Congress is considering a bill, the Eliminating Thickets to Increase Competition (ETHIC) Act, that would undermine innovation by preventing patent owners from enforcing many of their rightfully earned patents. To combat “patent thickets” — groups of patents allegedly used to block competition — the bill would prevent patent owners from asserting more than one patent in a group of related patents. Proponents of the bill have claimed that it would promote competition, preserve innovation, and benefit patients.
In reality, however, the “patent thicket” narrative that the bill rests on is a myth — and, far from benefiting patients, it would undermine incentives for life-saving innovation. Below, we explain why the primary assumptions underlying the ETHIC Act are wrong:
| Claim: Companies can use terminal disclaimers to “double patent” the same invention, blocking competition. |
| In reality: The ETHIC Act targets groups of patents linked by terminal disclaimers — a legal mechanism that ties related patents together so they expire at the same time and remain commonly owned — by preventing patent owners from enforcing more than one patent within a group. Proponents of the bill and broader patent thicket narrative often assert that terminal disclaimers allow companies to block competition by acquiring multiple patents on the same invention. But this fundamentally misunderstands the purpose of terminal disclaimers, which function to prevent unfair double patenting rather than enable it. Companies use terminal disclaimers when patent examiners that an applicant is seeking patent claims on subject matter for which that applicant already has issued patent claims. In filing a terminal disclaimer, the applicant decides to accept the limitations of a terminal disclaimer rather than dispute the examiner’s characterization. These limitations include that the new patent will not extend beyond the term of the earlier one and must remain under common ownership. These safeguards ensure that patent protection on the same subject matter cannot be extended through overlapping patents. Terminal disclaimers are an important feature of the patent system because they streamline patent examination by forestalling potential objections about overlapping claims. But they do not allow patent owners to extend patent protection by filing similar patents — they explicitly serve to prevent that sort of gamesmanship. Put simply, use of terminal disclaimers is not a sign of abuse but a sign that the patent system is working as intended. |
| Claim: Pharmaceutical companies often file numerous patents on the same product to block generic competition for a longer period of time. |
| In reality: The ETHIC Act assumes that patent thickets constructed by pharmaceutical companies are a major obstacle to competition, but both parts of this assumption have been debunked by the USPTO itself. First, the USPTO has found that while “families” of related patents are present across all industries, these families are “not commonly found” in the context of drug patents. Second, the USPTO has demonstrated that the number of patents associated with a drug has no clear correlation to when a generic competitor can enter the market. In a study on drug patents and exclusivity conducted in response to a congressional inquiry, the USPTO found that “simply quantifying raw numbers of patents and exclusivities is an imprecise way to measure the intellectual property landscape of a drug product because not every patent or exclusivity has the same scope.” Further, all of the drugs that the USPTO studied experienced shorter effective exclusivity — less than 12 years, on average — than the statutory 20-year patent term, and for some, generic competitors even launched before all listed patents had expired. Finally, real-world evidence refutes the idea that generic drugmakers struggle to compete in the marketplace. Nine out of 10 prescriptions filled in the United States are for generic drugs, according to the FDA. The premise that large thickets of patents are a major barrier to drug competition is not supported by the government’s own research or by the actual state of the generic drug market. |
| Claim: The ETHIC Act would benefit patients. |
| In reality: The lack of evidence that patent thickets are a significant barrier to competition directly undermines ETHIC Act proponents’ claims that the bill is a necessary reform to promote competition and reduce drug prices. Rather than benefiting patients, the primary effect of the ETHIC Act would be to undermine life science innovation that patients rely on. The bill would make numerous valid, duly issued patents unenforceable, weakening a crucial incentive for investment in one of the most research-intensive sectors of the economy. Small companies in particular, which are responsible for most new drugs developed in the United States, rely heavily on strong patents to attract the capital they need to sustain research and development. If these companies cannot enforce all the patents on the various components that make up each new drug, that investment will inevitably dry up. Investment in valuable follow-on research is likely to be especially hard hit. Currently, companies often continue researching drugs after they reach the market, which can lead to improvements like faster-acting formulations and more convenient dosing methods. But if companies lose the ability to secure strong patents on improvements to existing drugs, patients could lose out on newer versions of drugs that would have been safer, more effective, and easier to adhere to. In short, any short-term savings that might stem from weakened patent enforcement would come at the cost of new therapies and improvements to existing ones — ultimately harming the patients the ETHIC Act purports to help. |