LawTech Talk, Oct. 2, 2007 Patents and Innovations in China’s Biotech/Pharmaceutical Industries Background and Questions
Outlines of National M&L Term S&T Development
“innovation-oriented country” and “top 5 in annual
Is there a strong correlation between patent and
innovation? (More patents = more innovations?)
Is a strong patent system beneficial to China’s
innovation, and to the society as a whole?
Is China’s patent regime appropriate for
Utilitarian Æ spur innovation (John Wiley, 1991)
Disagreement on whether, or how well, this purpose
Prospect theory: based on “tragedy of the commons”
Competitive Innovation (Ken Arrow, 1962) Cumulative innovation (Merges and Nelson, 1990) The “tragedy of anticommons (Michael Heller, 1998) Industry-specific theory (Burk and Lemley, 2003)
Case study on patent-innovation in China’s biotech/pharma industries
China’s innovation strength and strategies in
Patent filings and grants in these industries
The problems in current patent law and the
pending amendments relating to biotech and pharmaceutical industries
The role of patent in innovation: reflections
HGP: completed in 2003 Bio-medical:
Decoded genes for HBV, SARS, etc. Gene mutation chart for Chinese man’s No. 21 chromosome.
Plant: Bt rice and cotton, silkworm gene mapping, pest and disease
Stem cell: superior technique Pharmaceutical:
Biomedicines: EPO, G-CSF, Human Insulin Humilin, TPA,
Epidermal growth factor, PCR enzymes, etc; and gene therapy drugs: e.g., Endostar, H101, Gendicine (P53)
Vaccine: AIDS, SARS, Hapatitis A and B TCM: qinghao Su, TangHerb, fufang dansen diwanInnovation Models (or strategies)
97-99% imitation rate Intense competition and legal risk
“me too” and “me better”, e.g., Endostar, H101 Advantages Difficulties: to get around patents
“tough but unrewarding business” Only one (qing hao) but not patented Short fund, low tech. & lack high quality drug
Problems and Causes
Fairly strong in up-stream basic research, weak in
down-stream R&D and commercialization.
Broken chain of commercialization between: gov’t
research institutes Æ universities Æ biotech firms Æpharma firms Æ healthcare system Æ market.
Lack of expertise and good models in tech. transfer
More Patents = More Innovations?
20% annual growth in patent filings and grants:
Gene: domestic increase (>60%), mostly for sequencing
Pharma: steady , but mostly foreigners (80%) for
TCM: mostly Chinese (96%); mostly for mixtures
Are the Innovations Promoted by Patent?
But how about gov’t funded projects?
Probably not in the beginning Funding not sufficient or appropriate Fund mostly upstream basic research Patents not owned by the research institutes
Is China’s Patent Regime Appropriate for Innovation?
Some subject matter not covered, e.g., transgenic
animals and plants, human ESCs, methods of treatment and diagnosis of diseases, etc.
Inconsistency between law and practice, eg the
above subject matter are excluded by law, but granted patents in practice through “back door” –process patent.
Incompatibility between patent standards and the
characteristics of patentable subject matter, eg TCM
Proposed amendments: Implications for Innovations
“building an Innovation-oriented country” More clear ownership of patent rights:
Joint patent holders state funded-projects
No big breakthrough in patentable subject matter:
Diagnosis and treatment of diseases Biodiversity and genetic resources
Invention completed in China, but first patent in
other countries: no Chinese patent can be granted. Anticommons and Public Health
Measures useful to prevent the tragedy of
Compulsory licensing Exemption for market approval Parallel import Prior art defence and malicious litigation Willful silence over infringing act Anti-competition
Is there a “tragedy of anticommons” in China? Is there a public health crisis in China? If so, what caused? Will the re-balance be beneficial to China’s innovation?
To some extent, yes. But more not always mean better
Stronger patent Æ stronger innovation?
To some extent, yes. Particularly for biotech/pharma. industries
But needs to balance various interests.
Both the level of innovation and the level of patent protection
in China is still fairly low: much room for improvement
“prospect theory” and “anticommons” theory may work well in
Suggestions: give patent protection to transgenic plants and
“A gene is a kind of wealth. If China does not
get its own gene patents, then in the next century its biotech industry – and in particular its pharmaceutical industry – will be like ‘the Admiral of the Northern Fleet who saw all his ships capsize and sink beneath the waves.’”(Tan Jiazhen)
Patents for TCM in 4 categories in 1999, 2000 and 2003
Year / Mixture / Active agents / Equipments / Processes
Increase in Pharmaceutical patents
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