Of all the university research findings possible, inventions–because of patents–attract the attention. Everything else about research–data, findings, experimental setups, reports, how to do things–is pretty much ignored. No one spent time worrying about whether data or findings would be “made available” on reasonable terms–even though withholding data turns out to be a huge problem. Copyright and trade secret weren’t big concerns–the government could publish reports, and in any event, before the 1976 Copyright Act, folks could publish reports without copyright notices and registration and the text would enter the public domain–rather like what is still the case with inventions now (but for a year “grace” period in which bureaucrats can work to prevent an invention getting to the public domain in the U.S., at least). But more so, there was absolutely nothing about how non-patentable research findings might be presented to industry for advantageous use. Nothing about how industry might use something that had no patent position for its benefit. Nothing about how such things might form valuable products or features to products, even without a monopoly position–as if nothing done by industry could possibly be done without a monopoly position. If a company was not the only one, and couldn’t remain the only one, then, why, nothing new would happen.
This sort of thinking never comes out directly. No one was foolish enough to actually say or write things this way. Yet this view is the strange attractor around which circle the arguments for patents, commercialization, innovation, and public benefit. We find all the time that companies and the general public adopt things that have no monopoly position. Indeed, imitation is a primary method of dissemination. The “free rider” issue–so threatening to monopoly thinking–is in fact a primary driver of widespread dissemination and public use. If a monopoly is so essential to commercial success, why is it that companies are happy to copy technology and products in use by others? If a monopoly was essential, wouldn’t they forgo such imitation and instead focus on developing something in which they had a monopoly? Of course, the answer is that monopolies are not all that important to the diffusion of a technology where the technology has shown itself to be useful.
To push this point, we might posit that monopolies are most important in business settings precisely where imitation would operate to spread the use of a new technology or product. If anyone could practice a new method just by learning about it, then a patent is useful only to prevent that practice (in favor of requiring a license to practice the method, or even to ensure that no one is allowed to practice the new method in favor of an older method that’s still profitable–nonuse of something new as a business advantage). If anyone can build a copy of a product and sell it for 1/10th the price (think Xtandi, say), then the monopoly price point of the product likely will collapse (unless brand is everything, or representatives carrying, um, violin cases are diligent) and the market will fragment among multiple suppliers competing on price, quality, availability, additional features, post-sales support, brand, and overall cheerfulness. A patent can prevent such awfulness–and such a use has next to nothing to do with promoting the use of an invention.
There is one point at which a patent appears to play a useful role–where the effort to develop a technology or product is expensive or the result of substantial cleverness and insight (which also may be expensive to develop or acquire or retain) and where the cost to copy is low. Why go to all the work to employ clever people working on expensive projects only to have a bunch of lazy companies waiting around to copy things the moment they show up on the market? That’s a legitimate question, generally, if one’s business focus is profit from that new thing.
Let’s tease the issue out a bit. If one’s new thing is, say, a way to repair spinal chord injuries, so that most anyone can do it (just apply this small patch of chemicals derived from starfish, cesium, and electrical stimulation to the injury area and wait 24 hrs)–then we might argue that a patent that withholds this treatment from use unless one pays a monopoly price for a commercial product is simply immoral.
Put it another way. So you are clever and involved in an expensive project–spinal chord repair, say. And you get your project paid for by public money. And one of the conditions of the public funding is that you make the results broadly available. And you come up with this variant on a starfish extract in the form of a stimulator thing and it works. Now, while there has been expense, that was covered by the government. Most anyone could create their own starfish extract variant stimulator. Yes, there’s “development” expense if one is going to create a commercial version–all sorts of things that might have to be done, from gathering data formally to demonstrate that the patch works, doesn’t have bad side effects, and is disposed of properly (cesium is radioactive, after all, and if that starfish gel gets on your dog, it could grow another leg). Those development expenses will have to be recovered. Thus, a patent has its use.
But here’s the rub: if the idea can be used by most anyone, then the product version has to offer some benefit substantially beyond that of the bother of a DIY stimulator–one that any medical team could use. The product version has to be better than local DIY–way more effective, less expensive, doesn’t leave a tiny tube footed appendage at the point of application–something. Otherwise, the patent’s role is to block widespread DIY use in favor of a monopoly product version. The effect of the government funding is to remove entirely the need to recover the development costs leading to the invention. What’s left is recovering the development cost of preparing a commercial version that competes with DIY use of the invention. And, of course, taking in as much profit as possible for two decades for being the first to develop the patch.
Even here, in being first, the government with its public money rather chose you to be first. They could have funded other competing clever folk instead, but you got the funding. Why then, given that the government chose you (no doubt for your credentials and well written proposal) and paid for your work (direct costs, indirect costs), should you be allowed to use a patent to prevent all DIY use so that you can spend another four years working a commercial version and then have nearly two more decades of monopoly control over price, availability, features, and applications? Once you have that monopoly, what’s your motivation to make many versions, to explore other applications? Why bother? Oh, sure, make improvements and obtain patents on these and extend the monopoly.
Overall, there’s an argument that innovation and variation fall off once there’s a monopoly position. That’s the case whether the monopoly is in the form of a patent right, a standard, or a government regulation. Every suburban street looks like every other suburban street thanks to uniform codes. Blah, guck. Only a code official could admire the handiwork. While a patent might be useful in motivating the development of a commercial product (exclusive position, beat back free riders), it may also stand in the way of further rapid development (profit over variations and small-market applications) and DIY use (without any product whatsoever). The patent in these circumstances works against availability, against fringe applications, against variations, against new feature additions (someone can invent a new feature, but can’t use it without your patent license–all they can do is block you from adding that new feature–but no matter, you are profitable anyway, so screw that).
We get to, then, a special case: an invention that (i) is expensive to develop into a product version, and that (ii) can only be used in a product version, (iii) that product version is cheap to copy once it is publicly available, and (iv) how to make the product is readily ascertainable upon inspection or because how to make the product has been published (by patent or as a result of regulations or just the general happiness of claiming to be first).
In this special case, we are talking about new things that people cannot do for themselves, cannot have some handy friend do for them, and cannot have a master craftsman or chemist or mad scientist in the area do for them as a one-off. We are talking something that has to be mass produced, “commercialized” and can’t be used except in a “commercialized” form, and that form is easy to copy and expensive to figure out in the first place. Some biomedical products come to mind. But even here, the primary barrier is regulatory–that for therapeutic compounds to be “dispensed,” they have to go through an expensive regulatory process and must be made available only by a second regulated process of “prescription” authorization. These two processes act as barriers to use (and to entry into a market to sell) that run up the product development expense (though imitation may be cheap) and set up the argument for the need for a patent monopoly.
For some time Frank Douglas has made the argument that a key source of innovation in biomedical areas is to create products that shift practice from the hands of experts into those of typical users. We see this in, say, social media, where cameras and recording technology are now so well engineered that non-experts can produce what once was expert work. The algorithms, design, and build quality are there to do what high-end equipment and expensive technicians once did. Same can go for many sorts of therapeutic compounds. Some once were prescription but then become available “over the counter.” Why is that? Typically, it’s because the company that has marketed the drug via prescription and finds that the prescription writing has become a bottleneck that limits sales growth. The FDA, for instance, has never successfully led an effort to move an approved drug from prescription to over-the-counter.
Douglas’s argument is that one can design biomedical products so that they can be used directly by consumers, without going through the hands of professional experts as a gate. Think “over the counter” instead of “prescription”–but think more generally than just biomedical stuff. Issues in the design have to do with safety, efficacy, and training in use. But we have many products that are hazardous, somewhat work, and require substantial training that doesn’t always stick–the automobile, say. One might wonder whether in biomedical work, there is too much attention to the effort to design things so they stay behind a regulatory barrier rather than getting them out as soon as possible for DIY use. A patent is one way to ensure that things stay behind regulatory barriers.
Thus, if one is dealing in inventions on new therapeutic compounds, one has a choice of where to place patents–with companies that derive their profits from widespread direct use or with companies that derive their profits from prescription or expert-mediated use. For a university licensing campaign with an invention funded by the federal government, perhaps this question is more important than the mere fact that something has been licensed–or even that there is a commercial product. If the commercial product could have been over the counter, but instead, because of the choice of licensee, has become prescription, is not that a failure in the licensing program to achieve the widest possible availability?
The problem with university licensing is that almost everything is invisible. The invention is invisible but for claims that define it logically; the patent represents an intangible property right, signified by a piece of paper; the options on licensing represent potential relationships–quick, imagine a relationship. A license contract is an exchange of enforceable promises. Draw a picture of a promise. Thus, as we point out things that aren’t there in a landscape that itself is largely not there, it seems that we are involved in something that’s pointless, quite literally. But it is just here, where stuff that’s possible but disregarded by a prevailing practice offers the potential for innovation, for change. It’s just that those whose livelihoods derive from prevailing practices often have little incentive to want to change.