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Above the Law

Two years ago the District of Columbia inadvertently set in motion a case that potentially expands the rights of patent owners, making them immune from many state and local laws.

The case was the result of legislation the district passed to address the growing problem of skyrocketing prescription drug prices. In recent years, the average cost of prescription drugs jumped more than 10 percent annually. Medicaid and Medicare are supposed to provide a safety net to those who can't afford prescription drugs, but states are staggering under the programs' costs. This leaves many individuals with an impossible choice--spend their money on prescription drugs and end up broke, or do without and put their health at risk.

Balancing Act
When the Federal Circuit struck down the law, the court's decision startled many experts. "Most people expected the Federal Circuit would invalidate the D.C. law ... however, the scope of the holding took everyone by surprise," Sarnoff says.

The decision began by noting that one aim of the Patent Act is to encourage innovation by granting inventors exclusive rights; this allows them to exploit their inventions without competition and so "obtain above-market profits during the patent's term." According to the court "enhanced profits" play "the central role" in the incentive structure Congress set up in the patent law.

D.C. is appealing the Federal Circuit's ruling, asking for reconsideration en banc. Meanwhile, the ramifications of the court's decision remain unclear. "Time will tell how this is interpreted," Gollin says.


Steven Seidenberg

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