ALF 6, Panel discussion on property rights

The 4th Asia Liberty Forum 2016, #AsiaLF16, has successfully ended in Kuala Lumpur last Saturday night. Among the important panel discussions was the one on “Protecting Yourself Against Daylight Robbery -- Current Challenges to Property Rights”.

Photo below, holding the microphone is Wan Saiful Wan Jan, CEO of IDEAS Malaysia, who chaired the discussion. The speakers from left:  (1) Lorenzo Montanari of Property Rights Alliance (PRA), Washington DC, USA; (2) Barun Mitra of Liberty Institute, India; (3) Kriengsak Chareonwongsak of the Institute of Future Studies for Development, Thailand; and (4) Julian Morris of Reason Foundation, USA.

Lorenzo spoke about the International Property Rights Index (IPRI) annual reports, especially the latest, 2015 Report.

Barun talked about fighting for property rights of poor rural workers and households in their tilled land in India.

Julian talked about IPR, especially of trademarks and company branding. His paper title was witty, "Marks vs. Marx", the former refer to trademarks, the latter refer to IPR confiscation and stealing/socialization.

Among the slides shown by Julian. An example of a medicine whose products and corporate brand/logo was copied and stolen to sell substandard or fake medicines, which can have serious or even fatal consequences to patients.

Plain packaging of cigarettes, the logo and brands of Winfield and Marlboro were removed, only their product name is displayed. Further below, when plain packaging is applied on softdrinks/soda and beer.

I don't smoke, never smoked my entire life, I derive zero pleasure in smoking, but I respect other people's decision to smoke. It's their life, their body, they can do whatever they want with their life so long as they do not harm other people, like puffing heavy smoke in an enclosed room with many non-smokers inside.

I think people should not smoke, but if they decide to smoke because they derive some pleasure in smoking -- the same way that I derive pleasure in drinking with friends, frequently when I was still a bachelor, and seldom now with a family and 2 young girls -- then their freedom to choose which cigarette products or brands to take should not be curtailed by the government.

After all, the government is a huge hypocrite institution that says "promote public health, discourage smoking and drinking" on the left hand, then happily and gleefully collects billions of pesos or dollars of "sin tax" revenues every year from more smokers on the right hand.

Meanwhile, I am thankful again to EFN Asia and FNF regional office for giving me a travel grant to attend the 4th ALF. Thanks Siggi, Pett, Jules.
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See also:

ALF 3: Photos with Friends, Kathmandu Conference, January 20, 2015 

ALF 4, Conference 2016 in Kuala Lumpur,January 09, 2016 

ALF 5, Meeting of Property Rights Alliance in KL, February 19, 2016 

BWorld 45, Asia Liberty Forum and property rights, February 20, 2016

ETHIKOS 2: Pharma Companies and Patients

During the launching of Ethikos Movement last week, among the colorful speeches were those from two patient groups, the Kythe Foundation and the Philippine Alliance of Patient Organizations (PAPO) headed by Fatima "Girlie" Lorenzo, and the Psoriasis Philippines headed by Mr. Josefino de Guzman, photo below. Both Girlie and Josefino detailed how difficult, even draining -- financially and emotionally -- it is to help patients with difficult cases. The issues can range from helping poor patients with costly treatment and medications to dealing with social ostracism.

The two other colorful speeches were from the pharma federations, the Philippine Chamber of Pharmaceutical Industry (PCPI) represented by Dave Escalona, and the Pharmaceutical and Healthcare Association of the Philippines (PHAP) headed by Ted Padilla.

Dave emphasized that strict intellectual property rights (IPR) of newly-invented drug molecules via longer data exclusivity and frivolous patents is in effect unethical and not serving the patients. He added that many local pharma companies are small and hence, have lesser-known brands compared to products by the big multinational pharma companies. Ted on the other hand emphasized the importance of innovator or newly-invented drugs in saving more lives.

As I have argued in many papers in this blog, I believe that IPR is a good tool to encourage the research and development of new medicines against old or new diseases. If a firm is to spend $1+ billion to develop just one drug and such invention is not protected so that other pharma companies can jump in later and demand that they can also manufacture that drug molecule and sell it even if they did not spend money for its discovery, conducting several clinical trials involving hundreds or even thousands of people, that practice is not fair nor ethical.

Besides, Dave is from Unilab, the biggest pharma company in this country cornering one fourth (25 percent) of the total national pharma market. Their products are well known, from outdoor billboards to tv and radio to physicians and pharmacists. 

What patients need are more choices, more options. More medicine brands for each molecule with different brands, different prices. If the rich want the more known but more expensive drugs, so be it. If the poor want the lesser known but cheaper drugs, so be it. So long as those medicines are guaranteed to be safe and effective. More options among medical professionals, among hospitals, among diagnostic centers, among health insurance providers.

Finally, FDA Director Kenneth H. Go also gave a colorful discussion how they as food and drugs regulators, would deal with frequent lobbying by senior government officials (legislators, Cabinet Secretaries, Malacanang officials, etc.) in behalf of certain companies, or pressuring them to give information about the status of products by competing companies.

During the open forum, I briefly spoke and emphasized that a movement to emphasize business and professional ethics is indeed a civil society movement. There are existing government laws that regulate business practices and avoid unethical ones but these are often not followed. It is another case of government failure that was meant to correct any perceived market failure. Thus, people are moving on their own to have certain codes to guide their business behavior, and they are instituting their own set of rewards and punishment for violation of such code of ethics, outside of penalties and fines that are contained in government laws that are not properly enforced anyway.

What are truly unethical are government high or multiple taxation of health products and services like medicines, laboratory and hospital services. And government price control and forced discount policies that affect the financial condition of many small entrepreneurs like small drugstores.

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See also: 
ETHIKOS 1: MeTA-PH, PCPI, PHAP and FDA on launching, March 30, 2014

Drug Price Control 39: Presentation at USC, Cebu, March 2014.,  March 25, 2014 

MeTA 17: CHAT General Assembly, March 2014, March 31, 2014

On IPR Abolition 7: Ideas Cannot be Owned?

Further continuation of my debate with a young Singaporean libertarian, Say Peng.

Say:‎ Where is the evidence to prove a causal relationship between IPR and the creation of all that you listed above? That is to say, how do you know that all the above inventions and innovations wouldn't happen in a non-IPR world? This issue is still disputed, as I've point out.

To give you a counter-example, about the time of the Renaissance, where copyright laws were non-existent or weak, nevertheless, this did not stop artistic and literary creations and innovations. Shakespeare, Milton, Chaucer did not stop writing because of weak or non-existent copyright laws, did they?

Nonoy: Proof? All those big and monster companies in music and movie, agri-business and biotech, books and magazine publishing, automobile, pharma, etc., are in developed economies where the rule of law, where IPR is strictly protected. Are thosehuge companies found in the Philippines, Indonesia, Myanmar, Vietnam, Somalia, etc. where counterfeits, fakes and copying are rampant? I dont think so. People will still write books, invent new products, with or without IPR protection. It's just that there are more innovators, more inventors, in countries where IPR is strictly protected than in countries where IPR is a joke or not strictly protected.

Say: Indeed, you realize that the media and printing businesses today are dominated by the few "big and monster" conglomerates and corporations--oligopolies who finance the politicians within government to push the IPR agenda so that they may continue to keep out potential competition and dominate the industry.

You list 5 countries where those huge companies do not operate in, not realizing their absence in those countries are due to different reasons....

Look at the origins of intellectual property rights. They were grants for monopoly privileges--the monopoly of intangible ideas and concepts--by the monarchical government, which, when enforced, entails exacting force against nonviolent people doing peaceful things with their own property.

Nonoy: Supposing IPRs will be granted by an industry association, to be respected by industry players. Govt is out. Still an unacceptable situation?

Say: It's acceptable only if it is voluntary, which includes the choice to opt out and not suffer any violent retaliation for nonviolent behavior.

So I do see a possibility of an "intellectual property" social contract, in which it becomes common practice through habit not to copy wholesale the conceptual designs and whatnot of others, and that anyone who violates this social contract will be ostracized and no one would want to do business with him, and so he will be compelled to respect the IP social contract. All that can happen without the initiation of force from the state that current IPR laws entails.

Nonoy: New trend: libertatrians and anarchists' main enemy is supposed to be the state. Now, private capitalists, private individuals and inventors who want protection of their own invention are the big enemy of libertarians and anarchists?

Say: The enemy is the state that initiates violence upon peaceful people. The moral state, which is a state funded voluntarily if I may add, will defend the physical property of people against theft, but not a kind of property that does not exist physically in the material reality but as mental projections from our minds.

Nonoy: I am a rock star, I composed several good rock songs. I want my songs to be protected from some copycatters who they record my songs and do concerts from them with zero recognition of me and get all the money and fame. Now I am an enemy of the libertarians? Why don;t you compose your own rock songs too, instead of spending your energy attacking me for seeking protection of my own invention, my own song compositions?

Say: You will be an enemy, if you want to unleash state violence on peaceful people. But the thing is, you will get some recognition, if the people who copied your music go famous. I have many such examples, from the era of Mozart to Madonna. You won't get as much attention as them, but there will be recognition. Their fame is after all based more on their interpretation and performance of your lyrics than on the lyrics themselves.

I could compose my own songs, but I might not want to. I just want to copy others. I might be deemed a lazy freeloader within the industry, but I haven't used force against you.

Nonoy: People who do nothing but copy my good rock songs and make money from them with zero recognition of me are "peaceful people"? Now the world is upside down. If you're too lazy to compose your own songs and just copy my songs for your own enjoyment, fine. But if you copy my songs to do concerts, to record songs under your name, it's ok? Upside down world indeed.

Say: You won't get zero recognition, as I have said; but even if you get no recognition, the people who have copied and performed your songs are still peaceful nonviolent people. Such acts might be immoral and unprofessional according to your ethics, but it does not warrant the state's violent retaliation.

Nonoy: I already qualified above, supposing an industry association will grant the IPR, not the state. No IP system is good for lazy and non-innovative people, you just copy, it's moral and legal, life is good.

Say: And I have already replied to your point about such a potential IPR system above. The key issue is that one must be free to opt out of it and that the industry association cannot initiate physical force to enforce IPR.

Nonoy: No need for physical force. A country's music industry will grant IPR to rock band A, Then rock bands B and C do nothing but copy the songs of A, do concerts on them, make product endorsements from the songs of A, make lots of money. Pure lazy but good marketing guys. The no IP system will expand their rank. But while there is IP system, the music industry association can blacklist rock bands B and C, tell corporate sponsors not to get their services or they won't get the services of any other music groups in the industry. Just to punish the lazy and non-innovators.

Say: Such an IP system I can endorse.

Nonoy: Then IPR is good. It's just the mechanics how it can be implemented. IPR system will encourage more inventors, more composers, more innovators. The lazy are penalized by exclusivity, so instead of being a lazy copycatter, people would rather become innovators and inventors too.

Say: ‎"IPR system will encourage more inventors, more composers, more innovators."
I very much doubt so. Just ask any writer, musician, artist, inventor: What motivates you to create what you create? I don't think their answer would be "IPR!"

But I do agree with you that the nonviolent excluding process is a good way to discourage copycats.

Nonoy: People invent or compose something because they want to be creative, to produce something original. IPR system protects them from being copied by others who do nothing but copy the works of the successful composers and inventors. IPR discourages the lazy.

Say: When you the "IPR system protects...", as long as it does not include the initiation of physical force, there is nothing above I disagree with.

Nonoy: ok, case close :-)

Say: Indeed. We've come a long way. I presume you've now rejected the current statist IPR system and embraced a nonviolent form of IPR?

Nonoy: In the absence of private sector-granted IPR, I have to support the state-granted IPR system. My interest is protection of invention and composition by their authors if they seek it, not protecting the state itself. Ultimately, industry associations themselves should issue (or reject) IPR applications, and f___ the state.

Say: Do you not think that the means to attain your ends of "protection of invention and composition by their authors if they seek it" should be peaceful and nonviolent? Or do you think that the ends justify the means?

Nonoy: The end does not justify the means. The latter is incidental and can be replaced.

Say: You are now advocating a violent means to achieve your ends of the "protection of invention and composition by their authors if they seek it". Shouldn't you change it?

Nonoy: That's false accusation. What sentence, what paragraph, did I say that I "advocate violent means"? Is it plain paranoia?

Say: Here: "In the absence of private sector-granted IPR, I have to support the state-granted IPR system."

Nonoy: One rule of paranoia says: If you dont like what your opponent says, concoct stories and imaginations. Like he advocates violence, he is going to kill you, he will steal your girlfriend...

Say: I gave evidence, a quotation of yours, to back my statement about your advocacy of using state violence to achieve IPR ends. Perhaps you should clarify my confusion (if it exists) rather than invoke paranoia on my part.

Nonoy: I gave zero statement, zero sentence, that I advocate violence to protect IPR. What's next, that I advocate raising taxes, creating new govt. bureaucracies, new UN offices, to protect IPR? Concoction and imagination is endless.

Say: To prove that you did advocate state violence to enforce IPR, I shall quote you again: "In the absence of private sector-granted IPR, I have to support the state-granted IPR system." A state-granted IPR system is a system enforced by state violence.

Nonoy: I am a rock star, I produced good music. Rock bands B and C do nothing but copy my songs, do concerts, do product endorsements, make lots of money by stealing my songs without permission. I go to the IPO or other govt agencies in charge of IPR in music, they send a letter to rock bands B and C to discontinue their stealing as they can compose their own songs. Some libertarians now say that I am advocating violence. Weird world.

Say: In the first place, it is not the theft of a physical item, and rock bands B and C did not use physical force against you when they copied your songs. Their copying of your songs, regardless of whether you think is moral or otherwise, was a nonviolent act--which does not merit violent retaliation from the state, which you euphemistically describe as "I go to the IPO or other govt agencies in charge of IPR in music, they send a letter to rock bands B and C"--the paper threat backed by the violence mechanism of the state is what it is.

Don't be so glib about state violence. It's not just "they send a letter"...

Nonoy: Stealing song composition for big money is ok, is alright, the song composer should not even complain. Wow. Robbery morality = libertarianism?

Say: Sure, the composer should complain, but he should not unleash state violence upon the copycat. Because, and I keep repeating this over and over again, the copycat has not initiate violence against the composer; the composer has not lost any of his physical property. The copycat took the composer's idea. It does not mean the composer has lost the idea to the copycat. Both of them now hold the same idea in their minds. It is not robbery since nothing has been robbed; no one party has lost property to another party. You are basically saying that ideas can be stolen. (And since you apparently love sarcasm...) Wow, isn't a miraculous kind of robbery in which previously one person owns something, and after the robbery, two persons own it. Really brilliant kind of robbery.

Nonoy: I am a univ. student taking up BS Music, or BS molecular biology. My goal is to produce lots of good music or lots of good drug molecules someday. In short, my entire career, my future, is to produce ideas. Now some liibertarians and anarchists say that other people can steal my ideas anytime, anywhere, it's perfectly ok, and I have no right to complain whatsoever. Good message. I can never be an anarchist. An anarchist even views the miniarchists as advocating violence. Absolute truth belongs only to anarchists, great.

Lesson: dogmatic anarchists -- I think they're few -- believe that only them are correct; anyone who disagrees with them are lovers of state violence and are advocating violence.
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See earlier exchanges, On intellectual property abolition, part 6.

On IPR Abolition 5: Various Comments to Ownership of Ideas

After posting Part 4 of this discussion series on IP in my facebook wall, it attracted a number of comments. For brevity purposes, I will enumerate the comments and questions from 6 friends – Froilan, Say, Siegfried, Marvin, Dominic and Donaldson. Here they are:

1. Here's a libertarian's comment on this group: "Lets put it this way... I bought a book from a great author and I love to share it with my friends and relatives for free, re-print it using my paper, ink, printing machine, my valuable time and produces 100 the same copy with the full name of the author and title. And the author is nowhere to be found or maybe he's already dead. Still I have no right?" SO EVIL!
http://www.facebook.com/home.php?sk=group_196382230406190

In a society that respects property rights, which include IP rights, no one may infringe upon anyone's right (copyright, patent right, etc.) however noble the intention. But in an anarchic society, reprinting copies of an author's book even without the latter's consent either for good intention or for profit is deemed perfectly "moral" [and legal].

2. What does one actually own under an intellectual property rights regime? I believe ownership of property can only be physical ownership. Under a property rights regime, I own physical stuff like chairs and houses. Under an intellectual property rights regime, what do I physically own?

3. As to IPRs, I do feel they are materially different, and intrinsically weaker, than property rights in land and goods, simply because land and goods can only be used by one person at a time, while intellectual goods can be used by multitudes simultaneously. IPRs sole justification is thus a claim on the fruits of one's labour, which is important but has to be balanced by the need to avoid socially harmful extended monopolies that pre-empt potentially beneficial markets. There is considerable scope for misuse when IPRs are claimed without an intention to use the invention, just to pre-empt competitors, or when farmers are not allowed to produce their own seedgrain from patented seeds, to cite two notorious examples. And the extension of Disney's IPR to Mickey Mouse by the US Congress shows how open this all is to political manipulation.

4. I agree with your blog's general direction from an evolutionary economics (neo-Schumpeterian) point of view.

In the present world, much 'intellectual property' is the result of conscious effort and work not just of individuals but also of institutions like R&D laboratories or research universities - new knowledge comes more and more from the work of teams. Some form of IP protection provides incentives for such innovation work to happen. Societies that provide the fairest protection, like the U.S., Switzerland, EU, become the most innovative and therefore best able to deliver rising living standards to its citizens. Two examples:

a) For drugs and medicine, the safety and efficacy standards of the U.S. Food and Drug Administration (FDA) to protect the populace from quacks and snake oil salesmen require a fixed stress test period of seven years that is quite expensive and a big barrier (and still gives incomplete protection for cases like mutative risks from toxic compounds - mercury- or lead-based - that accumulate in the parent but affect the offspring, i.e. thalidomide or nicotine/saccharine that are consumed in minute quantities and take up to thirty years to become high risk of local cancer to the consumer).

If one agrees that the FDA provides value to society, in concept, then drug developers ought to be given enough time to obtain returns on their directed effort to develop drugs.

Even this reasonable period may still not be enough without government spending on the science research (not just application development) that requires finding new and basic knowledge that are not appropriable to discoverers, not in the best interest of society to provide temporary monopoly cover, or too expensive for even large corporations or countries to invest. Four examples - (a) Manhattan project for national defense in the development of the atomic bomb, (b) DARPA project for alternative distributed command-and-control channel in case of nuclear that was eventually released to the public domain in 1995 when risk from war with the Soviet Union to become the Internet/WWW, (c) CERN collider in Europe to discover the behavior of atomic particles for leading-edge Physics, and (d) mapping the human genome for future development on next level gene-based drugs.

b) Thus far, patents that provide temporary monopoly protection for about seventeen years (that in the case of drugs 7-10 years are already used in the approval process) and seem to be the fairest and at the same time most advantageous to society in providing incentives for innovation.

Obviously, there is some administration needed to do this in behalf of the total population and thus taxes to pay for such administration. As mentioned above, the U.S. patent system, on the whole, provided fair protection and created the richest and most innovative society.

With the recent crises, some budget proposals are made to gut the U.S. Patent Office under the general ideological rubric, without looking at the details, of creating small government.

Let us watch the reduction of U.S. dominance in having 19 out of 20 top universities in the world and the migration of research laboratories overseas now happening (as pull in) because of the search for talent but maybe accelerating in the future because of lack of IP protection from patents (as push out).

5. So I'm going to warn a friend who is passionately creating and innovating a device that will surely help his father because of disability. He might get sued…. As Mr. Michaels concluded that "The recognition of IPR is consistent with the pursuit of democracy, property rights and economic development... Now is the time to strengthen IP laws to drive technological development in the digital age and to provide certainty for investment in the future."

Are we asking here for more Government intervention? I think the drive for technological development and advancement will come from the market, the competition, not from more regulations.

6. The intellectual property regime is full of grey areas.

Here are my response and rejoinder to the above six comments and questions.

On #1, I think that even if the author is alive, is around nearby, he won't mind that his book is being copied and distributed for free to more people. What he would object would be if his book is copied and sold for a good price or profit by some guys.

On #2, In the IP regime, one owns ideas, an invention, a composition, a molecule or compound of molecules. Ideas are ownable. For instance, one  million rock songs from 100,000 rock bands and singers worldwide, one million copyrights (on each of those songs), what's wrong with this? Invention of drug molecule to control if not kill breast cancer, such molecule is a product of hard work, huge investments, long R&D work, involving several dozen scientists. In a No-IP regime, anybody can also claim, "I also invented that useful drug molecule" even if they spent not a single $ for its discovery.

On #3, Patented seeds number in millions. Rice seeds in the IRRI seed bank alone, should be several tens or hundreds of thousands, each may be patented. The reason for the expansion of so many different seeds is biotechnology and agri- or bio-engineering. The seed patent system has encouraged thousands of seed scientists to invent new breeds, new varieties, with very specific properties. Say a rice with vitamin C, a rice harvestable in just 2 1/2 months, a drought-resistant rice that can survive with just few days of rain up to harvest. On Mickey's patent, thanks for it, other cartoon producers simply say, “So we cannot use Mickey for our tv program? We will just invent our own cartoon characters.” That is why Winnie the Pooh, Tigger and Pooh, Dora, Dibo, Pocoyo, Pororo, Angelina Ballerina, Chuggington, Little Einsteins, Barbie, and several dozen other cartoon characters were invented. All competing with each other, and little kids today know more cartoon characters than 2 or 3 decades ago. The IP mini-monopoly system created more and more products and services, more innovators, all competing with each other.

On #4, Amen to your points, Marvin.

On #5, Don't warn your friend, encourage him to pursue it. Each invention, especially health related, requires some form of "clinical trials". If he succeeds in his invention to help his father, he can show it as proof, he can go to IPO and register his invention for IP recognition, only if he wants it. Or he can share it with the rest of humanity, no problem on both actions. Re Michael Williams' concluding note, No, no need for "additional" government intervention. The interventions and regulations are already there. What he is referring to, is for governments not to bend to the anti-IP academics and socialists to relax if not abolish the IP system.

On #6, Yes, IP has lots of grey areas. But if we focus on "more private ownership, more capitalism; more social ownership, more socialism", I think we can reduce the grey areas and limit the debate to a few issues.

On intellectual property abolition, part 3

A number of libertarians call intellectual property rights (IPR) as intellectual monopoly rights. They argue that IPR is "evil because granting artificial rights to non-property restricts everyone else’s property rights."

One such article is by Jock Coats in the Adam Smith Institute blog. Coats' short paper today, Intellectual property: an unnecessary evil, argues further that

..."intellectual property" is a contemporary conceit to conceal crude market interference through state granted privilege with the flimsiest gossamer of respectability. The primary origins of patents lie in maintaining the state’s coffers, and of copyright in state censorship of ideas.

Property rights arise from a desire to prevent conflict over scare resources. Ideas, patterns, recipes and processes are non-scarce. Intellectual monopoly laws impose different time periods and restrictions...

19th century libertarians ranked Intellectual Monopoly as state created privilege that impoverishes the majority. We should heed them: they are still destructive, unnecessary, statist and evil.

It was a friend in facebook, a young German liberal thinker, who posted that article. I mentioned to him that top anti-IP libertarians like Stephan Kinsella want the abolition of all forms of IP -- copyright, patent, etc. They argue that ideas can never be owned. If I am an aspiring rock or rap star, I composed several good rock/rap songs, then I cannot say "I own" those songs. My friend replied,

You will still be recognized as the producer of that song and be able to make money with it, even without IP protection (contract law is sufficient). And with modern technology it is becoming increasingly difficult to protect IP and in the process of protecting them you are causing more harm to the principles of liberalism/libertarianism than otherwise. And by composing a rap song you will undoubtedly use some other form of IP in the process and should you not pay royalties to the inventor of rap? That seems absurd. And your song won't be scarce, if I copy it, I'm not taking anything away from you. Earning money will be more difficult for you, I grant that. But doesnt that create an incentive for quick production of new IP? This will create more dynamism and make it more difficult for monopolies to emerge, a major criticism of market-sceptics. And physical property - which must be protected - is being attacked on by protection of IP, as the ways you can use the former can be limited throuh IP protection.

I suggested in my earlier paper, On intellectual property abolition, part 2, that
it should be up to the IP owner if he wants to share his invention for free to all, or to be protected. Very often, the cost of enforcement is much much larger than the benefits of full enforcement, say of fighting song piracy, so many IP owners, except the big ones like The Beatles and U2 perhaps, won't bother full enforcement of their IPR.

I think the bigger debate on IPR is on expensive inventions like drug molecules. If the cost of inventing a new beer molecule (or compound of molecules) is not very high, then the new beer inventor/s may not press for full IPR protection. But in the case of drug molecules where the average industry cost of producing one successful molecule (successful meaning safe, hurdled dozens of clinical trials, and effective as killer of a particular disease) is up to $1 B, then such inventors will try to seek full IPR protection whenever possible.

One big opposition to IPR by the libertarians, liberals, anarchists and other shades of free marketers, is that it is a government (usually the Intellectual Property Office) that gives IPR. If that is a big problem for them, then it can be solved by having a private entity, say a federation of industry players, that can give such IPR. I discussed this in my other paper, IPR and medicines, part 7.

Do the anti-IP people consider a molecule or an atom as "non-tangible"? I still have to dig about this. But for me, a newly-invented molecule (or compound of molecules), say a drug molecule, tire molecule, beer molecule, etc. are tangibles. Water is a tangible object, it is composed of 2 atoms of hydrogen and 1 atom of oxygen (H2O). See also my other paper on the different molecules currently in R&D stage to treat prostate cancer alone, IPR and medicines, part 8.

The more directly related to health a molecular invention is, say a new anti-cancer drug, a new weight-loss food supplement, a new skin whitener, etc., the bigger the cost of inventing them. Inventors and manufacturers have to entertain the possibility that they can be sued someday by their customers if the latter will suffer some adverse health results, or at least if the promised "miracle" did not happen. If there is huge costs in the R&D of such drugs or food supplement or ointment, if there is huge costs in possible future legal battles over the safety of such new products, then the inventors and manufacturers need to price their new invention at a higher level, via the temporary monopoly period (a patent, copyright, etc.).

Some anti-IP libertarians can unwittingly merge ideologically with the leftists and socialists in arguing for the eradication of IPR in drugs. The higher price of new and patented drugs compared to off-patent and older ones is, for them, proof of the evil of IPR. And this is another dangerous mistake that free marketers from whatever shade should avoid committing. Pricing is a private property right. It can never be communal or government right.

On intellectual property abolition, part 2

After writing On intellectual property abolition yesterday, it attracted 3 comments. See my reply to them in the comments section of the article.

I also posted yesterday that link in the comments section of Stephan Kinsela's article, The Four Historical Phases of IP Abolitionism. There were several other comments after I posted mine. I post 3 of them below:

(1) Edgaras, April 18, 2011

Who argues that nonsense? To argue, that people should be forced not to act with their property as they see fit just because some “scientist” had this precious idea first and would like that no one used it in his “way” – that is dictatorship. Owning ideas is owning other people. And this is argued by most of the IP proponents. Or at least, it’s a logical conclusion of their ideas.

(2) Stephan Kinsella, April 18, 2011

They aren’t forced to share it. If they want to keep it secret, fine. but if they decide to make it public–for example by selling it–then they cannot whine when others use the information.

(3) Edgaras April 19, 2011

Abolishing IP won’t prevent producers from producing. Reality debunks such inane claims by thousands of examples. I hope I don’t need it to mention… Take for example all the open source and creative commons music. Take for example free books by many authors who profit from donations. Jeez.

Below are my rejoinders to those comments.

On #1. "Owning ideas is owning other people." I find zero connection between the two. I say for instance, "I own this blog." Did I own other people, or did I control their lives? They too, can also start and own a blog of their own, it's fast and free, courtesy of blogger, wordpress and other sites.

On #2, by forcing the abolition of IP, proponents are forcing the sharing of ideas that some idea owners may not be happy to do without some compensation or even citation. Owners of idea -- a song composition, a picture or cartoon, a new drug molecule, a new tire molecule, etc. -- decide whether they want their ideas to be shared for free with the rest of humanity, not some ideologues or government bureaucrats. If idea owners want their intellectual output be used publicly in exchange for compensation, say a new drug or a new tire, then they should be respected. IP abolition proponents want total disrespect for ownership of ideas.

On #3, "Abolishing IP won’t prevent producers from producing." True. But keeping IP will also encourage actual and potential producers to produce more. Rock band A composed and produced 500+ songs, all copyrighted. Rock band B composed and produced 400+ songs, all copyrighted. Rock band C composed and produced 75 song, all copyrighted... Rock band Z produced and composed 200+ songs, and so on.

Currently, people are allowed to say, "I composed that song, I own it. But other people can also sing it, play it, knowing that it was me who originally composed and sang it." The IP abolitionists argue that ideas, like a song composition, cannot be owned. Thus, no one can say that "I composed that song, I own it." To me, that is unfair.

Meanwhile, below are portion of the long comments made by Paul, who is a friend and owns Colorful Rag blog. He wrote,

...I would maintain that ideas are not ownable. Hans Hermann-Hoppe points out that IP is not only illegitimate, but it is actually CONTRARY to physical, scarce property rights. When you claim ownership of an idea, what you are doing is actually claiming control over what other people do with their physical property. This means a person is unable to truly exercise their control over their computer when prohibited from downloading this or that. Or, one does not actually have control over certain owned physical materials meant to be used to create medicines, because of IPR restrictions...

I also mention in the book I gave you that the logical inconsistency of IP as property is quite apparent when an architect is commissioned to build a house. If we are to be consistent with the belief in IP, this would mean that the very house he is designed to make is his to control. Only by some logical wrangling does the actual owner retain title.

If I am a struggling rock artist and I hope to earn some stable income (if not become rich) someday by composing and singing more rock songs on more subjects, then I wish that some protection be given to me so that I can be compensated for my ideas, for my effort. The IP abolitionists say that I am not entitled to claim ownership of my own song compositions. Implying that every Tom-Dick-Harry can sing any or all of my songs, perform rock concerts or do big product endorsements on my songs, and not a bit of originality and authorship can be traced to me.

One implication of this proposal is to encourage plain copying and laziness in innovation. Why innovate and invent on some useful products like a new life-saving medicine or a new race track-hugging tire, which requires huge amount of money, research work, multiple clinical trials, and take many years to finish, when the inventors cannot even be allowed to claim ownership of their own inventions?

An architect who designed a house can only claim ownership of the design, the one on paper, not the house itself. But since the owner of the house already paid the architect, it is the house owner who will decide later whether he will follow all the designs made by the architect, or introduce new revisions, or throw away the design and commission another architect or other artists to do the job. Whatever the house owner will decide later, the architect can afford to be indifferent as his idea, the house design, was already compensated for.

I repeat, private property is private property. It is not communal or government property, whether physical property or intellectual property.

On intellectual property abolition

One thing that I find strange among some free marketers, especially among certain camps in the libertarian movement, is the rabid campaign to disrespect and abolish intellectual property rights (IPR).

One of the most important basis of individual freedom and personal liberty is the protection of private property rights. Your cellphone is yours and yours alone. It cannot be a cellphone of your neighbor or your friend or your city mayor or President of your country. If other people can say that "Your cellphone is also my cellphone; now, give it to me and I will use it the way I want to use it", then there will be no peace in society. Bullying and stealing is the rule of the game. And society can stagnate if not revert back to barbarism.

A group of libertarians argue that intellectual property (IP) is different from physical property. A song composition (an idea) is different from a cellphone or laptop; a blog article or magazine article or book (an idea) is different from shoes or pants or a tv set. The latter is physical property to which past and present laws and regulations on property rights apply. Thus, IP on song composition, on book (copyright) ownership, on drug molecule, should be abolished, partly because such property right was created and granted by government anyway.

There is one ideologue in the libertarian blog, http://blog.mises.org, Mr. Stephan Kinsella, who consistently argues for IP abolition. Of course there are many libertarians who also take his position.

I have argued before and I will repeat it: an idea is private property. This blog, or at least this particular blog article, is owned by Nonoy Oplas, and not by any leftist or centrist or rightist or what have you ideologue. Now it is up to the idea owner whether he/she wants his/her ideas to be shared to others for free, or be protected. If he wants to share it for free as it is part of his educational advocacies, then fine. If he wants the use of his ideas, his composition and invention, to be protected somehow, then it should be respected.

To argue that owners of ideas, composers of famous songs, authors of fantastic scientific or academic papers, inventors of important drug molecules, should be coerced, should be forced and arm-twisted, to share their inventions for free to other people, is plain dictatorship. How can such attitude be considered as advocating individual liberty?
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Related and most recent article here is IPR and medicines, part 8.

IPR and medicines, Part 8

In a discussion with fellow free market bloggers here in Manila, I argued that a patent (or any other type of intellectual property right (IPR)) applies only to one molecule or product and that it is possible to have hundreds of patents, say, to cure a particular disease like blindness. See my longer argument here, IPR and medicines, part 6.

One commented that it's like saying, “You’re free to produce tires, just not rubber tires. You can use wood, or leather…”

This is wrong logic. There are hundreds, if not thousands of molecules and molecular compounds, that can be invented from rubber. That is why there are dozens of different tires from Michelin alone, from Goodyear, from Bridgestone, Continental, Dunlop, Firestone, Kumho, Pirelli, Toyo, Yokohama, etc. Each tire manufacturer would have a phalanx of different tires suited for different types of roads: ordinary roads, race track, rugged terrain, snow, mud, sand and desert, and so on. Not one of those many tire manufacturers make tires from wood or leather.

There is also one concern that two or more inventors can work independently on something, but only one of them will be rewarded with a patent on a first come, first served basis.

Although this might be theoretically possible, I do not know if this ever happened. Let me expand on the search for new drugs to kill different diseases, say prostate cancer. Photo credit here and the next picture from Mens Hormonal Health.

I often cite prostate cancer for the simple reason that it's the disease that killed my elder brother about 4 years ago, also my mother's cousin just 2 years ago. And just this afternoon, I talked to a friend here in Manila, said she's working 7 days non-stop to earn more to help her father who has prostate cancer, stage 4.

I checked the web and searched if there are new drugs that can potentially control if not kill prostate cancer cells someday. I was delighted to know that in the US alone, there are 101 different molecules - patented, granted IPR -- that are potential drug candidates. Drug molecules with weird names like abiraterone acetate, azazitidine, befetinib, cixutumumab, docetaxel liposomal, enzastaurin, intetumumab, ixabepilone, lenalidomide, nimotuzumab,... my tongue is tied just trying to pronounce those weird names. There are also acronym-numbers like MLN 8237, ISIS EIF4ERx, GDC 0449,...

If I write blog articles like this, I did not hire molecular biologists or biochemists or zoologists or botanists or other natural scientists. I also did not construct a laboratory and will not require dozens of animals, then people, sick and non-sick, for different types of clinal trials. Thus, if other people will confiscate my blog articles and say that they are the ones who really wrote such papers, then no problem with me if they can steal and claim authorship of 1, 2, or a dozen article from this blog. There was little cost on my part to write each blog article.

But can the same comparison apply to the inventors and developers of those weird-sounding drug molecules? And those inventors are not even sure if after hurdling 10 years of continued research on each molecule, it will become successful and hurdle the 2nd to the last and the last clinal trials. Meanwhile the clock is ticking. Their 20 years patent on the molecule has only 10 or 8 or 6 years to go and they have not marketed and sold the drug yet.

Let each IP owner or holder decide whether they want their IP invention (a song, a poem, a blog article, a book, etc.) be shared for all, zero IPR, or be made exclusive for them, even for a few months or years. A call to "abolish all IPR" is coercion by itself, when free marketers are supposed to be fighting coercion in the first place.

As to whether it should be the government or some private entity that should grant an IPR, I have discussed it earlier in IPR and medicines, part 7.

IPR and medicines, Part 7

I will discuss two related topics on the role of government in IPR. See my earlier discussion on why fellow free marketers and advocates of individual liberty do not believe in IPR in Part 6.

Should IPR be granted by governments only?

Currently, governments through their Food and Drugs Administration (FDA) and Intellectual Property Office (IPO) or similar agencies, are the ones that produce the various regulatory and health requirements then grants (or denies) the IPR application by the innovator pharma or biotech companies. There is no private entity yet like those private credit rating agencies that does the job. Government would think that bublic health is too important to be left to the market players and thus, unlucky for us, it seems improbable that government will abandon this function.

Let us assume just for discussion purposes, that one government in the rich world will allow a private body, say a federation of pharma + biotech companies + universities, with DOH/MOH participation, to grant or deny an IPR application for drug molecules.

Most likely it will be a less bureaucratic set up than existing government FDAs' approval process. Thus, the entire regulatory procedures before a drug can be finally marketed to the public will be shorter, less than the current 10 to 12 years. It is not the regulatory procedures that will put fear in the hearts of the innovator pharma companies should they produce an ineffective or effective but unsafe drug. It is the fear of being sued left and right and from many countries that will put fear and internal discipline for the pharma companies.

Between a government and a private agency that will grant or deny the IPR application, I would choose the latter, for the reason I cited above. But nonetheless, I am indifferent for now of who should give or grant the IPR, government or private. The point is that there should be a mechanism to assure those who invested huge amount of time and money to give us effective and safe medicines, to recoup their investments. Those drugs and vaccines will save or prolong our own lives and the lives of our loved ones anyway.

Please note that we are not talking about simply copying others' ideas here. We are talking about innovation and first time invention, about originality and creativity. Some can start from scratch, some can start from other researchers' studies, some can start from their previously failed experiment on other diseases. Their ultimate goal is to produce something that is new, something that is revolutionary and was never invented by anybody else.


Legislation and cronyism

I think that most if not all legislations after the State has expanded, are favoring certain vested and crony interests, mostly local. I discussed for instance that the Renewable Energy (RE) law is cronyism in favor of the wind, solar and other renewable plants. See here, Energy rationing and climate alarmism, part 2.

The current Cheaper Medicines Law also has the signature of favoring local pharma which have the capacity at large-scale manufacturing of drugs that can be issued a CL or can use the “early working” provision. It appears to me that the CL benefactor is saying, "The high cost of your innovator drug’s R&D is yours and yours alone; the losses of your non-successful or non-profitable drug molecule are yours and yours alone. But your successful and profitable drug invention is also MY invention too."

Government can give in a silver platter, certain favored local companies this kind of privilege. Luckily, CL has never been issued so far. I think the main reason is not that government regulators and politicians suddenly have a change of heart and decided not to issue CL. Rather, there are no more blockbuster drugs with long patent life remaining in the market. Most if not all have their patents expiring in 2 years or less. The cost of litigation is high compared to just waiting for those patents to expire naturally.

I have argued before and I will repeat it here – government’s multiple taxes on drugs (import tax 3 to 5 percent; VAT 12 percent; local taxes, etc.) that contribute to expensive medicines were never touched or withdrawn by RA 9502. Government taxes, over-regulations and local cronyism conspired to discourage the entry of more innovator companies.

The good thing is that competition in the generics drugs is intensifying among more and more players. Major players producing different drugs from the same drug molecule only compete in branding and brand loyalty by customers.

IPR and medicines, Part 6

This is the continuation of my debate with some friends who are also advocates of free market and individual liberty, but do not believe in intellectual property rights (IPR). Here are among their arguments.

1. Ideas are non-scarce goods. Nothing is lost by me using another person's idea. Copying is not theft.

2. IP is pointless. IP does the opposite of motivating Innovators, it scares them. For the protected, since his idea is protected, he has monopoly over it and isn't motivated to innovate more since there's no more competition.

3. The other potential innovator, even though he knows the innovation better to the point that he can upgrade it 100000x better than the original, he can not. Why? Because it is government enforced IP.

4. It is taken for granted that a patent is necessary to be profitable, that competitors should be restricted so as to allow innovators to recoup their expenditures. That’s misrepresenting capitalism. If high costs were a hindrance to innovation, no railroads or shopping malls or anything could have been made at all; the opposite is true in fact.

5. If IP didn’t exist, there would still be a competition of ideas, but no group is restricted from applying ideas to their products and seeing if customers patronize them. The IP process, while seemingly protecting innovations by rewarding patent holders, actually aborts many innovations that would have otherwise sped up developments in the particular field, because of restrictions in market application, if not in lab testing itself.

6. During the time a drug/invention is reverse engineered, the 'original' creator has a temporary monopoly on its sale. IPR stops the means of innovation by outlawing derivative works. The market process is about competition between old and new ideas. The entrepreneurs must copy the old ideas first before they can improve upon them.

7. IP actually concentrates resources among fewer pharma players rather than allows smaller competitors to come in. Big pharma’s lobbying makes them buddies with politicians; they have greater pull in getting and renewing patents.

I think the answers to a number fo the arguments above I have already articulated in Part 5 yesterday. Let me restate them again and will expand the argument further.

1. Limitless raw materials to invent a new drug molecule

An IPR like patent is granted on each specific invention.

People want a drug against prostate cancer or any other type of cancer. Pharma A invented a drug using a molecule extracted from tropical herbs; Pharma B invented a drug using a molecule from temperate herbs; Pharma C invented a drug using a molecule from sea shells; Pharma D invented a drug using a molecule from big fishes like barracuda and sharks; Pharma E invented a drug using a molecule from deer or monitor lizards... Pharma X invented a drug using a molecule from mangos and avocado; Pharma Y invented a drug using a molecule from rambutan and mangosteen....

Assume further that each newly-invented drug molecule is able to treat patients with prostate cancer but at various degrees of success. Pharma A's, B's and C's drugs do not really kill the disease but they somehow prolong a patient's life by 1 to 5 years and their prices are different. Pharma D's and E's drugs are effective but they cannot be used for prostate cancer patients with hypertension as they can trigger some adverse effects. Pharma F's and G's drugs are also effective but cannot be used for cancer patients with diabetes, and so on.

In this case, no one has an industry monopoly on anti-prostate cancer treatment. Anyone and everyone who desires to neutralize if not kill prostate cancer can do so, as there is limitless raw materials and processes available as human imagination is limitless.

So it is possible to have 30 or more "mini-monopoly" drugs representing the 30 or more patented drug molecules to control if not kill prostate cancer cells.

2. Patent life

Such mini-monopolies in the form of patent on each molecule are not permanent. The international practice is 20 years patent life starting from the discovery of a molecule. It is not clear to me too why they randomly chose 20 years. Why not 12 or 35 or any other number of years.

The IPR of 20 years patent includes complying with all the strict and costly regulations by the drug regulatory agencies (currently governments like the US FDA, but it can be a private agency someday). Those multiple clinical trials on animals, then different groups of people with different health conditions, eat up around 10 to 10 years of the original 20 years patent life.

And that leaves the patent holder -- assuming their drug molecule becomes successful in hurdling all the regulatory requirements by governments to ensure substance efficacy while ensuring safety of patients -- with only about 8 to 10 years of commercial, patent monopoly period. And from what I read, not all patented and highly-advertised drugs are successful and profitable.

When the patent of a successful drug molecule expires, then copying by all other interested generic manufacturers is possible and allowed by law. It becomes a free for all to manufacture and create their own product brands. This is what happened to paracetamol molecule. Innovator drug then was Tylenol. Upon its expiration, every Tom-Dick-Harry pharma, Filipino or Indian or Pakistani or Chinese or American, etc. produced their own brand of paracetamol. Currently, the most popular brand in the Philippines is “Biogesic” produced by one local pharma.

3. Launch delay or non-lunch of patented drugs in anti-IPR countries

It is possible to disrespect all inventions with IPR protection. Copyrighted songs and softwares, pirate them. Patented drugs, copy them. But patients who buy the copycats that turn out to be counterfeit or substandard drugs will have a hard time suing or running after their manufacturers.

(Phtocredit: 3CPNet) The existing Cheaper Medicines Law or RA 9502 contains many provisions that allow such tweaking of IPR, like compulsory licensing (CL), parallel importation, early working on a patented drug, government use of a patented drug, drug price control, and mandatory production of generics equivalent by the patent holder.

Here is one possibility, a reality for other countries already. Some of the more revolutionary, more disease-killer but patented drugs, are available in Hong Kong, Singapore, S. Korea, Japan, US, etc. but not in the Philippines. Why? There are no CL, no price control and similar measures awaiting those expensively-researched drugs there. In the Philippines, all the threats to introduce a revolutionary but patented drugs are present. So Filipino patients who are desperate to get such new drugs will have to buy those from abroad, and this will make treatment even more expensive. And this defeats the purpose of having “cheaper medicines” as envisioned by the law.

An alternative to non-launch of a new but patented drug is launch delay. After all regulatory requirements (with US FDA, etc.) are hurdled, out of the remaining 8 to 10 years of patent life, innovator companies can bring into the country such drug when there are only about 2 years before the patent will expire.

IPR and medicines, Part 5

There is a discussion in one of my facebook groups, on intellectual property rights (IPR) in the pharmaceuticals sector. One argument goes like this:

When a person invents a useful “1st-gadget” people will want to buy it and the inventor will Profit. Inevitably someone else will make a cheaper or an improved “gadget mark 2”. Now Everyone will want to buy the “mark 2” version and the person who invented the “1st-gadget will lose a portion of his expected profits unless he makes a more attractive gadget. Of course, there is nothing to stop “1st-gadget” inventor from improving on “gadget mark 2” and start selling “gadget mark 3”. In this way the world progresses and life gets better and easier for us all.

Progress depends on what happens after the“1st-gadget” is invented. The “1st-gadget” inventor is not obliged to share this invention to “improve the world”. No one can force him/her to share the idea. He could rightfully keep it to himself. However, if he reveals this knowledge to the world, then others may act upon that knowledge. Will people be willing to share knowledge if others are able to make a bigger profit from an Invention than they made? That depends on the motives of the inventor....

The “1st-gadget” inventor might wish to call on the government to use the law to prevent anyone else from copying or improving on his“1st-gadget”. He then has a patent on “1st-gadget” and nobody else may sell it or make improvements to it without paying him. One problem is that it is impossible to invent something without using ideas of others who Came before. Every inventor is building on ideas that came from an idea, sight, book, or invention that touched him. If this is so, how can the “1st gadget” inventor are permitted to restrict other people’s freedom to use his invention for further inventions? What about intellectual rights – the right to own the use of ideas? Do the rules for inventing “1st-gadget” apply to “1st-song”, “1st-fi lm” and “1st-computer program”? Haven’t these originated from other people’s ideas and inventions of music, musical instruments, photography, computers, and programs? Would there be more harmony and less Aggression, more co-operative spirit and fewer disputes, without patents?

A number of good ideas and points above. But there are a number of faulty logic as well. Let me enumerate them.

1. An IPR like patent is granted on each specific invention. There are 1,000 composers of 1,000 different rock songs, so there are 1,000 copyright holders here. No one can claim that another band's rock song is also their invention, and no one has a monopoly on the rock songs category; instead, there are 1,000 "mini-monopolies" here.

2. People want a cheap but comfortable sedan, so Toyota invented Vios, Hyundai invented Getz, Honda invented City, and many other car manufacturers (Ford, Isuzu, Daewoo, Mazda, GM, Cherry, Tata, etc.) have their own invention of a cheap but comfortable car. There is no monopoly of a "people's car." Rather, there are dozens of mini-monopolies on the cheap and comfortable car category. Then there are dozens of mini-monopolies too, on the 2.0 to 2.5 engine displacement car category, on the SUV category, and so on. There is no industry monopoly.

3. People want a drug against prostate cancer (or breast cancer and all other cancer types). Pharma A invented a drug using molecules from tropical herbs, Pharma B invented a drug using molecules from temperate herbs, Pharma C invented a drug using molecules from sea shells, Pharma D invented a drug using molecules from big fishes like barracuda, sharks and blue marlin, Pharma E invented a drug using molecules from wild animals, and so on. No one has a monopoly on anti-prostate cancer drug. Rather, there are dozens of mini-monopolies and patents on anti-prostate cancer drugs.

4. Private property is private property, it can never be national or collective property, unless the inventor will voluntarily share his invention (a drug molecule, a song, a poem, a business software, etc.) to others. Or if he thinks that the cost of enforcement is much larger than the benefit of going through it. If we say that al IPR shd be confiscated, that's coercion. Let inventors decide whether they want their invention to be shared to all or be protected by IPR laws (patent, trademark, copyright, etc.).

5. Not all lawyers and players in the pharma sector are pro-IPR. Those working in innovator pharma companies (the multinationals) are generally pro-IPR. Those who work in generic pharma are, to some extent, anti-IPR, citing TRIPS flexibilities. Then there are also other NGOs, media and academics who argue on "patients over patents", "people over profit", "health is a right" arguments. The Cheaper Medicines Law (RA 9502) is generally an anti-IPR law for institutionalizing IPR confiscation via compulsory licensing, parallel importation, government use, and so on, with riders like drug price control provisions.
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Here are Part 4, Part 3, Part 2, in this "IPR and medicines" series.

Further references, just type "IPR and health" and related keywords in this blog or the major search engines.