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Two White Papers Address Patent Reform's Impact on Biotech

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Earlier this summer, the California Healthcare Institute and the Biotechnology Industry Organization each released white papers addressing the current patent law landscape and its potential impact on the biomedical industry and academic technology transfer.

Taken together, the papers underscore the growing apprehension from these sectors regarding recent proposed patent reform legislation and patent-related Supreme Court decisions in the US — as well as concerns that faster-moving industries such as information technology may be influencing patent reform too much.

However, representatives from CHI and BIO also warned that characterizing the growing patent debate as being “biomedical versus IT” is likely a gross oversimplification and that many other entities have a stake in the proceedings.

CHI’s paper, entitled “Impact of Patent Law Changes on Biomedical Investment and Innovation,” was authored by several members of the organization, and analyzes a number of recent developments related to patent law that “could have serious implications to the biomedical industry in California and nationwide,” CHI said in a statement.

CHI cited a series of lawsuits from recent years, saying that they have weakened the ability of patent holders to enforce their rights against companies performing drug research; allow a licensing entity to challenge the validity of a patent without infringing upon it; have changed the standards used to evaluate the obviousness of a patent; and may eventually invalidate diagnostic patent claims that include both a generic assay and correlation step.

In addition, the white paper bemoans the Patent Reform Act of 2007 (currently being considered by US Congress), as well as “the hostile approach taken by the US Patent and Trademark Office toward making and promulgating new patent rules.”

BIO’s white paper, entitled “The Myth of the Anticommons,” was authored by Ted Buckley, director of economic policy for BIO. It refutes the theory of the anticommons, which was proposed in 1998 by Michael Heller, a professor at Columbia Law School, to describe a scenario in which excessive patenting could stifle innovation in the biotechnology industry. Specifically, the anticommons theory claims that too many patent holders of upstream technology may inhibit downstream innovation due to transaction costs and strategic behaviors.

The BIO white paper sets out to counter that theory by providing evidence that research, development, employment, and the number of therapies in the clinical pipeline in the biotechnology industry is steadily increasing.

“What I see people in our industry being flabbergasted about is that patents for a very long time generally carried an air of being kind of a good thing,” says Hans Sauer, associate general counsel for BIO. “But on a basic level, at least right now, and for the past two or three years, we have a public perception that doesn’t quite follow that.”

According to Sauer, the “tragedy of the anticommons” theory is an economical manifestation of that kind of thinking, but there is no empirical evidence to support the theory. “To the contrary, we have a very vibrant, IP-based economy in this country. And it is IP-based as much in the IT sector as it is in the biotech sector.”

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