
A Patently Ridiculous Patent System
The stifler of innovation itself comes in reams of paper, hoarded in the unexplored depths of the US patent office. Previously heralded as the protector of innovation, has the time for patent passed?
Dr. Jonas Edward Salk was born the son of Jewish, Polish immigrants on the 28th of October, 1914. This man of humble, second generation immigrant origins, growing up in the Bronx would go on to dedicate his life to finding the cure for Polio and in 1955 find it and in doing so save the lives of thousands of people from the debilitating disease. Upon his discovery of a vaccine he was interviewed by the TV personality Ed Murrow and was asked on the show, “Who owns the patent?”. The assumption made by Murrow was that Salk would be a fool to have not rushed to the patent office, discovery clutched firmly in his fist, to register his creation. The race to the patent office constituted the modern equivalent to Archimedes leaping from the bathtub and streaking through the streets of Ancient Greece immortalised by the foot race to the U.S patent office between Elisha Gray and Alexander Graham Bell in the fight over the telephone. Dr. Salk potentially held a patent worth an estimated $7 billion had the vaccine been bottled exclusively, sold at a premium, at restricted supplies, by the milligram to the highest bidder (otherwise known as the most desperate mother). Instead, his response was simple, “No-one” he said “Could you patent the sun?”.
Unfortunately, Dr. Salk’s act of generosity and altruism is all too rare in the market for drug research and development. The use of patent and IP laws intended to protect small-scale investors have become dominated by corporate heavyweights like GlaxoSmithKline, patent trolls and corporations motivated by their bottom line and shareholder dividends.
The current system for the allocation of patents creates a set of perverse incentives for a race to the patent office, not a race to the consumer market.
But where is this most problematic? To be clear, I have little to no problem with the frivolous patent applications for inventions that most of us would rather never see progress beyond the prototype stage for instance a patent on an “apparatus for facilitating the birth of a child by centrifugal force” which sounds more similar to a medieval torture tactic than a method to bring life into the world. Instead it is the use of patent law on particular goods and services that are significant merit goods boasting large-scale positive externalities, life-saving medicines like Salk’s polio vaccination or green technology that could revolutionise the fight against global warming.
Whilst the protection of intellectual property is without a doubt one that states ought to respect it must, like any other state afforded right, operate a sliding scale rather than being an absolute right.
The problem comes when the decision is made to make such a law absolute in its protection without due consideration to other factors. In the case of crucial technologies it is abundantly clear that the creation of monopolistic control is an active decision allow corporations to excessively profit from the misfortune of others and whilst this may be a crucial tenet of the religion that is capitalism, the state has a duty to separate itself from this particular church. Furthermore, it could be claimed that it was through the hard work of the state in the creation of infrastructure such as roads and the provision of education that you were able to create a good in the first place and therefore do not hold any sort of divine right over what has been created. This is even more the case when we turn to the Stanford University patent administration office, which loans out the rights to use patents to patent trolls that then use afore mentioned patents to terrorise genuine business owners. There were a plethora of variables other than the inventors themselves that played a role in the acquisition of a patent, and in the case of crucial technology they needn’t hold such inordinate control. The final and most crucial element is that of time. With the creation of new and more efficient photovoltaic cells, paired with the irreversible nature of climate change, we do not have time to wait for the patent to expire before we are able to bring goods to the open market and given the often tedious and bureaucratic nature of even passing a patent, the less time we waste, arguably, the better. Perhaps a far better mechanism would be to offer a one time stipend rather than continued control over an extended period of time, furthermore, a decision not to grant a patent wouldn’t eliminate the structural advantage that a company line Hoover had when they invented the vacuum cleaner but would instead only hasten the approach of dyson to take its place.
In the case of life saving medicines the use of patents is particularly problematic given that it offers the ability to charge incredibly high prices without any possible substitutes. Furthermore given the nature of medical advancements often, the discovery of one compound can be put to a wide range of uses, but with a patent in place that is restricted to only the applications undertaken by the patent holders. In the case of Glaxosmith and Pfizer it means that large corporations can rapidly monopolise because in order for other companies to make their products they have to pay for copious licensing agreements which decreases their profit margins and therefore the amount of money they have to fund research and development themselves. Realistically, the democratisation of access to newly invented medicines would not pose too significant a threat to profit margins, given the significant war chests that companies like Pfizer boast. We know this because the market for copy-cat drugs in nations like India continue to expand year on year. Interestingly enough, in recognition of this fact Glaxosmithkline in what was likely a PR move decided to waive their patent litigation in developing countries, a fantastic step forwards, but realistically nothing more than a glorified recognition of the inevitable. Whilst progress has been made on this frontier, we still live in a world where Martin Shreleki can continue to extort those desperate for HIV treatment with 500% increases in the price of medication. We describe the perfect market as one in which homogenous products are offered, but the existence of patents and the ability to drive down prices via the introduction of new firms is lost when there are extensive barriers to entry posed to those applicants. Most perverse is the fear of attempts at innovation by small scale inventors on the basis that they know they would have insufficient funds to fight off exorbitant legal cases launched by the likes of patent trolls. This loss of attempted innovation stifles increases in general utility and is not worth the sacrifice of such a crucial good.
This is a problem that isn’t unique to the patent industry but also extends to the market for the creation of green technologies. Isn’t it rather telling that one of the greatest holders of green technology patents is the government of Saudi Arabia, followed only by the likes of BP and Shell. Now if we were to extend the benefit of the doubt then we could say that these corporations and entities are fulfilling a crucial service in their research and innovation, a responsibility that governments have thus far reneged upon. This is because climate change is by definition an international issue and the benefits of tackling such an issue are experienced by everyone and yet the cost only borne by the nation that decides to act. This same tragedy of the commons does not apply to firms due to the fact that Transnational corporations operate on a global scale, and the access to patent law ensure that incentives to innovate and create these products continue. On the other hand one of the major advancements in recent time has come, less in the form of actual products and more in a realisation of the fact that fighting global warming and GDP growth needn’t be in tension with one another. This has been evidenced in the rapid growth of the Chinese solar panel industry, making the country the largest investor in green technology in the world. This production of cheap, high quality solar panels has since saturated the US market, boosting supply and driving down price. What this means in the real world is that many americans have taken to the installation of solar panels, not because they care about the earth (which would be a fairly odd reason given that the effect of one individual is frankly negligible) but instead because doing so has become a viable investment, and decreases their energy bills over time. It is through the expulsion of patents that the change we have witnessed has been so rapid in nature.
In conclusion, the continued use of patents in industries of life altering importance is an irresponsible use of intellectual property laws. We need to open the gates for further innovation, democratisation of access for individuals across wealth divides and eliminate the counter-productive barriers to entry put in place by patent trolls. The patent has, of course, served its purpose in the past but it is perhaps time for it to step aside to welcome in the new age of competition in the interest of the consumer.
