This week I read a post in Patent Doc blog critical of an editorial that appeared in Nature Biotech regarding the state of patent law with respect to patenting genes. The editorial (spurred by the recent Myriad decision by Judge Sweet) took the position that allowing gene patents was a effectively a license to block innovation. Society, according to the editorial, was worse off as a result. The editorial opined that patent pools or clearinghouses might serve the public's interest in breaking through patent thickets, but that it would likely take government legal coercion to implement these remedies in the biotech arena.
The Patent Doc post argued that the Nature editorial writers were confusing the role of patents in preventing infringement relative to commercial activity, with perceived blocks by these same patents on basic research. The latter activity hasn't been impeded by patent enforcement actions relative to patents like the BRAC gene patents. This - according to Patent Doc's - is where the innovation is occuring unencumbered. This post also criticizes the Nature Biotech writers for not understanding the "balance of rights" that the patent bargain actually strikes relative to protecting both incremental improvements and the groundbreaking ones. Finally, the Nature writers are called to task for asserting that patent pools will require government coercion to be enacted in biotech -- in conflict with actual recommendations given by the US Health and Human Services Secretary's Advisory Committee on Genetics, Health and Society (SACGHS) report.
See report here Download SACGHS Patents Report Approved 2-5-20010 and page 92 for patent pool recommendation.
Patent Pools are an interesting concept, and not new, for resolving the gene patenting issue. A patent pool as defined in Wikipedia is a consortium of two companies agreeing to cross-license patents relating to a particular technology. Follow link for more history.
Patent pools date back to 1850's and have been used to break up logjams of overlapping patents, referred to as patent thickets, in industries as diverse as sewing machine manufacturers, aircraft manufacturers, digital broadcast signals, DVDs and RFID technology. Now, will they work for biotechnology and specifically for gene patent issues?
In 2000, the US PTO issued a white paper, Patent Pools:A Solution to the Problem of Access in Biotechnology Patents? The paper does a great job of summarizing history of patent pools, requirments/characteristics of a pool to be legal (interaction with anti-trust law), discusses their plusses and minuses, and finally discusses potential benefits to their application in biotechnology.
The major benefits in terms of biotechnology (according to this report):
- Elimination of problems caused by "blocking" patents or "stacking" licenses
- Significantly reduce several aspects of licensing transaction costs
- Distribution of risk across all members of the pool can spur more innovation due to effects of sharing risk
- Pools often lead to systematic, more open exchange of technical information (not covered by patents) among pool members, i.e. sharing trade secrets for advancement of all
There can be negatives too, primarily pools can inflate costs of competitively priced goods, can shield invalid patents (thrown illegally into the pool), can encourage collusion and price fixing among pool members. The US PTO concluded that there were enough existing guidelines, regulations, and laws to prevent this type of behaviour. Their conclusion? Patent pools are win-win for biotech.
In a similar paper, published in The Journal of Philosophy, Science & Law, the author, David Resnick, Prof. of Medical Humanities, Brody Sch. of Medicine, ECU, similarly concluded that "companies, universities, and other interested parties should form a biotechnology patent pool" to prevent problems related to licensing from undermining scientific research and technical innovation. The key is to convince potential members of the pool that it is in their long term best economic interests to be in the pool. If members perceive that they have individual patents that are more valuable than those in pool, there is an incentive to "go rogue" as Sarah might say.
The jury is still out - both for the appeal of the Sweet verdict and for the viability of patent pools in biotechnology.
Verbeure, B., van Zimmeren, E. et al. Patent pools and diagnostic testing. Trends in Biotechnology 24(3): 115-120.
Patent Docs blog, Debating Gene Patents - Round four
Posted by Bruce Lehr June 3rd 2010.