We Waited Too Long To Figure Out If Genes Are Patentable
from the now-it-will-only-cause-problems... dept
Yesterday, at the excellent Tech Policy Summit, I got to interview Stanford professor and IP expert Mark Lemley on stage. Lemley has a new book out, The Patent Crisis and How the Courts Can Solve It. It's a good read -- and I recommend it to everyone interested in what's happening with patents. I don't agree with everything Lemley says in the book, but I think it is a much more thoughtful view than you hear coming from the two big industries fighting over patent reform. Patent reform has been (unfairly) set up as the tech industry vs. the pharma industry, and that totally misses the real problems with the system. Lemley believes that the problems can be fixed via the court system... whereas I'm not convinced, but I do think that the current patent reform proposals miss the mark by a wide margin.The interview was quite interesting, and while most of it reviewed some of the big discussion points (what's the "problem," where is the reform plan heading, does it make sense to carve out exceptions -- such as for software patents) my final question to him was about the lawsuit we wrote about yesterday concerning the patentability of genes.
Lemley did a great job outlining the issues brought forth in the case, but concluded by highlighting what I believe is the big problem with letting the courts sort things out. He noted that while there had been legal battles over patented genes before, they had always been between two biotech firms, neither of which wanted to challenge the very idea of gene patents. So, instead, the very concept of patenting genes has been left untested in the courts for twenty-five years. What's the result? Well, an entire industry built up around it. If we suddenly say that genes are unpatentable, that will wreak havoc in that industry. Now, that may be a good thing, but it highlights the problem of leaving the question to the courts. Since no one challenged this for so long, the disruption could have quite an impact.
Earlier in the interview, Lemley quoted one of my favorite quotes about the patent system, by economist Fritz Machlup, who noted that, if we had to do it all over again, there appears to be no reason to actually create a patent system, but since we already have one, it doesn't make sense to get rid of it. But that's a big part of the problem. Now that we already have "patented genes" and an entire industry built up over 25 years around it, some will undoubtedly argue that it doesn't make sense to get rid of gene patents because of all the problems that would cause. And thus, we're left with a situation that has been highlighted in Petra Moser's research: the patent system, by default, distorts the market by creating certain industries built up around those patents, and makes it very difficult for more complete market forces to take effect.
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Filed Under: gene patents, mark lemley, patent reform, patents
Companies: myriad genetics
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Another point...
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So whats the problem? From Lonnie, it will be moo point anyway (was that from Seinfield?)
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fix???
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Re: fix???
Lots of people have suggested this, but I don't see that as reasonable. If you are going to have patents, that would preclude the idea of research shops whose focus is on licensing what their research comes up with.
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Re: Another point...
While many gene patents are starting to expire, there are still plenty more to come -- and similar molecular patents that are equally as troubling. I think you're ignoring the problem if you don't face up to the question of whether or not such a thing should be patentable.
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Re:
Those reports were wrong. There is plenty of evidence, much of which we've pointed to over the years, and the details of the people who are suing that have shown, quite clearly, the damage done by gene patents.
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Re: Re: Another point...
I think you are correct. I still personally find patenting of genes troubling. Methodologies to isolate genes, okay. But a gene is a naturally occurring feature of biology. It will be interesting to see how the courts deal with this case.
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Inventor Shops
As for genes being ineligible for patents, it wasn't until the last few years that we've had patent reform come in. Trolls are much weaker now (it's almost impossible for them to get an injunction), and only things that are a "particular machine or transformation" are eligible for patents (it used to be "anything under the sun" that's not an algorithm, law of nature, human, or atomic bomb"). In computers, tech companies are arguing that the patents don't cover particular machines (a computer isn't a particular machine), and in biotech, companies are arguing that the patents rarely cover a machine as it's usually on the compound itself. The result is that unless to patent claimed the transformation, there's going to be a problem.
However, I do disagree with Mike in one aspect -- it definitely is tech companies vs big pharma. We would have had the patent reform act 2 years ago if the tech companies didn't say no. Now, we're getting the same things, but through the courts instead.
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great idea
Oh sure, a great idea. Just like they fixed injunctions and unobviousness. Brilliant idea! They should try reading the constitution first or better yet, run for office.
patent reform is a fraud on America...
please see http://truereform.piausa.org/ for a different/opposing view on patent reform
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Re: Re: Re: Another point...
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Re: great idea
Care to summarize key points?
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Re: great idea
Er, they actually have done a good job fixing the problems with injunctions and at least some of the obviousness question.
please see http://truereform.piausa.org/ for a different/opposing view on patent reform
Ooooooooh, I should have realized. You're an Ronald Riley disciple. Please come back when he's got some credibility. Until then, it's hard to take you seriously.
You do realize that all of the nasty warnings you guys made about how the rulings in MercExchange and KSR would destroy innovation in America didn't come true? Yeah, you haven't yet explained that.
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Credibility
1) I have multiple patents and Mike has none.
2) I have commercialized patents and Mike has not.
3) I have been dealing with public policy issues related to inventing and the utility of the patent system far longer than Mike and understand the issues in ways which no blowhard pseudo self professed expert can possibility understand.
Mike, you constantly spout nonsense about the patent system and inventing, and never seem to learn. You constantly argue around the real issues. Your conduct looks much like a PR shill.
Why is it that the inevitable result of your interactions with inventors is their coming to disrespect you? There is a reason that they shift from trying to educate you to simply making fun of you.
The reason is that ignorance of patent and invention issues coupled with a huge ego and unwillingness to learn from your mistakes all culture disrespect.
I am going to make one more attempt to educate you. You say "You do realize that all of the nasty warnings you guys made about how the rulings in MercExchange and KSR would destroy innovation in America didn't come true? Yeah, you haven't yet explained that."
What do you think the latency is in the life cycle of inventing? I submit that MercExchange and KSR are already extracting a terrible toll on the invention process. It will take ten to twenty years for the full impact to become apparent in the marketplace and it will ten take a similar amount of time to fix the problem.
Ronald J. Riley,
Speaking only on my own behalf.
Affiliations:
President - www.PIAUSA.org - RJR at PIAUSA.org
Executive Director - www.InventorEd.org - RJR at InvEd.org
Senior Fellow - www.PatentPolicy.org
President - Alliance for American Innovation
Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
Washington, DC
Direct (810) 597-0194 / (202) 318-1595 - 9 am to 8 pm EST.
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Re: Credibility
Please explain why nature should be patentable.
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Re: Inventor Shops
I agree that it's tech companies vs. big pharma in terms of the fight over patent *reform*. I disagree that either side is willing to admit what the actual problems of the patent system are, which is why any reform package being talked about is unlikely to solve the fundamental problems with the system.
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Ronald J. Riley,
Please explain why nature should be patentable.
Hello AC,
Haven't you ever heard of gene splicing? Back in the 60's and seventies,there were tremendous gains in the productivity of corn and rice crops for example, as scientists experimented with splitting genes and re-combining them to produce hybrids that were at once more productive, more disease tolerant, and also needed less water in some cases, due to the cross-linking of the desired genetic features. That is not to even mention that the farmers could radically reduce their use of pesticides, which are by their very nature are usually somewhat toxic. The end result was improved yeild, less expense to the farmers, and less use of questionable pesticides to avoid losing large percentages of the farmers' profits, to the publics benefit, I would tend to think.
Perry Mason
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Re: Credibility
Which seems rather meaningless when it comes to understanding the economic impact of patents, doesn't it? If anything, that should harm your credibility for bias. You make money off the system, so of course you defend it.
2) I have commercialized patents and Mike has not.
I have built a successful business without patents, despite the fact that we could have patented some of the tech we developed. What business did you build?
Again, it would appear my credibility here seems stronger, since I've shown that patents are not necessary to build a successful business.
3) I have been dealing with public policy issues related to inventing and the utility of the patent system far longer than Mike and understand the issues in ways which no blowhard pseudo self professed expert can possibility understand.
Resorting to insults doesn't increase your credibility. Nor does talking about how long you've been wrong on these issues.
Mike, you constantly spout nonsense about the patent system and inventing, and never seem to learn.
Ronald, we have asked you to actually present some evidence to refute the evidence and research I presented. Last time we did so, you insulted my parents. Now, that's credible.
Why is it that the inevitable result of your interactions with inventors is their coming to disrespect you?
The only ones who seem to "disrespect" me are ones who are followers of your views. I work with numerous inventors and patent holders all the time. Some of my closest friends are very successful "inventors" and my wife holds a patent as well. All of them seem to agree with me about the problems caused by patents. The fact that you've got a few followers who have been abusing the system and are angry at me for showing that is hardly a knock on my credibility.
There is a reason that they shift from trying to educate you to simply making fun of you.
Yes, clearly because they have no fundamental basis on which to base their misguided assertions. If they did, they would present it and this would be over. The fact that none of your little band of followers have ever even TRIED to present evidence speaks volumes.
What do you think the latency is in the life cycle of inventing? I submit that MercExchange and KSR are already extracting a terrible toll on the invention process. It will take ten to twenty years for the full impact to become apparent in the marketplace and it will ten take a similar amount of time to fix the problem.
Ok. Fair enough. I'll grant you that it may be early in the process, but if it were actually true that the damage of MercExchange and KSR (both of which simply brought more reasonable policies into play) were causing a terrible toll, we'd see it in the investment community. I spend a lot of time working with tech investors. It hasn't bothered any of them. At all.
But, let's make a deal. Let's revisit this in 10 years and see what the evidence is.
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Then why did you point to it?
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"Those reports were wrong"
One must consider the possibility that patents give relevant industries (who stand to benefit from those patents) a reason to fabricate and skew data.
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Re:
Do you patent the instruments created to facilitate such splicing ?
Do you patent the rearranged chemical composition ?
How is it that nature is patentable ?
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by Mike - May 14th, 2009 @ 7:11pm
1) I have multiple patents and Mike has none.
Which seems rather meaningless when it comes to understanding the economic impact of patents, doesn't it? If anything, that should harm your credibility for bias. You make money off the system, so of course you defend it.
~What system? Do you mean the laws governing the rights granted to US inventors by the US Constitution? If you don't like that *system*, it sounds to me like you will need a Constitutional Amendment to correct the flaws MIKE sees in the *system*~
2) I have commercialized patents and Mike has not.
I have built a successful business without patents, despite the fact that we could have patented some of the tech we developed. What business did you build?
Again, it would appear my credibility here seems stronger, since I've shown that patents are not necessary to build a successful business.
~Well I suppose so, but my niece made a good profit from her Lemonade stand when she was about 12 years old. Not sure about the credibility part, as I have Never seen you quoted in any of the IP blogspots. Not invective, just the truth.Have you ever considered that you might not be thought of at all in the IP bloggosphere?~
3) I have been dealing with public policy issues related to inventing and the utility of the patent system far longer than Mike and understand the issues in ways which no blowhard pseudo self professed expert can possibility understand.
Resorting to insults doesn't increase your credibility. Nor does talking about how long you've been wrong on these issues.
Mike, you constantly spout nonsense about the patent system and inventing, and never seem to learn.
Ronald, we have asked you to actually present some evidence to refute the evidence and research I presented. Last time we did so, you insulted my parents. Now, that's credible.
~Now this sentence is Really Rich! I have never seen anything that I would consider to be evidence to support your Rush Limbaugh of IP proclamations. Just lots of very cynical observations about what inventors should or should not be allowed to be able to get a patent for.(overwhelmingly Not) Why all the hate and animosity towards inventors and patents? I resemble the following sentence, since you are apparently trying to take away my rights to profit from my honestly and hard-won innovative efforts.~
Why is it that the inevitable result of your interactions with inventors is their coming to disrespect you?
The only ones who seem to "disrespect" me are ones who are followers of your views. I work with numerous inventors and patent holders all the time. Some of my closest friends are very successful "inventors" and my wife holds a patent as well. All of them seem to agree with me about the problems caused by patents. The fact that you've got a few followers who have been abusing the system and are angry at me for showing that is hardly a knock on my credibility.
There is a reason that they shift from trying to educate you to simply making fun of you.
Yes, clearly because they have no fundamental basis on which to base their misguided assertions. If they did, they would present it and this would be over. The fact that none of your little band of followers have ever even TRIED to present evidence speaks volumes.
~What type of evidence would you like to hear Mr. Masnik? Perhaps the fact that 40% of the value of the US economy is represented by Intellectual Property? That 80% of the new jobs in the US are created by innovative small businesses, that generally use patents to validate venture capital funding? That 75% of the new inventions come from very small businesses? That small businesses and inventors are trying to be subdued by large IT firms that have been trying to run them out of the market, if not off the planet, to the tune of over $100 million in lobbying the Congress of the US to change US patent to suit themselves, and apparently Mike Masnik as well?~
What do you think the latency is in the life cycle of inventing? I submit that MercExchange and KSR are already extracting a terrible toll on the invention process. It will take ten to twenty years for the full impact to become apparent in the marketplace and it will ten take a similar amount of time to fix the problem.
Ok. Fair enough. I'll grant you that it may be early in the process, but if it were actually true that the damage of MercExchange and KSR (both of which simply brought more reasonable policies into play) were causing a terrible toll, we'd see it in the investment community. I spend a lot of time working with tech investors. It hasn't bothered any of them. At all.
But, let's make a deal. Let's revisit this in 10 years and see what the evidence is.
~Is this last supposed to be funny? I find it to be extremely perverse and warped, because we all know it will be too late to save the US economy if inventors and the US patent *system* is slanted to favor large IT corporations for only a year or two. More substantive evidence please, and perhaps a bit less pontificating on your part Mike. Once again, I can hardly imagine any mention of your particular opinions ever appearing on Patently O or any other Patent Law blogs that hope to keep their credibility intact.~
Perry Mason~
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That's one of the problems with this nation, it's ran by a punch of politicians and lawyers (in opposed to economists, engineers, doctors, inventors, etc...). BTW, just because someone doesn't appear on a particular source that you agree with doesn't make their arguments any less credible. The credibility of ones arguments is independent of its source or where it's presented and the fact that you don't seem to understand this only helps demonstrate your poor logic.
So your argument is that YOU make a lot of money on the patent system. That doesn't make the patent system better for society as a whole (sure it's better for you but that doesn't mean it's better for society).
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Re:
Perry Mason
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Re:
Perry Mason
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If it sounds to good to be true ...
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So our patent system has a 96 - 97 percent failure rate. If patents motivate such failure perhaps we can act more efficiently without them. Bad investments happen with or without patents, the fact that some people may invest in bad products does not justify giving patents to anyone. We should only give patents to the extent that they help society. Also, as you mention, as for the 96 - 97 percent of patents that don't get turned into real products, the fact that they are patents maybe preventing OTHERS from turning them into products, others who would otherwise do a good job at turning them into products. Someone gets a patent for a product and fails, but someone else, who would succeed, comes up with the same idea (independently) and can't implement it because of the patent resulting in a 96 - 97 percent failure rate. I don't think a 96 - 97 percent failure rate is something to be proud in terms of the success of patents.
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http://www.freepatentsonline.com/EP1675333.html
What a STUPID patent.
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Re:
Perry Mason~
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(more on E - Mail filter patent). I remember before this patent came out there was free software to filter spam but that free software disappeared after such a patent. However, it was determined that spam could still be filtered at the ISP and so that is now how it's often filtered.
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Re:
Perry Mason~
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The problem is that 96 - 97 percent failure rate prevents others from advancing those ideas. One person may not know how to adequately advance an idea but others, who would properly advance the idea, shouldn't be punished for doing so (and that punishment is a huge disincentive for advancing ideas. Why should I advance an idea that YOU have a patent on just because you failed to advance it properly. That just means that I have to give some profit to you and that still doesn't give me the power to prevent or profit from competing products since you are the one who has that control).
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Lets see, communism allows the government to allocate resources. What does a patent do? It allows the government to allocate resources. The government gets to choose who can develop what and who has rights over ideas, not the free market. A free market has no patents. Patents are a communist idea.
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What? Sorry, I can't comprehend what you are trying to say.
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Re:
I find it amusing that you attack my credibility under a fake name. Stunning, really.
~What system? Do you mean the laws governing the rights granted to US inventors by the US Constitution? If you don't like that *system*, it sounds to me like you will need a Constitutional Amendment to correct the flaws MIKE sees in the *system*~
If you were a real lawyer -- and I can only assume you are not based on the statement above -- you would know that the Constitution grants the Congress the ability to set up a system. That does not automatically make the system itself unquestionable. I have no problem with the Constitutional clause. I have tremendous problems with how Congress has twisted the Constitutional clause into creating a law that does massive harm to innovation and innovators.
You can't honestly think that the Constitution means no one can credibly critique the patent system itself.
~Well I suppose so, but my niece made a good profit from her Lemonade stand when she was about 12 years old. Not sure about the credibility part, as I have Never seen you quoted in any of the IP blogspots. Not invective, just the truth.Have you ever considered that you might not be thought of at all in the IP bloggosphere?~
Oh my goodness! Why didn't you tell me? The IP blogosphere doesn't think highly of me? Well, I might as well shut down...
Of course, I'll point out that this is untrue and second that it doesn't particularly matter. I've regularly been quoted throughout the IP blogosphere and know many of the bloggers in the space quite well. But, apparently they're not the ones you read.
But... why does it matter who quotes me? Does that make me any more or less correct? I'm sorry, but I don't go by who quotes me.
~Now this sentence is Really Rich! I have never seen anything that I would consider to be evidence to support your Rush Limbaugh of IP proclamations. Just lots of very cynical observations about what inventors should or should not be allowed to be able to get a patent for.(overwhelmingly Not)
Over the years, we have pointed to and discussed somewhere close to 40 different studies showing the harm the patent system has done. The fact that you are unable to read or unable to do a basic search does not add to your credibility.
Why all the hate and animosity towards inventors and patents?
Perry, I have no animosity whatsoever towards inventors or patents. I have tremendous problems with those who abuse the system in order to harm innovators and harm the economy, but even then, no animosity. The only animosity around here has been directed at me, by folks like Ronald Riley who has insulted me and my parents.
I resemble the following sentence, since you are apparently trying to take away my rights to profit from my honestly and hard-won innovative efforts.~
I am not trying to take away any rights at all. I am trying to make sure that we encourage the most innovation possible, and that will enable you to make more money over the long run. However, I should point out that NO ONE has ever been guaranteed a "right to profit from your efforts." If you think that's what the patent system allows, you really ought to go back to law school.
~What type of evidence would you like to hear Mr. Masnik? Perhaps the fact that 40% of the value of the US economy is represented by Intellectual Property? That 80% of the new jobs in the US are created by innovative small businesses, that generally use patents to validate venture capital funding?
Hahaha. Oh man. You make me laugh. You post bogus stats from biased parties unsupported by reality. You know back in the Mercantilist era, nearly 80% of the economy of the UK was backed by monopolies from the gov't. Yet, people realized that was a bad thing and held back growth. That's not evidence that patents are good. That's evidence that they're abused. Also, the VC stat is ridiculous and has been widely debunked. I spend plenty of time with VCs and it's only the bad ones who care about patents.
That 75% of the new inventions come from very small businesses?
That has nothing to do with patents. I'm willing to believe it's true, and it's all the more reason why they should be wary of patents being abused to stop them from building strong businesses.
That small businesses and inventors are trying to be subdued by large IT firms that have been trying to run them out of the market, if not off the planet, to the tune of over $100 million in lobbying the Congress of the US to change US patent to suit themselves, and apparently Mike Masnik as well?~
First of all, I'm not sure which part of my many explanations of why I'm also AGAINST the current patent reform you seemed to have missed (hell, I even said it in this VERY POST), but it's pretty ridiculous for you to accuse me of supporting the patent reform bill when I do not. I agree that big tech companies are pushing it, and I think it's a bad plan.
For you to falsely accuse me of supporting it (and worse, claiming that I'm shilling for it) is so laughable as to suggest that you not only have no credibility, but no reading comprehension as well.
I don't support the patent reform bill at all.
Now, back to the issue of big tech companies "stealing" from small companies. As we've detailed here at great length, that claim is also totally overblown. It's quite difficult for big companies to actually copy truly innovative small businesses -- which is why we so often see small businesses up end legacy businesses. It's not about copying, it's about execution, and small companies have many advantages in being able to out-execute big companies.
If your idea is REALLY innovative, trust me, most big companies will totally ignore it.
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Not to mention that bogus patents take away the rights of others to invent advance ideas without having some patent troll taking royalties.
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The clause says, "for limited Times" but it seems that this has been interpreted to say "forever minus one day." When they said for a limited time they probably did NOT mean a million years or a thousand years, etc... The longest any patent or copyright should last is 7 years. Software patents and copyrights should last a maximum of 5 years (and software patents should be RARE).
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Are they going to stop us from having kids?
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Re:
That's true of copyright. But not patents. And we're discussing patents.
Betta, I'm sympathetic to your position, but arguing with blatantly incorrect information doesn't make your position any stronger. It just hurts the argument of those of us who are concerned with the current patent and copyright system. If you spent some time getting the facts straight, you would be a more effective proponent.
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Re: Re: Credibility - Correction
Small correction. You believe you could have patented some of the tech you developed. As I frequently tell inventors complaining about rejections, it isn't a patent until an examiner says it is a patent. Though some examiners have quality issues, there are many good examiners doing a very good job and their rejections can be difficult or impossible to overcome, which is why patent applications go abandoned.
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This statement flies in the face of both logic and common sense.
Think about this carefully. The end result of the patents we are discussing is a product, which is consumed by someone. If the product fails to perform as advertised, or the product is no better than previous products, or the product has a flaw, and the company responsible for the product has hidden data that would have given a consumer a better ability to make an informed decision, when the consumer finds out, as they inevitably will, either sooner or later, the backlash affects will not only affect the product in question, but may affect other products and may provide consumers with legal remedies.
Why would a company deliberately hide or skew data that would not only eventually eliminate the market for the product, but potentially eliminate the company itself? The array of organizations that independently test products, regardless of whether they are products, chemicals or drugs, is huge. Even those products that currently do not benefit from patents, regardless of whether the product is aspartame, aspirin or the Ford Focus, are tested and tested and tested. Aspirin, which has been around for what, a century or more, is still being tested.
While you might try to argue that the data only needs to sell products until the patent runs out, history shows us otherwise. When a patented product is flawed (think Vioxx) and the court cases determine that the company hid data, the resulting awards not only wipe out all the profits, they eat into profits from all the other products of a company.
A company can hide or skew data, but customers will eventually find out and make that company pay. Lying about data is not a long-term strategy for survival and while some companies may do it, the ones that want to be around in 50 years don't.
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Re:
Independent studies show that 14% of products overall would not exist without patents. However, that 14% is skewed (one of your favorite words). About 60% of all pharmaceuticals would not exist. About 30% of all chemicals would not exist. About 20% of mechanical inventions would not exist.
Unfortunately for those in the electronics industry, somewhere around 3% of their inventions would not exist, though the margin of error in the study was significant enough that the authors said that the number was probably closer to zero. As for the software industry, the number was zero.
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Mikey's cluelessness
A lot of independent inventors (including myself) and small startups have switched to trade secrets as opposed to patenting after the string of recent anti-inventor and anti-patent court decisions (or worse - they have stopped inventing altogether...)
The congressional patent "reform" of 2009 would be the last nail in the coffin
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Why do you think it is zero, punky ?
And what exactly is "software industry" ? (hint: everything has something to do with software nowadays)
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You have missed a key point in your cutesy little scenario. Let us correct your definition:
Communism allows the government to uniformly allocate resources.
Patents allow the government to restrict the right to make, use or sell for a limited time to an entity so that the entity and other entities, recognizing the value of the intellectual property right conferred by the government, are comfortable disclosing what might otherwise be kept secret for an undefined period of time and are also incentivized to be even more creative in the future.
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Lets quote the constitution again.
"Clause 8. The Congress shall have Power *** To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."
http://supreme.justia.com/constitution/article-1/40-copyrights-and-patents.html
Lets see, inventors ... what does that fall under ... Patents or copyrights? Please don't tell me that someone is an inventor just because he wrote a poem.
"I'm sympathetic to your position, but arguing with blatantly incorrect information doesn't make your position any stronger."
I think I know what I'm arguing.
"Communism allows the government to uniformly allocate resources."
Patents allow the government to allocate resources, the free market does not. Patents are not a product of the free market, having a system where the government allocates resources (by the use of patents) is closer to communism than not having patents (which allows the free market to allocate resources).
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If you can't refute the argument you attack the source. Just label the source a "conspiracy theorist" and you have automatically refuted it. Excellent logic.
"Pharmaceutical companies have lobbied for more extensions and longer patent terms multiple times, without even a hint of success."
Please know your facts before arguing with me. I have arguing with people who have NO idea what they are talking about.
"Over the past few years, several industrial countries have made provision for extending the life of pharmaceutical patents to compensate for the erosion of the length of patent terms by the time necessary for regulatory approval procedures. This paper describes measures taken in a number of countries to broaden patent protection for pharmaceutical products.
In most countries, including the United States, the basic patent term is 20 years from the date on which a patent application is filed. Until recently the standard patent term in the U.S. was 17 years from the date of the granting of a patent. The recent change aligns U.S. law with the provisions of the Uruguay Round Agreements under the General Agreement of Tariffs and Trade (GATT). "
http://dsp-psd.tpsgc.gc.ca/Collection-R/LoPBdP/MR/mr144-e.htm
It was the pharmaceutical industry that lobbied for this extension, I remembered I was upset when this passed. I KNOW what I'm talking about.
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Re: Allocation of Resources
This statement is almost completely erroneous, and is easily proven wrong.
If a patent X is granted, and the patent is not exploited, then no resources were used, diverted or otherwise.
If a patent X is granted, and the entity receiving the patent decides to invest $1 million in the invention described in the patent, the government did not allocate or decide to spend $1 million.
If a patent X is granted and the entity receiving the patent allows anyone to license the patent for a nominal amount, the government did not allocate the opportunity to exploit the patent to any of the licensees of the patent.
A patent represents a potential restriction and an opportunity, nothing more. Unless the government is funding the activity related to the patent, the patent has no relationship to the "government" by the definition of government as you used it.
As for free market, there have been studies showing that a pure free market is more inefficient than a free market with some regulation (mind you, I am not saying that our market has "some regulation;" I think our market is over-regulated). I should point out that in all the history of man there has never been a true free market, and it is unlikely there will ever be because it leads to an inefficient allocation of resources.
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http://en.wikipedia.org/wiki/Patents
This has also helped pharmaceutical corporations.
"That said, I am skeptical about the length of the patent term for pharmaceuticals. Congress has tacked on to the normal 20-year patent term (which until 1995 was only 17 years) an additional term of up to 5 years for the time it takes a pharmaceutical manufacturer to get a new drug approved by the Food and Drug Administration."
http://www.becker-posner-blog.com/archives/2004/12/pharmaceutical_1.html
So don't tell me, "Pharmaceutical companies have lobbied for more extensions and longer patent terms multiple times, without even a hint of success." They have also gotten extensions.
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If it is exploited then the government is deciding who has rights to the idea. It is the government that is deciding how resources can be allocated.
If patent X is granted and I don't doesn't advance an idea because you have the patent (and hence the idea never gets advanced) it is still the government deciding that only YOU have the right to that idea and as a result is worse off.
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Re:
By golly, you got me there. I am unable to refute the factual statement that Nazis experimented with fluoride. Why that has any relevance to anything is beyond me. I guess one could point out that the CIA (as well as other branches of the government) studied the effects of LSD, which is a darn good reason for banning LSD. In fact, anything studied by any government anywhere at any time should be banned. Again, just because it was studied by a government that did things we consider to be evil makes something automatically undesirable? Where is YOUR logic?
Just out of curiosity, have you been studied by the government?
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The government decided that this person is the only one who has rights to allocate resources towards this idea, in effect, a government sanctioned monopoly. The government is deciding how resources should be allocated, that person X is the only person who has rights to allocate resources towards this idea (or to decide who can allocate resources towards this idea or to decide who has the right to require resources (money) to be allocated towards the holder of a patent if some other entity decides to use the patent (ie: via paying royalties)). Patents are closer to communism than not having a patent because patents give the government MORE control over resources (and who has rights to use resources for what ideas).
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You are putting words in my mouth, where did I say any such thing?
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Where the heck did I say any such thing?
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I don't remember ever arguing any such thing.
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The government allocated the RIGHT for the entity to do so. Patents give more control to the GOVERNMENT over how resources should be allocated and communism is a system where the government has more control over the allocation of resources. In a free market the government has no such rights. So comparing the lack of patents to communism is nonsense since patents are closer to communism then the lack thereof.
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It is a GOVERNMENT SANCTIONED restriction, it DOES have a clear relationship to the government.
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I am not arguing against regulation and patents per - se, just that our current patent system is being overly abused.
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Re:
So don't tell me, "Pharmaceutical companies have lobbied for more extensions and longer patent terms multiple times, without even a hint of success." They have also gotten extensions.
READ CARE-FUL-LY...SLOW-LY...I used the word "MORE." Do you understand the word "MORE"?
I am quite well aware that the pharmaceutical industry got extensions of patent term. Prior to the extension the effective life of a pharmaceutical patent was significantly less than 10 years because of the time it took for the FDA to approve a new drug. The current system allows extensions, but limits ALL extensions to 14 years from the time the drug is approved - which is significantly less then 20 years.
Also, the change from 17 years to 20 years served two purposes. First, it harmonized the U.S. with much of the rest of the world. Second, the 17 years was from the date of issuance, not the date of application, which led to undesirable submarine patents. The change from 17 years from the DATE OF ISSUANCE to 20 years from the DATE OF APPLICATION. The result is that the effective patent life for most industries has gone down since it takes longer than 3 years to get a patent in many industries.
I should also point out again and separately that I doubt the pharmaceutical industry was thrilled with the change from 17 years from the date of issuance to 20 years from the date of filing. Since it can take a decades to get a drug approved, that leaves little time for the pharm company to recoup its investment.
Lastly, I was aware of the available extensions, which I talked about, but those were available beginning in 1995. I was referring to the pharmaceutical industries continued lobbying to GET MORE EXTENSIONS.
Do you have any other questions?
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This is absolute nonsense. Merck is still rich and successful despite the fact that they lied about Vioxx. And if it weren't for the discovery process in court cases (which preemption TRIES to restrict) this would have EASILY not been discovered. To say that such data is so difficult to hide is also nonsense. These companies can shred documents and delete information on computers and even if employees do confess (which often doesn't happen, ie: in the case of Vioxx where it was the discovery process that revealed the information) the company can simply deny it. Did anyone go to jail over Vioxx? No. The company is still successful. One of the reasons for that is because they have patents on other drugs and people who need those drugs have no choice BUT to fund them. So consumers can't simply switch companies, it's not that easy and it's exactly our patent system that allows it. Heck, Bayer got away with selling aids tainted blood over seas (the FDA allowed it) and they're still rich and about. No one went to jail for it. Those responsible for these atrocities (at Merck and Bayer) are/were still rich and about with no criminal consequences.
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I understand everything you said in that article. So basically you are saying that you KNEW that they got extensions and you still said, "Pharmaceutical companies have lobbied for more extensions and longer patent terms multiple times, without even a hint of success."
So you willfully LIED to me. Wow, that just kills your credibility.
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So not only was this statement FALSE but YOU KNEW it was false.
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Re:
o Factual error: Patents are granted on inventions, not ideas. While there is some splitting of hairs and quibble over this point, patents that are inadequately supported (leaning toward idea rather than invention) also tend to be losers in court.
o Factual error: The inventor decided that the invention would be revealed to the world, so the inventor decided that the opportunity to allocate resources would be presented. The inventor could just as easily kept his invention secret. The only difference with patents is that the government provided incentive for the inventor to present his invention for potential resource allocation. In exchange for sharing knowledge, the inventor received a limited right to exclude others from making, using or selling, which again has NOTHING to do with resource allocation.
o Factual error: ...the government [has] MORE control over resources (and who has rights to use resources for what ideas). This statement is wrong for several reasons. First and foremost, the government decides nothing. Even a patent is not a guarantee, for it may be challenged on numerous grounds in court, defensible only by the holder. Essentially, the patent holder must decide what resources to be allowed in support of the patent, or not since the government provides no guarantees. Note that defense of a patent is a civil matter between two parties, the patent holder and an infringer wishing to allocate resources to the patent.
Patents are incompatible with a pure communism because in pure communism everything is held for the benefit of everyone (see how well that worked for the non-existent communist governments, all but a few of which are now gone).
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Pharmaceutical corporations will always lobby for things that help their profit, so the fact that they are lobbying for more extensions means nothing. They will not get everything they lobby for but they did receive SOME success. What you said was, "Pharmaceutical companies have lobbied for more extensions and longer patent terms multiple times, without even a hint of success."
you KNEW this was false.
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My point is that the existence of patents are closer to communism than the lack thereof.
"o Factual error: Patents are granted on inventions, not ideas. While there is some splitting of hairs and quibble over this point, patents that are inadequately supported (leaning toward idea rather than invention) also tend to be losers in court."
But the threat of having to go to court (waste time and resources) may deter someone else from advancing an idea.
"The only difference with patents is that the government provided incentive for the inventor to present his invention for potential resource allocation."
The government provided exclusive rights for someone to control a certain idea/product. This gives the government MORE control over the matter.
"which again has NOTHING to do with resource allocation."
It does have to do with resource allocation. The government is deciding who has rights to allocate resources towards a particular product/idea/invention/whatever you want to call it (or who has rights to have resources allocated to them for utilizing such a product).
"First and foremost, the government decides nothing."
When the patent office (a government entity) grants a patent it's making a decision. It's deciding that you have exclusive rights to something.
"Note that defense of a patent is a civil matter between two parties, the patent holder and an infringer wishing to allocate resources to the patent."
and who is making the decision? The court, a government entity.
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These are jury trials...the people decide.
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Judges are people too. So is the president. So is everyone in congress. They are acting on BEHALF of the government, they are taking a government role. You can label them as being not a government but they are acting like a government by telling anyone who can and can't do what (ie: making rules that everyone must abide by), so there is no real difference.
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So you are referring to the incidents that they didn't receive success. So matter how much success they received, your statement would still be true since, by definition, you are referring to the specific occasions that they were unsuccessful. This makes your statement meaningless.
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Troll...
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Lets see, inventors ... what does that fall under ... Patents or copyrights? Please don't tell me that someone is an inventor just because he wrote a poem.
Dude. Please. I'm on your side, and you're making a fool of yourself.
You said that BOTH patents and copyrights had been extended to "forever minus a day." THAT is what I was referring to. THAT is true of copyrights, but NOT patents, which are 20 years (mostly).
I think I know what I'm arguing.
Then you need to improve your debating skills.
Patents allow the government to allocate resources, the free market does not. Patents are not a product of the free market, having a system where the government allocates resources (by the use of patents) is closer to communism than not having patents (which allows the free market to allocate resources).
I'm not sure why you put this in your reply to me. I agree with you and did not make the original statement.
I think you really need to slow down and be more careful in your replies. While I am strongly in agreement with some of your positions, your style is turning even those of us who agree with you on most things off.
I mean.. geeze.. I agree with you and you come back with nonsense attacking me.
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Re: Re: Allocation of Resources
Actually, his point is stronger than your response.
If a patent X is granted, and the patent is not exploited, then no resources were used, diverted or otherwise.
Not true. Resources were devoted to getting a useless patent, that could have been to work more efficiently. That's waste.
If a patent X is granted, and the entity receiving the patent decides to invest $1 million in the invention described in the patent, the government did not allocate or decide to spend $1 million.
Ah, but it did. It indicated that it would give extra-market protections to that inventor, thus granting a subsidy that distorts the market. That's bad.
If a patent X is granted and the entity receiving the patent allows anyone to license the patent for a nominal amount, the government did not allocate the opportunity to exploit the patent to any of the licensees of the patent.
Again, not true. The market has been distorted (massively in some cases).
A patent represents a potential restriction and an opportunity, nothing more. Unless the government is funding the activity related to the patent, the patent has no relationship to the "government" by the definition of government as you used it.
Not at all. Economically you are almost 100% wrong. A gov't monopoly represents a distortion of the market. That's a pretty big issue.
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I think 20 years is TOO long.
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"Is Bettawrekonize a troll?"
You just refuted everything I said by labeling me a troll. Excellent logic.
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It was in response to anonymous. I specified the quote (and it wasn't your quote) but maybe I should have specified who made the quote. I'm more familiar with how to quote people on message boards, not used to this so much.
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Re: Re: Re: Allocation of Resources
And if the invention was never released to the world? What if the inventor decided that he/she would just keep it a secret so that no one could ever capitalize on it? How much of a market distortion is that? Of course, then the inventor has an absolute monopoly on his invention until someone independently invents the same mechanism. If the invention does not happen for 30 years, then 30 years of being able to capitalize on the invention have gone to waste.
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People think that if they wave their hand and use the term "free market" it automatically makes their position pro - free market no matter how anti - free market their position really is. What's sadder is the fact that our stupid (and corrupt) media buys into this nonsense.
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Re: Re: Re: Re: Allocation of Resources
Assumes that no one else would independently invent the same thing. However, historically, we've seen that's almost NEVER the case. There are always multiple people coming up with the same inventions at the same time. So I wouldn't worry too much about it. If there's a need, someone else will invent if. If the first inventor is too stupid to commercialize it, so be it.
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Re:
Also, you should try using the "reply to this comment" link. Then people who read in threaded form can actually follow. Otherwise it's much tougher to understand who you're replying to.
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Re: Re: Re: Allocation of Resources
Actually, his point is stronger than your response.
His point may have been stronger, but that does not prove that it is correct.
If a patent X is granted, and the patent is not exploited, then no resources were used, diverted or otherwise.
Not true. Resources were devoted to getting a useless patent, that could have been to work more efficiently. That's waste.
Your opinion. A bigger waste may have happened had the inventor decided to keep his invention a trade secret (assuming it was possible to do so) and thus have an absolute monopoly. An even bigger waste might occur if a truly valuable invention ends up in a file cabinet and never used (until independently invented, one year of one thousand years from now).
If a patent X is granted, and the entity receiving the patent decides to invest $1 million in the invention described in the patent, the government did not allocate or decide to spend $1 million.
Ah, but it did. It indicated that it would give extra-market protections to that inventor, thus granting a subsidy that distorts the market. That's bad.
I am surprised you would say this. The only thing that the patent gives to the owner is the right to sue, in civil court, an infringer. The government does not care whether the patent holder wins or loses and offers only the use of the court systemm, not a guarantee. As you and I both know people who begin patent suits end up losing 80% of the time. Apparently the "distortion" to the market is not so distorting that people are stopping doing business.
If a patent X is granted and the entity receiving the patent allows anyone to license the patent for a nominal amount, the government did not allocate the opportunity to exploit the patent to any of the licensees of the patent.
Again, not true. The market has been distorted (massively in some cases).
Your response does not make sense. My point is that the government only provides the opportunity. For example, Red Hat has a number of patents and other than revealing their knowledge to the world I do not believe they have used their patents offensively. Thus, I question that Red Hat's patents are a market distortion.
There are many companies with patents that have them for various reasons that have never sued anyone for patent infringement. In fact, considering that there are roughy 1.5 million patents in force, and there are roughly 2800 patent suits per year, it seems that only roughly 2% of all patents are contested per year. That seems more of a minor issue than a "massive distortion."
Yes, there have been single incidents that are a "massive distortion," but they are only massive when considering the total value, not when amortized over the millions of incidents alleged to be infringing. Those "massive distortions" are a small fraction of all patent suits, and represent a nearly infinitesimal fraction of all patents.
A patent represents a potential restriction and an opportunity, nothing more. Unless the government is funding the activity related to the patent, the patent has no relationship to the "government" by the definition of government as you used it.
Not at all. Economically you are almost 100% wrong. A gov't monopoly represents a distortion of the market. That's a pretty big issue.
But, how real is the monopoly. The monopoly is only a monopoly to exclude someone from making, using or selling under a set of rules that can cause patent suits to drag out for years. The cards are clearly stacked in favor of infringers since the burden of proof is on the plaintiff. Which then brings up the question of how real the monopoly is if companies continue to infringe in spite of the supposed monopoly. In extremely few cases has someone been halted from practicing an invention because of infringement. Okay, maybe there is a distortion, but if the distortion is virtually unmeasurable, or has insignificant effect on the market, is the distortion large enough to be worrisome? In the vast majority of instances, the answer is no. If the distortion is only significant in 2% of all cases, is that a situation where the exception is driving the rule?
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Re: Re: Re: Re: Allocation of Resources
"A bigger waste may have happened had the inventor decided to keep his invention a trade secret (assuming it was possible to do so) and thus have an absolute monopoly."
I don't think that any inventor is smarter than the general population. I don't really buy into this nonsense elitism. People find solutions to problems they encounter, there typically is no need for a patent. I don't need someone to find an obvious solution to a problem, that many other people could find as well (that I could find if I encountered the same problem) and tell me that I can't use that solution without paying him royalties. I'd rather keep my freedom to find solutions to problems than to have his alleged genius tell me that I can't use an idea because it's so innovative and hence only he can come up with it. What nonsense.
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Re: Re: Re: Re: Allocation of Resources
Uh, no, fact. It is a FACT that resources were wasted getting a patent that did nothing. You claimed, and I quote" "no resources were used, diverted or otherwise." That is factually untrue. My response was FACTUALLY true.
Your separate point is whether more resources are wasted otherwise, and that's a separate issue. But the history of pretty much all economics shows that letting the free market decide how to allocate resources leads to less waste than setting up a gov't program.
So, if you are going to say that the gov't program leads to less waste, you can't just randomly throw up "what ifs." You need to support it, because it goes against all of economic history, and would be pretty miraculous.
I am surprised you would say this. The only thing that the patent gives to the owner is the right to sue, in civil court, an infringer. The government does not care whether the patent holder wins or loses and offers only the use of the court systemm, not a guarantee. As you and I both know people who begin patent suits end up losing 80% of the time. Apparently the "distortion" to the market is not so distorting that people are stopping doing business.
That's an incredibly misleading statement. I mean so much so that it's difficult to take you even remotely seriously. If you don't think that the patent system is being used to distort the market place, you don't live in the same world I do. Bessen & Meurer recently showed how much money is wasted on litigation compared to the benefits from patents. The numbers are staggering. To claim that's not distortionary is delusional.
Your response does not make sense. My point is that the government only provides the opportunity.
That's not true. The gov't provides a MONOPOLY, and to get that MONOPOLY many will and do spend resources towards getting the MONOPOLY when it could have been spent focusing on INNOVATING. On top of that, once someone has the MONOPOLY it allows them to PREVENT others from INNOVATING.
That's a massive distortion thanks to a gov't system.
For example, Red Hat has a number of patents and other than revealing their knowledge to the world I do not believe they have used their patents offensively. Thus, I question that Red Hat's patents are a market distortion.
They absolutely are. First, Red Hat had to spend resources getting those patents, which is a waste of money. Second, because of those patents, others likely have needed to take less efficient or more costly routes to get to obvious results. That's distortionary.
It's really quite incredible that anyone would claim otherwise.
There are many companies with patents that have them for various reasons that have never sued anyone for patent infringement. In fact, considering that there are roughy 1.5 million patents in force, and there are roughly 2800 patent suits per year, it seems that only roughly 2% of all patents are contested per year. That seems more of a minor issue than a "massive distortion."
See above. All that paragraph says to me is "hot damn, think of all that time, money and effort WASTED on patents that could have gone to innovation." That's a MASSIVE distortion of the marketplace. It's a tremendous tax on innovation. It's outright depressing.
But, how real is the monopoly. The monopoly is only a monopoly to exclude someone from making, using or selling under a set of rules that can cause patent suits to drag out for years.
You can't be serious, right?
The cards are clearly stacked in favor of infringers since the burden of proof is on the plaintiff. Which then brings up the question of how real the monopoly is if companies continue to infringe in spite of the supposed monopoly. In extremely few cases has someone been halted from practicing an invention because of infringement. Okay, maybe there is a distortion, but if the distortion is virtually unmeasurable, or has insignificant effect on the market, is the distortion large enough to be worrisome?
Again, you're not serious. I mean, are you REALLY ignoring every other impact that patents have? The cost, the time, the effort, the fact that you focus on an area that is "patentable" rather than "marketable." The fact that you design your business around business models that rely on artificial scarcity rather than business models that exploit abundance accurately? All of those are massive economic DESTRUCTION vehicles. They shrink economic growth and create massive distortions in the market.
To claim that the only distortion occurs when a product is stopped by injunction is flat out missing the point.
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Re: Re:
I do not believe they are bogus stats at all, as they come from the National Small Business Association, which has been doing business as the NSBA since about 1937 or so. Where do you derive Your numbers from? I have seen very few links where I might be able to actually READ all this information that you are referring to. All I seem to be reading is your opinions, which would probably not hold up in Court, for instance. Ha Ha doesn't help at all.~
Hahaha. Oh man. You make me laugh. You post bogus stats from biased parties unsupported by reality. You know back in the Mercantilist era, nearly 80% of the economy of the UK was backed by monopolies from the gov't. Yet, people realized that was a bad thing and held back growth. That's not evidence that patents are good. That's evidence that they're abused. Also, the VC stat is ridiculous and has been widely debunked. I spend plenty of time with VCs and it's only the bad ones who care about patents.
That 75% of the new inventions come from very small businesses?
That has nothing to do with patents. I'm willing to believe it's true, and it's all the more reason why they should be wary of patents being abused to stop them from building strong businesses.
~On the other hand, it has everything to do with what gets invented, as if there is no market for the *inventions*, they will not be implemented, and you and others can go chew on somebody else's leg. I have not bothered to read many of your other explanations, as I don't happen to find them to be especially relevant to my case, and to be perfectly honest, I really happen to dislike your prediliction for insulting the intelligence of any that happen to disagree with your opinions. As I mentioned yesterday, I am not an attorney, but have watched Perry Mason on television for several years... I invent new things, and happen to take exception when non-inventors casually take cheap shots at the importance of new technologies. Pennecillan, Smallpox and Polio vaccines, and perhaps Quinine are all good examples of good inventions or discoveries that have saved millions of lives and prevented a lot of misery. Do you and your pals think that the inventors or innovators should not be allowed to profit from their works? An inquiring mind would really like to know...
I am very glad to hear that you agree that the current patent reform efforts are perhaps somewhat mis-guided, as recent court decisions in the Fed Circ and Supreme Court have significantly changed the lay of the land as regards what is possible to be claimed as an *inventon* I would much prefer that the courts decide issues like this, as there seem to be precious few in the Congress that really understand how badly they might harm the future of American innovative efforts if they pass and implement legislation that is overwhelmingly in the favor of large corporations.
Perry Mason~
That small businesses and inventors are trying to be subdued by large IT firms that have been trying to run them out of the market, if not off the planet, to the tune of over $100 million in lobbying the Congress of the US to change US patent to suit themselves, and apparently Mike Masnik as well?~
First of all, I'm not sure which part of my many explanations of why I'm also AGAINST the current patent reform you seemed to have missed (hell, I even said it in this VERY POST), but it's pretty ridiculous for you to accuse me of supporting the patent reform bill when I do not. I agree that big tech companies are pushing it, and I think it's a bad plan.
For you to falsely accuse me of supporting it (and worse, claiming that I'm shilling for it) is so laughable as to suggest that you not only have no credibility, but no reading comprehension as well.
I don't support the patent reform bill at all.
Now, back to the issue of big tech companies "stealing" from small companies. As we've detailed here at great length, that claim is also totally overblown. It's quite difficult for big companies to actually copy truly innovative small businesses -- which is why we so often see small businesses up end legacy businesses. It's not about copying, it's about execution, and small companies have many advantages in being able to out-execute big companies.
If your idea is REALLY innovative, trust me, most big companies will totally ignore it.
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I do not believe they are bogus stats at all, as they come from the National Small Business Association, which has been doing business as the NSBA since about 1937 or so. Where do you derive Your numbers from? I have seen very few links where I might be able to actually READ all this information that you are referring to. All I seem to be reading is your opinions, which would probably not hold up in Court, for instance. Ha Ha doesn't help at all.~
Hahaha. Oh man. You make me laugh. You post bogus stats from biased parties unsupported by reality. You know back in the Mercantilist era, nearly 80% of the economy of the UK was backed by monopolies from the gov't. Yet, people realized that was a bad thing and held back growth. That's not evidence that patents are good. That's evidence that they're abused. Also, the VC stat is ridiculous and has been widely debunked. I spend plenty of time with VCs and it's only the bad ones who care about patents.
That 75% of the new inventions come from very small businesses?
That has nothing to do with patents. I'm willing to believe it's true, and it's all the more reason why they should be wary of patents being abused to stop them from building strong businesses.
~On the other hand, it has everything to do with what gets invented, as if there is no market for the *inventions*, they will not be implemented, and you and others can go chew on somebody else's leg. I have not bothered to read many of your other explanations, as I don't happen to find them to be especially relevant to my case, and to be perfectly honest, I really happen to dislike your prediliction for insulting the intelligence of any that happen to disagree with your opinions. As I mentioned yesterday, I am not an attorney, but have watched Perry Mason on television for several years... I invent new things, and happen to take exception when non-inventors casually take cheap shots at the importance of new technologies. Pennecillan, Smallpox and Polio vaccines, and perhaps Quinine are all good examples of good inventions or discoveries that have saved millions of lives and prevented a lot of misery. Do you and your pals think that the inventors or innovators should not be allowed to profit from their works? An inquiring mind would really like to know...
I am very glad to hear that you agree that the current patent reform efforts are perhaps somewhat mis-guided, as recent court decisions in the Fed Circ and Supreme Court have significantly changed the lay of the land as regards what is possible to be claimed as an *inventon* I would much prefer that the courts decide issues like this, as there seem to be precious few in the Congress that really understand how badly they might harm the future of American innovative efforts if they pass and implement legislation that is overwhelmingly in the favor of large corporations.
Perry Mason~
That small businesses and inventors are trying to be subdued by large IT firms that have been trying to run them out of the market, if not off the planet, to the tune of over $100 million in lobbying the Congress of the US to change US patent to suit themselves, and apparently Mike Masnik as well?~
First of all, I'm not sure which part of my many explanations of why I'm also AGAINST the current patent reform you seemed to have missed (hell, I even said it in this VERY POST), but it's pretty ridiculous for you to accuse me of supporting the patent reform bill when I do not. I agree that big tech companies are pushing it, and I think it's a bad plan.
For you to falsely accuse me of supporting it (and worse, claiming that I'm shilling for it) is so laughable as to suggest that you not only have no credibility, but no reading comprehension as well.
I don't support the patent reform bill at all.
Now, back to the issue of big tech companies "stealing" from small companies. As we've detailed here at great length, that claim is also totally overblown. It's quite difficult for big companies to actually copy truly innovative small businesses -- which is why we so often see small businesses up end legacy businesses. It's not about copying, it's about execution, and small companies have many advantages in being able to out-execute big companies.
If your idea is REALLY innovative, trust me, most big companies will totally ignore it.
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Perry
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Uh, no, fact. It is a FACT that resources were wasted getting a patent that did nothing. You claimed, and I quote" "no resources were used, diverted or otherwise." That is factually untrue. My response was FACTUALLY true.
I think you are missing a point. Yes, the resources of the patent holder were used (wasted only in your personal opinion), but the patent holder did not see them as wasted or diverted. I would be willing to bet that patents would be applied for even if they granted no monopoly protection whatsoever. Why do I make this statement? Because R&D magazine gets hundreds of applications each your for a yearly competition it holds for the most innovative products. Indeed, the strategy of many companies is to acquire patents as a marketing tool. Waste? Only in your opinion. And that is factually true.
Your separate point is whether more resources are wasted otherwise, and that's a separate issue. But the history of pretty much all economics shows that letting the free market decide how to allocate resources leads to less waste than setting up a gov't program.
I grant you that this point is indeed generally accurate, to a point. However, since you are obviously well-versed in the history of free markets and economics, you also know that a market with some restrictions provides more benefits to society than a market with zero restrictions.
Patents serve a public policy goal. You are also likely well aware of the studies that show that about 14% of all inventions would not exist without patents (about 60% pharm, 30% chemical, and 20% mechanical, the rest are negligible amounts). Unfortunately, these same studies do not tell whether these inventions were the most useful - they have left that to future studies. These same studies do not examine (unforatunately) whether inventions happened faster with patents than not, and do not address this question.
So, if you are going to say that the gov't program leads to less waste, you can't just randomly throw up "what ifs." You need to support it, because it goes against all of economic history, and would be pretty miraculous.
In general, I am against government interference in the economy. It is my belief that the economy is going down hill because of government interference. However, some government interference has benefits to the public good. However, government keeps trying to fix one mistake by making another rather than letting things happen as they will. I do believe that patents were one of the few things that society keeps using again and again because, used properly, they lead to a net benefit. Are they being used properly? Not over the last twenty years or so. The courts are doing their best to correct many of the inequities, but Congress really needs to do something right.
I am surprised you would say this. The only thing that the patent gives to the owner is the right to sue, in civil court, an infringer. The government does not care whether the patent holder wins or loses and offers only the use of the court systemm, not a guarantee. As you and I both know people who begin patent suits end up losing 80% of the time. Apparently the "distortion" to the market is not so distorting that people are stopping doing business.
That's an incredibly misleading statement. I mean so much so that it's difficult to take you even remotely seriously. If you don't think that the patent system is being used to distort the market place, you don't live in the same world I do. Bessen & Meurer recently showed how much money is wasted on litigation compared to the benefits from patents. The numbers are staggering. To claim that's not distortionary is delusional.
I assume you are talking of their methodology of looking at what happens to the stocks of companies when threatened with litigation. I believe their methodology is incredibly flawed. If the technique is the one I remember, it was used by another analyst to estimate the costs of Sarbanes-Oxley, and that analysis yielded waste that exceeded a trillion dollars. The problem I have is that their approximation does not examine what happens after the initial announcement of the suit. The market reaction is an extremely poor gauge because patent suits typically take years, and stocks may take a hit, but they quickly rebound when people realize nothing is going to happen.
This analysis also does not take into consideration that according to a paper presented in the AIPLA that roughly 80% of all plaintiffs ultimately lose.
Do patents distort the economy? There has to be some distortion. However, as has been noted a number of times, it is impossible to accurately calculate the net benefit from patents because there is nothing to use for comparison. All we have are highly speculative and inaccurate estimations that could be off by orders of magnitude.
Your response does not make sense. My point is that the government only provides the opportunity.
That's not true. The gov't provides a MONOPOLY, and to get that MONOPOLY many will and do spend resources towards getting the MONOPOLY when it could have been spent focusing on INNOVATING. On top of that, once someone has the MONOPOLY it allows them to PREVENT others from INNOVATING.
As I have been reminded many times by attorneys, a patent is only effective if you take someone to court. Rephrase: A patent is a weapon only when someone is taken to court. IBM is a company that typically uses their patents as a marketing tool, though they also have a tremendous licensing program. Yes, the "monopoly" granted by the government allows someone to prevent someone else from making a copy of their invention, but the key word here is allows. It does not require someone to prevent someone else from copying, and as we have already noted, about 98% of all patents in any particular year are not involved in a lawsuit.
While we are on the subject of waste, I think the vast majority of marketing and advertising is a waste. Certainly I pay nearly no attention to ads, commercials, etc. However, marketing and advertising is typically a HUGE expense for many companies, while the documentation of innovation in the form of patent applications is relatively insignificant. I notice that a lot of marketing groups love to use patents as one of their tools
For example, Red Hat has a number of patents and other than revealing their knowledge to the world I do not believe they have used their patents offensively. Thus, I question that Red Hat's patents are a market distortion.
They absolutely are. First, Red Hat had to spend resources getting those patents, which is a waste of money. Second, because of those patents, others likely have needed to take less efficient or more costly routes to get to obvious results. That's distortionary.
It's really quite incredible that anyone would claim otherwise.
You claim they are a waste. I think consultants, marketing and executive perks are a waste. However, that is merely an opinion. Many companies do not think patents are a waste, and, as I pointed out above, not only do companies apply for patents, but they also spend money on submitting their inventions for non-monopoly related awards. Eliminating patents will merely drive people to spend that money in other ways, either in protecting trade secrets or in competing for technology prizes.
There are many companies with patents thatf have them for various reasons that have never sued anyone for patent infringement. In fact, considering that there are roughy 1.5 million patents in force, and there are roughly 2800 patent suits per year, it seems that only roughly 2% of all patents are contested per year. That seems more of a minor issue than a "massive distortion."
See above. All that paragraph says to me is "hot damn, think of all that time, money and effort WASTED on patents that could have gone to innovation." That's a MASSIVE distortion of the marketplace. It's a tremendous tax on innovation. It's outright depressing.
One of the other things that FREQUENTLY comes out of discussing inventions with inventors is even MORE INNOVATION. I always think of the additional things that inventors created as a result of analysing the innovative features of their devices, which is a MASSIVE boon to invention and company efforts.
But, how real is the monopoly. The monopoly is only a monopoly to exclude someone from making, using or selling under a set of rules that can cause patent suits to drag out for years.
You can't be serious, right?
Totally. Very few companies are typically affected by patents to more than a minor amount. Except for certain litigious entities, very few companies ever assert their patents against other companies. Yes, the few that do make headlines, and in an extremely limited number of cases the amounts of awards or settlements can be huge, but these situations are the rarity and not the rule.
The cards are clearly stacked in favor of infringers since the burden of proof is on the plaintiff. Which then brings up the question of how real the monopoly is if companies continue to infringe in spite of the supposed monopoly. In extremely few cases has someone been halted from practicing an invention because of infringement. Okay, maybe there is a distortion, but if the distortion is virtually unmeasurable, or has insignificant effect on the market, is the distortion large enough to be worrisome?
Again, you're not serious. I mean, are you REALLY ignoring every other impact that patents have? The cost, the time, the effort, the fact that you focus on an area that is "patentable" rather than "marketable." The fact that you design your business around business models that rely on artificial scarcity rather than business models that exploit abundance accurately? All of those are massive economic DESTRUCTION vehicles. They shrink economic growth and create massive distortions in the market.
To claim that the only distortion occurs when a product is stopped by injunction is flat out missing the point.
I do think of all the other distortions patents have had. The numbers of innovations that build off of patents. The new markets founded on inventions described patents. The increase in economic growth and knowledge from patents. The drive inside companies to focus on that which is marketable and then determine whether it is sufficiently innovative to also be patentable. The business models which use the diversity of technology driven by patents to distinguish themselves over their competitors.
You may look at the glass as being half empty, but it is really half full. I have noticed that you have never adequately addressed the loss of knowledge without patents. There is no suitable avenue for the independent, non-scientist inventor to describe his or her invention. Since roughly 1/3 of all patents are from independent inventors, then that knowledge would be largely lost.
Then, there are the millions of foreign-based patents that again spread knowledge, knowledge that would frequently be hidden because of lack of avenues to share that knowledge. The dissemination of knowledge in some areas would slow dramatically.
Of course, that is neglecting the effect of the use of trade secrets, which is currently expanding rapidly. Classes on how to use trade secrets have been exploding. Several surveys conducted among business executives have been clear. The decreasing strength of patents is causing increased use of trade secrets, which are considered more valuable in some circumstances anyway. Everything we do to eliminate patents TREMENDOUSLY DECREASES the accumulation of knowledge in some fields.
If you wish to argue that knowlege in some fields, particularly electronics and software would see the opposite effect, I would agree. Spread of knowledge in the mechanical arts would come to a relatively screeching halt.
I also have to wonder what would happen to pharmaceuticals if patents did not exist. Each company would likely have to have separate clinical trials because the formula for a drug would have to be reverse engineered from a sample since the patents would not be available to describe the drug. I suspect that the FDA would also eliminate the current rules regarding use of clinical trials from the original for additional copies since there would be no way to guarantee that a copied version of a drug was exactly the same as the original. In any event, multiple clinical trials would have to be conducted in parallel in any case because it takes up to a decades to finish one set of clinical trials. The waste from conducting several sets of clinical trials for a similar drug would be a TREMENDOUS WASTE, in the tens of millions of dollars.
Anyway, I do not think that eliminating patents would be as advantageous as you believe. I think there would be a lot of negative effects in certain technology fields. Of course, then we could apply to the government to bail us out.
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You mix issues.
The first fallacy is that patents are required for inventions. I do not believe anyone has ever said that. Patents results from inventions, not the other way around.
As for elitism, well, I know I do not have the capability to develop a new drug. That sort of activity typically requires several PhD's and a lot of money. I suspect your average garage inventor would struggle with that sort of thing.
I also suspect that most inventors would struggle developing chemical inventions in their garage, but I could be wrong.
I have not seen too many jet engine inventions from independent inventors as well.
As for whether "any inventor" is "smarter" than the "general population," I have no answer for you. I do suspect that the average inventor working for a corporation has a significantly better technical education and has more technical experience than the "general population." However, that is not saying a lot because the technical education of the "general population" is poor if you believe comparisons between Americans and foreigners.
As for "obvious" solutions to problems, why don't you show me a mechanical patent that provides an "obvious" solution to a problem? Even better, how about a chemical or drug patent that is an "obvious" solution to a problem.
As for speculating about worst case scenarios, nah, I think patents in general have been one of the greatest inventions of all time. They have been quite useful throughout history. However, when any valuable system is abused it can lead to non-valuable results. Does that mean the system should be eliminated or fixed?
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I have NEVER seen evidence that this is the case. Perhaps you can provide a reference we can look at.
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There are trade secrets that have been kept secrets for decades - and continue to be kept. There are significant trade secrets in optics, various mechanical industries, and in chemical industries. The need exists, but in many cases the company holding the trade secret stays well ahead of the others.
I remember reading about the history of powdered metal. I think it was Hoeganaes (spelling may be wrong) that had a trade secret process to mix their powder. Rather than patenting the process, they kept it a trade secret. After a couple of decades, other companies came up with processes that were almost as good, but I am unsure of whether they have ever told anyone how they create their powders, which are still considered the best in the industry.
If this was an isolated example, it would lend more credence to your belief in independent invention. However, there are thousands of trade secrets that yield results no one else has been able to obtain (I personally know perhaps a dozen or so that have never been successfully duplicated). I suspect that the number of trade secrets being practiced in the United States today probably numbers in the thousands, if not tens of thousands, and the number is climbing. Secrecy is a far better protector of knowledge than patents.
Sure, any given invention will eventually be invented again. It may take decades, but it will eventually happen. Thank goodness patents speed that process up significantly.
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Re: Inventor Shops
Actually this is not the case. It was the entry of organized labor into the fray which stalled Patent Deform.
The independent inventor community has been tossing graveling in the gears of Patent Deform since about 1992.
You should all be supporting our efforts because without patent protected invention based small business there is nothing standing between America's current standard of living and a precipitous drop far worse than what we have already seen.
Ronald J. Riley,
Speaking only on my own behalf.
Affiliations:
President - www.PIAUSA.org - RJR at PIAUSA.org
Executive Director - www.InventorEd.org - RJR at InvEd.org
Senior Fellow - www.PatentPolicy.org
President - Alliance for American Innovation
Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
Washington, DC
Direct (810) 597-0194 / (202) 318-1595 - 9 am to 8 pm EST.
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Re: Re: Inventor Shops
While you sometimes say things that make me cringe, I just read an interesting article in the AIPLA quarterly review that was eye-opening.
Many in the anti-IP crowd like to point to the fashion industry as the poster child that does not rely on IP protection. As it turns out, that statement is COMPLETELY incorrect.
This particular article pointed out that copyists can now take a picture of a design for a spring fashion show in the fall, use computer analysis of the design, and turn out exact copies in 4-6 weeks in Asia. The article provided several dramatic examples of where the normal transition from high end designer to low-end knock-offs is being short circuited by copyists.
The response to this trend has been different in the U.K., which has FORMAL IP protection for fashion (which seems to get very little press in this blog) and the U.S., which has only minimal IP protection for fashion.
In the U.K., high end fashion designers have used a mix of strategies, including both EU fashion protection and their own fashion protection laws to halt copyists from copying. High-end designers have also used more expensive designs that are harder to duplicate using inexpensive materials, forcing copyists to make versions that are more "inspiration" than actual copies.
In the U.S., since only exact material patterns and trademarks are protected, U.S. designers have been using complex material patterns and patterns of their logos (protected by trademark law, which, as is known, was instigated to prevent unfair competition between the company owning the trademark and copyists) to prevent copying.
So, the much-vaunted example of the fashion world as an example of an industry that has not used IP protection and yet is highly innovative is inaccurate to say the least. In fact, lawsuits between clothing manufacturers happens all the time, both in the U.S. and in the U.K. and the EU, but somehow people seem to have overlooked those suits to be able to use fashion as a poster child for what lack of IP can do. I am looking forward to the next person quoting the fashion industry as an example of what lack of IP protection can yield. Perhaps after citing twenty or thirty lawsuits over fashions, they might change their mind.
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This assumes, totally incorrectly, that you need to sell "inventions" rather than products. There is no evidence that this is the case. Look at the research done by Eric Schiff, which found markets without patents still have plenty of new businesses AND new inventions. But the focus is on selling PRODUCTS, not selling "INVENTIONS".
Petra Moser's research found quite similar impact.
The idea that you need a market for inventions is wrong. That's like saying advertisements will never be made if there's no market for "advertisements". But advertisements make money by making you buy something else.
I have not bothered to read many of your other explanations, as I don't happen to find them to be especially relevant to my case, and to be perfectly honest,
Uh, what? So you don't read anyone who might prove you wrong? Fascinatingly telling.
I really happen to dislike your prediliction for insulting the intelligence of any that happen to disagree with your opinions.
I do no such thing. Lots of people disagree with me who I respect. Where I get annoyed is when people make idiotic suggestions that have been debunked for 100 years.
As I mentioned yesterday, I am not an attorney, but have watched Perry Mason on television for several years... I invent new things, and happen to take exception when non-inventors casually take cheap shots at the importance of new technologies. Pennecillan, Smallpox and Polio vaccines, and perhaps Quinine are all good examples of good inventions or discoveries that have saved millions of lives and prevented a lot of misery.
None of which required patents to be invented, but thanks for falsely pretending that it was true.
Do you and your pals think that the inventors or innovators should not be allowed to profit from their works? An inquiring mind would really like to know...
Oh come on. We've debunked that fallacy over and over again. NO ONE is saying that no one has a right to profit from their works. We just think they need to use smarter business models that don't require gov't monopolies. The fact that you don't seem to think they exist is your problem, not ours. But we have no problem with inventors and innovators profiting. In fact, we WANT them to profit and profit greatly. We just don't want them making MANY MANY OTHER innovators NOT be able to INNOVATE by blocking them and harming the market and consumers.
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We're talking about waste from a societal economic viewpoint, and money put towards a blackhole of economic usefulness is a waste. No questions asked. To deny that is to deny reality. The idea that it's not wasteful because the invention my not be useful is economically clueless. The money and effort that was wasted on getting those patents could have been put to economically USEFUL activity. I'm not sure why you continue to deny this.
I grant you that this point is indeed generally accurate, to a point. However, since you are obviously well-versed in the history of free markets and economics, you also know that a market with some restrictions provides more benefits to society than a market with zero restrictions.
Depends greatly on the market. But it has also been shown, over and over again, that in the *RARE* cases where some restrictions are necessary, there's a big question in what those restrictions should be, and the burden should be very great to prove why those restrictions are needed. Furthermore, the *restrictions* that make sense in almost free markets are almost always around stopping FRAUD, not providing monopoly powers. Other than a situation with a natural monopoly, I've never seen a market that functions better with monopoly rights. Can you provide an example?
Patents serve a public policy goal. You are also likely well aware of the studies that show that about 14% of all inventions would not exist without patents (about 60% pharm, 30% chemical, and 20% mechanical, the rest are negligible amounts). Unfortunately, these same studies do not tell whether these inventions were the most useful - they have left that to future studies. These same studies do not examine (unforatunately) whether inventions happened faster with patents than not, and do not address this question.
The question of whether or not specific inventions would exist without patents is an interesting one, but not as interesting as you make it out to be. You act as if the invention is the goal, rather than the innovation. Even the numbers you cite seem to go against your point. If only 14% of inventions wouldn't exist without patents then we've granted monopoly rights that weren't needed in 86% of cases. Yikes. That's awful. That's an incredibly economically inefficient system. Criminally so.
In general, I am against government interference in the economy. It is my belief that the economy is going down hill because of government interference. However, some government interference has benefits to the public good. However, government keeps trying to fix one mistake by making another rather than letting things happen as they will. I do believe that patents were one of the few things that society keeps using again and again because, used properly, they lead to a net benefit. Are they being used properly? Not over the last twenty years or so. The courts are doing their best to correct many of the inequities, but Congress really needs to do something right.
Again, the areas where gov't interference has made sense are cases of stopping fraud. Not in providing monopoly rights. The fact that patents are used are not evidence that they lead to net innovation. They are only evidence that they unfairly benefit a single party.
Do patents distort the economy? There has to be some distortion. However, as has been noted a number of times, it is impossible to accurately calculate the net benefit from patents because there is nothing to use for comparison. All we have are highly speculative and inaccurate estimations that could be off by orders of magnitude.
There are enough studies to show how the distortion works. We've got studies of countries without patents compared to neighboring countries with patents (showing patents actually slow down innovation and economic growth). We've got studies showing how industries fare in countries that change their patent laws both before and after patent laws are made stricter (showing patents actually slow down innovation and economic growth -- and can in fact kill off certain industries). We have studies of industries in multiple nations with differing levels of patent control (showing patents actually slow down innovation and economic growth). Pretty much every study I've seen shows the same thing: patents actually slow down innovation and economic growth -- but do allow patent holders to gain monopoly rents at the expense of the public.
As I have been reminded many times by attorneys, a patent is only effective if you take someone to court. Rephrase: A patent is a weapon only when someone is taken to court.
That's simply not true. I mean, it's laughable to even suggest it. You ignore all of the chilling effects of the patent when used as a weapon. You simply can't be serious.
Do you work in an industry with patents?
Yes, the "monopoly" granted by the government allows someone to prevent someone else from making a copy of their invention, but the key word here is allows. It does not require someone to prevent someone else from copying, and as we have already noted, about 98% of all patents in any particular year are not involved in a lawsuit.
Again, you keep shifting focus and insisting that the only waste is in a lawsuit. That's laughable and suggests you've never worked in an industry where patents are widely used. The amount of time, effort and resources just used towards GETTING a patent are a massive distortion. The fact that it encourages companies to get involved in economically bad business models is a distortion. To claim that it's only patents used in lawsuits that matter is laughable and economically wrong.
Out of curiosity, what's your background in economics, because you seem to be making a lot of economic fallacies.
While we are on the subject of waste, I think the vast majority of marketing and advertising is a waste. Certainly I pay nearly no attention to ads, commercials, etc.
Right, so anecdotal evidence on a sample size of one proves your point? Yikes. I mean... come on...
Anyway, advertising and marketing is not a net waste. There is tremendous research and evidence on this, that the net benefit of advertising and marketing is positive. That's not the case with patents. Furthermore, as technology has improved, we're seeing the net benefit and efficiency of advertising and marketing increase.
You claim they are a waste. I think consultants, marketing and executive perks are a waste. However, that is merely an opinion.
No, it's not me claiming that it's a waste. It's the result of numerous studies that this is a MASSIVE economically DISTORTING waste.
Many companies do not think patents are a waste, and, as I pointed out above, not only do companies apply for patents, but they also spend money on submitting their inventions for non-monopoly related awards. Eliminating patents will merely drive people to spend that money in other ways, either in protecting trade secrets or in competing for technology prizes.
The fact that companies value patents is not evidence of whether or not they're economically beneficial. The fact that their money would go towards other things is true, but we actually HAVE EVIDENCE on where that money will go and it's TOWARDS MORE ECONOMICALLY BENEFICIAL ACTIVITY THAT RESULTS IN MORE ECONOMIC GROWTH.
You keep throwing up your hands saying "well, we just don't know..." but that's bullshit. You could say the same thing about mercantilist policies. Mercantilists loved them. They loved getting those monopolies, and when people suggested getting rid of such monopolies, they threw their hands up and said "but think of all the waste, because who knows where we'll spend our money." By your reasoning, we never should have gotten rid of the sugar monopoly.
But that makes no sense, because you can look at the basic economics and realize that a much more beneficial market result comes about via competition, rather than monopolies.
One of the other things that FREQUENTLY comes out of discussing inventions with inventors is even MORE INNOVATION. I always think of the additional things that inventors created as a result of analysing the innovative features of their devices, which is a MASSIVE boon to invention and company efforts.
What does that have to do with patents? That happens entirely without patents, and actually is ENCOURAGED without patents.
Also, what you describe is a massively limiting situation where the only one who can add to the original invention is the original inventor. What a HUGE economic waste.
The story of the steam engine is instrumental. Watt's engine didn't work. It was a piece of crap. But no one else could improve on it because he stopped them all with his patents. So there was little to no economic usefulness of his engine for years. Then his patents finally expired, and suddenly there was massive innovation from all those others who had perfected the invention but were unable to do anything with it for DECADES. That's DECADES of economic growth down the drain. It's incredibly sad.
Totally. Very few companies are typically affected by patents to more than a minor amount. Except for certain litigious entities, very few companies ever assert their patents against other companies. Yes, the few that do make headlines, and in an extremely limited number of cases the amounts of awards or settlements can be huge, but these situations are the rarity and not the rule.
What industry do you work in? Most industries that have any serious impact on the economy are heavily involved in patent issues. To claim otherwise is flat out wrong. I can't even begin to describe how wrong you are. It's stunning that you would claim that patents don't impact most businesses. That's simply wrong.
I do think of all the other distortions patents have had.
Clearly, you do not. Because all of your statements were only focused on the impact patents have in lawsuits. Clearly, you've never worked for a company in the tech industry.
The new markets founded on inventions described patents.
Assumes, incorrectly, that the markets are due to the patents, not the innovation.
The increase in economic growth and knowledge from patents.
Assumes, incorrectly, that the markets are due to the patents, not the innovation.
The drive inside companies to focus on that which is marketable and then determine whether it is sufficiently innovative to also be patentable.
If only. Have you ever worked at a bit company where patents are important? No one cares about the marketability of patentable stuff. I've worked at these companies. They just send in lawyers to figure out what can be patented. The marketability discussion is entirely separate.
Which is exactly a big part of the problem. If companies just focused on what was marketable then we'd have a much bigger economy.
You may look at the glass as being half empty, but it is really half full
Uh, the evidence says it's a lot less than half-full.
I have noticed that you have never adequately addressed the loss of knowledge without patents. There is no suitable avenue for the independent, non-scientist inventor to describe his or her invention. Since roughly 1/3 of all patents are from independent inventors, then that knowledge would be largely lost.
We have addressed this in great detail. To claim otherwise is either malice or ignorance. First, you assume (incorrectly) that only one person comes up with any invention and they hold all of that info in their heads. That's simply not true. Almost every invention ever made has had multiple people come up with it at the same time, and the knowledge is explained by getting the product in the market.
Second, you assume, incorrectly, that inventions are explained in patents. If an idea is truly new and amazing that no one else can figure it out then it still makes sense to keep it as a trade secret. The ONLY inventions it makes sense to reveal in a patent is ones that you KNOW others will figure out on their own before a patent expires.
Finally, and MOST importantly, you assume (again, totally incorrectly) that the passage of knowledge happens via patents. It's quite rare that people learn anything new by looking at patents. Most innovation occurs by smart people figuring stuff out, not by searching through patents, which are often written in a way that does little to actually explain how the invention is useful.
Then, there are the millions of foreign-based patents that again spread knowledge, knowledge that would frequently be hidden because of lack of avenues to share that knowledge. The dissemination of knowledge in some areas would slow dramatically.
Again, you give patents WAY too much credit. There are very few industries where there is ANY value to be gleaned from patents.
Of course, that is neglecting the effect of the use of trade secrets, which is currently expanding rapidly. Classes on how to use trade secrets have been exploding. Several surveys conducted among business executives have been clear. The decreasing strength of patents is causing increased use of trade secrets, which are considered more valuable in some circumstances anyway. Everything we do to eliminate patents TREMENDOUSLY DECREASES the accumulation of knowledge in some fields.
Again, you falsely assume that only one person (or company) understand an invention and it actually can be kept secret. That's almost never true.
Also you assume that patents are the only way that knowledge is disseminated. Have you ever worked in industry?
If you wish to argue that knowlege in some fields, particularly electronics and software would see the opposite effect, I would agree. Spread of knowledge in the mechanical arts would come to a relatively screeching halt.
Not true at all. Reverse engineering is perfectly legal, and in the mechanical field innovation would continue and increase as others would be able to improve upon the design flaws of earlier inventors.
I also have to wonder what would happen to pharmaceuticals if patents did not exist. Each company would likely have to have separate clinical trials because the formula for a drug would have to be reverse engineered from a sample since the patents would not be available to describe the drug. I suspect that the FDA would also eliminate the current rules regarding use of clinical trials from the original for additional copies since there would be no way to guarantee that a copied version of a drug was exactly the same as the original. In any event, multiple clinical trials would have to be conducted in parallel in any case because it takes up to a decades to finish one set of clinical trials. The waste from conducting several sets of clinical trials for a similar drug would be a TREMENDOUS WASTE, in the tens of millions of dollars.
You are thinking too small. Don't look at what happens to the pharma industry. Look at what happens to the healthcare industry. Think, for a second, about how the healthcare market changes if innovative cares are available cheaply -- or even free. Think about what amazing new businesses that enables... such businesses that would be so profitable that it would make economic sense to create new treatments and give them away for free....
Then you'll realize just how harmful patents have been to healthcare.
Anyway, I do not think that eliminating patents would be as advantageous as you believe. I think there would be a lot of negative effects in certain technology fields. Of course, then we could apply to the government to bail us out.
I think the negative impacts would be similar to what we're seeing in the music industry today. Harmful to the legacy industry (the RIAA), but amazingly helpful to tons of other industries, whose overall economic benefit greatly outweighs the old legacy industry.
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Do you have statistics on this? What are these trade secrets? I suppose since they are secrets the answer is no. So this is a speculative statement.
So lets assume you're right. We have a patent system and these trade secrets still exist. So the patent system did nothing to advance these secrets to the rest of society. Interesting.
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From the hoping-you-were-going-to-ask-department...
There is an absolutely wonderful article by Erika Myers in AIPLA Quarterly Journal, Volume 37, number 1, Winter 2009, titled Justice in Fashion: Cheap Chic and the Intellectual Property Equilibrium in the United Kingdom and the United States.
This 33 page article discussed intellectual property protection of fashion in the United Kingdom and the United States, but also discusses peripherally fashion in several other countries. I leave the detailed reading to you, but some of the conclusions she makes debunk several myths about intellectual property and the fashion industry.
Fact: With current computer technology, copiers have the ability to take fashion show designs and have cheap duplicates for sale in 4 to 6 weeks, short circuiting the historical flow of designs from designers, to cheap chic, to mass merchandisers.
The speed of copying has harmed some designers in the fashion industry by reducing the value of some designs. Fundamentally, when a design that just hit exclusive stores is already available in Target, why would you want the exclusive store design?
Designers are responding to the speed of copying by making increased use of IP, both in the U.S. and in the U.K.
Fact: Intellectual property is widely used in the fashion industry.
The approaches in the U.K. and the United States are different because the protection in the U.S. is limited to trademarks and unique fabric patters. However, as one person from the U.S. fashion industry noted, the U.S. makes a lot of use of logos to reduce copying.
In the U.K., four forms of intellectual property protection are available, and are used to varying effect.
Point: It can be argued that the U.K., which has significantly greater IP protection than the U.S., has greater fashion innovation.
Because copying is so easy in the fashion industry (easier than ever before), fashion designers around the world have become more creative to slow copying. In the U.S., upper end designs have focused on logos, limiting some forms of innovation. In the U.K., with multiple forms of IP protection, creativity is increasing in both the cheap chic stores along with fashion designers.
In addition to using the four forms of intellectual property protection, designers in the U.K. (and in the EU) have expanded their innovation to hard-to-copy designs that have a chilling effect on copiers who are unable to cheaply duplicate the complex designs of some fashion designers.
Erika's Conclusion: Though the U.K. has significantly more intellectual property protection than the United States, innovation appears thriving in both countries. I quote from Erika's paper:
And contrary to Raustiala and Sprigman's predictions, IP protection for fashion designs in the U.K. has deterred indistinguishable copies to some degree, without chilling the industry. Both cheap chic and high fashion are flourishing in the U.K. The main effect of protection has been to encourage greater innovation, though along with somewhat higher prices, in the U.K.'s cheap-chic industry.
Thus, the comparison between the U.S. and the U.K. suggests that IP protection for fashion designs is mildly beneficial to the industry and to consumers.
Another Point: Erika does point out that excessive litigation in the fashion industry has backfired on at least one company. She urges protection, but believes the protection should be moderate and sparingly applied.
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Do you have statistics on this? What are these trade secrets? I suppose since they are secrets the answer is no. So this is a speculative statement.
Naughty, naughty. No trade secret sharing, though I did give you an example, and others are known - but you may have not noticed.
Some trade secrets that have survived for more than two decades:
How Hoeganaes produces their powder for powdered metal.
The 11 herbs and spices and their proportions in KFC's chicken.
The formula for Coca-Cola.
So lets assume you're right.
You need not assume, if you read intellectual property journals, trade secrets are a hot topic. How to keep aspects of your technology secret. How to design secrecy in. How to recognize trade secrets. How to maintain a trade secret.
We have a patent system and these trade secrets still exist. So the patent system did nothing to advance these secrets to the rest of society. Interesting.
As has been discussed numerous times, patents and trade secrets are a value proposition. Which is cheaper to keep? Historically, a company has to look at how easy something would be to reverse engineer, and how hard it is to keep a secret. Things that have historically been "on the bubble" are being re-examined. Since patents are less valuable than what they were, then trade secrets are becoming more popular.
This balance should not be a surprise. When the stock market goes up, the desire for gold goes down (in general). The same with patents and trade secrets.
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Negative Effects...
I think the negative impacts would be similar to what we're seeing in the music industry today. Harmful to the legacy industry (the RIAA), but amazingly helpful to tons of other industries, whose overall economic benefit greatly outweighs the old legacy industry.
The loss of patents would most heavily affect capital equipment intensive industries. Many companies that require significant payback time for payback of new equipment would leave those industries. We might well find whole industries that no longer advance or only advance in small amounts (though we need huge advances).
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Not as big as you think....
You are thinking too small. Don't look at what happens to the pharma industry. Look at what happens to the healthcare industry. Think, for a second, about how the healthcare market changes if innovative cares are available cheaply -- or even free. Think about what amazing new businesses that enables... such businesses that would be so profitable that it would make economic sense to create new treatments and give them away for free....
Then you'll realize just how harmful patents have been to healthcare.
Since patents affect less than 10% of all health care dollars, I am kind of wondering just where all this innovation will be, and how valuable it can be.
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Not as big as you think....
Again, you falsely assume that only one person (or company) understand an invention and it actually can be kept secret. That's almost never true.
Have YOU ever worked in a manufacturing industry? Virtually every company I have worked for or with has had key trade secrets that have yet to be reverse engineered. Some of these trade secrets are amazing, sometimes because a little thing can make a big difference, sometimes because the secret seems obvious in hindsight, and yet it has not been discovered by anyone else.
Also you assume that patents are the only way that knowledge is disseminated. Have you ever worked in industry?
It is not "have I ever worked in industry," it is how many industries have I worked in? At least seven industries, possibly more, depending on how you count. All of them manufacturing related.
No, I do not assume that patents are the only way that knowledged is disseminated. However, in the manufacturing industries far more knowledge is disseminated through patents than any other way.
If you wish to argue that knowlege in some fields, particularly electronics and software would see the opposite effect, I would agree. Spread of knowledge in the mechanical arts would come to a relatively screeching halt.
Not true at all. Reverse engineering is perfectly legal, and in the mechanical field innovation would continue and increase as others would be able to improve upon the design flaws of earlier inventors.
Mike, you are a very bright guy, which is why I fail to understand why you fail to understand the economics of capital equipment investment and payback. If a company is unable to get payback on an investment, then investment in that area will halt. Simple economics. That leaves entire industries that require huge capital equipment investments and long payback times that will simply cease to develop new products - there will be no way to recoup the dollars invested.
Yes, reverse engineering happens, to a point. Even today when I analyze a competitors product, sometimes I (and my team) are unable to figure out how the competitor did something. Fortunately, the patent frequently comes to our rescue and permits us to complete our understanding. Otherwise, in some circumstance we might as well develop our own product from scratch to see what they did. It is cheaper to begin with the competitor's patent.
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I must work in those industries...
Again, you give patents WAY too much credit. There are very few industries where there is ANY value to be gleaned from patents.
Most of the last ten years I have spent mining data from patents. There is HUGE value to be gleaned from patents - even more so from expiring patents. Of course, it is possible that all the industries I have worked in are the very industries that gain value from patents - because that also seems to be the opinion of the managers in those companies as well.
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So, indepenent invention ALWAYS happens...says...?
I asked for support for this statement before. I ask again.
Almost every invention ever made has had multiple people come up with it at the same time, and the knowledge is explained by getting the product in the market.
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How Hoeganaes produces their powder for powdered metal.
The 11 herbs and spices and their proportions in KFC's chicken.
The formula for Coca-Cola.
I don't know about the powdered metal thing, but both the KFC recipe and the Coca-Cola recipe were broken ages ago by competitors. The idea that they're still trade secrets is a marketing gimmick. Pepsi has long known the exact formula for Coca-Cola.
Reverse engineering is common. Trade secrets are not.
You need not assume, if you read intellectual property journals, trade secrets are a hot topic. How to keep aspects of your technology secret. How to design secrecy in. How to recognize trade secrets. How to maintain a trade secret.
So there are a lot of lawyers who make silly suggestions that most engineers laugh at.
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Re: Negative Effects...
Not so at all. It might be true that some businesses who can't compete leave, but it opens up a tremendous new opportunity for smarter competitors, even those where there are major capex involved. Again, one need not look very far for examples. It's funny that the pharma business today insists it needs patents to cover massive capex, but the progenitor to the pharma industry -- the chemical industry, specifically avoided patents in many countries for as long as possible in order to develop more quickly. Then you have countries like Italy and India who both avoided pharma patents -- and despite the massive capex involved, both had thriving industries... until patent protection was put in place. Then suddenly those industries shrunk. Ooops.
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Re: From the hoping-you-were-going-to-ask-department...
I've read it. I honestly don't have the time to get into all the details here, but there are serious problems with the methodology and the conclusions drawn by Myers.
But, just to highlight the problems, you quote as "fact" the idea that it "harmed some designers." That's really not the point, is it? Of course increased efficiency will harm a few designers who relied on monopoly rights to gain monopoly rents. But does it increase competition and innovation? Myers focuses too much on how the top designers fared, which misses the point.
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Re: Not as big as you think....
You keep doing this. You seem to narrowly interpret a market. Think bigger.
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Re: Not as big as you think....
Yes. I've worked for a few different manufacturing companies, in both the high tech and low tech space. I can't recall there ever being a problem reverse engineering anything. But, who knows. Perhaps I just worked with really smart engineers. I also found that in a group of smart engineers, it was never that difficult to come up with a way to do something that competitors had done as well, without making use of a patent (due to willful infringement fears, we weren't allowed to look at patents).
No, I do not assume that patents are the only way that knowledged is disseminated. However, in the manufacturing industries far more knowledge is disseminated through patents than any other way.
I guess we worked in different industries. I've yet to come across one where patents are taken seriously.
Mike, you are a very bright guy, which is why I fail to understand why you fail to understand the economics of capital equipment investment and payback.
I understand it quite well. I used to create financial investment models for companies on billion dollar plus investment opportunities. But we focused on ways to get payback by serving the customer. Not by hoarding ideas.
If a company is unable to get payback on an investment, then investment in that area will halt. Simple economics. That leaves entire industries that require huge capital equipment investments and long payback times that will simply cease to develop new products - there will be no way to recoup the dollars invested.
Only if the management has no foresight. If that's the case, then who cares if they go out of business.
Yes, reverse engineering happens, to a point. Even today when I analyze a competitors product, sometimes I (and my team) are unable to figure out how the competitor did something. Fortunately, the patent frequently comes to our rescue and permits us to complete our understanding. Otherwise, in some circumstance we might as well develop our own product from scratch to see what they did. It is cheaper to begin with the competitor's patent.
Fair enough. If that's the way you prefer to do things, so be it. But I've yet to find engineers in the industries I've worked in who needed to use patents. Perhaps you work in the one industry where they help. If so, then the companies you work for should be able to demonstrate that clear need to the USPTO, while the rest of the universe can get along fine competing in the marketplace.
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Re: So, indepenent invention ALWAYS happens...says...?
We wrote about it here:
http://www.techdirt.com/articles/20080507/0114581051.shtml
Commenting on a Malcolm Gladwell piece that highlighted some of the research around this:
http://www.newyorker.com/reporting/2008/05/12/080512fa_fact_gladwell/?currentPage=all
Wh at's odd and totally unsupported is why Gladwell's piece then supports IV's patent regime. It makes no sense based on the research he highlighted in his own article.
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Re: Re: Negative Effects...
I have analyzed the Italian pharmaceutical company case. While the industry provided cheap drugs for Italians, the provided no new drugs to Italy. They were great copyists with no capability to be innovative. Once their source of new drugs to copy dried up due to patents, they dried up too.
So, do we want great copyists with nothing to copy, or do we want companies that invent.
Incidentally, have you also read "Patent Rights and Economic Growth: Cross-Country Evidence," by Albert G.Z. Hu and I.P.L. Png, February 2009?
One of the things they point out is that there has been very little study to see whether patents are beneficial. The reverse is not true. There are many people with axes to grind who have "proven," with bias and false assumptions, that patents are not beneficial, but that is a secondary issue.
From their conclusion:
Using an ISIC 3-digit industry level database that spans 54 manufacturing industries in 72 countries between 1981-2000, we found evidence that stronger property rights were associated with faster industrial growth measured by value added. The impact of the stronger patent rights were both stastically and economically significant in three of the four periods we analyzed: 1981-85, 1991-95, and 1996-2000, and had become stronger in the 1990s compared to that in the 1980s.
Our analysis also showed that the stronger patent rights promoted industrial growth through technical progress in the 1981-85 and 1996-2000 periods and through more rapid factor accumulation in the 1991-95 period.
One of the things I liked about this study was that it pointed out areas where it might be deficient, as opposed to the anti-patent papers and studies that gleefully over-exaggerate sparse evidence and fail to consider when their assumptions might be wrong.
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Re: Re: Negative Effects...
We have lost an array of equipment manufacturers in capital intensive industries in many other areas because the volumes required to sustain the capital industry become higher and higher as margins are pressured ever downward. Sometimes patents are the only thing between the innovative company and the non-innovative copier just behind them. However, as was proven with the Italian pharmaceutical industry, once the copiers are unable to copy, most go away like a bad dream. In a few rare cases, the copiers finally learn to create and be innovative. I note that some of the copiers in Erika Myers paper did exactly that when their ability to copy was reduced.
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Re: Re: Re: Trade Secrets
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Re: Re: So, indepenent invention ALWAYS happens...says...?
The reason the two are different I will not get into here (this very issue has been explored at length by several scientists - I vaguely seemed to recall an article about the simultaneity of discovery; a scientist hypothesized that when math and science support a discovery it will be made simultaneously by multiple people given the same set of information; however, while invention could work the same way, it does not seem to; the author of the paper on simultaneous discovery warned against extending the results of his paper outside scientific and mathematical fields because there was no basis to do so). However, scientific and mathematical discovery are different from invention and neither of your links provides any evidence that "almost every invention ever made has had multiple people come up with it at the same time." The reason that the opposite is most likely true was actually contained in the articles you linked to - which I find amusing.
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See my post above. If the ratio of secrets to patents follows the survey quoted in "Against Intellectual Property" follows through to secrets and patents, there could be (or, I suppose more accurately, there were up to because, just like patents, many trade secrets have been discovered or reverse engineered - as Mike correctly pointed out) 12.5 million trade secrets.
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Re: Re: Not as big as you think....
Perhaps the over-influence of the pharmaceutical industry is leading to the backlash that is showing up in various ways, including alternative medicine and anti-patent sentiment.
If your point is that without patent-backed drugs that people might be seeking other forms of treatment more often, point taken and I agree. However, even without patent-backed drugs doctors up until the last year or so have been quick to prescribe generics faster than considering non drug treatments. Until that mindset is changed, lack of patents would have a relatively small effect (about 7% of all health care related dollars) on health care expenses.
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Re: Re: Secrecy & I am not Completely Crazy
From "The Economics of the European Patent System," page 82:
"An economy with a stronger patent system would be expected to specialize more in drugs, as an economy with a weaker patent system would specialize, say, in textiles. This assumption has been tested by Moser (2005) who, using data from the mid-nineteenth century industrial exhibitions, shows that the suppression of the patent system in the Netherlands from 1869 to 1911 led to the re-orientation of industrial research towards areas-mechanics notably-where secrecy and technical complexity offer protection."
I should point out that while I have been involved in an array of industries and technologies, virtually all of the trade secrets I know or know about are mechanically oriented, which is consistent with the hypothesis of the authors of the cited book and consistent with Moser's findings.
As I stated before, lack of a patent system would influence economic behavior as much as a patent system does. Emphasis on industries would change, as would economics.
I may be crazy, but I am not completely crazy.
On the other hand, this book also has an excellent section on the pharmaceutical industry and the distortion caused by patents in the pharmaceutical industry. What is not clear is whether some of the problems identified by this book would be resolved by elimination or weakening of the patent system. The authors also point out that some of the duplication in the pharmaceutical industry may be beneficial - but it is difficult to analyze that benefit.
The authors also have a lovely quote on page 84:
"Fifth, patent [sic] disclose inventions and could prevent duplicative research occurring because of the ignorance of companies about each other's research activities."
I wholeheartedly concur, and have personally observed this situation.
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