Open Source Technology is
- More reliable and evolutionary as compared to closed source technologies.
- Open-source technology is peer-reviewed.
- Much of it is contributed by individuals who simply need an improvement to serve their own needs.
THE CASE AGAINST THE PATENT SYSTEM
by Pierre Desrochers
One of the
few topics over which free-market proponents often radically disagree is the
relevance of the patent system (Kinsella,
2000). According to some, without patent protection an inventor has no
incentive to invest time and money into something that can be easily copied by
its competitors without incurring significant R&D costs. Patents therefore
correct this market failure by providing a temporary monopoly to the inventor.
Even though monopolies typically involve a misallocation of society’s
resources, any welfare losses due to the restrictions in disseminating an
invention are outweighed by the incentive to invention they provide. Besides,
the fact that the technological bases for these rights are made public
contributes to the body of generally accessible information. Furthermore, to
the extent that patents cover successful process innovation, lower costs of
production and lower market prices will result even if the patentee behaves
like a rational monopolist.
Despite this rationale, there has always been a set of thorny issues about the
patent system. For example, patent holders may capitalize on inventions by
suppressing their development, even though these inventions would benefit the
public. Furthermore, the patent system provides incentives to focus on what is
patentable and on developing certain superfluous innovations simply to avoid
what is covered by a patent.
The arguments for and against patents are probably as old as the patent system
and numerous studies on both sides of the debate can be found. Yet, most
analytical and historical examinations of patents and their meaning for technology
and economic growth are generally deemed inconclusive. Actually, the authors of
many empirical studies point out that patents do not play anything like a
dominant role among the various mechanisms by which returns from innovation are
captured. Indeed, for most firms trade secrets, know-how, lead time to markets,
continuing technological innovation, licensing, name recognition, service
capabilities and the use of complementary marketing and manufacturing
capabilities are often deemed more effective than patent protection. In the
end, in virtually all branches of industry, the absence of patent protection
would have had little or no impact on the innovative efforts of a majority of
firms (Mazzoleni and Nelson, 1998; Cohen et al., 2000). To understand how this
can be, one must go back to the essence of what patents are (and are not) and
to the way human creativity actually generates new ideas and products.
A Right to Exclude, but not to Use
A patent is a property right granted by a government to an inventor or his
assignee to exclude others from making, using, or selling an invention
fulfilling certain requirements, most notably that it performs a « useful »
function. What needs emphasis, however, is that a patent only grants the patentee
the right to prevent others from practicing the patented invention, not of
using it. There are thus special circumstances where a patent owner cannot use
his own invention because it would infringe on the patent rights of others. For
example, inventor Jones patents a device comprised of components A, B, and C.
Inventor Smith improves on Jones’s invention by adding D. Smith can then get a
patent on the new device with components A, B, C, and D. Inventor Smith can
prevent everyone from using the device with these four components, but he
cannot use it either because it infringes on inventor Jones’s patent. On the
other hand, Jones cannot add component D to his patented device because that
would infringe on Smith’s patent. Such situations are very typical. As one
American lawyer has put it: « Everybody is infringing everybody’s patents all
the time. So one guy puts a pile of papers five inches high on the table, and
the other guys have a smaller pile » (The Economist, 2000: 76). What
then typically results in such a scenario is a cross-license between the
original and improvement patent owners, with or without money being thrown
in.
Another issue that must be stressed is that the final responsibility for
validating or invalidating a patent lies with the court. In practice, the
burden of proof of infringement lies with the patent owner because the alleged
offender is held innocent until proven guilty. Furthermore, the patent office
is not responsible for failure to discover previous conflicting claims, which
means that a patentee never knows for sure if his patent will be deemed valid
by a judge (who might also lack the training to understand the technical
aspects of a case). Even though it is often argued that there is a presumption
of validity on behalf of the patentee, as one critic pointed out many decades
ago: « Numbers are stamped by an impartial numbering machine but patents are
granted by all-too-human examiners » (Carter, 1939: 44).
Considering the huge amounts of money needed to use the patent system
successfully (i.e. to hire patent attorneys and industrial drawers, to file
applications, to manage a portfolio of patents in many countries, to renew
patents and to sue alleged infringers in courts), such a process is not too
comforting even if in some cases damage suits have proven very lucrative.
Actually, a patent protects the inventor only so far as the inventor’s money
will carry him in the courts, for the more financially endowed party to a suit
might prevail simply by bankrupting its opponent. It is therefore not
surprising that many individuals and corporations do not seek patent protection
because they see no added value to it. This will typically be the case when
technological advances are very rapid, difficult to police, costly to copy or
are likely to infringe on other patents.
« Even an anonymous author writing in a
brochure of the Canadian Intellectual Property Office had to admit that 90% of
all patented inventions are minor improvements on existing patented devices. »
Despite all these flaws, however, patenting activity has grown substantially in
the
On the other hand, firms who employ people who know better will typically
patent for reasons that go beyond directly profiting from a patented
innovation. Among their most prominent motives are the prevention of rivals
from patenting related inventions, the use of patents in negotiations
(especially for cross-licensing) and the prevention of suits (Cohen et al.,
2000). In short, in these instances patents are nothing more than « protection
money » that is being paid either to block competition or to gain access to a
particular technological area.
The previously listed flaws of the patent system are serious enough to make the
case for the abolition of the patent system. An even stronger case can be made,
however, when one considers that the patent system rests on a fundamentally
flawed view of human creativity.
A Misleading View of Human Creativity
As many psychologists and historians of technology have shown, innovation does
not proceed through major breakthroughs by specific individuals, but rather
through the collaboration of different people who, through small and cumulative
improvements, yield novel and useful artifacts over time (Basalla, 1988). All
of patent law, on the other hand, is based on the assumption that an invention
is a discrete and novel entity that can be assigned to the individual who is
determined by the courts to be its legitimate creator. The associations of an
invention with other existing or past artifacts are therefore obscured. Despite
its philosophical foundation, however, the patent system cannot entirely
obscure the true nature of technological change. As I have already mentioned,
virtually every new patent infringes in some way on other patents. Furthermore,
most patented innovation are typically very minor improvements. As the
economist F.M. Scherer (1987: 124) has noted: « As the bleary-eyed reviewer of
some 15,000 patent abstracts in connection with research… I was struck by how
narrowly incremental (adaptive?) most "inventions" are. » Even an
anonymous author writing in a brochure of the Canadian Intellectual Property
Office (1994: 8) had to admit that 90% of all patented inventions are minor
improvements on existing patented devices.
What the incremental view of technological change implies is that the
contribution of an individual to a new device is likely to be small. Thus an
inventor that comes up with a better mousetrap is building on the previous work
of metallurgists, machinists and wood-workers, but also on the contribution of
other individuals who previously worked on similar devices (if only by learning
what did not work). Granting him a 20-year monopoly from the initial filing
date seems somewhat outrageous in this light.
It must also be kept in mind that technological innovation implies a continuous
flux, for creative individuals never cease to improve existing artifacts,
whether they be cars, computers or ballpoint pens. Why do some people innovate
relentlessly? As Petroski (1992: 22) puts it: « The form of made things is
always subject to change in response to their real or perceived shortcomings,
their failures to function properly. This principle governs all invention,
innovation, and ingenuity; it is what drives all inventors, innovators, and
engineers. » How do creative individuals come up with new things? Essentially,
by combining previously unrelated things in a new way.
For example, in order to increase the assembly rate of their tremendously
successful Model T, engineers and technicians at the Ford motor company drew
inspiration from the « dissasembly » lines of the Chicago meatpackers, the
grain conveying machinery of the flour milling and brewing industries along
with some process technology used in the food canning industry (Hounshell,
1984). The fact that people solve problems by combining existing things in a
new configuration goes a long way toward explaining the persisting recurrence
of « simultaneous inventions » throughout history. The patent system, however,
will unduly penalize inventors who come up independently with a solution to a
problem that might be similar to something that has already been
patented.
Another recurring feature of creative individuals is that they do not come up
with « the » solution to a problem, but rather always improve their particular
way of solving it. As DeGregori (1985: 5) put it: « Progress in the human
endeavor is most meaningfully defined not in terms of the ultimate or final
solution to problems but in creating smaller or less important ones than those
we solve. » The logical outcome, as Petroski (1992: 22) points out, is that «
since nothing is perfect, and, indeed, since even our ideas of perfection are
not static, everything is subject to change over time. There can be no such
thing as a “perfected” artifact; the future perfect can only be a tense, not a
thing. » It is therefore usually only a matter of years after an inventor has
patented a « basic » idea that he must improve it beyond recognition in order
to turn it into a commercially viable product. An inventor spending his
resources on patenting his basic idea without having perfected his invention in
every practical detail is likely to waste his resources because he is
destroying any possible value his patent might have had.
One last feature of technological change that deserves mention is the fact that
there is always a surprisingly wide range of alternative methods of getting a
job done, each being characterized by a different mix of inputs. It is
therefore not surprising that most interesting inventions can easily be «
patented around » by making small modifications only a few years after a patent
has been granted.
Conclusion
Anyone familiar with the world of inventions knows that there is no short
supply of new ideas. Indeed, most companies are typically flooded by
request from inventors who have come up with a « new and improved » way of
doing something. In most cases, however, the new invention has some major flaw
that will make it either too expensive or impractical. The patent system
reflects this reality, for the vast majority of patents end up their lives
unused in the files of patent offices, corporations and individual inventors.
In 1869, United States Commissioner of Patents Samuel Sparks estimated that at
most 10% of all patents had commercial value. Most modern commentators still
agree that this estimate holds true today or is even too optimistic (Basalla,
1988: 69). In views of all the flaws of the patent system, a case can therefore
be made that there would almost certainly be even more innovation in its
absence, if only because more money would be available for R&D at both the
individual and corporate level if it was not spent on patents and lawsuits.
The case against the patent system is even stronger if one considers that an
inventor is, to some extent, protected by the law as long as he clearly
explains to another party that he is presenting him an idea which is his
personal property. The use of a « confidentiality letter » offers increased
guarantees, although in practice it is probably no more valuable than a patent.
In the end, however, unpatented inventions are very rarely stolen for, as
Carter (1939: 36) warned inventors many decades ago: « Don’t worry about having
your undeveloped invention stolen. Nobody wants it. Nobody will want it
when you have completed it and are ready to sell. Selling fully developed
inventions is hard enough and only an imbecile would steal a crude idea. » When
an invention has been proven useful and all its technical difficulties have
been worked out, however, what an inventor needs more than anything is instinct
in choosing the right people to work with. Ultimately, a patent adds nothing to
the value of an impractical invention and little to one that might seem
promising.
—, « Patent Wars », The Economist 355 (8165), April 8, pp. 75-78, 2000.
Basalla,
G., The Evolution of Technology,
Canadian
Intellectual Property Office, A Guide to Patents,
Carter,
H.D., If You Want to Invent,
Cohen,
W., R.R. Nelson and J. P. Walsh, Protecting their Intellectual Assets:
Appropriability Conditions and Why
De
Gregori, T.R., A Theory of Technology: Continuity and Change in Human
Development,
Desrochers, P., De l’influence d’une ville diversifiée sur la combinaison de techniques: Typologie et analyse de processus, Ph.D. dissertation (Geography), Université de Montréal, 2000.
Hounshell,
D., From the American System to Mass Production, 1800-1932,
Kinsella, N.S., « Is Intellectual Property Legitimate? », Paper presented at the Austrian Scholars Conference 6, Auburn, Alabama, March 25, 2000.
Mazzolini, R. and R.R. Nelson, « The Benefits and Costs of Strong Patent Protection: A Contribution to the Current Debate », Research Policy 27 (3), p. 273-284, 1998.
Petroski,
H., The Evolution of Useful Thing,
Rosegger,
G., The Economics of Production and Innovation: An Industrial Perspective,
Scherer, F.M., « Comment » on R.E. Evenson « International Invention: Implications for Technology Market Analysis », In Zvi Griliches, ed. R&D, Patents, and Productivity, Chicago, University of Chicago and National Bureau of Economic Research, p. 123-126, 1987.
http://www.quebecoislibre.org/000902-3.htm
Intellectual Property: Protecting a Patent
Charles
Boulakia
Usually, once someone has obtained
a patent or two, the first thing they want to do is either sell that patent or
start up their own company to exploit the patent (that is, make lots of money
manufacturing and selling their invention). If you're planning on selling your
patent, good luck to you! It's probably the best way of getting quick cash for
something you've invented. But don't be surprised if it's not a whole lot of
cash. If you're planning on starting a company and doing it all yourself,
again, good luck! Starting a company is a tough process. Here are two little
tips on protecting your patent that might help you out.
Protecting a
Patent in the Courtroom
The first
thing you've got to know is that, if you're just a small company, protecting a
patent can be very, very difficult. If a larger, but kind of unethical company
wants to infringe on your patent, they will. And often, in a small company, the
"monopoly right" that the patent offers you is just about the only
thing keeping you in business.
Well, the
problem is that if your patent is worth a lot (that is, if the company
infringing on your patent thinks they can make millions of dollars off your
idea), chances are, there's not a whole lot you can do. There are two basic
strategies: Suing for breach of patent, or negotiating a licensing fee with the
company infringing on your patent.
Suing for
breach of patent is what's done most often. However if the patent is worth a
lot of money, and you're a small company, this can be very difficult to do. A
larger, patent-infringing company who's making a lot of money off your patent
can usually drag courtroom proceedings out for a long time -- often for years.
This causes two problems: First, while the proceedings are taking place, they
often continue infringing on the patent (putting a significant dent in your
company's revenues and profits). Second, because your company needs lawyers to
represent it, deliberately dragging out courtroom proceedings in this way can
cost you a lot of money. Your company could easily go bankrupt because of the
cost of the proceedings (this often happens with small companies).
Unfortunately,
there are few things you can do about this problem. The first is that, if your
patent is really worth that much, you can sometimes find financing for your
courtroom proceedings in the form of an equity investor. That is, someone who
sees that your patent is being infringed (and a company is making tons of money
doing it) may want to take the "bet" that you could make just as much
if the patent wasn't infringed upon. This person may finance your courtroom
costs for a percentage of your company. The second, more frequent way is by
having a "big-shot" as part owner of the patent. They may want to
enforce their patent rights on principle alone. An example is a large,
research-based university. An institution of this nature may realize that, if
they get a reputation for enforcing any and all of their patents, no one will
mess with any of their patents. This reasoning is why Stanford and Harvard are
often seen in court, defending their patent's rights.
The other
strategy I mentioned was negotiating a licensing fee. You may ask: Why would
any company, knowing the problems you're going to have defending your patent
rights in a courtroom, ever pay you licensing fees? Well, remember that the
courtroom battle will often cost the offending company millions of dollars as
well: It may be less expensive for them to just pay you a small license fee,
rather than pay a lot of money trying to make you go bankrupt.
Protecting
Your Patent From Creditors
The second
group of people you need to protect your patent from are creditors: that is,
people that lend your company money. The issue here is that they may ask you
for your patent rights as collateral. Also, if the company should fail, all of
its assets go into receivership, and this might include your patent. Because
your patent may be the most valuable part of your business, you don't want this
to happen.
In order to
protect yourself (to a certain degree) from having this happen, you can do what
a lot of technology-based companies do: Set up two companies. Company A can own
the patent and license it to company B. Because the only asset for company A is
the patent, and the only purpose for company A is to earn money licensing the
patent, chances are it's not going to go bankrupt: It has no costs, and no
creditors. If company B goes bankrupt, well, at least you've still got your
patent.
Because this
is a very common practice, many creditors ask company A to co-sign loans to
company B before they give them any money; however, the two-company approach
gives you some protection and gives you a little more control if things turn
sour.
A
worldwide fight against biopiracy and patents on life
By Martin Khor
There is growing worldwide opposition to the granting of patents on biological materials such as genes, plants, animals and humans. Farmers and indigenous peoples are outraged that plants that they developed are being 'hijacked' by companies. Groups as diverse as religious leaders, parliamentarians and environment NGOs are intensifying their campaign against corporate patenting of living things.
WORLDWIDE opposition to biological piracy' is rapidly building up as more and more groups and people become aware that big corporations are reaping massive profits from using the knowledge and biological resources of Third World communities.
There is growing public outrage that these companies are being granted patents for products and technologies that make use of the genetic materials, plants and other biological resources that have long been identified, developed and used by farmers and indigenous peoples, mainly in countries of the South.
Whilst the corporations stand to make huge revenues from this process, the local communities are unrewarded and in fact face the threat in future of having to buy the products of these companies at high prices.
The transnational corporations are racing one another to manufacture pharmaceutical and agricultural products, the main ingredients of which are the genetic materials of the medicinal plants and food crops of these local communities. The firms are also collecting other living things, ranging from soil microorganisms to animals and the genes of indigenous people, which they use for research and making new products.
These companies are rushing to apply to patent the new products containing the collected genetic materials, so as to prevent competitors from using them. They can then reap larger profits from being able to hike up prices for the products, or by charging royalties to other firms wishing to use the technology.
There is much at stake in this great race of companies to patent ahead of their rivals, for the coming century is already being termed 'the age of biology', when products derived from biological materials are expected to increasingly replace those made from metals and chemicals.
The genes of living organisms are the basic 'raw materials' of the new biotechnologies. The 'Gene Rush' has thus become a new version of the old 'Gold Rush', in the scramble for future profits.
Farmers and indigenous communities, backed by citizen groups, are protesting against the companies being given patent rights, as it is these communities that have been responsible for identifying and evolving the use of the plants for food, medicines and other functions.
The knowledge and use of 'biodiversity' resides with these farmers and indigenous people, which have shared their knowledge and plants freely. Yet through patent applications, the companies are now claiming the exclusive right to produce and sell many 'modified' plants and animals, which have been manipulated to contain selected foreign genes.
The knowledge, innovation and efforts of these communities are not acknowledged (and indeed are discarded) when the legal 'intellectual property rights' systems grant patents on genetic and biological materials and on living organisms to corporations. This injustice is being fought at different levels by farmers, indigenous people and public interest groups. For the past few years, NGOs such as RAFI, GRAIN and the Third World Network have been networking to raise general awareness of the phenomenon of 'biopiracy'. Indigenous groups and farmers are also getting together to put forward their viewpoints. In recent months, legal challenges have been filed against patents granted on biological products. In a parallel move, new campaigns have been launched by religious leaders and NGOs against the patenting of life.
The following are some of the actions by various groups around the world.
Legal challenges to patents
Some groups have recently filed legal petitions or test cases to challenge patents already granted.
* In
* In
* In March 1995, the Swiss Supreme Court, in a landmark decision, ruled that the manzana variety of the camomile plant may not be patented. It revoked the patent that the Swiss patent office had granted in 1988 to the German pharmaceutical company Degussa/Asta Medica on its manzana variety. The case had been brought to court by a Swiss farmer Peter Lendi, president of the Bio-Herb Growers' Association.
* In February 1995, the European Patent
Office withdrew key parts of a patent granted to a Belgian company (Plant
Genetic Systems) and a
Farmers and indigenous people against life patenting
Meanwhile, there have been activities by many different groups, including farmers, indigenous people, parliamentarians, religious leaders, and NGOs opposing the patenting of all life-forms, or living things.
In
Indigenous peoples' groups have held
regional meetings in
Parliaments vote against life patents
Parliaments have joined in the fight by
opposing proposed laws that would legalise patents on life. In March 1995,
Also in March, the European Parliament voted against the European Commission's proposed directive on 'legal protection of biotechnological inventions'. The directive would have allowed for patenting of biological materials and microbiological processes, with only some restrictions. The European Parliament vote was a major victory for NGOs such as GRAIN and for Green groups in the Parliament that had lobbied on this issue for many years.
Religious leaders and NGOs widen the campaign
In May 1995, leaders of 80 religious faiths
and denominations (including the Protestant, Catholic, Muslim, Hindu, Buddhist
and Jewish faiths) held a joint press conference in
Environment and development NGOs have also
been increasingly active. Groups like the Third World Network, RAFI and GRAIN
have been carrying out educational activities and also carrying out lobbying in
the Biodiversity Convention. A coalition of 14
Crucial global battles ahead
The campaign against life patenting is likely to spread, with more actions taken up by public interest groups at national level, and increased networking among these groups.
At international level, the World Trade Organisation and the Biodiversity Convention are two critical fora for setting principles and legal frameworks on the patenting of biological materials and life forms.
The WTO's trade-related intellectual property rights (TRIPs) agreement will have the most decisive influence over national laws. TRIPs has ambiguous language in its clause on living organisms: patenting of microorganisms is compulsory, plants and animals can be excluded, but protection of one kind or another is required for plant varieties. This clause is up for review after four years, and is already on the agenda of the WTO's trade and environment committee. The outcome of the review process will be of crucial importance.
The Biodiversity Convention is presently more 'friendly', in recognising 'farmers' rights' to their knowledge over the use of biodiversity. The rights of indigenous people are also likely to enter the Convention's future agenda. The treaty's references to intellectual property rights is finely balanced between recognising the need to implement IPRs and the need to ensure that IPRs do not block the sustainable use of biodiversity.
The challenge for those campaigning against life patents is to ensure that the WTO does not make it compulsory for member countries to patent living organisms, and to develop within the Biodiversity Convention the case against biopiracy and concrete measures to counter it.
Martin Khor is the Director of Third World Network.
http://www.twnside.org.sg/title/pat-ch.htm