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Abstract:
As proprietary claims have proliferated in biomedical research, the costs that such claims impose on R&D have become more salient. At the same time, patents on biomedical research plainly offer important social benefits in the form of motivating private investment in invention and product development. The presumption that patent incentives are necessary to promote research and development has less force, however, for inventions arising from government-sponsored research than for inventions arising from purely private funding. It is therefore important that decisions about patenting the results of government-sponsored research be made on the basis of a careful balancing of the costs and benefits that such patenting will entail for future R&D. Current law entrusts these decisions to the unbridled discretion of institutions, such as universities, that receive federal funds. But universities may be inadequately motivated to take the social costs of their proprietary claims into account in deciding what to patent. A more sensible approach would give research sponsors, such as NIH, more authority to restrict proprietary claims on publicly-funded research when such proprietary claims are more likely to retard than promote subsequent R&D.

Abstract:
This article employs the burgeoning literature on law-and-norms theory to take a fresh look at the debate over patent rights in basic scientific research. After reviewing how the issue of patent rights in this research implicates not only intellectual property law but also research norms, it argues that patent policy has been insufficiently sensitive to contexts in which the central instrumental goals of patent law -- creation, disclosure, and development -- would be maximized not through stronger property rights but through norms that emphasize the public domain. Equally important,because of the relative imprecision of the law; the difficulty it often has in dealing with rapid technological change; and the poor access that legal actors often have to relevant technological information, formulating laws that reinforce and reflect efficient norms may be a better way of achieving creation, disclosure, and devlopment than the alternative of strictly legal change.

Abstract:
This article employs the burgeoning literature on law-and-norms theory to take a fresh look at the debate over patent rights in basic scientific research. After reviewing how the issue of patent rights in this research implicates not only intellectual property law but also research norms, it argues that patent policy has been insufficiently sensitive to contexts in which the central instrumental goals of patent law -- creation, disclosure, and development -- would be maximized not through stronger property rights but through norms that emphasize the public domain. Equally important, because of the relative imprecision of the law; the difficulty it often has in dealing with rapid technological change; and the poor access that legal actors often have to relevant technological information, formulating laws that reinforce and reflect efficient norms may be a better way of achieving creation, disclosure, and devlopment than the alternative of strictly legal change.

Abstract:
This Article addresses the question of how the tools of patent and antitrust law can best be used to foster the cumulative process that is biopharmaceutical innovation. This issue is of particular moment because we have begun in recent years to see a substantial amount of vertical and horizontal integration in the biopharmaceutical industry. The Article argues that although horizontal concentration may be useful for appropriating the value of a lengthy and expensive research and development process, a role for competition needs to be preserved. In the context of the biopharmaceutical industry, broad patents, particularly on upstream innovation, represent the main threat to competition. Thus patent law needs to take the lead in preserving competition, primarily by limiting the scope of patents on upstream invention. Antitrust law, and especially the theory of innovation markets, should play a secondary role. In this secondary role, innovation markets theory will actually support certain market transactions that aggregate patent rights, in particular procompetitive patent pools. Innovation markets theory will, however, have an important role to play in restricting market transactions if the transactions will give a single entity control over what appears to be a fundamental platform technology.

patents, antitrust, biopharmaceuticals

Abstract:
The advent of open source software has prompted some theoretical speculation about the applicability of open source production principles to biomedical research. This paper moves beyond theoretical analysis into an empirical examination of biomedical research projects that operate under what might be called an open and collaborative model. Open and collaborative projects represent a fresh approach to biomedicine in that they not only disavow its exclusionary behavior but they also reject its small-lab based structure. The paper argues that open and collaborative biomedical research represents a promising experiment. Not only has it produced software and genomic data that is usable, but the resulting public domain status for this software and data may reduce access and transaction cost problems for follow-on innovators. The model's least intuitive, but most exciting, application may involve wet lab systems biology: in this context, the model may allow a more coordinated and comprehensive attack than has heretofore been possible on the sorts of problems that cause promising drug candidates, particularly for complex diseases, to fail.

Open and collaborative biomedical research does diverge, however, from non-biomedical open source production. Particularly outside the area of software, open and collaborative biomedicine may require restrictions on participation; significant centralization and standardization; reliance on public funding; and limitations on use of copyleft licensing. Additionally, if the model is to gain significant traction, practical problems involving the division of consulting revenues between scientists and universities as well as inefficient biological science publication norms will have to be addressed.

Open and collaborative, open source, biomedical research

Abstract:
Software patents and university-owned patents represent two of the most controversial intellectual property developments of the last twenty-five years. Despite this reality, and concerns that universities act as "patent trolls" when they assert software patents in litigation against successful commercializers, no scholar has systematically examined the ownership and litigation of university software patents. In this Article, we present the first such examination. Our empirical research reveals that software patents represent a significant and growing proportion of university patent holdings. Additionally, the most important determinant of the number of software patents a university owns is not its research and development ("R&D") expenditures (whether computer science-related or otherwise) but, rather, its tendency to seek patents in other areas. In other words, universities appear to take a "one size fits all" approach to patenting their inventions. This one size fits all approach is problematic given the empirical evidence that software is likely to follow a different commercialization path than other types of invention. Thus, it is perhaps not surprising that we see a number of lawsuits in which university software patents have been used not for purposes of fostering commercialization, but instead, to extract rents in apparent holdup litigation. The Article concludes by examining whether this trend is likely to continue in the future, particularly given a 2006 Supreme Court decision that appears to diminish the holdup threat by recognizing the possibility of liability rules in patent suits, as well as recent case law that may call into question certain types of software patents.

Abstract:
Synthetic biologists aim to make biology a true engineering discipline. In the same way that electrical engineers rely on standard capacitors and resistors, or computer programmers rely on modular blocks of code, synthetic biologists wish to create an array of modular biological parts that can be readily synthesized and mixed together in different combinations. Synthetic biology has already produced important results, including more accurate AIDS tests and the possibility of unlimited supplies of previously scarce drugs for malaria. Proponents hope to use synthetic organisms to produce not only medically relevant chemicals but also a large variety of industrial materials, including ecologically friendly biofuels such as hydrogen and ethanol. The relationship of synthetic biology to intellectual property law has, however, been largely unexplored. Two key issues deserve further attention. First, synthetic biology, which operates at the confluence of biotechnology and computation, presents a particularly revealing example of a difficulty that the law has frequently faced over the last 30 years - the assimilation of a new technology into the conceptual limits around existing intellectual property rights, with possible damage to both in the process. There is reason to fear that tendencies in the way that the law has handled software on the one hand and biotechnology on the other could come together in a "perfect storm" that will impede the potential of the technology. Second, synthetic biology raises with remarkable clarity an issue that has seemed of only theoretical interest until now. It points out a tension between different methods of creating "openness". On the one hand, we have intellectual property law's insistence that certain types of material remain in the public domain, outside the world of property. On the other, we have the attempt by individuals to use intellectual property rights to create a "commons," just as developers of free and open source software use the leverage of software copyrights to impose requirements of openness on future programmers, requirements greater than those attaching to a public domain work.

Abstract:
In the context of prescription drugs, the inevitable tension between stimulating innovation and preserving access creates serious equity concerns that are simply not present in other contexts. This paper identifies some promising mechanisms for relieving this tension. One such mechanism, often ignored by intellectual property scholars, is the simple, and emphatically low-technology, remedy of insurance. Because of the manner in which the health care industry is structured, providing access to insurance is a low-cost mechanism for reducing deadweight loss. At the other end of technology spectrum, there is the growing science of genomics. Although genomics should increase the importance of prescription drugs in health care, and thus might threaten to exacerbate equity concerns, it may also provide ways to produce these drugs more efficiently than before. To the extent that the biotechnology and pharmaceutical industries can internalize fully the efficiency benefits of digital technology, reforms that align the structure of intellectual property protection for pharmaceuticals more closely with that of other innovation might be considered. Equally important will be regulation that imposes cost-effectiveness requirements on pharmaceutical innovation. If innovations in genomics can be channeled in a cost-effective direction, we may yet see a time where Moore's law provides not simply faster and cheaper computers but also a more equitable health care system.

cost-effectiveness, genomics, patents, pharmaceuticals

Abstract:
In the past few years, we have witnessed a proliferation of patents in the two industries that are central to our information economy - computer software and biotechnology. Many commentators fear that the rush to patent in these economically vital industries will lead to restricted information flow and retarded innovation and development. The proliferation of high-technology patents directly implicates the two institutions that are primarily responsible for administering the patent system - the Patent and Trademark Office ("PTO"), which grants patents, and the Court of Appeals for the Federal Circuit ("CAFC"), which hears all patent appeals. Moreover, given that the CAFC's reversal of PTO decisions denying patent protection to certain biotechnology and computer program inventions has been a major reason for the recent proliferation of patents, it is important to reassess the relationship between the CAFC and the PTO. This paper argues that, from the standpoint of institutional competence, the CAFC should not independently review the PTO's decisions denying patentability. Rather, it should apply traditional administrative principles of deference to the PTO's patentability denials.

Abstract:
Innovation is central to economic growth and human welfare. Government officials and commentators have recognized this reality and have called for a variety of different substantive incentives for stimulating innovation. But the question of how an innovation regulator should be structured has received little attention. Such consideration is important not only because of the significance of innovation but also because current government innovation policy is so haphazard. There is no government entity that looks at innovation broadly, and the narrower agencies that regulate aspects of innovation policy not only fail to pay systematic attention to innovation goals but often act at cross-purposes with each another.

In this Article, Professors Benjamin and Rai analyze how government policy on innovation should be structured. Drawing on existing theoretical and empirical work, as well as their own original empirical research, they propose the creation of an entity in the executive branch that would both analyze pending agency action and offer regulatory suggestions of its own. This entity would introduce a new, trans-agency focus on innovation while drawing upon, and feeding into, existing executive branch processes that aim to rationalize the work of disparate federal agencies. This approach, Professors Benjamin and Rai contend, offers a great improvement over existing government institutions while avoiding a costly (and politically infeasible) remaking of the administrative state.

Abstract:
In recent years, widespread dissatisfaction with the perceived poor quality of issued patents has spurred a diverse range of groups to call for reform of administrative procedures. Strikingly, however, most calls for reform pay little attention to principles of administrative law. Similarly, judges (in particular the judges of the Federal Circuit) have treated patent law as an exception to the Administrative Procedure Act, and to administrative law more generally. In this Article, Professors Benjamin and Rai contend that this treatment is doctrinally incorrect and normatively undesirable. Standard principles of administrative law provide the appropriate approach for judicial review in the current system of patent grants and denials. As for proposed reforms, such as the institution of post-grant opposition proceedings, an administrative approach to judicial review is the best mechanism for addressing the collective action/public good problems that inevitably arise in challenges to patent validity. Finally, an administrative approach provides the doctrinally appropriate and normatively desirable institutional foundation for the determinations of economic policy that the patent system should be making.

Abstract:
In areas of cumulative research such as biotechnology, broad patents on fundamental research tools have the potential to create impediments to follow-on research and development. Impediments to R&D may also be created by possible thickets of upstream rights. Whether such impediments actually arise in any given case is of course an empirical question. From an empirical standpoint, the net impact of recent increases in upstream biotechnology rights is far from clear. It is fair to say, however, that one standard market solution to rights thickets - the reduction of transaction costs through collective institutions that pool and exchange rights - has not emerged. Rather, in the commercial arena, significant transaction costs and licensing fees have simply become part of the cost of doing business. Although these costs may have reduced profits, foreseeable sales revenues have been sufficiently high that the profit incentive has not been eliminated.

In contrast, when follow-on research is conducted in the university context, or by non-profit institutions that target the developing world, foreseeable payoffs are either highly uncertain or are clearly small. In these contexts, large transaction and licensing costs may pose a more pressing problem. However, at least in the context of low-margin research that targets the developing world, there is reason to be optimistic that the standard solution of collective rights management will actually work. When the follow-on research in question is of demonstrably low commercial value, there is no reason for upstream rightsholders to fear that they are foregoing large downstream rents. Thus, even though conditions in the biotechnology sector may, as a general matter, work against collective action, low-margin research should be an exception. Non-profit institutions such as universities that are highly sensitive to reputational pressures should be the easiest players to enlist. Fortunately, in both agricultural and health-related biotechnology, non-profit institutions own a significant percentage of upstream patents.

Abstract:
Drug discovery is stagnating. Government agencies, industry analysts, and industry scientists have all noted that, despite significant increases in pharmaceutical R&D funding, the production of fundamentally new drugs - particularly drugs that work on new biological pathways and proteins - remains disappointingly low. To some extent, pharmaceutical firms are already embracing the prescription of new, more collaborative R&D organizational models suggested by industry analysts. In this Article, we build on collaborative strategies that firms are already employing by proposing a novel public-private collaboration that would help move upstream academic research across the valley of death that separates upstream research from downstream drug candidates. By exchanging trade secrecy for contract-based collaboration, our proposal would both protect intellectual property rights and enable many more researchers to search for potential drug candidates.

Abstract:
The growing prominence of the patent system has revealed an institutional structure in need of repair. Legal scholars and commentators have identified and discussed some of the difficulties of the individual institutions within the patent system. But they have not incorporated into their analyses a recognition of all of the relevant institutions and their highly interdependent roles. Because of this interdependence, patent reform requires multi-institutional analysis. This Article argues that the ostensibly discrete problems of our patent institutions stem from an initial mistake in institutional design. This mistake was made in 1982, when Congress implemented patent reform by attempting to concentrate expertise at the appellate level. Congress focused on the appellate courts even though the patent questions that require narrowly focused expertise are largely questions of fact, not law or policy.

Multi-institutional reform must therefore focus on remedying the system's substantial deficiencies in the areas of both fact-finding and policymaking. Under a traditional administrative law model, primary responsibility for questions of fact would rest with the PTO. The role of the courts - whether the trial court or the appellate court - would be secondary. With respect to fact-finding, adopting certain aspects of the traditional administrative model is clearly necessary. Thus Congress should advance the PTO beyond its nineteenth century moorings and endow the agency with the expertise and neutrality necessary for it properly to wield significant fact-finding responsibility. At the same time, however, giving plenary responsibility on factual questions to the PTO would not be cost-effective. Accordingly, the trial courts should also be endowed with fact-finding expertise. Solving the allocation puzzle for questions of policy is more challenging. Each of the available institutional options - the legislature, the PTO, and the courts - has substantial associated liabilities. From the standpoint of political economy and institutional flexibility, the most disadvantaged institutional actor is probably Congress. The institutional choice thus comes down to one between the PTO and the appellate courts. On first examination, given the Federal Circuit's apparent aversion to policy analysis, its possible tendency towards pro-patent bias, and the well-known difficulties courts face in undertaking policymaking, the PTO might appear the better option. In order for the PTO to be a reasonably good policymaker, however, Congress would have to change the PTO into an altogether different agency: merely implementing reform that improved the agency's fact-finding capabilities would not be sufficient. In contrast, the level of change required in the court system would be less substantial. What we would need is greater generalist input in the appellate process. To some extent, the Supreme Court's increased interest in reviewing patent cases has already taken us down that path.

Abstract:
In recent years data-sharing has been a recurring focus of struggle within the scientific research community as improvements in information technology and digital networks have expanded the ways that data can be produced, disseminated, and used. Information technology makes it easier to share data in publicly accessible archives that aggregate data from multiple sources. Such sharing and aggregation facilitate observations that would otherwise be impossible. But data disclosure poses a dilemma for scientists. Data have long been the stock in trade of working scientists, lending credibility to their claims while highlighting new questions that are worthy of future research funding. Some disclosure is necessary in order to claim these benefits, but data disclosure may also benefit one's research competitors. Scientists who share their data promptly and freely may find themselves at a competitive disadvantage relative to free riders in the race to make future observations and thereby to earn further recognition and funding. The possibility of commercial gain further raises the competitive stakes.

This article discusses data sharing in California's stem cell initiative against the background of other data sharing efforts and in light of the competing interests that the California Institute for Regenerative Medicine (CIRM) is directed to balance. We begin by considering how IP law affects data-sharing. We then assess the strategic considerations that guide the IP and data policies and strategies of federal, state, and private research sponsors. With this background, we discuss four specific sets of issues that public sponsors of data-rich research, including CIRM, are likely to confront: (1) how to motivate researchers to contribute data; (2) who may have access to the data and on what conditions; (3) what data get deposited and when do they get deposited; and (4) how to establish database architecture and curate and maintain the database.

Abstract:
In the last ten years, the workload of the Patent and Trademark Office ("PTO") has increased dramatically. Complaints about the PTO's ability to manage its workload have increased in tandem. Interestingly, although Congress has explicitly given the PTO rulemaking authority over the processing of patent applications, and withheld from it authority over "substantive" patent law, the PTO has arguably enjoyed more success in influencing substantive law than in executing direct efforts to manage its workload. This Article explores the multiple, mutually reinforcing reasons for this anomaly. It argues that although there are good reasons to be frustrated with the PTO's past performance, the anomaly should not persist. To the contrary, incremental reform that gave the new PTO administration greater control over its procedures and its budgetary outlook would move us a long way toward a more efficient system of patent examination.

Abstract:
The current logjam over legislative reform might lead to the pessimistic conclusion that patent reform efforts are likely to be either: 1) ineffectual (the current situation); 2) zero sum (one set of industry interests is able to garner more votes than its opponent and override the legitimate interests of the other); or 3) founded in disparate treatment of different industries (a departure from the much-heralded "unitary" nature of the patent system).

This Essay argues that such a conclusion would be premature. One important counter to the pessimistic view is the example of the Supreme Court's recent judicial reform. Although the biopharmaceutical industry has been quite opposed to this judicial reform, the available evidence thus far suggests that the Court's decisions will have only a limited impact on the legitimate interests of the industry. Specifically, although the Court's decisions adopt a facially neutral approach, this approach is likely to have a disparate impact that leaves relatively untouched the patent law that surrounds end product therapeutics.

Two other counters to the pessimistic view bear emphasis. First, to the extent that the outlier set of inventions appears to be biopharmaceutical end products, these end products are embedded in a web of non-patent-based regulatory and market structures that do much of the heavy lifting in terms of setting up barriers to entry and influencing price. These non-patent structures are narrowly tailored to the peculiar economic questions raised by end product therapeutics.

Second, in those situations where neither existing patent law standards nor existing regulation specific to end product therapeutics is sufficiently sensitive to relevant considerations of economic policy, additional facially neutral standards (and tweaks to FDA and health insurance regulation) could be implemented.

Abstract:
Under well-settled patent law, the decision regarding whether to grant or deny a patent turns on technical fact-finding. Recommendations made in recent patent system reform reports issued by the Federal Trade Commission (FTC) and the National Academy of Sciences (NAS) could have a substantial impact on which patent institution has power over fact-finding. The FTC's approach to power allocation is relatively explicit: the USPTO's factual findings should be accorded a low level of deference when made in the context of an ordinary patent grant; significant deference when made in the context of a patent denial; and perhaps the highest level of deference when in a post-grant review. While the NAS study does not focus as explicitly on how courts should treat USPTO fact-finding, its recommendations also have significant implications for power allocation. In this Essay, I argue that, in their areas of overlap, both the FTC and NAS reports properly account for the fact-finding competence - or lack thereof - of the USPTO. Where the reports diverge, however, the FTC report may do a better job of accurately diagnosing, and suggesting remedies for, the relevant fact-finding problem.

patent, reform, fact-finding, deference

Abstract:
Only about 1% of newly developed drugs are for tropical diseases, such as African sleeping sickness and dengue fever. While patent incentives and commercial pharmaceutical companies have made Western health care the envy of the world, the commercial model works only if companies can sell enough patented products to cover their R&D costs. The model thus fails for diseases found largely in the developing world, where markets for patented products are tiny. Any solution to the problem of tropical diseases must recognize the need for rigid cost-containment. An open source approach to identifying promising drug candidates would keep costs down by relying on volunteer scientific labor, low-cost or donated computational resources, competitive bidding for development, and competitive production.

open source, neglected disease, patent

Abstract:
The campaign to curtail "fraud and abuse" in the Medicare and Medicaid programs represents an attempt by regulators to evade more fundamental and difficult questions regarding cost and quality control. In the Medicare arena, tackling these larger questions will require dismantling the program's fee-for-service structure and imposing on providers financial incentives to evaluate carefully health care costs and benefits.

Abstract:
As the amount of genetic information available has grown exponentially, it has become possible to identify gene-level variations that cause individuals who present with similar disease symptoms to have divergent responses to drugs for those symptoms. The segregation of disease populations based on genotypic variation, or pharmacogenomics, is likely to create small genotypic subgroups for which no private pharmaceutical company will have a market incentive to develop a drug. U.S. law currently provides liberal research subsidies for groups with rare diseases who have been "orphaned" by the market. Because pharmacogenomics is likely to create a much larger number of such orphan groups, policymakers will need to consider the distributive justice question of how to allocate scarce research resources between different orphan groups. Moral theory does not provide a definitive answer to this question. Therefore, we must supplement moral theory with transparent, well-reasoned political debate. This paper advocates cost-benefit analysis as an important component of this debate. It argues that some orphan drugs may in fact be cost-beneficial and should, on that basis, be accorded some preference. The most promising mechanism for identifying such cost-beneficial drugs, and giving them preference, would be some type of patent term extension.

Abstract:
This Article argues that the Court of Appeals for the Federal Circuit ("CAFC") has misapplied patent law in the context of biotechnology, making patent protection far too strong in certain respects and too weak in other respects. One major reason for the CAFC's mistakes has been its limited comprehension of the new technologies that are central to the biotechnology industry. Moreover, a comparative analysis of the various institutions that could address the new genetic technologies reveals that the Patent and Trademark Office ("PTO") is best equipped for the task. Thus the CAFC should show greater deference to the PTO's factual and legal determinations regarding patentability.

Abstract:
The majority of states prohibit patients from appointing their
physicians as health care proxies. These prohibitions are grounds in fears of paternalism and conflict of interest. However, the potential for conflict is not unique to physicians. Moreover, patients -- particularly individuals who do not have relatives or friends who can help with medical decisionmaking -- may have compelling reasons to appoint their physician as a proxy. Managing potential conflicts serves patients better than denying them the right to choose who will make health care decisions for them when they are no longer competent.

Abstract:
The recent explosive growth of managed health care has occurred in large part because of a recognition that we need to make cost-benefit trade-offs in health care. Managed care plans typically make cost-benefit trade-offs by giving plan physicians financial incentives to reduce medical spending or by giving third-party utilization reviewers the authority to deny approval for treatments proposed by plan physicians. Yet individuals who enroll in managed care plans generally have little knowledge of how physician financial incentives or utilization review guidelines operate. As an alternative to this type of sub rosa rationing, a number of commentators have argued in favor of systems in which patients/consumers would make choices among health plans with explicit rationing schemes. However, one powerful argument that has been advanced against a consumer-choice oriented approach to rationing is that such an approach falsely assumes that consumers can make reflective, autonomy-enhancing choices about their health care priorities. This Article examines the issue of choice with an eye towards determining whether, and how, information technology could assist individuals in making truly reflective health care rationing choices. It argues that information technology could be invaluable in giving consumers a genuine understanding of how different allocational mechanisms worked. Informational technology could also facilitate communication between patients who had chosen a particular allocational mechanism.