Patentability of Improvement Patents and Strategic Patenting

Hyewon Ahn


There have been concerns about the so-called blocking patents, incrementally improved patents, surrounding patents, fencing patents, second-tier inventions, and the like (hereinafter, "improvement patents"). This is especially important in the field of pharmaceuticals because of the following reasons; firstly, patent protection is one of the most efficient ways to recoup the investment of developing a new medication. Secondly, despite drastically increased R&D expenditure, the number of new chemical entity approvals before the regulatory bodies has remained unchanged or has even declined. This makes investments for the development of new medication less attractive than ever before and potentially causes innovator companies to focus more on strategically filing for improvement patents. Thirdly, improvement patents may hamper competition not only horizontally, but also vertically, as they may prevent generic companies from entering the market, or at least make them hesitant.

This research project approaches the above issues from two perspectives. Firstly, the issue of patentability for specific pharmaceutical innovations such as enantiomer, polymorphs, esters, salts, metabolites, prodrugs, and combinations would be revisited. After reviewing recent case laws in various jurisdictions and amended examination guidelines, the paper would propose a guideline to assess the patentability of improvement patents. Secondly, this paper would discuss the tension between the exclusive rights and patents in the pharmaceutical sector. In particular, the paper explores the European General Court decision, AstraZeneca v. Commission, T-321/05, and the first extensive investigation by the Korean Fair Trade Commission on anti-competition activities by foreign and domestic pharmaceutical companies in relation to their intellectual property rights.

Based on these, this paper would explore the issue of exploitation of patent rights on improvement inventions and the problems of abuse. Under certain circumstances, such as the case of improvement patents on medication owned by an innovator company who is also the holder of the basic patent, non-use of the improvement inventions may constitute an abuse, weakening the competition in this field. On the other hand, arguments can be made for the promotion of capitalization or donation of so-called dormant patents (i.e. non-used but maintained patents). Considering both aspects, it is not easy to draw a line between the legitimate and illegitimate non-use of improvement inventions on medication. Thus, issues related to non-use including non-working, refusal to license, and the problem of NPE (non-practicing entity) are to be explored. In conclusion, a proposal defining the line between legitimate and abusive non-uses would be made, to remove uncertainties for private actors and users of the patent system in the pharmaceutical sector, and for the benefits for society.