Monday, January 24, 2005

Speaking of Seduction...

It has been said that the recent changes in the FDA have led to some deleterious unintended consequences.  As the agency has evolved to get more and more of their funding directly from industry, they have spent more time of getting drugs approved rapidly, and less on monitoring safety.

Now, we learn that a similar thing has happened in the Patent and Trademark Office.  In 1982, the agency was restructured, such that most of their funding comes from application and maintenance fees -- also direct from industry.  This has been beneficial for large corporations:
The U.S. Congress set us on this road in 1982, when it created a centralized appellate court for patent cases called the U.S. Court of Appeals for the Federal Circuit. A decade later, Congress ordered that the U.S. Patent and Trademark Office (PTO), which up until then had been funded by tax revenues, instead fund itself through application and maintenance fees. Both changes were described as administrative and procedural rather than substantive.

But now, after still another decade, it is apparent that together these changes have resulted in the most profound transformation in U.S. patent policy and practice since the Patent Act of 1836. They make it easier to obtain patents, to enforce patents against others, and to extract large financial awards from such enforcement but harder for those accused of infringing patents to challenge the patents' validity.

What's more, the changes increase the risks associated with innovation—and not just for U.S. companies and inventors. Of the 169 028 U.S. patents issued in 2003, nearly half were issued to foreign entities.
This is illustrated by the following:
ALBIE'S FOODS INC., a small grocery and catering company in Gaylord, Mich., received an unusual letter in 2001 from the law firm representing jelly giant J.M. Smucker Co. The letter accused Albie's—which sells pastries and sandwiches in northern Michigan—of violating Smucker's intellectual property by selling crustless peanut butter and jelly sandwiches.

In particular, Smucker's claimed that Albie's had infringed Smucker's recently granted U.S. Patent No. 6004596, which gives the Orrville, Ohio, company broad protection on its "sealed crustless sandwich." In a move that undoubtedly surprised the jam magnates, Albie's decided to defend itself in federal court. Albie's law firm noted in its filings that the "pasty"—a meat pie with crimped edges—has been popular fare in northern Michigan since the immigration of copper and iron miners from Cornwall, England, in the 19th century.
Gee, I would like to have a patent on the pasty, too.  And collect back royalties from the six zillion businesses in Michigan that have sold them for decades.

Clearly, the notion of having federal agencies derive their funding from industry, is misguided.   It seems like a good idea: make the government run more like a business.  It fits the Platonic Ideal of efficiency.  (We all know that businesses inevitably find the most efficient ways to do things.) Also, it lowers the burden on the taxpayers.  But it seems to alter their priorities as well. 

They serve whomever pays their bills.