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Patent Attorney On Why We Need To Rethink Intellectual Property

Posted by ScuttleMonkey on from the undermining-from-the-inside dept.

Techdirt called our attention to an interesting video of patent attorney Stephan Kinsella's presentation on 'Rethinking Intellectual Property Completely.' It's a long presentation, but well worth the time to watch. There is also an ongoing series of posts discussing intellectual property rights on Techdirt for additional reading.

35 of 226 comments (clear)

  1. Old concept in a new world by FiReaNGeL · · Score: 5, Insightful

    Intellectual property is a very egoist concept nowadays, in a time in which technological innovation can help so many people. It depends on the way it is used; if you just sit on your invention for 20 years and prevent others from doing something similar, or if you sell it at an outrageous cost (see: drugs) it's really detrimental to humanity as a whole.

    --
    Eureka Science News - automatically updated
    1. Re:Old concept in a new world by _PimpDaddy7_ · · Score: 3, Insightful

      With regard to drugs, doesn't the research and testing that goes into drugs cost major $$$$$ and time?

    2. Re:Old concept in a new world by WaltBusterkeys · · Score: 4, Insightful

      It depends on the way it is used; if you just sit on your invention for 20 years and prevent others from doing something similar, or if you sell it at an outrageous cost (see: drugs) it's really detrimental to humanity as a whole. But it's equally detrimental if those innovations are never made. It's just as bad to NEVER INVENT something as to not sell it, or to sell it at high prices. Most people who innovate don't do it for free; they do it because they need to feed their families and might even hope to strike it big.

      And the process of innovation is rarely cheap. You use the example of drugs. For every one drug that makes it to market, hundreds of drugs fail animal tests or basic safety tests, and tens more fail in human trials. These are extremely expensive. Right now we compensate drug developers for the risk and expenses of drug design by allowing them to sell the successful drugs at a price above cost. Requiring that drugs be sold at or near cost would put a halt to innovation that has saved countless lives; there'd just be no reason to sink millions (or even billions) into research and testing if any competitor could copy your product as soon as it it the shelves.

      There might be other ways to encourage innovation (government grants, government funding, competitions, etc), but any solution has to recognize that innovation is rarely cheap.
    3. Re:Old concept in a new world by poetmatt · · Score: 4, Insightful

      If nobody can use something, it's still useless.

      If nobody can improve it further (which is the original reason for improvement patents), then it's hampering innovation in the first place.

      If someone were to patent running processes on a computer, where do you think software innovation is going to go?

      For drugs, the price is now dictated by the maker regardless of the cost of manufacturing...hello superexpensive medicines in africa? Whoops?

      The millions and billions are collective research, not just solely put on one product. It's throwing money at the wall, waiting for some to stick, and suing the hell out of everyone once something does.

    4. Re:Old concept in a new world by nohup · · Score: 3, Insightful

      "If you sell it at an outrageous cost (see: drugs) it's really detrimental to humanity as a whole."

      Wouldn't it be more detrimental if the drug is never developed in the first place? Developing a new drug costs anywhere from $800 million to $2 billion dollars, and takes around 12-15 years. Of the drugs that come on the market, only around 30% of them actually make enough revenue to actually pay for all their upfront costs. It's a high risk game and I know people that have put in lots of money into making a medical innovation and ended up burned. They won't be doing that again.

      I don't like high drug costs as much as the next guy, but at least the innovation is occurring and after it's 20-year or so patent runs out, we'll all reap the benefits at great savings.

    5. Re:Old concept in a new world by frosty_tsm · · Score: 5, Insightful

      Probably not.

      But if there is not a perceived investment opportunity, many drugs sold for high prices today (and lower prices tomorrow) would never have been developed.

    6. Re:Old concept in a new world by Anonymous Coward · · Score: 1, Insightful

      The cost of developing them dwarfs in comparison to making sure they work without too many side effects and satisfying the fda. How much is merck on the table for lawsuits over vioxx also?

    7. Re:Old concept in a new world by reebmmm · · Score: 5, Insightful

      Is the money you gain from prohibiting others from using the same idea in a generic drug worth the lives lost by those who are unable to afford your prices?

      You've phrased this exactly backwards: is giving up a short term of exclusivity worth all the lives SAVED because someone took the time to invest the money in getting that drug from discovery through clinical trials.

      Without patent protection, you'd have a free rider problem.
    8. Re:Old concept in a new world by reebmmm · · Score: 1, Insightful

      This is more easily explained when you realize that the money spent on marketing turns into actual sales FASTER, more RELIABLY than taking a drug from discovery to market.

      It's really not that surprising.

    9. Re:Old concept in a new world by maxume · · Score: 2, Insightful

      That article talks about administrative costs (this is where employee salaries get accounted for) as if they are somehow evil drains on what should be R&D spending. If there wasn't any administrative cost, there wouldn't be a company. You are making it worse by grouping administrative, sales and marketing costs all under 'marketing'.

      Drug companies spend a healthy amount of money on marketing, and they make healthy profits, but the solution isn't to dismantle them, it is to build more efficient competitors and then let them dismantle themselves. If it isn't possible to build a more efficient competitor, then the law needs to be changed, or the drug companies are making appropriate profits.

      --
      Nerd rage is the funniest rage.
    10. Re:Old concept in a new world by A+beautiful+mind · · Score: 3, Insightful

      But it's equally detrimental if those innovations are never made. It's just as bad to NEVER INVENT something as to not sell it, or to sell it at high prices. Most people who innovate don't do it for free; they do it because they need to feed their families and might even hope to strike it big.
      This is a nice pipedream, but most innovations happen because companies want to sell a product. It would happen without a patent regime too.

      And the process of innovation is rarely cheap. You use the example of drugs. For every one drug that makes it to market, hundreds of drugs fail animal tests or basic safety tests, and tens more fail in human trials. These are extremely expensive.
      The process of innovation isn't cheap and the pharma companies know this too. That is why they got the US government to fund their research costs almost entirely. Direct research funding from the govt. drives 90% of base drug research, plus the huge tax breaks these companies receive basically means that the government pays for just about all drug research going on in the states. Safety testing is quite cheap compared to this.

      Right now we compensate drug developers for the risk and expenses of drug design by allowing them to sell the successful drugs at a price above cost. Requiring that drugs be sold at or near cost would put a halt to innovation that has saved countless lives; there'd just be no reason to sink millions (or even billions) into research and testing if any competitor could copy your product as soon as it it the shelves.
      I already said, but I'll reiterate my point: the government already pays for at least 90% of this research. These companies add 10% research, patent the government research and rake in the bucks. Please just do a cursory research and you'll find the numbers. By the way, pharma spends twice as much on advertising than on research (research nominally, without substracting the tax breaks from this number).

      There might be other ways to encourage innovation (government grants, government funding, competitions, etc), but any solution has to recognize that innovation is rarely cheap.
      Innovation is not cheap, but why pay for it if you can get the govt. to do so? Pharma wants to have their cake and eat it too. Even at the cost of lives due to the artificially high drug prices. If you look at the tech industry, it can be clearly seen that most research is done in order to sell a product.
      --
      It takes a man to suffer ignorance and smile
      Be yourself no matter what they say
    11. Re:Old concept in a new world by Chandon+Seldon · · Score: 2, Insightful

      It's just as bad to NEVER INVENT something as to not sell it, or to sell it at high prices.

      If that were really the choice, then I would agree with you completely. But in reality if Bob doesn't invent something today then Charlie will likely invent it next year, or Dave the hobbyist will invent it in a decade when the field becomes widely understood.

      Thinking about "NEVER INVENT" is absurd. The best case for patents is that they cause something to be invented sooner. And patents that last for 20 years are only a good deal if they, on average, cause inventions to be published more than 20 years sooner than they otherwise would be.

      Neither of us have any solid figures comparing the date of publications of inventions with or without patents - I can't even think of any way to collect that data - but a claim that patents speed up innovations by more than 20 years in todays high tech fields is obviously absurd.

      --
      -- The act of censorship is always worse than whatever is being censored. Always.
    12. Re:Old concept in a new world by CSMatt · · Score: 2, Insightful

      Depends on whether the inventor views success in terms of money gained or lives saved.

      Not that those are the only ways to value success. It can easily be any combination of both.

    13. Re:Old concept in a new world by JPLemme · · Score: 3, Insightful

      If drug companies earned very small profits, then I would agree that the high prices of the drugs are required to recoup their R&D investment. But (and I'm relying on memory, not actual facts or anything) drug companies have historically been really, really profitable. And consistently profitable. So the high prices are getting redistributed to their shareholders, not to the common good.

      It's possible that the high profits were the reason that there was so much money for R&D in the first place, but if there was ever a case where a free-trade believer like me could justify using everybody's money (via taxes) to subsidize the development of drugs that can benefit the sick, then this would probably be that case.

    14. Re:Old concept in a new world by bunratty · · Score: 2, Insightful

      a monopoly on your invention in perpetuity is NOT the intent of the patent system
      Correct. But a monopoly on your invention for seventeen years is the intent of the patent system, and it allows the people or companies that spend money on R&D on the invention to recoup their costs.
      --
      What a fool believes, he sees, no wise man has the power to reason away.
    15. Re:Old concept in a new world by Znork · · Score: 4, Insightful

      With regard to drugs, doesn't the research and testing that goes into drugs cost major $$$$$ and time?

      The research of new drugs costs nowhere near what the marketing does.

      Take a look at the financial report of your average pharmco; approximately 15-20% is spend on R&D, 40% on marketing and administration, and 40% on comparatively inefficient production (compare generics pricing).

      That means we'd get 5 times as much medical R&D if the insurance companies and government simply funded it outright and let the free market generics handle the production and marketing. Or we could get the same level we're getting today at a fifth of the cost.

      The only thing patents give you is monopoly inefficiency. A level of inefficiency that surpasses even what governments can waste on their own.

      Imagine the diseases we could cure and the medicines we'd have access to had medical research funding not been bogged down and hindered by a century of patents.

      Oh, well, at least you can be sure your doctor is well equipped with complimentary pencils and golf vacations.

    16. Re:Old concept in a new world by bunratty · · Score: 3, Insightful

      If you know anything about investment, you know that the higher risk, the higher the expected profit. Developing drugs is a risky business, because companies get only seventeen years at most of exclusivity in selling each drug, then they need to develop more "blockbusters" to continue their revenue stream. I suppose they seem "consistently profitable" to you because there are so many mergers and buyouts in the industry. The ones that aren't profitable disappear.

      --
      What a fool believes, he sees, no wise man has the power to reason away.
    17. Re:Old concept in a new world by bunratty · · Score: 2, Insightful

      If you or anyone else has a better way to discover new drugs, you have the right to start your own company and wipe out the competition. What are you waiting for?

      --
      What a fool believes, he sees, no wise man has the power to reason away.
    18. Re:Old concept in a new world by Anonymous Coward · · Score: 4, Insightful

      Obviously you haven't worked in government much. I've worked in industry for years before working for the government. I thought I had seen lots of waste in big industry, but that's nothing compared to what gets wasted by the government.

      Don't get me wrong. There are some things that are better done by the government even at the outrageous cost it requires, but it's almost never the most cost effective way to do something when the government does it.

    19. Re:Old concept in a new world by monxrtr · · Score: 2, Insightful

      Without patent protection, you'd have a free rider problem. Epistemologically impossible. Companies must by definition have the money to invest in drug research before they know whether the research will produce a viable drug or not. There must also by definition be a consumer market that will purchase the drug if it ends up viable. Thus the incentive for drug research exists *independently* of patent protection. Solution: those who need a drug themselves invest their money in finding a cure that can be copied by all who need it.

      By definition of drug company profits it would be *cheaper* for those who need a drug medication to cut out the patent protected pharmaceutical company, as drug company profits would be turned into non-profit R&D medication cost SAVINGS! There would be no free rider "problem" as those who needed a medication by definition profited from realizing the development of a medication.
      --
      "From DNA to P2P, we are all Copycats now. Go Go Copycat Power! Copycat Powers activate! Form of, a Copycat." --monxrtr
    20. Re:Old concept in a new world by dshadowwolf · · Score: 2, Insightful

      Go watch "Johnny Mnemonic" sometime. Pharmaceuticals companies exist to make money, the same as every other company. Even if they did find a cure for Cancer or AIDS do you honestly believe they'd market it?

      The fact is that making $2000 a month for the drugs to treat a disease is a lot more profitable than making a one-time earning of $20,000 for each person cured of that disease. Companies are not beholden to the public but to their shareholders. Remember this. It's one of the reasons that companies like Microshaft^WMicrosoft do business in the way that they do - to make as much money for the shareholders as possible.

      ----

      Before going off on a rant about the movie I mentioned, note that I've read every cyberpunk novel written by Gibson and have also read his anthology "Burning Chrome".

    21. Re:Old concept in a new world by Javagator · · Score: 2, Insightful

      Let the private companies develop the drugs. Let the government (i.e. tax payers) pay for the drugs for the poor. Let the rest of us pay our own way.

  2. A better way of saying this... by tgatliff · · Score: 5, Insightful

    How big businesses, attorneys, and the court system have hijacked our us patent system to squelch new entrepreneur innovation in the US...

    Let me summarize the conclusion as well... Good ideas on IP change do not matter at this point because nothing meaningful will happen until we can somehow get congress to stop their continuous feeding at the trough of corporate lobbyists...

    1. Re:A better way of saying this... by tgatliff · · Score: 4, Insightful

      Exactly my point...

      In fairness, history tells me that this behavior was caused by "too good of times" for too long. Meaning, during the good times people really just ignore what their elected officials do. Once things turn sour for more than a brief period, however, this will change... I guess only time will tell if history will repeat itself.. :)

    2. Re:A better way of saying this... by tgatliff · · Score: 4, Insightful

      Well, let me put it this way... Large businesses use patents in a strategy of what they call an "IP moat".... Meaning, the main reason MS, IBM, and countless other businesses are building huge patent portfolios are not because of all of the "innovation" they are doing, but rather because of their desire to protect their core business from any potential rising competition...

      At first look, this does not seem like a bad thing, until you realize that most of the large businesses that exist today could have never grown up in such an environment.... Meaning, for a free market capitalism system to function, older obsolete businesses must die and new more competitive businesses must rise to take their place. In the current business environment, this mechanism cannot occur...

      So, do you still think that startups are not being hurt?? :)

  3. IP will never go away. by Recovering+Hater · · Score: 2, Insightful

    The concept of IP is here to stay. We have too many laws already on the books and there is too much money invested in IP for anything to drastically change. The power brokers in Hollywood and in Washington are only going to perpetuate the current system as long as they can.

    --
    My humor is probably your flamebait
    1. Re:IP will never go away. by Zigurd · · Score: 5, Insightful

      To say that copyright protection for recorded performances is permanent is like saying gasoline engines are forever going to power cars. There was a time before gas engines, and copyright recorded performances, and there will be a time that comes after.

      As with gas engines and global warming, if we find that copyright protection for recorded performance amounts to pollution of the law and of the public domain, there is every reason to do away with that aspect of copyright protection.

      Copyright is not a fundamental human right. Copyright is a deal: "I'll publish, if the governments protects publications." Unlike natural rights, copyright is a created right, a bargain between governments and publishers, and the bargain can be partially or fully revoked, or the term shortened. There is nothing immoral about revoking or curtailing copyright protection, especially for a relative novelty like recorded performances. It is a decision based on utility.

      --
      I wrote parts of this stuff
  4. Intellectual Property Tax by apenzott · · Score: 5, Insightful
    This could be a wonderful revenue opportunity for cash-strapped state and local governments.

    When such a court claim is made on infringement of this intellectual property by a business located within the tax jurisdiction, just take the claimed infringement value and multiply it by the prevailing property tax rate and invoice said property holder. (Be sure to tack on interest and penalties for back taxes.)

    If property holder doesn't pay in 90 days, start lien and foreclosure proceedings.

    To recover the costs of this collection, auction off this IP. If there is no starting bid (1% of value), property becomes public domain.

    --
    The Roman Rule: The one who says it cannot be done shall not interrupt the one who is doing it.
    1. Re:Intellectual Property Tax by WaltBusterkeys · · Score: 2, Insightful

      multiply it by the prevailing property tax rate The only asset that gets taxed in most jurisdictions is land. Other kinds of assets (factory equipment, inventory, raw materials, etc) doesn't get taxed at all.

      Applying your formula would always result in $0.
    2. Re:Intellectual Property Tax by krazytekn0 · · Score: 3, Insightful

      A receipt and/or bill of sale is legally equal to a "deed" And yes, if someone claims you stole their backhoe and the police show up, you'd better damn well have your bill of sale.

      --
      Not all life is cyber. Extra Income
    3. Re:Intellectual Property Tax by Anonymous Coward · · Score: 1, Insightful

      IP valuation seems easy enough to me. The holder of the IP must declare its value. Once it does so, that becomes the statutory license fee for that IP and the upper limit of any damages in infringement cases. So if a song is really worth $10K/per copy then you pay taxes on that amount ($10K * copiesSold / taxRate). If it's not, it's now in their best interest to reduce the claimed value.

  5. Incentive by v(*_*)vvvv · · Score: 3, Insightful

    The incentive to save lives is big enough. All this "without money no one will do it" is BS. Without money no *company* will do it. Well, just don't make companies do it.

    Look at all the philanthropic jobs that don't pay and the NPOs.

    Create publicly funded labs. Create open lab diaries and open development. Make it an honorable job. Applications will flood in.

    We don't need anymore pharmcos and anymore garden fountain commercials.

  6. Re:quite wrong by servognome · · Score: 3, Insightful

    It turns out that if you grind through the math, it's cheaper to have taxpayers pay 100% for drug development and have the drugs produced generically than to give drug companies this economic incentive.
    Exactly, The proponents of the freemarket system don't understand the medical industry is so heavily regulated that such economic theory breaks down. All we're paying for is the profit, and risk liability for new drugs. Of course big pharma is going to charge huge amounts, they're on the hook for potentially hundreds of millions of dollars in litigation and settlements, even after they jump through all the governmental hoops, even when there is no concrete scientific evidence of the claims.

    And the argument for abolishing drug patents becomes even more compelling once you realize that drug companies are incentivized to develop the most profitable drugs, not the ones for which there is the greatest need. Companies have the biggest incentive to develop tiny, patented variations of symptomatic treatments for common ailments like light allergies and colds. Other drugs are drugs that try to compensate for unhealthy living and lack of exercise. Those are not the kinds of drugs that it makes sense to develop from a public health point of view.
    I disagree on that point. They have the incentive to capitalize on less competitive markets. You can spend the cash to patent an allergy medication, then are forced to advertise to carve out a small segment of that market. Meanwhile you can create treatments for which there is no alternative and can charge the maximum the market will pay. The reason some ailments are saturated with products is because they are better understood so it's easy to create treatments.
    Alternatively government mandated research will become very focused based on the political climate and vocal special interest groups. Look at how much government spends on AIDS vaccine research vs how much of a public health threat it is.
    --
    D6 63 0D 70 89 81 BB 8E 7B 7C 5F 5D 54 EA AB 73
  7. Re:It's some Ayn Rand follower by tarranp · · Score: 3, Insightful

    No, Stephen Kinsella is not a follower of Ayn Rand. In fact, I think he gets a great deal of pleasure out of mocking them:

    http://blog.mises.org/archives/004065.asp

    This column, An Unnatural Disaster: A Hurricane Exposes the Man-Made Disaster of the Welfare State by capital-O Objectivist Robert Tracinski makes some insightful points, if you can get past the giggle-inducing Objectivist stock-phrases like "sense of life".

    http://www.lewrockwell.com/blog/lewrw/archives/010779.html

    I've noted before Randians' bizarre practice of "officially" "breaking" with one another (other comments on this).

    Now some Objectivists who actually have a sense of humor have made up an "Official Solo Schism Form Letter". Funny stuff. The letter is lampooning Objectivist nobody Diana Mertz Hsieh, who felt compelled to Officially, Publicly Break with a former Objectivist friend, the brilliant Chris Sciabarra (who is a decent, sincere, honest person who did not deserve to be treated like this), and to justify it by printing his private correspondence to her and a set of charges to any normal person would appear very bizarre (strange for a Randian, eh?).

    ...

    Update: Just came across the latest Official Objectivist Denunciation: Andrew Bernstein of the Ayn Rand Institute has apparently been pestered into apologizing for having =gasp= published a short piece in the "Journal of Ayn Rand Studies". Bernstein's apology states "I deeply regret my thoughtless decision to contribute to this journal, and hereby irrevocably repudiate any and all association with it."

    Well, then, Dr. Bernstein--it's official--and more than that, irrevocable! Thanks for letting us know!

    He goes on: "To all who are sincerely concerned with Objectivism, I apologize, and recommend a complete repudiation and boycott of this journal and of any and all of Mr. Sciabarra's work."

    Okay! I hereby repudiate and boycott Sciabarra.

    And now I take it back! ha ha, I forgot to make it irrevocable!

  8. You realize that everyone owns property.... by tarranp · · Score: 2, Insightful

    He claims that you have a right to use your property, including your vocal cords as you see fit. Since you, and no one else, owns your speech organs, or your hands, you are free to say or write whatever you want.

    You call that elitist? You think that's a bad thing? What do you support?

    Forcing people to say things they don't agree with? Forcing them to write things they would prefer not to write? Mandatory loyalty oaths?