Tuesday, 25 March 2014

Patent Trolls Coming Soon to the Bio-pharmaceutical Industry--and a Roadmap?

In a recent article titled “Patent Trolling: Why Bio and Pharmaceuticals Are at Risk”, Professor Robin Feldman of University of California, Hastings College of Law, and W. Nicholson Price II, Fellow at Harvard Law School, argue that so-called patent trolling is likely to develop in the bio-pharmaceutical industry.  The authors examine the biotechnology patent portfolios of five major universities and find many patents that could be used against players in the relevant industry.  Monetization anyone?  Notably, the authors state:

In deciding whether to undertake this analysis, we lost sleep over whether the potential for harm outweighed the potential benefit. If reform efforts are not undertaken, our work could do no more than provide a handy road map for those who would follow. However, with scattered anecdotal evidence suggesting that monetization is moving into biopharmaceuticals, life sciences trolling is predictable and in its infancy. If reforms are implemented before the problem proliferates, legislators and regulators could cabin the activity before it becomes deeply entrenched and too much harm occurs.

I think the authors’ concerns are well-founded, but more information is always helpful.  The authors’ also note that “the Association of University Technology Managers recently announced that it was re-examining its policies that had recommended against transferring rights to non-practicing entities.”  Would anyone like to expand on any anecdotal evidence about monetization in the bio-pharmaceutical industry? 

In examining why “trolling” may occur in the bio-pharmaceutical industry, the article also explains:

There is much truth to the conventional wisdom. Biotechnology and pharmaceutical research does involve a greater investment of time, money and expertise. This results in fewer patents, fewer targets, and a longer lead time for problems to emerge. In addition, developments in product type and patent rules affect the opportunities for patent demands. Biotech and pharmaceutical products tend to have fewer components, and patents in the field tend to be less broad than the software and business method patents that proliferate in the technology industry.

However, the conventional wisdom suffers from three weaknesses. First, it ignores the role that regulation plays in making some pharmaceutical patents harder to invent around, thus raising the potential hold-up costs of what patents are available to monetize. Second, it assumes a classical model of patent bargaining, rather than the strategic bargaining and suit filing adopted by modern monetizers. Third, it assumes that monetizers will confine themselves to a relatively narrow set of technological targets; while high-tech may be low-hanging fruit, the proliferation and increasing sophistication of monetizers means that other industries are likely to be targeted in the near future.

The article goes on to discuss the specific patents held by five universities that could be used by “trolls.”  (Oh, my.  Now I am losing sleep over this blog post about the article.)  And, on to reform efforts and data, IP Finance reader Dr. Reuven K. Mouallem from Israel has sent me links to two of his papers on “patent trolls.”  One paper discusses the issue of “patent trolls” from the patent quality perspective and the second paper examines statistics/procedures from the USPTO, JPO and EPO that evidence quality problems. 

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