Building a Better Innovation System: Combining Facially Neutral Patent Standards with Regulation of End Product Therapeutics

Arti K. Rai, Duke University School of Law

8/08/2008
(Original Publish Date: 7/15/2008)

Prompted by persistent complaints, particularly from the information and communication technology (ICT) industries, about the dangers allegedly posed by strong patents of poor quality, both the legislative and judicial branches have recently made attempts at patent reform. At least for the moment, legislative reform has been thwarted, largely by opposition from the biopharmaceutical industry. Judicial efforts at reform have been more successful. As with legislative efforts, however, the biopharmaceutical industry has been quite opposed to judicial reform. The apparently disparate needs of different industries have led some commentators to suggest that patent reform may need to be "industry specific" - perhaps treating the biopharmaceutical industry differently from other industries. This Essay argues that such suggestions are premature. Even when patent reform does not treat industries differently (as the recent Supreme Court cases do not), disparate impact on different types of innovation is likely to be the norm. More generally, patent reform that is industry-specific is undesirable for at least three reasons. First, the standards-based approach of traditional patent jurisprudence automatically takes into account the disparate technical challenges associated with information creation and development for different innovators. Second, to the extent that the outlier set of innovations appears to be end product therapeutics, such end product therapeutics are already embedded in a web of highly "innovation specific" regulatory and market structures that do much of the heavy lifting in terms of setting up barriers to entry and influencing price. Finally, 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 could be implemented.