Category Archives: Economics

EU Pharma Patent Settlements

These points are from a talk given by John Cassels at fieldfisher’s Pharma Patents Seminar on 16 October 2014.

  1. Anticompetitive behaviour can arise either due to agreements between parties or from unilateral behaviour, and patent settlements are agreements that may be anticompetitive. Anticompetitive behaviour can be approached either through looking at the ‘object’ of the agreement or through the ‘effect’. The EU normally analyses the ‘object’ as this is easier to prove.
  2. Pay for delay (or ‘reverse settlement’) agreements are where a patent holder pays a competitor to not enter the market and not to challenge the validity of the patent. See TaylorWessing comments on pay for delay here.
  3. EU case law is still evolving in this area and decided cases so far focus on individual bad behaviour of the parties, rather than developing principles to guide which pay for delay settlements are anticompetitive. However in the recent Servier case it was relevant that the ‘product’ patent had expired and Servier was relying on a ‘process’ patent. Servier was also found guilty of abusing its dominant position over a particular ‘molecule’. See Law360’s report here.
  4. In the Lundbeck decision the internal documents of the parties were very damaging, referring to a ‘club’ being formed and ‘piles’ of cash being made.
  5. The EU fining guidelines can be found here. The fines increase for repeat offending and refusal to cooperate.

You may also wish to see related articles Evergreening in the Pharma Sector and Mazzucato’s ‘Innovation as Growth Policy’.


Biotech Roundup: Time Frame of Investments, Gap in Funding Proof of Concept, Personalised Medicine and Reverse Payments

Here are various items of biotech news that recently caught our eye. We’ve provided a summary of each trying to show how the news item relates to the bigger picture.

1. Time Frame of Biotech Investments

Advent Capital is setting up a fund to invest in early and midstage European biotechs (see here). The proviso is that they wish to see returns in 6 years. That illustrates the drawbacks of investing in biotech companies developing drugs. It usually takes 10 to 15 years to develop a drug, and that keeps a lot of investors away who want to see returns in around 5 years.

2. The Gap in Funding Proof Of Concept Work

UK non-profit organisations Cancer Research and Leukaemia & Lymphoma Research are funding proof of concept work in treating blood cancers (see here). This illustrates how infrastructure needs to be provided to do ‘basic’ research which won’t see any immediate returns. It remains for government to enter into these funding gaps to make sure research and innovation systems operate effectively.

3. Personalised Medicine

Personalised medicine is a difficult technology to develop as it is proving challenging to identify the appropriate markers. However it clearly has a lot of scope for improving patient care. ‘Incentives, Intellectual Property, and Black-Box Personalised Medicine’ (see here) examines changes needed to the innovation landscape to better develop this technology.

The US Supreme Court Akamai decision makes it harder to find induced infringement for multi-step method claims (see here) as it requires primary infringement by a single party. However for personal medicine the diagnostic part and the treatment parts of the invention could well be performed by different parties. This adds to the difficulties in obtaining patent protection beyond those caused by the Mayo and Myriad decisions.

4. What exits are happening in US biotech?

An article from the Life Sci VC blog (see here) discusses the proportion of IPO versus M&A exits that are happening in US biotech. The ratio is 40% IPO to 60% M&A. It’s therefore important to biotech to keep both options open.

5. Reverse Payments (Pay for Delay)

A recent PatentlyO article (see here) explained the economics of pay for delay settlements where it can be in a patentee’s interests to pay a generics company to stay out of the market, but this risks being anticompetitive.

A slightly old article on the European position can be found here.


Reforming University Tech Transfer

This article is a roundup of recent articles we have read about how to change university tech transfer.

The vast majority of university tech transfer offices do not break even, but some are very profitable. ‘The roadblock to commercialisation’ (see here) discusses new business models that tech transfer offices could adopt. It’s not clear to us that the suggested models adequately protect university interests, but they clearly provide food for thought.

‘Maximising the ROI of intellectual property (see here) discusses how universities could make more money from tech transfer as well as disseminating knowledge and technology better. The article also provides links to interesting reports.

‘Challenges in university technology transfer and the promising role of entrepreneurship education’ (see here) proposes that universities need to focus on entrepreneurship education to know how to make best use of the knowledge they have to offer.

‘Five challenges facing all tech transfer programs’ (see here) briefly discusses the issues faced by university tech transfer offices.

You may also wish to see our other articles on tech transfer:

10 Points on Patents and Tech Transfer

10 Observations on the Success and Failings of University Tech Transfer

Problems of Patenting and Commercialising University Research

Our article on the IP Finance blog about ‘Ethics versus Money in University Tech Transfer’ can be found here.


Bits and Pieces: Value of Weak Patents, Assessing CETA and the Contribution of Academic Knowledge to Industry

Here are three publications that caught our eye:

  1. The Value of a ‘Weak’ Patent (see here)

A Monte Carlo simulation is used to value weak patents in this interesting study. Liu finds the value of weak patents to be affected by litigation risk. Whether or not one agrees with this finding it raises interesting questions about the strategies around weak patents, and perhaps helps decision-making on how much resource to devote to them.

  1. Making Sense of the CETA (see here)

This is a study of the Canadian-European Union Comprehensive Economic and Trade Agreement. It is very detailed and has caused controversy. It is of interest to us as providing a possible framework to look at the fairness of trade agreements in general. The study focuses on provisions to allow corporations to seek compensation from governments outside of the regular court system. That will undermine environment protection measures, public health policies and other public interest legislation.

  1. The Contribution of Academic Knowledge to the Value of Industry Inventions (see here)

This study finds that inventors benefit more when they can gain theoretical academic knowledge from universities, rather than simply solutions to specified technical problems. Perhaps this offers insights to how best to university academic knowledge in advancing technological progress.

How Patents Contribute to Academia, Economics and Society

Patents are important, complex and bring up controversial issues that affect many people. This post briefly examines some of the issues around patents that would be of interest to people in other sectors.

1. Language and claim construction

Much has been written about how to interpret claims, and claim construction is often pivotal to the outcome of litigation particularly in the US. Indefiniteness was the subject of a recent US Supreme Court decision Nautilus (see here). Clearly there is an inherent uncertainty in language which will always be there. In addition in certain territories the claims are also the basis of a doctrine of equivalents or ‘purposive’ construction.

Claim construction can therefore help us to formulate theories of how to approach text (see here).

For further academic articles about claim construction see here, here, and here.

2. Morality of Biotech Inventions

In Europe the Biotech Directive (see here) has given guidance on biotech inventions which are considered unpatentable for morality reasons. Subsequently the Brustle decision tackled the patentability of embryo stem cells (see here). Whether or not one agrees with these it is a platform to discuss and formulate a ‘European’ view of morality. That can then feed into discussions such as these.

3. Post-Structuralism

Patents are complicated and take place in the context of human systems. That means we must be aware of the limits in understanding them to the extent imposed by ‘post-structuralism’, i.e. there may not be an underlying ‘structure’ or ‘right answer’ in a situation. That means for any given situation it may not be possible to achieve complete certainty to ‘is this claim scope patentable?’ or ‘how much is this patent worth?’.

4. Patents and Economics

How do patents affect innovation? Generally of course patents are judged to be good incentives for promoting innovation (see here). However the situation is complex and there is evidence that patents inhibit the subsequent development of an invention by other parties (see here). Clearly the answers to these questions will also vary from country to country (see here).

5. International Relations

Each nation has agreed to respect other nation’s patent rights. However there have been accusations that this can lead to a sort of neo-colonialism (see here). Clearly this is a complex issue, but the power of IP monopolies means they can conflict with national interests. However harmonisation of IP laws has also demonstrated the power of countries to work together and to develop joint institutions such as the European Patent Office.

6. Ways of Doing Research: Open Innovation

The traditional way of doing research and then patenting is being challenged by the rise of open innovation and collaborative models of research. This leads to the question of how the patent system should respond (e.g. for defensive patent licencing see here), and whether in fact it is time to get rid of it altogether (see here).


A Collection of IP Reports

We come across many IP reports, articles and decisions which are of interest in trying to keep up to date, but which we can’t devote entire posts to. Here’s a bundle of them:

1. An OECD/G20 report ‘Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance’ which comments on Patent Box and generally approves of the way the UK is doing it. See the report here. See IP Finance discussing it here.

2. AIPPI’s Working Committee Q238 report on ‘Second Medical Use Claims and Other Medical Indication Claims’ which provides a background on claim formats to protection medical inventions and the approach which different territories take to enforcement. See the report here. See IPKat’s discussion of it here.

3. Baillie v Spencer [2014] EWHC 2149 (Ch), a UK High Court case where a patent attorney was accused of professional negligence. The patent attorney was ultimately found to not be negligent, but there were clearly instances where he was too optimistic about the protection that could be gained and he offered advice on commercial matters that he should not have done. See the decision here. See Solo IP discuss it here.

4. The WIPO Journal (see here). We found the first article of Volume 5 Issue 1 on the development of the Chinese patent system very interesting (see here).


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.