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Comment by alzamos | Hacker News Reader

The book “against intellectual monopoly” has shaped a lot of my thinking on this topic - economists have looked at the various occasions in which patents were introduced into an industry (or extended in scope), and there is no evidence they actually improve innovation/efficiency/outcomes (including the pharma industry!). I was quite surprised as my whole life, it was sold to me as an incentive-boosting measure which in turn would lead to said outcomes.

With that lens, I welcome gradually phasing this stuff out, especially as we navigate into the unknown game-theory landscape AI-as-inventors brings.

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So I was an intern at Merck MANY years ago and they had this interesting comparison.

Most companies only publish medical research findings on blockbuster drugs once both are true:

1. Production has started

2. A patent has been filed

The reason for this is that they want to maximize the amount of production time under patent b/c that maximizes revenue.

If you are the researcher, that means you have to wait until all of the production setup is ready to go.

Merck took a different stance.

There, the patent was filed as soon as the researcher was ready to publish. This meant that there was less time under patent for production but was much better for the researcher as they got their findings out earlier.

The thinking was that being able to publish earlier would attract better researchers and in turn would lead to better drugs, more revenue, more profits.

This was in the late 1990s so not sure how this plan worked out as I haven't been in pharma since that era.

Would be interesting to hear from other folks more knowledgeable.

2 I recognize, 1 not so much. Patents are usually filed as early as possible, because you risk losing priority to someone else. And you cannot file a claim on inventions that are in the public domain.

But then it takes a decade or so to develop towards approval. You work together with outside researchers who lend their credibility and get attractive publication possibilities in return. Those publications also help to raise awareness with doctors and investors. Since some company researchers are also authors, this does indeed work as an incentive and is helpful for recruitment and ultimately more successful products.

To the core of the article: why would anyone want to file a patent with AI as a (co-)inventor? It's a tool, and it cannot have any ownership rights. And even if it did, it would diminish your share of royalties.

> because you risk losing priority to someone else.

Historically not so much in the US, but yes now that the US has joined the rest of the world with a first-to-file system

Assuming "MANY years ago" is >15, then the US was still in a first-to-invent system

> it cannot have any ownership rights

Actor network theory sheds a tear. And more promptly: ownership rights are enacted via tools. Whether agentful or non-agentic, listing them would in the very least be similar to disclosing funding bodies or agencies.

This book gets a lot of airtime in discussions of IP but the authors have a narrative they are trying to push and they don't let inconvenient things like facts or history get in the way.

The book cherry-picks its sources, and even then contains several mischaracterizations and exaggerations of those works. There are many other economists who have shown significant beneficial aspects of patents with empirical data but they conveniently don’t get mentioned at all.

As an example, see this: https://www.researchgate.net/publication/46556404_Watt_Again...

Yep, the very first chapter of the book starts with patents and steam power, and they got called out on it by actual experts on the topic. Note the “still” in the title – this is after the book was already “revised” once. The book was not revised after this last note, so the exaggerations still stand.

The rest of the book had many similar issues. Once I started digging into their sources, I could not get past the first few chapters, but anecdotally others on HN have also pointed out glaring inaccuracies. I remember thinking wryly that it should be called “Against Intellectual Honesty.”

When I read the bit on the steam engine, I remember thinking it wasn’t a great argument as it was hard to know how a patent-less world would have developed. I’m not surprised to see there’s a link which talks about how the claim was exaggerated (though not entirely wrong? I’ll have to read it).

Having said that, the bits I found juicy - i.e on the various shock analyses coming from patent introductions or increasing of scope, the studies on how effective first mover advantages was etc. all seemed pretty solid when I checked the sources - admittedly they were deeper into the book, so you may have already abandoned it by then.

> There are many other economists who have shown significant beneficial aspects of patents with empirical data but they conveniently don’t get mentioned at all.

Any chance you have some to share? When I LLM’d the topic a while ago the best I got was some weak investment effect in Singapore (unaccompanied by TFP/etc).

I last looked into this a decade+ ago so my memory is fuzzy, and there are a lot of economists who looked at a lot of different things, but the authors I recall from the time were Kenneth Sokoloff, Petra Moser, Adam Mossoff, Zorina Khan, Bhaven Sampat, and Bronwyn Hall. Undoubtedly there are dozens more, but I just happen to remember these offhand.

You spend billions to get a drug from concept to approval - and then once you've invested all that money, someone else can just sell it too, free loading on all the studies you ran? Why would anyone invest in drug studies?

I need a bit more depth and detail to believe that this doesn't destroy the pharma industry.

What would the empirical evidence even look like? It's not like the modern pharma industry existed before patents.

> Why would anyone invest in drug studies?

To make a shit ton of money. These things are insanely profitable. Generics exist and they're still profitable. You can get 99% of drugs from over seas and they're still profitable. These companies make trillions of dollars over the years. Yes, they might make slightly less money, but they still would be making a shit ton of money.

Generics exist for drugs that usually someone did hold a patent for that has since expired and they're much less profitable than patented drugs.

Not sure how that address the point. Again, the investment to get a drug to market is gigantic and you're saying that someone should pay for that and someone else should get the reward. It really doesn't work that way. Everyone would want to be the one who didn't pay.

Who is going to invest in your company when they could invest in the company that just makes the drugs you invent without the overhead of R&D?

And why would you manufacture anything but generics?

To make a shit ton of money.

How? you would make more money by only manufacturing generic drugs. Investing massive amounts of money to subsidize your competitors would be irrational.

> You spend billions

The you being taxpayers, right?

No, only a small part of this is publicly funded.

Which part is small? Productizing? R&D? Marketing?

Nearly all basic science research is publicly funded, then in the US transferred to the private sector for commercial exploitation

Phase 1/2/3 clinical trials (the kinds of studies that cost tens of millions of dollars) are overwhelmingly funded by private industry.

The book goes into quite a bit of depth if it is a topic that interests you.

I would flag that we’re getting into “prove a negative” territory here: the goalpost is that we need to prove empirically that patents achieve the desired outcome. If the scenario you describe accounts for all game-theory/incentive/complex-adaptive-system universes, we should see this reflected in the data.

When it comes to pharmaceuticals, they looked into Italy and Switzerland who switched to a patent system in 1978 (and I believe Portugal in the 1990s). They looked at the growth curves of things like # of inventions, total factor productivity, percentage R&D spending, and the conclusion was that there was no statistically significant change in trajectory that would suggest the introduction of the patents had any positive effects. (Edit: they accounted for domestic/international + US filings before/after as well).

Thanks for actually giving a great answer to this versus the other knee-jerk comments! I will definitely look into this more.

I think it's important to note that the cost of bringing a drug to market has increased a lot (about threefold) since 1990, so if the case studies are that old they might not generalize.

Of course! Happy you found it useful.

You’ll have to forgive me if my answer isn’t super satisfying - it’s possible, but I’d want to see patents under these conditions empirically validated.

Some things you might find interesting - the author(s) make various arguments such as:

1) Ranking (by various metrics/criteria) the most impactful medicines and making the case that the ones developed independently from patents are both over represented and more impactful. (There was some stuff around what kind of medicines are incentivised with each regime)

2) I don’t exactly remember what they say about R&D costs increasing with time (aside from (1)-style skepticism), but they did talk how as time went on, logistics/distribution/marketing technology has grown immeasurably, so the window one has before the copycats come in can be exploited with a lot more gusto.

3) Reverse engineering of medicines + especially their industrialisation takes longer (and requires more capital) than people think, and there’s a bit of a conundrum where, because you don’t know which medicines will be commercially successful, you have to wait to see how they perform on the market… but the longer you wait, the more (2) happens (and the more you have to fight first mover advantage, established marketing etc)

The points are more rigorously covered in the book - (2)+(3) had papers that quantified the stated effects in question.

I will stress again though that while the “counter-narratives” are interesting and may help build some intuition, I would set the gold standard to some econometric/shock-analysis of patents in action.

I think the "prove a negative" idea is a bit silly, my common sense says that the patent system should work better so if it doesn't, somebody's going to have to extensively prove it to me or show me a clear mechanism as to why it doesn't.

I could read a book on it but Italy/Switzerland (combined ~5-10% of drug discovery) making changes 60 years ago doesn't get me too excited about updating my priors.

My intuition is the opposite. My favorite example is the patent situation around flight in the 1910's, which ensured that the USA entered WWI without its own fighter aircraft industry. The US actually ended up buying french machines.

I'm having a hard time even grappling with how that could be true?

I always assumed that intellectual property was invented in order to protect against a specific use case:

If researching a new product is extremely cost intensive. But once a product is invented, it is easy to reverse engineer how the product works. Then the first firm will need intellectual property to put in the initial cost, otherwise they will not do so, as they know they will not have enough time to recoup their costs in the market before a competitor moves in with a copy-cat product without having to paid the initial costs.

Indeed. Patents incentivize investment in R&D. There is an argument to be made that the scope of patentable inventions should be more limited, in particular preventing trivial patents that didn’t require substantial R&D, and maybe also that patents shouldn’t last as long.

But doing away completely with patents would certainly stifle companies’ willingness to invest in R&D. They’d rather wait for someone else to invent something they can copy.

Yet an ungodly amount of money has been pouring into AI R&D

The study could have revealed that industries without patent protection evolve to have better trade secret security, effectively leveling the benefits of patents.

Not all inventions can be effectively kept secret, and patents also have the benefit that what would otherwise remain secrets gets published.

I’m not in favor of the current patent landscape, but doing away completely with them would likely be throwing out the baby with the bathwater.

Obviously. Yet on balance, the ones that can't be kept secret may not be significant.

I'm not making a judgement on what the ideal situation is, more so explaining why the referenced study could have come to its conclusion.

Literally any product you send to the consumer can be reverse-engineered at comparatively low cost. The world doesn’t just revolve around server-side software.

> Patents incentivize investment in R&D.

In theory or in real life?

In real life.

In real life, although the amount of incentive is different in different industries; and if one's main experience is in an industry where the amount of incentive is low, it's easy to imagine it's the same everywhere

There are two things to tackle here which I’m keen not to mix up as I think their epistemological properties are quite different:

1) [the stronger one] while the scenario/narrative is a compelling one (or maybe it just feels compelling as I’ve heard it so many times), if it doesn’t have experimental/data backing I have to abandon it.

2) [the weaker one, as it replaces a narrative with another narrative within a complex system] I’ll only give the highlights as the arguments are a lot more eloquently laid out in the book; part of it is comparing the force of “many inventor nodes building on top of many invention nodes” vs “inventor nodes (with more investment individually?) building on top of fewer invention nodes”, part of it is the game theory effect of companies collectively investing less (proportionally) in R&D as the ROI from lawyers under this regime has more power, part of it was that actually, the reverse-engineering-simplicity story was too overblown and that actually the friction + domain knowledge has a stronger effect than people think (they published a paper on this). There were others, but it’s been a while now!

Reverse engineering may be easy for really simple inventions, but quickly becomes so hard you may as well invent the thing from scratch. Look at USSR's domestic chip production. At one point they succeeded in reverse-engineering chips like Intel's 8086, VAX etc., but chip design very quickly became so complex reverse-engineering the entire chip became impossible. I would say if an invention can be easily reverse-engineered, then it is a simple foundational idea that should not be patented, and if it is truly innovative, then it cannot be reverse-engineered easily and doesn't need patent protections.

Then there is the fact that when something is patented, that has a chilling effect on competition, making the market less efficient.

There are also a lot of really silly patents that end up benefitting no-one, not even their inventor, but only result in needless litigation. The recent lawsuit between Nintendo and PocketPair comes to mind.

While there are cases in which patent law can help individual people profit from their invention, once all consequences are tallied, the overall effect of patent law on society appears to be negative.

In many research-intensive products go-to-market costs are bigger than the cost of actual invention. You buy a pharma startup for a few million for their patents, then spend tens of millions on certification, trials and manufacturing pipelines. Your competitors would spend most of that too on the same markets. Also, true inventions are rare. A lot of stuff that is being patented is just effort spent, that a lot of people could reproduce (and routinely reproduce, then hit the patent and spend more time to find a workaround).

This sounds like it is working as intended. The patent comes early in the process to protect all the commercialization investment. Patents are intended to be filed early in the process, and they gain value as the invention proves its worth. Note also that you can patent a mining claim before pulling a single precious gem or mineral out of the ground.

Well, the way you describe it, they protect investors, not inventors. Investors do not need protection. Money are abundant, market can solve the commercialization part efficiently.

Patents are an incentive to encourage an inventor to lay out an invention or process in exchange for the state protecting that process, we did this because there have been in the past inventions that have been lost, that were valuable largely because the inventor died without documenting what they did (keep in mind the first patent was issued in 1331[0], this is old law)

The complicating factor is that as time passes our ability to reverse engineer has grown, however I'm not sure that invalidates the need for patents, the question is whether the new patents are being assessed well from a novelty / inventiveness perspective

-[0]: https://en.wikipedia.org/wiki/History_of_patent_law

That's interesting, but I'm a little skeptical about pharma. Right now there are a lot of really potentially-promising molecules that pharma isn't really interested in bringing to market because they can't patent them. I don't know though, maybe the game changes if nobody can patent drugs, but then I think you'd need to make FDA approval a lot cheaper.

Care to name a few of them? I've always suspected that novel new substances were being "kept on the shelf" due to a lack of monetization

I have 3 product ideas that I do nothing with because I'd have to sell on Amazon and if they were successful the upper case alphabet shops would eat my lunch I can't compete with their production. So the options to the world are a little bit smaller because I can't afford the patent process. Spreading that industry wide seems like it would make society poorer, not richer.

Patents make us richer, in the short term with new ideas/products that people can only afford to invest in/bring to market because of patent protections, and in the long term with public access to those things as the patents expire. We have hundreds of years of seeing this model be successful, the same with copyright.

I could be into that

Patents have been mostly a pride checkbox for me, but at the same time being able to get credit for something you could never build is interesting. I’m less supportive of the loose monopoly part though, that seems to be the real issue dampening innovation

Everyone hates patent trolls (non practicing entities who dont implement the idea themselves), but practically its an extremely high burden. I did some patents on financial market plumbing, implementing that requires licensing and infrastructure far beyond any coding or building problem

Thinking of it 10 years before investment banks get around to it I think should still be incentivized someway

But the current system is cooked

>my whole life, it was sold to me as an incentive-boosting measure which in turn would lead to said outcomes

at the time patents were debated, a key part of the proposal was to encourage the transfer "trade secret knowledge" to the public good while still protecting the inventor. this is not an "encourage innovation" argument, it's to stop knowledge from dying with a secretive inventor, knowledge such as glass or metallurgical techniques, formulas, etc.

the inventor also benefited from this patent protection because they could expand their business unlimited by maintaining a small inner circle who knew the secret.

Patents actually hurt innovation. Patents are the tools of lawfare and are used to limit competition, keep lawyers employed, not improve innovation.

I've seen too many companies use the patent system to prevent progress because the innovation would cut into their profits.

You could probably take a competitor closing in on a patent and destabilize them by taking just enough of their R&D and feeding it though an LLM to reach a motivated conclusion, then publishing that transcript. I wonder if we'll see an increase in corporate espionage as a result of this powerful new tactic evolving.

Do you remember some of the studies this book cites? I always thought the drug development lag times and success rate made patents necessary. Do the authors make exceptions for rare disease or CNS therapies?

If you ever invent something that is truly unique. How would you protect it?

same as copyright, culture has become repetitive, cluttered, boring, protections should last 10 years not a lifetime

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