50 Years Of Scientific Discovery & Sharing In Antarctica May End Thanks To Patent Greed
from the patents-against-peace dept
For the past 50 years, 47 countries have been a part of the 1959 Antarctic Treaty, which was used to establish Antarctica as a peaceful science outpost where scientists from many nations could work together and share their discoveries. And it may now all be coming to an end. Why? Because (as Will Klein alerts us) all this discovery and sharing is going on mostly without patenting! This has greatly upset a bunch of companies who want to hoard any such discoveries and want to be able to patent "Antarctic organisms or molecules." Beyond the rather serious question of why either organisms or molecules can be patented, this is a microcosm of what's wrong with patents. Patents are supposed to be used to encourage research (promoting the progress, remember). And this treaty has done a great job promoting progress without patents. As the article notes, products already "derived from Antarctica include dietary supplements, anti-freeze proteins, anti-cancer drugs, enzymes and cosmetic creams." In other words, all of that happened mostly without patents. The only reason to break up this treaty, stop the sharing, and start allowing patents is to slow down the discovery, hoard the results and limit the progress to single companies who get a monopoly on that work.
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: antartica, discovery, patents, science, sharing
Reader Comments
Subscribe: RSS
View by: Time | Thread
Science? Huh?
How many scientists are there vs. non-scientists? We're there for one good reason - to make sure we get a big slice of the pie when it melts. Science is just the side-line.
[ link to this | view in chronology ]
Patents should only be for people.
[ link to this | view in chronology ]
Unions are small potatoes
Scott
[ link to this | view in chronology ]
Re: Unions are small potatoes
[ link to this | view in chronology ]
Patents
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re:
More to the point, after you patent it how can you sue mother nature and collect damages from her?
[ link to this | view in chronology ]
Re: Re:
You can sue anybody these days. But more to the point, patents also prevent the unlicensed use of whatever the patent covers. Thus, any person using anything from nature covered by a patent without a license is open to a lawsuit shakedown.
[ link to this | view in chronology ]
And thus..
You do know that's how it's going to turn out. A company starts patenting things in the US, and then someone in the UK wants to do it, and then China, and so on. Then little squabbles start about who gets to patent what. It may not end in all out war, but it will end in international incidents and probably the complete break down of the international cooperation.
[ link to this | view in chronology ]
You Have Misrepresented the Article
"Unilever has a patent based on an anti-freeze protein in a bacteria found in an Antarctic lake that may help keep ice cream smooth."
So, the foundation of your argument is flawed. If the debate is whether the patent system encourages or discourages scientific discoveries in the Antarctic, the article really provides little evidence either way. Perhaps none of this commercial research would be conducted without the patent system, which provides a pwoerful incentive for research.
[ link to this | view in chronology ]
Re: You Have Misrepresented the Article
Fair enough. Changed it to read *mostly* without patenting. Otherwise, why would companies be so aggressive in trying to kill off this treaty?
Perhaps none of this commercial research would be conducted without the patent system, which provides a pwoerful incentive for research.
As we've pointed out in the past, we've yet to see a single piece of evidence that shows patents are a powerful incentive for research. We've shown they're a powerful incentive to divert resources into a monopoly, but that is not the same thing. The evidence has shown, time and time again, that patents DECREASE the pace of innovation and increase information hoarding.
[ link to this | view in chronology ]
How fortunate that the article is objective...
The description focuses a lot of attention on fish, with most of the species being northern fish, I think, like Greenland Cod, Atlantic Cod, Atlantic wolffish. The article lists a number of plants that can provide the protein. Then, almost as an afterthought, the proteins can come from invertebrates, and yeah, bacteria.
More interesting is the claims. The claims are directed to an antifreeze protein; no bacteria, no Antarctic, no nothing.
What does this mean? Well, it appears that the author took some liberties with the meaning of some of the patenting done that was supposedly "based on Antarctic research." So, when Unilever found an antifreeze protein in fish and plants and filed a patent based on the protein, and noted merely in passing that the protein could come from bacteria, that qualifies as a patent based on Antarctic research.
Here are the two references in the patent to bacteria:
Also AFPs may be obtained from Bacteria.
A number of expression systems may be utilised to express the polypeptide coding sequence. These include, but are not limited to, bacteria, yeast insect cell systems, plant cell culture systems and plants all transformed with the appropriate expression vectors.
The article seems to imply that Clarins has a patent on an algae used in a face cream. However, the USPTO shows no grant to Clarins for anything other than a design for a cosmetic container. I then tried the European Patent database for a patent on algae with Clarins as the applicant. Again, no success.
I noted that Aker Biomarine was also listed in this article with regard to krill. As it happens, Aker Biomarine indeed does have a couple of patent applications (I did not find any patents) for krill related stuff. However, krill are found in the waters around Antarctica and well away from Antarctica, and are thus not covered by the 1959 Antarctic treaty (which covers the continent and ice shelves).
So, the article appears alarming on its face, but three of the companies listed in the article (I chose them in reverse order, starting with one selected at random) either had no patents related to Antarctica, or a patent that made a reference to something that might be associated with Antarctica.
Pardon me, but I have to go remind myself what the definition of yellow journalism is.
[ link to this | view in chronology ]
Re: How fortunate that the article is objective...
So, the article appears alarming on its face, but three of the companies listed in the article (I chose them in reverse order, starting with one selected at random) either had no patents related to Antarctica, or a patent that made a reference to something that might be associated with Antarctica.
That would, at the very least, seem to support my position in the post. The research being done in Antarctica has been mostly without regard to patents. Yet, now the effort underway is to try to end the treaty for the sake of getting patents.
So, the article might not be "yellow journalism" at all. It's making the point that there's interest from some companies in getting patents on *similar things* which they haven't been able to patent until now, due to the treaty.
[ link to this | view in chronology ]
Re: Re: How fortunate that the article is objective...
Now that I re-read the article, I find that I mis-read it. The article does not state that the treaty is in any jeopardy at all. In fact, the article states that:
"We need to find out if it is a problem and if so, what is the problem," said Johannes Huber, head of the Antarctic Treaty Secretariat in Buenos Aires. Governments "have not found a consensus," he added.
And:
Johnston said there were worries -- but no evidence -- that corporate involvement might make researchers delay publication of key scientific findings until patent applications were filed.
So, I am unsure of what the point is. According to the article, patents have not been shown to have any affect on research or sharing of knowledge. Further, there is no indication of a problem. Lastly, the article does not hint that the treaty might be either modified or eliminated. So, what is the point?
[ link to this | view in chronology ]
Re: Re: Re: How fortunate that the article is objective...
As best I can determine...none.
[ link to this | view in chronology ]
Re: Re: Re: How fortunate that the article is objective...
Ahem:
"governments are trying to end a dispute over a surge in company patents on life in the continent."
and
"The treaty says: "Scientific observations and results from Antarctica shall be exchanged and made freely available."
It's pretty clear that companies are putting pressure to change the terms of the treaty.
As for MLS, why is it that every time you stop by to pass along an insult, you do so anonymously. I've asked you this in the past, but it really makes you look pretty cheap. Stand up and admit who you are if you're going to act like such a child all the time. You seem to take great pleasure in insulting people. Are you really so weak that you can't put your name on comments?
While Lonnie and I disagree on plenty, he stands up for himself and signs everything under his name.
[ link to this | view in chronology ]
Re: Re: Re: Re: How fortunate that the article is objective...
The more I examine this article, it dumber it seems. Yes, governments are "trying to end a dispute," but there are two problems. First, the dispute involves who? Later, the article says:
"We need to find out if it is a problem and if so, what is the problem," said Johannes Huber, head of the Antarctic Treaty Secretariat in Buenos Aires. Governments "have not found a consensus," he added.
Seems to me the real purpose of the meeting is to figure out if there even is a dispute.
I also fail to see where the article indicates that companies are putting any pressure at all on treaties. I suspect that if there is "pressure," it may be coming from people like Jose Retamales.
The article appears to be making it appear that there is a problem, when the real point of what the members of the treaty are doing is to determine whether there is a problem. The only dispute I see in the article is between a few members of the scientific commmunity and...? The members of the treay, maybe?
And yes, Mike, I do sign my real name. Why would I do anything else? We live in a democracy where opinions may be freely expressed as a matter of right. While I generally disagree with you (actually, I agree with you a lot as well; occasionally I am motivated to say so), I defend your right to express your opinion. I certainly appreciate the perspectives you bring to many things, even when I believe you are wrong.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: How fortunate that the article is objective...
Your contributions here and at Against Monopoly are in my view quite quite valuable, particularly due in part to your propensity to perform independent research before submitting a comment. Attempting to ascertain what is really going on, and not slavishly relying on headlines and incomplete, perhaps inaccurate, statements presented in an article is to be commended.
Sadly, it appears that far too many who comment here are unprepared to roll up their sleeves and do the extensive grunt work necessary to form an intellectually honest opinion. It seems they are inclined to accept pronouncements of law and fact at face value, and then express their opinions with vitriolic vigor.
The pespective you bring I find to be both refreshing and highly informative. While it may not change others' opinions, it at least should give them pause for concern that perhaps some of these issues are much more nuanced than they have hitherto believed.
I thank you for your consistently well articulated comments. Perhaps your approach may encourage others to follow your lead. If they did the discussions on this site would be much more beneficial to all who read it.
Michael L. Slonecker
Windermere, FL 34786
slonecker@earthlink.net
P.S. If you search the web you will find few, if any, papers I have authored. There is a very good reason for this. First, I am not included to regurgitate yet another trite article on a legal issue/case that is being written about by others ad nauseum for what seems to be merely a filler for their CVs. Academics seem to be the worst offenders, but many in private and corporate practice are inclined to do the same. Second, much of my work has been directed at the margins of the law where I examine the assumtions and validity of "conventional wisdom". When representing clients I see no useful purpose to be served blithely publishing articles that can operate to the detriment of many clients, and oftentimes an entire industry, facing a common issue. I certainly do not tip my hand in poker, and believe it would be incredibly foolish to do so in many of the circumstances I face on a daily basis. Finally, I firmly believe my time is much better spent working closely with persons who actually create those things from which all of us benefit to understand the entirety of the process this site terms as "innovation.
You will, however, find my name referenced in association with photography, my hobby and not my avocation (as much as at times I wish it was). Perhaps it will come as a surprise to some, but every photo I have uploaded to free stock photo sites such as SXC contain a notice that downloaders are absolutely free to do whatever they want with my photos, including doing nothing more than copying them and selling them for whatever they can get. The notice in my profile at SXC (I use the name "slonecker" provides:
Please feel free to modify and/or use these uploads for any purpose whatsoever (commercial or personal, for-profit or not-for-profit, for print, for web, for "print on demand", for web templates for sale or distribution, for "whatever", etc.) You do not need to contact me before or after using an image, though a note is always appreciated if you have the opportunity to do so. Similarly, attribution is nice, but not necessary.
See, even a copyright lawyer is able to recognize the benefits of "free". The payback for me is knowing that some people like them and use them in the most unusual of places. It is a "kick" to walk into a store of a national chain and see one of my photos being used, or having them appear in a television commercial, a catalog, etc.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: How fortunate that the article is objective...
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: How fortunate that the article is objective...
Aww gee, that's awfully nice of you MLS, actually letting the images you upload to free image sites be, you know, free.
What would the alternative be? Maybe finding a way to slip some non-free images in there in the hopes of generating some lawsuits? What kind of a lawyer thinks he being so nice in not doing that that he needs to brag about it? What kind of a value system is that?
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re: How fortunate that the article is objective...
As for the particulars of your comments, they are just plain silly and little more than what some may call "snarky".
[ link to this | view in chronology ]
dibbs
[ link to this | view in chronology ]
Interesting, except that this statement is not attributed by the correspondent to anyone associated with the upcoming meeting of treaty members. It seems, based upon the contents of the article, that the only who sees a "dispute" is the correspondent. As Mr. Holder has noted, the pricipals associated with this matter appear to want to talk among themselves to see if there even is a problem.
Let me be frank. I am neither a copyright nor patent apologist. I am, however, an attorney who has devoted over 30 years of time to examine and understand the many aspects of the law of which you speak so derisively. It is not the fact you have opinions that is troubling, it is that you express your opinions in ways where you broach no contrary views or take even a moment to try and understand nuances that may place a given situation is a slightly different perspective. You say you have closely studied the law and are very well familiar with what it says, yet you continually make comments that clearly contradict what you say. It is not that I disagree with you having opinions. It is that you present your opinions in a manner wherein you hold yourself out as an expert on the law, but when those who are expert say something with which you happen to disagree, your modus operandi is to go on the attack and simply label them as either uninformed or biased or worse.
You declare every patent you look at as obvious. You decry the stifling of innovation by a system that you seem to believe is repugnant. When challenged you resort to a laundry list of "research" that you repeatedly assert proves you are right and the commenter is wrong. When other research is brought to your attention that may (note, "may" and not "does") contradict your sources, the individual is declared misinformed, devoid of any knowledge of even basic economics, and an apologist for a system of law you palpably dislike. What is especially troubling is that whenever such research is noted and cited, the dialogue ends with nary a comment from you.
The other day I read yet another, all too predictable, article pertaining to copyright law. You declared that an item being "transformative", then all further inquiry was over because under your understanding of law that was dispositive. No attorney, academic or practitioner, versed in copyright law, certainly neither Mr. Lessig, Mr. Patry, Mr. Nimmer, etc., would ever make such a declaration because it is simply incorrect.
Attorneys like myself who read your articles are impressed with your mastery of economics and constant search for new ways of doing business. Yes, technology is changing many of the old rules and does need to be embraced. However, the fact that some individuals may choose a path you deem sub-optimal is no good reason to call them uninformed and "buggy whip" makers. I still reel at the thought of the totally inappropriate comments directed some months back towards an individual who pursues as his avocation the design of creative fonts. Your view was quite simple. Once something goes digital, any attempt to try and preserve one's livelihood in a manner other than what you deem is correct means that the person is a fool. No allowances are made for such a person's opinions or circumstances, and that mitigating/ameliorating factors are simply irrelevant.
You are a bright young man, but I daresay that as time goes by you will come to the realization that what seemed so "right" at the time is not quite so cut and dry. I urge you to hold firm to your opinions, but do not believe in them so unerringly that you pass by situations and opportunities that may cause you to rethink them. A phrase I was taught many years ago was to not "get drunk on your own wine". Keep it in mind and it will hold you in good stead.
As a final aside, and your views to the contrary notwithstanding, in the days of Jefferson and the other so-called "Founding Fathers", the term "progress" signified the dissemination of information. To say that progress can only be measured via economics misses by a wide margin the underpinnings of Article 1, Clause 8, Section 8 of the US Constitution. See, e.g., Madison's Detached Memoranda, Jefferson's letter as detailed in Mr. Boyle's book "The Public Domain", Adams' record of the Constitutional Convention proceedings, the treatises by Messrs. Nimmer and Patry, the work by Mr. Mossoff, etc. While there can be nibbling at the margins as is always the case among legal scholars, the substance of each in largely in agreement.
If I may ask a small favor. Please do not view this as yet another insult because this is most certainly not my intent. I am commenting solely to make the point that there is much to be learned from persons holding other points of view, and that thoughtful consideration of them is immeasurably beneficial for a more informed and complete understanding of the many issues of law you write about.
Thank you for affording me the opportunity to better understand other viewpoints. I agree with some, disagree with others, but feel quite confident that I have acquired a more informed perspective.
BTW, it is not that I "hide" behind a wall of anonymity, but that I have configured by browser to clear all history, temporary internet files, cookies, etc. each time I close my browser. Frankly, it is laziness on my part that keeps me from filling in the boxes above before commenting. Since I choose not to hide my IP address, it is clear my browser preferences as noted above do not hide my identity from you. This is as it should be.
M. Slonecker
[ link to this | view in chronology ]
Re:
I'm sorry you feel that way and I'm sorry you feel that I dismiss these ideas out of hand. I do not. I take these ideas very seriously, but I *have* been studying these issues for a long time, and if someone brings up an idea that *is* clueless then I will say so.
I saw this post today from Mark Potts concerning journalists, and I feel the same way:
http://recoveringjournalist.typepad.com/recovering_journalist/2009/02/welcome-to-the-ageold- debate.html
People come and bring up poorly thought out arguments that were proven wrong ages ago -- and so I say so.
As for the other stuff that you accuse me of doing, I would suggest that you are more guilty of almost every one. You have been rude, condescending, dismissive (obnoxiously so, repeatedly) and not at all open to any new ideas... and you mostly do so anonymously, which I find to be particularly weak. Your excuse that you don't save cookies is hardly compelling. You write long posts. Is it that hard to put MLS in the name field?
I do not, and have never, set myself up as an expert in the *law*, though I do take getting the points of law important correctly. I often run aspects of my posts by a group of IP lawyers that I know -- and they don't find many problems with them. My posts are my opinions, and I have always made that clear. They are not legal advice. It's not that I think all patents are obvious, but I tend to comment on the ridiculous patents that I find.
So, yes, I do have an open mind. I have told you this before, but apparently you choose not to believe it. My position on these subjects now is quite different than it was when I started this. That's because I do keep an open mind and as the evidence has accumulated, I have changed my mind.
But, if I get short with people, it's because they present already disproved ideas and they do not present themselves with an open mind at all. I would suggest that you are often in that crowd. You have shown, repeatedly, that when you are caught being incorrect on something that you lash out and insult people. You call people morally repugnant. You have insulted many readers here and have directed many personal insults at myself.
Because of this we don't take you seriously at all. You don't like the tone in which I say things, but I do not insult YOU, I challenge you, your thoughts and your actions, because they are based on outdated ideas. Your response has to become belligerent, defensive and insulting.
I'm sorry if you feel I have been like that, and I will try to avoid it in the future, but it's tiring to have to respond to the old silly ideas over and over again. Your insistence, for example, that it is morally correct to have everyone be WORSE off when everyone can be better off is particularly troubling to me.
Your claims about "promoting the progress" are also incorrect and are taking my words out of context. I agree that they meant the dissemination of ideas. My point is that it has been PROVEN time and time again that the WAY in which you best and most widely disseminate ideas is through better economic growth. Economic growth is the conduit by which this works. And you are simply incorrect if you think that the "promote the progress" clause is not about economic progress. If it weren't, why would the entire purpose of the law be about setting up a system to remunerate the holders of such monopolies? It's about getting people paid. It's the recognition that the best way to disseminate ideas is to get people paid. The *mistake* was thinking that the best way to get people paid was to set up monopolies. It's an understandable mistake. At the time that the constitution was written, economic monopolies were still considered a good thing by many. The realization by Jefferson, Madison and others that they also cause harm was actually quite unique at the time -- and very forward thinking. However, today there is much more evidence on the harm done by monopolies, and I think it's important to focus on the best way to promote the progress -- and to date, all of the convincing evidence I have seen is that it's to reduce or get rid of such monopolies.
I do not dismiss other evidence. I just have not seen any that is convincing. Lonnie has sent in some evidence that shows patents help *divert* money to a particular industry, but that is not convincing to me. That just means that other aspects of the economy are unfairly hurt by such things.
So, I'm sorry that you feel I am dismissive of you or your ideas or the ideas of others. I am not. But if you are simply repeating silly myths and making dumb statements I will say so.
[ link to this | view in chronology ]
Re: Re:
You made one comment that other have made that I find particularly disquieting, because there is an assumption behind the comment that cannot be proven. Your comment is:
Lonnie has sent in some evidence that shows patents help *divert* money to a particular industry, but that is not convincing to me. That just means that other aspects of the economy are unfairly hurt by such things.
Regardless of what we wish, money will always be "diverted" somewhere, if it is possible for such diversion to occur.
Let us consider a little scenario.
People will always divide their income in various ways. Let us say that income is divided in a way that 70% of all income is for the necessities of life that are not protected by intellectual property (this assumption is just that; I make no representation that this is true or not).
Now, let us say that 30% of all income will be spent on items that may or may not be protected by IP, but have the potential to be protected by IP.
First, all these items have the potential to be protected by IP, so at the outset, the only "diversion" that can occur with this 30% of income is when a consumer decides that that he or she will purchase an item protected by IP or not protected by IP. The consumer may or may not (probably will not) consider whether IP is even a factor.
Okay, let's say the consumer has a choice between six items, three of which are protected by IP and three of which are not protected by IP. If the six items are non-competing, the consumer will choose the items that either meets a need, or, if all needs have been met, they will choose an item that is a high want. Again, the consumer has selected a choice, not a need, and the "diversion" is only because the consumer makes it so.
Okay, let us say that amongst the six items two of the items are competing. As an example only, let us say that the consumer has a choice between an item that is $10 that has no related IP, and an items that is $11 that is protected by IP. Further, let us say that the $1 is because of the famous "monopoly price" (pardon me while I laugh; yes, the IP holder has a monopoly on widget B, but widget A has been available for 30 years and offers a solution that is perfectly usable, say standard plastic wrap versus a new "cling wrap).
When a consumer elects to spend a dollar more for the item protected by IP, is that a diversion or a market choice? The cheaper alternative was readily available and performed perfectly well. In fact, we know that there are opportunities to perform the same function for $5, and yet the consumer CHOSE to spend $11 on a patented item, deliberately spending at least $1 more than the consumer would have spent on the non-patented item.
Now, my points:
(1) If a consumer elects a patented item when there are numerous non-patented items available, how is that a "diversion"? The consumer had options, the consumer did not "divert" his money, he selected to spend his money.
(2) If you remove patented items from the choice menu, which may or may not affect price, then are you not in fact making choices for the consumer, reducing the consumer's freedom of choice? Then, it seems to me that potentially eliminating options, you are restricting freedom of choice all over the place.
Just something to wonder about.
[ link to this | view in chronology ]
Re: Re: Re:
Your scenario is not what I'm talking about at all. My point is the diversion in *investment* dollars, not consumer spending. And I disagree that there will always be "diversions" of money. An *efficient* economic system is one where the dispersal of resources is allocated in the way to create the largest overall economic pie (i.e., the one that benefits the most people). History has shown time and time again that the best way to do that is to let the market decide how to allocate those resources. If there's a role for gov't it is *solely* in preventing fraud and preventing monopolies. The problem with patents, in most cases that I have studied, is that it's the opposite. It's the gov't granting a monopoly for the sake of diverting funds from *efficient* allocation to *inefficient* allocation.
So I have a serious problem with that. The end result is a smaller economic pie, and many more people hurt by it. That's tremendously troubling to me at a moral and ethical level.
[ link to this | view in chronology ]
Re: Re: Re: Re:
I understand your point, now. Since I wrote my earlier post I have thought even more about "diversions," and the more I think about them, the more I am convinced that just because dollars are not spent on patents that they will be spent for other, theoretically more useful things. In fact, it is likely that much of that money will still be unproductive from an investment viewpoint.
Why? Intellectual property spending is typically quite elastic, at least for the companies I have worked. The economy goes down, spending on IP goes down. When the economy is great, spending on IP goes up. Let us supposed that company X has a gross income of 500 million dollars and a gross income of 75 million dollars. This scenario is quite reasonable for a market leader in a manufacturing company.
Now, let us assume that this company spends one million dollars on intellectual property. Again, this is fairly reasonable for a manufacturing company. I have heard, but am unable to provide evidence, that manufacturing companies spend about 0.2% of their revenue on intellectual property, so one million dollars seems about right. I should point out that manufacturing companies spend that much inclusive of litigation according to unconfirmed information I have heard, which tells me that litigation is apparently not all that common in manufacturing (excluding electronics manufacturing), or the actual average spent per company is far less and companies that have experience litigation spend more than average.
Now, let us say that one day patent laws are suddenly abolished. Let us keep it to patents only, meaning that copyright and trademarks still exist. A typical manufacturing company has little interest in copyrights, but they do have trademarks, so the percentage of their dollars spent on trademarks will remain. Let us say, for the sake of this example, that trademarks only consume $25,000 per year of IP dollars. That leaves $975,000 to spend elsewhere.
Now, that amount is subject to corporate tax, which will likely be state and federal. For the amount I provided, the federal corporate income tax is 38%, and in Indiana the state income tax is 8%, which means that 46% of $975,000 will be paid out as corporate income tax, leaving $526,500.
Now, the typical manufacturing company tends to provide bonus on dollars that are above a certain line. Again, assuming that the net income for that company has increased by $526,500, it is likely that all that money will be "above the line," and thus highly valued bonus dollars. It is quite likely that 20 to 30% of this amount will turn into bonus. For the sake of calculation, let us say that the amount of 25%, which then leaves $394,875.
However, these are mere assumptions, because we have other problems before we even get this far. The question will be whether this company is even still in business, or whether it decides to reduce investment dollars because it is more difficult to recoup investment. It may well decide that more of its product can be protected by trade secret, which is relatively expensive compared to patents, and it may be that the trade secret department consumes all of the one million dollars not spent on patents. In other words, eliminating patents does not mean that money will be spent on a net "societal good," whatever that means. Nor does it mean that the money will be diverted to a more efficient use.
The market is very flexible and elastic. It has shown that it can accommodate a lot of abuse and will still allocate resources as efficiently as possible. I wish I could dig up the paper that was linked to on Against Monopoly (my bad, I thought I kept the link because it was a fantastic paper that gave a proof that the market was better with some regulation than none at all).
I have a problem with people asking for proof. I have provided proof, and yet it is waved off with a "oh, that is anecdotal," or "the market would have done better," or any number of answers. I try once again with a study done with respect to the Plant Variety Protection Act of 1970 and the effect on cotton.
The PVPA of 1970 was essentially a grant of monopoly for new plant varieties propagated sexually. A study done for cotton notes in its conclusion (there are caveats regarding the conclusion, by the way, which you are free to review for yourself):
Rather than the "sound and fury, signifying nothing" conclusion for plant variety protection drawn by Janis and Kesan (2002), our analysis of cotton varieties may be yielding a different Shakespeare quotation: "We must take the current when it serves, or lose our venture." In this paper we have found that the PVP Act was the current that served the cotton industry well, particularly when other forms of IP protection were unavailable or unused. Analysis of the relationship between PVP and cotton yields requires consideration of trends in yields (and trend shifts), changes in total area planted and area planted to PVP varieties, numbers of protected varieties planted, and teh interation of PVP area planted with trend. There has been an increase in the number of new varieties released annually since the PVP Act, and econometric results indicate a positive effect on yields. We conclude that at least for cotton, the PVP Act has served to encourage a greater flow of innovation and the development of more productive cotton varieties.
http://www.agbioforum.org/v8n23/v8n23a06-oehmke.pdf
So, according to the authors of this paper, the PVP Act helped increase new cotton varieties, providing positive econometric results, which therefore increased the pie for all those involved in the cotton industry. Well, hallelujah!
[ link to this | view in chronology ]
Re: Re: Re: Re: Re:
Again, you seem to be focusing on the micro-impacts, rather than the macro-impacts. How an individual company responds is somewhat meaningless as compared to how the larger marketplace responds.
As for the PVP Act, again, this is the same point I have made before. It may have benefited the *cotton* industry, but that does not mean it benefited the wider *textiles* industry -- and, in fact, it's quite likely that the greater investment in cotton came at the expense of other and more important fabrics that would have yielded greater overall economic improvement.
As for trade secrets -- again, you are focused on the micro, rather than the macro impact. Yes, some firms keep trade secrets now, but we're learning that doing so actually helps keep a market smaller than it need be. Even MLS above admits that he doesn't think non-competes should be enforceable, and as such I hope he's aware of the multiple studies on the impact of non-competes -- which is that when they're not enforceable the overall markets for products tends to grow, and innovation increases. Why? Well... the truth is because trade "secrets" get shared among companies as people switch jobs. And that's "terrible" according to all the lawyers out there, but the actual impact for industry is that it helps SPEED UP innovation, INCREASING market size for all the players (if they're able to capture it). Thus, losing the trade secret actually tends to benefit the company that tried to hold onto it.
The fact that some companies have been able to hold onto trade secrets is meaningless compared to the actual impact on the economy and the market of losing that trade secret. As companies get smarter, they'll realize that trade secrets like that are not actually to their benefit.
There is a wide range of (mostly recent) economic research being done in this area concerning market education and market growth, and it will lead to a total rethinking in the entire concept of trade secrets. They tend to be quite harmful to the companies that hold them in the long run, even if they believe they're helpful in the short-run. One key reason why? It's the same problem that patents cause: the "hoarding" of information slows down the pace of innovation, gives less incentives for companies to actually meet customer needs and continue the *ongoing process* of innovation. It gives them a monopoly that lets them rest on their laurels instead of keeping pace with what consumers really want.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re:
As I have argued before, in the macroeconomic sense, there are very few monopolies. Every time I point this out, everyone over at AgainstMonopoly pulls out a microeconomic argument on me. Interesting that you have pulled out a macroeconomic argument instead.
It really does not matter whether a company with a trade secret shares or does not share, does it, because they will do what they are going to do, regardless of whether they are "hurting" themselves or not. They do not think they are hurting themselves because they have knowledge that is in high demand and they have a customer base that values their knowledge. You will never convince them to give up their secrets unless you can prove to them convincingly that by giving up their knowledge they will ultimately gain.
Now, you discussed "non-compete clauses." I never signed a "non-compete clause," but I did sign an agreement that I would never divulge any trade secret I learned from my former employers. Why would I? For the greater good? I am unconvinced that the "greater good" really exists. The "greater good" is selfish and self-serving. I am convinced that if a competitor of a company that holds a trade secret obtains that secret, then they will not divulge it either. In fact, that was the whole purpose of the patent system. Get knowledge into the open so that it can benefit more people.
I am 100% convinced that if patents were limited, trade secrets would increase. If you believe Boldrin and Levine, they have essentially proven this will occur because according to them, secrecy is valued more than patents. So, if patents no longer exist, what will be the reaction of companies? They will have more secrets, and innovation in the market will slow even more. As you well know, this is how people think, and nothing that you say will ever change what they believe.
I can't leave this without a comment on macro versus micro economics. If you believe that we should be concerned about macroeconomic effects, then patents are relatively unimportant because there is almost always an option that is not patented (there are a few exceptions, but in all but a few cases the exceptions are irrelevant). The market automatically considers the relative value of a patented product and determines whether the value is worth it. If it is, the market responds positively. If the patented product is not worth it, the market causes the product to fail, and ultimately the patent will be abandoned.
On the other hand, if a patent is a microeconomic effect, then the release of knowledge is unimportant. I am unable to argue the microeconomic effect well because I believe that patents should be considered from a macroeconomic viewpoint only, where their importance generally fades. There are exceptions, of course, when the patent represents blocking of a path of technology. While such blocking has happened occasionally in history, it usually does not. Software and business methods patents have been trying to make themselves blocks, but courts are just as busily trying to undo that damamge. We will see.
Mike, there is some merit to your viewpoint about expanding knowledge and markets, but you cannot change the instinctual behavior of people. People will always defer to being protective of their territory or their knowledge. If patents lead to that protection, that is what they will use. If patents are unavailable, then trade secrets will be used to the extent they can be.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re:
I certainly agree that many companies will focus on trade secrets, but as more open business models find success, they'll discover that it goes against their best interests.
Also, the fact that trade secrets would increase in response to an abolishment of patents is rather meaningless. Of course it would, because those who formerly got patents would *try* to use trade secrets. That doesn't mean it would succeed, of course. In many of those cases, it will quickly be reverse engineered, such that the trade secrets are meaningless.
Anyway, I'm not sure I get your point about macro vs. micro here anyway. Macro and micro are not mutually exclusive. Micro can focus on the individual actions of a company, while macro discusses the whole system. If we're deciding which system is the best, we should be using the macro perspective, but if we want to understand *why* something is happening, then we look at the micro perspective.
Mike, there is some merit to your viewpoint about expanding knowledge and markets, but you cannot change the instinctual behavior of people. People will always defer to being protective of their territory or their knowledge.
On this, I have to vehemently disagree. We're seeing every day businesses that are much more open using that to defeat more closed businesses. Yes, it's mostly in the tech space right now, but it will spread as more recognize the benefits of openness.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re: Re:
Sadly, there are companies that have never filed for patents that have used trade secrets from the time they were formed. They seem unlikely to change their mode of behavior any time soon.
I do have an interesting conundrum for you that you might find amusing to think about.
As I may have told you, when integrated hydrostatic transmissions for front engine mowers were first patented in the late 1980's and the early 1990's, the number of patents reached into the hundreds, and there were five competitors in the market place (Dana, Eaton, Tecumseh, Tuff Torq/Kanzaki and Hydro-Gear). Hydro-Gear presented an integrated zero turn transaxle to the market place in 1995, and began selling units in about 1998, I think. However, Hydro-Gear had minimal patent protection for these products, especially in comparison to transaxles with two axles (the type used on front engine mowers).
Here is the interesting point. Though Dana, Eaton and Tecumseh have essentially taken themselves out of the market place (first movers forced to exit market, details at 11), Tuff Torq is as vibrant as ever and Parker-Hannifin is throwing huge resources into this market. However, it has been at least 11 years after the introduction of integrated zero turn transmissions, the sales per year are in the hundreds of thousands of units, there are few, narrow patents, and yet Hydro-Gear remains the only company with an integrated hydrostatic transmission in this market.
So, huge number of patents, multiple competitors. Minimal, narrow patents, only one company in a huge market.
I might point out that after sitting on their hand for most of a decade that Tuff Torq is trying to launch transaxles in this market (I believe they have demonstrated three transaxles three years in a row at the lawn and garden expo in Louisville), thus far with minimal success (well, zero success to my knowledge, but they may have made some sales), and Parker-Hannifin is trying as well, thus far with no success.
I thought you might find that amusing.
[ link to this | view in chronology ]
Open-Minded & Other Things
Thank you for your observations. I try to be open-minded, especially here, because there are many valid points being made. However, there are places where correlation is being stretched to causation, and there are places where a suggestion of smoke is turned into a forest fire.
Intellectual property is a conundrum. I truly believe we need intellectual property because I believe that enough people do not act in the self-interest of society that lack of intellectual property would create a dog-eat-dog world, and I truly believe the world would have fewer choices without it. Recently the folks over at Against Monopoly, to my great surprise, posted a link to a study that indicates markets with unlimited choices ultimately limit choice. I will not pretend to understand why. I have an intuitive feeling this is so, but the proof is beyond my capability.
Though I believe in intellectual property, that does not prevent me from finding silliness in it. Intellectual property serves a specific purpose envisioned by the creators of the constitution. As with any purpose or function, it should have its limits. Intellectual property has exceeded those limits and our system, albeit painfully slowly, is in the process of correcting those problems. Of course, "painfully slow" is a relative term. The real abuses of the system have occurred in the last couple of decades, which is really not that long, though it may seem so. We have issues that it has taken us more than a century to correct, so twenty years is short.
I enjoy Mike's perspectives because they make me think. I am also ready to jump all over Mike when I think he is in error or has stretched a point too far. Of course, he is quite able to defend his viewpoint. Though there is seriousness behind all this, it is also a kind of hobby too.
My one goal is to have one person who is vehemently anti-intellectual property admit that intellectual property, when properly administered, can serve a useful function for society.
There is a corollary. If society is finding that intellectual property is not as useful as it should be, then society has a responsibility to change the system. That is what is happening right now. In re Bilski and the CAFC cases that have cited Bilski are correcting the system.
I find many things objectionable about the comments made regarding some of these posts, but they are not worth my time to address. The ones I find most disturbing and ignorant are those claiming that "the system is broke and needs abolished." If the system is broken based on a few abuses, then democracy is broken and must be abolished, for similar abuses are occurring in our political system. However, no one is saying we should abolish democracy. Rightfully so.
Our system was set up to make incremental changes, and we have done so to our democracy, which includes intellectual property. We incrementally change the system (well, excluding trillion dollar programs that are supposed to jump start the economy that will not do so) until we find a balance that works. That is the democracy I live in and the one I choose to live in.
[ link to this | view in chronology ]
Re: Open-Minded & Other Things
Yes, In re Bilski does seem to be a correction, perhaps to the point that "software" (an ill-defined term) and "business method" (likewise ill-defined) are effectively eliminated from consideration under our patent laws. In a way I find this very troubling, but for reasons other than those typically propounded.
I am intrigued by the interplay between patent and trade secret law. There are (dare I say it) nuances that in the long run could come back to bite the very persons who are strong supporters of the decision. Not very long ago Professor Miller at Harvard published a very thought provoking paper exploring these nuances, one of which was whether or not federal law excluding certain categories of subject matter from patent law was the equivalent of saying that as a matter of national policy no legal protection should be accorded to such subject matter, and specifically state protection under the law of trade secrets.
As the law stands right now, software excluded under the patent law is completely eligible for protection as trade secrets. This is the majority view garned from Supreme Court precedent, but there is a minority view that if such matter is not protectable under federal law then is should likewise not be protectable under state law. Now, the majority view currently carries the day, and because of it it is mere child's play to employ contract law in a manner imposing constraints on use far in excess of what patent law permits.
Personally, I do hope that in the not too distant future the current minority view becomes the majority view. Until that happens there is a gaping hole that is easily exploited.
I do admire you for your above-noted goal. It is not that I believe Mr. Masnick is vehemently antagonistic to intellectual property. I have no doubt that were it conclusively shown that, for example, patents have a significant and positive economic effect, that he would reconsider his views and adjust them accordingly. Where he and I happen to differ is that I believe the sources upon which he relies are flawed in numerous, fundamental respects, the consequence of which is that they neither prove nor disprove anything. At best they simply leave things up in the air. Of course, there are contrary sources that suffer from similar flaws, each of them also leaving things up in the air. GIGO applies with equal force on both sides of the issue.
I do hope you are able to achieve at least some small part of your goal. I am not, however, sanguine it will happen (as much as I hope I am proven wrong). I encourage you to keep up your good work and continue trying to serve as an honest broker.
[ link to this | view in chronology ]
Re: Re: Open-Minded & Other Things
I've discussed this with you in the past -- and I tend to find it to be a red herring. Companies are discovering today that relying on trade secrets is also a *bad* business practice.
So they can try, but they'll be eclipsed by companies that are more open, and this problem is not a problem at all.
Where he and I happen to differ is that I believe the sources upon which he relies are flawed in numerous, fundamental respects, the consequence of which is that they neither prove nor disprove anything
There are certainly some studies that have flaws. But on my desk alone, I have a stack of nearly 70 different studies on this issue (mostly patents, a few IP in general, some copyright, some other IP rights). Some have flaws -- certainly. But as you go through the evidence, it's impossible to not realize how harmful to society IP has been.
Again, that doesn't mean that we should throw the whole thing out. But I think that if you are going to have IP, you NEED to show the market failure first to prove the need for it. No one has done so.
I'm very much against any time of gov't interference without evidence of market failure. My whole problem with the IP regime is that no one wants to present any such evidence.
[ link to this | view in chronology ]
Re: Re: Re: Open-Minded & Other Things
If we are talking about a "pure" trade secret (and by this I do not mean each and every piece of information that someone in a company happens to believe confers a competitive advantage...because usually it does not), I respectfully disagree.
If we are talking about the "lazy man's" way by using non-competes and the like, then of course I agree. In fact, this is one feature of California law that I wish was exported to the other 49. For example, I was shocked when I left California and came to Florida to learn that non-competes were perfectly fine, even when applied to a low level, grunt worker whose job was solely to exterminate termites.
There are certainly some studies that have flaws.
Personally, I have as yet to see any study on either side of the aisle that is not seriously flawed, and in virtually every instance it is due to the initial set of assumptions and/or data sets selected by the researchers.
[ link to this | view in chronology ]
Re: Re: Re: Open-Minded & Other Things
Re trade secrets: Why is this a "bad" business practice? I am aware of a heat treat company that has a really cool process for heat treating that, to the best of my knowledge, is unknown to anyone else. Yes, they treat the process as a trade secret.
I know another company that has a finishing process for certain of their components the generate a superior performance to the performance of any of their competitors. This process has been a trade secret for a long time and will continue to be so for as long as no one can figure out the important feature and how it is achieved.
I am also familiar with an optical company that has a superior process for polishing that yields incredible results that are an extremely closely held trade secret. They charge a premium price for their components, which are highly regarded and valued in the laser industry.
Why are any of these "bad" business practices? These companies have superior products and are able to charge more for their products. They have no lack of customers who need the performance that these processes provide.
I have to assume that if I know of three such trade secrets, all of which have survived for more than a decade, than there must be dozens or hundreds more.
[ link to this | view in chronology ]
Open-Minded & Other Things
Thank you for your observations. I try to be open-minded, especially here, because there are many valid points being made. However, there are places where correlation is being stretched to causation, and there are places where a suggestion of smoke is turned into a forest fire.
Intellectual property is a conundrum. I truly believe we need intellectual property because I believe that enough people do not act in the self-interest of society that lack of intellectual property would create a dog-eat-dog world, and I truly believe the world would have fewer choices without it. Recently the folks over at Against Monopoly, to my great surprise, posted a link to a study that indicates markets with unlimited choices ultimately limit choice. I will not pretend to understand why. I have an intuitive feeling this is so, but the proof is beyond my capability.
Though I believe in intellectual property, that does not prevent me from finding silliness in it. Intellectual property serves a specific purpose envisioned by the creators of the constitution. As with any purpose or function, it should have its limits. Intellectual property has exceeded those limits and our system, albeit painfully slowly, is in the process of correcting those problems. Of course, "painfully slow" is a relative term. The real abuses of the system have occurred in the last couple of decades, which is really not that long, though it may seem so. We have issues that it has taken us more than a century to correct, so twenty years is short.
I enjoy Mike's perspectives because they make me think. I am also ready to jump all over Mike when I think he is in error or has stretched a point too far. Of course, he is quite able to defend his viewpoint. Though there is seriousness behind all this, it is also a kind of hobby too.
My one goal is to have one person who is vehemently anti-intellectual property admit that intellectual property, when properly administered, can serve a useful function for society.
There is a corollary. If society is finding that intellectual property is not as useful as it should be, then society has a responsibility to change the system. That is what is happening right now. In re Bilski and the CAFC cases that have cited Bilski are correcting the system.
I find many things objectionable about the comments made regarding some of these posts, but they are not worth my time to address. The ones I find most disturbing and ignorant are those claiming that "the system is broke and needs abolished." If the system is broken based on a few abuses, then democracy is broken and must be abolished, for similar abuses are occurring in our political system. However, no one is saying we should abolish democracy. Rightfully so.
Our system was set up to make incremental changes, and we have done so to our democracy, which includes intellectual property. We incrementally change the system (well, excluding trillion dollar programs that are supposed to jump start the economy that will not do so) until we find a balance that works. That is the democracy I live in and the one I choose to live in.
[ link to this | view in chronology ]
Re: Open-Minded & Other Things
Well, I am not one who is convinced that the system needs to be abolished (despite what some people claim), but I'd argue that you are being unfair to at least some of those who do support abolishment. They are not saying "oh, the system is broken, let's abolish it" they are saying if you look at *all* of the evidence, it shows a pretty clear trend not that the system is broken, but that the entire concept of providing gov't granted monopolies is broken, leads to a smaller economic pie, and does tremendous harm. That's why they believe the system should be abolished.
I'm willing to be convinced that there is a benefit to IP, but I have yet to see anything convincing.
I believe -- quite strongly -- that if you are going to remove market forces and have the gov't get involved in cases of market failure, that it is incumbent upon those pointing to the market failure to first PROVE the market failure. To date, I have seen no convincing evidence of a market failure that requires intellectual property. There are broad claims, but the evidence destroys those claims at every turn.
I am especially troubled by the fact that both the patent and copyright system are designed to *assume market failure in all cases*. That's deeply troubling to me on an economic and moral basis. I'd be all for a system that encourages developing IF there is evidence of a market failure. But the assumption that there must be a market failure in the absence of IP is clearly untrue.
[ link to this | view in chronology ]
Re: Re: Open-Minded & Other Things
Some common ground here. I agree with your statement that the patent and copyright system are designed to "assume market failure in all cases." That, of course, is the trouble with any legislation that treats all things equally.
Let us focus on patents for a moment. Patents have provided a lot of benefit over time. It has been shown (if you really want evidence, I will go dig it up) that patented inventions spread technology faster than non-patented inventions, benefiting more people faster. Patents encourage the adoption of technology in more geographic locations.
However, patents were created at a time when technology was very different than it is today. When the current patent system was created (and all the previous ones, for that matter), investment to obtain an invention was relatively huge, and payback times could be incredible. It made sense to encourage invention and to get that invention out as fast as possible. However, it should also be noted that technology moved rather slowly in this times too. In fact, technology has moved relatively slowly until the latter half of the 20th century.
The problem that we have now is not that patents have no value, but that they may have too much value. If it truly costs 50 million dollars to develop a product, and payback is more than 10 years, patents are doing what they are supposed to do, assuming that we find such a product valuable.
On the other hand, if it costs $250,000 dollars to develop an invention, and payback is three months, then why are we permitting a patent? This is the problem that we face with patents, and to which I have no immediate answer. However, I have a suggestion.
Again, assuming that protection of invention in order to obtain payback is in fact a value to society, why not tie patent length to revenue streams? For those inventions that are not exploited within a certain length of time, say five years after issuance, the patents automatically expire without hope of renewal. The maximum possible patent length remains 20 years otherwise.
Now a company has to show by submitting auditable statements whether it has recouped its investment, and the patent expires on the anniversary of the year following the year payback is achieved.
Just a thought.
As far as copyrights, I have mixed feelings. One part of me sees some value in copyrights, but I have significant trouble with copyrights that last for 75 or 100 years, or more. Absurd. If you look at the life of a typical book, it might be months, but typically no more than years. At the very most I might see a copyright for 20 years, but even that is probably excessive. Further, the use of resources, particularly in the movie and recording industry, to track down infringers is huge and wasteful. I have to believe that they are not getting back as much as they spend.
Keeping things simple: Are the systems perfect. Hah!
Do the systems need eliminated? No. Though you may not have encountered evidence you find compelling, I have (I guess it depends on whether you find the glass half empty or half full).
Do the systems need reforms? Yes, absolutely. Even most IP proponents find the current system has issues that cause waste and inefficient allocation of resources. The system needs adjusted.
[ link to this | view in chronology ]
No, I guess you don't. You may have made some good points, but sorry, I just stopped reading.
[ link to this | view in chronology ]
Re the talk about trade secrets, in virtually all instances where abuses are noted it is not trade secrets that are t the root of the problem, but the more ubiquitous term generally known as "proprietary information". The former has a definite meaning in law (In California you can review how the Uniform Trade Secrets Act has been implemented by reference to Cal. Civ. Code § 3426 et. seq.). The latter does not, and this is a constant source or confusion that leads to abusive behavior such a non-compete "agreements" (if one can really call a take-it-or-leave-it document as an agreement).
Statutory trade secrets can be quite effective. The same cannot be said of the latter. In more enlightened companies confidentiality obligations are limited to specific information falling within the purview of state law. It is is unenlightened companies that problems are virtually certain to occur as employees come and go.
Personally, I firmly believe that companies who pursue the latter path are/have receiving/received very poor legal advice, largely because those providing such advice are relatively clueless how businesses and industries actually operate.
[ link to this | view in chronology ]
concrete benefit
please see http://www.piausa.org/ for a different/opposing view on patent reform
[ link to this | view in chronology ]
no use
[ link to this | view in chronology ]
thanx
[ link to this | view in chronology ]