the value of patents and the impact of patents on research and development.
PATENT ACTIVITY
There is widespread ownership of patents in the biotechnology industry and in research institutions involved in this area of research. Thirty-seven of the 49 respondents to the company survey said that their company owned patents (76 percent). Similarly, 19 of the 23 respondents to the research institutions survey said they owned patents (82 percent) and one of the others stated that their institution had an equity share in the company owing patents for inventions created in the institution.174
Conversely, only two of the 18 respondents to the diagnostics survey indicated that they owned patents. However, it must be taken into account that of the 18 respondents, only 13 said that they were involved in research. On this basis, 15 percent of those diagnostics facilities with a research program had patents. These results probably reflect the nature of research being conducted in diagnostics facilities, but they are also likely to reflect different attitudes about patenting and commercialisation.
One respondent involved in diagnostics research commented that although his laboratory had patentable technology it had not been patented because the patent process was simply too hard, in part because of lack of expertise but also in part because of intransigence on the part of some parties regarding ownership. He added that at the end of the day unless the patent process is made easy he would not
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It is perhaps surprising that a higher percentage of research institutions than companies reported that they owned patent. Some of the possible reasons for this are explored later when we consider technology transfer.
bother. Another research institution respondent described the patenting process as boring and painful.
Only a very small number of company respondents commented that patenting was not part of their commercial strategy. One respondent said that his company’s strategy was to rely on trade secrecy rather than patents. His justification was that patents are only as good as your defence of them. It will become apparent that defending patents is a major issue.
Many patent holders, particularly those in the public sector, do not have adequate funding to contemplate instituting infringement proceedings or opposition proceedings to challenge the validity of competitors’ patents. Nevertheless, it is clear that in general patenting is seen as an essential part of the mainstream commercialisation process in Australia.
Trade secrecy may well be a valid alternative strategy in some areas of research and development, particularly when it is difficult to reverse engineer. However, one respondent pointed out that in the area of genetic technology you don’t have to be too clever to reverse engineer and therefore patents are absolutely necessary. This was confirmed by another respondent who stated that: “often you put in a patent and a competitor will have theirs ready to go a week later. Trade secrecy doesn’t make a lot of difference at this stage, but may be useful at the lead compound stage.”
Numbers of patents
As previously discussed, there has been a huge escalation in the number of biotechnology patent applications filed in most countries, including Australia. Indeed, some gene sequencing companies have issued statements reporting that they have filed thousands of applications.175 We sought information about the quantum of patenting in each of the three sectors of the industry that we surveyed. Respondents were asked to specify the number of patents that they owned. The results are summarised in Table 3.
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Table 3: Numbers of patents held Number Research institutions (%) Companies (%) Diagnostic facilities with research base (%) 0 3 (13) 12 (25) 11 (85) 1 2 (9) 2 (5) 2-4 4 (17) 7# (14) 1 (8) 5-9 6# (26) 4 (8) 10-19 2 (9) 7#** (14) 20-50 5 (22) 4 (8) >50 0 (0) 9* (18) Not specified 1 (4) 3 (6) 1 (8) No answer 0 (0) 1 (2)
Three of the company respondents referred to in Table 3 distinguished between granted patents and applications (marked as * - numbers represent granted patents only). Given the time lag between application and grant, it is likely that a number of the patents referred to by respondents in Table 3 have not yet been granted. Ultimately, some of these may fail to satisfy the patent requirements, and hence the number of granted patents may actually be lower than reported herein. Nevertheless, the results give broad guidance as to the quantum of patenting by Australian organisations surveyed by us. One respondent in the research institutions survey and two respondents in the company survey referred to the numbers of families of patents rather than the number of patents per se (marked as #). As such, it is possible that a number of respondents may have been referring to patent families rather than individual patents.
These results show that large scale patenting is not the norm in the Australian industry, or at least in the sectors that responded to our surveys. For example, these results show that the majority of respondents in research institutions and in the private sector have less than 10 patents. These results probably reflect the structure of the industry in Australia. Although quality research may be performed in Australian research institutions, there are insufficient resources to support large scale patenting. The private sector is largely made up of small upstream and intermediate companies that are also likely to lack the resources to support large patent portfolios. Of those companies that reported owning more than 50 patents, only one reported that the number of patents owned by the company was in the “thousands”. One other put the number at “hundreds”. Both of these were foreign owned companies. Only one respondent from an Australian owned company reported owning more than 150 patents. The rest fell
somewhere between 50 and 150. Most of these reported that their activities were primarily downstream, although one respondent said that their company owned 123 patents and engaged in both upstream and downstream research.
Types of patents
Survey respondents were also asked to identify the nature of their patents within the broad categories of: gene sequence, research tool, gene product, drug, diagnostic and other. The results are summarised in Table 4.
Table 4: Types of patents held
Types Research institutions (%) Companies (%) Diagnostic facilities with research base (%) Gene sequence 6 (26) 14 (29) 1 (8) Research tool 9 (39) 8 (16) Gene product 5 (22) 8 (16) 1 (8) Drug 10 (43) 18 (37) Diagnostic 11 (48) 15 (31) 2 (15) Other 4 (17) 15 (31)
These figures show the number of respondents with patents that include claims in each of these areas rather than the actual number of patents. A single patent may fall within a number of the categories listed in the survey questions, hence the total percentages add up to more than 100. These results are intended to provide broad guidance as to the areas in which patent applications are being made rather than precise quantitative data. In the category of “other” patent types, respondents listed such things as equipment, therapies, bioactive products and formulations and four of the company respondents listed devices.
These results show that the types of patents held by respondents spread across the whole gamut from gene sequences to drugs. Some of the patents owned by Australian companies are likely to be foundational in nature (the GTG junk DNA patents being the prime example). However, as previously indicated, the majority of the most controversial foundational patents that have been discussed in the literature are foreign-owned.
Filing of patents
Most respondents stated that they or their clients routinely patented in the United States and in a number of European countries. The next most favoured country was Japan. Some respondents stated that they started with a broad sweep of countries and then narrowed depending on a number of financial and other decisions. For example, one respondent stated that they would consider patenting in countries where a disease was prevalent as well as the countries with the largest markets. However, the cost involved in maintaining a patent in a number of countries was a major factor in deciding both where to patent in the first instance and where to keep patents active.
Although most respondents said that they invariably took out patents in Australia, there was a certain degree of ambivalence about the value of Australian patents. Indeed, one respondent commented that his company filed in Australia only “out of nostalgia”. In general the reason given for the lack of enthusiasm about patenting in Australia was the small size of the Australian market for products sold under patent. Clearly this is a good reason for not patenting exclusively in Australia. However, it would be difficult for an Australian company to justify excluding Australia altogether from the list of companies in which to pursue patent applications. Indeed, although disparaging remarks about the value of Australian patents were common, in practice no single respondent actually said that they did not file patents in Australia.
For some respondents, patenting in Australia seems to be more important from the public perception perspective than from a financial one. In particular, respondents from public sector institutions and public companies commented on the desirability of being seen to be giving something back to the Australian public: unless products are patented here they will not be marketed here. Public company respondents said that they simply had to do this for public interest purposes. For public research institutions, respondents commented that there was even stronger justification to patent in Australia because of the mandate to ensure benefit for Australia economically and socially.
One respondent noted that, because of the small volume of patents passing through the Australian Patent Office and the relatively smooth process of examination, sometimes an Australian patent will
be pursued as a test case and used as a basis for other applications elsewhere.