☆ Patents and Innovation

What Does Not Kill Me Makes Me StrongerAn interview with a pharmaceutical industry analyst on the BBC today illustrated a key point about patents and reminds us they are about stimulating, not rewarding, innovation.

Explaining why AstraZeneca were having difficulties that were making them plan large layoffs, the analyst talked about the “patent cliff”, and the interviewer insightfully observed that it was the motivation to continuing innovation. The “patent cliff” is the end of the 20 year monopoly on an invention. During the 20 years period, the pharmaceutical company has no competition and is free to charge whatever it wants for a drug. It is thus able to make enormous profits.

As soon as the 20 years are up, other drug companies are able to use the knowledge that’s freely available in the commons to produce the drug at a price the market will bear rather than at a monopoly price. The inventor is then able to continue making and selling the drug, but not at monopoly prices. The only way to continue making monopoly profits is to invest in research and to continue to innovate. Thus, the “patent cliff” is actually a spur to innovation and achieves exactly what the social contract behind patents was intended to achieve – a incentive for research and innovation so that the pubic commons is enriched.

In other comments on the news, I could clearly hear people ready to use this news to demand extensions to the patent span for pharmaceuticals. But a key quote from the BBC article contains the real sting in the tail – it’s not the loss of patents that’s to blame as much as a failure to innovate fast enough:

The company is also facing the loss of patents on some of its products such as anti-psychotic treatment Seroquel, and has not yet released alternative money earners.

While the equation clearly depends on the monopoly as a reward for innovation, the spur to innovation is actually the expiry of the patent. While some would have us believe that extending patent terms would increase innovation, there is clearly a balance to be achieved. If patent terms are extended, there’s a real risk of reducing the incentive to innovate. We have to remember that the point of society granting patents and temporary monopolies is not to reward innovation; it is to encourage it.

☆ Voicemail Cracking

Lock PickingI’m getting tired of all the news reports that are incorrectly accusing the News of the World of  “phone hacking”. For goodness sake, haven’t we already covered this? It’s both inaccurate and unhelpful. Even the BBC are doing it and they ought to know better.

It is inaccurate because the activity does not involve access to phones but to the voicemail service they connect to. As far as I can tell, no phone system has had its integrity violated during this incident, only a voicemail system. Most likely the culprit just cracked the voicemail PIN – pretty easy stuff if you know how to dial in to the service.

It is also inaccurate because the term “hacking” is not correctly applied to the violation of the integrity of systems. Hacking is a more general term indicating that a system is being used in a way that was not envisaged by its creators, and can be used both positively and negatively. The term that should be used is instead “cracking”.

It is unhelpful because huge numbers of technically skilled people routinely engage in “hacking” as a positive activity, involving innovation and problem solving. Misuse of the term only with a negative connotation diminishes the contribution these skilled individuals make to society.

The correct term for the alleged activity is “voicemail cracking”. It’s time people learned the difference.

✍ OSI Opposes BBC DRM

§ The Open Source Initiative Board has added OSI to the list of organizations asking that the BBC not be allowed to add digital restriction measures to digital broadcasts in the United Kingdom. The BBC’s request to do so is being reviewed by the UK regulator, OfCOM, and OSI is supporting the position statement from the UK’s Open Rights Group and encouraging others to do likewise.

Read more…

☞ Access to Knowledge

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