Maximizing the Use and Business Value of Patents

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1 Maximizing the Use and Business Value of Patents Getting from Patents to Innovation Corey Salsberg Head International IP Policy Medellín, Colombia, April 16, 2015

2 Who We Are: Novartis at a Glance Novartis is a global healthcare company whose mission is to discover, develop and successfully market innovative products to prevent and cure diseases, to ease suffering, and to enhance the quality of life for patients. Headquarters: Basel, Switzerland 3 Main Global Operating Divisions Pharmaceuticals Innovative Rx Alcon Eyecare 123,000+ full-time associates from 150+ countries Sandoz Generics + Biosimilars Operations in over 140 countries (sales in 180 countries) 2

3 Novartis: Innovation and Patient Health Our core medicines reach more than 1 billion people annually. Consistent with our focus on patients, we reach hundreds of millions more through our special access programs. Our ability to continue to address patient needs depends on innovation. [B]efore Gleevec, only 30% of patients with CML [chronic myelogenous leukemia] survived for even five years after being diagnosed. With Gleevec, that number rose to at least 89%. Pray, L. (2008) Gleevec: the breakthrough in cancer treatment. Nature Education 1(1):37 In 2014, we teamed up with Google to develop smart lens technology. In 2006, Sandoz launched the firstever biosimilar in the EU Omnitrope (somatropin), and in March 2015 secured FDA approval for the first biosimilar in US history, Zarxio (filgrastim). At heart, we are an innovation company. More than 200 R&D projects are underway, with 20 compounds in development, and 5 FDA breakthrough therapy designations (2 in 2014) 3

4 What do these have to do with patents? The very first official thing I did, in my administration and it was on the very first day of it too was to start a patent office; for I knew that a country without a patent office and good patent laws was just a crab, and couldn t travel any way but sideways or backwards. Time travel Scrap books Camelot A Connecticut Yankee in King Arthur s Court (1889) 4

5 The Beauty of the Patent System in the Words of the US Founding Fathers The utility of th[is] clause will scarcely be questioned.... The right to useful inventions... belong[s] to the inventors. The public good fully coincides... with the claims of the individuals. James Madison, Federalist No. 43,

more money in his lifetime than any other of his other books. B. The Adventures of Huckleberry Finn C.

6 Which Was Mark Twain s Most Profitable Book? A. Twain s The Adventures patented self-pasting of Tom Sawyer scrapbook (1873) sold over 25,000 copies, earning more money in his lifetime than any other of his other books. B. The Adventures of Huckleberry Finn C. Life on the Mississippi This was well enough for a book that did not contain a single word that critics could praise or condemn. D. A Connecticut Yankee in King Arthur s Court 6

7 Do Patents = Business Success? A Means, Not an End Not all inventions are innovations. Invent = Create something new Innovate = Put an invention to practical use Innovation requires more than patents! US Patent No. 6,293,874 US Patent No. 5,830,035 UK Patent GB

8 Getting From Patents to Innovation What Can Patents Do for Entrepreneurs? 1. Provide a limited term of market exclusivity through which to recoup investment and establish customer loyalty. Case Study: In the 1980s, Brazil s Achē isolated a compound from an Amazonian plant that showed promise as an effective pain reliever but it was not developed until after 1996, when Brazil began to recognize pharmaceutical patents under TRIPs. The drug became Achéflan, the first patented medicine ever developed by a Brazilian firm. All trademarks are property of their respective holders. Achéflan was an instant hit with professional football players 8

3 years later his brother died from the same. At age 8, a measles epidemic led Twain to expose himself to infection by sharing a bed with his infected friend.

9 Getting From Patents to Innovation What Can Patents Do for Entrepreneurs? 2. Enable risk-taking through R&D Risk leads to innovation... - More than 90% of all successful innovations start off as failures Innovation leads to business success and transforms and saves lives Mark Twain s sister died of a fever when he was 4. 3 years later his brother died from the same. At age 8, a measles epidemic led Twain to expose himself to infection by sharing a bed with his infected friend. Cholera killed at least 24 people in his small town. In 1847 his father died of pneumonia. - In our industry, risky and expensive R&D fueled by patents has transformed medicine Why else take risks? 460 BC s AD 1880s - Present Average life span of all-sized companies in Japan and Europe is only 12.5 years Average life of a multinational (Fortune 500) is around 45 years Of the top 500 U.S. firms in 1980, only 202 had survived by the year

10 Getting From Patents to Innovation What Can Patents Do for Entrepreneurs? 3. Enable entrepreneurs to innovate in directions where other forms of IP (e.g. trade secrets, TMs, know-how) do not work. Lessons from History: The 19 th Century World s Fairs Moser, P., How do Patent Laws Influence Innovation? National Bureau of Economic Research 33,000 examples of real innovations from 1851 and 1876 World s Fairs Countries w/o patent laws were innovative, but only where secrecy worked (food processing, scientific instruments) Countries with patent systems innovated much more broadly (e.g. machinery, where secrecy does not work). As scientific instruments grew dependent on machinery, countries w/o patent laws stopped making them, moved further into food processing. Secrecy does not work well for many fields today (or for society)! 10

11 Getting From Patents to Innovation What Can Patents Do for Entrepreneurs? 4. Attract investment to convert inventions into innovations (enable product development) Beam Brush Toothbrush with built-in-sensor and link to mobile app. Records duration of teeth brushing Connects to smartphone Tracks dental habits Sends notice when kids have brushed Use toothbrush as game controller After filing patent applications beginning in 2011, inventor was able to secure requisite venture capital to fund development, making the product a reality. Sources: Reuters, Small businesses likely to benefit from patent law overhaul, Sept. 25, 2012; All trademarks are property of their respective holders. 11

assigned most of his patented inventions to third parties in order to fund his full-time R&D efforts Over 70% of the great inventors of the 19 th century had only a primary school education (half had

12 Getting From Patents to Innovation What Can Patents Do for Entrepreneurs? 5. Provide licensing income for those who do not/cannot practice inventions directly Finances career inventors or companies (enables anyone to become a career inventor) Thomas Edison licensed or assigned most of his patented inventions to third parties in order to fund his full-time R&D efforts Over 70% of the great inventors of the 19 th century had only a primary school education (half had no formal schooling at all). Charles Goodyear invented and patented the process for vulcanized rubber (1844), but never manufactured or sold rubber products In 1894, American Bell Telephone Co. licensed 73 patents from outside inventors, developing only 12 inventions in-house Image from Scientific American (Aug. 12, 1854), p Sources: A. Mossoff, The History of Patent Licensing and Secondary Markets in Patents, George Mason U. School of Law, Dec. 2013; H. Nothhaft & D. Kline, Was Thomas Edison a Patent Troll?, IP Watchdog June 1,

13 Getting From Patents to Innovation What Can Patents Do for Entrepreneurs? 6. Increase value of overall enterprise (for eventual investment or purchase) 1880s: Herman Hollerith obtained series of patents on tabulating machine technology which became the standard for tabulating and computing data input. 1911: Financier Charles Flint took notice and bought the company for $2.3m. Merged with 3 other companies, and formed Computing Tabulating Recording (CTR) Company. 1924: Business spread to Europe, South America, Asia and Australia. The company was renamed. 13 All trademarks are property of their respective holders.

14 Getting From Patents to Innovation What Else Can Patents Do for Entrepreneurs? 7. Knowledge dissemination (compare with trade secrets) 8. Enabling improvements or new products through cross-licensing, JVs, collaborations. 9. Defining scope and allocation of rights in JVs and partnerships. 14

WIPO-WEF IAP Stay close to the business Manage IP ownership File IP

15 Increasing the Odds of Business Success: Seven Steps to IP Nirvana Use IP Counsel incl. WIPO-WEF IAP Stay close to the business Manage IP ownership File IP applications ASAP Use NDAs when approaching others Take care when publishing inventions Adopt a state of IP mindfulness (which IPR and when?) 15

Targeting Cancer: Innovation in the Treatment of Chronic Myelogenous Leukemia EXECUTIVE SUMMARY. New England Healthcare Institute

Targeting Cancer: Innovation in the Treatment of Chronic Myelogenous Leukemia New England Healthcare Institute NEHI Innovation Series March 2004 Executive Summary From drugs and medical devices, to information