A mistake to weaken U.S. patent rights

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Copyright 2007 Newark Morning Ledger Co.All Rights Reserved
The Star-Ledger (Newark, New Jersey)
November 26, 2007 Monday

DANIELE CAPEZZONE
Congress is considering legislation to change America's patent system. The bill would change the means by which patent lawsuits are filed, reduce punishments for infringement and, most consequentially, reward patents to the first person to file with the government, not the first person to invent.
Advocates claim that the proposed changes would bring the American patent system in line with the European one. Litigation procedures would be streamlined and international cooperation enhanced.
But as a member of the Italian Parliament who is deeply familiar with the European patent system, I believe such a move would be a step backward for patent rights in the United States. It also would retard the efforts of Italy's Parliamentary Productivity Committee to import American-style intellectual property protections into our dormant and overregulated pharmaceutical and biotechnology sectors.
For the most part, support for the congressional measure is coming from the technology industry, which has long called for lawmakers to weaken the protections offered to patent holders. Citing the nearly 200 patent infringement lawsuits that technology firms have faced in just the past 21 months, large companies like Microsoft and IBM contend that patent reform would provide them with the flexibility needed to invent new products without fear of lawsuits.
Support is also coming from special-interest groups that blame strong patent protection for America's high drug prices. Too often, these advocates claim, pharmaceutical companies receive patent protection on new and expensive drugs that are simply updated versions of drugs that already exist.
But these supporters ignore the fact that the United States leads the world in research-based innovation, particularly in the health sciences, by virtually any measure. Fifteen years ago, Europe produced 80 percent of the world's new drugs, while the United States lagged far behind. Today, the situation has reversed and the United States produces 80 percent of new drugs.
It's easy to see why - the U.S. pharmaceutical industry spends roughly $5 billion more annually than Europe does on research and development. Europe's rate of investment growth lags as well. While the amount of money spent by U.S. pharmaceutical firms on research grew by 9.7 percent last year, it grew by only 5.3 percent in Europe.
These disparities are directly attributable to the relative weakness of Europe's patent system. Only if a pharmaceutical firm can recoup its initial investment - $800 million per drug, by most accounts -will it make the massive outlays necessary to invent a new cure in the first place.
Italy's pharmaceutical industry is a prime example of how Europe's patent system retards the sector's growth.
Consider two facts: Italy possesses the world's seventh-largest economy and is home to the second-highest number of drug companies per person in the European Union. In other words, the pharmaceutical industry plays a huge role in the Italian economy.
Yet not one of Italy's drug manufacturers is among the 50 largest worldwide. Not coincidentally, Italy ranks 27th in the world in property protection - well behind most EU countries, according to the International Property Rights Index.
Ignoring this relationship is unwise.
Other nations have had considerable success in following the American model of strong patent protection. Thirty years ago, for instance, Japan modified its copy-friendly laws to grant full patent protection for 15 years. Consequently, research and development spending has skyrocketed, such that Japan today is among the world leaders in pharmaceutical research and development. Canada, too, has experienced a great deal of growth in its knowledge-based industries since strengthening its patent system 20 years ago.
In an age of rapid globalization, national competitiveness is among the most important issues that policymakers can address. For far too long, Europe's leaders have given short shrift to intellectual property standards, and today, our once-proud and innovative firms are paying the price. Italy has suffered a great deal and faces many challenges in reclaiming its rightful place as a source of pharmaceutical research.
As a European working to restructure my country's patent system by following the U.S. model, I can express nothing but puzzlement at Congress' quest to tear down the legal structure that has put the United States at the forefront of pharmaceutical innovation.
Daniele Capezzone is a member of the Italian Chamber of Deputies.
Infobox: America's strong patent protections have helped make research-based innovation possible and have served as a model for other countries.