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Source link: http://archive.mises.org/9380/do-patents-save-our-lives/

Do Patents Save Our Lives?

February 5, 2009 by

[Chapter 9]

How essential are drugs patents as a piece of the machinery of the modern pharmaceutical industry? Incredibly so. Repealing them with no other changes would likely lead to a dismantling of a massive and lucrative industry that saves lives every day.

To elaborate, without patents, compensation for the hundreds of millions of dollars necessary for jumping through FDA hoops would not be forthcoming. Without patents, the huge manufacturers, who face mandatory disclosure requirements, would have their formulas taken by others and knock offs would immediately drive the price to marginal cost.

And the vast costs of redundant testing and retesting could not be absorbed by future revenue streams. And these streams are themselves uncertain due to arbitrariness of the FDA’s process. And thanks to wicked antitrust laws, companies face a legal minefield in combining efforts, cooperating on research, maintaining prices, and sharing markets.

But notice: all the reasons why patents in pharmaceuticals seem necessary are themselves due to some other form of government intervention: drug regulation, antitrust, government funding, and government mandates of all sorts. Regulation has begat regulation, with each step seemingly dependent on every other regulation.

The result is a massive rat’s nest of laws that is buried deep within a much larger hairball of the medical industry itself, which has been dominated by increasingly tight state controls for nearly a century. Then there is a further problem of liability confusion and court precedent that is woven through the system like a tapeworm in a deeply diseased body.

How can anyone begin to discuss only one aspect of the marketplace without thoroughly discussing all the other aspects? How can the authors of Against Intellectual Monopoly possibly sort through this thicket to make a case for repealing patents on pharmaceuticals?

Because of the above complications, I dreaded this chapter most. I was wrong to do so.What they have produced is a masterpiece of exposition. They have both the big picture and the small picture, with fascinating details in paragraph after paragraph. They take the reader through the logic and evidence at just the right pace, and manage the seemingly impossible: the reader is wholly convinced that drug patents are not necessary and in fact are doing great evil in the world today. It is the hardest case to make and they knew this going in. Theirs is a virtuoso performance, worthy of separate publication.

Some people love the pharms and other people hate them. The authors take a middle ground position. They do great good for the world. But they are embedded deep within in a regulatory that is stultifying the industry, and drug patents play a big role in this.

Can we imagine a world without drug patents? No need to dream. In the sweep of history, patents like we have today are essentially a postwar phenomenon, and prior to that, the industry developed faster in countries without patents than those with them. One way to show that is to examine 19th century chemical production. They tell the story of the French patent on coloring dyes granted to the La Fuchsine company, a patent that pretty well destroyed all development in France while the absence of patent in Germany, Switzerland, and Britain led to massive innovation and the beginnings of the modern industry. The US was very behind here due to its strong patents, and even in the first world war the U.S. had to import dyes from Germany in violation of the British blockade. This was how DuPont got its start.

In the last centuries, there have been pockets of pharm-patent freedom. Before 1978, it was Italy where a thriving industry existed for a century in the absence of patents. It only account for the discovery of 10% of the new compounds between 1961 and 1980. Foreign companies poured into Italy to imitate and develop. But this shut down after 1978 when Italy introduced patents under pressure from foreign multinationals. India then took the position of the free market country, and its industry began a huge player in the generic drug production market, until India too was forced into the WTO agreement and shut down its dynamic market.

The whole world of pharmaceuticals is now engulfed in incredible patent thicket, and people praise all the innovation taking place but rarely ask the question how much prior innovation really owes to the patent or how much innovation we might experience or how low the prices would be in absence of the patent.

Boldrin and Levine dare to ask the question about where the innovations of highest social value over the centuries have come from. They looked through medical journals and found several surveys. What were the medical milestones most significant in history? The list: penicillin, X-rays, tissue culture, anesthetic, chlorpromazine, public sanitation, germ theory, evidence-based medicine, vaccines, the Pill, computers, oral rehydration therapy, DNS structure, monoclonal antibody technology, and the discovery of the health risks of smoking.

Only two of those were patented or were due to some previous patent or brought about with a patent incentive.

A separate list of the top ten public health achievements of the 10th century was put together by the U.S. Centers for Disease Control. It is striking that not a single one involved patents at any level. Several people wrote in to complain that aspirin, Helicobacter pylori, and Medline were not on the list. None owe anything to patents.

Even looking at a list of top pharmaceuticals does not produce a patent-favorable result. Boldrin and Levine find that patents had nothing to do with: aspirin, AZT, cyclosporine, digoxin, ether, fluoride, insulin, isoniazid, medical marijuana, methadone, morphine, oxytocin, penicillin, phenobarbital, prontosil, quinine, ritalin (methylphenidate), salvarsan, vaccines, or vitamins.

Of the remaining products that owe their existence to patents, most were either discovered accidentally, were discovered in university labs, or were simultaneous discoveries that led to expensive battles over who would get the patent.

The authors turn to the problems of corruption in pharms and their relationship with doctors, and to the crazy requirements involved in redundant testing for patents and final FDA approval. More than half of newly patented drugs are nothing other than repackaging of existing drugs on the market.

It is not uncommon for a drug going out of patent to be re-patented as something new but that requires massive new clinical trials and high costs. The companies then have the incentive to market the patented over the out-of-patent product, and doctors have proven responsive to this tactic.

It is not surprising that even some studies sponsored by the pharmaceutical industry have concluded that they would be better off without the patent, given the high costs of otherwise adhering to the mandates, marketing, and all the rest, and especially given that the length of patent is comparatively short given the time required for FDA approval.

Despite all odds, the authors have made a very compelling case that a free market in pharmaceuticals would lead to the development of innovative drugs, save dramatically in all the associated costs of bringing drugs to market today, and save consumers a bundle. Even if you are completely unconvinced by this cursory summary, I urge you to read their entire case. It causes a mind shifting to take place, consistent with the overall theme of the book: competition, not monopoly, is the source of innovation and development.

Life-saving drugs are too important to be left to government grants of monopoly.

{ 65 comments }

Silas Barta February 5, 2009 at 12:25 pm

Yes, this argument again. Easily refuted:

- In the absence of the FDA, drugs would still be tested, probably extensively, before any underwriter would sign off on them, and therefore before any reputable store would bother stocking them. Repealing the FDA makes the process cheaper, yes, but it’s still incredibly expensive regardless.

- Over time, research costs necessarily increase, for the simple reason of diminishing marginal utility: people “grab the lowest-hanging fruit” first. After these are flushed out, they have to expend more effort. So even if you remove the costs added by the FDA, there will certainly be some point in the future where drugs costs as much to develop *without* the FDA, as they do now, *with* the FDA. Then, how do you expect drugs requiring intense effort and with tremendous (distributed) benefit to be produced on the market?

Or do you concede that only charities can handle this consumer want, rather than well-capitalized entrepreneurs?

-Yes, some drugs will still be produced without patents. No one argues otherwise. But people will still arguably miss out on tremendous Pareto improvements that would occur on top of all the innovations that don’t require patents to exist.

-You are aware of the problem of the “seen and the unseen”. How many drugs today simply aren’t being developed because their producers fear they would be expropriated on “humanitarian” grounds.

-You can just the same argue that “Property rights costs lives, because we could loot farms and feed the world’s poor if we didn’t have to respect them. Oh, don’t worry, communes and charities can take care of food needs afterward.” Anyone ready to argue that? No? Okay then.

Next?

I Hate Taxes February 5, 2009 at 12:45 pm

Do Drugs save our lives ?

Most of them are designed as cosmetic patch up to be taken for life.

Pharmaceutical companies DON’T sell cures.

And the psychiatric industry is a big force and fraud scam that destroys lives rather than save them.

Stay away from drugs, cut your calories, exercise and you should be fine.

Andras February 5, 2009 at 12:51 pm

This is a total misinterpretation and outright falsification of medical, pharmacological, chemical and industrial history.
Where is the bottom on the author’s road to rationalize the anti-IP doctrine?

Matthew February 5, 2009 at 12:54 pm

ktibuk et al.,

You contend, according to natural rights, that if more than one person independently created something, each would have patent rights over the creation.

So in the example of drugs, the original creator and tester of the drug has rights of course. What would constitute independent creation of the drug by another person? Would he have to do all the exact same identical research and testing? Could he not buy a pill from the store, reverse engineer the chemical formula, and begin producing it himself? How would that not be “creating” the drug himself?

Conducting experimental trials is a cost of ensuring a product is marketable. It’s not a necessary process of “creating the drug.”

On an unrelated note, as an anti-IP person who’s attempting to build a common understanding on this issue, instead of just entrenching ourselves in our positions further, I’ll mention that I agree with Silas’ argument above. But this entire argument is a utilitarian one, so personally I don’t place much importance on it.

Gil Guillory February 5, 2009 at 12:57 pm

Silas, as a live blog, this is more like an extended book review than an original exposition by Tucker. Your comments here miss the overall context of your other criticisms and posts. Do you plan to write a complete, critical book review of Against Intellectual Monopoly? You should. Or a paper in reply to Kinsella’s Against Intellectual Property. Or, perhaps, a paper covering both. I’m sure such a paper would be of interest to

Jeffrey Tucker February 5, 2009 at 1:08 pm

Silas, the conventional “low-hanging fruit” thing is addressed extensively in B/L.

Stop reading my stuff and read the B/L book instead!

Yes, I know it takes time, etc., but it will help you think more clearly.

Silas Barta February 5, 2009 at 1:27 pm

@Jeffrey_Tucker: Yes, because it’s *my* thinking that lacks clarity on this issue, right?

the conventional “low-hanging fruit” thing is addressed extensively in B/L.

I’m sure you feel that way, but given the responses I’ve made to your previous posts, you’ll understand why I believe I’ve addressed those arguments, even if I wasn’t quoting B/L’s exposition at the time.

@Gil_Guillory: Point taken about putting my criticisms in *some* academic paper. However,

a) If you think Stephan_Kinsella will give it the hearing it warrants, you’re most likely wrong, given my history with him.

b) My points here are completely responsive to Jeffrey_Tucker’s post, and completely appropriate for this forum.

c) Based on reading Jeffrey_Tucker’s liveblog, AIM adds no new insight to the debate except a few more examples.

engine44 February 5, 2009 at 1:30 pm

“… They take the reader through the logic and evidence at just the right pace, and manage the seemingly impossible: the reader is wholly convinced that drug patents are not necessary and in fact are doing great evil in the world today. It is the hardest case to make and they knew this going in. Theirs is a virtuoso performance, worthy of separate publication.”

Why should this case be any harder to prove than any other case against ip?

“…how much prior innovation really owes to the patent or how much innovation we might experience or how low the prices would be in absence of the patent.”

Does the patent not help the manufacturer regain his investment capital that was needed to be spent on years of research and development to bring cutting edge drugs to market?

Would the cutting edge drugs even be developed with out some kind of protection?

I think this along with every other ip question comes down to this: Do I own the idea in my head?

I believe that I do!

Eithrial February 5, 2009 at 1:35 pm

Some illnesses are very rarely. It can be profitable to make medicines to heal it only when you can sell it in quite long parts of time. If we abandon patents, than some medicines won’t be discovered because of too high expenses of research process and the fact that other companies will start to use its formula for nearly free.

This post pass over problem of high costs of research in these days. which I think is the most important and the strongest argument for patents. If someone could explain why it isn’t any obstacle, than we could have really strong weapon against patents. Hope to see it soon.

Mashuri February 5, 2009 at 1:44 pm

“I think this along with every other ip question comes down to this: Do I own the idea in my head?

I believe that I do!”

Not if I had the same thought before you — then *I* own the idea in your head! See how ridiculous that is?

engine44 February 5, 2009 at 1:59 pm

Mashuri,

Not ridiculous at all. If you have the idea first, great. We are all owners of our own thoughts and ideas. If my idea takes time energy and money to bring to fruition, I may choose to protect it.(i.e contracts, copyrights, patents).

Marcelo February 5, 2009 at 2:07 pm

engine44, your right to protect your idea ends when you start infringing on my property rights.

engine44 February 5, 2009 at 2:17 pm

Marcelo,

How would I infringe on your property rights?

Kevin Hodgkins February 5, 2009 at 2:47 pm

engine44,

you do own the idea in your head, and noone can ever take that away from you.

Your idea is protected becaues I cannot forcibly extract it from your mind. When you produce something based on that idea it is no longer an idea. Now the actual physical thing you build cannot be taken from you, but I can sure as heck copy it to the best of my ability.

When you keep me from building something, you infringe on my property rights. If I can purchase and transform materials into a final product, but you keep me from doing so, that is infringing on my property rights.

I don’t think patents are property right protections, simply monopoly licenses.

Ron February 5, 2009 at 2:55 pm

I think you’ve got it exactly right, Kevin. IP protection can’t help but be arbitrary. If they were concrete, then no one would be able to build or create anything, as we necessarily copy elements of other works into our own. Notice that there’s no fuss when I use wood, glue, and stain in my workshop to build a chair, then someone else does the same in their workshop to build a similar chair. I don’t own that person’s chair any more than he owns mine, and it would be immoral of me to tell that person he can’t use his own lumber, glue, and stain to build a chair simply because I built one first. If IP laws were consistent, no one would ever be able to build a chair.

JackSkylark February 5, 2009 at 3:09 pm

Kevin,
I believe you are misrepresenting engine44′s argument. First, nowhere does he say that 2 people cannot both claim full ownership of an idea. Instead, he brings up the important point of conditional ownership (bound by contract). When you buy a piece of computer software you are met with a end user license argeement, which grants you conditional ownership of the ideas bound into the good. In this manner, copyright is a contract of conditional ownership (whereas the inventor/author has reserved the right to copy).

Once again, this does not prohibit full and complete ownership of an idea by a multiple of people, only grants conditional ownership by those who are contracted by the inventor/author/publisher/drug company/etc.

C. Evans February 5, 2009 at 3:22 pm

Suppose you have an idea which you tell me about. You begin to bring your idea to market, but I am more efficient and I beat you to market. I then protect “my” product with a patent. Have I stolen your idea even though I was able to create your product before you have?

I’m still studying this issue, but so far I have found the anti-IP arguments more convincing. This pro-IP line of reasoning which says that I own the ideas in my heads and such ideas are property means that any idea I can think off, no matter how rudimentary, can be patented. It appears to me that IP proponents must conclude that a person can receive a patent on any idea he thinks off even if this person has taken no steps toward bringing this idea to fruition. For instance, if I think of a flying car, even though I don’t know any physics, I should be able to go to the patent office and protect my idea. Otherwise if I tell someone that I have an idea of making a flying car and he beats me to market he has “stolen” my idea, even though I don’t have a clue as to how to make a flying car.

Even if we assume that the idea does not become “property” until a marketable good is produced, there is still a flaw in the system. Suppose that two people have the same idea and bring that idea to market at the exact same time. Who receives the patent then? Do they both receive the patent? Can they both be exclusive owners? Suppose that I create a flying car with two doors and another person creates the same flying car with four doors at the same time. Do we get exclusive patents for the two door and four cars, respectively. Suppose someone later designs a flying car with three doors? Has this person infringed on our patent(s)? If so, which one? If not, why not? Since human ingenuity is limitless, just what are the criteria that should be used to determine a patent? How different does my idea have to be in order to not infringe on an existing patent? Doesn’t this lead to the conclusion that not only must I patent my idea and the marketable good, but I have to patent ideas and marketable goods which may arise after someone sees my flying car and wants to improve it? Can I patent ideas that I did not have because someone might use my original idea and make some changes I did not anticipate? Just how unique must my idea be to justify a patent?

I find this IP argument relevant to my personal life because I am a dancer and amateur choreographer. I have yet to hear of anyone in the dance community being sued for copyright infringement. I don’t even know if we can copyright our performances. But dancers take movement anywhere and everywhere we can find it. We can see people walking and integrate that movement into a piece. And we are always taking movement from other dancers and other routines. The line between influence and plagarism is thin, but we manage pretty well. I think overall we do a good job of discerning between a piece that was influenced and a piece that was stolen. If someone steals a piece, that person’s reputation takes a huge hit so there are incentives to make sure whatever movements you do take, you make your own expression. This is completely self-regulating. When we are creating a routine, we work in secret because we want to be the first to perform to a certain song or use certain movements. But after we perform, we know that if people like it they will take pieces here and there to create their own visions. Or they may use the same song we used to create a different vision. On other hand, if dancers could enforce copyright, the dance community of any and all types of dance would dissolve overnight.

Cosmin February 5, 2009 at 3:29 pm

I also agree with Kevin. What engine44 doesn’t understand is that noone had THE idea FIRST, because it’s not one idea. It’s 2 separate ideas, if we are 2 people. And the ideas are different because we have different backgrounds, even if they reference the same object.
Now, one of the people here could have developed his ideas by building upon precursor ideas, whereas the other person developed his idea by observing the object the first one created. However, the second one still created the idea for himself and can thus use it in any way he wants.

Paulio February 5, 2009 at 3:35 pm

I’m constantly surprised by those who spend the time and energy to read this blog and attack the review with great vigor but refuse resolutely to read the free book online. Seems real strange to me, kind of internet-trolling.

And please don’t reply to this post, I have already invented all the possible refutations and I OWN these ideas you want to express. After all you will see my sign of ownership when you think of those ideas that I have homesteaded.

Read the book, review the book and publish it anywhere on the internet. If it’s a good review you will find plenty of places to publish it and AFAIK Kinsella does decide what gets published on Libertarian Papers as it is peer-reviewed, is it not?

JackSkylark February 5, 2009 at 3:51 pm

STRAWMAN… all of you have misrepresented the rational IP position. This is because you have not brought in the concept of conditional ownership. You have all recognized the property one has in the individual mind (ideas specific to self). But do not seem to understand then that the idea can be subject to contract.

Just to make this completely clear, no one here is defending the current patent system, or IP in its modern perspective. But, rather that copyright grants conditional ownership of ideas to those who are subject to contract. This does not prohibit the full ownership of an idea by multiple people.

engine44 February 5, 2009 at 3:58 pm

Thank you Paulio,

I will read it, print it, then sell it to my friends and neighbors. Maybe, I’ll establish a business relationship with my local independant book seller down the street. I’ll tell him the ideas in the book are mine and say that I wrote the book. My new part time job will be to distribute AIM to booksellers across the country. What with the right business model, rebates and promotions, I could get rich!

If you don’t want a reply to your post, then don’t post.

Thanks

Ron February 5, 2009 at 4:08 pm

I agree with you, Jack. Ideas can certainly still be subject to contract, but the contract is only binding to the contracted parties, not to the whole of society as is claimed by IP proponents. An author, for instance, could contract with a publisher for exclusive publishing rights to his or her book. This would bind the author from giving his book away for free to others, and would bind the publisher against selling publishing rights to another publishing house. It could not, however, prevent someone who purchased a copy of the book from photocopying and republishing it; although, this could be accomplished by an agreement between the purchaser and the publisher to not duplicate the book as a condition of the exchange.

Ron February 5, 2009 at 4:18 pm

Engine44: “I’ll tell him the ideas in the book are mine and say that I wrote the book.”

Then, you would be guilty of fraud, which has nothing to do with IP, but would give the consumers you duped by lying about the book due cause to sue you and get their money back. There are many such disincentives to copying intellectual work, without the need for the waste inherent in IP laws.

Cosmin February 5, 2009 at 4:27 pm

“Just to make this completely clear, no one here is defending the current patent system, or IP in its modern perspective.”
Yeah, noone here is defending the current patent system. They’re just attacking those who are attacking the current patent system.

Andras February 5, 2009 at 4:32 pm

@Ron: “An author, for instance, could contract with a publisher for exclusive publishing rights to his or her book. This would bind the author from giving his book away for free to others, and would bind the publisher against selling publishing rights to another publishing house. It could not, however, prevent someone who purchased a copy of the book from photocopying and republishing it; although, this could be accomplished by an agreement between the purchaser and the publisher to not duplicate the book as a condition of the exchange.”

Your last statement is in every published material.
Congratulation, you have just built a chain of contracts between natural persons to prevent copying, thus copyright. So anybody who copy a copyrighted material is either a fraud or an accessory.

Andras February 5, 2009 at 4:39 pm

No Cosmin,
Pro-IP people just want to refute the proposition that there is no IP or that IP is worthless or IP is valued at $0 etc. We truly agree that IP laws are not perfect. They are bad, very bad!
The same way, as Silas said it countlessly, bad property right laws does not imply that there should not be property rights!

Cosmin February 5, 2009 at 4:39 pm

Wait, was Big Pharma selling copyrighted materials?
Why do pro-IPers keep defending patents by switching the conversation to copyrights and then switching back to patents in their conclusion?

Andras February 5, 2009 at 4:44 pm

@Cosmin
We did not start the fire. Jeffrey’s series became a wholesale IP discussion forum. Everything goes.
On the other hand, if you eat aspirin (or any brand name drug) you eat copyrighted material.

JackSkylark February 5, 2009 at 4:52 pm

Andras,
Your post was so great I’m going to reference it again:

“Your last statement is in every published material.
Congratulation, you have just built a chain of contracts between natural persons to prevent copying, thus copyright.”

Cosmin February 5, 2009 at 5:31 pm

A written statement saying “you can’t copy this” is not a contract.

Why would anyone want “to refute the proposition that there is no IP”? Because there is no IP.

Here’s how it works: I come up with an idea. I make an object. I write on the object: “You can’t copy this!” Someone buys my object. He understands how my object works (develops his own idea about my object, based on his observation of my object). My written statement could not have prevented him from doing this any more than it could prevent him from seeing the colour blue. Then, he uses his new-found idea to build a similar object to mine and sell it. My written statement can not prevent him from doing this either, as I can not stop him from using his idea. That would be tantamount to slavery.
What I could do, since I control my idea, is to not give him the “enhanced environment” that lead to him developing his idea, by not realizing my idea as a physical object.

Andras February 5, 2009 at 5:59 pm

@Cosmin,
By buying you agreed to the contract. You are not forced to buy so your slavery argument is mute.

Deefburger February 5, 2009 at 6:01 pm

engine44: “I think this along with every other ip question comes down to this: Do I own the idea in my head?

I believe that I do!”

Yes, you do, so long as you keep it there. Problem with ideas is they have to be shared to worth anything.

I own my thoughts too, exclusively. Until I share them. That’s the problem with “intelectual” property. There is no shortage of it, it must be shared with other minds to have value beyond it’s existence in your “head”, and once shared, it can’t be taken back.

So instituting state “controls” on such things is difficult at best, and impossible at worst.

Once I have the thought in my head, I perceive it in my own unique way, thus changing it, and making it my own. Not that this is deliberate. It’s just the nature of individual thought. You are You and I am I, and narry shall we ever have the other’s true experience, ever.

So now we have the problem of distinguishing between similarities in conceptual reality. If you are a patent or copyright attorney, this is the gravy train! If not, then it’s a quagmire of fees and finger pointing, or, if you are a judge, then it’s a mind-numbing go-nowhere dog-and-pony show of hair-splitting and who-dunnit-first argument.

newson February 5, 2009 at 6:02 pm

silas barta says:
“But people will still arguably miss out on tremendous Pareto improvements…”

“pareto improvements” is a concept antithetical to the austrian school. garlic to vampires.

newson February 5, 2009 at 6:21 pm

silas barta says:
“- Over time, research costs necessarily increase, for the simple reason of diminishing marginal utility: people “grab the lowest-hanging fruit” first. After these are flushed out, they have to expend more effort.”

there are no low-hanging fruits. how could there be? something is never “almost invented”, it is either invented or not. if it’s not discovered, it’s impossible to divine whether the discovery may be near at hand or distant.

end of diminishing marginal utility argument.

you really should read the book, as well. then you could highlight specific instances where the authors err.

Joe B February 5, 2009 at 6:50 pm

Silas,

The “Low-hanging fruit” argument sounds very Malthusian. Pro-IP’ers seem to assume that every innovation is a ground-up effort. In reality, every innovation is an incremental improvement on other existing innovations.

Patents cause individual efforts to be less incremental, increasing individual development costs, since each innovator often has to reinvent or work around the restrictions imposed by other patents. So all of the examples you see where huge development costs and sunk investments cannot be offset are distorted by the current patent regime.

I agree that eliminating the FDA would not entirely remove the costs of testing etc. As you said, insurance companies would also require testing, since they stand to lose their own assets.

However, market forces would play a part here in reducing ineffective or unnecessary regulations since the insurance companies can’t collect premiums if drug producers aren’t making a profit. Multiple producers testing the same or a similar drug would also spread out these costs. In addition, patients in desperate need of a cure would have the ability to request experimental drugs without waiting for approval, and agree to release the developer of liability.

The utilitarian “seen and unseen” arguments in general won’t get us anywhere, because for every story describing all that we would be missing if not for patents, there is another describing all that we are missing because of patents, and vice versa. In addition, policy based on utilitarian arguments is necessarily arbitrary and results in the kind of system we have today. It is up to entrepreneurs, not economists or legislators, to figure out how to make a profit on their ideas.

The book “Wikinomics” by Don Tapscott has an interesting discussion on patents, specifically medical patents. I don’t necessarily agree with all of his conclusions, and the book is a bit overzealous, but it’s worth a look. For what it’s worth, Hayek gets a mention in the footnotes.

alansmithee February 5, 2009 at 7:40 pm

im atall sure how i feel about this IP lark…on one hand i thnk it totally fascistic bs that needs to be squashed asap (which it clearly is).

on the other hand i think there are sooooooo many more pressing issues. like, anti ip’ers go after it for the same reason pro-ip’ers defend it – namely, vested interest in the field.

anti war, then anti state, then somewhere pretty far down the line, anti-IP. ya get me?

ps: it still boggles my mind to think that some people defend ip for reasons other than vested interest. can i end that by saying – …c’moooon.

okthxplzbye.

Bothersome Minority February 5, 2009 at 7:48 pm

This wouldn’t even be an issue if we just made theft legal. End all our problems quick. For sure.

hebe February 5, 2009 at 8:45 pm

“You can just the same argue that “Property rights costs lives, because we could loot farms and feed the world’s poor if we didn’t have to respect them. Oh, don’t worry, communes and charities can take care of food needs afterward.” Anyone ready to argue that? No? Okay then.”

LOL

Any takers?

newson February 5, 2009 at 11:10 pm

to cosmin/andras:

just curious…what damages should the breach of contract attract?

if no penalties were stipulated, then restitution would be the only remedy for the breach of contract. i must hand back the object or give up the money purchase price.

(i’m assuming you can’t go after the customers of the copycat to recover).

Cosmin February 5, 2009 at 11:26 pm

Deefburger said:
“Once I have the thought in my head, I perceive it in my own unique way, thus changing it, and making it my own. Not that this is deliberate. It’s just the nature of individual thought. You are You and I am I, and narry shall we ever have the other’s true experience, ever.”

Those are my thoughts EXACTLY!
Well, almost exactly…
LOL

Cosmin February 5, 2009 at 11:43 pm

newson, I think you might be mistaking my position with someone else’s…
I’m saying there is no contract and there is no copycat.
There is just an object and an observer of said object. He then becomes an entrepreneur and builds a similar object, not owing anything to anyone.

ktibuk February 6, 2009 at 4:44 am

@ Matthew

“So in the example of drugs, the original creator and tester of the drug has rights of course. What would constitute independent creation of the drug by another person? Would he have to do all the exact same identical research and testing? Could he not buy a pill from the store, reverse engineer the chemical formula, and begin producing it himself? How would that not be “creating” the drug himself?”

Reverse engineering is “copying”. No one has to follow exactly the same steps and methods, but discovering something and copying something is entirely different.

I don’t defend patents, I defend copying rights where it is acknowledged that “copying without the consent of the owner is aggression”.

But of course the one who accuses of being aggressed against has the burden of proof. So in real life there would be reverse engineering, and while this would be a crime ethically, most of it wouldn’t be prosecuted because it is hard to prove.

“Conducting experimental trials is a cost of ensuring a product is marketable. It’s not a necessary process of “creating the drug.”"

Conducting trials is ensuring that a product is in fact the product that is aimed for. And the product itself is what’s marketable. Trials are not marketing gimmicks. At least they normally wouldn’t be in a free market.

ktibuk February 6, 2009 at 4:49 am

“”I think this along with every other ip question comes down to this: Do I own the idea in my head?

I believe that I do!”

Not if I had the same thought before you — then *I* own the idea in your head! See how ridiculous that is?”

You can both own the same idea. Why do you assume ownership means exclusivity?

Just don’t copy mine and claim you have right to it. Go homestead your idea yourself.

See how fair and ethical it is?

ktibuk February 6, 2009 at 4:55 am

“They’re just attacking those who are attacking the current patent system.”

If the people attacking the current patent system, jump to the conclusion that IP is illegitimate we have right to point this out I think.

ktibuk February 6, 2009 at 4:59 am

“Yes, you do, so long as you keep it there. Problem with ideas is they have to be shared to worth anything.”

Yes, just like jewelry. If you own jewelry you should keep it at home in a safe. If you wear it outside, this means you “shared” it and if it is stolen you can not do anything about it, since jewelry has to be shared to be worth anything.

ktibuk February 6, 2009 at 5:05 am

Joe B

“Patents cause individual efforts to be less incremental, increasing individual development costs, since each innovator often has to reinvent or work around the restrictions imposed by other patents. So all of the examples you see where huge development costs and sunk investments cannot be offset are distorted by the current patent regime.”

Why cant you imagine a world where previous developments are bought as raw materials in order add value by improving upon them. This would cost much less than building everything from ground up.

If IP is acknowledged as property this is what would happen.

The same thing is always brought up when it comes to music and remixing it.

Ok you may remix and create many things from a tune. If you know the owner of the tune, why not pay him for the tune as a raw material and remix and improve upon them? Why keep claiming you have a right to free access, as if the tune was nature given?

Joe B February 6, 2009 at 7:39 am

ktibuk: “Why cant you imagine a world where previous developments are bought as raw materials in order add value by improving upon them. This would cost much less than building everything from ground up.”

This is basically what happens now with patent sharing, licensing, etc. The result is ever-increasing licensing costs which increase the cost of development for any new innovation. These costs can be prohibitive to anyone who doesn’t already have a portfolio of patents to trade. So under a patent regime, Silas’ Malthusian argument holds true.

What I would like to see from the Pro-IP’ers is a suggestion for an IP protection system that gets around the acknowledged problems of the current systems. I don’t want a list of the problems with the current system saying “get rid of this stuff”, I want to see a well reasoned, self-consistent system based on Austrian fundamentals. Bonus points if it requires no state enforcement.

ktibuk February 6, 2009 at 7:58 am

@Joe B

“What I would like to see from the Pro-IP’ers is a suggestion for an IP protection system that gets around the acknowledged problems of the current systems. I don’t want a list of the problems with the current system saying “get rid of this stuff”, I want to see a well reasoned, self-consistent system based on Austrian fundamentals. Bonus points if it requires no state enforcement. ”

I have done this already in many places on this site. I will give one version for you.

I have been debating with people over here on the comments sections for a while and all the ideas are so sporadic it is very hard to keep a line of thought in tact. I think Bob’s format is a good one, although I don’t agree with his points.

1. Everyone should acknowledge that who ever produces something, owns it. This could be a tangible good or an idea.

2. Everyone should also acknowledge that copying without the consent of the owner is aggression, since aggression has nothing to do with the integrity of a tangible thing on the atomic level, but everything to do with the consent of individuals.

3. Anyone who owns and idea has to bear the cost of trying to protect his idea.

4. Anyone who thinks he fell victim to the act of aggression called “copying” has to take his case to court and should prove “an act of copying” indeed has taken place. If the accuser “wins” in court he should be compensated.

All IP laws should be reformed according to the above rules.

This means there would be no patent laws, and patent registiration offfices and courts would handle all IP disputes, just as they handle all tangible property disputes. Since the main crime is copying, “first comer” would be no bearing on the case.

This also means the current copyright contracts should be only a subsection of general “lease contracts”. Example, buying a copy of Harry Potter.

There would also be “sale contracts” where all the rights of one IP would change hands the and previous owner would give up all the claim on the property. Example, buying all the rights of Harry Potter.

This also means there would be “partial sale contracts” where certain rights regarding certain explicit sale channels (or media) could be sold separately where the owner relinquishes certain claim of the property. Example, buying the movie rights of Harry Potter.

This also means there would be no expiration of IP rights. IP would, just as tangible property, pass on to heirs or to companies.

This also means anyone aggressing against the owner of an IP by copying his property would have to bear the consequences whether he entered into contract with the owner or not.

If a third party aggress against ones property he should be made to compensate for his aggression against property. Just like for any aggression against any property, the accidental damages should be separated from intentional aggression.

The second party, the person who knowingly breaks an “IP lease contract”, should both compensate for aggression and if there were other explicit penalties in the contract, he should be made to pay for those too.

This also means trademark infringements should also be handled as aggression.

I should also clarify one more point.

Property is about natural rights and it doesn’t require a state or a similar authority to recognize and issue a piece of paper for it to exists.

This means land is a legitimate property before and “land titles” and/or “land lease contracts”.

Some people keep insisting that patent registration and/or copyright contracts “create IP”. And they keep arguing against that point.

If the IP socialists arguing repeating this issue claims to be a libertarian anarchist it is a blatant contradiction.

If not I can understand their main problem but then argument is not especially about IP but natural rights, and politics in general.

newson February 6, 2009 at 8:30 am

getting back to pharmaceuticals, my understanding is that many of the most significant discoveries weren’t due to searching for suitable compounds to cure particular ills, but were pure happenstance. penicillin comes to mind, and i think chemotherapy was a happy outcome of observing the effects of mustard gas. pure serendipity.

so maybe it is possible to imagine spending less and in different ways without necessarily stopping pharmacological progress.

Daniel C February 6, 2009 at 1:06 pm

ktibuk,

I have been awaiting a reply in the other thread, but I don’t mind continuing the conversation here. You write:

ktibuk: “If the people attacking the current patent system, jump to the conclusion that IP is illegitimate we have right to point this out I think.”

Sure, thanks for pointing it out. As it happens, these are not baseless conclusions. In fact, there has been a good amount of libertarian groundwork in this respect. Best of all is Stephan Kinsella’s treatise ‘Against Intellectual Property.’ I can confidently say that the author of this blog post would stand behind the theoretical work done there.

What do you know—these are no longer “jumped-to” conclusions! Do you have any actual critiques of Kinsella’s work? I’d be happy to discuss such criticisms here, but until you are ready to provide an argument I think it’s time to put away your claims to pre-emptive victory. It is simply talking past your opponents.

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