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An Inconvenient Truth: Patents Do Not Deter Research


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: February 21, 2011 @ 12:30 pm
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Frankly I am getting rather sick and tired of those who oppose intellectual property protections ignoring the overwhelming truth that patents and other forms of intellectual property are a net positive for society. These anti-patent and anti-intellectual property zealots purport to present objective facts, but if you look at their reports there is never anything other than conjecture and speculation.

For example, on January 24, 2011, an article in the Chronicle of Higher Education exclaimed: “A new study released today indicates that overly complicated and restrictive patenting practices, and scientists who do not fully share information and materials, are creating a research bottleneck at the corporate level that could soon hinder work at dozens of universities.” The trouble is when you look at the “study” you notice it really wasn’t a “study” at all. The report is devoid of a single fact or concrete observation. The report is nothing more than the opinions of a panel of supposed governmental and academics experts.  In fact, it is just a “consensus statement” that makes numerous recommendations without any factual support.  Those familiar with the gene patent challenges in the Courts will not be surprised that the extraordinarily intellectually dishonest Robert Cook-Deegan was a member of the supposed panel of experts.

First, real studies on the issue have demonstrated that patents do not in any way, shape or form create a research bottleneck.  The book Innovation for the 21st Century by Rutgers University Law Professor Michael Carrier explains the truth.  Professor Carrier states:

The Supreme Court’s robust version of the statutory experimental defense stands in marked contrast to the Federal Circuit’s constricted interpretation of the common-law defense.  Perhaps the most important question in this chapter is whether innovation has suffered as a result of the narrow defense.  The answer, as shown by the empirical evidence, is that it has not, at least to a level that warrants expansion of the defense.

Carrier goes on to detail the comprehensive research of Professor John Walsh who in 2007 surveyed 1125 biomedical researchers in universities, government labs and nonprofit institutions.  Walsh received 414 responses and the responses were overwhelmingly clear.  Carrier explains that only 3% of respondents indicated that they stopped pursuit of a research agenda based on an excess of patents present in the space.  Furthermore, Carrier explained that a mere 5% of respondents even regularly checked for patents related to their research and “no respondents reported that they had abandoned a line of research because of a patent.”

But why is Cook-Deegan so upset about a supposed patent thicket that doesn’t exist?  Well, patenting has become big business for universities.  The Madey v. Duke decision makes it extremely difficult, if not really impossible, for universities engage in commercial research to claim that what they are doing is experimental in nature and should not be considered to be infringing.  The Federal Circuit appropriately recognized that as universities continue to move forward as commercial enterprises they are not engaging in pure scientific research aimed at discovery, but rather they are commercial players and such commercial use of the innovations of others ought to be and is in fact infringing activity.

So what is the connection between Cook-Deegan and the Madey v. Duke case?  Cook-Deegan is the director of the Center for Genome Ethics, Law, and Policy at Duke University.  Does he have an axe to grind?  Frankly I don’t know and I don’t care.  All I know is that his positions are not supported by factual evidence.  Instead he parades his opinion and belief around as if it should suffice in lieu of facts because apparently s understanding of the issues is superior. This superiority approach is the refuge of those who do not have facts or truth on their side and is symptomatic of the worst kinds of charlatans.

Meanwhile, the charlatan Cook-Deegan, who protests gene patents specifically and patents more generally, is really doing nothing other than forwarding the Duke University line in the Madey v. Duke case.  When it is convenient for Duke University they obtain patents and when it is inconvenient for them they seek to use the innovations of others without paying for them.  In fact, Duke University is the owner of hundreds of patents, including hundreds of patents characterized as the gene patents Cook-Deegan apparently so despises.  See Patent Reality Check: The Hypocrisy of Duke University on Patents.  Maybe Duke and Cook-Deegan are still stinging over the Federal Circuit observing that they their research is commercial and not academic.  That has to be a slap in the face to someone, like Cook-Deegan, who would prefer to be cloistered away from the real world and firmly ensconced in an ivory tower.

But let’s not stop here!  Let’s move forward with even more proof that patents and intellectual property are a net positive for society.

I was reading the 2011 Special 301 Submission recently made by the Biotechnology Industry Organization (BIO).  This submission caught my attention for many reasons, the one germane to our discussion here is the mentioning of two recently published working papers that demonstrate that strong intellectual property regimes in developing countries are objectively positive.  The BIO submission explains:

Two working papers, recently presented in a World Bank Symposium, enlighten our understanding on the economic benefits of stronger IPR regimes in developing countries. The authors find that “a strengthening of IPR protection in the South (the developing world) reduces the rate of imitation, which, in turn, increases the flow of foreign direct investment (FDI). The increase in FDI more than offsets the decline in production undertaken by Southern imitators, so that the South’s share of goods produced by the global economy increases. Furthermore, real wages of Southern workers increase even though prices of goods produced by multinationals exceed those of Southern imitators.”

The second working paper adds to these findings and provides additional theory and data. The paper’s model predicts and finds evidence that in a North-South model IPR reform “accelerates Southern industrial development. The South’s share of global manufacturing and the pace at which production of recently invented goods shifts to the South both increase.”

In another portion of the BIO 301 Submission the following appears:

The biotechnology industry relies heavily on patents. The development of a single biotechnology product often takes more than a decade to be commercialized, and hundreds of millions (if not a billion) of dollars of capital investment, a significant amount of which comes from private sources. Biotechnology product development is also fraught with high risk ? the vast majority of biotech products fail to ever reach the marketplace. In addition, while biotech health inventions are entitled to the same patent term as all other inventions ? 20 years from the time they are filed – they have the additional hurdle of a rigorous pre-launch regulatory review process during which they may lose between 8 to 10 years of the patent life. Venture capital firms invest in capital-intensive, long-term, and high-risk research and development endeavors only if they believe there will be a return on their investment. Patents help provide this assurance.

“Biotech companies rely heavily on the strength and scope of their patents to generate the significant investment necessarily to bring biotech therapies and other products to market,” stated BIO Vice President for Global Intellectual Property Policy Protection Lila Feisee.  “The importance of international intellectual property protection has increased as these companies seek to expand the markets for their products.”

Those who don’t like patents can pretend all they like, but the truth is that patents are required in order to entice corporations to invest the excessive amounts of money necessary to develop those innovations that we want so desperately.  There is no point pretending that the revolutionary, pioneering innovations that our patent system is supposed to encourage can be made cheaply.  There is also no point to delude ourselves into thinking that a corporation will spend many hundreds of millions of dollars, or even a billion dollars in some instances, without obtaining a competitive advantage that will realistically allow them to both recoup their research and development expenditure and also a profit commensurate with the risk undertaken.

Just as the evidence is clear regarding the necessity to have patents in order to obtain funding, see Start-Up Reality: No Patent = No Funding, No Business, No Jobs and Patents in the Real World, the evidence is clear that patents do not get in the way of research and development.  While that might seem counter-intuitive it is the truth.  Those who don’t like the truth do a disservice to everyone when they pretend that the truth is not what it is and pursue crusades that can only be characterized as disinformation campaigns aimed at forwarding their own agenda.

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Posted in: Anti-patent Nonsense, Gene Quinn, IP News, IPWatchdog.com Articles, Patents

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

22 comments
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  1. Gene,

    I would be careful reading too much into the Madey v. Duke University case. I wrote an article for the AUTM Journal on that case, and it’s really more of a “food fight” between a disgruntled former director and professor(Madey) at Duke and the university. Madey came to Duke which created the FEL lab for him. When Madey left after he was dismissed as director of the FEL lab, Duke continued to use the equipment in the FEL lab, some of which equipment was covered by two patents that were assigned to Madey when he previously worked at Stanford (how Madey got ownership of those patents is a quesiton I’ve yet to find an answer to).

    Put differently, Duke was simply trying to use the FEL lab which it had paid for after Madey departed. The “experimental use” defense issue in Madey was strictly an afterthought after the lawsuit was filed. Where Duke really fell down was in not getting at least a license from Madey under those patents for setting up and paying for the FEL lab. The Madey case gave us some interesting holdings on the “narrowness” of the “experimental use” defense, as well as the applicability of the “federal contractors” defense under 28 USC 1498(a) to federally-sponsored research, but is very tangential to point you’re trying to make in this article.

  2. EG-

    I suppose you are right, although if it does seem tangential then it is because I didn’t do a good enough job. If you look at Professor Carrier’s book the section I was quoting from dealt with Madey v. Duke and whether there was a need for a more robust experimental use defense as so many have claimed. It seems to me that many academic researchers want a more robust experimental use defense because they believe that patents get in the way. The studies, however, tell a different tale. Whether it is good, bad or indifferent, researchers by and large do not even consider patents or research them, so that means that all the patents in the world are not interfering with their research.

    I also find it ironically interesting that Duke is the home of Cook-Deegan and Duke patents genome innovations liberally and was the party in interest trying to use patent technology in Madey v. Duke. You are right to observe (probably) that it was a side issue, but talk about the tail wagging the dog! Not exactly what Duke thought they would get I’m sure.

    -Gene

  3. Gene,

    You left out the argument that patents “free up” corporate scientists to publish their findings in peer-read journals.

    If it weren’t for patents, companies would hide near everything they could as a “trade secret”.

    That practice would include forcing their scientists to not reveal anything about anything.

    We would live in a dark cloaked world where no worked is shared, all is held close to the chest so as to stifle the spread of innovative ideas.

  4. step back,
    You seem to forget that trade secrets are only protected while they are actually secrets. If I can effectively keep how something works a secret for more than 20 years while exploiting it commercially (such as the exact recipe for Coca-Cola or KFC), then a trade secret is more appealing than a patent. While other factors can figure in and cause exceptions, that means as a general rule, patents are going to be on things that can’t be kept secret for 20 years.

  5. true.

  6. step-

    Excellent point. I will try and remember to add that to the list. I’m sure there will be other opportunities to write about the anti-patent folks in the future.

    -Gene

  7. Gene … please comment on the correctness of my understanding of the experimental-use exception:

    Under the experimental-use exception, inventors are free to experiment with the patented inventions of other inventors … to create new inventions.

    For example, an inventor can freely experiment with inventions (A to Z) and end up inventing NEW invention that uses/incorporates invention E. The owners/inventor of patent E only have recourse if/when NEW is brought to the market/commercialized.

    The experimental-use exception seems to have several benefits:
    1) The owners/inventor of patent E benefit … from the expanded use/market for invention E.
    The market value of NEW may complement or be many times larger … than the market for E by itself.
    In the cases where E was originally a commercial failure (most patents), NEW may create value for E.
    2) Inventors benefit by creating more NEW inventions.
    3) Society benefits from more NEW inventions.

    One negative … is the inventor’s nightmare … the inventor’s published patent (and the experimental-use) inspires/leads others to design-around the patent (morphed-E) … and the inventor receives nothing for their creation/investment. Perhaps not even credit … for the shoulders others stood upon.

  8. Another interesting feature of the patent system is how it causes (what would have been unknown) failures … to live and morph into the NEW.

    If there were no patents (with their publication), most inventions that are commercial failures (perhaps >95% of patented inventions) would remain largely unknown. There would be ~20 times fewer inventions to draw upon.

    For example, unless failed-E was published in a patent … the use of failed-E to invent NEW … would not occur.

    And another example … the design-around of failed-E … to invent morphed-E … would not occur.

  9. Actually, Gene, Cook-Deegan’s conclusions are based on an empirical study, not just opinion. As reported in Scientific American:

    “The researchers’ conclusions come from a series of case studies initiated in 2007 to examine genetic risk testing for 10 clinical conditions, including breast and colon cancer, cystic fibrosis and hearing loss. In seven of these conditions, exclusive licenses were a source of controversy, according to the case study results, which were published April 14 in a special issue of Genetics in Medicine.”

    The Sci Am. article is here, with links to the journal article with the study: http://www.scientificamerican.com/article.cfm?id=gene-patent

    best,
    David

  10. David-

    You should read the alleged report. It isn’t even put out as a report, but rather a consensus statement. There are absolutely no facts presented, so whether they engaged in the empirical study you mention or not does not address or rebut what I said. What I say is true. I challenge you to find a single fact backed up by evidence.

    Good luck.

    -Gene

  11. Inventor0875-

    Your understanding of the experimental use exception is not quite right. This area is fact intense.

    A patent gives the owner the right to prevent others from making, using, selling, offering for sale or importing into the US. Your analysis focuses on selling and offering for sale. If you were to make the invention and then add to it that would be an act of infringement unless it is a purely academic pursuit. The problem Duke had was that it was not a purely academic pursuit, but rather a commercial pursuit.

    Now, if you purchase the underlying invention and then modify it that would not be an infringement because you acquired the rights through a sale that exhausted the rights of the underlying patent owner.

    Having said this, it is typically quite difficult for a patent owner to know whether an inventor is making and using the invention in private, but that wouldn’t mean it isn’t a technical infringement.

    -Gene

  12. Gene, as I mentioned, and provided links to, the evidence is in the published journal articles, check them out.

  13. Specifically, 9 articles (all available for free online, please for God’s sake read them) almost all involving Cook-Deegan as a co-author having done nearly 2 years of study, provide significant evidence of negative impact on clinical research due to patenting. http://journals.lww.com/geneticsinmedicine/toc/2010/04001 It is simply unfair for you to slur Cook-Deegan, calling him “intellectually dishonest,” characterizing the report you cite above as being mere opinions when there were solid, empirical studies done to support the report’s conclusion. Disagree all you want, but don’t mischaracterize the man or his work.

  14. David-

    Debating you is a fools errand really. I present a point and then you counter point with something that is unrelated. I don’t know whether you are just engaging in annoying debating tactics, diversionary tactics to forward your agenda or whether you really are not smart enough to engage in a meaningful debate on a particular topic. In short, your comparing of apples and elephants and then standing back as if you have made a good point has grown old. Either stick on point or leave.

    You provided a link to a Scientific American article. What I was referring to was the ACTUAL report. The link is provide in the article above, but to make it as simple for you as I possibly can let me provide the link again:

    http://hinxtongroup.wordpress.com/2011/01/21/consensus_statement/

    Now, this is what I was referring to, this is what was referred to in the Chronicle of Higher Education. This is labeled “Consensus Statement” and then thrown about as if it is a report with supporting evidence. Of course, it is not. I suspect you know it has no evidence to support the recommendations which is why you keep trying to provide links to other sources and ignore the reality that this alleged report has no facts to back up the recommendations.

    So please, David. Either point to facts contained in the Consensus Statement or just go elsewhere. I am not going to let you hijack a debate through your ridiculous, amateurish and juvenile misdirection.

    -Gene

  15. Gene:

    Cook-Deegan is a member of the Hinxton Group, is referenced in the Chroncle article, and his studies I have shown you are backed by empirical research. Moreover, there is a bibliography provided at the site you linked to with the consensus statement, and that bibliography includes the Cook-Deegan studies I referenced and many more:

    http://hinxtongroup.wordpress.com/annotated-bibliography/ip/intellectual-property/
    http://hinxtongroup.wordpress.com/annotated-bibliography/ip/proprietary-challenges/
    http://hinxtongroup.wordpress.com/annotated-bibliography/data-sharing-material-sharing/intellectual-property/

  16. I am curently reading a book by a couple of Washington University Economics professors called “Against Intellectual Monoply” by Michele Boldrin and David Levine. While I am a big proponent of the value of patents, the book is interesting reading and they make some points that are worth thinking about – but, that being said, they have not persuaded me to agree with their position which is that patents and copyrights should be elliminated entirely.

    I first stumbled upon the book on a site that was selling published copies for about $25. But when I went to their website, they had it available for download for free. So at least they are being self-consistent with their own ideas.

    If you are interested in reading some rhetoric from the opposing side, you can download the book for free from:
    http://www.micheleboldrin.com/research/aim.html

  17. Gene, so you need not dig through the bibliography, I pasted just one relevant excerpt below. The consensus report was based upon the 77 members’ meetings, deliberations, and submissions, and their coming to some consensus agreement. The evidence includes the studies I referenced, and they are cited to in the annotated bibliography for the site to which you linked. So it really is unfair to say there is no evidence for the report’s conclusions, when the evidence is cited to by the bibliography. Here are some of the relevant citations, there are many more if you browse through the bibliography:

    Kepler BT, Crossman C, Cook-Deegan R. Metastasizing patent claims on BRCA1. Genomics. 2010 May; 95(5): 312-314.
    Bioinformatics was used to quantify the scope of the claim under patent 4,747,282 on BRCA1. The authors found that the patent claim covers a significant portion of cDNA and mRNA sequences contributed to GenBank, and that “Any “isolated” DNA molecules that include such 15 bp nucleotide sequences would fall under the claim as granted by the US Patent and Trademark Office.” The authors argue that the patent is broad because if it were enforced, many medical practices and research projects would be affected and will be in danger of patent infringement.

    Carbone J, Gold ER, Sampat B, Chandrasekharan S, Knowles L, Angrist M, Cook-Deegan R. DNA patents and diagnostics: not a pretty picture. Nature – Biotechnology. 2010 Aug;28(8): 784-91.
    The authors highlight the problems that patenting and licensing practices produce for DNA diagnostics. The authors particularly focus on the difficulties that broad patent claims and ambiguities about patent deployment cause for DNA diagnostics. Additionally, they unite on the claim that TTOs need to be adequately funded to promote permissive clinical data dissemination policies and transparency in the industry.

    Cook-Deegan R, Heaney C. Patents in genomics and human genetics. Annual Review of Genomics and Human Genetics. 2010 Sep 22;11: 383-425.
    Genomics and human genetics came to prominence via government and non-profit funding and, even more so, privately funded research in biotechnology and pharmaceuticals. Existing patents on DNA technologies seem to harm the relevant fields due to the exclusivity of university licensing practices. However, whole-genome sequencing will confront uncertainties regarding existing patents with broad and generic patent claims.

  18. David-

    I thought you were a respectable academic. Obviously not. A bibliography is no substitute for citation and presentation of fact. The consensus statement is just a set of wishes, desires and alleged observations. If this were a student research project it would receive an F and you and I both know that to be 100% true. There are no citations to fact. Making conclusory statements and presenting a bibliography is nothing more than saying “I’m too important to prove my conclusions so you do the work.”

    So it would seem that I am, once again, correct. It would also seem that you, once again, are not correct. How you as an academic could in any way defend such a ridiculous and indefensible piece of propaganda that doesn’t make any factual assertions backed up by data is almost beyond me. Almost.

    I now will observe that so far we have been arguing about whether the Cook-Deegan consensus statement asserted any facts. Anyone who can read readily can see that no facts are present. In the meantime, as we have been arguing about the obvious I notice you haven’t taken any opportunity to in any way address the ACTUAL facts that I present in the article. I wish I could say it is surprising for you to make nearly Monty Pythonesque diversions, but that is the way you debate I guess, at least hear. But if this “debate” is going to continue you really should address the facts presented.

    The reality, David, is that the overwhelming body of evidence proves that you and Cook-Deegan are on the losing side of the argument. The facts are overwhelming and as far as I can tell completely unchallenged. You and others merely engage in diversion rather than address data, which is rather pathetic actually.

    -Gene

  19. Gene,

    Just take an hour or so to read the studies cited in the bibliography, they provide the evidence you say is lacking. Tempting though it is, I won’t be goaded into attacking you personally as you try to do to me. I was just trying to clarify the record.

    best,
    David

  20. David-

    Just so we are clear, evidence that may or may not exist in a bibliography pretty clearly and convincingly demonstrates my statement was correct. Either Cook-Deegan et al was lazy or they didn’t want their recommendations to be scrutinized with whatever factual evidence they claim they have, which is why no citations are provided. Reports and studies are supposed to have citation, and the fact that you won’t even acknowledge that is rather remarkable.

    The problem I have with you is that you never acknowledge when your side is incorrect. You are a zealot. It is easy enough to acknowledge the truth that a report without citation is not the norm. If I were to do this on a pro-patent report you and others would be jumping and screaming that I have deviated from academic norms and I must be hiding something. So why not at least acknowledge the obvious?

    I also find it incredibly amusing that you continue to choose to ignore the facts presented. The actual evidence rather than the anecdotes proffered by Cook-Deegan et al.

    -Gene

  21. Whichever side you take on this issue, nevertheless I think you have to acknowledge that patent law does have a PR problem, and perhaps one that it has partly brought on itself. Cook-Deegan and Techdirt aren’t the only culprits. For instance, last week I read a story at Physorg.com, entitled “Scientists warn against stifling effect of widespread patenting in stem cell field.” The article discusses a piece in the journal Science in which a team of Johns Hopkins researchers “urges the scientific community to act collectively to stem the negative effects of patenting and privatizing of stem cell lines, data and pioneering technologies.” If you read the Physorg article closely, the problem described appears to spring more from lack of transparency about IP than from the patents themselves. But most people aren’t going to read the article that closely, and will just take away the general idea that there are too many patents, and patents are bad. The point I’m making is that public perception of patents appears to be increasingly negative, whether or not that perception is accurate or informed. I can’t help but think that those in the patent community must share at least a little blame for the public’s declining opinion of the field.
    http://www.generalpatent.com/media/videos/gpc-senior-vp-paul-lerner-interviewed-cnbc-asia

  22. Gene, you’ve done your classic strawman by calling the “statement” of the group a “report” and then claiming it lacks what a “report” should have. As a statement representing the collective efforts of 77 members, gathering evidence, listening to others, reading primary resources, and coming to joint conclusions as a result, listing the bibliography of sources seems sufficient. If one actually reads the materials in the bibliography (as I have) one sees some disagreements about details, but finds that these materials generally support the consensus statement.