The Human Factor In Innovation

We’ve picked out the following points from The Global Innovation Index 2014 as being of interest to us.

1. The theme of this year’s Global Innovation Index Report concerns how to nurture the essential human factor in human innovation. That means an appreciation that creative and critical thinking, an appetite for risks and thinking entrepreneurially are important for the innovation process.

2. Educated people make good innovators, and deep technical skills are required for disruptive innovation.

3. Whilst ‘brain drain’, i.e. emigration of skilled people, is detrimental to a country, diaspora networks can be of benefit. Migrants can act as a bridge to investors and institutions with technical skills.

4. The BRICS countries have their strengths, but as yet they are not showing the ‘holistic’ improvements needed in their infrastructure which will lead to them being top innovators.

5. The US is ranked 6th in the world in according to innovation efficiency ratio, being hindered by weaknesses in tertiary education and low levels of student exchange with the rest of the world.

6. Many countries are in the process of ‘catching up’ which needs to occur through imitation and technology acquisition rather than their own R&D. However technology transfer is not simple, requiring a complex set of skills and organisational structures before it is successful. The presence of a large poorly educated population is the primary reason for poor innovative performance.

7. More recent view of innovation recognises the contribution of a wide range of disciplines, and not just science education. Good arts teaching is also important. In particular teaching methods in the visual arts are close to those that nurture skills useful for innovation.

8. The recent expansion in the Indian educational system has been impressive. However now the issue is one of ensuring the quality levels of tertiary education. In addition the humanities and social sciences have been neglected.

The report can be found here.

Our IPKat post on last year’s report can be found here.

You may also wish to see related articles 10 Observations on the Success and Failings of University Tech Transfer and Top 10 Points on the Trans-Pacific Partnership.


What’s Wrong With an Academic or Rigid Approach to the Patent System?

This post is written by a practitioner who is very appreciative of the role of academics in contributing to the patent system. The purpose is to highlight though how practitioners need to approach the patent system because it is very different from a typical ‘academic’ understanding of it.

1. Patents are a very grey area. There are often good counterarguments to any position which is taken on validity or infringement issues. That means there is a tremendous level of unpredictability and risk involved when making decisions around them. Often the most likely outcome can be defined, but so often the most likely outcome does not happen, and that must be appreciated. So whilst an optimal strategy can be deduced it must be realised there is lot that cannot be catered for.

2. The patent system is changing all the time, sometimes dramatically. The Mayo, Myriad and Alice US Supreme Court cases have transformed the landscape of chemical, biotech and software patent practice in the US in ways that are still not clear. That means the practitioner needs to know the absolutes are changing and be able to plan for that as much as possible. As an example many practitioners were caught by surprise when software became patentable under European practice and their patent applications did not have basis for introducing claims to it.

3. The ‘academic’ approach looks for clear principles with which to understand something. Patent laws and decisions seemingly provide such clear principles. However what might not be appreciated is that the practical interpretation of laws and decisions can change, particularly where concepts such as novelty and inventive step are involved. In addition it can become clear that certain decisions were not correct, and will not be followed.

4. Analysing patentability is complicated, and so different people will have different approaches, coming to different conclusions. Different Examiners, Opposition Divisions and Boards of Appeal are capable of deciding the same things differently. That is part and parcel of legal systems where it is observed that many findings are reversed on appeal and so often decisions on points are not unanimous where there is more than one person who contributes to it.

5. Oral proceedings at the EPO will sometimes determine the outcome of difficult examination proceedings, and usually determine the outcome of opposition proceedings. However many factors will unduly influence that outcome, in particular how the individual attorneys performed on the day: if they are caught by surprise, misunderstand a point or misread what the Division or Board is thinking they may lose the case. That decision would reflect what happened on the day, rather than what should have happened based on case law. Parties taking part in oral proceedings should recognise this can happen, and when one is reading decisions of the Boards of Appeal to determine case law one must understand how such ‘human’ factors might have impacted the conclusion.

6. As well as dramatic changes happening in case law and practice (as mentioned in point 2 above) there are always small changes happening in patent practice. Usually practice seems to get more strict (such as claiming homologues of nucleic acids), but it can also become more lenient (such as the EPO becoming more lenient on added matter recently).

7. It is often difficult to give advice to clients, particularly on the chances of success or the scope of claims that might be gained in examination. Examiners can raise objections that were not predicted, and whether or not basis is available for the required amendments is then a matter of luck rather than justice. Whilst clients prefer more certain answers, that certainty will often not reflect the reality of the situation.

You may also wish to see related posts 10 Observations on the Complexity of Patents and Top 10 Problematic Things for a Patent Attorney to Advise On.


Mazzucato’s ‘Innovation as Growth Policy’

These points are taken from a recent article by Mazzucato and Perez titled ‘Innovation as Growth Policy: the challenge for Europe’.

1. The world is in a crucial time of transition as to how to direct the economy after the financial crisis of 2008. We have a polarisation of incomes, high unemployment, low growth and a fearful financial sector which is steering away from the real economy.

2. Presently private and public investment go into speculative and short-term investment. The spread of information and communications technologies (ICT) in the 1990’s and 2000’s turned into casino capitalism. That financialisation has hindered progress.

3. Banks and venture capitalists have become risk-averse wanting returns in 3 years. However major innovations take 15-20 years to develop. That means they are not investing in the ‘big waves’ of the future. Long term funding must therefore come from public institutions.

4. A deeper understanding is needed of the process of innovation so that policies can be implemented to promote it as a driver of economic growth. Innovation is not just about easy money being available. It also needs a direction for the deployment of resources, i.e. a mission-led approach to innovation is needed. ‘Green growth’ can serve as a powerful global direction for deploying the potential of the information revolution.

5. Green growth is relevant to energy sources and uses, designing products, promotion of collaborative economies and promotion of health and education.

6. The markets cannot find the green direction on their own because there is no ready-made route that will make the multiple possible directions and disparate innovations profitable. Governments must take on the required high risk R&D.

7. Present efforts to generate growth which is both smart and inclusive are not working. A major innovation effort is needed to change this and a dialogue in which innovation and employment are not seen as trade-offs.

8. Conclusions:

- public investments are needed in a mission orientated approach

- direct and indirect incentives need to be provided to promote innovation

- EU banks can be used to cure the investment crisis

- ‘green’ can be used as the key challenge and direction

- long term committed finance is required

- definancialisation of the economy is required

- regulation is needed to shift profitability to key green areas

- taxation must reward long-term investment.

You can see the report here.

You may also wish to see related articles 10 Points on Muzzacato’s Rethinking the Role of the State and What is Wrong with Pharma R & D?

10 Points on US Patent Litigation

These points are based on the article ‘Understanding the Realities of Modern Patent Litigation’ by Allison, Lemley and Schwartz.

1. The article is based on 949 merits decisions based on infringement suits decided in 2009 to 2013 from every case filed in 2008 and 2009. The decisions come from 462 different cases involving 777 different patents. Of the 949 merits decisions 636 were definitive wins for one side or the other. The remainder were interim wins, usually denial of a summary judgment motion.

2. The most common source of merits rulings were summary judgments of invalidity (430) and non-infringement (473). In contrast patentees were less likely to seek or obtain a summary judgment in their favour. Patentees brought and received rulings on 125 summary judgments on validity and 128 summary judgements on infringement.

3. Of the 949 merits decisions 290 patents went to trial. 273 merits decisions reached a Federal Circuit decision on appeal and another 126 were appealed but settled before decision. 82 of the merits decisions are pending before the Federal Circuit.

4. Less than 10% of the patent lawsuits filed in 2008 and 2009 resulted in a merits decision, i.e. more than 90% of lawsuits were settled before summary judgment or trial.

5. In a study in 1998 it was found that validity challenges were overwhelmingly based on obviousness. In the present study it was found that whilst obviousness was still important, there were fewer summary judgements based on it than anticipation. There are also a growing number of decisions based on patentable subject matter and the largest category of validity decisions was indefiniteness which barely registered in the 1998 study. This is due to indefiniteness being applied on software means-plus-function cases and also the rise of claim construction.

6. Only 31% of invalidity challenges succeeded at summary judgment, overall in 42.4% of cases. However patentees won only 26% of the definitive merits rulings as they do badly on infringement. Accused infringers win 57% of judgements on infringement.

7. Patentees do badly because of ‘fractioning’ of patent law. They have to win every issue of validity and also infringement to win overall. A patentee’s burden for summary judgement for infringement is higher than the accused infringer because they need to show lack of disputed issues for ‘all’ elements of the invention whilst the accused infringers need to show it for ‘any’ element of the invention. Also the patentee must survive at summary judgment and trial, whilst a win at either is sufficient for the accused infringer.

8. Patentees fared better on validity issues in multi-patent decisions.

9. Foreign patents were more likely to prevail in merits decisions, suggesting that foreign plaintiffs were only asserting their best patents.

10. Patent characteristics, such as number of prior art references, seem to have no correlation with overall win rates, validity or infringement outcomes.

The article can be downloaded here.

You may also be interested in related articles 10 Observations on Patent Litigation and Top 8 Disadvantages of a Specialist Patent Court.

10 Points on Ernst & Young’s Biotechnology Industry Report 2014 ‘Unlocking Value’

1. R&D remains the central point of value leakage. Failure for drugs in phase III remains very high at 40%. This represents very inefficient use of capital as pursuing a drug candidate to this point is very expensive.

2. Value can be unlocked by biotech companies by the following 3 approaches:

- precision medicine, i.e. targeted therapies tailored to the patient’s individual condition

- adaptive clinical trials, i.e. modifying a clinical trial based on early patient reactions

- precompetitive consortia, i.e. using open learning frameworks.

3. Biomarkers can be used to mitigate drug development risk. They are a tool for managing biological complexity and can also make it easier to deal with regulatory complexity. Payers increasingly want confidence that the drug works in the population it is being used in.

4. Biotech companies need to acquire the following new capabilities:

- partnering early and often to gain missing skills

- empowering senior R&D leadership to allow them freedom to take the appropriate risks

- participate in precompetitive consortia to gain access to data from diverse sources and build relationships with other stakeholders

- prioritise evidence collection early on during the drug discovery process.

5. The biotech industry performed strongly in 2013 with revenues of the publically traded companies in US, Europe, Canada and Australia increasing by 10%. However a small group of US companies drove a lot of this this growth. R&D spending increased by 14% overall, a 20% rise in the US and a 4% drop in Europe.

6. The biggest drivers of growth were Biogen Idec, Celgene and Gilead Sciences. The US IPO class of 2013 added $662 million to the biotech industry’s revenues. The 17 largest US biotech companies accounted for $7.9 billion of the $8.2 billion increase in revenues, whilst the other 322 companies accounted for the remaining 4% in revenue growth.

7. Whilst Europe saw weak increase in revenues (3%) there was a strong growth income.

8. Of the 49 companies that went to IPO in 2013, 42 were therapeutics companies, 3 were diagnostics. Circassia’s debut on the London Stock Exchange have given hope to VC’s that markets in France and Switzerland may open up too.

9. Big pharma bolt-on acquisitions of biotech continues in 2013 though total deal value fell to $12.5 billion.

10. Only 27 new products were approved by the FDA. However both the FDA and EMA have launched programs making the regulatory process more responsive and user-friendly.

The report can be found here.

You may also be interested in related articles 10 Points on Open Innovation and 10 Points from Burrill’s Biotech Predictions for 2014.

5 Points on Incremental Innovation

These points are based on a report from the Fraser Institute entitled ‘The Benefits of Incremental Innovation’.

1. The economist Robert Gordon is of the view that western societies have reached a scientific plateau and now there will be a decline in the usefulness of future inventions compared to past inventions. Other academics believe that there is presently too much ‘imitative’ incremental innovation and too little ‘breakthrough’ innovation, and the pharmaceutical sector is pinpointed as a particular area for this concern.

2. Innovation can be classified into incremental (improving existing products), breakthrough (providing more substantial changes to technologies) and radical (creating drastic changes to the competitive environment and perhaps even creating entirely new businesses).

3. There is a feeling that managers of companies are more risk averse to innovation than shareholders would prefer.

4. In the pharmaceutical field incremental innovation does provide benefits to patients and helps cost-cutting. Incremental innovation will often be based on improving the ways of delivering known drugs, making them more effective or reducing side-effects.

5. There is controversy as to whether patents that protect incremental innovations in the field of medicine are ‘legitimate’ or whether this is simply an attempt to extend patent protection on the drug itself (so called ‘evergreening’). India has specific legislation designed to stop evergreening of drugs.

6. The report ultimately concludes that incremental innovation is beneficial. However we believe that this is a very complex topic where the discussion is ongoing.

The report can be found here.

Our IPKat article on IP and medicines can be found here.

Our PatLit article on innovation and the IP system can be found here.

You may also wish to see related articles 10 Observations on Different Types of Research and 10 Points About the State of the Pharma/Biotech Sector.

5 Recent Interesting Decisions of the EPO Boards of Appeal

The following recent decisions caught our eye as being interesting or illustrating policy points at the EPO.

1. T1142/12 concerns denial of the applicant’s request by the Examining Division to have oral proceedings in Munich rather than in The Hague. The Board found that this was not part of the Examining Division’s decision and could therefore not be subject to appeal, and nor could it be referred to the Enlarged Board. The outcome is as expected and is a reminder that what is appealable is tied to whether the issue is, or can be, the subject of a decision

2. T2599/11 concerns whether the patent proprietor can file a broader request in appeal than was decided upon by the Opposition. The Board decided that in this case the broader request could be filed. The fact that such an outcome is possible shows there is some flexibility in the Boards’ increasingly strict approach on accepting claim requests.

3. T67/11 concerns inventive step of a new antibody. The applicant limited the claims to antibodies with specific sequence changes. These were found to be inventive because the skilled person would not know which changes in sequence would be disruptive and which would be beneficial. Unpredictability can be the basis of inventive step, but then it usually requires the claims to be narrow.

4. T1293/11 has some interesting comments on the language used to claim a transgenic plant. The Examining Division had not accepted ‘…transformed with vector X…wherein expression of X gives activity Y’, arguing that it covered transformation of non-functional sequences and also covered plants where the activity was gained by other means. However the Board disagreed and allowed the applicant’s definition of the transgenic plant.

5. In T1100/10 an appellant (rather ambitiously) challenged the Board’s actions in not accepting claim requests by arguing that the Rules of Procedure of the Boards of Appeal did not have legal basis because they had been drafted by the Presidium rather than the Administrative Council. However the Board did not accept the argument because they said it was sufficient that the Administrative Council had approved the Rules.

You may also wish to see related articles 10 Points on the Ethics and Morality of Patents in Europe and Top 10 Tips For Success In EPO Appeals on Biotech Cases.