The ability to obtain a patent motivates continuing innovation, specifically in pharma.
Colleen V. Chien 22, Professor of Law at the Santa Clara University School of Law, J.D. from the University of California, Berkeley, School of Law, “The Inequalities of Innovation,” Emory Law Journal, Vol. 72, 2022, accessed via Nexis Uni
When an innovation is initially devised, it is generally motivated by a particular use case, situated within a particular community, within a particular geography, together comprising the innovation's initial target market. But the potential market may be much broader. In the absence of tradable rights, innovative ideas and know-how are fiercely guarded as trade secrets, 210and limited in their diffusion by the capacity and desire of their owners. Patents can accelerate commercialization by making it safer and easier for innovators, working alone or with their licensees, to attract investment and partners in order to commercialize the invention and reach additional markets. Studying the growth of patent systems internationally, Petra Moser has considered how patenting chemical inventions has impacted their reach. She found that as patenting became more prevalent, inventive activity spread, leading the industry to become significantly more geographically widespread. 211Licensing partnerships are particularly important when the costs of entering a market outweigh the benefits for the originator firm, and vice versa for a local or partner firm. 212
The ability to obtain patents, including on an ongoing basis, can also enhance access to relevant inventions and formulations. It is axiomatic that without the right to exclude, the pharmaceutical industry would not exist in its present form because patents enable the recapture of the enormous costs of drug development through a period of exclusivity. As the naloxone vignette illustrates, however, the ability to seek patents on different formulations, methods of administration, or other incremental inventions also drives investment in follow-on improvements tailored to custom markets by the original innovator or a licensee. The ability to patent incremental advances does raise other problems, as described in the next subpart; however, the rents created by patents can be used [*40] to support the further development of and, ultimately, wider diffusion of the innovation.