Pharmaceutical Patents
Getting Real About Fakes: Fake Medicine and Movies
If companies want to cut into sales of counterfeit products, they need to understand why consumers buy them in the first place
By PEGGY E. CHAUDHRY And STEPHEN A. STUMPF
As the counterfeit trade booms, companies are rolling out massive campaigns to get people to stop buying fakes. But the messages they use are often off the mark.
Companies have tried everything from threatening prosecution to linking phony products with organized crime. But marketers often don’t pay attention to what actually drives people in particular markets to buy counterfeits and what messages will actually work to curb demand of fake goods.
Companies, for instance, might roll out ads in a country stressing that fake products are of poor quality. But those ads might ignore the fact that local consumers have little disposable income and consider knockoffs a bargain—so they are willing to accept a price-quality trade-off. A better approach might be to stress that the phony goods, such as fake cigarettes, are funding terrorism or, in the case of counterfeit pharmaceuticals, are actually killing people.
To figure out how companies can improve their antipiracy marketing, we surveyed consumers in five large markets—Brazil, Russia, India, China and the U.S.—to see what would make them opt for knockoffs. Then we used that information to figure out what messages might get people to stop buying the illegitimate goods.
WHY CONSUMERS BUY
We presented consumers in each market with five possible motivations for buying counterfeits in two categories—movies and drugs—and asked them to rank the factors on a seven-point scale of importance. Here’s what they said about each.
1. Quality and performance. Consumers would buy a fake if they thought it was just as good as a legitimate product.
Only U.S. consumers ranked this as an important factor that would influence them. Elsewhere, this attribute was just "somewhat" important—and Russian consumers ranked it not important at all. Astonishingly, consumers in these country markets valued the quality of the fake medicine less than they did factors such as reduced price and availability.
On the other hand, the quality of bootleg movies was ranked as very important for Russian, Brazilian and Chinese consumers, and less so for people in the U.S. and India.
2. Cost. Consumers would buy a fake because they cannot afford a genuine product.
Not surprisingly, almost all consumers ranked this as a very important motivation for pursuing fake drugs and bootleg movies alike. The two exceptions: Chinese consumers said this factor was only somewhat important when it came to drugs; U.S. consumers said the same about movies.
3. Sentiment. Consumers would buy a fake because they do not like the big businesses that make the authentic products.
We expected some resentment here, since drugs and movies are usually produced by large corporations, and the people who buy counterfeits may believe that the industry is price-gouging consumers. But only in China did consumers express disapproval of the large movie studios as a significant motivator for buying bootlegs. And only U.S. consumers showed an anti-big-business sentiment for both the movie and drug industries.
Their Brazilian, Russian and Indian counterparts did not concur, and rated this as an unimportant justification.
4. Ethics. Consumers would buy a fake because they do not think it is illegal or immoral to do so.
In this area, consumers had very different attitudes about movies and drugs.
In Brazil, India and the U.S., consumers said that consumption of fake pharmaceuticals was an unethical behavior. In Russia and China, it was not important at all—in effect, consumers would buy the fake pharmaceuticals even if they realized it was an immoral or illegal act.
With movies, on the other hand, consumers in all markets but Brazil said that ethical behavior was unimportant when it came to obtaining counterfeit movies. (In Brazil, it was just somewhat unimportant.) These consumers simply do not see bootlegged movies as illegal or morally wrong, perhaps because of the ease and anonymity of Internet downloads and the widespread consumer acceptance of obtaining fake movies. In our survey, 50% of 1,910 consumers readily admitted to obtaining a bootleg movie.
5. Ease. Consumers would buy a fake because it is easy to obtain.
As with ethics, this factor brought up a big divide between movies and drugs. The ease of obtaining fake movies was a very important motivation in each market. However, with drugs, ease was an important factor only in the U.S., just somewhat significant in Brazil and India, and not significant at all in China and Russia.
Consumers, in other words, face different degrees of easy market access to counterfeit drugs and may pursue counterfeit drugs even if they are tougher to obtain.
Read the rest of this article on counterfeit products and fake medicine on the Wall Street Journal Web site.
A Cost-Effective Approach to Maximizing International Intellectual Property Protection
By David E. Rogers, Squire, Sanders & Dempsey L.L.P. and Amy L. Hartzer, IsoPatent
Aug. 12, 2009
International competition is increasing daily. Competitors are nimble and quick to copy, and customers are demanding and looking for the best price. Brand name and personal relationships still carry some weight, but not as in years past. One way for U.S. manufacturers to compete effectively in today’s marketplace is by controlling innovation through intellectual property ("IP"). Given the international nature of business, IP protection should also be international and, to the extent cost effective, coextensive with a business’ current and future market presence.
We suggest a three-step approach to creating an international IP portfolio. First, regardless of location, always utilize contracts and trade secrets with employees and business partners, such as suppliers, distributors and contractors. Second, if practical, use patents to both (i) fortify the protection provided by contracts and trade secrets, and (ii) protect your technology from entities with which you have no contractual relationship. Third, select the countries in which you desire patent protection, which are usually those in which your products are sold or will be sold, and then implement your IP strategy.
Below we explain the IP protection mechanisms, how to select the countries in which patent protection should be obtained, and two case studies that apply these principles.
(1) The IP Protection Mechanisms: Contracts, Trade Secrets and Patents.
(a) Contracts: Whether or not your technology is protected by a patent, it may still be protected by contract. Contracts should always be used with employees and your direct business partners, such as suppliers, distributors and contractors. Contractual protection may even be suitable for customers (for example, if you already enter into contracts with customers to sell industrial machinery.)
The contracts should require your employees and business partners to (i) maintain the confidentiality of business information (such as your technology, designs, marketing plans, costs, selling prices, and the identity of vendors and customers), (ii) not compete with you during the term of the contract and for a reasonable period of time (usually one to five years) thereafter, and (iii) assign improvements to your technology to you.
You can usually select the law that governs a contract and the locale for resolving contract disputes. Select the law of one of the United States that is likely to uphold the contract’s provisions (particularly the non-compete clause) and require any dispute to be resolved in a U.S. court or in arbitration in the U.S. If your employee or business partner is outside of the U.S., check with an attorney in the country where your employee or business partner is located to ensure the contract provisions are enforceable there.
The costs to enter into contracts are the legal fees associated with preparing and negotiating them. Depending on a contract’s complexity and the length of negotiations, plan on about $3,000 - $10,000 per contract with each business partner. The costs for employee contracts are usually negligible.
(b) Trade Secrets: A trade secret is information that both: (1) derives actual or potential economic value from not being generally known and not being readily ascertainable to others by proper means, and (2) is the subject of reasonable efforts to maintain its secrecy. Trade secrets cost nothing to obtain, although maintaining them requires some expense because each person or business exposed to the trade secret should execute a contract with an appropriate confidentiality provision (also called a non-disclosure provision).
Here, all persons and businesses that executed contracts in the preceding Section (a) would be bound to maintain the confidentiality of your business information. By using contracts and other reasonable efforts to maintain the secrecy of your information, trade secret protection protects against the misappropriation of your information by anyone, even persons with whom you have no contractual relationship. That is the added benefit of trade secrets as compared to contracts.
Information that cannot be maintained as a secret includes (1) publicly-available product designs, and (2) things that can be reverse engineered, such as (i) internal components that can be discovered through disassembly of a product, and (ii) material compositions that can be ascertained through laboratory analysis.
Trade secrets have at least one advantage over patents. In many countries, including the U.S., trade secret life is potentially indefinite whereas a patent’s life is typically 20 years from the original patent application filing date.
A major disadvantage of trade secrets is that they do not protect against independent development by a competitor, whereas patents do. Further, once a trade secret has been disclosed to numerous people, even with the proper confidentiality agreements in place, it can be misappropriated without you knowing who was responsible.
Read the rest of this article on pharmaceutical patent and other intellectual property issues on IndustryWeek.com.
Influenza pandemic: Pandemic flu shows need for pharma incentives: WHO
Great article from Laura MacInnis and Stephanie Nebehay regarding pharma incentives to create vaccines that fight against emergent threats, including the latest influenza pandemic.
By Laura MacInnis and Stephanie Nebehay
GENEVA (Reuters) - Pharmaceutical firms need incentives, including lucrative patents, to keep creating drugs and vaccines against emergent threats such as the H1N1 influenza pandemic, the World Health Organization’s head said on Tuesday.
“Progress in public health depends on innovation. Some of the greatest strides forward for health have followed the development and introduction of new medicines and vaccines,” said WHO Director-General Margaret Chan said.
Chan, who last month declared a full pandemic underway from the H1N1 virus, said that patents can help ensure that companies develop medicines to “stay ahead of the development of drug resistance” in diseases like malaria and tuberculosis.
The discovery of isolated H1N1 infections that resist the anti-viral Tamiflu, made by Roche and Gilead, and the global scramble to secure flu vaccines have shown the importance of robust research and development, Chan said.
“Innovation is needed to keep pace with the emergence of new diseases, including pandemic influenza caused by the new H1N1 virus,” she told a meeting on intellectual property and health, a contentious issue that has divided rich and poor nations.
In the speech, Chan said most drug access problems faced by developing countries could be remedied by tinkering with the existing patent system, which “operates as a stimulus for research and development for new products.”
In May, at the WHO’s annual assembly, rich and poor nations failed to reach consensus on how they should share virus samples of H1N1 and other flu strains with companies that use the biological material to make vaccines.
Indonesia has been especially vocal against this, arguing that developing countries would not be able to afford patented jabs made from their specimens.
Diamonds Are Forever. Why Not a Drug Patent?
Carl Weissman 5/29/09
Tell me if this makes sense to you:
—If I buy a diamond, I can own it for as long as I like;
—If I produce a brand name for a product, provided that I trademark it, I can own it for as long as I would like, until and unless it becomes “generic” (like the term “escalator”, which actually started as a brand name);
—If I write a novel, provided that I copyright protect it, I can own it until I die, and my heirs can maintain those rights for 70 years longer; but,
—If I invent a drug, even if I protect that intellectual property to the full extent of U.S. patent law, I can only own it for 20 years from the date I file for a patent on it.
I can own a tangible good forever, I can own a trademark virtually forever, I can own a copyright for my entire life plus 70 years. But property which is more intrinsically a part of me – my idea, my invention, the product of my intellect – I am only allowed to own that for 20 years after I reveal it to the patent office.
Rationally, it seems obvious that all property – whether tangible or intellectual – should be subject to the same rules and laws of ownership. If you can own a gemstone forever, you should be able to own an invention forever. In fact, if a society wishes to impose differential standards for ownership rights to different types of property, wouldn’t it make more sense that preferential treatment be given to those items which are the product of your talent, your creativity, your self, over those things which you earn or purchase based upon that product of your efforts? The logical extension of this argument, in any free society, is that you should be able to own all property, whether purchased or invented, physical or ethereal, for as long as you wish. Patents, trademarks, copyrights, title – all should be perpetual.
Read the rest of this article on drug patent laws here.
Pharmaceutical Patents - SICE
Patent Protection For Pharmaceuticals : A Platform For Investment, Markets And Improved Health In The Americas - SICE, March 1996
Excerpt: In this forum on policies affecting development and technology, I highlight the importance of the role of providing strong protection of intellectual property rights. In a study published in 1995 by the World Bank-affiliate — the International Finance Corporation (IFC) — it was concluded that "a country’s system of intellectual property protection seems to have a substantial effect in relatively high technology industries like chemicals, pharmaceuticals, machinery and electrical equipment on the kinds of technology transferred to that country and the amount of direct investment in that country … by Japanese and German, as well as U.S., firms."
The Motley Fool on Pharmaceutical Patents
You’re Only Hurting Yourself Thailand (Article regarding stance on pharmaceutical patents still held by Thailand) - Motley Fool, January 2007
Excerpt: When I was in grad school, we were repeatedly bombarded with examples of governments making idiotic, short-sighted moves that hampered the long-term health of their economies and citizens. And now it appears that Thailand has made just such a gaffe. On Monday, Thailand’s government announced that it was going to allow either the manufacture or importation of generic versions of Abbott’s (NYSE: ABT) HIV treatment Kaletra and Sanofi-Aventis’ (NYSE: SNY) blood clot drug Plavix, even though the drugs are still under patent protection and producing generic versions of them would be illegal in many countries.
African Liberty on Pharmaceutical Patents Still Enforced
Poverty and Sickness Won’t be Cured by Fighting Pharmaceutical Patents - African Liberty, June 2008
Excerpt: Last month, the World Health Organization’s governing body, the World Health Assembly (WHA), formally adopted a set of public policy recommendations for poor governments struggling with disease.
A Law Firm’s View on Pharmaceutical Patents
Pharmaceutical Patents - Ropes & Gray LLP
Excerpt: Patent protection is the foundation of pharmaceutical innovation. Without strong, effective patents, pharmaceutical companies would be unable to recoup the enormous cost of drug development and invest in important new research projects. Understandably, many leading companies in the pharmaceutical industry rely on the Intellectual Property Group to secure and enforce the patents that ensure their financial and strategic success.
The Risks of Violating Pharmaceutical Patents
Cipro and the Risks of Violating Pharmaceutical Patents - NCPA, November 2001
Excerpt: When the threat of anthrax became a widespread concern, the Canadian government said it had serious doubts that Bayer, the owner of the patent for the anti-anthrax drug Cipro, could meet Canadian needs. Canada ignored the patent and ordered generic copies. In the United States, Sen. Charles Schumer expressed the same concerns and proposed that the U.S. government do the same. After Bayer said it could meet the needs of both nations, and after other drugs that are effective against anthrax were identified, Canada reversed its decision, and the issue was dropped in the United States for the time being.
Pharmaceutical Patents PDF from Innovation.org
Pharmaceutical Patents (PDF) - Innovation.org
Excerpt: Patent protection in the United States gives inventors the exclusive right to sell an invention for up to 20 years before others may copy and sell it. However, the effective patent life, which only begins to run when the patent is granted and the invention can be marketed, is closer to 18 ½ years. For pharmaceuticals, the effective patent life is actually closer to 11 or 12 years since federal law requires a company to test its product for safety and efficacy and secure regulatory approval before marketing it, a process that can take years.