Weakened IP Rights as an Innovation Fatigue Factor

Weakened IP Rights: An Innovation Fatigue Factor
Weakened IP Rights: An Innovation Fatigue Factor
The ability of an inventor to profit from an invention for a limited time, while also sharing the advances with the world to further knowledge, is the genius of the patent system. The availability of patent protection has done much to advance the economy of the United States and other nations that have shown respect for property rights, including intellectual property. Without that option, advances in knowledge will tend to be held as closely-guarded trade secrets, not published knowledge, which was one of the key characteristics of the Medieval Ages and earlier IP-deprived times. For this reason, we should be concerned at trends in the US where patents are increasingly under attack in the courts and where the ability to get patents in a reasonable time is increasingly difficult at the USPTO.

Innovation fatigue due to inadequate intellectual property rights and property rights in general occurs in many other nations today, and is strongly correlated with economic difficulty in such nations. Hernando de Soto, a Peruvian economist and winner of many awards such as the 2006 Innovation Award from The Economist for the promotion of property rights and economic development, has shown that lack of property rights has been a key factor in keeping poor nations poor. It is respect of property rights that creates the means for men to be equal in opportunity. Intellectual property rights are part of that, and when they are in jeopardy, we should be concerned.

In Brazil, for example, a nation with tremendous potential for further economic development, recent government actions related to a trade dispute with the US over cotton threaten to reduce the value of US patents held by people in Brazil. In “Brazil Close to Declaring War on US IP” over at IAM Magazine, we read about the dangerous actions being taken by the Brazilian government. There may be many long-term costs for whatever short-term gains they obtain. This could harm innovation and economic development in that nation.

One example in the US of the attack on patent rights comes from the recent court case Association for Molecular Pathology v. USPTO in which a body of patents obtained by Myriad Genetics (NASDAQ:MYGN) has been declared invalid by a judge using dubious arguments presented by the ACLU. I am especially troubled that the patents were declared invalid for not treating patentable subject matter under 35 U.S.C. § 101.

Eric Guttag over at IP Watchdog offers some convincing arguments about the absurdity of the ACLU’s position and the injustice of Judge Sweet’s rulings. Please read the full article, “Foaming at the Mouth: The Inane Ruling in the Gene Patents Case.” Here is one excerpt:

What is most alarming about Judge Sweet’s opinion is his characterization (or more appropriately mischaracterization) of the CCPA’s Bergy case. Judge Sweet makes numerous quotes from Judge Rich’s opinion in Bergy on how 35 U.S.C. § 101 should be interpreted. But what Judge Sweet neglects to point out is that Judge Rich ruled in Bergy that a biologically pure culture was deemed to be patent-eligible under 35 U.S.C. § 101. Why did Judge Sweet neglect to point out this highly relevant fact? Instead, if the holding in Bergy is considered in appropriate context, it supports Myriad’s “isolated” BRCA1 and BRCA2 gene sequences as being at least patent-eligible under 35 U.S.C. § 101 because they don’t exist in nature and cannot exist without significant human intervention. . . .

In the end, it is my considered opinion that Judge Sweet knew the result he wanted to reach (i.e., invalidate Myriad’s patents), and simply cobbled together a justification for it. (Treating the claims in Myriad’s patents are a “lawyer’s trick” also doesn’t suggest impartiality.) If nothing else, there is enough of a dispute about the essential facts needed to reach Judge Sweet’s conclusion to deny the plaintiff’s motion for summary judgment of invalidity based on 35 U.S.C. § 101. That Judge Sweet needed to spend 152 pages trying to justify his grant of plaintiff’s motion for summary judgment speaks volumes about why this grant was inappropriate.

At many levels in the US and in other nations, there seems to be an increasing hostility toward patents and intellectual property rights for inventors. One of the best things that can be done to stimulate the economy right now would be to strengthen the USPTO, reduce examination time, and instill a healthy respect in the judiciary for property and intellectual property rights. Adding to the uncertainty, cost, and delay of patent protection only weakens the economy, and hinders innovation through yet another “innovation fatigue factor.”

4 thoughts on “Weakened IP Rights as an Innovation Fatigue Factor”

  1. Carl Youngblood

    Notice that I didn’t say that IP rights should be removed but that present trends have shifted the balance of power too far in the direction of the IP holder and not far enough in favor of the public domain. Gratuitous software patents for inventions with obvious prior art and extension of copyright far beyond the life of the holder, in addition to the fact that copyrights are hardly ever held by individuals anymore, are just some examples of the problem. Are you familiar with Lessig’s works in this area? I think they are quite insightful.

  2. On the other hand, you are right that tremendous innovation can occur when people feel free to teach across boundaries and collaborate. But that requires some form of mutual respect and assurance that one’s contributions will be rewarded in some way rather than simply being lifted and exploited by others. Relationships of collaborative innovation often have contractual or legal obligations behind them that embody respect of IP rights in some way. Without that respect, innovation would be much more limited.

  3. Thanks, Carl. Actually, IP rights are what help the little guy have a chance against large corporations, for whom patents are often viewed as a nuisance. Without them, size and marketing power would dominate and newcomers would have little chance in many areas, including hardware and software. Elimination of copyright and patent rights does not foster innovation, but discourages it. Marshall Phelps in Burning the Ships makes a strong case for collaboration and open-source innovation in which IP rights form a backbone that help companies share and create bridges for collaboration.

  4. Carl Youngblood

    Jeff, not speaking to this specific ruling but to the idea of increasing intellectual property rights in general, there are a lot of techies out there like me (I work as a software engineer) who feel that patents (especially software patents) have gone way too far and are being granted for all sorts of ridiculous inventions where anyone who is remotely educated in the specific areas of expertise will immediately be aware of multiple cases of prior art. This is only one example among many of how the old system is becoming increasingly unsustainable.

    I belong to a generation of inventors who recognize that we are at the cusp of a revolution in the ways that business is conducted. In the marketplace of the future, only the generous and collaborative survive. What kills you is not going to be piracy or IP theft but obscurity. If you provide a quality product and good service, it doesn’t matter if other people have your trade secrets or not–the things that really matter cannot easily by reproduced by your competitors, and customers will keep coming back for more. On the other hand, if you produce crap, customers will be less and less inclined to pay for it.

    My colleagues and I are slinging around code left and right, collaborating with each other to produce stuff that is way better than it could ever have been if we were required to write multi-million-line scaffolds on our own before we could even get started. Github, for example, facilitates collaboration between hundreds of thousands of developers, allowing them to build off of each others’ ideas very easily. The licenses they use for their software are usually MIT-based, basically meaning you can use the software for whatever you want but agree to hold its inventor harmless. They are making money from the cloud-based services built on top of this software, or from the physical goods that the software runs in, or from the things that the software enables them to do, not from the software itself.

    Economies are being built upon these new models that allow efficiency levels undreamed of in previous decades. Companies are paying their employees to contribute to these free software projects because they realize that they get more out of them than they are giving back.

    I highly recommend that you read some of Larry Lessig’s books on the subject of copyright and IP. He points out how our whole concept of IP has been severely corrupted in the last 50 years by corporate interests and how this is ultimately hurting innovation. The pendulum has swung too far in the direction of IP, with copyright being extended to 90 years in some cases, for example, which is way beyond the period that the Founders considered to be reasonable for inventors to be able to profit from their work.

    All that said, I haven’t read your book and don’t know your exact stance so it’s very possible that I’m preaching to the choir here, but your remarks on this particular ruling strike me as fairly corporatist and ultimately anti-innovative when viewed from this longer-term perspective of where the market is headed.

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