Patents - Friend or foe of capitalism?

[Knighted]

Patents have their pros and their cons. Providing an entity with exclusive rights to initially market and sell their product without fear of competition reduces their risks and allows them a large enough cushion to at least recapture in profits the money that went into that product's development. In that sense, IP could be seen as encouraging innovation. IP also protects smaller companies that have more hurdles to overcome in their initial stages from simply having their products stolen, copied, outproduced, outdeveloped, and outright devoured by a giant corporation. When the patent system is abused though, IP can be used as a tool to stifle competition, price gouge the consumer, and create a bunch of money leeching lawsuits to the benefit of lawyers. Overall, I think the patent system is probably a force of good, but it needs some more tuning.

[rpwi]

while i agree we should get rid of all electronics/software patients what about drug companies? i heard they spend millions/billions for research and development and it takes like 5-15 years to bring a new drug to market.

That is a little bit trickier...and of all industries...I think they make the best case for patents.

I like the idea of rewarding companies like drug companies that truly put in a lot of effort to create a great product. The problem is there are a ton of contentious patent issues in the drug industry...and a lot of obvious stuff is getting patented. Also, the university system is massively subsidizing the drug industry as are many noble but ignorant charities.

The delay the drugs have in getting into the market is due to the FDA which is highly political and subjective (they've really interferred with the natural remedy market). My vote is to cancel the FDA...let individuals decide for themselves what is risky and not...cancel the patents and call it a wash as the two should largely offset each other.

Just the biggest issue with drug patents is the danger of obvious cures being patented and then the government giving a corporation exclusive ability to withhold and produce such a cure. We're seeing genes being patented, natural cures being patented by drug companies, and this is a big mess that I think can only be cured by yanking patents.

[Knighted]

The delay the drugs have in getting into the market is due to the FDA which is highly political and subjective (they've really interferred with the natural remedy market). My vote is to cancel the FDA...let individuals decide for themselves what is risky and not...cancel the patents and call it a wash as the two should largely offset each other.

Abolishing the FDA would be a horrible idea, for two reasons.

The first reason is the placebo effect. Regardless of a medicine's efficacy, a certain percentage of the population will feel better while taking it, even if it's nothing more than water pills. Some studies have shown this percentage to be as high as 40%. Ask yourself this: what good is a consumer-regulated medicine market when almost 1 out of every 2 consumers thinks their medicine is working when it's really not? Any huckster can put a fraudulent medicine on the market, and for all intents and purposes, it will appear to be working to your average consumer who purchases many of their medicines (particularly herbal/natural) on the advice of a friend.

The second reason that abolishing the FDA is a terrible idea is the desperation factor. People with serious illnesses such as cancer will buy -anything- that pedals itself as a cure, no matter if it is dirt that is bottled up and put into capsules. People do not think rationally in such cases, and this opens the door wide open for unscrupulous people to drain the sick person for every dime they are worth since there are no federal standards to prove that the medicines work. Moreover, there is no recourse for the consumer, since without the studies that the FDA mandates, it would be prohibitively expensive to prove that the medicine doesn't work in a court. Just look at the herbal market right now to get an inkling of what the drug market in the US would look like without the FDA. There are pills out there advertised to cure everything under the sun. Something in the realm of maybe 5% or less actually do some good, and these are typically palliative effects. And who knows what kind of harm they are actually doing, since the unregulated herbal market requires no studies on side effects or efficacy.

Want an example of a drug market without the FDA? Take a look at China, where they are sticking powdered baby flesh into capsules and marketing it as the next Viagra. I kid you not.

[GeorgiaAvenger]

I take a middle of the road. It should not be permanent, but you should get first crack at it.

It is a tough situation.

[Roy L]

Curious to see what the people think...

I am amazed and gratified to see the great majority of posters in this thread have seen the light, and understand that while IP monopolies may be a friend of "capitalism," they are a foe of liberty, free markets, justice, prosperity and technological progress.

On the flip-side if government does not award exclusive access to an idea...and nobody else would have thought of it...then the inventor is not afforded the proportionate economic awards for his creativity and effort.

How so? He gets exactly the reward he earns in the market. He just doesn't get government to violate others' rights to liberty for his profit.

I know and have worked with people who rely on patents and copyrights for their business models, and I have made money on IP myself. Everything I have seen convinces me that there is no rational justification for it. It primarily functions as a way for rich, greedy takers to take from the productive without making any commensurate contribution to production in return. The inventor who makes any significant money from patents is very rare. The patent lawyer or patent troll company owner who gets rich from patents is far more common.

I know, personally, a top engineer whose team designed most of the switches the Internet ran on in the 1990s and early 2000s, and whose name is on dozens of patents. At one point he was not even allowed to read about other companies' technology, and spent most of his time defending suits by patent trolls. A system that does that is evil. Full stop.

[Roy L]

while i agree we should get rid of all electronics/software patients what about drug companies? i heard they spend millions/billions for research and development and it takes like 5-15 years to bring a new drug to market.

Drug patents are one of the WORST examples of IP abuse. They make medical care far more expensive, and they prevent researchers from looking into promising lines of research that won't result in patents. There is virtually no research into use of natural nutrients to treat disease, because natural nutrients can't be patented. There is virtually no research into use of human body chemicals like hormones to treat disease, because they can't be patented. The research that IS done tends to be focused on new ways of delivering the same old drugs. Study after study has found that although new drugs that are under patent are prescribed more than older drugs for the same condition (thanks to huge promotion budgets financed by patent profits), they are typically no better than the old drugs, and are often worse. Furthermore, the prospect of profits from patented drugs motivates researchers to ignore or cover up data that indicate the drug is ineffective or dangerous.

Drugs are the VERY LAST EXAMPLE you can use to justify patents.

[tttppp]

Abolishing the FDA would be a horrible idea, for two reasons.

The first reason is the placebo effect. Regardless of a medicine's efficacy, a certain percentage of the population will feel better while taking it, even if it's nothing more than water pills. Some studies have shown this percentage to be as high as 40%. Ask yourself this: what good is a consumer-regulated medicine market when almost 1 out of every 2 consumers thinks their medicine is working when it's really not? Any huckster can put a fraudulent medicine on the market, and for all intents and purposes, it will appear to be working to your average consumer who purchases many of their medicines (particularly herbal/natural) on the advice of a friend.

The second reason that abolishing the FDA is a terrible idea is the desperation factor. People with serious illnesses such as cancer will buy -anything- that pedals itself as a cure, no matter if it is dirt that is bottled up and put into capsules. People do not think rationally in such cases, and this opens the door wide open for unscrupulous people to drain the sick person for every dime they are worth since there are no federal standards to prove that the medicines work. Moreover, there is no recourse for the consumer, since without the studies that the FDA mandates, it would be prohibitively expensive to prove that the medicine doesn't work in a court. Just look at the herbal market right now to get an inkling of what the drug market in the US would look like without the FDA. There are pills out there advertised to cure everything under the sun. Something in the realm of maybe 5% or less actually do some good, and these are typically palliative effects. And who knows what kind of harm they are actually doing, since the unregulated herbal market requires no studies on side effects or efficacy.

Want an example of a drug market without the FDA? Take a look at China, where they are sticking powdered baby flesh into capsules and marketing it as the next Viagra. I kid you not.

Chinese traditional medicine has survived 5,000 years without the FDA. With all the regulations out there, western medicine still hasn't caught up with CTM. My guess is the FDA is providing much of a benefit.

China actually produces a much better quality of herbs than the U.S. and other capitalist countries. Because China has the death penalty there, they can't just throw in bogus stuff in their pills and claim its something its not. The acupuncturist I went to only purchased herbs from China for just this reason.

[Jovan Galtic]

You cannot "own" an idea.

[heavenlyboy34]

You cannot "own" an idea.

Thread winner.

[fisharmor]

Thread winner.

I said that first.
You'll be hearing from my lawyer.

[Jingles]

I take a middle of the road. It should not be permanent, but you should get first crack at it.

It is a tough situation.

That's what the market does. The one who first produces a good or services maintains a great advantage in profits, name promotion (brand name), etc... They will have great gains in the short term, but when you introduce a patent into the equation they will not be incentived to continually improve on their product by others who will to produce the good or service as well (who wish to produce it in a more effective, efficient, cheaper, and a better quality product). So if you grant someone a monopoly on this you shield them from the market, in effect, reducing the continual advancements to be made in the product for the firm/person that created the product "first" does not have the need to improve on the product for they don't have to (for they have no legally allowable competition). Patents stifle the process of the market.

[rpwi]

Great example of patents retarding as opposed to encouraging creativity is in the airline industry. The airplane was going to be invented without the Wright brothers. The industrial revolution had grown to the point that many industrial materials become cheap enough for flight hobbyist to conduct proper experiments (especially when it came to light-weight engines). It was time... Indeed to this day many countries outside of the US lay claim to launching the first airplane...many of such claims are not entirely untrue...although the Wright Brother's machine was certainly the most maneuverable.

What ensued was an epic patent war...and to a large extent the Wright Brother's patents were not enforced in Europe. With this advantage, almost all of the early advances in early airplane technology came from Europe...and many claimed the US flight industry was severely retarded by the Wright patents.

Internet (largely) is another great example of how a lack of patents helped grow an industry. There are certainly many patent/IP problems in the internet...but the core structure HTML is an open standard...and this has been a huge boon to the net. It is most unfortunate that people don't realize how important open standards are, and are moving toward and supporting closed standards (like flash, iphones, iphone apps, facebook apps, social networks in general, etc...). Very scary stuff for innovation.

[Henry Rogue]

Personally I think pursuing a patent is a waste of time, only lawyers get rich from it. Both with the patent lawyers during the patent process and the patent infringements afterwards. The Wright brother wasted time and resources trying to protect their patent instead of marketing their flying machine. Keeping their aircraft so secret at the time, that many people didn’t believe they even flew. I’ve dabbled in inventing things from time to time. coming up with ideas and actually trying to develop a prototype, Tomas Edison style. It’s difficult, better to join a inventers club and get help, use division of labor. I have seen some of my ideas come to fruition, but not by my hand. Someone else came up with these ideas independently and marketed them. More determination, more perseverance, more power to them.

[Henry Rogue]

Originally Postes by Jingles

That's what the market does. The one who first produces a good or services maintains a great advantage in profits, name promotion (brand name), etc... They will have great gains in the short term, but when you introduce a patent into the equation they will not be incentived to continually improve on their product by others who will to produce the good or service as well (who wish to produce it in a more effective, efficient, cheaper, and a better quality product). So if you grant someone a monopoly on this you shield them from the market, in effect, reducing the continual advancements to be made in the product for the firm/person that created the product "first" does not have the need to improve on the product for they don't have to (for they have no legally allowable competition). Patents stifle the process of the market.

Good example of this is the Fein tools patented I believe in 84 once the patent was up many tool manufacturers started selling oscillating tools. That forced Fein to make an improvement it now has a quick release blade attachment. Awesome tool by the way.

[heavenlyboy34]

That's what the market does. The one who first produces a good or services maintains a great advantage in profits, name promotion (brand name), etc... They will have great gains in the short term, but when you introduce a patent into the equation they will not be incentived to continually improve on their product by others who will to produce the good or service as well (who wish to produce it in a more effective, efficient, cheaper, and a better quality product). So if you grant someone a monopoly on this you shield them from the market, in effect, reducing the continual advancements to be made in the product for the firm/person that created the product "first" does not have the need to improve on the product for they don't have to (for they have no legally allowable competition). Patents stifle the process of the market.

THANK YOU!! I try explaining this every time IP comes up, but people just don't seem to want to get it.

[Steven Douglas]

I started out as IP friend before I came here (four generations of inventors with patents), but I'm steadily headed toward adamant foe.

My only holdout has been the general concept of a headstart for an original innovator, which has appeal to me on some level. But that's a very small holdout, because the tiny innovator typically doesn't get adequate protection anyway, and IP ends up being mostly a bunch of worthless paper amongst the actual shields and swords of industry Titans. Every once in a while you'll see a little guy win a big suit against an industry giant (or more than one), but usually it's the other way around, with Cease and Desist and other threats issued from bullies on the playground, even if they don't have an actual leg to stand on.

I will say that I am now fully of the opinion that IP stunts innovation overall. I also found that fashion industry video from TED extremely compelling.

So - IP foe, after all these years of simply accepting that it was a good thing and worth defending in principle.

[Jingles]

THANK YOU!! I try explaining this every time IP comes up, but people just don't seem to want to get it.

Some people don't want to and I have had these debates for quite a while within my libertarian club (well to be fair with one guy the entire club disagrees with). And he will concede to patents being incorrect, but not to IP. I think any libertarian that takes the time to read and listen to Stephen Kinsella eventually gets it and he has not yet. I just don't see any free market justification for patents (even for those that are minarchists). Also in regards to IP the best example I give is the fact that If I steal your personal property then that is of course theft. But if I go and create an item/object/product/etc... that is the same as your product that has not taken anything of your personal property how is that theft? When did theft become creating something new (even if it is exactly the same). Labor, capital, resources, etc... went into producing the same thing, but it was not theft if I copied you but did not steal your on property physically. Same applies for digitally. If I download a song to my computer, and someone copies the song to there computer it creates a second file (although they contain the same content), what theft did they commit? They did not steal the songs, they simply created a new file. Same applies for ideas if you express them to others. We aren't in 2nd grade yelling at others "COPYCAT" anymore.

[The Free Hornet]

patents are a friend of capitalism.

friend of free markets? maybe not so much.

Capitalism is private ownership and control. Patents and copyrights are closer to state ownership and control:

cap·i·tal·ism   [kap-i-tl-iz-uhm]
noun
an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, especially as contrasted to cooperatively or state-owned means of wealth.

Albeit, the definition does not make this point clear. Perhaps you meant "patents are a friend to fascists and mercantalists and corporatists"?


Here is the purpose of patents:



It may look they are fighting. That's what children sometimes think when they see sex. What is happening above is a web designed to keep the little players out. They all very much enjoy their "fighting".

It benefits the lawyers, not the innovators.

[Henry Rogue]

Just read through all the posts on this thread and am shocked to see that I agree with Roy L on something. Makes me question myself. Am I wrong about this?

[heavenlyboy34]

Just read through all the posts on this thread and am shocked to see that I agree with Roy L on something. Makes me question myself. Am I wrong about this?

+1 don't worry, you're on the right side of the issue.

[Henry Rogue]

Originally Posted by The Free Hornet

It may look they are fighting. That's what children sometimes think when they see sex. What is happening above is a web designed to keep the little players out. They all very much enjoy their "fighting".

It benefits the lawyers, not the innovators.

Sex hell, thats an orgy.

[Roy L]

Just read through all the posts on this thread and am shocked to see that I agree with Roy L on something. Makes me question myself. Am I wrong about this?

Of course not. You are just wrong about all the things you disagree with me about. Can you refute anything I have written, on any subject? Of course not. You just have to find a willingness to understand the relationship between being proved wrong and actually being wrong. It's not that hard once you get the hang of it.

[Travlyr]

If there is no patent protection, then why would anyone invest in R&D? It would be much more profitable to just sit back, let the other guy do all the work, and then mass produce his product.

[Roy L]

If there is no patent protection, then why would anyone invest in R&D?

To earn more money, same as they did before there was any patent "protection."

It would be much more profitable to just sit back, let the other guy do all the work, and then mass produce his product.

Garbage. How will you know what to mass produce, until he has demonstrated the market's acceptance of the product by making money from it? How will you stop others from competing with you by making the same product at an even lower price?

Your claims are typical of the brain-dead, economically absurd nonsense that is routinely trotted out to rationalize patent monopolies.

[Roy L]

Personally I think pursuing a patent is a waste of time, only lawyers get rich from it.

You forgot those Heroes of Innovation, top corporate execs and shareholders...

[heavenlyboy34]

To earn more money, same as they did before there was any patent "protection."

Garbage. How will you know what to mass produce, until he has demonstrated the market's acceptance of the product by making money from it? How will you stop others from competing with you by making the same product at an even lower price?

Your claims are typical of the brain-dead, economically absurd nonsense that is routinely trotted out to rationalize patent monopolies.

Amazing. I agree with you 100% on this. Thanks for contributing to the thread.

[heavenlyboy34]

You forgot those Heroes of Innovation, top corporate execs and shareholders...

lol! Reminds me of the various pop stars who were suckered into giving exclusive (or mostly exclusive) "ownership" of profits earned by "performances" of songs to record companies. IIRC, Don McLean gave up most rights to "American Pie" in order to get published. It made a lot of money for the publishers, and he got some scraps. Did you know the "Happy Birthday" song is copyrighted? To this day, "performances" (using the definition in the Copyright act, of course) of this song earn royalties for the copyright owner. (I don't recall his name now).

[Roy L]

If there is no patent protection, then why would anyone invest in R&D? It would be much more profitable to just sit back, let the other guy do all the work, and then mass produce his product.

I forgot to mention: without patents, every product becomes a commodity that anyone can produce, so competition drives out all profits EXCEPT those of the innovators who have invested in R&D and are thus offering something new that others haven't started producing yet! So no patents means an INCREASED economic incentive to innovate, not a reduced one. The truth is the exact, diametric opposite of your claims.

[heavenlyboy34]

I forgot to mention: without patents, every product becomes a commodity that anyone can produce, so competition drives out all profits EXCEPT those of the innovators who have invested in R&D and are thus offering something new that others haven't started producing yet! So no patents means an INCREASED economic incentive to innovate, not a reduced one. The truth is the exact, diametric opposite of your claims.

qft!

[thoughtomator]

An inventor has a natural market advantage by virtue of having invented an invention - a knowledge gap between him and his competitors. He needs no violence of the State in order to leverage that gap. He has no moral claim to any more privilege with regards to the invention.