Patents versus prizes: A Nobel case study

Patents versus prizes: A Nobel case study

Is the patent system the best way to incentivise innovation? This has been a longstanding question in scientific and technological spheres. Patents enable companies and institutes to see a return on their investment and, in many cases, turn a substantial profit. However, there are a number of advocates for moving to a prize-based system, arguing that patents only incentivise commercial innovations.
A number of prizes already exist with the aim of incentivising research, such as the Longitude prize, which encourages research into new antibiotics, and the Bill and Melinda Gates Foundation. Unquestionably, the most famous prize for research is the Nobel prize. This is undeniably an extremely prestigious and career-changing award, but how many scientists are happy with prizes alone?
Since its conception in 1901, the Nobel prize has been awarded annually over 500 times to over 900 individuals or organisations, in many cases acknowledging the lifetime achievement of the winner. In the words of Alfred Nobel, the winner of the Nobel prize “shall have conferred the greatest benefit on mankind”. This criteria is somewhat loftier than the new and inventive requirements for obtaining a patent!
Winning a Nobel prize can catapult the winner into a new realm of success, leading to invitations and opportunities, and enabling recipients to engage with, not only the scientific community, but to reach the wider general public. These benefits are, of course, alongside the 9 million Swedish Krona in prize money awarded for each prize. But is this enough to incentivise invention or are patents also necessary? Many consider that without the commercial incentive to invent provided by patents, research itself may falter.
Using the Nobel prize as a case study, there are some laureates who clearly do not find that patents are an incentive to research.
Marie Curie won the Nobel prize in Physics in 1903 alongside her husband and again in 1911 in Chemistry. This later prize was a result of her discovery of radium and polonium. However, after discovering radium in 1898, Curie did not pursue any patents and instead decided to share the isolated product with fellow researchers, thus did not financially or commercially profit from its production.
A more recent example of Nobel laureates not patenting their research was the 2010 Physics Nobel Prize, which was awarded jointly to Andre Geim and Konstantin Novoselov at the University of Manchester for their work on graphene. As neither laureate had filed patent applications to their research, there was a huge amount of speculation at the time that the Nobel laureates had “missed out”. Geim clearly does not consider this to be the case, having given a number of interviews denouncing the filing of patents when research is not at a stage suitable for commercialisation, especially when at the taxpayer’s expense. Although Geim and Novoselov’s original research did not appear to be incentivised by patents, this does not prevent others from being so incentivised. Impressively, over 10,000 patents or patent applications have now been published with the term “graphene” in the title.
Despite some laureates not being particularly pro-patents, there are many links between Nobel laureates and patented inventions. In particular, a number of Chemistry, Physics and Medicine Nobel laureates are prolific in the patent world. The link between Nobel prizes and patents was established way before the first Nobel prize was even awarded, as Alfred Nobel himself acquired over 300 patents before he died. Without the commercial success made possible by these patents, the Nobel prize would not even exist.
One of the most famous physicists of all time, Albert Einstein, won the Nobel prize in Physics in 1921 for the discovery of the photoelectric effect. Einstein had over 50 patents worldwide and even worked as an Examiner at the Swiss patent office for a number of years. Among Einstein’s inventions was a patent relating to a refrigeration system (co-invented with Leo Szilard) that was sold to Electrolux for $750, the equivalent of around $10,000 today. However, Einstein is renowned for coming up with the theory of relativity, which tends to outshine much of his other work and achievements, such that many are unaware that Einstein held patents or even won the Nobel prize.
One of this year’s Chemistry Nobel prize winners, Gregory Winter, received the award for expanding on the foundation laid down by fellow laureate George Smith for the method known as “phage display”. Gregory Winter took this method forward and was able to show that phage display could be used in the directed evolution of antibodies. This has now become an established technique for developing therapeutic antibodies with superior binding properties. Gregory Winter and his colleagues established the Cambridge Antibody Technology (ultimately acquired by Medimmune/AstraZeneca), which made use of this technique. The company, through a collaboration with BASF, went on to develop the biggest selling humanised antibody worldwide, Humira. Humira (now owned by AbbVie) reached over $18 billion in sales last year and is the subject of a vast number of patents. This case is one of many where patents have complemented, and perhaps incentivised, research.
Another successful example relates to Shuji Nakamura, who won the Nobel prize in Physics in 2014 for his invention of blue LEDs while working at Nichia Corp. Although not listed as an applicant, Nakamura was a named inventor on a number of patents relating to blue LEDs and, most notably, was involved in a law suit with his employer, Nichia Corp, over his right to compensation. The court estimated that the blue LED patents owned by Nichia Corp could have earned more than $1.1 billion in profits. Initially, Nakamura had only received a paltry $200 compensation from Nichia for his invention, however, following his successful law suit, he was awarded $180 million. Although Nichia was awarded his third share of the 9 million Kroner Nobel prize money, this pales in comparison to the amount he eventually received due to the success of the blue LEDs, which can be attributed to the fact that they are the subject of many patents.
However, the boundary or link between patents and the Nobel prize is not always black and white. For example, there have been a number of notable disputes between Nobel laureates and third parties, where the third parties held patents to the prize winning research. In these cases, ongoing patent disputes can trump any collaborative feeling that may exist between researchers working in similar fields, leading to a divide in that field and perhaps even leading to a harmful effect on research and innovation.
The 1964 Physics Nobel prize was awarded partly to Charles Hard Townes for fundamental work that led to the maser-laser principle. The little heard of “maser” (microwave assisted stimulated emission of radiation) predates the laser and was invented by Townes, while the laser was invented by Gordan Gould. Gould knew Townes and even sought Townes’ advice before filing his own patent applications. Despite this, Townes pipped Gould to the post and filed his own applications to Gould’s invention. It then took thirty years until Gould was awarded the patents for his invention.
Another interesting case relates to the 2003 Physiology and Medicine Nobel prize, which was awarded to Paul Lauterbur and Peter Mansfield for their work leading to magnetic resonance imaging (MRI). This award lead to outrage from another inventor, Raymond V. Damadian, and his supporters, who believed he should have also received recognition from his work in developing MRI. An advertisement was even published in several newspapers titled “The Shameful Wrong That Must Be Righted”, which encouraged readers to petition the Nobel Committee to include Damadian as a prize winner. Damadian had been the first to propose applying NMR (nuclear magnetic resonance) to medical imaging and was granted a US patent for an MRI scanner (US3789832). Despite having issues enforcing his patent against the companies that eventually manufactured the MRI scanner, in 1997 General Electric Company was ordered to pay almost $130 million to Damadian’s company for the infringement of his patent.


As indicated from the above cases, it is commonplace for Nobel prize winners to also have patents, suggesting that there is no single incentive to invent or research. In any case, it is near impossible to pin down incentives to a particular system or scheme. For many scientists, the patent system is a key facilitator of research, providing much needed returns on investment, even if is not their main incentive to innovate. There is no denying that in the current system, the profits obtained from patents can far outweigh prize funds that are available – as can be seen from Nakamura’s blue LEDs. It is therefore hard to see how prizes could become a viable alternative to patents.
Considering Alfred Nobel’s comment that the Nobel prize “shall have conferred the greatest benefit on mankind”, it seems likely that the recent CRISPR/Cas9 work may soon be the subject of a Nobel prize. This research is already renowned for ongoing patent wars, suggesting that the link between Nobel prizes and patents could run and run.

For more information or advice, please contact Alison Care, Lauren Stallard-Stephens, Claire Weston or your usual Kilburn & Strode advisor.

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