16 February 2018
CRISPR-Cas9 is heralded as a revolutionary gene editing technology that is regularly hitting the headlines for both its scientific promise and fiercely fought patent wars. Our colleagues have written extensively on these aspects (see here and here), but in this blog, we focus on the competition law issues which surround the growing trend for the creation of patent pools in the life sciences sector. The creation of the CRISPR patent pool was announced last spring by MPEG LA, an organisation well-known for creating patent pools for consumer electronics. Thus far, only the Broad Institute has publically revealed that it has submitted patents for evaluation. Patent pools can be subject to anti-trust scrutiny. Both the European and US competition authorities have provided guidance on this issue – see section 4.4 of the European Commission’s Technology Transfer Guidelines and section 5.5 of the US DOJ’s IP Licensing Antitrust Guidelines. These guidelines recognise the pro-competitive benefits of patent pools which can help integrate complementary technologies, reduce transaction costs, and limit cumulative royalties. In this case, there appears to be a clear pro-competitive benefit in offering a single licence for CRISPR technology as there currently exists a complex web of relevant patents that is growing by around 100 new patent families each month. Having said that, the competition authorities on both sides of the Atlantic also identify a number of competition law risks – namely, the risk of collusion, price fixing or foreclosure of alternative technologies. Indeed, the European Commission has previously investigated a patent pool for non-invasive prenatal testing (see our commentary here). The authorities’ guidance suggests principles which can reduce this risk. In particular, the European Commission suggests that:
- Participation (as a licensor or licensee) should be open to all.
- Only complementary technology should be included (inclusion of substitute technology is likely to infringe competition law).
- Independent experts should be involved in the creation and operation of the patent pool.
- Safeguards against the exchange of sensitive information should be in place.
For the CRISPR pool, MPEG LA has made an open call for patents, and will evaluate each patent before it is accepted. Its involvement, as a separate licensing body, should play an important role in safeguarding against the exchange of sensitive information. Looking ahead, MPEG LA may reduce the competition law risk by reviewing the pooled patents regularly, and considering licensing parts of the pool separately. In the life sciences sector, strands of research can head off in entirely new directions such that only half of the pool may remain relevant.
There are also commercial concerns for the CRISPR pool to overcome. Whilst technology and telecommunications pools are common, life science pools, such as the Golden Rice and Medicines Patent Pool, are rare and often not profit driven. One reason for this may be the prevalence of exclusive patent licensing in the sector, as well as the relative lack of interplay between technologies in traditional small molecule medicines.
This leaves MPEG LA with a tricky tightrope to walk. Having the Broad Institute on board is a promising start, but UC Berkeley, holding the patent to the underlying technology, must also join for the pool to be commercially successful. Beyond these two key players, the selection of patents to include will require some tricky choices: too few patents and the pool fails to achieve its aim of reducing transaction costs and may deter some investment by potential licensees altogether; too many and patent holders may be concerned about the returns they will achieve, and be wary of making the necessary large investments in further research.
We’ll be looking out for any further developments and will post them to the CLIP Board as and when they occur.