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 Category: All > Prescription DrugsPatents Must Be ProtectedFebruary 7, 2008
Congress is currently considering legislation that would alter the way patents have been awarded in America for centuries. But with America at the top of the global heap when it comes to innovation in science and technology, why mess with success? In fact, the recent explosion of American economic and technological progress is in large part due to the old institution of patent protection, which was enshrined by America’s Founding Fathers in the Constitution in order to reward ingenuity and entrepreneurship. It’s therefore puzzling that Congress is looking to tear down the institution most responsible for that success. The Founding Fathers gave Congress the power “to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” With that power, known today as patent protection, came the authority to protect intellectual property and inventors’ rights to profit from their discoveries. Ever since President Washington signed the first U.S. patent in 1790, this critical provision in the Constitution and the solemn respect with which the U.S. government treats intellectual property have contributed more than any other factors to American economic and technological leadership. Inventors have invested time and money in these creations knowing that they would have an exclusive period to license them and recoup their investments. Even the Internet, which began as a government tool, has become what it is today because of private innovation and the profit motive. Patents have enabled companies to create thousands of new drugs — from the antibiotic Cipro to the anti-cancer drug Rituxan. In the 1930s, after rediscovering Alexander Fleming’s work on penicillin, scientists faced the seemingly impossible task of mass-producing the world’s first miracle drug. They turned to Pfizer, which applied for a patent and invested millions of dollars devising fermentation technologies to produce penicillin. The company dedicated its resources to finding a method for manufacturing the drug in large quantities, hoping to see a sizable return on its investment. It succeeded and became the world’s largest distributor of penicillin. The drug — and Pfizer’s investment — saved countless lives during World War II. Some scoff at the profit motive and its role in medical advances. Why should patent-holders make money when their inventions save lives? Indeed, some great inventors heroically refused to apply for patents or profit from their inventions. But their work would never have been possible if not for technologies developed by other inventors, who may have depended on inventions for their livelihood. That’s why patents exist — to uphold the maxim that a laborer is entitled to his wage. It guarantees that future inventions will continue as long as there are creative minds and enough money to help them bring their ideas to fruition. Rather than destroying the patent system that has brought so much prosperity and progress to our lives, Congress ought to pay heed to the wisdom of the Founding Fathers and keep the current system in place. Grace-Marie Turner is president of the Galen Institute, a research organization based in Alexandria, Va. CommentsAdd Comment |
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anonymous at 04/02/2008 11:25:27
A gross example of this objective: Sen. Jeff Sessions (R-Ala.) has sponsored an unusual amendment if the reform bill at the urging of the nation's banks granting them immunity against an active patent lawsuit, potentially saving them billions of dollars. Adopted with little fanfare, the amendment would prevent a small Texas company called DataTreasury from collecting damages from banks for infringing on its patented method for digitally scanning, sending and archiving checks. The provision introduced by Sessions did not name DataTreasury but was carefully tailored to apply to that company and its "check collection" system. The patents were upheld last summer by the U.S. Patent and Trademark Office after they were thoroughly challenged.
Justification of the Sessions Amendment seems to be that the Check 21 Act forced the banks to adopt new check processing procedures with the innocent banks (who were merely complying with government regulation) thereby finding themselves opportunistically and indiscriminately sued for infringement by a“patent troll.” This view, however, fails to recognize that the (Data Treasury) patents in question were filed years before the Check 21 Act, that DataTreasury in 1999 offered to license its technology to the banking industry but was rebuffed, that thus far the key Data Treasury patents have withstood the best legal challenges the banks could buy, and that some of the more responsible banks have admitted the validity of the patents by licensing them. And every entity that has been sued almost surely had opportunity to negotiate a license before being sued.
But two added facts make the bank's legislative duplicity even more reprehensible.
The first is simply that nothing in the Check 21 Act requires banks infringe the Data Treasury patents.
The second is that Check 21 made it possible for the banks to dramatically reduce check clearance costs, relative to then current processes. ( $2.75 per cleared paper check as opposed to two to three cents per check using Data Treasury's Technology). Check 21 was opportunity, not burden!!
The Data Treasury Technology is a roadmap to pocketing these savings. Banks remain free to process checks the old way or themselves invent a non-infringing new way or license use of the Data Treasury roadmap for a modest portion of the savings it offers. But some banks are just plain greedy. They expect to use the Data Treasury road map, realize huge savings, and pay Data Treasury nothing. A number of financial institutions considered themselves above the patent law that applies to the rest of us and now, after 5 years of infringing and ongoing litigation, are on the cusp of facing huge damage awards for willful infringement. Any idea that the Sessions Amendment is justified as "relief" is simply preposterous. It is no more or less than the financial lobby buying a "Get out of Jail Free" card from congress.
Although the amendment would not invalidate DataTreasury's patents, it would spare the banks from paying for infringing them should courts decide that's warranted. It seems that Sessions is ready to, once again, throw the American taxpayer under the bus. This time to the tune of a multi-billion dollar back door bail out for the banking industry. The federal government would have to pay over $1 billion + (albeit grossly undervalued) to DataTreasury over 10 years as compensation for taking its property under the amendment, according to estimates by the Congressional Budget Office. Hence, let us not forget the "poor victims," (banking industry) who have realized almost
$300 Billion in profit during the period they have utilized this valuable technology. And all of this on the heels of the sub prime loan mess!! Apparently the financial industry feels that there is no downside to their risky business practices. As long as they continue to contribute generously to the right politicians the taxpayers will continue to bear the burden of their mistakes while they reap the fruit of their exuberant gains. Who would invest in developing a new technology if the big corps can steal it and then buy off Congress to pass a law giving them immunity from liability? Those that wish to see a clear and crass example of who gets bought in Congress and how, might read the amendment in contrast to the act and then examine who gives how much to Sessions. Political action committees of financial institutions were the largest single category of industry donors to Sessions, with $104,000 in the current election cycle.
This is the industry that Sessions champions:
The “innocent banks” and their ilk:
From: Chief Executive (U.S.)5/1/2001 Author: PRINCE, C.J
It's not every CEO who freely admits to swiping other people's ideas--although, truth be told, the vast majority of successful chief executives have probably taken the liberty. But ask Richard Kovacevich, CEO OF WELLS FARGO, whether he prefers inventing ideas or stealing them and he's quick with his response. "Oh, I'd much rather steal an idea," the 57-year-old CEO says matter-of-factly. "Quite frankly, it's much easier mentally. I have no pride about that."
The Commerce Department has objected to the amendment, including in a letter last week to Sen. Patrick J. Leahy (D-Vt.), the Judiciary Committee chairman. "Limiting patent holders' rights and remedies in this instance could reduce innovation in this technology area," wrote Assistant Secretary Nathaniel F. Wienecke. "The Administration does not support exceptions to patent protection based on a particular technology."
Overall, this bill is a great disservice to the small technology companies and independent inventors that drive American innovation. Reforms are needed. But this Bill, with or without Sessions, should go back to committee in a Congress with a "Purer Heart."
Respectfully,
Paul Principato