ITSSD President Delivers Presentation at Moscow Entrepreneur's Association

As the result of the well-received article entitled How Market-Based Policies Could Spur Biotechnology Growth In Russia, recently co-authored by ITSSD President/CEO Lawrence Kogan and Russian government lawyer Yelena Bakulina, accessible at: http://www.wlf.org/upload/03-21-08balukina.pdf; http://www.insideronline.org/summary.cfm?id=7019; and http://www.itssd.org/Publications/03-21-08balukina.pdf , the ITSSD was invited to deliver a presentation at the 9th International Forum on High Technology of the 21st Century, convened by the Moscow Entrepreneur's Association and the U.S.-based Mid-Atlantic Russian Business Council on April 24, 2008.


Information about the event, which took place at the Moscow ExpoCenter, is accessible at: http://ma-rbc.org/event/9hightech.html .


The ITSSD powerpoint presentation is accessible at: http://www.itssd.org/Programs/KoganPresentationMidAtlanticRussiaBusinessCouncilMoscowExhibitionApril2008.ppt .

Improve Europe's Business Climate Plus Adopt Regional Patents: This Will Spur Company R&D Investment!!

Improving the Business Climate Will Spur European Company R&D Investments



By Lawrence A. Kogan





March 10, 2008




The synopsis provided by Bruno van Pottelsberghe in his recent Financial Times Leaders & Letters article “Europe must use its head on academic research” (3-7-08) is true concerning the unrealized potential of Europe’s antiquated R&D framework and the lag that it places upon the region’s technological and economic growth, inconsistent with the stated political goals of the Lisbon Agenda.
[SEE: http://www.ft.com/cms/s/0/85f21278-eb97-11dc-9493-0000779fd2ac.html ].


Professor van Pottlesberghe is most correct when he states, “the bottom line is that the EU needs now to adopt a common European patent - under discussion for 30 frustrating years- and spend more, and more wisely, on academic research...” I previously drew a similar conclusion in my article (“European universities learn importance of technology transfer” 9-29-06) in explaining why North American universities’ technology transfer offices had realised ‘a sixfold return’ in R&D spending, far greater than those realized in Europe.



Apart from the monies dedicated to R&D, I then stated that “Due credit must be given to the underlying US common law legal system, which recognises and protects temporary but exclusive private intellectual property right ownership in the know-how that underlies and is reflected in such research. Private intellectual property (e.g. a patent) is important precisely because knowledge is an intangible good that is not readily susceptible to valuation.”
[SEE: http://www.ft.com/cms/s/0/6b48c96c-4f99-11db-9d85-0000779e2340.html ].


However, that is the reality in North America, not Europe. The present ‘free movement of knowledge / ‘fifth freedom’ movement which increasingly pervades European public consciousness is likely to derail the enactment of region-wide patent legislation, just as it already impairs new thinking on how to spur the growth of innovative companies to carry that R&D to market.



I would thus add to my earlier conclusions the observation that government R&D spending and protection of patents alone cannot provide the necessary stimulus for business-driven innovation. What is also essential is the enactment of laws that facilitate entrepreneurship; i.e., the taking of economic risks, such as business formation and expansion, and incentives to reinvest company earnings.



In other words, apart from political rhetoric, European governments must create an actual economic enabling environment that promotes ‘doing business’ in Europe and then get out of the way. Unfortunately European countries, apart from Denmark, Ireland and the UK, which have reduced government funding of R&D, have not been too skilled in this endeavor.



If the 2007 World Bank’s Doing Business Report is any indication, it is only these countries that made it into the ‘top 10’ rankings. Indeed, a review of the report will show that, with respect to each of the following key metrics, most EU member states were laggards - the costs of: starting a business, dealing with licenses, workers, property rights, obtaining credit, protecting investors, paying taxes, cross-border trade, enforcing contracts, and closing a business. http://www.doingbusiness.org/EconomyRankings/Default.aspx?direction=desc&sort=1



To be more specific, only three EU member states besides those mentioned above made it into the ‘top 20’ - Finland (13), Sweden (14) and Estonia (17), while most of the remainder made it into the ‘top 50’ - Latvia (22), France (31), Slovakia (32), Portugal (37), Spain (38), Luxembourg (42), Hungary (45), Bulgaria (46), Romania (48) – with some even falling into the ‘top 100’ - Italy (53), Czech Republic (56), Poland (74) and Greece (100)!



Arguably, this report strongly suggests that the inability of EU member state governments to promote business-friendly enabling environments may correlate positively with EU business’ relatively low investment in research. Therefore, before the participants at this week's grandiose EU summit commence their obsessive over-thinking about the European R&D model, they should also consider how to improve the climate for business. Perhaps, this may provide the true answer to the principal question posed by Professor van Pottelsberghe: “What, then, should the EU and governments do to get business to invest more in research?”

China Amends S&T Law to Boost Research

Jia Hepeng


January 3, 2008


Source: SciDev.Net


http://www.scidev.net/News/index.cfm?fuseaction=readNews&itemid=4166&language=1


[BEIJING] China has revised its science and technology constitution to give greater incentives to researchers, in an effort to boost innovation.


China's legislature — the standing committee of the National People's Congress (NPC) — passed the revision of the 1993 Science and Technology (S&T) Progress Law last month (29 December).
The law states that the nation's overall research and development (R&D) budget, from both the government and private sectors, should continue to increase steadily each year.


R&D investment in China grew by 22 per cent in 2006, totalling 300 billion yuan (US$41.1 billion) and accounting for 1.4 per cent of the country's gross domestic product (GDP). Existing plans state that R&D spending will account for 2.5 per cent of China's GDP by 2020.


Under the amended law, industry will be more involved in innovative research activities and the government will set up funds to support innovation in small and medium enterprises. Research activities and required equipment will enjoy favourable tax rates.


Amendments to the S&T law will also allow scientists, or their institutions, carrying out public-funded research projects to own the resulting patents.


Additionally, the government will not retract patents unless their holders do not use them in "a reasonable period". Previously, there was no universal regulation on intellectual property rights.
[THIS A FORM OF THE EUROPEAN 'FAILURE TO WORK' DOCTRINE]**


Li Yuan, director of the NPC's administrative law office, explained at a news conference for the new S&T law that the looser stipulation on the patent period is intended as an incentive for researchers.


Scientists who do not complete scientifically high-risk projects will not be punished under the new law, provided their research records can prove the risk was too great. But researchers committing malpractice will be punished with measures including public exposure and the deprivation of the rights to apply for public funding.


Duan Weiwen of the Chinese Academy of Social Sciences and a research ethics consultant to the Ministry of Science and Technology, welcomes the amendments, saying they have summarised many ongoing S&T policies in a legal way. But he warns that the coordination of different departments is essential to implement the amendments.


In related news, China's cabinet, the State Council, approved 'The Key New Drug Creation and Manufacturing Programme' last month (28 December), which will support the development of more than a dozen innovative drugs over the next five years.

European Commission Hands 110th Congressional Majority & Presidential Contenders a New Political Issue - Bashing Private Intellectual Property Rights

The following article demonstrates indirectly how the ‘failure to work’ doctrine in international intellectual property (patent) law has been squeezed down from 4 years under the Paris Convention for the Protection of Industrial Property (Patents) to practically zero years, and then used as a justification by governments to declare a compulsory license if there is found to be a ‘lack of adequate competition’.

Pursuant to Article 5 of the Paris Convention, the ‘failure to work’ doctrine essentially affords each member country “the right to take legislative measures providing for the grant of compulsory licenses to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent”.

However, within the European Union, it appears that a company’s indigenously (internally) developed know-how (as opposed to know-how and technologies acquired by means of merger & acquisition), especially in the healthcare or information technology sectors, is deemed to be a ‘public’ good – or in the international context, a ‘global public good’ (GPG).

Consequently, if the medical or healthcare-related knowledge or technology is unique in the marketplace without peer, and the holders of the patents to such know-how or technologies impose conditions for licensing or refuse to license the patent altogether, the EU Commission’s Antitrust Directorate is empowered to deem (i.e., to invoke a legal presumption of 'monopoly' against) the holders of the patents to such know-how or technology as operating an illegal ‘monopoly’. This makes it easier for governments to recommend the use of antitrust remedies to ‘break’ the monopoly via the issuance of compulsory licenses even though there is NO predatory behavior by the company and NO unreasonable contractual or market behavior by U.S. legal standards.

Emerging country governments, such as the Government of Brazil, are now basing their policies of ‘universal access to healthcare’ and ‘universal access to knowledge’ (A2K) on this approach to patents law. Such approach has also been embraced by many Majority members of the 110th United States Congress.



EU Probes Pharmaceutical Industry
On Dwindling New Patents, Drugs
http://online.wsj.com/article/SB120048256196094295.html?mod=hpp_us_whats_news

The Wall Street Journal Europe

By CHARLES FORELLE
January 16, 2008 9:17 a.m.

BRUSSELS -- European Union investigators raided drug companies in several countries as the bloc's antitrust watchdog launched a wide investigation of potentially anticompetitive practices in the industry.

Neelie Kroes, the EU antitrust chief, said the industry-wide inquiry would examine whether large companies are abusing their market power to prevent competitors from bringing new drugs to market, or whether companies were colluding to restrain competition. [THIS AMOUNTS TO A 'WITCH HUNT' – CORPORATE CITIZENS IN CONTINENTAL EUROPE ARE DEEMED ‘GUILTY’ UNTIL PROVEN ‘INNOCENT’ – PRECISELY THE OPPOSITE SITUATION IN AMERICA DUE TO THE U.S. CONSTITUTION]


AstraZeneca PLC, GlaxoSmithKline PLC, Sanofi-Aventis SA, and Pfizer Inc. said they were among the companies contacted, although the commission did not name the companies searched Tuesday and early Wednesday, nor where they were located.

The EU's so-called sector inquiries are broad-brush examinations; they don't necessarily lead regulators to bring antitrust cases, but can result in substantial fines. Recent sector inquiries have focused on energy markets and payment-card systems. Both eventually resulted in antitrust action -- most recently in the EU's declaring unlawful a type of interbank fee set by MasterCard.

Mrs. Kroes cited figures indicating that the number of new drugs launched annually has declined from an average of 40 in the late 1990s to 28 between 2000 and 2004. "The pharmaceutical markets are not working as well as they might," she said. [THIS IS ANOTHER ‘MARKET FAILURE’ WHICH THE EU REGULATORS WISH TO ‘CORRECT’ THROUGH GOVERNMENT INTERVENTION/REGULATION ANATHEMA TO EXCLUSIVE PRIVATE PROPERTY RIGHTS]

The pharmaceutical sector inquiry seems likely to reanimate a debate about the intersection of competition policy and patent law. EU officials say one concern is that companies are "misusing" patent laws to block new drugs made by rivals. Such misuse might entail overbroad patent filings or specious lawsuits. The officials say that if the companies in question are "dominant," then any abusive behavior falls under their jurisdiction as a violation of EU monopoly rules.[THERE DOES NOT NEED TO BE REALLY AN ‘ILLICIT’ ACTIVITY – JUST THE MERE PRESENCE OF INNOVATION LEADERSHIP AND NO DESIRE TO LICENSE THE TECHNOLOGY...]

Another potential violation is more straightforward -- collusion between companies, for instance, agreeing not to enter each other's markets, or taking payment not to launch a competing drug. [THIS IS A LEGITIMATE ‘CONCERN’ IN THOSE INSTANCES WHERE IT CAN BE DEMONSTRATED BY CLEAR & CONVINCING EVIDENCE]

The EU has taken on alleged patent abuses before. In 2005, the Commission fined AstraZeneca €60 million ($89 million) for trying to block generic-drug makers from coming out with versions of its blockbuster ulcer drug Losec. The Commission said AstraZeneca gave "misleading" information to national patent offices that led them to wrongly extend the company's patents on Losec. AstraZeneca has appealed the case.

Under EU regulations, commission officials can raid the premises of businesses operating in Europe, whether or not they are European companies.

The EU began the sector inquiry with unannounced inspections -- triggering the first ones within hours of the commission's decision Wednesday to authorize the inquiry. In earlier sector inquiries, EU officials had begun more politely, with requests for information.

--Dow Jones Newswires contributed to this article.

Former ITSSD Intern Reveals How American & European Activists and Politicians Attack U.S. Intellectual Property Rights

The New War on Drugs:
Activists and Politicians Attack Intellectual Property Rights

Capital Research Center - Organizational Trends

January 2008

http://www.capitalresearch.org/pubs/pdf/v1199294989.pdf

America’s pharmaceutical industry is the envy of the world and the savior of millions of sick people. But activist groups, many of them founded by Ralph Nader and funded by liberal foundations, are campaigning to limit the industry’s incentives to produce new life-saving drugs. Their strategy focuses on undermining the intellectual property rights that protect pharmaceutical innovation.

By Karl Crow


Karl Crow is a 3rd Year student at Temple University's Beasley School of Law. In 2007 he was an intern at the Institute for Trade, Standards, and Sustainable Development (ITSSD) in
Princeton, New Jersey.

Most Indian drug majors too in line for patent protection

14 Dec, 2007, 0046 hrs IST,Khomba Singh, TNN




NEW DELHI:

It’s not just global drug discovery majors that are seeking patent protection. Out of the 8,000 drug patent applications in India filed between 1995 and 2004, about 40% are from Indian pharma companies.

Domestic majors such as Ranbaxy Laboratories, Dr Reddy’s Laboratories and Cipla have filed over 100 patent applications each. Between 1995 and 2004, the Indian patent office received over 8,000 patent applications related to medicine.

Ranbaxy Laboratories, India’s largest drug maker, has claimed protection for 112 drugs during the period, including few which are at various stages of clinical development. In addition, Ranbaxy has also filed 30 patents in 2006, including seven for new drug delivery systems (NDDS), which are in advanced stages of development.

Similarly, other pharma majors such as Cipla and Dr Reddy’s Laboratories have each sought protection for over 100 drugs, says Dr Amit Sengupta who reviewed the mailbox applications in India in collaboration with the health ministry. However, many of these applications, both from global MNCs and Indian companies, are frivolous which may not qualify as a candidate for a patent.

According to Professor Carlos M Correa, a former member of the World Health Organisation (WHO) Commission on Intellectual Property, Innovation and Public Health (CIPIH), many of the patent applications worldwide are merely ‘new laboratory techniques’ and therefore would not qualify for patents. “The pipeline of discovery drugs are drying up. While there are around a million applications in the US, only 20 new chemical entity (NCE) got US Food and Drug Administration’s approval in 2005 compared to 51 in 1997,“ he said.

[THIS IS NOT BRAIN SCIENCE - WHEN FACED WITH IDEOLOGUES LIKE DR. CORREA WHO DISPISE PRIVATE PROPERTY RIGHTS, ESPECIALLY IPRs, PROMOTE CONVERSION OF PRIVATE PROPERTY INTO PUBLIC COMMUNAL PROPERTY AND SEEK TO JUSTIFY DEVELOPING COUNTRY GOVERNMENT EXPROPRIATION OF PATENTS WITHOUT PAYMENT OF FAIR & ADEQUATE COMPENSATION, PROFIT-SEEKING LIFE SCIENCES COMPANIES IN THE PHARMACEUTICAL & BIOTECHNOLOGY SECTORS WILL SLOW DOWN THEIR DEVELOPMENT OF PATENTABLE MEDICINES.]**

Companies are now merely tinkering with the existing drug and seeking patent applications for the same. Only 2-3 application from each of the Indian companies are serious contenders for a patent, Dr Sengupta added. However, some innovator companies feel that there are many innovations which deserve patent protection. “Innovations are either patentable or non-patentable. Patent offices are getting mature to weed out those inventions which do not merit a patent and one should look at the actual data of patents rejected before a claim like this is made, “ Novartis India vice-chairman and MD Ranjit Shahani said.

Since India became trade-related aspects of intellectual property rights (TRIPS)-compliant in 2005, both global and Indian companies have rushed to claimed protection for new drugs or innovations. If drugs get patented, the innovator company will get exclusive marketing right for 20 years. Few global companies have already got patent for drugs in cancer, anti-Aids and other therapeutic areas.

REQUEST TO MAKE INDIAN PATENT INFORMATION PUBLIC

The petition: REQUEST TO MAKE INDIAN PATENT INFORMATION PUBLIC

Dear Mr. Prime Minister: With the 2005 amendments, the Indian patent regime has come a long way. Indeed, India is turning out to be a trendsetter of sorts. Asian countries such as the Philippines are in the process of modelling their patent regime on the Indian Patents Act.

Sadly however, the current state of affairs at the Indian patent office (IPO) leaves much to be desired. Whilst there are a number of issues for concern, we focus on two of the most pressing ones.

1. Creating Comprehensive Patent Database

Firstly, despite India’s IT prowess, we do not have a full-fledged electronic patent database as yet. As you can appreciate, such a resource is of tremendous value to all patent stakeholders—inventors, industry, policy makers, civil society, academicians and members of the public. Most importantly, it will be a blessing for patent examiners. Owing to their inability to readily access prior patent application, they are currently handicapped in their examinations.

Some information is made available electronically by the IPO, but this is far from ideal. Critical components of a patent application, such as the claims and the complete specification are not available. It bears noting that almost all the major patent offices worldwide provide comprehensive patent information via publicly accessible databases. It also bears noting that the National Informatics Center (NIC), an agency of the Ministry of Information Technology, was tasked with the responsibility of creating a comprehensive patent database. Despite receiving funds for this task from WIPO as far back as 1993-96, they have not been able to deliver!

2. Uploading Patent Office Decisions

Secondly, it is lamentable that patent office decisions are never published. Illustratively, there are over 7000 pharmaceutical applications to be examined and many of them are under opposition. The patent office has accepted or rejected several cases, relying in part on section 3(d), an innovative section unique to India.

Pharmaceutical patents impact not just the applicant and his/her opponent, but also the man/woman on the street interested in accessing affordable medicines—a sentiment that has formed the basis of our well thought out patent regime. You will therefore appreciate the importance of making these decisions public. Greater public scrutiny of patent office decisions is likely to spur more transparency and accountability.

Currently, one has to write to the patent office and specifically request individual decisions—a terribly inefficient way of doing things. Today, most decisions by Indian courts are uploaded onto their respective websites within few days of the judgment being handed down. We therefore request you to urge the concerned authorities to do the same for patent office decisions. It will interest you to know that patent office decisions were published for a short period in the 1990’s.

A revival of this trend is absolutely essential, albeit in an “electronic” format and in a more timely fashion. Here again, as you may know, most advanced patent jurisdictions have websites that contain such information. In short, a website detailing comprehensive patent information, including patent office decisions will create more transparency and make the IPO more accountable. It will also equip stakeholders with timely information on patents. This will in turn lead to a more informed use of the patent system and better policy suggestions.

We therefore humbly request you to take this up on a priority basis. You will appreciate that the two concerns outlined above are not very resource intensive. More importantly, they will be an excellent example of India leveraging its IT prowess to achieve a worthwhile public policy goal.

Thanking you, we remain, Most sincerely yours, Shamnad Basheer Mrinalini Kochupillai Aysha Shaukat Prashant Reddy Duncan Bucknell Sumathi Chandrasekharan For: SpicyIP CC: Dr. Sam Pitroda, Chairman,The National Knowledge Commission Mr Kamal Nath, Minister for Commerce and Industry Mr Kapil Sibal, Minister for Science and Technology Dr. Montek Singh Ahluwalia, Deputy Chairman, Planning Commission

WIPO Consults On Protecting Traditional Knowledge, Genetic Resources

By Catherine Saez

How best to protect traditional knowledge, traditional cultural expressions and genetic resources against misappropriation and misuse was the main theme of a recent community consultation in the form of a roundtable organised by the World Intellectual Property Organization (WIPO).

The WIPO event on 10-12 December came in response to “the strong level of interest expressed by many national authorities and community representatives in sharing experience and developing dialogue and cooperation on practical initiatives to build capacity for appropriate protection.” The event was announced two weeks before it took place. WIPO said it aims to strengthen the practical capacity of holders of traditional knowledge (TK), traditional cultural expressions (TCEs, or folklore) and genetic resources (GR). It is preparing, among other things, a TK documentation toolkit, guidelines and a database for GR, and a creative heritage project.

The informal roundtable was organised around four workshops (creative heritage, TK and GR in the patent system, TK toolkit, and “customary law”) where participants were invited to share views and experiences. Work was then reported to all participants for discussion. Jacob Simet, rapporteur of the creative heritage session, said that “a great part of the problem could be addressed at the institutional and community level.” He said the misappropriation of TK and TCEs is worsened by tourism, thereby creating a dilemma for communities as it provides benefits while at the same time acting as an agent of misappropriation when, for example, tourists take photographs or film indigenous communities.

[TOURISTS AND INDUSTRY CANNOT MISAPPROPRIATE THAT WHICH NO ONE OWNS. UNLESS 'TRADITIONAL KNOWLEDGE' CAN BE REDUCED TO PATENTABILITY CRITERIA OR RECOGNIZED AS A 'TRADE SECRET', TWO FORMS OF PRIVATE INTELLECTUAL PROPERTY, THEN IT REMAINS IN 'THE COMMONS' AND IS OWNED BY NO ONE ]**

On the database project, participants on the closing day generally agreed that each country has a different level of examination and thus the database structure should be put together in a standardised and prescribed language taking into consideration local needs and focusing on the goals reflected in the recently adopted WIPO Development Agenda.

In the current system, patent examiners use an array of databases, according V K Gupta, a panel co-convener. “A system should be set up to ease the work of patent examiners,” he said, and suggested a systematic use of metadata, which provide greater detail. Many participants were concerned about protection of the database, which they said should not enter the public domain, but instead should be reserved for the sole use of patent examiners at the risk of betraying the trust of contributors. Xuan Li of the intergovernmental South Centre asked how the database was going to protect the rights of TK holders in cases such as Chinese traditional medicine that uses very complex plant preparations with over 20 ingredients. It would be very difficult to determine novelty in a patent application involving such products, she said.

Participants appeared to concur and said that patent examiners should be skilled and trained in different specialties. Li said that in the case of Chinese medicine it would be additionally difficult to examine a patent application given that China has 55 ethnic communities, each with their own preparations. The toolkit workshop synthesised the benefit and danger of documentation, according to participants.

The issue of confidentiality in particular was put forward as the group shared their questions about whose interest lies behind documentation, who is funding it and what kind of problem would arise if the databases were linked to funders. Brendan Tobin, rapporteur on the TK toolkit workshop, said that “if you can’t enforce the obligation of confidentiality, you need to take this into consideration.” He also said it was important to ensure that the TK databases are, in the main, established and maintained by communities, and that ownership of management structure should, where possible, be with local communities.

The potential danger of “catastrophic” disclosure, with the database “going wild on the Internet” also was a serious concern for the roundtable participants, with the effort to protect traditional knowledge possibly having, in this scenario, the reverse effect. According to WIPO’s Antony Taubman, the organisation has no initiative to establish a database but “would only ever work with existing initiatives, and would rather be a portal for access for patent examiners.” It should be a practical tool enhancing both protection and patent quality, he said.

WIPO has been working on different initiatives to address the issue of misappropriation of TK, TCEs and GR for the last five years, Taubman said. “WIPO wants to take it to the operational level,” he said, emphasising the organisation’s wish to produce non-binding guidelines meant to reflect best practices. The first phase of the guidelines, which currently are being written, is to reach out and solicit experiences and opinions. The first draft is expected to be released early next year. Roundtable participants recognised a need for capacity building and introducing safeguard mechanisms to protect the database. Manuel Ruiz from the Third World Network mentioned that the Honey Bee Database, which involves grassroots innovations, is an initiative that has won the trust of the communities. Catherine Saez may be reached at csaez@ip-watch.ch.

Patents Assume Increasing Global Importance Value Reflected in the Steady Increase of United States and Foreign Issued Patents

Despite fundamental challenges, including increasing hurdles to obtain and enforce proprietary rights, the centuries-old United States patent system is still regarded as a reliable mechanism for inventors and product developers to preserve the legal protections covering their technological achievements.

An enduring value is that patents instill confidence that the necessary legal exclusivity will be available for those seeking to recoup often sizeable investments during their products’ lifetimes. This is evident in the steady increase in issued patents over the years.

In a single year, 1996, the United States and foreign patent offices issued 121,805 patents. A decade later in 2006, the number of patents issued was 196,436, an increase of 38%. There was a 32% difference in the U.S. patents alone issued in 1996 and 2006, that is, an increase from 69,419 to 102,267, respectively. From the inception of patents to the end of 1996, a total of 3,455,886 were issued by the U.S. and foreign countries, while the U.S. alone issued 1,910,390, according to data from the U.S. Patent and Trademark Office.

In April 2005, Massachusetts Institute of Technology’s Technology Review magazine reported that the $150 billion earned globally from patent licensing that year was expected to grow by some 30% a year for the next several years. On that basis, earnings from patent licensing fees could exceed $250 million this year.

The right to patent an invention has its genesis and mandate in the U.S. Constitution. “As patent law evolved, one of the purposes was to encourage disclosure of inventions so that science could benefit and progress—in return, the inventor was granted a limited-term government monopoly,” says Lita Nelsen, director of Technology Licensing at MIT.“The basic premise is that you expose your invention to the public such that interested parties learn from it, in exchange for a monopoly,” says Mike Slessor, managing director, Office of Technology Transfer, California Institute of Technology.

Technology driven businesses are by far the largest users of patents. Contract research and engineering services companies and the technology transfer and licensing operations of research universities, among others, are also involved. Nelsen says that in university licensing, “Patents are used to accelerate the movement of state-of-the-art research into the economy by providing an incentive for companies to invest in early stage, unproven technologies.” She acknowledges that universities in general constitute a small player in the overall patent world, compared to commercial entities. “The fruits of university researchers’ efforts are not products but very early risky development opportunities, which if placed in the public domain will cause people to wait until someone else demonstrates that they actually work,” says Nelsen.

University licensing received a boost from the passage of the 1980 Bayh-Dole Act—before which less than 250 patents a year were granted to universities. MIT had some form of licensing since the 1930s, but prior to the act, universities were not very conscious of patents. “Their policies were either nascent or non-existent, and they may have coped with it on an ad-hoc basis—then once Bayh-Dole came in, there was much more uniformity,” Nelsen explains.This act allows universities to retain ownership of inventions funded with federal research grants.

The universities’ end of the bargain requires them to file for patent protection and pursue commercialization. Hundreds of leading universities operate highly efficient and capable technology licensing offices and, like MIT and CalTech, the patents they acquire and manage come almost exclusively from efforts of researchers within their university. Considerable cooperation exists among universities and their researchers.

“This is a societal mission rather than a competitive business,” says Nelsen.“Our job is to find out if our researchers’ ideas are new, generally via extensive literature searches,” says Nelsen. The next step is to weigh the effort and money to secure a patent, against investor interest, she notes. Most patents are used defensively, to ward off competitors. “Legally, patents are a mechanism to exclude potential competitors. A university has little interest in this exclusionary approach because it is not in competition with the commercial world. “We are, however, interested in getting interested parties to invest early in as yet unproven technologies,” explains Nelsen. “So we give them the right to exclude others.”

MIT’s licensing office has dealt with leading-edge technologies such as light emitting diodes (LED), computer caching of large amounts of data over multiple servers, diagnostics for bladder cancer, agents for heart imaging, superconductors, and advanced battery technologies, among others, according to Nelsen. The office also oversees inventions in laboratory instrumentation. “A number of our faculty members are now working on microfluidics, which is likely to be important in anything from cell counting to chromato- graphy,” says Nelsen. Every year, the MIT technology transfer group sees some 500 technology disclosures from which it acquires about 200 to 300 new patents. It grants about 100 licenses, and starts some 25 to 30 companies a year, some of which are now quite substantial. “In numerical terms, we have had the most impact in biotechnology,” says Nelsen.

“CalTech’s licensing office is here solely to help researchers and inventors navigate the post-invention, pre-commercialization stages of getting their technologies to market,” says Slessor. Success stories include image sensor technology that was used in the Voyager and Cassini space missions. “This is at the forefront of low-power, high- performance image sensors,” Slessor adds. Another huge success was the gene sequencer that became a foundation for Applied Biosystems human genome mapping work. Slessor says that his group gets about 200 to 300 disclosures a year from researchers. “For about two-thirds of those we pursue, we get at least a U.S. patent. If there is a good business case, we will seek foreign protection as well.” Over its ten years in existence, the CalTech technology transfer office initiated about 150 start-up companies. This is a hugely important area for technology-driven companies.

Bill Munroe, director of Licensing and Business Development at Beckman Coulter, states, “Patents and intellectual property are an ever growing focus in the field of medical diagnostics. We are certainly very active in trying to obtain patents for the technologies we develop, as well as obtain licenses that are necessary for some of the products we want to introduce. We expend much time and effort to make sure we understand the landscape.” “As we go forward, there will be an even greater need for this, especially when it comes to novel content such as the assays that run on the equipment. Certainly, the fundamental technologies that go into some of the equipment are patented, and you need to acquire licenses to practice some of those technologies.“That is key for getting into certain areas, and is particularly true in the area of molecular diagnostics and hematology where we are very active,” says Munroe. He adds that while patenting technologies is central in the R&D and product development processes, “We don’t make product decisions because of a patent; we make patent decisions because of products.”

Contract research and engineering service companies like Invetech, KMC Systems, Battelle, Stratec and Cambridge Consultants among others provide product development services to large numbers of client companies. “The business model is fee for service,” says Andreas Knaack, director, Instrument Design and Development with Invetech. “This means that we are hired to develop products as fast as possible with the maximum value for money, when you consider cost against product benefits and product features.” Knaack says that Invetech works somewhat differently from a number of contract researchers in that they transfer all patents and other intellectual property to the clients who engage and pay for Invetech’s services. “When a company outsources the development of technology, it is critical that there be a clear understanding of who will own the IP generated in the process,” says Knaack. “We provide the full complement of ideas to our clients, and we work with them to identify the ideas that are worth patenting. This is quite pivotal to our clients. They need to protect their business positions.”

Invetech works on very early research, such as new detection technology in spectrophotometers, as well as with products that are already well defined by clients but which need detailed solutions. Both situations offer opportunities for Invetech to help enhance its clients IP portfolio, according to Knaack. In the future, he sees a trend toward smaller technology— samples, reagent volumes, footprint—and the need for greater throughput with larger instrumentation. In clinical diagnostics, one of Invetech’s areas of focus, he sees more movement toward point-of-care testing, which will require smaller-sized consumables, and more use of microfluidics, nanotechnology and highly sensitive optics.

In the near future, CalTech’s Slessor does not anticipate dramatic changes in the patent arena. “As companies increasingly look for good innovations outside their R&D departments, there will be more pressure on university researchers to come up with ideas,” he says.

Beckman Coulter’s Munroe notes that patents may become harder to enforce in the future. Legal adjustments in the standards for obviousness may provide patent infringers a new basis for arguing that a patent is invalid. Proposed changes such as limiting the number of claims and continuations in patent applications would make it more difficult to obtain patents—and if you do get them, it will be more difficult to enforce them, he notes.“

Assuming that some of the proposed changes to our patent laws do not happen, I do not see any dramatic changes in the next several years. I envisage the continuation of a system that essentially works,” says Nelsen. This is important, she adds, because “patents and intellectual property are becoming increasingly important around the world.”

Bernard Tulsi is a freelance writer based in Newark, Delaware. He may be contacted at btulsi@comcast.net or by phone at 302-266-6420.

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