[ExI] Gene Patents: Good or Bad?

[Sondre Bjellås]

You ask if company X should be allowed to protect their invention in any
possible way: Yes they should! Everyone should try to protect their core
business ideas and implementations. Nobody has the right to corporate or
private information. Trade secrets is an essential part of many businesses
today.

Other than that, we agree on most points. Trade secrets and
copyright/trademark laws are more than enough to protect the software space.
The heart of the discussion is patents on genes, which I would say is
somewhat similar to patent on elements (gold, silver, titanium).

The economy in Norway is scary, it's too good. It makes it hard to export
Norwegian goods and services. Norway was (I think) the first country to
raise it's interests rates, as we have a problem with to many people
investing money into real-estate which doesn't really do good for anyone
economy. Few companies have had to cut down on employees and even less has
closed down. Some companies have used the "crisis" as a mechanism for laying
off unwanted employees, which is really, really hard in this country due to
regulations and laws that protect the employee.

Other than that, it's a great country to live in if you like to take things
easy and don't worry to much. Before we found oil, you wouldn't want to have
lived here. We're close to 4.8 million that lives here now and we have the
worst railroad and road system in whole of Europe ;-)


- Sondre (who's working in the top-office of Norway's largest office
building)


On Thu, May 27, 2010 at 4:20 AM, samantha <sjatkins at mac.com> wrote:

> 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
>
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-- 
Sondre Bjellås | Senior Solutions Architect | Steria
http://www.sondreb.com/
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