Tuesday, December 21, 2004

Becker-Posner on pharmaceutical patents

Good discussion at the Becker-Posner blog on pharmaceutical patents and reimportation.   Two points worth delving into some more:

(1) Reimportation policies will result in lower quantity and higher prices in the long run as patented pharmaceutical manufacturers in the US can control the flow of imports by simply reducing the quantity exported into Canada and other source nations.  But gray markets are a workable solution where the imports are manufactured in a third nation (such as India in the South Africa situation).   In such a situation, the patent owner loses the ability to control the flow of imports through its manufacturing decisions, but still retains some incentive to supply to the countries that are receiving the gray market drugs so as not to give up the market to the importer.   I do not think that this limitation on the patent owner's rights to import constitute a takings, and in fact would be consistent with competition policies, particularly the competition objectives of intellectual property law.  (Yes there are some; IP law is not only about property rights).  Of course this is all assuming adequate safety and efficacy.  Politics and social attitudes limit this type of gray market policy, as tried in South Africa, from being adopted in the US.

(2) On trademarks and patents:  Fellow bloggers are correct in separating trademark policy from patent policy in general, but there is one area where they do overlap and this is in the area of trade dress and patents protecting design.  In the Traffix Devices case from 2001,  the Supreme Court stated that trade dress protection under trademark cannot extend to useful features of a product that were  previously protected under an expired patent.   This decision might have some application to pharmaceuticals if a drug manufacturer attempts to extend the life of a patent through trademark law.  The problem is that the useful features protected by patent, such as chemical composition, may not be the basis for the trademark claim.  But if color, shape, smell, or taste (all elements of trade dress potentially) can be shown to be connected to the useful elements that were patented, then trademark protection would be limited.


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