Medical Patents Must Die

by on December 9, 2011 at 7:35 am in Economics, Law, Medicine | Permalink

Prometheus gave man fire, thankfully he didn’t charge every time man lit a match. Prometheus Labs in contrast wants to charge patients for a rule that says when to increase or decrease a drug in response to a blood test. Quoting Tim Lee:

The patent does not cover the drug itself—that patent expired years ago—nor does it cover any specific machine or procedure for measuring the metabolite level. Rather, it covers the idea that particular levels of the chemical “indicate a need” to raise or lower the drug dosage.

Even this is not quite right for suppose a physician notes that the patient’s metabolites are within the range where a change in dosage is not necessary; although the physician takes no action she still has used the patent and thus must pay Prometheus Lab a fee or infringe.

We already have significant incentives for producing pharmaceuticals (and thus the instructions required to best use those pharmaceuticals), we support medical research through universities and non-profit hospitals, and there is plenty of opportunity to profit from the manufacture of tests. Will we really get enough additional innovation to justify the monopoly prices and deadweight losses when we enforce patents on medical rules? Remember, we have to pay the higher prices on all the rules not just the ones brought into being by the patent.

And if medical patents why not economic patents? Will Scott Sumner now patent a rule for adjusting the money supply in response to metabolites the futures market? 

Patents like this are a logical consequence of the extension of patentable matter to software and business methods but extending patents to software and business methods has created huge legal costs without any increase in innovation.

Most importantly, patents can reduce innovation and are especially likely to do so in fields where innovations build on innovations. In fields of cumulative innovation, previous patents owners become veto players who can threaten to holdup the new innovation unless they are granted a share of the proceeds. In theory, bargaining can result in an efficient outcome. In practice, it means lawsuits, delay, waste and reduced innovation.

Since a smartphone may rely on many thousands of previous patents, the smartphone industry has heretofore been considered a classic case of how too many veto players can impede innovation. But now consider human metabolism, one of the most complicated systems known to man (just a tiny fraction of that system is shown at right), and note that if Prometheus is successful in this lawsuit that any correlation in that system can be patented. This is a recipe for disaster.

Addendum: Scotus Blog has a roundup of links. See  Launching the Innovation Renaissance (Amazon link, B&N for Nook, also iTunes) for more on patents and their problems. Hat tip also to E.D. Kain who writes:

The world, it appears, is determined to turn me into a full-fledged libertarian. What with SOPA, PIPA, the NDAA, software patent trolling, police violence, and now patents on how doctors provide treatment to their patients, it’s becoming more and more clear how pernicious the law can be when it’s designed for powerful special interests, national security hawks, and big corporations.

Gunnar Tveiten December 9, 2011 at 8:04 am

Watch for the next step: agressively pushing extensions to patent-duration. Currently patent-protection lasts for 20 years, which is half an eternity in modern medicine. Expect lobbying from special-interests-group for substantial increases in this period – perhaps even attempts to “bring it into line with other IP protection” i.e. to mirror the insanity which is current copyright-duration.

Cliff December 9, 2011 at 8:12 am

Gunnar, have you ever heard anyone propose that? I seriously doubt it will be raised or has even a slight possibility of actually happening. Actually they have been discussing the possibility of reduced patent terms for less innovative inventions.

Cliff December 9, 2011 at 8:14 am

By the way the reduced term system I mentioned would be generally in conformance with what other countries do, while an extended term would not. There might be treaty issues that would be raised by extending terms, I’m not sure.

Pub Editor December 9, 2011 at 9:53 am

There might be treaty issues that would be raised by extending terms, I’m not sure.

I think you are correct. The US changed from a 17-years-from-issue to a 20-years-from-filing precisely because the 20-years-from-filing standard was the standard agreed to by 100+ countries in the Uruguay Round of multilateral trade negotiations in 1993, embodied in the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) as part of the 1994 GATT.

Shorter version: an extension of patent terms would, among other things, annoy the WTO.

Right Wing-nut December 9, 2011 at 10:58 am

Shorter version: an extension of patent terms would, among other things, annoy the WTO.

Is that a bad thing? :D

As a professional programmer, btw, software patents muck up my drinking water.

Dan Dostal December 9, 2011 at 12:42 pm

Shouldn’t patenting ideas annoy the WTO in general? Isn’t that exactly the kind of organization that looks at the playing field and notices that large corporations and small entrepreneurs are damaged by this. Or do patent trolls like Prometheus have their hand up the WTO as well?

Jim D December 9, 2011 at 12:54 pm

TRIPS mandates a minimum term or 20 years, but no maximum. I’d be curious to hear about any sort of reduced term system you’re aware of, and how they plan on working within the existing WTO structure.

TRIPS article 33 declaring the minimum term: http://www.wto.org/english/docs_e/legal_e/27-trips_04c_e.htm#5

Jim D December 9, 2011 at 12:53 pm

Quite the opposite, according to the TRIPS agreement from the WTO that governs patents. (and forced the change in US patent law 1995)

TRIPS mandates a minimum term or 20 years, but no maximum. I’d be curious to hear about any sort of reduced term system you’re aware of, and how they plan on working within the existing WTO structure.

TRIPS article 33 declaring the minimum term: http://www.wto.org/english/docs_e/legal_e/27-trips_04c_e.htm#5

Cliff December 9, 2011 at 1:28 pm

Jim,

Many countries have utility model systems with a shorter term (like 10 years) for “inventions” that do not meet the inventive step requirement.

I have heard proposals for a similar tiered system in the U.S., no legislative drafts or anything like that.

Jim D December 14, 2011 at 3:06 pm

Cliff:

That is for “innovations” that don’t quite meet the patent requirements. If it’s patented, there is a treaty-mandated 20-year minimum. Higher maximums will not violate the treaty. Lower maximums will.

Regarding the shorter patent-like protection for “almost” innovations, why should any monopoly, for any length of time, be given to something that does not meet the fairly lose patentability requirements?

haskellhog December 10, 2011 at 5:00 pm

The big money resides with the Big companies , hey Gunnar ? Consider this . As we speed toward a ” Web Doctor ” mode of diagnosis . IF all things were equal , they have never been, let’s pretend for a moment ….Two words would come into play “Immient Domain “.Certainly when a new instrument or prosthetic is devised to be used in certain treatment scenario’s , a patent would certainly be warranted…..however , application of a suppository should not require my debit card number. Many may believe Prometheus Labs apply their patent to themselves ,in the same manner. Thank you .

prior_approval December 9, 2011 at 8:15 am

Which ‘we?’ Many countries that are not the U.S. refuse to recognize such patents, for any number of reasons, including the ethical. Maybe there has been more innovation occurring in the world that non-Americans are aware of? My titanium glass frames with their nanoceramic lens surfaces are really fantstic (a surface harder than sand means no scratches till now), though they were a bit pricey when I bought them a couple of years ago.

And since software patents are not recognized here, the various software companies in the region can continue to develop products for essentially all markets – except the U.S., but that isn’t really that large of a market loss, as most German ERP software is directed towards manufactuing and things like Anlagenbau, which doesn’t een really have an American Englich equivalent translation. At the ERP software houses in this region, covering everything from global car companies to Mittelstand companies producing niche products – like those which cooperate to build and maintain an Olympic class ice facility anywhere the Winter Olympics are being held, from the building to the rinks to the concession stands (a solid example of Anlagenbau, by the way).

The rest of the world is not waiting for the U.S., and some countries are not displeased in the least to see a former competitor cripple themselves. That Americans are seemingly unaware of this process is not a high priority for anyone to fix – but at this point, you will find better cell service throughout essentially all of Africa or South America than in many parts of the U.S., in part because those markets are not bound using antiquated, patented systems.

Cliff December 9, 2011 at 8:20 am

Not sure what you mean by “software patents are not recognized here.” There are software patents in the EU, though the standard is higher.

Andrew' December 9, 2011 at 8:58 am

By what philosophy do they determine which patents to honor and which to laugh out of the office?

Cliff December 9, 2011 at 9:03 am

It’s complicated and I am not an expert in EU patent law.

Wiki: “any invention which makes a non-obvious “technical contribution” or solves a “technical problem” in a non-obvious way is patentable even if that technical problem is solved by running a computer program.[12]

Computer-implemented inventions which only solve a business problem using a computer, rather than a technical problem, are considered unpatentable as lacking an inventive step (see T 258/03). Nevertheless, the fact that an invention is useful in business does not mean it is not patentable if it also solves a technical problem.”

Dan Dostal December 9, 2011 at 12:45 pm

The standard is high enough that “software patents” are not recognized in the EU. The term software patent is not an exacting phrase and means exactly the kinds of patents that the US allows and the EU does not.

Cliff December 9, 2011 at 1:29 pm

It means that, what, to you? I’ve never heard that before.

Dan Dostal December 9, 2011 at 2:24 pm

I’m a software engineer who actively participates in conversations about software patents. In academic terms it is useful to acknowledge that once upon a time, certain methods were originally developed in software engineering worthy of being patented. All such methods are 50+ years old and the industry has not developed anything nearly so novel since. In the current time, when discussing software patents, these methods are not what is being discussed. Agreeing on this saves us all a lot of wasted conversation.

Cliff December 9, 2011 at 2:53 pm

Well, consider this: http://en.wikipedia.org/wiki/G_3/08. There seems to be a great deal of confusion over what is patentable in the EU and what is not, but I suspect the limits are not quite as strict as you imagine.

kinkfisher December 10, 2011 at 11:38 pm

Dan,
1. You need to dig a bit deeper into EU and software patents. The EU most certainly does have “software patents”, and they are about the same quality as US software patents. This is to a large extent simply because they are European/International counterparts of the corresponding US filings for the same inventions. As such, the inventors, language and even the claims are almost identical, allowing for translation. For a recent example, google “Germany FAT patent” and follow the links. You are right in that the term “software patent” is not an exact phrase (it actually is a nonsensical phrase; saying “software patents” is like saying “steel patents”), but implying that the EU has no software patents is completely wrong.

2. There certainly have been worthwhile, even groundbreaking, inventions in software in recent years. You may be trying to be hyperbolic, but 50+ years is absurd. The RSA patent itself is much more recent than that. Sure, not all patents are exactly earth-shattering, but on the other hand, a large number of great software advances get published in patents on a regular basis. “All the really good inventions happened 50+ years ago” is a false premise and agreeing on that will not lead to fruitful discussions.

3. I too am a software engineer who has participated in conversations about “software patents”. But I have almost given up because of the tremendous amount of willful ignorance and misunderstanding about patents that otherwise-logical people simply refuse to educate themselves about. I mean, most people rant about patents after reading the title and the abstract, which have *no* significance in patent law. Even after I explain what the claims (you know, the part that really matters) really cover, they will either (a) complain about not being able to read “patentese”, or (b) deliberately misread into it the most trivial, obvious interpretation they can. There was a post about a patent solving a complex distributed clock problem in MMOs, and slashdot cited IRC as prior art. IANAL, but I have probably read hundreds of patents, and I find just as many “good” ones as I find “bad” ones.

Cliff December 9, 2011 at 8:17 am

You are really not making the case for whether this should be patentable or not. From a practical (not legal) standpoint, the question is, how hard was it to discover this correlation and how likely is it that it would be developed by someone else in the absence of patentability? Presumably if the drug is off-patent, in 20 years no one else came up with this correlation. So although you seem to imply that the correlation is obvious and not innovative, no evidence of that is provided. I don’t know one way or the other. Oral arguments on this case were just completed at the Supreme Court.

Bill December 9, 2011 at 8:18 am

Good point.

Inventions have to be non-obvious.

Curt Fischer December 9, 2011 at 8:29 am

Discoveries are different from inventions. This correlation was not “invented” — unless it is a fabrication — it was discovered. Even if the correlation is *not* obvious, I’m not sure it is patent-worthy.

Cliff December 9, 2011 at 8:50 am

There is a fine line between a discovery and an invention. What would you all the discovery of the electric light bulb? Edison tested thousands of materials and arrangements until he discovered one that worked. What if Prometheus labs tried thousands and thousands of correlations at great expense, is that different?

Andrew' December 9, 2011 at 9:00 am

It’s a fine, blurry line.

Nick December 9, 2011 at 9:12 am

Edison can patent the invention, namely, a vacuum glass with a particular filament used, but he cannot patent the discovery, namely, the fact that a certain kind of wire glows with a certain number of lumens as a function of the level of current passes through it. Similarly, Prometheus should be able to patent a machine that automatically reads the patient’s level and doses accordingly, but they shouldn’t be able to patent the discovery of the drug’s effectiveness as a function of some measure.

Cliff December 9, 2011 at 10:05 am

They are trying to patent a method of testing the blood for presence of the metabolite, if I recall correctly (though the actual testing itself is not novel- just the looking for that metabolite and recognizing its significance in a certain range).

dearieme December 9, 2011 at 10:06 am

Edison and the light bulb is a singularly ill-chosen example since he was beaten to it, lost his patent trial and had to buy out his competitor.

Dan Dostal December 9, 2011 at 12:47 pm

Also, Edison did not patent the ability to produce light through electrification. He patented a specific method for producing light through electrification. Which is exactly the problem. If Prometheus developed a new method, I still find it absurd, but they can currently patent such things. That is not what they have set out to do.

Dan Dostal December 9, 2011 at 2:26 pm

Actually, I take it back. If their method is truly novel, it certainly should be patentable.

Ryan Cooper December 9, 2011 at 8:53 am

Or in 20 years no one else thought they could possibly get away with such a patently (heh) ridiculous claim.

Cliff December 9, 2011 at 9:04 am

Well, to stop the patent they would just have to show that the method had been published somewhere or been used publicly.

Rahul December 9, 2011 at 9:41 am

I think arguments for or against patents on fairness grounds lead nowhere. IMHO the optimal level of patent protection for a society is one that is most welfare promoting for that society. So to me the question isn’t how hard, or how non obvious this was. Would it hurt society more if we denied Prometheus that patent or if we granted it.

Cliff December 9, 2011 at 10:07 am

That is exactly what I was saying, Rahul. From a practical standpoint, it DOES matter how hard it was to discover. It’s not an issue of fairness, it’s a question of the need to compensate in order to get the discovery. If it is very hard and expensive to make the discovery and then impossible to protect that invention from copying, no one would ever put the effort in in the first place. In that scenario patent protection makes sense from a utility standpoint.

Rahul December 9, 2011 at 10:18 am

@Cliff

Yes, but you think the patent examiner is competent (and motivated enough) to judge those parts about how hard it was, how novel it was, how expensive it was, etc?

As an aside: How may people did you know who had “patent examiner” as their profession of choice growing up or at the university?

Cliff December 9, 2011 at 10:22 am

Rahul,

No not at all, and that is not a consideration for the patent examiner. That is why I predicated my post with the fact that I was approaching the problem from a practical, and not legal, standpoint. I was merely trying to evaluate whether it would be good or bad to extend patent protection in this instance, not whether patent protection should be extended under the law.

There are alternative patent systems, which Tabarrok has proposed, that take into account that sort of thing, but they are very different from today’s system (i.e. auction-based).

Cliff December 9, 2011 at 10:23 am

And to answer your second question, none.

Bill December 9, 2011 at 8:20 am

The real issue is patentability, how diligent the Patent office is in determining whether something is patentable, and the transactions costs in challenging a bad patent.

This is a case where we would all benefit from public expenditures assuring us that a patent, granted under the terms of our constitution to promote the useful arts, is valid when issued.

Cliff December 9, 2011 at 8:47 am

I think Alex would argue for changing the standards of patentability.

Andrew' December 9, 2011 at 9:00 am

No, the real issue is by what philosophy they use to develop the standards they use…hmmm, I wonder if that process is patented yet…

neil December 9, 2011 at 11:04 am

I think this entire post is Alex arguing for changing the standards of patentability…

Bill December 9, 2011 at 4:26 pm

Changing the standards for patentability for one part of invention doesn’t make sense. It should be the same standard. Maybe argue the subject matter is non-patentable, ie, a procedure, but then why treat medicine differently.

Andrew' December 9, 2011 at 4:46 pm

First, we can’t argue about every solitary issue. Second, if they aren’t promoting progress, then Congress doesn’t have the power to grant patents. Third, the standards can only be those that promote progress. Thus, we have to determine the characteristics of things that are patentable and those that aren’t.

The get a crap ton of money and there is no way to make sure that more funding yields better results without different rules (and possibly new management).

Arthur December 9, 2011 at 8:42 am

I’m sure the world would be a better place if newton had a patent over the correlation between distance, mass, and attraction force.

Cliff December 9, 2011 at 8:48 am

This is exactly the question at issue in this case- laws of nature cannot be patented. How much must be “added” to a law of nature to transform it into an application of a law of nature, which is patentable?

neil December 9, 2011 at 11:03 am

Fortunately for us those patents would (hopefully) have expired by now.

J1 December 9, 2011 at 8:44 am

1. Does research by universities and non-profits (I disagree there’s any such thing, but that’s another argument) produce better results than the for profit medical industry? The fact that the a system is inefficient doesn’t necessarily mean it’s inferior to alternatives.

2. Aren’t universities and non-profits able to patent things too? It seems like they’d have as much incentive to do so as the medical industry.

3. Has anyone noted that your illustration looks like a FAA sectional chart?

“you will find better cell service throughout essentially all of Africa or South America than in many parts of the U.S., in part because those markets are not bound using antiquated, patented systems”

4. Why does cell phone technology exist?

Finch December 9, 2011 at 9:28 am

Universities, at least, can make a lot of money this way. My understanding is that the MIT licensing office is vigorous.

Alan Gunn December 9, 2011 at 10:01 am

3. Looks more like a low altitude IFR chart, to me. All those lines.

J1 December 9, 2011 at 11:34 am

It’s the colors. Still, you’re right; it does look kinda like that.

Pub Editor December 9, 2011 at 10:04 am

MIT is not alone; a number of university Technology Transfer Offices are very active, and licensing patents is a way for some professors and departments to supplement NSF or NIH or DOD funding.

“Does research by universities and non-profits…produce better results than the for profit medical industry?”

How do you want to define “better results”? My (unscientific) sense is that universities and non-profits do great work with what we might call basic research; in the pharma field, I am thinking especially of foundational work in chemistry and biochemistry, such as discovering new synthetic pathways or identifying useful catalysts or methods of producing chiral products. Universities and non-profits are good for doing the research that may not lead to a sellable product for another 15 or 20 years. When it comes to applied research (is that the right term?), such as taking a new molecule and turning it into part of a treatment regimen, I’m not sure that universities and non-profits have any advantages over the for-profit companies. (I could be wrong.)

Rahul December 9, 2011 at 10:10 am

There’s a very very few patents from the portfolio that get licensed. If you are a professor that brings in significant licensing revenues to the university you are a mighty good professor.

Most professors patent to pad their Resumes, fool the funding agencies, impress naive graduate students and other such baser motives.

Cliff December 9, 2011 at 10:23 am

The Office of Technology Transfer generally calls the shots and will want you to patent everything.

Rahul December 9, 2011 at 10:33 am

Why? Isn’t it a waste of effort and money to patent stuff that’s unlikely to make money?

Cliff December 9, 2011 at 11:05 am

If it is federally funded research, generally the federal agency will want you to patent. If not, I assume they have a poor ability to recognize at the time of invention what is valuable and what is not. Only in hindsight does it become clear which 5% (or whatever) are actually valuable. My insight into the matter may be limited as I am not involved in the decision-making process of Universities, I just patent what they tell me to.

You could be right about the inventors wanting the patent applications to be filed, but sometimes the process does seem to actually annoy the inventors a lot.

Rahul December 9, 2011 at 1:56 pm

@Cliff

Aren’t your incentives skewed anyways? Let’s say you came across an obviously not-so-marketable yet patentable application; would you risk your fees to advise your clients to not go ahead?

Cliff December 9, 2011 at 2:56 pm

Well, yes my incentives are skewed in the direction you suggest. However, honestly I really have little idea what (in terms of subject matter) is marketable and what isn’t. I think a lot of that depends on who is doing the marketing and how the marketing is done. Also, I not infrequently do tell inventors that I am unlikely to be able to obtain strong protection for their inventions, but that rarely discourages them.

Dredd December 9, 2011 at 8:48 am

They may change their story after they find out that eating hoi polloi will cause a kuru epidemic.

Becky Hargrove December 9, 2011 at 8:48 am

Among the more egregious uses of patents is taking a pre-existing product and making it practically impossible to get on the open market. Pharmaceuticals routinely would go into the undeveloped world and look for miracle drugs; locals got wise when they realized the ‘miracle’ herbs they relied upon would sometimes be lost to them in the process. We see this all the time when herbs considered too powerful are outlawed, when all it takes requires one to self educate to use herbs property in the first place. Impossible? People did this for thousands of years on their own and with the help of others. Also related to this is the fact that I cannot get my favorite rice in this area now (basmati) without paying an exorbitant price. Texmati came along and tried to claim the basmati rice for itself when the rice too had likely existed for thousands of years. While it didn’t completely win that battle it still made it harder to get the real thing.

Cliff December 9, 2011 at 8:52 am

Of course it should not be possible to get a patent for a pre-existing product. But, maybe they could get patents on new methods of isolating an active ingredient from an herb, etc.

Rahul December 9, 2011 at 9:49 am

In other words, loopholes?

Pub Editor December 9, 2011 at 10:05 am

+1

Cliff December 9, 2011 at 10:08 am

I don’t think of it as a loophole. The herb would still be available for anyone to use without infringing. They just would not be able to use the patented process to isolate the active compound. I don’t see that as problematic at all.

Dan Dostal December 9, 2011 at 1:48 pm

Not at all. This is exactly what the patent system is for. Just don’t expect to get a patent for the compound (which is completely abusive). Patent the method to extract the compound and you have made a meaningful contribution to society worthy of a temporary monopoly.

Rahul December 9, 2011 at 2:11 pm

The instances that seem unfair run like this: Let’s say a medicinal property of a herb is discovered in 2011. Five firms start projects to extract the active compound; the one that succeeds gets monopoly power for 10 years. The others were almost there anyways.

Is it in society’s interests to grant such a winner-takes-all monopoly?

Dan Dostal December 9, 2011 at 2:18 pm

What winner-takes-all? Unless they were all working on the same method, which is highly unlikely without an obviousness to the method, then they can all patent their methods. And if one of them happened to invent a better method than the rest, ergo being the winner? Then the patent system is working in at it’s brightest moment.

Cliff December 9, 2011 at 2:59 pm

Right, a problem from a practical perspective is that the patent system today does not even attempt to determine whether it makes sense to grant a patent or not (as far as social utility). Obviously nothing is gained from giving a patent for something someone dreamed up at no cost in a few days and that other people were about to dream up independently.

Dan Weber December 9, 2011 at 10:26 am

Sounds like you are talking about orphan drug patents. If people are taking a drug off-label (something it’s never been approved nor even tested for), and a drug company comes along and does the expensive research to actually test that claim, the company can then patent the new application.

To the people who were taking it before based on their anecdotal hunches, this sure does seem to suck. But now more people can use the drug safely, and when the patent re-expires the whole country will be better off.

Now, giving a brand new patent to the company that paid for the expensive research isn’t the only way of handling this, but it’s the one best understood.

Brent R December 9, 2011 at 11:10 am

You play this game at your own peril.

I can remember a case in which a company spent $millions in clinical trials to test the efficacy of a long known cancer drug at low doses to treat a non-cancer disease. They only agreed to do the trials if the FDA promised not to approve any pill of that particular cancer drug at the low doses that the company was exploring. The FDA agreed, the company did the trials. Before the company could even get the drug to market, the FDA approved a scored tablet (easy to cut in half) at exactly double the dose that the developing company was exploring. The developing company had patents related to the use of the drug at low doses to treat the specific indication, but the project was scrapped and $millions of R&D money was given to the public for free because enforcement of those patents would just be too tough.

Rahul December 9, 2011 at 2:06 pm

So does this mean Company-A can hold the patent on, say, 500 mg formulations and Company-B over 250 mg formulations both containing the same active ingredient? Just making sure this is what you mean?

Cliff December 9, 2011 at 3:03 pm

Rahul,

Company A could have a patent for a method of using a 500mg formulation for cancer treatment and Company B could have a patent on a method of using a 250mg formulation for some other treatment.

Dan Weber December 9, 2011 at 5:08 pm

Say company B’s patent expires 5 years before company A’s. Can people make generic 250mg formulations? Why would cancer patients buy namebrand 500mg pills when they can just take 2 generic pills?

Rahul December 9, 2011 at 5:09 pm

@Cliff:

You are probably right but I am just totally surprised (almost skeptical) that such patents are awarded. Do you have any examples? The art for making both formulations is the same and I didn’t realize that the rights to market it as a use got bundled within the patent. Is this some FDA license issue or a patent itself?

Cliff December 10, 2011 at 10:14 pm

Rahul,

It is well-accepted that you can get a patent on a new use for an old device/compound. This is one reason you come across patents with claims like “1. The use of [X new compound] to treat mental illness 2. The use of X to treat respiratory disorders. 3. The use of X to treat impotence” and on and on. Of course, if someone has a patent on the compound itself, no one can use the compound for any purpose without infringing that patent (but even that patent holder could not use it for the method patented by another- without a cross-license).

Anon December 9, 2011 at 8:59 am

Hasn’t anyone been paying attention? Ignoring for the moment the section 101 problems with the Prometheus claims, innovators have patented methods of treatment forever. Take Viagra. A patent on the molecule, a patent on the method of treatment for high blood pressure, then when they figured out it treats impotence a few years later, a patent on treating impotence using Viagra. Whether such “evergreening” is an abuse of the patent system is a discussion for another day, but it does not address the issue with Prometheus’ patent claims.

As you correctly recognize, the problem is not that Prometheus’ claims read on a medical treatment (although that does get provoke an emotional response not clearly supported by rational thought). The problem is much deeper — what subject matter should be patentable under section 101? (For the non-patent folks out there, 102 and 103 take care of novelty and obviousness. 101 supposedly addresses what subject matter is even eligible for consideration).

The Supreme Court’s interpretation of 101 is full on internal contradictions. In some of the cases, the Court clearly did not understand the technology at all (Benson v Gottshalk, I’m looking at you and your reentrant shift register, a particular machine if there ever was one).

But even so, drawing a line between patent-eligible and not patent-eligible — one that can be applied to every case by judges across all 50 states — seems like it might be intractable. Don’t take me wrong, I agree with you that there’s a problem. It’s just that no one has proffered a workable solution. They often think they have, but they usually have no idea of the collateral damage their brilliant ideas would cause.

For example, you can rail against “software patents” all you want, but when it comes down to brass tacks, getting rid of what you would call a “software patent” would also get rid of patents on hardware — the difference between hardware and software is an implementation detail, not invention. Where do you draw the line? Microprocessors have used microcode for decades. http://en.wikipedia.org/wiki/Microcode. Is that hardware or software?

Indeed, the actual design of a microprocessor looks like software. http://en.wikipedia.org/wiki/Hardware_description_language. And when you come down to it, it’s all math. When a EE101 student draws a NAND gate, we all understand that is really just a few transistors in an interesting configuration. When she uses Boolean algebra or a Karnaugh map to reduce a complicated problem to the simplest circuit, that’s math. The circuit itself is really just a logical statement, often written in Boolean terms. And as Godel proved long ago, it can all be contained in a single number. (aka Godel numbering). This should come as no surprise, because you can store the description of a microprocessor on your hard drive.

So we all agree that you can’t patent a number, but most would agree that you can patent a microprocessor. How can that be? In any processor, the point of novelty — the invention itself — lies in the unique arrangements of known items such as transistors. That arrangement is nothing more than a very big logical statement — a Godel number.

BTW, do you really think smartphone innovation slowed by patents? My 3 month-old phone is already obsolete! Serious point here…if that’s your best example of a patent thicket, I don’t see the problem.

Popeye December 9, 2011 at 9:47 am

If it’s so impossible to draw a line, then I guess we don’t bother to draw one right now. Wait, what?

Dan Dostal December 9, 2011 at 2:04 pm

It is not at all difficult to draw a line. You are correct that microcode is a melding of hardware and software. You are incorrect that it anyone in the industry would consider it patentable. Perhaps the concept of microcoding could have been patentable when it was first invented, but that time has long since expired. Patenting explicit microcode is a software patent and is abusive of the system.

Also, patenting a microprocessor is abusive of the system. Patenting a method to create the microprocessor is wonderful! Patenting a microprocessor is idiotic anti-competitive nonsense (re: Intel). These patents have been granted because the computing industry is all still new other engineering disciplines do not understand it well enough to draw analogies. Patenting a microprocessor is analogous to patenting a bridge, but good lawyers used smoke and mirrors to say the overall computer is the bridge, blinding those in power from the fact that bridges are also made up of non-patentable materials (steel beams, bolts, etc).

Also #2, explore the minefield of smartphone patents. Your 3 month-old phone may be obsolete, but if that’s your threshold of a highly competitive market, you don’t have skin in the game. Google recently bought Motorola’s wireless division explicitly for the patent war-chest to protect their Android platform. Yet still we are seeing absurd lawsuits about how round or square a phone can be.

ricardo December 9, 2011 at 9:58 am

That’s certainly not a blog title to read quickly.

Rahul December 9, 2011 at 10:19 am

Yeah, I thought this was Alex’s new policy prescription for Medicare troubles.

john personna December 9, 2011 at 9:59 am

A good related article at Sci Am: 1 Percent versus the 99 Percent–A Case for Open Access

In particular:

Usually, I work at my University where scientific articles are freely available. I faintly remember the orientation session when the university boasted of spending hundreds of thousands of dollars annually to provide free access to these expensive journals. I can see why this was a selling point for graduate students. Today, this one article is cutting a $32 hole in my poor grad student pocket.

But wait a second. This does not make sense. Why can I, a taxpayer, not have free access to the research I helped fund at every stage of the scientific process? How did the fruits of our investments become the properties of the corporations?

BTW, I think the focus on patents and IP as a constraint on innovation is very well founded. It is the low hanging fruit for change.

Dan Dostal December 9, 2011 at 2:07 pm

First point of order for me is to destroy the absurd term “Intellectual Property”. Use of the term only enables lawyers to confuse the courts that immaterial artifacts (ideas, sounds, images, etc.) can be property.

Pshrnk December 9, 2011 at 10:51 am

So…….Can I patent the idea that below a certain red blood cell count a transfusion is recommended?

neil December 9, 2011 at 11:02 am

No. Prior art has been demonstrated.

Carl1350 December 9, 2011 at 11:21 am

No. Because everyone already knows about this method, and it has been used publicly for decades.

The distinction is that this method has 1) never been used before, and 2) was discovered through expensive research by a pharmaceutical company. And to make things more complicated, this method involves the interaction between a drug that is off-patent and metabolite tests that have been used routinely for years (for a different purpose).

neil December 9, 2011 at 11:01 am

If reading on nook, it’s important to keep in mind that your device is claimed to be in violation of several Microsoft patents. Most Android manufacturers pay Microsoft off but B&N has chosen not to.

Rahul December 9, 2011 at 11:09 am

Good job B&N. At least someone has the balls.

Becky Hargrove December 9, 2011 at 11:31 am

Cliff,
Isolating parts of an herb is one thing. Waging a secret campaign to ensure that the public is not allowed to use the herb is quite another. Unfortunately it has become far too easy to make that happen, which only ensures that as people lose access to primary physicians (they are already warning us) it becomes even harder to be one’s own doctor when that is the only choice.

CBBB December 9, 2011 at 11:42 am

I don’t understand the last statement – everything I see on this blog leads me to believe libertarians love powerful (business-related) special interests, national security hawks, and big corporations.

Popeye December 9, 2011 at 12:28 pm

Exactly, patents are just property rights. And when special interests write legislation and buy off politicians, that’s just free speech. And ED Kain is saying he hates property rights and free speech? I guess he’s not close to being a libertarian after all.

Cliff December 9, 2011 at 1:31 pm

Best satirical commenter on the web

CBBB December 9, 2011 at 2:32 pm

I may have fun being a bit hyperbolic but I don’t think my comments are all that exaggerated.

TallDave December 9, 2011 at 4:59 pm

That’s because you don’t understand the difference between corporatism and free markets.

Don’t worry, almost no one else seems to either, esp. in Congress.

It’s very similar to the confusion between “supporting education” and kowtowing to special interests like teacher’s unions.

CBBB December 9, 2011 at 9:12 pm

I understand the difference – I’m just saying most so-called libertarians are really Corporatists.

TallDave December 10, 2011 at 9:26 am

If that were the case, they would tend to support things like the GM bailout and the Solyndra/SunPower/etc, green subsidies to GE, barriers to entry by big companies, ag subsidies, etc. Spend some time at Reason and you’ll pick up on the difference.

CBBB December 10, 2011 at 1:52 pm

What about the Wall St. Bailouts?

I always get the feeling that libertarian bloggers or essayists will write the odd piece condemning this sort of corporatism to “keep up appearances”, but in their hearts they just don’t care that much. Even from your list – Green subsidies, GM bailout, Solyndra – but the Wall St. bailout, the mother of all bailouts with absolutely no strings attached isn’t included. An innocent omission? I think not. If it’s the “right kind of people” being bailed out “libertarians” don’t really care too much.

Cliff December 10, 2011 at 10:17 pm

Support for the bailouts is extremely mainstream (among economists especially). Most believe that without it, the financial system would have collapsed. Most of those against the bailouts are libertarian. So libertarians are hardly uniquely pro-bailouts. Progressive economists are much much more pro-bailouts.

JWatts December 10, 2011 at 2:37 am

+1

Foster Boondoggle December 9, 2011 at 11:46 am

No one seems to be taking up the question of how things would work in the libertarian paradise. Presumably it would be more or less along the lines of current “trade secrets” practice, with NDAs and all that. That means that instead of investing in patent lawyers, firms would have to invest instead in obfuscation tools (for software), sealing components inside epoxy, and other strategies for blocking prying eyes. And of course the whole practice of open publication of potentially useful discoveries would shrink, if not entirely wither. The medieval practice of scientists writing their discoveries in code and teasing their rivals with hints at their methods may have disappeared in part because of the rise of patent law.

I’ve been on the receiving end of stupid infringement letters – finance is full of ridiculous “business method” patents. But lets not get too hasty. There are advantages to a system that promotes public sharing of ideas and discoveries.

And to argue that “20 years is an eternity” in medical innovation is entirely beside the point. The human genome is not evolving on a 20 year time scale. Many 20+ year old drugs are still the best choices. Human bodies are not smartphones.

In our struggle over medical cost inflation we keep looking around for easy scapegoats, rather than facing squarely the fact that most of the problem is the US’s peculiar neither-fish-nor-fowl approach to health care – with free market pricing of services and drugs and a substantially socialized payment system, where the payers (gov’t and insurers) are forced to pay for expensive new drugs and treatments of sometimes very limited utility. (Witness the hoo-hah over the FDA’s recent de-approval of Avastin for breast cancer.)

Andrew' December 9, 2011 at 1:58 pm

That’s one of the problems- what is the benefit in the published information if you now have to pay a fee for the thoughts rolling around in your head. That seems to be where this is going.

Dan Dostal December 9, 2011 at 2:10 pm

I hope you do not believe that modifying a smartphone is worthy of patentability. Inventing the smartphone replacement definitely, but taking an iPhone and making it square is not a sane patent.

Cliff December 9, 2011 at 3:01 pm

Design patent maybe…

TallDave December 9, 2011 at 5:25 pm

Yep, the incentives don’t really make much sense, and certainly aren’t aligned with outcomes. Why cure something when you can expensively treat it for years or decades with drugs that achieve only small marginal benefits?

I bet you could reduce Medicare costs by $10 for every $1 you spent on medical X Prizes.

Becky Hargrove December 9, 2011 at 11:54 am

CBBB,
There are libertarians who believe that economic access for all individuals, at all parts of their lives, is vital to maintaining economic stability.

Dan Dostal December 9, 2011 at 2:14 pm

Yes, but good intentions, candy and rainbows, etc. Without some form of patents corporate society will devolve to guilds. I hope most libertarians would accept limited monopolies in exchange for openness.

CBBB December 9, 2011 at 3:04 pm

Except more and more these “limited” monopolies have stopped being so limited.

Andrew' December 9, 2011 at 4:14 pm

And how open are they?

JWatts December 10, 2011 at 2:42 am

I agree with this chain of thought. Patents in general are a good idea. I disliked that the US increased the length of Patents from 17 to 20 years under pressure from the WTO. Indeed, I think in the modern world you could make a case for lowering patent lengths to something like 10 to 12 years across the board.

And the current Copyright laws are atrocious. I don’t think many Libertarians think that Copyright durations should be anywhere near there current length. Which is one of many reasons why Libertarians aren’t Corporatists.

CBBB December 10, 2011 at 1:56 pm

But I don’t often hear libertarians really complaining about this the way I hear them complaining about even the most minor tax increases on the rich. They might pay a bit of token lip service to these issues but that’s it. In the case of copyrights this is a major area where a lot of criticism should be leveled at the existing system (the current length is not only far too long but the Congress seems to roll over and extend the terms every time a big company like Disney decides to lobby). If anything the current copyright regime is getting much worse – note the new internet piracy bill – not a PEEP out of Tyler Cowen on this.

Cliff December 10, 2011 at 10:19 pm

Few people really understand or are interested in IP, but there are quite a few people who are outspoken against copyrights. Some are libertarian. Probably more libertarians feel this way than average.

Cliff December 10, 2011 at 10:19 pm

Actually the term effectively was shortened, because the 17 years was from issuance while the 20 is from filing. Also, this solved the horrible, horrible problem of “submarine patents”. Believe me, it was a very good policy change.

Becky Hargrove December 9, 2011 at 12:03 pm

Foster,
The problem is that service-related knowledge has not been allowed to accumulate trickle-down wealth in the same way as the wealth of manufacturing and production. Because of that, holes left by the lack of knowledge integration at local levels means that the tide never rises to lift all boats.

Bill December 9, 2011 at 2:05 pm

When I read, Medical Patents Must Die, I was wondering whether TextBook Copyrights Must Die was an appropriate response.

Cliff December 9, 2011 at 3:02 pm

I imagine he is at least in favor of dramatically shortening the copyright term.

noiselull December 9, 2011 at 3:01 pm

And Stephan Kinsella thinks Tabarrok is a statist IP-lover.

Lewis December 9, 2011 at 3:26 pm

How are we supposed to feel sorry for the top 1%, when the lawyers and trolls trying to impose this knowledge monopoly on the rest of us probably make more than $350K/year, and will certainly make more money the more they manage to harm us?

Cliff December 9, 2011 at 4:10 pm

I’m confused, how is this relevant to the post?

TallDave December 9, 2011 at 4:56 pm

I assume he meant Prometheus was one of those 1%ers, and so we shouldn’t feel sorry for his failure to patent fire.

Mark Fusco December 9, 2011 at 4:32 pm

So maybe since Prometius’ patent on fire has expired, he can patent the idea of quickly blowing out het stub of the match when your fingers start burning.

Bartram's Garden December 10, 2011 at 10:17 pm

+1

TallDave December 9, 2011 at 4:54 pm

I think the lesson here is that the Promethean business model failed.

JWatts December 10, 2011 at 2:45 am

No his business model has done fine. It was the Zeusian Guild protection on the knowledge of fire protection that got burned. ;)

JWatts December 10, 2011 at 2:46 am

should have been “fire production” (I hate the no edit / no preview feature on this sight!)

TallDave December 10, 2011 at 9:22 am

Yep, I think moving to Disqus would really help things.

Rahul December 10, 2011 at 11:09 am

I like the simple look as it is.

Kyle December 11, 2011 at 1:48 pm

As long as the whole 20yr patent thing is being discussed here—so what about the 20 yr patent expiring? A lot of big pharma today also own the company that makes the generic. And technically, to be considered a generic, it only has to cost 1cent less than the original. So either way, big pharma shouldn’t be losing THAT much money if they’re smart and also making the generic (aren’t many of them?). It seems like when things go generic there’s big layoffs in companies, and if they also own the company making the generic, I would think that would help prevent/slow layoffs.

Dan December 23, 2011 at 7:28 am

I think the big difference here is that when something goes Generic, any pharma company can make it which leads to competition. I think patents are a good thing, they encourage investment in R&D, but I believe we’d have the same level of investment if we lowered the time span of medical patents. I think 5 year medical patents would lead to a much better balance.

lyjn December 12, 2011 at 3:29 am

I agree with this quote:

“patents can reduce innovation and are especially likely to do so in fields where innovations build on innovations”

Same thing was argued brilliantly in this book – very recommended to read!:

http://www.amazon.ca/Against-Intellectual-Monopoly-Michele-Boldrin/dp/0521879280

Said book can be read here for FREE and LEGALLY:

http://www.dklevine.com/general/intellectual/against.htm

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