(Weekly Organ of the Communist Party of India (Marxist)
April 21, 2013
Innovation and Patents:
Is There a Link?
THE Supreme Court's
judgement throwing out Novartis’
attempts to secure a patent for the leukemia drug Glivec has
created a frenzy
in the pink press – both in
For those advocating patents, the argument is that without patents, there will be no incentive to innovate and therefore society will lose in the long run. Giving a short term monopoly, even if it creates short term high prices -- is preferable to innovation drying up. The problem with this position, more than at any other time, is that this is not how innovation works in the high tech industries today. Patents as incentives are as true as pink elephants or the tooth fairy.
First and foremost,
except for pharmaceuticals, in all
other industries the cost of maintaining and the legal costs
over patents are
far higher than the revenue generated. James Bessen and
Michael Meurer, in
their work Patent Failure, have
looked at the empirical evidence in the
In the pharma industry, the major part of the research comes from public funds, with pharma companies doing only the last mile development of taking the drug into the market. Even here, new medical or chemical entities are being discovered less and less; most of the pharma research concentrating on small tweaks by which they can continue their monopolies through ever-greening of their existing patents.
The cost of
maintaining a highly restrictive patenting
system, as it exists in the
This is the same
argument that Hewlett Packard, for
example, made in one of the congressional hearings on the
Bayh Dole Act in the
PATENTS IN FACT
The concept of patents as incentives comes from a time when a product was based on one or at most a few ideas. With increased complexity and a very large number of components in even the simplest of products, a model of the industry where a central idea makes or breaks the success of a product is obsolete. That is why the Apple-Samsung battle over smart phones and tablets is being fought over such a huge number of patents; the number of ideas that has gone into this device is very large indeed --- from hardware to software. This is the difference between invention, restricted as it is to a few ideas, and innovation, which integrates a large number of ideas into a product. Patents protect at best inventions, and retard innovation.
Patents were issued in
the 16th century as a royal
monopoly. It could be over anything --- salt, saltpetre,
All our textbooks tell
us the “beneficial” effect of
such monopoly --- James Watt and how his steam engine helped
the miners in
So even in the beginning, there were two competing models of developing new innovation --- the collaborative one followed by Cornish miners, against the restrictive one followed by James Watt. In a number of industries, the patent model was not followed --- for example, steel making, beer industry, etc. The one that followed the patent route was the chemical industry, of which the pharmaceutical industry is a part.
TOOL FOR BIG PLAYERS
TO KEEP OUT SMALL ONES
There are good reasons why in most industries, patents are not important. It is not that patents are not used --- they are used against new entrants or smaller companies. They have been primarily a tool for the big players to keep out smaller players. Most small players do not have the deep pockets to fight the biggies in the game. But in a fundamental sense, patents have never been very important for any other industry. For the big players, they were not a hindrance either --- each held enough patents to scare others --- a form of mutually assured destruction model. What has changed today is that patents are not just minor irritant, but a major hindrance to developing new technologies.
A number of US authors
have recently written on the
failure of the patent system in the
Whether patents should
exist or should society have
other ways of encouraging innovation is a larger issue.
Here, we are examining
the simple issue --- by not allowing minor advances to be
given as patent in
the Novartis case, has the Supreme Court harmed innovation,
as the drug MNCs
and their mouthpieces are arguing? Clearly, such is not the
case, and in
avoiding such a path, the Supreme Court has in a small
The only reason a 16th century anachronism survives in today’s world is the backing it receives from the drug industry, which is willing to send millions to their death to preserve their profits.