The rest of this chapter introduces some of the major issues as background for the in-depth discussions that follow. It also suggests a set of themes and questions that may be useful in considering the policy implications of the following chapters.

Today, scientific and technological changes are occurring so rapidly and across such a broad spectrum that they are creating unprecedented pressures for change in intellectual property protection in the United States and abroad. One of the major S&T trends that causes increased demand for effective intellectual property protection is the rising cost of R&D and other innovation-related activities. In the pharmaceutical industry, for example, an average expenditure of more than $231 million is required to discover, test, and secure marketing approval for a new drug in the United States (Pharmaceutical Manufacturers Association, 1992). To recoup such substantial investments, a company must be able to market the resulting products globally, which makes the worldwide intellectual property protection critical.

At the same time, product life cycles in some IPR-sensitive industries are shrinking dramatically, in some cases to 18 months or less. This time compression, in turn, reduces the period in which R&D and innovation costs can be recouped and puts a premium on strong and rapid protection of the innovation. Changes in technology, however, occasionally result in inventions that do not fit the old categories of patentable subject matter or cannot meet other requirements for patentability in certain countries. Biotechnology inventions (particularly microorganisms), for example, do not lend themselves to a written disclosure that enables their reproduction. Computer programs are perceived to have the characteristics of mathematical formulas, which are not patentable in some countries. Semiconductor chip designs are perceived as not meeting the U.S. criteria of novelty and nonobviousness.

Scientific discoveries, which are of increasing economic importance, also face difficulties when it comes to obtaining protection. Patent systems traditionally have denied protection to such discoveries. Moreover, the universities and research institutions in which basic scientific research is performed have traditionally put a premium on early dissemination of results, which is also at odds with the requirements for obtaining patents. For example, in many countries, any disclosure of an invention before a patent application has been filed precludes patentability. In one important case, the Cohen-Boyer patent on the basic recombinant DNA technique was granted in the United States, but the discoveries were denied protection in Europe and thereby suffered a considerable loss of royalties, because of their earlier publication (Benko, 1987:29-30).