Patents are undoubtedly a hot topic in biotech and pharmaceuticals. A company’s intellectual property strategy is often more important than its core technology in the race to win market dominance. This, of course, is not only they case with the brass ring at the end of the pipeline — the drugs themselves — but almost every component of the drug development process, from gene sequence to chemical compounds and to the enabling technologies that make discovery possible.
But while some areas of the biotech landscape are embroiled in perpetual patent litigation, this is not the case in bioinformatics for a very simple reason: A dearth of patents.
A recent study conducted by London-based consulting firm Silico Research found that only 50 software-related patents have been issued by the US Patent and Trademark Office since 1996 to companies operating in the pharmaceutical, biotechnology, and genomics sectors. The firm searched for US patents assigned under the international classification G06, which covers computers, databases, networks, and computing methods, for over 300 biopharmaceutical companies.
“We were genuinely surprised by the lack of technology and method patents issued to pharmaceutical and biotechnology companies,” said Emmett Power, senior partner of Silico Research. “These companies are very focused on intellectual property and, given that they have hundreds of computer programs and bioinformatics departments, it’s curious that they’re not attempting to patent the algorithms and methods they’re using.”
Power concluded that pharma and biotech companies focused on getting drugs to market are overlooking the IP value of the enabling technology in favor of genes and compounds. But, he asked, “If you buy into the hypothesis that the pharmaceutical industry is becoming an information-driven industry — where the value is in the information rather than the compound—should they now be looking at this issue so that in ten years’ time they don’t find that virtual drug development companies have cannibalized their market?”
But while the pharmaceutical industry’s historical reluctance to change its ways may explain the lack of bioinformatics patent activity, this doesn’t explain why smaller, younger biotech companies, and particularly bioinformatics providers, are wielding slim patent portfolios.
It seems that a number of factors may contribute to this situation. For one thing, the bioinformatics industry is relatively new, so companies that have emerged in the last few years may have filed patents that have yet to issue. Indeed this is true in some cases; however, the actual number of pending bioinformatics patents is relatively small, according to the US PTO.
In fact, anticipating a rush of patent applications in this emerging area, the US PTO demonstrated foresight by setting up a dedicated bioinformatics art unit in December of 1999, which operates under the biotechnology center. But as it turned out, “We were a little surprised that we haven’t seen the flood of applications that some people have predicted,” remarked Jasemine Chambers, director of biotechnology at the US PTO.
Currently the 11 examiners in the bioinformatics art unit are processing a total of around 200 patents. Of those, Chambers said 160 are in various stages of prosecution and 40 are waiting to be examined. Only 11 have issued from the unit so far. With a turnaround goal of 36 months, Chambers expects “a few more” to issue over the next year.
So while some bioinformatics companies are filing, the lack of issued patents isn’t entirely to blame on a patent office backlog. An alternative reason cited by some in the industry is the fact that many early-stage bioinformatics companies are services-driven rather than technology-driven. Rather than create novel technology or data of their own, some companies simplify the data-gathering process for their clients by combining publicly available data sources and algorithms into one product with a single interface. While convenient for its users, such an approach is not patentable.
John Pietrzyk, vice president of business development at Silicon Genetics, noted that this is the case with the company’s flagship product, GeneSpring. “The algorithms behind GeneSpring already exist in one form or another. Our unique strength is taking what exists and integrating it into the proper arrangement with visualization tools. It’s just the way we put things together, which we think is unique.”
Pietrzyk noted that the company has filed for a patent on its upcoming MetaMine automated data mining tool, however, due to the proprietary nature of its underlying algorithms. “We’re confident it will achieve patent status,” said Pietrzyk.
A third reason some bioinformatics companies aren’t patenting their technologies is due to the inherently complex nature of software patenting, in which it is easy for competitors to copy your work once it’s made public in patent form, but difficult and costly to actually prove infringement.
This has led a number of vendors to keep their IP as a trade secret rather than patenting it. The classic example of this strategy is Coca Cola, who never patented its secret recipe, which would have then become public property after 20 years. Instead, by keeping it under wraps, they were able to keep the formula safe for 100 years.
Most vendors evaluate their patent strategy on a case-by-case basis. Unless a technology is truly groundbreaking, many say, it’s often not worth the litigation costs that may occur down the road if a competitor decides to dispute the patent.
“Patents are definitely an important piece of how you build your company, but you have to weigh the tradeoffs between trade secrets and IP protection,” said Bill Ladd, director of bioinformatics at Spotfire, which has several patents in process. “It’s hard to enforce IP in software. It’s hard to tell what someone else is doing in their software.”
Eli Mintz, president of Compugen, said his company has adopted an IP strategy common in the software industry for its novel algorithms. “Our major concern is not to be blocked from using them by other people in the future,” Mintz said. Compugen files patents in this area, but after a certain period of time, “if nobody else is trying to patent the technology, we roll over our patents or abandon them,” preferring to keep them as trade secrets. Mintz said these issues do not apply for “conventional” biotech patents the company files for composition of matter and the function of genes or small molecules.
Christian Kilger, director of intellectual property and licensing at Lion Bioscience, said Lion seeks patent protection for “the principles and methods of how the software functions,” but avoids patenting algorithms because infringement is so difficult to prove.
But Leslie Restaino of law firm Brown Raysman Millstein Felder & Steiner, which recently launched a bioinformatics practice, said the industry’s reluctance to patent is beginning to wane. “There’s so many things out there that they can get patents on. Not just pure algorithms, but methods of data extraction, methods of tabulating genetic and molecular building blocks, and even in some instances database design.”
Restaino said that bioinformatics companies are just recognizing the benefits of patenting. “As with any new technology I think they’re just becoming aware of what they need to do with it,” she said.
Maciek Sasinowski, CEO of Incogen, agreed. “ A patent in any field is just to protect your investment. You spend a lot of time and money developing it and you would like to make it available to people but you don’t want somebody to benefit from all the hard work you put into it. I don’t see any reason why bioinformatics should be any different.”