50 Years Of Scientific Discovery & Sharing In Antarctica May End Thanks To Patent Greed

from the patents-against-peace dept

For the past 50 years, 47 countries have been a part of the 1959 Antarctic Treaty, which was used to establish Antarctica as a peaceful science outpost where scientists from many nations could work together and share their discoveries. And it may now all be coming to an end. Why? Because (as Will Klein alerts us) all this discovery and sharing is going on mostly without patenting! This has greatly upset a bunch of companies who want to hoard any such discoveries and want to be able to patent "Antarctic organisms or molecules." Beyond the rather serious question of why either organisms or molecules can be patented, this is a microcosm of what's wrong with patents. Patents are supposed to be used to encourage research (promoting the progress, remember). And this treaty has done a great job promoting progress without patents. As the article notes, products already "derived from Antarctica include dietary supplements, anti-freeze proteins, anti-cancer drugs, enzymes and cosmetic creams." In other words, all of that happened mostly without patents. The only reason to break up this treaty, stop the sharing, and start allowing patents is to slow down the discovery, hoard the results and limit the progress to single companies who get a monopoly on that work.
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Filed Under: antartica, discovery, patents, science, sharing


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  1. identicon
    Lonnie E. Holder, 7 Feb 2009 @ 6:09pm

    Re: Re: Re: Re:

    Mike:

    I understand your point, now. Since I wrote my earlier post I have thought even more about "diversions," and the more I think about them, the more I am convinced that just because dollars are not spent on patents that they will be spent for other, theoretically more useful things. In fact, it is likely that much of that money will still be unproductive from an investment viewpoint.

    Why? Intellectual property spending is typically quite elastic, at least for the companies I have worked. The economy goes down, spending on IP goes down. When the economy is great, spending on IP goes up. Let us supposed that company X has a gross income of 500 million dollars and a gross income of 75 million dollars. This scenario is quite reasonable for a market leader in a manufacturing company.

    Now, let us assume that this company spends one million dollars on intellectual property. Again, this is fairly reasonable for a manufacturing company. I have heard, but am unable to provide evidence, that manufacturing companies spend about 0.2% of their revenue on intellectual property, so one million dollars seems about right. I should point out that manufacturing companies spend that much inclusive of litigation according to unconfirmed information I have heard, which tells me that litigation is apparently not all that common in manufacturing (excluding electronics manufacturing), or the actual average spent per company is far less and companies that have experience litigation spend more than average.

    Now, let us say that one day patent laws are suddenly abolished. Let us keep it to patents only, meaning that copyright and trademarks still exist. A typical manufacturing company has little interest in copyrights, but they do have trademarks, so the percentage of their dollars spent on trademarks will remain. Let us say, for the sake of this example, that trademarks only consume $25,000 per year of IP dollars. That leaves $975,000 to spend elsewhere.

    Now, that amount is subject to corporate tax, which will likely be state and federal. For the amount I provided, the federal corporate income tax is 38%, and in Indiana the state income tax is 8%, which means that 46% of $975,000 will be paid out as corporate income tax, leaving $526,500.

    Now, the typical manufacturing company tends to provide bonus on dollars that are above a certain line. Again, assuming that the net income for that company has increased by $526,500, it is likely that all that money will be "above the line," and thus highly valued bonus dollars. It is quite likely that 20 to 30% of this amount will turn into bonus. For the sake of calculation, let us say that the amount of 25%, which then leaves $394,875.

    However, these are mere assumptions, because we have other problems before we even get this far. The question will be whether this company is even still in business, or whether it decides to reduce investment dollars because it is more difficult to recoup investment. It may well decide that more of its product can be protected by trade secret, which is relatively expensive compared to patents, and it may be that the trade secret department consumes all of the one million dollars not spent on patents. In other words, eliminating patents does not mean that money will be spent on a net "societal good," whatever that means. Nor does it mean that the money will be diverted to a more efficient use.

    The market is very flexible and elastic. It has shown that it can accommodate a lot of abuse and will still allocate resources as efficiently as possible. I wish I could dig up the paper that was linked to on Against Monopoly (my bad, I thought I kept the link because it was a fantastic paper that gave a proof that the market was better with some regulation than none at all).

    I have a problem with people asking for proof. I have provided proof, and yet it is waved off with a "oh, that is anecdotal," or "the market would have done better," or any number of answers. I try once again with a study done with respect to the Plant Variety Protection Act of 1970 and the effect on cotton.

    The PVPA of 1970 was essentially a grant of monopoly for new plant varieties propagated sexually. A study done for cotton notes in its conclusion (there are caveats regarding the conclusion, by the way, which you are free to review for yourself):

    Rather than the "sound and fury, signifying nothing" conclusion for plant variety protection drawn by Janis and Kesan (2002), our analysis of cotton varieties may be yielding a different Shakespeare quotation: "We must take the current when it serves, or lose our venture." In this paper we have found that the PVP Act was the current that served the cotton industry well, particularly when other forms of IP protection were unavailable or unused. Analysis of the relationship between PVP and cotton yields requires consideration of trends in yields (and trend shifts), changes in total area planted and area planted to PVP varieties, numbers of protected varieties planted, and teh interation of PVP area planted with trend. There has been an increase in the number of new varieties released annually since the PVP Act, and econometric results indicate a positive effect on yields. We conclude that at least for cotton, the PVP Act has served to encourage a greater flow of innovation and the development of more productive cotton varieties.

    http://www.agbioforum.org/v8n23/v8n23a06-oehmke.pdf

    So, according to the authors of this paper, the PVP Act helped increase new cotton varieties, providing positive econometric results, which therefore increased the pie for all those involved in the cotton industry. Well, hallelujah!

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