
The Case for Abolishing Patents (Yes, All of Them)  - geon
http://m.theatlantic.com/business/archive/2012/09/the-case-for-abolishing-patents-yes-all-of-them/262913/
======
lionhearted
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 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.

It's a _huge_ factor that's usually overlooked in these discussions -- the
United States isn't a closed system.

~~~
shadowmint
Remember theres a difference between getting rid of patents and getting rid of
intellectual property.

I don't think anyone is serious about suggesting we get rid of intellectual
property; if you're create something, there should be protections to stop
people ripping off your stuff and selling it without paying you for it.

It's _patents_ that are the problem.

Patents let you capture an idea and prevent people from creating new things.

That's not protecting something you've created; it's stifling the creative
will of others, because you don't want anyone to compete with you. It's the
legislative antithesis of the open market.

Notch wrote about this before too, thoughtfully:
<http://notch.tumblr.com/post/27751395263/on-patents>

The US could happily continue to have an major IP 'exports' (however that is
appropriately referred to) without patents.

~~~
Suncho
I disagree that there should be protections to stop people from "ripping off
your stuff" and selling it without paying you for it. Instead, there should be
protections to stop people from copying your idea without you getting credit
for it. But there don't need to be legal protections. All you need to do is
make your idea public to prevent anyone else from claiming they were first.

I'm serious about getting rid of all patents and all copyrights.

~~~
columbo
I don't understand.

Say I pay a Valve employee a million dollars for the current working source-
code of Half-Life 3. I then compile it and release the first couple working
levels for $10 a pop... I should easily be able to make 50 million out of that
exercise.

What protections would Valve have in your no-copyright, no-ip scenario?

~~~
Suncho
I'm not anti-trade secrets. In your scenario, the source code to Half-Life 3
is a trade secret that the Valve employee is obligated to keep. However, if
the code is ever made publicly available to read, it's no longer a secret and
no money should be made from selling or licensing it. And even if the source
is never public, once binaries are made public, it should be perfectly legal
to reverse engineer those binaries.

In a no-copyright world, Valve's business model would certainly have to
change, but your particular example would work mostly the same as it does now.
The major difference is that you wouldn't be able to make 50 million dollars.
Once those levels were released, people would be able to share them freely
among themselves. Only the first person has to pay the $10, which means if
you're willing to pay a million dollars for illegal access to secret source
code, you should probably have a better plan for what to do with it. =P

~~~
columbo
> Once those levels were released, people would be able to share them freely
> among themselves

> In a no-copyright world, Valve's business model would certainly have to
> change

Yes it would have to change. Honestly I don't think you've thought this all
the way through.

You need to show how companies like Apple, Microsoft, Valve and the thousands
of smaller software makers (Adobe, Autodesk, Bethesda, Roxio, Zynga, IBM,
Oracle, Blizzard, Symantec, Norton, SalesForce.com, Konami, Blackboard...) can
still make as much money as they do today and have the same protections they
have today.

If you can't well, then we may as well sit around discussing what the world
would be like if there was no war, or what kind of tidal waves two moons would
generate.

------
rauljara
> 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 costs faster. They would also
> set up a prize system to reward companies that invent the new medicines we
> need.

This strikes me as a really fantastic idea. Actually, I wonder if insurance
companies shouldn't offer these prizes regardless of the patent situation.
They know intimately well which disorders cost them the most money. They could
form a consortium and offer a prize for x amount of money for reducing the
cost of treating some disorder by y dollars per patient, where x is guaranteed
to be less than the amount of money they will save.

~~~
alexqgb
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.

~~~
refurb
Tens of millions of dollars won't get a drug to market. Will it fund research
that could find useful leads that could produce a drug? Of course.

So how do you incentive private organizations to fork over the $100 million(1)
or so it takes to get a drug to market? You provide a mechanism to regain your
capital plus something more. It's a system that works pretty well.

(1) That's if everything works the first time. Since only 1 out of 10 drugs
that are tested on humans get to market, it's closer to $1 billion on average.

~~~
alexqgb
"it's closer to $1 billion on average."

As mentioned, that's a hugely suspicious "fact". As noted by the National
Center for Biotechnology Information.

"In the March 2003 edition of the Journal of Health Economics, a trio of
economists from the United States wrote about a number. Soon after, that
number began popping up all over the place — in newspapers and political
speeches, on television and the Internet. But the figure, despite reaching
near-canonical status, drew criticism. Some said it was inflated. Less
diplomatic detractors said it was a 9-digit fairy tale.

That number was 802,000,000. It was, according to the 2003 study, the number
of US dollars that pharmaceutical companies spent, on average, to bring a new
drug to market (J Health Econ 2003;22[2]:151-85). Now there are new numbers.
Some health economists peg the current cost of drug development at US$1.3
billion, others at US$1.7 billion."

Full article here.

<http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2630351/>

Key point: the data used to come up with the original number came from an
industry financed source and was not made public. And here's a bit more
coverage that throws additional cold water on 10 figure costs.

[http://www.theglobeandmail.com/life/health-and-
fitness/drug-...](http://www.theglobeandmail.com/life/health-and-fitness/drug-
rd-costs-are-less-than-estimated---so-why-the-high-prices/article623054/)

While the actual costs remain unknown, it's a safe bet that they're nothing
like the inflated figures being circulated by the industry.

~~~
refurb
I agree that the numbers thrown around are often a lot of hand waving.
However, let me make a few points few points.

1\. Check out the Tufts Center for the Study of Drug Development. They
calculate the cost to create a new drug and their methodology is very
transparent.

<http://csdd.tufts.edu/research/research_milestones>

2\. You can do a simple sniff test on these numbers. Simply call up a CRO that
runs clinical trials and ask "What will it cost me to run a Phase III clinical
trial?" I did this recently for a project I was working on. They will freely
give the numbers about since they are all in competition with each other.

This is what a recent survey of CROs found[1]: "As for the average per-patient
trial costs across all therapeutic areas, in Phase I, costs rose from $15,023
in 2008 to $21,883 in 2011. In Phase II, the cost rose from $21,009 to
$36,070. In Phase IIIa, the cost increased from $25,280 to $47,523 and in
Phase IIIb, cost jumped from $25,707 to $47,095. Finally, Phase IV expenses
rose from $13,011 to $17.042."

Let's do some simple calculations. 1000 patients, 1 year trial. You need to
complete two Phase III trials to keep the FDA happy.

1000 patients * $47,000 * 2 = $94M

And that's only for phase III trials. Add in the cost of discovery, pre-
clinical work, formulation, Phase I, Phase II, all the paperwork with the FDA.

OK, great, now you're approved, you still need to actually _make_ the drug
which includes scale-up, testing, FDA certification of the manufacturing
process, packing and distribution.

When I was working at a big pharma company, I heard about a new manufacturing
site they had built in anticipation of a really big drug being approved. The
cost? Several hundred million dollars. What happen when the drug got rejected
by the FDA? The manufacturing site was written off (couldn't really be used to
make anything else).

That's why your drugs cost so much.

[1][http://www.pharmalot.com/2011/07/clinical-trial-costs-for-
ea...](http://www.pharmalot.com/2011/07/clinical-trial-costs-for-each-patient-
rose-rapidly/)

~~~
geon
I have heard that drug patents are trivially circumvented by adding some
irrelevant part to the active molecule. Instead it is the FDA approval process
that prevents ripoffs.

Doesn't that mean pharma is the one industry where patents could be abolished
with literally no consequence?

~~~
refurb
It is true that you can get around a patent by creating a slightly different
molecule. However, drug companies aren't stupid. When they patent a drug, they
are patenting a pretty big space around their molecule of interest. Pretty
much every modification you can think of, they will patent. The resulting
patents aren't just one molecule but rather an IP "space".

------
sbierwagen

      As long as they still cranked out out new, popular 
      products, companies like Apple would continue to profit by 
      being the first to market, which often confers a long-term 
      advantage.  
    

_Apple_ being first to market? When has Apple ever produced anything novel?
Personal computers, MP3 players, smartphones, and tablets; were all invented
by other companies. Apple's virtue is superior _execution_ , not being first
to market.

~~~
jonny_eh
They didn't invent the tablet, they invented the tablet as we know it. It
consider that to be a much harder thing to do. The concept of the tablet
hardly needed inventing, just watch Star Trek, it was pretty obvious. The less
obvious is the "how" (what you call the execution).

~~~
devilshaircut
I agree; it's a point often overlooked that execution can be innovation in and
of itself.

------
ryanwaggoner
So the argument here isn't that a patent system is inherently bad; you _could_
have a patent system that provides a net win for society. But over time,
entrenched interests will find ways to twist the system to their advantage, at
the expense of society at large.

Let's say this is true; how is this different from any government action in
the marketplace? From education to finance to healthcare, we're confronted
with problems that have may have good theoretical solutions by government, but
the reality is that our solutions will eventually devolve to rent-seeking and
regulatory capture by powerful entrenched interests. I have yet to hear a good
solution to this problem other than severely limiting the ability of the
government to interfere with markets in the first place.

~~~
bluedanieru
Stop electing assholes to public office.

~~~
barrkel
The people I've known personally who've tried (and sometimes succeeded, one of
them was a member of the European Parliament, my old Irish teacher Sean
O'Neachtain) to get into public office have all been pompous assholes. You
don't really get much of a choice.

------
savrajsingh
It's an interesting thought experiment. If all patents disappeared tomorrow,
what would you do differently at your startup? Probably nothing?

~~~
noonespecial
I would be less afraid.

~~~
zmmmmm
This. One of the biggest risks I would see in a startup these days is that the
moment you start to be successful or even just get decent funding there's a
decent chance you will be patent trolled out of existence.

~~~
rayiner
I assume you've quantified that statistical probability to support your
declaration that there's a "decent chance"?

~~~
noonespecial
The whole point is that its very difficult to quantify. The purpose of
government, law, and indeed perhaps civilization itself is to reduce the
amount of random, unquantifiable risks in daily life.

That's whats so bad about patent trolling. Its just so _uncivilized_.

~~~
rayiner
zm didn't say it was difficult to quantify. He said there was a "decent
chance" of being sued. The implication is that he has quantified it and that
quantity amounts to a "decent chance."

~~~
tsotha
Oh? Well, if "decent" is a quantity then perhaps you can give us the number
he's implying.

~~~
rayiner
"decent chance" implies you have quantified the probability and concluded it
is somewhere between unlikely and likely. It needn't be precise, but it
implies a quantity. There is a 0.001% chance of my dying in a car accident
this year. If someone said "you shouldn't move to the suburbs because there is
a decent chance you'll die commuting" you'd probably shrug that off as
hyperbole. There is a 1-3% chance of pregnancy each year despite use of birth
control. Would you say "there is a decent chance of knocking up your
girlfriend even with condom use?" Possibly, but I think most people consider
that probability "remote" rather than "decent." There is a 10% chance of being
audited as a small business. Is that "decent"? I think most people would say
"keep your books carefully, there is a decent chance of yor being audited."

------
1veteran
1\. Software costs next to nothing to produce. Why is it so easy to have
startups in this sector? What is the overhead of a software/web company? It is
almost all intellectual. Ask Microsoft. Pure profit.

2\. It is difficult for examiners to find prior art because there is no
"official" channel for "publishing" software research that they recognise.
There is much know-how that is common knowledge among developers but is never
published in any paper, textbook, standard, RFC, etc. The "database" for
searching all these sources may end being a web search engine. That is not
ideal.

1\. Drugs are very expensive to produce. Not only the research, the equipment,
the staff, but compliance with the regulatory regime. There are no protections
against bad software to protect users (developers operate in a wild west type
atmosphere), but we have many rules about medicines. These are designed to
protect patients. Can you imagine an unregulated pharma industry? Profits take
precedence over safety. It would be very dangerous for patients.

2\. There is a littany of journals that public chemical, biological and
medical research and they can all be searched easily in combined databases, to
which most all pharmaceutical patent owners subscribe. It is not too difficult
for examiners to find prior art and establish publication dates.

These are my thoughts.

~~~
zanny
> 1\. Software costs next to nothing to produce. Why is it so easy to have
> startups in this sector? What is the overhead of a software/web company? It
> is almost all intellectual. Ask Microsoft. Pure profit.

I'd argue software is extremelty expensive to produce, on the basis that
distributing software is so insignificantly expensive that it could be called
free. Relative to the costs of distribution, paying developers to write an
application is extraordinarily expensive. So is maintaining that code,
providing support, and advertising the product. I'd "guess" startups are so
abundant in the software sector because distribution is so cheap, not because
development is. Entering any other market's distribution channels on an
international scale is prohibitively expensive for almost anyone but an
already successful mid-sized company.

> 2\. It is difficult for examiners to find prior art because there is no
> "official" channel for "publishing" software research that they recognise.
> There is much know-how that is common knowledge among developers but is
> never published in any paper, textbook, standard, RFC, etc. The "database"
> for searching all these sources may end being a web search engine. That is
> not ideal.

Even more fundamentally, it is hard to find prior art because software is
information / knowledge and traditionally (in the context of math at least) we
never had patents on it. If you consider the physical properties of software,
it is just the presence of absence of charge over billions of indicants. Does
the interface that _exactly_ duplicates the ios home screen but has a binary
representation that is nothing like the disassembly of it represent
infringement, or the instant messenger whose disassembly looks 95% like the
ios home screen? What happens when a music track and an android map are 90%
binary identical?

> 1\. Drugs are very expensive to produce. Not only the research, the
> equipment, the staff, but compliance with the regulatory regime. There are
> no protections against bad software to protect users (developers operate in
> a wild west type atmosphere), but we have many rules about medicines. These
> are designed to protect patients. Can you imagine an unregulated pharma
> industry? Profits take precedence over safety. It would be very dangerous
> for patients.

Absolutely you need to regulate the pharma industry somewhat, but I would also
argue it is a consumers responsibility to know what they are putting in their
bodies. We expect people to be able to judge their own alcohol consumption,
how are prescriptions any different? If you make knowledge easily and readily
available on what drugs do and their effects, consumers could make informed
decisions. A lot of the fears in the phara industry is in how close-boxed
knowledge is - you assume your doctor knows best, and don't investigate the
effects of drugs you consume. I'd call it foolish to not understand the risks
of what you are consuming.

> 2\. There is a littany of journals that public chemical, biological and
> medical research and they can all be searched easily in combined databases,
> to which most all pharmaceutical patent owners subscribe. It is not too
> difficult for examiners to find prior art and establish publication dates.

That doesn't mean that a government granted monopoly on drugs is a good thing.
When the expenses of drug research (which end up significantly being the
rigorous 3 phase testing drugs need to pass to be allowed to be sold to end
users) are so high, and profit motive is involved, drug costs spiral out of
control. For Americans like myself without health insurance, we just can't
afford to buy any of these drugs even with a prescription because they can
cost upwards of $200 or more a bottle. The fact the actual drugs only cost at
most a few dollars to produce per bottle, so the rest is profit to recoup
research costs, doesn't help the fact that the good is cheap to make and is
artificially expensive to recoup tremendous research costs. One (not me, but
it is a theoretical) might argue that the R&D of a to-market drug could be
just paid in full to whoever developed it, and that the formula itself could
be released public domain. Taxes go up, drugs are cheap.

~~~
jacques_chester
The key is that software development is an unavoidable _sunk_ cost. Once it
has been paid, it can be ignored in terms of considering per-unit pricing.

The actual marginal cost of each unit of software sold is pretty close to
zero. This is what makes it so fantastically profitable compared to almost
anything else.

~~~
josephlord
The same is true of most drugs. Marginal cost is near zero compared to
development cost.

In neither case do you necessarily have fantastic profits although if you can
sell at scale at a good price it becomes very likely but if you have a drug
for a niche market or software in a crowded market it is quite possible to
make a loss.

This is neither an argument for or against the patent abolition proposition
which I am torn on. I can definitely imagine with alternative arrangements for
Pharma we could be better off than currently but I believe that there must be
something possible that is better than both what we have now and better than
nothing.

~~~
zanny
I think in half a century we won't have the backwards investment funding model
in industries where units are extremely cheap but R&D id expensive. Instead
you would have something akin to crowdfunding with guarantees and insurance
against failed investments by those that want the end product, so the motive
is not profit, but end product. That people who want a _thing_ fund the
creation of the thing, instead of people who want _money_ funding an expensive
up front thing that is then unnaturally restricted with patents and copyright
to try to profit off the unit sales, when in many cases (pharma) they are near
free, or in the case of software (past the first copy being distributed) are
absolutely free (if those that have the software willingly share it).

------
madprops
Yes patents should be abolished. They are not good for the advancement of
mankind as a whole.

------
panabee
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 patents are two good cases. If the
patent system didn't exist, is it reasonable to think someone else would come
up with a one-click method of shopping? Yes. Drugs, however, often require
hundreds of millions of dollars in upfront investment. It is reasonable to
think that pharma companies couldn't raise the necessary capital, and
therefore invent these drugs, without some protection.

~~~
rustynails77
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.

~~~
tetomb
"Would the innovation have happened if Apple hadn't driven it? Not any time
soon."

I am fascinated by this statement. What evidence do you have to support it?

~~~
TheCondor
The entire mobile industry pre-iPhone?

This is and endless argument, you either acknowledge that they pushed it
forward or you don't but there wasn't a significant application platform,
touch was nearly nonexistent and even dismissed by RIM, and while many of
these things might be dismissed as obvious, Apple made it stick and they beat
the entire current crop of competitors to the market.

Everything is easy once you've seen it done...

Take the typical Nokia and Motorola device from 1997 and the typical one from
the iPhone launch, biggest improvements? More SMS and the phones got a little
bit smaller

~~~
tetomb
I agree that apple did bring it all together rather well (over a sustained
marketing and development phase) but I just don't see how anyone could think
that smart phones similar to those that we have today weren't inevitable with
or without apple.

<http://mobile.engadget.com/2006/02/21/review-cingular-8125/> This was
released over a year before the first iphone.

I think that apple's contribution was not so much innovation as it was
popularisation.

------
kanzure
At Open Science Summit 2010, there were a few individuals proposing some prize
funds and reforming the patent system. The transcripts are a little rough (I
was typing), but here goes..

Knowledge Ecology International: [http://diyhpl.us/wiki/transcripts/open-
science-summit-2010/j...](http://diyhpl.us/wiki/transcripts/open-science-
summit-2010/jamie-love-knowledge-ecology-international/) .. where he talks
about an "open source dividend".

Health Impact Fund: [http://diyhpl.us/wiki/transcripts/open-science-
summit-2010/a...](http://diyhpl.us/wiki/transcripts/open-science-
summit-2010/aiden-hollis-health-impact-fund/)

------
fauigerzigerk
I'm unconvinced by their pharma argument. Some industries need patent
protection. My preferred solution would be for the patent office to set
different time limits for different industries, depending on the length of the
innovation/commercialization cycle in that particular field.

So if it takes 10 years to develop a new drug and have it approved, give them
10 years of patent protection. If it takes a year to invent and perfect some
user interface idea, give them a year's worth of patent protection.

Don't set the time limit on a case by case basis or everybody would claim to
have thought about it for 30 years before it came to fruition.

------
manaskarekar
A good resource: [http://www.stephankinsella.com/category/intellectual-
propert...](http://www.stephankinsella.com/category/intellectual-property/)

And innovations that thrive without IP:
[http://www.stephankinsella.com/2010/08/innovations-that-
thri...](http://www.stephankinsella.com/2010/08/innovations-that-thrive-
without-ip/)

Also: [http://mises.org/media/categories/226/Against-
Intellectual-P...](http://mises.org/media/categories/226/Against-Intellectual-
Property)

and

<http://mises.org/journals/jls/15_2/15_2_1.pdf> [pdf]

------
olliesaunders
The pharmaceuticals industry could never have grown so big without patents.
That kind of drug research would have had to been done by publicly-funded
bodies, such as universities. I kind of feel like this is an argument in favor
of this article. It also explains why it will never happen. Now that we have
big-pharma how are we doing to disassemble the thing that keeps it alive?

~~~
marshray
Simple, recognize that pharaceuticals are a highly special case and develop a
custom set of protections/incentives. There is already a mountain of custom
regulation for that industry.

It's absurd to think that the same age-of-steam monopoly grant system that
currently sorta benefits the pharmaceutical industry should also apply to
software, websites, business methods, and exercising one's cat.

It's completely retarded. In the literal sense, i.e., holding progress back.
End the retardedness now!

~~~
olliesaunders
The reason I didn’t suggest this is that industry-specific law feels like a
byproduct of the lobbyist culture that has lead to many of our current
problems and pre-existence doesn’t justify its continued creation. But,
overall, I think you’re right and this is the pragmatic solution.

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utopkara
Not all patents are by trolls or big corporates. Patents are crucial to medium
size and small size firms. A healthy economy requires to create an environment
for these firms to thrive. If you think big corporates are the ones to focus
on, check out Germany: <http://www.economist.com/node/18061718>

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maked00
The fashion industry does quite well thank you WITHOUT patents. Check it out.
No patents in fashion. The most you can do is copyright a logo and slap that
on your product. The rest is open season, and we all are the richer for it.
Patents only make lawyers rich at the expense of the rest of us (the 99%).

~~~
PatentTroll
There is no meaningful comparison between the fashion industry and high
technology. Keep in mind also that the fashion industry aggressively uses
copyright, which last time I checked is also not too popular. That's why a lot
of designer goods have a logo plastered all over them. If we abolished
patents, there would be a short time span where everyone would prosper, but
then eventually it would become clear that nobody is doing basic R&D, because
it would be stolen by a competitor immediately. Also, I assure you there is no
lawyer conspiracy. 99% of lawyers are in the 99%.

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y1426i
Thinking about this, the reverse might also work. Automate the process of
granting patents such that patents are granted solely based on algorithms and
prior art automated search. That way every one can get every patent
immediately.

The work of the patent office then would be to validate the patents when there
is a conflict, as a pre-requisite for a lawsuit. The office would have less
work to do relatively I would think and hopefully would have more time to
review the patents when they come to their desks that way.

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facundo_olano
It's no news that patents and copyright obstruct the progress of science and
society (nobody ever listents to Stallman?).

Now, acknowledging that is far from being enough to abolish them. The world
revolves around companies making profit, it's naive to think that the
government will agree to rule against the huge companies that currently
benefit from those restrictions.

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lumberjack
I don't know how the US patent legislation is implemented but in many
countries patents come with a compulsory license. That means that a patent
holder cannot restrict others from using his invention. He only has the right
to ask for the proper compensation. I think such a clause is imperative to
truly have an effective means of promoting innovation.

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stretchwithme
Is there a patent-free economy that is also as innovative as an otherwise
comparable one with patents?

Is there another way to encourage innovation?

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macspoofing
Why take drastic steps like abolishing all patents. A big problem right now
are software and design patents. If we're not willing to outright ban them,
why not limit their term to 5 years?

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rgovostes
> Somebody out there actually patented a method for moving information through
> the fifth dimension. As in the Bruce Willis movie. As in faster than the
> speed of light.

Which movie is that, exactly?

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EnsoSorrento
Immediately after abolishing patents, let's abolish Federal Reserve (who
suggested the patent thing)

------
podperson
The article summarizes the alleged benefits of patents as:

a) They improve productivity (I'm assuming this is somehow an Economic
encapsulation of the benefit of technological progress, although AFAIK
technological progress is essentially a Big Problem for economic analysis, and
one of those things that Economists wave off as a pathological one-off event
that ruins their assumptions, so I'm guessing it's A-OK for Economists to
approximate technological progress -- something they can't really cope with --
as simply output / production cost).

b) They are an alternative to trade secrets, which is dismissed in a single
paragraph with the argument that you'll only patent something you can't
protect for longer with trade secrets (because, as a typical economic actor
you are omniscient and can perfectly predict how long you'll be able to
protect something with a patent vs. secrecy).

The follow-up paragraph says this (emphasis mine):

> A more subtle point is that secrecy may bias the type of inventive activity
> away from innovations that are not easily kept secret to those that can be,
> viceversa for patents. There is historical evidence from Moser [2004, 2005]
> in this direction. In 19th Century expositions of inventions, while
> countries without patent systems had overall rates of innovation similar to
> those with a patent system, they did specialize in innovations which were
> more easily kept secret. __How strong this bias would be if no countries had
> patent systems – that is, whether it is true that patents encourage
> innovations that would not otherwise be made, or if they just shift the
> location of innovation from country to country – is not known. __

Oops. So this argument appears to be well-founded, and we don't know how big
the effect is. Never mind, moving right along...

> A good case in point is that of the Wright brothers, who made a modest
> improvement in existing flight technology which they kept secret until they
> could lock it down on patents, then used their patents both to monopolize
> the U.S. market and to prevent innovation for nearly 20 years.

Yes, there was no innovation in flight technology between 1903 and 1923.

> The modern and highly successful open source software movement is a more
> contemporary example of how collaboration and exchange of ideas thrives
> absent intellectual property.

This is where they lose me. OK they lost me a while back. Where is the great
open source project which is so awesome everyone is imitating it? Open Source
is great at commodifying innovations produced by others. We've got imitation
Windows UI, imitation Mac UI, imitation iOS, imitation UNIX, imitation
Microsoft Office, imitation Photoshop...

> On the other side of the coin, the rationale for patent systems is weak. In
> most industries the first mover advantage and the competitive rents it
> induces are substantial without patents. Again: the smart- phone industry –
> laden as it is with patent litigation – is a case in point.

So, do they think Apple's first mover advantage would have been worth much if
competitors had simply cloned everything it did? It was the delicate dance of
ripping off Apple's ideas without crossing the line that created at least of
the first mover advantage in this case.

I could go on and on -- the authors certainly do.

> In the case of patents, and particularly pharmaceutical patents, the
> situation is even more severe. We have made mention of the loss of human
> life due to the pricing of AIDS drugs.

Right, so kudos to the patent system for giving investors a reason to invest
money and attention span to creating AIDS drugs, but once they're created they
should sell them at break-even? Oh wait, no. No kudos to the patent system for
the former -- they were inevitable. People like spending their money making
stuff. It happens.

> A simple model helps to focus these thoughts. We suppose that there are two
> firms i = 1,2 who must choose between innovating (I) and not innovating (N).
> We have in mind here the creation of a new product, so that the choice to
> innovate is paramount to entering the market – a firm that does not innovate
> is assumed to have no product to sell.

Maybe if we do some pretend math it will make our thinking seem more rigorous.
As something of a failed mathematician I like counter-examples. In this
universe these guys are basing their entire theory on, the entire market for
laundry soap does not exist.

It's just magical thinking.

------
FrojoS
I saw the headline and the source and had one thought: "Finally"

