The Tragedy of the Anticommons

Do patents actually impede innovation?

Ronald Bailey | October 2, 2007

Congress is considering sweeping reforms to the U.S. patent system. In September, the House of Representatives passed the Patent Reform Act of 2007, and the Senate is slated to consider similar legislation later this fall.

One motivation for patent reform is a concern that the over-proliferation of patents, instead of encouraging innovation, is stifling it. This argument achieved prominence in an influential 1998 article published in Science by two University of Michigan law professors, Michael A. Heller and Rebecca S. Eisenberg. Heller and Eisenberg worried that the privatization of biomedical research "promises to spur private investment but risks creating a tragedy of the anticommons through a proliferation of fragmented and overlapping intellectual property rights."

By "anticommons," they meant a situation in which the existence of a large number of intellectual property rights applicable to a single good or service unduly retards or even prevents its provision. The blockage to innovation would occur because of high transaction costs, the conflicting goals of various intellectual property owners, and cognitive biases in which owners overvalue their own patents, undervalue others' patents, and reject reasonable offers.

As evidence for a biomedical anticommons, analysts regularly cite the high profile case of "probably the most hated diagnostics company," Myriad Genetics. In the 1990s, Myriad Genetics patented and developed a test for variations in the BRCA1 and BRCA2 genes that greatly increase a woman's risk of breast and ovarian cancer. The company refused to license its patent or test to any other company. Thus clinicians have to send all their samples from patients to Myriad Genetics at a cost of $3000 per test. The refusal to license means, among other issues, that the test has not been validated by other researchers. But is this a common problem?

In a recent presentation, Claire Driscoll, Director of the National Human Genome Research Institute (NHGRI)'s Technology Transfer Office, noted, "In my 10 or 15 years of doing this, I hear the same five examples or six examples repeated over and over. We can all name them by heart: BRCA1 and 2, Myriad Genetics; hemochromatosis; Canavan's disease. It's the same ones. Are there any new ones? Is it getting worse, or is it just these few that are exceptional?" She concluded, "I really think there are only a few, and I think it's the same ones over and over again."

Driscoll is right. The good news is that evidence for a growing biomedical research anticommons that can stifle biomedical research is almost non-existent. A study done for the National Academy of Sciences (NAS) in 2003, Patents in the Knowledge-Based Economy, reported the results of 70 interviews with researchers at biotechnology and pharmaceutical firms and universities about effects of research tool patents on industrial or academic biomedical research. The report found that although patents had proliferated, "drug discovery has not been substantially impeded" by them. In addition, there was "little evidence that university research has been impeded by concerns about patents on research tools." One possible worry was that restrictions on patented genetic diagnostics might be interfering with academic research.

In 2006, the NAS issued another report, Reaping the Benefits of Genomic and Proteomic Research, dealing with the question of whether or not patents were impeding research. Reassuringly, the report once again found that "Overall, the number of projects abandoned or delayed as a result of technology access difficulties is extremely small, as is the number of occasions in which investigators revise their protocols to avoid intellectual property issues or pay high costs to obtain one. Thus, it appears that for the time being, access to patents or information inputs into biomedical research rarely imposes a significant burden for academic biomedical researchers."

What factors did cause researchers to abandon projects? The researchers surveyed by the NAS cited "lack of funding, conflict with other priorities, a judgment that the project was not feasible, not scientifically important, or not that interesting, and the perception that the field was too crowded with competing investigators."

Also, in 2006, Nature Biotechnology published a review (free registration required) of the academic literature on the existence of a research anticommons. The review concluded that "among academic biomedical researchers in the United States, only one percent report having had to delay a project and none having abandoned a project as a result of others' patents, suggesting that neither anticommons nor restrictions on access were seriously limiting academic research." Worryingly, the review noted there was evidence that secrecy was growing among academic researchers. However, patent issues do not seem to be fueling this secrecy. One study suggested that increased academic research secrecy arises chiefly from concerns about securing scientific priority (scientific competition) and the high cost and effort involved in sharing scientific materials and data.

In 2007, the American Association for the Advancement of Science (AAAS) released a report, International Intellectual Property Experiences: A Report of Four Countries, which surveyed thousands of scientists in the U.S., Germany, the U.K. and Japan to assess their experiences in acquiring, using, or creating intellectual property. The AAAS study found "very little evidence of an ‘anticommons problem.'" As Stephen Hansen, the director of the AAAS study, noted in a press release, "All four studies suggest that intellectual property rights had little negative impact on the practice of science."

So why has there been so much anticommons hullabaloo over the past few years? "It is interesting that we rarely, if ever, hear from the researchers themselves about these issues. The issues have been brought to public attention instead by academic lawyers, sociologists and economists," noted Hansen. The Nature Biotechnology review further noted, "The Myriad Genetics controversy was used as a primary tool for justifying patent reform-thus highlighting the potential of a single high-profile controversy to mobilize both governmental and non-governmental policy makers."

Finally, it must be observer that the biggest backers of the current push for patent reform in Congress are big information technology companies. Why? Because most information tech products involve the blending of lots of technology covered by numerous software patents, which requires a significant investment of time and money. And yet a huge proportion of the research on the existence of an anticommons focuses on the biomedical arena.

Is there evidence for an infotech anticommons? In 2004, one influential study by Boston University visiting law professor James Bessen and the Federal Reserve Bank of Philadelphia's Robert Hunt suggested that the over-proliferation of software patents was reducing software research and development and slowing down innovation.

However, recent work by two econometricians at the London School of Economics concluded that the "expansion of patentability over software during the 1980s and early 1990s was not associated with any major changes in R&D investment" by software firms. They claim that their findings "contradict the controversial claim by Bessen and Hunt that the expansion of software patenting led firms to reduce R&D over this period." Nevertheless, infotech researchers and companies tend to see patents as creating an anticommons that stifles innovation whereas biotech researchers and companies do not.

One way to think of the current patent legislation is that Congress is favoring infotech companies over biotech companies. Ultimately, what you think about patent reform may depend on whether you want cheaper computers or cheaper drugs.

Ronald Bailey is Reason's science correspondent. His most recent book, Liberation Biology: The Scientific and Moral Case for the Biotech Revolution, is available from Prometheus Books.

Comments

|10.2.07 @ 3:27PM|#

Actually, there is compelling evidence that patents do stifle innovation. Compare the development of the automobile to the development of aircraft.

Until Ford won his case in court, automobiles where luxury goods owned by a few. It took about 50 years for the automobile industry to match 15 years' the development of the air industry.

When I worked on some product development projects, we did not look at IBM's patent database for useful ideas to make our job easier. Rather, we looked for stuff that we should avoid doing since we wanted to steer clear of being sued. In other words, rather than making the best product that would meet our customers needs, we made something worse that we could sell without getting sued. In those cases the patent system was not promoting progress in science and engineering.

From a libertarian perspective patents are profoundly immoral; if my neighbor decides to organize the materials he owns into a plow that looks just like mine, he is not aggressing against me. If I, on the other hand try to prevent him, I must aggress against him.

carrick|10.2.07 @ 3:28PM|#

Ron Bailey wonders if patents actually impede innovation.

Of course patents impede the creation of derivative works. That's their purpose.

But they encourage the creation of original works. That is also their purpose.

People that complain about patents are whining about the first point while ignoring the second.

|10.2.07 @ 3:29PM|#

"privatization of biomedical research promises to spur private investment but risks creating a tragedy of the anticommons through a proliferation of fragmented and overlapping intellectual property rights."

This seems quite prescient given the following statement:

"What factors did cause researchers to abandon projects? The researchers surveyed by the NAS cited 'lack of funding, conflict with other priorities, a judgment that the project was not feasible, not scientifically important, or not that interesting, and the perception that the field was too crowded with competing investigators.'"

Also, am I missing some quantitative analysis here, or is this based on anecdotal evidence? I miss Cathy Young. At least she recognized that these debates have two sides.

|10.2.07 @ 3:38PM|#

Also, am I missing some quantitative analysis here, or is this based on anecdotal evidence? I miss Cathy Young. At least she recognized that these debates have two sides.

And Lamar wins the thread.

|10.2.07 @ 3:39PM|#

Just happy to see a libertarian challenge to the patent oligarchy. Hope to see Reason carrying this banner more in the future.

|10.2.07 @ 3:43PM|#

tarran
I guess it just doesn't take that long when you don't have to work out that whole internal combustion thing...you didn't stand on anyone's shoulders by any chance did you?

patents are evil|10.2.07 @ 3:48PM|#

Tarran, the farmer, becomes completely fed-up with the plow he bought from AMCE Farm Implements, so he heads out the barn to tinker for awhile.

Low and behold, Tarran produces a completely original design for a new type of plow that works much, much better that his old one.

His neighbors are so impressed that they pay him to build plows for them. News travels far and wide, so Tarran stops farming and just makes plows.

Eventually, ACME Farm Implements hears about Tarran's plow. They buy one, figure out how to duplicate it, then flood the market with their products at one half the price Tarran is charging.

Tarran's plow business folds, so he goes back to farming his land.

This is socially OK, because patents are evil.

|10.2.07 @ 3:49PM|#

Or, more likely, ACME sues Tarran out of existence before his business gets off the ground.

Fritz Malchup (1958)|10.2.07 @ 3:53PM|#

"If we did not have the patent system, it would be irresponsible, on the basis of our present knowledge of its economic consequences,to recommend instituting one. But since we have had a patent system for a long time, it would be irresponsible, on the basis of our present knowledge, to recommend abolishing it."

patents are evil|10.2.07 @ 3:53PM|#

Or, more likely, ACME sues Tarran out of existence . . .

Patents don't exist in this world, so what would they sue for?

|10.2.07 @ 3:59PM|#

Eventually, ACME Farm Implements hears about Tarran's plow. They buy one, figure out how to duplicate it, then flood the market with their products at one half the price Tarran is charging.

Tarran's plow business folds, so he goes back to farming his land.

This is socially OK, because patents are evil.

Yes, it is OK. Now hundreds or thousands more farmers in faraway places -- as well as those locals who couldn't afford to buy at Tarran's price -- are gaining the benefits from Tarran's new plow design. Tarran also made money on the deal (since apparently plow-making was paying better than farming for whatever period he was plow-making).

I don't see the problem here, unless it's that Tarran doesn't get to ride the gravy train for the rest of his life because he was clever one day.

|10.2.07 @ 4:04PM|#

Yes, patents are evil, that scenario is just fine:

No DADDIO try reading a biography about Curtis some time. when the Wright brothers started going after Curtis for patent infringment, Ford bankrolled Curtis' legal defense. The end result was that the patent stranglehold that killed automobile development from 1880 - 1910 never developed in aviation.

As far as patents are evil's scenario goes, yes... that's just dandy. After all, I don't have any right to force people to do business with me. If ACME can do a better job satisfying customers than I can, I shouldn't be in business. Just because I once made a profit doing something does not mean that I have a god-given right to that profit indefinitely into the future.

Of course, ACME might find it cheaper to purchase my plow-making facilities from me; then they don't have to worry about retooling and they get the benefit of my manufacturing expertice and my reputation.

|10.2.07 @ 4:12PM|#

In the "patents are evil" hypo, the lack of protection would incentivize trade secrets. A farmer would be better off keeping his invention secret and benefitting from increased crop production than he would distributing the knowledge. That doesn't sound any better for consumers as a whole than the patent system.

|10.2.07 @ 4:17PM|#

AC -- If the knowledge would be independently rediscovered in less than the time of the patent term, trading patents for trade secrets would be a net win. Patents prohibit not just copying the invention but independently rediscovering it.

Dave Woycechowsky|10.2.07 @ 4:26PM|#

If the knowledge would be independently rediscovered in less than the time of the patent term, trading patents for trade secrets would be a net win.

On a related note, if patents were limited to inventions that would not be independently discovered during the patent term (or some substantial portion thereof), then the patent system would clearly be better than trade secrets.

|10.2.07 @ 4:27PM|#

Grant -- If the knowledge would be independently rediscovered and distributed, then yes, it would be a net win. However, given that trade secrets would be encouraged, it's not clear that would happen. A second discoverer might be just as likely to keep it for himself. If a large number of inventors discovered it and kept it secret, that doesn't seem to benefit society as much as a free-for-all following a limited time of protection.

Also, just as patents might discourage derivative creations, a lack of patents might do the same. An inventor could no longer look at other inventions for guidance or inspiration. If most inventors kept their invention secret, then other inventors couldn't "piggyback" on that knowledge to make progress.

Jacob|10.2.07 @ 4:29PM|#

Since our patent law is utilitarian and not rights-based, why do the two industries need to be under the same patent law?

|10.2.07 @ 4:31PM|#

"Just because I once made a profit doing something does not mean that I have a god-given right to that profit indefinitely into the future."

Patent term in the US is 20 years. That is meant to satisfy the "indefinitely" part of that scenario, and to keep innovation alive.

|10.2.07 @ 4:32PM|#

There is a point to patents are evil's comments in that if you are a person opposed to concentration of economic opportunity under a few large corporations, the elimination of patents is probably bad news for you. If it is bad to be bought out by established market players, how bad is it when they don't even have to cut you a check?

|10.2.07 @ 4:39PM|#

"Also, just as patents might discourage derivative creations, a lack of patents might do the same. An inventor could no longer look at other inventions for guidance or inspiration. If most inventors kept their invention secret, then other inventors couldn't "piggyback" on that knowledge to make progress."

The piggyback is essential in spuring new innovation. In order to get a patent you need to describe the invention so that anyone skilled in the art could duplicate it. Then it is published for anyone in the world to see.

There definitely is a problem in the current patent system with rent seeking. But the system it's self is moral and spurs creativity for a profit.

Just because powerful companies game the system doesn't invalidate the whole system. It just needs some tweaking.

Some other girl|10.2.07 @ 4:43PM|#

People who have not created and never will create anything of value tend to be against copyrights and patents. In that regard they are little better than parasites.

|10.2.07 @ 5:01PM|#

I should know better, but here goes anyway. The point of patents is to prevent us from living in a world of trade secrets. The deal is that if inventors tell us how do something, then they get a temporary monopoly on it (which in the modern world tends to mean the right to license it). Because he or she has revealed what they did, other inventors get to use the knowledge to further new inventions.

Now one might suggest that there are other ways to encourage innovations--prizes for example--but prizes only work for problems that people have already identified. Patents operating through markets marshal disbursed information to solve problems that most of us never knew we had.

As for IP being somehow different from real property or personal property, keep in minds that all of those forms of property are also vindicated through government enforcement. You can build all the fences you want around your fields, but unless you are personally prepared to spend a good bit of your time patrolling them with shot guns, the fences are likely to be torn down by those who decide not to recognize your property right to your fields. If you don't believe me, just ask people living in countries without good property rights.

|10.2.07 @ 5:02PM|#

lots of typos, but most important, "disbursed" should be "dispersed"

|10.2.07 @ 5:04PM|#

in patents are evil's scenario, if tarran is smart he will go to someone with manufacturing facilities and either sell his design or go into a sort of partnership to sell a lot of plows. He makes his money and then retires young.

|10.2.07 @ 5:06PM|#

"As for IP being somehow different from real property or personal property, keep in minds that all of those forms of property are also vindicated through government enforcement."

Private property has been around since before Rome, yet IP has only been around a couple of hundred years. Our own Constitution realizes the value of protecting IP, but also recognizes that it infringes on rights and can only be for a limited time.

So when you say that IP and property are "somehow" different, I would suggest that they are completely different. In fact, private property has been so successful that governments have tried to mimic it with intellectual property, with varying degrees of success. Why can't they replicate the results? Because IP is completely different.

|10.2.07 @ 5:06PM|#

Just so that people understand patents of monopoly assist the big guys and rarely protect the small inventor.

The reason being that patents are arbitrary. Unlike assault and battery, or trespassing, there is not way to define obviousness. To know whether or not one is committing the crime of patent infringement, one need to hire specialized lawyers that do research, and guess what the court is going to decide.

If you suspect someone of violating your patent, you must again hire lawyers, expensive ones that investigate then guess whether or not a crime is being committed. These lawyers, again, are going to cost gobs of money.

So, to establish a patent, you have to spend gobs of money. To identify wrongdoers, you have to spend even more money. Then, once you have identified them, you have to spend colossal amounts of money to sue the violators. And, god forbid that the violator has some patent that allows them to monopolize a device similar to one incorporated into your device. Then they can sue you too.

The fact is, big companies ignore patents owned by little guys. Why? Because unless a person has deep pockets, or can find an investor willing to finance a law-suit, he cannot prosecute the big company.

Little companies or individuals, on the other hand, can find themselves wiped off the map by a lawsuit from a big company, since it takes deep pockets to defend against a patent lawsuit.

A patent fight is almost invariably won by the guy with the most money, not whomever was the most inventive.

Patents are profoundly immoral in practice and in theory. They hinder development as often as not, allow businesses that are not as efficient in the market place to kneecap competition. And, since patent enforcement necessitates violence being initiated against people who are merely manipulating property that they own and are not aggressing against anyone they are incompatible with libertarianism.

|10.2.07 @ 5:21PM|#

Ron,

We already live in a world of trade secrets.

During my product development stint, the team leaders told us not to, under any circumstances, look in the patent database. Why? If we did, we could get sued for willfull patent infringement rather than inadvertant infringement. The former involved trebble damages, I believe.

Thus, people 'publishing inventions' by applying for patents did help our product development. It only hurt it, since we would vet the design past a patent expert who would turn around and say 'such and such violates a patent held by so and so, change it'.

So, not only did we not get a benefit, it was a roadblock to us producing the product we wanted to make.

As to requiring a government to establish private property rights, I have to laugh. Respect for property is a cultural thing. When I had problems with kids trespassing through my yard, the police sure weren't going to send someone to guard my property line.

Yes, governments that set up courts and police that respect property rights can improve propserity in places where there is low cultural respect fro private property. But, for the most part, governments have the opposite effect, they provide mechanisms for one group to loot another. The only reason governments appear to be necessary for defense of property rights is because they have outlawed competition in court and policing systems.

If the government outlawed anybody who wasn't a priest in the Catholic Church from providing medical care, after a few generations, the consensus would be that without the priesthood there would be no doctors since there would be no counterexamples to falsify the claim.

|10.2.07 @ 5:22PM|#

tarran: If you're right, isn't it funny that I went to a conference on IP at AEI last week where small companies in the form of the Innovation Alliance were vigorously defending the current patent system. The Innovation Alliance speaker was Bryan Lord of Amberwave. See also this InfoWorld article which reports that small companies oppose Congress' proposed patent reform whereas the big guys like it. I think the subtext is that small companies find patents valuable.

Also, I don't have the figures handy, but the vast majority of patents never earn any money whatsoever and the products patented never get built.

patents are evil|10.2.07 @ 5:28PM|#

Without patents, creators cannot make money. Only producers.

The results is that creators will create only if they are willing to give it away (e.g., the open source movement)or they are also producers that can keep the creation secret (e.g., trade secrets).

This will leave a hole for creations that are difficult to create but easy to replicate (e.g., drugs).

|10.2.07 @ 5:29PM|#

tarran: At the same AEI conference I mentioned earlier, the Cisco guy said that he advised his engineers to do the same thing. Could it be that infotech patents are the problem, not patents in general?

The current patent reform legislation significantly narrows the scope of "inequitable conduct" which is what you are talking about. Basically, lawyers when challenging patents automatically claim that alleged infringers didn't tell patent examiners everything (they lied in other words) and thus misled the examiners into handing out bad patents. The punishment is treble damages.

As for the plea for quantitative data on whether or not patent anticommons exist that other commenters asked for, please just click through the links to the NAS and AAAS reports I quote--you'll find plenty.

|10.2.07 @ 5:31PM|#

I don't think it matters that patents are expensive to enforce or tend to favor the big company. First, all complex civil litigation is expensive. It's a problem in general, not a problem specific to patents that indicate patents are a bad thing. Second, patent litigation favors big companies, but as JasonL pointed out earlier, the alternative is having no recourse against the company. It's difficult to triumph with a patent, but it's even harder when there's no protection.

It's not at all clear patents hinder development as often as not. They certainly don't hinder development as much as trade secrets, and they reduce information costs and allow others to create new inventions based on publicly available information.

As far as the charge that patents are immoral because they require agression against non-aggressors, it depends on how you define non-aggressors. Under a Lockean view, a person copying another's work is depriving the other of work belonging to them by virtue of them mixing their labor with their property. Considering the Lockean view was one of the early underpinnings of the patent system, it can't be simply declared that a copyist is a non-aggressor.

SJE|10.2.07 @ 5:37PM|#

Tarran and others would have you think that patents are only the big guy screwing with the little (or littler) guy. Nothing could be further from the truth. The entire biotech industry and all those small IT start ups would fold without IP protection. Why would google pay a billion for you tube if they could just steal the ideas?

The big guys already have the power to do what they want. The only hope that a little guy has is the support of the law. In our plow example, above, if there is no way that the inventor can protect his idea of the new plow, there is nothing to stop every other farmer, ACME etc from copying. So, you say, this is great coz everyone gets a better plow.

Not so great for the inventor. What if came up with an even better idea for a plow? If he knew that he would get no benefit, he would never invest any time and $ in checking to see if his idea actually is better. The more time and money, the more protection is needed.
Society would have benefited even more from the better plow, but it will never get invented (or will be invented many years later).

If anyone wants to live in a country without IP, there are plenty of places. Of course, they are, as a general rule, poor and/or have been unable to diversify their economies from e.g. oil, minerals or agriculture. The nations with the strongest IP generally have the highest economic growth, and most diverse economies.

|10.2.07 @ 5:50PM|#

Ron,

Of course the big guys like it. They can afford to switch to the new system. The mid-sized companies have figured out how to function under the current regime and can't afford the change.

The point remains though, the patent system, because there is no objective criteria to assign when a tresspass occurs, is a form of russian roulette that favors whomever has the deepest pockets. uncertainty whether or not the courts will shut down your business for what amount to subjective and unpredictable concerns happen to be a feature of despotic governments and tend to be a direct cause of poverty and poor economic performance. The patent system makes business ventures more risky and reduces wealth creation. Yes, you can point to a few cases where ti produced a good outcome. However, like Bastiat warned, one cannot ignore all the ventures that are not attempted because of the system and are thus unseen.

Finally, you still have the moral roadblock. To enforce a patent, I must aggress against someone else. I must seize control of their physical property because I don't like how they are using it. Even though I don't see a persuasive utilitarian argument for patents, even if there were one, I think this moral argument would trump it.

Imagine a scenario where, I don't know, three-quarters of the female population of Earth has been killed by some plague. One could make a utilitarian arguemnt that women should be forced to bear children as often as possible to repopulate the Earth. Yet such a scheme, requiring rape to put into practice, would still be immoral. Obviously jailing someone for refusing to comply with the fines/judgements in a patent infringement lawsuit happens rarely, and the whole system is far less destructive than the bizarre scenario described above, yet the utilitarian arguments are also far weaker.

|10.2.07 @ 5:55PM|#

Why would google pay a billion for you tube if they could just steal the ideas?

Because it takes time and money to replicate the code? Because they would have to spend years building the customer base that youtube already had?

As for the inventor not thinking an invention is worth his time:

Of course someone will invent the plow! If not for anything else, for his own use! People who want to invent things for a living would seek a patron who would finance them. In all likelihood, ACME would hire people like our plow-inventor so that they can stay ahead of the competition in bringing new products to market!

Incidentally, Hong Kong, until the ~2000 had pretty weak intellectual property laws, no natural resources, yet they had a pretty 'diversified' and productive economy.

SJE|10.2.07 @ 5:59PM|#

Name me 10 things invented in Hong Kong

|10.2.07 @ 6:28PM|#

Excellant article, Ron. Excellant comments, commentators. If you keep this stuff up, we libertarians will lose our hard earned reputation as wackos.

|10.2.07 @ 7:02PM|#

I think it pretty easy to determine whether patents in general and on whole do more good than bad. Just look at the rate of innovation and production in countries and regions with strong patent protection versus those without. If that doesn't work, simply compare different eras in which patents existed and when they did not. Note any patterns?

Like all forms of property, patents empower the small against the large by effectively backing the claim of the small with the power of State. Bill Gates, for all his wealth, cannot legally take from the least of your material property without your consent. If the definition of property rights is vague, however, then the advantage goes to those with the most resource. You can come up with a nifty new type of software and Microsoft can just copy its operation without giving you any credit or compensation. Microsoft can (and many argue does) profit handsomely from the innovative work of others.

The problem with patents is that the devil is in the details. The length of a patent is critical. To long a patent, like a 100 years, cripples innovation whereas to short a patent, like a year, renders it useless as a form of property. The length needs to be synced to speed at which the technology itself evovles. For example, I don't think a software patent should be granted from more than five years at the outside. If someone can't bring a software product to market in five years and make money on it, they should give up and let someone else try.

Some genetics related patents are flawed in my estimation because they give exclusive rights (because of the unique nature of each gene) to the patent holder to access a natural phenomenon. Its almost like someone patented the phenomenon of electricity. (The BRCA1 and BRCA2 genes fall into this category.) Its physically impossible for anyone else to create a test for those genes because the chemical anti-pattern for the gene is the patented information.

Some clean up work needs doing but the basic validity of patents and other forms of intellectual property is I think unquestionable.

|10.2.07 @ 8:27PM|#

Few companies base their business plans around patents. The companies that really like patents are ones that don't make anything (since they can't be sued).

Let's be honest. None of us has a clue whether patents are a net plus or a net minus. It's unknowable.

SJE|10.2.07 @ 9:16PM|#

Shannon raises some pertinent questions about patents on genes, questions which are often raised. I would note that the patents are NOT patenting a "natural phenomenon," which is illegal. They are however, rewarding (variously) the isolation and useful applications that arise out of isolating a gene.

SJE|10.2.07 @ 9:30PM|#

Max says that few companies base their business plans around patents. Since most companies (by number) are small mom-and-pop businesses, this is probably true.

In any event, so what. Thats like saying few companies based their wealth around ownership commercial office buildings. It is undisputable, however, that some do, as part of their business plan.

Max finally asks us to admit that we do not know if patents are a net gain or loss. Are we talking about epistimology? All I can offer is the comparison of countries that protect IP and that they tend, in general, to be more innovative, and to have diversified their economies and become richer.

As for Tarran's comments about Hong Kong. I would note that Hong Kong was a mercantile city, benefiting from unique situation of being the only interface between mainland China and the rest of the world until Deng Xiaopeng opened things up in the 90s. Even so, Hong Kong was mostly about (a) trade (b) finances associated with trade and (c) low wage manufacturing, especially cheap knock offs of Western products. The downside is that, failing to protect others IP, Hong Kong was not very good at protecting its own, and so is not such a great source of new ideas and inventions as, say Israel.

|10.2.07 @ 9:55PM|#

Still some basic problems:

-- owning an idea just seems bad/immoral and unlibertarian; should we pay royalties to Pythagoras everytime we use the theorem?

-- the equation of good patent enforcement with success is more likely the fact that in pre-capitalist societies, ALL things are enforced less efficiently, including such evil anti-freedom and anti-productive regulations as recreational drug prohibition (less developed countries are havens), abusive environmental regulations, etc. Capitalistic societies are simply better at enforcing anti-capitalist measures because of the overall economic, social and educational strengths lefties won't admit.

-- I don't think we can say whether patents are good or bad unless we have a developed society that does not enforce them, in order to watch and examine; but the libertarian gut should weigh against inhibitions on trade and private activity, and on calling something theft that doesn't require taking any actual THING

robc|10.3.07 @ 12:27AM|#

Without patents, creators cannot make money. Only producers.

The results is that creators will create only if they are willing to give it away (e.g., the open source movement)or they are also producers that can keep the creation secret (e.g., trade secrets).


Despite you mentioning open source in the 2nd paragraph, I will point out, wrt the 1st, that Linus Torvalds has made a good bit of money off his creation. Not bad for something he gives away.

The Wine Commonsewer|10.3.07 @ 1:35AM|#

Two comments.

The guy who invented the weed whacker made zip. In reality, it didn't matter that he had patent rights.

Power steering in cars was delayed by years because the car makers did not want to pay royalties and tried desperately to invent around the patents owned by the guy who actually invented power steering.

Dave Woycechowsky|10.3.07 @ 8:18AM|#

-- owning an idea just seems bad/immoral and unlibertarian; should we pay royalties to Pythagoras everytime we use the theorem?

Maybe. Depends on:

(1) how long royalties would be paid; and

(1) how long it would have been til someone else had been able to come up with that theorem.

Dave Woycechowsky|10.3.07 @ 8:22AM|#

calling something theft that doesn't require taking any actual THING

What about when credit card credit is taken?

Telephone minutes?

Shares of stock (not in the form of certificates, I mean)?

There are plenty of thefts where an actual "thing" is not stiolen.

stuartl|10.3.07 @ 8:37AM|#

The piggyback is essential in spuring new innovation. In order to get a patent you need to describe the invention so that anyone skilled in the art could duplicate it. Then it is published for anyone in the world to see.

Sadly, make most of the patents I've submitted or had to work around are made intentionally vague by the lawyers. This way they can cover more ground.

Dave Woycechowsky|10.3.07 @ 9:12AM|#

Sadly, make most of the patents I've submitted or had to work around are made intentionally vague by the lawyers. This way they can cover more ground.

It also gives you a good 112, paragraph 2 argument. Unless by vague you mean: going beyond the specific embodiments disclosed at time of filing. Then its just sour grapes.

|10.3.07 @ 10:08AM|#

Not to highjack this topic, but I am more curious about copyright reform and the creativity penalty of the current copyright system. The main problem I see there is that stuff gets locked out of circulation due to complexity in rights ownership. At least with patents the expiration of protection is straightforward. But if you've ever tried to track down an album by that local band you used to listen to in high school, you've probably run afoul of copyright stagnation.

So, is there a lack of parity between copyright protection and patent protection? Is society paying too high a price for the current copyright bargain?

stuartl|10.3.07 @ 10:20AM|#

It also gives you a good 112, paragraph 2 argument.

If we need a good argument, that means the product development is now a legal issue and frequently means the business opportunity is blown.

Typically there is about a 1 in 10 chance that an R&D will lead to a successful product. If the case goes to the court it becomes a crap shoot*. Now the products chances are 1 in 20.

On top of the already expensive development costs, I need to pay legal fees, and I need to divert my engineers and scientists from development to worrying about the turgid wording of patents.

So my chances of success have gone way down, my development costs have gone way up, and I am likely paying opportunity costs for my development staff.

The rational business decision may now be either to kill the development or to provide a product with less capability, either cutting sales or cutting usefulness to the customer.

*Whenever I've said something like "It is obvious..." the lawyer response is "Will it be obvious to a jury?"

Dave Woycechowsky|10.3.07 @ 10:40AM|#

If we need a good argument, that means the product development is now a legal issue and frequently means the business opportunity is blown.

Oh. It sounds like the things that you are saying are vague aren't really that vague.

Besides, your business opp is not blown. Just take a license and cut in the guy who hired the lawyer who staked the claim that you are now trying to prospect within.

If you don't sell product, then you won't have to pay license fees.

Sure, it is more probabilistically profitable to make a product if you don't have to cut in the innovator. Same could be said of your salary, or the CFOs salary, or the landlord's rent, etc., etc. Cost of doing business.

|10.3.07 @ 1:45PM|#

One of the most ridiculous columns by Ron Bailey since his decision to side with the IEA on their mealy-mouthed "plateau" versus calling a production peak.

Software patents, at least, are just plain stupid; business model patents are criminal, but Bailey doesn't deal with those. Having lived through the patent-anything-and-everything mania that pervaded the late 90's and early 2000's. Failing to call out obvious, garbage patents like Amazon's one-click, the proliferation of "with-a-computer" and "on-the-Internet" patents makes me wonder if he even spent any significant time researching this topic. More ominously, Rambus's bad-faith submarine patents shows just how ridiculous this essay is. Patent reform is long overdue.

As to the example given above about plows, that is how things are supposed to work. Ask Philo T. Farnsworth how that worked out (RCA refused to pay for almost a decade).

SJE|10.3.07 @ 2:09PM|#

I agree with Rob McMillan that the system is not perfect, and that Farnsworth was hard done by. At least with a patent system, Farnsworth HAD a legal property right. In the universe favored by some of the commenters, in which there are no patents, Farnsworth would have had no rights, and RCA would have no need to pay, ever.

That Voice-Over Guy|10.3.07 @ 2:41PM|#

As to the example given above about plows, that is how things are supposed to work.

In a world where patents don't exist . . .

Inventors are day-laborers, just like that guy the picks your lettuce . .

Virtual slaves to the wealthy few that control the means of production . . .

As it should be.

|10.4.07 @ 4:45PM|#

One the practical side small players mostly do not have the resources to defend against patent infringement.