaceuticals have been denied in China, even though the patent offices in the U.S., Canada, Europe and Japan have issued patents covering the innovations.

Kappos said anyone who wants China to have an innovative pharmaceutical industry now has a "golden opportunity" to suggest reforms, because China's State Intellectual Property Office is accepting comments on policy changes.

Retired Chief Judge Randall Rader said China had also been "very reluctant" to follow other nations in allowing drugmakers to submit supplemental data to support their patent applications after they have been initially filed.

But he said that could change under "the promise" of the U.S.-China Phase 1 trade agreement and potential further agreements between the two world powers, which the judge said should incorporate a judicial process to China's pharmaceutical patent procedures.

The comments came during a virtual event hosted by the Berkeley Center For Law and Technology as a part of its China Law Trade and IP Certificate Series, with approximately 100 attorneys and legal professionals in attendance.

Aside from Judge Rader and Kappos, attorneys and law professors offered insights on how patent law in China has changed over the past two decades and the challenges pharmaceutical innovators face as politics threatens to create barriers to international collaboration and they race to find a vaccine for the novel coronavirus.

Novo Nordisk's Karen Guo, who formerly worked for Jones Day and Wilson Sonsini Goodrich & Rosati PC, stressed that the coronavirus pandemic has highlighted the importance of innovation and the need to steer away from China's heavy reliance on generic drugs.

"We cannot rely on generic products to secure the health care of our people," she said.

Robert Merges, a professor at University of California, Berkeley School of Law, said that the pandemic had also highlighted the importance of having an international research community working toward solutions and that any efforts to limit trade between China and the U.S. would threaten the efficiency of that community. He added that while some national security measures can be taken, the governments should not silo the countries' pharmaceutical innovators and research teams.

"In my mind that's going back in history to a less integrated world, and I think it's inefficient," he said, adding that it also "sounds too much like the 1930s, and that bothers me for a bunch of reasons."

Jones Day partner Tony Chen said that the "golden age" of patent protection in China was during the late 1990s, and that since then, it had become more difficult to obtain patents protecting pharmaceutical inventions in the country. He said one recent poll indicated that 75% of such pharmaceutical patent applications were rejected in China.

Chen said the change came in 2001, when China amended its guidelines so companies could not submit supplemental data backing their inventions after they had filed the patent application.

"From that point on ... the life for pharmaceutical companies applying for patents in China changed for the worst," he said, adding that many patent applications were rejected under article 26.3 of the Chinese Patent Law for lacking sufficient disclosures.

In 2014, China changed its practices, due in part to pressure from then-Vice President Joe Biden, to allow companies to submit supplemental data, according to Chen. Chen said the issue then moved from sufficient disclosure rejections under 26.3 to prior art rejections under article 22.3 of the CPL.

Chen said that in China, inventors don't have a duty to search for all prior art related to the invention, because that's the patent examiners' job. But that makes it difficult for companies to anticipate what prior art examiners are considering and to offer evidence rebuffing it, he said.

"That's why today we're still stuck with this issue and why we see such a high percentage of cases of pharmaceutical patents being invalidated or they cannot get patent protection, even though they're protected [in other countries]" Chen said.

Kappos said the issue is a real "Hobson's choice" for patent applicants, who have "no hope" of getting an application granted without submitting supplemental data, but if they wait to collect the supplemental data before submitting the application, the information will be in the public domain and likely can't be protected.

Kappos said the Chinese patent system must come to grips with the practical reality that supplemental data needs to be accommodated and recognized when it comes to pharmaceutical patents.

He said the Chinese policy shift from focusing on supplemental data to prior art has had a "Whack-a-mole effect" of solving one problem and creating another. Kappos added that politicians don't have the patience to understand the issue, but now is the time to raise it.

"Unless you get the patent, none of this other stuff matters," he said. "It is the very core issue, and it's been the core issue now for well over a decade … nothing's changed. Some things have changed, but the results are the same. The patents are not being granted."

--Editing by Peter Rozovsky.

For a reprint of this article, please contact reprints@law360.com.

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