Covid-19 Patents Provide Funding for Development of Future Vaccines

(p. A25) South Africa and India have petitioned the World Trade Organization to suspend some intellectual property protections from Covid-19 drugs, vaccines and diagnostic technologies. In support of the effort, Doctors Without Borders began a social media campaign urging governments to “put lives over profits,” warning of “pharma profiteering” and urging support for “#NoCovidMonopolies.”

. . .

Intellectual property rights, including patents, grant inventors a period of exclusivity to make and market their creations. By affording these rights to those who create intangible assets, such as musical compositions, software or drug formulas — people will invent more useful new things.

Development of a new medicine is risky and costly. Consider that scientists have spent decades — and billions of dollars — working on Alzheimer’s treatments, but still have little to show for it. The companies and investors who fund research shoulder so much risk because they have a shot at a reward. Once a patent expires, generic companies are free to produce the same product. Intellectual property rights underpin the system that gives us all new medicines, from psychiatric drugs to cancer treatments.

. . .

Eroding patent protections has far-reaching consequences.

Take “messenger RNA,” the technology platform that supports the vaccines from Pfizer-BioNTech and Moderna. Ozlem Tureci and Ugur Sahin, the wife-and-husband team at the helm of BioNTech, began exploring the use of mRNA more than 25 years ago and founded their company in 2008. Theoretically, mRNA can instruct the body to engineer proteins, including ones that increase immunity against infectious pathogens, cancers and rare genetic conditions. But the Covid-19 vaccines are the first truly successful applications of this technology. Scientists eager to explore future uses of mRNA will struggle to find investment if intellectual property protections are snatched away when others deem it necessary.

For the full commentary, see:

Thomas Cueni. “The Risk in Suspending Vaccine Patent Rules.” The New York Times (Saturday, December 12, 2020): A25.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Dec. 10, 2020, and has the same title as the print version.)

Silent Monks Keep Chartreuse Recipe Secret for Centuries

A firm may not need to patent its invention if it can keep the invention’s construction secret because its workers are isolated loners who view each other as brothers. Otherwise, good luck.

(p. 6) The Chartreux, also known as Carthusians, embrace a deeply ascetic existence in the western French Alps, observing customs that have barely changed since their order, one of Christianity’s oldest, was founded. They pass the days alone, praying for humanity and listening for God in the silence that surrounds them.

. . .

The Carthusians sustain this isolated lifestyle largely through the production and sale of Chartreuse, a liqueur the monks developed centuries ago. Like its mountainous namesake and the hue named after it, Chartreuse is sharp, bright, profoundly herbal.

. . .

The year was 1084, and seven men in search of isolation and solitude took refuge in southeastern France’s Chartreuse Mountains — “the emerald of the Alps,” as the French writer Stendhal called them.

According to legend, centuries later, in 1605, the order’s monastery near Paris received an alchemist’s ancient manuscript for a perfectly concocted medicinal tonic of about 130 herbs and plants: the “Elixir of Long Life.”

. . .

Today, the order sells about 1.5 million bottles of its three hallmark products annually, with the yellow and green liqueurs going for about $60, and cask-aged versions for $180 or more. About half its production run is sold in France, with the United States the largest export market.

. . .

Remarkably, among them, only two monks know the full 130-ingredient recipe.

“The secret of Chartreuse has long been the despair of distillers, just as the natural blue of forget-me-nots has been the despair of painters,” reads an 1886 document referred to in a recent history of the company and order. Father Holleran spent five years overseeing the distillation process, ordering ingredients and planning its production schedules. When he departed the site in 1990, he became the only living outsider to know the liqueur’s ancient formula.

“It’s safe with me,” he said. “Oddly enough, they didn’t make me sign anything when I left.”

This trade secret is both a marketing coup and a potential catastrophe. “I really have no idea what it is I sell,” a Chartreuse Diffusion president told The New Yorker in 1984. “I am very scared always. Only three of the brothers know how to make it — nobody else knows the recipe. And each morning they drive together to the distillery. And they drive a very old car. And they drive it very badly.”

Beyond the two monks who now protect it, all the others — Carthusian or not — involved in the production of Chartreuse know only fragments of the recipe.

. . .

Along its five-week distilling process, and throughout the subsequent years of aging, those two monks are also the ones who taste the product and decide when it is ready to bottle and sell. “They are the quality control,” said Emmanuel Delafon, the current C.E.O. of Chartreuse Diffusion.

. . .

Since 1935, the city of Voiron has served as the liqueur’s main manufacturing site. But in 2011, Mr. Delafon said, regional officials tightened distilling regulations, mostly aimed at the hazards — fires and vapor-fueled explosions, notably — of making such high-proof alcohol. After all, at 138 proof, the Elixir barely escapes the International Civil Aviation Organization’s threshold for dangerous goods.

Officials, more or less, deemed the Chartreuse distillery a refinery dangerously close to schools and homes. “It was the Eiffel Tower of Voiron, and then it became a problem,” Mr. Delafon said. “Completely unsupportable.”

Chartreuse looked for a new production home, and settled on a plot of land previously owned and farmed by the Carthusians starting in the 16th century. In 2017, they officially moved the distillation from Voiron to rural Aiguenoire, a 15-minute drive from Chartreuse’s mountainside headquarters and three kilometers from the source of wa-(p. 7)ter used to make the liqueur.

“The Carthusians came home,” Mr. Delafon said.

. . .

Over their nearly thousand-year history, the order has recovered from natural disasters, government expulsions, pestilence, poverty and impostors.

“Every time they’ve lifted themselves up, recovered and redefined themselves,” Ms. Druzkowski, the documentary maker, said.

That willingness to transform while remaining loyal to the order’s legacy is both a luxury and a safeguard during times of turmoil, Mr. Delafon said.

“When you have roots this deep,” he said, “it allows you to forget the short term and project your vision far in the future.”

For the full story, see:

Marion Renault. “Where Life, And an Elixir, Are Timeless.” The New York Times, SundayBusiness Section (Sunday, December 20, 2020): 6-7.

(Note: ellipses added.)

(Note: the online version of the story has the date Dec. 17, 2020, and has the title “An Elixir From the French Alps, Frozen in Time.”)

Abramson “Was Too Busy Surfing” to Patent Wireless Networking

I argue that patents enable funding for poor inventors or inventors who aspire to big expensive breakthroughs. If you have independent means (like a professorship in Hawaii) and mainly aspire to surf, you can afford to ignore patents.

(p. B11) Professor Abramson has been called the father of wireless networking. But it was a shared paternity. The project included graduate students and several faculty members, notably Frank Kuo, a former Bell Labs scientist who came to the University of Hawaii in 1966, the same year Professor Abramson arrived.

His deepest expertise was in communication theory, the subject of his Ph.D. thesis at Stanford University. The fundamental design ideas behind ALOHAnet were his. In a 2018 oral history interview for the Computer History Museum, Professor Kuo recalled, “Norm was the theory and I was the implementer, and so we worked together pretty well.”

. . .

That the ALOHAnet technology became so widely used was partly because Professor Abramson and his team had shared it freely and welcomed other scientists to Hawaii.

“We had done no patenting, and ALOHA was published in scientific papers,” putting their work in the public domain, Professor Abramson said in the oral history, adding: “And that was fine with me. I was too busy surfing to worry about that sort of thing.”

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Some of the data-networking techniques developed by Professor Abramson and his Hawaii team proved valuable not only in wireless communications but also in wired networks. One heir to his work was Robert Metcalfe, who in 1973 was a young computer scientist working at Xerox PARC, a Silicon Valley research laboratory that had become a fount of personal computer innovations.

Mr. Metcalfe was working on how to enable personal computers to share data over wired office networks. He had read a 1970 paper, written by Professor Abramson, describing ALOHAnet’s method for transmitting and resending data over a network.

“Norm kindly invited me to spend a month with him at the University of Hawaii to study ALOHAnet,” Mr. Metcalfe recalled in an email.

Mr. Metcalfe and his colleagues at Xerox PARC adopted and tweaked the ALOHAnet technology in creating Ethernet office networking. Later, Mr. Metcalfe founded an Ethernet company, 3Com, which thrived as the personal computer industry grew.

“Norm, thank you,” Mr. Metcalfe concluded in his email. “Aloha!”

For the full obituary, see:

Steve Lohr. “Norman Abramson, a Pioneer Behind Wireless Networking, Is Dead at 88.” The New York Times (Saturday, December 12, 2020): B11.

(Note: ellipses added.)

(Note: the online version of the obituary has the date Dec. 11, 2020, and has the title “Norman Abramson, Pioneer Behind Wireless Networks, Dies at 88.”)

Feds Investigate Theft of Intellectual Property by Chinese Nationals

(p. A10) BOSTON — Zaosong Zheng was preparing to board Hainan Airlines Flight 482, nonstop from Boston to Beijing, when customs officers pulled him aside.

Inside his checked luggage, wrapped in a plastic bag and then inserted into a sock, the officers found what they were looking for: 21 vials of brown liquid — cancer cells — that the authorities say Mr. Zheng, 29, a cancer researcher, took from a laboratory at Beth Israel Deaconess Medical Center.

Under questioning, court documents say, Mr. Zheng acknowledged that he had stolen eight of the samples and had replicated 11 more based on a colleague’s research. When he returned to China, he said, he would take the samples to Sun Yat-sen Memorial Hospital and turbocharge his career by publishing the results in China, under his own name.

. . .

Mr. Zheng’s case is the first to unfold in the laboratories clustered around Harvard University, but it is not likely to be the last. Federal officials are investigating hundreds of cases involving the potential theft of intellectual property by visiting scientists, nearly all of them Chinese nationals.

For the full story, see:

Ellen Barry. “Chinese Man Is Accused Of Smuggling Lab Samples.” The New York Times (Wednesday, January 1, 2020): A10.

(Note: ellipsis added.)

(Note: the online version of the story has the date December 31, 2019, and has the title “Stolen Research: Chinese Scientist Is Accused of Smuggling Lab Samples.”)

Art Carden Praises “Openness to Creative Destruction”

Economist Art Carden has written a fine review of my Openness book under the title “New Ideas Are the Key to Economic Development.” The review is fair, mostly positive, and well-written. His main reservation is that he sides with many other distinguished libertarians, but against me, on my argument that the patent system should be reformed rather than abolished.

Here is the final paragraph of Carden’s review:

I am glad to see Openness to Creative Destruction appear in print. It strikes a fine balance between detail and a big-picture perspective that, I think, can be read profitably by specialists and students alike. Anyone who wants to understand how the world grew rich and, importantly, what will sustain our enrichment would do well to have this book on the shelf.

“Authors Need to Eat, Too”

(p. A23) Authors need to eat, too, and we get by (or not quite, these days), by showing up at our writing places at a designated time day after day and staying there till we have fretted out our quota of words, to be sent off, after a time, to a publisher, in the hope that, two or three years down the road, a few pennies may come trickling back under the ludicrously grandiose name of “royalties.”

. . .

“There are people out there that just want everything to be free,” says Mary Rasenberger, the executive director of the Authors Guild (where I am a member), “and it’s like a religion to them.” Some piracy sites, she says, even advise users how to buy a digital copy of a book, strip out the digital rights management (D.R.M.) intended to protect the author’s rights, upload the book to a file-sharing site, and then return the book for a refund, “so they don’t even have to pay for the original.” Some sites are so insanely bent on copyright piracy that they offer their followers wedding vows, in which the couple solemnly commits to support the copying culture. “They don’t understand that writers need to get paid, and publishers are not going to publish books if they can’t make money on them.”

Since 2009, when eBooks and book piracy became a phenomenon, income for authors has declined 42 percent, according to a 2018 Authors Guild income survey, with the median income from writing now so low — just $6,080 a year — that poverty level looks like the mountaintop. By contrast, a 2017 Nielsen survey found that people who admitted to having read a pirated book in the previous six months tend to be middle class, educated, female as well as male, between the ages of 30 and 44 — and with an income of $60,000 to 90,000 a year.

For the full commentary, see:

Conniff, Richard. “Steal This Book? There’s a Price.” The New York Times (Monday, September 16, 2019): A23.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Sept. 16, 2019, and has the same title as the print version.)

Evidence That Patents Do Not Holdup Innovation

(p. A17) The trade war has highlighted the competitive advantage of reliable patent rights in driving innovation, prompting a bipartisan effort in Congress to strengthen patents.

. . .

Yet the FTC doesn’t seem to have received the message. It continues to push regulatory policies and undertake enforcement actions based on the story that bad actors licensing their patents somehow are stopping companies from making new innovative products and are harming consumers with higher prices. This idea that “patent holdup” raises prices and stifles innovation is based entirely on an academic theory first proposed in the Texas Law Review in 2007 by professors Mark Lemley and Carl Shapiro.

In contrast to the theory, extensive empirical research since 2007 has failed to find any of the predicted harms of stifled innovation or higher prices, and has in fact found the opposite. “An Empirical Examination of Patent Holdup,” published in 2015, found that industries like smartphone design with patents on foundational technologies have the fastest quality-adjusted price reductions in consumer products. A 2016 George Mason Law Review study also found consistent reductions in consumer prices, increased research-and-development spending, and incredibly fast technological innovation driven by patent licensing of key technologies in the smartphone industry.

For the full commentary, see:

Adam Mossoff. “The FTC Joins Huawei on a Misguided Troll Hunt; The commission’s lawsuit against Qualcomm threatens to undermine American innovation.” The Wall Street Journal (Saturday, Jan. 27, 2019): A17.

(Note: ellipsis added.)

(Note: the online version of the commentary has the same date and title as the print version.)

The 2016 George Mason Law Review study, mentioned above, is:

Mallinson, Keith. “Don’t Fix What Isn’t Broken: The Extraordinary Record of Innovation and Success in the Cellular Industry under Existing Licensing Practices.” George Mason Law Review 23, no. 4 (Summer 2016): 967-1006.

The 2015 paper mentioned above, is:

Galetovic, Alexander, Stephen Haber, and Ross Levine. “An Empirical Examination of Patent Holdup.” Journal of Competition Law and Economics 11, no. 3 (Sept. 2015): 549-78.

A related 2017 paper, is:

Galetovic, Alexander, and Stephen Haber. “The Fallacies of Patent-Holdup Theory.” Journal of Competition Law and Economics 13, no. 1 (March 2017): 1-44.

Patenting a Better Vacuum Tube as Semiconductors Emerge

After his disappointing improved-vacuum-tube invention (see below), Kates did not give up. He went on to make important contributions in coordinating traffic lights to ease traffic flows.

(p. A9) When he demonstrated a computer tic-tac-toe game called Bertie the Brain in 1950, Josef Kates thought he was on the verge of making a fortune. The game, introduced at the Canadian National Exhibition, featured streamlined vacuum tubes invented by the Austrian-born Dr. Kates, who came to Canada in the 1940s as a refugee from Nazism. He hoped the tubes would revolutionize computing.

His timing was off. The rise of semiconductors was about to render vacuum tubes obsolete as computer components. “I got the patent, but the patent was useless,” he said in an oral history. “Okay, so on goes the world.”

For the full obituary, see:

James R. Hagerty. “Refugee Crunched Data to Unsnarl Traffic Jams.” The Wall Street Journal (Saturday, July 28, 2018): A9.

(Note: the online version of the obituary has the date July 27, 2018, and has the title “Josef Kates Found Ways to Unsnarl Traffic and Solve Business Problems With Computers.”)

Huawei “Spent All Their Resources Stealing Technology”

(p. B1) On a summer evening in 2004, as the Supercomm tech conference in Chicago wound down, a middle-aged Chinese visitor began wending his way through the nearly abandoned booths, popping open million-dollar networking equipment to photograph the circuit boards inside, according to people who were there.

A security guard stopped him and confiscated memory sticks with the photos, a notebook with diagrams and data belonging to AT&T Corp. , and a list of six companies including Fujitsu Network Communications Inc. and Nortel Networks Corp.

The man identified himself to conference staff as Zhu Yibin, an engineer. The word on his lanyard read “Weihua”—an accidental scramble, he said, of his employer’s name: Huawei Technologies Co.

. . .

(p. B6) A review of 10 cases in U.S. federal courts, and dozens of interviews with U.S. officials, former employees, competitors, and collaborators suggest Huawei had a corporate culture that blurred the boundary between competitive achievement and ethically dubious methods of pursuing it. Continue reading “Huawei “Spent All Their Resources Stealing Technology””

Patent Troll Is Bankrupt After Victims Fight Back

(p. B5) Shipping & Transit LLC sued more than 100 mostly small companies in 2016, making it the largest filer of patent lawsuits that year. But when the Florida company recently declared bankruptcy, it valued its U.S. patents at just $1.
Its demise followed three cases where companies fought back and were awarded legal fees after Shipping & Transit decided not to pursue the patent claims against them. Judges in the cases awarded a total of more than $245,000 in attorneys’ fees and costs to businesses in 2017.
Shipping & Transit doesn’t sell tracking systems or anything else. Instead, it claims to own patents “for providing status messages for cargo, shipments and people,” according to court filings. The company typically demanded licensing fees of $25,000 to $45,000 from companies it said were infringing on its patents. Most agree to pay small amounts to avoid costly litigation.
. . .
In one ruling, a U.S. district judge in Santa Ana, Calif., called Shipping & Transit’s patent claims “objectively unreasonable” in light of a 2014 Supreme Court decision that held that certain kinds of abstract ideas weren’t patentable.
. . .
Patent assertions by companies that don’t make products and are primarily focused on making money off of patents have declined since the Supreme Court decision, but still “remain extremely high,” said Shawn Ambwani, chief operating officer of Unified Patents, which specializes in challenging these types of assertions.
In another of the cases from 2017, a federal magistrate judge in West Palm Beach, Fla., said Shipping & Transit’s actions suggest that the company’s “strategy is predatory and aimed at reaping financial advantage from defendants who are unwilling or unable to engage in the expense of patent litigation.”.

For the full commentary, see:
Ruth Simon. “Company That Filed Patent Suits Derails.” The Wall Street Journal (Monday, Dec. 17, 2018): B5.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Dec. 16, 2018, and has the title “Pushback Derails Company That Thrived on Patent Lawsuits.”)

Only Presidents with Their Names on Patents Are Lincoln and Trump

(p. A15) Fostering patentable innovation should appeal to President Trump. He is the only U.S. president other than Abraham Lincoln to have his name on a U.S. patent header. Though he wasn’t the inventor, Trump Taj Mahal Associates’ 1996 patent for a “Proportional payout method for progressive linked gaming machines” makes Mr. Trump, at least indirectly, the second presidential patenter.
But unlike Lincoln’s invention, a method of lifting boats over shoals that was cited only 10 times as prior art by subsequent inventors, the Trump Taj Mahal patent has accrued an incredible 1,066 citations. These citations are a key metric for judging economic significance and downstream impact. For someone who loves ratings, Mr. Trump must surely be pleased that his patent topped the charts.

For the full commentary, see:
Mike Kalutkiewicz and Richard L. Ehman. “A Government Agency That Produces Real Innovation; What does Trump have in common with the National Institutes of Health? Patents.” The Wall Street Journal (Friday, June 23, 2017): A15.
(Note: the online version of the commentary has the date June 22, 2017.)