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The Law of Unintended Consequences: Patents
An anonymous reader writes "Fortune has an
interesting article about the relationship between patent law and innovation. It compares the biotech industry with the computer industry and discusses the effects of the Bayh-Dole amdendment, which has allowed universities to make a lot of cash. But in the process innovation and scientific collaboration seem to have been stifled."
... is actually a fundamental problem built into all IP law: the assumption that money is the prime motivator for creative endeavors. (And yes, science is a creative endeavor.) This is a myth successfully propagated by generations of moneymen, but a myth is all it is. Scientists, like artists, certainly want to make a living from their work, but the best ones pretty much always do what they do simply because they want to do it, not because they expect it to make them rich. If your primary concern is making money, OTOH, you don't have the time (or, probably, the brainpower; suits who think of themselves as intellectuals because they have an MBA simplye have no idea what goes into a serious scientific education) to become good at anything that constitutes real creative work.
The correlation between ignorance of statistics and using "correlation is not causation" as an argument is close to 1.
While there are certainly areas of crossover, like the algorithms to filter through the volumes of data that biotech firms have, the fundamental difference between bio companies and computer companies is that biotech produces *something*. Computer technology is basically ephemeral. But Biotech leads to medicines and other discoveries that are both difficult to discover and inherently valuable.
It makes sense to cover biotech with patents, as it took significant effort to research and develop those things.
Computer tech, on the other hand, is primarily focused on automating processes. Computers are inherently faster than humans at doing repetitive tasks, especially in regards to calculations. But it is difficult to find a program that implements a process that doesn't exist already in another form, or that isn't blatantly obvious to everyone. Something like developing "a secure mechanism by which encrypted media data is stored on a device and available for playback when read and decrypted by the client application" would probably be a good candidate for a patent. "Users can click once and purchase an item without having to load the shopping cart menu" is both obvious and not really that far removed from the systems that preceded it.
That people get greedy and innovation slows down when companies are competing is just a small side-effect of the patent process.
Jesus saved me from my past. He can save you as well.
Also, if someone wants to question the patent system in biotech, then what's the alternative? Patents have, despite a few cases of misuse, been proven to be the suitable intellectual property rights regime in that field. In contrast, today's leading software companies like Microsoft, Oracle and SAP needed no patents at all during the first 10+ years of their existence. SAP only had a total of four patents a few years ago. It would be too simplistic to say that copyright law alone protects software because it's actually a combination of copyright, trade secrets, complexity, trade marks, and the possibility of converting a technological lead into sustainable economic value (by selling products, acquiring customers, building the brand identity of an innovator). That form of protection is much more dynamic than patents because it requires someone to actually market a product, as opposed to just sitting on a patent and waiting for others to unwillingly and unknowingly "infringe" upon it.
The other issue is who should own the outcome of the research work that is performed with tax money. I don't think it's reasonable to let the public pay twice for the same work, upfront by employing many such scientists for decades in each case (the fewest of which ever come up with something that can be commercialized on a large scale) and subsequently through patent royalties.
From the article.
" A 1979 audit of government-held patents showed that fewer than 5% of some 28,000 discoveries--all of them made with the help of taxpayer money--had been developed, because no company was willing to risk the capital to commercialize them without owning title"
To all those in this thread that argue "scientists will do it for the love" or any of that crap. That sentence above says it all. Scientists might do it for the love, but companies won't pay to develop it. I work at a biotech company - we won't do stuff that won't make us money. We have to pay our salaries. If we do something that we DON'T have patent coverage on, our competition will just copy it at no cost to them... oh yeah - we will have spent A LOT of money to do the development. If we can't get an exclusive license, then for the most part we won't touch it. It WONT make financial sense to do so.
You can preach about "greater good of man" and all that. At the end of the day I just want to send my daughter to college and be able to go surfing. To do that, we have to make tools that help people, and I enjoy being part of that. I love solving the problems. I enjoy working on the projects. BUT - I have to eat and the company has to make money.
Gavin Fischer
As usual, you didn't read the article or get the point.
While Bayh-Dole was about commercialization of products developed with federal funding by universities (not particularly onerous a concept if you accept the basic concept of the state in the first place), the "unintended consequence" was patent legal wars - which are a direct result of there being patents.
And then you have the nerve to talk about pharma - which is exactly the point and example of the article.
RTFA next time.
And yes, you DO pay twice (or X or multiple times X) when the company is granted a monopoly on a drug invented by someone else. The issue - and the point of the problem the article has with Bayh-Dole - is that those with patent monopolies tend NOT to license or cross-license their products - which raises the cost of those products to monopoly rates and limits the spread of the IP - which is supposed to be the point of patents in the first place.
Just because patents are supposed to grant you a monopoly, that monopoly is supposed to be limited in time and subject to the provision that the IP gets licensed to all comers, so invention and distribution are both served.
Of course, it doesn't work that way. Monopoly is monopoly - I get it all, you get nothing. That's how humans work when they can use the coercive power of the state in their favor.
In a TRUE free market, you take your chances and the only thing keeping you from bankruptcy is smarts and speed.
And that's how it SHOULD be - raw evolution in action.
You monkeys just can't handle that, however.
Richard Steven Hack - This sig is TOO GODDAMN SHORT TO DO ANYTHING USEFUL WITH! MORONS!
First of all, this article is well-researched but poorly written and the author fails to achieve a coherent voice and statement. IMHO, this was a waste of 10 pages. Secondly, I have worked in the biotech industry for last 6 years, 2 years of which have been with THE largest biotech company and the remaining 4 years with various start-ups. From this insider's perspective, I can tell you that the number one challenge of innovating in the biotech industry has less to do with IP law and more to do with the lack of management experience amongst life scientists. When you have industry where start-ups can get $90 million in venture capital and ballon to 150 employees without have a commercial product, that's not an IP issue... it's business 101 issue... think 1990's dot.com reduex
The problem with patenting algorythms and functions is in the very concept and purpose of computers. Programming languages are basically tools for expressing thoughts. As human toungues are used for expressing speakable words, programming languages are used to implement thinking processes of the mind. Data is non-material, and computers merely receive, process and output data, as human nervous system does. Algorythms are same as thoughts - they are ways of analyzing and processing data.
Patenting physical devices (ever computer hardware) is fine by me, but patenting algorythms is comparable to patenting and restricting ways of thinking. Imagine what would happen if a law ordered people to think (or avoid thinking) in a certain way...
I am not saying that everything on the computer must be completely patent-free. I believe that only unique, sophisticated and unparalleled applications should be allowed to be patented by the US Patent Bureau, for a limited time.
- Matvei M.S
09 f9 11 02 9d 74 e3 5b d8 41 56 c5 63 56 88 c0
Basic academic research is a phenomenally important beast - perhaps the most important component of our long-term economy and the long-term health of our nation. It's impossible to overstate this or to use enough hyperbole here.
And contrary to the tiresome pop-culture tirades, America doesn't have a terrible shortage of scientists. We could use more, sure, but our labs are jam-packed with Ph.D.s and incoming students. In fact, we have a slight overabundance of them, which is reflected in their unappreciatively low salaries.
When I talk to scientists about the factors holding back their research - which I do frequently, in fact, as part of my job - I get a pretty consistent answer.
Grants are getting more competitive. While federal funding overall is growing, it hasn't kept pace with the explosion in life sciences research in labs across the country. Life sciences research complexity and data have experienced Moore's-Law-like rates of growth; just look at the sizes of GenBank and the Protein Data Bank over time. But because all universities are increasingly focusing on federal research dollars (in part because their academic rankings are based on it), it's becoming harder every year to get a grant funded. Scientists must show more data, and argue more convincingly that the research is useful.
Contributing factors:
The federal government has taken a stronger role in guiding research. A growing proportion of federal funds is earmarked for research on specific topics - e.g., AIDS or bioterrorism defenses. This necessarily diverts funds away from other areas of research.
Also, the administrative oversight of federal grants has grown. Universities are now held to much stricter rules about how those federal funds are spent. If a grant proposal indicates that a scientist will commit 40% of his employment to a project, he must actually commit that 40%. Funds must be carefully tracked by university admins - no more "I want to buy a Light Cycler with my unrelated grant money" discretionary BS.
These are real rules, and are strictly enforced. The penalties for violating them include paying the grant money back to the federal government, large penalty fines, and potentially getting barred from future federal funding. As a result, scientists and university admins have to spend tremendous time on administrative tasks - which detracts from research.
Those are the factors that scientists most frequently cite. Surely there are others.
- David Stein
Computer over. Virus = very yes.
In general, I agree with you. Like oil companies, pharmaceutical companies achieve annual net profits that can only be described as indefensible.
I like your idea about channeling some big pharma profits back into basic research. But I think that's an indirect route to solving the core problem with big pharma: the complete lack of a normal capitalist buyer/seller market for prescription drugs. No patient in America knows or cares how much drug companies actually get paid for their prescription, since they never pay the price directly; the costs are completely hidden by the impenetrable bureaucrasies of health insurance and federal healthcare payments. It's a ridiculous scandal, but one that most Americans will only see in retrospect after it has collapsed.
Pressuring big pharma to sell drugs at more realistic prices would tremendously reduce the crushing healthcare burden on the federal government. Those spare tax dollars could be used in many other ways - for instance, more federal funding of basic research.
- David Stein
Computer over. Virus = very yes.
From TFA
Universities have evolved from public trusts into something closer to venture capital firms. What used to be a scientific community of free and open debate now often seems like a litigious scrum of data-hoarding and suspicion. And what's more, Americans are paying for it through the nose.
And who's to blame for that? Yup, the good old American system.
The fact of the matter is, America doesn't care about science. We worship things like actors and singers and sports figures and then snub our nose at scientists in academia and pay them crap. Business is the most popular major, not because it provides the most to society, but rather it is the most profitable. In other countries, scientists are looked up to and admired (for example, India).
In the US, the budgets have been cut drastically for academia (most grants are getting a 8% cut straight across the board this past year). Adjusting for inflation, the NIH and NSF budget's have actually shrunk over the past 10 years-- which is ridiculous considering the massive amounts of improvement in technology that have occured. With such a drastic decrease in available funds, researchers need to tighten their projects, search for alternative funding, and be wary of who they tell people what they are doing. Sharing data with someone you aren't collaborating with or on unpublished work is a sure way to find yourself out the door in academia. This is further being complicated by the fact that tenure reviews are starting to shift from the old paradigm of how many papers you published, to a newer paradigm of how much grant money you bring in (while this is usually correllated, it is not always the case).
It's not the scientists that have created the environment, it's the environment that has created the scientists. There's a reason why College Professors were listed as one of the top 5 undervalued professions in America. Patents are the one bone that academia gets and the writer seems to think that scientists are exploiting America. Academia is already losing a lot of great talent (and henceforth, progress) as it is in America due to lack of funding-- how do you think it would be if patents didn't exists?
but it's undeniable that they have created a host of useful drugs since the Bayh-Dole Act passed.
This implies that none of these drugs would have been developed without the act. Pharma wasn't exactly hurting before the act, and it's defintely not hurting now. Who wins? The American consumer doesn't, as they are subject to inflated drug prices.
If your premise is correct, why were new drugs and treatments coming out before 1980? If your premise is correct that we'd be reduced to "a Wikipedia page" without this rampant patenting of everything, shouldn't that have been the state of things before it?
To fight the war on terror, stop being afraid.
I personally think you skimmed the article.
However, lets get to the reality of patents. First there is no NEED whatsoever to spend 5 billion to develop a test a drug! 5 billion is 5 billion! The argument that you need so much money to bring out a drug is bogus! The biotech industry can do with less, but because it is so easy to pump the clientel it is done!
I detest patents because they don't promote innovation. Cars became popular because a Mr Henry Ford broke the car patent and mass produced a car! It is possible to earn money in an pure competition world.
The reason why biotech is different is because it deals with the lives of humans, and that is why I don't agree with patenting of drugs. I like capitalism, but bio-tech is a vulture preying on the lives of humans. They say, "Oh you want to live? Well here is a drug, but guess what it is going to cost you!" That, my friend, is very scummy! Again not against those that want to earn money, but reasonable money like all other industries!
I am glad that you mentioned Microsoft. First yeah sure Microsoft copies, but Netscape was not the original maker of the web browser, neither was Eudora, neither was WordPerfect. If you accurately check your history books before Netscape was what Tim Berners Lee wrote, before WordPerfect was Wordstart, and the list continues.
In other words you have proved the argument that by copying we get a vibrant industry! You get real innovation! Because copying is evolution as multiple ideas are combined to create a new idea!
"You can't make a race horse of a pig"
"No," said Samuel, "but you can make very fast pig"
Just look at art and science in totalitarian countries. In all former communist countries, you definitely couldn't get rich by doing science, not even in relative comparison to general population. Yet they had a lot of excellent scientists, and produced huge amount of research.
As far as art goes, not only you couldn't get rich, in many cases you could get yourself locked up. Still, all the Soviet block countries had very active unofficial art scenes.
AccountKiller
Wrong root cause--the blame lies with the left and their reaction to the Vietnam War, with their one permanent reform the destruction of basic research in United States universities through the Mansfield Amendment. Just go to the musty bookshelves of one's university to the mathematics section and look for books before 1970. Many of them will have an acknowledgement of funding through some agency such as the Office of Navel Research.
The Mansfield Amendment deliberately destroyed the relationship between the United States military and university basic research, so that instead of getting crumbs from a gargantuan Department of Defense budget, which meant the crumbs were quite substantial, basic research had to rely on the politically castrated National Science Foundation with no important constituency to push for funding.
Faced with the prospect of basic research almost completely disappearing, the only alternative was something similar to Bayh-Dole, because there was no way anymore to politically push through explicit funding. What an irony that now what were once considered public goods are now the property of the largest corporations and the rich only get richer. Now that is the true unintended consequence considering who initiated the Mansfield Amendment.
You *do* pay twice, because you are paying licenses to use technology which was never previously patented because it grew out of the public domain and so there were greater barriers to patenting it because a bureaucratic approval process was required.
To put it clearly, US taxpayers pay twice from the taxpayer money the government earmarks for drug research AND the money that the taxpayer then spends on drugs.
What makes this even worse is that the drug companies then sell the drugs in countries such as Canada for less than what they sell it in the US. In that way, the US taxpayer is triple screwed over.
Hi,
In fact, this:
> c) it never fucking ends. You can be president of
> the school and a nobel prize winner and so
> important that they've decided to make you the
> first human cloned, and your grant STILL only has
> a 10-18% chance of being funded.
this is good! Grants should be awarded on merit and not on who they are for.
"If you spent $5 billion developing and testing a new drug, would you let your competitors buy the rights to sell their own versions?"
What part of LICENSING don't you understand?
You license so you can partake of the profits of everybody else selling your invention as well or better than you can yourself.
By not licensing, all you do is stimulate everyone else to come up with a better product - under a different patent - and put you out of business.
Read my lips. Patents don't last. No form of IP lasts. Monopolies that are not coercively protected by the state do not last. If you rely on a patent to make you money, you will shortly go out of business or spend most of your monopoly profits fighting legal battles in court.
Richard Steven Hack - This sig is TOO GODDAMN SHORT TO DO ANYTHING USEFUL WITH! MORONS!
Well, not quite, perhaps, but...
I think the debate about whether patents are stifling innovation or not misses an important point: that most inventions don't happen because an inventor suddenly invents a brilliant new gadget. The real way most things are invented is when somebody has a problem and solves it; and most often the person doesn't even think of it as anything special, because it isn't in that situation - it's just a handy solution to a problem, so he/she could get on with the job at hand. Later, perhaps, somebody combines a number of these solutions and it turns out to be a great idea.
I think people who are just 'inventors' are likely to be some sort of pathological phenomenon; a kind of obsessive tinkerers, perhaps.
As for patents - they certainly make it difficult for others to make money from their good ideas, and I have no doubt that at some point it will become too cumbersome; then it will change. But since people will always run in to new problems and look for solutions, innovation will happen.
Perhaps when it becomes clear enough that the patent system, with all the mindlessly stupid patents for trivial non-inventions, simply doesn't work, perhaps then will people begin to 'anti-patent' their inventions by immediately laying them out in the public domain; that way you at least ensure that nobody else can shut you out from making a fair earning from your good ideas.
The argument that only granting exclusive use of some specific piece of knowledge can make commercialising products based on the idea viable financially is unconvincing. (Leaving aside that this does not eliminate risk because competitive products based on other ideas may still appear.) If necessary, have a system where the government compensates organisations for development in certain cases (perhaps with tax breaks) to give an advantage to the original developer. But do not prevent others from making improvements.
The patent system adds huge costs for ephemeral benefits. Creativity and invention prosper in an atmosphere of freedom, not one of bureaucratic control.
"If you spent $5 billion developing and testing a new drug"
The vast majority of the pharm money is not spent on R&D. It's wasted on marketing, administration and inefficient production.
"But their product strategy is simple reality, owing to the very simple fact that copying is easier than innovating."
The very simple fact is that once you have a monopoly, marketing, lobbying and litigating is easier than either copying or innovating.
The very simple fact is that we're not getting even 20% efficiency out of the monopoly money we're paying.
The very simple fact is that we'd get more than five times as much R&D done for the same money we're spending today if we simply got rid of the patents, paid for the R&D outright and let generic producers run a competetive industry instead.
I'm not talking about Slashdot - though those people have their selfserving reasons to agree. I've been part of the innovation community for over 15 years. I can tell you that most people I know who invent things - software, hardware or protocols/architectures - have contempt for patents. And for the lawyers/financiers who value them. We work in that environment, so we derive value from them, as lawyers/financiers are the gatekeepers on the money we want for our value. But the patent system is broken enough that it impedes more than it promotes.
The main complaint we have is that the PTO offers too many, too broad patents. Which forces innovators to work with too many lawyers for our productivity. Either to get one of those "paper patents" or be left behind, or to spin our wheels ensuring that someone else's paper patent doesn't interfere with our real invention. We feel that most patents we deal with are paper tigers with real teeth.
Most of us agree that hardware patents should require at least a testable working model, that software should be covered by copyright, not patents, and that business or procedure patents are a travesty. And that practically all patents last too long for the purpose of recouping investment, the basis of their artificial monopoly, while copyright lifetimes threaten not only innovation, but the sustainability of our culture.
That's what I mean by "the consensus". Not that no IP should be protected, but that the patent system currently threatens much more than it protects. And even the lawyers and financiers who read and write _Fortune_ magazine are starting to think that way.
--
make install -not war
The odd thing about this sad state of affairs.... If I'm reading this right, the Federal Government retains royalty free rights to virtually all the research it has funded. Which means, at least in theory, it could seriously leverage its position to purchase drugs for the medicare prescription benefits. Something that has apparently not occured...
Which just goes to show who the politicians really represent.
I agree in general, but my point is that money men need legal protection for their risk - which is then not exactly risk, is it?
And the effect you mention in the last sentence is exactly the problem of patents - if somebody can claim a legal monopoly, others won't bother investing in the market - which reduces innovation.
That's the reason legally protected monopolies are bad for the species - in the pure free market case, monopolies which arise (by natural means) are quickly (relative to the existing case anyway) torn down by investment in alternative means of accomplishing the same function. If the monopoly is legally protected - and patents overly broad - there is no incentive to invest in alternative and probably better means of accomplishing the same function; you won't make any money anyway.
Richard Steven Hack - This sig is TOO GODDAMN SHORT TO DO ANYTHING USEFUL WITH! MORONS!