For years, Germany has been the world's leading exporter, buoyed by sales of high-end technology. People across the globe have benefited from Germany's life-saving drugs and state-of-the-art machinery, not to mention its unrivaled luxury automobiles.However, a recent effort by the United States to reform its patent system threatens to undermine German innovation and deprive Americans and the world of its benefits.The U.S. patent system has been an integral part of German technological development. American patents have helped spur German dominance in areas such as industrial machinery, chemicals, pharmaceuticals and advanced medical devices. They have also helped preserve the nearly one in four German jobs that are dependent on exports.
Between 2000 and 2005, more than 64,000 German inventions received patents from the U.S. Patent Office - roughly the same number of patents Germany issued to its own citizens.The appeal of the American patent system is not limited to Germans. Last year, the U.S. Patent Office granted more than 94,000 patents to foreign inventors. Activity in the U.S. Patent Office was 50 percent higher than the European patent offices combined.The American system is regarded as the strongest protector of patent rights in the world. Unfortunately, the U.S. Congress is considering "reforming" the system. A bill has already been passed by the House and is under consideration in the Senate. Proposed changes could have potentially devastating consequences to research-based industries, especially the pharmaceutical industry.
Europe's inventors have flocked to the U.S. Patent Office because the European patent system is far inferior to America's. Europe's extended post-grant review procedures and artificially low caps on damages for stolen patents undermine the value of European intellectual property. Other flaws include ineffective and slow prosecution of counterfeit and copyright infringement cases.America has reaped great benefits when foreign inventors use the U.S. patent system. Thanks to the development and innovation spurred by American patents issued to Germans, for example, the two countries have developed a remarkably close trade relationship, which has reinforced their close political ties.
Germany consistently ranks as America's top trade partner in Europe. Moreover, as of 2000, 50 percent of German foreign direct investment went to the United States. Similarly, America was the top investor in Germany. As a direct result of German-American trade, millions of jobs have been created on both sides of the Atlantic.Patent protections will play an even more important role in German-American trade as it becomes increasingly dominated by research-based industries such as pharmaceuticals, chemicals and high-tech machinery. The process of innovation is so costly in these sectors that they cannot survive without strong protection of intellectual property rights.
In the pharmaceutical industry, it takes on average about 10 years and $800 million to develop just one drug. Many attempts lead to dead ends. Of the few drugs that make it to market, more than 50 percent will never turn a profit.To continue the research necessary to develop new drugs, which have been credited with 40 percent of the increase in life expectancy over the past 20 years, drug companies must recoup all their losses on just a handful of drugs. When patent regimes allow generics to flood the market, this becomes impossible.
However, by passing the Patent Reform Act of 2007, Congress would replace many of the best aspects of the U.S. patent system with the worst aspects of the European system. It would hurt the United States, Germany and - in the long run - many consumers worldwide."Virtually all of the inventions which ultimately hastened economic development and lifted living standards - especially new technologies and manufacturing processes - were developed in societies with strong intellectual-property protections," according to a 2005 report, "The Economic Value of Intellectual Property." U.S. patent reform will only weaken international protection of intellectual property.
The patent-reform bill would reduce incentives to perform research and development, threaten jobs at home and abroad and damage trans-Atlantic trade relationships, which have brought wealth and vital goods to the United States and Europe.Congress should think twice before "fixing" a patent system that is the envy of the world.
(This is is an interesting article from GERNOT PEHNELT who is a lecturer of economics and research associate at the Friedrich-Schiller-University in Jena, Germany.)
Between 2000 and 2005, more than 64,000 German inventions received patents from the U.S. Patent Office - roughly the same number of patents Germany issued to its own citizens.The appeal of the American patent system is not limited to Germans. Last year, the U.S. Patent Office granted more than 94,000 patents to foreign inventors. Activity in the U.S. Patent Office was 50 percent higher than the European patent offices combined.The American system is regarded as the strongest protector of patent rights in the world. Unfortunately, the U.S. Congress is considering "reforming" the system. A bill has already been passed by the House and is under consideration in the Senate. Proposed changes could have potentially devastating consequences to research-based industries, especially the pharmaceutical industry.
Europe's inventors have flocked to the U.S. Patent Office because the European patent system is far inferior to America's. Europe's extended post-grant review procedures and artificially low caps on damages for stolen patents undermine the value of European intellectual property. Other flaws include ineffective and slow prosecution of counterfeit and copyright infringement cases.America has reaped great benefits when foreign inventors use the U.S. patent system. Thanks to the development and innovation spurred by American patents issued to Germans, for example, the two countries have developed a remarkably close trade relationship, which has reinforced their close political ties.
Germany consistently ranks as America's top trade partner in Europe. Moreover, as of 2000, 50 percent of German foreign direct investment went to the United States. Similarly, America was the top investor in Germany. As a direct result of German-American trade, millions of jobs have been created on both sides of the Atlantic.Patent protections will play an even more important role in German-American trade as it becomes increasingly dominated by research-based industries such as pharmaceuticals, chemicals and high-tech machinery. The process of innovation is so costly in these sectors that they cannot survive without strong protection of intellectual property rights.
In the pharmaceutical industry, it takes on average about 10 years and $800 million to develop just one drug. Many attempts lead to dead ends. Of the few drugs that make it to market, more than 50 percent will never turn a profit.To continue the research necessary to develop new drugs, which have been credited with 40 percent of the increase in life expectancy over the past 20 years, drug companies must recoup all their losses on just a handful of drugs. When patent regimes allow generics to flood the market, this becomes impossible.
However, by passing the Patent Reform Act of 2007, Congress would replace many of the best aspects of the U.S. patent system with the worst aspects of the European system. It would hurt the United States, Germany and - in the long run - many consumers worldwide."Virtually all of the inventions which ultimately hastened economic development and lifted living standards - especially new technologies and manufacturing processes - were developed in societies with strong intellectual-property protections," according to a 2005 report, "The Economic Value of Intellectual Property." U.S. patent reform will only weaken international protection of intellectual property.
The patent-reform bill would reduce incentives to perform research and development, threaten jobs at home and abroad and damage trans-Atlantic trade relationships, which have brought wealth and vital goods to the United States and Europe.Congress should think twice before "fixing" a patent system that is the envy of the world.
(This is is an interesting article from GERNOT PEHNELT who is a lecturer of economics and research associate at the Friedrich-Schiller-University in Jena, Germany.)
