Tuesday, August 5, 2008

Patent Nonsense

One of the things that distinguishes intellectual property from the more intuitively obvious tangible variety is that the very notion of intellectual property requires a justification in the sense that tangible property almost never does. Utopians of one variety or another have tried, almost always with disastrous consequences, to abolish the institution of private property, but as far as I know there has never been a society that has denied the existence or necessity of property rights of any sort at all. Typically, their alternative has been to assert some sort of collectivist or communitarian ownership; but while it may be that the clan or the tribe “own everything in common” or the “people (collectively) own the means of production,” woe be any rival clan or tribe or people who happen by and start asserting similar property rights in the same stuff. Wars have been known to start that way even in utopia.

The obvious thing about tangible property is that, being stuff, it’s there whether we call it property or not. That is, whether ♫ This land is my land (or) this land is your land ♫, this land is here whether we say so or not, let alone whether ♫ This land was made for you and me. ♫ And so are its flora and fauna and minerals and water running through it or beneath its surface, etc.

How human society has gone from the realization that the world is filled with stuff to the notion that some of it is our stuff (or your stuff or, most importantly, my stuff) is an interesting topic, but not one with which I wish to concern myself here in any detail. If you care, I’ll merely note in passing that I reject all “natural right” theories of property, personally, especially including the so-called Lockean “labor + stuff = property” theory.

Still, I constantly run across fellow self-described libertarians who believe in one sort of natural rights theory or another and a fairly large number of them believe that their theory justifies the notion of tangible personal property (whether, forgive the legalism here, real or chattel) but not intellectual property. Intellectual property – by which I mean here the usual unholy trinity of patents, copyrights and trademarks – is on this account the equivalent of a state enforced and, worse yet, state created monopoly. To which I respond:

Yes, that’s true. Exactly like the state-created and state-enforced monopoly any owner of any sort of property whatsoever enjoys versus any non-owner. To be sure, the land would still be there with or without a state enforced legal system, but it wouldn’t be anyone’s property. Not in anything like the sense we mean by property now, that is. All of our philosophical twaddle about what should or shouldn’t or can or can’t be deemed property aside, the ownership of a patent or trademark is no different from the ownership of an automobile or a condominium. They are all creatures of the state or, more specifically, of a state enforced legal system one of the principle justifications for is the sorting out of competing claims over the same resources.

Ah, say my opposition, but land and the stuff we find and trap or kill or take and make new stuff out of on the land (and sea) are quintessential examples of real resources; namely, natural resources. Patents and trademarks and copyrights are mere fictions.

I agree. But they are highly useful fictions, and if my libertarian confrères would get off their pseudo-Kantian high horses about absolute right and wrong and concentrate instead on the far more useful questions of pragmatic good or bad, I think they’d be more inclined to agree with my perspective. Which is as follows:

(1) The state of the law of intellectual property is in need of serious reform, but (2) we would all be better served by, for example, a reformed law of patents than by the entire abolition of patents. For you theorists, I will add (3) there are no serious theoretical reasons, ethical or otherwise, precluding us from, as it were, saving the baby even as we throw out the dirty bathwater here.

By way of giving an example of the sort of unnecessary and counterproductive infanticide I have in mind here, let me quote extensively from a recent Kevin Carson piece over at Art of The Possible. Carson makes his point by quoting a commenter there, and because I am too lazy to edit extensively I will do the same, as follows:
2) Eliminate drug patents. Patents are often justified by the allegedly high cost of developing drugs. But as frequent AoTP commenter quasibill observed, the main source of the expense is not developing the version of the drug that is actually marketed, but gaming the patent system. He challenged the popular misimpression, encouraged by smarmy drug company ads,
that what big pharma is researching is cancer meds. It’s not. In the rare instances that big pharma produces and markets such medicines, it has purchased them from small start-ups that themselves are the result normally of a university laboratory’s work. When big pharma cites to billions of research costs, what it is talking about is the process whereby they literally test millions of very closely related compounds to find out if they have a solid therapeutic window. This type of research is directly related to the patent system, as changing one functional group can get you around most patents, eventually. So you like to bulk up your catalogue and patent all closely related compounds, while choosing only the best among them, or, if you’re second to market, one that hasn’t yet been patented.

This work is incredibly data intensive, and requires many Ph.D’s, assistants, and high powered computers and testing equipment to achieve. But it is hardly necessary in the absence of a patent regime. In the absence of patents, (and of course the FDA), you could just focus on finding a sufficient therapeutic window, and cut out the remaining tests.

Patents also grossly distort the market, leading drug companies to focus most of their research on “me too” drugs that tweak an existing formula just enough to enable it to be repatented, and use it to replace the older version that’s about to go generic. Then the drug reps hit the hospitals and clinics, drop off some free samples and pamphlets, and (most M.D.s relying on drug industry handouts for their information on drugs that come out after they leave med school) the “me, too” drug becomes the new standard form of treatment.
The license cartels and drug patents are two examples of essentially the same phenomenon: First, the government creates a honey pot by enforcing a monopoly and making particular forms of service artificially lucrative. Then the market skews toward where the money is, as practitioners adopt the more lucrative business model and crowd out affordable alternatives.

Okay, so let’s clear the air here a bit. In the first place, whatever may be the truth about the claim that “[p]atents are often justified by the allegedly high cost of developing drugs,” the better question is whether we will have more and better drug research and development with patents or without them regardless of whether those patents go to “big pharma” or to “small start-up firms.” That is, we shouldn’t really care who the incentive of profitable patent rights is spurring on to do research, and that is true whether such research is on cancer drugs or toe fungus drugs.

If Mr. Carson or his commenter believe that there are better ways to encourage such research, they should by all means argue for them. I, however, know of no better incentive than self interest and until I am shown fairly compelling evidence to the contrary, I am not inclined to believe that removing the profit motive from drug research is likely to produce a better, more readily available or affordable pharmacopeia.

Now, that said, no one bothering to read this far should leave thinking I’m an apologist for the pharmaceutical companies. Their successful efforts some years back to retroactively extend the life of patent protection (and similar so-called “reforms” in copyright for the entertainment industry) constitutes nothing more than massive theft and the politicians who voted for such theft should all be horsewhipped. They all created and / or invented whatever they did when the state of the law provided a certain term of proprietary rights and they should enjoy the benefit of that bargain, but nothing more. If the case could be made for patents or copyrights of longer duration, whether for drugs or novels or whatever, fine. But such revised laws should take effect only prospectively. Retroactive extension deprives the public (you and me) of our rightful future expectations with regard to these properties, future expectations we have been paying for throughout the life of the original patents or copyrights. Moreover (okay, go ahead and get back on your Kantian high-horse for a moment here), fair’s fair and a bargain is a bargain.

I don’t deny that the current state of patent law should be extensively reformed (starting with repealing the patent extensions granted “big pharma” in the recent past). It is also true that, to use Mr. Carson’s phrase, patents “distort the market ... [skewing it] toward where the money is.” But, ignoring the emotive connotations of “distort,” it is true of all property schemes that they provide incentives toward certain sorts of behavior and against others.

Perhaps the current system does encourage gaming of sorts which we want to discourage, instead. Perhaps we permit new patents on new drugs that are too closely similar to previously developed drugs. I say perhaps. In fact, I don’t know whether it does or not. The point, however, is that there are all sorts of ways of changing the existing system short of simply abolishing it.

And replacing it with what? The milk of human kindness as a spur to research or, what I fear is the real intended replacement, more massive government control and funding?

Do you want more invention and innovation or less? Do you want more creative works of art or fewer? Those, I think, are the critical questions in any useful discussion of intellectual property. And at the risk of repeating myself, details aside, I know of no better means of getting more of both than by encouraging self-interest through the creation of private property interests in the fruits of such invention and creativity.

Do you?

1 comment:

Bruce said...

D.A.,
I just found your site through a search for a feature on Hopper, the artist. Your commentary kept me, though. I like your work, your commentary, regardless of any specific claims or conclusions you may be making.

All the best.
Bruce