Monday, May 21, 2012

The dictatorship of intellectual property rights

"At the heart of the defense of modern day capitalism is the view that it is an innovation machine powered by competition and rivalry. In its ambit, the fittest survive and the leanest grow, goes the argument. In practice, however, it is precisely in the area of innovation that capitalism today affords private firms legal monopolies in the form of patents. And such protection is proving increasingly difficult to justify in the context of the huge investments being made by firms in acquiring and hoarding patents (not inventions) and financing litigation costs incurred to defend themselves against patent violation suits." writes C. P. Chandrasekhar in

In Garden Earth: I write the following:

Shortly after a large-scale clinical trial in 1955, the first inactivated polio vaccine was being injected into tens of millions of people around the world—possibly the most successful pharmaceutical product launch in history. Asked why he had not obtained a patent on the phenomenally successful vaccine, Jonas Salk reportedly replied, ‘That would be like patenting the sun.’ A few decades later, this view seemed laughably quaint. (Alan Dove, quoted in Science Commons 2010)
Some problems are associated with the fact that nobody owns a certain resource, but certainly greater problems are associated with privatization of common resources such as knowledge, natural resources, innovations and technology. While there might have been secrets of the trade or knowledge that was monopolized also earlier, in no society this was done from the perspective of ownership. At a certain stage society started to protect intellectual property in order to motivate investments by assigning monopoly to certain people who, falsely or rightly, were seen as innovators or originators.
In England, patents in the modern sense originated in section 6 of the 1623 Statute on Monopolies, which described patents as ‘monopolies’ and exempted them from the general ban on royal grants of such rights. Mostly intellectual property rights have been established not on the basis of any idea of the ‘rights’ of the originator but rather on the basis of a utilitarian perspective that it is beneficial for society to assign such rights (compare with the discussion on privatization of nature’s resources).[1] It is by protection of the interest of the originator that they will be stimulated to be more creative, innovate and bring to the market new products. Gradually, over the course of history, this perspective was replaced by the notion that rights to control the use and dissemination of information are forms of ‘property’ rights[2] (Fisher 1999). 

The 1790 Copyright Act of the United States established a copyright term of 14 years. Copyrights acquired today will last for the life of the author plus 50 years. A less straightforward but equally important issue is the definition of a copyrighted ‘work’. Until the middle of the nineteenth century, a copyright owner enjoyed little more than protection against verbatim copying of his or her language. So, for example, in 1853 a federal Circuit Court rejected the claim of Harriet Beecher Stowe that a German translation of Uncle Tom’s Cabin infringed upon her copyright. Today the story is quite different and the kinds of works to which copyright laws may apply have also grown enormously: in 1884, the Supreme Court concluded that photographs could be copyrighted; in 1971, Congress decided that musical recordings should be shielded from copying. In 1979, computer software was added to the list of protectable works. Like copyright, patent laws were gradually extended. In 1842, hoping to provide ‘encouragement to the decorative arts’, Congress extended the reach of the patent statute to cover ‘new and original designs for articles of manufacture’. Until the early twentieth century, plants were considered products of nature and hence unpatentable. The Plant Patent Act of 1930 overrode this principle, extending a modified form of patent protection to new varieties of asexually reproducing plants. In 1970, Congress went further, reaching new and ‘distinct’ sexually reproducing plant varieties (Fisher 1999).

Half the costs are licensing fees

As the world is getting more and more complex, the tangling web of patents and copyrights is getting more and more impenetrable and it is reasonable to ask which of the original motives for these rights are still valid, if any. Innovation, art and culture all existed before intellectual property rights, and the empirical evidence for the value of them for society is largely missing. If the manufacturing of a product needs a number of components or technologies patented by others, it is a complicated process just to negotiate with all patent holders. Additionally, all the licensing fees have to be paid. One single microchip can ‘contain’ more than 5000 patents; for a cheap DVD player patent costs are as high as manufacturing costs (Wikipedia 2009). In practice, this could mean that good products never reach the market despite both demands from consumers and interest from manufacturers. In the words of economists, a clear ‘market failure’.

The use of the neem tree as a fungicide was patented by an American company, despite that neem has been used as a pesticide for 2000 years. A coalition of the Greens in the European Parliament, the Research Foundation for Science, Technology and Ecology and the International Federation of Organic Agriculture Movements sued the company to the European Patent Office. After a 10-year-long process, the patent was declared void (IFOAM 2005). At a certain time there were concerns over this kind of bio-piracy, that is, that companies would capitalize on indigenous knowledge. This led to the possibility of patenting that kind of knowledge. Even if the intention was good, it seems as if, ironically, these measures paved the way for exactly what should have been prevented, a privatization of these resources. 

Patent rights can mean that fewer medicines are produced and that they are produced for a higher price, because patent rights limit competition (remember the origin in England in the Statute on Monopolies). A special case is the antiretroviral drugs used for HIV/AIDS. For long the ‘giant pharma’ refused to let generic copies be produced and sold cheaply in low-income countries, which meant that millions didn’t get access to them, again a typical ‘market failure’. In this case, public relations of the pharmaceutical companies ultimately became nightmarish and they backed considerably. It is indisputably the case that a lot of pharmaceutical research would not happen unless there was some protection for the innovation. On the other hand, the research is not necessarily geared towards what is best for the patient or society. There is, for instance, much less interest in drugs that, once and for all, cure an ailment than in those that need to be administered for the rest of your life.

 As can be seen with malaria treatments, there is little private investment in it because the clientele is so poor—which is also the case for why so much public and charity money is spent on this. As well as being an argument for patent rights, the situation with medicinal drugs seems to provide at least equally strong arguments for publicly funded research and common access to the result. For example, the effects of antibiotics are threatened by resistant bacteria. To be able to still treat the growing number of infections with such bacteria, we need to develop antibiotics that are only used as a last resort (so that no bacteria develop resistance against them too). But there is clearly little commercial interest to develop a new antibiotic and then not use it actively. Only governments or other public interest organizations will do that.

(extract from Garden Earth) 

an article in New York Times  writes: 
Another huge barrier to independent inventors is, paradoxically, the system set up to protect them. “The patent system has become rather costly for a small inventor,” says James Bessen, a lecturer at the Boston University School of Law. “Go back 100 years, and patents were very inexpensive to get. You didn’t have to have a lawyer to get one. The system is working in a very different way than it did years ago, and that favors large corporations.”  

[1]            Notably, in continental Europe, the perspective of a ‘natural right’ to the originator was more prevalent.
[2]            In a way, the same process has taken place with ownership of land, which was also a common resource that was gradually privatized.

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