It is widely accepted that innovation and intellectual property rights buttress economic growth and vice-versa. In an economic downturn, for example, businesses usually experience falling revenues and diminished cash flows. A recession engenders companies to cut investment into research and development, resulting in fewer patents being filed. This is exactly what happened during the 2008 economic recession. At the height of this economic crisis, in 2009, applications filed through the Patent Cooperation Treaty (PCT) dropped by 4.5%, the first drop since the inception of the PCT System. This great recession had a significantly stronger impact on the amount of patent applications in Canada, reducing filings by approximately 20%.
It is expected that a similar drop in patent filing is on the way due to the ongoing coronavirus crisis as a result of a general economic downturn which the Canadian economy has felt. This downturn has been extreme and has already decimated many areas of economy to an even greater extent than the 2008 recession. One area where this is particularly apparent is the in the labour market. Unemployment figures during the 2008 financial crisis reached 8.6%. In contrast, the peak unemployment rate in Canada reached in June 2020 was 13.7%, a record since the previous high of 13.1% set in December 1982.
The coronavirus pandemic, however, can be distinguished from 2008 recession primarily on the grounds that it is a crisis with the potential to be addressed substantially through technological innovation, particularly of the biomedical kind. Unlike the 2008 recession, there is a clear solution to our current conundrum: stop the spread and lethality of COVID-19. Importantly, these clear objectives are principally being accomplished through innovations in medical care, personal protective equipment, pharmaceuticals, medical treatments including (hopefully) vaccines. In light of COVID-19, the two developments which are likely to impact the business of IP law are as follows: (a) IP law stake-holders focusing on promoting the wide-availability of pandemic alleviating innovations, and (b) an injection of capital into biomedical research which will almost certainly produce patentable products.
Legal Innovation leading the way
With regards to this latter development, transitioning between patent prototypes to marketable products is where problems may arise. Steven Leach, partner at Ridout and Maybee LLP argues that COVID-19 exposed Canada’s inefficient system of connecting IP formulated at a conceptual level with enterprises capable of bring the innovations to market. He argues that Canadian universities, in particular, are producing top-notch research that unfortunately does not receive the financial capital or entrepreneurial leadership to get it to consumers. Leach’s non-profit organization, Techlink Innovation Exchange, is a solution whose purpose is to link innovation to enterprise. Leach hopes that the Exchange will be used to facilitate the manufacturing of critical COVID-19 equipment. With that end in mind, the platform’s subscription fees have been eliminated during the crisis. Services like Techlink are likely to help ease the bottleneck of medical innovation in Canada during this crisis.
Another issue which further compounds problems regarding this “innovation-gap” are the inefficiencies in government operations such as the delays with the Canadian Intellectual Property Office (CIPO) services. In Canada, before the COVID-19 crisis hit, it took an average of 33.6 months from requesting examination (which may be done at filing) to get a patent. However, as the crisis has exacerbated CIPO Service interruptions, obtaining a patent while COVID-19 is ongoing may entail further delay.
Increased IP Sharing
Another development allowing for the proliferation of IP to be an important tool in the fight against COVID is the increased sharing of IP. As Noel Courage, a lawyer at Bereskin and Parr LLP has noted, the sharing and availability of IP in the private sector during COVID-19 is unprecedented. Additionally, in the public sector, the federal and Ontario governments are creating databases of company names and skills in order incentivize collaboration. Some examples of the ways IP is currently being shared by companies are: (a) creating a patent pool, (b) releasing their products’ industrial designs, and (c) more generally permitting access to already patented inventions. IP sharing is seen as providing an important impetus for accelerating the development of a cure for COVID-19 and helping to fight the effects of the virus. A great example of a company sharing IP is Medtronic, a US based leading medical device innovator. They recently enabled others to copy their ventilator design by releasing its full technical specifications. This example is highly unusual for a leading and trusted commercial manufacturer. Not only did Medtronic release their patent but, by making their design public, they greatly facilitated the production of their ventilator. This generous openness has allowed Baylis Medical, a Canadian company, to use Medtronic’s design to make ventilators in Canada, helping prevent their shortage.
Other recent developments in the way companies are approaching IP during COVID-19 is through drug repurposing. Drug repurposing involves combining drugs that have already gone through the process of patenting and approval in order to create a new pharmaceutical approach. Drug repurposing is a quicker way to get drugs to market than developing new medications from scratch. Within the last few years roughly one-third of drug approvals have been based on repurposed drugs. Recently, to help treat COVID-19, several open source platforms dedicated to repurposing drugs have been set up.
If history is any indicator, there will be a short-term decrease in patent creation and innovation during this crisis. However, we should consider COVID-19 as a Black Swan event whose wide-reaching effects are still to be seen. The nature of the crisis may very well lead to a growth in innovation as a result of increased investments into technology-centered business enterprises. Furthermore, COVID-19 may provide an impetus for positive changes to the general IP regime, including the streamlining of IP’s commercialization and sharing. If done right, these changes will ultimately boost economic growth and, more critically, increase the proliferation of medical innovations to fight COVID-19.
Written by Sarah Silverwood & Joaquin Francis Arias. Sarah is a guest IPilogue Editor and recent graduate of the University of Toronto, where she studied International Relations and Political Sciences. She is currently studying Business Analytics at George Brown College. Joaquin is a contributing IPilogue editor, President of Osgoode’s Legal Entrepreneurs Organization and a fellow of Osgoode’s Innovation Clinic.