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Time for change in patent protection

Research and Development is not just an integral part of the world economy, it is crucial to the prosperity and indeed survival of humankind. In the UK, R&D expenditure in 2005 was estimated at £21.8 billion or 1.76% of GDP (compared to 2.51% in Germany, 2.86% in the USA, 3.18% in Japan). (1) Compare this to £19.4 billion spent on advertising in the UK in 2007 (2). I have a proposal on how to transform this landscape. It is a radical yet relatively simple and inexpensive step that will help to bring the world economy out of the recession in which we find ourselves.

Copyright protection has crept up from an initial term of 28 years in 1710 (Statute of Anne) to 75 years after the death of the creator (or 120 years in the case of corporate authorship) in 1998. (3) The term for patent protection on the other hand has essentially remained the same since John of Utynam was awarded protection for a period of 20 years in 1449 for his glass-making process. (4) It is time that patent protection was extended, possibly doubled to 40 years, and this is why.

Research costs have increased exponentially and together with registration and legal costs mean that industry follows a strategy of investing in advertising and marketing rather than in research and development. It is widely understood, for example, that the pharmaceutical industry spends twice as much on marketing than on R&D (5). Once a patent is filed, the patent holder has 20 years to recoup any investment and make any profit. That investment includes not only the costs of bringing that particular product to market, but also the cost for all the other products that never made it to market for whatever reason. On top of that are the registration costs and legal costs for defending your patent (which will be constantly under attack if the product is at all successful). Normally a product will not make any money at all for the first 10 years or so, which leaves an enormous amount to recoup in the final 10 years. This has two important effects.
1. The cost of the product has to be well above the cost of production (which is why patent medicines are so expensive), and
2. Industry can only afford to carry out research and development into potential “blockbusters”, i.e. products that will capture a significant share of the market and can result in enormous sales revenue.
A secondary effect is that large industry has embarked on a wait-and-see acquisition strategy, whereby the research and development costs are covered by universities and start-up companies and larger companies buy-up only those ventures that demonstrate promise in the market place.

What would the likely effect be of doubling the period for which an invention is protected? Inventors would have a longer period to recover their investment and investment in R&D would become more attractive. Higher investment in R&D will result in increased innovation, further breakthroughs and more efficient production. This in turn will result in higher GDP and tax revenue and all the associated benefits. It would also be easier for governments to insist (possibly through legislation) on lower prices for essential medicines.

What are the down sides? First, those profiting from making generic products would have to wait an additional 20 years before being able to join the market and this will almost certainly result in higher prices for customers. Ultimately, however, price is driven by what the market can afford and this applies to both patented and generic products. At present after expiry of a patent, generic products compete with the original patented product as well as other generic products for a share of the market and this requires investment in costly advertising and marketing campaigns. It is clear that we need to move the emphasis away from investment in advertising and marketing and towards research and development. There will also be greater opportunity for counterfeiters, but this is a problem that we already need to deal with and cannot be a reason for limiting patent protection.

There are many problems faced by the world today, mostly from overpopulation and a drain on limited resources, but solutions to these problems will certainly benefit from increased funding into R&D. No doubt new problems will arise as we solve old ones, but we can and should do everything we can to make the world a safer, happier and more comfortable place for all.

References:

1) Allen, T., Eurostat Press Office. (2007) Research & Development in the EU: preliminary results. [online] Available at: http://epp.eurostat.ec.europa.eu/pls/portal/docs/PAGE/PGP_PRD_CAT_PREREL/PGE_CAT_PREREL_YEAR_2007/PGE_CAT_PREREL_YEAR_2007_MONTH_01/9-12012007-EN-AP2.PDF [Accessed 25 March 2009].
2) Advertising Association (AA). (2008) The Advertising Statistics Yearbook 2008. [online] Available at: http://www.adassoc.org.uk/Ad_stats_yearbook_2008_-_8june08.pdf [Accessed 25 March 2009].
3) Wikipedia. (2009) History of copyright law. [online] Available at: http://en.wikipedia.org/wiki/History_of_copyright_law [Accessed 25 March 2009].
4) Thomsonreuters. (2009) The history of patents. [online] Available at: http://science.thomsonreuters.com/support/patents/patinf/patentfaqs/history/ [Accessed 25 March 2009].
5) Gagnon, M.A. and Lexchin, J. (2008) The cost of pushing pills: A new estimate of pharmaceutical promotion expenditures in the United States. PLoS Med 5(1): e1. [online] Available at: http://medicine.plosjournals.org/perlserv/?request=get-document&doi=10.1371/journal.pmed.0050001 [Accessed 25 March 2009].

Do you remember these three?

Technologies to change our world

One of the things that I enjoy doing is guessing what technical advances will change the way we live in the future. I am fascinated by change and always find it quite remarkable how rapidly a change is accepted, especially by an unsuspecting society. I am not into predictions and I don't claim to have insight that others do not have, but I do try to keep up to date and I have read a bit about scientific progress. So here goes, these are my top ten "predictions" for the next 50 years. These technologies are all already with us. They have all been demonstrated to some extent already, but the question is whether they can be developed into useful technologies that have a serious impact on how we live.

1. Power generation from fusion
2. Nanotechnology
3. Human genetic engineering
4. The use of genetically modified crops
5. Space tourism
6. Communication by means of quantum entanglement
7. Artificial intelligence
8. Quantum computing
9. Brain-computer interfacing
10. Space exploration

These were all science fiction ideas until recently. In fact many would claim they still are. Let know what you think.