When I suggested in my book Who Owns You? that unaltered genes, such as “disease genes” like that responsible for Canavan’s Disease, ought not to be patentable because they are not in the least bit inventive, I was attacked as a pariah by the minions of the IP-Industrial Complex.  Gene patents, specifically on merely “isolated” genes, are particularly insidious perversions of the patent law’s ever expanding breadth, and they are also tremendously valuable to any company that happens to get them.  These patents encompass the sequences of genes known, for instance, to cause a propensity for a certain disease.  Identifying them through a genetic test involves significant consequences for individuals.  Companies that tie up these sequences by patent can “own” the exclusive right to test for the presence of that gene.  The most famous example is Myriad, which owns patents on the BRCA1 and 2 genes known to increase one’s propensity for breast and ovarian cancers.  This patent enables Myriad to prevent anyone else from performing clinical tests for the BRCA1 and 2 genes, and so in the absence of competition they can charge the ludicrous monopolistic price of nearly $3000 US for a test that costs less than $400 to perform.  This sort of patent is particularly offensive, not merely because of the consequences, but because of the “theory” behind them.  While we ordinarily consider patents to apply to “inventions,” they can also apply to new “discoveries” as well.  This nasty little ambiguity has been extended through painfully strained reasoning to allow patents on synthesized, but otherwise naturally-occuring molecules like adrenaline and now, unmodified (but “isolated”) genes.  Defenders of the practice say that by “isolating” a gene from the 3 billion base-pair string that is the human genome, something “new” has been created, and as a new composition of matter, it is somehow patent-eligible.  In my book, and ever since, I have analogized this to drawing a boundary around the Devil’s Tower and claiming to have invented the Devil’s Tower.  Nature defines the boundaries of genes even more precisely than natural boundaries around physical features, because at the end points of genes are well-known markers called “promoter” and “stop” codons.  Because of the value of gene patents, there has been a gold-rush of sorts to identify and claim ownership of genes, and this has had a real effect on the progress of basic research.  Worse, it defies all reason and awards the right to exclude others from basic, natural facts and phenomena.

But the tide may be turning.  The ACLU sued Myriad last year and won a surprising summary judgment which is now being appealed.  The court reasoned that the mere isolation of a naturally-occurring mutation to a gene was not sufficiently inventive to warrant a patent.  The decision was of course derided by patent attorneys, but it seems to have presaged a general shift in thinking about this issue.  Public opinion has been firmly against these sorts of patents for some time, and now even the US government (outside of the PTO) is beginning to push back.  Early this year, the The Secretary’s Advisory Committee on Genetics, Health and Society (SACGHS) for the Department of Health and Human Services (HHS)  issued a report that called for scaling back a bit  the practice of granting patents over isolated genes.  Even more significantly, the Department of Justice filed a surprise amicus brief  last week in the Myriad lawsuit, siding with the plaintiffs and arguing that patents on unmodified (but merely “isolated”) genes are contrary to the purposes of patent law and ought to stop.

You can bet that this issue will not die down soon, and it will be fascinating to see how this all plays out given that the PTO clearly disagrees with the DoJ’s position, but it is good to see movement, however slight, in the right direction.

Following is Jeff Tucker’s recent Mises Blog post:

Study with the Leader of the Resistance

OCTOBER 31, 2010 by JEFFREY TUCKER

I am very happy that Stephan Kinsella is finally teaching a class on intellectual property, which is surely one of the most important issues of our time. We need desperately to spread education about this topic, which is a difficult one. It is not one of the “armchair” issues that you can solve without much thought or serious study.

Let me try to give a flavor of what we are dealing with here.

Last week, I had to haggle with an authors’ consortium in Britain concerning a 1946 text. The author had no children and he died before the copyright on the book expired. Someone swept in a renewed the thing, thereby taking it off the market. It hasn’t been in print for some 40 years. A paralegal helped me discover the owner, which turns out to be some scam operation that preys on people who want to reprint books. I asked to distribute the thing online. The consortium never seem to have heard of the internet. They wanted a fee for $1 per book with a contract that lasted 2 years and a limit on our sales. None of this works for us. So we said no. As a result, the book, which is not that mission critical, goes back to its eternal resting place, all because of “intellectual property” which is just so obviously a hoax and a violation of human rights. [continue reading…]

First, there was “Fear the Boom and Bust,” the excellent Hayek v. Keynes rap video, and Nina Paley’s catchy “Copying is not Theft” and her creative “All Creative Work Is Derivative”–now there’s the anti-IP inspired “Death of ACTA” by Dan Bull, which opposes IP and ACTA. Video below (warning: some profanity). The lyrics is obviously inspired by the scarcity-focussed pro-property rights position, not by the anti-property mentality of some “dot-communist” so-called opponents of IP. On Bull’s FaceBook page, he displays his creativity in making money off of bundled scarce and non-scarce goods:

When you buy my CD, I’ll write a unique rhyme into the artwork for you, on any topic you choose. Tell me your topic in the PayPal form. Get clicking:

http://itsdanbull.com/shop

p.s. Take my Mises Academy course on IP, starting tomorrow (Monday).

also, the lyrics to the video are pasted below.

[continue reading…]

From the Mises blog; archived comments below.

In Adam Mossoff in the WSJ, Objectivist Diana Hsieh admits IP is a “thorny” issue. Progress! The WSJ piece citing Mossoff notes:¹

The Sewing Machine War was the first instance of what is today called a “patent thicket.” The disputes prevented Singer from selling his invention, and tensions ran high in and out of court: When Howe personally called on Singer, Singer threatened to throw him down a flight of stairs.

But there’s a happy ending to the story, as your machine-stitched clothes evince. The Sewing Machine War ended with a just and lasting peace in 1856, when Orlando B. Potter–a lawyer representing one of the plaintiffs–suggested a solution that Mossoff calls “groundbreaking but also breathtakingly simple”: The patent-holders would combine their patents in a “patent pool” and share the profits from selling the machines. The patent pool participants lived happily and wealthily ever after—or at least until 1877, when the last patent expired.

The happy ending is that the holders of patent monopolies granted by the states pooled them to form a united front to quash competition. Thus larger companies erect barriers to entry, partially monopolizing a field, with the help of the monopolies granted by the state. Ironically, the state then turns around and uses its own antitrust law against them–as the article notes, “anti-trust legislation today would likely render a smartphone patent pool an impossibility.”²

Quoting Mossoff, the article says:

the fact remains that lawsuits are often no more than an invitation to negotiation. “Oftentimes the way a party signals to another party in one’s industry, ‘I’m serious about this–you need to speak with me,’ is by filing a lawsuit,” says Mossoff.

Ha! Extortion is an “invitation to negotiate.” The euphemisms for statist aggression are many and varied–collateral damage, and so on. (See also Patent trolls as mafioso (and that’s a compliment) and “Investment Grade Patents are not for Rent Seeking … They are for business negotiations”.)

And most companies do reach amicable licensing agreements where they use one another’s technology for a fee.

Amicable! This means friendly. Yes. Very friendly to threaten to sue someone unless they pay you not to.

The article concludes:

So while the maze of patent lawsuits might seem like wasteful litigation, Mossoff cautions that the opposite might very well be true. Those who defend the patent system and intellectual property rights argue that it encourages innovation by ensuring that inventors get their due. “What the patent system is about is not what’s happening today or yesterday, but what’s going to happen tomorrow,” says Mossoff.

This seems to recognize that IP creates injustice, but that those who favor it think it’s worth it in the long run, for the sake of higher goals. This is exactly the structure of the argument normal statists use to endorse conscription, taxation, and so on–that the violations done to individuals are “worth it” for the greater good.

[Cross-posted from Mises Blog]

archived comments

El Tonno October 31, 2010 at 11:03 am

“What the patent system is about is not what’s happening today or yesterday, but what’s going to happen tomorrow”

What does that even mean? Something is going to happen if the patent expires, but apart from that..

iawai October 31, 2010 at 10:53 pm

It means that Mossoff can’t refute those instances where the existence of Intellectual monopoly privilege actually hindered technological progress and peaceful cooperation in the marketplace. So instead of trying to explain why these might be “necessary evils” in a good system, he will only argue in the hypothetical world of “what could happen” and “what could be invented”.

Of course this takes all empirical evidence out of the debate, and leaves Mossoff only with the unfalsifiable propositions that absent the current (or a modified) version of Patent law “creators would go unremunerated” or that “creators would have no incentive to advance technology”. These propositions are easily understood to be false if you look at actual human action, where creators are always seeking to better their position – but if you cannot appeal to historical evidence you are left arguing about what some hypothetical homo inventus would do if he couldn’t rely on the brutal power of the monopoly state to limit his competitors and potential consumers.

And Mossoff, in this falsely framed debate, will always be able to come up with some situation where he wouldn’t get the invention he desired because the realities of scarcity would limit his homo inventus to choices that actually made economic sense. And from that hypothetical “market failure”, Mossoff will always argue for the socialist solution of forcing every individual into a single system where the type of invention he desires is provided “for free” (i.e. at the expense of every taxpayer, manufacturer, consumer, and rival inventor, regardless of their own internal opinions of the system).

Stephan Kinsella October 31, 2010 at 11:05 pm

I think what he means is, what is going on at any present time with the patent system might seem unjust–like if your liberty is restricted by someone’s patent–but we do this so that we get more innovation in the future. So it’s worth it. Or something. This is just a confused, not backed up utilitarian argument that denies it’s utilitarian. So what can you do with it?

Edgaras November 1, 2010 at 5:57 am

“invitation to negotiation.” just killed me… Wow…

1. For discussion of Hsieh and Mossoff see IP: The Objectivists Strike Back! [↩]
2. See my posts When Antitrust and Patents Collide (Rambus v. FTC); The Schizo Feds: Patent Monopolies and the FTC; The Schizophrenic State; Intel v. AMD: More patent and antitrust waste; Are Patents “Monopolies”?; Patents, Prescription Drugs, and Price Controls. [↩]

In Tim Cavanaugh’s recent article, Why Jean-Luc Godard, Irish ISPs, German Historians and the Pope Won’t Join the Kiss Army, in Reason Online, an ostensibly libertarian magazine, he mentions various modern opponents of and movements opposed to intellectual property but omits mention of the modern and growing libertarian opponents of IP. It took a commenter to mention libertarian opponents of IP.

Embedded below is the video of a Cato Institute Book Forum (November 10, 2008) featuring C4SIF Board Member Michele Boldrin, author of Against Intellectual Property. (Note: embedding not working here for some reason; the video may be found at the Cato Book Forum page.)

Great post by C4sIF board member Mike Masnick on Techdirt (below). I discuss why patent and copyright are not the only bad IP law–why trademark is also problematic, in Trademark versus Copyright and Patent, or: Is All IP Evil?; Trademarks Ain’t so hot, either…; The Patent, Copyright, Trademark, and Trade Secret Horror Files; and Trademark and Goats-on-the-Roof Bans.

***

How Trademark Law Has Turned From A Consumer Protection Law, Into A Weapon To Hinder Competition

from the abuse-of-the-system dept

We’ve talked, regularly, about how trademark law is quite different than patent and copyright law. Patent and copyright law come from the “progress clause” of the Constitution, and are there to create incentives for “promoting the progress.” Trademark law, on the other hand, falls under the “commerce clause” of the Constitution and is really about protecting consumers from confusion and harm (such as believing a product is from one reputable source, when it’s really from someone else). Unfortunately, after some lawyers successfully lumped them all together as “intellectual property law,” there’s been an ongoing effort to treat trademark law more and more like copyright law — and that’s a problem. This is most clearly seen in the more recent “innovation” within trademark law of moving beyond “a likelihood of confusion” into the concept of “dilution.”

Trademark lawyer Ron Coleman, who runs the excellent Likelihood of Confusion blog, has nowwritten a paper that highlights his concerns about where trademark law has been trendingrecently, and comparing it to the excesses of copyright law these days. The first part of the paper details just how ridiculous copyright law has become lately, way outside of its Constitutional moorings. For example, he highlights the serious problems and misunderstandings of the purpose behind statutory damages by the court, to produce awards that make little sense, and clearly go beyond the law’s intended purpose: [continue reading…]

When I began law school, the term for copyright protection was a mere life-of-author plus 50 years.  The term for patents was 17 years.  By the time I graduated, copyright terms were extended an additional 20 years, and patents an additional 3.  The ongoing efforts by industry to extend their monopolies enjoys very little opposition among the political elites of both parties for the same reason that true opposition to the ongoing illegal military adventures in Iraq and Afghanistan is not reflected in any real political action.  The economic stakes are too great, and the politicians who make the laws are corrupted by the vast sums of money now flowing from corporations to ensure the status quo.¹ Eisenhower warned us of the emergence of the “military-industrial complex” that would perpetuate conflicts at all costs in order to reap their economic rewards.  There is now a vast IP-industrial complex, permeating both the corridors of political power, and the academy.  To question the ethics of IP, to argue for its abolition even buttressed by overwhelming evidence for its inefficacy and corruption, or to do anything but debate around the edges for  some bland “reform,” will earn you their wrath.  And why not?   Should we be surprised?  Moneyed interests with political influence have always won the day even against reason and evidence.

When the Copyright Term Extension Act of 1995 was passed, Mary Bono stated that her dead husband believed that copyrights should be permanent.  The act has since been called the Mickey Mouse Protection Act due to the intense lobbying efforts of Disney, which faced the horrific prospect of Mickey Mouse lapsing into the public domain, where just anyone could use his image for any creative purpose.  This is of course incredibly ironic given that Disney made a fortune recycling content from such sources as Grimm’s Fairy Tales, appropriating these free works, and churning out sure-fire, field-tested hits in cartoon form… now with copyright protection for Disney.   The patent extensions and exceptions that are seemingly continually debated and considered in the halls of Congress are often the result of frantic lobbying by pharmaceutical companies and their lobbyists (like BIO and PhrMA), who face tragic stock losses every time one of their blockbuster drugs faces the inevitable prospect of lapsing into the public domain, and turning “generic.” [continue reading…]

1. As well as an entrenched and costly government bureaucracy (the PTO) and related academic institutions built to serve this bureaucracy (pumping out IP lawyers). [↩]

I was interviewed earlier today by Mark Edge, as part of his “Edgington Post Interview Series,” for his Free Talk Live radio show, about my upcoming Mises Academy course, Rethinking Intellectual Property: History, Theory, and Economics. The interview lasts about 20 minutes, and starts at 2:02:43 in the Oct. 26, 2010 show. Edge conducted an excellent interview–very informed and interesting. And, like many others, he’s come around to the anti-IP position.

In an incredibly well-written and insightful post by by David Parkman on Business Insider, Why Netflix Won, Parkman–a partner at Venrock and the former CEO of eMusic–highlights two of the key elements of Netflix’s success. First, Netflix CEO Reed Hastings capitalized on copyright law’s “first sale doctrine” that allowed Netflix to legally rent copies of DVDs they legally purchased. As the article notes, ‘

when many of the studios didn’t want to play ball with Netflix and offer them discounts (or even wholesale pricing) on DVDs, Netflix just went to the store to buy them at retail. This allowed Netflix to get off the ground and assess market demand for their DVD-by-mail rental business without any approval or licenses from rights holders.

Second, Hastings’s gut instinct

proved right — a more consumer-friendly model of no late fees and big selection overpowered the immediate convenience of going to a corner store to pick up a movie for a night. He offered a better service for consumers against the strong will of the rights holders. And by building a great product, he was rewarded with massive consumer adoption. There are more than 15MM subscribers today, and growing.

Parkman concludes: “Without the first sale doctrine, however, Netflix never would have gotten there. And once they got leverage, they played their cards perfectly.” This seems to imply either that Hastings somehow cheated–by figuring out a loophole–or that copyright law somehow shares the credit for Netflix’s success due to the  magnanimous “first sale doctrine.” In my view, Netflix cannot be blamed for navigating the legal terrain that exists. And copyright law cannot be credited for having a few loopholes that.

By Michael Geist:

Monday October 25, 2010

The Vatican has spoken out against unduly aggressive intellectual property protection. In a statement at the World Intellectual Property Organization, it noted “on the part of rich countries there is excessive zeal for protecting knowledge through an unduly rigid assertion of the right to intellectual property, especially in the field of health care.”

The Vatican is more honest and intelligent about this than IP advocates are, acknowledging that the

Economists recognize mechanisms through which Intellectual Property Rights (IPRs) may stimulate economic development. These are interdependent so that a broad view of incentives associated with IPRs is appropriate. They devote much attention to this issue, but evidence to date is fragmented and somewhat contradictory, in part because many of the concepts involved have not yet been measured. A stronger system of protection could either enhance or limit economic growth. While strengthening IPRs has potential for enhancing growth and development in the proper circumstances, it might also raise difficult economic and social costs.

So the Vatican recognizes that (a) the economists have not proven their case with solid numbers;¹ and (b) that there are real and significant costs to an IP system that should not be ignored.²

Jeff Tucker has also written about the incompatibility of IP and the Church’s mission: see his “Why Catholics Don’t Understand Economics ” and “Why ICEL Needs To Put Its Texts Into the Commons.”

1. See my post Yet Another Study Finds Patents Do Not Encourage Innovation [↩]
2. See my article There’s No Such Thing as a Free Patent, Mises Daily (Mar. 7, 2005). [↩]

See updated post here.