artdiamondblog.com – Page 531 – Art Diamond's web log

Our “Patently Absurd” Patent System

(p. A15) The Founders might have used quill pens, but they would roll their eyes at how, in this supposedly technology-minded era, we’re undermining their intention to encourage innovation. The U.S. is stumbling in the transition from their Industrial Age to our Information Age, despite the charge in the Constitution that Congress “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”
. . .

Both sides may be right. New empirical research by Boston University law professors James Bessen and Michael Meurer, reported in their book, “Patent Failure,” found that the value of pharmaceutical patents outweighed the costs of pharmaceutical-patent litigation. But for all other industries combined, they estimate that since the mid-1990s, the cost of U.S. patent litigation to alleged infringers ($12 billion in legal and business costs in 1999) is greater than the global profits that companies earn from patents (less than $4 billion in 1999). Since the 1980s, patent litigation has tripled and the probability that a particular patent is litigated within four years has more than doubled. Small inventors feel the brunt of the uncertainty costs, since bigger companies only pay for rights they think the system will protect.
These are shocking findings, but they point to the solution. New drugs require great specificity to earn a patent, whereas patents are often granted to broad, thus vague, innovations in software, communications and other technologies. Ironically, the aggregate value of these technology patents is then wiped out through litigation costs.
Our patent system for most innovations has become patently absurd. It’s a disincentive at a time when we expect software and other technology companies to be the growth engine of the economy. Imagine how much more productive our information-driven economy would be if the patent system lived up to the intention of the Founders, by encouraging progress instead of suppressing it.

For the full commentary, see:
L. GORDON CROVITZ. “OPINION: INFORMATION AGE; Patent Gridlock Suppresses Innovation.” Wall Street Journal (Mon., JULY 14, 2008): A15.
(Note: ellipsis added.)

The Middle Ages Were Poor Ages (and, Yes, Dark Ages Too)

Source of book image: http://images.barnesandnoble.com/images/11610000/11613340.jpg

(p. A19) . . . some excellent books for general readers in the past few years, notably Brian Ward- Perkins’s “The Fall of Rome and the End of Civilization” (2005), have shown how devastating was the economic and human cost paid between 450 and 900. It is still unfashionable to speak of the Dark Ages (there was continuing cultural life), but these were certainly the Poor Ages, in which protection for the weak and vulnerable, from roaming killers and even from the weather, was much more precarious than it had been under Roman rule.

For the full review, see:
SCOTT PATTERSON. “Bookshelf; The Emperor Left Town.” Wall Street Journal (Tues., APRIL 21, 2009): A19.
(Note: ellipsis added.)
(Note: the book mainly under review by Patterson, is NOT the book featured in this blog entry.)

The reference for the Ward-Perkins book, is:
Ward-Perkins, Bryan. The Fall of Rome: And the End of Civilization. Oxford, UK: Oxford University Press, 2005.

Entrepreneurs Learn “Not in the Classroom Where Old Ways are Taught, But in the Factories and Labs, Where New Ways Are Wrought”

Gilder’s rhyme about the classroom is cute, and maybe mainly true. In an important paper, Baumol has more prosaically (in the literal sense) expressed a similar view.
But there are counterexamples. Gilder himself, in his Microcosm, notes how what was taught in some classrooms was crucial to progress in information technology.

(p. 296) Entrepreneurs can be pompous and vain where it doesn’t count; but in their own enterprise, the first law is to listen. They must be men meek enough–and shrewd enough–to endure the humbling eclipse of self that comes in the process of profound learning from others.
In all the history of enterprise, most of the protagonists of major new products and companies began their education–and (p. 297) discovered the secrets of their later breakthroughs–not in the classroom, where the old ways are taught, but in the factories and labs, where new ways are wrought.

Source:
Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

The important Baumol paper mentioned above, is:
Baumol, William J. “Education for Innovation: Entrepreneurial Breakthroughs Versus Corporate Incremental Improvements.” In Innovation Policy and the Economy, edited by Adam B. Jaffe, Josh Lerner and Scott Stern, 33-56. Cambridge, Mass.: MIT Press, 2005.

Berkshire BYD Technology Bet Based on Munger’s View of BYD Manager

“BOOK VALUE: Berkshire Hathaway’s Charles Munger reads businesses well — and, as a bibliophile, he goes through several books a week.” Source of caricature and caption: online version of the WSJ article quoted and cited below.

At a Berkshire Hathaway annual meeting a few years ago, I remember hearing Warren Buffett say that he stays away from technology stocks because he does not know how to judge which technologies are likely to succeed in the long-run. So I was a bit puzzled by the news that Berkshire Hathaway was investing in BYD, a Chinese company producing an electric car.
The passages quoted below may partially solve the puzzle: the investment in BYD was pushed by Charlie Munger and David Sokol, and was based more on a judgment about the quality of BYD’s management, than the prospects for BYD’s technology.

(p. C1) Mr. Munger’s views have pushed Berkshire into some surprising directions. Several years ago, Mr. Munger learned of an obscure Chinese maker of batteries and automobiles called BYD Inc., which hopes to create a cheap, functional electric car.

A Chinese tech company is nothing like the shoe and underwear makers Berkshire had been buying. But Mr. Munger was enthusiastic, less about the technology than about Wang Chuanfu, who runs BYD. Mr. Wang, Mr. Munger says, is “likely to be one of the most important business people who ever lived.”
Mr. Buffett was skeptical at first. But Mr. Munger persisted. David Sokol, chairman of Berkshire utility MidAmerican Energy Holdings Co., paid a visit to BYD’s factory in China and agreed with Mr. Munger’s assessment. Last year, MidAmerican paid $230 million for a 10% stake in BYD.
“BYD was Charlie’s idea,” Mr. Buffett said. “When he encounters genius and sees it operating in a practical way, he gets blown away.”

For the full story, see:

SCOTT PATTERSON. “Here’s the Story on Berkshire’s Munger.” Wall Street Journal (Fri., MAY 1, 2009): C1 & C3.

If the Medici Had Not Intervened, Galileo “Would Have Been Killed”

(p. D7) The Franklin Institute and its aspiring blockbuster, “Galileo, the Medici & the Age of Astronomy,” are something of an odd couple — a circumstance explained, like so much else, by history.
. . .

Meanwhile, the exhibition leaves provocative questions — about the nexus of church and state, as well as science and faith — unanswered. If Galileo was still a court favorite, and science was so revered in Florence, why weren’t the powerful dukes able to prevent his 1633 trial, heresy conviction, and sentence of house arrest?
Galileo’s patrons did, in fact, intervene on his behalf, Filippo Camerota, vice director of the Institute and Museum for the History of Science and one of the exhibition curators, said in an interview. “If the Medici were not there,” Mr. Camerota said, “he would have been killed.” Good to know.

For the full commentary, see:
JULIA M. KLEIN. “Exhibition; What Galileo Saw.” Wall Street Journal (Tues., APRIL 28, 2009): D7.
(Note: ellipsis added.)

RIP Marjorie Grene, Who Helped Polanyi with Personal Knowledge

“Marjorie Grene in 2003.” Source of photo and caption: online version of the NYT obituary quoted and cited below.

The NYT reported, in the obituary quoted below, that philosopher Marjorie Grene died on March 16, 2009, at the age of 93.
Although I studied philosophy at the University of Chicago, my time there did not overlap with Marjorie Grene’s and I don’t believe that I ever met her, or ever even heard her speak (though I did occasionally walk past her former husband David Grene, on my way to talk to Stephen Toulmin).
I am increasingly appreciating Michael Polanyi’s book Personal Knowledge in which he introduced his view of what he called “tacit knowledge.” In particular, I am coming to believe that tacit knowledge is very important in understanding the role and importance of the entrepreneur.
So if Marjorie Grene was crucial to Personal Knowledge, as is indicated in the obituary quoted below, then she is deserving of serious consideration, and high regard.

(p. 23) In Chicago, she had met Michael Polanyi, a distinguished physical chemist turned philosopher; she ended up helping him research and develop his important book “Personal Knowledge” (1958). The book proposed a far more nuanced, personal idea of knowledge, and directly addressed approaches to science.

“There is hardly a page that has not benefited from her criticism,” Dr. Polanyi wrote in his acknowledgments. “She has a share in anything I may have achieved here.”
. . .
Her sense of humor sparkled when she was asked about being the first woman to have an edition of the Library of Living Philosophers devoted to her — Volume 29 in 2002. Previous honorees included Bertrand Russell and Einstein. “I thought they must be looking desperately for a woman,” Dr. Grene said.

For the full obituary, see:
DOUGLAS MARTIN. “Marjorie Grene, a Leading Philosopher of Biology, Is Dead at 98.” The New York Times, First Section (Sun., March 29, 2009): 23.
(Note: ellipsis added.)

The reference for the Polanyi book, is:
Polanyi, Michael. Personal Knowledge: Towards a Post-Critical Philosophy. Chicago: University Of Chicago Press, 1958.

“Entrepreneurs Must Be Allowed to Retain the Wealth They Create”

(p. 305) Entrepreneurs seek money chiefly for positive reasons: to perform their central role in economic growth. Just as a sociologist needs free time and access to libraries and research aides, and a scientist needs a laboratory and assistants, and a doctor needs power to prescribe medicine and perform surgery–just as intellectuals need freedom to write and publish–capitalists need economic freedom and access to capital to perform their role in launching and financing enterprise. Entrepreneurs must be allowed to retain the wealth they create because only they, collec- (p. 306) tively, can possibly know who to give it to–how to invest it productively among the millions of existing businesses and the innumerable visions of new enterprise in the world economy.

Source:
Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

To Cure Fatal Diseases We Need More Financial Incentives and Fewer F.D.A. Restrictions

“JOSHUA THOMPSON with his sons, Wyatt and Jordan, after his diagnosis, top, and before, with his wife, Joy, and Wyatt.” Source of the photos and caption: online version of the NYT article quoted and cited below.

(p. 1) VIRGINIA BEACH — As Lou Gehrig’s disease sapped Joshua Thompson of his ability to move and speak last fall, he consistently summoned one question from within the prison of his own body. “Iplex,” he asked, in a whisper that pierced his mother’s heart. “When?”

Iplex had never been tested in people with amyotrophic lateral sclerosis, the formal name for the fatal disease that had struck Joshua, 34, in late 2006. Developed for a different condition and banished from the market by a patent dispute, it was not for sale to the public anywhere in the world.
But Kathy Thompson had vowed to get it for her son. On the Internet, she had found enthusiastic reviews from A.L.S. patients who had finagled a prescription for Iplex when it was available, along with speculation by leading researchers as to why it might slow the progressive paralysis that marks the disease. And for months, as she begged and bullied biotechnology companies, members of Congress, Italian doctors and federal drug regulators, she answered Joshua the same way:
“Soon,” she said. “Soon.”
At a time when terminally ill patients have more access to medical research than ever before, and perhaps a deeper conviction in its ability to cure them, many are campaigning for the chance to be treated with drugs whose safety and effectiveness is not yet known.
. . .
(p. 19) “Josh’s sadness is unbearable,” his mother wrote one night in her journal, nearly a year after her son’s diagnosis.
Unexpected encouragement came in a Mother’s Day note from her ex-husband. “You have given me some peace of mind that all potential options for Josh are being researched and acted upon,” Bruce wrote. “Thank you.”
Kathy’s boyfriend accompanied her to Insmed’s headquarters in Richmond, Va., offering to raise several million dollars to underwrite a compassionate use program for Iplex in the United States with A.L.S. patients. But the couple came away with a new understanding: F.D.A. regulations, they were told, prohibit any company from profiting on compassionate use. Even if Insmed could wriggle free of restrictions in the patent agreement, there was little financial incentive for it to invest in making the drug solely for compassionate use by A.L.S. patients.
. . .
On Jan. 16, when Dr. Werwath called to tell her the application had been rejected, she stood up in disbelief.
“How could that be?” she asked, dazed.
Kathy’s friend Mrs. Reimers had received a call with the same news.
“He said they had safety concerns,” Mrs. Reimers said. “This for a drug that was approved for children!”
“Safety,” Kathy repeated. “And what, exactly, is safe about A.L.S.?”

Appealing an F.D.A. Denial
Before the F.D.A.’s decision, Kathy had spared little thought for any broader meaning of her quest for Joshua. But when she met with Richard A. Samp, a lawyer with the Washington Legal Foundation a week later, her outrage went beyond her son, and beyond Iplex.
“The F.D.A. is supposed to protect American citizens,” Kathy fumed over an iced tea in Williamsburg, Va. “How does denying dying patients access to this drug serve the common good?”
Mr. Samp had handled a lawsuit by a patient advocacy group, the Abigail Alliance, that had sought to establish a constitutional right for terminally ill patients to use experimental drugs. In the case, which the group had lost on appeal in 2007, the F.D.A. claimed that it granted “nearly all” requests for compassionate use.
They would first make an administrative appeal, Mr. Samp told Kathy, asserting that the F.D.A. had violated its own guidelines. If that failed, they could pursue litigation that might allow them to raise the constitutional question again in a federal court in Virginia.
. . .
Kathy was pouring milk for her cereal on the morning of March 10 when Dr. Werwath’s number flashed on her phone. The F.D.A. had just reversed itself, he said.
Before she could take a breath, Senator Mark Warner’s office called. E-mail bleeped in as the news seeped out.
In the weeks after the appeal, Kathy learned, the F.D.A. had reached out to Insmed. The agency had persuaded the company to run a clinical trial for Iplex with several dozen A.L.S. patients, and permitted it to recoup the hefty costs directly from participants. In the trial, some of the participants would get a placebo. That way, the F.D.A. wrote on its Web site, the next wave of A.L.S. patients would learn whether the drug was in fact beneficial or harmful.
But for now, the agency had ruled, Joshua and 12 other patients would be given Iplex outside of the trial, on a compassionate use basis, if they agreed to read all the data about the risks.

For the full version of a very long story, see:
AMY HARMON. “Months to Live; Fighting for a Last Chance at Life; One Family’s Tenacious Campaign for Access to an Unproven Drug.” The New York Times, First Section (Sun., May 17, 2009): 1, 18-19.
(Note: ellipses added.)

“IN MARCH, Joshua Thompson received his first Iplex injection, from Dr. David L. Werwath. Thereafter Joshua’s wife, Joy, left, and mother, Kathy, took over the daily duties.” Source of the photo and caption: online version of the NYT article quoted and cited above.

“Don’t Kill the Goose”

(p. A11) I think there are two major but not fully formed or fully articulated fears among thinking Americans right now, and the deliberate obscurity of official language only intensifies those fears.

The first is that Mr. Obama’s government, in all its flurry of activism, may kill the goose that laid the golden egg. This is as dreadful and obvious a cliché as they come, but too bad, it’s what people fear. They see the spending plans and tax plans, the regulation and reform hunger, the energy proposals and health-care ambitions, and they–we–wonder if the men and women doing all this, working in their separate and discrete areas, are being overseen by anyone saying, “By the way, don’t kill the goose.”
The goose of course is the big, messy, spirited, inspiring, and sometimes in some respects damaging but on the whole brilliant and productive wealth-generator known as the free-market capitalist system. People do want things cleaned up and needed regulations instituted, and they don’t mind at all if the very wealthy are more heavily taxed, but they greatly fear a goose killing. Economic freedom in all its chaos and disorder has kept us rich for 200 years, and allowed us as a nation to be generous and strong at home and in the world. But the goose can be killed–by carelessness, hostility, incrementalism, paralysis, and by no one saying, “Don’t kill the goose.”

For the full commentary, see:
PEGGY NOONAN. “What’s Elevated, Health-Care Provider? Economy of language would be good for the economy.” Wall Street Journal (Sat., MAY 15, 2009): A11.

“Flock of Intellectuals” Called Eiffel Tower “Dizzily Ridiculous”

(p. W12) The tower is so beloved that few today remember the storm of vitriol, mockery and lawsuits provoked by its selection as the startling centerpiece of the 1889 Paris Exposition Universelle. (One of the losing entries was a gigantic working guillotine!) Even as Eiffel was breaking ground by the Seine River in February 1887, 47 of France’s greatest names decried in a letter to Le Temps the “odious column of bolted metal.” What person of good taste, this flock of intellectuals asked, could endure the thought of this “dizzily ridiculous tower dominating Paris like a black and gigantic factory chimney, crushing [all] beneath its barbarous mass”? The revered painters Ernest Meissonier and William-Adolphe Bouguereau, writers Guy de Maupassant and Alexandre Dumas fils, composer Charles Gounod and architect Charles Garnier all signed this epistolary call to arms, stating that “the Eiffel Tower, which even commercial America would not have, is without a doubt the dishonor of Paris.”

Gustave Eiffel, a self-made millionaire whose firm constructed much-admired bridges all over the world, happily twitted his critics: “They begin by declaring that my tower is not French. It is big enough and clumsy enough for the English or Americans, but it is not our style, they say. We are more occupied by little artistic bibelots. . . . Why should we not show the world what we can do in the way of great engineering projects?”

For the full commentary, see:
JILL JONNES. “MASTERPIECE; ‘Odious Column’ of Metal; The Eiffel Tower wasn’t always a beloved icon.” Wall Street Journal (Tues., MAY 9, 2009): W12.
(Note: ellipsis in original.)