The patent fraud

I occasionally rant on this blog about the state of patent law (and intellectual property law in gereral) in this country (and beyond). Via Kevin Drum, I came across this excellent summary of some of the problems. Here's a snippet:

The Oxycontin patent was just one of thousands of instances of lax scrutiny at the patent office in recent years. Paxil and Prozac are two other multibillion dollar drugs that earned monopoly profits for their makers before their patents were struck down. And the office's errors range far beyond the pharmaceutical industry to include everything from software to biotechnology to e-commerce. Greg Aharonian, a Bay-Area patent consultant who sends out an almost-daily email newsletter on every patent-related development under the sun (an item from February was headed, "Kazakhstan Patent Office Runs Out of Paper") highlighted one recently granted patent, which included a "graphical traceroute"--a technology used to map online traffic events to physical locations. As he points out, had examiners simply Googled "graphical traceroute," they would have found, under the first entry, an excellent example of the technology, along with a link to an explanatory paper, published by a different team of technologists in November 1999--more than two years before the patent application was filed.

No one knows how many mistaken patents the office issues each year. But the results of one patent office experiment suggest that, in some areas, the error rate may be as many as half of those issued may be faulty. Faulty patents may be doing immense damage to the economy. They not only allow patent-holding firms to gouge consumers with exorbitant prices, but they also inhibit innovation and research, put a drag on economic growth, and may even create an investment bubble. (See sidebar.)

The cause of the problem is easy to pinpoint. Over the last decade and a half, the patent office has been set up in such a way that it's an easy mark. The system overwhelms many patent examiners, operates under laws and bureaucratic incentives that favor applicants, and can potentially be hoodwinked by the unscrupulous. A recent Federal Trade Commission report, which laid out these criticisms, concluded that in key industries such as pharmaceuticals, software, biotechnology, and the Internet, the office now "hamper[s] competition that would otherwise stimulate innovation." For some companies, armed only with dubious claims, the patent office has become not something to fear but a patsy, as easy to fool as those elderly couples who send cash to the Nigerian prime minister's wife.