Ideas and ownership: series highlights

Lightbulb moments come at any time – but how do we protect them? Adriano Agulló

The concept of protecting ideas and innovation by legal means dates back to antiquity. But many of our existing laws are under strain, their suitability and ultimate purpose called into question.

Here are some snippets from our series, Ideas and Ownership, looking at where the law currently stands, where it might be going, and whether the time has come for a major change.

We’ve heard of IP, patents, copyright and trademarks – are these the essentially the same thing, or different? University of Canberra’s Bruce Arnold explains.

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It’s become a cliché that most Australians are part of an information society or information economy. In fact, we’re all part of an intellectual property society. Intellectual property (IP) affects what we consume and what we create. It also affects when we’re born and when we die, given modern medicine is founded on pharmaceuticals and devices that are encouraged by intellectual property law.

[…] IP is ultimately about power, money, innovation and regard for individuals who struggle to add to the sum of knowledge and cultures. Academia needs to make decisions about its own IP on an informed rather than emotive basis, and work with other interests in developing equitable law and practice. IP is not just something that belongs to the vice-chancellor or Bill Gates: it’s about us. Read more

We’re told patents, and the patenting system, promote innovation, but do the numbers back this up. Dianne Nicol and John Liddicoat of University of Tasmania investigate.

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The extent to which patents actually encourage innovation is difficult to empirically measure. Anecdotally, the CEO of any company operating in a field of high technology will probably argue their patents are crucial to the success of their business. On the other hand, economists who have been modelling such questions for many years tend to provide much more equivocal answers.

Recent work by economists at the Intellectual Property Research Institute of Australia (IPRIA), based at the University of Melbourne, suggests patents provide some incentive to commercially develop an invention. The researchers found that, if a patent application is not granted for whatever reason, the chance of the invention making it to market decreases by 13%.

A separate paper analysing the same dataset focused on the commercial returns from patents. Controlling for the value of the invention itself, it was found that having a patent increased the financial returns by between 40% and 50%. Read more

Anyone standing on the sidelines would be forgiven for wondering what was – and still is – going on with the so-called “patent wars” between Apple, Samsung and a raft of other high-profile companies.

University of Sydney’s Kimberlee Weatherall considers the strategic use of patents by major corporations, whether for defensive or offensive purposes.

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Why would a company need masses and masses of patents? There are a few reasons. One is to stake out a technological “territory” and deter or block potential competitors. Evidence from research suggests that smaller firms do avoid working in areas of technology that are heavily patented already.

Another reason would be for offensive use: a company with a large number of patents can overwhelm a competitor they allege is infringing on their technology with a barrage of different patents. The more patents that are alleged to be infringed, the more costly the option of litigation becomes for the alleged infringer.

In theory the alleged infringer can challenge the validity of the patents, but patent litigation is expensive at the best of times, and challenging multiple patents is a very daunting prospect. In these situations, the company with multiple patents may be able to force a settlement – perhaps including the alleged infringer paying royalties or changing their product. Read more

Thomas Faunce of the Australian National University examines the legal loophole that allows pharmaceutical companies, and others, to continually renew product patents – a process known as “evergreening”.

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To overcome the use of patents to inhibit community and environmental benefit in areas such as solar fuels and pharmaceuticals, law reform should focus on what patent experts call “raising the bar of patentability”.

Patents should not be granted simply to allow companies to profit from, and potentially impede, an area of expanding research that is important to the national interest.

When a patent expires, competition should be rapidly allowed to enter the market. If a public health crisis evolves, patents should be able to be discarded and, after reasonable compensation is paid, mass production commenced. Read more

Has the internet given us a glimpse of life without copyright, and is that a lesson we should be taking greater note of? Philip Soos of Deakin University thinks we should.

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Ownership under copyright is twisted to the point where consumers do not own the software they purchase; rather, they are merely extended a license to use the software that the company owns.

The problems with copyright (and other forms of intellectual property rights) are extensive. The most obvious flaw is the monopolistic pricing inherent to this form of intervention. Any introductory economic textbook tells us the efficiency is met when outputs are produced and sold at marginal cost – what it costs to produce the next good or service.

In the information age, electronic data or informational goods can be copied for free. Accordingly, this is what goods should be priced at: zero, instead of monopoly pricing.

Ironically, pirates are acting as conventional economists claim people should – that is, they are rational agents seeking to maximise their utility (happiness) by obtaining copies of informational goods at marginal cost. Read more

Since gaining recognition in the 1970s, the open-source movement has shown how collaboration, rather than competition, can lead to cheaper, more effective solutions.

University of Tasmania’s Anton Hughes explores the benefits of working, living and creating outside the patent system.

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Given its origins as a liberalisation of the copyright paradigm, speaking about open source in the patent context is tricky. While copyright protection is automatic, and free, getting a patent is a slow and expensive process. The pragmatic critic might question why anyone would invest in such a process, only to give free access to everyone else.

But if we think of open source, as Janet Hope, author of The Open Source Revolution and Biotechnology suggests, as “the basis for an analogy – the seed of an idea rather than a rigid formula for success”, possibilities begin to emerge.

Rather than trying to graft “copyleft” (making a work and its derivatives free) on to patent law, it might be possible to work within patent law to promote collaborative innovation. Read more

Patenting an invention such as the telephone makes much intuitive sense. But genes? Dianne Nicol examines what’s at stake in a case currently before the Federal Court of Australia.

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The Federal Court of Australia will soon rule on a case with significant implications for the multitude of gene patents granted in Australia.

In a hearing that ended on February 24, the court was, for the first time, given the opportunity to decide whether genes are patentable subject matter in Australia.

Patient advocacy organisation Cancer Voices Australia has challenged the validity of a patent owned by the US biotechnology company Myriad Genetics, Inc. Myriad claims exclusive rights to exploit the so-called BRCA1 gene, which is linked to increased susceptibility to breast and ovarian cancer. Read more