As officials from around the world gather to discuss global trade in Doha, Qatar many are challenging one of the towering achievements of US industry during its economic boom years: an unprecedented expansion of intellectual property rights.
Brazil, India and other developing countries argue that a US devotion to the sanctity of patents puts drugs for AIDS and other diseases beyond the reach of the poor and costs millions of lives. And, they charge, Washington showed its hypocrisy last month when it considered revoking Bayer's patent on the anthrax-fighting drug Cipro because it was Americans at risk. Suddenly, the US stance that, without patent protection there would be no drugs, seemed hollow.
PHOTO: NY TIMES
But whether the two sides reach an accommodation -- US President George W. Bush's administration wants the WTO meeting to serve as a display of global unity in the face of terrorism -- the dispute illuminates a broader battle over the ownership of innovation in an information economy.
The questions on the table at Doha (Should one corporation have control over a lifesaving innovation? Would anyone develop new products and technologies if he were not guaranteed a temporary monopoly on their use? Can strong protection actually inhibit innovation?) are at the core of a debate roiling nearly every industry, encompassing areas from Internet services to scientific research to movie characters.
Call it the idea wars. At a time when information has emerged as the world's most valuable currency, owners are asserting, and winning, more control than ever over how ideas are used, sold and consumed.
Proponents hail the advent of an era of "intellectual capitalism," the latest stage in the evolution of the post-industrial economy. "In the knowledge economy, ideas become the product," said Kevin Rivette, author of Rembrandts in the Attic, which has become a textbook for would-be intellectual property owners.
But critics warn that, far from promoting innovation, the US is amid an information-age enclosure movement comparable to the fencing off of public grazing lands at the dawn of the Industrial Revolution. Building on the ideas of others, a fundamental part of creativity, they say, is much harder when a license must be negotiated to use any existing sliver of innovation. And, they complain, intellectual property rights regularly trump social values such as free speech or public health.
Throughout the 1990s, the drug, entertainment and technology industries lobbied hard to erect the strongest protections for intellectual property rights in US history. For drugs, the effective duration of patents has in some cases almost doubled, to 16 years. Copyrights on creative works can now stretch as long as 95 years, the result of lobbying by companies such as Walt Disney, which wanted to keep the 73-year-old Mickey Mouse from slipping into the public domain alongside the works of Shakespeare and Victor Hugo.
A new copyright law made it a crime to distribute software or other tools that could allow people to make illegal copies of digital media such as DVDs or electronic books. Although the tools may also have legitimate uses, companies say they need the extra protection because of the Internet-era ease of wide-scale copying.
Court cases established the right of companies like Bayer to extend their monopolies on patented drugs by keeping cheaper generic versions off the market. Drug, computer and software makers amassed extensive "thickets" of patents to discourage innovation by competitors. Even Bristol-Myers Squibb, a company that supports the Bush administration's efforts to extend drug patent protection in the developing world, has said its researchers cannot pursue at least 50 promising approaches to fighting cancer because of patents accumulated by others.
Meanwhile, more than 26,000 scientists, including several Nobel laureates, have vowed to boycott major scientific publishers after they rejected a petition demanding that journal articles be turned over to a free, online archive within six months of publication. The scientists say the efforts of magazines like Science and Nature to control distribution of articles based on taxpayer-supported research is delaying scientific progress.
Even trademark holders are increasingly asserting ownership claims over their marks, based on laws originally intended to prevent consumer confusion. Several young Harry Potter fans took their Web sites down earlier this year after Warner Brothers threatened legal action, claiming that such sites were "likely to cause dilution" of its intellectual property rights to the film about the fictional boy wizard.
Spurring creativity
Proponents say that tighter protections on intellectual property have spurred creativity and innovation. Patents and copyrights certainly have boomed. The Patent and Trademark Office received a record 315,015 applications for patents last year, up from 176,264 a decade earlier. It issued 254,329, almost double the 1990 figure. The US Copyright Office said that registrations totaled almost 600,000 in its last fiscal year, a 16 percent increase over the year before.
As the number of patents and copyrights has grown, so have the disagreements over them. Patent litigation alone cost US companies more than US$4 billion last year. Many companies pay royalty fees to patent holders rather than risk an infringement case -- even if they do not infringe. New businesses divert scarce resources from generating innovations to paying lawyers to make sure someone else does not already own their ideas.
Increasingly, patents cover things that were rarely subject to anyone's ownership before, often lumped in a category called business methods. The floodgates opened in 1998, when a court decision upheld a patent on a bank's computerized method of managing a mutual fund, but the patent office has since been widely criticized for issuing patents on practices that are neither new nor novel.
Patents have been issued on a method for producing a personal golf lesson video, computer software for privatizing socialist economies, even a process for filing patent applications. The Marine Corps has applied for a patent on the design of its new uniform, featuring a digitally generated camouflage pattern. "Microsoft Patents Ones, Zeros," read a recent headline on The Onion, a humorous Web site, satirizing the frenzy.
Indeed, whole new industries are springing up, from insurers offering hedges against litigation to patent bounty hunters and specialists in spotting patent infringement. Self-styled "IP" consultants tout their ability to identify the stray innovations stored in a company's file cabinets, on its hard drives and in the heads of its employees.
But some analysts say it is lawyers and business executives skilled at writing patent applications -- not innovators -- who are being rewarded the most.
Civil liberties advocates are contending in several court cases that the assertion of property rights by copyright owners restricts the development of technologies.
They also argue that copyright holders are using the Digital Millennium Copyright Act to restrict the free expression of computer programmers such as Dmitry Sklyarov, a Russian who was arrested in the US, accused of illegally distributing software that can enable consumers to copy electronic books.
They say that the 1998 statute, by banning software tools used to circumvent the locks on digital material, prevents consumers from using copyrighted works in ways that have long been considered acceptable -- excerpts for criticism or teaching, say, or making a personal backup copy.
"The emergence of new technologies has called into question whether we might have gone too far in strengthening the rights of property holders against consumers," said Richard Levin, the president of Yale University, who is heading an investigation by the National Academy of Sciences into the nation's intellectual property policy. "The key question is, are we getting the balance right?"
It is a question that has long been relegated to lawyers and lobbyists. But the direction of intellectual property policy has gained urgency in recent weeks as the Bush administration has begun to view international development in terms of national security. Further complicating the debate, a growing contingent of economists suggests that more protection for intellectual property does not necessarily lead to more innovation.
"There's been a tendency on the part of policy-makers in the US to equate stronger intellectual property rights with more innovation in a very simplistic way," said Josh Lerner, an economist at Harvard Business School. "A more nuanced approach is much more appropriate." In a study of 150 years of patent policies in 60 countries, Lerner found that there was no evidence that increased patent protection in developing countries led to increased innovation among domestic companies.
Some economists, legal scholars and entrepreneurs argue that patent protection should also be applied more sparingly in industries such as computer technology where innovation is already taking place at a rapid rate. They point to the growth in a method of software development known as open source, in which programmers do not patent or copyright their work, as proof that innovation can occur without intellectual property protection.
"Patents are regulating a broader range of innovative activity than ever before," said Lawrence Lessig, a Stanford University law professor and author of The Future of Ideas, that emphasizes the importance of a healthy public domain to fuel innovation. "I believe we should be extremely skeptical about extending government-backed monopoly in the context of the Internet before we find out if it's doing any good."
Flood of patents
At a hearing of the House Judiciary Committee earlier this year, Andrew Steinberg, vice president of the Internet travel site Travelocity.com, said a flood of patents on business practices was discouraging innovation in his industry and wasting resources on legal fees that ought to be spent on developing products.
Travelocity had to pay to use Priceline's system for selling name-your-own-price airline tickets over the Internet, for instance, even though, Steinberg says, the basic reverse-auction concept is not new. By contrast, since the concept of holding traditional auctions online was not patented, he said, eBay, Yahoo, Amazon and others have been free to innovate and compete in that business.
"We believe the proliferation of these patents is a serious threat to the growth of electronic commerce," Steinberg said. "No prudent business would allow its competitors to patent key business processes without attempting to obtain some patents of their own. And so we, and virtually every other large Internet company, must accept the law as it is and aggressively attempt to obtain patents wherever we can."
But Jay Walker, the founder of Priceline, said he could not have started the company without being able to assure investors that airlines would not be free to copy his idea.
"Strong property rights fairly applied build assets for society," Walker said. "Lack of property creates uncertainty, destroys investment and ultimately is worse for society. The only people who really dislike intellectual property are the people who don't have any."
That may well be true. Steinberg's testimony contained strong echoes of a public hearing in 1994, when patents on computer software were just beginning to be issued in large numbers. Then, most of the executives who testified at patent office hearings argued for limiting such patents, saying that novelty in the software business was fleeting at best. Now, most of their companies have large patent portfolios, and many bring in annual revenue.
"Companies found that software patents were very easy to get in very broad terms," said Matthew Powers, a managing partner at Weil, Gotshal & Manges, a law firm whose 20 or so software industry clients have all been involved in patent litigation in the last year. "The inherent power of a patent -- the power to force someone to stop selling a product -- is so much greater than any other form of protection. They started embracing patents with every arm they could find."
Rather than share patents, leading companies in the semiconductor industry today swap and shuffle licenses in what is widely viewed as a way to keep others out. Although large concerns like AT&T, IBM and Texas Instruments have long held large portfolios of patents for trading purposes, other semiconductor manufacturers have radically expanded their portfolios since the 1980s, largely for defensive purposes. For example, LSI Logic, a chip maker in Milpitas, California, increased its portfolio from seven US patents in 1986 to more than 1,000 by last year, an increase that far outpaced spending on research and development, according to the RAND Journal of Economics.
"The main reason they've been patenting like crazy is either because they lost a lawsuit or they want to prevent one," said Rosemarie Ziedonis, an assistant professor at the Wharton School of the University of Pennsylvania who helped write the study. "That's not the same thing as saying, `I spend more money developing innovative technologies because of patents.'"
Even some industry executives say the frenzy of cross-licensing may be anti-competitive. "Pretty soon, if it continues, you'll find that everyone's going to have rights to everyone else's technology, so there's not going to be any competition," said Julie Mar-Spinola, chief litigation and intellectual property counsel for the Atmel Corp, a semiconductor maker in San Jose, California.
That may not sound much like Abraham Lincoln's famous description of the patent system "adding the fuel of interest to the fire of genius." Critics argue that the patent office, established in 1790, is tailored to the needs of industries whose products require years of work and large capital investment -- manufacturing in the 19th and 20th centuries, for instance, or the pharmaceutical industry today.
Indeed, drug makers justify their large profit margins on patented medications by pointing to the billions they invest each year in research and development, often in pursuit of drug targets that do not pan out. But even pharmaceutical giants, facing the specter of thousands of gene patents owned by universities and biotechnology companies, are now raising questions about the effectiveness of the system.
"If people have put effort into patentable material, they should expect a return," said William Koster, a former senior executive at Bristol-Myers Squibb. But what sort of return, and under what conditions? "What is intellectual property worth?" asked Koster, who recently left Bristol-Myers to become chief executive of a biotechnology company. "It's a debate, and its outcome is very significant."
Thomas Jefferson, who served as the nation's first patent examiner, wrote that the exclusive right to ideas is "given not of natural right, but for the benefit of society." The deliberate bargain is enshrined in Article 1 of the Constitution, which authorizes Congress to issue patents and copyrights "for limited times" in order to "promote the progress of science and the useful arts."
Patents originally covered only inventions that could be demonstrated with working mechanical models. Copyrights could be held for 28 years, and the law governing them evolved to allow for some public uses of copyrighted material without the owner's permission.
Now, many legal scholars argue that major patent and copyright owners are trying to stretch their qualified grants into a more absolute form of control. The relatively new use of the term "intellectual property," they say, has skewed the original legal and cultural meaning of patents and copyrights.
Ideas as property
Thinking of ideas as property creates "a very powerful metaphor that tips the scales in the direction of the person asserting their property rights have been violated," said Pam Samuelson, co-director of the Center for Law and Technology at the University of California at Berkeley. "When you're talking about real property you're not talking about people's ability to express themselves in a democratic society."
Some members of Congress want to shift the balance. Representatives Rick Boucher and Howard Berman have introduced legislation that would establish higher standards for issuing patents on the rapidly growing category of business methods.
Boucher, the most outspoken critic of expanded intellectual property rights on Capitol Hill, also said he planned to propose softening the terms of the Digital Millennium Copyright Act. "There has been an overreach at the expense of information users that needs to be corrected," he said.
But even as there are signs of a backlash against intellectual property expansion, from the coalition of developing nations making their case in Qatar to the scientists who are starting their own online repository for the free distribution of peer-reviewed articles, companies are striving harder than ever to lock up their valuable intellectual assets.
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