Lila Feisee, vp, global intellectual property policy with BIO, told GEN one possible model for helping small biotech businesses is a program along the lines of last year’s Qualified Therapeutic Discovery Program (QTDP). QTDP set aside $1 billion in tax credits and grants for biotechnology and pharmaceutical companies working on new therapies or other biomedical innovations.
QTDP delivered all its available $1 billion in grants and tax credits for the 2009 and 2010 tax years to 2,923 biotech companies for 4,606 projects in 47 states. The credit covered up to half the cost of a qualifying biomedical research project, up to a maximum $5 million per company of up to 250 employees, with a per-project limit of just $244,479. Startups could elect to receive their award as cash if they could prove they had yet to make a profit, a provision that has made QTDP especially attractive to early-stage life science firms.
Supporters of government aid to startups pursuing international patents argue that the help is needed given that the perpetual cash squeeze affecting most startups has worsened as many venture capital firms have retreated from life science investing. However, USPTO and the Obama administration also view such assistance as a piece of a larger puzzle, namely harmonizing U.S. patent laws with those of European and Asian nations.
The U.S. has had informal dialogue with the European Patent Office (EPO), and in February, informal talks with EPO and the free-trade group Asia-Pacific Economic Cooperation, whose 21 member economies include non-nations Taiwan and Hong Kong.
“There is some move afoot to actually coordinate, cooperate on harmonization, and it’s very important. You don’t need duplicative efforts done in several different offices across the world, doing the same search and examination and charging an arm and a leg for it,” said Robert L. Stoll, commissioner for patents, addressing the Biotechnology Industry Organization’s IP Counsels Committee Fall Conference, held November 3 in New York City.
Speaking minutes later with GEN, Stoll said the informal discussions are expected to lead to more formal talks at the World Intellectual Property Organization (WIPO): Asked how long it might take before the talks progressed to WIPO, he replied: “A couple of years. Not many, but a couple.”
That window of two or so years should be plenty of time for USPTO to study the issue, then offer some suggestions that Congress can adopt. But why reinvent the wheel? Among the simplest suggestions came from Erck: use existing business assistance programs to aid companies pursuing international patents.
For example, NIH’s Small Business Innovation Research (SBIR) program doesn’t allow funding of patent costs unless prospectively negotiated in a provisional indirect cost rate agreement, as a report by Edward G. Jameson, of Jameson & Company CPAs, noted earlier this year. Some patent costs can be recovered via the Department of Defense SBIR program, also subject to negotiation. But to recover foreign patent cost filing fees, a company will need to have revenues from overseas.
“Because IP business assets are at least as important as other, more tangible business assets, there is no reason to exempt patent rights from publicly funded small business assistance programs that are available for more tangible assets such as capital equipment, hiring, or leasing space,” Erck concluded.
It’s not a stretch to say that IP protection is at least as crucial to a biotech startup than capital equipment or leasing space, if not more so. But as Washington is finally on the cusp of an overdue spending diet, it’s hard to imagine the government being able to afford the kind of start-up aid that the biotech industry is seeking, at least until economic times finally improve.
Erck acknowledged as much when he suggested a matching program that ties government funds to money invested by startups. While his numbers—$8 in government money for every $2 from startups—seem high, he also said further thinking was needed. That thinking should begin sooner than later.
Should the federal government provide money to help small businesses establish international IP protection?