Chief Judge Rader (Not Surprisingly) Gets it Right about Chimerical "Tragedy of the Anti-Commons"

By Kevin E. Noonan --

In his dissent from the majority opinion in Momenta Pharmaceuticals, Inc. v. Amphastar Pharmaceuticals, Inc. (a case have interesting features discussed elsewhere), Chief Judge Randall Rader (at right) opines eloquently regarding the so-called "tragedy of the anti-commons" and the widespread but unsupported idea that patents inhibit innovation (Justice Breyer to the contrary):

The safe harbor provision at issue in this case, due to its origin and purpose in reversing Roche v. Bolar, receives attention as an exception that permits experimentation.  This link to experimentation and its role in advancing the progress of technology requires some commentary as well.  Too often patent law is misunderstood as impeding more than promoting innovation.  This academic proposition, called the tragedy of the Anti-commons in some scholarly presentations, suggests that exclusive rights impede the flow of information and limit experimentation that might lead to the next generation of technological advance.  Michael A. Heller & Rebecca S. Eisenberg, Can Patents Deter Innovation? The Anticommons in Biomedical Research, 280 SCIENCE 698 (1998).

In the first place, in an era of empirical research, one might ask the reason that this academic notion has never actually been verified.  Although studied, no research has substantiated this alleged attack on the patent system.  In fact, "the effects predicted by the anti-commons hypothesis are not borne out in the available data."  Timothy Caulfield, Human Gene Patents: Proof of Problems?, 84 Chi.-Kent L. Rev. 133, 137 (2009); see also American Association for the Advancement of Science, INTERNATIONAL INTELLECTUAL PROPERTY EXPERIENCES: A REPORT OF FOUR COUNTRIES 12 (2007) (finding the results of a 2006 survey of U.S. and Japanese researchers "offer very little evidence of an 'anticommons problem'" and that "IP-protected technologies remain relatively accessible to the broad scientific community").  Surveys of academic researchers have revealed that "only 1 percent . . . report having to delay a project, and none abandoned a project due to others' patents."  Wesley M. Cohen & John P. Walsh, Real Impediments to Academic Biomedical Re-search, in 8 INNOVATION POLICY AND THE ECONOMY 1, 10-11 (Adam B. Jaffe, Josh Lerner, & Scott Stern eds. 2008), available at http://www.nber.org/~marschke/mice/Papers/cohenwalsh.pdf (citing John P. Walsh et al., The View from the Bench: Patents, Material Transfers and Biomedical Research, 309 SCIENCE 2002 (2005)).  In other words, patents on research tools and biomedical innovations do not significantly slow the pace of research and do not deter researchers from pursuing promising projects.

The reason that patents have not been proven to impede more than stimulate technological advance is simple:  it does not happen.  It does not happen for several reasons.  First, experiments advancing technology rarely, if ever, generate commercial value.  Thus patent owners have little, if any, incentive to license or inhibit research.  Stated otherwise, even if a patent owner wanted to sue or license potential researchers, experiments do not produce income or a source of damages.  See id. at 12.

Second, in the modern age of technology, the character of technological advance has changed.  The era when the Bell Labs or some other tech center could hire the most promising engineers and essentially invent everything for the world has passed.  With the vast specialization of all fields of research, advances in technology require great cooperation.  A new product or a new direction in biotechnology or electronics will be produced by cooperation between a professor in Chengdu, China, a young programmer in Bangaluru, India, an engineer at a large corporation in Munich, Germany, a graduate student at Tokyo University, and a team at a small start-up company in Silicon Valley.  The patent system can help inform each of them of the other and bring together their incremental advances to achieve the next generation of progress in some tiny corner of human progress.

Thus, patents properly remain a tool for research and experimentation because the system encourages publication and sharing of research results.  Disclosure of how to make and use the invention is the "quid pro quo" of the patent grant.  See JEM Ag Supply, Inc. v. Pioneer Hi-Bred Int'l, Inc., 534 U.S. 124, 142 (2001).  In exchange for disclosure, the inventor receives a limited term of exclusivity to benefit from commercialization of his invention.  Without this promise of exclusivity, researchers at corporations would be forced to turn to secrecy as the best protection for their inventions.  Even academic researchers may delay publication of results in order to maintain an edge over the competition, Cohen & Walsh, supra at 14, and the race to the patent office helps counteract this tendency toward secrecy by rewarding earlier disclosure.  "The information in patents is added to the store of knowledge with the publication/issuance of the patent.  . . .  [It] is not insulated from analysis, study, and experimentation for the twenty years until patent expiration."  Classen, 659 F.3d at 1072.  Rather, information shared through patent applications is immediately available for others to build upon.  It speeds the progress of scientific endeavor.  In other words, the patent system's modern benefits facilitate experimentation far more than any hypothetical inhibition.

To reiterate:

"[I]n an era of empirical research, one might ask the reason that this academic notion has never actually been verified.  Although studied, no research has substantiated this alleged attack on the patent system."

"[P]atents on research tools and biomedical innovations do not significantly slow the pace of research and do not deter researchers from pursuing promising projects."

"The reason that patents have not been proven to impede more than stimulate technological advance is simple:  it does not happen."

"[I]nformation shared through patent applications is immediately available for others to build upon.  It speeds the progress of scientific endeavor."

"In other words, the patent system's modern benefits facilitate experimentation far more than any hypothetical inhibition."

(emphasis added).

The facts cannot be more clearly recited.  But "there are none so blind as those that cannot see," or perhaps even more so those who would rather not be confused by the facts.

Comments

[EG]

Kevin,

Very nice article. As you point, no evidence/proof that patents impede research. Why does that not surprise me?

[Keep It Real]

"patents inhibit innovation (Justice Breyer to the contrary)"

Nice strawman, Kevin.

Sheesh.

[Keep It Real]

"[I]nformation shared through patent applications is immediately available for others to build upon."

Not if the information itself is patented, or if the patents literally turn practitioners of the prior into infringers when they think about the disclosed information.

That's what Prometheus was about, Kevin.

Don't forget it.

[Kevin E. Noonan]

Now, Keep, regardless of the correctness of the Court's decision in Prometheus, there were many ways Justice Breyer could have supported the decision that the Prometheus claims were not patent-eligible (including your arguments). He did not: he put on his judicial Goldilocks garb and set out the analysis of finding just the "right" amount of patent eligibility. And he supported that analysis with the idea that patenting can harm innovation.

So I don't think Justice Breyer is a straw man, I think he is part of the problem that Judge Rader is describing. And I don't think it's a coincidence that Judge Rader illustrated his point with the same academic proponent - Professor Rebecca Eisenberg - that Justice Breyer cited in Mayo.

Thanks for the comment.

[6]

"unsupported idea that patents inhibit innovation"

Did you read about the Monsanto case over at PO? One billion dollar damages for researching, aka "innovation".

[6]

"Stated otherwise, even if a patent owner wanted to sue or license potential researchers, experiments do not produce income or a source of damages."

Hilarious. I guess this one billion wasn't "produced".

http://www.patentlyo.com/patent/2012/08/monsanto-wins-1b-verdict-on-roundup-ready-seed-patent.html

[Kevin E. Noonan]

Just wait, 6 - unlikely that this will stand.

But of course, this was commercial research, which will either be kept secret or used to support a patent. Not the same thing that Judge Rader was talking about, and not what the academics are talking about, either. (And for pharma, there is a safe harbor not applicable here.)

Remember, I asked scientists, not commercial competitors, for what would be precluded. After all, if Apple created and patented a smartphone and Samsung copied it, don't you think the copying would be an infringement even if they didn't sell any phones? Not to suggest any bias or information on the outcome of THAT case - I try to avoid opining when I am not familiar with the subject matter.

But I will read the case and get back to you. Keep in mind, the Myriad case proves you can sometimes get a district court to agree with any argument, however ill-conceived. But again, not prejudging here.

[6]

"But of course, this was commercial research,"

So, only "commercial research", aka the only kind anyone gives two shts about, is what is subject to patents and thus has (or will have shortly) a tragical anti-commons.

Very convincing Kev. Or ... not. Yeah, probably not. You're right about one thing though, this type of sht will probably be going down here shortly. But I would wager that the decision cited, unless some technicality unrelated to this being a case about "research" pops up, will stand.

"After all, if Apple created and patented a smartphone and Samsung copied it, don't you think the copying would be an infringement even if they didn't sell any phones? "

Does my personal feelings on whether or not this is an infringement somehow alter whether or not patent laws that discourage such "copying" are in fact creating an anti-commons? No. It does not. Just as your personal feelings do not alter such either.

A broad research amendment to the infringement statute is needed if the courts are going to start to widely consider research to be infringement and toss around billions.

"I asked scientists, "

Wow. I'm excite.

The bottom line here is that you, personally, do not think that research, whether commercial or non-commercial is discouraged by patents. And you go on and on at length about such. But let's be clear, regardless of your personal feelings what happens in the courts is what matters.

The fact is, patent maximalism, shall we say, is a very real phenomena and has very real effects. We see them in Prom, and we see them in the 1 billion dollar monsanto case. And without substantial protections against such, those effects can get really negative really fast.

In any event, a funny thread.

[Keep It Real]

Kevin: "there were many ways Justice Breyer could have supported the decision that the Prometheus claims were not patent-eligible (including your arguments). He did not"

On the contrary. He was plain as paint that the claims were not eligible because you could not turn ineligible subject matter (i.e., a method of thinking about a newly discovered fact) into eligible subject matter merely by reciting an old, conventional step prior to the thinking step. Do you need a pin cite? Gosh, I hope not.

"he put on his judicial Goldilocks garb and set out the analysis of finding just the "right" amount of patent eligibility. And he supported that analysis with the idea that patenting can harm innovation."

Actually, Justice Breyer defended the result in the case by noting that if we grant patents which literally turn skilled artisans into infringers when they THINK about, e.g., a correlation, we are hindering the ability of those people to innovate.

It's mystifying why anyone would wish to turn a simple, unanimous Supreme Court case into something terrifically complicated. It wasn't complicated. It was never complicated. The claims at issue in Prometheus were going to go down one way or the other for a very simple reason.

And they did. This is was predicted, Kevin. It was explained to you. It's not complicated. Pretending it's complicated will not reverse the result. Nothing will reverse the result because everybody who isn't invested in claims that protect facts and thoughts understands that you can't protect facts and thoughts merely by appending old steps to claim reciting facts and thoughts.

That's all that Prometheus was about. I'm sorry if you find the unanimous Court's discussion about patenting facts (e.g., "mutation X means disease Y") upsetting for some reason. You're a member of a very very very tiny minority of misinformed people if you continue to believe that Prometheus was wrongly decided or predicated on incorrect assumptions about the effects of patents on alleged facts or methods of thinking about those facts.

[Keep It Real]

6: "patent maximalism, shall we say, is a very real phenomena and has very real effects. We see them in Prom"

Indeed. Prometheus' lawsuit was based, in part, on the fact that Mayo's doctors (1) knew about a patent-ineligible correlation and (2) thought about the correlation while looking at metabolite levels obtained by an old, unpatented (indeed, unpatentable) method.

You understand Kevin? Mayo Clinic was taken to court and had to defend their doctors who dared to think about a patent-ineligible fact while looking at data obtained by an old non-patented method.

Such lawsuits are not innovation-neutral. And they certainly don't promote progress. They do promote the filing of patent applications, however, and the assertion of those patents unless the granting of those patents is stopped. And it's really this latter sort of promotion which concerns those who whine loudest about cases such as Prometheus.

[Mike]

I'm scratching my head after reading this post. The conclusion seems to be indirect contradiction of how most academic research works. Patents and rights clearance is a VERY important consideration for most every researcher. This is particularly true when you look at spaces like biotechnology research. If you don't think researchers alter their research on the account of patents, you're showing your lack of academic experience. Major research universities staff people whose sole responsibility can involve acquiring the appropriate research rights.

License agreements, materials acquisition agreements, research agreements, etc. are common. The inability to acquire the necessary rights has thwarted many a researcher. Perhaps more accurately, the inability to acquire the rights in an economical manner to enable research has thwarted many a researcher.

What's more, those rights acquisition agreement usually involve onerous ownership clauses that make such research even less likely. And forget about it if the research is actually commercially sponsored.

Patent rights certainly do stop some areas of research or move them to other locations.

The claims of this article that patents do not harm research are the extraordinary claims that require extraordinary evidence.

[Kevin E. Noonan]

Mike:

Do tell. The evidence for the lack of patents interfering with basic research can be found in Judge Rader's opinion, in almost all academic research on whether there is an effect or not, and on the >8,000 or so basic research papers on the BRCA genes post-patenting, keeping in mind that everyone knows Myriad is extremely aggressive in protecting its patent rights.

Where the disconnect comes is in your comment - Judge Rader didn't say IP was unimportant he said there is no evidence that patents impede basic research. Material transfer agreements, licenses from commercial vendors and collaborators, etc. are different (and are not patents). Moreover, the rhetoric, from Justice Breyer on down is that basic research is impacted. This does not apply to commercial development, nor should it - if you intend to benefit commercially you should respect others' IP (including patents).

So the message from the Chief Judge is: find another basis for opposing patents. But I would like some examples of where an academic scientist, looking at a basic biological question, was impeded by a patent that did not involve a commercially available reagent or other research tool.

Thanks for the comment.

[Gary Johnston]

Kevin: Who opposes patents? Breyer? I am very much interested in reading the article or opinion where Breyer says that he opposes patents, so if you wouldn't mind, I would appreciate a cite.

[Kevin E. Noonan]

Now, Gary -the quote is:

"the widespread but unsupported idea that patents inhibit innovation (Justice Breyer to the contrary)."

Which does not say Breyer opposes patents per se. If you want support for the quote, read Mayo.

[Gary Johnston]

Kevin:

OK, thanks for clarifying. For a second there, it seemed like you were suggesting that someone opposes patents if he believes that the discovery of an optimum range of drug metabolites in the blood of a person that has taken the drug is not eligible for a patent. Glad that's been cleared up.

You and I are in agreement on the patent-eligibility of the composition claims in Myriad. But I do think there may be something to the opposing view. One of the things that bugs me a little bit is that a given genome is finite. It's going to be the same (basically) for the life of the organism. So whether a given genome includes 100 genes or 10,000 genes, there is a maximum amount of genes, no? Does it strike you as at least somewhat curious that we grant patents for isolated DNAs at all if you could theoretically get to the point where the entire genome of an organism has been characterized such that no patents could be obtained anymore anyway due to prior art? I understand it's hard work to sequence and characterize a genome, but I work pretty hard and I'm not a named inventor on any patents.

[Kevin E. Noonan]

Dear Gary:

I think we have a self-limiting problem with gene patents, because (at least for humans) the actual gene sequences have been publicly disclosed since about 2000, the same time frame for filing most gene patents (except for the ones filed earlier). So human gene patents will be expired by about 2020.

The real question will be whether patents on genes for plants, etc. are permitted, because those efforts are on-going.

As for the "patent it until its all gone" question, I suspect that there are a finite number of chemical compounds in petroleum, but there is much less angst over the idea that you could patent an isolated, previously undiscovered molecule from crude oil with beneficial properties (such as a lubricant).

But it comes down to the Chief Judge Rader's point: if there is some impediment to basic research imposed by patents it has not been demonstrated. On balance, patents on genes have benefited not only the public but science. After all, it is (was) possible to publish a paper showing a new gene without knowing its function; the PTO's interpretation of Sec. 101 forced applicants to disclose at least one specific, substantial and credible utility (function) of the gene product, which is tougher to do.

And, for the record, the Supreme Court's decision in Mayo doesn't bother me - I can see how the Court came to the conclusion that those claims were closer to Flook than Diehr (I don't agree, but I can see the logic). What I don't like is all the unnecessary dicta, but that comes with the territory, I guess.

Thanks for the comment.