Outsourcing Trends

Outsourcing Trends

Guest post: Reforming the patent system to better promote innovation

This is a guest post by Llewellyn Cox, Program Administrator for Research at the USC School of Pharmacy, and Founder of Research2.0. (full bio below).

One of the biggest barriers to market entry for a startup business, whether it is in biotech, software, or any other innovative industry, is dealing with the thorny issues of intellectual property (IP); securing licenses, negotiating with rights holders, and submitting and defending patents are expensive and time consuming activities that can undermine a startup’s financial position and create delays in getting critical early products to the market.

Why is this so? Robust protections for inventors have been recognized for centuries in Western economies, even so far as to be detailed in Article I of the original, unamended United States Constitution as a key responsibility of the newly-created Congress. However, the US patent system in the early 21st century is widely regarded as arcane and confusing, producing a considerable barrier to the commercialization of research discoveries, especially for entrepreneurial academic and independent scientists that may not benefit from the support of large, institutional tech transfer offices.

The enemy of reform is inertia, and this status quo is compounded by contradictory issues facing two of the most active areas of patent litigation: biotech and info tech. With regards to IT, the explosion of IP litigation has led to a situation where industry giants such as Google and Apple now spend more on patent lawsuits and purchases than on research and development.  It is no surprise that costs are so high when the state of IP litigation is such that a senior executive such as Google VP of Corporate Development, David Lawee, recently had to admit “we didn’t believe rounded corners were patentable”.

While it is clear that IT could benefit from stricter and clearer rules as to what is patentable, especially with regard to minor iterations on existing technology platforms, there is pressure from the biotech sector to do the exact opposite. Due to the lengthy post-filing development timelines of pharmaceutics and other therapeutics, companies must make high profit margins and aggressively defend IP in the relatively few years a drug is under patent protection in order  to recoup their investment.

So, how do we solve the problem of one industry segment needing longer, more robust patent protections, while another needs a more limited landscape to stop the deluge of patent trolls from bleeding their engines of innovation dry?

Let’s roll back to the beginning and ask why we have patents at all: starting with the US Constitution, responsibilities of the Congress include “… to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries” (Article I, Section 8, Clause 8). The key issue here is the subject of the clause: “Authors and Inventors”. Patents have lately become commodities, chips traded and banked for use against rivals in legal proceedings to protect or gain market share – the text of the Constitution however, makes it clear that the intent of this protection is solely for the Author or Inventor. Secondly, there is the preamble: “…to promote the progress of science and useful arts…”. It thus seems inconsistent that one could hold and defend a patent that is intended to promote progress, but not actually create a product or service from it.

By embracing these two key concepts, we can make relatively simple, common-sense reforms to the system that would not unduly burden those who require robust IP protection for the furtherance of innovation in their fields. Firstly, patents should not be transferrable; it is quite clear that patents were invented to protect “Authors and Inventors”, and thus the purchasing of patent portfolios for the sole purpose of litigation is not a justifiably protected activity. The protection should be solely for the individual or corporate entity that realized the invention (or their direct descendants through inheritance or merger, respectively).

Secondly, we should reinforce the intent “to promote progress” by creating a “Use it or Lose it” system; following a reasonable preliminary patent period (say, 5 yrs), inventors or their agents should be making a bona fide effort to commercialize or otherwise produce their inventions, or lose legal protection for them. Sitting on a patent and hoping that Santa Corporation will swoop in and make you rich may be a common academics’ fantasy, but is not a viable business plan for anybody. Likewise, buying up companies for the sole purpose of using their patents to sue other innovators, but not to produce the patented inventions themselves, is not an economically beneficial activity, and fails the constitutional test on both points.

[about_box image=”http://thebenchapp.s3.amazonaws.com/wp-content/uploads/2012/11/LJC1.jpeg”]Llewellyn Cox is the Program Administrator for Research at the USC School of Pharmacy, as well as Founder and Organizer of Research2.0, a community initiative to promote a more efficient, robust and rapid research network, and to engage academia with startup culture. Once upon a time, Dr Cox received his PhD in cell/molecular biology in Cardiff, UK before moving to New York to perform postdoctoral research in neuroscience at Weill Cornell Medical College. Follow Llewellyn on Twitter @LlewellynCox.[/about_box]

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