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'Evidence of Patent Thickets in Complex Biopharmaceutical Technologies' (2013) 53 IDEA: The International Property Law Journal 1 Evidence of Patent Thickets in Complex Biopharmaceutical Technologies
Abstract
We test for the existence and the influence of patent thickets in the biopharmaceutical industry by analyzing the statistical distribution of patent licenses in the 200 top-selling drugs in the United States. We show that: (1) a patent thicket effect is discernible when the potential seller must acquire a license from two or more patent owners in order to create a downstream commercially viable product that flows from complex (as opposed to discrete) biopharmaceutical technologies; (2) a patent thicket effect in the domain of complex biopharmaceutical technologies becomes quite pronounced when the potential seller must acquire a license from three or more patent owners; and (3) where a potential seller must acquire a license from four or more patent owners exist, a patent thicket effect develops that makes successful negotiation for all of the necessary licenses with the relevant patentees virtually impossible. Our findings contribute (a) to the literature on patent thickets in the biopharmaceutical industry; (b) to the perennial policy debate on whether patents stifle or stimulate innovation; and (3) to discussions regarding the appropriate contours of a regulatory regime that would positively nudge production of more commercially viable and socially desirable drugs that rely upon complex biopharmaceutical technologies.
In a variety of surveys, most people believe a free market economy is best. But the assumptions supporting the view are far too simple. A more realistic set of assumptions suggests the need for a variety of regulations.
This article deals with the increasing tension between the tradition of protecting commercially valuable inventions through patenting and the need for a robust public domain of freely available technical information as a springboard for further research. The experimental use exemption, permitting some unauthorized research uses of patented inventions, might be used to relieve some of this tension. However, the scope of the research exemption has been shrunk so far by recent Federal Circuit opinions that even basic university research is not excused from infringement liability. This article returns to the first principles of patent law - the incentives to invent and to disclose - and argues that the current narrow exemption is not giving the public the benefit of its patent bargain. In this article, I analyze the effects of disclosure and the incentive to invent on different types of inventions. The article concludes that, partly because of distinctions between types of inventions that I dub self-disclosing and non-self-disclosing, it is possible to design an experimental use exception that promotes the progress of the useful arts more effectively than the current restrictive doctrine.
This dissertation examines the history of MIT's Patent Policy in its formative era, roughly 1932 through 1946. It was during this period that MIT administrators conceived policies and established precedents to shape a practice recognizable today as deliberate technology transfer. MIT was one of the first American universities to license patents. Over time, the Institute also became one of the most prolific centers of such activity, and its practices were widely emulated. By tracing the motivations behind MIT's patent policy, insight is sought not only on MIT's history, but more generally on the overall development of economic relationships between American universities and industry. Many contemporary assumptions about the way business and academia should interact are rooted in MIT's early experience. It will be argued that MIT's patent policy was not conceived by any individual, nor was the policy deduced with a consistent economic rationale. Instead, the evolving policy can be seen as a highly complex social phenomena, in which disparate communities of businessmen and scientists, administrators and technologists, struggled to exploit particular professional interests. Social history, rather than economic history, is the appropriate interpretive mode. The aspirations of numerous faculty entrepreneurs were mediated in highly politicized patent committee. Committee debates centered on the distribution of equity in patents, on the terms of licenses, and on public relations concerns. Over time, the Patent Committee began discussing potential revenues and the financial risks of litigation. MIT's patent policy was further influenced by Research Corporation, a non-profit patent agent with close ties to MIT. Among the entrepreneurial faculty discussed are Nicholas Milas, Wilmer Barrow, Robert Van de Graaff, John Trump, and C. Hawely Cartwright. The premise of this dissertation is that a fundamental transmogrification occurred: In 1931, MIT's interest in patents was essentially passive. After a period of about 15 years, those passive interests were transformed into an enthusiastic culture of technology transfer. Administrative practices for technology transfer in 1946 conceptually resemble those of today.
There is widespread consensus that patents have long benefited biomedical innovation. A forty-year empirical legacy suggests that patents are more effective, for example, in protecting the commercialization and licensing of innovation in the drug industry than in any other. Patents are also widely acknowledged as providing the basis for the surge in biotechnology startup activity witnessed over the past two decades. Heller and Eisenberg (1998) and the National Research Council (NRC) (1997) have suggested, however, that recent policies and practices associated with the granting, assertion, and licensing of patents on research tools may now be undercutting the stimulative effect of patents on drugs and related biomedical discoveries. In this chapter we report the results of seventy interviews with personnel at biotechnology and pharmaceutical firms and universities in considering the effects of research tool patents on industrial or academic biomedical research. We conceive of research tools broadly to include any tangible or informational input into the process of discovering a drug or any other medical therapy or method of diagnosing disease. Heller and Eisenberg (1998) argue that biomedical innovation has become susceptible to what they call a "tragedy of the anticommons," which can emerge when there are numerous property right claims to separate building blocks for some product or line of research. When these property rights are held by numerous claimants (especially if they are from different kinds of institutions), the negotiations necessary for their combination may fail, quashing the pursuit of otherwise promising lines of research or product development.
When companies decide to engage in technology transfer through exclusive licensing to other firms, they have two basic options: to use standard licensing contracts or to set-up more elaborate partnership-embedded licensing agreements. We find that broader partnership-embedded licensing agreements are preferred with higher levels of technological sophistication of industries, with greater perceived effectiveness of secrecy as a means of appropriability, and when licensors are smaller than their licensees. Innovative differential between companies, innovative supremacy of the licensor and market and technological overlap between partners appear to have no effect on the preference for a particular form of licensing. Copyright 2009 , Oxford University Press.
which could potentially lead to increased costs in the licensing of genes) See also Fiona Murray & Scott Stern, Do Formal Intellectual Property Rights Hinder the Free Flow of Scientific Knowledge? An Empirical Test of the Anti-Commons Hypothesis
2005) (reporting that a moderate number of genes have fragmented ownership, which could potentially lead to
increased costs in the licensing of genes). See also Fiona Murray & Scott Stern, Do Formal Intellectual Property
Rights Hinder the Free Flow of Scientific Knowledge? An Empirical Test of the Anti-Commons Hypothesis, 63 J.
ECON. BEHAV. & ORG. 648, 648 (2007).
Strong Patents Beneficial to Innovative Activities? Lessons from the Genetic Testing for Breast Cancer Controversies, 14 INDUS. & CORP See generally Giovanni Abramo et al., The Role of Information Asymmetry in the Market for University-Industry Research Collaboration
- Benjamin Orsi
- Are Coriat
Orsi & Benjamin Coriat, Are " Strong Patents " Beneficial to Innovative Activities? Lessons from the
Genetic Testing for Breast Cancer Controversies, 14 INDUS. & CORP. CHANGE 1205, 1215 – 1216 (2005). See
generally Giovanni Abramo et al., The Role of Information Asymmetry in the Market for University-Industry
Research Collaboration, 36 J. TECH. TRANS. 84 (2011);
Pharmaceutical Patent Protection and TRIPS: The Countries That Cried Wolf and Why Defining " National Emergency " Will Save Them from Themselves
- Caroline Manne
- Geo Wash Note
- Int 'l L
- Rev
Caroline Manne, Note, Pharmaceutical Patent Protection and
TRIPS: The Countries That Cried Wolf and Why Defining " National Emergency " Will Save Them from
Themselves, 42 GEO. WASH. INT'L L. REV. 349, 378–79 (2010).
65 Pharmaceutical Sales
65 Pharmaceutical Sales 2007, DRUGS.COM, http://www.drugs.com/top200_2007.html (last visited Nov. 6, 2012).
Wal-Mart Stores, Inc., 138 F
- Inc Nike
Nike, Inc. v. Wal-Mart Stores, Inc., 138 F.3d 1437, 1446–47 (Fed. Cir. 1998).