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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.
I'm so bugged with this whole paptent issue. I will tell you why. I was once developing a IM Bot for MSN messenger using perl. I was almost towards the end of coding the bot. Thats when I hear that the IM bot technology is patented by ActiveBuddy. I had to stop development. I wish they had a better model to protect software inventions
fuvoo: watch something
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.
If it's property such that the RIAA and MPAA consider it theft rather than copyright infringement, would states or the federal government have the power to pay "fair market value" (whatever that is) and release it to the public?
Not everything would be that way, of course, but if the government has the right to take land to preserve our natural heritage, why not take art to preserve our cultural heritage?
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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?
because the drug companies wouldnt lower prices. Although I would say that this would easily be overturned/outlawed by the bought and paid for Congress. Although if they were to take patents for drugs, whats to stop them for taking patents for everything else?
Its a shame that the states are doing what the federal govt. should be doing these days.
The Doormat
If you're not outraged, then you're not paying attention.
The summary above refers to Susette Kelo v. City of New London. The city is attempting to use eminent domain to take some land from people, and sell it to a private developer to develop. (I emphasize private because the case hinges on that) Cnn had a good write up here
To make laws that man cannot, and will not obey, serves to bring all law into contempt.
--E.C. Stanton
I think that Big Money and Big Media has such a strong grip on national politics and national politicians, that going local is the way to bring leftist/progressive solutions to America. Best to just go ahead and let the Republicans and Republicrats kill off the IRS. THat way the states can start their own mini-IRS's and go ahead with universal healthcare, long term unemployment, low cost broadband, and other progressive/leftist quality of life improvement. All local....
eat shiat and bark at the moon
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.
With good reason, since the concept of eminent domain is not actually part of the constitution. Not that it will stop political bodies from trying it.
Of course, the "huge profits" that phamaceutical companies get from selling a drug under patent are not all that great. Not after paying for the cost of creating the drug... not to mention a dozon other drugs that don't make it through the FDA approval process.
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.
> I don't see how it would be assuming there's due process.
The US Constitution gives authority over patents to the US Congress, not to the states.
Sheesh, evil *and* a jerk. -- Jade
It's a fantastic idea. Drug companies make way too much money. Better the states take their patents to more fairly control them. The same goes for most other successful businesses and, indeed, private individuals, too. If the state takes them all over, they'd be able to distribute the assets far more fairly.
It's such a great idea, I can't believe no one's tried it before!
The only concern would be those damn Commie Ruskies trying to undermine our great system.
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.
because patents have an expiration. if i have property and some government (local, state, etc) wants to take it, i have rights to fight it in court.
most drug patents are close enough to expiration that the company could delay enough in court to make it a moot point.
eric
What we really need is for patents to protect the copying the invention itself, not all independent developments of the same idea.
Anyone who independently develops an idea without looking to see how the patent holder did it should be able to use and profit by his work.
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.
Actually, Article I, Sec. 8 of the Constitution gives Congress authority to grant patents and copyrights. However, it is not specifically denied to the states - it is up to Congress, under the Supremacy Clause, to decide whether to allow states to regulate the same areas. For example, states had independent copyright laws until the 1970s, until Congress took that power away. With that said, it's a meaningless issue here, as the Federal government has in fact blocked parallel state rulemaking regarding patents.
However, the doctrine of sovereign immunity and the 11th amendment make it hard to prosecute state governments for patent or copyright infringement. So a statewide agency could just start making patented drugs, and it would be hard to stope them
Why not? In NYC, Mayor Bloomberg is using Eminent Domain to sieze property from people in Brooklyn brownstones so he can give it to the giant developer, Ratner, for a private arena/mall. If a Republican billionaire can "liberate" actual real estate for his developer buddies, why can't we do the same with patents, when that property is not actually removed from its owner, and is actually given to the public?
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make install -not war
The Law gives, the law takes away" was the court's basic argument.... It will be really funny to find out what happens when the Congress wants to "take away" This could be good or bad, after all, When We want to get copyright back under control we'll have the same basic argument again by the *IAA's...
Hopefully the court will keep tooting it's horn!! This jsut the IP trap we need to get the IP situation under control... then all we have to do is convice lawmakers... their decisions will stick.
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.
I don't know whether it's true or not, but critics claim that the drug companies spend 10x as much on advertising as they do on research.
There's no need to discuss these things theoretically, when all publicly traded companies have to make SEC filings of their financial statements.
According to Pfizer's most recent 10-Q filing, for instance, they incurred "selling, informational, and administrative expenses" of $4,036 million (or 31.5% of revenues), and "research and development expenses" of $1,888 million (or 14.7% of revenues). The former category includes much more than advertising (administrative expenses include accounting, payroll, facilities maintenance, etc.) Nevertheless, total administrative and marketing expenses were only about twice as much as R&D costs.
People like to talk about the rapacious profits of drug companies. Well, go and look at the numbers for yourself: Pfizer's earnings per share are $1.19; Eli Lilly's are $1.66; Merck's are $2.90. By way of comparison, American Electric Power is $1.51, Wal-Mart is $2.41, Staples is $1.40, Home Depot is $2.26, Anheuser-Busch is $2.77.
Drug companies are not massively more profitable than everything else. People who think that they are should simply invest in them and benefit from the price-gouging which they are supposedly inflicting upon the public.
All employees must wash hands before seeking equitable relief.
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.
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
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.
For comparison, we would need to know what the return on invested capital is.
This, too, is easily available. Return on equity is a good measure of whether investors in drug companies are enjoying disproportionate returns. For Pfizer, RoE is 13.46%; for Eli Lilly 17.06%; for Merck 38.46%. For Home Depot, RoE is 21.71%; for Wal-Mart 22.99%; for Staples 18.45%; for Anheuser-Busch 82.26%. The conclusion is the same.
All employees must wash hands before seeking equitable relief.
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.
I am not sure this regulates copyrights or patents. Instead, it seems more like the idea that the state is not regulating the patent process or making patent law, but rather purchasing property (via eminant domain) for public projects.
The interesting thing about the current case before SCOTUS is that it is about the city taking private homes to give to a developer who would build facilities for a pharmaceutical manufacturer. The same right that they claim (the right of the state to forcibly buy your land and sell it to another private commercial property) doesnt seem at all different from forcibly buying patents, and indeed, if they are retired or given to the public domain seem to raise fewer Constitutional issues, IMO.
IANAL, of course.
LedgerSMB: Open source Accounting/ERP
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?
The industry will fight vociferously to protect them.
If only the citizenry of the US would fight as hard for our REAL property rights! Over the last several years, eminent domain has been used by many municipalities to force people off of the property they OWN so that developers like Wal-Mart can build stores. Some examples:
Alameda Square in Denver Colorado: The City of Denver is considering condemning the shopping center so that Wal-Mart can build a super center. story
Alabaster, Alabama: Colonial Properties Trust wants to build a shopping center anchored by a Wal-Mart in the town of 24,000. The local government is all for it because they're "not receiving enough in tax revenue to support the town." Trouble is, there are a few property owners that don't want to sell. Answer, local government is resorting to eminent domain. They're citing the increase in tax revenue as the "public good" that justifies condemnation of the property. story
Ardmore, Pennsylvania. A local government plan to "revitalize" the town of Ardmore has officials seeking to use eminent domain to oust property owners and demolish several historic buildings. story
New London, Conneticut. (This is the Supreme Court case that's being heard and was referenced in the posted article). The town is attempting to use eminent domain to forcibly evict seven property owners and sieze their property so that a private company can develop more tax-profitable properties on the land. story
Lakewood, Ohio. Scenic Park, a middle class neighborhood, was seized under eminent domain. The homes were deemed "blighted" because they didn't conform to certain criteria. They didn't have three bedrooms, two baths, an attached garage or central air. Incidentally, the mayor's house, in another neighborhood, doesn't fit these criteria, either. The homes were razed in order to put in a mall and high-end condos. story
Ogden, Utah. The Mayor and City Council want to demolish 34 homes and 6 businesses in order to erect a Wal-Mart (there's that Wal-Mart again) Super Center.
Clemson, SC (right up I-26 from me). Pickens County Council voted to invoke eminent domain to condemn a tract of land zoned residential for the purpose of building a Wal-Mart. story
Between the years 1998-2002, TEN THOUSAND properties were seized via eminent domain in order for the municipalities to sell to private developers!!! The right to own land and property is directly tied to all our other rights. Now, I'm not a big, Anti-Corporation type of guy as I recognize that corporations are not vast, faceless entities, but are made up of individuals that work, eat, sleep, and all that. I have BECOME extremely anti-Wal-Mart, though, in part due to this eminent domain thing and also because of their recent trouble with the labor laws. I don't begrudge Wal-Mart's right to exist, but they've demonstrated time and time again that they are willing to tight rope the law and even break it if necessary in order to continue growing. They're like a virus that must be stopped. I'm on a personal boycott of Wal-Mart. If something isn't done about governments seizing property rightfully owned by law-abiding individuals, a huge pillar of our democratic republic is going to be severely compromised. This is no joke, people. This poses one of the most severe threats to our country.
If you want to keep abreast of the situation, here are a couple of good links. And I especially want to thank Neal Boortz (national talk radio guy, Libertarian). Were it not for him, FAR fewer pe
A patent is just property, and the fact it is granted under federal law shouldn't really matter. (I could be wrong about this). The big fight would be just compensation - all the drug company gets from their patent is profit - so if they are "justly compensated" then they really have nothing to complain about. Except of course "just compensation" under eminent domain jurisprudence is anything but just.
You are right, a patent is just property. It's a government-sanctioned monopoly for a fixed period of time. Governments have taken non-real property for public use many times before. Most notably, the government nationalized the railroads during WWII.
There's precedent for this as several other countries have nationalized drug patents or threatened to do so. One thing's for sure, though: Were this actually done, it would blow open the entire pharmecutical company machine. It would expose for all the world to see the lies about R&D costs, etc. In other words, "just compensation" would be what it actually cost you to make the thing and sell it at a reasonable price, not the trillions of dollars you make from selling it at your ridiculously inflated prices. It would also expose the rampant abuse of the patent system for which OxyContin is Exhibit "A".
Patents? Expire? Holy shit, there's a concept.
When a drug patent comes close to expiring (which they'll prolong), the company generally makes a chemical change to the drug just slight enough such that it can pass as something different (e.g. adding an extraneous methyl group or similar), change the packaging around, maybe make it a 12hr dose instead of 6hrs, and say "WHOA HOLY SHIT NEW DRUG HERE!" and get a new patent. That heartburn/acid reflux drug that I'm totally forgetting the name of now (Nexiium?) is a prime example of this... it's been "reformulated" about three times now, each time is 6-10 years of $billions in profit with basically no new R&D.
That's just the surface, for popular my-job-sucks-and-i'm-fat-so-gimme-a-pill-doc type drugs for the anesthetized middle class in the first world. The really sick things, imho, have to do with the way that they will consider the maximum profit to be extracted from a disease as part of the research process. That means that if there is more money to be made from treatments for an illness than from a cure, guess what comes to market.
Further, the high costs of drugs in the firstworld go primarily to support advertising budgets. Not R&D. Pull the yearly SEC filings for somebody like Merck or Pfizer if you doubt. So that medicine you open your wallet deeply for is primarily going to fund the millions of crappy ball point pens that they fart out to doctors everywhere. (Ask a doctor sometime about the lengths a pharma salesperson will go to. It is unreal.)
Big Pharma does things routinely that make Big Oil or Big Tobacco look like motherfucking saints in comparison. There's a reason I've taken my chemistry degree and run for the I.T. hills to work as a programmer... So maybe my days are spent in a cube, but my days aren't spent in a cube figuring out ways to make money off of the suffering of other human beings.
News for Geeks in Austin, TX
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?