Published on 18 Mar 2015
AIDS has killed more than 36 million people worldwide. There are drugs available to treat AIDS, but the price of one pill is incredibly high in the U.S. — coming in at 25 times higher than its cost. Why is that? In this video, we show how patent rights have created a monopoly in the U.S. market for AIDS medication, causing pills to be very expensive. In other countries, however, such as India, which does not recognize patents on AIDS medication, prices remain low. Using this example, we go over how monopolies use market power to increase prices.
December 2, 2015
October 12, 2015
In The Atlantic, Josh Giesbrecht postulates that our penmanship went south in parallel with the rise of the ballpoint pen:
Recently, Bic launched a campaign to “save handwriting.” Named “Fight for Your Write,” it includes a pledge to “encourage the act of handwriting” in the pledge-taker’s home and community, and emphasizes putting more of the company’s ballpoints into classrooms.
As a teacher, I couldn’t help but wonder how anyone could think there’s a shortage. I find ballpoint pens all over the place: on classroom floors, behind desks. Dozens of castaways collect in cups on every teacher’s desk. They’re so ubiquitous that the word “ballpoint” is rarely used; they’re just “pens.” But despite its popularity, the ballpoint pen is relatively new in the history of handwriting, and its influence on popular handwriting is more complicated than the Bic campaign would imply.
The creation story of the ballpoint pen tends to highlight a few key individuals, most notably the Hungarian journalist László Bíró, who is credited with inventing it. But as with most stories of individual genius, this take obscures a much longer history of iterative engineering and marketing successes. In fact, Bíró wasn’t the first to develop the idea: The ballpoint pen was originally patented in 1888 by an American leather tanner named John Loud, but his idea never went any further. Over the next few decades, dozens of other patents were issued for pens that used a ballpoint tip of some kind, but none of them made it to market.
These early pens failed not in their mechanical design, but in their choice of ink. The ink used in a fountain pen, the ballpoint’s predecessor, is thinner to facilitate better flow through the nib—but put that thinner ink inside a ballpoint pen, and you’ll end up with a leaky mess. Ink is where László Bíró, working with his chemist brother György, made the crucial changes: They experimented with thicker, quick-drying inks, starting with the ink used in newsprint presses. Eventually, they refined both the ink and the ball-tip design to create a pen that didn’t leak badly. (This was an era in which a pen could be a huge hit because it only leaked ink sometimes.)
The Bírós lived in a troubled time, however. The Hungarian author Gyoergy Moldova writes in his book Ballpoint about László’s flight from Europe to Argentina to avoid Nazi persecution. While his business deals in Europe were in disarray, he patented the design in Argentina in 1943 and began production. His big break came later that year, when the British Air Force, in search of a pen that would work at high altitudes, purchased 30,000 of them. Soon, patents were filed and sold to various companies in Europe and North America, and the ballpoint pen began to spread across the world.
October 8, 2015
The current US patent system is set up to create and maintain — for a limited time — monopolies that can be exploited by pharmaceutical companies:
The Wall Street Journal has a puzzling piece complaining about how the pharmaceutical companies seem to make out like bandits from the existence of the patent system. What puzzles is that the entire point and purpose of the patent system, in an economic sense, is so that inventors of things can make out like bandits. The background problem is that of public goods, something I’ll explain in a moment. That problem leads us to thinking that a pure free market in things which are public goods isn’t going to work as well as something a little different. So, we design something a little different. And the point and purpose of our design is so that people who innovate can make vast mountains of cash out of having done so.
It’s then more than a bit odd to point out that our system enables people who innovate to make vast mountains of cash.
Which brings us to the subtlety of those pricing decisions. With drugs, pharmaceuticals, close enough the cost of manufacturing a dose is zero. All of the costs go in the original research, the clinical testing (the lion’s share) and getting it through the FDA. Profit is therefore determined, since marginal production costs are zero (they’re not, accurately, but close enough for this comparison), by gross revenue. And we want to maximise the incentive for people to innovate, that’s the very reason we’ve got this patent system in the first place, and thus we would rather like the pharma companies to be maximising revenue.
And thus, from this economic point of view, we should be quite happy with people raising their prices. Demand does fall as they do so, yes, but as long as gross revenue increases, the price rises more than compensating for the fall in unit demand, then we should be happy with the way the system is working. Gross revenue is being maximised, profits are being maximised, incentives to innovate are being maximised. That’s what we want our system to do after all.
Far from being worried about this price gouging we should be welcoming it. Because, obviously, someone making bajillions out of having innovated a drug to cure a disease increases the incentives for many other people to go and invest bajillions of their own to cure other diseases. Far from complaining about it we should be celebrating the system working.
In Wired, Sarah Zhang handicaps the horses in this year’s highly competitive Nobel Sweepstakes:
Nobel prize speculation, gossip, and betting pools kick off every fall around the time Thomson Reuters releases its predictions for science’s most prestigious prize. This year, one prediction was unusual: a genome-editing tool so hyped that it even got on the cover of WIRED.
(No, seriously, how often does molecular biology get to occupy the same space as Star Wars or Rashida Jones?)
The tool, Crispr/Cas9, is essentially a pair of molecular scissors for editing DNA, so precise and easy to use that it has taken biology by storm. Hundreds if not thousands of labs now use Crispr/Cas9 to do everything from making super-muscled pigs to snipping HIV genes out of infected cells to creating transgenic monkeys for neuroscience research. But the Nobel prediction stands out for two reasons: First, the highly-cited paper describing Crispr/Cas9 came out a mere three years ago, a blip in the timescale of science. Second, the technique is currently at the heart of a bitter patent fight.
Thomson Reuters bases its predictions on how often key papers get cited by other scientists. Here, the paper in question has as its authors Jennifer Doudna, a molecular biologist at UC Berkeley, and Emmanuelle Charpentier, a microbiologist now at the Max Planck Institute for Infection Biology. Missing is Feng Zhang (no relation to this writer), a molecular biologist at the Broad Institute and MIT, who actually owns the patents for CRISPR/Cas9 and says that he came up with the idea independently. So let’s say Thomson Reuters gets it right. Could the patent for a discovery go to one scientist, and the Nobel prize for the discovery to someone else?
The two groups — or their patent lawyers, really — are in fact fighting over credit for CRISPR/Cas9. At stake are millions of dollars already poured into rival companies that have licensed patents from the two different groups.
But putting aside all the lawyers and all the money for a moment, obsessing over finding the one true origin of Crispr/Cas9 gets science all wrong. Casting the narrative as Doudna versus Zhang or Berkeley versus MIT is a misapprehension of history, creativity, and innovation. Discovery comes not from a singular stroke of genius, but an incremental body of research. “I’m not a great believer in the flash-of-genius theory. If you are a historian —” says Mario Biagioli, who is in fact a historian of science at UC Davis — “you quickly will realize exactly how many times there are independent discoveries of the same thing.” The dispute over credit for CRISPR/Cas9 is not the result of exceptional coincidence and disagreement. In fact, it illuminates how science always works.
July 29, 2015
Who would ever have thought of combining wireless computing with sexual appliances? Nobody, right? There’s no possible way that anyone could have even imagined such a thing could happen … otherwise this patent would not have been issued:
Alright, people, strap in and keep the laughter to a minimum because we’re going to talk dildos here. Specifically, remotely operated dildos, and other sex apparatuses, including those operated by Bluetooth connections or over the internet. It seems that in 1998, a Texan by the name of Warren Sandvick applied for a patent that casts an awfully wide net over remotely controlled sexual stimulation, specifically any of the sort that involves a user interface in a location different from the person being stimulated. You can find the patent at the link, but here’s the abstract:
An interactive virtual sexual stimulation system has one or more user interfaces. Each user interface generally comprises a computer having an input device, video camera, and transmitter. The transmitter is used to interface the computer with one or more sexual stimulation devices, which are also located at the user interface. In accordance with the preferred embodiment, a person at a first user interface controls the stimulation device(s) located at a second user interface. The first and second user interfaces may be connected, for instance, through a web site on the Internet. In another embodiment, a person at a user interface may interact with a prerecorded video feed. The invention is implemented by software that is stored at the computer of the user interface, or at a web site accessed through the Internet.
Great, except that nothing in the above is an actual invention; it’s essentially an acknowledgement that a dildo could be controlled remotely and an attempt to lay claim to that function exclusively. The description of the art outlaid in the patent rests solely on the claim that sexual stimulation devices have always been either self-stimulation devices or that any remotely operated stimulation devices still required close proximity. But it all rests on what you consider a stimulation device.
Even before this patent was filed, there was a term for this kind of thing in use: teledildonics.
April 20, 2015
David Warren casts his thoughts into the air, but a hundred years ago the Wright Brothers’ lawyers would have been doing their legal damnedest to bring him back down to earth in a hurry:
Work on powered, controlled flight in the United States was far behind that in France, or England, but fell farther behind thanks to the Wright brothers. Fixated on the problem of converting invention into wealth, they pursued rival aviators around the USA with teams of lawyers. Their numerous, voluminous, cumbersome lawsuits were based on often fanciful patent claims, emerging from their own intensely secretive research.
One thinks for instance of the great aviator, Louis Paulhan (first to fly London to Manchester), who arrived with two Blériot monoplanes and two Farman biplanes to give flying demonstrations across the USA. Amazed at the workings of the American judicial system, but ignoring legal injunctions to prevent them from flying their machines, they took every prize at the Los Angeles Air Meet in January 1910, setting new records for altitude and endurance.
The Wrights were present, there as elsewhere, though never competing. They and their gaggle of lawyers followed Paulhan and the other foreigners around the country, serving them with process papers, and demanding unbelievably huge sums to call off their dogs, in vile and obvious attempts at extortion. And then they’d hit the local impresarios with additional suits to impound all the cash from ticket sales, &c. Truly: vicious and contemptible men.
To avoid fines or imprisonment in backwoods American jurisdictions, the visitors took to giving their demonstrations entirely for free, but still the lawsuits kept coming. Finally they gave up and went home.
And there’s even a maple-flavoured sidelight in the story:
Part of the reason for Canada’s early advances in aviation (first flight of the Silver Dart at Baddeck in Cape Breton, with its ingenious ailerons, &c) was the migration of American inventors, such as the brilliant motor-mechanic Glenn Curtiss, to safe territory away from the corrupt and unpredictable U.S. courts.
This, I suspect, was among the reasons that the spectacularly inventive Scotchman, Alexander Graham Bell, re-located from his grand mansion in Washington, DC. At first he went north, back to Canada (where he had settled before), only for the summers; but soon he was staying through the winters, too. Not only in flight, but in all the many other areas of his pioneering work (he invented the telephone, &c), he was afflicted with lawsuits from American cranks, with those dollar signs twirling in their eyes and the slick lawyers lining up behind them, ready to exploit a patent regime wide open to political manipulation. For apart from the beauty of the Bras d’Or landscape, Bell was back under the protection of British Common Law.
April 14, 2015
H/T to Veronique de Rugy, who explains that much of the increase in “patents for trivial and non-original functions” can be traced back to the creation of one particular court.
August 28, 2014
The Guardian Technology Blog looks at how digital product vendors attempt to lock you into their own (more profitable) platform or ecosystem:
Depending on your view, the stuff you own is either a boon to business or a tremendous loss of opportunity.
For example, your collection of spice bottles in your pantry means that I could possibly sell you a spice rack. On the other hand, it also means that I can’t design a special spice rack that only admits spice bottles of my own patent-protected design, which would thereby ensure that if you wanted to buy spices in the future you’d either have to buy them from me or throw away that very nice spice rack I sold you.
In the tech world, this question is often framed in terms of “ecosystems” (as in the “Google/Chrome/Android ecosystem”) or platforms (as in the “Facebook platform”) but whatever you call it, the discussion turns on a crucial different concept: sunk cost.
That’s the money, time, mental energy and social friction you’ve already sunk into the stuff you own. Your spice rack’s sunk cost includes the money you spend on the rack, the time you spent buying fixings for it and the time you spent affixing it, the emotional toil of getting your family to agree on a spice rack, and the incredible feeling of dread that arises when you contemplate going through the whole operation again.
If you’ve already got a lot of sunk costs, the canny product strategy is to convince you that you can buy something that will help you organise your spices, rip all your CDs and put them on a mobile device, or keep your clothes organised.
But what a vendor really wants is to get you to sink cost into his platform, ecosystem, or what have you. To convince you to buy his wares, in order to increase the likelihood that you’ll go on doing so — because they match the decor, because you already have the adapters, and so on.
The vendor wants to impose a switching cost on you, to penalise you for disloyalty should you defect to another ecosystem/platform. The higher your switching costs, the worse the vendor can afford to treat you — rather than supplying the best goods at the best price, he can provide the best goods at the best price, plus the switching cost you’d have to pay if you went somewhere else. Or he can offer the best price, but offer goods whose manufacture — and quality — is cheaper by a sum of about the cost you’d have to pay for switching.
May 12, 2014
Stephen Shankland provides another exhibit in the patent-system-is-broken case:
Photographers are hooting derisively at a patent Amazon won in 2014 for a photography lighting technique that’s been in use for decades, a patent that’s helped undermine the credibility of the patent system.
Amazon’s patent 8,676,045, granted in March and titled “Studio Arrangement,” describes a particular configuration of the photography subject in the foreground and a brightly lit white screen behind, an approach that “blows out” the background to cleanly isolate the subject.
It’s a fine idea, but not a novel invention, argued David Hobby, a professional photographer since 1988 who runs the Strobist site that for years has been a popular source of advice on flash photography. He used the approach himself as a staff photographer on his first job decades ago for a business publication.
January 27, 2014
In the Boston Globe, Katherine C. Epstein makes a strong case for the origin of the military-industrial complex not being the era that President Eisenhower warned about, but actually in the run-up to the First World War:
The phrase [Eisenhower] popularized to describe the emerging system — the “military-industrial complex” — has since become a watchword, and Eisenhower’s account of its rise has struck most observers as accurate: It was a product of an immense war effort and the new attitudes spawned in the aftermath.
But what if Eisenhower — and others — had the origin story wrong? Although the military-industrial complex unquestionably became far larger and more deeply entrenched as a result of World War II and the Cold War, a closer reading of the history suggests that its essential dynamics were actually decades older. An armaments industry in close collaboration with the military — coping with global and national arms markets, sophisticated technology, intense geopolitical rivalries, and a government prone to expand its power in the name of national security — had its roots in the way geopolitics, industrialization, and globalization collided at the turn of the 20th century. And one key innovation that helped to tip the United States over into the national security regime that we recognize today was, of all things, the torpedo.
The torpedo didn’t just threaten to change naval warfare. It was a sophisticated new weapon so important to the US Navy that it forced the government to form a novel relationship with industry — and to introduce the trump card of national security as a rationale for demanding secrecy from private companies. The policy that developed along with the torpedo set the terms for the efforts to control information in the name of national security that we’re seeing now. To appreciate just how far back that policy runs — back to a time not of war, but of peace — gives us a new lens on our current struggles over the military-industrial complex, and perhaps a different reason to worry.
January 6, 2014
In The Register, Tim Worstall explains why the notion of patents was introduced to the law and why we need to fix it now:
Having decided that the patent problem is an attempt to solve a public goods problem, as we did in part 1, let’s have a look at the specific ways that we put our oar into those perfect and competitive free markets.
It’s worth just noting that patents and copyright are not, absolutely not, the product of some fevered free market dreams. Rather, they’re an admission that “all markets all the time” does not solve all problems. That exactly why we create the patents.
Given that people find it very difficult to make money from the production of public goods, we think that we probably get too few of them. Innovation, the invention of new things for us to enjoy, is one of those public goods. It’s a hell of a lot easier to copy something you know can already be done than it is to come up with an invention yourself. So, if new inventions can be copied easily then we think that too few people will invent new things. We’re not OK with this idea. Thus we create a property right in that new invention. The inventor can now make money out of the invention and thus we get more new things.
And if it were only that simple, then of course we’d all be for patenting everything for ever. However it isn’t that simple. For not only do we want people to invent new things, we also want people to be able to adapt, extend, play with, improve those new things. Or apply them to areas the original inventor had no thought about. In the jargon, we want not just new inventions but also derivative ones. So we want to balance the ability of inventors to protect with the ability of others to do the deriving. And that’s probably what is actually wrong with our patent system today.
Have a look at Tabarrok’s curve:
If we have no protection of originality, then we get too little innovation. But if we have too strong a protection, then we get too little of the derivative stuff. There’s a sweet spot and the argument is that we’re not at it at present and are thus missing out on some goodies as a result. Perhaps some tweaks to the system would help?
November 14, 2013
This time it’s apparently a recent draft of the Trans-Pacific Partnership agreement. The Register‘s Richard Chirgwin assures us that it’s not as bad as we thought — it’s much worse:
The TPP is a document supposed to harmonise intellectual property protections in participating nations — America, Canada, Australia, New Zealand, Japan, Malaysia, Vietnam, Brunei, Singapore, Chile and Peru. Instead, it looks like a an Australia-US-Japan club force-marching the treaty into America’s favoured position on nearly everything, from criminalisation of copyright infringements through to a blank cheque for pharmaceutical companies.
The document, here, is huge, but some of the key items include:
- Criminalisation of copyright infringement by all signatories;
- Stronger DRM and “technological protection measure” regimes;
- ISPs to be made liable for copyright infringement on their networks;
- A “take it down first, argue later” DMCA-like process for notifying copyright infringements;
- Patentable plants and animals;
- The evergreening of patents — this has become particularly notorious in the pharmaceutical business, where the repackaging of an out-of-patent medication is used to keep common compounds out of the public domain.
America and Japan are opposing consumer protections proposed by the other nations (Australia excepted). These provisions, in Article QQ.A.9, would be designed to prevent the abuse of copyright processes, use of intellectual property rights as a restraint of trade or as the basis of anticompetitive practises.
America manages to put itself beyond the pale as the sole sponsor of Article QQ.E.1, pretty much a “Monsanto clause” by pushing for patent coverage of plants and animals, including “biological processes for the production of plants and animals.” New Zealand, Canada, Singapore, Chile and Mexico want to specifically exclude these, along with “diagnostic, therapeutic and surgical methods for the treatment of humans or animals”.
August 29, 2013
A major new patent bill, passed in a 117-4 vote by New Zealand’s Parliament after five years of debate, has banned software patents.
The relevant clause of the patent bill actually states that a computer program is “not an invention.” Some have suggested that was a way to get around the wording of the TRIPS intellectual property treaty, which requires patents to be “available for any inventions, whether products or processes, in all fields of technology.”
Processes will still be patentable if the computer program is merely a way of implementing a patentable process. But patent claims that cover computer programs “as such” will not be allowed.
It seems there will be some leeway for computer programs directly tied to improved hardware. The bill includes the example of a better washing machine. Even if the improvements are implemented with a computer program, “the actual contribution is a new and improved way of operating a washing machine that gets clothes cleaner and uses less electricity,” so a patent could be awarded.
August 20, 2013
Remixing is a folk art but the techniques are the same ones used at any level of creation: copy, transform, and combine. You could even say that everything is a remix.
H/T to American Digest for the link.
July 1, 2013
Micheal Geist rounds up some good news for Canada Day:
As Canadians grapple with news of widespread secret surveillance, trade agreements that could upend intellectual property policy, and the frustrations of a failed wireless policy, there are plenty of digital policy concerns. Yet on Canada Day, my weekly technology law column argues that it is worth celebrating the many positive developments that dot the Canadian digital policy landscape. Eight of the best include:
1. The Supreme Court of Canada’s strong affirmation of user rights and technological neutrality in copyright. [. . .]
2. The Canadian Radio-television and Telecommunications Commission’s policy on network neutrality. [. . .]
3. The defeat of the government’s lawful access legislation. [. . .]
4. Canada’s promotion of user generated content. [. . .]
5. The CRTC’s pro-consumer agenda. [. . .]
6. The Privacy Commissioner of Canada’s aggressive investigations of top Internet companies. [. . .]
7. Canada’s notice-and-notice system for Internet providers. [. . .]
8. Canada’s balanced patent law standards. [. . .]