Patent Docs

The Financial Times' Take on Gene Patenting

By Kevin E. Noonan --

The staid Financial Times (London) has an article today on the gene patenting debate, and while there are things to criticize in it, the article (perhaps predictably) takes a carefully measured, dispassionate (and welcome) tone ("Who steals the gene from off the common"; free registration required).

The paper's conservative bona fides are established on its website:

First published in 1888 as a four-page newspaper, the Financial Times' initial readership was the financial community of the City of London.  The Financial Times soon established itself as the sober but reliable "stockbroker's Bible", with its only rival being the slightly older and more daring Financial News.  In 1893, the FT turned salmon pink -- a masterstroke that made it immediately distinguishable from its competitor.  From their initial rivalry, the two papers merged in 1945 to form a single six-page newspaper.  The Financial Times brought with it a higher circulation, while the Financial News provided enormous editorial talent.

And it is with a "sober" voice that the article by James Boyle, William Neal Reynolds Professor at Law, Duke Law School addresses a frequently emotional subject.  He cites critics of gene patenting as describing a "'genetic land grab' that promised to privatize the common heritage of mankind," and characterizes their arguments as "frankly moral, protesting the hubris and in some eyes, heresy, of claiming to own the human genome."  He contrasts this with arguments that "patents over genes [are] necessary to spur investment and jump start biotech innovation."  And he includes the third part of the debate, whether gene patents "spur innovation" or slow it, by "introducing a tangle of property rights into the most fundamental building blocks of research science."

Although evenhanded, the piece suffers from the common misconception that genetic information is patented (Judge Sweet's view), rather than isolated nucleic acids themselves as chemical compounds (which, despite Judge Dyks' recent pronouncements, has been the Federal Circuit's view).  This deficiency also informs the article's discussion of what the author calls a "new consensus," patterned on the recent publicity regarding the Alzheimer's Disease Initiative.  As previously reported in The New York Times, this is an effort by the National Institutes of Health joined with academic and "commercial" researchers "to unlock the secrets of that debilitating disease."  The key development, cited in this article as well as the original Times piece, was that the data from the collaboration would be made public "immediately," and that "no one would own the data" (and no one would file any patent applications, although "private companies would ultimately profit from any drugs or imaging tests developed as a result of the effort").  Professor Boyle hails this development as one where "all parties . . . are better off."  He attributes (without attribution) to private companies "who had watched their drug pipelines dry up" the fear that "the old model of in-house development and jealous guarding of data" would not be able to "unlock such complex biological mysteries" as the motivation for joining the initiative.

Perhaps.  It is also good to remember that a great deal of the initial research from the Initiative (like much initial research) was unlikely to lead to any patentable subject matter in the first place.  Patents protect inventions, not data.  As the Federal Circuit said in Ariad v. Eli Lilly:

Ariad complains that the doctrine disadvantages universities to the extent that basic research cannot be patented.  But the patent law has always been directed to the "useful Arts," U.S. Const. art. I, § 8, cl. 8, meaning inventions with a practical use, see Brenner v. Manson, 383 U.S. 519, 532-36 (1966).  Much university research relates to basic research, including research into scientific principles and mechanisms of action, see, e.g., Rochester, 358 F.3d 916, and universities may not have the resources or inclination to work out the practical implications of all such research, i.e., finding and identifying compounds able to affect the mechanism discovered.  That is no failure of the law's interpretation, but its intention.  Patents are not awarded for academic theories, no matter how groundbreaking or necessary to the later patentable inventions of others.  "[A] patent is not a hunting license.  It is not a reward for the search, but compensation for its successful conclusion."  Id. at 930 n.10 (quoting Brenner, 383 U.S. at 536).  Requiring a written description of the invention limits patent protection to those who actually perform the difficult work of "invention" -- that is, conceive of the complete and final invention with all its claimed limitations -- and disclose the fruits of that effort to the public.

That research hypotheses do not qualify for patent protection possibly results in some loss of incentive, although Ariad presents no evidence of any discernable impact on the pace of innovation or the number of patents obtained by universities.  But claims to research plans also impose costs on downstream research, discouraging later invention.  The goal is to get the right balance, and the written description doctrine does so by giving the incentive to actual invention and not "attempt[s] to preempt the future before it has arrived."  Fiers, 984 F.2d at 1171.  As this court has repeatedly stated, the purpose of the written description requirement is to "ensure that the scope of the right to exclude, as set forth in the claims, does not overreach the scope of the inventor's contribution to the field of art as described in the patent specification."  Rochester, 358 F.3d at 920 (quoting Reiffin v. Microsoft Corp., 214 F.3d 1342, 1345 (Fed. Cir. 2000)).  It is part of the quid pro quo of the patent grant and ensures that the public receives a meaningful disclosure in exchange for being excluded from practicing an invention for a period of time.  Enzo, 323 F.3d at 970.

And it is also well to remember that the reason for the extensive collaboration between scientists (who heretofore guarded their pre-publication Alzheimer's disease research results just as jealously as any commercial enterprise) is precisely because Alzheimer's disease has proven so intractable.  In today's New York Times is an article bemoaning the lack of progress at developing an effective treatment for the disease, in the face of 30 years effort (and 10 years of that same Alzheimer's Disease Initiative so praised by Professor Boyle).  So while it is evident that at least some of the participants were happy (and self-satisfied) to paraphrase Quincy Jones by proclaiming that they "left their intellectual property at the door," it is less evident that anything of commercial value (or any intellectual property) was put at risk by what was publicly disclosed by the Initiative.  (Recognition of this reality explains as well as the Professor's speculation does why commercial entities were willing to participate in the Initiative.)

Being the Financial Times, the article is quick to point out that "[t]he idea is not to give up property rights," because "these will be essential in the development of therapies down the line."  Rather, Professor Boyle contends that "science -- and commerce -- will benefit from the establishment of a pre-competitive commons, a pool of information from which all can draw," using the NIH as an "honest broker."  As evidence of a trend, he cites the Bermuda Accords guiding the public prong of the Human Genome Project, the Sage Bionetworks project, as well as the Science Commons (which organization had Professor Boyle as one of its founders).  He suggests that the economic tools exist to ascertain the best ways to "jump-start commercial innovation" while at the same time recognizing that the task of deciding where sharing should end and privatization and property rights begin is complex.  Refreshingly, he says that this enterprise "is not an ideological war but a pragmatic process of design."

The article charmingly analogizes the gene patenting debate to enclosure of the English commons over 500 years ago, and in doing so returns the analogy from the "anticommons" rhetoric that usually accompanies discussions of this debate.  The article begins and ends with part of a poem regarding this ancient argument:

The law locks up the man or woman
Who steals the goose from off the common
But leaves the greater villain loose
Who steals the common from off the goose
And geese will still a common lack,
Til' they go and steal it back.

However the gene patenting debate is resolved, it would be well if the same benefits garnered from enclosing the common -- providing the greatest benefits to the greatest number -- are the result.

National Law Journal Editorial Questions USPTO Three-Track Examination Proposal

By James DeGiulio --

Earlier this summer, U.S. Patent and Trademark Office Director David Kappos announced a proposal for a three-tiered patent prosecution regime that could be instituted in the Office (see "USPTO Director Announces New Examination Options").  The new regime will provide for an accelerated examination track, a standard (status quo) track, and a delayed examination track.  Of course, there will be appropriate fees depending on the examination track selected.  For more information on the three-track proposal, see "USPTO Publishes Notice Regarding Enhanced Examination Timing Control Initiative."

The three-tiered examination proposal is intended to address the application backlog at the USPTO and its alleged negative impact on innovation.  However, according to an August 16 editorial published in the National Law Journal ("New patent regime won't help"), this proposal is vastly insufficient to remedy the application backlog and will merely let richer customers get faster patent reviews by paying more for the privilege.

The editorial, written by David Feigenbaum (at left), a principal at Fish & Richardson in Boston, vigorously rejects the proposal as any type of solution to the USPTO's application backlog.  Mr. Feigenbaum argues that while the three-track proposal may result in greater fee collections from some applicants, a complete overhaul of the patent system from Congress is the only way to truly address the backlog.  The source of the backlog, according to the author, is the interaction with patent examiners under the current system, calling the exchange "overly iterative, done on paper, gated by arcane time periods for action and delayed by almost endless deadline extensions."

Mr. Feigenbaum places the responsibility for reform squarely on Congress, charging them with the task of changing a system that is "tailored to be unresponsive to modern technology and work styles."  None of the current proposals go nearly far enough, according to the author of the op-ed piece.  The three-tiered proposal, as well as other so-called patent reform proposals, are described as merely "tinkering with where money and rights will land post-issuance and in litigation," accusing Congress of refusing to legislate at the USPTO, where it is most needed.  Mr. Feigenbaum challenges Congress to write into the law proper funding for the Patent Office, combined with "clear instructions to dump the 19th century nonsense (quaint though it may be) and operate like a 21st century business."  His suggestions include increasing phone interviews, encouraging interaction with applicants over very short periods of prosecution, and yielding quicker decisions.

James DeGiulio has a doctorate in molecular biology and genetics from Northwestern University and is a graduate of Northwestern University School of Law.  Dr. DeGiulio is a member of MBHB's 2010 associate class and he can be contacted at degiulio@mbhb.com.

Facts, Perhaps the Antidote to the Anti-gene Patenting Plague

    By Kevin E. Noonan --

It is apparent that the facts are often at risk or ignored by opponents of gene patenting.  Indeed, the various forms of fact-twisting or outright falsehood ("corporations own your genes") suggests that it isn't facts that are at issue but opinions, and how the public's opinion on gene patenting is to be best manipulated to oppose the practice.

One example (of the very many) of this phenomenon came to us in a reader comment to our post, "Huffington Post Provides Latest Ant-gene Patenting Soapbox" last week.  Our commenter writes:

While the errors throughout her "editorial" are too numerous to recount, her discussion of African sleeping sickness deserves special recognition.  She writes "In 1990 Sanofi-Aventis developed the drug Ornidyl (eflornithine) which is safe and effective against trypanosomiasis but it was withdrawn from the market in 1995 because few poor subSaharan sufferers could afford it.  Ornidyl can no longer be bought for love or money but Aventis, and later, Bristol-Myers Squibb, began to market eflornithine to the West as Vaniqa, a prescription-only facial depilatory."

First, Orindyl for sleeping sickness she mentions above is eflornithine via intravenous injection, while the eflornithine currently marketed as Vaniqua is formulated as a topical creme.  This is a major difference she conveniently overlooks.  And much more importantly, her claim that the drug is unavailable is completely false.  "In 2001, Aventis (now Sanofi-Aventis) and the WHO formed a five-year partnership, during which more than 320,000 vials of pentamidine, over 420,000 vials of melarsoprol, and over 200,000 bottles of eflornithine were produced by Sanofi-Aventis, to be given to the WHO and distributed by the association Médecins sans Frontières (also known as Doctors Without Borders) in countries where the sleeping sickness is endemic ... From 2001 (when production was restarted) through 2006, 14 million diagnoses were made.  This greatly contributed to stemming the spread of sleeping sickness, and to saving nearly 110,000 lives.  This changed the epidemiological profile of the disease, meaning that eliminating it altogether can now be envisaged.[9]  . . .  The positive results of the 2001-2006 partnership between Sanofi-Aventis and the WHO in the fight against sleeping sickness motivated and justified the decision taken by the Sanofi-Aventis Group's senior management to continue supporting the WHO at the same level for another five years, 2006-2011," citing "IFPMA Health Initiatives: Sleeping Sickness."

I guess I must concede that Ms. Washington's point may actually have been accurate, as eflornithine really is not avialable for "love or money" since Sanofi, WHO and MSF have collaborated to make it available for free.  All this information is available at Wikipedia or the Sanofi website http://en.sanofi-aventis.com/binaries/brochure_aam_en_tcm28-18133.pdf.

(Quoted citations from Wikipedia, see, http://en.wikipedia.org/wiki/Eflornithine).

In addition, our commenter states Ms. Washington "is wrong that there is only [one] drug for HCV, with a 20% cure rate (she is off on both points)."  Again quoting from Wikipedia (with references to supporting scientific journal articles; http://en.wikipedia.org/wiki/Hepatitis_C#Treatment):

Current treatment is a combination of Pegylated interferon-alpha-2a or Pegylated interferon-alpha-2b (brand names Pegasys or PEG-Intron) and the antiviral drug ribavirin for a period of 24 or 48 weeks, depending on hepatitis C virus genotype.

Pegylated interferon-alpha-2a plus ribavirin may increase sustained virological response among patients with chronic hepatitis C as compared to pegylated interferon-alpha-2b plus ribavirin according to a systematic review of randomized controlled trials.  (Awad et al., (2009). "Peginterferon alpha-2a is associated with higher sustained virological response than peginterferon alfa-2b in chronic hepatitis C: Systematic review of randomized trials.".  Hepatology (Baltimore, Md.) 51 (4): 1176–84. doi:20187106. PMID 20187106).  The relative benefit increase was 14.6%.  For patients at similar risk to those in this study (41.0% had sustained virological response when not treated with pegylated interferon alpha 2a plus ribavirin), this leads to an absolute benefit increase of 6%. 16.7 patients must be treated for one to benefit ( number needed to treat = 16.7. click here to adjust these results for patients at higher or lower risk of sustained virological response).  However, this study's results may be biased due to uncertain temporality of association, selective dose response.

Treatment is generally recommended for patients with proven hepatitis C virus infection and persistently abnormal liver function tests.

Treatment during the acute infection phase has much higher success rates (greater than 90%) with a shorter duration of treatment; however, this must be balanced against the 15-40% chance of spontaneous clearance without treatment (see Acute Hepatitis C section above).

Those with low initial viral loads respond much better to treatment than those with higher viral loads (greater than 400,000 IU/mL).  Current combination therapy is usually supervised by physicians in the fields of gastroenterology, hepatology or infectious disease.

The treatment may be physically demanding, particularly for those with a prior history of drug or alcohol abuse.  It can qualify for temporary disability in some cases.  A substantial proportion of patients will experience a panoply of side effects ranging from a 'flu-like' syndrome (the most common, experienced for a few days after the weekly injection of interferon) to severe adverse events including anemia, cardiovascular events and psychiatric problems such as suicide or suicidal ideation.  The latter are exacerbated by the general physiological stress experienced by the patient.

Responses can vary by genotype.  (Approximately 80% of hepatitis C patients in the United States have genotype 1.  Genotype 4 is more common in the Middle East and Africa.)

Early virological response is typically not tested in non-genotype 1 patients, as the chances of attaining it are greater than 90%.  The mechanism of cure is not entirely clear, because even patients who appear to have a sustained virological response still have actively replicating virus in their liver and peripheral blood mononuclear cells.  (Castillo et al., (2006). "Hepatitis C virus replicates in the liver of patients who have a sustained response to antiviral treatment". Clin Infect Dis 43 (10): 1277–83. doi:10.1086/508198. PMID 17051492)

In the face of such consistent disinformation, it can be difficult to decide the most effective course for combating it.  However, some suggestions come to mine:

First, don't challenge the morality issue component, since it is generally hard if not impossible to change deeply-held moral beliefs (no matter how out of touch with reality).

Second, however, do challenge the flawed logic.  For example, using claims made in Ms. Washington's article, just because the National Health Service in Britain or a private insurance company in the U.S. won't pay for a test or a treatment doesn't mean the test is too expensive.  It means the payor has decided it can wait until the cost of the test goes down when the patent expires, and the patients denied the test be damned -- the bottom line is more important.

Third, while not necessarily convincing those whose minds are closed to information (aka, the facts), it is also good to use actual data, such as the limited numbers of patents granted to U.S. universities before enactment of the Bayh-Dole Act and the veritable flood of university patents thereafter.  The point is that the amount of basic research isn't what's different (after all, President Nixon started the "War on Cancer" in 1971 with increased funding for the NIH and NCI), but that universities now have ways to prevent predation from private businesses that would otherwise turn publicly-funded research into private investment without many of the advantages of the Bayh-Dole Act, including preference for U.S.-based licensees (i.e., jobs); royalty revenue to the universities to be used for teaching and further research; "march-in" rights in a case of a private licensee enacting a public harm by failing to commercialize an important invention (such as a cure or treatment of a disease, something that has never happened in the 30 years since the Act was passed); and the many milestones and other positive incentives on the patent right incorporated into licenses from universities because of the university's unique public service mission.  These facts turn the anti-corporate argument on its head, since by being able to protect its intellectual property, universities have real leverage for deciding how and by whom their technology is commercialize.  Coupled with the fact that, prior to Bayh-Dole, many of the predating companies were overseas or large international conglomerates, and that such technology piracy cost American jobs, there is a good argument that university patenting is good for society.

Finally, it is good to paint the picture of what would happen if these inventions could not be protected.  As has been argued here in the past, the patent system promotes disclosure and the advancement of the useful arts, i.e., technology.  Patents require disclosure to a degree not required by scientific journal articles and other sources, with "a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention."  35 U.S.C. §112, first paragraph.  Since patents expire, this information can be used by anyone thereafter, and importantly, can be used as information even during the lifetime of the patent.  Thus, arguments that basic (as opposed to clinical for profit) genetic research is impeded by patenting is wrong, since the information (whether of a genetic sequence or the existence of a mutation) is not patented.  The public availability of this information, and the requirements as to its completeness, fulfill the Constitutional mandate that patenting "promote the progress" of the useful arts.

The alternative would be the antithesis of this reality, where there would be significant incentive not to disclose genetic and other information.  In situations where an invention is easy to "reverse engineer" (as for many mechanical inventions), this would not be a fruitful path to protect intellectual property.  For something as complicated as human genetics, the possibilities for being able to "hide" basic discoveries are greater and the consequences much more dire.  Ironically, universities would be the victims of this alternative, since the university's mission would not permit it to use trade secrets and other forms of undisclosed intellectual property protection.  The predictable result of this alternative would be to inhibit if not destroy the university-company partnership that has promoted the biotechnology industry for a generation, to society's benefit.  Perhaps new diagnostics and treatments would arise "eventually" under such an alternative reality, but not as rapidly as in the past.  Thus, the counter-argument for the "anti" groups is that they are (in philosophy or as a consequence of their vision of morality) anti-science, anti-progress, anti-better diagnostics, and anti-treatment.  If this argument is effectively made, it's hard to see how the public would prefer the "eventually" world their position would produce.

Huffington Post Provides Latest Anti-gene Patenting Soapbox

    By Kevin E. Noonan --

The Internet over the past decade has given rise to a wide variety of "alternative media" outlets, including for example Slate, The Drudge Report, The Huffington Post, and arguably blogs like this one.  Even conventional news outlets like The New York Times, The Washington Post, and The Wall Street Journal have exclusively on-line content.  Despite the differences between these disparate sources, including writing by some non-traditional "journalists," news outlets of all stripes have many things in common.  Unfortunately one of these is an uninformed antipathy to biotechnology, particularly with regard to gene patenting.

This similarity is evidenced most recently in The Huffington Post, in a piece entitled "Gene Patenting Produces Profits, Not Cures."  The author, Harriet A. Washington (who also authored Deadly Monopolies; more on that later) writes that Myriad Genetics "predictably" appealed Judge Robert Sweet's decision invalidating fifteen claims in seven patents challenged by several breast cancer patients, medical associations, and researchers (and supported by the ACLU and the Public Patent Foundation).  The piece is replete with misstatements concerning the scope of rights conferred by gene patents, such as that Biogen controls "your kidney's essential KIM gene" as well as a list of other genes patented by the University of California and other patent holders.  Ms. Washington boldly asserts that the "coalition" challenging gene patents in the Myriad case may have too narrow an agenda, and proposes (conveniently, since her argument provides a précis of her "forthcoming book") that all "life patents" should be banned.  These include "the more than 500,000 genes that control the most basic processes of human life," a stunning statement in view of the reality that there are only about 30,000-40,000 genes in the human genome.  Setting her sights even higher than genes, she believes that patents on "bacteria, viruses, biologicals such as 'artificial blood', cell lines, tissues, pharmaceuticals, and even on medically important plants and animals such as Harvard's patented cancer-prone 'oncomouse'" should be banned.  Why?  Because "[t]he $60 billion pharmaceutical industry became the most profitable industry on the planet by exploiting its plethora of patents."

She sets forth a generally correct history of the development of the biotechnology industry.  She mentions the Diamond v. Chakrabarty decision, and passage of the Bayh-Dole Act that encouraged universities to protect their inventions (instead of letting them fall into the public domain where they could be exploited by corporations, including foreign corporations, with no compensation to the university or its researchers).  She also discusses the rise in university patenting, from about 260 patents/year prior to Bayh-Dole to more than 3,000 patents/year today.  She also notes that "by 1991 [universities] had gleaned $218 million in royalties" (an amount certainly much higher today).

Where she begins to show her naïveté about how technology its transferred between academia and pharmaceutical companies is when she says that "corporations receive valuable, ready-made patents on medications, biologicals, genes, devices, plants and animal hybrids," which suggests that the technology transferred is ready to be commercially exploited solely as the result of federal grant support and "university brainpower."  While necessary, these factors are woefully insufficient, at least because the FDA requires extensive safety and efficacy studies before any pharmaceutical comes on the market (protection it is unlikely Ms. Washington opposes).

Her argument seems to be that with all the patents and all the research, the public has received less than they were promised.  She cites in support of this proposition that "[b]y 2003, North American university researchers had started 374 companies and academic institutions had completed 4,516 licensing arrangements earning them more than $1.3 billion" and that "[b]y 2006, university technology transfer offices had generated at least $45 billion, largely from licensing fees."  The result, she maintains, is that universities have become research "satellites" rather than independent entities.  This charge is, ironically, belied by the statistics on licensing, which illustrate how universities, due to their patent rights, are in the position to grant licenses to those companies committed to commercializing their inventions.  Indeed, most such licenses have commercialization milestones and other provisions that, for example, change an exclusive license to a non-exclusive one (that can be licensed to another company) should the performance milestones not be met.

She repeats some oft-told tales, such as the purported pernicious effects of Chiron's hepatitis C virus test, and the company's failure to produce better treatment despite patents on isolated viral genes.  She uses Chiron's lawsuit against a commercial infringer to allege that there was a "chilling effect on researchers who wish to work on better HCV treatments," but provides no evidence that Chiron has sued any basic (non-commercial) researcher working on HCV biology.  This is similar to allegations in the Myriad suit that the company was inhibiting basic research, despite the >8,000 basic research papers easily found in PubMed and other databases.

Ms. Washington raises some real limitations to the Western medical research model, including that diseases prevalent in the undeveloped world (such as trypanosmiasis) have not been adequately addressed, and the inefficiencies in business models that require "blockbuster" drug status to support the incredible costs ($800 million - $1.2 billion) of bringing a drug to market.  And she mentions John Moore's hairy cell leukemia, Henrietta Lack's vulval adenocarcinoma (HeLa) cells, and Canavan's disease patient samples as examples of corporate exploitation.  On the contrary, all of these incidents occurred in a university setting, and the HeLa example occurred in the same time period that saw Jonas Salk perform experiments on his polio vaccine with retarded children from a nearby sanitorium, with precious little informed (or parental) consent.

What Ms. Washington refuses to acknowledge (because it doesn't support her argument) is the real benefits (or "cures") that biotechnology has provided over the past 30 years.  Nowhere in her piece is there anything about the thousands (millions?) of heart attack patients whose lives have been saved by recombinant tPA (Genentech), or the thousands (millions?) of kidney disease patients leading relatively normal lives due to recombinant EPO (Amgen), or the thousands (millions?) of breast cancer patients treated with Herceptin® (Genentech), or colon cancer patients treated with Avastin® (Genentech) or macular degeneration patients whose eyesight has improved using Lucentis® (Genentech), not to mention the hundreds of other biotechnological drugs on the market or in development.  No, these triumphs don't exist in the world Ms. Washington describes, which must make it easier for her to say:

Some argue that gene patents are necessary to generate the profits essential to funding the medical cures.  But as the cases of breast cancer, hepatitis C and hemochromatosis illustrate, genes are more commonly used for faster, easier routes to profit, such as marketing tests, selling licenses and suing those patent-infringers who step on the corporation's biomedical toes.

The biotechnology industry is not without its inefficiencies, but failing to acknowledge the benefits along with the deficiencies makes it easier to set forth the portrayal contained in Ms. Washington's article.  But doing so fails to describe "the rest of the story," and does a disservice to anyone wanting to understand the role of both universities and patenting in the biotechnology industry.

New York Times Provides Soapbox for Data Exclusivity Critics

    By Kevin E. Noonan --

Policy arguments based solely on outcome rather than process are rarely effective when put into practice.  This is because the desired benefits of the outcome blind the policymaker to the question of whether the desired outcome can be achieved without considering the effects (intended or otherwise) by the process.  This effect can be seen, for example, in the Federal Trade Commission's crusade to ban "reverse payment"-containing settlements of ANDA litigation.  The desired outcome is cheaper drug prices as soon as possible.  However, against the "per se" illegal stance of the FTC, several regional Courts of Appeal, as well as the Federal Circuit, have assessed the reasonableness of such settlements and found instances where such agreements are, and are not, anticompetitive -- something an outright ban cannot accommodate.  Indeed, according to some of these analyses, generic drug entry would be delayed, and unnecessary drug costs incurred, by the ban advocated by the FTC.

The same type of goal-oriented thinking is evidenced in an Op-Ed piece (where else?) in The New York Times ("Biologics Boondoggle").  (The Times has previously voiced its objections to the length of the data exclusivity period; see "Follow-on Biologics News Briefs - No. 11").  Today's piece was written by Anthony D. So, director of the Program on Global Health and Technology Access at Duke University, and Samuel L. Katz, a professor and chairman emeritus of Duke's Pediatrics department.  Their goal, like the FTC's, is to hasten the availability of generic drugs, in their case biologic drugs, to increase patient access and reduce costs.  And, like the FTC, they have a "simple" solution -- limit the data exclusivity period of biologic drugs to 5 years, the same period "enjoyed" by conventional, small molecule drugs.  But this position ignores most of the evidence that this is not a sufficient period to maintain innovation in biologic drug development, and reduces to greed (never expressly stated) the motivations of the biotechnology industry in advocating for the 12-year period contained in both the House and Senate versions of the healthcare reform bill.

The position also ignores the evidence, ironically in a peer-reviewed scientific paper (not an op-ed piece) by their colleague, Professor Henry Grabowski, that the "proper" data exclusivity term is between 14 and 17 years (see "Professor Grabowski's Economic Analysis of data Exclusivity for Follow-on Biologic Drugs"), and that the 12-year period is a compromise from the term that the data indicates is necessary.  It also ignores the current situation, where the data exclusivity period is unlimited since there are no follow-on biologic provisions under current U.S. law.  Also ignored is the reality that the data exclusivity period is one of the few provisions of the two versions of the healthcare bill that are in agreement (a fault shared with President Obama; see "Snatching Defeat from the Jaws of Victory?"), or that the term could be easily reduced if it turns out to be longer than necessary.

Further, unlike other entrants in this debate (even the FTC), the article contains no compelling economic arguments.  Besides bemoaning the high costs of biologic drugs, the only mention in the piece about the economics of biologic drugs, generic or otherwise, is the assertion that biologic drugs cost about the same to bring to market as conventional drugs (without any citation to the basis for this statement other than "according to studies cited by the pharmaceutical industry's own trade association").  There is also reference to the high prices of these drugs, such as Herceptin® for breast cancer, Humira® for Crohn's disease, and Cerezyme® for Gaucher's disease.  The prices are high, but these drugs are used to treat life-threatening illnesses (in the Gaucher's disease example, a lethal childhood disease); while there may be a debate to be had on whether our society can afford to treat these diseases (or ethically afford not to), their cost is not the best way to frame the debate (and, according to the FTC's report, the savings achieved by follow-on biologic drugs won't be that significant anyway, reducing the costs by no more than 30%, in contrast to the 80-90% reductions seen with conventional drugs; see "No One Seems Happy with Follow-on Biologics According to the FTC").

Also not ignored are allegations about excessive "monopoly protection" (using a buzzword that always signals an intent to inflame rather than illuminate), or that biologic drug makers can extend their "monopoly" by making minor changes in the drugs (which would not preclude the generic biologic drug maker from using the innovator's data to obtain approval for the original version of the drug), or that the 12-year data exclusivity period for biologics will be used to bootstrap a longer data exclusivity period for conventional drugs (again, with no attribution except a statement that "GlaxoSmithKline has already called for 14 years of exclusivity for conventional drugs"; regardless of anything GSK might wish, changing the data exclusivity period for conventional drugs is not part of any follow-on biologics legislation introduced either as stand-alone legislation (H.R. 1427 or 1548 or S. 726 ) or as part of the healthcare bill (H.R. 3590)).  As such, the suggestion is an irrelevancy, except to once again increase the sense of "urgency" the writers seem to want to engender to provoke the public to adopt their position.

That position is clearly expressed in the last paragraph of their piece:

Congress should allow biologics no more than five years of protection.  That would provide drug makers plenty of incentive for innovation, and still protect consumers from the high prices that extended monopolies allow.  Striking the right balance will ensure that Americans can afford the most effective medicines available.

Providing cheaper drugs is an admirable goal, for many reasons -- improved access to these drugs, sound economics, or just plain thrift.  But cheaper drugs come with a price in the real world, and part of that price is to make drug development less attractive for investment and investors.  That may sound cold-blooded, but anyone who has a 401k account wants her investments to be profitable, so the public should understand the need for some assurance of a return on investment.  The current economic downturn cannot blind us to the folly of killing the golden goose of biologic drug development, and nothing will cook that goose more quickly and more certainly than creating a climate inimical to investment in these drugs.  That isn't a goal anyone wants.

Newsweek = Newspeak on Gene Patenting

    By Kevin E. Noonan --

Newsweek has always been Avis to Time Magazine's Hertz -- evidenced by an increasing difference in subscriptions (3.3 million versus 1.97 million on 2009).  So it isn't surprising that the magazine needs to do something to tweak its readership, even if that something is to distort its reporting on an important issue.  Which is, of course, what Newsweek has done on its science news page in the February 15th issue, in an article cleverly entitled "Who Owns Your DNA?"

The article, by "Science Editor" Susan Begley (at left), is of course not a science story but a legal one.  This is something Ms. Begley expressly acknowledges ("I defer to others on the legal merits here").  But that, of course, doesn't stop her from repeating many of the most egregious falsehoods in the debate, starting with the first sentence:

Ever since the first human gene was patented in 1982, there's been a near-universal "What??!!" when people hear that it's legal for someone to own the rights to our DNA.

Of course, no one owns anyone's DNA (something even the most vociferous participants in the debate acknowledge except, of course, the ACLU who use the lie emblazoned on buttons to inflame the passions of their constituents).  And Ms. Begley is careful to acknowledge the source of the lie, the late author Michael Crichton who (in)famously expressed these views on the Op-Ed page of the New York Times at the same time he was selling a book about the evils of gene patenting (perhaps Ms. Begley was concerned about infringing Mr. Crichton's copyright).

But she is not done, however, next reporting that the "scientific issues . . . have become serious enough in the past few years to call into question whether gene patents, meant to promote research, instead impede it, with no offsetting benefits."  Ms. Begley, unlike the rest of the news industry, seems not to have lost the "Search" button on her computer -- she acknowledges that "[t]housands of BRCA papers have been published, and in surveys few scientists say patents are an obstacle to research."  But she has an answer for that:  "But few isn't none."  And who are those none that she quotes?  None other than the plaintiffs in the ACLU suit.  Now, since Ms. Begley isn't a lawyer she can't be held to legal standards, but even a reporter should realize that the plaintiffs are not particularly reliable for refuting the overwhelming evidence that scientific research has not been impeded, such as the hundreds of researchers who have published thousands of research papers on the BRCA1 and BRCA2 genes since the patents at issue in the ACLU suit were granted.

Being facially even-handed, Ms. Begley quotes Rick Marsh, Myriad's general counsel that "Myriad 'has never told someone they cannot do [noncommercial] research on BRCA,'" and that "'[t]he notion that Myriad has hindered research is incorrect.'"  But rather than exploring whether two of the plaintiffs, Arupa Ganguly and Haig Kazazian, may have been performing research directed towards commercial applications (thus explaining why they, and they alone, have received a "cease and desist" letter from Myriad, and what may make them different from those hundreds of other BRCA1 and BRCA2 researchers), she reports that Dr. Ganguly was "scared off" from doing research by the letter and that Dr. Kazazian thinks gene patents "inhibit biomedical research."  That's their position and they're sticking to it, of course, but while understandable in a brief, only a writer with an unstated bias would report these sentiments uncritically.

The same could be said for a quote from another plaintiff, Dr. Wendy Chung of Columbia University, who alleges that there has been no testing to study the "normal variation" of mutations in the population.  That would come as quite a surprise to the research group (Haffty et al.) at the Department of Radiation Oncology at the Cancer Institute of New Jersey, whose paper "Breast cancer in young women (YBC): prevalence of BRCA1/2 mutations and risk of secondary malignancies across diverse racial groups" reported (in the October 2009 issue of the Annals of Oncology):

BACKGROUND: Despite significant differences in age of onset and incidence of breast cancer between Caucasian (CA), African-American (AA) and Korean (KO) women, little is known about differences in BRCA1/2 mutations in these populations.  The purpose of this study is to evaluate the prevalence of BRCA1/2 mutations and the association between BRCA1/2 mutation status and secondary malignancies among young women with breast cancer in these three racially diverse groups.  METHODS:  Patients presenting to our breast cancer follow-up clinics selected solely on having a known breast cancer diagnosis at a young age (YBC defined as age <45 years at diagnosis) were invited to participate in this study.  A total of 333 eligible women, 166 CA, 66 AA and 101 KO underwent complete sequencing of BRCA1/2 genes.  Family history (FH) was classified as negative, moderate or strong.  BRCA1/2 status was classified as wild type (WT), variant of uncertain significance (VUS) or deleterious (DEL).  RESULTS:  DEL across these three racially diverse populations of YBC were nearly identical:  CA 17%, AA 14% and KO 14%. The type of DEL differed with AA having more frequent mutations in BRCA2, compared with CA and KO.  VUS were predominantly in BRCA2 and AA had markedly higher frequency of VUS (38%) compared with CA (10%) and KO (12%).  At 10-year follow-up from the time of initial diagnosis of breast cancer, the risk of secondary malignancies was similar among WT (14%) and VUS (16%), but markedly higher among DEL (39%).  CONCLUSIONS:  In these YBC, the frequency of DEL in BRCA1/2 is remarkably similar among the racially diverse groups at 14%-17%.  VUS is more common in AA, but aligns closely with WT in risk of second cancers, age of onset and FH.

Perhaps someone should explain the inhibitory effects on breast cancer research occasioned by the Myriad patents to these researchers.  Ms. Begley's bias is revealed at the end of the article:

The justification for patents is that they encourage innovation: make a discovery, reap the financial rewards.  But I have real doubts that this applies in genetics.  Discoveries, not dollars, are what motivate most geneticists.  (I have criticized that before: because scientists care so little about turning basic discoveries into useful treatments, they have dropped the ball when it comes to helping patients.)  If being first, not being rich, is what drives gene researchers, it is hard to see why society should tolerate patents on human genes that act as even the slightest brake on discovery.

Ms. Begley should realize that she, and society, can't have it both ways -- either we want treatments and diagnostic testing for diseases or we don't.  These treatments and tests are developed by companies, not universities, and companies require investment, if only to maximize the likelihood that the treatments will work and the diagnoses will be reliable.  While discoveries would still occur in the absence of patents, commercialization would not, and Ms. Begley should consider those realities if she thinks scientists have "dropped the ball" when it comes to helping patients.  She says her goal is for basic research to help patients; if so, Ms. Begley should think long and hard about whether that aim is consistent with stories like hers directed instead to selling more copies of Newsweek.

Everybody Knows -- The Boston Globe Weighs in on Gene Patenting

    By Kevin E. Noonan --

Fifteen hundred years ago everybody knew the Earth was the center of the universe.  Five hundred years ago, everybody knew the Earth was flat, and fifteen minutes ago, you knew that humans were alone on this planet.  Imagine what you'll know tomorrow.

Men in Black (1997)

And in 2010, everybody knows that gene patenting is a bad idea, at least if you define "everybody" as the editorial boards of major metropolitan newspapers (and, of course the ACLU).  Today, The Boston Globe took that brave stand in an editorial that proved they know much less than that.

The conclusion is familiar, but the level of either ignorance or misinformation is impressive.  Here is a smattering:

Under US patent law, no one can patent what occurs in nature.

Ah, no.  Possibly correct if the sentence read ". . . what occurs in nature as it occurs in nature," but certainly not correct as written.  And a good thing, too, since the natural world is full of chemical compounds (such as taxol) that are useful as medicines.  An absolute ban on patenting chemicals that occur in nature (in an purified state) would preclude protection for any such medicine -- a bad (and unnecessary) result, but one that would follow from the kind of absolute ban The Globe envisions.

And it isn't even good law.  The closest Supreme Court case on point, the Wood Paper Patent Cases from the 19th Century, says (with regard to a claim for purified cellulose):

Whether a slight difference in the degree of purity of an article produced by several processes justifies denominating the products different manufactures, so that different patents may be obtained for each, may well be doubted, and it is not necessary to decide.

Which says nothing about a purified chemical (and the patent rolls abound which such patents).  Providing a nice counterpoint is much more recent, binding Supreme Court precedent that "anything under the sun made by man" is patentable, for things that are "a product of human ingenuity 'having a distinctive name, character [and] use'" (Diamond v. Chakrabarty).  Isolated nucleic acid qualifies under this proper standard.

It is also sad (albeit not surprising) that the message that gene patents do not impede basic research hasn't penetrated -- the editorial states that "researchers who discover what a specific gene does can retain the exclusive right to study it."  Again, no, and that isn't even a matter of opinion.  Had the esteemed editorial writers at The Globe bothered to do their own basic research (something much less difficult than scientific research), they would have realized that thousands of papers written by hundreds of researchers other than the scientists who patented the BRCA1 and BRCA2 genes have been published since the late 1990's (the time when the patents at issue were granted).  So the inventors named on those patents (and their assignees and licensees, including Myriad Genetics) don't seem to have exercised any exclusive rights with regard to such basic research.  The Globe thinks that "[s]uch research should be an open avenue of scientific inquiry," and apparently it is.

Then the editorial strives for -- and attains -- complete unreality.  Addressing the argument that gene patenting is necessary for attracting investment and to insure a return on such investment, the writers assert:

Yet even without gene patents, it's hard to imagine that companies would not invest in the basic research that leads them to tests and treatments that can be patented -- and become highly profitable -- for devastating diseases.

It appears that no one told The Globe's editorial board that the ACLU has sued not only on claims to the genes, but to the genetic tests as well -- the very tests The Globe agrees should be patentable.  And insofar as those "treatments" The Globe endorses include the drugs -- in this case, biologic drugs -- used in those treatments, gene patents are an important component of protecting those drugs and making investment capital available for their commercialization.

Blissfully ignorant of these realities, The Globe concludes its editorial like this:

Eliminating these patents would attract new researchers and sources of capital that could lead to treatments for many diseases, including Alzheimer's and cancer.  It would also encourage market competition for tests and treatments based on gene sequences, saving money as well as lives.

On the contrary, without these patents there would be much less investment, and it is difficult to see how there could be more basic research than is already being done.  "Market competition" is fine, but the concept can't be cherry-picked -- the very market that promotes competition can completely stifle progress by precluding the conditions necessary to attract investment.  That is the future The Globe envisions, because its editorial writers blindly accept the wisdom of what everybody knows.

Like Peas in a Pod

Now, L.A. Times Gets It Wrong on Gene Patenting

    By Kevin E. Noonan --

Maybe it is just the state of newspapers in the 21st Century -- a 19th Century medium supplanted by technology that is more immediate, extensive, comprehensive, and relevant.  Or maybe it is the pressure of deadlines and "getting the story," although "getting" it correctly seems to be an anachronism.  Or finally, maybe it's just being named "The Times," whether on the right or left coasts, that makes it impossible to render a rational opinion on patenting.

But Sunday, in an editorial entitled "Genes and patents," the L.A. Times joined its East Coast cousin in taking an inaccurate and irrational position on an important question:  patents on diagnostic methods involving genetic information.

"According to the Patent Office," the editorial reads, "patents can be obtained for 'practically everything which is made by man and the processes for making the products,' but not naturally occurring substances."  Not exactly, of course.  It is the U.S. Supreme Court that determined that the patent statute (and the constitutional basis thereof) is to grant patents on "anything under the sun made by man," in Diamond v. Chakrabarty.  As the Court explained, quoting Kewanee Oil Co. v. Bicron Corp., "[t]he authority of Congress is exercised in the hope that '[the] productive effort thereby fostered will have a positive effect on society through the introduction of new products and processes of manufacture into the economy, and the emanations by way of increased employment and better lives for our citizens.'"  The Office has followed the Court's instructions with regard to isolated human DNA, as the editorial says by granting patents on "isolated [and] purified" DNA.

While acknowledging that the period of exclusivity is limited, the editorial cannot avoid the "m" (for monopoly) word, and then repeats the falsehood that patenting isolated human DNA for BRCA1 and BCRA2 stop researchers "not only from conducting the tests but from doing more research into the genes' links to breast cancer and other diseases."  This will come as a surprise, we expect, to the authors of the 7,200 peer-reviewed scientific journal articles listed on the PubMed database in response to the search term "brca1 or brca2" (you would think newspapermen would understand the value of such a simple check on such a serious claim).

On the subject of the importance of the exclusivity incentive for developing these tests, the editorial says that:

[I]t doesn't necessarily follow that barring patents for gene sequences would lead to fewer breakthroughs on genes and their correlations with disease.  There is a virtually insatiable demand for better diagnostic tools and more efficient and effective treatments.  The amount we know about health and disease pales in comparison to what we don't know.  This demand for advancement provides a powerful incentive for companies to seek their fortunes in discoveries.  Even if a gene can't be patented, its discovery can lead to diagnostic and treatment techniques that can be.

Insofar as these sentiments speak to the drive to innovate and develop diagnostic tests, they are correct.  What the editorial writers miss is that such tests will not necessarily have the other important (and typically neglected) feature of patented tests, i.e., that they are disclosed to the public and available to all once the patents expire.  Unlike other types of technology (who wants to practice a patent on a 1980's vintage answering machine?), the value of genetic diagnostic tests will not diminish with time, and they will be valuable far longer than the exclusivity term for patents protecting them.  This public benefit is not an inevitable consequence, however -- it is patenting that mandates disclosure as the quid pro quo of the exclusive grant.  In their absence, it won't be universities and other now-common sources of genetic information that are involved in discovering genetic information commercialized as diagnostic tests (since university professors will still need to publish their work).  It will be private companies, that will have no incentive to publish or disclose the genetic bases for their diagnostic tests.  In the world envisioned by the editorial writers at The Times, throwing off the yoke of patenting will lead to unfettered genetic diagnostic test development.  In the real world, no one will undertake the expense of perfecting such testing just to see larger or better-financed companies out-compete them.  (Have we learned nothing from the 1980's in this regard?)  Rather, it will be companies capable of developing tests for the kinds of multigenic diseases that are most prevalent (diabetes and most cancers, for example) and then keep the genetic information underlying these tests as their trade secret in perpetuity (or at least much longer than the 20 year maximum for patented technology).

The remainder of the editorial is full of similarly fantastical statements -- praise for Congressman Xavier Becerra's benighted attempt to ban "gene patenting" by statute (that, as the editorial states, never made it out of the Judiciary Committee), for example.  The editorial also states, without attribution or reasoning, that Congressman Becerra's bill would not "undermine the biotechnology or pharmaceutical industries -- in fact, it could help them do the research needed to develop their products," a stance opposed by, inter alia, the Biotechnology Industry Organization (which no doubt knows more about what would undermine their members' industry than does The Times).

The Times editorial writers clearly accept the allegations of the ACLU and others that patenting human DNA is "wrong," but like plaintiffs in the AMP v. USPTO lawsuit, they base their arguments on overstatements, misstatements, and downright falsifications.  It's unfortunate that such an important issue is being argued on this level.  With luck, Judge Sweet in New York will see past the posturing and understand where the public's true interests lie.

AIPLA Mid-Winter Institute

The American Intellectual Property Law Association (AIPLA) will be holding its 2010 Mid-Winter Institute on January 27-30, 2010 in La Quinta, CA.  The preliminary program for the Mid-Winter Institute includes presentations on the following topics:

• Building strong IP on a smaller budget;

• Business-based decision making and modeling for IP budgets;
• Aligning patent filing strategies to the technology development strategy;
• Top ten ideas for reducing IP costs at a global company;
• Strategic uses of patent prior art research in view of budget constraints;

• Peering into the 2010 crystal ball:  What awaits the IP practitioner?

• Reforming intellectual property law:  What's happening on Capitol Hill?
• The Supreme Court's reshaping of the IP landscape in recent years;
• The "other" Supreme Court of IP:  How recent Federal Circuit decisions affect IP and the practice of IP;
• Are alternative fee structures really an acceptable alternative?
• Bidding for IP work through requests for proposals:  An in-house perspective on reality;

• Fact or fiction?  How to really make patent prosecution more efficient;

• Tips from the USPTO for increasing efficiency of prosecution including reducing the number of Office actions and techniques for handling delays;
• What the applicant can do before the RCE/appeal decision point to increase efficiency of prosecution;
• RCE or appeal?
• The value of the pre-appeal brief;

• Reexamination - New ground rules in the new Administration.

Readers should consult the preliminary program for a complete listing of presentations being offered at the Mid-Winter Institute.  The preliminary program, which includes a complete agenda, list of speakers, and registration information, can be downloaded here.

The registration fee for the Mid-Winter Institute is $895 for AIPLA members, $1,205 for non-members, $55 for AIPLA student members, $70 for government employees or AIPLA academic/government members.  AIPLA members or non-members registering by January 13, 2010 will receive a $100 discount off the registration fee.  Those interested in registering for the conference can obtain a registration form here.

Interactive Graphic Illustrates How U.S. Patent System Has Driven American Economy

    By Donald Zuhn --

Last month, the Milwaukee Journal Sentinel published two articles documenting the current state of the U.S. patent system (see "The Milwaukee Journal Sentinel Gets It Right about Patents").  The authors of those pieces, John Schmid and Ben Poston, have now compiled an interactive graphic that shows how the U.S. patent system has shaped American history and innovation.  The graphic contains a number of elements, including a timeline of key patents and significant events in American history, a comparison of domestic and foreign patents issued between 1790 and 2009, and charts showing the top countries and states in which U.S. patents originated, the number of pending applications between 1981 and 2009 and average application pendency between 1983 and 2008, fee diversion between 1992 and 2004, and rapid growth of the Chinese patent system between 1999 and 2008.

Among the patents making the Journal Sentinel's timeline are the issuance in 1928 of U.S. Patent No. 1,680,818 to Harry Steenbock, the issuance in 1948 of U.S. Patent No. 2,442,141 to Andrew Moyer, and the issuance in 1998 of U.S. Patent No. 5,843,780 to James Thomson.  The '818 patent, which is directed to an antirachitic product and process (i.e., a process for enhancing Vitamin D in "organic substances of dietary value").  Dr. Steenbock secured a Nobel nomination in 1929 for the work leading to the '818 patent, and the success of the patent helped launch the Wisconsin Alumni Research Foundation (WARF).  The '141 patent is directed to a method a producing penicillin, and the '780 patent is the first embryonic stem cells patent.  The timeline also includes the Diamond v. Chakrabarty decision, which the authors state spurred an "unprecedented growth in biotechnology," among its significant events.

Cancer Drug Development in The New York Times

    By Kevin E. Noonan --

The fastest-growing part of the biotech/pharma industry is anticancer drugs, according to an article in The New York Times today ("For Profit, Industry Seeks Cancer Drugs").  Written by Andrew Pollack, one of the paper's senior business and technology writers, the article highlights the interplay between scientific interest and business opportunity driving this phenomenon.

The article supports its thesis on the recent rise in anticancer drugs with some telling statistics:  there are "more than twice the number of experimental drugs for heart disease and stroke combined, nearly twice as many as for AIDS and all other infectious diseases combined, and nearly twice as many as for Alzheimer's and all other neurological diseases combined."  This corresponds to 860 anticancer drugs currently in clinical trials.

The scientific reasons for these efforts stem from the nature of cancer as a disease.  Robert Weinberg (at left) from the Whitehead Institute at MIT is quoted in the article as saying "Cancer is not a single disease.  It's really dozens, arguable hundreds of diseases."  Bert Vogelstein (below right) from Johns Hopkins is quoted as saying that a typical tumor may have 50-100 genetic mutations, with any two patients having the same type of cancer having as few as five mutations in common.  Accordingly, there are many approaches and molecular targets for small molecule, immunological, and other avenues for attacking cancer cells in an effort to find a cure.  In addition, the situation is ripe for "personalized medicine," or efforts to tailor the treatment to the tumor based on the unique signature of genetic mutations and the corresponding phenotype of an individual's cancer and the targets for therapeutic intervention expressed by each individual's tumor.

But this very complexity is the main reason why cancer remains so daunting after 40 years of concerted efforts to find a cure.  On the one hand, individual cancers even of the same type or in the same tissue vary dramatically in changes in gene expression, chromosomal abnormalities, and cancer-associated phenotypes, so that treatments that are effective for some cancer patients are completely ineffective for others.  This has caused the "war on cancer" to resemble a "grinding war of the trenches," according to an uncredited quote by a cancer researcher.  And intractable clinical situations provide a correspondingly broader scope of opportunities for new drugs effective against cancer in some portion of the patient population.

However, on the other hand, the efficacy of many anticancer drugs is limited at best.  The article cites the instance of drugs like Erbitux® used as a "last ditch treatment for colorectal cancer" providing on average about 90 days of additional life to patients.  And Taceva®, used for treating pancreatic cancer (a cancer having a 3% 5-year survival rate that hasn't changed in the past 100 years), extends life for pancreatic cancer patients on average only 12 days (the basis for its approval by the FDA for this indication).

Since 1998, when there were twelve anticancer drugs in the world's 200 medicines having the greatest sales, the number of anticancer drugs has almost doubled (to 23), and 20 of the 126 drugs having revenues of $1 billion are anticancer drugs.  Despite these efforts, however, only a handful of new anticancer drugs are approved each year (two in 2008, one so far in 2009).  Nevertheless, the article cites studies by IMS Health, a pharmaceutical market research company, for evidence that "[c]ancer drugs have been the biggest category of drugs in terms of sales worldwide since 2006 and in the U.S. since 2008."

One factor driving anticancer drug development is the revenues that can be generated from their sales, which carry a hefty price tag.  Taceva® treatments cost about $3,500 a month, according to the article, and Erbitux® costs $10,000 per month (with an "extra" cost per patient averaging $50,000, based on the average length of treatment course).  These costs have resulted in ImClone having revenues of $1.6 billion in 2008 for Erbitux®, revenues that the article asserts motivated "Eli Lilly & Co. to outbid Bristol-Myers Squibb to acquire ImClone for $6.5 billion."

While these costs are exorbitantly high, the article notes that "[p]atients are often desperate, and insurers risk outrage by denying payments for a[n anti]cancer drug," even when there is little chance of benefit from the treatment.  "Cancer is such an emotional issue that the free market doesn't work like it does for bicycle wheels and umbrellas," according to Robert Erwin, head of the Marti Nelson Cancer Foundation.  Money will flow to anticancer drugs "[a]s long as the health care system will pay the price."  This situation raises special concerns for the healthcare system as a whole, particularly under the current economic climate, the pressures to reduce drug costs, and the amount of investment required to determine whether an anticancer drug lead compound will come to market.  These circumstances are characterized as "the biggest bubble you've ever seen," according to Dr. Mark Ratain (at right), a University of Chicago oncologist.

The confluence of the exponential increase in genetic information over the past decade and the technical ability to identify genetic polymorphism and outright mutation with different cancer phenotypes presents an unprecedented opportunity for developing new anticancer therapeutics.  Mr. Pollack's article is a reminder that the science is only part of the equation, and that the economic realities of drug development and the healthcare marketplace will also have a role in determining how many, and which, of these drugs will be available for the next generation of cancer patients.

The Milwaukee Journal Sentinel Gets It Right about Patents

    By Kevin E. Noonan --

Published articles in the popular press rarely report accurately about patents and the patent system.  That's why it is unexpected, remarkable, and incredibly timely that the Milwaukee Journal Sentinel published not one but two in-depth articles about patents and the U.S. Patent and Trademark Office this week.  Written by John Schmid and Ben Poston, the articles, "Patent backlog clogs recovery" and "Patent rejections soar as pressure on agency rises" document the current (parlous) conditions for patenting in the U.S.  Most importantly, the articles recognize the importance of innovation in pulling the country out of the current economic crisis.

The authors cite statistics familiar to anyone involved in the patent system:  that Congress spent almost two decades raiding Patent Office coffers to fund other programs, to the tune of $752 million during that time (accounting for about 7% of the Office's budget) and reducing its ability to hire new examiners.  That while that trend ended in 2005, and the Office added 1,200 new examiners per year from 2006-2008, attrition is a serious problem, with one examiner leaving the Office for every two that are hired.  And that the current budget crisis has frozen new hiring, exacerbating the problem of a 1.2 million application backlog facing the Office and an average pendency of 3.5 years.

But beyond the statistics, the articles outline how ill-considered (or at least ill-fated) policies have contributed to these problems.  One of these policies is the increased rates of rejection; the article states that "[a]fter consistently rejecting applications at a rate of about 35% since 1975, the Patent Office -- faced with a growing backlog -- underwent a convulsive shift around 2004 and now turns down well over half.  In the quarter that ended June 30, it denied more than 59%."  This is something that John Doll, who until last Thursday was the Acting USPTO Director, has been touting as a desirable result for the past few years:  "[i]f the allowance rate is falling because we are improving quality, then that's a good thing."  The article pointedly characterizes this as the "culture of rejection," which it attributes to the rise of business method patents in the late 1990's and some unfortunately trivial patent grants (including the laser cat exercising method patent (U.S. Patent No. 5,443,036) and the children's swing patent (U.S. Patent No. 6,368,227) that became lightening rods for those (like Josh Lerner) who argued that the patent system was "broken" (see "Once again, The New Yorker Gets It Wrong on Patents").

The response to these developments was that "[t]he Patent Office starting running scared," according to former USPTO Director Bruce Lehman (at right), by setting up a "second pair of eyes" review of a random sampling of newly issued (more accurately, allowed) patents to "double check that they have merit."  The article described the consequences for the examiner responsible for applications deemed to have been improvidently granted:

Those that turn out to have been strong candidates for rejection can count as errors in the performance reviews of the examiner.  Errors whittle down examiners' bonuses.  . . .  Close calls became rejections.  And rejections, according to critics, became the path of least resistance to meeting in-house work quotas, which also are used to grade examiners.

As a consequence, patent examiners exclaim that "We're the ones who put 'no' in 'innovation," according to a current PTO joke.  As the authors recognize, it's not funny.  As a further consequence, "a culture of fear" has taken hold, a feeling that, "If I make the wrong step, I could lose my job," according to Robert Budens, president of the examiners' trade union.

These developments have not gone unnoticed, most pointedly by Judge Paul Michel (at left), Chief Judge of the Court of Appeals for the Federal Circuit.  Judge Michel is quoted as characterizing the increased rejection rates as "suspicious" and as saying the agency is "practically dysfunctional."

The authors clearly believe that a dysfunctional Patent Office is not in the best interests of the country, particularly during times of economic crisis.  While conceding that most patents "have little or no economic impact," the articles cite a Research-Technology Management report from 1997 for the proposition that 5-10% have "potential market relevance."  But:

[T]hat includes those with the potency to build and help maintain the U.S. economy.  These represent advances in science, technology and human creativity, from Robert Fulton's steamboat to Orville and Wilbur Wright's flying machine to Google's search engine.

The articles also quote a 2005 Federal Reserve Bank study found that the largest factor in a state's income growth is the volume of patents each state generates.  (As a local newspaper, the article notes that Wisconsin is 12% above the national average and ranked 14th nationally with regard to patents per capita.)  Mr. Lehman is quoted as saying patents "are essential instruments for an innovation-based economy," and that neither Silicon Valley nor the Madison biotechnology industry would exist without patent protection.  "To advance science in a market economy, you have to have a system that permits you to capture property rights in inventions so investors will invest and the public gets the benefit," according to Mr. Lehman.

The article notes further consequences of a "dysfunctional" agency unable to meet its responsibilities.  "In many cases, applications languish so long that the technology they seek to protect becomes obsolete, or a product loses the interest of investors who could give it a chance at commercial success."  In addition:

Under a practice that Congress authorized a decade ago, the Patent Office publishes applications on its Web site 18 months after the inventor files them, outlining each innovation in detail regardless of whether an examiner has begun considering the application.  The system invites competitors anywhere in the world to steal ideas.

The authors also recognize that the significance of delay is particularly important for the U.S., and why:

Garage entrepreneurialism, the type that created Hewlett-Packard and Harley-Davidson, is more influential in the United States than in most other countries, said Lehman, the former Patent Office director.  "Investments in technology in the United States are to a much greater extent than elsewhere financed by venture capitalists, who require the certainty of patent protection as a precondition," he wrote this year in a policy paper.  "Companies like Google didn't exist 10 years ago."

Carl Gulbrandsen, the Wisconsin Alumni Research Foundation's managing director, is given the last word in the article (and we can't improve on them):

This [the application backlog] is a time bomb that will bring the whole system down," Gulbrandsen said.  "If we want to be a leader of innovation in this country and the world, we have to get patents issued.

A Response to Mr. Brill, and a Modest Proposal Regarding Inequitable Conduct

    By Kevin E. Noonan --

As reported today in a Patent Docs post, Economist Alex Brill (at right) has proposed that Congress include in patent reform legislation provisions "putting some teeth" into the penalties available for inequitable conduct, presumably as a way to discourage it.  These "teeth" include "criminal penalties, punitive damages and jail terms" to prevent "liars and cheaters" from abusing the patent system.

It is easy for the patent cognoscenti to dismiss Mr. Brill's proposals as being out of touch with the realities of the inequitable conduct defense.  He may not recognize that the Federal Circuit, a court with vastly more real-world experience in assessing whether inequitable conduct occurs at rate requiring Mr. Brill's proposed (draconian) measures, has long considered the inequitable conduct defense to be a "plague on the patent system."  Burlington Industries Inc. v. Dayco Corp., 849 F.2d 1418 (Fed. Cir. 1988):

Reputable lawyers seem to feel compelled to make the charge against other reputable lawyers on the slenderest grounds, to represent their client's interests adequately, perhaps.  They get anywhere with the accusation in but a small percentage of the cases, but such charges are not inconsequential on that account.  They destroy the respect for one another's integrity, for being fellow members of an honorable profession, that used to make the bar a valuable help to the courts in making a sound disposition of their cases, and to sustain the good name of the bar itself.  A patent litigant should be made to feel, therefore, that an unsupported charge of "inequitable conduct in the Patent Office" is a negative contribution to the rightful administration of justice.  The charge was formerly known as "fraud on the Patent Office," a more pejorative term, but the change of name does not make the thing itself smell any sweeter.  Even after complete testimony the court should find inequitable conduct only if shown by clear and convincing evidence.  A summary judgment that a reputable attorney has been guilty of inequitable conduct, over his denials, ought to be, and can properly be, rare indeed.

Nor may Mr. Brill realize that the standards for determining what is inequitable conduct have varied, both over time and in decisions from different Federal Circuit panels.  The ill-fated patent reform bill introduced in the Senate in the 110th Congress (S. 1145) contained a provision for "reforming" inequitable conduct.  In the Report of the Judiciary Committee on that bill were identified five different definitions used by the Federal Circuit in defining materiality, a required component of any inequitable conduct assessment:

(1) the objective "but for" standard, where the misrepresentation was so material that the patent should not have issued;

(2) the subjective "but for" test, where the misrepresentation actually caused the examiner to approve the patent application when he would not otherwise have done so;

(3) the "but it may have" standard, where the misrepresentation may have influenced the patent examiner in the course of prosecution;

(4) the old Rule 56 standard where it is likely a reasonable examiner would have considered the information important in deciding whether to issue of the patent; and

(5) the new Rule 56 standard where the information is not cumulative and (i) establishes a prima facie case of unpatentability (either alone or in combination with other references), or (ii) refutes or is inconsistent with a position the applicant has taken.

See Digital Control Inc. v. Charles Machine Works, 437 F.3d 1309, 1314-16 (Fed. Cir. 2006); see also American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1362 (Fed. Cir. 1984).  The Federal Circuit justifies these different tests on the grounds that there is "no reason to be bound by any single standard."

Given this backdrop, it is unclear why there is any reason to increase penalties, particularly because the current remedy, the "nuclear option" of unenforceability of the entire patent (and, perhaps, any related patents) would appear to be sufficient.  Indeed, the attractiveness of this remedy is surely one of the reasons the defense is plead in almost every patent case, being a "Get Out of Jail Free" card for an accused infringer.  It is difficult to believe that the "enhanced" punishments promoted by Mr. Brill would have any greater deterrent effect on a patentee than the prospective loss of patent protection and the exclusivity attendant on such loss.

There is a way to reform how the patent system deals with inequitable conduct, and it has its roots in how the Federal Circuit recently revised a parallel area of the law prone to abuse by patentees:  allegations of willful infringement.  Just as the inequitable conduct defense can be a fruitful way for an accused infringer to encourage settlement, a willful infringement charge can be used by a patentee to the same end, since the possible remedy (treble damages, attorneys' fees and costs) can be daunting to the accused infringer.  Since the conventional defense to a willfulness charge, a competent opinion of counsel, raised issues of attorney-client privilege and waiver, or in the alternative permitting a fact-finder to raise an adverse inference over failure to produce such an opinion, willfulness jurisprudence became another area of patent law fraught with uncertainties for all parties.  The Federal Circuit addressed, and perhaps overcame, these difficulties, by holding in In re Seagate Technology LLC that willfulness required a showing of "objective recklessness."  Applying this rationale to inequitable conduct, ordinary (or even severe) negligence would not be sufficient, and objective recklessness, if proven, would satisfy the standard.  There would also be no need to prove objective recklessness by clear and convincing evidence.

Incorporating this standard into inequitable conduct law would go a long way towards inhibiting the greatest abuses that have arisen in this area.  It would avoid ex post facto reasoning and witch-hunts over what persons with a Rule 56 obligation "should have known," and substitute instead an assessment of what they did know.  The objectiveness of the standard would not prevent true malfeasors from being found to have committed inequitable conduct, since instances where such a person knew of a reference, appreciated it was material to patentability, and did not submit it would be objectively reckless.

There are, of course, a number of other, perhaps better and certainly more direct ways to address the problem of inequitable conduct.  These include reducing (rather than increasing) the remedy, to destroy the presumption of validity or to be focused on particular claims related to (or invalid over) the undisclosed reference.  Inequitable conduct allegations could be postponed until after a defendant has procured a judgment that a claim or claims are invalid over an undisclosed reference, using the objective standard of invalidity as a gatekeeper.  Even absent this type of substantive reform, the defense can be curtailed in litigation by stringent application of Federal Rule of Civil Procedure 8(a).  This rule requires a pleading to contain assertions of fact supporting any allegations contained therein, including affirmative defenses.  Inequitable conduct allegations are usually contained in a defendant's answer to the patentee's complaint, at a time prior to discovery when the defendant has not yet obtained evidence to support the claim.  Preventing this automatic allegation of inequitable conduct, coupled with liberal application of the Rules regarding amended pleadings (Fed. R. Civ. Proc. 15), would at a minimum permit the inequitable conduct defense to be plead only after there was some evidence to support it.

Ironically, most commentators opine that inequitable conduct is an issue in dire need for resolution to promote efficiency in both patent prosecution and litigation because it is plead so often, so unsuccessfully, and with so little evidentiary support.  In other words, this reasoning is the exact opposite of the reasoning Mr. Brill employs in support of this proposal to increase penalties.  While the evils Mr. Brill addresses would certainly be serious if they existed, it should not be too much to hope that a proposal as serious as his would be supported by equally serious objective evidence that the purported problem demands the proposed solution.  That is not the case with Mr. Brill's proposal, and this by itself provides ample reason why it should be ignored.

Former House Economist Sets Sights on Inequitable Conduct "Reform"

    By Donald Zuhn --

Economist Alex Brill, who last fall released a report on follow-on biologics, is back, this time focusing on proposals for "reforming" the U.S. patent system instead of suggestions for creating a follow-on biologics regulatory pathway.  Patent Docs readers may recall that in November, Mr. Brill (at right), a research fellow at the American Enterprise Institute and former chief economist to the House Ways and Means Committee, issued a white paper asserting that a follow-on biologics regulatory pathway providing a data exclusivity period of seven years would be "sufficient for maintaining strong incentives to innovate while fostering a competitive marketplace" (see "Former House Ways and Means Economist Claims 7-Year Data Exclusivity Period Is Sufficient").  Today, in a commentary appearing on Forbes.com (see "What Should Congress Do With Liars and Cheaters?"), Mr. Brill argues that "[c]ompanies that feel overly burdened by current [inequitable conduct] law should take solace in the fact that the government does not throw patent holders that lie and cheat behind bars" as it has done with a "parade of executives sentenced to jail time over the last few years for securities fraud."

In the midst of continued Congressional debate over patent reform, Mr. Brill makes it clear that he favors harsher penalties for "patent holders that lie and cheat."  Few would disagree with Mr. Brill's assertion that "it is vital that patent holders not commit fraud" while procuring patents.  More than a few patent practitioners, however, would disagree with Mr. Brill's suggestion that Congress "put[] some more teeth into [the inequitable conduct defense]."  Mr. Brill's proposal appears to stem from his belief that Congress has begun "contemplating changing the rules with regard to inequitable conduct" -- rules changes that he believes might "defang the inequitable conduct defense."  It is important to note, however, that the Senate patent reform bill (S. 515), which has already been reported out of Committee, and the House patent reform bill (H.R. 1260) do not address inequitable conduct.  Thus, Mr. Brill's fears of a weakened inequitable conduct defense would seem to be (at least for now) unfounded. 

In addition, while Mr. Brill contends that "[a] strong deterrent is necessary to produce confidence in the entire patent system so that investors are willing to risk their capital to develop new innovations," he provides no evidence that fraud before the USPTO has become so rampant that investor confidence can only be restored (or assured) by passing radical inequitable conduct reform.  Moreover, Mr. Brill's proposed reform would only exacerbate a problem the Federal Circuit recognized more than twenty years ago when it called the frequent practice of pleading inequitable conduct a "plague on the patent system" (Burlington Industries Inc. v. Dayco Corp., 849 F.2d 1418 (Fed. Cir. 1988)).  Thus, while Congress should take up the issue of inequitable conduct reform, it would best refrain from adding "criminal penalties, punitive damages or jail terms" to the current penalty of patent unenforceability, and instead consider ways in which the defense can be improved in order to encourage a more open dialog between applicants and the Patent Office.

The New York Times Gets One Right

    By Kevin E. Noonan --

Like a broken clock that nonetheless tells the right time twice a day, it was inevitable that The New York Times would eventually run a story where they got it right on patenting (see "Crop Scientists Say Biotechnology Seed Companies Are Thwarting Research").  It was, of course, a story about how large companies seem to be abusing the power conferred by the patent grant.

The story involves the following statement by 26 academic scientists to the Environmental Protection Agency:

Technology/stewardship agreements required for the purchase of genetically modified seed explicitly prohibit research.  These agreements inhibit public scientists from pursuing their mandated role on behalf of the public good unless the research is approved by industry.  As a result of restricted access, no truly independent research can be legally conducted on many critical questions regarding the technology, its performance, its management implications, IRM, and its interactions with insect biology.  Consequently, data flowing to an EPA Scientific Advisory Panel from the public sector is unduly limited.

The scientists are described on the EPA website as being "leading corn insect scientists working at public research institutions located in 16 corn producing states."  Their names are withheld from the public docket, because "virtually all of [them] require cooperation from industry at some level to conduct [their] research" according to the EPA.  (Some of them did permit their names to be used for their interviews with the Times.)  Indeed, Dr. Elson J. Shields (at right), an entomology professor at Cornell University, noted that support for agricultural research has shifted from the public to the private sector, making agricultural scientists increasingly dependent on seed companies for financing and technical support.

Their complaint stems from restrictions on their research imposed by industry, specifically companies selling herbicide-resistant and other genetically-engineered crops.  As reported in the Times on Friday by science reporter Andrew Pollack, the scientists allege that companies make purchasers of genetically-engineered seed sign an agreement used in other contexts to prevent farmers from regrowing seed (violations of these agreements by farmers have been the bases of several patent infringement and breach-of-contract lawsuits; see, e.g., Monsanto Co. v. McFarling; Monsanto Co. v. David).  For the scientists, these agreements have been used to prevent recombinant seeds from being grown for research purposes.  While companies can give scientists permission to use recombinant seeds for their research, they can also impose (and have imposed) restrictions on what research can be done, as well as demanding review of the results prior to publication, according to Mr. Pollack.

This results in de facto censorship of research, since the companies can prevent negative results from being published.  This also limits the information and evidence available to government regulators, including the EPA.  Dr. Shields says this gives the companies the opportunity to "launder the data."  Dr. Ken Ostlie (at left), a University of Minnesota entomologist, illustrated the type of control by the companies by describing a study for which he had received permission from three companies selling genetically-engineered seed, comparing how well each of their corn seed resisted predation by Minnesota rootworms.  One year later, Syngenta withdrew its permission and Dr. Ostlie was forced to discontinue the study.  And Dr. Mark Boetel described the refusal by both Monsanto and Syngenta to grant permission for a study, prior to market launch, of their genetically-engineered sugar beets and how the crop would respond to an insecticide. 

Perhaps predictably, the companies defend their behavior.  Dr. William S. Niebur (at right), Vice President for DuPont Crop Genetics Research and Development (DuPont owns Pioneer Hi-Bred), cites the need to comply with government regulations on how recombinant crops are grown to justify the restrictions.  Monsanto and Syngenta spokesmen were quoted in the article as using their intellectual property rights as a defense, as well as compliance with government regulations.  (The Syngenta agreement prohibits any comparisons between Syngenta's product and any other crop.)  An EPA spokesman, Dale Kemery, contradicted the regulatory rationale, saying that the government only required "management of the crops' insect resistance and that any other contractual restrictions were put in place by the companies" not the EPA.

The EPA has published an announcement in the Federal Register for a meeting on insect-resistant biotech crops (see 73 Fed. Reg. 75099).

The seed companies' activities are legal, of course.  The Federal Circuit has deemed the types of restrictions imposed on farmers not to be an abuse of the patent grant, and has affirmed patent infringement and breach-of-contract judgments when they have been appealed (see, e.g., McFarling; David).  However, these judgments have been in the context of commercial activity and commercial agreements.  They have involved farmers, some of whom have extensive holdings, breaching their agreements in an effort to avoid the cost of new seed.  They have also involved allegations, some persuasive, that the defendants had been less than forthcoming about their conduct or have attempted to deceive the court.  In short, in decisions favorable to Monsanto, the company's conduct (while criticized) has not been the issue.

The scientists raise very different issues.  It is one thing to prevent a customer from reneging unilaterally on commercial agreements entered into to obtain a commercial advantage (i.e., greater crop yields due to herbicide resistant recombinant seed).  It is quite another to use the exclusionary right granted under the patent laws to enforce contractual agreements restricting research use.  Genetically-modified foods, while facing much less resistance in the U.S. than in, for example, Europe, have ambiguous public support.  And in the present environment, behavior that could be characterized as an abuse of the patent grant is risky.  For example, seed companies are already at risk from the Supreme Court's Quanta Computer, Inc. v. LG Electronics, Inc. decision, which reaffirmed the principle of patent exhaustion:  a patentee's rights to a patented product are exhausted upon first sale of the product.  The contractual restrictions on reseeding can be argued to be contrary to this principle, although this theory has not yet been advanced with any success.  This is particularly relevant because this situation comprises the confluence of two private activities "affected with a public interest":  patenting and public health.  Where U.S. common law has traditionally limited legal restrictions on contract terms between two parties dealing at arms' length, the law has permitted restrictions based on public policy (limiting enforceability on adhesion contracts, for example).  The allegations by these scientists raise the real possibility that the restrictions recombinant seed companies have successfully included in their commercial contracts will, at least with regard to research science, be deemed unenforceable.  In view of the other possible consequences (such as patent misuse or antitrust allegations), such a determination may turn out to be the best the seed companies may be able to hope for.

For additional information regarding this and other related topics, please see:
• "Monsanto Announces Latest Lawsuit Settlement over Roundup Ready® Soybean Seed," September 2, 2008)
• "Quanta Computer, Inc. v. LG Electronics, Inc. (2008)," June 9, 2008
• "Monsanto Co. v. David (Fed. Cir. 2008)," February 6, 2008
• "Supreme Court Fails to Grant Certiorari in Monsanto Co. v. McFarling," January 7, 2008
• "Monsanto Co. v. McFarling (Fed. Cir. 2007)," June 4, 2007

The Future of Biotechnology

    By Kevin E. Noonan --

Congress has the power, under Article I of the U.S. Constitution, to grant patents "to promote the progress of Science and the Useful Arts."  The value of patenting to the public is disclosure –- the raw material that drives progress is full disclosure of an invention in a patent specification that satisfies 35 U.S.C. § 112, 1st paragraph.  In this way, the public will be able to practice the invention throughout its full scope once the patentee's exclusionary power has expired (a maximum term of 20 years from filing, with shorter terms for patents that expire 4, 8, or 12 years after grant for failure to pay maintenance fees).

But for patentees, and their assignees, the value of patents is to spur investment, so that the invention can be commercialized and the exclusionary grant can have economic value.  This value has always been one of the drivers of commercial biotechnology, from the first nascent biotechnology companies in the early 1980s, some of which survived (Amgen and Genentech) and some of which did not (Biotechnica International and Genetics Institute).

This value is likely to come to the fore once again if the prognostications of Stephanie Marrus, writing in the latest issue of The Scientist, are true (see "How to save biotech: What the industry needs is not a bailout, but some sensible policies"; free registration required).  As Ms. Marrus says in the first sentence of her piece, "[b]iotech is in trouble, again."  The evidence:  about one third of the 370 U.S. public biotechnology companies have less than six months in cash to support operating expenses, according to the Biotechnology Industry Organization.  This is a 90% increase in the number of companies that were this cash-strapped two years ago.  In addition, BIO estimates that 40% of private biotechnology companies have less than one-year's worth in cash requirements.

Part of the problem, of course, is that the source of investment for many biotechnology companies –- venture capitalists –- have more important things, like their own survival, to worry about, and as a result they have been either "hoarding cash or closing their doors," according to Ms. Marrus.  Moreover, Big Pharma has become sophisticated enough, and as affected by the poor economy and their own pipeline and other woes (see "Predictions Dire for U.S. Pharmaceutical Industry," August 8, 2008) to be more discriminating in their acquisitions.  The result, as noted by Ms. Marrus, is that "the companies that most need to be saved are the least likely to be bought."  And the expected consequences of this situation are bankruptcies, layoffs of research personnel, cancellations of clinical trials, and "sell outs."

Under these circumstances, Ms. Marrus has the following suggestions for intervention:

• "FDA:  Appoint a respected leader for the FDA and resource the agency properly.  Do not go overboard with control in the post-Vioxx era, thereby preventing life saving drugs from coming to market.  Let informed patients choose -- sick people without good options are willing to take some risk."

• "Price controls:  Do not make the mistake of interfering with free market pricing mechanisms.  If a drug is overpriced relative to its efficacy, it will not sell.  Setting a ceiling or instituting other price controls will only serve to insure that new drugs are not developed.  Industry must see an economic return to invest in highly risky drug development or it will opt out."

• "Intellectual property:  Intellectual property protection is the lifeblood of the industry, and the reason investors will fund companies without revenue.  Set policies to enhance and extend protection, not dilute it.  Do not weaken the predictability, value and enforceability of patents such as provisions of the Patent Reform Act of 2007, which made it through the House but thankfully stalled in the Senate last year."

• "Funding sources:  Increase NIH funding so that fledgling companies have a pre-venture capital source of funds.  [NOTE:  NIH will receive $10 billion from the economic stimulus bill signed into law by President Obama earlier today.]  NIH funding has remained stagnant for a number of years as costs continue to rise.  Consider the national venture capital fund model used in other countries to provide financing during the "Valley of Death," the period when companies are engaged in translational research to bridge academe to industry and not yet fundable by venture capital."

These are all in lieu of a financial bailout which is not forthcoming (although Ms. Marrus remarks that companies involved in developing lifesaving drugs are just as deserving as Detroit automakers or other proposed recipients).  Reasons for this, according to Ms. Marrus, are that many biotechnology companies do not have sufficiently-developed commercial goals or products to attract anything but speculative investment (she calls these companies little more than "science projects").  And while there may be creative ways for such companies to identify merger partners with complementary technologies, Ms. Marrus contends that management has "a vested interest in keeping their company intact to the detriment of their shareholders" and gets in the way of sound(er) business practices.  "Some companies should continue life only as part of a merged entity.  Some companies should sell their assets.  Other companies may have to bite the bullet and shut their doors.  Management needs to act responsibly for the shareholders even if it means their jobs will end," she writes.

Biotechnology is considered to be the future because it is believed to be the engine that will drive future new drug development as well as a better understanding of the molecular basis of disease.  It is commonly understood by ecologists and evolutionary biologists that extinction of a species may have the consequence that some unappreciated property or beneficial product will be unavailable in future, perhaps to the detriment of humans and, more broadly, the planet.  It is also recognized that sometimes in nature extinction occurs by chance, that is by (relatively) short-term perturbations of climate or other variables that the species cannot survive.  It would be tragic if the current economic disruptions "killed off" a company with the combination of researchers, technology and management that could provide a future life-saving drug because we did not have the foresight to provide the conditions in which it could endure.

The Effects of Intellectual Property Protection on Agricultural Research: Patents Are Not The Problem

    By Kevin E. Noonan --

Perhaps the most beautiful sentence in scientific literature is this one:

It has not escaped our notice that the specific pairing we have postulated immediately suggests a possible copying mechanism for the genetic material.

James Watson & Francis Crick, "Molecular Structure of Nucleic Acids; A Structure for Deoxyribose Nucleic Acid," Nature 171: 737-38 (April 25, 1953)

It is beautiful because of its elegance, its understatement, and because it provokes in the reader recognition that one of the fundamental mysteries of life on this planet has been answered, with the tantalizing promise that the first two human beings who know that answer are preparing to tell the rest of us.  Perhaps this type of sentence can only be written by scientists who realize that they have made such a fundamental discovery that worries about careers, funding, and all the other cares of the working scientist are no longer their concern.

Unfortunately, for more mundane topics there is a tendency to provoke, posture, or puff up the significance of the research, a tendency that sometimes results in mischaracterizing what has actually been found.  A recent example of this is a paper in the January issue of Nature Biotechnology by Zhen Lei, Rakhi Juneja, and Brian D. Wright entitled "Patents Versus Patenting: Implications of Intellectual Property Protection for Biological Research."  The paper purports to show that agricultural scientists believe that university patenting impedes the free flow of academic exchange and, as a consequence, retards their research.  Upon more careful reading, however, it is clear that the scientists are woefully misinformed about the difference between patents and "intellectual property," and that most of their responses are self-serving and reflect the cultural differences between academics and industry, with university technology transfer professionals being caught in the middle.

First, the authors report the results of a qualitative research survey on the attitudes of agricultural scientists at several University of California campuses (Davis, Berkeley, and Riverside) and the University of Arizona.  The researchers, using a survey format that both asked for detailed narrative answers and for rankings on a 1-5 scale, asked the scientists about the effects on their research of university involvement in intellectual property protection.  The response rate was about 25%, which the authors say is typical in these types of studies.  The responder pool was characterized as follows:  56% of respondents undertook at least one project directed towards commercial application, 45% report some funding from industry (by comparison, 23-28% of biomedical scientists have industry funding), 40% disclosed inventions within the last 5 years, and 34% had applied for patents.  Of the last group, one third (13%) had research tool inventions and 9% had patented research tools themselves.

The scientists believe, the authors summarize, that "contrary to the current consensus, proliferation of IP protection has a strongly negative effect on research in their disciplines" (which were limited to agricultural science).  Upon more detailed questioning, the authors report that the scientists attribute problems stemming from delays in their research or blocked access to research materials to university requirements for material transfer agreements (MTAs).  These, the scientists understand, are required by university administrators "to protect the value of IP rights held by their institution or to reduce their exposure to lawsuits by third parties."  

The authors characterize as "standard policy" the requirement for MTAs between academic scientists who exchange research tools.  Surprisingly, formal agreements between universities account for only 21% of instances where respondents to the survey supplied research tools to colleagues (overall, the authors report that 48% of academic exchanges are covered by MTAs), and the respondents reported that they frequently ignored the university requirements for these agreements.  Even more surprisingly, about 25% of respondents reported sending research materials to industry without a formal MTA.  The researchers do not find the MTA process itself particularly difficult (a question on this point averages between 2.5-3.0 on a scale of 1 to 5, where 5 = very difficult), but this may be due to the fact that the scientists themselves do very little of the negotiating between universities.  Delay is the reported "dominant transaction cost" of MTAs (4 months from academia, 6 months from industry), and overall delays averaged about 9 months in the survey.

More generally, the respondents reported on average that IP rights had a negative effect on their incentive to invent or conduct related research (2.7 average on a 1-5 scale), and a score of 2.3 versus 3.7 on whether the effects of IP protection on research is negative or positive, respectively.

Paradoxically, patents seem to have a much lower effect on research, primarily because the respondents reported that they routinely ignore the existence of patent protection for research tools.  Of the 85 respondents, 77 reported that they "have never checked whether a tool that they might need in planned research is patented," a result consistent with reports of only 5% of biomedical researchers who actively assess the patent landscape for research tools.  The reason, according to the scientists, is that most think they won't be sued (despite Madey v. Duke University), something the authors state is "consistent with the rational toleration of researcher infringement often reported by industry patent holders," citing Eisenberg, 2006, "Patents and Data-Sharing in Public Science," Indus. Corp. Change 15: 1013-31.  This casual attitude regarding patent infringement may explain why the respondents reported no reason to support efforts to provide them with a stronger research exemption (citing Cukier, 2006, "Navigating the Future(s) of Biotech Intellectual Property," Nat. Biotechnol. 24: 249-251).

With regard to IP protection of research tools, the authors report that "[t]he type of research tools that are most frequently exchanged between researchers are quite distinct from those that researchers choose to patent.  Vectors, plasmids and gene clones are the most commonly exchanged unpatented tools, followed by seeds, germplasm and plant varieties.  Gene and protein sequences feature most frequently in invention disclosures, followed by seeds, germplasm and plant varieties."  In what is perhaps another surprise, despite their negative views on "IP protection," the respondents did not report encountering a "patent thicket" or an "anticommons effect" with regard to research tool patenting.

One conclusion that can be readily drawn from the study is that both the authors and scientist respondents did not distinguish between patenting and MTAs, comingling them under the umbrella term "IP protection."  This is perhaps one reason why the results they report are contrary to a variety of reports from the U.S. (Walsh et al., 2003, "Science and the Law: Working Through the Patent Problem," Science 299: 1020; Walsh et al., 2005, "Science and Law: View from the Bench: Patents and Material Transfers," Science 309: 2002-03), Germany (Straus, 2002, Genetic Inventions, Intellectual Property Rights and Licensing Practices), Australia (Nicol et al., 2003, Patents and Medical Biotechnology: An Empirical Analysis of Issues Facing the Australian Industry, Centre for Law & Genetics, Occasional Paper 6) and Japan (Nagaoka, 2006, "An Empirical Analysis of Patenting and Licensing Practice of Research Tools from Three Perspectives," presented in OECD Conference in Research Use of Patented Inventions, Madrid) finding that "patent thickets" (Shapiro, 2001, "Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting," In: Innovation Policy and the Economy 1: 119-50) or the "anticommons" (Heller & Eisenberg, 1998, "Can Patents Deter Innovation? The Anticommons in Biomedical Research," Science 280: 698-701) rarely affect the research of academic scientists.  One explanation for this disparity is that there are many and significant differences between patent protection and MTAs.  For example, patents promote disclosure, whereas MTAs typically require continued confidentiality.  MTAs are exactly that:  agreements concerning the transfer of materials.  This means they are limited to tangible items that can be transferred and exclude intellectual property such as know-how, trade secrets, and methods (indeed, their tangibility makes them move akin to personal property than intellectual property).  Patent rights are exhausted by a sale (see "Quanta Computer, Inc. v. LG Electronics, Inc. (2008)"), whereas with MTAs, the granting institution typically retains ownership of the transferred materials and requires either their return or certification that they have been destroyed after the term of the agreement has expired.  In addition, while patents are governed by Federal statute, and are encumbered with protections against improper use (such as patent misuse and Walker Process antitrust concerns, for example), MTAs are private contracts between the parties, governed by state common law that typically permits any behavior not in direct contravention of criminal or other statutes (i.e., contract law is much more permissive than patent law).

Thus, the actual conclusions of the paper are not related to the effects of patenting on academic research at all.  Rather, the authors report the subjective opinions of academic scientists on the delaying effects of institutionally-mandated MTAs on their research, something the authors report that the scientists consider puts "sand in the wheels" of an otherwise "lively system of interdisciplinary exchanges" of research materials.  No doubt the researcher respondents feel this way; however, the disparity between these results and the results of the academic reports that the authors admit are contrary should raise a few questions about the nature of the study and the elicited responses.  Academic researchers are focused, ambitious, egotistical people used to having their own way; these traits are perhaps necessary for them to have the temerity to believe they can make sense of a complex world, and are certainly an expected consequence for individuals having the intelligence of most academic researchers.  The law presents them with another, different set of rules and a logical structure that differs from science, having to take into account the unpredictable peculiarities of individual human beings.  Particularly in view of the power differential between tenured professors and the staff of most university technology transfer offices, the scientists frequently believe they can ignore the rules (see their disdain for potential patent infringement reported in the paper), or if "forced" to comply, believe that it must have a negative effect on the only thing they are interested in, getting their research done as timely as possible (since there are usually other researchers actively engaged in their area). 

Indeed, rather than patenting or other intellectual property protections, academic competition may be the greatest impediment to the "free exchange" of research materials and information.  As the study authors admit, "[l]ong before the proliferation of IP protection, scientists were often secretive and uncooperative in their interaction with competitors (Hagstrom, 1974, Am. Sociol. Rev. 39: 1-18)," and "[r]espondents anticipate a moderate (3.2/5) degree of difficulty in obtaining tools or materials from rivals."

But recognizing these nuances of the problem is not as "sexy" as pitching the results as being "contrary" to the "developing consensus" that patents have not had a negative effect on university research.  While the authors believe that there is an advantage to obtaining "direct" results of the effects of "IP protection" from the researchers, an uncritical acceptance of the responses, and a failure to appreciate the important distinctions between MTAs and patents (which promote disclosure and hence academic cooperation and the free flow of information) leads them to conclude that intellectual property protection impedes academic freedom and stifles research.  From the responses reported in this paper, nothing could be further from the truth, and failing to address or even simply report that does little to illuminate an important issue for U.S. patent policy.

Newsweek Joins the Anti-patent Bandwagon

    By Kevin E. Noonan --

Ah, the popular press!  Purported protectors of our fundamental freedoms, their behavior (at least in the mainstream press) has recently been less than noble.  Eschewing the role of crusader (or even muckraker), the press seems to look for the common popular denominator of received wisdom, and then to trumpet it.  After all, it wasn't until the war in Iraq went badly and Katrina went ashore that the press did anything more than cheerlead every move of the last, recently departed occupant of the White House.

When it comes to patents, the press has been with the Zeitgeist, echoing the clamor that there is a "broken" patent system and that it imposes a burden on us all.  The New York Times has made a cottage industry of such articles (see "New York Times to Innovation: Drop Dead"; "Science Fiction in The New York Times"; "War is Peace, Freedom is Slavery, Ignorance is Strength"), most based on fundamental a misunderstanding of the underlying facts and a penchant to blindly accept as impartial, partisan advocates with their own axe to grind (see "Anti-Patent ("Sullivan?") Malice by The New York Times").  And The New Yorker has not been above similar antics regarding the state of the U.S. patent system, again missing important facts available from consultation with any patent attorney (see "The 'Unfairness' of World Intellectual Property Protection According to The New Yorker"; "Once Again, The New Yorker Gets It Wrong on Patents"). 

Next week, it will be Newsweek's turn, when it publishes an article entitled:  "Innovation Gridlock: Today's inventors need to put together many bits of intellectual property. Too bad they are all patented."  The author is Michael Heller, a professor of real estate (not intellectual property) law at Columbia.  Professor Heller is also the co-author, along with Professor Rebecca Eisenberg, of the "tragedy of the anti-commons" hypothesis, that patent protection for gene sequences would impede progress in deciphering the human genome and reaping its benefits.  That hypothesis was not borne out by events (see "The Future of DNA Patenting"; "The 'Anti-Commons' Aren't So Tragic, After All").  And not coincidentally, Professor Heller is also the author of "The Gridlock Economy: How Too Much Ownership Wrecks Markets, Stops Innovation and Costs Lives." 

Professor Heller's thesis is the now-familiar one that patenting hurts innovation; having been proven wrong with the anti-commons idea, he has expanded his intellectual playground to assert that patenting is preventing the development of life-saving drugs.  He trots out his favorite "proof" of the thesis:  a quote from Peter Ringrose, former chief science officer at Bristol-Myers Squibb, in The New York Times that BMS could not investigate "'more than 50 proteins possibly involved in cancer' because patent holders 'either would not allow it or were demanding unreasonable royalties.'"  Unfortunately, Professor Heller (at left) does not include "the rest of the story" as reported in the Times (see "Bristol-Myers and Athersys Make Deal on Gene Patents," January 8, 2001); in fact, BMS partnered with Athersys, a small biotech startup from Cleveland that had a (patented) technology for making "a collection of cells that produces virtually every protein" -- thus effectively, and legally, designing around those "unreasonable" patent holders.

Professor Heller also makes the (unsupported) conceptual leap that all this patenting of genetic information has resulted in the dearth of pharmaceutical innovation by major pharmaceutical companies.  This statement ignores the achievements of biotechnology companies like Amgen and Genentech and the rest of the industry, who are providing an ever-increasing stream of new drugs such as Humulin® (recombinant human insulin); Epogen® (recombinant human erythropoietin); Herceptin® (anti-Her2/neu monoclonal antibody); beta-interferon (for treating multiple sclerosis); Cerezyme® (for treating Gaucher's disease); Enbrel® (soluble TNF receptor); and Gleevac® (imatinib; anticancer drug).  Indeed, the Biotechnology Industry Organization says that there are more than 200 biotechnology drugs on the market as of 2007, with more than 400 drugs and vaccines in various phases of clinical testing for FDA approval (see "Guide to Biotechnology: 2007").  It also ignores (and is ignorant of) the difference between identifying targets for therapeutic intervention and finding safe and effective drugs that take advantage of this knowledge.  This isn't a matter of patent law, it is science and science will occur at its own pace.  Professor Heller's argument also disregards University of Chicago Professor Richard Epstein's (at right) insight, in "Overdose: How Excessive Government Regulation Stifles Pharmaceutical Innovation," that "[m]edical science is not immune from the iron economic law of diminishing marginal returns" and the time for having "low-hanging" fruit of easily-achieved increased well-being (for example, by developing drugs against bacterial diseases) is behind us.  The viability of "Big Pharma" partnering and reaping the fruits of biotechnology are evident in Pfizer's acquisition of Wyeth, which (according to the Atlanta Journal Constitution) was spurred to make the acquisition by Wyeth's robust biologics drug pipeline (see "In Wyeth, Pfizer Sees a Drug Pipeline").

Professor Heller also conflates the real problems encountered in the information technology industry with biomedical science.  In biomedicine and pharmaceutical science, intellectual property tends to be discrete.  For example, AstraZeneca can market and patent the acid reflux drug omeprazole (Prilosec® and Nexium®) and TAP Pharmaceuticals can market and patent the acid reflux drug lansoprazole (Prevacid®) without any interference from patent law.  These molecules are discrete, and the development and patenting of one is independent of the other.  The only area in biotechnology where the "patent thicket" problem has been evident is in microarray technology (used for drug and target screening and certain diagnostic applications), and that industry tends to side with IT groups (like the oxymoronic Coalition for Patent Fairness) in supporting or fomenting political attempts to reduce patent protection.

Professor Heller also draws the wrong conclusions when he assesses the different reactions to biotechnology patenting in the U.S. and the competing economies of Europe and Japan.  While it is evident that America's early embrace of patent protection for biotechnology was an important reason why biotechnology breakthroughs occurred here rather than abroad (see "The Continuing Value of Biotech Patenting"; "Disadvantages For Biotechnology Patents in Japan"), Professor Heller concludes that the U.S. Patent and Trademark Office has issued "hundreds of thousands of weak, vague patents" and "if you are a U.S. innovator, there is no way even to figure out who owns rights relevant to your proposed new drug."  To anyone with experience in biotechnology and pharmaceutical patent law or drug development, those statements are worse than hyperbole -- they are just simply untrue (at least as far as pharmaceutical and biotechnology patents are concerned).

Finally, he accuses U.S. scientists of being forced to be "patent pirates" as if this was a serious impediment to biotechnology innovation.  While using patented materials or processes for commercial development (in or outside the groves of academe) is not tolerated, Professor Heller does not provide any examples of purely academic research being impeded by patents (if for no other reason than the ideas, the scientific breakthroughs, and the information of discovery are not patentable).

Professor Heller tells a compelling story, and it probably provides impetus for future sales of his book.  He has been consistent in his "perils of patenting" theme throughout his career (clearly eschewing Emerson's caution about intellectual consistency).  But his thesis is wrong and the history of the biotechnology era in the U.S. clearly demonstrates it is wrong.  What won't help American innovation is Newsweek's giving Professor Heller yet another platform for this failed thesis.

New Attack on Patenting in The New York Times

    By Kevin E. Noonan --

The New York Times seems to have an unending supply of pundits willing to support its anti-patent agenda, as has been noted on this blog before (see below).  The latest example is an article in this Saturday's paper, entitled "When Academia Puts Profit Ahead of Wonder," by Janet Rae-Dupree.  Once past its precious and naïve title, it evinces the same patent animus and the same degree of ignorance about the issues and the stakes behind them.

The piece is ostensibly about the Bayh-Dole Act, passed under the Carter Administration to permit, for the first time, inventors working in U.S. universities and funded by Federal grant monies to apply for patents on their inventions.  The program is generally accepted to be a success, providing an alternative source of licensing revenue for universities and "the fire of interest" spurring innovation.  But pundits, academic and otherwise, rarely achieve prominence affirming the status quo, and expectedly the success of the Bayh-Dole regime has engendered critics.  The critics' point is that the pursuit of profit has somehow stifled the pursuit of pure science and sullied the motivations of its academic practitioners.

To quote Ms. Rae-Dupree from another context, "Balderdash!"  Unmentioned in the piece is the context under which Bayh-Dole was enacted.  Before patent protection was available, U.S. academic science, funded by U.S. taxpayers, represented unpaid-for research and development for corporations, many of them from abroad.  At least a portion of the American R&D fueled the economic miracle economies of Europe and Asia during the late 1960's and 1970's, unwittingly aiding and abetting competition by these economies for American jobs and technology.  This trend turned around in the 1980's, as Bayh-Dole and the creation of the Court of Appeals for the Federal Circuit strengthened patent protection for U.S. inventors.  The consequence:  a U.S. biotechnology sector that promoted the ascendance of U.S. pharmaceutical companies enjoyed until recently, as well as innovation in the telecommunications and computer fields.  (If there is any doubt about the importance of protecting innovation, recall that twenty years ago everyone had a Walkman and today everyone has an iPod.)

Of more concern than a failure to appreciate these historical facts are the continued misstatements, particularly concerning patent law, that once again grace the pages of the Times.  Quoting Daniel S. Greenberg, another anti-patent pundit, the article asserts that, had the current patent regime existed when Watson and Crick discovered the double helical structure of DNA, they would have tried to patent it.  Like the hyperbole of others (see "Science Fiction in The New York Times"), the statement is not only wrong it is demonstrably wrong:  the double helix, like the relationship between mass and gravity or the fact that water boils at 100°C (at sea level) is an unpatentable phenomenon of nature.

Indeed, Mr. Greenberg proves the converse of one of the arguments inherently advanced by the article:  that somehow "corporate secrecy" has besmirched the heretofore pure pursuit of knowledge.  Prior to the errant speculation that Watson and Crick would have patented the double helix, the article ascribes to him this apocryphal description of how science was done in 1950's England:

When James Watson and Francis Crick were homing in on DNA's double-helix structure in the 1950s, they zealously guarded their work from prying eyes until they could publish their findings, to be certain that they would get the credit for making the discovery.

Similar descriptions have come from Jim Watson himself, in The Double Helix and elsewhere.  Thus, it seems that a due concern for advancing one's own career provided ample motivation for jealously guarding research results very much before the advent of university patenting under Bayh-Dole.

Similarly wrong are the purported consequences of the infiltration of filthy lucre into the ivory towers of academe.  The piece bemoans that "[b]lue sky" research -- the kind of basic experimentation that leads to a greater understanding of how the world works -- has largely been set aside in favor of projects considered to have more immediate market potential."  Perhaps a quick perusal of the grant proposals to the National Institutes of Health or the National Science Foundation would have helped, since these are replete, even today, with exactly this kind of "blue sky" research.  The reason is simple, and well understood by those who actually do the science:  technology is when you know the answer, and the important and exciting work in science comes when you not only don't know the answer, you aren't really sure about the question.  Grant proposals, while needing to convince the funding agency that the proposal has a chance of providing useful information, are not geared towards technological applications; perhaps Ms. Rae-Dupree is confusing this type of grant with applications for Small Business Innovation Research (SBIR) grants, which resemble the types of non-"blue sky" research she mentions.

Also untrue is that "[p]atenting a new basic science technique, or platform technology, puts it out of the reach of graduate students who might have made tremendous progress using it."  Patents are meant to prevent commercial activity, and although there is no "pure research" exemption in patent law, there is a higher law in play:  never sue anyone who doesn't have any money.  It is extremely unlikely that a graduate student, working on a dissertation that is used merely to fulfill the requirements of a degree and perhaps publish a paper in a scientific journal, would ever have need to worry about being sued for patent infringement.  The proof of this state of affairs is that the poster child for the supposed risk of patent infringement, Madey v. Duke University, has never been used to support an infringement action for non-commercial research activities.

Many of the critics cited in the article represent industry, and they recite how the current state of affairs -- where universities can patent their inventions -- has stymied commercial application of these inventions.  This is undoubtedly the case; it is always easier just to take the fruits of another's labor than to pay for them.  Uncritical reproductions of these types of complaints from industry can serve only one purpose, to persuade policymakers to rethink the Bayh-Dole scheme.  While this might be good for those industries who have recently shown disdain for any innovation other than their own, it would not be good for the rest of us.

There are certainly some inefficiencies in the current system that are mentioned in the article, for example that only a few major universities have reaped the greatest benefits of licensing patented technology.  Rather than damning the effort, however, this data merely confirms that invention, and profitable commercial exploitation of invention, is unpredictable, serendipitous and a lot harder than most of us (including, perhaps, some tech transfer managers) contemplate.  The fact is that permitting university patenting over the past quarter century has fostered wide innovation, new products including new drugs and therapies, and promoted U.S. jobs and the economy.  We would be foolish indeed to go back to having U.S. academia let corporations free-ride on the innovations produced as the fruits of their research.

For additional information regarding this and other related topics, please see:

• "New York Times to Innovation: Drop Dead," April 30, 2008
• "The Continuing Assault on Innovation at The New York Times," July 15, 2007
• "The Anti-Patent Beat Goes on at The New York Times," July 1, 2007
• "Science Fiction in The New York Times," February 13, 2007
• "Anti-Patent ("Sullivan?") Malice by The New York Times," January 29, 2007

Once Again, The New Yorker Gets It Wrong on Patents -- Update

Last week, Patent Docs posted an article by Kevin Noonan (see "Once Again, The New Yorker Gets It Wrong on Patents") regarding "The Permission Problem," an article by James Surowiecki that appears in the August 11th edition of The New Yorker.  Over the weekend, Mr. Surowiecki and Dr. Noonan engaged in an interesting and spirited dialog regarding each of their articles in the Comments section following Dr. Noonan's piece.  For Patent Docs readers who may have missed their online conversation, we are reprinting it:

Mr. Surowiecki:

Actually, Heller opens his book with precisely this kind of example:  a drug company that has decided not to develop a promising Alzheimer's drug because of the patent thicket that surrounds it.

On the broader point, I'm not "blindly accepting" Heller's argument.  I'm familiar with the anti-anticommons literature.  I just find it unconvincing, particularly the work based on surveys.

I'm also mystified by the idea that the U.S. drug industry is "flourish[ing]."  On the contrary, as you well know, despite the massive amounts of money put into R&D, the number of NMEs approved annually has been dramatically lower in the 2000s (with the exception of a spike in 2004) than it was in the 1990s.  And this decline follows, of course, the biggest explosion in patenting in the industry's history.  Now, it may be that a few years from now we'll all be reaping the benefits of the patent explosion in the form of powerful and efficacious new drugs.  But to say the empirical record of the past decade demonstrates that more patenting leads to more innovation is absurd.

What I find most curious is the idea that it's those who are skeptical about the value of expanding the reach (and length) of patents who are accused of "hysteria."  On the contrary, what's hysterical is the insistence that any limitations on intellectual-property rights will lead to disaster (thus EG in this thread saying that the anticommons folks are going to "doom this country's remaining competitive advantage, namely innovation.")  There is no theoretical or historical evidence that would suggest this is true -- as Lerner's work shows, the connection between stronger patent protection and innovation is tenuous at best.  And there's no good reason to believe that with the expansion of patent rights in recent decades we've struck the right balance between giving incentives to innovators (the only justifiable reason for patents or copyright) on the one hand and allowing the free movement of ideas on the other.

Dr. Noonan:

I am aware of Professor Heller's anecdote to begin his book, and I am skeptical -- as someone who performs freedom to operate searches for drug companies, I can think of many ways to avoid the kind of problem he maintains exists.  As I mentioned elsewhere in the thread, with the exception of gene chips, the kind of patent thicket that occurs in IT does not occur in biotech/pharma, and with the Merck v. Integra decision the liability for using such chips to develop new drugs is tenuous at best.

The anti-commons idea, especially as Professor Heller developed it with Professor Eisenberg, has been debunked by empirical studies showing that patenting has had negligible effects on research.  It was a plausible idea for anyone who had no experience with high-level science; believe me, before patenting became commonplace in the biological sciences, research results and materials were jealously guarded between lab groups.  And the ultimate benefit to society of the research, disclosure, is a goal also served by the patent system.

As for the state of the pharma industry, my point was about the changes in the robustness from about 1980, when European drug companies and products predominated, until recent times, when it has been U.S. companies that have dominated.  This was discussed in the earlier post referenced in the piece, based on a Washington Post article last year.  I agree that things don't look so rosy for pharma worldwide at the moment, but every industry has ups and downs, and the Post authors looked over a sufficiently long time frame that the trend became clear.

It is also untrue that there has been any "expansion" of patent rights in recent times.  Indeed, these rights have been diminished, first by changes in the way patent term is calculated, and second by the expansion of what amounts to inequitable conduct and Supreme Court decisions such as eBay that have reduced the certainty that patent holders have in the patent right.  The "hysteria" I reference is that kind of hyperbole -- as if patents were some new government boondoggle that is threatening our economic well being.  The exact opposite is the case.  Your reference to Lerner's work is telling, since it has also been refuted by others who are not academic economists with a careerist ax to grind.

Finally, you didn't address the point -- patents are by definition extremely limited in time, and have definite expiration dates which have consequences for the patentee, their competitors and society.  One of the reasons that those who understand this feature of patents strongly react to the anti-patent crowd is that they generally propose long-term changes in patent law, which I believe are not in our best economic interests, to solve short term problems.  Patents are not the problem -- being unwilling to license them is the problem.  If the license is too expensive, all a competitor need do is wait a short time (a time getting shorter every minute) and the patents will simply expire.

So, no, Mr. Surowiecki, if Congress hadn't stepped in to solve the airplane patent problem in the second decade of the 20th Century, we wouldn't still be flying blimps.  And if you understood the ephemeral nature of patents you wouldn't have written that we would.

Mr. Surowiecki:

As the recent history of copyright shows, IP rights aren't "by definition" limited, at least not by any reasonable definition of "limited."  If Congress decided patents should last well over a century, it could.  And by your logic, it seems like that would create an innovator's paradise.  Part of the point of the anticommons argument is to ensure that we don't see the kind of creep in patent length that we've seen in copyright.

Your contention that we haven't seen an expansion in patent rights in "recent decades" (which is what I wrote) is simply mystifying.  Strictures against universities (particularly public universities) patenting have been abolished.  Living-organism, business-method, and software patents have all become generally accepted by the court and ubiquitous.  Things have gotten a little better in the last couple of years -- thanks to a widespread sense that our veneration of IP rights has gone way too far -- but the arc of the last 25 years is clear, and it bends firmly in the direction of more patents, not fewer.

Finally, on the supposed impact of Josh Lerner's "careerism" on his research findings.  Let's be serious.  The people producing much of the research and the studies you cite so favorably -- like BIO -- have a huge financial stake in keeping their own IP rights as strong as possible.  Other researchers receive funding from the drug industry.  You yourself, meanwhile, are apparently a patent attorney, which I assume means that in a world with many fewer patents you would have less work.  The financial incentives that are influencing your side of the argument, in other words, are huge, and I think most people would say that they might very well have a material impact on your arguments and your findings.  Lerner, by contrast, is an academic who can look at whatever he wants to look at, who reaps no obvious financial (or career, for that matter) benefit from reaching one conclusion or another.  (You can bet that if he'd found that patents had a massively positive impact on innovation that he'd have been feted by industries across America.)  The notion that his research is somehow less valid than the work you cite because of some supposed ax he has to grind (when all the obvious grinding axes are on your side) is preposterous.

Dr. Noonan:

As to the "expansion" of patent rights, it isn't the rights that have expanded, it is the scope of what can be patented.  Part of that has to do with new technologies that didn't exist decades ago, like biotech.  If you want to write an article about copyright, you won't hear from me -- as important as culture may be it doesn't hold a candle to policy decisions that will influence development of life-saving drugs.  And while I question the wisdom of business method patents (and software patents for that matter, since copyright protection on top of patenting seems like a "double dip"), my objections to the statements in your article were focused on biotech and pharma patenting, where the stakes are, in my opinion, too high for the kind of sloppy arguments the anti-commons folks like to trot out.

As for university patenting, would you prefer that U.S. taxpayer funded technology be freely exported abroad as it was prior to Bayh-Dole, or that the producers of the research supporting the technology have the opportunity to license that technology and become more self-supporting (look at the data on licensing revenues for universities if you think it is insignificant)?

And remember, the whole "anti-commons" argument was based on how patenting would purportedly inhibit academic research, not commercial drug development.  The "creep" I see is in the arguments that anti-commons is somehow necessary to analyze commercial competition; trust me, these competitors don't need anti-commons crusaders protecting them from each other.  The negative effects on academic biotech research anticipated by Heller and Eisenberg just didn't happen.

You are correct that Congress could, within constitutional boundaries, expand the length of patent term, but I wouldn't be in favor of it and it wouldn't be good for innovation.  It would, in fact, create the fictional patent hell of your article, since then blimps might be our only option.  I think limited patent term is fine, because it satisfies the balance between the public benefit of disclosure and the fire of interest patenting brings to innovation.

Finally, I am a patent attorney.  I find it funny when people immediately point to my "vested interest" in the patent system, which is always presumed to be purely financial.  Don't fret:  unless Congress totally abolishes patent law, there will always be work for me to do, and the more Congress and the Patent Office and the Supreme Court monkeys with the rules, the more work there will be, and the more valuable my services will become.  So if money were the object, I would welcome the kinds of misinformed arguments made by Lemley and Lerner and Mauer and you, because it would mean more work for me.

But enough about me.  Your defense of Josh Lerner is surprisingly naive, in view of the competition academics rightly feel to publish work deemed to be important and significant.  Frankly, had Mr. Lerner "found" that patents were a good thing, he would have started to work on something else, because that has been the prevailing belief.  Academics don't get invited to testify before Congress and get interviewed on NPR because they verify beliefs; the point is to challenge them.  So while my interests appear clear to you, don't be too sure that you understand Mr. Lerner's.  Maybe you should look into who is funding his research, and how many of the anti-patent people are funded by think tanks and interest groups funded by Cisco, Microsoft, Intel and the other members of the IT community who want restricted patent rights to improve their corporate bottom lines and support the latest "gee-whiz" gadget.  That might be a quite a story.

Editor's Note:  Mr. Surowiecki's and Dr. Noonan's comments were edited to correct minor typographical and grammatical errors.  In addition, portions of the comments that were not relevant to the discussion of their articles were deleted.  However, the original comments can be found in their entirety at the end of Dr. Noonan's article.