By MoneyMorning.com.au
The [US] Supreme Court — a politically appointed gang of black-robed lawyers — is soon going to decide on one of the most contentious issues in medical science: Can human genes be patented, and to what technologies can those patents be extended to cover?
The particular issue concerns one company, Myriad Genetics, and its claim to own the source code of two genes called BRCA1 and BRCA2, which, when mutated, are related to breast and ovarian cancer.
If anyone else tries to test for this mutation, the company’s lawyers swoop down and stop it. Their patent claim has netted the company a great deal of profit, and the CEO a huge salary (nearly $6 million).
The Myriad patents have understandably annoyed many people who are interested in the spread of human knowledge about how to defeat this and many other horrible diseases. That’s why the American Civil Liberties Union has sued. One lower court sided with liberty, and another court sided with the monopolist. Now the high court is called upon to settle the dispute.
In particular, the court will try to decide whether these two genes are more correctly thought of as part of nature, and therefore not subject to patent, or are different enough in isolation to constitute a real technological discovery. Obviously, the entire scientific community is rooting against this company. Researchers need up-to-date information.
Patents Stifle Free Enterprise
It’s one thing for a company to keep its stuff private. That’s a normal business practice. Think of Google: Its search algorithm is a closely held secret, but most everything else it gives away.
Every business would like to keep its secret sauce secret. But the nature of the commercial marketplace is always working in the other direction. Profits attract competitors, who try to outdo the innovator in service and price.
That’s how free enterprise works. The patents take a secret to a different level. The technology behind the patent is public information — in fact, it has to be. What the patents do is actively prevent other companies who have reverse-engineered the code from using their newly acquired information.
In other words, patents essentially violate other companies’ rights to innovate. This is the bone of contention.
In other words, the patent holder is making a killing using a government grant of privilege over something that has been with us since the dawn of humankind. Meanwhile, anyone else who wants into this business suffers, as do the people seeking testing for cancer.
The opinion will be rather tricky to write. It will attempt to avoid the largest question that everyone is asking these days, which is whether any patents are economically and morally valid. Instead, it will try to narrow the ruling to cover only the point in dispute.
The larger issue is what can and cannot be patented with the government. It’s a controversy that has been around as long as the patent power itself. During the Industrial Revolution, it was only the high-profile inventions that were subject to the patent.
Think of the steamship or, much later, the telephone and the airplane. Now the limit of the patent is entirely up to the clerks at the Patent Office. They can issue one on anything, and are tested only later in court.
That’s why for those who are convinced that patents in general are a gigantic error — a form of government grant of monopoly privilege — this decision will be disappointing either way.
There are so many more patents that deserve a look closer, such as those on software, seeds, and industrial machinery. They all end up slowing development. They are dragging us down.
In a paper for the St. Louis Fed, Michele Boldrin and David Levine makes the point as plainly as possible:
‘The case against patents can be summarized briefly: There is no empirical evidence that they serve to increase innovation and productivity, unless the latter is identified with the number of patents awarded — which, as evidence shows, has no correlation with measured productivity.
‘This is at the root of the ‘patent puzzle’: In spite of the enormous increase in the number of patents and in the strength of their legal protection, we have neither seen a dramatic acceleration in the rate of technological progress nor a major increase in the levels of R&D expenditure — in addition to the discussion in this paper, see Lerner [2009] and literature therein.’
This should not be a surprise at all. People say that patents incentivize innovation. That’s just wrong. The prospect of profits incentivizes innovation. The patent only extends the period of profitability — if it comes about — beyond which the market would otherwise allow it. The patent does this by using legal restrictions to prevent anyone else from emulating the invention or improving on it.
The case of the human genome is a great case in point. Research is proceeding at a breakneck pace in every area. Most of the code is not subject to patents. Some of the old patents have run out and become irrelevant. It is only in this area of genes ‘owned’ by one company that we have a bottleneck.
Back in 1851, The Economist magazine had it exactly right. The patent ‘“inflames cupidity” excites fraud, stimulates men to run after schemes that may enable them to levy a tax on the public, begets disputes and quarrels betwixt inventors, provokes endless lawsuits… The principle of the law from which such consequences flow cannot be just.’
Who Owns What?
There are many absurd aspects to the current patent case in the hands of the Supreme Court. First, the idea that these lawyers should be arguing a case involving difficult details of scientific discovery is preposterous.
Second, the notion that the DNA sequence itself should be subject to patent offends the whole idea of self-ownership. Third, the reality that there is no effective limit on what innovations can or cannot be patented is deeply dangerous to the free commercial marketplace.
The whole debate gets to the core of the whole problem of intellectual property itself. Do we only own the stuff we own or do we own the ideas that go into shaping the stuff we own into other things? Example: If you use ingredients to make a cake, do you own the cake or do you own the way to make the cake — and, therefore, do you have the right to forcibly prevent anyone else from using your method?
The broadest sweep of human history is absolutely clear: We own what we own and nothing more. We can do what we want with our stuff, but we can’t prevent others from doing what they want with their stuff. Not to put too fine a point on it, but Myriad Genetics does not own me or you.
On the other hand, a century or more of decisions shows that the Supreme Court evidently thinks it owns you, me, and everyone. If the court decides against Myriad in this case, how to respond? ‘Thank you, guys, for recognizing the existence of an essential postulate of freedom in this one case at least’?
Jeffrey Tucker
Contributing Writer, Money Morning
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