Patent protections are key to biopharmaceutical technology

The biological sciences are yielding an impressive array of inventions which involve the manipulation and use of genes and genetic elements, and there has been a surge in patenting in this area in recent years. Patents have emerged as the most important form of intellectual property protection for much of the biotechnology industry, in particular the biopharmaceutical sector.

Patent protection for biotechnology inventions has been available for over 20 years. Each year, thousands of biotechnology patents are issued worldwide, leading to the successful development of new products, services, and tools in fields as diverse as agriculture, pharmaceuticals, environmental clean-up, and industrial products and processes. An important early legal landmark was the 1980 US Supreme Court Diamond vs. Chakrabarty decision on the patentability of a genetically modified bacterium, after which inventions involving life forms were deemed patentable in the United States. Over time, court decisions, legislation (such as the 1998 EC Biotechnology Directive), multilateral trade agreements and examination guidelines at the major patent offices have confirmed the patentability of biotechnology-based inventions. The categories of patentable biotechnology inventions in many OECD countries have expanded over the years to include genes, gene fragments and genetic-based tools and diagnostics, genetically modified plants and animals, and a host of inventions derived from the revolutions in genomics, proteomics and pathway engineering.

Biotechnology patent statistics show some special characteristics. First, there has been a rapid rise in patent grants. From 1990 to 2000, the number of patents granted in biotechnology rose by 15% a year at the USPTO, and by 10.5% at the EPO, compared with a 5% increase in overall patents. Second, the share of US organisations granted patents is much higher in this sector than in other sectors. Third, the public sector has played an important role in the growth of patents for biotechnological inventions. For example, US and European PROs own 30% of all the patents for DNA sequences filed between 1996 and 1999. Finally, start-up companies have a higher share of biotechnology patents than do large, established pharmaceutical companies.

Industrial surveys on the effectiveness of patents in protecting inventions across sectors show that pharmaceutical firms traditionally place a high value on patents for protecting intellectual property – more so than do other industries (Levin et al, 1987; Cohen et al., 2000). In the pharmaceutical sector, where innovation costs are very high, regulatory approval substantially increases time-to-market, and few R&D projects result in marketed drugs, patents are considered an essential factor in protecting competitive advantage. Patents are also very important to start-ups and university spin-offs in the biomedical field because both rely on protected intellectual property as their main asset in raising capital for development. The importance of patent protection for public sector research is more controversial. Commercial innovations are generally considered a by-product of government-funded basic research. Whether patent protection helps or hinders the development and use of these innovations by others is still unclear