Projectile Dysfunction

The coming showdown over the State Intellectual Property Office’s decision to void Pfizer’s Viagra patent will likely be long and ugly. If the past is any guide, the heavy media focus on the IPR protection problems around Viagra will lead many to conclude that the IPR issue is the primary cause of Viagra’s commercial failure in China.

The full blame cannot be laid on China’s failure to protect Pfizer’s intellectual property. Distribution issues caused by the government’s determination that Viagra is a controlled substance certainly were a contributing factor.

But if one were to dig deep enough into the Wall Street Journal story covering the government’s decision, one would find that Pfizer itself suggests the problem was caused by inadequate information filed with the original patent application. While the information was not required by the government at the time, the government is apparently requiring the data retroactively. Pfizer has 3 months to file an appeal along with the data. Given the saber-rattling going on today, smart money in Beijing has SIPO granting the patent again once the information is filed.

One also discovers that Pfizer never tried to patent the compound. There could have been a range of reasons for this.

Finally, the story notes that a coalition of Chinese pharmaceutical companies are the proximate cause for the voiding.

This entire case makes a few important points:

1. Chinese intellectual property law continues to evolve. Even if you have patents, copyrights, and trademarks in China, you are likely to have to keep watching the law, because today’s protection is tomorrow’s loophole.

2. Don’t count on intellectual property protection to create a market position for you in China. Market position needs to be built the old-fashioned way – branding, distribution, positioning.

3. The locals are a powerful force if allied against you. Don’t let those alliances grow by being aloof – find strong local partners (either in manufacturing, the channel, or among key advocates) and make them your shield against this kind of ambush.