Can We Get Rid Of The Myth That More Patents Means More Innovation?

from the pretty-please dept

I've talked repeatedly about some of the problems with the current patent reform efforts underway in Congress, but it amazes me when I read some of the arguments made against the bill. The latest comes from Steve Tobak at News.com, who argues that patent reform will harm US innovation. It's a position that others have taken, but you need to be able to back it up. Tobak's entire argument seems to be that since this new law would make it more difficult to get a patent, it would be harder to innovate. The problem with this argument is that it simply equates patents to innovation, which has never been true. In fact, if you look at the research you quickly realize that actual innovation is totally disconnected from patents. That's because the important part of innovation (unlike Tobak's claims) have little to do with invention and much to do with the process of making any technology more useful for the market. Patents don't help with that. In fact, patents quite often can often do a lot more damage by slowing the pace of innovation -- limiting the ability for companies to improve upon a technology or even a business model concept. Tobak's article is based on a faulty premise. I agree that the patent reform act has many problems, but the reasoning that fewer patents would mean less innovation is not supported by the research about the impact on patents.


Reader Comments (rss)

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  1.  
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    Hellsvilla, Mar 7th, 2008 @ 12:13pm

    We will see this in China

    The US will not adapt, and China will steamroll us.

    Why? Because they won't be hindering their innovation with patents.

    While we litigate, they will destroy us.

     

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  2.  
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    Ima Fish, Mar 7th, 2008 @ 12:18pm

    "The latest comes from Steve Tobak at News.com, who argues that patent reform will harm US innovation."

    Maybe "innovation" now means "the status quo"?

    If we ever got rid of our liberal patent system all of those slow moving giants would quickly die if they had to compete with fast moving upstarts without resorting to lawsuits.

     

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  3.  
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    Steve R. (profile), Mar 7th, 2008 @ 1:34pm

    It's a Perception Problem

    Some people are color blind, so they can't perceive colors. Some people are economically challenged, like the color blind person they can not perceive certain economic (colors) principles. Specifically, that people can innovate and invent without the necessity of patents. Historically, most of our progress in the arts and science has occurred in the absence of patents since the concept of patent only recently metamorphosed into its parasitic adult stage.

    Getting rid of the myth that patents lead to innovation will be akin to teaching a color blind person to "see" color. A highly unlikely scenario. (Now my obligatory politically correct apology if I accidentally offended a person who is color blind. And yes there are varying degrees of color blindness.)

     

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  4.  
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    MATT, Mar 7th, 2008 @ 1:34pm

    liberal?

    Liberal? Come on dude, the patent system is just horrible. Both Dems and Republicans are to blame for that. Trying to say its a partisan issue is just trying to get people to focus on something else other than the real issue at hand (aka you're trolling).

     

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  5.  
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    Not Bob, Mar 7th, 2008 @ 4:34pm

    Re: liberal?

    Sorry Matt. I think you made the connection to political parties, not Mike. I'm pretty sure he meant "liberal" in the sense of easily applied to an overly broad range of instances and frequently in an inappropriate manner. If that sounds like Democrat to you, that may be something to think about.

    NB

     

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  6.  
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    PAul Principato, Mar 7th, 2008 @ 5:02pm

    Patent Reform Boondoggle

    S-1145 Patent Reform Bill 2007/Boondoggle

    The "REAL" meaning of special interests:
    After an exhausting 6 months, all eyes cautiously look towards March, where
    the next installment of "Who Wants to Reform the Patent System?" is being
    prepared in the Congress. As a small inventor I might concur that our
    patent system is in need of some reform, but I am very concerned that the
    bill in its present form picks winners and losers among industries with
    different business models in a way that has never before been attempted in
    patent law or practice.



    A gross example of this objective: Sen. Jeff Sessions (R-Ala.) has
    sponsored an unusual provision 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 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. If DataTreasury collected a royalty of just a couple pennies per
    check, the cost would run into billions of dollars. It seems that Sessions
    and his Ilk are ready to, once again, throw the American taxpayer under the
    bus. This time to the tune of a billion dollar and more back door bail out
    for the banking industry. The federal government would have to pay $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 and Schumer. Political action committees of financial
    institutions were the largest single category of industry donors to
    Sessions, with $104,000 in the current election cycle.

    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."



    As a side note: Bank of America is the only bank among the big four to list
    Datatreasury as a potential, pending litigation liability on their SEC 10-K
    filings. It has done this systematically since the suit was initiated in
    2005. In the filings Datatreasury is said to be suing for an undisclosed
    sum of money. It does not however make mention of any reserve funds set
    aside for the possible outcome. Apparently Citigroup, Wells Fargo and
    Wachovia do not feel their shareholders should be privy to same information.

    P.Principato

     

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  7.  
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    ntlgnce, Mar 8th, 2008 @ 1:07am

    Your wrong Patents do force innovation.

    If someone patents say the flip phone, Other companies are not going to want to pay to make the same kind of phone, especially a competitor. They are going to invent cheaper versions like the slide phone.

     

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  8.  
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    Anonymous Coward, Mar 8th, 2008 @ 7:24am

    Re: Your wrong Patents do force innovation.

    Hypothetical scenarios don't count as evidence.


    You'll need empirical evidences to prove your point.

    Otherwise, as it stand, there are no to very little evidence that patents' incentive work.

    Rather the opposite is true. The free market works better.

     

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  9.  
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    MLS, Mar 8th, 2008 @ 9:10am

    Creating a Myth

    The above summary of Mr. Tobak's article in and of itself perpetuates a myth, i.e., that the author correlates patents and innovation. At no point in the article does the author even suggest this is an opinion he personally holds. He says nothing about the proposed legislation making it harder to secure a patent. What he does opine is his view that a weakening of the ability to enforce a patent does not bode well for US industry vis a vis foreign competition.

     

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  10.  
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    Robert Fuller, Mar 8th, 2008 @ 12:24pm

    You want to pay $15 billion? I don't....

    With the current patent reform act, taxpayers (us) WILL PAY more than $1B that the banks SHOULD pay. Many experts expect taxpayers will pay closer to $20B to DataTreasury according to actual figures. Thanks to Senator Session's amendment this is our fate. See the excerpt below from the official CBO Gov't document:

    "CBO anticipates that enactment of section 14 {Session's amendment} would result in litigation against the federal government seeking compensation for a taking of private property {from DataTreasury}. Further, certain patent holders who believe their patents would be infringed have indicated that, if section 14 is enacted, they would immediately file suit against the federal government. CBO generally has insufficient information to assess the likelihood or outcome of litigation against the federal government. In this case, the likelihood of litigation alleging a taking of private property is very high; based on Supreme Court precedents, there is a high likelihood that the federal government will have to pay damages; and there is a strong basis for estimating those damages. Hence, we estimate that the expected value of the federal government’s liability under section 14 would total about $1 billion, representing a royalty of 0.5 cents per check on more than 200 billion checks cleared by financial institutions that would be authorized to infringe on the rights of patent holders under the bill. Depending on the outcome of the likely litigation against the government, the cost could be substantially more.

    From my research, DataTreasury has valid patents and have licensed them (http://www.datatreasury.com/news.asp) to JP Morgan, Merrill Lynch, etc., so why not allow the banks to fight it out with DataTreasury and let THEM pay if they lose...not us SENATOR SESSIONS!

     

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  11.  
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    Mike (profile), Mar 8th, 2008 @ 12:34pm

    Re: Creating a Myth

    The above summary of Mr. Tobak's article in and of itself perpetuates a myth, i.e., that the author correlates patents and innovation. At no point in the article does the author even suggest this is an opinion he personally holds. He says nothing about the proposed legislation making it harder to secure a patent. What he does opine is his view that a weakening of the ability to enforce a patent does not bode well for US industry vis a vis foreign competition.

    It's the equivalent. The idea is that the patent itself represents the innovation. If Tobak knew anything about history, he'd find the opposite to be true. Even the US was able to innovate faster when it ignored patents. The root of the problem is associating patents and innovation as if they're one and the same.

     

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  12.  
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    MLS, Mar 8th, 2008 @ 4:51pm

    Re: Re: Creating a Myth

    (Perhaps someone can tell me how to reproduce quotes here without having to copy and paste)

    "It's the equivalent. The idea is that the patent itself represents the innovation. If Tobak knew anything about history, he'd find the opposite to be true. Even the US was able to innovate faster when it ignored patents. The root of the problem is associating patents and innovation as if they're one and the same."

    There are some who quite erroneously opine that the number of patents that exist are a yardstick by which innovation can in part be measured. I am certainly not one of them, and apparently neither is Mr. Tobak judging from what he states in his article. In this regard he and I agree with you that to use patents as a metric for "measuring" innovation is sheer folly.

     

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  13.  
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    angry dude, Mar 8th, 2008 @ 5:42pm

    Re: It's a Perception Problem

    And some people are plain idiots, like you, dude

    Destroy your computer, stop taking your medicine for slowing down mental retardation process, take off your pants and go live in woods
    Otherwise just shut the fuck up
    You just don't know what you are talking about

     

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  14.  
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    Anonymous Coward, Mar 8th, 2008 @ 8:53pm

    Your wrong again Mike

    "Patents don't help with that."

    Yes they do....Perfect Example: if a company is trying to get funding to help execute a plan in bringing an innovation to the market, and if they don't have a patent for their innovation, it's a lot hard to get the funding from VC's (not impossible, just harder). Thus, not having a patent can hinder innovations from reaching the market in these cases.

    So, to answer your question - "No" we can't get rid of it because it's not a myth as proved above.

    Also, Mike, you previously complimented on how good a job Garmin did to TomTom - causing Tom Tom to pay over twice of what they wanted to pay for the maps. Thus, Tom Tom ends up wasting a bunch of money that could have otherwise been used to innovate.

    This waste of money is usually your top argument for why all the patent litigation is hindering innovation, because that money could have been spent innovating.

    But, because the garmin/tomtom deal didn't involve patent litigation, the same harm it will cause to tomtom's ability to innovate somehow gets your full approval - how's that?

    Mike, Double standards...double standards ;)

     

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  15.  
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    Willton, Mar 9th, 2008 @ 11:49am

    Re: Your wrong again Mike

    Indeed. It's almost as if Mike thinks "patent" is a dirty word.

     

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  16.  
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    Mike (profile), Mar 9th, 2008 @ 2:21pm

    Re: Your wrong again Mike

    Yes they do....Perfect Example: if a company is trying to get funding to help execute a plan in bringing an innovation to the market, and if they don't have a patent for their innovation, it's a lot hard to get the funding from VC's (not impossible, just harder). Thus, not having a patent can hinder innovations from reaching the market in these cases.

    I could just as easily say that, you know, if I was granted a gov't monopoly on producing cars, it would be a lot easier to get me funded. That's true, but it doesn't mean innovation would increase. In fact, most everyone would agree that it decreases.

    Competition drives innovation, not monopolies.

    Also, Mike, you previously complimented on how good a job Garmin did to TomTom - causing Tom Tom to pay over twice of what they wanted to pay for the maps. Thus, Tom Tom ends up wasting a bunch of money that could have otherwise been used to innovate.

    Well, first of all, my comments on Garmin/TomTom were a joke. I said it because it was amusing... But second of all, the money being spent is actually going towards efforts that build and innovate, not towards an empty blackhole or lawsuits... quite different.

     

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  17.  
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    Mike (profile), Mar 9th, 2008 @ 2:22pm

    Re: Re: Your wrong again Mike

    Indeed. It's almost as if Mike thinks "patent" is a dirty word.

    You think gov't granted monopolies are a good thing? I'm not against patents, per se, if someone could just show me the market failure that requires one.

     

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  18.  
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    MLS, Mar 9th, 2008 @ 4:08pm

    Re: Re: Your wrong again Mike

    "Competition drives innovation, not monopolies."

    You insist on using the word "monopoly" as if it has some talismanic quality that makes your positions unassailable. As noted before, I have never seen (and am certain I will never see) a patent so generic and broad in scope that it will stifle innovation in any specific area of technology.

    For example, back around 1948 Bell Labs secured patents on transistors. I most certainly did not see innovation in new transistor structures and methods for making such structures, as well as in electronic systems employing transistors, grind to a halt.

    I note your bio indicates that in a former life you worked in marketing at Intel, a company well known for using patents to protect its inventions. If Intel indeed had a "monopoly" as you seem to believe patents confer, they why in the world did Intel even need a marketing group? Might the answer in part be because those patents did not preclude innovation by companies such as AMD?

    I will of course grant that there are many companies employing business models that do not depend upon patents to achieve their financial goals. However, there are many businesses that depend upon them because that is the nature of the business environment within which they operate. They are in business to make money, and that is a bit difficult to do if their latest and greatest "widget" is susceptible to immediate copying.

    Broad generalizations do little to encourage intelligent and accururate discourse. Provide a specific factual situation that you believe supports your position and perhaps a meaningful discussion can take place. Until that happens articles such as this seem more in the nature of rants than an informed presentation.

     

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  19.  
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    Anonymous Coward, Mar 9th, 2008 @ 4:48pm

    "the money being spent is actually going towards efforts that build and innovate"

    Says who?

     

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  20.  
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    murf, Mar 9th, 2008 @ 7:15pm

    Re: Re: It's a Perception Problem

    LOL!

    How about this, we take the 2 kids he and his wife 'invented', into prevent any enjoyment and reward he gets from his 'inventions' (because they are his until they are 18, we keep the originals.

    We then make boy clones for a personal army and use them to rob all of the money from anyone we want. All the girl inventions get turned into love slaves and become thier Pimp so we can collect a portion from the labor they put out. After they turn 18 we turn them over to the public to use as they may.

    Why not? He thinks it is ok to do it to my inventions....the freakn' dope...why can't we do this?

     

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  21.  
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    Anonymous Coward, Mar 9th, 2008 @ 8:39pm

    Re: Re: Re: Your wrong again Mike

    You think gov't granted monopolies are a good thing?

    I do when they encourage inventors to invest the proper amount of resources into the development of an invention. I also think patents are a good thing when they encourage inventors to disclose their inventions to the public at the earliest possible moment.

    I'm not against patents, per se, if someone could just show me the market failure that requires one.

    The pharmaceutical industry is a big one, as well as the world of prosthetics, surgical tools, electric power generation and storage (batteries), and any other industry that requires a tremendous amount of resources to fund the research and conception of the invention, as well as its eventual reduction to practice.

     

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  22.  
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    Willton, Mar 9th, 2008 @ 8:42pm

    Sorry, forgot to tag my own writing.

    That's me replying to Mike at Post 21.

     

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  23.  
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    Anonymous Coward, Mar 9th, 2008 @ 9:03pm

    "That's true, but it doesn't mean innovation would increase"

    Two identical worlds - one with 5 innovations with patents for them and the other world with the same 5 innovations, but no patents for them.

    Ah...if you agree that not having a patent *can* (but not always) hinder getting funding, then simple math proves it can only *increase* innovation because the world with the patents and funding would have a better chance of making it to the market then the world without funding.

     

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  24.  
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    Anonymous Coward, Mar 9th, 2008 @ 9:21pm

    "Well, first of all, my comments on Garmin/TomTom were a joke"

    (re: your post at http://www.techdirt.com/articles/20071116/105507.shtml)

    A joke? Your comments of "Sometimes you just need to stand back and applaud a strategy that works so well.", and "Well played, Garmin. Well played, indeed." don't really sound like fake/joking comments.

    So, if those comments were meant to be a joke, then how many of all your other posts are also jokes - because the difference appears to be indistiguishable?

    Oh, nice try to back-step out of your conflicting opinion ;)

     

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  25.  
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    strangeratrandom, Mar 10th, 2008 @ 8:08am

    No Because its not a myth..

    Look at the Flip phone, If there were no patent on the flip phone, all the phones would flip, and not slide or fold. It does, and just because you think its not so, does not make it not so.. Think about it, Everything we have a bunch of, is probably because someone patented the original, and who wants to pay someone just for there idea when Ideas are plenty? NOBODY, thats why they decide to make there own kind of product.

    I hope this is clear enough for you..
    Thanks and I hope you use your newly found time to write better stories...

     

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  26.  
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    plh (profile), Mar 10th, 2008 @ 10:20am

    "I have never seen (and am certain I will never see) a patent so generic and broad in scope that it will stifle innovation in any specific area of technology."

    Dear Santa,

    I have been a good boy this year and I like books. But please NO books about patents or industrial history - especially not about steam engines or radio or powered flight.

    Ta,
    MLS

    ;-)

    "I most certainly did not see innovation in new transistor structures and methods for making such structures, as well as in electronic systems employing transistors, grind to a halt."

    That's a variation on the Campbell-Kelly/Merges/Mann straw man argument (about patent thickets rather than individual patents not having *completely* stifled software innovation).

    Doc: How are you feeling plh?

    plh: Never better thanks, Doc.

    Doc: Hmm... Okay - I'm going to prescribe you this powerful experimental drug. It's thought that it may be beneficial for people with serious heart conditions.

    plh: But Doc - there's nothing wrong with my heart!

    Doc: Well maybe there is and maybe there isn't - but you could develop a problem at any time. It's best to be on the safe side.

    plh: Errr right... You said it's a powerful drug. What about side effects?

    Doc: Well apparently it has caused liver damage, aneurisms, respiratory paralysis and a few other problems in some older patients, but you're still young and fit - you should be okay for now.

    plh: Okay, thanks Doc.

     

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  27.  
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    MLS, Mar 10th, 2008 @ 10:23am

    Re: No Because its not a myth..

    ...and the patent (by patent number) that you are referring to is...?

    If there is such a beast, it is undoubtedly limited to specific construction features that are easily designed around by anyone with even a modicum of technical knowledge in the mechanical arts.

     

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  28.  
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    MLS, Mar 10th, 2008 @ 10:33am

    Re:

    I think you are trying to make a point, but I am having a difficult time determining what it is.

     

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  29.  
    identicon
    Willton, Mar 10th, 2008 @ 11:29am

    Re: Re:

    I think he's trying to say that you are naive, but he does not put forth any evidence to bolster his point.

     

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