Posts Tagged: "incentive to innovate"

LITAN: ”But let’s go back to the main point again from our paper, which is that we need to switch the national conversation about patents to doing a better job of exploiting what we have as opposed to arguing so much about what the standards should be going forward. If we did that, maybe we’d get some greater bang for the buck our of our innovation system. Because there are a lot of unexploited patents out there that could be commercialized. Of course, your point that a lot of patents will drop off because the maintenance fee won’t be paid in the four year period. That’s true for some patents, but certainly not all. In our paper we call the unexploited patents singles and doubles. Our current patent system is set up really only to reward home runs. It’s because of the costs and risks of commercializing the singles and doubles that we don’t see enough of them.”

LITAN: ”Cross industry variation in the use of patents shouldn’t mean that we should just junk the patent system. As I said, the alternatives to go to a system of trade secrets which has very, I think, suboptimal social implications relative to patents. Indeed I think when people object to patents they don’t think about well what else would firms rely on for protecting their hard-earned IP. Indeed, even companies that are heavily involved in the open source world are using patents as a ‘currency’ through which they can achieve collaboration with other firms. That’s why you see big firms like Microsoft and IBM cross license. They do it not only to insulate themselves from infringements against them but because patents are the tickets through which can collaborate with other parties to innovate, make better products and so on.”

In a recent article in the New England Journal of Medicine, Amy Kapczynski argues that the Supreme Court of India’s strict interpretation of the country’s new patent law provides a model to be followed by other countries. Kapczynski applauds this “Patent Law 2.0” and argues that it will enhance access to medicines and may improve pharmaceutical innovation. Unfortunately she is wrong on both counts. Section 3(d) of the Indian Patent Act forbids the patenting of new forms of known drugs unless the new form significantly enhances efficacy and yields therapeutic benefits. Accordingly, much of the incremental innovation that is done on existing treatments will no longer be patentable under the so-called Patent Law 2.0. These are not issues considered by Kapczynski. Astonishingly, she interprets the impact of this law as follows, “Provisions like Section 3(d) can help reverse this effect [prioritizing incremental innovation over breakthrough drug discovery] and encourage companies to undertake the riskier and more expensive research that is required to generate breakthrough drugs.” Her analysis is strikingly naïve. It is laughable to think that weaker intellectual property rights (IPR) protection will incentivize innovative pharmaceutical firms to expend more resources and take on greater risk.

These first-level-thinkers just assume that information would be disseminated at the same rate without a patent system, which is so ridiculous it is hard to take anyone seriously who actually professes to believe such nonsense. Can anyone really believe that? This is why it seems overwhelmingly clear to me that there is an anti-patent agenda in many newsrooms across the country. No intelligent person who has reviewed history and has any knowledge about how business works would think that businesses would randomly disclose proprietary information in the volume that occurs today absent a patent system that incentivizes such disclosure.

Richard M. Marsh, Executive Vice President and General Counsel for Myriad Genetics is on the panel. He started off his presentation explaining that he really wants to talk about the case and the issues, but given that the case is ongoing and the future is uncertain regarding whether it will continue to be appealed, go back to trial or be dismissed altogether he might be unable to answer all questions. He did say clearly that the biotechnology industry “is under attack.” Marsh explained that the industry needs to be proactive because “if we sit back and idly do nothing there could be grave consequences.” Marsh explained that Myriad was able to do what it did thanks to the patents by giving it the time, money and incentive to innovate. I couldn’t agree with him more.