Intended for healthcare professionals

Editorials

Scrooge and intellectual property rights

BMJ 2006; 333 doi: https://doi.org/10.1136/bmj.39048.428380.80 (Published 21 December 2006) Cite this as: BMJ 2006;333:1279

In defence of an improved Patenting system

The suggestion that the current Patent system be replaced
by an over simplified system of bounty offer in reward for
"important" pharmaceutical (or any invention) is both
fraught with naïve misconceptions about the patent “social
contract” and poses more questions of implementation than
it solves.

To incentivise innovation which J E Stiglitz appears to
support, The reward is offered to incentivise the research
and development of valuable inventions for social good. One
problem with a bounty is how to determine which innovation
is significantly important to warrant reward and how to
value such reward commensurate with the inventions social
value. Surely an incentive needs to be perceived to warrant
the often substantial investment demanded of innovation
research.

Another question is who determines this importance, selects
the most worthy recipient and who shoulders the burden of
paying this reward?

His reference to “governments in advanced industrial
countries” may well be translated into the “taxpayers of
advanced industrial countries” Someone would need to define
that august club and convince them of its merits and surely
they would want a say as to the relative importance of the
proposed innovation. Would they select a cure for an
unknown tropical disease over their own topical threats?

But the real question raised is; In what way does the
proposed “reborn” scrooge differ from the existing patent
system and if so in what way/s is it improved upon?

Firstly a patent grant is a reward. The patent granting
authority offers the grantee (the inventor) normative
scarcity to an otherwise freely available idea. In this way
it creates a commercial asset. If the innovation is of
little value this scarcity may not even be worth the cost
of registration. (Interestingly more than 90% of patents
are withdrawn due to lack of commercial viability). If it
is truly of value it may warrant considerable further
investment to bring it to market. Thus the reward is driven
by market demands and the reward commensurate with social
wants. Yet the burden of payment of the reward is borne by
the end user the one who actually needs and benefits from
the innovation.

Of course the writer would agree that an arbitrary term and
somewhat “flexible scope of claim” may allow for
disproportionate reward for social good but this arises out
of the difficulty to define innovation (IP asset) values.
However this value could be agreed upon between grantor and
grantee subject to taxable declared revenues over the life
of the grant. At a point where this payback is reached the
grant could be withdrawn. Also the investment in so called
orphan drugs where commercial viability is limited by a
small number of sufferers would demand extended rather than
limited patent protection to recoup the investment
required.

The point about underdeveloped countries having limited
access to these innovations has been debated for decades
and continues. As a result there are a number of measures
including mandatory local licensing which allow for this
disparity.

Thus the patent system, though flawed and in real need of
adjustment to more developed global conditions, offers all
the benefits proposed by Stiglitz without the vague and
arbitrary controls which would be impractical to enforce on
any free commercial society. A reward commensurate with
social value. Incentivised innovation and continued
investment in worthy pharmaceutical research.

Competing interests:
None declared

Competing interests: No competing interests

15 December 2008
Paul G Fairhurst
Partner
IPV Consulting 04808 Leipzig Germany