The Role of Patents: A Competition Sword or Shield


Andrew Masson is an IPilogue Writer and 2L JD candidate at Osgoode Hall Law School. 


A business’ success is strongly tied to the ability to protect Intellectual Property. However, the USA appears to use patent protections as a sword to attack and acquire large market shares, instead of as a shield to protect from other companies’ encroachment on another’s IP. This position is demonstrated by the House Committee on Oversight and Reform report regarding drug pricing, which suggests that the primary use of patents is protection of the market share and not innovation.

The patent office’s enforcement and issuance process greatly impacts the number of competitors that can enter a market. The patent office has therefore become a fundamental part of the economy, as patent protection plays an important part of many businesses’ strategies. Priti Krishtel, Attorney and Co-Founder of the Initiative for Medicines, Access and Knowledge, states that ”[t]he patent office holds sway over huge swaths of the U.S. economy,”. This naturally leads to questions about the role patents should play in society, especially in the USA, where the enforcement and granting of patents has been seen as limiting innovation and stifling smaller innovators from establishing in the markets.

Purpose of Patents

The ‘sword and shield’ metaphor likely oversimplifies the patent process. The data suggests that in practice, patents are not used for innovation. Only 20% of pharmaceutical patents between 2005 and 2015 were for new drugs. Thus, many  incorrectly view the patents primary function as protecting or fostering innovation. Patents  are instead being used to continue protections or expand the scope of protection on existing products.

Some believe that using patents as a sword abuses their purpose and others support the protection of businesses it provides. It may be a subjective question if patents should serve this role in business, but this use may have gone too far. Practically speaking, the 80% of pharmaceutical patents which do not protect new drugs will occupy resources in patent office, and if successful – these issued patents will limit competition and can permit industry monopolies.

How the System Can Be Exploited

It is important to dissect society’s perspectives on the role of patents. For example, one way to “game” or exploit the USA patent system and register new patents is by arguing that “new” products are like existing products. “New” medical devices can obtain faster regulatory approval by showing regulators that a product is like an existing product warranting approval. At the same time, the companies will also submit to the patent office that it is novel enough to require a new patent. This process has allowed medical devices to  is granted through incremental changes.

Conclusions

The problems highlighted are of much greater concern currently in the USA but do not exclusively occur there. The actual rules and laws appear similar to those in Canada but in the USA, the enforcement of the rules has changed to benefit businesses or large corporations. This perspective initially could have been useful in protecting companies and establishing markets but can result in monopolies and stifle small companies’ innovation. The patent office may need to reform in some way because they have allowed patent “swords” to become common practice. The US  patent system should ensure patents are not morphed into solely a tool to control market shares. Unfortunately, wielding patents as swords can harm innovation and to solve the problem, the patent office should consider their ability to dull the edge of the patent sword.

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