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Dow Jones & Company Inc Jul 6, 1989WASHINGTON -- The U.S. may be in danger of losing its lead in the world's biotechnology industry -- not because Americans don't have enough ideas, but because the government doesn't know how to deal with them.
The Patent and Trademark Office is groaning under the weight of a biotech-patent-application backlog that may approach 8,000 by year end. Meanwhile, its 100 biotech-patent examiners -- many of them inexperienced and underskilled -- are taking from 2 1/2 to four years to process an application.
The government says it can solve the problem -- by 1994. But industry leaders say that may be too late. "Using 1994 as a date just won't do for the small start-ups that will die by then," says George Rathmann, chairman of Amgen Inc. of Thousand Oaks, Calif. "Time is the worst enemy."
Industry complaints have found willing ears in Congress, where lawmakers fear that patent delays will result in failed companies and lost jobs. They also worry that patent delays will give foreign firms a head start in developing and marketing genetically engineered drugs.
"To the uninitiated, this might sound like the harmless disorganization of the bureaucratic backwater," Rep. Ron Wyden said during hearings he conducted last year on the issue. But, the Oregon Democrat added, "particularly for the small U.S. biotechnology companies, those that are staking their future on just one breakthrough, the current state of affairs at the patent office is a crippling hurdle."
In the wake of industry and congressional pressure, the patent office has launched a "13-point biotechnology catch-up plan." All biotechnology reviews were consolidated into one office, the number of examiners was increased to the present 100 from 67, and salaries were increased so that a senior examiner can make as much as $74,303 a year. The office can now process about 8,000 applications a year, 1,500 more than before, says John Kittle, head of the biotech section.
But with 7,800 new biotechnology applications filed last year and the number climbing every year, the biotech section -- known as Group 180 -- clearly can't keep up with the fast-paced field. Experienced examiners are in short supply. Only a little over one-third have more than four years' experience, with many of the younger examiners -- who make up more than half the group -- leaving for private-sector jobs where they can command higher salaries and better working conditions.
"It's a common thing for someone who has been here two or three years making $40,000 being offered a $75,000 invitation to work in California," says Mr. Kittle. "That's the most they could ever make as senior patent examiners."
Examiners work in an antiquated office that has yet to see the benefits of computerization. To find the proper references, officials must search through more than 27 million documents contained in miles of wooden shoe boxes -- a system first used by one of the earliest patent commissioners, Thomas Jefferson. Plans to install a state-of-the-art computer system are running three years behind schedule at almost twice the estimated costs, so for now they must rely on a few personal computers.
"What we have is an electronics sweatshop in the Patent Office," says Harold Wegner of the intellectual-property firm of Wegner & Bretschneider.
Add to this the inherent difficulties in scrutinizing biotechnology inventions. Biotechnology's "complexity, its newness, and its rapid development" force examiners to spend 15% more time on biotech applications than on those from other industries, says a report from the General Accounting Office, an arm of Congress. And examiners are finding it difficult to keep pace with the nonstop advances of the field.
All this spells trouble for an industry that relies on patents for its future. Because of high research-and-development costs and the low costs of duplicating results, the only way for a small company to recoup its investment is to obtain a patent monopoly. A study conducted by Linda Miller, a vice president at PaineWebber Inc., found that biotechnology companies cite obtaining patents as the second most significant risk to their business. Industry officials also complain that delays and uncertainties in the process scare off potential investors.
Only a few companies have been willing to risk millions on production facilities without patent protection. Without the revenue from a marketed discovery, the smaller biotechnology companies -- which make up 84% of the industry -- will find it harder to support their expensive research, says Mr. Rathmann of Amgen.
With the end of the backlog barely in sight, the government and the industry are trying to overcome their traditional animosity toward each other and work together. Recently, the industry and the patent office announced a first-of-its-kind project called the Biotechnology Institute, headed by a board of industry and government officials. Planners expect to organize a series of scientific seminars for patent examiners and donate learning and reference materials to Group 180.
Advocates hope the institute will become an important instrument to help train new examiners and keep senior ones abreast of "the realities of cutting-edge biotech research," says Lisa Raines, a patent expert with the Industrial Biotechnology Association, which gave birth to the idea. But few if any expect the institute to have much impact any time soon. "It's good in that it's a broad-based increase in contact between industry and the office," says Mr. Wegner. "But it will have no effect on the backlog."
To cut the backlog quickly, experts say, the number of examiners would have to be doubled -- an unlikely scenario given today's tight budgets. "The only way to reduce the backlog radically is to spend more money," says Robert Merges, a Boston University law professor who studies patents. "And that's not going to happen."
Credit: Staff Reporter of The Wall Street Journal
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