An empirical analysis of patenting and licensing practices of research tools from three perspectives

Transcription

1 Prepared for the Conference on Research Use of Patented Inventions" organized by the Spanish National Research Council, the Spanish Patent and Trademark Office and the OECD, to be held in Madrid on 18 and 19 May 2006 An empirical analysis of patenting and licensing practices of research tools from three perspectives Sadao Nagaoka* Institute of Innovation Research, Hitotsubashi University May 2006 *2-1 Naka Naka Kunitachi Tokyo Japan Fax: addresses: 1

2 Introduction In Japan, the use of a patented invention for the research on the subject matter would not constitute infringement while their use as research tools would constitute infringement. Research exemption for research on the subject matter seems to make good economic sense in the context of perpetual R&D competition (Nagaoka and Aoki(2006)). In this paper we provide an analysis of research tools in life science area from three perspectives: 1. The research tool patents in the 47 key inventions in the life science area 2. The licensing conditions for research tools as disclosed mainly by the US biotech firms 3. Access problems as seen by Japanese pharmaceutical and biotechnology firms 2

3 I. The research tool patents in the 47 key inventions in the life science area Based on the joint research with Koichiro Onishi (2006), supported by the JPO We have analyzed the structural characteristics of the 47 key foundational inventions in the life science area across the world, identified by the JPO, which covers recombinant DNA technology by Cohen and Boyer, PCR (Polymerase chain reaction) technology, Axel patent, phage display technology etc. 3

4 How important are the research tools among these key inventions? 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1 Patents mainly for final products Dual Research tools Other EU Japan&USA Japan USA Research tools Dual Patents mainly for final products 4

5 Who owns them (by organizations)? 25 O ther 20 Pharm aceuticaland the other firm s Boitech University & N ationallaboratory Research tools D ual Patents m ainly for final products 5

6 Who owns them (by periods)? Other Pharmaceutical and the other firms Boitech University & National laboratory Note. This table covers two types (research tools and dual) of key inventions 6

7 How important are the government interests? no Government interests University Others Note. This table covers two types (research tools and dual) of key inventions 7

8 How globally are they applied for patents? Application for a single area Application for two areas Trilateral Applications Note. This table covers two types (research tools and dual) of key inventions 8

9 In summary, Almost 80% of the key inventions in life science area can be used as research tools. University and national laboratories used to be granted the significant proportion of these inventions, but their share has declined significantly over time. There are government interests in half of the university patents. The share of trilateral applications is high, 60%. 9

10 II. The licensing conditions for research tools as disclosed by biotech firms Based on the joint research with Kenta Nakamura (2006), supported by the JPO We have uses the licensing database in the life science area of RecapIP, which covers more than 800 contracts, mainly disclosed by US biotech firms either as licensees or licensors. 10

11 The Proportions of exclusive licenses by the stages of research (Ex-post license) no. of contracts Exclusivity 80% 70% 60% 50% 40% 30% 20% 10% 0 Discovery Lead Molecule Preclinical Clinical 0% Note. Ex-post license is that made after the completion of the research by the licensor.

12 Royalty rate of ex-post licensing by stage of research No. of contracts Royalty(%) Discovery Lead Molecule Preclinical Clinical Post Clinical

13 Licensing conditions by types of technology (Ex-post licensing) Exclusivity, % Royalty,% 90% % 70% Exclusivity Royalty % % 40% % % 10% % Tool Dual Drug types of technology

14 The ratios of exclusive licenses by the types of contracts and licensors 90% 80% Ex-ante license Ex-post license 70% 60% 50% 40% 30% 20% 10% 0% Univ Biotech Pharma Licensor Note. Ex-ante license is made before the undertaking of the research by the licensor and involves the financial contribution by the licensee to the research project committed at that stage. 14

15 In summary, The frequency of exclusivity provisions and the level of royalty are lower for the discovery stage than in the downstream stage, and lower for the licensing of tools than for the product technology, as expected. Lower royalty for upstream technology would reflect higher risk and more R&D cost to be paid solely by the licensee in its commercialization. Ex-ante licensing involves more exclusivity than ex-post licensing. Ex-post licensing by a university often involves exclusivity (even after controlling the stage of research and technologies in our econometric analysis), which may reflect the financial constraint on the university in a licensing negotiation. 15

16 III. Access problems as seen by Japanese pharmaceutical and biotechnology firms A survey on the member firms of the Japan Pharmaceutical Manufactures Industry Association (75 firms) and the Japan Bioindustry Association collected in January responding firms and 36 firms of them use research tools The following is my analysis based on the above survey results 16

17 At what stage does a firm engage in the search of research tool patents? Relative to the firms using research tools (multiple answers allowed) Other When moving to the next stage research When the seed is identified after the exploratory stage Before undertaking the exploratory research 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 17

18 The response of a firm when it discovers the blocking research tool patent granted Relative to the responding firms using research tools (multiple answers allowed) Challenging the patentability of the "blocking patent" Using alternative research methods Implementing research without a license, assuming that research does not constitute infringement Implementing research without a license until some results are obtained Licensing negotiation after the close investigation of the "blocking" patent Giving-up the research after the close investigation of the "blocking" patent 0% 10% 20% 30% 40% 50% 60% 18

19 "Reasonableness" of the licensing conditions offered by the research tool patentee as seen by the user firm Relative to the responding firms using research tools Case by case Not-reasonable Reasonable 0% 10% 20% 30% 40% 50% 60% 70% 80% 19

20 Outcomes when unreasonable licensing conditions are offered by the patentees Relative to the responding firms using research tools (multiple answers allowed) Others Any negotiation refused by the patentee Breakdown of the negotiations with the user firm challenging the patentee in the court Breakdown of the negotiations with the potential user giving-up of the research Licensed although the conditions are not "reasonable" "Reasonable" conditions agreed after the negotiations 0% 10% 20% 30% 40% 50% 60% 20

21 Licensing conditions offered by the research tool patentee (multiple answers allowed) Relative to the responding firms using research tools Other Lump-sum Mile-stone Rights on final product, such as reach-through royalty Cross license 0% 10% 20% 30% 40% 50% 60% 70% 80% 21

22 In summary, A firm often does not give up research even if it finds a blocking research tool patent. It seeks a license from the patentee, it uses alternative research tools etc. A firm often finds the licensing conditions offered by a patentee unreasonable in light of the strength of the patentability, the level of royalty, royalty stacking, the remaining length of patent term etc. On the other hand, the licensing deals are more often struck than not. 22

23 Concluding comments (preliminary) Patent protection of research tools would stimulate their development and might also facilitate ex-post licensing rather than ex-ante licensing which is often exclusive, as long as it meets clear patentability standard. For the efficient use of the research tools, (1)Avoidance of royalty stacking due to multiple licensing and (2)cost-based or free non-exclusive licensing of government supported inventions of research tools, unless their development requires exclusivity would be important. 23

24 References Nagaoka Sadao and Reiko Aoki, 2006, Economics of Research Exemption, Hitotsubashi University, Working Paper of the Institute of Innovation Research of Hitotsubashi University ( ) Nakamura Kenta and Sadao Nagaoka, 2006, Licensing Agreements for Upstream Inventions: A Contract-Based Analysis of Pharmaceutical Industry, based on the research project report on patent protection of upstream inventions supported by the JPO, forthcoming as a Working Paper of the Institute of Innovation Research, Hitotsubashi University Koichiro Onishi and Sadao Nagaoka, 2006, Structural characteristics of key inventions in the life science area," based on the research project report on patent protection of upstream inventions supported by the JPO, forthcoming as a Working Paper of the Institute of Innovation Research, Hitotsubashi University 24