Patent bill jeopardizes life sciences innovation

Hoosiers familiar with Eli Lilly and Co.'s campuses in Clinton, Greenfield, Indianapolis and Lafayette could be forgiven for believing that our company's most valuable assets are its acres of modern facilities and state-of-the-art equipment, which cost us billions of dollars to acquire over the past 130 years.

In my view, Lilly's employees are the company's most valuable and irreplaceable assets. Yet Lilly could invest in neither buildings nor people were it not for another, nearly invisible asset: our patents. These give us a short period -- often no more than 10 years after we bring a new medicine to market -- to benefit exclusively from the sale of our scientific inventions.

Legislation that has reached the floors of the U.S. House and Senate would put our ability to invest billions of dollars annually in new drug research at grave risk, and it must be changed or stopped. The people of Indiana should make sure their representatives in Congress understand what's at stake: jobs and growth.

As currently written, the Patent Reform Act of 2007 would greatly limit the damages many inventors could receive when their patents are violated, and create a new administrative process for attacking patents via the U.S. Patent and Trademark Office -- without court protection.

For Lilly and other companies and individuals whose success rides on innovation, the consequences would be twofold. First, companies wanting to sell copies of our latest medicines or to incorporate our discoveries into their own products would have the ability to mount inexpensive challenges to our patents -- under procedures in which there is no presumption that a hard-earned patent is even valid. Financial penalties that copycats ultimately might face would be small enough to be seen as a cost of doing business.

Second, far fewer people or financial institutions would still believe that buying shares in Lilly and similar businesses represents an attractive investment. The proposed system for allowing administrative challenge procedures to continue throughout the life of a patent would keep clouds of uncertainty hanging over what are now valuable company assets. Research and development in the life sciences almost certainly would dwindle, resulting in fewer breakthroughs for patients and diminished prospects for economic-development efforts such as BioCrossroads.

Hundreds of other innovation-based businesses, along with individual inventors and entrepreneurs, universities and labor groups share Lilly's opposition to the bill. But the most powerful evidence against the proposed changes comes from those who hope the bill will become law.

The Economic Times of India excitedly reported last month that "a crucial bill making its way through the U.S. Congress is set to give a new inexpensive option for Indian drug makers to attack the patents that give monopoly rights to top-selling brands in the largest pharmaceutical markets. . . . It allows one to challenge a patent anytime during its life at a fraction of the cost of litigation."

Translation: Some foreign interests see this bill as Americans about to give away the store.

U.S. companies that support the bill -- including Dell, Microsoft, Palm and other information technology businesses -- have a different perspective as aggregators and assemblers of innovation. They typically do not rise or fall on individual discoveries and are angered that courts have on a few occasions forced them to pay hefty penalties for infringing patents on components of the much more complex products they sell.

But entire segments of the U.S. economy do in fact rise or fall on individual discoveries -- notably the life sciences sector upon which Indiana depends so heavily. That's why the current version of patent reform must be rejected. Scratching one industry's itch should not drive a stake into another industry's heart.

Lilly and its many partners in the Coalition for 21st Century Patent Reform (www.patentsmatter.com) are not trying to shut the door to change. Many aspects of U.S. patent law are outdated, cumbersome and out of synch with global practices, and we can find plenty of common ground with the IT sector. Let's look for remedies that will promote innovation across the board -- which is, after all, our country's competitive advantage.