Prof. D’Agostino helped to link the two federal initiatives, describing Canada as a country home to entrepreneurial talent but lacking the ecosystem and infrastructure necessary to capitalize on these resources domestically. Earlier, Mr. Paikin had stated that the innovation or knowledge-based economy represented the “future economy”. This is primarily true, as information-based, knowledge-intensive industries and technologies affect a growing number of sectors. However, as Prof. Breznitz helped to highlight that outside of Canada, other companies and their home countries — such as Google in the United States (US) — are already reaping the rewards of knowledge-based research and development, some of which Canadian universities originally generated.

Answering Mr. Paikin’s question about tackling the widening pay gap, Prof. D’Agostino highlighted the work of the . “You do need the patents, the IP, so with patents come all the other associated IP rights,” said Prof. D’Agostino, “you also need that ecosystem.”

Speaking to her experience with law students in both Canada and the US, Prof. D’Agostino argued that Canada is lacking a culture of innovation. “In many ways, when we look to other countries or when I go back to my time in the [Silicon] Valley, you saw that there: they go to law school, they want to make millions. They want to be the next Facebook. When students go to law school here, they want to go work in a law firm or make policy or other options but they don’t really come to law school to make that big company. So, I think there needs to be a cultural shift and that’s something that takes time. That’s something more on the ground.”

The IP Osgoode Innovation Clinic, conceived and founded by Prof. D’Agostino, seeks to build off of the burgeoning ecosystems in the Toronto, 91��ɫ, and Waterloo regions to help develop the next generation of commercialization-savvy IP practitioners. By having Innovation Clinic Fellows assist student start-ups at��, in particular the at the , inventors at incubators and accelerators, such as ventureLAB and , and entrepreneurs in the Waterloo Region and elsewhere who are in need of pro bono assistance to protect and formalize their ideas and IP, the IP Osgoode Innovation Clinic is helping to build an ecosystem based on IP awareness, support, and inclusivity.

Under the supervision of partners at , the Innovation Clinic Fellows take carriage of their own files and provide IP information and support to Canadian start-ups and entrepreneurs as they work to scale-up and commercialize their products or provide publicly oriented tools and services to disadvantaged communities.

At the same time, Innovation Clinic Fellows are able to hone their understanding of IP law and commercialization practices, enabling them to provide more value to their Clinic Clients and those they will work with during their future careers as legal practitioners. A small number of similar clinics operate in Canada, including the University of Detroit Mercy School of Law and Windsor Law’s . As Prof. Myra Tawfik and Jim Hinton have argued in a number of places (see , , and ), these pro bono IP law clinics help address a gap in Canada’s innovation ecosystem. ��Mr. Paikin and Mr. Ciruiak both note that this ground-up approach may be a generational project. But in just over 7 years of operation, the IP Osgoode Innovation Clinic has already demonstrated success, providing services to hundreds of clients and having trained close to a hundred law students from .

This summer’s as well as the Canadian Intellectual Property Office’s new highlight the need to improve education, build IP awareness and outreach, and improve IP savviness and access to IP advice. As Prof. D’Agostino points out, the federal government will need to demonstrate a long-term financial and public commitment to increasing capacity in these areas. If expanded and networked across the country, IP law clinics, such as the IP Osgoode Innovation represent ground up ways to fill a gap in the country’s innovation ecosystem.

The IP Osgoode Innovation Clinic is operating with support from the Centre for International Governance Innovation, Osgoode Hall Law School, ��and Norton Rose Fulbright LLP.

If you would like more information about the Clinic or are interested in engaging the services of the Clinic, please contact us: IP Osgoode Innovation Clinic, Osgoode Hall Law School, 91��ɫ, 4700 Keele Street, Toronto, ON M3J 1P3, Email: ipinnovationclinic@osgoode.yorku.ca, Tel: (416) 650-8449, Fax: (416) 736-5736, Website:

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In last week, Berners-Lee was responding to recent revelations of state-based surveillance in the United States and elsewhere. The father of the web also contends that a ‘digital Magna Carta’ would need to address the often-conflicting rights of users and producers in online environments.

Calls for the calibration of competing rights are not new. At least since the early 2000s, legal scholars and social scientists such as , , and have articulated about reforming intellectual property (IP) laws for emerging realities. The proliferation of digital and networked technologies continues to facilitate social, economic, and political shifts. New transnational political economic arrangements are premised on the ability to employ information and communication technologies (ICTs) to coordinate global production chains. studying the impacts of the ICTs that decentralized, network technologies are transforming historic relations generated during industrial economic times. Advocates for the rights of creators point out how these changes are disrupting existing business models and threatening entire industries.

IP law regimes—most often in the forms of copyrights, patents, and trademarks—are used to incentivize creative endeavours and to protect the moral rights of creators. In doing so, these legal regimes help to convert knowledge—communicative and cultural resources that circulate within communities and contribute to their maintenance and growth—into marketable forms of rent-seeking information.

However, suggests that these systems have led to two contradictory outcomes: increasing returns for rights-holders and a “digital divide”, whereby there is increasing disparity between the ‘haves’ and ‘have-nots’ of contemporary capitalism. Scholars Tzen Wong, Graham Dutfield, and their contributors that IP law is regarded as playing various roles in the maintenance of this development disparity. From this perspective, the ‘digital divide’ is a symptom of the global political economy, within which growing inequality between and within states is exacerbated due to differing levels of access to and control over digital technologies and content.

Govindan Parayil, while knowledge-based economic activities generate growth and wealth for the owners of proprietary information; this also results in inequity for those with restricted or no access to this information and the ability to use existing knowledge in productive ways. A of transnational corporations conducted by Sean Starrs, a PhD Candidate at 91��ɫ, highlights how the contemporary political economy is marked by the concentration of wealth in developed states, particularly the United States.

Bridging the digital divide between and within states is becoming a key focus of international and domestic policy initiatives. Civil-society organizations as well as governmental and international organizations and forums have proposed ‘information-communication technologies for development’ (ICT4D) as a means of enabling greater connectivity for disadvantaged persons in post-industrial as well as industrializing states. ICT4D proposes that the proliferation of ICTs will alleviate poverty and inequality by providing new groups with the technological tools necessary to engage in capitalist activities. However, as Jan Nederveen Pieterse , this approach often fails to recognize that the digital divide is not entirely digital; instead, the digital divide entails socioeconomic considerations, including the ability to use ICTs as well as digital content for various purposes.

Human rights-based claims are becoming prominent in struggles to address economic inequality and bridge the digital divide. For example, Access to Knowledge (A2K) movements related to international intellectual property debates challenge the privileging of economic and proprietary rights over the rights of users, citizens, and consumers.

, Professor of Information Studies at Syracuse University, A2K movements focused on a number of areas—including life saving medicine, educational materials, biodiversity and the prevention of famine as well as knowledge circulation in digital contexts—have “become a master frame linking many formerly disparate elements of communication and information politics, business, policy, and law. As an intellectual and political movement, A2K is based on a reappraisal of the nature of property rights over information and networks” (p. 12).

As Internet governance and informational policies are adapted to meet contemporary realities, addressing and balancing these sets of rights will be important for bridging the digital divide and economic inequality.

Note: This post is based upon a paper that the author will present at the in Toronto, Canada and reflects the on-going work of his dissertation.

Joseph F. Turcotte is an IPilogue Editor, a PhD Candidate and SSHRC Doctoral Fellow in the Communication & Culture Program (Politics & Policy) at 91��ɫ, and a Nathanson Graduate Fellow at the Jack & Mae Nathanson Centre on Transnational Human Rights, Crime and Security at Osgoode Hall Law School.

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As I wrote at the time of the last , the Government of Canada has been working on a strategy to position the country to benefit from the so-called "digital future" since May 2010. Four years and three Industry Ministers later, this strategy has not yet been formally announced. Now, with the , at the helm of the Industry portfolio, the broad contours of this plan appear to be becoming clear. At the time of the , then-Industry Minister Tony Clement that ‘improving Canada’s digital advantage’ would foster “a more prosperous and successful Canada [that] will ensure a better quality of life for all Canadians.”

In order to do so, Canada’s Digital Economy Strategy – or an ‘iCanada’ framework – should address four intersecting areas: infrastructure, intellectual property, incentives, and interface. These policy areas contribute to economic growth and human development by affording individuals, communities, and companies to benefit from opportunities associated with digital innovations.��

Infrastructure

The greatest number of Canadians will only succeed in digital environments if they have access to necessary technological and human resources. In the evolving ‘digital age’, access to broadband and network communication technologies will be essential. An , where Canadians living outside of city-centres or their suburbs are often unable to join the ‘information superhighway’ to the same extent—and with the same speeds—as those based in more urban areas.

seeks to address this issue by offering a five-year, $305 million fund “to extend and enhance broadband Internet service for Canadians in rural and Northern communities” (p.8). (a technology analyst and consultant who co-organizes the annual ) states that this is an encouraging sign. However, the specifics of this fund will need to be clarified. Furthermore, the download speed target of 5mbps by 2019 is unambitious when compared to other jurisdictions and will not immediately address the situation. Professor (the Canada Research Chair in Internet and E-commerce Law) points out that while . With the fast-changing nature of digital technologies, in five years' time, this goal will be outdated. It is my opinion that the Government of Canada needs to reassess this goal to account for current needs and future realities.

Another barrier to technological adoption is cost. Canadians located in areas where high-speed broadband is available are faced with relatively high costs to access these services. A 2013 report from the Canadian Radio-television and Telecommunications Commission (CRTC) , they remain higher than prices in the United Kingdom, Australia, France, and Japan. For many lower-income Canadians, these prices are prohibitive. Budget 2014 renews the ‘Computers for Schools' program with $36 million over four years (p. 77). This is a welcome step, which recognizes that “a vibrant economy requires that students have access to the equipment they need to acquire the skills that will prepare them to fully participate in the digital economy” (p. 77). Unfortunately, the Computers for Schools program does not address the issue of what happens once students leave the classroom. As Mr. Goldberg has , “we should be looking at making PCs and computers part of our social safety net in Canada, re-targeting subsidies based on financial need, not based [solely] on geography”.

The technological infrastructure necessary for a Digital Economy Strategy should also enhance the human and social capacities required for leveraging digital technologies. Although a provincial responsibility, education will be key moving forward. Budget 2014 offers “more than $1.8 billion in new funding committed to the Canada Foundation for Innovation to support research infrastructure at universities, colleges, research hospitals and other not-for-profit research institutions across Canada” (p. 75). Part of this fund will go towards the country’s Granting Councils, which provide funding to researchers, scholars, and students in post-secondary institutions. For example, the Social Sciences and Humanities Research Council (SSHRC) has . These types of funding programs will allow scholars and graduate students to conduct necessary research for understanding and extending Canada’s place in the digital realm. (Disclosure: the author holds a Doctoral Fellowship with the SSHRC).

Intellectual Property

The ‘basic’ research carried out in public institutions, and funded by the public purse, should contribute to the public good. Intellectual property (IP) created in public institutions can be used to link this research and spur research & development (R&D). Budget 2014 proposes $3 million in funding (over three years) to fund an 'Open Data Institute' (p. 122). This Open Data Institute “will play a role in aggregating large datasets, informing the development of interoperability standards, and catalyzing the development and commercialization of new data-driven apps” (p. 123). This project will help provide opportunities to make creative applications out of valuable information and knowledge.

These goods and services are valuable in domestic and global contexts. As Nobel Laureate Joseph E. Stiglitz , “intellectual property regimes are a key component of innovation policy frameworks and the ongoing evolution of a globalized knowledge-based economy” (pp. 1696-1699). This globalized framework necessitates ensuring that Canada’s IP regime adheres to international standards while maintaining policy spaces for meeting domestic objectives.

In , (a senior partner at McCarthy Tétrault and an adjunct faculty member of IPOsgoode) points out where Budget 2014 proposes to align Canadian IP law with international treaties and trade agreements. In particular, the Budget “proposes to modernize Canada’s intellectual property framework by ratifying or acceding to the following widely recognized international treaties: the Madrid Protocol, the Singapore Treaty, the Nice Agreement, the Patent Law Treaty and the Hague Agreement” (p. 108). Coupled with the recent , Budget 2014 demonstrates that Government IP policy has largely been set.

Incentives

Intellectual property protections are but one way of incentivizing entrepreneurship, growth, and development. Historically, ��incentivizing innovation. In , and , from the Information Technology and Innovation Foundation in Washington, D.C., outline a number of other incentives that governments are using to encourage existing companies to become more innovative as well as to attract foreign investment, and to encourage foreign companies to operate within their jurisdictions (p. 171). These measures include stable R&D tax credits designed to spur creative activities and inventive research and development. For example, so-called 'patent boxes' allow income derived from the sale of patented products and technologies to be taxed at a lower rate than other income (p. 172). As well, preferential tax treatment can be given to ‘young’ or ‘start-up’ companies (p. 173) and governments can remove complex bureaucratic processes for starting new companies (p. 176), which may otherwise deter creative endeavours. So-called government red-tape is for companies attempting to work across a number of provinces. The Government of Canada should review tax policies with these objectives in mind while also ensuring that such reforms contribute to general, ‘middle class’ economic opportunities by maintaining social and political objectives.

Interface

A Canadian Digital Economy Strategy should recognize that the federal government cannot be the sole driver of the country’s digital future. Instead, a proper combination of infrastructure, IP, and incentives can empower Canadians to capitalize upon emerging opportunities. Interface and interaction between the provinces, municipalities, communities, industry, and academia are essential for this to occur. This type of helps bring theory into practice in order to capitalize on Canada's research strengths. ��A from the University of Toronto’s highlights how linkages between industry and universities help create ‘regional innovation systems’ or ‘clusters’, which contribute to regional economic growth through knowledge transfer (p. 5). These ‘clusters’ capitalize upon the intersecting interests and expertise of researchers, practitioners, and entrepreneurs to generate creative and innovative outcomes. Ryerson University’s , the , and the network are examples of this type of interface across sectors that often work in isolation. The federal should continue to be supported in order to promote cross-country linkages and opportunities.

The fact that it has taken some four years for the Government of Canada to craft a Digital Economy Strategy demonstrates the complexity of the task at hand. However, a close reading of Budget 2014 shows that the release of such a strategy might be drawing nearer. In order to capitalize on current conditions and emerging opportunities, an ‘iCanada’ strategy that address infrastructure, intellectual property, incentives, and interface issues will help position the country and Canadians to benefit and thrive in the coming years.

Joseph F. Turcotte is an IPilogue Editor, a PhD Candidate and SSHRC Doctoral Fellow in the Communication & Culture Program (Politics & Policy) at 91��ɫ, and a Nathanson Graduate Fellow at the Jack & Mae Nathanson Centre on Transnational Human Rights, Crime and Security at Osgoode Hall Law School.

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The Guide’s primary author is Canadian . In the Guide’s acknowledgments, Pantalony recognized the instrumental help of fellow Canadian art IP expert . Art and law commenters the new guide, but that it fails to address what museums can do when faced with copyright law shortcomings born from the in counterfeit art facilitated by new technologies. The Guide openly states that it “does not argue for strong or weak IP protection” but rather focuses on how museums can manage IP while balancing their societal mandates to be centres of learning and intellectual curiosity.

Analysis: Guide Review

This 90-page document is a must read for anyone in the museum, art or cultural industries. It’s an accessible, straightforward read. Given the variability in copyright and intellectual property between countries, it acts to whet the appetite of anyone looking for a general guide to the issues of art and culture preservation within a legal context.

Moreover, the document flows brilliantly. The author takes the reader through introductory definition chapters; for example, how copyright and trade-marks are defined in a museum context. The author then goes into heavier issues such as best practices for a museum IP audit. It also covers digital rights management solutions and notes on social media and museums. It includes case studies of successful museum IP management models around the world. Finally, it lists out important commercial considerations such as distribution, licensing and co-branding with non-museum entities.

In regards to the Guide’s attempt to take a neutral position vis-à-vis the laws themselves, there is certainly no such thing as neutrality, especially when it comes to museum art and ownership. One need look no further than the or the to know that even where the law is clear, politics pervades. Additionally, WIPO in its entirety has for its western cultural and legal bias.

Another controversial issues is that assertive museum IP policies – aptly described in Canadian Heritage Information Network’s (CHIN’s) as the demise of the “” – can have a on museums as educative experiences for consumers.��Growing focus on IP laws by museums increases the tension between museums and the consumers of the content; copyright versus education is one of the most common debates in intellectual property law. One of the most obvious examples of this, one that touches all of us, is the way museums choose to restrict visitor photography. Some museums believe that photos violate intellectual property, while some and ��are advocating for more open photo policies.

Even with these tectonic issues underlying museum IP and WIPO, the Guide does do a fairly good job of being fair. It attempts to stand back from the fray and be as politically agnostic in its recommendations as possible. And it succeeds.

On a final personal note, it’s nice to see the Canadian authors and those that influenced the document comfortably promote our domestic museum management practices on the world stage. CHIN's Community Memories initiative for smaller Canadian museums and community centre archives is profiled. The Guide also outlines CHIN’s North America-wide studies of museum IP and management practices. And finally, the Guide profiles the Department of Heritage’s launch of the , an online museum of internet-based exhibitions.

So even amidst mild criticisms of the Guide’s neutrality in regards to the current IP laws, it’s hard not to be proud of this document, its authors, and the progressive work that Canada has done to support museums and their IP management.

Denise Brunsdon is an IPilogue Editor, JD/MBA Candidate at Western University, and researcher for GRAND (Graphics, Research and New Media) Centre.

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A recent filed by Myriad Genetics involving the alleged infringement of their controversial breast cancer screening tool has included the prestigious Toronto SickKids hospital as a co-plaintiff. This lawsuit has been a source of criticism for the hospital and has reinvigorated the debate on the merits of public-private research collaborations in health care innovation.

Aftermath of SCOTUS Ruling - Myriad Genetics Sues Archrival

This , the US Supreme Court rendered a landmark , ruling out the patentability of some genetic sequences in patents developed by Myriad Genetics for their breast cancer screening tests. (You can view some of the IPilogue’s extensive coverage of the international litigation around this issue , and .) The results of this decision and the invalidation of the Myriad patents were seen by many as a development that of breast cancer screening methods due to the possibility of cheap alternatives being produced without being hindered by patent licensing. A sound prediction, as , companies started releasing breast cancer screening tools at a lower cost than the Myriad products. A few weeks after the ruling, however, Myriad in the Utah District Court against Ambry Genetics, claiming that the company owned or licensed to Myriad that had not been a part of the US Supreme Court case. In response to the lawsuit, Ambry has recently Myriad for antitrust violations.

This case is interesting from a Canadian point of view since some of the patents at issue involve ownership agreements between Myriad and various public health organizations, . In the , it is stated that the public health organizations will lose "significant amounts of revenue" from lost royalties, and that the revenue stream from their ownership to date has brought in around $57 million. Although listing SickKids as a plaintiff in the lawsuit due to their ownership agreement, the story has nevertheless garnered . This lawsuit has been seen by some as an attack on affordable breast cancer screening for patients, with SickKids seemingly in a position that is opposite its role as a health care provider. Patent arrangements like the one between SickKids and Myriad can be seen as paradoxical; preventing patients from being able to access the medical discoveries that have been made possible by .

Public-Private Research Collaboration: A Complex Issue

Discussions arising from situations such as this ultimately stem from the relationship between public institutions and profit-seeking entities in health research collaboration. Analyses of the merits of such collaboration has reached conclusions in different fields and , but a recent seemed to suggest a statistically significant increase in pharmaceutical industry innovation from publically-funded scientific research.

Critics of these joint research ventures frequently cite the through a “tragedy of the anticommons” effect, where other research entities choose not to enter a field of innovation due to the fear of their production ultimately getting blocked by existing patents. Luigi Palombi, an Australian lawyer that has written a book about the Myriad breast cancer screening saga, criticized the SickKids incident and that “[i]t is our outrageous for any publicly funded research institution to be put in this situation” and that “[o]nce you have publicly funded institutions getting into bed with these guys, well then that raises a whole series of other questions and issues”. Other commentators, such as McGill University law professor Richard Gold, that "[t]here's always been a relationship obviously between industry and hospitals and universities. And it's not all bad because, of course, universities do basic research." Professor Gold also went on to state that he hopes public institutions “will be wiser in the way they set up their agreements in order to have a choice to whether to be involved in ligation". Although the majority of commentators seem to agree that SickKids is currently occupying an unfavourable position from its public involvement in the lawsuit, the debate on the merits of these joint health-care research ventures is certainly an unresolved issue.

The Future of Public-Private Health Research Collaboration in Canada

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Welcoming Remarks by Conference Chair Guiseppina D'Agostino & Keynote by Sylvain Laporte

Session One: The Student Researcher Perspective

Session Two: The Academic and University Perspective

Luncheon Keynote by Bill Mantel

Session Three: Applications in the Industry

Concluding Remarks by Dr. Janusz Kozinski

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To achieve this end, Abrams & Wagner looked to Canada’s shift from a “first-to-invent” (FTI) to “�ھ�������-�ٴ�-�ھ�����” (FTF) system for claiming priority. The study finds that the shift to FTF resulted in a reduction in the number of patents granted to individual Canadian inventors and small businesses and warns American law makers of similar consequences could result from the implementation of s3 of the AIA.

From First-To-Invent to First-To-File
Currently (and until March 16, 2013) the US follows an FTI-priority rule. ��This means that in a dispute between two applicants for a patent of the same invention, the party which had the inventive idea first is entitled to the patent.�� This is typically established by using lab notebooks, emails and other documentation that may have recorded the date of invention.�� Conversely, a system based on FTF-priority rules relies on the date when��a patent application was filed with the Patent Office for the determination of priority.

The Resulting Issues
This change is not without controversy (). argue that a shift away from FTI-priority rules reduces the inventive process to a “race to the patent office” --a race that ultimately favors large corporations over individual inventors given that large firms have the financial capacity to keep expensive legal teams on call. ��have argued that the AIA’s streamlining of the priority�� determination process is actually better for small businesses since it reduces overall legal costs in the event of a dispute (click ��to read about a constitutional challenge to the AIA). Still others have raised relevant concerns pertaining to protection of the ��and .

Contribution of the Abrams & Wagner Study
Abrams & Wagner lend an empirical perspective to this debate by considering a that occurred in Canada on .�� This study finds that: (1) the overall rate of patent applications experienced a sudden drop after the law change (from an average of 1700 applications/month to 1000 applications/month), (2) patents awarded to individual inventors dropped by 15% after the legislative change, and (3) there was no apparent change in the quality of the patents granted after the law change – but is not conclusive as to the cause of these phenomena.

Caveats of the Abrams & Wagner Study and Areas for Further Research
The authors submit that contemporaneous legal changes to the patent laws may have also affected the sudden drop in applications in 1989.�� These include: changing patent term from 17 to 20 years, the introduction of maintenance fees, and the introduction of deferred examination.

Additionally, socio-economic causes may have contributed to a reduction in the number of patent applications submitted by individual inventors.�� These include: fewer resources available to inventors, less invention by individuals, demoralization in the light of the legal changes and an increase in the number of individual
inventors that joined firms.�� Further academic research into these possible causes should be conducted to test the conclusion reached by Abrams and Wagner.

Regarding conclusion (3), Dr. Ron Bouchard wrote on this blog, describing a new way of incrementally grading the value, not only for patents in the life sciences and other technology-intensive sectors, but also for associated regulatory approvals, chemical components, patent characteristics (the “innovative index”).�� It would be interesting to see if the methodology developed by Dr. Bouchard could be used to expand upon the picture created by the Abrams & Wagner study.�� (For other IPilogue entries pertaining to patent valuation click ��and .)

Takeaway for Canadians
As alike watch our largest tech giant through , , and – the Abrams & Wagner study may raise some appropriate questions in this time of self-reflection.�� Does the Canadian patent system stifle true grassroots innovation in our tech sector? ��If so, is there room for reform?�� If not, what are the consequences of the American harmonization with��the rest of the world's��FTF priority laws?�� Could we be seeing��the levelling of a procedural playing field? Could we start to see a reduction in the traditional Canadian-to-US brain drain?

“Poisoning the Next Apple? How the America Invents Act Harms Inventors” can be viewed ��and is scheduled for publication in the current volume of the .

Beatrice Sze is a JD Candidate at Osgoode Hall Law School.

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On December 6 2011, the European Commission a to review the current regulatory regime surrounding “EU antitrust rules for the assessment of technology transfer agreements” for “patents, know-how and software licensing”. The aim of the public consultation is to gather information from relevant stakeholders (citizens, consumer interest groups, public authorities and the business community), in an effort to review and possibly reform competition and licensing rules in a way that would “strengthen the incentives for research and innovation, [and] facilitate the diffusion of intellectual property and stimulate competition”.

are meant to facilitate and increase innovation, growth and competition. However, these agreements may, in certain circumstances, also have the undesirable effect of restricting competition. of the Treaty on the Functioning of the European Union is a general rule enacted to prohibit the possible restriction of competition between companies, and also applies to the restriction of competition where licensing agreements are concerned. There are two additional instruments which are used to prohibit the restriction of competition specifically designed for technology transfer agreements: the (TTBER) and the (Guidelines).

The TTBER grants a safe harbor for technology transfer agreements (in cases where agreements appear to be "non problematic") from Article 101, while the Guidelines provide instruction for the implementation of the TTBER, as well as on transfer agreements that do not qualify for the safe harbor. The consultation was prompted by the imminent expiry of the above instruments, which were originally enacted in May 2004.

The consultation was launched after the release of a study commissioned by the European Commission, Directorate General for Competition, conducted by and , titled “”.

The purpose of the study was to examine selective aspects of the “interface between competition law and patent law” by undertaking a review of recent economic analysis and literature on the Technology Transfer Guidelines. The authors caution that the study is not meant to be read as a ‘policy document’, rather, it is intended to act as a future guide for policy evaluation based on ‘economic foundations’.

The body of the study is divided into two general sections. The first section includes an analysis of the effects of intellectual property contracting on competition – specifically as it relates to patent thickets, cross-licensing, grant-backs, and pass-through agreements. The second section illustrates an overview of the impact of current merger policies, specifically in the context of licensing arrangements.

Overall, the 142-page study reveals many interesting insights and concludes with 16 recommendations that highlight issues for further consideration and analysis in future policy discussions on competition law and technology transfers. These recommendations reveal that there are an abundance of deficiencies - including the lack of empirical evidence and theoretical literature in many areas of the study - consequently rendering the depth of the study short of what the authors originally intended it to encompass.

For example, although ‘pass-through’ agreements - which are defined in the report as an instance where the "license of technology to a manufacturer also guarantees that clients using the manufacturer’s output in their own products are protected from infringement claims by the licensor upstream” - are an important aspect of licensing, the lack of case law concerning these agreements causes much uncertainty as to the direction reform should take in this area (Régibeau & Rockett, 101).

The authors also warned against the push towards reducing the safeguards guaranteed by competition law in cross-licensing and patent pool agreements. They argue that even in sectors with a higher incidence of patent thickets, the evidence should demonstrate “that there are actual thickets that would be cleared by the agreement” and justification should be sought as to whether or not clearing thickets is even beneficial to competition (Régibeau & Rockett, 96).

Based on the recommendations made in the study, it is evident that the Directorate General for Competition has a large task ahead. The study and ensuing public consultations are only preliminary steps necessary for a competent and accurate review, one which may inevitably affect the future of technology transfer agreements within the European Union.

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In , we learned that it is both possible and valuable to import empirical scientific methods typically used in the hard sciences to the study of law. In fact, in our analysis of patent law and policy we can move beyond patent valuation to assess how and indeed whether a given piece of law or policy is working in conjunction with its so-called . This includes the assessment of innovation within the context of the patent bargain and whether governments that have accepted pharmaceutical linkage laws are being rewarded in their twin policy goals of producing more new and innovative drugs and facilitating timely generic entry. Using the new tools of empirical legal research, we hope to assess whether, as put it at the time the U.S. legislation came into force, the public is in fact “receiving the best of both worlds - cheaper drugs today and better drugs tomorrow.”

We can address this possibility using the innovation index discussed in Part 1 in combination with 3-D spatiotemporal models such as those used in the medical sciences. Over the last few decades, these models have been used increasingly for studying protein, DNA, RNA, and other structure-function relationships, including using x-ray and other crystallography techniques. Consistent with their use in medicine, 3-D legal models can be used to construct data for both descriptive (structural) and prescriptive (functional) law-making and law-reform purposes.

For example, in our study, we developed a 2-D model of identifying patents in relation to “new and innovative” drugs and “follow-on” drugs that tracked the functional and temporal evolution of drug forms and associated patents over time. The example below is for the combination of Salmeterol and Fluticasone into one of several available forms of Advair®. We referred to this technique as a “patent tree” method and used it specifically to identify legally-related drug forms, associated patents, and patent types.

Fig. 1. Example of Convergent Patent Tree Analysis for Fourth Generation Product Advair Diskus.®
Patents were identified using the specific and general search strings described in our Berkeley study. In addition to quantifying patents per drug, the patent tree method allows assessment of how specific drugs evolve into related drug forms or (in this case) drug products representing combinations of known drugs. In addition, the patent tree analysis allows for identification of relevant patent types based on the classification nomenclature described in the Northwestern study. Finally, the patent tree analysis provides data relating to drug development, but also on the type of patents selected by pharmaceutical companies for listing on the patent register in order to prevent generic entry.

This method can be extended, as shown below, to identify “product clusters.” The patent tree method was expanded to include patents listed on the patent register under linkage law and a diagonally increasing axis of cumulative spatiotemporal growth. The model represents a constellation of legally and functionally related new and follow-on drug forms and regulatory approvals, patents associated with these drug forms, the fraction of total patents listed on the patent register in order to slow down generic entry under linkage laws, and how each of the data classes relate to one another over time.

Fig. 2. Product Cluster-Based Model of Drug Development. Product clusters begin at some point in time with the first new and innovative drug (big orange circle; NCE) and associated originating patent (small purple circle). With time, and vetting by the market and regulators, further follow-on drug approvals (big blue circle) and patents (small green circle) are granted within the cluster, and an increasing number of these patents are listed on the patent register (small red circle). Listed patents can be used increasingly over time to prohibit generic entry not only on the originating new and innovative drug, but also on all drugs in the cluster that are deemed under law to be relevant to the originating drug.

We are now in a position to take our 2-D product cluster model above, first reported in , and combine it with the innovation index depicted in of this series, reproduced below for convenience. The result is the spatiotemporal product cluster model shown below in Fig. 4.

Fig. 3. Innovation Index Data for Total Approval Cohort. Bar graphs showing the number of total approvals expressed as a function of the level of innovation (LOI) before (a) and after (b) of generic approval data. (c) shows brand approvals expressed as a function of LOI. Solid line is a fit of the data to a single exponential function. (d) shows cumulative normalized brand approvals expressed as a function of LOI. Solid line is fit using a sigmoidal function.

The combination of the drug nomenclature, product cluster and innovation index described in Fig. 4 yields a potentially new way of looking at the impact of regulatory and market incentives on drug development by multinational firms. As shown by the data in the study, this clearly includes both brand-name firms and generic firms, as both are pursuing cluster-based models of drug development. The resulting analytical model focuses on drug development driven by purposeful policy, and cumulative vetting of serial products by regulators and the market.

Fig. 4. Combining Innovation Index and Product Cluster Models to Study Portfolio-Based Drug Development and Hedging. Product clusters are hypothesized to begin life at the most innovative end of the spectrum, with few patents and a small or negligible number of listed patents. Over time, and with increased vetting by regulators and the market, the cluster expands to include more products, patents and listed patents but, as a whole, becomes less and less innovative. The desired end point (the “home run”) is a substantial but low-level cluster with numerous products, patents and listed patents, and the widest scope of market exclusivity and cumulative patent protection. Prior to this point, clusters are “at bat”, as they reach a critical state prior to moving into an expanded spatiotemporal state or merely “on deck” as firms await critical regulator and market vetting.

Described in detail in a forthcoming , which summarizes our research over the last four years, drug clusters denoted ‘on deck’, ‘at bat’, and ‘home run’ represent a theoretical mock-up of how drug clusters grow in time from a spatiotemporal perspective. In this model, product-patent clusters begin their life as single-drug products or small groupings at the most innovative end of the index and, with increased vetting of products in the cluster over time by regulators, the market grows in scope to encompass an increasing number of products and patents. As this occurs, the cluster may be anticipated to ‘swing up and to the left’ of the innovation index, moving from a high level of innovation with a low number of patents and listed patents to first a moderate and then a much lower level of innovation but with greater spatiotemporal characteristics. The model shown here is for 2,087 drug approvals over an eight-year study period; similar results have been obtained using patents and chemical components.

An important observation with regard to product-patent drug clusters is that as a given cluster grows spatiotemporally over time, it grows not only in scope but also in the scale of the interrelatedness of its functional components over time.

As noted in 2001 by and later by and, notably, the , the strength of patent portfolios and related product clusters from an intellectual property law perspective is “greater than the sum of its parts”. An easily identified example of the value-added dimension of clusters is the strong profitability for follow-on Me Too drugs that nevertheless have low levels of innovation. This “more is different” element of product clusters, originally described in 1972 by , is characteristic of complex systems, including complex legal systems such as those described by JB Ruhl and many others in the mid-1990s. As noted in , we have referred to the complex multidirectional interrelationships and interdependencies between drug development, drug regulation and intellectual property law in our previous and studies as a regulated Therapeutic Product Lifecycle or rTPL.

Of interest, our data show that the profit of a given molecule is strongly related to the number of patents, regulatory approvals, the number of patents listed on the register, and the range of drugs and regulatory approvals that are legally related but separated by only very minimal changes to existing uses and chemistry. This is true even for drugs thought be innovative such as those with First in Class and New Active Substance (New Chemical Entities), owing to regulatory loopholes.

At least somewhat surprisingly, in light of global innovation policy over the last 50 years, the greater the number and scope of these metrics, the lower is the calculated level of innovation of a basket of drugs in a product cluster. As market and regulator vetting increases with time, one sees generally (1) more patents, regulatory approvals, fractional patent listing, patent classifications per marketed drug, (2) a greater follow-on-to-new drug ratio in the cohorts studied, and (3) greater profitability for less innovative drugs.

Indeed, drug clusters driven by line extension, or follow-on, drugs are proving to be very profitable. For example, we found that the vast majority of approval, patenting and chemical development activity associated with brand pharmaceutical products is directed to the development of Me Too drugs, in particular follow-on Me Too drugs. Of the top 25 most profitable drugs in 2006, 48% (12) were line extension Me Too drugs. The combined sales of these drugs were US $45.7 billion dollars. Follow-on First in Class drugs represented 28% of the top 25 selling drugs, and 7 of the top 15 selling drugs. Profit on this group of drugs was US $39.7 billion dollars in 2006. Combined, follow-on Me Too and First in Class drugs accounted for 19 of 25 of the most profitable drugs, with total sales of US $85.5 billion in a single year.

From a science of law perspective, a major advantage of the rTPL and product cluster models is that there is, in fact, considerable empirical evidence available for study. This includes the various types of new and follow-on drugs, patents, patent classifications, listed patents, related litigation, as well as the relation of these metrics to one another over time. This wide array of empirically observable metrics and the observation that they change over time sets up the possibility that, akin to protein folding and X-ray crystallography models, the data can be expressed in 3-D spatiotemporal form.

Indeed, the goal of our empirical work over the last four years involving new and follow-on drugs, patent trees, patent types, WHO Anatomical Therapeutic Classification (ATC) data, litigation data, the innovation index, and product cluster model is to convert the cumulative data into 3-D formats used in the medical sciences. For example, the protein-RNA model presented below underscores the utility of 3‑D “rotational” models to both identify and quantify the complex structural and functional characteristics in a given network of biological components, here those between an RNA strand and protein components in the context of Multiple Sclerosis.

Fig. 5. Medical Sciences Template for Rotational 3-D Spatiotemporal Models of Cluster-Based Drug Development. From: .

As discussed , rotational 3-D drug product-drug patent cluster models would be particularly useful to policy-makers and law-makers in order to enable visual and numerical quantification of the impact of intellectual property law on drug development, generic entry, and access to essential medications in the same manner that one might look at a car from behind (highlighting the ‘gas tank,’ or original drug product and associated patent tandems) as well as from the side (from the rear to the front of the vehicle, underscoring how and when approvals, patents, and listed patents increase over time with market and regulator vetting).

In this manner, extrapolating the empirical techniques conventionally used in the hard sciences to the study of law, including patent law and innovation policy, offers an important opportunity to not only quantify the effect of a given piece of law or policy, but also to help determine the vires of such laws after they have been put in motion and to guide law reform efforts in light of objective arm’s length evidence.

It is hoped this series of articles has shed some light on the utility of traditional scientific methods for quantitative and qualitative assessment of patent value, and on whether laws made decades ago to enhance innovation in the pharmaceutical sector and to facilitate timely generic entry are producing intended effects, unintended effects, or some combination of both.

In any event, it will be interesting to see whether, as in other fields such as medicine and engineering that are accustomed to taking an “evidence-based” approach to problem identification and problem solving, we in the legal field may also include empirical evidence in our expanding toolkit of legal assessment and interpretation methods.

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In the , the flood of computationally predicted genes has introduced a new challenge for the patent system: How much does a gene patent have to disclose to satisfy the “useful” requirement for patentability? In Human Genome Sciences Inc v Eli Lilly & Co, , the United Kingdom Supreme Court (UKSC) unanimously held that a patent for a gene sequence, without having done any concrete functional experiments, is a valid patent. The decision has significant implications on the scope of disclosure for gene patents and gives rise to far-reaching consequences in the scientific and biotechnology industry.

Background and Facts

Based on bioinformatics, scientists at the Human Genome Sciences (“HGS”) discovered a novel gene called Neutrokine-α and predicted it to be a member of the TNF ligand superfamily. The patent, which was granted by the European Patent Office (EPO) in 2005, claims the nucleotide of Neutrokine-α, the amino acid sequence and its antibodies, which might be useful for the diagnosis or treatment of an extraordinarily large range of immune disorders. However, there is no experimental data to support these suggestions.

Eli Lilly opposed the patent, arguing that the patent did not disclose a practical way of exploiting the gene. , Eli Lilly has already spent $50 million on the development of an antibody to Neutrokine-α and plan on spending another $250 million in clinical trials.

Judicial History

The Opposition Division of the EPO revoked the patent on the basis that the invention did not have a known function. The Technical Board of Appeal held that the patent was valid because a person skilled in the art would have appreciated the general knowledge of the TNF ligand superfamily.

Eli Lilly brought parallel proceedings in the UK Patents Court for revocation of the patent. At the Mr. Justice Kitchin stated that the specification “contains extravagant and sometimes contradictory claims” and struck down the patent. The also invalidated the patent, asserting that “however clever and inventive you may have been in discovering a gene sequence, you cannot have a patent for it or for the protein for which it encodes if you do not disclose how it can be used.”

Issue on Appeal

The primary issue is whether the requirement of industrial applicability in Articles 52 and 57 of the (“EPC”) extends to a patent for biological material. To satisfy the requirement of industrial applicability, the invention must be made or used in an industry.

UK Supreme Court Decision

The UKSC unanimously held that the patent satisfied the requirement of industrial application. Lord Neuberger, penning the leading decision, based his reasons on the policy argument advanced by the BioIndustry Association (BIA) and a desire to be consistent with the EPO jurisprudence.

The BIA, which is an association representing the bioscience sector with an aggregate turnover of £5.5 billion in 2010, intervened as a neutral party. It submitted that following the Court of Appeal decision will “make it appreciably harder” to satisfy the patentability requirement in the future, and will cause the “UK bioscience companies great difficulty in attracting investment at an early stage in the research and development process.”

Even though Lord Neuberger recognized that “it would be undesirable to have a monopoly over a particular biological molecular too early, because it risks closing down competition”, His Lordship ultimately agreed with BIA’s submission and said that “it would be wrong to set the hurdle for patentability too high.”

Next, Lord Neuberger made an effort to align UK patent law “so far as possible” with the EPO jurisprudence. Even though the UK Court of Appeal held, and Eli Lilly argued, that the Board’s decisions should carry less weight because the proceedings were unopposed and without cross-examination, Lord Neuberger rejected the argument and stated that the Board has applied its principle consistently. After reviewing the Board’s approach to Article 57 in relation to biological material, Lord Neuberger stated, among other things, that a “plausible” or “reasonably credible” claimed use, or an “educated guess” on biological function can suffice even without any experimental or wet lab evidence. Since the newly discovered gene belongs to the well-known TNF ligand superfamily, where its members share many common features, finding this new member will have great value and the “educated guess” made in the patent application is plausible. Therefore, the gene patent is held to be valid.

Comments

Whole genome sequencing projects have inundated the bioinformatics world with a vast amount of data. It is expected that the rate of gene discovery will continue to accelerate; yet these newly discovered genes would not be very useful until further functional or therapeutic research is performed. However, allowing a monopoly on gene sequence will reserve this unexplored territory for the patentee, thereby hindering research in the community. The anti-competitive effect may also undermine the quality of experimental data. Without good biomedical research, human health may suffer.

Further, the patent gives the patentee over others who have been actively investigating in the field. For instance, researchers who have worked on the TNF ligand superfamily for years may now have to pay a licensing fee for including the patented gene in a routine experiment. Rather than promoting innovation, this unfair arrangement may become an impediment to scientific progress.

A policy goal of the patent system is to encourage others to perform fair research and make improvements on the patented invention during the monopoly period. However, given the broad patent claims in a gene patent, the line between fair research and patent infringement is blurred. For example, if others discover a genetic variant of the patented gene, it is unclear whether the finding is a patent infringement or not. Such uncertainty in law will inevitably lead to an increased number of patent infringement litigations in the future.

Given that bioinformatics is becoming an increasingly popular method to draw predictions on the function of a gene, and that this is a UKSC decision that many will follow, the trend of gene patenting based on computational predictions will probably continue. Therefore, it is imperative to devise a solution to preserve the quality of granted patents and to prevent clogging up the patent office with unmerited applications.

One possible solution is to set a high threshold of reliability for computationally derived data and grant patents only to those with sufficient accuracy. If computational methods become highly accurate and predicted the function of the gene with 99% accuracy, such gene patents should be allowed. On the other hand, if the prediction has 50% accuracy, then the gene should not deserve patent protection. Setting a clear benchmark will prevent patent applicants from wasting effort to file for patent protection. Until such highly accurate bioinformatics methods become available, a higher standard of disclosure should be required for computationally derived gene patents.

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