The New Death of Exclusive Patent Profits

by Jack Fritz

We have come full circle.  We used to analogize to the physical world to understand the digital, but a new ruling may require us to use the copyright wars of the digital realm to understand innovations in patent law in the physical realm.  In the early days of digital copyright law, courts frequently analogized to the physical world in order to better understand infringement.  Copying was thought of as larceny, video games were thought of as compilations of works of art, ping and echo port attacks were thought of as ringing a doorbell, and hot-spot sniffing was thought of as listening to a radio wave.  The legal world had no other tools to understand or language with which to address these issues.

Patents were easier to understand because they dealt with the physical world.  Although patent law had its own complexities that rivaled the merger doctrine or the second bite in copyright, patents were  more understandable.  But today, patent law is finally facing an issue that may be best understood by analogizing to the EFF, MPAA, and RIAA infringement battles that are being waged in the theater of copyright.  For the first time, a pharmaceutical patent is being used much like music is used on a late night talk show – that is, via a compulsory license.

This recent article in the Times of India describes a novel ruling in India, in which a court granted a compulsory license for a U.S. patent in order to provide wider access to a costly, life-saving drug.  The issue raised was whether the exclusive profits ensured by patent innovation outweigh the benefit of saving lives.

I believe that the royalty structure described in the article saves many lives while preserving sufficient profits for innovators, so it seems to be a reasonable (albeit imperfect) compromise in the complex and transnational world of IP.  Still, the economic argument – that some profits from a stream that would not have been tapped is better than no profits – may face ardent opposition from proponents of the capitalist sweat-equity argument that people should reap what they sow.  But often, when it comes to patent law, the absolutist arguments that are raised in copyright law seem a little out of place; while the unauthorized copying of copyrighted movies in China always seems wrong, the copying of life-saving, patented drugs that cure cancer in India seems like a far more complex case.

Original article: “Govt uses special powers to slash cancer drug price by 97%” by Rupali Mukherjee
Jack Fritz, Esq., is a member of the Executive Board of Directors for the IP, Internet, and New Media Section of the Beverly Hills Bar Association.

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