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IP: Are bioscience patents worthwhile?

The industry could come under pressure as legislators seek to raise revenue and “free” markets

A recent discussion on a major television network business program addressed the purported deficiencies of the U.S. patent system. The commentators and panelists expressed some dislike for patents in general, espousing a "you didn't invent that" philosophy which argues that many inventions only build on prior research, most of it by other inventors, and so patents constitute an unreasonable reward for the inventors’ efforts. The bioscience community is acutely aware that this is only partly true—every inventor builds on the prior work of others; however, improvements in the field can require monumental achievement in the laboratory and in the development process to bring such inventions to the market. This should remind the bioscience community that the business community sometimes needs to remind politicians and the public of the importance and value of patents.

First, here are some data from the U.S. Patent Office. According to a 2012 study, "Intellectual Property and the U.S. Economy: Industries in Focus," the most IP-intensive industries were directly or indirectly responsible for 27.7 percent of all jobs in the economy. IP-intensive industries directly accounted for 27.1 million American jobs, or 18.8 percent of all employment, in 2010. IP-intensive industries accounted for $5.06 trillion in value added, or 34.8 percent of U.S. gross domestic product. Every two jobs in IP-intensive industries support an additional one job elsewhere in the economy. The percentage of process product and process innovations for which patents were considered an effective mechanism for appropriating the returns to innovation was 54.7 percent in medical equipment, and 50.2 percent in pharmaceuticals. From this data, the impact that intellectual property in general and patents in particular have on our economy should be clear.

Another recent report studied how global biotechnology benefits from patents. This study, "Taking Stock: How Global Biotechnology Benefits from Intellectual Property Rights," was commissioned by the Biotechnology Industry Organization (BIO). Among the reported data was that the number of biotechnology patents filed under the Patent Cooperation Treaty in the U.S. alone from 1977 to 2009 increased from virtually none to well over 10,000. Not surprisingly, this growth in biotechnology-related patent applications has outstripped the rate of growth for other industries. Clearly, biotechnology companies are making significant investments in biotechnology patenting.

Yet another study, the "Battelle/BIO State Bioscience Industry Development 2012," demonstrated the vitality of the bioscience industry through the recession, at least when compared to other industries. Salaries for the bioscience industry also outpaced those of the private sector in general by a very significant margin.

These studies and many others all provide significant support for the importance of patents to the biotechnology industry and the economy in general. The recent 2.3 percent medical-device tax imposed by the Affordable Care Act, which just went into effect, is a sign that the industry and patents for the industry will continue to come under increasing scrutiny by politicians and some members of the public as sources of revenue. Remember that in the recent past, Congress took dollars from the PTO, effectively a tax on inventorship.

Recent experience indicates that intellectual property and the bioscience industry could increasingly come under legislative pressure both as sources of revenue and as part of a misguided attempt to “free” markets. It is important that the biotechnology patent community stay vigilant in reminding legislators, lobbyists and the community at large of the importance of this industry and of the patents that serve it.

Contributing Author

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Gregory Nelson

Gregory A. Nelson is a partner in the West Palm Beach office of Novak Druce + Quigg. He represents clients in all phases of patent, trademark...

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