John van der Luit-Drummond

A study released last Friday by Professor Robin Feldman and Harvard Fellow Dr Nicholson Price predicts that biopharmaceutical companies are about to become the next targets for “patent trolls”.

Entitled Patent Trolling: Why Bio & Pharmaceuticals Are at Risk, the study examines life science patents from five leading universities to evaluate their potential for assertion by NPEs. The authors conclude that the holdings of these institutions would make an attractive proposition to “patent monetisers”, which in their opinion would be detrimental to the industry and consumers.

Up to now, the fact that drugs, treatments and other products in the life sciences industries have been underpinned by as few as one patent have led many to believe that there is less opportunity for the kind of patent monetisation that we have seen in areas such as mobile communications. Feldman and Price, however, believe that this is beginning to change.

There is increasing pressure on universities to monetise their patent portfolios, with some reports suggesting only 5% are subject to licensing. The Association of University Technology Managers announced last year that it was re-examining policies that had previously recommended not transferring rights to NPEs. That makes sense. This blog has already suggested that the optimal route for the licensing of university-generated patents might be through outsourcing to NPEs. They have the expertise in conducting licensing campaigns and would allow universities to focus on what they do best – research and development. Furthermore, because  the terms of any licensing operation can be agreed in advance it would be relatively simple to minimise any negative PR and, more importantly, to put in place systems to ensure that patents were diffused as widely as possible. For NPEs, the advantage of working with universities would be a regular supply of rights and the chance to show there is more to what they do than mere assertion.

But is it not just universities under pressure to make their patents sweat. The biopharma sector itself is potentially missing out on revenue by failing to focus on generating more value from its IP. Companies are hamstrung by time and regulatory restraints, and often do not have the incentives to run their own licensing programmes – despite owning many patents which they do not use themselves, but which could be of benefit to others.

There is an opportunity for any number of companies in the various life sciences sectors to work with third parties to see if there are others out there who could put their patents to good use – or, indeed, to find  those who may be doing so already without permission. It is something that is already beginning to happen with regard to med-tech. In October 2012, Acacia announced the purchase of “over 1,900 patents and applications relating to stent grafts, vascular grafts, bypass grafts, graft retrieval technology, graft manufacturing technology, vena cava filter technology, and filter retrieval technology from a leading global medical device company”. The seller is thought to have been Boston Scientific. Other deals involving other med-tech companies and NPEs have followed. However, it may not just be med-tech – in their study Feldman and Price state that: “Patent brokers are beginning to hear from major pharmaceutical companies interested in shopping their noncore patents to monetisers, and studies of patent demands against start-up companies show monetisers moving into the life science space.”

Universities and life sciences companies have invested large amounts of time and money into R&D projects and as consumers we want them to continue to do so. Only then will there be new and innovative products for us to enjoy in the future. However, these entities require a return on their investments. Any strategy that enables this is therefore a benefit to us all. No one is forcing them to work with monetisers, they will do so only if they see there is something positive to gain. Perhaps this is something that Feldman and Price should have spent more time thinking about.