The USPTO's proposal of a biological research tool patent pool doesn't hold water.

AuthorIyama, Scott
PositionUS Patent and Trademark Office

INTRODUCTION I. AN OVERVIEW OF THE PATENT THICKET PROBLEM A. The Patent Thicket B. The Adverse Effects and Fundamental Causes of a Research Tool Patent Thicket 1. The tragedy of the anticommons 2. The hold-up problem II. PATENT POOLS: THE USPTO'S ANSWER TO THE PROBLEM OF RESEARCH TOOL PATENT THICKETS III. THE USPTO PATENT POOL IS NOT A SOLUTION TO THE PROBLEM OF RESEARCH TOOL PATENT THICKETS A. A Patent Pool Does Not Adequately Address the Root Causes of the Problem of the Anticommons 1. Transaction costs of rights bundling 2. Divergent incentives 3. Ex ante valuations B. A Patent Pool Does Not Solve the Hold-Up Problem IV. ANTITRUST CONCERNS A. Practicalities of Biological Research 1. The evolutionary problem 2. The antitrust implications based on the evolutionary problem B. Distinctions from Other Permissible Patent Pools CONCLUSION INTRODUCTION

A recent report by the National Institutes of Health (NIH) announced that the granting of intellectual property (IP) rights to research tools (1) "can stifle the broad dissemination of new discoveries and limit future avenues of research and product development." (2) Specifically, IP rights to research tools can limit the viability of particular research scenarios because of the phenomenon known as patent thicketing. (3) Patent thickets arise because of well-distributed and overlapping patent rights. Thus, a given research process will be adversely affected where a would-be investigator encounters difficulty in the assembly of utilization rights for each research tool required for the particular research scheme. (4) To mitigate this problem of patent thicketing, the U.S. Patent and Trademark Office (USPTO) issued a white paper arguing for the creation of a patent pool, composed of biological research tools, to mechanically facilitate a broad licensing scheme of the necessary use rights. (5)

In this Comment, I argue that a patent pool is an inadequate solution to the problem of patent thicketing in the field of biological research tools. Following a background discussion in Part I on the formation of research tool patent thickets and the USPTO white paper, I will attempt in Parts II and III to elucidate the distinct characteristics of biological research in order to demonstrate that the pool's goal of "one stop patent license shopping" is simply not feasible. Specifically, in Part IV, I will show that the uncertain nature of experimental investigation creates fatal impracticalities when one is trying to identify a particular collection of patents to be included in the pool. Then, in Part V, I will argue that, even if a set of patents can be identified for inclusion in a research-tool-based patent pool, the doctrines of antitrust will render its usage impermissible. Thus, this Comment concludes that legislators and agency policymakers should not adhere to the recommendation of the USPTO white paper.

  1. AN OVERVIEW OF THE PATENT THICKET PROBLEM

    The stated objective of the USPTO white paper is to offer a solution to the patent thicket problem; thus, I will first identify and define the patent thicket problem as applied to biological research tools. To that end, this Part will focus on the development of a patent thicket and its theoretical consequences for biological research.

    1. The Patent Thicket

      The theory of patent thicketing was first articulated by Carl Shapiro and is premised on the modular concept of scientific research. (6) Science, as an evolutionary process, is predicated upon the developments and theories of preceding scientific generations; thus, modern scientific research can be viewed as being composed of various building blocks. Each block is a past theory, tool, or hypothesis that is utilized in conjunction with other blocks to construct a more inclusive or insightful scientific endeavor. (7)

      Under this metaphor, a patent thicket arises when each block is granted separate, yet concurrent, exclusivity rights. The so-called thicket is the resulting nexus of concurrent and overlapping IP rights that one must navigate in order to practice any evolutionary form of science. (8) In the ease of biological research tools, the thicket arises where multiple tools are required for an investigative process, but the IP rights to the tools are distributed across a diverse array of patent holders. Consequently, to proceed with the project, a researcher must hack her way through the thicket by acquiring licenses from each patent holder.

      But how likely is it that a patent thicket for biological research tools will develop? According to the NIH working group on research tools, a thicket of research tool patents has already begun to form. (9) The underlying policies of the USPTO and recent legislative enactments facilitate this expansion of research tool patents by incenting public research institutes to take advantage of the available IP rights for patent tools. Specifically, as evidenced by the prevalence of patents on transgenic animals, gene fragments, nucleotide markers, and other intermediate techniques, the USPTO and the Court of Appeals for the Federal Circuit have extended the scope of patentable subject matter to include novel, nonobvious, and useful research tools. (10) As patent rights to prominent research tools can create lucrative licensing revenues, developers are now quick to capitalize upon patentability options and thereby propagate the patent thicket. Moreover, with the enactment of the Bayh-Dole Act, (11) federally funded research programs responsible for many of the developments in upstream research tools have incentives to seize on economic opportunities by patenting all research tools for potential licensing. The cumulative result of these actions is the initial formation of a patent thicket for research tools. (12)

    2. The Adverse Effects and Fundamental Causes of a Research Tool Patent Thicket

      The negative consequence of an extensive research tool patent thicket and its accompanying licensing scheme is the potential chilling effect upon future innovation. (13) Namely, as a result of the cumulative effects of fragmented rights and excessive licensing terms, the transaction costs associated with the development of a scientific program may simply rise to a level sufficient to preclude efficient utilization of the given tool technology. It is this possibility of stifling innovation that is the primary concern of both the NIH and the USPTO. (14)

      It is important initially to note the inherent policy tension fundamentally associated with a research tool patent thicket. Namely, incentives need to be aligned such that researchers are induced to develop the evolutionary research tools; yet, the system must be tempered to the extent that the density of the thicket must not make the tools' usage infeasible. However, according to the public concerns detailed in the USPTO white paper, current patent guidelines for research tools too heavily favor the former policy goal, leading to the foreseeable development of a dense thicket. (15) Thus, according to the white paper, the current paradigm for research tool patents will lead to patent thicketing and consequently may be a significant danger to biological innovation. (16) This danger can arise in two possible forms: (1) the tragedy of the anticommons, or (2) the so-called hold-up problem. (17)

      1. The tragedy of the anticommons

        The proliferation of overlapping patent rights on biological research tools and the subsequent formation of a thicket can lead to a scenario where scarce resources are severely underutilized. (18) This problematic scenario, termed the tragedy of the anticommons by Michael Heller and Rebecca Eisenberg, is described in the context of biomedical innovation as follows:

        By conferring monopolies in discoveries, patents necessarily increase process and restrict use--a cost society pays to motivate invention and disclosure. The tragedy of the anticommons refers to the more complex obstacles that arise when a user needs access to multiple patented inputs to create a single useful product. Each upstream patent allows its owner to set up another tollbooth on the road to product development, adding to the cost and slowing the pace of downstream biomedical innovation. (19) Essentially, for each patented research tool required for an investigative process, the user must overcome the transaction costs caused by the strategic behavior of the patent holders in order to obtain use rights to the tool. (20) Consequently, where the sum of these costs exceeds the expected returns of the experimental process, there is a societal loss in the forgone benefits of a particular research program.

        Given the current state of IP in the field of biotechnology, Heller and Eisenberg argue that biomedical research and innovation are particularly vulnerable to the tragedy of the anticommons for three reasons. First, given the presence of a large and diverse field of research tool patent holders (so-called upstream rights holders), there is a very high probability that the licensing and transaction costs of bundling those rights will exceed the ultimate value of the final downstream product for a given research endeavor. (21) Second, as a consequence of the diverse nature of the patent holders, there will be heterogeneity in their business practices, norms, and agendas such that negotiation and deal formation will further complicate minimization of transaction costs. (22) The diversity of the rights holders and potential divergence of interests can easily be highlighted by considering the current participants in biomedical research: universities, small start-ups, mature biotechs and pharmaceutical companies, etc. (23) Finally, inability to determine the ex ante value of a research tool will create asymmetric valuations that can lead to breakdowns in the negotiating process. (24)

        In sum, Heller and Eisenberg assert that if the current patent and licensing scheme of biological research tools is not restructured to...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT