Patent fight: Tech vs. pharma, round one

April 18, 2007 | David P. Hamilton | Comments | |

US PTO sealA long-awaited struggle over patent reform appears to be upon us, the Washington Post reports today (hat tip to the WSJ’s Health Blog). It pits the tech industry against pharmaceutical/biotech companies over intellectual property protections that, depending on where you stand, are either largely a nuisance or an industry’s lifeblood.

Both the House and Senate are expected to introduce bills today that reflect the tech industry’s long-standing desire to weaken the protection patents offer their holders — over, of course, the vehement objections of pharma/biotech. The main issue separating the two pillars of U.S. high technology: Big tech companies tend to end up as defendants in patent-infringement suits, while big drug companies are more frequently plaintiffs. (The Washington Post’s Alan Sipress didn’t put it that simply, but that’s essentially what’s going on).

Generally speaking, tech companies want a greater ability to challenge the validity of existing patents and relief from what they consider exorbitant damages, such the $1.52 billion Microsoft was ordered to pay Alcatel-Lucent in February for infringing two patents on MP3 digital-music technology. Companies that pop up with such patent claims when a technology is already in widespread use are frequently derided as “patent trolls,” and the tech industry is anxious to limit their ability to block product development or to demand huge damages after the fact.

The pharmaceutical and biotech industries, by contrast, frequently spend years — and sometimes decades — developing drugs that are often protected by a limited number of patents. As a result, drugmakers are far more interested in protecting their investment by using those patents to ward off would-be competitors.

The possibility of patent changes is clearly a big deal for both sides, although I suspect that warding off changes is going to be an uphill battle for the drugmakers, who could even end up longing for a presidential veto. Not only has the drug industry leaned heavily Republican in recent years — hardly an auspicious sign now that Congress is held by Democrats — but criticism that overly strong patents stifle innovation has been growing steadily in recent years, and has even seemed to pique the interest of the Supreme Court. Plus, if things do get down and dirty on Capitol Hill, it probably won’t take long for stories about drug companies’ own abuses of the patent system to begin circulating again, potentially tipping the scales further toward reform.

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About the Author, David P. Hamilton

David Hamilton has been writing for VentureBeat LifeScience since April 2007. He formerly spent 14 years as a reporter for the Wall Street Journal in its San Francisco and Tokyo bureaus. Prior to that, he spent several years as a reporter at Science Magazine and as a reporter/researcher for the New Republic, both in Washington.

  • MS
    It is a shame that policy makers still don't include R&D costs in their policy making framework. The question our political representatives should be asking themselves, on our behalf, is what is more important...an IPOD that can turn into a dildo that sings Sinantra classics while sorting your junk mail, or, a drug that can save lives etc.. I like life, so I will go with the latter of the two...
  • This is precisely the battle or discussion that needs to be done and done properly - balancing the various stakeholders needs thoughtfully.

    What is often lost in deciding merits of many patent filings today is the relevance of the simple test of obviousness.

    Many examples of granted software or business practices "methods patents" might not properly pass a carefully considered test of obviousness.

    A clear case of this of recent note, is the apparent Verizon / Bell Atlantic VOIP patents granted some time ago.

    A simple way of looking at it, is if a priori - patent or no patent, is it obvious how one would do something (implement VOIP and connections to the PSTN ) if the functions and building blocks one needs to accomodate are what one MUST implement to access various protocols etc...one properly must conclude that the issued IP really does not pass the test of obviousness to those skilled in the art, even if the application might be new at the time of filing....

    Was the examiner doing his job in allowing the patent?

    Is the core of this "methods" or in other cases "business processes" IP, really worthy of a patent when one asks oneself "Is this OBVIOUS to those SKILLED IN THE ART".

    I plainly suspect that this simple means test is not applied and validated OFTEN enough at the USPTO ( or EU WIPO? ).

    Another example I have difficulty comprehending was the UC Berkeley patent gained for "Internet Browser PlugIns". This "IP" is a SIMPLE and STRAIGHTFORWARD application of "dynamically loadable code modules" which is as old as the hills - since time immemorial when memory used to be expensive.

    Trivially obvious, and while "browsers" were NEW code for viewing content on the internet, I'd be hard to claim substantive patents on the core of the functions of basic browsing - at least I'd hope this to be the case.

    I suspect if tests of obviousness to those skilled in the [respective] arts were applied more frequently and rigorously (are patent examiners properly skilled in the respective domains or "arts?") Many many patents would properly be disallowed.

    But this is very unlikely to transpire as the wheels of bureaucracy rarely keep up with the pace of the torrent of recent filings and innovations...

    As much as Microsoft might wish to otherwise claim the importance of software patents they are repeatedly being hurt by the very mode of protection they would otherwise wish to use...

    It is ironic that Microsoft is one of the larger victims of software patents...

    Yes the FSF and others in Europe indicate that software patents stifle innovation needlessly...

    Somewhere somehow there might be wisdom to strike a fair balance, which is undoubtedly hard to define.

    In Biotech, due to the natural barriers to successful innovation - challenges and substantive time consuming development most often required to perform at real risk of failure - for example identify or develop from scratch a novel cancer pharmaceutical, the test of obviousness when properly applied will more often fail (ie the Biotech innovaiton is NOT obvious) than for a business practices or business (software) methods patent...

    hmmm ... so are the patent examiners applying the fundamental test of obviousness in the domain of software as often or as strictly as should be done???

    And are substantive biotech or chemical or manufacturing process innovations protected well enough...

    I think the issues are not obvious, nor trivial, but the debates are worthwhile and hopefully result in more equitable protections for various commercial endeavors involving innovation.

    Clearly the issues surrounding the impending demise of Vonage might not pass the proper test of obviousness to those skilled in the art...

    Fascinating really....
  • Mark,
    Thanks for stating it so well. I work in at a company that makes software for biotech so I get to see both sides of the story. I agree that we need to keep patent protection for biotech where new developments may not be "obvious" but we also need to weaken the effect patents have on high tech. Figuring out a new way to present a UI is not usually revolutionary and should not be treated the same way as developing a new drug.

    GJ
    http://www.60in3.com
  • GAL, I agree. I also think that less challenging process / device patents should be of intermediate strength. One could envisage that the power of a patent might be somehow connected to the material effort required to invent, but this is hard to implment fairly. Software / esp use interfaces, or trivial modifications to existing software - Like 1 CLick Shopping ( that one gets my goat ) need some re-evaluation as to the appropriateness of issuing a patent.

    Algorithms of significant improvement, I can understand, novelty of any substance.... But if the "innovation" is reapplying the old in a new context within software.... I might think it worthy to ponder this a bit, as it can easily be stretched too far.

    If it takes huge amount of development to just take a risk that an idea might work, the protections might be worthy of more substantive barriers than a file format, or a file compression format, where the risks in development were far smaller, and the time to prove the function (ie was the risk taken not wasted / failed) is almost immaterial in software concepts.

    Patents for a word processor "feature" vs. a new compound proven and tested to cure cancer ... hints that maybe some protection might be given to the word processor feature, but the strength in enforcement and the like should be far stronger when the risk of failure in development and the cost of development is far greater.

    But no doubt this is hard to codify in a fair manner in patent rules and in differences in enforcement. It might be an impossible job to do. But if patents were weakened across the board to make life more realistic for software endeavors ( and vonage lets say), comparable changes in loosening the issues re patents and enforcement, would have catastrophic implications to the pharmaceutical industry, as in other capital intensive development efforts...

    Software is relatively low risk (I know coding is hard) and less capital intensive and has lower technical barriers to emulating features of competitors... Sometimes the FSF is hinting at a useful balance - or at least a compromise is worthwhile considering.

    Even mandating (reasonable)licensing versus exclusion from markets, might be pragmatic in the case of software / methods patents, to limit damages to more realistic values. How to do that fairly? Ha there is a tough tough question. Moreover in case of large versus small entity, it can become trickier.

    One other aspect is patents / patent holders who do not use their patents in their own products. Again a tricky issue. At present one can be held hostage by this kind of thing and who benefits?

    Well maybe Intellectual Ventures might soon...
    Nathan Myhrvold is the extreme case, and the question is will he have a benefit to society? or be a parasite?? a pox on implementation of innovations, holding others to ransom ( and handsome ransoms at that?)

    Hard to envision comparable compromise in pharmaceuticals being of any benefit to industry progress...nor of betterment to society.
  • MS
    Bottomline: We need a unique patent system for industries that have fundamentally different business models (costs).