Pharma Patent Nuclear War In Action

from the boom-goes-the-dynamite dept

Wed, Feb 3rd 2010 8:26pm — Mike Masnick

Peter Amstutz writes "Techdirt often talks about the "mutually assured destruction" model of patent litigation. Well, here is an excellent example of the staggering costs of competing through the courts instead of the markets. Boston Scientific and Johnson & Johnson have been locked in patent disputes for years, each alleging the other infringed on the their patents. Recently, Boston Scientific was ordered to pay a staggering $1.73 Billion (with a B!) in settlement to J&J. As if that's not enough, apparently there are additional unrelated patent cases still ongoing between the companies. One wonders how much has been spent on lawyers."

Think of all this money being shuffled around having nothing to do with actually creating new products that help people or actually getting those products to market where they can help. The patent system isn't being used to promote progress here at all, but to stifle competition and hold back progress.

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Filed Under: patents, pharma
Companies: boston scientific, johnson & johnson

33 Comments

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vilain (profile), 3 Feb 2010 @ 9:03pm

What about all those awsome new products from J&J
Like Pledge wipes. Or the Nav'i Bandaids coming soon. Highly imaginative and innovative company.
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FormerAC (profile), 3 Feb 2010 @ 9:06pm

What does this kind of litigation do ...
What does this kind of litigation do to the price of stents?
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Nick Mc, 3 Feb 2010 @ 9:15pm

Paywall
Hey Mike, the link goes to a WSJ paywall page. That's just not cricket old boy!
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Big Al, 3 Feb 2010 @ 9:42pm

So, Boston Scientific are now down over $2,400,000,000 to J & J.
Just shows the pro-patent trolls are right when they say it costs a fortune to bring products to market...
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Anonymous Coward, 3 Feb 2010 @ 10:08pm

Re:
It costs a fortune to bring product to market mostly because they have to fight the broken patent system.
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Anonymous Coward, 3 Feb 2010 @ 10:33pm

Re: Re: the broken patent system.
Great observation.
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Anonymous Coward, 3 Feb 2010 @ 11:04pm

I once asked a basic question in school, get 5 programers to build a web store from scrach. It turns out that so many truly basic items for a web store are patented that if someone wanted, you could be blocked from selling stuff online because you took credit cards or you show your product via an automaited page per product generator.

The system is broken because when internet tech came out, the landgrab lost its mind and for the next 15-20 years everyone will be living in fear of getting sued out of business over using custom XML (hint:all XML is custom)

The entire system is broken, at this point the only fix would be limiting them to 3 years and after that a public system of licencing.
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KD, 4 Feb 2010 @ 1:34am

Re: 3 years?
It would be interesting to learn why you think the only fix would be a term of 3 years followed by public licensing, whatever that is.

I feel there is no justification for a term of even 3 days for the vast majority of things that have been granted patents recently, at least in the software realm, which you are discussing, and in most other realms as well. If there is to be a fix rather than outright abolition of patents, it might be a strict limitation on the granting of patents such that patents are granted only to things which are not natural developments in the field. I don't have any suggestion about how to set up a system to properly evaluate applications to insure that nondeserving applications are rejected. Perhaps it could be done. But outright abolition would certainly be easier and VERY effective. There might be other approaches.

I'm not very concerned that abolishing patents would slow down innovation. People don't invent things to secure patents. They invent things to solve some problem they have. In the absence of patents, those people will still have problems to solve, so they will still invent things. And it generally will be easier than it is now, since they won't be distracted either by making an effort to patent the invention or by dealing with claims they are infringing someone's patent.

The only thing I have some concern about is whether there are some inventions that won't happen because the time and/or cost would be too much to undertake without the possibility of getting the monopoly that a patent grants. The pharma industry is often cited as an area where patents are necessary for this reason, but Mike has said many times that there are lots of reasons to believe that people who claim that are wrong. He keeps promising to write about that sometime, but never seems to get around to it.
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Richard (profile), 4 Feb 2010 @ 2:03am

Jarndyce and Jarndyce
http://en.wikipedia.org/wiki/Jarndyce_and_Jarndyce
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The Anti-Mike (profile), 4 Feb 2010 @ 2:55am

Imagine how far they could have gotten spending 1.x billion on developing a non-infringing product, rather than just infringing and hiring lawyers to protect them.

You might think that the lack of progress is because Boston Scientific chose duplication over innovation.
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Peter, 4 Feb 2010 @ 4:15am

Medical Devices != Pharma
Not much sense in even paying attention to this digbate.

J&J is a Pharma company but the patents involved are for medical products. They happen to contain a drug but if that makes Boston Scientific a part of Big Pharma then you have to include every soap maker in that category.

The war of patents is part of doing business on the cutting edge. If you are going to spend any money in R&D you have to have patents to at least make that spending worth the risk.
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:), 4 Feb 2010 @ 4:58am

That is why the U.S. doesn't compete anymore.
Medical Tourism is growing soon doctors could find themselves in the same conditions the manufacturer workers found themselves, no jobs.

IP laws and a very litigious nature is turning the business environment into a sterile one for conducting any kind of business.

J&J on the original article was said to have problems because and increase in competition and the lack of new products but it is doing very well litigating.

There is something wrong when it is cheaper to put medicine and medical hardware into a ship and cross oceans than it is to do it locally.

The world should look at the U.S. and see what they don't want to do to themselves.
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Duh, 4 Feb 2010 @ 6:03am

Re:
"Imagine how far they could have gotten spending 1.x billion on developing a non-infringing product,"

That is the point, it can not be done.
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Yer crazy, 4 Feb 2010 @ 6:07am

Re: Medical Devices != Pharma
"The war of patents is part of doing business on the cutting edge"

- Actually, it is part of the human condition better known as insanity.

"If you are going to spend any money in R&D you have to have patents to at least make that spending worth the risk."

- See - that's just crazy talk

And seriously, you have to admit, it is not the most efficient way of doing things
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The Anti-Mike (profile), 4 Feb 2010 @ 7:00am

Re: Re:
That is the easy answer. I am sure there are other options. If not, perhaps they should have go to a different part of the medical field and innovated. Duplication isn't innovative.
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Anonymous Coward, 4 Feb 2010 @ 7:15am

Re: What does this kind of litigation do ...
Healthcare goes up by 20% every year. You figure it out genius.
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mobiGeek (profile), 4 Feb 2010 @ 7:32am

Re: Re: Re:
Don't believe in the benefits of competition much?
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Anonymous Coward, 4 Feb 2010 @ 9:28am

Re:
Imagine if both companies actually had to spend their money innovating instead of worrying about patents on something that shouldn't even be patented in the first place.
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Reed, 4 Feb 2010 @ 9:31am

Re: That is why the U.S. doesn't compete anymore.
"The world should look at the U.S. and see what they don't want to do to themselves."

The US leading the way to what not to do.

Hey! We are still at least in the lead somewhere.
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staff, 4 Feb 2010 @ 9:55am

whiners
"Well, here is an excellent example of the staggering costs of competing through the courts instead of the markets."

Big companies like to whine about that because the fact is they are continually out maneuvered by smaller more nimble firms. Patents for big firms are a nightmare and the only hope for small firms.
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Another AC, 4 Feb 2010 @ 12:53pm

Re: Re: Re: Re:
That's pretty much a given with TAMmy. Everything is about locking down ideas with him.
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Anubhav Chattoraj, 4 Feb 2010 @ 8:10pm

Re:
Why should they spend 1.3 billion on developing non-infringing products when they can spend $13 to develop products that help the world?

Finding solutions to global health issues is more important than trying to live in little TAMmy's fantasy land.
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Anonymous Coward, 4 Feb 2010 @ 9:34pm

This settlement appears to have ended a raft of pending lawsuits. It is possible that this is actually a good deal between the parties, perhaos including an exchange of cross-licenses and perhaps even a joint venture or the like for future product development.
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Tek'a R (profile), 4 Feb 2010 @ 10:41pm

Re: (innovation)
Yes, because obviously trying to actually innovate is a poor second place to simply patenting things.

J&J (and unfortunately anyone else who can afford to do it) can simply patent broad swathes of all possible inventions without having to do any messy work.

"Yes, this patent covers any stent-like devices. not any particular design, just all of them, so pay us forever. Designs? no, we dont have any schematics of an Actual product, that part isnt really important, is it?"
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Vic kley, 5 Feb 2010 @ 6:06am

Just Nuke
Nether of the businesses involved are humanitarian enterprises i.e. non-profits. they exist because people invest in them expecting rightly that they should see a profit on their investment. They are expected to do no harm and as much good as is consistent with well managed profitability.

If their patent fight has been misguided it is the CEOs and Boards who should be held to account by the shareholders.

In a capitalist society it is difficult to imagine why anyone and in particular the "Dirty Tech Guy" Mike should believe that the patent system should be held to account for litigation or "progress". The latter being of course completely in the eye of the beholder.

Mike's grandfather Josef Stalin thought progress was the death of 5,000,000 peasant farmers who did not like his form of progress. Perhaps Mike will enlighten us with his definition of progress?
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Ronald J Riley (profile), 5 Feb 2010 @ 7:58am

Re: What about all those awsome new products from J&J
Or how about KY, a product with more uses than anyone imagined. Some years ago I started attaching personal sized tubes of KY to settlement offers for patent pirates. It was really quite funny and after spending years being worked over by a patent pirate I was entitled to a bit of fun at their expense as a prelude to taking a wad of their cash.

I mentioned this to a fairly high level person at J&J and he excitedly said that was one of their products. We then had an interesting discussion about market segments which are not anticipated. I am sure that this is a growing market segment today and I hear that the Coalition for Patent Fairness and Piracy have banded together to fund a Chinese plant to pirate personal lube formulas for their own use. They must be shipping it into the US in container loads the way things are going.

In any event, J&J does produce many innovative products and even more important they learned that dealing reputably with inventors is good business.

Ronald J. Riley,

I am 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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Ronald J Riley (profile), 5 Feb 2010 @ 8:52am

The price did not go up.
What patent litigation is about is one entity stealing another company's profit. All that happened here is that the court found that Boston Scientific had to give that profit to J&J. The end cost to the consumer was the same.

Now think about the economic drain on America's economy when the patent pirating entity is outside the US. That means lost jobs and prosperity. One example of this is the Rambus saga.

Ronald J. Riley,

I am 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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Ronald J Riley (profile), 5 Feb 2010 @ 4:30pm

Difference
There is a huge difference between being a tech guy and actually inventing the tech.

I would love to see how Mike would react to someone coming in and swiping his assets. I bet he would be just as militant as inventors have been forced to become.

Ronald J. Riley,

I am 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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Mike Masnick (profile), 5 Feb 2010 @ 5:33pm

Re: Difference
I would love to see how Mike would react to someone coming in and swiping his assets. I bet he would be just as militant as inventors have been forced to become.

Again, not sure how many times this needs to be repeated, but everything on this site is public domain. You are free to take it. That's because we based our business model on not relying on locking up things that can be copied.

So why do you keep stating falsehoods?
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Anonymous Coward, 5 Feb 2010 @ 10:39pm

Re: Difference
No, long ago he stated that he would not be bothered in the least if someone came in and swiped a copy of trade secrets he may have. It would simply mean he would have to work harder.
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Overcast (profile), 6 Feb 2010 @ 1:57pm

Just another Drug Dealer Turf War.
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Chill, 8 Feb 2010 @ 7:35am

Re: Re: Difference
Apparently, not enough.
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Ruby R Ails, 5 Jun 2010 @ 2:41pm

Interesting article. Thanks.
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