May 27, 2015

The Honorable Charles Grassley

Chairman
Senate Judiciary Committee
152 Dirksen Building
Washington, D.C. 20510

The Honorable Robert Goodlatte

Chairman
House Judiciary Committee
2138 Rayburn Building
Washington, D.C. 20515

The Honorable Patrick Leahy

Ranking Member
Senate Judiciary Committee
224 Dirksen Building
Washington, D.C. 20510

The Honorable John Conyers

Ranking Member
House Judiciary Committee
B-351 Rayburn Building
Washington, D.C. 20515

Dear Chairmen Grassley and Goodlatte and Ranking Members Leahy and Conyers:
On behalf of Americas Health Insurance Plans (AHIP), I am writing to express our support for
your bipartisan legislation, the Protecting American Talent and Entrepreneurship Act of 2015
("the PATENT Act").
Our members appreciate your efforts to ensure that important tenets of the patent system are not
undermined by frivolous lawsuits. The PATENT Act reflects an important step towards an
environment in which such abusive practices are deterred. When coupled with the reforms made
under the America Invents Act (AIA), potential changes made by the PATENT Act would
continue the movement towards reducing the heavy burden placed on the patent system by weak
patents and weak patent challenges.
We are concerned, however, that some efforts to modify the PATENT Act would undermine the
positive impact of a critical aspect of the America Invents Act, the Inter Partes Review (IPR)
process.
The IPR process serves a vital role in quickly, efficiently, and accurately clearing the system of
patents that do not deserve patent protection. The relative speed and low cost of such
proceedings -- compared to the time and cost of district court proceedings -- increases the ability
to challenge patents that are invalid because they fail the essential requirements of novelty and
non-obviousness. As noted in the legislative history of the AIA, the IPR process "will allow
invalid patents that were mistakenly issued by the USPTO to be fixed early in their life, before
they disrupt an entire industry or result in expensive litigation." The IPR is a well-designed,
rule-governed process, allowing for settlement, appeals, and sanctions for abusive conduct. In
addition, the IPR process has the benefit of being conducted before administrative patent judges

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of the Patent Trial and Appeal Board, who possess the scientific and legal expertise to separate
those patents which are entitled to patent protection and those which are not.
Some would like to weaken the IPR process, arguing that it is too easy to invalidate a patent.
This is simply not the case. The IPR is aimed at streamlining the process for invalidating a
patent that should not have been issued in the first place and laser-focused on the essential issue
of whether the patent at issue is valid. The best measure of the fairness of the process is not
some win-loss score, but the logic and reasonableness of the decisions when viewed against the
requirements of patent law. The reliance of the IPR on expert administrative patent judges, and
the ability to appeal decisions to the Federal Circuit, suggest that the process is both appropriate
and better than any available alternatives for quickly and fairly dealing with the question of
whether a patent is valid or invalid.
AHIP has a particular interest in ensuring that weak patents are not used to "evergreen" the
patents of pharmaceutical products. Under such an approach, pharmaceutical companies follow
an original patent with an additional patent that reflects relatively minor changes to the originally
patented item. This practice turns the patent system upside down and has the effect of extending
the original patent monopoly for many years, resulting in significantly higher prices for
consumers and higher costs and premiums for employers, states and the federal government (and
taxpayers). In short, these unwarranted patent extensions increase the cost of drugs and
insurance coverage without doing anything to deliver better care or improve quality.
We believe the IPR holds great promise for reducing such "evergreening," which is an important
step toward addressing the unsustainable costs of prescription drugs. In contrast, the arguments
against the IPR boil down to asking consumers to continue to pay, though higher prices, for
patent rights that should never have been granted in the first place. We, therefore, strongly
encourage you to reject any modifications to the PATENT Act that would reduce the
effectiveness of the IPR process.
Thank you for your strong leadership on this important issue. We look forward to continuing to
work with you as the process moves forward.
Sincerely,

Daniel T. Durham
Interim CEO
c:

Members of House Judiciary Committee

Members of Senate Judiciary Committee