Patents are Just the Start

Patents encourage and protect innovation. That’s undeniable, but it’s naïve to believe that’s all we need to develop the new products that evolve into the industries that bolster the dynamic U.S. economy. Patents, and other forms of intellectual property protection, are a necessary prerequisite, but incentivizing innovation requires more. Just as plants require sunshine, water and nutrients to grow, innovation needs more than simply patent protection to thrive. To thrive innovation requires a climate that is conducive for business success.

Sadly, Capitol Hill is frequently the setting for both grandstanding and pandering, and given the prevailing political and public sentiment it is also frequently a place where businesses find an inhospitable welcome. A recent case in point: Three senior members of Congress (Henry Waxman, Frank Pallone Jr., and Diana DeGette) have started a joint investigation into the pricing of Sovaldi, a breakthrough drug for hepatitis C produced by Gilead Sciences (NASDAQ: GILD). Rather than applaud the health benefits that this drug will deliver, Congress is grilling the company on their pricing decision, striking fear in the investment community, and indirectly undermining the healthcare innovation that is so desperately needed.

L to R – Representatives Waxman, Pallone and DeGette.

The subject that should be the focus of the Sovaldi discussion is health: the health benefits and savings it will provide to individuals, payers, and to society, and how we can secure more innovative treatments that deliver like this. With Sovaldi Gilead has provided exactly what society needs: a safe, effective treatment that demonstrably adds value to the healthcare system and transforms patients’ lives. For years, vocal critics of the pharmaceutical industry have denounced the resources spent to develop incremental advances, insisting that the industry should focus on truly innovative drugs that significantly enhance or extend life. Sovaldi does exactly what patient advocates and industry critics have been asking for, and yet it isn’t enough.

Sovaldi is a breakthrough drug for hepatitis C that studies show can cure more than 90 percent of patients in just twelve weeks. Gilead’s product is more effective, safer, and causes fewer side effects than existing first-line treatments. The Sovaldi controversy stems from the drug’s price. Gilead has priced the treatment regimen at $84,000 ($1,000/day) in the United States, a price that is competitive with existing therapies. Notably, the previous standard-of-care, Incivek costs approximately $100,000 per year, roughly 20 percent more than Sovaldi. And it’s less effective and accompanied by nasty toxicity. When combined with two other drugs (interferon and ribavirin), Incivek claims a cure rate of no-more-than 80 percent through a 24 week treatment regimen that included significant toxicity and side effects.[1]

[Kristina]

Evidence also shows that Sovaldi has the potential to save money and lives in the long run. Hepatitis C can lead to liver cancer, cirrhosis and liver failure, conditions that are much more costly to treat. Given that Sovaldi cures close to 90 percent of patients in half the time required by current therapies, it seems very cost effective. In contrast, liver transplants can cost $300,000 and then require $40,000/year anti-rejection drugs that must be taken for the rest of the patient’s life.[2] According to the Center for Health Engagement, annual costs to treat, not cure, a single patient range from $8,529 (for hepatitis C treatment with no liver disease) to $668,609 (for a liver transplant).[3]

In addition, recognizing that slightly more than half of U.S. Medicare dollars are spent on patients who die within two months, Sovaldi is a strikingly solid investment: a cure and improved life for years, if not decades, into the future. Moreover, experts suggest that future infections may also be reduced by treating patients with Sovaldi. Since most new hepatitis C infections stem from drug users sharing needles, treatment of these individuals would limit the spread of the disease and benefit the general public.

A recent contribution to Forbes lays out the conditions for real biopharmaceutical innovation: it must (1) deliver value to the healthcare system; (2) be a major improvement over existing, and often generic, therapies, and (3) be safe and well tolerated.[4] Gilead has accomplished precisely this with Sovaldi and yet they are vilified for their pricing decision.

If we truly value innovation and breakthrough treatments and cures, we should be encouraging and incentivizing more of this type of innovation. Patents are just the starting point. For innovation to flourish, a set of complementary systems must also be in place. Intellectual property rights protect innovation, but innovative firms also need the ability to recover their investments and reap the reward of their success. Congressional inquiries and attempts to publicly shame such companies work against innovation and effectively undermine the incentives of the patent system. If innovation is to continue to be a cornerstone of the American economy, patents are a necessary but not sufficient condition.

_________________________

[1] Sadeghi-Nejad, Nathan. “Sovaldi and the Cost-Innovation Paradox,” Forbes, March 27, 2014.

[2] LaMattina, John. “What Price Innovation? The Sovaldi Saga,” Forbes, May 29, 2014.

[3]Center of Health Engagement, http://www.cyndynayer.com/what-value-cancer-cure/

[4] LaMattina, John. “What Price Innovation? The Sovaldi Saga,” Forbes, May 29, 2014.

Kristina M. L. Acri née Lybecker is an Associate Professor of Economics at Colorado College in Colorado Springs, and Chair of the Department of Economics and Business. She earned a B.A. from Macalester College, with a [...see more]

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com.

Join the Discussion

31 comments so far.

Alexa Jackson
October 21, 2014 04:34 am
Great point. Though patents encourage innovation and drive companies to create ideas if it is not supported with incentives, nothing will flourish. Thanks for the article.
Gene Quinn
October 13, 2014 11:28 am
Anthony-

You really should do some research. Your understanding of research and development is wrong. Until you inform yourself you probably shouldn’t form any opinions. Opinions based on false information aren’t very useful, or correct.

-Gene
Anthony
October 13, 2014 11:13 am
IF the people developing the medical treatment did such development without the aid of government funding i would be interested in letting them set their own price. However in the world of research and incentivizing ‘innovation’, pharmaceutical companies get plenty of money to develop cures. Specifically they receive the most for research on topics that are not considered economically viable. Parkinson disease being a good example. At no point will enough people be afflicted to make a company want to research medicines for a small population that will not be able to guarantee ROI,. So the government forks over money to make the research worthwhile. Now we have a company with product developed with government funding attempting to squeeze what is acknowledged to be a lower economic group ( needle sharing drug users, trust me anybody making 100k or even 40k buys fresh needles every time) for an amount that accounts for the majority of the yearly income for lower economic class workers. Even better the insurance companies diffuse the cost to the rest of the public. If we were only paying to research and pay the health care costs of these people, i would be fine. However the earnings of the company on said chemical ( which they will not want to disclose ) will likely be very high. Look at the earnings for the biotech companies, And most of them try to deflate their earnings by ignoring grants used in the production of a chemical, claiming they funded the entire project. This in the end is a company attempting to use a government funded product to exploit a captive group of people for profit.
Simon Elliott
September 4, 2014 05:34 pm
Breaking news: FDA approves Merck’s new antibody against PD-1 for treating melanoma. Expected to cost about $150,000 for year of treatment. Will we see a parade of Congressmen and women asking if $150K is too much? Or will they compare it to the costs of existing therapy and the high risk of death without this drug. Also interesting to see if Congress will treat it differently from Solvadi for HepC: for some reason, less questions are asked about the costs of cancer drugs than drugs to treat infections. Its as if dying from HepC or bacterial infection is somehow less dead than dying from cancer.
Anon
September 3, 2014 09:31 am
Benny,

I have no idea what explanation you are looking for. You seem to be asking about what makes a valid patent valid, and I am not seeing how that relates to the discussion here, nor how anything I have said would indicate a change in understanding what validity means.

Do you want to have a different discussion?
Benny
September 3, 2014 09:15 am
Anon,
Wouldn’t it be simpler if you just explained what you meant in the statement I quoted?
Anon
September 3, 2014 08:14 am
Benny,

I fail to see the point of your post. You do not even need to quote me, but your question comes across as a nonsense question: an invalid patent has no validity. Can it be anything else? Are you trying to say something different? How is this related to the discussion? Where are you trying to go with this?
Anon
September 3, 2014 06:51 am
Vance,

What is Jim’s point in questioning that patents be secured by governmental processes?

And please answer in light of my several posts, wherein I do use the authority of the constitution as the basis for law, but I do much more than that as well.

Please supply a basis for the law that you wish to have in place of the one we do have. And please let it be more than the anarchist Free Beer version of the Free Market.
Benny
September 3, 2014 03:29 am
Anon at 16 ,
I quote you – “As I indicated, a valid patent cannot take away that which was known and practiced openly prior to the application file date of the granted patent”.
What validity does such a “valid patent” have, if it does not meet the minimum basic requirements for grant, i.e, it was known and practiced before the application was filed?
Vance Proust
September 2, 2014 07:59 pm
Gene,

I think you are missing Jim’s point in questioning why even if we think innovation is good it should be a good secured by governmental processes. The Constitution merely enables, it would be equally constitutional if Congress decided not to create patent rights. To wit: the general welfare is part of Congress’s ambit too, and we like to be healthy and to have health care, should the government secure health care for us too?
Anon
September 2, 2014 06:50 pm
Jim at 17:

Thank you for the compliment of falling back on only the most important authority that one can expect in a legal discussion.

If you want to ground your discussion in a fantasyland with a completely different basis for discussion, you will have to do a lot more work upfront in order for your position to have any semblance of meaning.

My apologies as I thought you wanted to have a serious discussion. I see that such is not your aim.
Gene Quinn
September 2, 2014 06:34 pm
Simon-

Excellent point.

I find it almost comical that these Representatives would investigate a better, cheaper solution. As if they don’t want medicine to advance. Are they afraid of science?

-Gene
Gene Quinn
September 2, 2014 06:32 pm
Jim-

Saying the Constitution is not sufficient reason is really quite laughable. If you don’t recognize the Constitution as authority I suppose you are likely signing your contracts in red ink and living in a “compound” somewhere in Montana. The Founding Fathers understood that to get innovation you had to give incentive, that is why the wrote patents into the Constitution. I notice that you didn’t mention, question or rebut my statement about Russian and communist countries not having innovation, neither did you rebut, mention or question the reality that third-word countries have no innovation.

You ask: ” Isn’t the grant of a patent picking a winner, Gene?”

No, actually it is recognizing the winner who was the first to innovate and put the innovation into the public domain. Picking a winner would be to pick someone who is friends with the King, as happened in England prior to the Revolution, for example.

You say: “By granting that monopoly…”

Patents are not monopolies. You really have much to learn. Start here for this fallacy:

https://ipwatchdog.com/2012/09/03/debunking-innovative-copycats-and-the-patent-monopoly/id=27749/

You say: “Your resort to my use of prescription drugs also still begs the question: why do we assume that someone wouldn’t have made that drug without government?”

So you think pharmaceutical companies would spend between $4 billion to $11 billion to create and take a new drug to market only to have someone else copy them? Are you really that ridiculously naive? There are no questions being begged here. Just reality being spoken. Only the most intellectually dishonest individuals would even pretend that drugs would be created, tested and pass the rigorous FDA process without the promise of exclusive rights. To inform yourself see:

https://ipwatchdog.com/2014/04/03/patents-drugs-and-the-moral-high-ground/id=48875/

You say: “Innovation might be slower without patents, who knows…”

Everyone who honestly looks at the data knows. If patents inhibited innovation you would see run away innovation where there is no patent system, but you see the opposite because patents promote innovation. So if you take away the patent incentive you will get less innovation. It is that simple. Again, please inform yourself here:

https://ipwatchdog.com/2012/12/06/forfeiting-the-future-over-irrational-fear-of-software-patents/id=30957/

https://ipwatchdog.com/2014/05/08/reality-check-patents-foster-innovation-and-economic-activity/id=49452/

https://ipwatchdog.com/2014/05/02/the-economic-case-for-strong-protection-for-intellectual-property/id=49376/

You say: “There’s no clear path from liking innovation to the conclusion that the government would have anything positive at all to do with “fostering” it…”

FALSE. The government recognizes the rights. Without the right being recognized in the first place and a vehicle to enforce the right then there is no incentive and there would be no innovation.

Please read the links and educate yourself. Everyone has a right to an opinion, but you are not expressing an opinion here. Instead you are demonstrating an extraordinarily shallow understanding of human nature and basic economic realities. You are wrong on the facts.

-Gene
Simon Elliott
September 2, 2014 05:15 pm
Totally agree, Gene. People seem to think that it’s somehow reasonable to pay far more than $100,000 for a liver transplant, but unreasonable to pay more than a few thousand for for a drug that will save your liver and remove the need for a transplant.

This is nothing new: people expect low prices for antibiotics and vaccines, even if they save your life. The result is the continued underinvestment in vaccines and antibiotics, and the growth of drug resistant (and vaccine resistant) disease, while pharmaceuticals invest in erectile dysfunction drug. See work by Ramanan Laxminarayan on this area.

We should look at what has happened with psychiatric drugs: with the invention of Prozac and the SSRIs, and increasingly effective other drugs, there is less need for for expensive long term psychiatric hospitals, electroshock therapy and lobotomies.
Jim Mortz
September 2, 2014 02:46 pm
Gene and Anon, you’re falling back on an argument from authority, namely “the Constitution says so” .. that is not sufficient reason. If, as I do, one values freedom as the ultimate value, one should be skeptical of seeking government solutions to human problems, it seems in the end always to muck things up and yes, lead to some sort of nanny state. Isn’t the grant of a patent picking a winner, Gene? By granting that monopoly based merely on getting to the patent office before someone else, the state is picking a winner. Shouldn’t the market do that rather than some technocrat or bureaucrat? Your resort to my use of prescription drugs also still begs the question: why do we assume that someone wouldn’t have made that drug without government? As well, why should government fund basic science? “That government is best which governs least” is attributed to Jefferson, that patent and slave holder… I’d add, that government is best that governs not at all, and gets the hell out of the way. Innovation might be slower without patents, who knows, but again that is not sufficient reason to think that the government ought to be involved in any way with “promoting” innovation. I wrote because underlying assumptions of the article included: innovation is good and thus the government ought to promote it. Innovation is, as I said, something we might like, but I also like pancakes, and I wouldn’t suggest that government get into the pancake business. Just create an environment in which pancake makers can compete freely and pancake eaters will become happier. There’s no clear path from liking innovation to the conclusion that the government would have anything positive at all to do with “fostering” it, that’s all I’m saying, your appeals to the Constitution and personal preferences notwithstanding.
Anon
September 2, 2014 01:21 pm
Jim at 12 – see my reply at 5.

From the beginning of this country, we the people as leaders and founders of this nation saw the value of patents. Perhaps the better question for you is why not?

I will hold off on any truly harsh rebukes – given the latest posting issues – and give you the benefit of the doubt as to not having read and informed yourself before your second response (and would invite Gene to ease back a bit as well – Jim may be earnest and may not be one of those who would sooner bait you than listen to an answer carefully).

I would also emphasize that the nature of the Quid Pro Quo fits with how Gene is describing the real power of progress at his post at 14 and would add that people voting with their pocketbook is very much in play beyond the grant of the patent. This is a more nuanced point, but nonetheless is a critical point in understanding why a strong patent system is desired and that the fear of impeding innovation is vastly overblown.

A newly granted patent cannot truly take away anything that was openly practiced prior to the grant of the patent. Society – as in the people of this nation always have the option of not partaking of a patented item (one running joke on Patently-O concerns the Amish, whom are an actual example of a group of people who so choose not to partake in many advancements). A strong patent system puts teeth into the exclusive right – and makes it so that you pay what the patent holder wants, or you go without – or if neither of these options suits you, you join in and invent yourself a new solution. Far too often nowadays one sees the attributes of what I call “Infringer’s rights” which again can be directly linked to established entities seeking to diminish the power of patents.

I will also add that the judicial notion of “too much blocking power” is an inappropriate “value” decision made by the wrong branch of the government. As I indicated, a valid patent cannot take away that which was known and practiced openly prior to the application file date of the granted patent – the very nature of novelty and non-obviousness prevents such an occurrence. This over reaction is reflective of a liberal – and activist – mindset that is far too nanny-like. If an invention is (or to put it more correctly – becomes) so important and indispensable, then the inventor should be able to ask for as high as a premium that the market will tolerate (again the options should strictly be based on the compelling power of exclusivity: pay what the inventor wants, do without, or invent something yourself – the simplicity and power of this method of promotion should not be diluted, except for the gravest of circumstances or the most dangerous of technologies – natural disasters, true medical emergencies, nuclear power – all of which are already reflected in current patent law).
EG
September 2, 2014 12:43 pm
“Are you familiar with the Savings and Loan debacle or the expose on the death of the electric car from a few years back?”

Anon,

I very familiar with both. Also, the reason now for the Fannie Mae/Freddie Mac debacle is similarly predicated on governmental encouragement of mortgage loans to people who had no financially sound reason for receiving those mortgage loans, and were ultimately hurt by them, as were the rest of us taxpayers..
Gene Quinn
September 2, 2014 12:36 pm
Jim-

You say: “Do we “need” an environment of innovation, or is that something that we prefer, the two are very different claims.”

No, not really, unless you are going to be a hypocrite. So tell me, do you take any prescription medications for any reason at any time? Do you feel like you “need” those prescriptions or are you just taking them on a whim?

You say “I was really just curious as to why “innovation” is a state issue rather than a private one.”

You mean other than because it is in the U.S. Constitution?

Aside from intellectual property rights being one of the foundational building blocks of the United States, places where there are no intellectual property rights there is no innovation. So if you want to live in a place where there is no incentive to innovate you can easily find those locations all over the world. Property is typically extremely cheap in those third-world countries. Basic amenities like running water, access to health care, jobs and stability are, however, lacking.

You ask: “Why not give away billions of dollars to entrepreneurs starting companies?”

Because government should not choose winners and losers.

You ask: “Why not create an “office of innovation” that is supposed to create new things?”

How has that worked for the Russians? Without incentive you get no innovation and what new products you do get are terrible.

You ask: “So why do we think the government should play ANY role in encouraging innovation at all, rather than let the free market take care of it?”

The free market does play the role. The government really only gets involved merely to fund purely scientific research that otherwise would be too speculative to undertake. The government also gets involved to the extent that they recognize rights that prevent copycats from stealing the work of others. You see, without those rights people would spend many hundreds of thousands of dollars even to take a simple kitchen gadget from conception to market and have all their work ripped off by the copycat who didn’t spend any time, money or energy to create. That is, of course, a recipe for no independent creation. Why would anyone spend money if they can get so easily ripped off by copycats? And, of course, when dealing with sophisticated innovation and drugs the amount spend ranges from many hundreds of millions of dollars to several billions of dollars.

The problem with people like you Jim is your understand is first level and you are a hypocrite. You take benefit of consumer protection laws, perhaps even unions or professional organizations, employment laws, laws the prevent price fixing and gouging with respect to loans and interest rates. But when it comes to intellectual property you profess a perverse hypocrisy and want the free market to decide. That is just code for you being cheap and not wanting to pay creators for what they have created. You want copycats and at the moment you are buying from copycats and counterfeiters you don’t care about that fact that you are making less likely that innovation will occur in the future.

Despite what you probably think to the contrary, innovation just doesn’t happen. Without the ability to recoup time, money and energy spent plus a reasonable profit innovation won’t happen. Again, just look to Russia and other communist countries where there is no incentive to do better. They don’t have innovation.
Anon
September 2, 2014 11:05 am
EG at 4,

Are you familiar with the Savings and Loan debacle or the expose on the death of the electric car from a few years back?

Your post reminds me of that fact that “agency capture” occurs – and appears to occur again and again throughout history.

Perhaps it is time to examine the power structure in our Congress and lobby structures and clean house.
Jim Mortz
September 2, 2014 11:01 am
Do we “need” an environment of innovation, or is that something that we prefer, the two are very different claims. Moreover, why do we see it as a government role to create such an environment, as opposed to merely staying out of the way of such an environment developing. Again, two very different claims. I was really just curious as to why “innovation” is a state issue rather than a private one. People are free to innovate, it seems to me, so why do we feel it is somehow the necessary role of government to create an “innovative” environment? If innovation is so bloody important, then why not make engineering schools free and available to all the best students? Why not give away billions of dollars to entrepreneurs starting companies? Why not create an “office of innovation” that is supposed to create new things? All of these seem ridiculous, and of course we’d seem them as socialistic. So why do we think the government should play ANY role in encouraging innovation at all, rather than let the free market take care of it? It harks of both Asian and European attempts now to “foster innovation.” Seems to me the only thing that government should foster is freedom (by staying out of our business as much as possible), and let the rest sort itself out.
Anon
September 2, 2014 11:00 am
Anon at 7 is a different Anon than I – but I agree with his (her?) point in relation to the subsidizing factor. Such though, is but yet another symptom in the reality that large multi-national corporations are not truly “citizens” of any one country versus another, and that their pan-nationalism (and profit motives for seeking out the lowest cost factors anywhere in the world) are actually factors that impede innovation systems that are still sovereign based (like patent laws).

This understanding supports a critical eye towards any harmonization effort that exists for the sake of harmonization alone. A “one-world-order” type of law has its benefits, but those benefits are often skewed to those corporations that play on a world stage – the very same organizations that have an innate desire to lessen any potential impacts of truly break-though and disruptive innovation. This is not to say that all harmonization efforts are ill-conceived, but it is to say that any one sovereign should be aware of – and guard against – weakening patent law in the name of making it “easier” for those that play on the world stage.
Benny
September 2, 2014 10:37 am
SadPanda,
As Anon says, the issue is complicated. You can’t put a price on human life and health, but insurance companies can and do, and they are the ones paying for the treatment. It requires a balance of both insurance premiums, the rarity of the condition being treated, and the cost of treatment, with no simple equations.
Anon2
September 2, 2014 10:21 am
“Reasonable Price” is an anti-concept. A Rational price would be the one that given all the various factors, costs of research, costs of regulation, costs of manufacture per dose, costs of shipping, costs of marketing, number of potential buyers in various states of wanting the pharmaceutical and various states of economic capability, which gives the greatest return.

By what principle/rule authority of law can a company be grilled about pricing what it produces and its customers want to buy?
Benny
September 2, 2014 08:26 am
Gene,
I think you are over-simplifying the case in your reply to Jim. The primary incentive to innovation is profit. If profit can be maximised by monopolizing a market with patent protection, there is more butter on our bread, but in the real world a new feature can be designed, tested, and placed on the market in less time than it takes the USPTO to examine a patent application (24 to 36 months?), and there is NO guarantee that a patent protecting the innovation will in fact be granted.
The pharma world obviously takes a different approach – after all, a patent is not enough to gain a market for them – they need FDA approval too, and there is always the chance they will have one without the other.
Anon
September 2, 2014 08:17 am
I think the issue is complicated. Of course we need an environment of innovation, but at what cost? Companies sell the same branded therapies outside the US for a fraction of what it costs in the US, and so the high prices in US health care system effectively subsidize the same treatments found in the rest of the world’s health systems. This situation can be compared to the US military costs where there too, US taxpayers pay tremendously more their foreign counterparts, and the increased benefits are hard to find (is safety in the US really any more guaranteed than that of Germany, Norway, Australia, etc?). Furthermore, it’s not clear that the health care system of the US is the most innovative and worth the current cost. For example, the US population is no where near the world’s healthiest; additionally, the first gene therapy has been approved in Europe, though is not available in the US (Glybera; cost is a whopping ~ $1M). A host of poor policies supporting an ever-costlier system have resulted in the current healthcare situation, and I’m fine with congress doing its job and looking into it.
SadPanda
September 2, 2014 01:34 am
The only problem I have with the article is that it lays down a basic premise to back up it’s arguments, but doesn’t lay the foundation for that premise.

The premise is, the former ‘best treatment’ has a reasonable price.

I’m not saying it isn’t reasonable, or is reasonable. I’m saying that the article assumes it is.

I can ask $60 Million for a painting. Then I can point to another painting, which is for sale for $75 million and tell you it’s a bargain, why are you complaining.

If the painting I’m selling is Femme aux Bras Croisés by Picasso, and the painting I’m pointing to is Au Lapin Agile by Picasso, I have laid my foundation that the sale of my Picasso is a good and reasonable price.

If the painting I’m selling is the one my child did in elementary school for a class, and the one I’m pointing to is Au Lapin Agile, I am using an invalid comparison to make an invalid point (and rip you off).

If the painting I’m selling is a Salvador Dali painting, and I point at another Salvador Dali painting being sold by another con artist, I’m not really establishing that my painting is worth $60 Million by pointing at another con artist’s listing of $80 million for another Dali.

To argue the point made, the author needs to establish that the existing treatment is not overpriced based on cost of treatment (ingredients, doctor’s time, etc) as well as the research cost. Otherwise, she’s simply picking another treatment that can be argued is expensive, and saying ‘Hey, at least this one is not ripping you off as bad’.

Again, not saying the treatment isn’t worth every single cent of the price. All I’m saying is, the author is using basing the argument off of an assumption that wasn’t proven (that the previous best treatment was reasonably priced).
Anon
September 1, 2014 11:21 pm
Gene,

I took a step back from Jim Mortz’s question and thought that perhaps he was asking honestly and without guile.

I would take the opportunity to tell Jim in a way that would hopefully help put to rest a misnomer I often see on patent blogs (and note that the misnomer I see is shockingly made by supposed patent professionals who should know better).

Jim,

Let’s focus on the word “need.”

That word implies more than what is actually present in patent law: there is a trap that springs from the use of that word – what I (and many others) would call a “but for” reasoning. The trap is that the word implies that only “but for” reasoning is an acceptable reasoning for having patents.

Such is simply a false idea.

We have a patent system in place and the reason we do covers not only those situations where a “but for” reasoning may exist, but many other situations. Since the reasoning extends beyond the “but for” to ask a question focusing on “need” is to ask the wrong question. In other words, while a “but for” reasoning can provide a reason why we should and do have patents, it is not the only reasoning. There is no “need” to have a “need” – from the very beginning of our country – the very foundation of our legal system – we recognized the value of having a patent system.

The constitution was put together with the understanding that having a patent system was thus understood to be a good thing – even a necessary thing (if you read some of the works of the founding fathers, as well as other innovation thought leaders of the day – as advancement was directly acknowledged as a necessary by product of having a patent system, and this young country needed to and wanted to capture advancement). To answer your second question then Jim, from the very foundation of this country the government recognized the power of promoting advancements with a patent system. You may even note that many legal items you deem absolutely essential to our way of life – as reflected in the bill of rights – do not rise to the level of importance that our government considered with the patent power, as the patent power was recognized and delegated in the main body of the document – before the addendum of the Bill of Rights.

It is through the patent system that not only the “but for” types of advancements are obtained, but that we – as a people – want advancements more quickly and are willing to make a balanced and even swap – called the Quid Pro Quo – in order to obtain all types of advancements, far beyond merely only the “but for” types. We – again as a people – delegated the authority to Congress to write the rule of law for that Quid Pro Quo exchange, and wanted people to take advantage of that exchange.

When the rule of law as set forth by Congress is met, when the exchange of Quid for Quo is realized, we as a people are enriched – right there at the grant of patent, even before any products that may flow from the patent are made, or bought and sold.

The further fruits of that exchange – the additional innovation effects of putting inventions into practice, into commerce, is a step beyond the Quid Pro Quo. This too, I have often seen misunderstood by professionals in our field. This is one of the reasons why we do not have a working requirement (as some other nations have decided to enact). This is also one of the reasons why the grant of the patent is considered a negative right – and not a grant of money or a positive right: we still let society decide if a patented invention is worth it to them to buy and provide the actual flow of money as a reward to the inventor (or his assigns).
EG
September 1, 2014 11:08 pm
Jim M.

I would be happier if the federal government didn’t at least impede innovation. But the sad fact is that the AIA (Abominable Inane Act) and Congress generally, as well as the current administration do everything they can to make it difficult for the David’s of Innovation to succeed. The Goliaths of the computer and software world who don’t innovate have totally “gamed” our patent system against innovation.
Gene Quinn
September 1, 2014 09:07 pm
Jim-

Are you serious? Why do we need to provide incentive to innovate? Wow!

I suppose the only reason to provide incentive to innovate is to get more innovation. If you want less innovation then you should champion doing away with incentives. That way we will get fewer innovative products, absolutely no new drugs and everyone will be so much better off.

-Gene
Jim Mortz
September 1, 2014 04:47 pm
Why do you think we need to “incentivize” innovation, or that the government should play any role in doing so?
Anon
September 1, 2014 01:19 pm
Not to detract from the message of the author here, but this mindset is only a logical outcome of the anti-software, anti-business method and anti-patent mindset very much active in the U.S.

There needs to be an across-the-board pro-patent message crafted and pursued.

As to the content of the article itself, I would point out that comparing the price to other comparable alternatives is expressly NOT the avenue to take to assuage the Congressmen looking into the matter. That is the wrong metric to have in mind, as such a pricing decision – divorced from any actual cost of the new method drives a view (correctly or incorrectly – I make no comment) that gouging is going on. If the advance costs pennies, then what the Congressmen will be alarmed at is an obscene (to them) mark-up and it is not the final item to item comparison that is key.

Are we privy to a mark-up to mark-up comparison? That is the more pertinent point as I view what these people may be upset about.