The other day I wrote about the Supreme Court dismissing an important patent infringement case without ruling on the merits of the case. This whole case got me thinking. I have been speaking to people for several years about the problems with the intellectual property system. To most people this seems to be an arcane subject that has no real bearing on their lives. After all they’re not inventors getting patents, or writers or film-makers or artists worried about copyright. But as technology advances, and more and more people write blogs, post there photos and videos on the web, and record podcasts these become real issues. My son Max recently started doing a music podcast called MewzikCast. I had to explain to him why he couldn’t play some of his favorite songs on his show. Big record companies pay millions of dollars a year to companies like Clear channel to get songs played on their radio stations. But if someone doing an independent podcast wants to play the same songs, there is no way to do it. And if you do, they will come after you. And the reality is that podcasts are helping to sell music.

However, another very real cost of this system is one that we all (at least in the United States, less so in more enlightened countries) have to pay every day. The vast majority of Americans are familiar with the skyrocketing cost of health insurance. After a brief respite in the the latter part of the 1990’s when HMOs started to catch on, the rate of inflation of health care coverage has been on a very steady climb for last 5-6 years. Probably the single biggest driver of this inflation is the cost of prescription drugs. One of the reasons for these costs is the patent system. When the pharmaceutical companies develop a drug, they patent it. This gives them a monopoly for a limited period of time for that drug. When you have a monopoly on a product you can charge whatever price you want. The premise of patents and copyrights as defined in the constitution is to promote progress by giving inventors and artists a period of limited monopoly in exchange for disclosing their discoveries and works publicly. In this way the creators get make some money from their works while ultimately the works pass into the public domain so that others can build on it. This premise is one of the contributors to the incredible technological and cultural advancement of the last two centuries. However, as these monopolies have helped to create fortunes, the fortunes have led some to do whatever they can to preserve the cash flow, without necessarily creating anything new or useful.

This has been manifested in several ways. In the entertainment industry, copyright holders (and not that these copy right holders are not necessarily the creative people but the holders of the copyright), there has been continued drives to extend the period of copyright, and greater restrictions on what can be done with copyrighted material. In the area of patents, patent holders have tried to tweak their patented products to get new or extended patent protection. They have also tried to get broader less specific patents. An example this would be a drug company developing a new treatment for some medical problem. After getting a patent and getting the drug on the market for some number of years, they develop a new variant with the same drug in a new form. For example, the drug may initially come in a tablet form. Then it is developed in a capsule form. Now having a drug in a capsule form may be an innovation in itself and patentable. However once this has been done, putting other drugs into this form is no longer innovative. Similarly developing extended release versions might also be patented, even though it really shouldn’t be. In this way pharmaceutical companies have manipulated the patent system in order keep drugs under their control. By keeping a patent in force on brand name drugs, they keep generic versions off the market.

If you have ever compared the prices of generic and brand name medications you know how huge this gap is. For example, I take loratadine which is sold under the brand name Claratin for my allergies. The brand name stuff sells in a box of 40 tablets for about $16 I bought a bottle of 120 at Target for $17 for the generic version. It is the exact same drug for 1/3 of the price. This example is available over the counter now, but similar comparisons apply to must prescription drugs. The pharmaceutical companies do everything they can to preserve their patent protection as long as they can. Other examples of abuse of the system are of the type by Metabolite to patent a basic chemical relationship. They get patents on overly broad or general ideas. Health care systems are then forced to pay exorbitant fees to conduct tests, or pay for medicine. This affects each and every one of us. If we can afford health insurance we end up paying much more. More people than ever cannot even afford insurance. For the rest of us we end up paying for all the un-insured either through the taxes we pay to support Medicaid or through the higher fees charged by hospital to cover the costs of the emergency care they have to provide to un-insured patients.

The patent system need to be fundamentally changed with the onus put on the applicants to demonstrate the true innovation of their “invention”. There should also be an open comment period after an application is published so that people can shoot holes in it and demonstrate prior art before a patent is granted. It needs to be easier to show that an idea is not valid for patenting before granting a patent. I will be discussing this last thought more in another post I am working on and will publish shortly.