Patents

A new paper from the Stockholm Network on developing countries and pharmaceutical patents. In a review of the empirical literature, the report finds, among other things:

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The patent reform debate continues with commentary on Sen.

According to Hal Wegner, the Intellectual Property Owner’s Association reports that

Sen. Patrick Leahy (D-VT) will attempt to pass a revised version of S. 1145 in the Senate in February. Major amendments likely will not be available more than a few days in advance of Senate consideration….If the Senate does pass a bill, it likely will be sent to the House for swift passage by the House without amendments, eliminating the need for a Senate-House conference.

Whether the votes are there is open to question.

Music Patents

by on December 24, 2007 · 4 comments

Ike Elliott offers a great analogy:

Tim asserts that copyright should be adequate protection for software, and that patents for software are harmful because they inhibit innovation. I find that argument far more fascinating.

I found myself comparing software to music. Music is not patentable, but it is subject to copyright. So, at the risk of oversimplifying, Tim is proposing that we treat software in the same way that we treat music.

Imagine if music were patentable…what kind of changes would it have caused in the music industry? I imagine that somebody along the way would have patented the twelve-bar blues, the classic blues form that frames so many great blues songs. For the ensuing twenty years, nobody else could have written a twelve-bar blues song without “licensing the blues” from the patent holder.

To me, the patentability of music would have created a grave inhibitor to creative expression, and would have deprived the world of many great musical works. I would definitely not favor patenting music.

Don Marti has drawn a similar analogy to literary patents. One can imagine a world in which novelists file patents describing the plot twists and other literary techniques they use in their novels, requiring other novelists to license the patent if they want to use that particular literary technique in their own novels. Needless to say, I don’t think very many novelists would be in favor of this plan, although the patent bar and some large book publishers might be.

One of my favorite podcasts is David Levine’s Hearsay Culture, which I stumbled across this summer. I noticed recently that back in March he did a podcast with Richard Epstein, a giant of classical liberal legal thought, back in March, so I’ve been listening to that episode.

Epstein has long been one of my favorite libertarian thinkers. On most subjects, I find myself nodding along in agreement. But when he gets to the application of patent and copyright law to the technology industry he has a tendency to go off the rails pretty quickly. This is apparent in his Hearsay Culture interview as well. For example, about 25 minutes into the interview, he talks about the problem of patent thickets in the tech industry thus:

The question is, how do we know when there’s a blockade? Well, a lot of it depends on the topology of the landscape if you’re looking at physical resources, and the same thing will happen with respect to intellectual property. So just to take the general question, let’s start with a background on the tech side before we get to the documentary film. Do we think that the addition of any new patent in any particular area is going to increase or reduce the blockade effect of other patents? And the answer to that question is frankly my dear we don’t know in the abstract but the betting would be that the more patents you have, the fewer the blockades. Now why is that? If you imagine these things as being in an array. Suppose you have to go through six steps in order to get a process, and at every one of these steps you’ve got four alternatives. Well if that’s what’s happening, you’ve got a lot of choices at each stage and you’ll be able to bargain one off against another and presumably find a path through this thicket. Somebody comes up with a new invention, now instead of having four alternatives at the first stage you may have five. Or you’ll get a new invention which means that you don’t have to bargain with anybody at stages 6 or 7. And if that guy comes in with a blockbuster patent, he will not be able to charge more than the old 6 and 7 combination could have been able to do, and if he’s really good somebody else is going to come into that same field because the patent doesn’t give you a monopoly over the functionality as such, only the device or the invention that allows you to actualize that functionality. I mean, that’s not 100% correct, but it’s 95% correct for these particular points. Samuel Morse could patent the telegraph, he could not get control over all uses of the electromagnetic spectrum. So new inventions in the tech area generallly seems to me to expand possibilities by giving you alternative stepping stones through the thicket.

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Don Marti has a great podcast where he interviews a Linux Foundation executive on the patent troll question. Don asks a question that clearly caught the guy by surprise: do efforts to find patent prior art prior to litigation help the patent trolls by making it more likely that the trolls’ remaining patents will stand up in court? The answer was basically that invalidating bad patents will reduce the total number of patents, which will in turn reduce the number of opportunities for patent trolling.

Don seemed skeptical of this response, I have to say I share his skepticism. The number of software patents in the wild is now so astronomical that it’s simply not going to be feasible to invalidate all of them on a case-by-case basis. Moreover, there’s a more fundamental issue here: there is not, on the one hand, “bad” software patents that need to be invalidated and “good” software patents that need to be enforced. Software patents are just a bad idea, even when they’re “good” in the sense that they don’t have obvious prior art. A “good” software patents can be used for trolling purposes just as easily as a “bad” one, with effects that could be just as devastating to the software industry. Hence, even if the Linux Foundation could find every software patent with prior art and get them invalidated, that wouldn’t eliminate the patent trolling problem, it would just cause the trolls to shift their focus to the remaining patents in their portfolios, with a correspondingly greater confidence that they’ll prevail in court.

The solution to the patent trolling problem in the software industry is for the Supreme Court or Congress to overrule the Federal Circuit’s misguided decision to expand patents to the software industry. There are now so many software patents on the books that striking down a few bad patents just won’t make any difference. You can troll with a half-dozen patents almost as easily as you can with a dozen. The Linux World exec was a little bit wishy-washy on this point, first stating vaguely that “meaningful patent reform” was needed, and then conceding when pressed that banning software patents was probably a good idea. I imagine one of the reasons the Linux Foundation hasn’t come out officially against software patents is that its board includes several companies with substantial software patent portfolios of their own. They no doubt would like to find a way to continue collecting royalties for their own patents while giving them new defenses against trolls.

Recently, there are reports of more compulsory licensing for 20 more drugs in Thailand; and a conference is announced to celebrate this strategy.

Hence this series of links and clips.

On April 11, http://www.africasia.com/services/news reported on a plan that seems to implicitly suggest that African states might set aside an array of patents (sorry, no present link):

“We need to produce (medicines) in Africa. We have the potential, why do we want to take them from outside when we can take it in Africa?” Mamadou Diallo, chief pharmacist in the AU commission’s medical services directorate, told AFP.

“The main objective is to identify which kinds of medicines we are going to produce, essential drugs we need for Africa, and who is going to produce these drugs.”

Many African countries currently rely on India and China for imports of affordable generic drugs, but both countries are subject to patent laws which threaten Africa’s access to the medicines.

According to Diallo, Africa has all the resources and capacity at its disposal to manufacture essential medicines for the opportunistic infections like tuberculosis, malaria and HIV/AIDS which plague the continent.

It is sad that the plan to produce the drugs in Africa apparently does not extend to actually inventing and developing more such drugs in Africa–or then the patents would be important.

Contrast Alec Van Gelder’s article on African medicines:

The UN Economic Commission for Africa endorses fears that “drastic trade liberalization, particularly substantial reductions in tariff, could entail, for instance, loss of tariff revenue hence fiscal difficulties.” The anti-globalisation group Oxfam issued a 128-page document in 2005 called “Why Developing Countries Need Tariffs”, as part of the Trade Justice Movement coalition.

All of this means that many religious, aid and international organisations think incomes for bureaucrats matter more than prices for citizens. They also believe that tariffs protect local industries and allow them to grow up into competitive industries.

Thus Tanzania imposed on 26 July a 10 per cent tariff on imported medicines, to protect what it called its “infant medicine industries.”

What about real infants? The immediate effect of this new tariff will be deadly. “Low income of the majority of the Tanzanian population hinders their accessibility to health services as medicines and other services are unaffordable,” according to the World Health Organisation. The average Tanzanian earns US$744 annually–a 10 % increase in the cost of medicines can make the difference between life and death for the 21.7% of the population that suffers from malnutrition.

While few of the world’s poorest–and least healthy–countries have any viable pharmaceutical sectors, a shocking number apply similar taxes and tariffs on medicines. A 2005 American Enterprise Institute study revealed that over 33 countries impose levies higher than the new Tanzanian rate.

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I excerpt below from an Investors Business Daily oped by Philip Stevens:

[A] powerful group of ideological nongovernmental organizations, or NGOs . . . abhor profit in medicine and are pushing the World Health Organization toward a global treaty that would completely change the way drugs are researched and developed…

This Medical Research and Development Treaty, proposed by Brazil and Kenya, would have a central U.N. bureaucracy deciding what diseases to research while allocating funds, contracts and prizes accordingly. Its expert scientists would ensure that all diseases are given appropriate resources, including the handful of “unprofitable” tropical diseases in poor counties…

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A letter signed by a number of groups nationwide, opposing the current reforms.

And Claude Barfield and John Calfee weigh in via the Wall Street Journal Online (subscription required). They argue among other things:

Before rushing to enact major changes, Congress should remember that its past reforms have often spawned new problems. For example, the Court of Appeals for the Federal Circuit, a specialized intellectual property court, was created in 1982 in order to centralize judicial decisions on patents and end forum-shopping. It accomplished that, by and large — but at the cost of producing a court, peopled largely by patent attorneys, that instinctively sided with patent holders, strengthened patent protection, lowered the bar for inventiveness (“non-obviousness” in patent-law jargon), and paved the way for large damages against alleged patent infringers.

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Yesterday I had the pleasure of attending a Show-Me Institute conference on education policy. One theme that was echoed by a number of conference participants is that after decades of study, researchers have been unable to quantify what makes a good teacher or a successful school. We know that certain schools, such as KIPP, work much better than other schools. But replicating those successes at scale has proven maddeningly difficult. When someone tries to take a successful school and use it as a model for producing a large number of equally successful schools, something invariably gets lost in translation. Generally speaking, a successful school can only be replicated through a labor-intensive process of apprenticeship, in which key personnel for the new school spend several years at the existing school learning the details of how it works. Obviously, that makes the process of replicating successful agonizingly slow.

I’ve read (although I can’t find a good source right now) that development economists in the mid-20th century discovered similar problems when they tried to export American technology to third-world countries. They hoped that if they helped poor countries build American-style factories and sent them manuals and technical advisors to explain how to use them, that those third-world countries could start producing manufactured goods and rapidly increase their standard of living. Unfortunately, things didn’t work out that way. Duplicating American infrastructure overseas turns out to be a lot more complex than anyone imagined.

In short, a central problem in both education policy and development economics is that technology is surprisingly sticky. Merely observing someone do something innovative is almost never sufficient to replicate that innovative activity elsewhere. Policy wonks in both fields would love to find a way to mass-produce successes, but that turns out to be maddeningly difficult. Tacit knowledge turns out to be surprisingly important.

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Some months ago, I noted that Betzip.com (since rechristened “PurePlay.com”) employs an intriguing legal hack to avoid anti-gambling regulations. It charges its customers a flat monthly fee, which qualifies them to win large prizes for winning online poker games. Non-paying customers can play the same games for free, too—though without qualifying for the largest prizes.

Why adopt that business model? Presumably, because it allows PurePlay to argue that it does not offer a gambling service. Specifically, PurePlay could claim that, because the amount players win has no relation to how much they stake, it dodges the “consideration” element of the legal definition of gambling. Query whether that claim would survive the devoted attentions of a prosecutor and court. I set that question aside, though, and here focus on PurePlay’s claim that they have patented their business model.

Curious about the scope of PurePlay’s patent, I searched its website for details. It offered none. I wrote to PurePlay asking for the patent’s number. PurePlay refused to say. So I put my able research assistant, Mr. Sherwood Tung, on the case. He found PurePlay’s patent, and more.

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