Patent Pools & Clearinghouses: A Theoretical Perspective...2011/04/28 · 1 Patent Pools &...
Transcript of Patent Pools & Clearinghouses: A Theoretical Perspective...2011/04/28 · 1 Patent Pools &...
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Patent Pools &
Clearinghouses: A
Theoretical PerspectiveTTO Circle, 1st Plenary Meeting April 28-29th
Esther van Zimmeren
Centre for Intellectual Property Rights
University of Leuven
Please do not use these slides without prior authorization
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1. Rationale Patent Pools (PPs) & Clearinghouses (CHs)
2. From Closed to Open Innovation (OI)
3. Patent Pools & Clearinghouses - A brief reminder
4. Survey
5. Case Study: IMI
6. Conclusions & Policy Recommendations
Overview
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1. Focus on Problem/Challenges
• Fragmented patent rights – patent
thickets/anticommons: multiple patents, held by multiple
patent owners (complex technologies)
– Transaction costs (identification, negotiation,
enforcement)
– Legal uncertainty (e.g. hold-out, patent trolls)
– High royalties
– Royalty stacking
2. Focus on Opportunity
3. Sector-specific?
Rationale PPs & CHs
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1. Focus on Problem
2. Focus on Opportunity• Open Innovation
• Pools and clearinghouses as models to appropriate value
3. Sector-specific?• “Complex” technologies:
– Complementarity, interoperability (standardization)
– Information technology, consumer electronics,
biotechnology
Rationale PPs & CHs
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Rationale PPs & CHs
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Patent Thickets/
Anticommons
Open Innovation
Collect/Integrate
complementary
technologies
(Standards)
YES YES
Reduce transaction
costs
YES YES
Clear blocking
positions
YES YES
Avoid costly
infringement
litigation
YES YES
From Closed to Open Innovation
Closed Innovation6
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From Closed to Open Innovation
Open Innovation
Internal Research Projects
External Research
Projects
Technology
Spin-insTechnology
In-licensing
Technology
Out-licensing
Technology
Spin-offs
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Inbound OI
Outbound OI
“…the use of purposive inflows and outflows of knowledge to
accelerate internal innovation, and expand the markets for
external use of innovation, respectively.
Open Innovation is a paradigm that assumes that firms can
and should use external ideas as well as internal ideas, and
internal and external paths to market, as they look to advance
their technology.”
Open Innovation
Open Innovation
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Open Innovation
Motives
• Inbound: value creation
• Outbound: value capturing
• ‘other’ reasons:
– reduced R&D costs;
– access to technology;
– greater technical critical mass;
– shared risk and liability;
– better relationships with strategic partners;
– technology transfer benefits;
– improved access to capital and new business;
– access to marketing/distribution strengths;
– standardization;
– etc.
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Open Innovation
Criticism
• Strong Dichotomy: black/white
• Are there (still) companies that only engage in closed innovation?
• P. Trott & D. Hartmann (2009), “Why 'Open Innovation' is Old Wine in New
Bottles”, Int'l J. Innov. Manag.
• Broad term, need for a clear definition?
But:
• Chesbrough coined the term and is leveraging the concept quite effectively
• the term is widely used (academics, business, legal experts, media, etc.)
• stimulates a reconsideration of long-held business models
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Closed v. Open Innovation
• The smart people in our field work for
us
• To profit from R&D, we must discover
it, develop it, and ship it ourselves
• If we discover it ourselves, we will get
it to market first
• The company that gets an innovation
to market first will win
• If we create the most and the best
ideas in the industry, we will win
• We should control our IP, so that our
competitors don’t profit from our
ideas
• Not all the smart people work for us.
We need to work with smart people
inside and outside our company
• External R&D can create significant
value, internal R&D is needed to
claim some portion of that value
• We don’t have to originate the
research to profit from it
• Building a better business model is
better than getting to market first
• If we make the best use of internal
and external ideas, we will win
• We should profit from others’ use of
our IP, and we should buy others’ IP
whenever it advances our own
business model
Source: Chesbrough (2006)
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Open Innovation
• Some sectors may be more appropriate for open innovation
than others
• Continuum instead of dichotomy?
• Organizations use a combination of closed and open
innovation strategies
• What is the role of the legal framework, in particular IP
(patents and know-how), in these strategies?
• What kind of IP licensing models are most appropriate
within the context of open innovation?12
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Assumption: Trend towards (more)
Open Innovation
Trend towards more “Open IP”/“Open
IP Licensing Models”?
Open Innovation
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Open Innovation
Classical “Open” Organizational Modes
• R&D Alliances
• Licensing (bilateral licenses and cross-licenses)
• Spin-offs
• Joint-ventures
• Purchase and Supply Agreements
• Mergers & Acquisitions
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Open Innovation
‘Other’ “Open” Organizational Modes
• Open Innovation Intermediaries, e.g. InnoCentive, NineSigma
• Public-Private Partnerships (PPPs) e.g. IMI
• Consortia
• Networks
• Open Source
• Patent Pools
• Clearinghouses
L1
L2
L3
L4
P2
P1
P4
P3
L1
L3
L2
L4
P2
P3
P4
P1 Cle
arin
gh
ou
se 15
No patent pool L1
L2
L3
L4
P1
P2
P3
P4
L1
L2
L3
L4
P1
P2
P3
P4
L1
L2
L3
L4
P1
P2
P3P4
L1
L2
L3
L4
P1
P2
P3P4
PATENT POOL
An agreement between two or more patent owners
to license one or more of their patents as a package to one
another and to third parties willing to pay the royalties
associated
1. Multiparty Agreement
2. (Sub)licensing to Third Parties
Patent Pools
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• Advantages
– No more stacking of licenses and royalties
– FRAND-licensing
– Reduced transaction costs
– Legal certainty
– Reduced litigation
– Exchange of know-how
– No need for state intervention
– Dissemination of technology
– No duplication of R&D investments
• Disadvantages
– Risk of invalid patents in the pool
– Proportional royalty allocation?
– Cartel cover-ups
Promoting
Competition
Innovation
Incentive
Patent Pools
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ONEONE--STSTOPOP--SHOPSHOP
USSewing machines (1850)
Radio (1920s)
Airplanes (WW II)
WorldwideElectronics & Telecom
MPEG2 (1997)
DVD (1998 en 1999)
Third Generation Patent Platform Partnership 3G3P (2002)
Biotech & Pharma
Golden Rice
SARS
Medicines Patent Pool-UNITAID pool
Pool for Open Innovation against Neglected Tropical Diseases-BVGH
pool
First half
20th
centuryE
nd 20
thcentury
More recent
developments
STANDARDS
Patent Pools
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“While the concept is intruiging for biotechnology, it is
questionnable whether the technologies and markets for
genetic inventions are amenable to pools”
OECD, 2002
• No standards in biotech (??)
• Interoperability irrelevant
• “Bunker mentality” – importance of patents
• High R&D costs, highly regulated markets
• Evaluation of patents = difficult process
• Incentives for dominant players
• Anti-competitive practices
Patent Pools
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Patent Pools
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Identification
patent
thicket
Patent
attorneyRo
leo
f exp
erts
De
velo
pm
en
tp
hase
Ro
leo
f au
tho
rities
Patent
attorney
Patent
attorney
Identification
essential
technology
Patent
attorney
Identification
essential
patent
holders
Agreement
to set up a
pool
between
patent
holders
Evaluation
patents
Develop
operating
model
Design
full
arrangement
Patent
attorney
Comp.
law expert
Comp.
law expert
Contract
law expert
Contract
law expert
Contract
law expert
Contract
law expert
Comp.
law expert
Patent
attorney
Patent
attorney
Patent
attorney
Initiator
(e.g.
WHO)
Comp.
agencies
Comp.
agencies
Comp.
agencies
Comp.
agencies
Comp.
agencies
Initiator
(e.g.
WHO)
Initiator
(e.g.
WHO)
Initiator
(e.g.
WHO)
Initiator
(e.g.
WHO)
Execution
arrangement
Comp.
law expert
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Competition Law
• Technology Transfer Block Exemption Regulation (TTBER)
• TTBER Guidelines
• ‘Old’ comfort letters
• Limited number of formal decisions of the European Commission
• US IP Licensing Guidelines (1995)
• Business Review Letters Antitrust Division of the Department of
Justice (MPEG2-pool, DVD-pools, 3G3P-platform, etc.)
• IP Antitrust Enforcement Report (2007)
• JFTC Standardization & Patent Pool Arrangements Guidelines
(2005)
Patent Pools
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Checklist
1. Patents
– Valid
– Essential
– Evaluation independent expert
– Dynamics of the pool
2. Patent holders- patent pool
– Non-exclusive license to the pool
• Licensing outside the pool should be permitted
– Royalty allocation formula
– Royalty collection and allocation by the pool
Patent Pools
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12
Checklist
3. Patent pool- licensees
– Non-exclusive license & FRAND-terms
– Development of alternative technologies
– Non-exclusive grant-back for improvements (essential patents,
reasonable conditions)
4. Institutionally
– Independant expert
– Confidentiality – Chinese Walls
– Arbitration/mediation
Patent Pools
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‘Any mechanism whereby providers and users of goods [resources],
services and/or information are matched’
Independent intermediary – two-sided platform
Clearinghouses
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[See also: Esther van Zimmeren, et al (2006), Bulletin of the World Health Organization, 352-359]
Clearinghouses
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Information
CH
Technology
Exchange
CH
Open
Access
CH
Standard
Licenses
CH
Royalty
Collection
CH
CHs providing only access CHs providing access & use
Differentiation of offered services increases
Information
CH
Technology
Exchange
CH
Open
Access
CH
Standard
Licenses
CH
Royalty
Collection
CH
CHs providing only access CHs providing access & use
Differentiation of offered services increases
INPIT PIPRASNP
Consortium
Science
Commons
SNP Nutrigenomics
CH
MPEG LA
Genetic Diagnostics
Royalty Collection Clearinghouse
- Platform:
• Provides Access to Information
• Identifies the Essential patents
• Matches Licensees with Licensors
• Offers Standardized Licenses
• Collects Royalties
• Distributes Royalties
• Monitors
• Enforces Patents
• Offers Dispute Resolution: Mediation &
Arbitration
Clearinghouses
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LICENSINGLICENSING
SUPERMARKETSUPERMARKET
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Licensing Practices
Cross-licensing
Patent Pools
Clearinghouses
Survey
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Licensing Practices
Patenting Profile
Knowledge CL, PP, CH
Experience CL, PP, CH
Attitude CL, PP, CH
- impediments
- merits
Recommendations
Survey
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15
L1
L2
L3
L4
P2
P1
P4
P3
L1
L3
L2
L4
P2
P3
P4
P1 Cle
arin
gh
ou
se
Cross-license (CL)
Patent Pool (PP)
Clearinghouse (CH)
Survey
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Medical biotechnology
Pharmaceutical, therapeutic and diagnostic applications as
well as research applications
drug discovery
vaccines
gene therapy
diagnosticsand ...
medical devices
genomics proteomics
pharmacogenomics
Survey - Scope
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Contracting states of the
European Patent Convention
(December 2007)
Source: Website EPO
Survey - Scope
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Professionals responsible for patenting and licensing
Members of LESI, Eurogentest, EuropaBio, national biotechnology
organisations, or Proton-Europe
Response rate: 19.7%
f
Pharmaceutical company/subsidiary 30
Biotechnology company 64
University and Research institutes 46
Hospitals 20
Other 17
Total 177
Survey - Sample
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17
0
10
20
30
40
50
60
70
0
5
10
15
20
25
30
35
40
45
In-licensing Out-licensing
f f
Survey - Results
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Types of out-licenses (Interaction-effect organisation x type of out-license)
1.5
2
2.5
3
3.5
4
Pharmaceuticals U&RI Biotechnology
Like
rt s
cale
Models
Non-exclusive
Exclusive for all fields of use
Exclusive for a specified field of of use
Sole license
Option to take a license
Likert scale variable experience
Never = 0
Sometimes = 1
Regularly = 2
Often = 3
Very often = 4
Survey - Results
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18
0
10
20
30
40
50
60
Yes No I don't know
%
Undue burden freedom to operate
Survey - Results
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Remedies
1. Negotiating licenses
2. Inventing around
3. Research exemption
4. Abandoning the project
5. Opposition
Survey - Results
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19
Knowledge about CLs, PPs and CHs
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Cross-licensing Patent Pools Clearinghouses
Like
rt s
cale
Models
Pharmaceutical companies
U&RI
Hospitals
Biotechnology companies
Likert scale variable knowledge
No = 0
Yes = 1
Survey - Results
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Experience with CLs, PPs & CHs
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Cross-licensing Patent Pools Clearinghouses
Like
rt s
cale
Models
Pharmaceutical companies
U&RI
Biotechnology companies
Likert scale variable experience
No = 0
Yes = 1
Survey - Results
38
20
Collaborative mechanisms, such as PPs
and CHs in open innovation?
• Multiple patents, multiple patent owners
• Complementary patents
• One-stop-shop/licensing supermarket
• Long-term relationships – research collaborations
• Open way of dealing with IP
Survey - Discussion
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Key issues
Control
Exclusivity – non-exclusivity
‘Customized’ way of gaining FTO?
All patent owners – essential, valuable technologies
– FRAND-terms
Competition Law?
Trust & Commitment
Flexibility
Survey - Discussion
40
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http://www.imi.europa.eu/
ObjectiveThe objective of IMI is to support the faster discovery and development of better
medicines for patients and to enhance Europe’s competitiveness by ensuring that its biopharmaceutical sector remains a dynamic high-technology sector.
Bottlenecks in the biomedical research and development process a:
• predicting safety,
• predicting efficacy,
• bridging gaps in knowledge management, and
• bridging gaps in education and training
IMI supports collaborative research projects and builds networks of industrial and academic experts in order to boost pharmaceutical innovation in Europe.
Focus- Precompetitive research – risk sharing
- Open Innovation
Case Study IMI
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GovernanceEuropean Joint Technology Initiative launched by the European
Commission (€1 billion) and the European Federation of Pharmaceutical
Industries and Associations (EFPIA) (€1 billion in-kind contributions) in
2004.
Consortia:
• large biopharmaceutical companies that are members of EFPIA,
• small- and medium-sized enterprises,
• patients' organizations,
• universities and other research organizations,
• hospitals,
• regulatory agencies,
• any other industrial partners.
Case Study IMI
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IP Policyhttp://www.imi.europa.eu/sites/default/files/uploads/documents/imi-ipr-policy01august2007_en.pdf(incl. copyright; design rights; patent rights; or similar forms of protection)
ObjectiveTo promote knowledge creation, together with its disclosure and exploitation, to achieve fair allocation of rights, to reward innovation, and to achieve a broad participation of private and public entities in projects.
PrincipleFlexibility (grant and/or project agreement), dissemination and fair allocation
Provisions• Background/foreground/sideground (data, know-how and information) identification
and ownership• Access Rights Completion Project: foreground (royalty-free), background (royalty-
free)• Access Rights for Research Use: foreground (non-exclusive, fair &
reasonable/royalty-free), background (non-exclusive, fair & reasonable/royalty-free)
• Access Rights for Research Use Third Parties: foreground (non-exclusive, fair & reasonable), background (non-exclusive, fair & reasonable)
• Access Rights Direct Exploitation: negotiations• Confidentiality – publications (review, delay)• Obligation to disseminate foreground within one year after the termination of the
project
Case Study IMI
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IP Policy
Case Study IMI
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Open Innovation & IP
• Need for tailor-made business models
– Sectors
– Partners (incentives)
– Aims
– R&D phase
– etc.
• Does “Open Innovation” require a more “Open IP Culture”?• Issue of control (closed innovation)
• Exclusivity – non-exclusivity
• Interests of different stakeholders, e.g. university v. industry, large companies v.SMEs (see IMI)
• Universities: government policies that focus on patents and revenu generation
• Foreground/background definition, Access Rights
Conclusions & Policy Recommendations
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Stimulate rethinking
tradititonal
IP licensing models
Open Innovation & IP
• Trust, balance of power – Governance Schemes
– Role of neutral intermediary/expert
– Expertise
– Competition
– Partners
– Valuation of patents
• Commitment
– Management e.g. Speeches GSK CEO Witty
– Legal Department!
Conclusions & Policy Recommendations
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Support research into &
experimentation with
different governance
schemes
Strong commitment
to use such models
in projects supported by the EU