Learning to play the patent game

Biotechnology is a booming business. Sales of pharmacy drugs in the world's top 10 markets were worth $140bn in 1995 and more than half the top 100 biotechnology companies worldwide saw their share prices more than double last year to a market value of around $60bn.

Britain has around 100 quoted and unquoted companies involved in biotechnology, the largest number in Europe, and there is concern to see that the industry remains healthy and competitive, for the benefit of those companies and the effect it has on the Exchequer.

Intellectual property rights (IPRs) are central to a successful biotechnology industry. Paramount of those IPRs are patents, a 20-year monopoly granted by national patent offices in exchange for making an invention public. In turn, this disclosure drives the pace of innovation forward, with new inventions formed on the back of previous patents. These monopolies allow patent owners exclusive manufacturing and selling rights, or the opportunity to sell those rights to others by licensing. For many of the smaller companies, their continued existence may depend on the success of one or two patented products, obtained after many years of R&D.

But there is another problem. Patents are national property. A UK patent covers only the UK. Biotechnology is a global industry and it is necessary for a company to get worldwide protection in around 50 or more countries to ensure that an adequate monopoly is obtained - one that is enough to entice a major pharmaceutical company to invest in the product.

Different countries have different patent systems, but those of Europe and European Free Trade Agreement (Efta) countries have been harmonised (though not identical) for many years. The system is also being adopted by the more western of the former Soviet states. However, the largest market, the United States, has a system that is fundamentally different. Rather than grant patents to the first person to file an application (as in Europe and most of the rest of the world), it grants patents to the first person to make the invention. Also, until forced to change its system following the Gatt Uruguay Round, only research undertaken in the US (and proved by following set guidelines for recording research) would be sufficient to establish inventorship. Since 1 January, however, UK companies can now use UK-based research to support a date of invention, provided it complies with the US standard of proof.

But UK companies are failing to adopt these simple procedures that could help them to protect their patent rights in the world's largest market for biotechnology products. Unless these procedures are adopted, biotechnology companies risk losing their patent rights, and therefore their livelihoods, in court battles in the US.

This is the conclusion of a report published by the law firm Nabarro Nathanson and the CBI's Biotechnology Forum last week. The report is based on a Mori survey of around half the UK's biotechnology companies, which found that only around two in five would be able to prove in a US courtroom that they had invented their technology at the time they claim.

The procedures involved are not complex and require the following:

nEnsuring that observations and other information is recorded in a bound notebook with each page numbered;

nMaking sure each page in the notebook is dated and signed by the researcher responsible;

nHaving each page witnessed by someone who understands the nature of the work and its possible implications, while not being directly involved in the invention.

While 90 per cent of companies surveyed recorded their experiments in bound notebooks, less than half comply with the other necessary steps required to prove the date of invention.

It is vital that UK companies structure their operations to meet the toughest legal requirements. This process of following the "highest" common denominator is what separates those companies which are commercially aware of the potential of their discoveries from those that may be less astute. UK companies could easily protect their rights just by following the simple procedures of signing and dating their research and having it witnessed.

Earlier this year, as an example of the problem, two rival research groups, Myriad Genetics in the US and the Cancer Research Campaign in the UK, announced that each had applied for the patent rights for the second gene responsible for inherited breast cancer. The dispute could delay the research and production of diagnostic tests for the gene, and could affect hundreds of lives.

The US guidelines have already been adopted by a number of biotechnology companies, both large and small. For example, the Cambridge-based bio- pharmaceutical development company Peptide Therapeutics is on the verge of breaking into the multi-billion pound global healthcare market. The company is developing an allergy vaccine that has been clinically tested in people who suffer severe allergic reactions to foodstuffs.

Peptide Therapeutics realises that it has to play the US game in the possible event of its patent applications being challenged in the US courts and it is putting the appropriate recording and double witnessing procedures in place. But, at the same time, it will still file patent applications at the earliest opportunity and recommends other UK biotechnology companies do the same.

Biotechnology is a growth industry. It represents an opportunity for UK companies to take a leading role in the development of a truly global business. However, to play on the global stage requires an understanding of not just the global marketplace but also regulatory regimes around the world. It would be a great economic loss for this country if this opportunity was wasted due to an inadequate understanding of international law.

The author is head of Nabarro Nathanson's biotechnology and pharmaceuticals group.