Patents and Health Care

By December 18, 2009Commentary

Intellectual property law is complex, particularly in regard to patents.  Having clear rules is important for entrepreneurs, consumers and investors.  Having rules that maximally encourage and reward innovation while not unduly stifling competition is also important.  The Supreme Court is reviewing a lawsuit regarding the appropriate standard for method or process patents.  The New England Journal of Medicine has a commentary on the case.  (NEJM Perspective)

While the case does not specifically involve health care, it will affect all industries.  A number of observers believe that the lower federal courts had gone too far in allowing process or method patents on general ideas and that these decisions had the effect of limiting innovation and competition due to fear of patent enforcement suits.  The Federal Circuit Court of Appeals responded to these concerns by creating a new, more restrictive test for granting this type of patent.  That standard is what will be reviewed by the Supreme Court.

Protecting a truly innovative idea is important to incent inventors by allowing them to exclusively profit from the idea.  Protecting more trivial or generalized ideas or concepts can block progress by making inventors fearful of litigation.  Obtaining funding is often dependent on perceptions of a company’s intellectual property position.  In regard to health care, broad, easy to obtain patents can also substantially raise costs and may even restrict how providers practice medicine.  Whatever it ultimately decides, the Supreme Court will have a significant impact on health care companies.

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