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Patents and Eminent Domain
mrbill writes "Interesting take on the Eminent Domain case now before the Supreme Court. Could the same logic behind using Eminent Domain to take real property be used to take a Patent? Apparently some states are contemplating taking drug company patents to force lower drug prices." From the article: "Patents are the key to huge drug-company profits. The industry will fight vociferously to protect them. In West Virginia, where the issue came up last summer, industry lawyers warned a legislative advisory council away from proposing such action on patents, claiming it would be unconstitutional. "
I'd have to say I'm a little skeptical about this, even if the drug companies did lose. Not to be a troll, but I imagine if they did lose in court they'd do what every other industry does when they lose in court; buy legislation.
if a government did apply this to drug patents they would be required to pay fair market value for them which would be roughly equal to the rediculous profit the companies are gaining from their sale. This means that any difference in price would be made up in tax money.
Since the drug companies invest so much in research due to the potential profit, wouldn't reducing the potential profit reduce the incentives for research?
"Patents are the key to huge drug-company profits. The industry will fight vociferously to protect them. In West Virginia, where the issue came up last summer, industry lawyers warned a legislative advisory council away from proposing such action on patents, claiming it would be unconstitutional. "
Sounds like the consequences of blurring the lines between real property and intellectual have come back to haunt them.
There is a difference between taking away the right to use your house, and the right to exclude others from using a copy of your house.
Taking away a person's house is fundamentally wrong if you believe in the concept of private property. Taking away a patent is only wrong if you believe that patents are exactly like houses.
To "take away" a patent actually just means, the government won't help enforce it any more. It's not like they can extract the data from the employee's brains. Not the same thing as having the police remove you from your house.
I think calling this "eminent domain" is a big mistake. Call it "patent forfeiture" or something. The company can still make the product and profit from it, they just have to compete on the open market instead of hoping for a government-granted monopoly.
However I would rather the government weaken all forms of patent protection across the board, or just in specific industries. Having the government choose who gets the monopoly protection and who doesn't seems an even worse idea than granting them uniformly to anyone with a valid patent. I can just imagine the conflicts of interest that would arise, and the opportunity for corruption.
Let a private business go through all the work and expense of developing a drug, and then simply procure it because of "public good."
That'll keep drug companies in business developing new drugs. In fact, if I was president of a drug company, I'd make sure I got my products to market faster after this happened the first time. I would just love deals like this. Here, let me bend over for you... do you mind if I lean on my desk?
"Alcohol, Tobacco, Firearms, and Explosives" should be a convenience store, not a government agency.
From the Article:
The councilman argues that if drug companies were smart, they would "start talking about price reductions now rather than leave themselves open to a long, drawn-out due process review and hearings to determine just compensation."
So the states wouldn't want this to go to trial. They'd very likely lose. Isn't this just blackmail? However, if their argument is that falicious, the drug companies may not be persuaded to do anything and simply fight back.
Such review and hearings, he warns, would expose "just how pervasive the price gouging and profiteering has been."
Drug companies take on huge risk when developing drugs and shouldn't their prices be high enough to cover past and future risks? The total cost of a drug has to include the drug company's failures in R&D, which I would presume are higher than other industries. There is also a possibility for future liability when you find that the drug has nasty side effects (cox-3 inhibitors). On the other hand, they probably are a little too greedy. Besides, isn't it fun to get the juicy details of the inner workings of corporate america and keep consciousless big business in check.
You said it man. Nobody f#%ks with the Jesus.
Hey, I will be the first one to say that drug prices are insane. I have one prescription that I don't take because it costs too much -- I only take it when I have too. But if a drug company has the fear of immenient domain, what is going to keep a drug company innovating and researching? The idea of patents is to protect the innovator's investment and to encourage innovation. If I were a drug company, I would threaten to close shop. The drug companies may enjoy high profits, but the R&D costs are insane too.
The views expressed are mine own and do not express the views of my employer.
These days, the government takes land from one citizen or business so it can transfer to another citizen or business.
Their rationale is that it is okay to do that if the new owner will pay more in taxes.
Of course, the new owner, in addition to being able to receive stolen property, is often given a tax break. So it's not about increasing tax revenue -- it's about doing favors for the rich and powerful.
Personally, I think there are cases where eminent domain should be applied to patents-and cases where the government should offer prizes for creation of patents that will be placed in the public domain. The only real dangers of application of Eminent Domain to patents are
a) the price will be too low so folks have their property expropriated
b) the price is too high-so companies lobby to get
Eminent Domain applied to their patents
Of these, I tend to see 2 as the lessor danger.
Because if I'm living in a state that's wasting my taxes on this broadband, healthcare, and other ridiculous shit, I can just move to Nevada.
The article states that the Supreme Court has said that it is acceptable for states to do this, which is kinda of surprising to me (IAAL). Article I, Sec. 8, Clause 8 of the U.S Constitution specifically states that regulating Patents and Copyrights is a power of the Federal government. Since the Feds are a government of limited power, when the Constitution says its theirs, it is generally theirs.
Even so, eminient domain requires "just compensation" by the state at the time of the taking. With a monopoly on the drug for the duration of the patent, "just compensation" is going to be nothing any rich states can afford, let alone a poor mid-west or southern state. So it seems to me, the states attempting this will spend a lot of tax dollars only to find out they are really not getting any kind of "deal" from the drug companies. Drug companies like Merck, Smith Kline, etc. have as much money, if not more, than the budgets of most states. They can afford to drag this out, even to the point when the patent expires.
Way long ago, when today's biggest, most-gigantorrific companies were scrappy litte upstarts, they all moved their operations to Switzerland. Why? Switzerland did not grant and did not recognize patents! So these little companies could live in poor, backwards Switzerland and happily "pirate" the patents of other people. One of these companies, Ciba, got its start by ripping of an English patent on aniline dye. Ciba eventually grew up to be one of the planets biggest companies, Syngenta. Syngenta successfully lobbied the European Convention to allow patents on genes, and also went to court to stop South Africa from treating AIDS patients with its patented drugs.
The moral of this story appears to be, the more you rip off other people's "IP", the better chance you stand of become a multigazillionaire. I'm all for it, then.
- I'd prefer not to.
Drug patents expire in 20 years. 20 years from now you will be able to buy all the expensive drugs of today in generic versions for almost nothing. No need to invade drug companies with guns and steal their IP, just wait it out. Until then you can party like it's 1985.
Yup. Always remember that government is a necessary evil. As such, it should be kept as small as possible - no larger than is absolutely necessary to do the job. Oh, and it likes to define more and more things as "government responsibility" so that it can grow. Beware of that, too. They key to personal liberty is personal responsibility. Jealously guard both.
Constitutionally Correct
In this case, we are not talking about a school or a road. In this case the locality is arguing that the "public good" comes solely from the increased tax base that the condemnation would provide. You end up with neighbors being forced off land to be given to a PRIVATE, PROFIT-MAKING developer. You get these arbitrary groups that can pull figures out of their ass, and use these numbers as sole justification for getting rid of the current landowners. In the amicus brief, filed by the libertarian institute for justice, in addition to the NAACP and other groups you might expect to have joined against this was the National Association of Home Builders, who can see that giving land to the highest bidder will skew away from homes and to businesses and buildings that will generate higher tax bases, which homes won't.
This kind of eminent domain is NOT a public good, but is merely as case of whoever pays the most tribute to rome gets to have the land. And there will always be someone who can pay more than you.
Doesn't really matter. Eminent domain only works against lower middle class people. Trillion dollar pharm companies will be immune. However, if some laid off $32k a year construction worker ever gets ahold of an AIDS vaccine patent, I'm more than confident that the state will be able to take it away from him.
Comparing profit per share as a measure of profitability is ridiculous - you aren't taking into account the number of outstanding shares. Net profit = # of outstanding shares * profit per share.
Example: MSFT made $0.92 per share last year, BRKA made $4,134.48 per share!!! So Berkshire-Hathaway is way more profitable than Microsoft right? Wrong - Microsoft made about $9 billion last year vs about $4 billion for Berkshire-Hathaway.
The difference is that Microsoft has TEN BILLION outstanding shares and Berkshire-Hathaway has less than a million. Source for all data is yahoo finance.
I know all this seems scary however, in Brittain where you can't remove a prive house or even hedge they have terrible infrastructure, curving roads and train tracks, bridges that could be removed with a culvert.
No one wants to think of their home as the property of the government but there are significant advantages to having it that way.
"The theory of Communism may be summed up in one sentence: Abolish all private property."
Karl Marx
"Just as man can't exist without his body, so no rights can exist without the right to translate one's rights into reality, to think, to work and keep the results, which means: the right of property."
Ayn Rand
"America's abundance was not created by public sacrifices to "the common good", but by the productive genius of free men who pursued their own personal interests and the making of their own private fortunes."
Ayn Rand
The Supreme Court will probably come down on the side of local governments and developers, but they are 100% wrong. I'm all in favor of using eminent domain for projects that are truly for the public good, but letting local governments take property simply to sell to somebody who will pay higher taxes is NOT what eminent domain was ever intended to do.
Pay attention, people. While you're all whining about the Patriot Act, the feds are about to take away one of you most fundamental rights - the right to own private property.
This is most important. They want to be able to take your property for "fair market value" and let somebody build a fucking Wal-Mart.
As for states taking drug patents. Go ahead. It will be the end of any new research into new drugs. I know that there's no way I'd invest my money in a project if the government can step in and STEAL the results.
Bottom line is - are you a capitalist or a communist?
It's not the fact that they're profitable companies that's the problem. It's the fact that they're profitting from peoples' illnesses.
With the exception of antibiotics, I doubt there are any drugs that cure a patient's disease.
Some currently contested drugs are Celebrex and Vioxx. Why were these drugs even made? Why were they marketed? They fall under the category of NSAID (Non-Steroidal Anti-Inflamatory Drug). Other NSAIDS are asprin and ibuprofen.
Which drugs have a proven history and have well understood consequences? The cheap ones we've been using for years.
Which drugs do not have a proven history, and have been shown to increase the risk of heart attack? The expensive new ones.
What are all of these drugs? Pain relievers.
Does Vioxx work much better than Ibuprofen? No.
Does Celebrex work much better than Asprin? No.
So why take these drugs at all? Because the drugs companies are controlling the health care of this nation. Drug companies fund most medical research. They bombard doctors daily with FUD and misinformation about their products, i.e. they lie to doctors to get them to perscribe their products.
And why do they do this? It is profitable for people to be sick.
Drug companies should research drugs. They should fully test their drugs. When and if they are shown to be better with less side effects than the current drugs, they should release and update to a central database that a new drug is out. They should not be advertising to the general populace. The people should not choose their medications based on what they saw on the television or in a magazine.
People should have the right to have their doctor's pick their medications without bias, without restrictions, based on what works the best and has the fewest side effects.
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You make a good point. They AREN'T "excessively" profitable. It's still a bad way to organize the business. They are encouraged to keep negative reports about promissing drugs secret. And they do. They are encouraged to drop unprofitable, but successful, drugs. And they do.
They act precisely as a business governed solely by economics should. And this is bad, because they are given power that affects the lives of people who aren't necessarily benefited by what benefits them.
I would recommend that drug testing be divorced totally from the drug companies. I also think that all patents on drugs are questionable. The patents, rather, should be on the industrial processes (!NOT!! business methods!! !!NOT!!) used to make them.
The drug research should be carried out by state funded universities and colleges which should be forbidden to accept any money or other equivalent contributions from the drug companies.
OTOH, if a drug company develops a process for making a promissing drug, it would clearly like to get it approved. I suggest that it should be able to post a "hiring offer" at a federal agency, possibly the FDA, and that that agency should contract with some college or university research lab to perform the tests. And that the company should not even be told who is doing the tests, and should be forbidden from communicating with them. That should be through the federal agency. This could prevent the suppression of unpleasant results.
I dislike proposing such a role for a government agency. If would be better if some less centralized way could be devised. But it's important that ALL results of drug tests be available, not just the ones that are favorable to the sales of the drug.
I think we've pushed this "anyone can grow up to be president" thing too far.
Plenty of prior art doesn't mean that a lawsuit can't be filed. For somebody who doesn't have the financial resources to overturn the patent, it is totally discouraging. For the well heeled corporate developer, it's full speed ahead.
Drugs cost hundreds of millions of dollars to develop. If the government gets in the habit of stealing the patent rights, then why should investors pony up the $$$ to develop new drugs?
Funny that at a time when the rest of the world is actively privatizing various parts of their formerly-public economy in recognition of the fall of "communism" (actually socialism in practice, but communism in ideal) -- such as in Britain, where various automakers, such as Jaguar, were state-owned -- here in the U.S., we would consider stealing private property from people and redistributing the benefits of that property to all, i.e., we would move in the *reverse* direction from the rest of the world.
But then, we do that with religion too (in an attempt to promote "faith-based initiatives" and such). Perhaps I shouldn't be surprised.
Eminent Domain is the worst legal doctrine in the world, and it is routinely used by small cities to bulldoze private property for the benefit of large corporations for the sales tax revenue the city gains from doing so. Wal-Mart is a classic example of this.
And now the socialist hippies of America want to use Eminent Domain to steal patents from drug makers? Who the hell is going to develop new drugs then?
Some people seriously need to go fucking read Atlas Shrugged. Then take at least 2 courses in economics, and then read some about economic history, because nobody who understands economics, even economists on the left, promote such idiotic ideas.
Solidarity comrade, solidarity.
Is Capitalism Good for the Poor?
In the SCOTUS case private indivuduals are exploiting government force to acquire private property against the wishes of the former owners.
Looks to me like both the government and the manipulating individuals are wrong.
The US Military Tribunal that decided the case of IG Farben at the Nuremberg trials would probably have agreed. (In brief, the executives of Farben (a chemical company) were held criminally responsible for Farben's seizure of property. The seizure was often done via Nazi government force, or was done with the connivance of the Nazis. The executives were held guilty despite all the dressings of legality they had draped themselves with at the time).
Er...great, from patents to Nazi regimes so smoothly in this thread. An indicator of the times we live in?