[ExI] Gene Patents: Good or Bad?

[samantha]

Sondre Bjellås wrote:
> Obviously would it be positive for a single entity to gain 
> government-controlled monopoly on anything it can sell, that's pretty 
> certain. It is also very certain that this has negative consequence on 
> the society as a whole.

That is an on the face prejudicial way of saying it.  If X puts together 
the money, resources to R&D something new to market then X gets to say 
under what terms they will sell it that the market will bear (people are 
willing to pay) and under what conditions they will or will not divulge 
the innards of how exactly X works.    Do you want to claim that somehow 
everyone on earth has the right to know all those innards just because 
it would be convenient for them if they did?   Or that everyone has a 
right to X's production for whatever they wish to pay including for 
free?   

If not, exactly how would you arrange things so it is possible for X to 
actually turn a profit, which is to receive more value than the R&D of 
the product costs?   Do you think that is greedy?  If X does not receive 
more value then X has no more to invest in producing new values beyond 
what it started with.  It cannot grow to produce and offer more value to 
the world.   

In light of this why wouldn't X deserve/need some greater rights to 
control of production and licensing of its product for some period of 
time?  Of course X could just keep all the innards of the product a 
trade secret, at least for long enough to recoup costs.  But then those 
that could build other good and valuable things on that tech don't get 
to know about it or use it on any terms and reinvent something sort of 
like it.    Is this better?  Are you sure?

>
> Certain types of organizations and products probably wouldn't sell as 
> well in a society without patent laws, but you would most likely have 
> other products and organizations which would serve other purposes and 
> markets. Nothing beats the free market, and it's not a positive trend 
> we're seeing around the global with big governments protecting failing 
> corporations, some companies and products are just prone to fail 
> sooner or later.

Government bailouts are totally separable from patents and other forms 
of IP so let's not conflate them.   The Free Market requires sound 
economics and property law.  The above is part of what is required in 
order for producers to produce in a self-sustaining and increasing 
capacity. 
>
> It's a philosophical discussion whether "intellectual property" 
> deserves to exist in the manner it does today, but that's a whole 
> another discussion.

It is indeed a philosophical (and particularly economic) discussion.  It 
cannot be fully avoided if we are to talk about this area 
intelligibly.   Otherwise we would likely just be posturing without an 
agreed basis to a large extent.

>
> With this said, I would just like to add an example to your question:
>
> Company X and Y are in the business of developing CRM software. 
> Company X is first on the market and patent-protects some of it's 
> innovations.
Which means that company Y can either license them or show they had 
prior art.  If they filed provisional patents early as is cheap and easy 
to do, they are protected from any coercion by company X's patents in 
the same area.   But remember that software is a bad example as many 
agree that software should not be patented.   Copyright law plus trade 
secrets (what you make open or not) are sufficient for what is needed 
there.  So I am going to act as if instead of sofware, X and Y are 
working on creating a hot new spaceplane or some other material product.


> This means Company Y is under the constant treat of being in violation 
> of Company Y's patents as patents are generally very broad in their 
> descriptions.
Patents should be much more specific.  But yeah, if X and Y are both 
working on a particular kind of revolutionary space plane and one gets 
there first the other loses out.  Even without patents the first entrant 
into the market with a viable product is likely to take the lion's share 
of the business.   Does their entry mean that they must divulge their 
product details or that it is better for everyone they keep them secret, 
at least long enough to recoup the R&D cost and a bit?    Unclear.   

Yes, you want specificity,  the proper areas for patent and you want 
reasonable  term lengths and preferably non-discriminatory licensing 
terms.    This last keeps patents from being used to shut off 
competition entirely.

> Hence, X is stifling Y's ability to innovate and bring competing 
> products to the market.
Not really.  They just beat them to one area.   If licensing terms are 
non-discriminatory Y can still introduce new improvements or lower 
manufacturing cost, better service, derivative products and so on.

> Then again, you could argue that Y should pay royalty fee to X since 
> they where there first, but remember that two inventions can happen at 
> the same time independently but only the first guy to patent it wins. 
> Patent laws makes it possible for any holder to actually crush a 
> competitor completely and make it impossible for them to actually sell 
> competing products.
If they had prior documented work then X's patent can be successfully 
challenged.   If X threatens them for patent infringement they can show 
X the documents and if they are sound it is in X's interest to not bring 
the matter to trial assuming Y doesn't see a full court challeng as 
worth their trouble.   Patent laws definitely need reform.  I am not 
clear that patents as such serve no useful purpose for the economy and 
society or are totally unjustified in all forms and circumstances.

>
> So then we have X and Y, who are both putting a lot of money into R&D 
> to develop CRM products. They both spend one billion dollars, a total 
> of two billion. To cover these costs, they would need to price their 
> products in the market to earn money back on their investments in R&D. 
> So the market has to pay a minimum of two billion dollars for CRM 
> software.

The market doesn't have to pay twice as much just because two companies 
spent that much at all.  The market values that product for however much 
in total that it values it.  If it values it less than the company or 
companies spent to produce it then tough.  That is the risk of 
business.   Hey, if it costs A to invent, manufacture and market 
something and you do not recoup these cost and more over time then you 
will not remain in business or not in that line of business.   Note the 
market pays this amount over the effective life cycle of the product.  
It does not have to pay it at once.    Also, many products are loss 
leaders.  They are sold or give away at a loss to get customer loyalty 
or a customer base that brings in enough revenue to keep the business 
afloat.  
>
> If no protection was possible and Y could "copy-cat" some of the ideas 
> and innovations from X, then we potentially could cut the R&D costs in 
> half, one billion dollars (for the point of the argument let's make it 
> half, though would probably be higher).
So what?  Does each company have the right to their own work product or 
not?  That it might be convenient or cheaper if they both could see into 
each other's plans, designs and operations doesn't mean that 
anything/everything else is wrong or bad.    It would be very convenient 
if I could use everything ever produced for free to do whatever my thing 
is.  But that is not the way reality works or can work this side of 
santa machines at least and perhaps beyond.

Also X and Y, realizing they have a lot of common needs, could 
collaborate on those common needs or even create and lead an Open Source 
effort (going back to a software example a sec) to address those common 
needs.  

> This means the two companies have used only one billion dollars to 
> create two competing CRM software products, which the market only have 
> to pay in total one billion dollars for. This means the market spend 
> less money on CRM licenses and the two companies probably would earn 
> more money since software generally are cheap anyway so they wouldn't 
> lower their prices 50%.
> Would company X do the initial investments in R&D if they couldn't 
> protect their innovations? My argument is yes, they would. Wherever 
> there is money to be made, there will be investments. Would the 
> product be different? Yes, probably. Would the product be developed in 
> more incremental manner? Yes, probably. Is this good for the 
> consumers? Yes, very likely.
>
> -- 
>
> Regarding one of the links mentioned on this thread, I seriously doubt 
> patents is the reason for SAP's problematic issues. I have worked at 
> big organizations with large SAP-implementations, it's in no way 
> related to patents that they are having problems now.

SAP got in early to this space, did very effective marketing and became 
the elephant in that room.  It was a safe bet in large IT especially to 
plug in SAP for a while just as IBM used to be a safe bet to plug in.   
But a lot of the SAP stack suffers imho from what a lot of first movers 
suffer over time.  It has too many outdated parts that everything else 
has too many dependencies upon and too large a legacy installed base to 
stay nimble and up-to-date in all areas.  But this is good news.  As the 
old growth reaches its zenith and starts its decay there is food, 
opportunity and room for new growth.   Also many a company has made a 
living trailing behind SAP adding value or satisfying things that SAP 
did not.


> SAP consultants have generally been very expensive and very lucrative, 
> with innovations in the open source space and availability of cheaper 
> resources from countries such as India and China, few companies are 
> willing to pay the premium and costly investments that SAP represents.
Yep.  You can be expensive when demand is high and viable alternatives 
few.  Not thereafter.

> SAPs recent change in view on patents is in my persona opinion, just a 
> way to gain money where they no longer are able to stay up-to-date and 
> be a choice for 
> customers: http://techdirt.com/articles/20060118/0256239_F.shtml

I agree that outgrowth should not be able to prevent new growth by 
salting the earth with patents.   At least not with strong restrictions 
on time they are valid and reasonable licensing terms.  If a product has 
been out for years without patent protection then I don't think it 
should be allowed to patent it after everyone has done their best to 
figure out how to do the equivalent as well or better.  
>
> PS: We don't have software patents (which are really process patents) 
> in Norway, and we've had some pretty big innovations that was very 
> costly. Opera Software (browser), Funcom (games), Qt (open source 
> framework) and FAST (search engine). Qt was bought by Nokia and FAST 
> was bought by Microsoft.

I very much agree that software patents are a blight that should be 
removed.  BTW, I noticed recently that on many economic indicators 
Norway is really booming.  Among others it has budget surpluses, little 
debt and a quite positive trade balance.  It is really looking good.  It 
makes me sorry I didn't take a Norwegian friend who wanted to make me a 
kept woman while I finished schooling if I would go back to Norway with 
him up on the offer.  :)

- samantha