Monthly Archives: October 2020

Interdisciplinary Reflections on ‘Patents as Capital’ with Erkan Gürpınar

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This blog post is the third and final part in a PASSIM blog series where invited scholars reflect on patents as capital from an interdisciplinary perspective.

Dr Erkan Gürpınar is Assistant Professor in Economics at the University of Ankara. His disciplinary background is in Economics (BSc, Msc Middle East Technical University & PhD Univ. of Siena) and Development Studies (MSc Uppsala University). During his PhD, he was a visiting researcher at the Centre of Development Studies of the University of Cambridge between 2011-2012.

His website can be found here: https://eb.asbu.edu.tr/en/staff/dr-ogr-uyesi-erkan-gurpinar

 

 

1. why do you study patents?

I study patents because they affect and shape the organizational structure of knowledge-based economies at micro and macro levels. Modern economies are knowledge-intensive, and we have seen a dramatic increase in the importance of knowledge as a means of controlling production. The accumulated knowledge about methods employed in production processes is of utmost importance. Patents, and in a broader sense, intellectual property rights are central elements for the organization of production within such knowledge based economies. They have the power to (partially) determine who owns – hence controls – the usage of accumulated techniques and knowledge of any community. Patent regimes have long lasting effects on production organization at the local as well as international level, for example developed vs developing nations, employers vs employees, multinationals vs SMEs. Moreover, the extension of patents to the realm of basic knowledge and public research is a relatively novel development that has implications for production organization and the future of open science and universities.

 

2. how do you understand patents as capital?

Traditionally in economics, capital has been treated as a physical phenomenon. Economic theory does not try to explain the history (and evolution) of capital as a concept. Patents, and intellectual property in general, are indicative of the limits that such a narrow approach to the theory of capital entails. An alternative understanding of capital goes beyond physical equipment and tangible assets, and includes intangible assets and immaterial wealth as legitimate parts of the definition of capital. Indeed, the obsession with tangibles in the definition of capital is historically rooted in the rise of industrial societies, in which the possession and utilization of material wealth are central to the organization of production. The classical division between capitalists and workers rest on this fact. Today, such an analysis is incomplete. Immaterial wealth is even more important in some leading sectors, such as information and communication technology and biotechnology.

Patents as capital should be understood in its historical context. Intangible assets are crucial parts of the production process. Although economics now embraces some of the conceptual developments of capital (e.g. human capital), economic theory overlooks the tacit character of useful knowledge and the legal disputes surrounding it. In economics, capital as knowledge cannot be understood properly without taking into account its legal, historical and organizational dimensions.

 

3. how does your work relate to this understanding?

In line with Thorstein Veblen, I argue that the term capital should be defined by observation rather than by deduction. Modern economies, at least in the developed world, are knowledge- intensive. Therefore control over useful (workplace) knowledge is important for managerial reasons. Such a control, in turn, has an effect on the distribution of income across different groups in society. An analysis of such an immaterial wealth cannot be confined to human capital, since it is embedded in organizational structure of firms. Immaterial wealth will be local and ‘sticky’ depending on the choice of a firm’s different technologies, its legal environment, as well as country of operation. It is unevenly distributed across employees, firms, sectors and regions. Furthermore, the extension of intellectual property regime to the realm of basic science and public research is an example of how legal decisions affect the institutional structure within various economies. By extending Veblen’s approach to capital to knowledge-based economies, I propose to re-define the term capital to include patents, as well as trade secrets and restrictive (non-compete) covenants. The analysis could then be used to explain changes triggered by knowledge-based economies. By doing so, I hope to contribute to the debates on the successes and failures of high-tech sectors and clusters (e.g. Silicon Valley), the role of legal regulations on knowledge, their effects on economic growth, and the distributional and efficiency implications of alternative organizational structures in knowledge based economies.

 

4. what do you think are the benefits and drawbacks of studying patents from an interdisciplinary perspective?

Diverse disciplines, such as economics, law, history and management, have studied patents. Not dissimilar to other interdisciplinary debates on rationality and rational actor, there is not any consensus on the definition of the core concepts. This makes interdisciplinary exchange difficult. And yet, an interdisciplinary approach is unavoidable since only a holistic view on the origin, development and the current state of the patent system can help us avoid just-so stories about the relevance and efficiency of patent regimes. This requires an interdisciplinary exchange: while legal scholarship could shed light on the role of patent systems on technology and notions of innovation, historical analysis can point to the developments of important changes to the patent system in the last two centuries. Moreover, economics could analyze the efficiency of patent systems in relation to the challenges faced by knowledge-based economies. Last but not least, insights from the discipline of management could show why knowledge and its ownership via patent systems are vital elements in the organization of production, and why treating knowledge as mainly freely available information may be incomplete. Patents and other forms of intellectual property represent a battle ground for interest groups around the world. An interdisciplinary approach can help us to understand scale and scope of such an antagonism and also possibly derive policy implications for the knowledge-based economies of the future.

 

5. your questions to others in the workshop group (if there is anything you’d like others to comment or discuss)?

What do you think about the definition of capital in economics textbooks?

 

Would you like to comment on Erkan Gürpınar’s reflections? Please do so below or on twitter. @passimproject

 

 

Interdisciplinary Reflections on ‘Patents as Capital’ with Susi Geiger

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This blog post is the second part in a PASSIM blog series where invited scholars reflect on patents as capital from an interdisciplinary perspective.

Susi Geiger is a Professor of Marketing & Market Studies at University College Dublin and the Principal Investigator on an ERC Consolidator project “MISFIRES” (2018-2023) project. MISFIRES asks how actors can engage with a market’s failures to challenge its organisation and make it more collaborative, more open to civic values and to social or political concerns. More broadly in her research Susi tries to figure out how complex markets are organized, with specific interests in technology and healthcare markets. She has published numerous articles in outlets including Organization Studies, Research Policy, Entrepreneurship Theory and Practice, Business & Society, and Journal of Cultural Economy.

Susi Geiger and MISFIRES are on Twitter: @complexmarkets @MISFIRES_ERC

 

1.why do you study patents?

 

Together with the ERC research group that I’m leading, I am researching ‘concerned markets’, that is markets where multiple actors’ interests, values and concerns clash (Geiger et al. 2014). In healthcare, such concerns include for instance those of patients and their advocacy groups, healthcare providers, civic society, governments, pharmaceutical firms, generics manufacturers, and health insurers, and could revolve around prices of medicines, access to innovative drugs, sustainability of supply and other issues. We are interested in how healthcare markets are organised, and how they could be organised better to take account of these various concerns. Patents are one of the strongest market shaping mechanisms and of central importance in healthcare as they will confer a legal monopoly onto innovative pharmaceutical companies for up to 20 years at a time (and sometimes longer, if we consider patent ‘toolbox’ strategies such as evergreening or the use of supplementary legal safeguards). This will have effects on pricing, on the negotiation strength these firms have vis-à-vis government buyers, on the entry of generic competitors, on innovation elsewhere in the system (through the use of patent ‘thickets’ and defensive patenting). Essentially, pretty much every aspect of the healthcare market is shaped through the patent system, therefore it is vital to understand how exactly it works – and again, if there are any alternatives to it that could make the market work ‘better’ (what ‘better’ is, and if it is indeed required, is of course in the eye of the beholder).

 

2. how do you understand patents as capital?

 

I consider patents in the context of the so-called financialisation of the pharmaceutical industry. According to financialization scholars, biopharmaceutical firms have, for some years now, focused more on a ‘rentiership’ than on an innovation business model. The latter would see vertically integrated pharmaceutical firms investing in a research and development pipeline that leads all the way from fundamental R&D efforts to post-market pharmacological surveillance in the interest of manufacturing innovative medicines to serve the world’s population. The former ‘financialized’ business model describes a strategic stance that can be characterized by six broad practices: First of these is the replacement of in-house R&D with the sourcing of external R&D through acquisitions or alliances with smaller biotech firms, which arguably lessens the risks large pharmaceutical firms need to take (Andersson et al. 2010). Second, pharmaceutical firms have been accused of a focus on what are often seen as modestly innovative but lucrative ‘blockbuster’ drugs that may yield revenues in excess of US$1bn per year, perhaps to the detriment of focusing on less lucrative but more pressing disease categories (Li 2014).  Third, they are increasingly adept at wielding a toolkit for strategic patent management, which for instance includes the so-called evergreening or incremental innovation of branded drugs to elongate their patent protection periods (Finch and Geiger 2011; Geiger and Finch 2016). Fourth is the exploitation of dominant market positions to extract arguably excessive rents in the form of high prices for medications from national and private healthcare payers (Roy and King 2016; Glabau 201; Gabaldon 2018). Fifth, and relatedly, reinvestment of these super-normal profits increasingly takes the form of share buybacks rather than future-driven R&D investments (Lazonick and Tulum 2011; Lazonick et al. 2017). Lastly, pharma has witnessed the emergence of pure ‘rentiers’ or ‘functionless investors’ ( van der Zwan 2014) in the form of so-called patent trolls or ‘Non-Practising Entities’ that buy and sell patents purely for financial gain (see also Kang 2015). In a nutshell, the financialization thesis portrays biopharmaceutical firms as viewing their drug portfolios as assets to be exploited through rent-seeking behaviors rather than instruments through which to ensure and enhance the public good. The patent, in this business model, turns from technological signifier to financial asset – or capital – to be bought and sold, banked and speculated upon, strategized and preempted.

 

3. how does your work relate to this understanding?

 

In our empirical work we observe how activists in the access to medicines space have turned their attention to patents in recent times. Of course, patents have always represented a bone of contention between access activists and innovator firms, particularly in the Global South where patent contestations by activists and governments have a history since the late 1990s AIDS crisis. However, it is only in recent years that activists in high income countries have focally taken on and contested patent decisions for instance by the European Patent Office. Assets can only be assets if and when they are specific, exclusive, and (typically) immutable.  The cases we have traced in our work reveal the gaps left open in the process of enclosure of ‘patents as capital’. These gaps can be grasped not only by rival companies wishing to gain a piece of the market pie, but they can also help other actors – for instance civil society or social scientists – analyse and/or contest the ‘asset condition’ (Muniesa et al. 2017 p. 34) of the biopharmaceutical enterprise. For instance, in one high-profile case of the Hepatits drug Sofosbuvir, since its launch and the associated public outrage its inflated price point caused, the mantle of patent contestant has been taken over from Gilead’s pharmaceutical rivals by civil society. In 2015 and 2017, the NGO Médicins du Monde led a group of activists into two patent oppositions that, interestingly, did not make appeal to the drug’s ethical and moral entanglements but that referred back to potential weaknesses in its patentability by referring chiefly to its lack of novelty –conjuring up its traces in extant HIV and Hepatitis C research much like the earlier patent disputes among private firms did . As an extension of the toolkit wielded by social movements around access to medicines, such patent contestations are becoming an important part of an increasing resistance against biopharmaceutical financialization.

 

4. what do you think are the benefits and drawbacks of studying patents from an interdisciplinary perspective?

 

Patents are complex entities (one would even say they are ontologically multiple). They have legal, technical, commercial and social lives, and they perform and are understood differently in each of these networks. In order to study patents-as-capital comprehensively, perspectives including those of law scholars, STS researchers, economic sociologists, institutionalists and technical specialists need to be integrated and connected. In short: to study something that is ontologically multiple requires epistemological multiplicity – though this requires building, to speak with Galison, ‘trading zones’ of interdisciplinary research between such different academic disciplines.

 

5. your questions to others in the workshop group (if there is anything you’d like others to comment or discuss)?

 

How can we go beyond the statement that ‘patents are capital’ to envisage and enact alternative and perhaps more ‘moral’ conceptions of technical ‘enclosures’? Commons, open science, sharing, license pooling, … ?

As technological signifiers and innovation signposts, patents are a one-size-fits all mechanism. While ‘breaking up’ the patent system – a system that has solidified over centuries into what it is today – is clearly not a realistic goal, what can scholar-activists contribute to nuance what has become a globally uniform and often very blunt instrument?

 

Would you like to comment on Susi Geiger’s reflections? Please do so below or on twitter. @passimproject

Interdisciplinary Reflections on ‘Patents as Capital’ with Vitor Henrique Pinto Ido

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Vitor Henrique Pinto Ido is a phd candidate at University of São Paulo, Brazil. This blog post is the first part in a PASSIM blog series where invited scholars reflect on patents as capital from an interdisciplinary perspective.

Vitor Ido is on twitter: @vitor_ido

 

 

1.why do you study patents?

 

It started almost as a coincidence. Back home, at the University of São Paulo, a course on “intellectual property and access to knowledge” became mandatory right after I became a student in 2009. The issue of how patents may curb access to medicines was a hot topic as Brazil had just issued a compulsory licensing for the patent of Efavirenz, a medicine for the treatment HIV/AIDS,, after failed negotiations to lower prices. The country – in its paradoxical position in world affairs and in the global economy – had actively defended the interests of developing countries in intellectual property issues at multilateral arenas (for instance, during the negotiations of the TRIPS Agreement), but had also approved relatively stringent domestic industrial property and copyright laws that created many obstacles for access. This was an easily identifiable problem: for instance, given the uncertainty on a copyrights’ exception or limitation for educational purposes, we actually could not share the course texts that would precisely discuss the role of intellectual property. So, in a sense, I study patents (and intellectual property) to reflect on how they affect the issue of access more generally understood: to essential medicines, to cultural goods, to scientific knowledge, to diverse information. And how this seems even more relevant in societies such as Brazil, marked by long histories of exclusion and inequality. Whether we want it or not, this is often overlooked in the Western IP scholarship, unless it is dealing directly with developing countries as case studies. Patents felt like a particularly contested field in legal discussions that almost unavoidably leads to discussion of political economy and history. As such, in countries where law is often portrayed as “neutral” and “formal” by academics, but which contrasts drastically with the reality of how legal techniques concretely take place, patents are a starting point for these broader discussions on law and legal practices. Finally, a broader understanding of the functioning and logic of the patent system enables concrete interventions in reality: for example, supporting efforts to legally challenge an unmerited patent for a certain pharmaceutical, which can reduce prices and lead to increased access to medicines.

 

 2. how do you understand patents as capital? 

 

There is one commonly referred to paradox in the patent system: because it refers to “intangible goods”, information that circulates beyond borders and easily, the patent system constantly needs to deal with the international sphere; however, it is a system designed and still based on territoriality, which means that patents need to be granted or not by each different country. This framing is limited in terms of how the system really operates, and dismisses the material implications of patents (their documents and applications, the buildings constructed, etc.), but it is still interesting to draw a parallel with similar narratives on the transnationalization of capital flows, the general financialization of global capitalism, and the increasing commodification of “things” (i.e. that may be turned into commodities/assets and therefore traded in markets). Patents are part of this contemporary system, operating as new forms of generation of capital in the strong, conventional sense (perhaps in the Marxian sense even), which have raised the attention for already a long time on the risks of “new enclosures of the commons”, i.e. the privatization of information. It would be hard not to acknowledge the ties between patents and capital in this economic sense, and perhaps it is the backbone of the whole discussion. But there are often overlooked dimensions related to other forms of capitalization through patents, which for instance are identifiable in the arguments that associate patents with innovation. If more patents are a good proxy for “innovation” (which empirically is not), then patents are, at least partly, a sign of prestige for a certain scientific and economic community, but also a form of personal entitlement. This is basically a sense of prestige (sometimes remunerated by institutions and employers) for having created an “invention” that was worth receiving a patent. The problem is that this is a self-referred system: you are worthy because you have a patent and a patent is supposed to be granted to worthy applications.

 

One dimension that particularly interests me is how patents are related to notions of nationalism and modernity. In a sense, a patent that was granted by the USPTO or by the EPO has a different legitimacy and signaling mechanism to peers and markets as compared to one granted, for instance, by the Brazilian INPI or the Chinese CNIPA. In other words, market players often use the fact they have a patent in the United States or European Union as a sign of validity of its “asset” (the technology but also the patent), but will probably won’t do so for most other countries.  Why? I feel that at least part of the answer is in the entanglements with what the post/decolonial scholarship insists on: there may be a formal equality in the global order, but intrinsically the existing system of states is unequal. In this sense, a patent may be associated to other forms of capital, perhaps even a “national capital” so to say? This is only an intuition, but I would like to investigate this more.

 

3. how does your work relate to this understanding?

 

My PhD thesis deals with the political economy of a specific vernacular expression in China, the idea that the country is creating a intellectual property system “with Chinese characteristics”. This is formally adopted in high-level government and judicial authorities’ speeches, and evokes the idea of socialism “with Chinese characteristics”. China has recently become the biggest international applicant of patents, trademarks and designs, drawing attention for how this relates to the huge transformation of the Chinese economy, which can be simplified as a form of imperfect transition from “copy” to “innovation”. It also draws criticism that question the quality of the patents and other rights granted in China, as well as specifically from the USA the narrative of a continued forced technology transfer and “theft” of “American intellectual property”. In dialogue with what I could perhaps call a critical scholarship on patents and/as capital, I tend to argue that the numeric expansion of IP, also followed by a robust institutional development of specialized IP courts in China, reflects an association between patents and innovation (a always imperfect, if not misleading, association), but moreover an association between patents and modernity. This is particularly relevant as the scholarship on China has for a long time focused on the idea of a “cultural” clash between Confucianist values that are embedded in contemporary China (and used by the central government) and the protection of IP; in parallel, the changes in the global economy that have led China to a prominent political field are a fruitful channel to discuss what changes this shift has in the ways patents are valued in China. In a typical anthropological way of thinking, in my research, I decide to take the expression “IP with Chinese characteristics” not as purely State ideology or market rhetoric, but as something that has a functional role for Chinese policymakers and innovator companies – as well as unintended consequences. Perhaps, if it is true that there is this indirect association between valuing patents as a sign of modernity, my interest is then on how this leads to impacts on notions of what it means to be a “modern” or “developed” Nation (i.e. in this case modern means a country that fully respects IP, but also that has a lot of national IP). Subsequently, how this may or not impact even the way certain Chinese people perceive themselves in their network of social interactions.

 

4. what do you think are the benefits and drawbacks of studying patents from an interdisciplinary perspective?

 

For those personally fascinated about patents and their “myths” interdisciplinary perspectives on patents literally open descriptions and analyses that are often completely ignored. Some of them can be broad and make us think philosophically on how something that seems to be so “technical” and specific such as a patent may be, as noted before, perhaps an entry point to understand Western cosmologies. But some may also be very grounded and contextualized. Although the objective of research certainly does not need to aim a pragmatic/concrete intervention in the world, I feel that an important benefit stemming from an interdisciplinary perspective in patents is the possibility to provide new insights on real world issues related to patents. For instance, the impacts of artificial intelligence for the patent system: both if countries should grant patents for “AI-generated” and “AI-assisted” inventions and the impacts for the use of AI in patent application processes (for example, conducting a novelty and inventive step search – two basic requirements for a patent to be granted – with AI tools may be more rigorous, but also reinforce certain biases). Another example is on what falls under the scope of “non-patentable subject matter”, and which therefore do not receive patent protection. This has become more and more relevant in discussions about genomic therapies, patenting of living organisms and their laboratory modified versions, among others. It also refreshes notions that are long ascertained, such as the figure of the “individual inventor”, something that indigenous traditional knowledges for instance may present a counterpoint. Of course, all of this brings additional difficulties to create engagements with people from different backgrounds (e.g. a patent attorney, an inventor, an industry representative, a policymaker, academics from other areas, including in law). In some cases, an “interdisciplinary” perspective is confounded with a reduced application of one “discipline” to another: this is the case of the “law and economics” literature that applies microeconomic orthodox tools to understand patents as “incentives” that reduce a “market failure”. Differentiating interdisciplinary work that aims at integrating different aspects, including not understanding law as a monolithic body of knowledge and not dissociated from material practices, is very important. Finally, because of so many strong economic interests involved in the protection of patents, interdisciplinary views may be often unjustly criticized if they propose a critical view – this is an instance where, in my view, academics struggle with the impact of economic interests.

 

5. your questions to others in the workshop group (if there is anything you’d like others to comment or discuss)?

 

Really looking forward to learning more from this amazing group. Perhaps one general issue I would have in mind is how the scholarship relates – implicitly or explicitly – with practitioners in the IP field (including negotiators in international organizations and scientists in laboratories), who may be not necessarily very welcoming of attempts to somehow challenge the foundations of the system they are so accustomed to.

 

Would you like to comment on Vitor Ido’s reflections? Please do so below or on twitter. @passimproject

Interdisciplinary Reflections on ‘Patents as Capital’: A Short Blog Series

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The second PASSIM workshop, entitled ‘Patents as Capital’ was initially planned to take place at the Nobel Museum in Stockholm this autumn. We were enthusiastic over the response to our call for papers, as we received many great contributions from diverse disciplines and national contexts.

Unfortunately, in the midst of final preparations for the workshop, Covid-19 hit the world and it reshuffled our lives and the workshop plans. Now we are hoping to hold the workshop in 2021, either in person or online.

In the meantime, we wanted to initiate an interdisciplinary conversation around the issue of ‘patents as capital’, particularly with the view of highlighting some of the diverse disciplinary perspectives that this topical problem elicits. We invited three workshop participants to reflect on the theme that we will publish a series of blog.

Our hope is that these reflections will introduce and identify some central aspects of the critical issue of ‘patent as capital’. They will also serve as a useful record of some of the key questions raised ahead of the workshop next year.

Our first blog post is written by Vitor Henrique Pinto Ido, PhD candidate at the University of São Paulo, Brazil. It will be published shortly.

We will also publish posts from Susi Geiger, Professor of marketing & market studies, University College Dublin and Erkan Gürpinar, Assistant professor, Social Science University of Ankara.

Please, follow us here and @Passimproject on twitter.