The Case for Abolishing Patents (Yes, All of Them)

http://m.theatlantic.com/business/archive/2012/09/the-case-for-abolishing-patents-yes-all-of-them/262913/

by geon • 14 years ago

235 121 14 years ago

m.theatlantic.com

madprops• 14 years ago

Yes patents should be abolished. They are not good for the advancement of mankind as a whole.

It's an interesting thought experiment. If all patents disappeared tomorrow, what would you do differently at your startup? Probably nothing?

noonespecial2• 14 years ago

I would be less afraid.

zmmmmm• 14 years ago

This. One of the biggest risks I would see in a startup these days is that the moment you start to be successful or even just get decent funding there's a decent chance you will be patent trolled out of existence.

rayiner4• 14 years ago

The startup I worked at would've closed up shop.

Most HN-ers work on web startups where $100k is a lot of capital and time to market is everything. I don't think they have a good grasp on the mechanics of industries where you can burn through $100k in a few weeks and where a usable product might take 3-5 years or more to make it to market.

rauljara• 14 years ago

> The poster child for strong patent protection is usually the pharmaceutical industry, as drugs are easily copied and can cost upwards of a billion dollars to develop. Here, Boldrin and Levine admit that the government would likely need to step in. But rather than giving companies a legal monopoly over their formulas, the authors suggest we should modify the drug approval process to let makers start recouping their costs faster. They would also set up a prize system to reward companies that invent the new medicines we need.

This strikes me as a really fantastic idea. Actually, I wonder if insurance companies shouldn't offer these prizes regardless of the patent situation. They know intimately well which disorders cost them the most money. They could form a consortium and offer a prize for x amount of money for reducing the cost of treating some disorder by y dollars per patient, where x is guaranteed to be less than the amount of money they will save.

kybernetikos• 14 years ago

Might work nicely for diseases that take a long time to kill you, but insurance companies have no incentive to find a cure to something that kills you quickly and cheaply.

refurb10• 14 years ago

While it's true that insurance companies use cost as a major driver for decisions, however it's not the only driver.

In the US, insurance companies compete with eachother to provide coverage for employers. Many (not all) companies want insurance that is beneficial for their employers. If you drop coverage for something an employer wants, you may lose a major customer.

refurb10• 14 years ago

The "award system" for drug development is full of problems.

Who makes the call as to how much to award? Who decides who the award goes to (very few drugs are develop by one group alone)? Who decides when a drug is actually better than existing treatments?

Insurance companies already reward innovation. When a new drug hits the market, insurance companies collect and review all the data available and decide on how much access they'll provide their customers with. This analysis includes looking at a drug's impact on total cost of care.

wtallis• 14 years ago

Right now, the insurance companies' decisions are skewed by the fact that the new drugs have to be compared against the price of generic drugs. That means that unless the new treatment is orders of magnitude better, it won't be much of a cost savings until long after the inventors should have been rewarded for their innovation.

dfc• 14 years ago

I was struck by how little effort the author put into describing the proposed solution for "the poster child for patents." Is the Atlantic going downhill?

How do you let drug companies recoup costs quicker without reducing the oversight that goes into drug approval? I am also a little curious about the free market implications. Instead of the invisible hand guiding drug development we will be relying on government autocrats? It seems that the incentives for governments to lengthen patent protection would just shift their nefarious attention to the prize system and drug approval process.

nitrogen2• 14 years ago

I don't see (har har) an invisible hand guiding commercial pharmaceutical development. I see an oligopoly of pharmaceutical corporations acting out of unenlightened self interest. From my layman's perspective, it seems that curing diseases is largely done by government- and university-funded research, while treating symptoms for profit is the domain of corporate R&D.

alexqgb3• 14 years ago

I'm always astonished by the idea that, were it not for patents and the profits they promise, "no motivation to develop drugs would exist".

At one point I worked with a group that raised money to finance medical research for patients with lupus. These were folks who were seen as too few, and suffering from something too complex, to be profitable. For the most part they were relying on some pretty toxic treatments that hadn't progressed since the 1950's - the pharmaceutical equivalent of pre-anastasia surgery.

Believe me, the people suffering from this were HIGHLY motivated to find a cure, and given an organization capable of focusing that interest, they've raised millions upon millions of dollars* to do exactly that. This was an early form of crowd-funding and it just obliterates the argument that "without patents, there's no motivation to cure stuff."

I'm sorry, but that is absolutely, categorically, and demonstrably false. If people are sick and dying, they have bottomless motivation. Indeed, the extraordinarily high prices people people put on their own lives ("my kingdom for a horse!") represents a profound reservoir of motivation.

The patent and approval system diffuses this deep and natural drive, replacing it with the more limited motivation offered by monopolistic rent-seeking (which aims not to cure disease, but to make it 'manageable').

The thing about an awful disease is that it develops a sense of community. I cannot imagine, for instance, someone who has raised a lot of money to find a cure saying, "yeah, but fuck the next generation that comes along and gets hit with the same affliction - those guys are on their own. WE paid for this, and the cure is OURS. They can reinvent their own damn wheel if they want to live."

Just...no, that's not how people think. What they really think is that in devoting themselves to finding a cure, they are finding a valuable role for themselves in a society that tends to see them as victims. It's how they recover a sense of self-worth and dignity. They are PROUD to pay it forward. Indeed, one of the top sentiments I heard from people I interviewed was "I want to find a cure so that no one else anywhere in the world ever has to suffer what I've gone through because NOBODY deserves this."

THAT's what real decency sounds like. And it's what our patent system frustrates in a very profound way. I know the pharmaceutical industry is always brought up as the tough case against patent reform - the exception that "must" be made in any discussions tending towards to liberalization. I'd argue the opposite. I'd say that this is one of the easiest cases to make. Maybe not a decade ago, but as the organizing power of the internet comes into focus, I can see a world where direct and massively distributed research finance is the norm, with the results made openly available to the entire world.

People who are sick used to feel terribly isolated. Thanks to the internet, that's changing. They're finding they discover others going through the same thing, and that they can use the same channels to pool their resources. Were they given tax credits, their resources would increase substantially. And they don't want to "manage" their diseases. They want to cure them. Researchers working on behalf of people trying to solve their own problem pursue tacks different from those who are working from companies looking to exploit that problem most profitably. And when people finding their own cures succede, their natural impulse is to share their triumph with all mankind, the world over, not start trade wars over IP that use the pain and death of millions already in - or facing - poverty as leverage.

*People who say research costs billions, not millions have been suckered by the most pernicious line of bullshit imaginable. The "billions" figure does not represent actual R&D costs, which, in a shocking number of cases, represent single-digit percentages of pharmaceutical company budgets. Instead, they represent the fully loaded costs of maintain legal departments to protect patents and marketing departments to push drugs in cases where they have marginal or negative value. Inflating the reported development costs into the billions is simply propaganda designed to make any system that doesn't involve patents seem like a financial impossibility.

refurb10• 14 years ago

Tens of millions of dollars won't get a drug to market. Will it fund research that could find useful leads that could produce a drug? Of course.

So how do you incentive private organizations to fork over the $100 million(1) or so it takes to get a drug to market? You provide a mechanism to regain your capital plus something more. It's a system that works pretty well.

(1) That's if everything works the first time. Since only 1 out of 10 drugs that are tested on humans get to market, it's closer to $1 billion on average.

tsotha7• 14 years ago

>I'm sorry, but that is absolutely, categorically, and demonstrably false. If people are sick and dying, they have bottomless motivation.

Yes, but they don't have bottomless wallets. I'm sure a great deal of research would still happen in the absence of large potential profits. The problem is very little of it would lead to drugs your doctor could prescribe. The drug targets are the easy part - the hard part is getting a compound through clinical trials, and ones you get approved has to pay for the other 90% that didn't make it because they were too toxic or didn't work as well as existing treatments.

As a real-world case consider antibiotics. There's a huge need for new antibiotics - if you get the right strain of MRSA your doctor is going to be about as useful as the local faith healer. Same goes for a nasty strain of the clap that's making the rounds in Japan. Totally resistant to existing antibiotics - once you get it, it's not going away.

But for various reasons there's no money in antibiotics (or vaccines, either, but let's just stick with antibiotics). You don't get repeat customers, and the bugs will start to develop resistance in a few years. With no profit motive drug companies aren't doing what they need to do to bring new antibiotics to market. So there's nothing in the pipeline.

The concern, of course, is that if you did away with patents entirely every type of drug would be like antibiotics. Drug companies wouldn't exist at all, or they'd exist as contractors to governments (oh, and wouldn't that be efficient).

cturner3• 14 years ago

I'm a big fan of Boldrin/Levine but suspect they're wrong about this. The reason medical investigation is so expensive is because there's so much red tape around it in the form of approvals, and the convoluted systems health coverage in the developed world. It's a classic insiders' club. People got institutionalised into the culture, and then can swap between government and industry. There's no strong incentive for anyone in the game to keep costs down. Much more important for the insiders that the barriers remain high.

PatentTroll3• 14 years ago

But there is a reasonable expectation that a pill your doctor prescribes will not kill you (with few notable exceptions). This is a good thing. Who is better at safety, the "free market" or the government?

luriel3• 14 years ago

It is a textbook case of regulatory capture.

Still, abolishing patents would go a long way to allowing real competition and progress in healthcare.

manaskarekar• 14 years ago

A good resource: http://www.stephankinsella.com/category/intellectual-propert...

And innovations that thrive without IP: http://www.stephankinsella.com/2010/08/innovations-that-thri...

Also: http://mises.org/media/categories/226/Against-Intellectual-P...

and

http://mises.org/journals/jls/15_2/15_2_1.pdf [pdf]

panabee3• 14 years ago

The patent system somehow has morphed from shield to sword.

Protecting inventors is one path toward innovation, but it should be a byproduct of maximizing innovation and not the end state.

If the objective of the patent system is to foster innovation, then it should grant patents only if they are necessary for innovation, i.e., innovation wouldn't reasonably occur otherwise.

Amazon's one-click patent versus drug patents are two good cases. If the patent system didn't exist, is it reasonable to think someone else would come up with a one-click method of shopping? Yes. Drugs, however, often require hundreds of millions of dollars in upfront investment. It is reasonable to think that pharma companies couldn't raise the necessary capital, and therefore invent these drugs, without some protection.

rustynails77• 14 years ago

I like that idea, and I believe it rings true with most responsible people. However, it's difficult to measure.

As an example, in the recent Apple v/s Samsung, if it weren't for Apple, we would still be dealing with shitty Nokia, Samsung and Sony Ericsson phones with crap OSes, no decent applications, and the phones would be anything but smart - because there was no need to improve. Once Apple made everyone lift their game, their strategy has been to sue all large players aggressively to ensure they can't implement the things that Apple used, no matter how trivial (eg. the green telephone icon). On one hand you can argue that a "slide to unlock" was not done before on a smart-phone and deserves protection. On the other hand, you can argue that it's a very obvious solution for touch screens and someone else would have easily come up with it. You could also argue there's prior art (but that's another story). So ... In this instance, did Apple drive innovation? Yes. Was it necessary for Innovation? Maybe. Would the innovation have happened if Apple hadn't driven it? Not any time soon.

In my view, your definition needs to be tighter to cover scenarios such as these.

In case the Apple fans get their knickers in a knot, Apple aren't the only ones suing others over trivialities. The industry has been locked in a stale-mate for a long time.

tetomb2• 14 years ago

"Would the innovation have happened if Apple hadn't driven it? Not any time soon."

I am fascinated by this statement. What evidence do you have to support it?

nitrogen2• 14 years ago

Would the innovation have happened if Apple hadn't driven it? Not any time soon.

Maemo, Openmoko, and Android all serve as counterexamples to your claim that Apple was the sole driver of recent smartphone innovation. Our smartphones might look a bit different now had Apple not released the iPhone, but they would still exist. Industry consortia were developing higher-bandwidth data standards (a Danish friend told me in 200[012] that 256kbit/s access on cell phones was already widespread), companies were experimenting with different form factors, operating systems were being developed, etc.

In my view, your definition needs to be tighter to cover scenarios such as these.

Perceived scenarios such as these are often a product of missing information.

panabee3• 14 years ago

Thanks, rustynails77. I also agree it's very difficult to measure, which is why it fails to qualify as the optimal solution.

There is no magical solution, but the contours of the ideal system will account for the capital requirements of an invention. Areas with low capital requirements, such as "slide to unlock" and "one-click buying," should not warrant patent protection.

Not because they require less ingenuity, but because even absent patent protection, companies would still continue to differentiate through new features and ideas.

It's very similar to music and movies. Artists continue to introduce new sounds and new films even though success spawns a host of copycats.

Would Apple cease innovation on software features -- like "slide to unlock" -- if they weren't granted patent protection? I think it's reasonable to assume not because of the relatively small capital requirements and because of their passion to advance technology.

seanalltogether• 14 years ago

It seems we could solve this by adding some conditions around lifetime and protections offered by a patent. if you are a small company you are afforded maximum protections on your patent. If you're large scale company that has delivered products based on features you've patented, your patent stops being valid after 3 or 4 years. If you aren't actively trying to develop or sell a product based on a patented feature, the lifetime of the patent also is significantly reduced.

kanzure• 14 years ago

At Open Science Summit 2010, there were a few individuals proposing some prize funds and reforming the patent system. The transcripts are a little rough (I was typing), but here goes..

Knowledge Ecology International: http://diyhpl.us/wiki/transcripts/open-science-summit-2010/j... .. where he talks about an "open source dividend".

Health Impact Fund: http://diyhpl.us/wiki/transcripts/open-science-summit-2010/a...

lionhearted2• 14 years ago

Frequently overlooked -- American companies are huge net-exporters of IP, IP licenses, and IP-protected stuff.

Take the recent Apple/Samsung fiasco, for instance. That's a net cash transfer of over $1B from the South Korean economy to the American economy. Maybe $2B to $3B total when accounting for all the factors.

Is that good? No, it's disgraceful, actually. But good luck convincing American legislators of some abstract far-future benefits to a less regulated world when the short-term result would be a worsening of the trade-deficit, a lowering of American exports, and a lowering of American income and tax yields.

It's a huge factor that's usually overlooked in these discussions -- the United States isn't a closed system.

AnthonyMouse2• 14 years ago

>But good luck convincing American legislators of some abstract far-future benefits to a less regulated world when the short-term result would be a worsening of the trade-deficit, a lowering of American exports, and a lowering of American income and tax yields.

I'm not sure any of those is actually true. Maybe the trade deficit, but only on paper. In fact the money just goes into Apple's coffers instead of Samsung's, and in turn to Apple's shareholders instead of Samsung's. But they're mostly the same people. Large publicly traded companies are owned predominantly by highly diversified institutional investors. The fact that one company is nominally American and one is nominally South Korean doesn't really have any bearing. Apple manufactures almost everything in China and Samsung does a significant amount of R&D in the United States, and American and Korean investors both invest in both companies.

And the same goes for income tax -- Samsung pays U.S. income tax the same as Apple. (Which is to say not really at all, but that's a different debate.)

Transferring money from one to the other without creating any underlying economic activity has no productive economic consequences. It doesn't create any new non-litigation jobs or produce any new tax revenue, it's just the broken window fallacy as applied to corporate litigation.

lionhearted2• 14 years ago

> I'm not sure any of those is actually true. Maybe the trade deficit, but only on paper. In fact the money just goes into Apple's coffers instead of Samsung's, and in turn to Apple's shareholders instead of Samsung's. But they're mostly the same people. ... The fact that one company is nominally American and one is nominally South Korean doesn't really have any bearing.

I don't think the numbers bear that out. Take employment, for instance.

Samsung employment:

190,464 employees globally; 95,662 working in Korea (50.2% Samsung employees employed in Korea) [1]

Apple employment:

70,000 employees worldwide; 47,000 in the U.S. (67.1% Apple employees employed in U.S.) [2]

> Transferring money from one to the other without creating any underlying economic activity has no productive economic consequences. It doesn't create any new non-litigation jobs or produce any new tax revenue

Right, I don't disagree. From a global standpoint, it results in a wealth transfer from other countries to the United States that's somewhere between mildly negative sum (if you think patents are a net hinderance), mildly positive sum (if you think patents are a net gain), or neutral.

But it's definitely a wealth transfer to the USA. Without digging through all the financials, I'd speculate that in addition to more employees, Samsung also does a greater sum of capital investment into Korea than elsewhere, pays more corporate taxes in Korea than elsewhere, stimulates and patronizes Korean universities more than foreign universities, etc, etc, etc, etc, etc, etc, etc.

I don't even disagree with you philosophically... I'm sort of undecided when looking at policy to work from a starting point of Enlightment values / ethics / humanism, or to start with realpolitik, Schelling points, and incentives. The former is more aesthetic; the latter seems a much better predictor of what will happen in the future.

[1] http://www.samsung.com/us/aboutsamsung/ir/corporategovernanc...

[2] http://www.apple.com/about/job-creation/

marshray4• 14 years ago

OK, so $1B goes from Samsung to Apple.

But what is the cost to the US economy of the fact that we now have only ONE* company left who can design and market handheld portable electronics?

* One might argue that Motorola isn't fully dead yet.

tsotha7• 14 years ago

What about Amazon?

shadowmint• 14 years ago

Remember theres a difference between getting rid of patents and getting rid of intellectual property.

I don't think anyone is serious about suggesting we get rid of intellectual property; if you're create something, there should be protections to stop people ripping off your stuff and selling it without paying you for it.

It's patents that are the problem.

Patents let you capture an idea and prevent people from creating new things.

That's not protecting something you've created; it's stifling the creative will of others, because you don't want anyone to compete with you. It's the legislative antithesis of the open market.

Notch wrote about this before too, thoughtfully: http://notch.tumblr.com/post/27751395263/on-patents

The US could happily continue to have an major IP 'exports' (however that is appropriately referred to) without patents.

nancyhua2• 14 years ago

How do you get rid of patents without getting rid of intellectual property? Do you mean setting up better infrastructure for licensing?

Suncho2• 14 years ago

I disagree that there should be protections to stop people from "ripping off your stuff" and selling it without paying you for it. Instead, there should be protections to stop people from copying your idea without you getting credit for it. But there don't need to be legal protections. All you need to do is make your idea public to prevent anyone else from claiming they were first.

I'm serious about getting rid of all patents and all copyrights.

facundo_olano2• 14 years ago

It's merely conventional that humans can claim the property of ideas. Nobody can "steal" an idea, so there's no way of ripping off the creator.

The notion of intellectual property is now widespread because is the source of profit for companies, but it's not "natural" as the property of material stuff.

Apart from that, if you think that the current laws protect the creators from third parties profiting with their ideas, how do you think Microsoft got big?

jandrewrogers• 14 years ago

There is definitely an element of US self-interest. The US invests a disproportionate amount of capital into R&D relative to its GDP compared to other countries and also reaps a disproportionate result from that R&D investment (i.e. US R&D investments tend to have a higher return per dollar invested compared to most countries).

I have a strong self-interest in making sure effective R&D happens: computers, biomedical, etc. I don't care where that investment happens for the most part. In terms of maximizing R&D output for the currency invested, US has been the clear leaders for a long time. I am less concerned with why the US is producing so much high-value R&D than with why so few other countries are producing anything comparable. A few European countries do produce similar results on a per capita basis but the tend to be outliers with tiny populations that don't add up to much in absolute terms.

cturner3• 14 years ago

Two things. R&D is not a generic, fungible thing. R&D that occurs in a patent environment will have a different focus than R&D that occurs without. I'd expect funding spent on lawyers writing defencive patent proposals would be figured on the balance sheet as R&D, even though it isn't. Or R&D spent finding new ways to extend existing patent rights of a drug. Or finding ways to innovate without breaching competitors' patents.

Secondly, there's no evidence to demonstrate that the amount of R&D that happens with patents is more than there would be without patents. I think you're focussed on the upside - companies that do some more work because of protection. But that needs to be balanced against the amount of research and development that isn't done because of the increased barriers to entry.

6ren• 14 years ago

The 1850-1880 campaign to abolish patents:

> Abolitionist lobby faded away mid-1870s, as most European countries retreated to tariff protection (prompted by influx of cheap N. American grain and severe economic downturn). https://docs.google.com/viewer?url=http://www.usc.es/epip/do...

stretchwithme• 14 years ago

Is there a patent-free economy that is also as innovative as an otherwise comparable one with patents?

Is there another way to encourage innovation?

FrojoS• 14 years ago

I saw the headline and the source and had one thought: "Finally"

olliesaunders2• 14 years ago

The pharmaceuticals industry could never have grown so big without patents. That kind of drug research would have had to been done by publicly-funded bodies, such as universities. I kind of feel like this is an argument in favor of this article. It also explains why it will never happen. Now that we have big-pharma how are we doing to disassemble the thing that keeps it alive?

marshray4• 14 years ago

Simple, recognize that pharaceuticals are a highly special case and develop a custom set of protections/incentives. There is already a mountain of custom regulation for that industry.

It's absurd to think that the same age-of-steam monopoly grant system that currently sorta benefits the pharmaceutical industry should also apply to software, websites, business methods, and exercising one's cat.

It's completely retarded. In the literal sense, i.e., holding progress back. End the retardedness now!

olliesaunders2• 14 years ago

The reason I didn’t suggest this is that industry-specific law feels like a byproduct of the lobbyist culture that has lead to many of our current problems and pre-existence doesn’t justify its continued creation. But, overall, I think you’re right and this is the pragmatic solution.

luriel3• 14 years ago

Most medical research already happens in publicly-funded bodies, bit it is then spun-off and captured by big pharma.

Not to mention that as many have pointed out over and over again, the main expenses of drug companies are not research, but drug approval bureaucracy and marketing.

rgovostes• 14 years ago

> Somebody out there actually patented a method for moving information through the fifth dimension. As in the Bruce Willis movie. As in faster than the speed of light.

Which movie is that, exactly?

1veteran• 14 years ago

1. Software costs next to nothing to produce. Why is it so easy to have startups in this sector? What is the overhead of a software/web company? It is almost all intellectual. Ask Microsoft. Pure profit.

2. It is difficult for examiners to find prior art because there is no "official" channel for "publishing" software research that they recognise. There is much know-how that is common knowledge among developers but is never published in any paper, textbook, standard, RFC, etc. The "database" for searching all these sources may end being a web search engine. That is not ideal.

1. Drugs are very expensive to produce. Not only the research, the equipment, the staff, but compliance with the regulatory regime. There are no protections against bad software to protect users (developers operate in a wild west type atmosphere), but we have many rules about medicines. These are designed to protect patients. Can you imagine an unregulated pharma industry? Profits take precedence over safety. It would be very dangerous for patients.

2. There is a littany of journals that public chemical, biological and medical research and they can all be searched easily in combined databases, to which most all pharmaceutical patent owners subscribe. It is not too difficult for examiners to find prior art and establish publication dates.

These are my thoughts.

zanny2• 14 years ago

> 1. Software costs next to nothing to produce. Why is it so easy to have startups in this sector? What is the overhead of a software/web company? It is almost all intellectual. Ask Microsoft. Pure profit.

I'd argue software is extremelty expensive to produce, on the basis that distributing software is so insignificantly expensive that it could be called free. Relative to the costs of distribution, paying developers to write an application is extraordinarily expensive. So is maintaining that code, providing support, and advertising the product. I'd "guess" startups are so abundant in the software sector because distribution is so cheap, not because development is. Entering any other market's distribution channels on an international scale is prohibitively expensive for almost anyone but an already successful mid-sized company.

> 2. It is difficult for examiners to find prior art because there is no "official" channel for "publishing" software research that they recognise. There is much know-how that is common knowledge among developers but is never published in any paper, textbook, standard, RFC, etc. The "database" for searching all these sources may end being a web search engine. That is not ideal.

Even more fundamentally, it is hard to find prior art because software is information / knowledge and traditionally (in the context of math at least) we never had patents on it. If you consider the physical properties of software, it is just the presence of absence of charge over billions of indicants. Does the interface that exactly duplicates the ios home screen but has a binary representation that is nothing like the disassembly of it represent infringement, or the instant messenger whose disassembly looks 95% like the ios home screen? What happens when a music track and an android map are 90% binary identical?

> 1. Drugs are very expensive to produce. Not only the research, the equipment, the staff, but compliance with the regulatory regime. There are no protections against bad software to protect users (developers operate in a wild west type atmosphere), but we have many rules about medicines. These are designed to protect patients. Can you imagine an unregulated pharma industry? Profits take precedence over safety. It would be very dangerous for patients.

Absolutely you need to regulate the pharma industry somewhat, but I would also argue it is a consumers responsibility to know what they are putting in their bodies. We expect people to be able to judge their own alcohol consumption, how are prescriptions any different? If you make knowledge easily and readily available on what drugs do and their effects, consumers could make informed decisions. A lot of the fears in the phara industry is in how close-boxed knowledge is - you assume your doctor knows best, and don't investigate the effects of drugs you consume. I'd call it foolish to not understand the risks of what you are consuming.

> 2. There is a littany of journals that public chemical, biological and medical research and they can all be searched easily in combined databases, to which most all pharmaceutical patent owners subscribe. It is not too difficult for examiners to find prior art and establish publication dates.

That doesn't mean that a government granted monopoly on drugs is a good thing. When the expenses of drug research (which end up significantly being the rigorous 3 phase testing drugs need to pass to be allowed to be sold to end users) are so high, and profit motive is involved, drug costs spiral out of control. For Americans like myself without health insurance, we just can't afford to buy any of these drugs even with a prescription because they can cost upwards of $200 or more a bottle. The fact the actual drugs only cost at most a few dollars to produce per bottle, so the rest is profit to recoup research costs, doesn't help the fact that the good is cheap to make and is artificially expensive to recoup tremendous research costs. One (not me, but it is a theoretical) might argue that the R&D of a to-market drug could be just paid in full to whoever developed it, and that the formula itself could be released public domain. Taxes go up, drugs are cheap.

jacques_chester• 14 years ago

The key is that software development is an unavoidable sunk cost. Once it has been paid, it can be ignored in terms of considering per-unit pricing.

The actual marginal cost of each unit of software sold is pretty close to zero. This is what makes it so fantastically profitable compared to almost anything else.

y1426i• 14 years ago

Thinking about this, the reverse might also work. Automate the process of granting patents such that patents are granted solely based on algorithms and prior art automated search. That way every one can get every patent immediately.

The work of the patent office then would be to validate the patents when there is a conflict, as a pre-requisite for a lawsuit. The office would have less work to do relatively I would think and hopefully would have more time to review the patents when they come to their desks that way.

sbierwagen• 14 years ago

  As long as they still cranked out out new, popular 
  products, companies like Apple would continue to profit by 
  being the first to market, which often confers a long-term 
  advantage.

Apple being first to market? When has Apple ever produced anything novel? Personal computers, MP3 players, smartphones, and tablets; were all invented by other companies. Apple's virtue is superior execution, not being first to market.

jonny_eh• 14 years ago

They didn't invent the tablet, they invented the tablet as we know it. It consider that to be a much harder thing to do. The concept of the tablet hardly needed inventing, just watch Star Trek, it was pretty obvious. The less obvious is the "how" (what you call the execution).

devilshaircut• 14 years ago

I agree; it's a point often overlooked that execution can be innovation in and of itself.

EnsoSorrento• 14 years ago

Immediately after abolishing patents, let's abolish Federal Reserve (who suggested the patent thing)

ryanwaggoner3• 14 years ago

So the argument here isn't that a patent system is inherently bad; you could have a patent system that provides a net win for society. But over time, entrenched interests will find ways to twist the system to their advantage, at the expense of society at large.

Let's say this is true; how is this different from any government action in the marketplace? From education to finance to healthcare, we're confronted with problems that have may have good theoretical solutions by government, but the reality is that our solutions will eventually devolve to rent-seeking and regulatory capture by powerful entrenched interests. I have yet to hear a good solution to this problem other than severely limiting the ability of the government to interfere with markets in the first place.

bluedanieru• 14 years ago

Stop electing assholes to public office.

barrkel2• 14 years ago

The people I've known personally who've tried (and sometimes succeeded, one of them was a member of the European Parliament, my old Irish teacher Sean O'Neachtain) to get into public office have all been pompous assholes. You don't really get much of a choice.

ryanwaggoner3• 14 years ago

This is as useful as saying "Fix the problem."

jcroll2• 14 years ago

How about an educated electorate that votes and votes good representatives into office who will diligently represent the interests of their informed electorate? Read through that sentence again, let it soak in, you will begin to see everything that is wrong with the American political system.

ryanwaggoner3• 14 years ago

I think it's very tough to make the case that America is uniquely bad in this regard. Do you seriously think that Europe is a political utopia that elects people who only do the best for citizens, or that entrenched interests haven't captured public power and funds??

fauigerzigerk• 14 years ago

I'm unconvinced by their pharma argument. Some industries need patent protection. My preferred solution would be for the patent office to set different time limits for different industries, depending on the length of the innovation/commercialization cycle in that particular field.

So if it takes 10 years to develop a new drug and have it approved, give them 10 years of patent protection. If it takes a year to invent and perfect some user interface idea, give them a year's worth of patent protection.

Don't set the time limit on a case by case basis or everybody would claim to have thought about it for 30 years before it came to fruition.

utopkara• 14 years ago

Not all patents are by trolls or big corporates. Patents are crucial to medium size and small size firms. A healthy economy requires to create an environment for these firms to thrive. If you think big corporates are the ones to focus on, check out Germany: http://www.economist.com/node/18061718

maked00• 14 years ago

The fashion industry does quite well thank you WITHOUT patents. Check it out. No patents in fashion. The most you can do is copyright a logo and slap that on your product. The rest is open season, and we all are the richer for it. Patents only make lawyers rich at the expense of the rest of us (the 99%).

PatentTroll3• 14 years ago

There is no meaningful comparison between the fashion industry and high technology. Keep in mind also that the fashion industry aggressively uses copyright, which last time I checked is also not too popular. That's why a lot of designer goods have a logo plastered all over them. If we abolished patents, there would be a short time span where everyone would prosper, but then eventually it would become clear that nobody is doing basic R&D, because it would be stolen by a competitor immediately. Also, I assure you there is no lawyer conspiracy. 99% of lawyers are in the 99%.

facundo_olano2• 14 years ago

It's no news that patents and copyright obstruct the progress of science and society (nobody ever listents to Stallman?).

Now, acknowledging that is far from being enough to abolish them. The world revolves around companies making profit, it's naive to think that the government will agree to rule against the huge companies that currently benefit from those restrictions.

podperson• 14 years ago

The article summarizes the alleged benefits of patents as:

a) They improve productivity (I'm assuming this is somehow an Economic encapsulation of the benefit of technological progress, although AFAIK technological progress is essentially a Big Problem for economic analysis, and one of those things that Economists wave off as a pathological one-off event that ruins their assumptions, so I'm guessing it's A-OK for Economists to approximate technological progress -- something they can't really cope with -- as simply output / production cost).

b) They are an alternative to trade secrets, which is dismissed in a single paragraph with the argument that you'll only patent something you can't protect for longer with trade secrets (because, as a typical economic actor you are omniscient and can perfectly predict how long you'll be able to protect something with a patent vs. secrecy).

The follow-up paragraph says this (emphasis mine):

> A more subtle point is that secrecy may bias the type of inventive activity away from innovations that are not easily kept secret to those that can be, viceversa for patents. There is historical evidence from Moser [2004, 2005] in this direction. In 19th Century expositions of inventions, while countries without patent systems had overall rates of innovation similar to those with a patent system, they did specialize in innovations which were more easily kept secret. How strong this bias would be if no countries had patent systems – that is, whether it is true that patents encourage innovations that would not otherwise be made, or if they just shift the location of innovation from country to country – is not known.

Oops. So this argument appears to be well-founded, and we don't know how big the effect is. Never mind, moving right along...

> A good case in point is that of the Wright brothers, who made a modest improvement in existing flight technology which they kept secret until they could lock it down on patents, then used their patents both to monopolize the U.S. market and to prevent innovation for nearly 20 years.

Yes, there was no innovation in flight technology between 1903 and 1923.

> The modern and highly successful open source software movement is a more contemporary example of how collaboration and exchange of ideas thrives absent intellectual property.

This is where they lose me. OK they lost me a while back. Where is the great open source project which is so awesome everyone is imitating it? Open Source is great at commodifying innovations produced by others. We've got imitation Windows UI, imitation Mac UI, imitation iOS, imitation UNIX, imitation Microsoft Office, imitation Photoshop...

> On the other side of the coin, the rationale for patent systems is weak. In most industries the first mover advantage and the competitive rents it induces are substantial without patents. Again: the smart- phone industry – laden as it is with patent litigation – is a case in point.

So, do they think Apple's first mover advantage would have been worth much if competitors had simply cloned everything it did? It was the delicate dance of ripping off Apple's ideas without crossing the line that created at least of the first mover advantage in this case.

I could go on and on -- the authors certainly do.

> In the case of patents, and particularly pharmaceutical patents, the situation is even more severe. We have made mention of the loss of human life due to the pricing of AIDS drugs.

Right, so kudos to the patent system for giving investors a reason to invest money and attention span to creating AIDS drugs, but once they're created they should sell them at break-even? Oh wait, no. No kudos to the patent system for the former -- they were inevitable. People like spending their money making stuff. It happens.

> A simple model helps to focus these thoughts. We suppose that there are two firms i = 1,2 who must choose between innovating (I) and not innovating (N). We have in mind here the creation of a new product, so that the choice to innovate is paramount to entering the market – a firm that does not innovate is assumed to have no product to sell.

Maybe if we do some pretend math it will make our thinking seem more rigorous. As something of a failed mathematician I like counter-examples. In this universe these guys are basing their entire theory on, the entire market for laundry soap does not exist.

It's just magical thinking.

macspoofing• 14 years ago

Why take drastic steps like abolishing all patents. A big problem right now are software and design patents. If we're not willing to outright ban them, why not limit their term to 5 years?

lumberjack• 14 years ago

I don't know how the US patent legislation is implemented but in many countries patents come with a compulsory license. That means that a patent holder cannot restrict others from using his invention. He only has the right to ask for the proper compensation. I think such a clause is imperative to truly have an effective means of promoting innovation.

The Case for Abolishing Patents (Yes, All of Them)

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