Tuesday, September 20, 2011

On IPR Abolition 12: Patent, Mini-Monopolies and Trademark

Businessmen and companies themselves want trademark and IPR protection. Apple, Microsoft, Google, Yahoo, Facebook, Youtube, Nokia, Samsung, Toshiba, etc., they want their own unique corporate brand and identity. So when the IP Code or law of the US, UK, Japan, Phils., etc. was enacted, all these companies supported it. I am not aware of any big companies moving earth and mountains to abolish IPR.

For better appreciation of this thread, check also On IPR Abolition 11: Trademark and Brands, September 05, 2011.

There was a case of a local burger shop named “Mang Donalds” with logo somehow similar to MacDonald. The latter did not like this, so it sued the former over trademark issue, the former later closed shop, resurfaced as another food shop with a more unique name and encountered no legal issues. This shows how McDo can be so protective of its name and trademark.

With this precedent, I don’t think there will be another burger company that will be named Jollybees or Joylibee or Jojolibee and have logo similar to Jollibee’s. The latter will most likely hail them to court. The latter will say, "You lazy and opportunist businessmen, Be creative, find a business name really unique and not borrowing rhymes from our name". Which should validate that IPR abolition is for the lazy and non-innovative guys.

There are additional points raised by the anti-IPR camp:

1. The people in generic companies don't even know a paradigm exists apart from IP, like those articulated by Stephan Kinsella, et al… IP is anti-physical property.

2. Period of patent is arbitrary.

3. Loss of earnings is not a property violation.

#1 looks too presumptuous. The owners, lawyers, PR guys of those generic companies are ignorant of the anti-IPR philosophy and campaign? First time I've heard that. I have talked to some officials of the PCPI, the federation of local pharma companies here, I asked them if they ever entertained or wished the possibility of drug patent abolition, of no-IPR world, they said NO. They know the huge costs of inventing new drug molecules. They don't want to enter that high risk, high cost business. They are happy waiting for the patent of the innovators to expire, then they manufacture their own brands and make money. Both innovators and generics companies are happy with this arrangement, they only squabble from time to time on the extension or the granting of another patent to what they think was a non-inventive process. The debate is more on legality, not on philosophy of IPR.

A molecule is a physical, tangible property. It is intangible with the naked eye, but tangible under a microscope. The “non-physical property” label on a molecule is a misnomer in the first place.

A logo and trademark may be a product of the mind but it also attains physical presence. Even a no-read no-write person can distinguish a McDo or Jollibee logo from the logo of other companies.

On #2, I agree that the 20 years patent on a drug molecule, the 50 years copyright on a song composition, may have been arbitrary. Any number of years can be labeled as arbitrary, but that is no reason to call for the abolition of the patent or copyright system.

If a drug patent is longer than 20 years, say 39 or 53 years, I bet that many of the current big generic companies around the world, like Unilab – the biggest pharma company in the Philippines with about 24 percent of total pharma market share, also ASEAN'S 2nd or 3rd biggest pharma company -- will also become an innovator company.

On #3, I agree too. A company which hired an idiot CEO who wasted the money for his perks, will soon be losing money if not go bankrupt. And IPR has nothing to do with it.

During the online debate, I asked the anti-IPR guys several questions:

a. Any big and successful company which has no trademark? Say a big "motor company", a big "IT company"?

b. An IPR is a mini-monopoly. Starbucks, Figaro, UCC, McCafe, Seattles Best, etc have their individual trademark and hence, individual monopoly. Who now has monopoly for the entire coffee shop industry?

c. If Jollibee will sue a hypothetical Joyllibee burger company, if Figaro will sue a hypothetical Figaru coffee company, if Itallianis will sue a hypothetical Ittaliano’s restaurant, etc., will the anti-IPR camp also be against those companies who sued?

d. Who is the bigger enemy, the BIG state or the many famous and successful private companies who just want all their competitors to have their own unique trademark and company names, and not copy-catting from their corporate name, trademark and logo?

The anti-IPR camp followed up with another round of arguments.
4. These trademark and patent holders are beneficiaries of the patent system. They are not going to move for its abolition.

5. It's like saying Meralco is a mini-monopoly because it only monopolizes electricity distribution.

6. Those private companies using the state to enforce their supposed IP, these companies are cronyistic to the degree that they use the state.

7. Generic companies not knowing the anti-IP paradigm, this is sure. It's not simply a matter of you asking if they're against abolishing IP altogether and their saying "No." It's about their being aware of the arguments for abolition.

On #4. the IPR system has contributed to dynamic capitalism. We consumers benefit from more choices from more players -- should we go for Figaro or Starbucks or UCC or Gloria Jeans or Seattle’s Best or Dunkin Donuts coffee? Each trademarked company wants to do better, to keep improving to please consumers so they will come back. Why abolish the IP system that contributed to a more dynamic capitalism?

On #5. Meralco monopoly is bad because it is an industry monopoly, it is not just a mini-monooly under the electricity distribution sector. Are there other electricity distributors in Metro Manila and surrounding provinces? No. Meralco has monopolized the entire power distribution business in said franchise area. In the case of the coffee shop or burger business, there ARE many other suppliers and players. Each is a mini-monopoly in a deregulated and non-monopolized industry.

On #6, it’s the first time again I’ve heard that those famous coffee shop brands, those successful burger and fastfood restaurants, those successful innovator and generic pharma companies, all those big and trademarked names in the IT industry like Apple, Sony, Toshiba, HP, etc., now are ALL cronies. This is weird.

On #7, it is weird to say that leaders of the local generic industry are not aware of the anti-IP paradigm as lionized by urban legend propagator Stephan Kinsella, et al. I have heard of the IP lawyer of Unilab, an expert on TRIPS and other IPR issues. I heard him argue against patent ever-greening, the Bolar principle, etc. but I haven’t heard him saying that IPR like patent should be abolished. Or did I miss it big time?

The IP Code (IPC) of the Philippines and other countries recognize something that is an "inventive step" over the previous process or molecule as patentable.

Now here is one mistake or myth that many anti-IP folks sometimes or often mention: that mathematical formulas, chemical and physical formulas, dance steps, etc. are patentable. WRONG. These are NON-patentable. I've heard a number of anti-IP guys arguing against IPR because they thought that such things are patentable. Equations in algebra, trigonometry, Integral and differential calculus, the famous E=MC2, hydrogen, oxygen, H20, CH4, breakdance, new tango steps, etc. are NON-patentable.

The inventive step whether it is 1% or 0.001% over the originally-patented process or molecule is a matter of details. But that’s treading on many grey areas that are easily questionable. So IP lawyers come in, and a referee called the IP Office (IPO) decides which patent applications are valid and which ones are frivolous and invalid. The point is that changes over the original is encouraged, recognized, respected and protected. I think that's how the IPhone evolves, marginal improvement over the previous ones. IPone1 patented, IPhone2 another patent, IPhone3 another patent, and so on.

If one is a serious and really innovative entrepreneur, he should avoid those inventions which have grey areas. Do not go for a drug molecule which is just 1% or 0.1% different over the currently patented drug molecule. Go for 50% to 100% different drug molecule. If a new and famous patented drug against breast cancer is using raw materials 100% from mangos, then go for a drug against breast cancer where the raw materials are at most 50% mangos, 10% avocado, 25% orange, etc. to produce another drug to kill a similar disease that the currently patented famous drug aims to do. Or get raw materials and active ingredients from rabbit intestines or cow liver, etc. The raw materials for active ingredients can be endless for the really innovative inventors. For copy-catters and somehow lazy inventors, they want to hop on what is currently popular and effective and introduce minute different and claim they made big inventive step.

There is a facebuko.com, trying to make fun of facebook itself. I say that it’s cute, its funny. So I don’t think that facebook will ever be worried of their existence and hail the creator of that site to court. The site does not attract subscribers, it's a non competitor. It's just a spoof, and normally, big companies which are getting spoofed usually get entertained rather than get irritated.

Another round of counter-points by the anti-IPR camp:
8. It is careless to say that IP abolition is for lazy businessmen. That's an ad hominem.

9. By bringing in trademarks, you make someone legally liable for something in which they will fail anyway due to competition.

10. My own Meralco mini-monopoly comment was intended to express the absurdity of euphemizing a monoply by calling it 'mini.'”

11. Private companies are cronyistic TO THE DEGREE that they use the state to monopolize certain aspects of their business.

12. What IP does is because you patented the IDEA of a molecule, you own not just that one molecule in your possession, but even those molecules on the other side of the planet.

13. Tthe patent system is supported by businesses out of ignorance and because they are beneficiaries.

On #8. It is my perception that IP abolition attracts the lazy and non-innovative businessmen. Like the guys perhaps who will put up a Jollybee burger or Starbacks coffee or Unolab pharma or Philtranko bus line. There are thousands of possible names for their company but they lazily choose one that rhymes very closely and trademarked very closely, with the popular brands. That's why I call it plain laziness, lack of productive creativity, only the creativity to copy-cat.

On # 9. Trademark violation applies to the non-innovative businessmen. There is an Aling Pilang Cafe. Would new coffee shops aspire to name their company as Aling Pelang or Manang Pilang Cafe? Not a bit. The former is a never-heard, unglamorous to hear company name. On the other hand, lazy and deceitful businessmen are likely to try their new company names Starbacks, Storebucks, Straybucks coffee, etc. Why? Envy, desire to attract many customers at once despite having zero track record as a good coffee company. Laziness to become really unique and creative.

On #10, Wrong. If we do not differentiate what is a mini-monopoly in trademark only vs an industry monopoly, then one can also say that ‘UCC monopolizes the coffee shop industry’, or Figaro monopolizes the coffee shop industry, which is clearly wrong. But if one will say ‘Meralco monopolizes the electricity distribution industry in Metro Manila and neighboring provinces’, that is clearly correct.

On #11. Then ALL companies are government cronies because to some degree, whether 1% or 100% degree, they use the state to monopolize certain aspects of their business, say their location, their parking lot, their oh-cute company name, their oh-pretty actress model, their oh-macho athlete model, their unique and eye-catching logo, etc. Could it be true that all companies are government cronies? Tough luck.

On #12, This is really weird, that if one owns and patented one drug molecule, then he also owns ALL other molecules around the planet. Where could this urban legend come from? I wrote earlier about different molecules SIMULTANEOUSLY invented, all patented, all not in drugstores yet. Molecules just to kill prostate cancer with weird names like abiraterone acetate, azazitidine, befetinib, cixutumumab, docetaxel liposomal, enzastaurin, intetumumab, ixabepilone, lenalidomide, nimotuzumab,... There are also acronym-numbers like MLN 8237, ISIS EIF4ERx, GDC 0449,... So I invent only one molecule, the other guys invent their own molecules, everyone happy. Now whether the molecule that we invented will become blockbuster and profitable or not, is another story.

On #13, Again wrong. ALL generic manufacturers are non-ignorant, and non-beneficiaries of the patented drugs. And yet they all support the patent system for drugs. Why? Because they spent not a single centavo in the very costly R&D, multiple clinical trials (with some animals first, then with a few sick people, then with many sick people, the non-sick, etc.), taking up from 8 to 13 years out of the 20 years total patent life, just to develop one drug. But once the patent expires, all the generic manufacturers can jump in and develop their own brand of drugs from the same molecule that the innovator companies have developed.

I repeat my observation that the libertarian anti-IPR cause is really infantile. They would rather point their guns and angst on private individuals, private companies, which only want protection of their new invention, their carefully-protected business name and brand, than point their guns on the BIG and monster state that taxes big, intervenes big, regulates and restricts big.

More private ownership, more capitalism.
More social ownership, more socialism.

1 comment:

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