Stronger Patent Protection Research Articles

Differentiating Stem Cell Patents

Stem cells are defined by their capability for both self-renewal through cell division and for producing a lineage capable of differentiating into one or more specialized cell types. Stem cells are found both in adult tissues and in the developing embryo. While embryonic stem cells are able to differentiate into each and every cell type, adult stem cells are generally only able to form the cell types of the organ from which they originate. Stem cells are essential for the renewal and repair of human tissues and have been at the centre of research into regenerative medicine. They have also emerged as a valuable tool for drug discovery and development. Strong patent protection is a crucial driver of investment into new stem cell technologies. However, their special nature has created a number of uncertainties. In particular, the biological potential of embryonic stem cells to create new human life raised ethical concerns and caused boundaries to be set on the scope of patentability. The bar has been set at different places in the USA, Europe and Canada. Careful assessment of the options for protection in these jurisdictions is necessary in order to manage risk and maximize rewards. This article provides an overview of the patentability of stem cells with a focus on recent developments regarding embryonic, adult and induced pluripotent stem cells.

Leadership Cycles in a Quality‐Ladder Model of Endogenous Growth

We study a quality-ladder model of endogenous growth that produces stochastic leadership cycles. Over a cycle, industry leaders can innovate several successive times in the same sector before being replaced by a new entrant. Initially, new leaders do much of the research but they then tend to rest on their laurels and are eventually overtaken. The model generates a skewed firm size distribution and a deviation from Gibrat's law that accord with the empirical evidence. We also find conditions under which policy should favour R&D by incumbents, not outsiders, and show that stronger patent protection may reduce innovation and growth.

Enforcement Costs: Some Humanitarian Alternatives to Stronger Patent Rights

Diseases that cause comparatively few problems in developed countries kill millions of people in the Third World each year. In many cases, people die because they cannot afford the medication needed to save their lives. In others, there are simply no drugs available because there are no wealthy western patients to justify pharmaceutical companies investing in a cure. This reveals a deep-seated problem within the patent system and the pharmaceutical industry that emphasises markets and profits at the expense of health and global welfare. Global efforts have seen substantial improvements in access to medicines in isolated areas, but with international agreements driving towards stronger patent protection and the expiry date for the TRIPS grace period fast approaching, it is time to consider alternatives which will allow the patent system to work for the humanitarian cause rather than against it. This paper considers two such problems in the patent system and pharmaceutical industry - prohibitive pricing and misdirected incentives - to offer a mode of regulation and enforcement that will support both a viable pharmaceutical industry and the human right to health and medication.

The Mexican Exception: Patents and Innovation Policy in a Non-conformist and Reluctant Middle Income Country

This article analyzes patent and innovation policies in Mexico. Unlike many developing countries, Mexico has enthusiastically embraced external pressures for stronger patent protection. Yet, also unlike other countries, Mexico has not complemented changes to its patent regime with measures to buttress science, technology and innovative (STI) capabilities. To explain this atypical trajectory, I focus on the shape of political coalitions in the areas of patents and STI policies. The early adoption of a strong patent regime, combined with liberalization and internationalization of the economy, consolidated a coalition based on a low-technological form of integration into the global economy, and the same processes withered away the coalition that might have pushed for an alternative project. Understanding the political underpinnings of Mexico's behavior sheds light on the conditions under which middle-income developing countries may engage in issue leadership and join with other developing countries to shape the international economic architecture.

The Effect of IP Protection on Radical and Incremental Innovation

This paper examines the effects of risk in shaping and developing innovations at the country level by introducing the idea that strong patent protection can lead innovators to rest on their laurels. Specifically, in the context of a simple static framework, the model shows that there is a negative relationship between the ability of the economy to innovate and how strong patent protection should be.

Patents, knowledge spillovers, and entrepreneurship

We develop an endogenous-growth model in which we distinguish between inventors and innovators. This distinction implies that stronger protection of intellectual property rights has an inverted U-shaped effect on economic growth. Intellectual property rights protection attributes part of the rents of commercial exploitation to the inventor that would otherwise accrue to the entrepreneur. Stronger patent protection will therefore increase the incentive to do research and development (R&D) and generate new knowledge. This new knowledge has a positive effect on entrepreneurship, innovation, and growth. However, after some point, further strengthening of patent protection will reduce the returns to entrepreneurship sufficiently to reduce the overall growth rate.

International Outsourcing, Tax, and Patent Protection

AbstractWe show the implications of strengthening patent protection in a developing country in the presence of a vertical technology transfer, which, despite its empirical relevance, did not get due attention in the literature. We show that if there is imperfect knowledge spillover under a weak patent protection, a strong patent protection in the developing country increases the profit of the developed‐country firm if there is a uniform tax rate in the developing country. However, if there is either perfect knowledge spillover under weak patent protection or discriminatory tax policy in the developing country, the profits of the developed‐country firms are the same under weak and strong patent protections in the developing countries.

International Outsourcing, Tax and Patent Protection

We show that, in the case of a vertical technology transfer, if there is imperfect knowledge spillover under a weak patent protection, the strong patent protection in the developing country increases the profit of the developed-country firm if there is a uniform tax rate in the developing country. If there is either perfect knowledge spillover under weak patent protection or the developing country charges discriminatory tax rates, the profits of the developed-country firms are the same under weak and strong patent protections in the developing countries.

TRIPS, Patent Rights and Right to Health: 'Price' or 'Prize' for Better Access to Medicine?

The interface between ‘patent rights’ and ‘right to health’ has been one of the most hotly debated issues in the international arena in the past years. By recognizing ‘flexibilities’ to the enforcement of patent rights, the TRIPS agreement aims at reconciling the interests of the patent owners with those of the consumers. However TRIPS has been criticized as not being flexible enough for developing countries facing acute health issues. Although the developments in the framework of Doha could be considered a ‘victory’ for developing countries towards improved access to medicine, extrinsic factors to TRIPS, such as the so called “TRIPS-Plus” agreements and the United States political involvement through the “Special 301”, constitute strong barriers to access to medicine in developing countries. Finding a fair balance between patent rights and rights to health in these conditions is not an easy task. In an attempt to reconcile patent rights and right to health different solutions have been considered. The ‘price’ and ‘prize’ ideas are amongst them. The differential pricing scheme is framed on the idea of a differential pricing of patented medicine between developed and developing countries. As to the ‘prize’ solution, it involves a change in the current patent system rationale. Instead of 20 years monopoly, inventors would be rewarded in a form of ‘monetary prize’ depending on the impact of the invention on the improvement of public health. Even though the rationale and the purpose of these solutions are in line with the need of improving the health conditions in developing countries, they both embody intrinsic limits. The ‘price’ solution leaves unsolved the orphan diseases question. As to the ‘prize’ solution, many issues regarding its implementation still need to be addressed. The ‘price’ and ‘prize’ solutions have not been always considered separately. For instance the Medial Innovation Prize Act of 2005, although based on the “prize” idea, left open the possibility of getting a patent. Leaving the door opened to the possibility of getting a patent would render the “prize” idea more appealing to the pharmaceutical industry. This paper discuss the issues of access to medicine with regard to the developments in the international area first, and, second, defend the idea of a coexistence of the current patent system and the reward system in a form of ‘prize’. Neither the ‘price’ nor the ‘prize’ idea ends the patent system. They constitute alternatives aiming at remedying the drawbacks of strong patent protection. Depending on the type of diseases at hand the ‘price’ solution or the ‘prize’ may be more suitable. For instance, the Type I diseases, (diabetes, heart disease, asthma and most non-communicable diseases) according to the classification of the World Health Organization’s (WHO) Commission on Intellectual Property, Innovation and Public Health (“CIPIH”), which affect both developed and developing countries, the ‘price’ solution could be suitable. For types II and III diseases (e.g. Tuberculosis, AIDS, and Malaria) which primarily affect developing countries, a ‘prize’ system could give more R&D incentive to pharmaceutical companies.

COMPETITIVE INNOVATION WITH CODIFIED AND TACIT KNOWLEDGE*

ABSTRACTR&D‐based models of endogenous technical progress rest on a premise that technical progress is driven by profit‐seeking entrepreneurs. This literature led to a dominant view that endogenous technical advance is not consistent with perfect competition with constant returns to scale. Departing from this dominant perspective, we demonstrate that technical progress endogenously occurs in a perfectly competitive economy under constant returns to scale in rivalrous inputs. Our result is based on a hypothesis that R&D creates codified and tacit knowledge as joint products. Empirical and case studies are discussed to support the hypothesis. Using the model, we demonstrate that stronger patent protection can encourage or discourage R&D, depending on the size of an economy.

R&D Portfolio and Market Structure

This article analyses how firms allocate their resources when they compete for multiple patents in heterogeneous research projects simultaneously. A simple model shows that firms’ resource allocation is biased away from risky and basic research, even when imitation is not possible and firms are fully rational. Therefore a market may lack major innovations despite large aggregate research expenditure and strong patent protection. This article also shows that as a market becomes more competitive, firms invest relatively less in basic research but more in risky research. These results provide a novel explanation for an ambiguous empirical relationship between innovation and market concentration.

Innovation and Technology Transfer to Address Climate Change: Lessons from the Global Debate on Intellectual Property and Public Health

This paper examines issues surrounding the development and transfer of technologies for addressing the problem of climate change based on the experience of developing countries in addressing problems of innovation and access in the field of medicines. It looks at alternative energy resources (AERs) and climate change mitigation technologies (MTs), at the forms of intellectual property rights (IPRs) used to promote and protect innovation, and at the ways these IPRs may have different effects and implications for AERs/MTs as compared with pharmaceutical technologies. It is generally assumed that the originator pharmaceutical sector is highly dependent on strong patent protection, mainly because of the high cost involved in developing novel drug therapies and the low cost of reverse engineering these new drugs. Preliminary research suggests that most AERs/MTs industries may be less dependent on strong patent protection, and/or that patents are less likely to cause significant bottlenecks in the development and transfer of AERs/MTs. While it is premature to come to a definitive conclusion because researchers are only now focusing on the evidence, there is some basis for anticipating that IPRs will present fewer risks for developing countries in the context of climate change than for public health. Developing country negotiators understood that the GATT Uruguay Round negotiations on trade related aspects of intellectual property rights would affect access to medicines. The resulting WTO TRIPS Agreement did, in fact, present serious risks to public health. These risks were addressed through negotiation of the Doha Declaration on the TRIPS Agreement and Public Health, the Article 31b is amendment and the WHO Global Strategy and Plan of Action on Public Health, Innovation and Intellectual Property. The “Doha Declaration process” broadly speaking has resulted in some positive movement. There are a number of lessons that can be drawn from the public health-related negotiations, at the WTO and other forums that may be useful to developing country negotiators addressing IPRs and climate change. Some of these lessons are relatively straightforward: economic and political power substantially influences the outcome of negotiations; the involvement of NGOs and other stakeholders is essential; it is important to shape public opinion through effective communication. Other lessons may be somewhat less evident. Public health negotiations suggest that zero-sum bargaining is unlikely to be productive from the standpoint of developing countries, and that appeal to “equity” as the basis for demanding concessions is not enough. The private sector in the developed countries controls most pharmaceutical technology and AERs/MTs. Governments in developed countries are unlikely to “order” that technology be transferred by the private sector. Developing countries therefore might usefully focus on establishing frameworks for mutually beneficial joint venture economic arrangements between developed and developing country enterprises that will stimulate innovation and concrete transfers of technology to address climate change. To the extent possible, technology transfer commitments resulting from climate change negotiations should be specific and concrete. “Soft” commitments on transfer of technology typically do not bear fruit. A number of developing countries and NGOs have proposed that a declaration comparable to the Doha Declaration on the TRIPS Agreement and Public Health be adopted with respect to IPRs and Climate Change. Even if current multilateral IPRs rules incorporate flexibilities and exceptions adequate to address most foreseeable obstacles to technology transfer, a declaration may be useful in the progressive development of international law so that it properly balances the rights of innovators and access by the public to the benefi ts arising from new technologies.

Quality and quantity: Can we have both within the European patent system?

Scrutiny of patent systems is never far away. The European Patent Office has long faced rising levels of ‘inventive activity’. Fast, fluid technologies and strategic firm behaviour add to the difficulties faced in trying to reward inventions with commensurate rights. Analysis suggests stronger patent protection does not necessarily equate with more innovation and greater diffusion of knowledge; nor do more patents lead to or reflect more innovation. This article focuses on improving the fundamental workings of the European system as is stands, and proposes a focus on quality and patent examiners as the best way to do so.

International R&D spillovers and institutions

The empirical analysis in “International R&D Spillovers” [Coe, D., Helpman, E., 1995. International R&D Spillovers. European Economic Review, 39, 859–887] is first revisited on an expanded data set that we have constructed for the purpose of this study. The new estimates confirm the key results reported in Coe and Helpman about the impact of domestic and foreign R&D capital stocks on TFP. In addition, we show that domestic and foreign R&D capital stocks have measurable impacts on TFP even after controlling for the impact of human capital. Furthermore, we extend the analysis to include institutional variables. Our results suggest that institutional differences are important determinants of TFP and that they impact the degree of R&D spillovers. Countries where the ease of doing business and the quality of tertiary education systems are relatively high tend to benefit more from their own R&D efforts, from international R&D spillovers, and from human capital formation. Strong patent protection is associated with higher levels of total factor productivity, higher returns to domestic R&D, and larger international R&D spillovers. Finally, countries whose legal systems are based on French and, to a lesser extent, Scandinavian law benefit less from their own and foreign R&D capital than countries whose legal origins are based on English or German law.

Is knowledge creation hindered by intellectual property rights?

Even though stronger patent protection increases an innovator's incentives to innovate, the entrenched boundaries of her innovation may prove non-surpassable to some innovators, who choose not to innovate. As innovators abstain from innovating we should witness a reduction in knowledge spillovers that hinders innovation.

Effect of the TRIPS‐Mandated Intellectual Property Rights on Foreign Direct Investment in Developing Countries: A Case Study of the Indian Pharmaceutical Industry

The Agreement on Trade‐Related Aspects of Intellectual Property Rights is the most important as well as the most controversial instrument to date concerning intellectual property protection. What is not clear is the impact it will have on developing countries and whether it will actually meet its objective in the “… promotion of technological innovation and to the transfer and dissemination of technology …”. The proponents of a strong patent regime vehemently argue that strengthening patent protection will lead to greater technology transfer in developing countries, and consequently inflow of foreign direct investment (FDI) as it is the most important channel for technology transfer. This article takes the Indian pharmaceutical industry as an example to examine the above assertion, and argues that simply enhancing patent protection may not necessarily result in a corresponding increase in FDI in the Indian pharmaceutical sector. It shows that in addition to strong patent protection, there are equally or even more important factors that have a bearing on the inflow of FDI.

Give the Poor Patients a Chance: Enhancing Access to Essential Medicines through Compulsory Licensing

The important relationship between pharmaceutical patents and problem of inaccessibility of medicines by poor nations is exemplified more clearly by the experiences of developing countries in Asia. Thailand is one of these developing countries which has the most experience of the negative impact of stronger patent protection. The paper provides a general view of the problem of the inaccessibility of lifesaving medicines in Thailand. It also discusses the attempts of the Thai Government to use an available legal measure (ie compulsory licensing) to control the abuse of pharmaceutical patent rights, and provides a theoretical and practical analysis of various legal issues relating to the use of the non-voluntary licensing scheme to improve access to essential medicines.

Does strong patent protection facilitate international technology transfer? Some evidence from licensing contracts of Japanese firms

This paper examines how patent protection in a technology recipient country affects international technology transfer. A theory suggests that the effect of stronger patent protection on technology transfer is negative if the binding constraint is the imitation profitability and positive if it is the incentive for the licensor to undertake technology transfer. We evaluate these implications by examining the variations of the structure of licensing contracts across countries, based on a newly collected database of licensing contracts by Japanese firms. Our major findings are the following. First, the incidence of know-how licensing, either in the pure or in the bundled form, relative to that of pure patent licensing, declines significantly with the level of foreign patent protection. This indicates a limited role of patents for facilitating know-how licensing. Secondly, the probability and the strength of ownership control by a licensor declines with the level of patent protection, indicating a positive effect of stronger patent protection in expanding the scope of the recipients of technology transfer.

Flexibilities Under Trips [Compulsory Licensing]: The Pharmaceutical Industry in India and Canada

India has a thriving pharmaceutical industry dedicated to providing healthcare at the lowest possible cost. India's growing pharmaceutical industry is based on reverse engineering of existing drugs rather than on innovative technology which gives a better leverage to the generic manufacturers in the country. Following TRIPS agreement, India is obligated to provide strong patent protection to the pharma industry by 2005. However, protection of the rights of the patentees is not the only concern of TRIPS. It also strives to achieve a balance between the private rights of the patentees and the socio economic needs and objectives of its people. Towards this end there are certain flexibilities provided for the member countries, which were adopted at the Ministerial Conference at Doha, November, 2001. Despite this declaration, the developing countries have been experiencing difficulties in implementing these flexibilities for varied reasons. Canada has been one country that has made the most effective use of some of these provisions (Compulsory Licensing) which has benefitted the Canadian pharmaceutical industry as well as the consumers in Canada. India has not yet been able to take full advantage of these provisions. This paper is an attempt to make a parallel study of the pharma industry in India and Canada from the above mentioned perspective and draw policy implications.

James Watt: The steam engine and the commercialization of patents

Great Britain (GB) was the first country to undergo an Industrial Revolution (1760–1850) and, in consequence, the first where patents for inventions evolved from an occasional curiosity to a powerful commercial tool. It is argued that this paradigm shift was largely caused by the later development of the steam engine and especially the first patent of James Watt (1736–1819). Despite extensive litigation, this proved extremely lucrative and thereby convinced GB’s rapidly growing industry of the importance of strong patent protection. In an annex, the author notes that 2008 is the 200th anniversary of the demonstration of the first practical steam railway engine, Richard Trevithick’s ‘Catch me who can’ on a circular track in London.