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Against Monopoly

defending the right to innovate

Pharmaceutical Patents

Monopoly corrupts. Absolute monopoly corrupts absolutely.





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Great post! I left this comment with the story: "A slight twist to this story. The Red Hen is actually a researcher at a University who received a government grant, funded by the taxpayers, for developing a useful public application for this substance called Aspirin. Now that the Red Hen has developed the process, she has - as a true entrepreneur - obtained a patent to protect her "investment" and founded her own company to bring this useful product exclusively to the public."

I guess we can thank the Bayh-Dole Act for this type of abomination. If the public pays, through their tax dollars, for research; the results of that research should be in the public domain.

After writing my previous post, I sat down to read Analog (September 2009 edition). In his editorial "Where Credit is Due", Stanley Schmidt makes a statement very central to the little red hen story. Unfortunately, Stan's editorial has not yet been posted. So I will give an abbreviated version:

Stan writes: "Take the airplane, for instance. Ask almost anybody who invented it, and you'll probably get the answer, "The Wright Brothers, in 1903." It's certainly true that Orville and Wilbur made a dramatic and major breakthrough on that December day at Kitty Hawk, North Carolina, but to say that they invented the airplane then makes the whole process sound far simpler that it was. It makes it sound as if before them there was nothing in the aeronautical realm, and then suddenly they brought forth a fully formed new technology."

Stanly goes on that the work of the Wright Brothers represented the "... culmination of several lines of work by many people over many decades ..."

While Stan's editorial is not intended as a comment on so-called intellectual property, he does make the point that progress is built on incremental improvements to the existing knowledge base. Our out-of-control patent process does not seem to comprehend this. I hope that you will have an opportunity to read Stan's full editorial.

Once upon a time there was a little Red Hen. One day, as she was tending her little garden, she had a creative flash and thought she might have a method to cure 80% of all cancers. However, she to expedite her research, she needed investment money.

She went to the cow and asked her if she would support her research, explaining that she would share in royalties from her eventual patent. The cow replied, "You stand on the back of giants." Puzzled, the little Red Hen went to see the duck.

The duck said, "There are thousands of people around the world working on your idea, and they will independently invent your cure before you." Again puzzled as to how the cure would miraculously materialize when it had yet to do so in the more than fifty years cancer research had continued, she moved on to the pig.

The pig said, "Regardless of what you invent, it will be obvious." Now the little Red Hen was really puzzled. If it had yet to be invented, how could it be obvious. Lastly, she went to the goose.

The goose said, "So, you wish me to invest in your invention so you obtain a monopoly. You will have all the advantages of being first to market. If your cure is truly innovative, then the world will flock to it and you have no need for a patent. Indeed, if you are creative, you will find all the money you need for your cure."

The little Red Hen wondered if the entire world was insane. She was unaware of any giants. She was aware that she would be creating new technology based on the inventions and research of those who came before her, but their average height was somewhere around five feet nine inches, at best. Hardly the height of giants. If her invention was obvious, then why was it not invented already? As for thousands working around the world, she had read their research and they had missed something basic. Lastly, because even she was not certain that her invention would work, and because she was not well known, she was clueless as to how to get others to invest in researching her proposed cure.

Somewhat daunted, but having faith in her invention and herself (she was, after all, somewhat of an individualist), the little Red Hen took her time working on her cure at home, using nearly all her salary for equipment and supplies. The little Red Hen worked on her cure for more than two decades, doing little for her health, and frequently going hungry to pay for another expensive piece of equipment, but she finally had a solution that appeared to kill cancer cells, and only cancer cells, with no discernible affect on other cells. Indeed, the little Red Hen found in a routine medical visit that she had breast cancer and liver cancer, and, unbeknownst to anyone, she drank her invention and cured both her breast cancer and liver cancer.

The little Red Hen had spent nearly $1 million investing in her invention, and was deeply in debt, barely scraping by. She thought about filing a patent application, but then she remembered all the comments from cow, duck, pig and goose, and wondered whether she even wanted the world to have her cure. She wondered whether she should just cure a few select people and let the secret die with her. To keep her options open she decided not to patent her invention, relying instead on trade secret law.

The little Red Hen approached the FDA about approving her drug for human use. The little Red Hen was appalled at the cost and time it would take to approve her drug. She would either be dead or bankrupt before the drug was approved. Further, the FDA wanted to know the secret of her invention, and once they knew, she knew her trade secret would be gone.

The little Red Hen researched all the countries of the world until she found one that, while a little backward, also had a nearly non-existent drug approval system. The little Red Hen moved there, rented a building and hired a small staff with the specific purpose of providing "alternative medicine" to treat cancer (after all, she was not a doctor, so she could not claim to be practicing medicine, and she did not wish to make exaggerated claims, just in case her cure did not cure some cases of cancer).

At first, the little Red Hen's business was slow, because no one knew her. But after several cancer patients came to her and were cured completely, it was not long before word spread.

The little Red Hen decided that even though her cure was relatively inexpensive to make, only about $1 per dose, she had about $1 million in investment spent, almost 25 years of her life, and nearly $300 thousand in debt to make up for, so she priced her treatment at $1,000.

It just so happened that pig, cow, duck and goose came to her clinic. Upon seeing the little Red Hen, they began to yammer about obvious giants and thousands of independent first movers and so on. The little Red Hen asked them to be silent, and spoke quietly.

"Cow, you said I stand on the back of giants. I do not know about giants, but I built on the work of thousands before me. However, they were paid for their time and investment, and their contributions have been acknowledged. Does that make my contribution any less important or valuable? Before you answer, you should consider that, to the best of my knowledge, I am the only inventor on earth with the treatment I offer.

"Duck, you claimed that there were thousands working around the world on a cure just like mine. You said that they will independently invent my cure. The implication was that any patent I got would somehow block or stifle research. Well, I decided to keep my treatment a trade secret. The thousands of independent inventors have failed to materialize, though I have done nothing to stifle or block their research. Quite frankly, I am not sure I should treat you at all since you had more faith in others than in me.

"Pig. Dear pig. Do you now think my invention is obvious? You do not have a clue as to what it is. I have carefully selected the people who work with the treatment and paid them extremely well to aid in guarding my trade secret, though even they do not know the secret of preparation. If it was so obvious, then why have none of the thousands of independent researchers mentioned by duck arrived at the same cure? I will tell you, pig, that once you know how the cure works it would indeed seem obvious. However, we call that hindsight. You always knew the answer once you find it, right?

"And goose. You claimed all sorts of advantages to me being first to market, which meant that I do not need a patent. Amazingly, I agree with you. In fact, not only am I first to market, I am only to market. I got there through my own resources and using my own knowledge to create a non-obvious solution by building off thousands of years of knowledge. Yet, my invention is, pardon me if I snicker a little, obviously not incremental, though each of you would have belittled it had you known what it is.

"Lastly, I point out that in the end, you each came to me. Now, it just so happens that I have also learned that each of you plans to attempt to steal my intellectual property, my trade secret. You each plan on trying, through various means, to break into my files and make a copy of my formulas and methods, on the logic that I will not have been deprived of anything. You are all wrong. I have control of the treatment I invented, and you will take that from me, which is stealing. However, my treatment is not saved on a computer, and it is in a location from which it can never be stolen, my brain. Furthermore, and know this well, when I die, my secret may die with me. Just remember, that it is you who has caused me to take the actions I did.

"Now, I will treat the cancers of each of you. I have looked at the information provided in your medical files, and I am nearly certain that my treatment will cure your cancers. However, because you behaved like arrogant little asses and continue to do so, rather than pay $1,000, which is my standard price, you will each pay me $50,000 for the treatment. If you do not like the price, then go find the obvious, independent giant who has also found the cure."

Cow and goose paid the fee, but duck still thought one of the thousands of independent inventors would soon independently invent the same cure, and refused the treatment, and pig continued to think the cure was obvious and in any case objected to paying monopoly prices for the treatment. Cow and goose received the treatment and were cured. Pig passed away relatively peacefully a few years later. Duck, on the other hand, was in constant, agonizing pain for months before death finally claimed him.

What happened to the little Red Hen? Well, she retired after earning tens of millions in monopoly rents. In fact, she did not bother to sell her treatment at all because she was so wealthy, so she explained to one of her trusted employees the secret, admonishing her to keep the secret, secret. The little treatment center continues on in its third decade, now treating nearly 1,000 people per day. Had the little Red Hen patented her cure, the entire world would have access to the treatment, but hey, the little Red Hen made a decision based on the greed of others and their beliefs, so she figured she could make one based on her beliefs.

Moral of the story? I am not sure their is one, but given that only one person knows the secret, you better hope they do not die before passing it on.

Lonnie, is that you with that ludicrously hyperbolic rant?

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