Could The Innovation Act Stifle Medical Device Innovation?

The Medical Device Manufacturers Association (MDMA) recently expressed its apprehensions about provisions of a patent reform bill that the group claims would stifle innovation of breakthrough, life-saving technologies developed by small medical device companies.

In a four-page letter addressed to House Judiciary Committee chairman Bob Goodlatte (R-Va.) and ranking member John Conyers (D-Mich.), MDMA president and CEO Mark Leahey stated that the bill’s proposed changes to the U.S. patent system for protecting intellectual property “will have a chilling effect on developing the medical cures and treatments of tomorrow.”

While the MDMA supported the Innovation Act’s (H.R. 9) aim to curb so-called “patent trolls” and abusive patent legislation, Leahey expressed concern that “the provisions in H.R. 9 that purport to target only abusive patent practices are so broadly drafted that they would make the defense of legitimate intellectual property from infringement more costly and burdensome, and discriminate against innovation models such as those who develop technologies and license them to larger players for distribution purposes.”

“The patent is the lifeblood of the medical technology industry and serves as the bedrock on which risk-taking entrepreneurs are able to create new markets and new jobs, and most importantly, deliver break-through technologies to patients who need them,” Leahey added.

MDMA asked the Judiciary Committee to consider the following enhancements to the bill:

• Establish a balanced fee shifting threshold
• Significantly narrow or eliminate the customer stay language
• Require balance in any heightened pleadings requirements and discovery limits
• Maintain strong estoppel for the newly created post-grant review process
• Permanently end the diversion of patent fees from the U.S. Patent and Trademark Office (USPTO)

The trade group also expressed concern about the bill’s current joinder language, which it said would drive venture capitalists and other investors out of patent-intensive industries like medical devices.

“It takes years, sometimes a decade or more, and tens of millions of dollars to secure regulatory approval and reimbursement for new medical devices,” the letter stated. “Because the industry is so highly regulated, investment in early-stage medical device companies is a very risky proposition. Exposing investors to the significant financial liabilities created by the joinder provision would further discourage investment in the breakthrough medical technologies of tomorrow.”

The MDMA has strongly lobbied for patent reform to protect the interests of the small, venture-backed start-ups, which make up the majority of its membership. In 2011, the association successfully pushed for the exclusion of some provisions of the America Invents Act, such as the apportionment of damages in infringement cases and an open-ended post-grant review system, according to Legal News Online.

The group also expressed concerns last year regarding certain provisions of the Targeting Rogue and Opaque Letters Act, or TROL Act, which was drafted to address abusive patent letters.

In contrast to its opposition against some provisions of the Innovation Act, the America Invents Act, and the TROL Act, the association said it supports the STRONG (Support Technology and Research for Our Nation’s Growth) Patents Act, according to Legal News Online. The STRONG Act would make it harder for companies to be targeted with frivolous patent lawsuits, level the playing field between smaller firms and larger companies, and help the USPTO retain enough resources to ensure patent quality.