Posts Tagged: "research and development"

It’s hard to believe that, not too long ago, alliances between the public and private sectors were unheard of unless the government was picking up the entire tab. After World War II, the policy was that if the government funded even a small percentage of the research, it would take any resulting inventions away from those who created them to make the discovery readily available to anyone and everyone. While that might sound noble, it was a death knell for commercialization because then, like now, these discoveries required significant private sector effort and investment to turn into commercial products. The result was that not only were few government funded inventions ever developed, but even worse, companies avoided alliances with government funded institutions.

The biggest vaccination effort in the history of medicine is underway to eradicate the global pandemic, with several strong prospects appearing poised for regulatory approval. As of December 2020, data from the World Health Organization showed over 50 vaccine candidates in clinical research, and 163 more in the preclinical stage. The wait could soon be over. Two separate vaccines – one from Pfizer and BioNTech and one from Moderna – are pending emergency use authorization from the U.S. Food and Drug Administration. The former is already being administered for the first time outside of clinical trials following its approval by the UK government. That’s why recent calls to strip away intellectual property protections are so dangerous. Specifically, some nations have asked the World Trade Organization (WTO) to waive intellectual property protections related to COVID-19 – including not only vaccines, treatments, diagnostics, and medical technologies, but all forms of IP – until the majority of the world’s population has developed immunity. They argue that the current global intellectual property system is a barrier to accessing said COVID-19 vaccines, treatments, diagnostics, and medical technologies.

On June 23, the Eagle Forum Education & Legal Defense Fund celebrated 40 years of the Bayh-Dole act with a virtual briefing, titled: “The Bayh-Dole Act at 40 Years: How the ‘Most Inspired Piece of Legislation’ of a Half-Century Has Turned American Basic Research Discoveries into Products, Startups and Economic Growth.”  The event was moderated by Jim Edwards, the Eagle Forum Education & Legal Defense Fund Patent Policy Advisor and featured remarks by Courtney Silverthorn, the Acting Director, National Institute of Standards and Technology O?ce of Technology; Joseph Allen, IPWatchdog contributor and the Executive Director of Bayh-Dole 40th Coalition and Former Senate Judiciary Aide to Sen. Birch Bayh; Hans Sauer, the Deputy General Counsel and Vice President for Intellectual Property for the Biotechnology Innovation Organization; Jennifer Gottwald, the Senior Licensing Manager at the Wisconsin Alumni Research Foundation (WARF);  and David Korn, the Vice President of Intellectual Property (IP) and Law for the Pharmaceutical Research and Manufacturers of America (PhRMA).

Since China announced the first fatality caused by a virus about which little was known at the time, coronavirus and the disease it causes, COVID-19, has grown to pandemic proportions. In the less than three months since that first death, this new strain of the severe acute respiratory syndrome-related (SARS) coronavirus has shuttered social gatherings, precipitated a mandatory work-from-home revolution and decimated large parts of the world’s economy. As of the afternoon of March 27, the Coronavirus Resource Center at Johns Hopkins University reports that more than 585,000 cases of COVID-19 infection have been confirmed worldwide, resulting in a total of 26,819 deaths. Those figures have been increasing exponentially each day.

The recent White House meeting with leaders from American pharmaceutical companies sought their help in solving the coronavirus that originated in Wuhan, China and is currently gripping the globe. The meeting was part of the U.S. government marshaling our nation’s private and public medical research and development (R&D) resources in a race to create therapeutics, vaccines, diagnostic tools and cures. The Wall Street Journal has noted that “a core U.S. strength is the breadth of its private medical resources. That’s on display now as the government is calling on private actors to buttress the federal response.” Ironically, the same U.S. government urging the same private industry whose intellectual property rights enable it to develop medical miracles to help is targeting American pharmaceutical firms with a number of IP-killing policy proposals. One such bad idea comes from the Food & Drug Administration in a rulemaking titled “Importation of Prescription Drugs Proposed Rule (Docket No. FDA-2019-N-5711).”

One of the few areas of bipartisan agreement in Washington is that it’s time to respond to Chinese economic and military aggression. The need is underscored by a sobering report from the Senate Homeland Security & Governmental Affairs Committee’s Permanent Subcommittee on Investigations titled “Threats to the U.S. Research Enterprise: China’s Talent Recruitment Plans.” The report documents how China exploits our culture encouraging the open exchange of science in order to achieve their commercial and military objectives. In its editorial, “China’s Bid on American Science,” The Wall Street Journal aptly summarizes the report:  “It found the U.S. government is funding research for hundreds of scientists at American universities and labs who are effectively under contract to turn over their findings to China.” No nation can allow others to steal its cutting-edge technologies. While we must effectively respond to China and others looking to do us harm, we must avoid inadvertently undermining the policies which made us the leader in turning government funded R&D into highly innovative products. Unfortunately, an initial agency response is not reassuring on that score.

Nokia Corporation announced it entered into a patent licensing agreement with Chinese mobile consumer electronics firm OPPO. Although terms of the deal weren’t disclosed by Nokia, the company did state that under the agreement, OPPO would make payments over a multi-year period… OPPO may not receive the same kind of attention that its domestic rivals Xiaomi and Huawei receive, but it has become a major competitor in the Chinese smartphone market in recent years. OPPO had the greatest market share of smartphone makers in terms of Chinese sales during 2016 when the company shipped 78.4 million units to achieve a 16.8 percent market share within the country.

Rather than frustrate innovation, Maurer and Haber found that patent assertion entities have research and development expenditures which, on average, are twice that of U.S. high tech firms… Public PAEs do not appear to operate in a manner consistent with the hypothesis on patent trolls, which includes the view that PAEs own patents which have no value and that they file frivolous lawsuits that amounts to a tax on innovation.

Certain innovations—known as enabling technologies—provide the foundation for progress across a range of industries. Enabling technologies include mobile wireless, the laser, CT scanners, the microprocessor, artificial intelligence, and freight containerization. Such technologies drive wealth creation throughout the economy. However, the difficulties associated with monetizing this type of IP, which I explore in this article, mean that private enterprise tends to underinvest in new enabling technologies. Public policy needs to be more supportive, and firms need to be willing to support more blue-sky projects. As a nation, we are harvesting the fruits of old enabling technologies without investing sufficiently in new ones. We are eating our seed corn.

Three events boosted our economic turnaround in the 1980’s: the passage of Bayh-Dole, which injected the incentives of patent ownership into the federal R&D system; the enactment of the Court of Appeals for the Federal Circuit, which insured the courts would apply the patent law consistently; and the Supreme Court’s ruling in Diamond v Chakraberty that living organisms could be patented. That decision stated that patents could “include anything under the sun that is made by man.” Today that quote is only ironic.

Over the next few years, the most interesting intellectual property trend to watch will be what happens with new patent applications. The number of utility patent applications filed in the United States declined in 2015 (compared with 2014) and again in 2017 (compared with 2016). If the downward slide continues, will this be due to smarter filing strategies, or will it be because less emphasis is being put on patents? Will it be because more emphasis is being placed on trade secrets? Is it because of an unfavorable climate in the United States for certain types of inventions? Filings in other parts of the world are on the rise at a time when U.S. utility applications are either stagnant or in decline. Could it be because patent applicants are moving elsewhere?

Failure is success if we learn. So why shouldn’t failure qualify as a trade secret? Competitors would love to avoid making the effort and taking the risk… Negative information is most commonly put at risk not by theft of the records of R&D, but by departing employees who are familiar with how a particular technical solution was created or optimized. Eager to help their new colleagues, a recent arrival may wince at a suggested development path and blurt out a warning not to go there. Even very general pointers about an engineering direction to try or to avoid can help a competitor reduce risk and shorten development time. That is why hiring someone who has worked on a similar project for a competitor can lead to trouble.

Protecting innovation through patents is the lifeblood of the global pharmaceutical industry. Without patents the world and its expanding population would be deprived of new and, ultimately, affordable life-saving medicines. Nevertheless, the high profitability of pharma companies has prompted an increasingly widespread (and often ill-informed) political debate on patents. This is not just because of mounting health costs but also the lack of access to life-saving medicines in developing countries. But this argument on the alleged high costs caused by patents falls short because most patents for essential medicines on the World Health Organization (WHO) list are expired and are available at generic medicine prices. Even so, patients in countries where they are most needed do not have access to generics. And the reasons for this are multiple, not least inadequate, poorly-funded healthcare systems.

Sen. Bernie Sanders (I-VT) introduced legislation requiring every agency and non-profit entity to include a “reasonable pricing” provision based on King’s formula for any life science invention made with government support. Apparently the colossal failure of a similar requirement forced on the National Institutes of Health (NIH) in the 1990’s which led to the collapse of industry partnerships without any reduction in drug prices is either unknown, or made no impression on Sen. Sanders. Or perhaps like his trust in socialism, he thinks that what failed in the past will somehow work by some weird magic if trotted out again.