Against Monopoly

defending the right to innovate

Monopoly corrupts. Absolute monopoly corrupts absolutely.

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Prometheus or innovation unbound?

The New York Times ran a surprisingly long and tough piece from Reuters titled Making Sense of Patent Law link here. It opens, saying "The United States Supreme Court has a chance to reverse the mission creep in patent law. The system is supposed to reward inventors but not stifle innovation. Fuzzy and overly broad concepts like thought processes generally are not protected. Yet one company, Prometheus Laboratories, reckons it owns a method for interpreting how patients react to a drug."

It then traces the history of patent law covering ideas which consistently forbade such patents but by 1994, was patenting "any software with a practical purpose."

The instant case began "in 2004, [when] Prometheus claimed the Mayo Clinic had infringed a patent on a seemingly simple process for diagnosing patients. The procedure was the kind of analysis based on observation that doctors do every day, the clinic maintained. But the Federal Circuit upheld the patent. The Supreme Court is to hear oral arguments in the case on Dec. 7."

"The seven years of litigation are one cost of a broken system. The number of federal patent infringement lawsuits has soared, to more than 3,300 last year from about 800 in 1980. Legal experts say the suits have cost companies hundreds of billions of dollars a year."

"But the greater expense may be lost innovation. The risk of getting sued discourages research investment and delays medical breakthroughs the opposite of what those who devised the patent system intended. Reversing years of damaging precedents is hard, but a Supreme Court ruling against Prometheus would be a start."

Hope rises. We will be watching.


Hundreds of billions per year in costs? lol...Talk about hyperbole. Even the most pessimistic studies claim tens of billions. Boldrin and Levine estimated something on the order of 10 to 20 billion. So, now we have hundreds of billions? It would sure be nice to know his source of information - is it a fact, did the author slip some digits, or is the author engaged in yellow journalism?

It appears that R&D investment has really been discouraged by patent litigation. The U.S. accounts for about 1/3 of all R&D spending in the world with 2011 spending at about $405.3 billion. The second largest spender is a far distant second. While the growth in R&D spending has slowed somewhat with the slump in the economy, it continues to grow and the rest of the world has a long way to go to catch up to the U.S.

Of course, R&D spending in the U.S. is absolutely DWARFED by the "hundreds of billions of dollars a year" spent on patent litigation - if it really is "hundreds of billions" rather than someone who just does not know the difference between billions and millions.


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