I’m going to start with the phones and finish with the genes. The news article titled Patents emerge as significant tech strategy by Janet I. Tu featured Oct. 27, 2011 on physorg.com provides some insight into problems with phones and patents,
It seems not a week goes by these days without news of another patent battle or announcement: Microsoft reaching licensing agreements with various device manufacturers. Apple and various handset manufacturers filing suits and countersuits. Oracle suing Google over the use of Java in Android.
After Microsoft and Samsung announced a patent-licensing agreement last month involving Google’s Android operating system, Google issued a statement saying, in part: “This is the same tactic we’ve seen time and again from Microsoft. Failing to succeed in the smartphone market, they are resorting to legal measures to extort profit from others’ achievements and hinder the pace of innovation.”
Microsoft’s PR chief Frank Shaw shot back via Twitter: “Let me boil down the Google statement … from 48 words to 1: Waaaah.”
This was Microsoft’s PR chief??? I do find this to be impressive,but not in a good way. Note: Tu’s article was originally published in The Seattle Times. [Dec.17.11: I’ve edited my original sentence to make the meaning clearer, i. e., I changed it from ‘I don’t find this to be impressive …]
My Sept. 27, 2011 posting focused on the OECD (Organization for Economic Cooperation and Development) and their Science Technology and Industry 2011 Scorecard where they specifically name patenting practices as a worldwide problem for innovation. As both the scorecard and Tu note (from the Tu article),
… technology companies’ patent practices have evolved from using them to defend their own inventions to deploying them as a significant part of competitive strategies …
Microsoft says it’s trying to protect its investment in research and development – an investment resulting in some 32,000 current and 36,500 pending patents. [emphasis mine] It consistently ranks among the top three computer-software patent holders in the U.S.
One reason these patent issues are being negotiated now is because smartphones are computing devices with features that “are generally in the sweet spot of the innovations investments Microsoft has made in the past 20 years,” said Microsoft Deputy General Counsel Horacio Gutierrez.
There’s no arguing Microsoft is gaining a lot strategically from its patents: financially, legally and competitively.
Royalties from Android phones have become a fairly significant revenue stream.
Investment firm Goldman Sachs has estimated that, based on royalties of $3 to $6 per device, Microsoft will get about $444 million in fiscal year 2012 from Android-based device makers with whom it has negotiated agreements.
Some think that estimate may be low.
Microsoft is not disclosing how much it gets in royalties, but Smith, the company’s attorney, has said $5 per device “seems like a fair price.”
Various tech companies wield patents also to slow down competitors or to frustrate, and sometimes stop, a rival from entering a market. [emphases mine]
It’s not just one industry sector either. Another major player in this ‘patenting innovation to death game’ is the health care industry. Mike Masnick in his Oct. 28, 2011 Techdirt posting (Deadly Monopolies: New Book Explores How Patenting Genes Has Made Us Less Healthy) notes,
A few years ago, David Koepsell, came out with the excellent book, Who Owns You?, with the subtitle, “The corporate gold rush to patent your genes.” It looks like there’s now a new book [Deadly Monopolies] out exploring the same subject, by medical ethicist Harriet Washington.
NPR (National Public Radio) highlights this story in their feature on Washington’s book,
Restrictive patents on genes prevent competition that can keep the medical cost of treatment down, says Washington. In addition to genes, she also points to tissue samples, which are also being patented — sometimes without patients’ detailed knowledge and consent. Washington details one landmark case in California in which medically valuable tissue samples from a patient’s spleen were patented by a physician overseeing his treatment for hairy-cell leukemia. The physician then established a laboratory to determine whether tissue samples could be used to create various drugs without informing the patient.
“[The patient] was told that he had to come to [the physician’s] lab for tests … in the name of vigilance to treat his cancer and keep him healthy,” says Washington.
The patient, a man named John Moore, was never told that his discarded body parts could be used in other ways. He sued his doctor and the University of California, where the procedure took place, for lying to him about his tissue — and because he did not want to be the subject of a patent. The case went all the way to the California Supreme Court, where Moore lost. In the decision, the court noted that Moore had no right to any share of the profits obtained from anything developed from his discarded body parts.
According to the webpage featuring Deadly Monopolies on the NPR website, this state of affairs is due to a US Supreme Court ruling made in 1980 where the court ruled,
… living, human-made microorganisms could be patented by their developers. The ruling opened the gateway for cells, tissues, genetically modified plants and animals, and genes to be patented.
I gather the US Supreme Court is currently reconsidering their stance on patents and genes. (As for Canada, we didn’t take that route with the consequence that it is not possible to patent a gene or tissue culture here. Of course, things could change.)