“I charged you $5 for the pills,” the doctor replies, “and $95 for knowing which pills to prescribe.” The point, of course, is that knowledge has value. A lot of time and money go into developing the specialized knowledge a skilled physician needs, and that investment deserves a return.
What if this tale had a different ending? What if the patient left from that first visit, bought the pills on his own and never paid the doctor’s bill? Most people would say such behavior was tantamount to theft. The patient used the doctor’s time and expertise—to say nothing of the years and the effort that went into building that knowledge—to solve his problem, without offering just compensation.
Now, let’s change the story a bit more. In this version, in the place of the doctor we have an inventor who has toiled long and hard to create and develop a patented innovation. In the place of the patient, we have a company that is reluctant to pay a licensing fee. The players are different, but the dynamic is analogous, and the moral is the same.
When inventors take patents, they accept the Constitution’s offer of a 20-year monopoly over the manufacture, use, and sale of their inventions in exchange for teaching the public (via publication of the application) how to practice (patent jargon for how to make or use) the invention. This serves the country in two ways: It provides a monetary incentive to the inventors who invest untold time and resources in their research, and it makes the resulting inventions available to the public to build upon, either by taking a license from the patent holder during the monopoly period or for free thereafter.
When a patent application is published, however, a company has access to the knowledge, because its scientists and engineers read journals, attend conferences, and keep current with the state of the art. If the company so chooses, it can use the patented technology without paying for it. If the inventor learns of the infringement, demands payment and is refused, he or she is in the same situation as the doctor.
Like the patient, the company already has the necessary information, and sees paying a fair price for it as an onerous burden. The company may even bemoan the fact it is asked to pay a significant portion of their offering’s net profit in order to use a perhaps inexpensive infringing component. This argument of course ignores the simple fact that the component may be cheap but someone else created the idea of that component and may even have paid to develop and perfect it.
If doctors did not receive fair payment for their services, they would have little incentive to invest years and a small fortune in medical school, let alone endure the many risks and frustrations of medical practice. Certainly, some would pursue medicine out of a sense of altruism, just as some inventors invent for the joy if it, but the net result would be far, far fewer doctors to serve the community. By the same token, removing the incentives to innovate would result in far fewer inventors, and fewer inventions.
Doctors and inventors face similar challenges. Each must confront unsolved problems and rely on specialized knowledge and experience to determine possible and practical solutions. The difference is: the doctor expects immediate payment regardless of whether the solution ultimately works. The inventor only gets payment if someone finds his or her invention useful enough to use, make or sell a product based on the patent.
Surprisingly, many are unsympathetic to the inventor’s plight -- not least of whom are members of our legislative and judicial branches. Recent changes to the law have made it significantly less likely that individual inventors will be able to overcome an infringer’s disregard for their patent rights.
Unless we provide equitable returns to our inventors, we face the real prospect that there will be fewer inventions -- the very antithesis of the ultimate ambition of our nation’s intellectual property system.
Paul Schneck, Ph.D., is chairman of Rembrandt IP Management LLC.