Variable-length patents

Alex Tabarrok brings up an interesting question: Why should all patents have the same length?

Pharmaceuticals are really the classic case of where the [ratio of] innovation-to-imitation costs are extraordinarily high. It costs about a billion dollars to create a new pharmaceutical. The first pill costs a billion dollars; the second pill costs 50 cents. So, that’s a classic ase where imitation costs really are low. That’s the best case for patents, in a field like that.

But my question is: Why does every innovation deserve or require the same 20-year patent? Why do we have a system which gives a one billion dollar pharmaceutical—where there’s $1 billion in research and development costs—we give that a 20-year patent and one-click shopping gets the same 20-year patent? That makes no sense whatsoever.

So, what I suggest is a more flexible system. I’d like to have a 20-year patent, maybe a 15-year patent, maybe a 3-year patent. Something like that. And then we could say: You want to apply for a 3-year patent? We are going to get this through the system quickly; we won’t look at it so much. … You want a 20-year patent, though, you’d better show us that you really are deserving and put some costs in there.

Source: EconTalk

I don’t like software patents, though I don’t see them going away. But it might be possible to pass legislation to reduce the length of software patents.

See also this post about the tragedy of the anti-commons. The tragedy of the commons is misuse of a resource nobody owns. The tragedy of the anti-commons is the under-use of a resource that too many people own.

Building a DVD player requires using hundreds of patented inventions. No company could ever build a DVD player if it had to negotiate with all patent holders and obtain their unanimous consent. … Fortunately, the owners of the patents used in building DVD players have formed a single entity authorized to negotiate on their behalf. But if you’re creating something new that does not have an organized group of patent holders, there are real problems.

6 thoughts on “Variable-length patents

  1. *cynical hat on* Of course, what will happen is not a class of shorter patents, but a new class of longer ones. You’ll have 20-year patents, but now also 30 year, 40 year… And once you’ve started changing the patent length there will be a heavy push to treat patents like copyrights and simply extend them all periodically to create permanent patents.

    Now, what a glorious future that would be, with things like Apple becoming the sole approved manufacturer of rectangular devices for the next century or two.

  2. Janne, I share your concern, but I don’t think that’s very likely (although I am 100% sure that “BigCo” will push for such terms).

    The history of the (U.S. at least) patent system, and the motivation for patents – protection for the inventor while at the same time ensuring that the invention is disclosed, thereby ensuring 2 things: (a) that it doesn’t die with the inventor, and (b) that the idea can be refined and improved over time.

    Stranger things have happened though. Your concern is not unreasonable or misplaced. In fact, in the U.S., the whole SOPA trainwreck tells me that big companies with outdated business models and an evaporating pool of cash & revenue are becoming desperate.

  3. I’ll put my economist hat on for a second and just mention that the anti-commons example you cite fails to mention that if said inventor comes up with something as valuable and marketable as a DVD player, there is a huge incentive for the various patent-holders to form the single negotiating entity mentioned, when it does not already exist.

  4. can I apologize for my prev post ? what upset me is that you have a common mindset, that in healthcare, most people assume that the “problem” is economic or political, and that the solution is economic or political – single payer, vouchers, whatever.
    I disagree; the problem is not primarily economics or politics; the problem is that we know very, very little about how the human body operates, compared to what we need to know
    Of course, the rate of increase is huge. Take DNA sequencing, which is determing the physical order of the “letters” in DNA, in humans, there ae about 3e9 letters/genome that is A,T,C,G….3 billion times
    Back in 1979, Me and my friends who were sequencing DNA were astonished that by himself, J Sutcliffe had sequenced, over a year or so, 4,361 bp of DNA from a small genetic element from a bacteria. We thought, he must have worked like a dog.
    today, with a miseq (illumina) or a PCM (IonTorrent) one good person can do many gigabases a year – a million fold increase in ability to sequence DNA.
    Yet compared to what we need to do for cancer diagnostics, we are still way off of where we need to be, technically.
    The same holds true in pharmaceuticals (and that billion dollar figure – I don’t think there are independent accounts; only the Tufts group has access to internal pharma cost figures, and tufts maybe be an example of “academic capture” ala regualtory capture)
    In any event, we can’t predict, till we get to phaseIII clinicals, if a new chemical will cause cardiac arrythimias (I don’t think you need an md to know that irregular beating of the heart is NOT good)
    so, when I see things like obama care or patent discussions, I just want to tear my hair out – this is not the problem !!!
    our ignorance is the problem !!!

  5. I agree that our ignorance of medicine is enormous. And I agree that too much of the discussion of health care is over who will fund the status quo, government or individuals.

    It’s interesting that you bring up the inability to predict what drugs will treat cardiac arrhythmia. In cancer research, we think of heart disease as the field where it’s easy to predict outcomes! The transition from lab to clinic is difficult in heart disease, but it’s even harder in cancer because cancer is more of a systemic disease. I think you can quantify this statement by looking at the ratio of successful phase I trials to phase III trials in both areas.

    And while cardiac arrhythmia is bad, treating arrhythmia can make things worse if you get cause and effect backward. See example here.

    I don’t agree with those who say science is woefully ignorant now, but we’re about to understand everything, if only the government will approve my grant spend more on research. I’m reminded of Nixon and the “war on cancer.” James Watson warned at the time that massive increases in spending on cancer research would result in “a massive expansion of well-intentioned mediocrity.” More on that here.

  6. In addition to variable duration of patent monopoly (with variable requirements for proof of novelty and even degree of novelty), I think it would be helpful if the expression of patents were changed. Patents seem to be written to be read by patent lawyers not by those skilled in the art, substantially hindering their utility for their original purpose of encouraging innovation by encouraging disclosure. Ideally, a formal or semi-formal language of expression (perhaps in parallel with a more human-friendly expression, though the formal expression would be more authoritative) would be used to allow more exhaustive searches not only for identical ideas but also for similar ideas to provide an impression of actual novelty. In the case of long-duration patents, the extra burden of proof can more reasonably be put on the applicant (perhaps including overturning an entire patent grant if any part exaggerated its novelty). It might be useful (barring a formal or semi-formal expression suitable for a high degree of automation) for the examination to be performed by those skilled in the art; i.e., the patent application would be published and put on public review such that experts in the field could document prior art.

    Another problem with respect to novelty is that prior art tends to include only previous patent applications. If minimal (possibly no) examination patent applications were possible without fees for zero duration grants and prior art discovered during challenges to patents, then the database of prior art might become sufficient to fairly evaluate patent applications. (There might even be a place for reciprocal license type of patent, where the burden of presenting the application is reduced because use for the idea is restricted only by the requirement that users likewise freely license “attached” ideas. Of course, in some circumstances this would bring the difficult questions that the GPL faces in terms of what is a part of the work.)

    I also think there might be some place for eminent domain in the area of “Intellectual Property”. Rather than having patent pools with Fair and Reasonable Licensing for broadly useful collections of ideas, the ideas could be made common property (vaguely like government buying land to establish parks). This would probably not be practical at a national level, however, and no organization exists which could provide such a service to all of humanity.

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