Intellectual Property Rights and U.S.-Japan Competition in Biotechnology Report of a Workshop (1991) / Chapter Skim
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2. Context
2. Context
Pages 5-16
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. 6For a comprehensive review of commercial biotechnology in the United States and elsewhere, see U.S.
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The FDA approval process takes years and costs $100 million or more for a single product.~° Larger companies have the resources to manage this process, but the emerging companies often have to go through a number of rounds of venture capital financing, public stock offerings, and licensing or marketing agreements with larger companies to raise cash and to maintain the development of products in the pipeline. The capital crunch does not end when a company becomes 7Stelios Papadopoulos in his presentation on "Japan's Growing Presence in the U.S." at the Workshop on IPR and U.S.-Japan Competition in Biotechnology.
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George Rathmann points out that Amgen spent $250 million before it sold its first dose of product; without adequate protection for IPR emerging firms will be unable to undertake long-term efforts of similar scope. Exclusive, proprietary rights are vitally important to all pharmaceuticals, not just biotechnology products.
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industry, and despite the fact that the Japanese pharmaceutical industry has not been as internationally competitive as the electronics, automobile, steel, or machine tool industries, it is widely believed that Japan's commercial biotech '3Biotechnology is generally included in lists of technologies and industries expected to be critical to the 21st century economy that appear in Japanese government publications and business magazines. See Ministry of International Trade and Industry, Sangyo Gijutsu no Shiko to Wadai (Trends and Topics in Industrial Technology)
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It is therefore likely that major intellectual property disputes will arise in the health care context. Japanese firms have abundant capital and the capability to manage patent applications, regulatory approval by the Ministry of Health and Welfare (Koseisho)
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mounted a "catch up" campaign to help Japanese companies develop the product themselves.20 It might be useful to enumerate the major differences in the respective legal frameworks for IPR protection and then consider some of the most common Although the term "intellectual property" covers trademarks, copyrights, and trade secrets as well as patents, it is patent issues that are most relevant to biotechnology, and U.S.-Japan IPR disagree ments in general revolve around patents. '~See Epstein and Jones, op.
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There is nothing in Japanese patent law that discriminates against foreigners or conflicts with principles of "national treatment" per se. In contrast, foreign firms accused of patent infringement in the United States may face legal challenges before the International Trade Commission as well as before the courts, and parties to an interference proceeding are not allowed to introduce evidence related to foreign activity before the foreign filing date.2' There are several substantial differences in the two systems.
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Japanese judges do not have as much authority to overrule the JPO as American judges do over the PTO.25 In addition, some observers claim that the lack of a "discovery" mechanism to collect evidence against an alleged infringer makes litigating in Japan more difficult.26 Because of the narrowness of grants, competitors of the initial innovator are encouraged to surround a patent with their own applications, making slight modifications in the original invention.27 Competitors can also lengthen the review of the innovator's application through pre-grant objections. Combined with the difficulties in distinguishing between innovation and imitation that may arise because applicants are not required to disclose prior art, the initial inventor may ultimately be granted a patent that is so narrow and so long delayed that it is of little value.
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Some argue that the United States and Japan emphasize opposite sides of this exchange, with the American system giving stronger protection to the patentee, and the Japanese system more focused on teaching industry new innovations and diffusing technology. But the Japanese point to the similarities between their system and European practices, such as the publication of applications, or kokai, and the option of delayed examination.
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Issues such as the patentability of living matenal, multicellular organisms, and transgenic animals have been resolved in the United States over the years in ways that generally give greater protection to inventors than previous practices.32 But there are still some issues that remain unresolved. For example, patenting genes found in nature poses certain problems, such as whether patents should be granted for the introduction of a gene into a species in which the gene occurs naturally.
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16 biotechnology IPR in the United Slates have opened a considerable gulf between the two systems In the most controversial and widely publicized biotechnology patent disputes between U.S. and Japanese has, the breadth of the claim has been a point al issue.
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