Importance of Patents for Start-ups, specially in Biotech

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A patent is one of the ways by which technological innovations are protected. The most ironical fact about a patent is that although it gives monopoly for a number of years, but in order to gain the monopoly, the invention has to be disclosed. Hence, it’s not a secret anymore, and the competitor knows how it works. Therefore, it becomes necessary to enforce rights of a patent, by taking legal actions, either to make others who are violating patent rights from stop infringing or to make them pay for the privilege of using the patent. If a patent is not enforced, its value is questionable. In simpler terms, if violators are not taken to court, they will continue to infringe.

It is well known that organizations spend thousands of dollars for filing patents each year. It is interesting to know how they gain an edge over their competitors by filing a large number of patents. The example of Taq patent justifies this to a certain extent. Taq polymerase is a thermostable enzyme employed in polymerase chain reaction (PCR) for amplification of a specific genetic sequence. The rights to both the enzyme and the PCR were owned by Cetus Corporation, and in 1991, they sold their rights to Roche for $300 million. The life sciences industry is full of various such instances.

In addition, patents for biotech startups serve two other functions. First, patents help companies secure an initial clientele base by presenting the uniqueness of their products, and secondly, patents serve as a competitive barrier of entry into the same field. As mentioned earlier, small biotech startups usually focus on specific drugs for specific diseases. Since the markets for these diseases are fairly small, it is imperative for them to have a dominant position in their respective fields.

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