GETI/GLOCOM Platform Joint Seminar

The Patenting and Licensing of Research Tools and Biomedical Innovation: Summary of Prof. John Walsh

Summary by GETI Staff

Over the last two decades changes in technology and policy have altered the landscape of drug discovery. These changes have led to concerns that the patent system may be creating difficulties for those trying to do research in biomedical fields. Based on interviews and archival data, Prof. Walsh and his colleagues, Professors Cohen and Arora from Carnegie Mellon University, have examined the changes in patenting in recent years and how these have affected innovation in pharmaceuticals and related biotech industries in the US.

His team found that there has in fact been an increase in patents on the inputs to drug discovery ("research tools"). The number of biotech-related patents granted per year increased significantly from 4,000 in 1995 to 9,000 in 1999. However, they found drug discovery has not been substantially impeded by these changes. There is, however, some evidence of delays associated with negotiating access to patented research tools, and there are areas where patents over targets limit access, and where access to foundational discoveries can be restricted. There are also cases where research is redirected to areas with more IP freedom. Still, the vast majority of respondents say that there are no cases where valuable research projects were stopped due to IP problems, he added.

The research team did not observe as much breakdown or even restricted access to research tools as one might expect because firms have been able to develop "working solutions" that allow their research to proceed. These working solutions combine taking licenses, inventing around patents, infringement (often informally invoking a research exemption), developing and using public tools and challenging patents in court. In addition, changes in the institutional environment, particularly new PTO guidelines, active intervention by NIH, and some shift in the courts' views toward research tool patents, appear to have further reduced the threat of breakdown and access restrictions. (In fact, the number of patents granted leveled off in the last few years because of these institutional changes.) Finally, the very high technological opportunity in this industry means that firms have a surplus of potential targets for drug development, so that the walling off of some by patent holders, while shifting the focus, does not prevent firms from discovering drugs, Prof. Walsh stated.

He concluded with a discussion that the pharmaceutical industry is very exceptional in that patents play a crucial role in the success of business. On the other hand, what is happening in the field of biomedical research tools looks quite similar to the patenting and licensing practice in other sectors such as microelectronics where defensive patenting is common. This finding leads to a speculation that research tool patent holders may not be able to capture a significant return by licensing their intellectual property. He also added that new actors have to learn the process (i.e. identify the business model to pursue) and the transition period is cumbersome. This insight seems particularly pertinent to Japanese firms who will have to understand the institutional and business practice difference between Japan and the US (and Europe), or learn the rules of the game, and then define their business strategy in order to keep up with the rapid pace of innovation in pharmaceuticals and related biotech industries globally.