BusinessWeek: Patent Flexibility

Posted by: Michael Arndt, BusinessWeek

Around the world today, most patents provide a monopoly for 20 years, with the clock starting on the date the application was filed. There are only a few exceptions. Because it takes so long to get regulatory OKs, drugmakers, for instance, are given extensions that take effect once their new products win approval.

Maybe it’s time to become more flexible. Or so says Gary Litman, the U.S. Chamber of Commerce’s vice-president of Europe and Eurasia policy. Litman is a participant in the Salzburg Global Seminar’s five-day conference on intellectual property and innovation. I’ve also been here, along with more than 50 others from some two dozen nations.

Stressing that he's offering only his personal views, and not necessarily the chamber's, Litman told us at the seminar that patent offices in the U.S. and elsewhere should think about establishing two categories of patents. One would be for drugs, with patent protection for 20 years. The second would be for devices, and their patents would expire after only a few years.

Pharmaceutical companies need patents that long, Litman told me afterword, to recoup their huge investments in R&D. But device producers generally can recoup their investments—and then some—within a few years of putting their new goods on the market. They have to. These products stop being money-makers soon after that as new versions take their place. And he was not just talking about consumer electronics; fishing rods, he said, can become obsolete that fast, too.

So OK, why not let continue awarding these device patent-holders protection for 20 years? Even if they drop out of the market, where's the harm? Litman's response: Increasingly, innovators are deciding that patents aren't worth the time and money. And they have an alternative: They can choose to keep their breakthroughs to themselves, as trade secrets.

Coca-Cola and KFC have done this forever, with their secret--and non-patent-protected--recipes. But there's a danger, Litman argued, if many high-tech pioneers go this same route. When a company files for a patent, it must reveal its discoveries. Sure, that stops everyone else from making that same exact thing, but others can learn from each advance to produce something even better. If those in the lead keep their how-to hush-hush, though, progress may be stymied.