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

m.theatlantic.com

11–20 of 124 posts

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

#11
post #4

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

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

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

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

#12
post #4

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

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

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

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

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

#13

Frequently overlooked -- American companies are huge net-exporters of IP, IP licenses, and IP-protected stuff. Take the recent Apple/Samsung fiasco, for instance. That's a net cash transfer of over $1B from the South Korean economy to the American economy. Maybe $2B to $3B total when accounting for all the factors. Is that good? No, it's disgraceful, actually. But good luck convincing American legislators of some abs…

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

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

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

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

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

#15
post #10
post #4

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

The "award system" for drug development is full of problems. Who makes the call as to how much to award? Who decides who the award goes to (very few drugs are develop by one group alone)? Who decides when a drug is actually better than existing treatments? Insurance companies already reward innovation. When a new drug hits the market, insurance companies collect and review all the data available and decide on how muc…

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

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

#18
post #4

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

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

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

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

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

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

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

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

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

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

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

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

#19
post #6

The patent system somehow has morphed from shield to sword. Protecting inventors is one path toward innovation, but it should be a byproduct of maximizing innovation and not the end state. If the objective of the patent system is to foster innovation, then it should grant patents only if they are necessary for innovation, i.e., innovation wouldn't reasonably occur otherwise. Amazon's one-click patent versus drug pate…

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

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

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

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

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

#20

Frequently overlooked -- American companies are huge net-exporters of IP, IP licenses, and IP-protected stuff. Take the recent Apple/Samsung fiasco, for instance. That's a net cash transfer of over $1B from the South Korean economy to the American economy. Maybe $2B to $3B total when accounting for all the factors. Is that good? No, it's disgraceful, actually. But good luck convincing American legislators of some abs…

>But good luck convincing American legislators of some abstract far-future benefits to a less regulated world when the short-term result would be a worsening of the trade-deficit, a lowering of American exports, and a lowering of American income and tax yields. I'm not sure any of those is actually true. Maybe the trade deficit, but only on paper. In fact the money just goes into Apple's coffers instead of Samsung's,…

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

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

Samsung employment:

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

Apple employment:

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

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

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

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

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

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

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

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