USPTO Meeting on Humanitarian Patent Program

By: Gregory Lultschik

On: November 2, 2010

The October 27th USPTO meeting on humanitarian patent vouchers was largely devoted to soliciting comments and questions from the non-profit representatives. The NGOs and non-profits represented at the meeting included Doctors Without Borders, Knowledge Ecology International, and the Medicines Patent Pool among others. Edward Elliott of the Office of External Affairs gave a brief summary of the program's objectives and current progress. The proposed voucher system will be a fast-track for ex parte reexaminations intended to incentivize technology creation and licensing for humanitarian purposes.  Vouchers would be offered in exchange for the donation of patents covering technology with recognized value in addressing humanitarian issues. These vouchers would be freely transferable. Any company engaged in ex parte reexamination proceedings would be able to exchange a voucher in return for their case being given the highest priority by the examiner. The PTO is targeting the pharmaceutical, information technology, and chemical industries at this point in time, since those are the most frequent users of reexamination and would logically be the largest market for vouchers. The current goal is to shorten the reexamination period under a voucher to six months, reduced from the average 19 to 20 month period.

The proposed rubric for assessing the value of a humanitarian technology is comprised of four principles: subject matter, effectiveness, availability, and access. Subject matter is judged according to whether the technology address a recognized humanitarian problem. Effectiveness assesses how well the technology can be used to address that problem. Availability is determined by whether the technology is available for by an affected population. Access evaluates the efforts of the applicant to increase access to the technology among affected populations. This is still only a very rough outline of how the value of a submitted technology might be determined.   

The PTO is looking for ways to leverage the mechanisms within the patent system that do not require congressional approval. The patent system offers opportunities for leverage because of its pro-business goals and long-standing relationship with business. Early in the process of reaching out to businesses regarding possible programs, the Office discovered that the reexamination system stood out as a very important phase to companies in converting their intellectual property into revenue generating products. The importance of this process to companies makes it stand out as a phase capable of generating value.

Issuing a voucher will require at least two stages of decision-making, neither of which will be made by examiners. The first stage is deciding whether the technology covered by a patent qualifies under the program as humanitarian in nature. The second involves deciding whether the patent (and technology) meets the standard for value required to qualify for a voucher. Although the PTO representative acknowledged the benefits of using narrow criteria for qualification, he also expressed concerns that overly constricting them could cause problems through conflicts with TRIPS compatibility, inability to address the broad range of problems faced by the developing world, and failure to address concerns voiced by pharmaceutical companies that the program will be perceived merely as a handout. The over-arching goal is to keep standards for the vouchers high, but not to make it sector-specific. The Office currently favors an approach that allows the inclusion of broad target subject matter. It wants to attract technologies that would, for example, help sub-Saharan countries deal with crop shortages and water purification needs. To this end, the Office has been reaching out to the agriculture, pharmaceutical, and biotech fields for support.

Several representatives were concerned about the effects of having too many vouchers available in the market. The general consensus was that high standards or narrow qualifying criteria would be necessary to avoid this. One suggestion for ensuring a limited supply of vouchers was to enforce a cutoff on the number issued per year, or on the number of applications accepted per year (first come first served).

Multiple representatives expressed the opinion that the program should incorporate input from developing countries about their needs and take current WTO programs into account. The concerns of possible consequences for not doing this included excessively narrow scope of the qualifications becoming a detriment to the program, and a possible focus on AIDS medications to the relative exclusion of other disease treatments. Broad initial standards were suggested for priming the market and giving companies some basis to judge the value of the vouchers.

Multiple representatives voiced concerns about maintaining high standards for accepted humanitarian patents. As of the meeting, the criteria for acceptance had not developed to the point where a plan for how companies could demonstrate compliance could be discussed. With no clear method of compliance, the discussion reverted to concerns over maintaining quality. There was a general acknowledgement that there will need to be room for human judgment in assessing the value of each application, and that a mechanistic approach to distributing vouchers must be avoided.

One of the representatives made a comparison the PTO's green patent program, which functions by accelerating the initial patent application. The problem with using that incentive here is that some industries, notably the biotechnology and pharmaceutical industries, can't afford to have the initial period of application shortened because of their need to synchronize regulatory and patent preparation.

There is currently no hard data on possible value of the vouchers. Some companies have suggested a willingness to pay $500,000 to $1 million per voucher. Nearly all of the representatives present pressed for more details about plans for controlling the value of the vouchers. One suggested method of buttressing the value of the vouchers would be to incorporate an award component. Such a system would add public relations value, and companies would be able to hold the successful donation of a patent out to their public interest partners. A suggestion that generated significant approval was the use of a pre-issuance auction for the vouchers to provide data on the value. It would gather buyers beforehand and give companies numbers to work with.

The practical effects of the program on the PTO and on other reexamination applicants will depend on the number of vouchers issued. The additional strain that the program would place on the staff is unknown at this point. The PTO's current estimation is that it will not affect the pendency of other examinations.

The options being considered for the application process at this point are a prize-based system and an entitlement system. A prize system would accept the highest quality patents up to a specified number, while an entitlement system would allow an applicant to appeal a rejection. Most representatives were not in favor of the entitlement approach. Such a system would require additional resources to be dedicated to appeal, and would make it more difficult to control the number of available vouchers. Multiple representatives argued in favor of the prize approach. The consensus was that offering the voucher as a prize would encourage a race to the top for quality. However, there was a general concern over the problem of maintaining adequate incentives to support a prize-based system. Also, the problem of how to compare the value of vastly different technologies becomes a critical issue in the implementation of a prize system. The use of an external board staffed with recognized experts received a positive response, but the organization of a functional board of that nature raised its own issues. Another concern raised about the prize system was that it would be difficult to estimate ahead of time the enthusiasm of companies to participate.

A problem that the program designers are grappling with is whether to allow third parties to use the vouchers. There are concerns that allowing this would generate inequalities. The current delay gives both the examiner and the responding company time to prepare. A third company using a voucher would have as much time as it needed to prepare, and significantly limit the time the responding company has to gather evidence

At this point, the PTO is expecting to run a twelve-month pilot program beginning late next year at the earliest. The period for comments will end on November 19.

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