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Patents Kill

So where do they go?

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Patents on medicine kill, says Christian Engström. Rick Falkvinge agrees. Rick's been authoring a three part series on patents, where they come from, and where they ought to go.

The last part of Rick's series deals with where you send patents off to - and what if anything you put in their place. And in the process he reveals some very nasty facts about the pharmceutical industry.

If patents are one of the last vestiges of the hostile commercial and development environment, then what does one put in their place?

The simplest answer is if someone is hitting you over the head with a hammer and you ask them to stop, you'd be a bit irritated if they asked you 'what do you want me to hit you with instead?'

The patent system is disastrous for industry, for the climate, for innovation, and for mankind. And the only thing that supports this is a balance of terror which forces new startups to create a patent portfolio because they're going to be sued by someone else with patents otherwise. Many major software companies - Google being a good example - get their patents expressly for this purpose. The proper solution isn't to modify something - it's to disarm the threat of terror against innovation that the patent system represents.

Patents are a mechanism that's replaced unbridled innovation with a fear for legal consequences if one happens to invent something. A patent lawsuit is today a reality as soon as one begins to get financing as an entrepreneur, whether the lawsuit is legitimate or not. And the only reason the system remains is that there are patent lawyers who are allowed to have opinions on how it's to work. One doesn't have to be a conspiracy theorist to understand that this leads to an improvement in the status quo for patent lawyers. Politicians are also generally oblivious to the situation. It's quite common with today's politicians to measure the strength of innovation by the number of patents, when a patent is actually an injunction against invention.

The patent system can be eliminated already tomorrow in all industries save one. One can't modify a system that's fundamentally wrong. If someone is hitting you on the head with a hammer, it's not OK to modify the situation a little bit so they hit you on the head with a spanner instead. Patents slow down innovation, hurt the economy and the climate, and kill people. The only industry that needs special consideration is pharma, the only industry that wins with the patent system.

The reason pharma wins with the patent system is that the industry is publicly financed to such an extent that it's we taxpayers who lose. 83% of the pharma revenues in Europe come from the public sector. In Sweden it's 74%. But pharma put only 15% of their revenues into research.

70% or over two thirds of the medicines manufactured are only manufactured to circumvent other patents and thus do not contribute anything new - this according to the FDA in the US. Two thirds of the medicines available would not exist without the patent system because they offer nothing new and represent only wasted and very expensive research that's needed to sidestep the old monopoly system. It's the same medical results in a new packaging.

Altogether pharma allocates about 5% of their revenues to research. They add 30% to actually manufacture the medicines. If we then compare a figure of 35%, the cost of research and manufacturing, with the 83% that pharma get in European tax money, we see that there is an enormous waste. In economics this is called a deadweight loss.

Research is effective because it is competitive. Research in a planned economy is unbelievably ineffective, as we know from experience. But at the same time there are few things as competitive as the open research at Sweden's universities.

By moving government subsidies from pharma (who only waste the money) to the competitive open research of medicine production and then putting the manufacture into open entrepreneurship, we can reduce the taxpayers' costs by nearly half, we can get cheaper medicines (70% cheaper according to the social foundation) and we can have a patent-free manufacturing that makes a sizeable profit and have a lot more money available for research (many times what we have today).

It sounds like magic but it can really be that simple. The losers are those who've wasted taxpayer money in the pharma industry in what they refer to as 'marketing' but which often is a thinly disguised system of bribery. The Pirate Party are not the first to make this observation: this has also been suggested by the Centre for Economic and Policy Research.

So that's pharma. What about culture? Indeed, the fight over the patent system is also intimately connected with the fight over copyright. Already today there are patent applications for proposals for movies and screenplay outlines - and these have received preliminary approval from patent offices! Patents such as these would forbid people from making movies about the same types of things, no matter they've seen the patent holder's movie or not. If we reduce copyright but do not at the same time tackle the patent system, then patents on culture would soon take over the current role of copyright - but on steroids.

Otherwise there are many ways to stimulate innovation, if that's what one wants the public sector to do. An X-Prize of $10 million was awarded to the first company able to send up the same manned rocket into space twice in a two week period. A lot more than those $10 million were invested by many companies involved.

In conclusion: we in the Pirate Party want to gradually eliminate the patent system and replace it with open research for the pharma industry, and have no monopoly at all for all other industries. This series has shown why. This is something we can begin with in Sweden, but to be effective it must be also accomplished on European level. And there we can get the help of our European sister parties.

This is also one of Christian Engström's major issues, and he's written a lot about it on his blog.

Ars Technica: Study: free markets superior to patent monopolies
Centre for Economic and Policy Research: The Reform of Intellectual Property
Swedish Pirate Party: Financing Drug Research: What Are the Issues?
PRWeb: First Patent Application on Fictional Storyline; Inventor Asserts Provisional Rights Against Hollywood
Slashdot: USPTO Issue Provisional Storyline Patent
European Federation of Pharmaceutical Industries and Associations: The Industry in Figures 2006
Wikipedia: Ansari X Prize
Christian Engström: Patents on Medicine Kill (Swedish)

See Also
Red Hat Diaries: Orwell Didn't Know Shit
Rick Falkvinge: On Patents (2/3) (Swedish)
Rick Falkvinge: On Patents (3/3) (Swedish)
Information Feudalism: Who Owns the Knowledge Economy?
IIPA: Sweden: 2009 Special 301 Report On Copyright Protection And Enforcement (PDF)
Médecins Sans Frontières: No agreement reached in talks on access to cheap drugs
Médecins Sans Frontières: World Trade Organisation wrestles with access to cheap drugs solution
Médecins Sans Frontières: Donate to Médecins Sans Frontières
Slashdot: Doctors Fight Patent on Medical Knowledge
Prometheus Labs
Wikileaks: Yahoo 'Spy Guide' (compliance guide for law enforcement) 23 December 2009
TorrentFreak: Record Labels Face $60 Billion Damages for Pirating Artists
Michael Geist: Canadian Recording Industry Faces $60 Billion Copyright Infringement Lawsuit
SVT: Swedish Minister to US to Discuss ACTA but Won't Bother Reading It
My $62.47 Royalty Statement: How Major Labels Cook the Books with Digital Downloads
Too Much Joy: My Hilarious Warner Bros Royalty Statement
The Problem With Music by Steve Albini
Wikipedia: Steve Albini

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