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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."
Nothing will hurt innovation more than the Patent Reform Act of 2005.
Why? Because it sets limits on damages for willful and even fraudulent patent infringement so that large corporations will find patents easy to ignore.
Meanwhile, the limits are still big enough to remain a deterrant for small companies and independent inventors.
In other words, if you are a big corporations, you might be able to knowingly ignore patents while startups and inventors don't have the same benefit.
There are some good improvements in the Patent Reform Act of 2005 but this fundamental flaw is going to hurt innovation by making the patent system benefit a small percentage of companies at everyone else's expense.
Please write to your representatives and respectfully ask them to fix the flaws before it becomes law.
Grease keeps systems working smoothly. Lawyers, money speculators, used car salesman, and a zillion other occupations are society's grease. In a frozen static society, you could get rid of them once you had polished the system to the nth degree. But in a dynamic society, these greasers keep the various diverse parts all working together relatively smoothly.
But too much grease in a gearbox bogs it down. That's what has happened with intellectual property in general. Those idiots in Washington listened to their corporate sponsors and believed what they said about the more the merrier.
At some point, hopefully sooner rather than later, business and politicians will notice what the true innovators and researchers have long since learned the hard way, and cut back on the flow of grease. In the meantime, the rest of us are stuck with completely counterpdocutive IP legal wrangling getting in our way. It may take a long time to notice the drop in innovation and productivity, but I sure hope not.
Infuriate left and right
First off, mod parent up. That was a wonderfully cogent explanation.
However, I think there is still a case to be made that drug companies are getting something of a free ride at taxpayers' expense. Sure, they still have to invest money in bringing a drug to market, and paying for the trials to do that is expensive. But they do get a big break by the taxpayer footing the bill for much of the basic research. Perhaps drug companies that market medications based on publically funded research should have to pay back the cost of the research into the fund, so it can be used to pay for further research. That seems like a start at fair compensation for lowering their product development risk by several orders of magnitude.
I did RTFA. Like all Fortune articles, it's ten pages long, comprising four pages of anecdotes, two pages of buzz-clip quotes, four pages of unsupported supposition, and zero pages of logical reasoning. Fortune caters to the C?O set, so it eschews attention-span-draining critical analysis for talking points.
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.
Of course they don't license their products. If you spent $5 billion developing and testing a new drug, would you let your competitors buy the rights to sell their own versions? And if you did, how quickly do you think your company's investors - the people who paid money to help build your company - would sell their stocks and run?
Again, I'm not here to defend the pharmaceutical industry, which I view as undeniably corrupt. But their product strategy is simple reality, owing to the very simple fact that copying is easier than innovating. Isn't that why everyone (rightly) criticizes Microsoft - because it lets everyone else take the R&D risks, and then just copies their ideas? (Stacker/DoubleSpace, Netscape/IE, Eudora/Outlook, WordPerfect/Word, etc.)
- David Stein
Computer over. Virus = very yes.
There are most definitely other problems, many of which are overlooked during all the hand-wringing of "we don't have enough (US) scientists".
A) Over the past 5 years, there are a huge increase in federal funding for basic research. Unfortunately, most of the money went to fund a few large-scale projects run by well-investigators--we're talking about guys who are already at the peak of the funding heap and don't really have to worry about their salary and their entire labs' salary and jobs depending on whether the grant submission scores in the top 9% (probably be funded), or outside of the top 12-15% (probably not funded). What I'm saying, long-windedly, is that much of the recent increase in NIH money made a few large-scale, high-profile projects even larger, at the very same time that young invenstigators were seeing a precipituous drop in the percent of acceptance for the smaller new investigator grants.
b) 6 years of grad school, a doctorate, and then you find out that you really aren't paid any better than losers straight from Party U--and THEY probably get health care. Raise your hand if you're ready to quit yet, since your first grant is going to be rejected anyway.
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.
So, um, I can't remember how this pertains to the patent thing. The key to remember, however, is that the Pharmas tend not to do the most productive basic research, so many of the potential drugs arise from federally-funded work a universities, where people are pursuing utterly novel stuff. It's good for the rest of us to provide a mechanism for the school to approach a biotech and offer that novel product in exchange for any possible royalties.
The only bad patents are patents on genes or part of the genome. Those are fucking stupid and people should be beaten.
Hear hear! Grandparent post has clearly not read the article, the basic logic of which is as follows:
(1) Inventions are now patented which would not have been patented previously because researchers could not *automatically* get patents for federally-funded research. There was a complex process that wasn't invoked for relatively trivial or cumulative research.
(2) The change in law led to a cash grab, and a research culture in which universities encouraged staff to patent any new developments, even those growing out of collaborative research. This led to commercial barriers being formed (licensing) which inhibited research and industrial application.
(3) As a result of #2, the amount of research flowing back into the academic commons is being sharply reduced. This is also inhibiting research.
(4) As a result of #2 and #3, there is a visible and statistically significant reduction in the amount of innovation in the drug industry since 1980, measured in terms of the amount of significant new drugs being made available to the public, and those which are significant enough to merit fast-tracked approval.
So parent post is correct. 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.
The argument is that the law made it possible to commercialize things which were not commonly commercialized before.
I'm surprised the parent was modded +5 insightful, since I'm not sure the poster actually took the time to read the article. Anyhow...
Technically, the Bayh-Dole law that the article talks about doesn't really say too much about companies being able/unable to patent the results of research that's been privately funded.
Even prior to the law, if you want to spend your money on research, you of course had the rights to patent the results. However, Bayh-Dole made it so that your company could spend tax-payer(read 'our') money to do research and development and then still be assured of your company owning the resulting intellectual property. So, the whole thing really seems like a big corporate well fair racket, whereby companies have been essentially gifted valuable IP by the American tax-payers.
Maybe the NIH or NSF should start acting a little bit like a VC firm in these cases. That is, if companies and/or universities want to profit by patenting the results of publicly funded research, then maybe the funding federal agency should get a proportion of the proceeds. That money could then be funded into other new and interesting research projects.